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EXHIBIT 1.1
2,200,000 Shares
ViaGrafix Corporation
Common Stock
UNDERWRITING AGREEMENT
______, 1998
Southwest Securities, Inc.
0000 Xxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
As Representative of the Several
Underwriters named on
Schedule I attached hereto.
Ladies and Gentlemen:
ViaGrafix Corporation, an Oklahoma corporation (the
"Company"), proposes to sell to you and the other underwriters named on
Schedule I to this Agreement (the "Underwriters"), for whom you are acting as
Representative, an aggregate of 1,750,000 shares (the "Company Shares") of the
Company's Common Stock, $0.01 par value (the "Common Stock"). Xxxxxxx X.
Xxxxxxx and Xxxxxx X. Xxxxxxx (the "Management Selling Shareholders") and
Geocapital III, L.P. ("Geocapital") (collectively, the "Selling Shareholders")
propose to sell an aggregate of 450,000 shares (the "Selling Shareholders
Shares") of Common Stock to the Underwriters. The Company Shares and the
Selling Shareholders Shares are sometimes collectively called the "Firm
Shares." In addition, the Selling Shareholders propose to grant to the
Underwriters an option to purchase up to an additional 330,000 shares (the
"Option Shares") of Common Stock from them for the purpose of covering
over-allotments in connection with the sale of the Firm Shares. The respective
numbers of Selling Shareholder Shares and Option Shares to be sold by each of
the Selling Shareholders are set forth on Schedule II to this Agreement. The
Firm Shares and the Option Shares are together called the "Shares."
1. Sale and Purchase of the Shares. On the
basis of the representations, warranties and agreements contained in, and
subject to the terms and conditions of, this Agreement:
(a) The Company and the Selling Shareholders agree to
sell to each of the Underwriters, and each of the Underwriters
agrees, severally and not jointly, to purchase from the Company and
the Selling Shareholders, at $______ per share (the "Initial
Price"), the number of Firm Shares set forth opposite the name of
such Underwriter on Schedule I to this Agreement.
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(b) The Selling Shareholders hereby grant to the
several Underwriters an option to purchase, severally and not
jointly, all or any part of the Option Shares at the Initial Price.
The number of Option Shares to be purchased by each Underwriter
shall be the same percentage (adjusted by the Representative to
eliminate fractions) of the total number of Option Shares to be
purchased by the Underwriters as such Underwriter is purchasing of
the Firm Shares, and the number of Option Shares to be sold by each
Selling Shareholder shall be the same percentage (adjusted by the
Representative to eliminate fractions) of the total number of
Option Shares to be purchased by the Underwriters as such Selling
Shareholder is selling of the total Selling Shareholders Shares.
Such option may be exercised only to cover over-allotments in the
sales of the Firm Shares by the Underwriters and may be exercised
in whole or in part at any time on or before 12:00 noon, Dallas,
Texas time, on the business day before the Firm Shares Closing Date
(as defined below), and only once thereafter within 30 days after
the date of this Agreement, in each case upon written or
telegraphic notice, or verbal or telephonic notice confirmed by
written or telegraphic notice, by the Representative to the Company
no later than 12:00 noon, Dallas, Texas time on the business day
before the Firm Shares Closing Date or at least two business days
before the Option Shares Closing Date (as defined below), as the
case may be, setting forth the number of Option Shares to be
purchased and the time and date (if other than the Firm Shares
Closing Date) of such purchase.
2. Delivery and Payment. Delivery by the Company and
the Selling Shareholders of the Firm Shares to the Representative for the
respective accounts of the Underwriters, and payment of the purchase price by
certified or official bank check or checks payable in New York Clearing House
(next day) funds to the Company and the Selling Shareholders, shall take place
at the offices of Xxxxxxx Xxxxxx L.L.P., 000 Xxxx Xxxxxx, Xxxxx 0000, Xxxxxx,
Xxxxx 00000, at 10:00 a.m., Dallas, Texas time, on the third business day
following the date of this Agreement, or at such time on such other date, not
later than 10 business days after the date of this Agreement, as shall be
agreed upon by the Company, the Selling Shareholders and the Representative
(such time and date of delivery and payment are called the "Firm Shares Closing
Date").
In the event the option with respect to the Option Shares
is exercised, delivery by the Company of the Option Shares to the
Representative for the respective accounts of the Underwriters and payment of
the purchase price by certified or official bank check or checks payable in New
York Clearing House (next day) funds to the Company and the Selling
Shareholders shall take place at the offices of Xxxxxxx Xxxxxx specified above
at the time and on the date (which may be the same date as, but in no event
shall be earlier than, the Firm Shares Closing Date) specified in the notice
referred to in Section 1(b) (such time and date of delivery and payment are
called the "Option Shares Closing Date"). The Firm Shares Closing Date and the
Option Shares Closing Date are called, individually, a "Closing Date" and,
together, the "Closing Dates."
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Certificates evidencing the Shares shall be registered in
such names and shall be in such denominations as the Representative shall
request at least two full business days before the Firm Shares Closing Date or,
in the case of Option Shares, on the day of notice of exercise of the option as
described in Section l(b) and shall be made available to the Representative for
checking and packaging, at such place as is designated by the Representative,
on the full business day before the Firm Shares Closing Date (or the Option
Shares Closing Date in the case of the Option Shares).
Certificates in negotiable form for the total number of
Selling Shareholders Shares and Option Shares have been placed in custody with
Chase Bank of Texas, N.A., as custodian (the "Custodian") pursuant to a Selling
Shareholders Power of Attorney and a Custody Agreement (collectively, the
"Custodian Agreement") executed by the Selling Shareholders for delivery of the
Selling Shareholders Shares and Option Shares; provided that Geocapital may
deposit, in lieu of Common Stock, a number of shares of Series A Convertible
Preferred Stock of the Company ("Preferred Stock") that are convertible into the
number of Selling Shareholders Shares and Option Shares to be sold by Geocapital
hereunder with authorization to the Representative to convert such shares of
Preferred Stock and all other outstanding shares of Preferred Stock into Common
Stock on or after the Closing Date. Each of the Selling Shareholders
specifically agrees that the Selling Shareholders Shares to be sold hereunder
by the Selling Shareholders, represented by the certificates held in custody
for the Selling Shareholders under the Custodian Agreement, are subject to the
interest of such Underwriters hereunder, that the arrangements made by the
Selling Shareholders for such custody are to that extent irrevocable, and that
the obligations of the Selling Shareholders hereunder shall not be terminable
by any act or deed of the Selling Shareholders, or by any other person, firm or
corporation, including the Company or the Underwriters, or by the occurrence of
any other event or events, except as set forth in the Custodian Agreement. If
any such event should occur prior to the delivery to the Underwriters of the
Selling Shareholders Shares to be sold hereunder by the Selling Shareholders,
certificates for such Selling Shareholders Shares shall be delivered by the
Custodian in accordance with the terms and conditions of this Agreement as if
such event had not occurred. The Custodian is authorized to receive and
acknowledge receipt of the proceeds of sale of the Selling Shareholders Shares
against delivery of such Selling Shareholders Shares.
3. Registration Statement and Prospectus; Public
Offering. The Company has prepared in conformity with the requirements of the
Securities Act of 1933, as amended (the "Securities Act"), and the published
rules and regulations thereunder (the "Rules") adopted by the Securities and
Exchange Commission (the "Commission"), a registration statement on Form S-1
(No. 333-42633), including a preliminary prospectus relating to the Shares, and
has filed with the Commission the Registration Statement (as hereinafter
defined) and such amendments thereof as may have been required to the date of
this Agreement. Copies of such Registration Statement (including all
amendments thereof) and of the related preliminary prospectus have heretofore
been delivered by the Company to you. The term "preliminary prospectus" means
any preliminary prospectus (as described in Rule 430 of the Rules) included at
any time as a part of the Registration Statement. The Registration Statement
as amended at the time and on the date it becomes effective (the "Effective
Date"), including all exhibits and information, if any, deemed to be part of
the Registration Statement pursuant to Rule 424(b) and Rule 430A of the Rules,
is called the
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"Registration Statement." The term "Prospectus" means the prospectus in the
form first used to confirm sales of the Shares (whether such prospectus was
included in the Registration Statement at the time of effectiveness or was
subsequently filed with the Commission pursuant to Rule 424(b) of the Rules).
The Company understands that the Underwriters propose to
make a public offering of the Shares, as set forth in and pursuant to the
Prospectus, as soon after the Effective Date and the date of this Agreement as
the Representative deem advisable. The Company hereby confirms that the
Underwriters and dealers have been authorized to distribute or cause to be
distributed each preliminary prospectus and are authorized to distribute the
Prospectus (as from time to time amended or supplemented if the Company
furnishes amendments or supplements thereto to the Underwriters).
