Exhibit 1.1
1,000,000 Shares
CATALOG.COM, INC.
Common Stock
________, 2000
UNDERWRITING AGREEMENT
INSTITUTIONAL EQUITY CORPORATION
CAPITAL WEST SECURITIES, INC.
As Representatives of the Several Underwriters
5910 North Central Expressway, Suite 1480
Dallas, Texas 75206
Dear Sirs:
Catalog.com, Inc., an Oklahoma corporation (the "Company"), proposes to
sell to you and the other underwriters named in Schedule I hereto (collectively,
the "Underwriters"), for whom Institutional Equity Corporation and Capital West
Securities, Inc. are acting as managing underwriters and representatives (the
"Representatives"), in the respective amounts set forth opposite each
Underwriter's name in Schedule I hereto, an aggregate of 1,000,000 shares of
Common Stock, $.01 par value (the "Common Stock"), of the Company (such shares
are hereinafter collectively referred to as the "Underwritten Securities"). The
Company also proposes to grant to the Underwriters the Underwriters' Option
(described in Section 2(b) hereof) to purchase up to an aggregate of 150,000
shares of Common Stock solely to cover over-allotments in the sale of the
Underwritten Securities (such shares are collectively referred to herein as the
"Option Securities"). Additionally, the Company proposes to grant to the
Representatives the Representatives' Warrants (defined in Section 7 hereof) to
purchase up to 100,000 shares of Common Stock (the Representatives' Warrants and
the underlying shares of Common Stock, are collectively referred to herein as
the "Warrant Securities"). The Underwritten Securities, the Option Securities
and the Warrant Securities are collectively referred to herein as the
"Securities".
The terms which follow, when used in this Agreement, shall have the
meanings indicated. The term "Effective Date" shall mean each date that the
Registration Statement (as defined below) and any post-effective amendment or
amendments thereto became or become effective. "Execution Time" shall mean the
date and time that this Agreement is executed and delivered by the parties
hereto. The term "Preliminary Prospectus" shall mean any preliminary prospectus
referred to in Section 1(a) below with respect to the offering of the
Securities, and any preliminary prospectus included in the Registration
Statement on the Effective Date that omits Rule 430A Information (as defined
below). Capitalized terms not otherwise defined herein shall have the meanings
ascribed to them in the most recent Preliminary Prospectus which predates or
coincides with the Execution Time. "Prospectus" shall mean the final prospectus
with respect to the offering of the Securities that contains the Rule 430A
Information. "Registration Statement" shall mean (a) the registration statement
referred to in Section 1(a) below, including Exhibits and Financial Statements,
in the form in which it has or shall become effective, (b) in the event any
post-effective amendment thereto becomes effective prior to the Closing Date (as
defined in Section 3(a) hereof) or any settlement date pursuant to Section 3(b)
hereof, such registration statement as so amended on such date, and (c) in the
event of the filing of any abbreviated registration statement increasing the
size of the offering (a "Rule 462 Registration Statement"), pursuant to Rule
462(b) (as defined below), which registration statement became effective upon
filing the Rule 462 Registration Statement. Such term shall include Rule 430A
Information (as defined below) deemed to be included therein at the Effective
Date as provided by Rule 430A. "Rule 424," "Rule 462(b)" and "Rule 430A" refer
to such rules promulgated under the Securities Act of 1933, as amended (the
"Act"). "Rule 430A Information" means information with respect to the Securities
and the offering thereof permitted to be omitted from the Registration Statement
when it becomes effective pursuant to Rule 430A.
<PAGE>
1.1. Representations and Warranties of the Company.
The Company represents and warrants to, and agrees with, each Underwriter that:
(a) The Company meets the requirements for the use of Form
SB-2 under the Act and has filed with the Securities and Exchange
Commission (the "Commission") a registration statement, including a
related preliminary prospectus ("Preliminary Prospectus"), on Form SB-2
(Commission File No. 333-_______) (the "Registration Statement") for
the registration under the Act of the Securities. The Company may have
filed one or more amendments thereto, including related Preliminary
Prospectuses, each of which has previously been furnished to you. The
Company will next file with the Commission either prior to
effectiveness of such Registration Statement, a further amendment
thereto (including the form of Prospectus) or, after effectiveness of
such Registration Statement, a Prospectus in accordance with Rules 430A
and 424(b)(1) or (4). As filed, such amendment and form of Prospectus,
or such Prospectus, shall include all Rule 430A Information and, except
to the extent the Representatives shall agree in writing to a
modification, shall be in all substantive respects in the form
furnished to you prior to the Execution Time or, to the extent not
completed at the Execution Time, shall contain only such specific
additional information and other changes (beyond that contained in the
latest Preliminary Prospectus) as the Company has advised you in
writing, prior to the Execution Time, will be included or made therein.
(b) The Preliminary Prospectus at the time of filing thereof,
conformed in all material respects with the applicable requirements of
the Act and the rules and regulations thereunder and did not include
any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the
statements therein not misleading. If the Effective Date is prior to or
simultaneous with the Execution Time, (i) on the Effective Date, the
Registration Statement conformed in all material respects to the
requirements of the Act and the rules and regulations thereunder and
did not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in
order to make the statements therein not misleading, and (ii) at the
Execution Time, the Registration Statement conforms, and at the time of
filing of the Prospectus pursuant to Rule 424(b), the Registration
Statement and the Prospectus will conform, in all material respects to
the requirements of the Act and the rules and regulations thereunder,
and neither of such documents includes, or will include, any untrue
statement of a material fact or omits, or will omit, to state a
material fact required to be stated therein or necessary in order to
make the statements therein (and, in the case of the Prospectus, in the
light of the circumstances under which they were made) not misleading.
If the Effective Date is subsequent to the Execution Time, on the
Effective Date, the Registration Statement and the Prospectus will
conform in all material respects to the requirements of the Act and the
rules and regulations thereunder, and neither of such documents will
contain any untrue statement of any material fact or will omit to state
any material fact required to be stated therein or necessary to make
the statements therein (and, in the case of the Prospectus, in the
light of the circumstances under which they were made) not misleading.
The two preceding sentences do not apply to statements in or omissions
from the Registration Statement or the Prospectus (or any supplements
thereto) based upon and in conformity with information furnished in
writing to the Company by or on behalf of any Underwriter through the
Representatives specifically for use in connection with the preparation
of the Registration Statement or the Prospectus (or any supplements
thereto).
(c) The Company does not own or control, directly or
indirectly, any shares of capital stock or equity interests in any
corporation, partnership, association or other entity, except as set
forth in the Prospectus.
<PAGE>
(d) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the
jurisdiction in which it is chartered or organized, with full corporate
power and corporate authority to own its properties and conduct its
business as described in the Prospectus, and is duly qualified to do
business as a foreign corporation and is in good standing under the
laws of each jurisdiction in which it conducts its business or owns
property and in which the failure, individually or in the aggregate, to
be so qualified would have a material adverse effect on the properties,
assets, operations, business, condition (financial or otherwise) or
prospects of the Company ("Material Adverse Effect"). The Company has
all necessary authorizations, approvals, orders, licenses, certificates
and permits of and from all government regulatory officials and bodies,
to own its properties and conduct its business as described in the
Prospectus except where the absence of any such authorization,
approval, order, license, certificate or permit would not have a
Material Adverse Effect.
(e) The Company does not own any shares of capital stock or
any other securities of any corporation or any equity interest in any
firm, partnership, association or other entity other than as described
in the Registration Statement.
(f) The Company's equity capitalization is as set forth in the
Prospectus; the capital stock of the Company conforms in all material
respects to the description thereof contained in the Prospectus; all
outstanding shares of Common Stock have been duly and validly
authorized and issued and are fully paid and nonassessable, and the
certificates therefore are in valid and sufficient form; there are,
and, on the Effective Date, the Closing Date (and any settlement date
pursuant to Section 3(b) hereof), there will be, no other classes of
stock outstanding except Common Stock; all outstanding options to
purchase shares of Common Stock have been duly and validly authorized
and issued; except as described in the Registration Statement, there
are, and, on the Closing Date (and any settlement date pursuant to
Section 3(b) hereof), there will be, no options, warrants or rights to
acquire, or debt instruments convertible into or exchangeable for, or
other agreements or understandings to which the Company is a party,
outstanding or in existence, entitling any person to purchase or
otherwise acquire shares of capital stock of the Company; the issuance
and sale of the Securities have been duly and validly authorized and,
when issued and delivered and paid for, the Securities will be fully
paid and nonassessable and free from preemptive rights, and will
conform in all respects to the description thereof contained in the
Prospectus; the Representatives' Warrants will, when issued, constitute
valid and binding obligations of the Company enforceable in accordance
with their terms and the Company has reserved a sufficient number of
shares of Common Stock for issuance upon exercise thereunder; the
Securities will, when issued, possess the rights, privileges and
characteristics as described in the Prospectus; and the certificates
for the Securities are in valid and sufficient form. Each offer and
sale of securities of the Company referred to in Item 26 of Part II of
the Registration Statement was effected in compliance with the Act and
the rules and regulations thereunder.
