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Warrant Agreement
35541_5 - 75205/00005NYDOCS:270387.4
NYDOCS:270387.4
EXHIBIT A
WARRANT AGREEMENT
July ___, 2000
INSTITUTIONAL EQUITY CORPORATION
CAPITAL WEST SECURITIES, INC.
As Representatives of the Several Underwriters
5910 North Central Expressway, Suite 1480
Dallas, Texas 75206
Gentlemen:
Catalog.com, Inc., an Oklahoma corporation (the "Company"), hereby
agrees to sell to you, and you hereby agree to purchase from the Company at an
aggregate purchase price of $100, stock purchase warrants (the "Representatives'
Warrants") covering 100,000 shares (the "Shares") of the Company's Common Stock,
$.01 par value (the "Common Stock"). The Representatives' Warrants will be
exercisable by you as to all or any lesser number of Shares covered thereby, at
the Purchase Price per Share as defined below, at any time and from time to time
on and after the first anniversary of the date hereof and ending at 5:00 p.m. on
the fifth anniversary of the effective date of the Registration Statement.
1. Definitions.
As used herein, the following terms, unless the context otherwise
requires, shall have for all purposes hereof the following meanings:
The term "Act" refers to the Securities Act of 1933, as amended.
The term "Affiliate" of any Person refers to any Person directly or
indirectly controlling, controlled by or under direct or indirect common control
with, such other Person. A Person shall be deemed to control a corporation if
such Person possesses, directly or indirectly, the power to direct or cause the
direction of the management and policies of such corporation, whether through
the ownership of voting securities, by contract or otherwise.
The term "Commission" refers to the Securities and Exchange Commission.
The term "Common Stock" refers to all stock of any class or classes
(however designated) of the Company, now or hereafter authorized, the holders of
which shall have the right without limitation as to amount, either to all or to
a part of the balance of current dividends and liquidating dividends after the
payment of dividends and distributions on any Shares entitled to preference, and
the holders of which shall ordinarily, in the absence of contingency, be
entitled to vote for the election of a majority of the directors of the Company
(even though the right so to vote has been suspended by the occurrence of such a
contingency).
The term "Current Market Price" on any date refers to the average of
the daily Market Price per Share for the 30 consecutive Trading Days commencing
45 Trading Days before the date in question.
The term "Exchange Act" refers to the Securities Exchange Act of 1934,
as amended.
The term "Market Price" refers to the closing sale price on the Nasdaq
SmallCap ("NASDAQ") or, if no closing sale price is reported, the closing bid
price of the Common Stock, as quoted on the Nasdaq National Market, or, if the
Common Stock is not quoted on the Nasdaq National Market, as reported by the
National Quotation Bureau Incorporated. If Market Price cannot be established as
described above, Market Price shall be the fair market value of the Common Stock
as determined in good faith by the Board of Directors whose determination shall
be conclusive.
<PAGE>
Warrant Agreement
A-15
35541_5 - 75205/00005NYDOCS:270387.4
The term "Other Securities" refers to any securities of the Company
(other than Common Stock) or any other person (corporate or otherwise) which the
holders of the Representatives' Warrants at any time shall be entitled to
receive, or shall have received, upon the exercise of the Representatives'
Warrants, in lieu of or in addition to Common Stock, or which at any time shall
be issuable or shall have been issued in exchange for or in replacement of
Common Stock or Other Securities pursuant to Section 6 below or otherwise.
The term "Person" refers to an individual, a partnership, a
corporation, a trust, a joint venture, an unincorporated organization and a
government or any department or agency thereof.
The term "Prospectus" shall mean the final prospectus of the Company,
dated the date hereof, relating to the offer and sale of Common Stock.
The term "Purchase Price" refers to the purchase price per Share of the
Common Stock subject to this Agreement. The Purchase Price shall equal to 115%
of the initial offering price to public of the Common Stock as set forth in the
Prospectus, subject to adjustment as provided in Section 6 below.
The term "Registration Statement" refers to a Registration Statement
filed with the Commission pursuant to the Rules and Regulations of the
Commission promulgated under the Act.
The term "Trading Day" shall mean a day on which the Nasdaq National
Market System or the principal national securities exchange on which the Common
Stock is listed or admitted to trading is open for the transaction of business.
The term "Underlying Stock" refers to the Shares (or Other Securities)
issuable under this Warrant Agreement pursuant to the exercise, in whole or in
part, of the Representatives' Warrants.
The purchase and sale of the Representatives' Warrants shall take
place, and the purchase price therefor shall be paid by delivery of your check,
simultaneously with the purchase of and payment for any Shares as provided in
the Underwriting Agreement between the Company and you, dated the date hereof.
2. Representations and Warranties.
The Company represents and warrants to you as follows:
(a) Corporate Action. The Company has all requisite corporate power and
authority, and has taken all necessary corporate action, to execute and deliver
this Agreement, to issue and deliver the Representatives' Warrants and
certificates evidencing same, and to authorize and reserve for issuance, and
upon payment from time to time of the Purchase Price to issue and deliver, the
Shares.
