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Proc-Type: 2001,MIC-CLEAR
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<SEC-DOCUMENT>0000950129-04-002904.txt : 20040506
<SEC-HEADER>0000950129-04-002904.hdr.sgml : 20040506
<ACCEPTANCE-DATETIME>20040506162345
ACCESSION NUMBER: 0000950129-04-002904
CONFORMED SUBMISSION TYPE: S-2/A
PUBLIC DOCUMENT COUNT: 5
FILED AS OF DATE: 20040506
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: I SECTOR CORP
CENTRAL INDEX KEY: 0001020017
STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-COMPUTER & PERIPHERAL EQUIPMENT & SOFTWARE [5045]
IRS NUMBER: 760515249
STATE OF INCORPORATION: DE
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: S-2/A
SEC ACT: 1933 Act
SEC FILE NUMBER: 333-113575
FILM NUMBER: 04785484
BUSINESS ADDRESS:
STREET 1: 6401 SOUTHWEST FREEWAY
CITY: HOUSTON
STATE: TX
ZIP: 77074
BUSINESS PHONE: 7137952000
MAIL ADDRESS:
STREET 1: 6401 SOUTHWEST FREEWAY
CITY: HOUSTON
STATE: TX
ZIP: 77074
FORMER COMPANY:
FORMER CONFORMED NAME: ALLSTAR SYSTEMS INC
DATE OF NAME CHANGE: 19960730
</SEC-HEADER>
<DOCUMENT>
<TYPE>EX-1.1
<SEQUENCE>2
<FILENAME>h13383a3exv1w1.txt
<DESCRIPTION>FORM OF UNDERWRITING AGREEMENT
<TEXT>
<PAGE>
EXHIBIT 1.1
500,000 Units
I-Sector Corporation
UNDERWRITING AGREEMENT
May ___, 2004
Paulson Investment Company, Inc.
As Representative of the
Several Underwriters
811 SW Naito Parkway, Suite 200
Portland, Oregon 97204
Ladies and Gentlemen:
I-Sector Corporation, a Delaware corporation (the "Company"), proposes
to sell to the several underwriters (the "Underwriters") named in Schedule I
hereto for whom you are acting as Representative (the "Representative") an
aggregate of 500,000 Units (the "Firm Units"). Each Unit will consist of two
shares (individually, a "Share" and, collectively, the "Shares") of the common
stock, par value $0.01 of the Company ("Common Stock") and one warrant
(individually, a "Warrant" and, collectively, the "Warrants") each to purchase
one share of Common Stock. The Warrants are to be issued under the terms of a
Warrant Agreement (the "Warrant Agreement") by and between the Company and
American Stock Transfer & Trust Company, as warrant agent (the "Warrant Agent"),
in each case substantially in the form most recently filed as an exhibit to the
Registration Statement (hereinafter defined). The respective number of the Firm
Units to be so purchased by the several Underwriters are set forth opposite
their names in Schedule I hereto. The Company also proposes to grant to the
Representative an option to purchase in aggregate of up to 75,000 additional
Units, identical to the Firm Units (the "Option Units"), as set forth below. The
Firm Units and the Option Units (to the extent the aforementioned option is
exercised) are herein collectively referred to as the "Units."
As the Representative, you have advised the Company (a) that you are
authorized to enter into this Agreement for yourself as Representative and on
behalf of the several Underwriters, and (b) that the several Underwriters are
willing, acting severally and not jointly, to purchase the numbers of Firm Units
set forth opposite their respective names in Schedule I.
In consideration of the mutual agreements contained herein and of the
interests of the parties in the transactions contemplated hereby, the parties
hereto agree as follows:
<PAGE>
1. Representations and Warranties of the Company. The Company
represents and warrants to each of the Underwriters as follows:
(a) A registration statement on Form S-2 (File No.