(g) The Securities (other than the Representatives' Warrants)
have been approved for listing on the Nasdaq SmallCap Market
("NASDAQ"), upon official notice of issuance.
(h) Other than as described in the Prospectus, there is no
pending or, to the best knowledge of the Company, threatened action,
suit or proceeding before any court or governmental agency, authority
or body, domestic or foreign, or any arbitrator involving the Company
of a character required to be disclosed in the Registration Statement
or the Prospectus. There is no contract or other document of a
character required to be described in the Registration Statement or
Prospectus or to be filed as an exhibit that is not described or filed
as required.
(i) This Agreement has been duly authorized, executed and
delivered by the Company and constitutes the legal, valid and binding
agreement of the Company, enforceable against the Company in accordance
with its terms, except as rights of indemnity and contribution
hereunder may be limited by public policy and except as the
enforceability hereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights
generally and general principles of equity.
(j) The Company has full corporate power and corporate
authority to enter into and perform its obligations under this
Agreement and to issue, sell and deliver the Securities in the manner
provided in this Agreement. The Company has taken all necessary
corporate action to authorize the execution and delivery of, and the
performance of its obligations under, this Agreement.
<PAGE>
(k) Neither the offering, issuance and sale of the Securities,
nor the consummation of any other of the transactions contemplated
herein, nor the fulfillment of the terms hereof, will conflict with or
result in a breach or violation of, or constitute a default under, or
result in the imposition of a lien on any properties of the Company or
an acceleration of indebtedness pursuant to, the Articles of
Incorporation or bylaws of the Company, as currently in effect, or any
of the terms of any indenture or other agreement or instrument to which
the Company is a party or by which the Company or any of its properties
are bound, or any law, order, judgment, decree, rule or regulation
applicable to the Company of any court, regulatory body, administrative
agency, governmental body, stock exchange or arbitrator having
jurisdiction over the Company. The Company is not in violation of its
Articles of Incorporation or bylaws, as currently in effect, or, except
as described in the Prospectus, in breach of or default under any of
the terms of any indenture or other agreement or instrument to which it
is a party or by which it or its properties are bound, which breach or
default would, individually or in the aggregate, have a Material
Adverse Effect.
(l) Except as disclosed in the Prospectus, no person has the
right, contractual or otherwise, to cause the Company to issue to it
any shares of capital stock in consequence of the issue and sale of the
Securities, nor does any person have preemptive rights, or rights of
first refusal or other rights to purchase any of the Securities. Except
as referred to in the Prospectus, no person holds a right to require or
participate in a registration under the Act of Common Stock, Preferred
Stock or any other equity securities of the Company.
(m) The Company has not (i) taken and will not take, directly
or indirectly, any action designed to cause or result in, or which has
constituted or which might reasonably be expected to cause or result
in, under the Exchange Act, or otherwise, stabilization or manipulation
of the price of any security of the Company to facilitate the sale or
resale of the Securities (other than those actions permitted by
applicable law) or (ii) effected any sales of shares of securities that
are required to be disclosed in response to Item 26 of Part II of the
Registration Statement (other than transactions disclosed in the
Registration Statement or the Prospectus).
(n) No consent, approval, authorization or order of, or
declaration or filing with, any court or governmental agency or body is
required to be obtained or filed by or on behalf of the Company in
connection with the transactions contemplated herein, except such as
may have been obtained or made for registration of the Securities under
the Act, and such as may be required under the Blue Sky laws of any
jurisdiction in connection with the purchase and distribution of the
Securities by the Underwriters.
(o) The accountants who have certified the Financial
Statements filed or to be filed with the Commission as part of the
Registration Statement are independent accountants as required by the
Act.
(p) No stop order preventing or suspending the use of any
Preliminary Prospectus has been issued, and no proceedings for that
purpose are pending or, to the best knowledge of the Company,
threatened or contemplated by the Commission; no stop order suspending
the sale of the Securities in any jurisdiction has been issued and no
proceedings for that purpose have been instituted or, to the best
knowledge of the Company, threatened or are contemplated; and any
request of the Commission for additional information (to be included in
the Registration Statement or the Prospectus or otherwise) has been
complied with.
(q) The Company has not sustained any material loss or
interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree, and, since
the respective dates as of which information is given in the
Registration Statement and the Prospectus, there have not been any
changes in the capital stock or long-term debt of the Company, or any
material adverse change, or a development known to the Company that
could reasonably be expected to cause or result in a material adverse
change, in the general affairs, management, financial position,
stockholders' equity, results of operations or prospects of the
Company, otherwise than as set forth in the Prospectus. Except as set
forth in the Prospectus, there exists no present condition or state of
facts or circumstances known to the Company involving its customers
which the Company can now reasonably foresee would have a Material
Adverse Effect or which would result in a termination or cancellation
of any agreement with any customer whose purchases, individually or in
the aggregate, are material to the business of the Company, or which
would result in any material decrease in sales to any such customer or
purchases from any supplier, or which would prevent the Company from
conducting its business as described in the Prospectus in essentially
the same manner in which it has heretofore been conducted.
<PAGE>
(r) The Financial Statements and the related notes of the
Company, included in the Registration Statement and the Prospectus
present fairly the financial position, results of operations, cash flow
and changes in shareholders' equity of the Company at the dates and for
the periods indicated, subject in the case of the Financial Statements
for interim periods, to normal and recurring year-end adjustments. The
unaudited pro forma combined condensed statements of the Company
present fairly the financial position and the results of operations at
the dates and for the periods indicated. Such Financial Statements and
the unaudited pro forma combined financial information of the Company
were prepared in conformity with the Commission's rules and regulations
and in accordance with generally accepted accounting principles applied
on a consistent basis throughout the periods involved.
(s) The Company owns or possesses, or has the right to use
pursuant to licenses, sublicenses, agreements, permissions or
otherwise, adequate patents, copyrights, trade names, trademarks,
service marks, licenses and other intellectual property rights
necessary to carry on its business as described in the Prospectus, and,
except as set forth in the Prospectus, the Company has not received any
notice of either (i) default under any of the foregoing or (ii)
infringement of or conflict with asserted rights of others with respect
to, or challenge to the validity of, any of the foregoing which, in the
aggregate, if the subject of an unfavorable decision, ruling or
finding, could have a Material Adverse Effect, and the Company knows of
no fact which could reasonably be anticipated to serve as the basis for
any such notice.
(t) Subject to such exceptions as are not likely to result in
a Material Adverse Effect, (A) the Company owns all properties and
assets described in the Registration Statement and the Prospectus as
being owned by it and (B) the Company has good title to all properties
and assets owned by it, free and clear of all liens, charges,
encumbrances and restrictions, except as otherwise disclosed in the
Prospectus and except for (i) liens for taxes not yet due, (ii)
mortgages and liens securing debt reflected on the Financial Statements
included in the Prospectus, (iii) materialmen's, workmen's, vendor's
and other similar liens incurred in the ordinary course of business
that are not delinquent, individually or in the aggregate, and do not
have a Material Adverse Effect on the value of such properties or
assets of the Company, or on the use of such properties or assets by
the Company, in its respective business, and (iv) any other liens that,
individually or in the aggregate, are not likely to result in a
Material Adverse Effect. All leases to which the Company is a party and
which are material to the conduct of the business of the Company are
valid and binding and no material default by the Company has occurred
and is continuing thereunder; and the Company enjoys peaceful and
undisturbed possession under all such material leases to which it is a
party as lessee.
(u) The books, records and accounts of the Company accurately
and fairly reflect, in reasonable detail, the transactions in and
dispositions of the assets of the Company. The system of internal
accounting controls maintained by the Company is sufficient to provide
reasonable assurances that (i) transactions are executed in accordance
with management's general or specific authorization; (ii) transactions
are recorded as necessary to permit preparation of financial statements
in conformity with generally accepted accounting principles and to
maintain accountability for assets; (iii) access to assets is permitted
only in accordance with management's general or specific authorization;
and (iv) the recorded accountability for assets is compared with the
existing assets at reasonable intervals and appropriate action is taken
with respect to any differences.
(v) Except as set forth in the Prospectus, subsequent to the
respective dates as of which information is given in the Registration
Statement and the Prospectus, the Company has not incurred any
liabilities or obligations, direct or contingent, or entered into any
transactions, in each case, which are likely to result in a Material
Adverse Effect, and there has not been any payment of or declaration to
pay any dividends or any other distribution with respect to the shares
of the capital stock of the Company.