(b) No Violation. Neither the execution nor delivery of this Agreement,
the consummation of the actions herein contemplated nor compliance with the
terms and provisions hereof will conflict with, or result in a breach of, or
constitute a default or an event permitting acceleration under, any of the
terms, provisions or conditions of the Articles of Incorporation or Bylaws of
the Company or any indenture, mortgage, deed of trust, note, bank loan, credit
agreement, franchise, license, lease, permit, judgment, decree, order, statute,
rule or regulation or any other agreement, understanding or instrument to which
the Company is a party or by which it is bound.
3. Compliance with the Act.
(a) Transferability of Representatives' Warrants. You agree that the
Representatives' Warrants may not be transferred, sold, assigned or hypothecated
for a period of one (1) year from the date hereof, except to (i) persons who are
officers of you; (ii) a successor to you in a merger or consolidation; (iii) a
purchaser of all or substantially all of your assets; (iv) your shareholders in
the event you are liquidated or dissolved; and (v) persons who are officers or
partners of participating broker-dealers.
<PAGE>
(b) Registration of Underlying Stock. The Underlying Stock issuable
upon the exercise of the Representatives' Warrants has not been registered under
the Act. You agree not to make any sale or other disposition of the Underlying
Stock except pursuant to a Registration Statement which has become effective
under the Act, setting forth the terms of such offering, the underwriting
discount and the commissions and any other pertinent data with respect thereto,
unless you have provided the Company with an opinion of counsel reasonably
acceptable to the Company that such registration is not required.
(c) Inclusion in Registration of Other Securities. If at any time
commencing one year after the date hereof but prior to the fifth anniversary of
the date hereof, the Company shall propose the registration on an appropriate
form under the Act of any Shares or Other Securities, the Company shall at least
30 days prior to the filing of such Registration Statement give you written
notice, or telegraphic or telephonic notice followed as soon as practicable by
written confirmation thereof, of such proposed registration and, upon written
notice, or telegraphic or telephonic notice followed as soon as practicable by
written confirmation thereof, given to the Company within five business days
after the giving of such notice by the Company, shall include or cause to be
included in any such Registration Statement all or such portion of the
Underlying Stock as you may request, provided, however, that the Company may at
any time withdraw or cease proceeding with any such registration if it shall at
the same time withdraw or cease proceeding with the registration of such Common
Stock or such Other Securities originally proposed to be registered.
Notwithstanding any provision of this Agreement to the
contrary, if any holder of Representatives' Warrants exercises such
Representatives' Warrants but shall not have included all the Underlying Stock
in a Registration Statement which complies with Section 10(a)(3) of the Act,
which has been effective for at least 30 calendar days following the exercise of
the Representatives' Warrants, the registration rights set forth in this Section
3(c) shall be extended until such time as (i) such a Registration Statement
including such Underlying Stock has been effective for at least 30 calendar days
or (ii) in the opinion of counsel satisfactory to you and the Company,
registration is not required under the Act or under applicable state laws for
resale of the Underlying Stock in the manner proposed.
(d) Company's Obligations in Registration. In connection with any offering
of Underlying Securities pursuant to Section 3(c) above, the Company shall:
(i) Notify you as to the filing thereof and of all amendments or
supplements thereto filed prior to the effective date thereof;
(ii) Comply with all applicable rules and regulations of the Commission;
(iii) Notify you immediately, and confirm the notice in writing, (1) when
the Registration Statement becomes effective, (2) of the issuance by the
Commission of any stop order or of the initiation, or the threatening, of any
proceedings for that purpose, (3) of the receipt by the Company of any
notification with respect to the suspension of qualification of the Underlying
Securities for sale in any jurisdiction or of the initiation, or the
threatening, of any proceedings for that purpose and (4) of the receipt of any
comments, or requests for additional information, from the Commission or any
state regulatory authority. If the Commission or any state regulatory authority
shall enter such a stop order or order suspending qualification at any time, the
Company will make every reasonable effort to obtain the lifting of such order as
promptly as practicable.
<PAGE>
(iv) During the time when a Prospectus is required to be delivered under
the Act during the period required for the distribution of the Underlying
Securities, comply so far as it is able with all requirements imposed upon it by
the Act, as hereafter amended, and by the Rules and Regulations promulgated
thereunder, as from time to time in force, so far as necessary to permit the
continuance of sales of or dealings in the Underlying Securities. If at any time
when a Prospectus relating to the Underlying Securities is required to be
delivered under the Act any event shall have occurred as a result of which, in
the opinion of counsel for the Company or your counsel, the Prospectus relating
to the Underlying Securities as then amended or supplemented includes an untrue
statement of a material fact or omits to state any material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or if it is necessary
at any time to amend such Prospectus to comply with the Act, the Company will
promptly prepare and file with the Commission an appropriate amendment or
supplement (in form satisfactory to you).