333-113575) with respect to the Units has been prepared by the Company in
conformity with the requirements of the Securities Act of 1933, as amended (the
"Act"), and the Rules and Regulations (the "Rules and Regulations") of the
Securities and Exchange Commission (the "Commission") thereunder and has been
filed with the Commission. Copies of such registration statement, including any
amendments thereto, the preliminary prospectuses (meeting the requirements of
the Rules and Regulations) contained therein and the exhibits, financial
statements and schedules, as finally amended and revised, have heretofore been
delivered by the Company to you. Such registration statement, together with any
registration statement filed by the Company pursuant to Rule 462(b) of the Act,
herein referred to as the "Registration Statement," which shall be deemed to
include all information omitted therefrom in reliance upon Rule 430A and
contained in the Prospectus referred to below, has become effective under the
Act and no post-effective amendment to the Registration Statement has been filed
as of the date of this Agreement. "Prospectus" means (i) the form of prospectus
first filed with the Commission pursuant to Rule 424(b) or, if no such
prospectus is filed pursuant to such rule, (ii) the last preliminary prospectus
included in the Registration Statement filed prior to the time it becomes
effective or filed pursuant to Rule 424(a) under the Act that is delivered by
the Company to the Underwriters for delivery to purchasers of the Units,
together with the term sheet or abbreviated term sheet filed with the Commission
pursuant to Rule 424(b)(7) under the Act. Each preliminary prospectus included
in the Registration Statement prior to the time it becomes effective is herein
referred to as a "Preliminary Prospectus."
(b) The Company has been duly organized and is validly
existing as a corporation in good standing under the laws of the State of
Delaware, with corporate power and authority to own or lease its properties and
conduct its business as described in the Registration Statement. Except as
described in the Registration Statement, the Company does not own a controlling
interest in any other corporation or other business entity that has any material
assets, liabilities or operations. Each entity that the Registration Statement
discloses as being controlled by the Company (each a "Subsidiary" and,
collectively, the "Subsidiaries") has been duly organized and is validly
existing under the laws of its jurisdiction of organization and has the
necessary legal power and authority to own or lease its properties and to
conduct its business as described in the Registration Statement. The Company and
each Subsidiary is duly qualified to transact business in all jurisdictions in
which the conduct of its business requires such qualification, except where the
failure to be so qualified would not have a material adverse effect on the
condition (financial or otherwise), results of operations, business or prospects
of the Company and its Subsidiaries taken as a whole (a "Material Adverse
Effect").
(c) The outstanding shares of each class or series of
capital stock or other equity interests of the Company and each Subsidiary have
been duly authorized and validly issued and are fully paid and non-assessable
and, except as disclosed in the Registration Statement, have been issued and
sold by the Company or the Subsidiary in compliance in all material respects
with applicable securities laws; the issuance and sale of the Units have been
duly authorized by all necessary corporate action and, when issued and paid for
as contemplated herein, the Units will be validly issued, fully paid and
non-assessable; and no preemptive rights
2
<PAGE>
of shareholders exist with respect to any security of the Company or the issue
and sale thereof. Except as set forth in the Registration Statement, neither the
filing of the Registration Statement nor the offering or sale of the Units as
contemplated by this Agreement gives rise to any rights, other than those which
have been waived or satisfied, for or relating to the registration of any shares
of Common Stock or other securities of the Company. The Company has duly and
validly reserved, out of its authorized and unissued Common Stock, for issuance
upon exercise of Warrants a number of shares sufficient for such purposes,
including Warrants included in the Option Units and Units obtainable on exercise
of the Representative's Warrants issuable as described in Section 2(d) (the
"Representative's Warrants").
(d) The information set forth under the caption
"Capitalization" in the Prospectus is true and correct. The Common Stock
conforms and the Units, the Warrants and the Representative's Warrants will
conform to the description thereof contained in the Registration Statement in
all material respects. The forms of certificates for the Units, the Common
Stock, the Warrants and the Representative's Warrants conform to the
requirements of the General Corporation Law of Delaware in all material
respects.
(e) The Commission has not issued an order preventing or
suspending the use of any Prospectus relating to the proposed offering of the
Units nor instituted proceedings for that purpose. The Registration Statement
contains, and the Prospectus and any amendments or supplements thereto will
contain, all statements that are required to be stated therein by the Company
and will conform to the requirements of the Act and the Rules and Regulations.
The Registration Statement and any amendment thereto do not contain, and will
not contain, any untrue statement of a material fact and do not omit, and will
not omit, to state any material fact required to be stated therein or necessary
to make the statements therein not misleading. The Prospectus, including any
amendments and supplements thereto, do not contain, and will not contain, any
untrue statement of material fact; and do not omit, and will not omit, to state
any material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided, however, that the Company makes no
representations or warranties as to information contained in or omitted from the
Registration Statement or the Prospectus, or any such amendment or supplement,
in reliance upon, and in conformity with, written information furnished to the
Company by or on behalf of any Underwriter through the Representative,
specifically for use in the preparation thereof.