4. Representations and Warranties of the Company.
(a) The Company hereby represents and warrants to each
Underwriter as follows:
(i) On the Effective Date the Registration Statement
complied, and on the date of the Prospectus, on the date any
post-effective amendment to the Registration Statement shall become
effective, on the date any supplement or amendment to the
Prospectus is filed with the Commission and on each Closing Date,
the Registration Statement and the Prospectus (and any amendment
thereof or supplement thereto) will comply, in all material
respects, with the applicable provisions of the Securities Act and
the Rules and the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and the rules and regulations of the Commission
thereunder; the Registration Statement did not, as of the Effective
Date, 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 on the
other dates referred to above neither the Registration Statement
nor the Prospectus, nor any amendment thereof or supplement
thereto, will contain any untrue statement of a material fact or
will omit to state any material fact required to be stated therein
or necessary in order to make the statements therein not
misleading. When any related preliminary prospectus was first
filed with the Commission (whether filed as part of the
Registration Statement or any amendment thereto or pursuant to Rule
424(a) of the Rules) and when any amendment thereof or supplement
thereto was first filed with the Commission, such preliminary
prospectus as amended or supplemented complied in all material
respects with the applicable provisions of the Securities Act and
the Rules 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. Notwithstanding the foregoing, the Company makes no
representation or warranty as to the paragraph with respect to
stabilization on the inside front cover page of the Prospectus and
the statements contained under the caption "Underwriting" in the
Prospectus. The Company acknowledges that the statements referred
to in the previous sentence constitute the only information
furnished in writing
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by the Representative on behalf of the several Underwriters
specifically for inclusion in the Registration Statement, any
preliminary prospectus or the Prospectus.
(ii) The financial statements of the Company (including
all notes and schedules thereto) included in the Registration
Statement and Prospectus present fairly the financial position, the
results of operations and cash flows and the shareholders' equity
and the other information purported to be shown therein of the
Company at the respective dates and for the respective periods to
which they apply; and such financial statements have been prepared
in conformity with generally accepted accounting principles,
consistently applied throughout the periods involved, and all
adjustments necessary for a fair presentation of the results for
such periods have been made.
(iii) Ernst & Young LLP, whose reports are filed with
the Commission as a part of the Registration Statement, are and,
during the periods covered by their reports, were independent
public accountants as required by the Securities Act and the Rules.
(iv) The Company has been duly incorporated and is
validly existing as a corporation in good standing under the laws
of the State of Oklahoma. The Company has no subsidiary or
subsidiaries and does not control, directly or indirectly, any
corporation, partnership, joint venture, limited liability company,
association or other business organization, except as disclosed in
Exhibit 21.1 to the Registration Statement (and for purposes of
this Section 4, the term "the Company" shall, where appropriate,
include such entities). Except as disclosed in Exhibit 21.1 to the
Registration Statement, all of the issued and outstanding equity
interests of each of such entities are owned directly by the
Company; all such interests have been duly authorized and validly
issued and are fully paid and nonassessable and are owned free and
clear of any pledge, lien, encumbrance, security interest or other
claim; and there are no outstanding rights, subscriptions,
warrants, calls, preemptive rights, options or other agreements of
any kind with respect to the equity interests of such entities.
The Company is duly qualified and in good standing as a foreign
corporation in each jurisdiction in which the character or location
of its assets or properties (owned, leased or licensed) or the
nature of its business makes such qualification necessary except
for such jurisdictions where the failure to so qualify would not
have a material adverse effect on the assets or properties,
business, results of operations or financial condition of the
Company. Except as disclosed in the Registration Statement and the
Prospectus, the Company does not own, lease or license any asset or
property or conduct any business outside the United States of
America. The Company has all requisite corporate power and
authority, and all necessary authorizations, approvals, consents,
orders, licenses, certificates and permits of and from all
governmental or regulatory bodies or any other person or entity, to
own, lease and license its assets and properties and conduct its
businesses as now being conducted and as described in the
Registration Statement and the Prospectus except for such
authorizations, approvals, consents, orders, material licenses,
certificates and permits the failure to so obtain would not have a
material adverse effect upon the assets or properties, business,
results of
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operations, prospects or condition (financial or otherwise) of the
Company; no such authorization, approval, consent, order, license,
certificate or permit contains a materially burdensome restriction
other than as disclosed in the Registration Statement and the
Prospectus; and the Company has all such corporate power and
authority, and such authorizations, approvals, consents, orders,
licenses, certificates and permits to enter into, deliver and
perform this Agreement and to issue and sell the Shares (except as
may be required under the Securities Act and state and foreign Blue
Sky laws).
(v) The Company owns or possesses adequate and
enforceable rights to use all trademarks, trademark applications,
trade names, service marks, copyrights, copyright applications,
licenses, know-how and other similar rights and proprietary
knowledge (collectively, "Intangibles") necessary for the conduct
of its business as described in the Registration Statement and the
Prospectus. The Company has not received any notice of, or to its
best knowledge is not aware of, any infringement of or conflict
with asserted rights of others with respect to any Intangibles
which, singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, would have a material adverse effect
upon the assets or properties, business, results of operations,
prospects or condition (financial or otherwise) of the Company.
(vi) The Company has good title to each of the items of
personal property which are reflected in the financial statements
referred to in Section 4(a)(iii) or are referred to in the
Registration Statement and the Prospectus as being owned by it and
valid and enforceable leasehold interests in each of the items of
real and personal property which are referred to in the
Registration Statement and the Prospectus as being leased by it, in
each case free and clear of all liens, encumbrances, claims,
security interests and defects, other than those described in the
Registration Statement and the Prospectus and those which do not
and will not have a material adverse effect upon the assets or
properties, business, results of operations or financial condition
of the Company.
(vii) Except as described in the Registration Statement
and the Prospectus, there is no litigation or governmental or other
proceeding or investigation before any court or before or by any
public body or board pending or, to the Company's best knowledge,
threatened (and the Company does not know of any basis therefor)
against, or involving the assets, properties or business of, the
Company which would materially adversely affect the value or the
operation of any such assets or properties or the business, results
of operations, prospects or condition (financial or otherwise) of
the Company.
(viii) Subsequent to the respective dates as of which
information is given in the Registration Statement and the
Prospectus, except as described therein, (i) there has not been
any material adverse change in the assets or properties, business,
results of operations, prospects or condition (financial or
otherwise), of the Company, whether or not arising from
transactions in the ordinary course of business (a "Material
Adverse Effect"); (ii) the Company has not sustained any material
loss or interference with its
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assets, businesses or properties (whether owned or leased) from
fire, explosion, earthquake, flood or other calamity, whether or
not covered by insurance, or from any labor dispute or any court or
legislative or other governmental action, order or decree; and
(iii) and since the date of the latest balance sheet included in
the Registration Statement and the Prospectus, except as reflected
therein, the Company has not (a) issued any securities or incurred
any liability or obligation, direct or contingent, for borrowed
money, except such liabilities or obligations incurred in the
ordinary course of business, (b) entered into any transaction not
in the ordinary course of business or (c) declared or paid any
dividend or made any distribution on any shares of its stock or
redeemed, purchased or otherwise acquired or agreed to redeem,
purchase or otherwise acquire any shares of its stock.
(ix) All contracts and other documents required to be
filed as exhibits to the Registration Statement have been filed
with the Commission as exhibits to the Registration Statement.
There is no document or contract of a character required to be
described in the Registration Statement or Prospectus or to be
filed as an exhibit to the Registration Statement which is not
described or filed as required. Each agreement listed in the
Exhibits to the Registration Statement is in full force and effect
and is valid and enforceable by and against the Company in
accordance with its terms, assuming the due authorization,
execution and delivery thereof by each of the other parties
thereto. Neither the Company, nor to the best of the Company's
knowledge, any other party is in default in the observance or
performance of any term or obligation to be performed by it under
any such agreement, and no event has occurred which with notice or
lapse of time or both would constitute such a default, in any such
case which default or event would have a material adverse effect on
the assets or properties, business, results of operations,
prospects or condition (financial or otherwise) of the Company. No
default exists, and no event has occurred which with notice or
lapse of time or both would constitute a default, in the due
performance and observance of any term, covenant or condition, by
the Company of any other agreement or instrument to which the
Company is a party or by which it or its properties or business may
be bound or affected which default or event would have a material
adverse effect on the assets or properties, business, results of
operations, prospects or condition (financial or otherwise) of the
Company.
(x) The Company is not in violation of any term or
provision of its charter or bylaws or of any franchise, license,
permit, judgment, decree, order, statute, rule or regulation, where
the consequences of such violation would have a material adverse
effect on the assets or properties, business, results of
operations, prospects or condition (financial or otherwise) of the
Company.