(v) Endeavor in good faith, in cooperation with you, at or prior to the
time the Registration Statement becomes effective, to qualify the Underlying
Securities for offering and sale under the securities laws relating to the
offering or sale of the Underlying Securities of such jurisdictions as you may
reasonably designate and to continue the qualifications in effect so long as
required for purposes of the sale of the Underlying Securities; provided that no
such qualification shall be required in any jurisdiction where, as a result
thereof, the Company would be subject to service of general process, or to
taxation as a foreign corporation doing business in such jurisdiction. In each
jurisdiction where such qualification shall be effected, the Company will,
unless you agree that such action is not at the time necessary or advisable,
file and make such statements or reports at such times as are or may reasonably
be required by the laws of such jurisdiction. For the purposes of this
paragraph, "good faith" is defined as the same standard of care and degree of
effort as the Company will use to qualify its securities other than the
Underlying Securities.
(vi) Make generally available to its security holders as
soon as practicable, but not later than the first day
of the eighteenth full calendar month following the
effective date of the Registration Statement, an
earnings statement (which need not be certified by
independent public or independent certified public
accountants unless required by the Act or the rules
and regulations promulgated thereunder, but which
shall satisfy the provisions of Section 11(a) of the
Act) covering a period of at least twelve months
beginning after the effective date of the
Registration Statement.
(vii) After the effective date of such Registration
Statement, prepare, and promptly notify you of the
proposed filing of, and promptly file with the
Commission, each and every amendment or supplement
thereto or to any Prospectus forming a part thereof
as may be necessary to make any statements therein
not misleading; provided that no such amendment or
supplement shall be filed if you shall object thereto
in writing promptly after being furnished a copy
thereof.
(viii) Furnish to you, as soon as available, copies of any
such Registration Statement and each preliminary or
final Prospectus, or supplement or amendment prepared
pursuant thereto, all in such quantities as you may
from time to time reasonably request;
(ix) Make such representations and warranties to any
underwriter of the Underlying Securities, and use
your best efforts to cause Company counsel to render
such opinions to such underwriter, as such
underwriter may reasonably request; and
(x) Pay all costs and expenses incident to the performance of the Company's
obligations under Sections 3(c) and 3(d), including, without limitation, the
fees and disbursements of the Company's auditors and legal counsel, fees and
disbursements of legal counsel for you, registration, listing and filing fees,
printing expenses and expenses in connection with the transfer and delivery of
the Underlying Stock; provided, however, that the Company shall not be
responsible for compensation and reimbursement of expenses to underwriters or
selling agents for the included Underlying Securities.
(e) Agreements by Warrant Holder. In connection with the filing of a
Registration Statement pursuant to Section 3(c) above, if you participate in the
offering by including the Underlying Securities owned by you, you agree:
<PAGE>
(i) To furnish the Company all material information
requested by the Company concerning yourself and your
holdings of securities of the Company and the
proposed method of sale or other disposition of the
Underlying Securities and such other information and
undertakings as shall be reasonably required in
connection with the preparation and filing of any
such Registration Statement covering all or a part of
the Underlying Securities and in order to ensure full
compliance with the Act; and
(ii) To cooperate in good faith with the Company and its
underwriters, if any, in connection with such
registration, including placing the Underlying
Securities to be included in such Registration
Statement in escrow or custody to facilitate the sale
and distribution thereof.
(f) Indemnification. The Company shall indemnify and hold harmless you
and any underwriter (as defined in the Act) for you, and each person, if any,
who respectively controls you or such underwriter within the meaning of Section
15 of the Act or Section 20(a) of the Exchange Act, against any loss, liability,
claim, damage and expense whatsoever (including but not limited to any and all
expense whatsoever reasonably incurred in investigating, preparing or defending
against any litigation, commenced or threatened, or any claim whatsoever), joint
or several, to which any of you or such underwriter or such controlling person
becomes subject, under the Act or otherwise, insofar as such loss, liability,
claim, damage and expense (or actions in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue statement of any material fact
contained in (i) a Registration Statement covering the Underlying Securities, in
the prospectus contained therein, or in an amendment or supplement thereto or
(ii) in any application or other document or communication (in this Section
collectively called "application") executed by or on behalf of the Company or
based upon written information furnished by or on behalf of the Company filed in
any jurisdiction in order to qualify the Underlying Securities under the
securities laws thereof or filed with the Commission, or arise out of or based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading;
provided, however, that the Company shall not be obligated to indemnify in any
such case to the extent that any such loss, claim, damage, expense or liability
arises out of or is based upon any untrue statement or alleged untrue statement
or omission or alleged omission made in reliance upon, and in conformity with,
written information respectively furnished by you or such underwriter or such
controlling person for use in the Registration Statement, or any amendment or
supplement thereto, or any application, as the case may be.