(f) The consolidated financial statements of the Company,
together with related notes and schedules as set forth in the Registration
Statement, present fairly the consolidated financial position and the results of
operations and cash flows of the Company and its consolidated subsidiaries at
the indicated dates and for the indicated periods. The impact of each material
accounting judgment made in the preparation of the financial statements included
in the Registration Statement has been fairly and adequately disclosed in the
notes thereto or elsewhere in the Registration Statement. Such financial
statements and related schedules have been prepared in accordance with generally
accepted principles of accounting, consistently applied throughout the periods
involved, except as disclosed in the Registration Statement, and all adjustments
necessary for a fair presentation of results for such periods have been made.
The summary financial and statistical data of the Company included in the
Registration Statement presents fairly the information shown therein and such
data has been compiled on a basis
3
<PAGE>
consistent with the financial statements presented therein and the books and
records of the Company.
(g) Grant Thornton LLP and Deloitte & Touche LLP, who
have certified certain of the financial statements filed with the Commission as
part of the Registration Statement, are each independent public accountants as
required by the Act and the Rules and Regulations.
(h) There is no action, suit, claim or proceeding pending
or, to the knowledge of the Company, threatened against the Company or any
Subsidiary before any court or administrative agency or otherwise which if
determined adversely to the Company or such Subsidiary might result in a
Material Adverse Effect or prevent the consummation of the transactions
contemplated hereby, except as set forth in the Registration Statement.
(i) The Company and each Subsidiary either has or has
disposed of in the ordinary course of business since December 31, 2003 good and
marketable title to all of its properties and assets, tangible and intangible,
reflected in the consolidated balance sheet of the Company and its consolidated
Subsidiaries as of that date that is a part of the financial statements included
in the Registration Statement, and has good and marketable title to all other
property described in the Registration Statement as owned by the Company or a
Subsidiary, subject to no lien, mortgage, pledge, charge or encumbrance of any
kind except those reflected in such financial statements (or as described in the
Registration Statement) or which are not material. All of the leases and
subleases under which the Company or any Subsidiary holds properties are in full
force and effect (with only such exceptions as are commonly accepted by prudent
companies engaged in the business of the Company or such Subsidiary) and neither
the Company nor any Subsidiary has received notice of any claim that is
materially adverse to rights of the Company or any Subsidiary under any of such
leases or subleases.
(j) The Company, for itself and its Subsidiaries that
have been consolidated for tax purposes, has filed all federal, state, local and
foreign income tax returns which have been required to be filed (or have valid
extensions for filing thereof) and has paid all taxes indicated by said returns
and all assessments received by it to the extent that such taxes have become due
and are not being contested in good faith. All tax liabilities have been
adequately provided for in the financial statements of the Company. Except as
described in the Registration Statement, all of the Subsidiaries are
consolidated with the Company for tax purposes.
(k) Since the respective dates as of which information is
given in the Registration Statement, as it may have been amended or
supplemented, there has not been any change or any development involving a
prospective Material Adverse Effect whether or not occurring in the ordinary
course of business; and there has not been any material transaction entered into
or any material transaction that is probable of being entered into by the
Company or any Subsidiary, other than transactions in the ordinary course of
business and changes and transactions described in the Registration Statement,
as it may be amended or supplemented. Neither the Company nor any Subsidiary has
any material contingent obligations which are not disclosed in the Company's
financial statements included in the Registration Statement or elsewhere in the
Prospectus.
4
<PAGE>
(l) Neither the Company nor any Subsidiary is, nor, with
the giving of notice or lapse of time or both, will any such entity be, in
violation of or in default under its Certificate of Incorporation or Bylaws or
other charter documents or under any agreement, lease, contract, indenture or
other instrument or obligation to which it is a party or by which it, or any of
its properties, is bound and which default would have Material Adverse Effect.
The execution and delivery of this Agreement and the consummation of the
transactions herein contemplated and the fulfillment of the terms hereof will
not conflict with or result in a breach of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of trust or other
agreement or instrument to which any member of the Company is a party, or of the
Certificate of Incorporation or Bylaws of the Company or any order, rule or
regulation applicable to the Company of any court or of any regulatory body or
administrative agency or other governmental body having jurisdiction.