(xi) Neither the execution, delivery and performance of
this Agreement by the Company nor the consummation of any of the
transactions contemplated hereby (including, without limitation,
the issuance and sale by the Company of the Shares) will give rise
to a right to terminate or accelerate the due date of any payment
due under, or
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conflict with or result in the breach of any term or provision of,
or constitute a default (or an event which with notice or lapse of
time or both would constitute a default) under, or require any
consent or waiver under, or result in the execution or imposition
of any lien, charge or encumbrance upon any properties or assets of
the Company pursuant to the terms of, any indenture, mortgage, deed
of trust or other agreement or instrument to which the Company is a
party or by which it or any of its properties or businesses is
bound, or any franchise, license, permit, judgment, decree, order,
statute, rule or regulation applicable to the Company or violate
any provision of the charter or bylaws of the Company, except for
such consents or waivers which have already been obtained and are
in full force and effect.
(xii) The Company has an authorized and outstanding
capital stock as set forth under the caption "Capitalization" in
the Prospectus. All of the outstanding shares of Common Stock have
been duly and validly issued and are fully paid and nonassessable
and none of them was issued in violation of any preemptive or other
similar right. The Shares, when issued and sold pursuant to this
Agreement, will be duly and validly issued, fully paid and
nonassessable and none of them will be issued in violation of any
preemptive or other similar right. Except as disclosed in the
Registration Statement and the Prospectus, there is no outstanding
option, warrant or other right calling for the issuance of, and
there is no commitment, plan or arrangement to issue, any share of
stock of the Company or any security convertible into, or
exercisable or exchangeable for, such stock. The Common Stock and
the Shares conform in all material respects to all statements in
relation thereto contained in the Registration Statement and the
Prospectus.
(xiii) No holder of any security of the Company has the
right to have any security owned by such holder included in the
Registration Statement or to demand registration of any security
owned by such holder during the period ending 180 days after the
date of this Agreement. Each shareholder, director and executive
officer of the Company has delivered to the Representative his
enforceable written agreement that he will not, for a period of 180
days after the date of this Agreement, offer for sale, sell,
distribute, grant any option for the sale of, or otherwise dispose
of, directly or indirectly, or exercise any registration rights
with respect to, any shares of Common Stock (or any securities
convertible into, exercisable for, or exchangeable for any shares
of Common Stock) owned by him, without the prior written consent of
the Representative.
(xiv) All necessary corporate action has been duly and
validly taken by the Company to authorize the execution, delivery
and performance of this Agreement and the issuance and sale of the
Shares by the Company. This Agreement has been duly and validly
authorized, executed and delivered by the Company and constitutes
legal, valid and binding obligations of the Company enforceable
against the Company in accordance with their respective terms,
except (A) as the enforceability thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the enforcement of creditors' rights generally and
by general equitable principles and (B) to
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the extent that rights to indemnity or contribution under this
Agreement may be limited by Federal and state securities laws or
the public policy underlying such laws.
(xv) Except as disclosed in the Registration Statement, the
Company has not violated any foreign, federal, state or local law
or regulation relating to the protection of human health and
safety, the environment or hazardous or toxic substances or wastes,
pollutants or contaminants ("Environmental Laws") in any instance
where such violation would result in a cost or liability to the
Company of $10,000. The Company reasonably has concluded that the
costs and liabilities associated with compliance by the Company
with Environmental Laws are not likely to have, singly or in the
aggregate, a material adverse effect on the properties, assets,
operations, business, business prospects or financial condition of
the Company.
(xvi) The Company is not involved in any labor dispute
nor, to the knowledge of the Company, is any such dispute
threatened, which dispute would have a material adverse effect on
the assets or properties, business, results of operations,
prospects or condition (financial or otherwise) of the Company.
(xvii) No transaction has occurred between or among the
Company and any of its officers or directors or any affiliate or
affiliates of any such officer or director that is required to be
described in and is not described in the Registration Statement and
the Prospectus.
(xviii) The Company has not taken, nor will it take,
directly or indirectly, any action designed to or which might
reasonably be expected to cause or result in, or which has
constituted or which might reasonably be expected to constitute,
the stabilization or manipulation of the price of the Common Stock
to facilitate the sale or resale of any of the Shares.
(xix) The Company has filed all Federal, state, local
and foreign tax returns which are required to be filed through the
date hereof, or has received extensions thereof, and has paid all
taxes shown on such returns and all assessments received by it to
the extent that the same are material and have become due.
(xx) The Shares have been duly authorized for quotation
on the National Association of Securities Dealers Automated
Quotation ("NASDAQ") National Market.
(xxi) Neither the Company nor any affiliate does
business in Cuba or with any person or affiliate located in Cuba.
(b) The Management Selling Shareholders, jointly and severally,
hereby represent and warrant to each Underwriter as follows:
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(i) The representations and warranties of the Company
contained in Section 4(a) hereof are true and correct; the Selling
Shareholders have reviewed and are familiar with the Registration
Statement as originally filed with the Commission and the Prospectus
and have no knowledge of any material fact, condition or information
not disclosed in such Prospectus that has adversely affected or
could adversely affect the condition (financial or otherwise),
earnings, business affairs or business prospects of the Company; the
Prospectus does not include an untrue statement of a material fact
or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which
they were made, not misleading; and the Selling Shareholders are not
prompted to sell the Selling Shareholders Shares and Option Shares
to be sold hereunder by the Selling Shareholders by any information
concerning the Company that is not set forth in the Prospectus.
(ii) When the Registration Statement shall become
effective, and at all times subsequent thereto up to the Closing
Date (and if any Option Shares are purchased, on the Option Shares
Closing Date), such parts of the Registration Statement and any
amendments and supplements thereto and the Prospectus as
specifically refer to the Selling Shareholders will not contain an
untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the
statements therein not misleading.
(iii) Each of this Agreement and the Custodian Agreement
is a legal, valid and binding agreement of the Selling
Shareholders, enforceable against the Selling Shareholders in
accordance with their respective terms except as such
enforceability may be limited by bankruptcy, reorganization,
insolvency, moratorium and other similar laws affecting creditors'
rights generally or by the application of equitable principles.
(iv) Neither the execution, delivery and performance of
this Agreement and the Custodian Agreement, the consummation of the
transactions contemplated herein and therein, including the
issuance, sale and delivery of the Selling Shareholders Shares nor
compliance with the terms and provisions hereof, will (i) conflict
with or result in a breach of any of the terms and provisions of,
or constitute a default (or an event which with notice or lapse of
time, or both, would constitute a default) or require consent
under, or result in the creation or imposition of, any lien,
encumbrance, security interest, claim or other restriction of any
nature whatsoever upon any property or assets of the Selling
Shareholders, pursuant to the terms of any agreement, instrument or
permit to which the Selling Shareholders are a party or by which
any of the Selling Shareholders' properties or assets may be bound;
(ii) violate or conflict with any provisions of any permit,
judgment, decree, order, statute, rule or regulation of any court
or any public, governmental or regulatory agency or body having
jurisdiction over the Selling Shareholders or any of the Selling
Shareholders' properties or assets. No permit of or with any court
or any public, governmental or regulatory agency or body having
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jurisdiction over the Selling Shareholders or any of the Selling
Shareholders' properties or assets is required for the execution,
delivery and performance of this Agreement and the consummation of
the transactions contemplated herein, including the sale and
delivery of the Selling Shareholders Shares, except the
registration under the Securities Act of the Selling Shareholders
Shares and such permits as may be required under state or foreign
securities or "Blue Sky" laws in connection with the purchase and
distribution of the Selling Shareholders Shares by the
Underwriters.
(v) The Selling Shareholders now have, and at the
Closing Date will have, good and marketable title to the Selling
Shareholders Shares to be sold hereunder by the Selling
Shareholders, free and clear of any pledge, lien, security
interest, charge, claim, equity or encumbrance of any kind, other
than pursuant to this Agreement; the Selling Shareholders have full
right, power and authority to sell, transfer and deliver such
Selling Shareholders Shares; the Selling Shareholders Shares have
been duly and validly authorized and issued, are fully paid and
non-assessable, conform to the description thereof in the
Prospectus, and have not been issued in violation of or subject to
any preemptive right or other right to subscribe for or purchase
such securities; and, upon delivery of such Selling Shareholders
Shares to be sold hereunder by the Selling Shareholders and payment
of the purchase price therefor as contemplated in this Agreement,
each of the Underwriters will receive good and marketable title to
the Selling Shareholders Shares, free and clear of any pledge,
lien, security interest, charge, claim, equity or encumbrance of
any kind.
(vi) No person has any right to acquire from any of the
Selling Shareholders any Shares to be sold hereunder and none of
the Selling Shareholders are under any obligation, whether absolute
or contingent, to sell any such Shares to any person, except as
disclosed in the Prospectus.