If any action is brought against a person in respect of which
indemnity may be sought against, the Company pursuant to the foregoing
paragraph, such person shall promptly notify the Company in writing of the
institution of such action and the Company shall assume the defense of the
action, including the employment of counsel (satisfactory to the indemnified
person in its reasonable judgment) and payment of expenses. The indemnified
person shall have the right to employ its or their own counsel in any such case,
but the fees and expenses of such counsel shall be at the expense of such
indemnified person or unless the employment of such counsel shall have been
authorized in writing by the Company in connection with the defense of the
action or the Company shall not have employed counsel to have charge of the
defense of the action or the indemnified person shall have reasonably concluded
that there may be defenses available to it or them which are different from or
additional to those available to the Company (in which case the Company shall
not have the right to direct the defense of the action on behalf of the
indemnified person), in any of which events these fees and expenses shall be
borne by the Company. Anything in this paragraph to the contrary
notwithstanding, the Company shall not be liable for any settlement of any claim
or action effected without its written consent. The Company's indemnity
agreements contained in this Section shall remain in full force and effect
regardless of any investigation made by or on behalf of any indemnified person,
and shall survive any termination of this Agreement. The Company agrees promptly
to notify you of the commencement of any litigation or proceedings against the
Company or any of its officers or directors in connection with the Registration
Statement pursuant to Section 3(c) above.
<PAGE>
If you choose to include any Underlying Securities in a public
offering pursuant to Section 3(c) or above, then you agree to indemnify and hold
harmless the Company and each of its directors and officers who have signed any
such Registration Statement, and any underwriter for the Company (as defined in
the Act), and each person, if any, who controls the Company or such underwriter
within the meaning of the Act, to the same extent as the indemnity by the
Company in this Section 3(f) but only with respect to statements or omissions,
if any, made in such Registration Statement, or any amendment or supplement
thereto, or in any application in reliance upon, and in conformity with, written
information furnished by you to the Company for use in the Registration
Statement, or any amendment or supplement thereto, or any application, as the
case may be. In case any action shall be brought in respect of which indemnity
may be sought against you, you shall have the rights and duties given to the
Company, and the persons so indemnified shall have the rights and duties given
to you by the provisions of the first paragraph of this Section.
The Company further agrees that, if the indemnity provisions
of the foregoing paragraphs are held to be unenforceable, any holder of a
Representatives' Warrant or controlling person of such a holder may recover
contribution from the Company in an amount which, when added to contributions
such holder or controlling person has theretofore received or concurrently
receives from officers and directors of the Company or controlling persons of
the Company, will reimburse such holder or controlling person for all losses,
claims, damages or liabilities and legal or other expenses; provided, however,
that if the full amount of the contribution specified in this Section 3(f) is
not permitted by law, then such holder or controlling person shall be entitled
to contribution from the Company and its officers, directors and controlling
persons to the full extent permitted by law.
4. Exercise of Representatives' Warrants.
(a) Cash Exercise. Each Representatives' Warrant may be exercised in
full or in part (but not as to a fractional Share) by the holder thereof by
surrender of the Warrant Certificate, with the form of subscription at the end
thereof duly executed by such holder, to the Company at its principal office,
accompanied by payment, in cash or by certified or bank cashier's check payable
to the order of the Company, in the respective amount obtained by multiplying
the number of Shares to be purchased by the Purchase Price per Share.
(b) Net Exercise. Notwithstanding anything to the contrary contained in
Section 4(a), any holder of a Representatives' Warrant may elect to exercise the
Representatives' Warrant in full or in part and receive Shares on a ?net
exercise? basis in an amount equal to the value of the Representatives' Warrant
by delivery of the form of subscription attached to the Warrant Certificate and
surrender of the Representatives' Warrant at the principal office of the
Company, in which event the Company shall issue to the holder a number of Shares
computed using the following formula:
X= (P)(Y)(A-B)
-----------
A
Where: X= the number of Shares to be issued to holder.
P= the portion of the Representatives' Warrant
being exercised (expressed as a fraction).
Y= the total number of Shares issuable upon
exercise of the Representatives' Warrant.
A= the Current Market Price of one Share.
B= Purchase Price.
(c) Partial Exercise. Prior to the expiration of the Representatives'
Warrants, upon any partial exercise, the Company at its expense will forthwith
issue and deliver to or upon the order of the purchasing holder, a new Warrant
Certificate or Certificates of like tenor, in the name of the holder thereof or
as such holder (upon payment by such holder of any applicable transfer taxes)
may request calling in the aggregate for the purchase of the number of Shares of
the Underlying Stock equal to the number of such Shares called for on the face
of the Warrant Certificate (after giving effect to any adjustment therein as
provided in Section 6 below) minus the number of such Shares (after giving
effect to such adjustment) designated by the holder in the aforementioned form
of subscription.
<PAGE>
(d) Company to Reaffirm Obligations. The Company will, at the time of
any exercise of any Representatives' Warrant, upon the request of the holder
thereof, acknowledge in writing its continuing obligation to afford to such
holder any rights (including without limitation any right to registration of the
Shares issued upon such exercise) to which such holder shall continue to be
entitled after such exercise in accordance with the provisions of this
Agreement; provided, however, that if the holder of a Representatives' Warrant
shall fail to make any such request, such failure shall not affect the
continuing obligation of the Company to afford to such holder any such rights.