(m) Each approval, consent, order, authorization,
designation, declaration or filing by or with any regulatory, administrative or
other governmental body necessary in connection with the execution and delivery
by the Company of this Agreement and the consummation of the transactions herein
contemplated (except such additional steps as may be required by the Commission,
the National Association of Securities Dealers, Inc. (the "NASD") or such
additional steps as may be necessary to qualify the Units for public offering by
the Underwriters under state securities or Blue Sky laws) has been obtained or
made and is in full force and effect.
(n) The Company or a Subsidiary holds all material
patents, patent rights trademarks, trade names, copyrights, trade secrets and
licenses of any of the foregoing (collectively, "Intellectual Property Rights")
that are necessary to the conduct of its businesses; there is no claim pending
or, to the best knowledge of the Company, threatened against the Company or any
Subsidiary or any of their respective officers, directors or employees alleging
any infringement of Intellectual Property Rights, or any violation of the terms
of any license relating to Intellectual Property Rights, nor does the Company
know of any basis for any such claim. The Company knows of no material
infringement by others of Intellectual Property Rights owned by or licensed to
the Company or a Subsidiary. The Company or a Subsidiary has obtained, is in
compliance in all material respect with and maintains in full force and effect
all material licenses, certificates, permits, orders or other, similar
authorizations granted or issued by any governmental agency (collectively
"Government Permits") required to conduct its business as it is presently
conducted. No proceeding to revoke, limit or otherwise materially change any
Government Permit has been commenced or, to the Company's knowledge, is
threatened against the Company or any Subsidiary, and the Company has no reason
to anticipate that any such proceeding will be commenced against the Company or
any Subsidiary. Except as disclosed or contemplated in the Prospectus, the
Company has no reason to believe that any pending application for a Government
Permit will be denied or limited in a manner inconsistent with the Company's
business plan as described in the Prospectus.
(o) The Company and each Subsidiary is in all material
respects in compliance with all applicable Environmental Laws. The Company has
no knowledge of any past, present or, as anticipated by the Company, future
events, conditions, activities, investigation, studies, plans or proposals that
(i) would interfere with or prevent compliance with any Environmental Law by the
Company or any Subsidiary in all material respects, or (ii) could
5
<PAGE>
reasonably be expected to give rise to any common law or other liability, or
otherwise form the basis of a claim, action, suit, proceeding, hearing or
investigation, involving the Company or any Subsidiary and related to Hazardous
Substances or Environmental Laws that could reasonably be expected to have a
Material Adverse Effect. Except for the prudent and safe use and management of
Hazardous Substances in the ordinary course of the Company's business, (i) no
Hazardous Substance is or has been used, treated, stored, generated,
manufactured or otherwise handled on or at any Facility and (ii) to the
Company's best knowledge, no Hazardous Substance has otherwise come to be
located in, on or under any Facility. No Hazardous Substances are stored at any
Facility except in quantities necessary to satisfy the reasonably anticipated
use or consumption by the Company. No litigation, claim, proceeding or
governmental investigation is pending regarding any environmental matter for
which the Company or any Subsidiary has been served or otherwise notified or, to
the knowledge of the Company, threatened or asserted against the Company or any
Subsidiary, or the officers or directors of the Company or any Subsidiary in
their capacities as such, or any Facility or the Company's business. There are
no orders, judgments or decrees of any court or of any governmental agency or
instrumentality under any Environmental Law which specifically apply to the
Company or any Subsidiary, any Facility (to the knowledge of the Company with
respect to any Facility) or any of the Company's or any Subsidiary's operations.
Neither the Company nor any Subsidiary has received from a governmental
authority or other person (i) any notice that it is a potentially responsible
person for any Contaminated site or (ii) any request for information about a
site alleged to be Contaminated or regarding the disposal of Hazardous
Substances. There is no litigation or proceeding against any other person by the
Company or any Subsidiary regarding any environmental matter. The Company has
disclosed in the Prospectus or made available to the Underwriters and their
counsel true, complete and correct copies of any reports, studies,
investigations, audits, analyses, tests or monitoring in the possession of or
initiated by the Company or any Subsidiary pertaining to any environmental
matter relating to the Company, any Subsidiary, their past or present operations
or any Facility.