<PAGE>
(w) The Company is in compliance in all material respects with
all applicable laws, rules and regulations, including, without
limitation, employment and employment practices, immigration, terms and
conditions of employment, health and safety of workers, customs and
wages and hours, and is not engaged in any unfair labor practice. No
property of the Company has been seized by any governmental agency or
authority as a result of any violation by the Company or any
independent contractor of the Company of any provisions of law. There
is no pending unfair labor practice complaint or charge filed with any
governmental agency against the Company. There is no labor strike,
material dispute, slow down or work stoppage actually pending or, to
the best knowledge of the Company, threatened against or affecting the
Company; no grievance or arbitration arising out of or under any
collective bargaining agreements is pending against the Company no
collective bargaining agreement which is binding on the Company
restricts the Company from relocating or closing any of its operations
and the Company has not experienced any work stoppage or other labor
dispute at any time.
(x) The Company has accurately, properly and timely (giving
effect to any valid extensions of time) filed all federal, state, local
and foreign tax returns (including all schedules thereto) that are
required to be filed, and has paid all taxes and assessments shown
thereon. Any and all tax deficiencies asserted or assessed against the
Company by the Internal Revenue Service ("IRS") or any other foreign or
domestic taxing authority have been paid or finally settled with no
remaining amounts owed. Neither the IRS nor any other foreign or
domestic taxing authority has examined any tax returns of the Company
nor has the IRS or any foreign or domestic taxing authority asserted a
position which conflicts with any tax position taken by the Company.
The charges, accruals and reserves shown in the Financial Statements
included in the Prospectus in respect of taxes for all fiscal periods
to date are adequate, and nothing has occurred subsequent to the date
of such Financial Statements that makes such charges, accruals or
reserves inadequate. The Company is not aware of any proposal (whether
oral or written) by any taxing authority to adjust any tax return filed
by the Company.
(y) With such exceptions as are not likely to result in a
Material Adverse Effect, the Company is in compliance with all Federal,
state, foreign and local laws and regulations relating to pollution or
protection of human health or the environment ("Environmental Laws"),
there are no circumstances that may prevent or interfere with such
compliance other than as set forth in the Prospectus, and the Company
has not received any notice or other communication alleging a currently
pending violation of any Environmental Laws. With such exceptions as
are not likely to result in a Material Adverse Effect, other than as
set forth in the Prospectus, there are no past or present actions,
activities, circumstances, conditions, events or incidents, including,
without limitation, the release, emission, discharge or disposal of any
chemicals, pollutants, contaminants, wastes, toxic substances,
petroleum and petroleum products, that may result in the imposition of
liability on the Company or any claim against the Company or, to the
Company's best knowledge, against any person or entity whose liability
for any claim the Company has or may have assumed either contractually
or by operation of law, and the Company has not received any notice or
other communication concerning any such claim against the Company or
such person or entity.
(z) Except as set forth in the Prospectus, there are no
outstanding loans, advances or guaranties of indebtedness by the
Company to or for the benefit of its affiliates, or any of its officers
or directors, or any of the members of the families of any of them,
which are required to be disclosed in the Registration Statement or the
Prospectus.
(aa) The Company is not an investment company subject to
registration under the Investment Company Act of 1940, as amended.
(bb) Except as set forth in the Prospectus, the Company has
insurance of the types and in the amounts that it reasonably believes
is adequate for its business, including, but not limited to, casualty
and general liability insurance covering all real and personal property
owned or leased by the Company, as applicable, against theft, damage,
destruction, acts of vandalism and all other risks customarily insured
against.
(cc) The Company has not at any time (i) made any
contributions to any candidate for political office, or failed to
disclose fully any such contribution, in violation of law; (ii) made
any payment to any state, federal or foreign governmental officer or
official, or other person charged with similar public or quasi-public
duties, other than payments required or allowed by all applicable laws;
or (iii) violated, nor is it in violation of, any provision of the
Foreign Corrupt Practices Act of 1977.
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NYDOCS:270387.4
(dd) The preparation and the filing of the Registration
Statement with the Commission have been duly authorized by and on
behalf of the Company, and the Registration Statement has been duly
executed pursuant to such authorization by and on behalf of the
Company.
(ee) All documents delivered or to be delivered by the Company
or any of its directors or officers to the Underwriters, the Commission
or any state securities law administrator in connection with the
issuance and sale of the Securities were, on the dates on which they
were delivered, and will be, on the dates on which they are to be
delivered, true, complete and correct in all material respects.
(ff) Except as described in the Prospectus, the Company does
not maintain, nor does any other person maintain on behalf of the
Company, any retirement, pension (whether deferred or non-deferred,
defined contribution or defined benefit) or money purchase plan or
trust. There are no unfunded liabilities of the Company with respect to
any such plans or trusts that are not accrued or otherwise reserved for
on the Financial Statements.
(gg) Any certificates signed by an officer of the Company and
delivered to the Representatives or the Underwriters or to counsel for
the Underwriters shall also be deemed a representation and warranty of
the Company to the Underwriters as to the matters covered thereby. Any
certificate delivered by the Company to its counsel for purposes of
enabling such counsel to render the opinions referred to in Section
6(b) will also be furnished to the Representatives and counsel for the
Underwriters and shall be deemed to be additional representations and
warranties by the Company to the Underwriters as to the matters covered
thereby.
(hh) The Company has obtained and delivered to the
Representatives the written agreements, substantially in the form
attached hereto as Exhibit B, of the principal shareholders of the
Company restricting dispositions of equity securities of the Company.
2. Purchase and Sale.
(a) Subject to the terms and conditions and in reliance upon the
representations and warranties herein set forth, the Company agrees to issue and
sell to the Underwriters an aggregate of 1,000,000 shares of Common Stock. Each
of the Underwriters agrees, severally and not jointly, to purchase from the
Company the number of Underwritten Securities set forth opposite its name in
Schedule I hereto. The purchase price of the Underwritten Securities to be paid
by the several Underwriters to the Company shall be $______ per share for sales
of Underwritten Securities to friends and family of the Company's current
stockholders and $______ per share for sales to all other parties.
(b) Subject to the terms and conditions and in reliance upon the
representations and warranties herein set forth, the Company hereby grants an
option (the "Underwriters' Option") to the several Underwriters to purchase,
severally and not jointly, up to an aggregate of 150,000 shares of Common Stock,
at the same purchase price per share as the Underwritten Securities for use
solely in covering any over-allotments made by the Representatives for the
account of the Underwriters in the sale and distribution of the Underwritten
Securities. The Underwriters' Option may be exercised in whole or in part at any
time on or before the 45th day after the Effective Date upon written or
telegraphic notice by the Representatives to the Company setting forth the
number of Option Securities which the several Underwriters are electing to
purchase pursuant to the Underwriters' Option and the settlement date. Delivery
of certificates for such Option Securities by the Company and payment therefor
to the Company shall be made as provided in Section 3 hereof. The number of
Option Securities purchased by each Underwriter pursuant to the Underwriters'
Option shall be determined by multiplying the number of Option Securities to be
sold by the Company pursuant to the Underwriters' Option, as exercised, by a
fraction, the numerator of which is the number of Underwritten Securities to be
purchased by such Underwriter as set forth opposite its name in Schedule I and
the denominator of which is the total number of Underwritten Securities to be
purchased by all of the Underwriters as set forth on Schedule I (subject to such
adjustments to eliminate any fractional share purchases as the Representatives
in its discretion may make).
3. Delivery and Payment.
<PAGE>
Certificates in definitive form for the Underwritten Securities to be
purchased by each Underwriter hereunder, and in such denominations and
registered in such names as Representatives may request upon at least 48 hours
prior notice to the Company, shall be delivered by or on behalf of the Company
to you for the account of such Underwriter, against payment by such Underwriter
or on its behalf of the purchase price therefor by certified or official bank
check or checks, payable to the order of the Company in same day funds, at the
offices of the Representatives, 5910 North Central Expressway, Suite 1480,
Dallas, Texas 75206 or at such other place as shall be agreed upon by you and
the Company. The time and date of such delivery and payment shall be, with
respect to the Underwritten Securities, 10:00 a.m., Dallas, Texas time, on July
___, 2000, or at such other time and date as you and the Company may agree upon
in writing, and, with respect to the Option Securities, 9:00 a.m., Dallas, Texas
time, on the date specified by you in the written notice given by you of the
Underwriters' election to purchase such Option Securities, or at such other time
and date as you and the Company may agree upon in writing. Said date shall be
not earlier than two (2) or later than ten (10) business days after the date of
said notice.
4. Offering by Underwriters. It is understood that the several
Underwriters propose to offer the
Securities for sale to the public as set forth in the Prospectus.