5. Delivery of Certificates on Exercise.
As soon as practicable after the exercise of any Representatives'
Warrant in full or in part, and in any event within twenty days thereafter, the
Company at its expense (including the payment by it of any applicable issue
taxes) will cause to be issued in the name of and delivered to the purchasing
holder thereof, a certificate or certificates for the number of fully paid and
nonassessable shares of the Underlying Stock to which such holder shall be
entitled upon such exercise, plus in lieu of any fractional share to which such
holder would otherwise be entitled, cash in an amount determined pursuant to
Section 7(g), together with any other stock or other securities and property
(including cash, where applicable) to which such holder is entitled upon such
exercise pursuant to Section 6 below or otherwise.
6. Anti-Dilution Provisions.
The Representatives' Warrants are subject to the following terms and
conditions during the term thereof:
(a) Stock Distributions and Splits. In case (i) the outstanding Shares
(or Other Securities) shall be subdivided into a greater number of shares or
(ii) a dividend in Common Stock (or Other Securities) shall be paid in respect
of Common Stock (or Other Securities), the Purchase Price per Share in effect
immediately prior to such subdivision or at the record date of such dividend or
distribution shall simultaneously with the effectiveness of such subdivision or
immediately after the record date of such dividend or distribution be
proportionately reduced; and if outstanding Shares (or Other Securities) shall
be combined into a smaller number of shares thereof, the Purchase Price per
Share in effect immediately prior to such combination shall simultaneously with
the effectiveness of such combination be proportionately increased. Any dividend
paid or distributed on the Common Stock (or Other Securities) in stock or any
other securities convertible into Shares (or Other Securities) shall be treated
as a dividend paid in Common Stock (or Other Securities) to the extent that
Shares (or Other Securities) are issuable upon the conversion thereof.
(b) Adjustments. Whenever the Purchase Price per Share is adjusted as
provided in Section 6(a) above, the number of Shares purchasable upon exercise
of the Representatives' Warrants immediately prior to such Purchase Price
adjustment shall be adjusted, effective simultaneously with such Purchase Price
adjustment, to equal the product obtained (calculated to the nearest full Share)
by multiplying such number of Shares by a fraction, the numerator of which is
the Purchase Price per Share in effect immediately prior to such Purchase Price
adjustment and the denominator of which is the Purchase Price per Share in
effect upon such Purchase Price adjustment, which adjusted number of Shares
shall thereupon be the number of Shares purchasable upon exercise of the
Representatives' Warrants until further adjusted as provided herein.
<PAGE>
(c) Reorganizations. In case the Company shall be recapitalized by
reclassifying its outstanding Common Stock (or Other Securities) into a stock
with a different par value or by changing its outstanding Common Stock (or Other
Securities) with par value to stock without par value, then, as a condition of
such reorganization, lawful and adequate provision shall be made whereby each
holder of a Representatives' Warrant shall thereafter have the right to
purchase, upon the terms and conditions specified herein, in lieu of the Shares
(or Other Securities) theretofore purchasable upon the exercise of the
Representatives' Warrants, the kind and amount of shares of stock and other
securities receivable upon such recapitalization by a holder of the number of
Shares (or Other Securities) which the holder of a Representatives' Warrant
might have purchased immediately prior to such recapitalization. If any
consolidation or merger of the Company with another corporation, or the sale of
all or substantially all of its assets to another corporation, shall be effected
in such a way that holders of Common Stock shall be entitled to receive stock,
securities or assets with respect to or in exchange for Common Stock, then, as a
condition of such consolidation, merger or sale, lawful and adequate provisions
shall be made whereby the holder hereof shall thereafter have the right to
purchase and receive upon the basis and upon the terms and conditions specified
in this Warrant Agreement and in lieu of the Shares immediately theretofore
purchasable and receivable upon the exercise of the rights represented hereby,
such shares of stock, securities or assets as may be issued or payable with
respect to or in exchange for a number of outstanding Shares equal to the number
of Shares of such stock immediately theretofore purchasable and receivable upon
the exercise of the rights represented hereby had such consolidation, merger or
sale not taken place, and in any such case, appropriate provision shall be made
with respect to the rights and interests of the holders of Representatives'
Warrants to the end that the provisions hereof (including without limitation
provisions for adjustments of the Purchase Price and of the number of Shares
purchasable and receivable upon the exercise of the Representatives' Warrants)
shall thereafter be applicable, as nearly as may be, in relation to any shares
of stock, securities or assets thereafter deliverable upon the exercise hereof
(including an immediate adjustment, by reason of such consolidation or merger,
of the Purchase Price to the value for the Common Stock reflected by the terms
of such consolidation or merger if the value so reflected is less than the
Purchase Price in effect immediately prior to such consolidation or merger). In
the event of a merger or consolidation of the Company with or into another
corporation as a result of which a number of Shares of the surviving corporation
greater or lesser than the number of Shares outstanding immediately prior to
such merger or consolidation are issuable to holders of Common Stock of the
Company, then the Purchase Price in effect immediately prior to such merger or
consolidation shall be adjusted in the same manner as though there were a
subdivision or combination of the outstanding Shares. The Company will not
effect any such consolidation, merger or sale, unless prior to the consummation
thereof the successor corporation (if other than the Company) resulting from
such consolidation or merger or the corporation purchasing such assets shall
assume by written instrument executed and mailed or delivered to the registered
holder hereof at the last address of such holder appearing on the books of the
Company, the obligation to deliver to such holder such shares of stock,
securities or assets as, in accordance with the foregoing provisions, such
holder may be entitled to purchase. If a purchase, tender or exchange offer is
made to and accepted by the holders of more than of the outstanding Shares, the
Company shall not effect any consolidation, merger or sale with the Person
having made such offer or with any Affiliate of such Person, unless prior to the
consummation of such consolidation, merger or sale the holders of
Representatives' Warrants shall have been given a reasonable opportunity to then
elect to receive upon the exercise of Representatives' Warrants either the
stock, securities or assets then issuable with respect to the Common Stock of
the Company or the stock, securities or assets, or the equivalent issued to
previous holders of the Common Stock in accordance with such offer.
