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[PROOF DATED 2/25/98]
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 Selling Shareholders 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 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, and in no event later than the third business day
after the expiration of the option to purchase the Option Shares specified in
Section 1(b) of this Agreement) 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
"Custody 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 Custody 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. The obligations of the Selling Shareholders under this
Underwriting Agreement and the Custody Agreement shall not be terminated by
operation of law or the occurrence of any event, including the death or
incapacity of any of the Selling Shareholders, or the termination of any trust
or estate, and if any such event should occur before the delivery of the
Selling Shareholders Shares as provided in this Agreement, certificates for the
Selling Shareholders Shares shall be delivered by the Custodian as Custodian in
accordance with the terms and conditions of this Agreement and the Custody
Agreement as if such event had never occurred, regardless of whether or not the
Custodian shall have received notice of such event. The Custodian is authorized
to receive and acknowledge receipt of the proceeds of the 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
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"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 "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 AND THE SELLING
SHAREHOLDERS.
(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
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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 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
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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 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
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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
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 conflict with or result
in the
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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.
(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) 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.
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(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:
(i) The representations and warranties of the
Company contained in Section 4(a) hereof are true and correct; the Management
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
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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 Management Selling Shareholders are not prompted to sell the Selling
Shareholders Shares and Option Shares to be sold hereunder by them 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 Management 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 Custody
Agreement is a legal, valid and binding agreement of the Management Selling
Shareholders, enforceable against the Management 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 Custody 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 Management Selling Shareholders,
pursuant to the terms of any agreement, instrument or permit to which the
Management Selling Shareholders are a party or by which any of the Management
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 Management Selling Shareholders or
any of the Management Selling Shareholders' properties or assets. No permit of
or with any court or any public, governmental or regulatory agency or body
having jurisdiction over the Management Selling Shareholders or any of the
Management 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.
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(v) The Management 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 Management 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 Management Selling Shareholders have full right, power and
authority to sell, transfer and deliver such Selling Shareholders Shares; such
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 Management 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 Management Selling Shareholders any Shares to be sold hereunder and none
of the Management 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) Neither of the Management Selling
Shareholders has taken, nor will either of them 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
(Geocapital further represents that it is not involved in the business and
affairs of the Company, and the Underwriters understand and acknowledge that
Geocapital has made no independent investigation in connection with its
representations contained in this subsection 4(c)(i)).
(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.
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(iii) Each of this Agreement and the Custody
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 Custody 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.
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(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 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(e) 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
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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;
(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 (f) are to such documents as amended and supplemented at the date of
the letter.
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(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:
(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) This Agreement, including without limitation
the covenant of each of the Selling Shareholders contained in Section 6(B) of
this Agreement 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 executed and delivered by or on behalf of each of the Selling
Shareholders and constitutes the legal, valid and binding obligation of each
such Selling Shareholder enforceable against each such Selling Shareholder in
accordance with its terms, except (A) 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 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. The several
agreements of the holders of 64,738 shares of Common Stock in the aggregate
contained in certain stock option agreements evidencing options to purchase
Common Stock ("Stock Options") stating that for a period of 90 days from the
date of this Agreement they will not, without the Representative's prior
written consent, sell, offer for sale, or otherwise dispose of the Stock
Options or any shares of Common Stock owned by them and acquired pursuant to
the exercise of the Stock Options (such agreement, the "Stock Options
Lock-Ups") have been duly and validly delivered by each of such persons and
constitute 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 (other than waivers already obtained)
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
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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 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.
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(xii) 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.
(xiii) 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.
(xiv) 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.
(xv) 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.
(xvi) 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 representatives of the
Company, the Representative and 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
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of the foregoing, no facts have come to the attention of such counsel which
lead such counsel to 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
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430A(a)(3) under the 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 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
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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 90 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.
(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).
(ix) The Company will not waive, release or modify
the Stock Options Lock-Ups, or any of them, without the prior written consent
of the Representative.
(B) Each of the Selling Shareholders covenants and agrees
with each of the Underwriters that:
(i) during the period of 180 days from the date
of this Agreement (the "Lock-Up Period"), the Selling Shareholder will not
offer to sell, contract to sell or otherwise sell, dispose of, loan, pledge or
grant any rights with respect to (collectively, a "Disposition") any shares
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of Common Stock, any options or warrants to purchase any shares of Common Stock
or any securities convertible into or exchangeable for shares of Common Stock
(collectively "Securities"), now owned or hereafter acquired by the Selling
Shareholder, directly or indirectly, or with respect to which the Selling
Shareholder has or hereafter acquires the power of disposition, directly or
indirectly; other than (a) as a bona fide gift or gifts, provided the donee or
donees thereof agree to be bound by the terms of this Section 6(B)(i), (b) in
the case of Geocapital, as a distribution to the limited partners of
Geocapital, provided that the distributees agree in writing to be bound by the
terms of this Section 6(B)(i), or (c) with the prior written consent of the
Representative. The Selling Shareholder acknowledges that the foregoing
restriction is expressly agreed to preclude the Selling Shareholder from
engaging in any hedging or other transaction which is designed to or reasonably
expected to lead to or result in a Disposition of Securities during the Lock-Up
Period, even if such Securities would be disposed of by someone other than the
Selling Shareholder. Such prohibited hedging or other transactions would
include, without limitation, any short sale (whether or not against the box) or
any purchase, sale or grant of any right (including, without limitation, any
put or call option) with respect to any Securities or with respect to any
security (other than a broad-based market basket or index) that includes,
relates to or derives any significant part of its value from Securities.
(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
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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. Each of the Selling Shareholders agrees to
reimburse the Company for a pro rata (determined in accordance with the number
of shares of Common Stock sold by each of the Selling Shareholders and the
Company) portion of all such costs (less $50,000 in the aggregate) promptly
after request therefor by the Company. Subject to the provisions of Section 9,
the Underwriters agree to 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
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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.
(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,
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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 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, asset 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
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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
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 anytime
(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
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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
(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
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(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. 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, asset 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% 15,820 35.1%
GeoCapital III, L.P. 54,190 12.0% 39,739 12.0%
-------- --------
TOTAL 450,000 330,000