For the purposes of the foregoing paragraph, "Environmental Laws" means
any applicable federal, state or local statute, regulation, code, rule,
ordinance, order, judgment, decree, injunction or common law pertaining in any
way to the protection of human health or the environment, including, without
limitation, the Resource Conservation and Recovery Act, the Comprehensive
Environmental Response, Compensation and Liability Act, the Toxic Substances
Control Act, the Clean Air Act, the Federal Water Pollution Control Act and any
similar or comparable state or local law; "Hazardous Substance" means any
hazardous, toxic, radioactive or infectious substance, material or waste as
defined, listed or regulated under any Environmental Law; "Contaminated" means
the actual existence on or under any real property of Hazardous Substances, if
the existence of such Hazardous Substances triggers a requirement to perform any
investigatory, remedial, removal or other response action under any
Environmental Laws or if such response action legally could be required by any
governmental authority; "Facility" means any property currently owned, leased or
occupied by the Company.
(p) Neither the Company, nor to the Company's knowledge,
any of its affiliates, has taken or intends to take, directly or indirectly, any
action which is designed to cause or result in, or which constitutes or might
reasonably be expected to constitute, the stabilization or manipulation of the
price of the shares of Common Stock or the Warrants to facilitate the sale or
resale of the Units.
6
<PAGE>
(q) The Company is not an "investment company" within the
meaning of such term under the Investment Company Act of 1940 and the rules and
regulations of the Commission thereunder.
(r) The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurances that (i) transactions are
executed in accordance with management's general or specific authorization; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain accountability for assets; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences. The Company has adopted Disclosure Controls and Procedures, as
defined in Section 13a-14(c) of the rules and regulations adopted under the
Securities Exchange Act of 1934, as amended, (the "Exchange Act") and has
implemented such procedures as adopted and has evaluated the effectiveness of
such Disclosure Controls and Procedures not less than ninety days prior to the
filing date of each report on Form 10-Q or Form 10-K filed by the Company since
August 29, 2002.
(s) The Company and each Subsidiary carries, or is
covered by, insurance in such amounts and covering such risks as is adequate for
the conduct of their respective businesses and the value of their respective
properties and as is customary for companies engaged in similar industries.
(t) The Company and each Subsidiary is in compliance in
all material respects with all presently applicable provisions of the Employee
Retirement Income Security Act of 1974, as amended, including the regulations
and published interpretations thereunder ("ERISA"); no "reportable event" (as
defined in ERISA) has occurred with respect to any "pension plan" (as defined in
ERISA) for which the Company or any Subsidiary would have any liability; neither
the Company nor any Subsidiary has incurred and the Company does not expect that
it or any Subsidiary will incur liability under (i) Title IV of ERISA with
respect to termination of, or withdrawal from, any "pension plan" or (ii)
Sections 412 or 4971 of the Internal Revenue Code of 1986, as amended, including
the regulations and published interpretations thereunder (the "Code"); and each
"pension plan" for which the Company or any Subsidiary would have any liability
that is intended to be qualified under Section 401(a) of the Code is so
qualified in all material respects and nothing has occurred, whether by action
or by failure to act, which would cause the loss of such qualification.
(u) The Company and each Subsidiary is in compliance with
all laws, rules, regulations, orders of any court or administrative agency,
operating licenses or other requirements imposed by any governmental body
applicable to it, including, without limitation, all applicable laws, rules,
regulations, licenses or other governmental standards applicable to its business
except for matters of non-compliance that would not have a Material Adverse
Effect; and the conduct of the business of the Company and each Subsidiary, as
described in the Prospectus, will not cause the Company or such Subsidiary to be
in violation of any such presently existing requirements.
7
<PAGE>
(v) Each of the Warrants and the Representative's
Warrants have been authorized for issuance to the purchasers thereof or to the
Representative or its designees, as the case may be, and will, when issued,
possess rights, privileges, and characteristics as represented in the most
recent form of Warrant Agreement or Representative's Warrants, as the case may
be, filed as an exhibit to the Registration Statement; the securities to be
issued upon exercise of the Warrants and the Representative's Warrants, when
issued and delivered against payment therefor in accordance with the terms
thereof, will be duly and validly issued, fully paid, nonassessable and free of
preemptive rights, and all corporate action required to be taken for the
authorization and issuance of the Warrants and the Representative's Warrants,
and the securities to be issued upon their exercise, have been validly and
sufficiently taken. The execution by the Company of the Warrant Agreement and
the Representative's Warrants has been duly authorized by all required action of
the Company and, when so executed and delivered (and assuming due and valid
execution by the Warrant Agent, in the case of the Warrant Agreement) will
constitute the valid and binding obligations of the Company, enforceable against
the Company in accordance with their respective terms, subject, as to
enforcement, to bankruptcy, insolvency, reorganization and other laws of general
applicability relating to or affecting creditors' rights and to general
principles of equity and limitations on the remedy of specific performance.