(d) Effect of Dissolution or Liquidation. In case the Company shall
dissolve or liquidate all or substantially all of its assets, all rights under
this Agreement shall terminate as of the date upon which a certificate of
dissolution or liquidation shall be filed with the Secretary of the State of
Oklahoma (or, if the Company theretofore shall have been merged or consolidated
with a corporation incorporated under the laws of another state, the date upon
which action of equivalent effect shall have been taken); provided, however,
that (i) no dissolution or liquidation shall affect the rights under Section
6(c) of any holder of a Representatives' Warrant and (ii) if the Company's Board
of Directors shall propose to dissolve or liquidate the Company, each holder of
a Representatives' Warrant shall be given written notice of such proposal at the
earlier of (x) the time when the Company's shareholders are first given notice
of the proposal or (y) the time when notice to the Company's shareholders is
first required.
(e) Notice of Change of Purchase Price. Whenever the Purchase Price per
Share or the kind or amount of securities purchasable under the Representatives'
Warrants shall be adjusted pursuant to any of the provisions of this Agreement,
the Company shall forthwith thereafter cause to be sent to each holder of a
Representatives' Warrant, a certificate setting forth the adjustments in the
Purchase Price per Share and/or in such number of Shares, and also setting forth
in detail the facts requiring, such adjustments, including without limitation a
statement of the consideration received or deemed to have been received by the
Company for any additional shares of stock issued by it requiring such
adjustment. In addition, the Company at its expense shall within 90 days
following the end of each of its fiscal years during the term of this Agreement,
and promptly upon the reasonable request of any holder of a Representatives'
Warrant in connection with the exercise from time to time of all or any portion
of any Representatives' Warrant, cause independent certified public accountants
of recognized standing selected by the Company to compute any such adjustment in
accordance with the terms of the Representatives' Warrants and prepare a
certificate setting forth such adjustment and showing in detail the facts upon
which such adjustment is based.
<PAGE>
(f) Notice of a Record Date. In the event of (i) any taking by the
Company of a record of the holders of any class of securities for the purpose of
determining the holders thereof who are entitled to receive any dividend (other
than a cash dividend payable out of earned surplus of the Company) or other
distribution, or any right to subscribe for, purchase or otherwise acquire any
shares of stock of any class or any other securities or property, or to receive
any other right, (ii) any capital reorganization of the Company, or any
reclassification or recapitalization of the capital stock of the Company, or any
transfer of all or substantially all of the assets of the Company to, or
consolidation or merger of the Company with or into, any other person or (iii)
any voluntary or involuntary dissolution or liquidation of the Company, then and
in each such event the Company will mail or cause to be mailed to each holder of
a Representatives' Warrant a notice specifying not only the date on which any
such record is to be taken for the purpose of such dividend, distribution or
right and stating the amount and character of such dividend, distribution or
right, but also the date on which any such reorganization, reclassification,
recapitalization, transfer, consolidation, merger, dissolution, liquidation or
winding-up is to take place, and the time, if any, as of which the holders of
record of Common Stock (or Other Securities) shall be entitled to exchange their
Shares (or other Securities) for securities or other property deliverable upon
such reorganization, reclassification, recapitalization, transfer,
consolidation, merger, dissolution, liquidation or winding-up. Such notice shall
be mailed at least twenty (20) days prior to the proposed record date therein
specified.
7. Further Covenants of the Company.
(a) Reservation of Stock. The Company shall at all times reserve and
keep available, solely for issuance and delivery upon the exercise of the
Representatives' Warrants, all Shares from time to time issuable upon the
exercise of the Representatives' Warrants and shall take all necessary actions
to ensure that the par value per Share, if any, of the Underlying Stock is, at
all times equal to or less than the then effective Purchase Price per Share.
(b) Title to Shares. All shares of the Underlying Stock delivered upon
the exercise of the Representatives' Warrants shall be validly issued, fully
paid and nonassessable; each holder of a Representatives' Warrant shall receive
good and marketable title to the Underlying Stock, free and clear of all voting
and other trust arrangements, liens, encumbrances, equities and adverse claims
whatsoever; and the Company shall have paid all taxes, if any, in respect of the
issuance thereof.