(vii) None of the Selling Shareholders have taken and
will not take, directly or indirectly, any action designed to, or
which might be reasonably expected to, cause or result in
stabilization or manipulation of the price of the Common Stock, or
any other securities convertible into or exchangeable or
exercisable for shares of Common Stock.
(c) Geocapital hereby represents and warrants to each
Underwriter as follows:
(i) To the best knowledge of Geocapital, the
Prospectus does not include an untrue statement of a material fact
or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which
they were made, not misleading.
(ii) When the Registration Statement shall become
effective, and at all times subsequent thereto up to the Closing
Date (and if any Option Shares are purchased, on the Option Shares
Closing Date), such parts of the Registration Statement and any
amendments and supplements thereto and the Prospectus as
specifically refer to Geocapital will not contain an untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading.
(iii) Each of this Agreement and the Custodian Agreement
is a legal, valid and binding agreement of Geocapital, enforceable
against Geocapital in accordance with their respective terms
except as such enforceability may be limited by bankruptcy,
reorganization, insolvency, moratorium and other similar laws
affecting creditors' rights generally or by the application of
equitable principles.
(iv) Neither the execution, delivery and performance of
this Agreement and the Custodian Agreement, the consummation of the
transactions contemplated herein and therein, including the
issuance, sale and delivery of Geocapital's Selling Shareholders
Shares, nor compliance with the terms and provisions hereof, will
(i) conflict with or result in a breach of any of the terms and
provisions of, or constitute a default (or an event which with
notice or lapse of time, or both, would constitute a default) or
require consent under, or result in the creation or imposition of,
any lien, encumbrance, security interest, claim or other restriction
of any nature whatsoever upon any property or assets of Geocapital,
pursuant to the terms of any agreement, instrument or permit to
which Geocapital is a party or by which any of Geocapital's
properties or assets may be bound; (ii) violate or conflict with any
provisions of any permit, judgment, decree, order, statute, rule or
regulation of any court or any public, governmental or regulatory
agency or body having jurisdiction over Geocapital or any of
Geocapital's properties or assets. No permit of or with any court
or any public, governmental or regulatory agency or body having
jurisdiction over Geocapital or any of Geocapital's properties or
assets is required for the execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated
herein, including the sale and delivery of Geocapital's Selling
Shareholders Shares, except the registration under the Securities
Act of Geocapital's Selling Shareholders Shares and such permits as
may be required under state or foreign securities or "Blue Sky" laws
in connection with the purchase and distribution of Geocapital's
Selling Shareholders Shares by the Underwriters.
(v) Geocapital now has, and at the Closing Date will
have, good and marketable title to the Selling Shareholders Shares
to be sold hereunder by Geocapital, free and clear of any pledge,
lien, security interest, charge, claim, equity or encumbrance of any
kind, other than pursuant to this Agreement; Geocapital has full
right, power and authority to sell, transfer and deliver its
Selling Shareholders Shares; Geocapital's Selling Shareholders
Shares have been duly and validly authorized and issued, are fully
paid and non-assessable, conform to the description thereof in the
Prospectus, and have not been issued in violation of or subject to
any preemptive right or other right to subscribe for or purchase
such securities; and, upon delivery of such Selling Shareholders
Shares to be sold hereunder by Geocapital and payment of the
purchase price therefor as contemplated in this Agreement, each of
the Underwriters will receive good and marketable title to the
Selling Shareholders Shares, free and clear of any pledge, lien,
security interest, charge, claim, equity or encumbrance of any kind.
(vi) No person has any right to acquire from Geocapital
any Shares to be sold hereunder and Geocapital is not under any
obligation, whether absolute or contingent, to sell any such Shares
to any person, except as disclosed in the Prospectus.
(vii) Geocapital has not taken and will not take,
directly or indirectly, any action designed to, or which might be
reasonably expected to, cause or result in stabilization or
manipulation of the price of the Common Stock, or any other
securities convertible into or exchangeable or exercisable for
shares of Common Stock.
5. Conditions of the Underwriters' Obligations. The
obligations of the Underwriters under this Agreement are several and not joint.
The respective obligations of the Underwriters to purchase the Shares are
subject to each of the following terms and conditions:
(a) The Prospectus shall have been timely filed with
the Commission in accordance with Section 6(A)(i) of this
Agreement.
(b) No order preventing or suspending the use of any
preliminary prospectus or the Prospectus shall have been or shall
be in effect and no order suspending the effectiveness of the
Registration Statement shall be in effect and no proceedings for
such
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purpose shall be pending before or threatened by the Commission,
and any requests for additional information on the part of the
Commission (to be included in the Registration Statement or the
Prospectus or otherwise) shall have been complied with to the
satisfaction of the Representative.
(c) The representations and warranties of the Company
contained in this Agreement and in the certificates delivered
pursuant to Section 5(d) shall be true and correct when made and on
and as of each Closing Date as if made on such date and the Company
shall have performed all covenants and agreements and satisfied all
the conditions contained in this Agreement required to be performed
or satisfied by it at or before such Closing Date.
(d) Subsequent to the respective dates as of which
information is given in the Registration Statement and the
Prospectus, there shall not have been any changes which would
result in a Material Adverse Effect, or any development involving
circumstances that could result in a prospective Material Adverse
Effect, except in each case as described in or contemplated by the
Prospectus (exclusive of any amendment or supplement thereto).
(e) The Representative shall have received on each
Closing Date a certificate, addressed to the Representative and
dated such Closing Date, of the chief executive officer and the
chief financial and accounting officer of the Company to the effect
that the signers of such certificate have carefully examined the
Registration Statement, the Prospectus and this Agreement and that
the representations and warranties of the Company in this Agreement
are true and correct on and as of such Closing Date with the same
effect as if made on such Closing Date and the Company has
performed all covenants and agreements and satisfied all conditions
contained in this Agreement required to be performed or satisfied
by it at or prior to such Closing Date.
(f) The Representative shall have received on the
Effective Date, at the time this Agreement is executed and on each
Closing Date a signed letter from Ernst & Young LLP, addressed to
the Representative and dated, respectively, the Effective Date, the
date of this Agreement and each such Closing Date, in form and
substance reasonably satisfactory to the Representative, confirming
that they are independent accountants within the meaning of the
Securities Act and the Rules, that the response to Item 10 of the
Registration Statement is correct insofar as it relates to them and
stating in effect that:
(i) in their opinion the audited financial
statements and financial statement schedules included in
the Registration Statement and the Prospectus and reported
on by them comply as to form in all material respects with
the applicable accounting requirements of the Securities
Act and the Rules;
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(ii) on the basis of a reading of the amounts
included in the Registration Statement and the Prospectus
under the headings "Summary Financial Information and
Operating Data" and "Selected Financial Data," carrying out
certain procedures (but not an examination in accordance
with generally accepted auditing standards) which would not
necessarily reveal matters of significance with respect to
the comments set forth in such letter, a reading of the
minutes of the meetings of the shareholders and directors
of the Company, and inquiries of certain officials of the
Company who have responsibility for financial and
accounting matters of the Company as to transactions and
events subsequent to the date of the latest audited
financial statements, except as disclosed in the
Registration Statement and the Prospectus, nothing came to
their attention which caused them to believe that:
(A) the amounts in "Summary Financial
Information and Operating Data," and "Selected
Financial Data" included in the Registration
Statement and the Prospectus do not agree with the
corresponding amounts in the audited and unaudited
financial statements from which such amounts were
derived; or
(B) with respect to the Company, there
were, at a specified date not more than five
business days prior to the date of the letter, any
increases in the current liabilities and long-term
liabilities of the Company or any decreases in net
income or in working capital or the shareholders'
equity in the Company, as compared with the
amounts shown on the Company's audited balance
sheet for the fiscal year ended December 31, 1997
included in the Registration Statement; and
(iii) they have performed certain other
procedures as a result of which they determined that
certain 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 reasonably
specified by the Representative agrees with the accounting
records of the Company.
References to the Registration Statement and the Prospectus
in this paragraph (e) are to such documents as amended and
supplemented at the date of the letter.
(g) The Representative shall have received on each
Closing Date from Johnson, Allen, Xxxxx & Xxxxxxxxxx, counsel for
the Company and the Selling Shareholders, an opinion, addressed to
the Representative and dated such Closing Date, and stating in
effect that:
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(i) The Company has been duly organized and is
validly existing as a corporation in good standing under
the laws of the State of Oklahoma. To the best of such
counsel's knowledge, except as provided in Exhibit 21.1 to
the Registration Statement, the Company has no subsidiaries
and does not control, directly or indirectly, any
corporation, partnership, joint venture, association or
other business organization. Each of the entities listed
on Exhibit 21.1 to the Registration Statement (the
"Subsidiaries") has been duly organized and is validly
existing in good standing under the laws of its state of
organization. The Company and each Subsidiary is duly
qualified and in good standing as a foreign corporation in
each jurisdiction in which the character or location of its
assets or properties (owned, leased or licensed) or the
nature of its businesses makes such qualification
necessary, except for such jurisdictions where the failure
to so qualify would not have a material adverse effect on
the assets or properties, business, results of operations,
prospects or condition (financial or otherwise) of the
Company and the Subsidiaries, taken as a whole.