(w) Except as disclosed in the Prospectus, neither the
Company nor any of its officers, directors or affiliates have caused any person,
other than the Underwriters and Gary Cohee, to be entitled to reimbursement of
any kind, including, without limitation, any compensation that would be
includable as underwriter compensation under the NASD's Corporate Financing Rule
with respect to the offering of the Units, as a result of the consummation of
such offering based on any activity of such person as a finder, agent, broker,
investment adviser or other financial service provider.
(x) Except as described in the Prospectus, the Company
does not directly or indirectly control or have a material interest in any other
business entity.
(y) The Common Stock is traded on the American Stock
Exchange ("AMEX"). The Units, the Common Stock and the Warrants have been
approved for listing on the AMEX upon the effectiveness of the Registration
Statement and the Company has satisfied all of the requirements of AMEX for such
listing and for the trading of its Common Stock, Units and Warrants on AMEX.
(z) The Company has adopted organizational structures and
policies sufficient to comply with the requirements of the AMEX corporate
governance rules in effect as of the date hereof (the "AMEX Corporate Governance
Rules"). Without limiting the generality of the foregoing, the Company's Board
of Directors has validly appointed an Audit Committee and a Compensation
Committee whose composition satisfies the requirements of the AMEX Corporate
Governance Rules. The Board of Directors and/or the Audit Committee or
Compensation Committee, as the case may be, has adopted a charter governing the
respective activities of the Audit and Compensation Committees that satisfies
the requirements of the AMEX Corporate Governance Rules. The Audit Committee and
the Compensation Committee have each acted in accordance with the provisions of
their respective charters, as amended from time to time in all material
respects.
8
<PAGE>
(aa) Neither the Board of Directors nor the Audit
Committee has been informed, nor is any director of the Company aware, of (i)
any significant deficiencies in the design or operation of the Company's
internal controls which could adversely affect the Company's ability to record,
process, summarize and report financial data or any material weakness in the
Company's internal controls, except for the internal control deficiencies
disclosed under the heading "Controls and Procedures" in the Registration
Statement; or (ii) any fraud, whether or not material, that involves management
or other employees of the Company who have a significant role in the Company's
internal controls.
(bb) Each of the certifications made by the principal
executive and principal financial officers of the Company pursuant to Section
302 of the Sarbanes-Oxley Act of 2002 and the rules and regulations adopted
thereunder was correct in all material respects when made.
2. Purchase, Sale and Delivery of the Units.
(a) On the basis of the representations, warranties and
covenants herein contained, and subject to the conditions herein set forth, the
Company agrees to sell to the Underwriters and each Underwriter agrees,
severally and not jointly, to purchase, at a price of $____ per Unit, the number
of Firm Units set forth opposite the name of each Underwriter in Schedule I
hereof, subject to adjustments in accordance with Section 9 hereof.
(b) Payment for the Firm Units to be sold hereunder is to
be made in New York Clearing House funds and, at the option of the
Representative, by bank wire to an account specified by the Company, certified
or bank cashier's checks drawn to the order of the Company, against either
uncertificated delivery of Firm Units or of certificates therefor (which
delivery, if certificated, shall take place in such location in New York, New
York as may be specified by the Representative) to the Representative for the
several accounts of the Underwriters. Such payment is to be made at the offices
of the Representative at the address set forth on the first page of this
agreement, at 7:00 a.m., Pacific time, on the third business day after the date
of this Agreement or at such other time and date not later than five business
days thereafter as you and the Company shall agree upon, such time and date
being herein referred to as the "Closing Date." (As used herein, "business day"
means a day on which the New York Stock Exchange is open for trading and on
which banks in New York are open for business and not permitted by law or
executive order to be closed.) Except to the extent uncertificated Firm Units
are delivered at closing, the certificates for the Firm Units will be delivered
in such denominations and in such registrations as the Representative requests
in writing not later than the second full business day prior to the Closing
Date, and will be made available for inspection by the Representative at least
one business day prior to the Closing Date.