(c) Listing on Securities Exchanges; Registration. If the Company at
any time shall list any Common Stock on any national securities exchange, the
Company will, at its expense, simultaneously list on such exchange, upon
official notice of issuance upon the exercise of the Representatives' Warrants,
and maintain such listing of, all shares of the Underlying Stock from time to
time issuable upon the exercise of the Representatives' Warrants; and the
Company will so list on any national securities exchange, will so register and
will maintain such listing of, any Other Securities if and at the time that any
securities of like class or similar type shall be listed on such national
securities exchange by the Company.
(d) Exchange of Representatives' Warrants. Subject to Section 3(a)
hereof, upon surrender for exchange of any Warrant Certificate to the Company,
the Company at its expense will promptly issue and deliver to or upon the order
of the holder thereof a new Warrant Certificate or certificates of like tenor,
in the name of such holder or as such holder (upon payment by such holder of any
applicable transfer taxes) may direct, calling in the aggregate for the purchase
of the number of Shares called for on the face or faces of the Warrant
Certificate or Certificates so surrendered.
(e) Replacement of Representatives' Warrants. Upon receipt of evidence
reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of any Warrant Certificate and, in the case of any such loss, theft
or destruction, upon delivery of an indemnity agreement reasonably satisfactory
in form and amount to the Company or, in the case of any such mutilation, upon
surrender and cancellation of such Warrant Certificate, the Company, at the
expense of the warrant holder will execute and deliver, in lieu thereof, a new
Warrant Certificate of like tenor.
(f) Reporting by the Company. The Company agrees that, if it files a
Registration Statement during the term of the Representatives' Warrants, it will
use its best efforts to keep current in the filing of all forms and other
materials which it may be required to file with the appropriate regulatory
authority pursuant to the Exchange Act, and all other forms and reports required
to be filed with any regulatory authority having jurisdiction over the Company.
(g) Fractional Shares. No fractional Shares are to be issued upon the
exercise of any Representatives' Warrant, but the Company shall pay a cash
adjustment in respect of any fraction of a Share which would otherwise be
issuable in an amount equal to the same fraction of the highest market price per
Share on the day of exercise, as determined by the Company.
<PAGE>
8. Other Holders.
The Representatives' Warrants are issued upon the following terms, to
all of which each holder or owner thereof by the taking thereof consents and
agrees as follows: (a) any person who shall become a transferee, within the
limitations on transfer imposed by Section 3(a) hereof, of a Representatives'
Warrant properly endorsed shall take such Representatives' Warrant subject to
the provisions of Section 3(a) hereof and thereupon shall be authorized to
represent himself as absolute owner thereof and, subject to the restrictions
contained in this Agreement, shall be empowered to transfer absolute title by
endorsement and delivery thereof to a permitted bona fide purchaser for value;
(b) each prior taker or owner waives and renounces all of his equities or rights
in such Representatives' Warrant in favor of each such permitted bona fide
purchaser, and each such permitted bona fide purchaser shall acquire absolute
title thereto and to all rights presented thereby; (c) until such time as the
respective Representatives' Warrant is transferred on the books of the Company,
the Company may treat the registered holder thereof as the absolute owner
thereof for all purposes, notwithstanding any notice to the contrary and (d) all
references to the word "you" in this Warrant Agreement shall be deemed to apply
with equal effect to any person to whom a Warrant Certificate or Certificates
have been transferred in accordance with the terms hereof, and where
appropriate, to any person holding shares of the Underlying Stock.
9. Miscellaneous.
All notices, certificates and other communications from or at the
request of the Company to the holder of any Representatives' Warrant shall be
mailed by first class, registered or certified mail, postage prepaid, to such
address as may have been furnished to the Company in writing by such holder, or,
until an address is so furnished, to the address of the last holder of such
Representatives' Warrant who has so furnished an address to the Company, except
as otherwise provided herein. This Agreement and any of the terms hereof may be
changed, waived, discharged or terminated only by an instrument in writing
signed by the party against which enforcement of such change, waiver, discharge
or termination is sought. This Agreement shall be construed and enforced in
accordance with and governed by the laws of the State of Texas. The headings in
this Agreement are for reference only and shall not limit or otherwise affect
any of the terms hereof. This Agreement, together with the forms of instruments
annexed hereto as Schedule I, constitutes the full and complete agreement of the
parties hereto with respect to the subject matter hereof.
IN WITNESS WHEREOF, this Warrant Agreement has been duly executed on
the date hereof.
Catalog.com, Inc.
By:_________________________________
Robert W. Crull
President
Institutional Equity Corporation
By:_________________________________
Robert A. Shuey, III
<PAGE>
35541_5 - 75205/00005NYDOCS:270387.4
SCHEDULE I
CATALOG.COM, INC.
Warrant Certificate
Evidencing Right to Purchase 100,000 Shares of Common Stock
This is to certify that Institutional Equity Corporation ("IEC") or
assigns, is entitled to purchase at any time or from time to time after 10:00
a.m., Dallas, Texas time, on July ___, 2000 and until 5:00 p.m., Dallas, Texas
time, on July _____, 2005 up to the above referenced number of shares (the
"Shares") of Common Stock, $.01 par value (the "Common Stock"), of Catalog.com,
Inc., a Oklahoma corporation (the "Company"), for the consideration specified in
Section 4 of the Warrant Agreement dated the date hereof between the Company and
IEC (the "Warrant Agreement"), pursuant to which this Warrant is issued. All
rights of the holder of this Warrant Certificate are subject to the terms and
provisions of the Warrant Agreement, copies of which are available for
inspection at the office of the Company. Capitalized terms used but not defined
herein shall have the respective meanings set forth in the Warrant Agreement.