5. Agreements. The Company agrees with the several Underwriters that:
(a) The Company will use its best efforts to cause the Registration
Statement, and any amendment thereof, if not effective at the Execution Time, to
become effective as promptly as possible. If the Registration Statement has
become or becomes effective pursuant to Rule 430A, or filing of the Prospectus
is otherwise required under Rule 424(b), the Company will file the Prospectus,
properly completed, pursuant to Rule 424(b) within the time period prescribed
and will provide evidence satisfactory to the Representatives of such timely
filing. The Company will promptly advise the Representatives (i) when the
Registration Statement shall have become effective, (ii) when any post-effective
amendment thereto shall have become effective, (iii) of any request by the
Commission for any amendment or supplement of the Registration Statement or the
Prospectus or for any additional information with respect thereto, (iv) of the
issuance by the Commission of any stop order suspending the effectiveness of the
Registration Statement or of the receipt by the Company of any notification with
respect to the institution or threatening of any proceeding for that purpose and
(v) of the receipt by the Company of any notification with respect to the
suspension of the qualification of the Securities for sale in any jurisdiction
or the initiation or threatening of any proceeding for such purpose. The Company
will use its best efforts to prevent the issuance of any such stop order or
suspension and, if issued, to obtain as soon as possible the withdrawal thereof.
The Company will not file any amendment to the Registration Statement or
supplement to the Prospectus without the prior consent of the Representatives.
The Company will prepare and file with the Commission, promptly upon your
request, any amendment to the Registration Statement or supplement to the
Prospectus that you reasonably determine to be necessary or advisable in
connection with the distribution of the Securities by you, and will use its best
efforts to cause the same to become effective as promptly as possible.
(b) If, at any time when a prospectus relating to the Securities is
required to be delivered under the Act, any event occurs as a result of which
the Prospectus as then supplemented would include any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, or if it otherwise shall be necessary to supplement the
Prospectus to comply with the Act or the rules or regulations thereunder, the
Company will promptly prepare and file with the Commission, subject to Section
5(a) hereof, a supplement that will correct such statement or omission or a
supplement that will effect such compliance.
(c) As soon as practicable (but not later than eighteen months after
the effective date of the Registration Statement), the Company will make
generally available to its security holders and to the Representatives an
earnings statement or statements (which need not be audited) of the Company
covering a period of at least twelve months after the Effective Date (but in no
event commencing later than 90 days after such date), which will satisfy the
provisions of Section 11(a) of the Act and Rule 158 promulgated thereunder.
(d) The Company will furnish to each of you and counsel for the
Underwriters, without charge, one signed copy of the Registration Statement and
any amendments thereto (including exhibits thereto) and to each other
Underwriter a conformed copy of the Registration Statement and any amendments
thereto (without exhibits thereto) and, so long as delivery of a prospectus by
an Underwriter or dealer may be required by the Act, as many copies of the
Prospectus and each Preliminary Prospectus and any supplements thereto as the
Representatives may reasonably request.
<PAGE>
(e) The Company will take all actions necessary for the registration or
qualification of the Securities for sale under the laws of such jurisdictions
within the United States and its territories as the Representatives may
designate, will maintain such qualifications in effect so long as required for
the distribution of the Securities and will pay the fee of the National
Association of Securities Dealers, Inc. (the "NASD") in connection with its
review of the offering, provided that the Company shall not be required to
qualify as a foreign corporation or to consent to service of process under the
laws of any such jurisdiction (except service of process with respect to the
offering and sale of the Securities).
(f) The Company will apply the net proceeds from the offering received
by it in the manner set forth under the caption "Use of Proceeds" in the
Prospectus.
(g) The Company will (i) cause the Securities (other than the
Representatives' Warrants) to be listed on NASDAQ and (ii) comply with all
registration, filing and reporting requirements of the Exchange Act, and NASDAQ
which may from time to time be applicable to the Company.
(h) During the five-year period commencing on the date hereof, the
Company will furnish to its shareholders, as soon as practicable after the end
of each respective period, annual reports (including financial statements
audited by independent certified public accountants) and unaudited quarterly
reports of earnings and will furnish to you and, upon request, to the other
Underwriters hereunder (i) concurrent with furnishing such quarterly reports to
its shareholders, statements of income and other information of the Company for
such quarter in the form furnished to the Company's shareholders; (ii)
concurrent with furnishing such annual reports to its shareholders, a balance
sheet of the Company as at the end of such fiscal year, together with statements
of income and surplus and of cash flow of the Company for such fiscal year, all
in reasonable detail and accompanied by a copy of the certificate or report
thereon of its independent certified public accountants; (iii) as soon as they
are available, copies of all reports and financial statements furnished to or
filed with the Commission, the NASD, NASDAQ or any other securities exchange on
which any of the Company's securities may be listed; (iv) every press release
and every material news item or article in respect of the Company or its affairs
which was released or prepared by the Company; and (v) any additional
information of a public nature concerning the Company or its business that you
may reasonably request. During such five-year period, if the Company shall have
active subsidiaries, the foregoing financial statements shall be on a
consolidated basis to the extent that the accounts of the Company and its
subsidiaries are consolidated, and shall be accompanied by similar financial
statements for any significant subsidiary that is not so consolidated.
(i) The Company will maintain a transfer agent and, if necessary under
the jurisdiction of incorporation of the Company, a registrar (which may be the
same entity as the transfer agent) for the Securities.
(j) The Company will not, for a period of 365 days following the
Effective Date, without the prior written consent of the Representatives, offer,
sell, contract to sell (including, without limitation, any short sale),
transfer, assign, pledge, encumber, hypothecate or grant any option to purchase
or otherwise dispose of, any capital stock, or any options, rights or warrants
to purchase any capital stock of the Company, or any securities or indebtedness
convertible into or exchangeable for shares of capital stock of the Company,
except for (i) sales of Securities as contemplated by this Agreement, (ii) sales
of Common Stock upon the exercise of Warrants or outstanding options described
in the Prospectus and (iii) granting of options and issuance of underlying
shares pursuant to the Company's stock option plans.
(k) The Company has reserved and shall continue to reserve a sufficient
number of shares of Common Stock for issuance upon exercise of the
Representatives' Warrants.
(l) If the Company elects to rely on Rule 462(b), the Company shall
file a Rule 462(b) Registration Statement with the Commission in compliance with
Rule 462(b) by 10:00 p.m., Washington D.C. time, on the date of this Agreement,
and the Company shall at the time of filing either pay to the Commission the
filing fee for the Rule 462(b) Registration Statement or give irrevocable
instructions for the payment of such fee pursuant to Rule 111(b) under the Act.
(m) For the five year period from the Closing Date, the Company will
nominate for election as a director a person designated by the Representatives,
and during such time as the Representatives shall not have exercised such right,
the Representatives shall have the right to designate a director or advisory
director, who shall be entitled to attend all meetings of the Board of Directors
and receive all correspondence and communications sent by the Company to the
members of the Board of Directors.
<PAGE>
(n) For a period of three (3) years from the date of the Prospectus,
the Company shall not, without the prior written consent of the Representatives,
issue, sell, contract to sell, or otherwise dispose of any shares of Common
Stock, any options to purchase any shares of Common Stock, or any securities
convertible into, exercisable for, or exchangeable for shares of Common Stock,
except upon the exercise of outstanding options or warrants or the issuance of
options under the Company's employee stock option plan.
6. Conditions to the Obligations of the Underwriters. The obligations of the
Underwriters to purchase the Securities described in Sections 2(a) and 2(b)
hereof shall be subject to (i) the accuracy of the representations and
warranties on the part of the Company contained herein as of the Execution Time,
the Closing Date and (in the case of any Securities delivered after the Closing
Date, any settlement date pursuant to Section 3(b) hereof), (ii) the accuracy of
the statements of the Company made in any certificates delivered pursuant to the
provisions hereof, (iii) the performance by the Company of its obligations
hereunder, and (iv) the following additional conditions:
(a) The Registration Statement shall have become effective (or, if a
post-effective amendment is required to be filed pursuant to Rule 430A under the
Act, such post-effective amendment shall become effective) not later than 5:00
p.m. Eastern Standard Time, on the execution date hereof or at such later date
and time as the Representatives may approve in writing and, at the Closing Date
(and any settlement date pursuant to Section 3(b) hereof), no stop order
suspending the effectiveness of the Registration Statement or any qualification
in any jurisdiction shall have been issued and no proceedings for that purpose
shall have been initiated or, to the best knowledge of the Company, threatened
by the Commission.