(ii) The Company and each Subsidiary has all
requisite corporate power and authority to own, lease and
license its assets and properties and conduct its business
as now being conducted and as described in the Registration
Statement and the Prospectus; and the Company has all
requisite corporate power and authority and all necessary
authorizations, approvals, consents, orders, licenses,
certificates and permits to enter into, deliver and perform
this Agreement and to issue and sell the Shares other than
those required under the Securities Act and state and
foreign Blue Sky laws.
(iii) The Company has authorized and issued
capital stock as set forth in the Registration Statement
and the Prospectus; the certificates evidencing the Shares
are in due and proper legal form and have been duly
authorized for issuance by the Company; all of the
outstanding shares of Common Stock of the Company have been
duly and validly authorized and have been duly and validly
issued and are fully paid and nonassessable and none of
them was issued in violation of any preemptive or other
similar right. The Shares when issued and sold pursuant to
this Agreement will be duly and validly issued,
outstanding, fully paid and nonassessable and none of them
will have been issued in violation of any preemptive or
other similar right. To the best of such counsel's
knowledge, except as disclosed in the Registration
Statement and the Prospectus, there is no outstanding
option, warrant or other right calling for the issuance of,
and no commitment, plan or arrangement to issue, any share
of stock of the Company or any security convertible into,
exercisable for, or exchangeable for stock of the Company.
The Common Stock and the Shares conform in all material
respects to the descriptions thereof contained in the
Registration Statement and the Prospectus.
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(iv) The agreement of the Company's
shareholders, directors and officers stating that for a
period of 180 days from the date of this Agreement they
will not, without the Representative' prior written
consent, sell, grant any option for the sale of, or
otherwise dispose of, directly or indirectly, any shares of
Common Stock (or any securities convertible into,
exercisable for, or exchangeable for any shares of Common
Stock) owned by them has been duly and validly delivered by
such persons and constitutes the legal, valid and binding
obligation of each such person enforceable against each
such person in accordance with its terms, except as the
enforceability thereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the enforcement of creditors' rights
generally and by general equitable principles.
(v) All necessary corporate action has been duly
and validly taken by the Company to authorize the
execution, delivery and performance of this Agreement and
the issuance and sale of the Shares. This Agreement has
been duly and validly authorized, executed and delivered by
the Company and this Agreement constitutes the legal, valid
and binding obligation of the Company enforceable against
the Company in accordance with its terms except (A) as such
enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar
laws affecting the enforcement of creditors' rights
generally and by general equitable principles and (B) to
the extent that rights to indemnity or contribution under
this Agreement may be limited by Federal or state
securities laws or the public policy underlying such laws.
(vi) Neither the execution, delivery and
performance of this Agreement by the Company nor the
consummation of any of the transactions contemplated hereby
(including, without limitation, the issuance and sale by
the Company of the Shares) will give rise to a right to
terminate or accelerate the due date of any payment due
under, or conflict with or result in the breach of any term
or provision of, or constitute a default (or any event
which with notice or lapse of time, or both, would
constitute a default) under, or require consent or waiver
under, or result in the execution or imposition of any
lien, charge or encumbrance upon any properties or assets
of the Company or any Subsidiary pursuant to the terms of
any indenture, mortgage, deed trust, note or other
agreement or instrument of which such counsel is aware and
to which the Company or any Subsidiary is a party or by
which it or any of its properties or businesses is bound,
or any franchise, license, permit, judgment, decree, order,
statute, rule or regulation of which such counsel is aware
or violate any provision of the charter or bylaws of the
Company or any Subsidiary.
(vii) To the best of such counsel's knowledge, no
default exists, and no event has occurred which with notice
or lapse of time, or both, would constitute a default, in
the due performance and observance of any term, covenant or
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condition by the Company or any Subsidiary of any
indenture, mortgage, deed of trust, note or any other
agreement or instrument to which the Company or any
Subsidiary is a party or by which it or any of its assets
or properties or businesses may be bound or affected, where
the consequences of such default would have a material and
adverse effect on the assets, properties, business, results
of operations, prospects or condition (financial or
otherwise) of the Company and the Subsidiaries, taken as a
whole.
(viii) To the best of such counsel's knowledge,
neither the Company nor any Subsidiary is in violation of
any term or provision of its charter or bylaws or any
franchise, license, permit, judgment, decree, order,
statute, rule or regulation, where the consequences of such
violation would have a material and adverse effect on the
assets or properties, businesses, results of operations,
prospects or condition (financial or otherwise) of the
Company and the Subsidiaries, taken as a whole.
(ix) No consent, approval, authorization or order
of any court or governmental agency or body is required for
the performance of this Agreement by the Company or the
consummation of the transactions contemplated hereby or
thereby, except such as have been obtained under the
Securities Act and such as may be required under state
securities or Blue Sky laws in connection with the purchase
and distribution of the Shares by the several Underwriters.
(x) To the best of such counsel's knowledge,
except as disclosed in the Registration Statement and
Prospectus, there is no litigation or governmental or other
proceeding or investigation, before any court or before or
by any public body or board pending or threatened against,
or involving the assets, properties or businesses of, the
Company or any Subsidiary which would have a material
adverse effect upon the assets or properties, business,
results of operations, prospects or condition (financial or
otherwise) of the Company and the Subsidiaries, taken as a
whole.
(xi) The statements in the Prospectus under the
captions "Description of Capital Stock," "Management's
Discussion & Analysis of Financial Condition and Results of
Operations - Liquidity and Capital Resources," "Business,"
"Shares Eligible for Future Sale,", "Management," and
"Certain Transactions," insofar as such statements
constitute a summary of documents referred to therein or
matters of law, are fair summaries in all material respects
and accurately present the information called for with
respect to such documents and matters.
(xii) The Agreement has been duly executed and
delivered by or on behalf of each of the Selling
Shareholders.
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(xiii) The Selling Shareholders have good and
valid title to the Selling Shareholders Shares, free and
clear of any pledge, lien, security interest, charge,
claim, equity or encumbrance of any kind and have full
right, power and authority to sell, transfer and deliver
the Selling Shareholders Shares. By delivery of a
certificate or certificates therefor, the Selling
Shareholders will transfer good and valid title to such
Selling Shareholders Shares free and clear of any pledge,
lien, security interest, charge, claim, equity or
encumbrance of any kind.
(xiv) The Custody Agreement executed and
delivered by the Selling Shareholders is a valid,
irrevocable instrument, and except as rights to indemnity
thereunder may be limited under applicable law, is binding
and enforceable against the Selling Shareholders in
accordance with its terms, subject to bankruptcy,
insolvency, and similar laws governing the rights of
creditors generally and to the discretion of courts in
granting equitable remedies. The attorneys-in-fact
appointed under the Selling Shareholders' Powers of
Attorney have the power and authority to sell, on behalf of
the Selling Shareholders, such of the Shares as are to be
sold by the Selling Shareholders on the terms set forth in
the Underwriting Agreement.
(xv) The Registration Statement, all
preliminary prospectuses and the Prospectus and each
amendment or supplement thereto (except for the financial
statements and schedules and other financial and
statistical data included therein, as to which such counsel
expresses no opinion) comply as to form in all material
respects with the requirements of the Securities Act and
the Rules.
(xvi) The Registration Statement has become
effective under the Securities Act, and no stop order
suspending the effectiveness of the Registration Statement
has been issued and no proceedings for that purpose have
been instituted or are threatened, pending or contemplated.
(xvii) To the best knowledge of such counsel, all
contracts and other documents required to be filed as
exhibits to, or described in, the Registration Statement
have been so filed with the Commission or are fairly
described in the Registration Statement, as the case may
be.
Such counsel shall state in their opinion that such counsel
has participated in conferences with officers and other Representative of the
Company, Representative of the Representative and Representative of the
independent certified public accountants of the Company, at which conferences
the contents of the Registration Statement and the Prospectus and related
matters were discussed and, although such counsel is not passing upon and does
not assume any responsibility for the accuracy, completeness or fairness of the
statements contained in the Registration Statement and the Prospectus (except
as specified in the foregoing opinion), on the basis of the foregoing, no facts
have come to the attention of such counsel which lead such counsel to
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believe that the Registration Statement at the time it became effective (except
with respect to the financial statements and notes and schedules thereto and
other financial data, as to which such counsel need express no belief)
contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading, or that the Prospectus as amended or supplemented
(except with respect to the financial statements and notes schedules thereto
and other financial data, as to which such counsel need make no statement) on
the date thereof contained any untrue statement of a material fact or omitted
to state a material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading.