(c) In addition, on the basis of the representations and
warranties herein contained and subject to the terms and conditions herein set
forth, the Company hereby grants an option to the Underwriters to purchase the
Option Units at the price per Unit as set forth in Section 2(a). The option
granted hereby may be exercised in whole or in part by giving written notice (i)
at any time before the Closing Date and (ii) only once thereafter within 45 days
after the date of this Agreement, by the Representative to the Company setting
forth the number of Option Units as to which the Underwriters are exercising the
option, the names and denominations in which the Option Units are to be
registered and the time and date at which
9
<PAGE>
certificates representing such Units are to be delivered. The time and date at
which certificates for Option Units are to be delivered shall be determined by
the Representative but shall not be earlier than three nor later than 10 full
business days after the exercise of such option, nor in any event prior to the
Closing Date (such time and date being herein referred to as the "Option Closing
Date"). If the date of exercise of the option is three or more days before the
Closing Date, the notice of exercise shall set the Closing Date as the Option
Closing Date. The option with respect to the Option Units granted hereunder may
be exercised only to cover over-allotments in the sale of the Firm Units by the
Underwriters. The Representative may cancel such option at any time prior to its
expiration by giving written notice of such cancellation to the Company. To the
extent, if any, that the option is exercised, payment for the Option Units shall
be made on the Option Closing Date in New York Clearing House funds and, at the
option of the Representative, by bank wire to an account specified by the
Company or certified or bank cashier's check drawn to the order of the Company
for the Option Units to be sold by the Company in consideration either of
uncertificated delivery of Option Units or delivery of certificates therefor
(which delivery, if certificated, shall take place in such location in New York,
New York as may be specified by the Representative) to the Representative for
the several accounts of the Underwriters. Except to the extent uncertificated
Option Units are delivered at closing, the certificates for the Option Units
will be delivered in such denominations and in such registrations as the
Representative requests in writing not later than the second full business day
prior to the Option Closing Date, and will be made available for inspection by
the Representative at least one business day prior to the Option Closing Date.
(d) In addition to the sums payable to the Representative
as provided elsewhere herein, the Representative shall be entitled to receive at
the Closing, for itself alone and not as Representative of the Underwriters, as
additional compensation for its services, Representative's Warrants for the
purchase of up to 50,000 Units at a price of $____ per Unit, upon the terms and
subject to adjustment and conversion as described in the form of
Representative's Warrants filed as an exhibit to the Registration Statement.
3. Offering by the Underwriters.
(a) It is understood that the several Underwriters are to
make a public offering of the Firm Units as soon as the Representative deems it
advisable to do so. The Firm Units are to be initially offered to the public at
the initial public offering price set forth in the Prospectus. The
Representative may from time to time thereafter change the public offering price
and other selling terms. To the extent, if at all, that any Option Units are
purchased pursuant to Section 2 hereof, the Representative will offer them to
the public on the foregoing terms.
(b) It is further understood that you will act as the
Representative for the Underwriters in the offering and sale of the Units in
accordance with an Agreement Among Underwriters entered into by you and the
several other Underwriters.
4. Covenants of the Company. The Company covenants and agrees
with the several Underwriters that:
(a) The Company will (i) use its best efforts to cause
the Registration Statement to become effective or, if the procedure in Rule 430A
of the Rules and Regulations is
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followed, to prepare and timely file with the Commission under Rule 424(b) of
the Rules and Regulations a Prospectus in a form approved by the Representative
containing information previously omitted at the time of effectiveness of the
Registration Statement in reliance on Rule 430A of the Rules and Regulations,
and (ii) not file any amendment to the Registration Statement or supplement to
the Prospectus of which the Representative shall not previously have been
advised and furnished with a copy or to which the Representative shall have
reasonably objected in writing or which is not in compliance with the Rules and
Regulations.
(b) The Company will advise the Representative promptly
(i) when the Registration Statement or any post-effective amendment thereto
shall have become effective, (ii) of receipt of any comments from the
Commission, (iii) of any request of the Commission for amendment of the
Registration Statement or for supplement to the Prospectus or for any additional
information, and (iv) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or the use of the
Prospectus or of the institution of any proceedings for that purpose. The
Company will use its best efforts to prevent the issuance of any such stop order
preventing or suspending the use of the Prospectus and to obtain as soon as
possible the lifting thereof, if issued.