(b) The Company shall have furnished to the Representatives the opinion
of Phillips McFall McCaffrey McVay & Murrah, P.C., counsel for the Company,
addressed to the Underwriters and dated the Closing Date (and any settlement
date pursuant to Section 3(b) hereof), or other evidence satisfactory to the
Representatives to the effect that:
(i) The Registration Statement has become effective under the
Act; any required filing of the Prospectus or any supplements thereto
pursuant to Rule 424(b) has been made in the manner and within the time
period required by Rule 424(b); to the best knowledge of such counsel,
no stop order suspending the effectiveness of the Registration
Statement or any qualification in any jurisdiction has been issued and
no proceedings for that purpose have been instituted or threatened; any
request from the Commission for additional information has been
complied with; the Registration Statement and the Prospectus (and any
supplements thereto) comply as to form in all material respects with
the applicable requirements of the Act and the rules and regulations
thereunder (except that such counsel need express no opinion with
respect to the Financial Statements and schedules included in the
Registration Statement and Prospectus).
(ii) The Company does not own or control, directly or
indirectly, any shares of capital stock or equity interests in any
corporation, partnership, association or other entity, except as set
forth in the Prospectus.
(iii) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the
jurisdiction in which it is chartered or organized, with full corporate
power and corporate authority to own its properties and conduct its
business as described in the Prospectus, and is duly qualified to do
business as a foreign corporation and is in good standing under the
laws of each jurisdiction in which it conducts its business or owns
property and in which the failure, individually or in the aggregate, to
be so qualified would have a Material Adverse Effect. The Company has
all necessary and material authorizations, approvals, orders, licenses,
certificates and permits of and from all government regulatory
officials and bodies, to own its properties and conduct its business as
described in the Prospectus, except where failure to obtain such
authorizations, approvals, orders, licenses, certificates or permits
would not have a Material Adverse Effect.
<PAGE>
(iv) The Company has an authorized share capitalization as set
forth in the Prospectus; the capital stock of the Company conforms in
all material respects to the description thereof contained in the
Prospectus; all outstanding shares of Common Stock have been duly and
validly authorized and issued and are fully paid and nonassessable and
the certificates therefor are in valid and sufficient form in
accordance with applicable state law; there are no other classes of
stock outstanding except Common Stock; all outstanding options to
purchase shares of Common Stock have been duly and validly authorized
and issued; except as described in the Prospectus, there are no
options, warrants or rights to acquire, or debt instruments convertible
into or exchangeable for, or other agreements or understandings to
which the Company is a party, outstanding or in existence, entitling
any person to purchase or otherwise acquire any shares of capital stock
of the Company; the issuance and sale of the Securities have been duly
and validly authorized and, when issued and delivered and paid for, the
Securities will be fully paid and nonassessable and free from
preemptive rights, and will conform in all respects to the description
thereof contained in the Prospectus; the Representatives' Warrants
constitute valid and binding obligations of the Company enforceable in
accordance with their terms and the Company has reserved a sufficient
number of shares of Common Stock for issuance upon exercise thereof;
the Representatives' Warrants possess the rights, privileges and
characteristics as represented in the forms filed as exhibits to the
Registration Statement and as described in the Prospectus; the
Securities (other than the Representatives' Warrants) have been
approved for listing on the American Stock Exchange upon notice of
issuance thereof; the certificates for the Securities are in valid and
sufficient form. Each offer and sale of securities of the Company
described in Item __ of Part II of the Registration Statement was
effected in compliance with the Act and the rules and regulations
thereunder.
(v) Other than as described in the Prospectus, there is no
pending or, to the best knowledge of such counsel after reasonable
investigation, threatened action, suit or proceeding before any court
or governmental agency, authority or body, domestic or foreign, or any
arbitrator involving the Company of a character required to be
disclosed in the Registration Statement or the Prospectus that is not
adequately disclosed in the Prospectus, and, to the best knowledge of
such counsel, there is no contract or other document of a character
required to be described in the Registration Statement or the
Prospectus, or to be filed as an exhibit, which is not described or
filed as required.
(vi) This Agreement has been duly authorized, executed and
delivered by the Company and constitutes the legal, valid and binding
agreement and obligation of the Company enforceable against it in
accordance with its terms (subject to standard bankruptcy and equitable
remedy exceptions, and limitations under the Act as to the
enforceability of indemnification provisions).
(vii) The Company has full corporate power and corporate
authority to enter into and perform its obligations under this
Agreement and to issue, sell and deliver the Securities in the manner
provided in this Agreement; and the Company has taken all necessary
corporate action to authorize the execution and delivery of, and the
performance of its obligations under, this Agreement.
(viii) Neither the offering, issue and sale of the Securities
nor the consummation of any other of the transactions contemplated
herein, nor the fulfillment of the terms hereof, will conflict with or
result in a breach or violation of, or constitute a default under, or
result in the imposition of a lien on any properties of the Company, or
an acceleration of indebtedness pursuant to, the Articles of
Incorporation (or other charter document) or bylaws of the Company, or
any of the terms of any indenture or other agreement or instrument to
which the Company is a party or by which its properties are bound, or
any law, order, judgment, decree, rule or regulation applicable to the
Company of any court, regulatory body, administrative agency,
governmental body, stock exchange or arbitrator having jurisdiction
over the Company. The Company is not in violation of its Articles of
Incorporation or bylaws.
(ix) Except as disclosed in the Prospectus, no person has the
right, contractual or otherwise, to cause the Company to issue to it
any shares of capital stock in consequence of the issue and sale of the
Securities to be sold by the Company hereunder nor does any person have
preemptive rights, or rights of first refusal or other rights to
purchase any of the Securities. Except as referred to in the
Prospectus, no person holds a right to require or participate in a
registration under the Act of Common Stock or any other equity
securities of the Company.
<PAGE>
(x) No consent, approval, authorization or order of, or
declaration or filing with, any court or governmental agency or body is
required to be obtained or filed by or on behalf of the Company in
connection with the transactions contemplated herein, except such as
may have been obtained or made and registration of the Securities under
the Act, and such as may be required under the Blue Sky laws of any
jurisdiction.
(xi) To the best knowledge of such counsel after reasonable
investigation, the Company is not in violation of or default under any
judgment, ruling, decree or order or any statute, rule or regulation of
any court or other United States governmental agency or body, including
any applicable laws respecting employment, immigration and wages and
hours, in each case, where such violation or default could have a
Material Adverse Effect. The Company is not involved in any labor
dispute, nor, to the best knowledge of such counsel, is any labor
dispute threatened.
(xii) The Company is not an investment company subject to
registration under the Investment Company Act of 1940, as amended.
(xiii) The preparation and the filing of the Registration
Statement with the Commission have been duly authorized by and on
behalf of the Company, and the Registration Statement has been duly
executed pursuant to such authorization by and on behalf of the
Company.
(xiv) Except as disclosed in the Prospectus, the Company owns
or possesses, or has the right to use pursuant to licenses,
sublicenses, agreements, permissions or otherwise, adequate patents,
copyrights, trade names, trademarks, service marks, licenses and other
intellectual property rights necessary to carry on its business as
described in the Prospectus, and, except as set forth in the
Prospectus, neither such counsel nor, to the knowledge of such counsel,
the Company has received any notice of either (i) default under any of
the foregoing or (ii) infringement of or conflict with asserted rights
of others with respect to, or challenge to the validity of, any of the
foregoing which, in the aggregate, if the subject of an unfavorable
decision, ruling or finding, could have a Material Adverse Effect, and
counsel knows of no facts which could reasonably be anticipated to
serve as the basis for any such notice.
In addition, such counsel shall state that such counsel has
participated in conferences with officers and other representatives of the
Company, representatives of the independent public accountants of the Company
and representatives of the Underwriters at which the contents of the
Registration Statement and Prospectus were discussed and, although such counsel
is not passing upon and does not assume responsibility for the accuracy,
completeness or fairness of the statements contained in the Registration
Statement or Prospectus (except as and to the extent stated in subparagraphs (i)
and (v) above), on the basis of the foregoing and on such counsel's
participation in the preparation of the Registration Statement and the
Prospectus, nothing has come to the attention of such counsel that causes such
counsel to believe that the Registration Statement, at the Effective Date and at
the Closing Date (and any settlement date pursuant to Section 3(b) hereof),
contained or contains any untrue statement of a material fact or omitted or
omits to state a material fact required to be stated therein or necessary to
make the statements therein not misleading, or that the Prospectus, at the date
of such Prospectus or at the Closing Date (or any settlement date pursuant to
Section 3(b) hereof), contained or contains any untrue statement of a material
fact or omitted or omits to state a 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 (it being understood that such
counsel need express no comment with respect to the Financial Statements and
schedules and other financial or statistical data derived therefrom included in
the Registration Statement or Prospectus). References to the Prospectus in this
Section 6(b) shall include any supplements thereto.