(h) All proceedings taken in connection with the sale
of the Firm Shares and the Option Shares as herein contemplated
shall be reasonably satisfactory in form and substance to the
Representative and its counsel and the Underwriters shall have
received from Xxxxxxx Xxxxxx L.L.P., a favorable opinion, addressed
to the Representative and dated such Closing Date, with respect to
the Shares, the Registration Statement and the Prospectus, and such
other related matters, as the Representative may reasonably
request, and the Company shall have furnished to Xxxxxxx Xxxxxx
L.L.P. such documents as they may reasonably request for the
purpose of enabling them to pass upon such matters.
(i) The Representative shall have received on each
Closing Date a certificate, addressed to the Representative, and
dated such Closing Date, of an executive officer of the Company to
the effect that the signer of such certificate has reviewed and
understands the provisions of Section 517.075 of the Florida
Statutes, and represents that neither the Company nor any of its
affiliates does business with the government of Cuba or with any
person or affiliate located in Cuba.
(j) The Representative shall have received the
certificate of each Selling Shareholder dated the Firm Shares
Closing Date that the representations and warranties of such
Selling Shareholder made in this Agreement are true and correct on
and as of such Firm Shares Closing Date as if made on such Firm
Shares Closing Date, and that to the best of such Selling
Shareholder's knowledge, the representations and warranties of the
Company made in this Agreement are true and correct and as of such
Firm Shares Closing Date as if made on such Firm Shares Closing
Date.
6. Covenants.
(A) The Company covenants and agrees as follows:
(i) The Company shall prepare the Prospectus
in a form approved by the Representative and file such
Prospectus pursuant to Rule 424(b) under the Securities Act
not later than the Commission's close of business on the
second business day following the execution and delivery of
this Agreement, or, if applicable, such earlier time as may
be required by Rule 430A(a)(3) under the
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Securities Act, and shall promptly advise the
Representative (i) when any amendment to the Registration
Statement shall have become effective, (ii) of any request
by the Commission for any amendment of the Registration
Statement or the Prospectus or for any additional
information, (iii) of the prevention or suspension of the
use of any preliminary prospectus or the Prospectus or of
the issuance by the Commission of any stop order suspending
the effectiveness of the Registration Statement or the
institution or threatening of any proceeding for that
purpose and (iv) of the receipt by the Company of any
notification with respect to the suspension of the
qualification of the Shares for sale in any jurisdiction or
the initiation or threatening of any proceeding for such
purpose. The Company shall not file any amendment of the
Registration Statement or supplement to the Prospectus
unless the Company has furnished the Representative a copy
for its review prior to filing and shall not file any such
proposed amendment or supplement to which the
Representative reasonably object. The Company shall use
its best efforts to prevent the issuance of any such stop
order and, if issued, to obtain as soon as possible the
withdrawal thereof.
(ii) If, at any time when a prospectus relating
to the Shares is required to be delivered under the
Securities Act and the Rules, any event occurs as a result
of which the Prospectus as then amended or 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 shall be
necessary to amend or supplement the Prospectus to comply
with the Securities Act or the Rules, the Company promptly
shall prepare and file with the Commission, subject to the
second sentence of paragraph (a) of this Section 6(A), an
amendment or supplement which shall correct such statement
or omission or an amendment which shall effect such
compliance.
(iii) The Company shall make generally available
to its security holders and to the Representative as soon
as practicable, but not later than 45 days after the end of
the 12-month period beginning at the end of the fiscal
quarter of the Company during which the Effective Date
occurs (or 90 days if such 12-month period coincides with
the Company's fiscal year), an earning statement (which
need not be audited) of the Company, covering such 12-month
period, which shall satisfy the provisions of Section 11(a)
of the Securities Act or Rule 158 of the Rules.
(iv) The Company shall furnish to the
Representative and counsel for the Underwriters, without
charge, signed copies of the Registration Statement
(including all exhibits thereto and amendments thereof) and
to each other Underwriter a copy of the Registration
Statement (without exhibits thereto) and all amendments
thereof and, so long as delivery of a prospectus by an
Underwriter
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or dealer may be required by the Securities Act or the
Rules, as many copies of any preliminary prospectus and the
Prospectus and any amendments thereof and supplements
thereto as the Representative may reasonably request.
(v) The Company shall cooperate with the
Representative and its counsel in endeavoring to qualify
the Shares for offer and sale under the laws of such
jurisdictions as the Representative may designate and shall
maintain such qualifications in effect so long as required
for the distribution of the Shares; provided, however, that
the Company shall not be required in connection therewith,
as a condition thereof, to qualify as a foreign corporation
or to execute a general consent to service of process in
any jurisdiction or subject itself to taxation as doing
business in any jurisdiction.
(vi) For a period of five years after the date
of this Agreement, the Company shall supply to the
Representative, and to each other Underwriter who may so
request in writing, copies of such financial statements and
other periodic and special reports as the Company may from
time to time distribute generally to the holders of any
class of its capital stock and to furnish to the
Representative a copy of each annual or other report it
shall be required to file with the Commission (including
the Report on Form SR required by Rule 463 of the Rules).
(vii) Without the prior written consent of the
Representative, for a period of 180 days after the date of
this Agreement, the Company shall not issue, sell or
register with the Commission (other than on Form S-8 or on
any successor form), or otherwise dispose of, directly or
indirectly, any equity securities of the Company (or any
securities convertible into or exercisable or exchangeable
for equity securities of the Company), except for the
issuance of the Shares pursuant to the Registration
Statement and the issuance of shares pursuant to the
Company's existing stock option plans or bonus plans. In
the event that during this period, (i) any shares are
issued pursuant to the Company's existing stock option
plans or bonus plans or (ii) any registration is effected
on Form S-8 or on any successor form, the Company shall
obtain the written agreement of such grantee or purchaser
or holder of such registered securities that, for a period
of 180 days after the date of this Agreement, such person
will not, without the prior written consent of the
Representative, offer for sale, sell, distribute, grant any
option for the sale of, or otherwise dispose of, directly
or indirectly, or exercise any registration rights with
respect to, any shares of Common Stock (or any securities
convertible into, exercisable for, or exchangeable for any
shares of Common Stock) owned by such person.
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(viii) On or before completion of this offering,
the Company shall make all filings required under
applicable securities laws and by the NASDAQ National
Market (including any required registration under the
Exchange Act).
(B) Each of the Selling Shareholders covenants and
agrees with each of the Underwriters that:
(i) without the prior written consent of the
Representative, the Selling Shareholders will not sell or
offer or contract to sell, except to the Underwriters
pursuant to this Agreement, any securities of the Company
before the close of business on the 180th day after the
commencement of the public offering of the Shares by the
Underwriters.
(ii) the Selling Shareholders will cooperate with
the Representative in endeavoring to qualify the Shares for
sale under the securities laws of such jurisdictions as the
Representative may reasonably designate in writing and will
make such applications, file such documents, and furnish
such information as may be reasonably required for that
purpose.
(C) The Company agrees to pay, or reimburse if paid by
the Representative, whether or not the transactions contemplated hereby are
consummated or this Agreement is terminated, all costs and expenses incident to
the public offering of the Shares and the performance of the obligations of the
Company under this Agreement including those relating to: (i) the preparation,
printing, filing and distribution of the Registration Statement including all
exhibits thereto, each preliminary prospectus, the Prospectus, all amendments
and supplements to the Registration Statement and the Prospectus, and the
printing, filing and distribution of this Agreement; (ii) the preparation and
delivery of certificates for the Shares to the Underwriters; (iii) the
registration or qualification of the Shares for offer and sale under the
securities or Blue Sky laws of the various jurisdictions referred to in Section
6(A)(v), including the reasonable fees and disbursements of counsel for the
Underwriters in connection with such registration and qualification and the
preparation, printing, distribution and shipment of preliminary and
supplementary Blue Sky memoranda; (iv) the furnishing (including costs of
shipping and mailing) to the Representative and to the Underwriters of copies
of each preliminary prospectus, the Prospectus and all amendments or
supplements to the Prospectus, and of the several documents required by this
Section to be so furnished, as may be reasonably requested for use in
connection with the offering and sale of the Shares by the Underwriters or by
dealers to whom Shares may be sold; (v) the filing fees of the National
Association of Securities Dealers, Inc. in connection with its review of the
terms of the public offering; (vi) the furnishing (including costs of shipping
and mailing) to the Representative and to the Underwriters of copies of all
reports and information required by Section 6(A)(vi); (vii) inclusion of the
Shares for quotation on the NASDAQ National Market; and (viii) all transfer
taxes, if any, with respect to the sale and delivery of the Shares by the
Company to the Underwriters. The Selling Shareholders agree to reimburse the
Company for _____% of such costs promptly after request therefor by the
Company. Subject to the provisions of Section 9, the Underwriters agree to
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pay, whether or not the transactions contemplated hereby are consummated or
this Agreement is terminated, all costs and expenses incident to the
performance of the obligations of the Underwriters under this Agreement not
payable by the Company pursuant to the preceding sentence, including, without
limitation, the fees and disbursements of counsel for the Underwriters.