The Shares issuable upon the exercise of this Warrant have not been
registered under the Securities Act of 1933, as amended (the "Act"), and no
distribution of such Shares may be made until the effectiveness of a
Registration Statement under the Act covering such Shares. Transfer of this
Warrant Certificate is restricted as provided in Section 3(a) of the Warrant
Agreement.
This Warrant has been issued to the registered owner in reliance upon
written representations necessary to ensure that this Warrant was issued in
accordance with an appropriate exemption from registration under any applicable
state and federal securities laws, rules and regulations. This Warrant may not
be sold, transferred, or assigned unless, in the opinion of the Company and its
legal counsel, such sale, transfer or assignment will not be in violation of the
Act, applicable rules and regulations of the Securities and Exchange Commission,
and any applicable state securities laws.
Subject to the provisions of the Act and of such Warrant Agreement,
this Warrant Certificate and all rights hereunder are transferable, in whole or
in part, at the offices of the Company, by the holder hereof in person or by
duly authorized attorney, upon surrender of this Warrant Certificate, together
with the Assignment hereof duly endorsed. Until transfer of this Warrant
Certificate on the books of the Company, the Company may treat the registered
holder hereof as the owner hereof for all purposes.
Any Shares (or other securities) which are acquired pursuant to the
exercise of this Warrant shall be acquired in accordance with the Warrant
Agreement and certificates representing all securities so acquired shall bear a
restrictive legend reading substantially as follows:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 OR UNDER ANY APPLICABLE STATE LAW. THEY MAY NOT BE OFFERED FOR
SALE, SOLD, TRANSFERRED OR PLEDGED WITHOUT (1) REGISTRATION UNDER THE
SECURITIES ACT OF 1933 AND ANY APPLICABLE STATE LAW, OR (2) AN OPINION
OF COUNSEL (SATISFACTORY TO THE CORPORATION) THAT REGISTRATION IS NOT
REQUIRED.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to
be executed by its duly authorized officer.
Date: July ___, 2000.
Catalog.com, Inc.
By:
---------------------------
<PAGE>
SUBSCRIPTION
(To be signed only upon exercise of Warrant)
To: Catalog.com, Inc.
The undersigned, the holder of the enclosed Warrant Certificate, hereby
irrevocably elects to exercise the purchase right represented by such Warrant
Certificate for, and to purchase thereunder, _________________ shares of Common
Stock, $.01 par value, of Catalog.com, Inc. and either tenders herewith payment
of the purchase price in full in the form of cash or a certified or cashier's
check in the amount of $______________ therefor or, if the undersigned elects
pursuant to Section 4(b) of the Warrant Agreement referred to in the Warrant
Certificate to convert the enclosed Warrant Certificate into Common Stock by net
issuance, the undersigned exercises the Warrant by exchange under the terms of
said Section 4(b), and requests that the certificate or certificates for such
Shares be issued in the name of and delivered to the undersigned.
Date: ______________________________
----------------------------------------
(Signature must conform
in all respects to name
of holder as specified on
the face of the Warrant
Certificate)
---------------------------------------
---------------------------------------
(Address)
Please indicate in the space below the number of Shares called for on
the face of the Warrant Certificate (or, in the case of a partial exercise, the
portion thereof as to which the Warrant is being exercised), in either case
without making any adjustment for additional Shares or other securities or
property or cash which, pursuant to the adjustment provisions of the Warrant,
may be deliverable upon exercise and whether the exercise is a cash exercise
pursuant to Section 4(a) of the Warrant Agreement or a net issuance exercise
pursuant to Section 4(b) of the Warrant Agreement.
Number of Shares:__________
Cash:____________________
Net issuance:______________
<PAGE>
ASSIGNMENT
(To be signed only upon transfer of Warrant)
For value received, the undersigned hereby sells, assigns and transfers unto
____________________________________ the right represented by the enclosed
Warrant Certificate to purchase ____________________ shares of Common Stock,
$.01 par value, of Catalog.com, Inc. with full power of substitution in the
premises.
The undersigned represents and warrants that the transfer, in whole in
or in part, of such right to purchase represented by the enclosed Warrant
Certificate is permitted by the terms of the Warrant Agreement referred to in
the Warrant Certificate, and the transferee hereof, by his acceptance of this
Assignment, represents and warrants that he or she is familiar with the terms of
such Warrant Agreement and agrees to be bound by the terms thereof with the same
force and effect as if a signatory thereto.
Date:___________________
(Signature must conform
in all respects to name of
holder as specified on
the face of the Warrant
Certificate)
(Address)
Signed in the presence of:
---------------------------------------------
<PAGE>
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