(c) The Representatives shall have received from
______________________, counsel for the Underwriters, an opinion dated the
Closing Date (and any settlement date pursuant to Section 3(b) hereof), with
respect to the issuance and sale of the Securities, and with respect to the
Registration Statement, the Prospectus and other related matters as the
Representatives may reasonably require, and the Company shall have furnished to
such counsel such documents as they may reasonably request for the purpose of
enabling them to pass upon such matters.
<PAGE>
(d) The Company shall have furnished to the Representatives a
certificate of the Company, signed by its Chief Executive Officer and its Chief
Financial Officer, dated the Closing Date (and any settlement date pursuant to
Section 3(b) hereof), to the effect that each has carefully examined the
Registration Statement, the Prospectus (and any supplements thereto) and this
Agreement, and, after due inquiry, that:
(i) As of the Closing Date (and any settlement date pursuant
to Section 3(b) hereof), the statements made in the Registration
Statement and the Prospectus are true and correct and the Registration
Statement and the Prospectus do not contain any untrue statement of a
material fact or omit 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.
(ii) No order suspending the effectiveness of the Registration
Statement or the qualification or registration of the Securities under
the securities or Blue Sky laws of any jurisdiction is in effect and no
proceeding for such purpose is pending before or, to the knowledge of
such officers, threatened or contemplated by the Commission or the
authorities of any such jurisdiction; and any request for additional
information with respect to the Registration Statement or the
Prospectus on the part of the staff of the Commission or any such
authorities brought to the attention of such officers has been complied
with to the satisfaction of the staff of the Commission or such
authorities.
(iii) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, (x) there has
not been any change in the capital stock or long-term debt of the
Company, except as set forth in or contemplated by the Registration
Statement and the Prospectus, (y) there has not been any material
adverse change in the general affairs, business, prospects, properties,
management, results of operations or condition (financial or otherwise)
of the Company, whether or not arising from transactions in the
ordinary course of business, in each case, other than as set forth in
or contemplated by the Registration Statement and the Prospectus, and
(z) the Company has not sustained any material interference with its
business or properties from fire, explosion, flood or other casualty,
whether or not covered by insurance, or from any labor dispute or any
court or legislative or other governmental action, order or decree,
which is not set forth in the Registration Statement and the
Prospectus.
(iv) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, there has been
no material litigation instituted against the Company, any of its
respective officers or directors, or, to the best knowledge of such
officers, any affiliate or promoter of the Company, and since such
dates there has been no proceeding instituted or, to the best knowledge
of such officers, threatened against the Company, any of its officers
or directors, or, to the best knowledge of such officers, any affiliate
or promoter of the Company, before any federal, state or county court,
commission, regulatory body, administrative agency or other
governmental body, domestic or foreign, which could have a Material
Adverse Effect.
(v) Each of the representations and warranties of the Company
in this Agreement is true and correct in all material respects on and
as of the Execution Time and the Closing Date (and any settlement date
pursuant to Section 3(b) hereof) with the same effect as if made on and
as of the Closing Date (and any settlement date pursuant to Section
3(b) hereof).
(vi) Each of the covenants required in this Agreement to be
performed by the Company on or prior to the Closing Date (and any
settlement date pursuant to Section 3(b) hereof) has been duly, timely
and fully performed, and each condition required herein to be complied
with by the Company on or prior to the Closing Date (and any settlement
date pursuant to Section 3(b) hereof) has been duly, timely and fully
complied with.
(e) At the Execution Time and on the Closing Date (and any settlement
date pursuant to Section 3(b) hereof), Arthur Anderson LLP, shall have furnished
to the Representatives letters, dated as of such dates, in form and substance
satisfactory to the Representatives, confirming that they are independent
accountants within the meaning of the Act and the applicable rules and
regulations thereunder and stating in effect that:
<PAGE>
(i) In their opinion, the audited Financial Statements of the
Company for the fiscal years ended December 31, 1998 and 1999, and the
notes to the Financial Statements and Financial Statement schedules for
those periods included in the Registration Statement and the
Prospectus, comply in all material respects with generally accepted
accounting principles and the applicable accounting requirements of the
Act and the applicable rules and regulations thereunder.
(ii) On the basis of a reading of the latest unaudited
Financial Statements made available by the Company, carrying out
certain specified procedures (but not an examination in accordance with
generally accepted auditing standards), a reading of the minutes of the
meetings of the shareholders, directors and committees of the Company,
and inquiries of certain officials of the Company who have
responsibility for financial and accounting matters of the Company,
nothing came to their attention that caused them to believe that: (i)
the unaudited Financial Statements of the Company for the three (3)
months ended March 31, 2000, and the notes to the Financial Statements
and the Financial Statement Schedules for the period then ended
included in the Registration Statement and Prospectus do not comply in
all material respects with generally accepted accounting principles or
the applicable accounting requirements of the Act and the applicable
rules and regulations thereunder; and (ii) with respect to the period
subsequent to March 31, 2000, at a specified date not more than five
business days prior to the date of the letter, (y) there were any
changes in the long-term debt or capital stock of the Company or its
subsidiaries, or decreases in net current assets, net assets or
stockholders' equity of the Company as compared with the amounts shown
on the March 31, 2000 balance sheets included in the Registration
Statement and the Prospectus or (z) there were any decreases in
reserves, sales, net income or income from operations, of the Company,
as compared with the corresponding period in the preceding year, except
for changes or decreases which the Registration Statement discloses
have occurred or may occur and except for changes or decreases, set
forth in such letter, in which case (A) the letter shall be accompanied
by an explanation by the Company as to the significance thereof unless
said explanation is not deemed necessary by the Representatives and (B)
such changes or decreases and the explanation thereof shall be
acceptable to the Representatives, in their sole discretion.
(iii) They have performed certain other specified procedures
as a result of which they determined that all information of an
accounting, financial or statistical nature (which is limited to
accounting, financial or statistical information derived from the
general accounting records of the Company) set forth in the
Registration Statement and the Prospectus and specified by you prior to
the Execution Time, agrees with the accounting records of the Company.
The Representatives shall also have also received from Arthur
Anderson LLP, a letter stating that the Company's system of internal accounting
controls taken as a whole are sufficient to meet the broad objectives of
internal accounting control insofar as those objectives pertain to the
prevention or detection of errors or irregularities in amounts that would be
material to the Financial Statements of the Company.
References to the Prospectus in this Section 6(e) shall
include any supplements thereto.
(f) Subsequent to the respective dates as of which information is given
in the Registration Statement and the Prospectus, there shall not have been (i)
any changes or decreases from that specified in the letters referred to in
Section 6(e) hereof or (ii) any change, or any development involving a
prospective change, in or affecting the properties, assets, results of
operations, business, capitalization, net worth, prospects, general affairs or
condition (financial or otherwise) of the Company, the effect of which is, in
the sole judgment of the Representatives, so material and adverse as to make it
impractical or inadvisable to proceed with the public offering or delivery of
the Securities as contemplated by the Registration Statement and the Prospectus.
(g) On or prior to the Effective Date, the Securities (other than the
Representatives' Warrants) shall have been approved for listing on NASDAQ
SmallCap.
(h) The Company shall not have sustained any uninsured substantial loss
as a result of fire, flood, accident or other calamity.
(i) The Company shall have furnished to the Representatives a
certificate of the Secretary of the Company certifying as to certain information
and other matters as the Representatives may reasonably request.
<PAGE>
(j) The Company shall have furnished to the Representatives such
further information, certificates and documents as the Representatives may
reasonably request.
If any of the conditions specified in this Section 6 shall not have
been fulfilled in any respect when and as provided in this Agreement, or if any
of the opinions and certificates mentioned above or elsewhere in this Agreement
shall not be in all respects reasonably satisfactory in form and substance to
the Representatives and its counsel, this Agreement and all obligations of the
Underwriters hereunder may be canceled at, or at any time prior to, the Closing
Date (or any settlement date, pursuant to Section 3(b) hereof), by the
Representatives. Notice of such cancellation shall be given to the Company in
writing or by telephone, facsimile or telegraph confirmed in writing.