(D) The Company agrees to pay to Southwest Securities,
Inc., for its own account and not for the account of any other Underwriter, a
financial advisory fee equal to 0.75% of aggregate Initial Price of the Shares
purchased by the Underwriters hereunder. The financial advisory fee shall be
paid solely by deduction from the proceeds payable to the Company pursuant to
Section 2 of this Agreement, and relates to financial advisory services
provided by Southwest Securities, Inc. in connection with the offering of the
Shares and related matters.
7. Indemnification.
(a) The Company and each of the Management Selling
Shareholders, jointly and severally, agree to indemnify and hold
harmless each Underwriter and each person, if any, who controls any
Underwriter within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act against any and all losses,
claims, damages and liabilities, joint or several (including any
reasonable investigation, legal and other expenses incurred in
connection with, and any amount paid in settlement of, any action,
suit or proceeding or any claim asserted) (collectively, "Losses"),
to which they, or any of them, may become subject under the
Securities Act, the Exchange Act or other Federal or state law or
regulation (a "Statute"), at common law or otherwise, insofar as
such losses, claims, damages or liabilities arise out of or are
based upon any untrue statement or alleged untrue statement of a
material fact contained in any preliminary prospectus, the
Registration Statement or the Prospectus or any amendment thereof or
supplement thereto, or arise out of or are based upon any 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 such indemnity shall not inure
to the benefit of any Underwriter (or any person controlling such
Underwriter) on account of any losses, claims, damages or
liabilities arising from the sale of the Shares to any person by
such Underwriter if such untrue statement or omission or alleged
untrue statement or omission was made in such preliminary
prospectus, the Registration Statement or the Prospectus, or such
amendment or supplement, in reliance upon and in conformity with
information furnished in writing to the Company by the
Representative on behalf of any Underwriter specifically for use
therein. THE COMPANY AND THE MANAGEMENT SELLING SHAREHOLDERS WILL
BE RESPONSIBLE UNDER THIS AGREEMENT FOR ANY AND ALL LOSSES WHETHER
OR NOT IT IS ALLEGED OR PROVEN THAT THE LOSSES AROSE OUT OF OR
RESULTED FROM THE SOLE OR CONCURRENT NEGLIGENCE OR GROSS NEGLIGENCE
OF ANY UNDERWRITER, OR THE SOLE OR CONCURRENT STRICT LIABILITY
IMPOSED ON ANY UNDERWRITER, OR THE SOLE OR CONCURRENT LIABILITY
IMPOSED VICARIOUSLY ON ANY UNDERWRITER, UNDER A STATUTE, AT COMMON
LAW OR OTHERWISE. This indemnity agreement will be in addition to
any liability which the Company and the Management Selling
Shareholders may otherwise have.
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(b) Each Underwriter agrees, severally and not
jointly, to indemnify and hold harmless the Company, the Selling
Shareholders, each person, if any, who controls the Company and the
Selling Shareholders within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, each director of
the Company, and each officer of the Company who signs the
Registration Statement, to the same extent as the foregoing
indemnity from the Company to each Underwriter, but only insofar as
such losses, claims, damages or liabilities arise out of or are
based upon any untrue statement or omission or alleged untrue
statement or omission which was made in any preliminary prospectus,
the Registration Statement or the Prospectus, or any amendment
thereof or supplement thereto, contained in the last paragraph of
the cover page, in the paragraph relating to stabilization on the
inside front cover page of the Prospectus and the statements
contained under the caption "Underwriting" in the Prospectus;
provided, however, that the obligation of each Underwriter to
indemnify the Company or the Selling Shareholders, as the case may
be, (including any controlling person, director or officer thereof)
shall be limited to the net proceeds received by the Company or the
Selling Shareholders, as the case may be, from such Underwriter.
(c) Any party that proposes to assert the right to be
indemnified under this Section will, promptly after receipt of
notice of commencement of any action, suit or proceeding against
such party in respect of which a claim is to be made against an
indemnifying party or parties under this Section, notify each such
indemnifying party of the commencement of such action, suit or
proceeding, enclosing a copy of all papers served. No
indemnification provided for in Section 7(a) or 7(b) shall be
available to any party who shall fail to give notice as provided in
this Section 7(c) if the party to whom notice was not given was
unaware of the proceeding to which such notice would have related
and was prejudiced by the failure to give such notice but the
omission so to notify such indemnifying party of any such action,
suit or proceeding shall not relieve it from any liability that it
may have to any indemnified party for contribution or otherwise
than under this Section. In case any such action, suit or
proceeding shall be brought against any indemnified party and it
shall notify the indemnifying party of the commencement thereof,
the indemnifying party shall be entitled to participate in, and, to
the extent that it shall wish, jointly with any other indemnifying
party similarly notified, to assume the defense thereof, with
counsel reasonably satisfactory to such indemnified party, and
after notice from the indemnifying party to such indemnified party
of its election so to assume the defense thereof and the approval
by the indemnified party of such counsel, the indemnifying party
shall not be liable to such indemnified party for any legal or
other expenses, except as provided below and except for the
reasonable costs of investigation subsequently incurred by such
indemnified party in connection with the defense thereof. The
indemnified party shall have the right to employ its counsel in any
such action, but the fees and expenses of such counsel shall be at
the expense of such indemnified party unless (i) the employment of
counsel by such indemnified party has been authorized in writing by
the indemnifying parties, (ii) the indemnified party shall have
reasonably concluded that there may be a conflict of interest
between the indemnifying parties and
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the indemnified party in the conduct of the defense of such action
(in which case the indemnifying parties shall not have the right to
direct the defense of such action on behalf of the indemnified
party) or (iii) the indemnifying parties shall not have employed
counsel to assume the defense of such action within a reasonable
time after notice of the commencement thereof, in each of which
cases the fees and expenses of counsel shall be at the expense of
the indemnifying parties. An indemnifying party shall not be
liable for any settlement of any action, suit, proceeding or claim
effected without its written consent.
8. Contribution. In order to provide for just and
equitable contribution in circumstances in which the indemnification provided
for in Section 7(a) is due in accordance with its terms but for any reason is
held to be unavailable from the Company or the Management Selling Shareholders,
the Company, the Management Selling Shareholders and the Underwriters shall
contribute to the aggregate losses, claims, damages and liabilities (including
any investigation, legal and other expenses reasonably incurred in connection
with, and any amount paid in settlement of, any action, suit or proceeding or
any claims asserted, but after deducting any contribution received by the
Company or the Management Selling Shareholders, from persons other than the
Underwriters, such as persons who control the Company within the meaning of the
Securities Act, officers of the Company who signed the Registration Statement
and directors of the Company, who may also be liable for contribution) to which
the Company or the Management Selling Shareholders and one or more of the
Underwriters may be subject in such proportion as is appropriate to reflect the
relative benefits received by the Company or the Management Selling
Shareholders, on the one hand and the Underwriters on the other from the
offering of the Shares or, if such allocation is not permitted by applicable law
or indemnification is not available as a result of the indemnifying party not
having received notice as provided in Section 7 hereof, in such proportion as is
appropriate to reflect not only the relative benefits referred to above but also
the relative fault of the Company or the Management Selling Shareholders, on the
one hand and the Underwriters on the other in connection with the statements or
omissions which resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations. The relative
benefits received by the Company, the Management Selling Shareholders and the
Underwriters shall be deemed to be in the same proportion as (x) the total
proceeds from the offering (net of underwriting discounts but before deducting
expenses) received by the Company and the Management Selling Shareholders, as
set forth in the table on the cover page of the Prospectus, bear to (y) the
underwriting discounts received by the Underwriters, as set forth in the table
on the cover page of the Prospectus. The relative fault of the Company, the
Management Selling Shareholders or the Underwriters shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact related to information supplied by the Company, the
Management Selling Shareholders or the Underwriters and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The Company, the Management Selling Shareholders
and the Underwriters agree that it would not be just and equitable if
contribution pursuant to this Section 8 were determined by pro rata allocation
(even if the Underwriters were treated as one entity for such purpose) or by any
other method of allocation which does not take account of the equitable
considerations referred to above. Notwithstanding the provisions of this
Section 8, (i) in no case shall any Underwriter (except as may be provided in
the Agreement Among Underwriters) be liable or responsible for any amount in
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excess of the underwriting discount applicable to the Shares purchased by such
Underwriter hereunder, and (ii) the Company shall be liable and responsible for
any amount in excess of such underwriting discount; provided, however, that no
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities 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, if any, who controls an Underwriter within the meaning
of Section 15 of the Securities Act or Section 20(a) of the Exchange Act shall
have the same rights to contribution as such Underwriter, and each person, if
any, who controls the Company within the meaning of the Section 15 of the
Securities Act or Section 20(a) of the Exchange 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 clauses (i) and (ii) in the immediately preceding sentence of
this Section 8. 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, notify such party or parties from
whom contribution may be sought, but the omission so to notify such party or
parties from whom contribution may be sought 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 than under this Section. No party shall
be liable for contribution with respect to any action, suit, proceeding or
claim settled without its written consent. The Underwriter's obligations to
contribute pursuant to this Section 8 are several in proportion to their
respective underwriting commitments and not joint.