7. Fees and Expenses and Representatives' Warrants. The Company agrees
to pay or cause to be paid and issue the following:
(a) the fees, disbursements and expenses of its own counsel and counsel
for the Company and accountants in connection with the registration of the
Securities under the Act and all other expenses in connection with the
preparation, printing and filing of the Registration Statement, any Preliminary
Prospectus, any Prospectus, and any drafts thereof, and amendments and
supplements thereto, and the mailing and delivery of copies thereof to the
Underwriters and dealers;
(b) all expenses in connection with the qualification of the Securities
for offering under state securities laws, including the fees and disbursements
of counsel for the Underwriters in connection with such qualification and in
connection with any Blue Sky memorandum, provided that in no event will the
attorney fees of counsel for the underwriters exceed $20,000;
(c) all filing and other fees in connection with filing with the NASD,
and complying with applicable review requirements thereof;
(d) the cost of preparing and printing certificates for the Securities;
(e) all expenses, taxes, fees and commissions, including, without
limitation, any and all fixed transfer duties sellers' and buyers' stamp taxes
or duties on the purchase and sale of the Securities and stock exchange
brokerage and transaction levies with respect to the purchase and, if
applicable, the sale of the Securities (the latter to the extent paid and not
reimbursed) (i) incident to the sale and delivery by the Company of the
Securities to the Underwriters and (ii) incident to the sale and delivery of the
Securities by the Underwriters to the initial purchasers thereof;
(f) the costs and charges of any transfer agent and registrar;
(g) the fees and expenses in connection with qualification
of the Securities (other than the
Representatives' Warrants) for listing on the NASDAQ SmallCap;
(h) a nonaccountable expense allowance of 1.5% of the proceeds derived
from the offering (including the Option Securities described in Section 2(b)
hereof) payable to the Representatives, provided the Company's prior payments
aggregating $75,000 shall be credited toward payment of amounts due pursuant to
this subsection (h); and
(i) all other costs and expenses incident to the performance of the
Company's obligations hereunder which are not otherwise specifically provided
for in this Section 7.
<PAGE>
Additionally, the Representatives shall be entitled to receive on the
Closing Date, as partial compensation for its services, warrants (the
"Representatives' Warrants") for the purchase of an aggregate of 100,000 shares
of Common Stock of the Company. The Representatives' Warrants shall be issued
pursuant to a Warrant Agreement in the form of Exhibit A attached hereto and
shall be exercisable, in whole or in part, for a period of four years commencing
one year from the date of the Prospectus, at 115% of the initial public offering
price for the Common Stock offered pursuant to the Prospectus.
Without limiting in any respect the foregoing obligations of the
Company, which obligations shall survive any termination of this Agreement, if
the sale of the Securities provided for herein is not consummated because any
condition to the obligations of the Underwriters set forth in Section 6 hereof
is not satisfied, because of any termination pursuant to Section 10 hereof, or
because of any refusal, inability or failure on the part of the Company to
perform any agreement herein or comply with any provision hereof to be performed
or complied with by the Company other than by reason of a default by any of the
Underwriters, the Company agrees to reimburse the Underwriters, upon demand, for
all out-of-pocket expenses (including reasonable fees and disbursements of
counsel) that shall have been incurred by them in connection with the proposed
purchase and sale of the Securities to the extent the amounts paid pursuant to
Section 7(h) hereof are insufficient therefor.
8. Indemnification and Contribution.
(a) The Company agrees to indemnify and hold harmless each Underwriter
and each person who controls any Underwriter within the meaning of the Act or
the Exchange Act against any and all losses, claims, damages or liabilities,
joint or several, to which they or any of them may become subject under the Act,
the Exchange Act or other federal or state statutory law or regulation, at
common law or otherwise, insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in (i)
Section 1 of this Agreement, the Registration Statement, any Preliminary
Prospectus or the Prospectus, or in any amendment thereof or supplement thereto,
or (ii) any application or other document, or any amendment or supplement
thereto, executed by the Company or based upon written information furnished by
or on behalf of the Company filed in any jurisdiction in order to qualify the
Securities under the securities or Blue Sky laws thereof or filed with the
Commission or any securities association or securities exchange, or arise out of
or are 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, and agrees to reimburse each such indemnified party, as
incurred, for any legal or other expenses reasonably incurred by it in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the Company will not be liable in
any such case to the extent that any such loss, claim, damage or liability
arises out of or is based upon any such untrue statement or alleged untrue
statement or omission or alleged omission made therein in reliance upon and in
conformity with written information furnished to the Company by or on behalf of
any Underwriter through the Representatives specifically for use in the
Registration Statement or Prospectus; provided further, that with respect to any
untrue statement or omission, or any alleged untrue statement or omission, made
in any Preliminary Prospectus, the indemnity agreement contained in this
subsection (a) shall not inure to the benefit of any Underwriter (or to the
benefit of any person controlling any such Underwriter) from whom the person
asserting any such losses, claims, damages, liabilities or expenses purchased
the Securities concerned to the extent that such untrue statement or omission,
or alleged untrue statement or omission, has been corrected in the Prospectus
and the failure to deliver the Prospectus was not a result of the Company's
failure to comply with its obligations under Section 5(d) hereof. The indemnity
agreement will be in addition to any liability which the Company may otherwise
have. The Company will not, without the prior written consent of each
Underwriter, settle or compromise or consent to the entry of any judgment in any
pending or threatened claim, action, suit or proceeding in respect of which
indemnification may be sought hereunder (whether or not such Underwriter or any
person who controls such Underwriter within the meaning of Section 15 of the Act
or Section 20 of the Exchange Act is a party to such claim, action, suit or
proceeding), unless the settlement or compromise or consent includes an
unconditional release of such Underwriter and each such controlling person from
all liability arising out of such claim, action, suit or proceeding,
satisfactory in form and substance to the Representatives.
<PAGE>
(b) Each Underwriter severally agrees to indemnify and hold harmless
the Company, each of its directors, each of the Company's officers who signs the
Registration Statement, and each person who controls the Company, within the
meaning of the Act or the Exchange Act to the same extent as the foregoing
indemnity from the Company to each Underwriter, but only with reference to
written information relating to such Underwriter furnished to the Company by or
on behalf of such Underwriter through the Representatives specifically for use
in the Registration Statement or Prospectus. The Company acknowledges that the
corporate names of the Underwriters, the stabilization legend on page 2 and the
information under the heading "Underwriting" in the Prospectus and in any
Preliminary Prospectus constitute the only information furnished in writing by
or on behalf of the several Underwriters. The obligations of each Underwriter
under this subsection (b) shall be in addition to any liability which the
Underwriters may otherwise have.
(c) Promptly after receipt by an indemnified party under this Section 8
of notice of the commencement of any action, suit or proceeding, such
indemnified party will, if a claim in respect thereof is to be made against the
indemnifying party under this Section 8, notify the indemnifying party in
writing of the commencement thereof and the indemnifying party shall assume the
defense thereof, including the employment of counsel reasonably satisfactory to
the indemnified party and the payment of all expenses; but the omission so to
notify the indemnifying party will not relieve it from any liability which it
may have to any indemnified party, unless such omission results in the
forfeiture of substantive rights or defenses by the indemnifying party. All such
expenses shall be paid by the indemnifying party as incurred by an indemnified
party. Any such indemnified party shall have the right to employ separate
counsel in any such action and to participate in the defense thereof, but the
fees and expenses of such counsel shall be at the expense of such indemnified
party unless (i) the indemnifying party has agreed to pay such fees and expenses
or (ii) the indemnifying party shall have failed promptly after notice by such
indemnified party to assume the defense of such action or proceeding and employ
counsel reasonably satisfactory to the indemnified party in any such action,
suit or proceeding or (iii) the named parties in any such action or proceeding
(including any impleaded parties) include both such indemnified party and the
indemnifying party, and such indemnified party shall have been advised by
counsel that there may be one or more legal defenses available to such
indemnified party which are different from or additional to those available to
the indemnifying party (in which case, if such indemnified party notifies the
indemnifying party in writing that it elects to employ separate counsel at the
expense of the indemnifying party, the indemnifying party shall not have the
right to assume the defense of such action or proceeding on behalf of the
indemnified party or parties, it being understood, however, that the
indemnifying party shall not, in connection with any one such action or
proceeding or separate but substantially similar or related actions or
proceedings in the same jurisdiction arising out of the same general allegations
or circumstances, be liable for the reasonable fees and expenses of more than
one separate firm of attorneys (together with appropriate local counsel) at any
time for all such indemnified parties, which firm shall be designated in writing
to the indemnifying party). Any such fees and expenses payable by the
indemnifying party shall be paid to or on behalf of the indemnified party
entitled thereto as incurred. An indemnifying party shall not be liable for any
settlement of any action or claim effected without its consent, which consent
shall not be unreasonably withheld.
(d) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in Sections 8(a) or 8(b)
is applicable in accordance with its terms but is for any reason held by a court
to be unavailable from the indemnifying party on grounds of policy or otherwise,
the Company and the Underwriters shall contribute to the aggregate losses,
claims, damages and liabilities (including legal or other expenses reasonably
incurred in connection with investigating or defending same) to which the
Company and one or more of the Underwriters may be subject in such proportion so
that the Underwriters are responsible in the aggregate for that portion
represented by the total underwriting compensation in respect of the Securities
bears to the public offering price appearing thereon and the Company is
responsible for the balance; provided, however, that (i) in no case shall any
Underwriter (except as may be provided in the Agreement Among Underwriters
relating to the offering of the Securities) be responsible for any amount in
excess of the total underwriting compensation applicable to the Securities to be
purchased by such Underwriter hereunder and (ii) no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 8, each person who controls an
Underwriter within the meaning of the Act shall have the same rights to
contribution as such Underwriter, and each person who controls the Company
within the meaning of the Act, each officer of the Company who shall have signed
the Registration Statement and each director of the Company shall have the same
rights to contribution as the Company, subject in each case to clause (ii) of
this Section 8(d). Any party entitled to contribution will, promptly after
receipt of notice of commencement of any action, suit or proceeding against such
party in respect of which a claim for contribution may be made against another
party or parties under this Section 8(d), notify such party or parties from whom
contribution may be sought, but the omission so to notify such party or parties
shall not relieve the party or parties from whom contribution may be sought from
any other obligation it or they may have hereunder or otherwise.
<PAGE>
9. Default by an Underwriter. If any one or more Underwriters shall fail to
purchase and pay for any of the Securities agreed to be purchased by such
Underwriter or Underwriters hereunder and such failure to purchase shall
constitute a default in the performance of its or their obligations under this
Agreement, the remaining Underwriters shall be obligated severally to take up
and pay for (in the respective proportions which the number of Underwritten
Securities set forth opposite their names in Schedule I hereto bears to the
aggregate number of Underwritten Securities set forth opposite the names of all
the remaining Underwriters) the Underwritten Securities which the defaulting
Underwriter or Underwriters agreed but failed to purchase; provided, however,
that if the aggregate number of Underwritten Securities which the defaulting
Underwriter or Underwriters agreed but failed to purchase shall exceed 10% of
the aggregate number of Underwritten Securities set forth in Schedule I hereto,
the remaining Underwriters shall have the right to purchase all, but shall not
be under any obligation to purchase any, of such Underwritten Securities, and if
such nondefaulting Underwriters do not purchase all of such Underwritten
Securities, this Agreement will terminate without liability to any
non-defaulting Underwriter or the Company except as otherwise provided in
Section 7. In the event of a default by any Underwriter as set forth in this
Section 9, the Closing Date shall be postponed for such period, not exceeding
seven days, as the Representatives shall determine in order that the required
changes in the Registration Statement and the Prospectus or in any other
documents or arrangements may be effected. Nothing contained in this Agreement
shall relieve any defaulting Underwriter of its liability, if any, to the
Company or any nondefaulting Underwriter for damages occasioned by its default
hereunder.
10. Termination. This Agreement shall be subject to termination in the absolute
discretion of the Representatives, by notice given to the Company prior to
delivery of and payment for the Securities, if prior to such time (a) a
suspension or material limitation in trading in securities generally on the New
York or American Stock Exchange or the Nasdaq National Market System shall have
occurred, (b) a banking moratorium shall have been declared by federal or New
York state authorities, (c) the United States shall have engaged in hostilities
which shall have resulted in the declaration, on or after the date hereof, of a
national emergency or war, or (d) a change in national or international
political, financial or economic conditions or national or international equity
markets or currency exchange rates shall have occurred, if the effect of any
such event specified above is, in the sole judgment of the Representatives, so
material and adverse as to make it impractical or inadvisable to proceed with
the public offering or delivery of the Securities as contemplated by the
Registration Statement and the Prospectus.
11. Representations and Indemnities to Survive. The respective agreements,
representations, warranties, indemnities and other statements of the Company,
its officers and the Underwriters set forth in, referred to in, or made pursuant
to this Agreement will remain in full force and effect, regardless of any
investigation made by or on behalf of any Underwriter or the Company or any of
the officers, directors or controlling persons referred to in Section 8 hereof,
and will survive delivery of and payment for the Securities until all appliable
statutes of limitation have expired. The provisions of Sections 7 and 8 hereof
shall survive the termination or cancellation of this Agreement.
12. Notices. All communications hereunder will be in writing and effective only
on receipt, and will be mailed, delivered, telegraphed or sent by facsimile
transmission and confirmed:
to the Representatives at:
Institutional Equity Corporation
5910 North Central Expressway
Attention: Robert A. Shuey, III
Facsimile No. (214) 237-3236
<PAGE>
to the Company at:
Catalog.com, Inc.
14000 Quails Springs Parkway, Suite 3600
Oklahoma City, Oklahoma 73134
Attention: Robert W. Crull, President
Facsimile No. (405) 753-9353
with copy to:
Douglas A. Branch, Esq.
Phillips McFall McCaffrey McVay & Murrah, P.C.
211 North Robinson, 12th Floor
Oklahoma City, Oklahoma 73102
Facsimile No. (405) 235-4562
13. Successors. This Agreement will inure to the benefit of and be binding upon
the parties hereto and their respective successors and the officers, directors
and controlling persons referred to in Section 8 hereof, and no other person
will have any right or obligation hereunder.
14. Counterparts. This Agreement may be signed in two or more counterparts, each
of which shall be an original, with the same effect as if the signatures thereon
and hereon were on the same instrument.
15. Applicable Law. This Agreement will be governed by and construed in
accordance with the laws of the State of Texas. Venue will lie in the federal or
state courts of Dallas County, Texas.
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicate hereof, whereupon
this letter and your acceptance shall represent a binding agreement among the
Company and the several Underwriters.
Very truly yours,
CATALOG.COM, INC.
By:
----------------------
Robert W. Crull, President
The foregoing Agreement is hereby confirmed and accepted as of the date first
above written.
Institutional Equity Corporation Capital West Securities, Inc.
By: By:
---------------------------------------- -----------------
Robert A. Shuey, III
For itself and the other several Underwriters in Schedule I to the foregoing
Agreement.
<PAGE>
<TABLE>
<S> <C> <C>
SCHEDULE I
---------------------------------------------------------------------------------- ---------------------------------
Number of
Underwriters Underwritten Securities
to be Purchased
---------------------------------------------------------------------------------- ---------------------------------
---------------------------------------------------------------------------------- ---------------------------------
Institutional Equity Corporation
---------------------------------------------------------------------------------- ---------------------------------
Capital West Securities, Inc.
---------------------------------------------------------------------------------- ---------------------------------
---------
---------------------------------------------------------------------------------- ---------------------------------
---------------------------------------------------------------------------------- ---------------------------------
Total 1,000,000
---------------------------------------------------------------------------------- ---------------------------------
</TABLE>
<PAGE>
-20-
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>
-2-
NYDOCS:270387.4
NYDOCS:270387.4
EXHIBIT B
FORM OF LOCK-UP AGREEMENT
Institutional Equity Corporation
Capital West Securities, Inc.
As Representatives of the Several Underwriters
5910 North Central Expressway, Suite 500
Dallas, Texas 75206
Ladies and Gentlemen:
The undersigned understands that you, as the Representatives of the
several underwriters (the "Underwriters"), propose to enter into an Underwriting
Agreement (the "Underwriting Agreement") with Catalog.com, Inc., a Oklahoma
corporation (the "Company"), providing for the initial public offering (the
"Offering") by the Underwriters, of 1,000,000 shares of Common Stock of the
Company (the "Common Stock") pursuant to the Company's Registration Statement on
Form SB-2 (the "Registration Statement") filed with the Securities and Exchange
Commission.
In consideration of the Underwriters' agreement to purchase the Common
Stock, and for other good and valuable consideration, receipt of which is hereby
acknowledged, the undersigned hereby agrees that during the period beginning on
the date of this letter and ending six (6) months (the "Lock-Up Period") after
the date of the final prospectus relating to the offer and sale of the Common
Stock, the undersigned will not, directly or indirectly, offer, sell, contract
to sell, grant any option for the sale of, pledge, or otherwise dispose of
(individually, a "Disposition") any Common Stock, or securities exercisable,
convertible, or exchangeable for or into Common Stock (collectively, the
"Securities"), that the undersigned now owns or will own in the future
(beneficially or of record), except (i) as a bona fide gift or gifts, provided
the donee or donees thereof agree in writing to be bound by this Lock-Up
Agreement, or (ii) with the prior written consent of the Representatives. The
foregoing restriction is expressly agreed to preclude the holder of Securities
from engaging in any hedging or other transaction which is designed to or
reasonably expected to lead to or result in a Disposition of Securities during
the Lock-Up Period, even if such Securities would be disposed of by someone
other than the undersigned. Such prohibited hedging or other transactions would
include, without limitation, any short sale or any purchase, sale or grant of
any right (including, without limitation, any put or call option) with respect
to any security (other than a broad-based market basket or index) that includes,
relates to or derives any significant part of its value from Securities.
Sincerely,
Date: July ___, 2000
--------------------------------------
By:-------------------------------------