9. Termination. This Agreement may be terminated
with respect to the Shares to be purchased on a Closing Date by the
Representative by notifying the Company and the Selling Shareholders at any
time
(a) in the absolute discretion of the Representative
at or before any Closing Date: (i) if on or prior to such date, any
domestic or international event or act or occurrence has materially
disrupted, or in the opinion of the Representative will in the
future materially disrupt, the securities markets; (ii) if there
has occurred any new outbreak or material escalation of hostilities
or other calamity or crisis the effect of which on the financial
markets of the United States is such as to make it, in the judgment
of the Representative, inadvisable to proceed with the offering;
(iii) if there shall be such a material adverse change in general
financial, political or economic conditions or the effect of
international conditions on the financial markets in the United
States is such as to make it, in the judgment of the
Representative, inadvisable or impracticable to market the Shares;
(iv) if trading in the Shares has been suspended by the Commission
or trading generally on the New York Stock Exchange, Inc. or on the
American Stock Exchange, Inc. has been suspended or limited, or
minimum or maximum ranges for prices for securities shall have been
fixed, or maximum ranges for prices for securities have been
required, by said exchanges or by order of the Commission, the
National Association of Securities Dealers, Inc., or any other
governmental or regulatory authority; or (v) if a banking
moratorium has been declared by any state or Federal authority, or
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(b) at or before any Closing Date, that any of the
conditions specified in Section 5 shall not have been fulfilled
when and as required by this Agreement.
If this Agreement is terminated pursuant to any of its
provisions, the Company shall not be under any liability to any Underwriter,
and no Underwriter shall be under any liability to the Company, except that (y)
if this Agreement is terminated by the Representative or the Underwriters
because of (1) any failure, refusal or inability on the part of the Company to
comply with the terms or to fulfill any of the conditions of this Agreement, or
(2) a Material Adverse Effect upon the condition of the Company, the Company
will reimburse the Underwriters for all out-of- pocket expenses (including the
reasonable fees and disbursements of their counsel) incurred by them in
connection with the proposed purchase and sale of the Shares or in
contemplation of performing their obligations hereunder and (z) no Underwriter
who shall have failed or refused to purchase the Shares agreed to be purchased
by it under this Agreement, without some reason sufficient hereunder to justify
cancellation or termination of its obligations under this Agreement, shall be
relieved of liability to the Company or to the other Underwriters for damages
occasioned by its failure or refusal.
10. Substitution of Underwriters. If one or more of
the Underwriters shall fail (other than for a reason sufficient to justify the
cancellation or termination of this Agreement under Section 9) to purchase on
any Closing Date the Shares agreed to be purchased on such Closing Date by such
Underwriter or Underwriters, the Representative may find one or more substitute
underwriters to purchase such Shares or make such other arrangements as the
Representative may deem advisable or one or more of the remaining Underwriters
may agree to purchase such Shares in such proportions as may be approved by the
Representative, in each case upon the terms set forth in this Agreement. If no
such arrangements have been made by the close of business on the business day
following such Closing Date,
(a) if the number of Shares to be purchased by the
defaulting Underwriters on such Closing Date shall not exceed 10%
of the Shares that all the Underwriters are obligated to purchase
on such Closing Date, then each of the nondefaulting Underwriters
shall be obligated to purchase such Shares on the terms herein set
forth in proportion to their respective obligations hereunder;
provided, that in no event shall the maximum number of Shares that
any Underwriter has agreed to purchase pursuant to Section 1 be
increased pursuant to this Section 10 by more than one-ninth of
such number of Shares without the written consent of such
Underwriter, or
(b) if the number of Shares to be purchased by the
defaulting Underwriters on such Closing Date shall exceed 10% of
the Shares that all the Underwriters are obligated to purchase on
such Closing Date, then the Company shall be entitled to an
additional business day within which it may, but is not obligated
to, find one or more substitute underwriters reasonably
satisfactory to the Representative to purchase such Shares upon the
terms set forth in this Agreement.
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In any such case, either the Representative or the Company
shall have the right to postpone the applicable Closing Date for a period of
not more than five business days in order that necessary changes and
arrangements (including any necessary amendments or supplements to the
Registration Statement or Prospectus) may be effected by the Representative and
the Company. If the number of Shares to be purchased on such Closing Date by
such defaulting Underwriter or Underwriters shall exceed 10% of the Shares that
all the Underwriters are obligated to purchase on such Closing Date, and none
of the nondefaulting Underwriters or the Company shall make arrangements
pursuant to this Section within the period stated for the purchase of the
Shares that the defaulting Underwriters agreed to purchase, this Agreement
shall terminate with respect to the Shares to be purchased on such Closing Date
without liability on the part of any nondefaulting Underwriter to the Company
and without liability on the part of the Company, except in both cases as
provided in Sections 6(B), 7, 8 and 9. The provisions of this Section shall
not in any way affect the liability of any defaulting Underwriter to the
Company or the nondefaulting Underwriters arising out of such default. A
substitute underwriter hereunder shall become an Underwriter for all purposes
of this Agreement.
11. Default by Selling Shareholders. If on the Firm
Shares Closing Date any of the Selling Shareholders fail to sell the Shares
which the Selling Shareholder has agreed to sell on such date as set forth on
Schedule II hereto, the Company agrees that it will sell or arrange for the
sale of that number of shares of Common Stock to the Underwriters which
represents the Shares which the Selling Shareholders have failed to so sell, as
set forth in Schedule II hereto, or such fewer number of shares of Common Stock
as may be requested by the Underwriters.
12. Miscellaneous. The respective agreements,
representations, warranties, indemnities and other statements of the Company or
its officers and of the Underwriters set forth in or made pursuant to this
Agreement shall 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 Sections 7 and 8
hereof, and shall survive delivery of and payment for the Shares. The
provisions of Sections 6(B), 7, 8 and 9 shall survive the termination or
cancellation of this Agreement.
This Agreement has been and is made for the benefit of the
Underwriters and the Company and their respective successors and assigns, and,
to the extent expressed herein, for the benefit of persons controlling any of
the Underwriters, or the Company, and directors and officers of the Company,
and their respective successors and assigns, and no other person shall acquire
or have any right under or by virtue of this Agreement. The term "successors
and assigns" shall not include any purchaser of Shares from any Underwriter
merely because of such purchase.
All notices and communications hereunder shall be in
writing and mailed or delivered or by telephone or telegraph if subsequently
confirmed in writing, (a) if to the Representative, at the address set forth
above, (b) if to the Company, to its agent for service as such agent's address
appears on the cover page of the Registration Statement, and (c) if to the
Selling Shareholders, in care of the Company.
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This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas without regard to principles of
conflict of laws.
This Agreement may be signed in any number of counterparts,
each of which shall be an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument.
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Please confirm that the foregoing correctly sets forth the
agreement among us.
Very truly yours,
VIAGRAFIX CORPORATION
By
----------------------------
Title:
Selling Shareholders:
GEOCAPITAL III, L.P.
By
----------------------------
General Partner
----------------------------
Xxxxxxx X. Xxxxxxx
----------------------------
Xxxxxx X. Xxxxxxx
Confirmed:
SOUTHWEST SECURITIES, INC.
Acting severally on behalf of itself
and as representative of the several
Underwriters named in Schedule I annexed
hereto.
SOUTHWEST SECURITIES, INC.
By
----------------------------
Title:
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SCHEDULE I
Number of
Firm Shares to
Name Be Purchased
---- --------------
---------
Total 2,200,000
=========
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SCHEDULE II
Number of Number of
Selling Shareholders Shares Option Shares
Selling Shareholders To Be Sold To Be Sold
-------------------- --------------------------- -------------
Xxxxxxx X. Xxxxxxx 237,874 52.8% 174,441 52.8%
Xxxxxx X. Xxxxxxx 157,936 35.1% 115,820 35.1%
GeoCapital III, L.P. 54,190 12.0% 39,739 12.0%
------- -------
TOTAL 450,000 330,000
31