(c) The Company will cooperate with the Representative in
endeavoring to qualify the Units for sale under the securities laws of such
jurisdictions as the Representative may reasonably have designated in writing
and will make such applications, file such documents, and furnish such
information as may be reasonably required for that purpose, provided the Company
shall not be required to qualify as a foreign corporation or to file a general
consent to service of process in any jurisdiction where it is not now so
qualified or required to file such a consent. The Company will, from time to
time, prepare and file such statements, reports, and other documents, as are or
may be required to continue such qualifications in effect for so long a period
as the Representative may reasonably request for distribution of the Units.
(d) The Company will deliver to, or upon the order of,
the Representative, from time to time, as many copies of any Preliminary
Prospectus as the Representative may reasonably request. The Company will
deliver to, or upon the order of, the Representative during the period when
delivery of a Prospectus is required under the Act, as many copies of the
Prospectus in final form, or as thereafter amended or supplemented, as the
Representative may reasonably request. The Company will deliver to the
Representative at or before the Closing Date, four signed copies of the
Registration Statement and all amendments thereto including all exhibits filed
therewith, and will deliver to the Representative such number of copies of the
Registration Statement (including such number of copies of the exhibits filed
therewith that may reasonably be requested), and of all amendments thereto, as
the Representative may reasonably request.
(e) The Company will comply with the Act and the Rules
and Regulations, and the Exchange Act, and the rules and regulations of the
Commission thereunder, so as to permit the completion of the distribution of the
Units as contemplated in this Agreement and the Prospectus. If during the period
in which a prospectus is required by law to be delivered by an Underwriter or
dealer, any event shall occur as a result of which, in the judgment of the
Company or in the reasonable opinion of counsel to the Underwriters, it becomes
necessary to amend or supplement the Prospectus in order to make the statements
therein, in the light of the
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circumstances existing at the time the Prospectus is delivered to a purchaser,
not misleading, or, if it is necessary at any time to amend or supplement the
Prospectus to comply with any law, the Company promptly will prepare and file
with the Commission an appropriate amendment to the Registration Statement or
supplement to the Prospectus so that the Prospectus as so amended or
supplemented will not, in the light of the circumstances existing at the time
the Prospectus is so delivered, be misleading, or so that the Prospectus will
comply with the law.
(f) The Company will make generally available to its
security holders, as soon as it is practicable to do so, but in any event not
later than 15 months after the effective date of the Registration Statement, an
earnings statement (which need not be audited) in reasonable detail, covering a
period of at least 12 consecutive months beginning after the effective date of
the Registration Statement, which earnings statement shall satisfy the
requirements of Section 11(a) of the Act and Rule 158 of the Rules and
Regulations and will advise you in writing when such statement has been so made
available.
(g) The Company will, for a period of five years from the
Closing Date, deliver to the Representative copies of annual reports and copies
of all other documents, reports and information furnished by the Company to its
stockholders or filed with any securities exchange pursuant to the requirements
of such exchange or with the Commission pursuant to the Act or the Exchange Act;
provided, however, the Company is not required to deliver documents that have
been filed with the Commission and are generally available to the public in
electronic format. The Company will deliver to the Representative similar
reports with respect to significant subsidiaries, as that term is defined in the
Rules and Regulations, which are not consolidated in the Company's financial
statements.
(h) The Company will make no offering, sale, short sale
or other disposition of any shares of Common Stock of the Company or other
securities convertible into or exchangeable or exercisable for shares of Common
Stock or derivatives of Common Stock (or agreement therefor), directly or
indirectly, for a period of ninety days after the date of this Agreement
otherwise than hereunder, or pursuant to contractual obligations existing on the
date hereof or pursuant to employee benefit plans in effect on the date hereof,
or with the prior written consent of the Representative, which consent will not
be unreasonably withheld, delayed or conditioned.
(i) The Company will use its best efforts to list,
subject to notice of issuance of the Units, the Common Stock and the Warrants on
the AMEX and to cause such listing to remain in effect with respect to each such
security unless and until (i) such security expires; (ii) such security is
listed on another exchange or automated quotation system of at least comparable
reputation; or (iii) the Company is no longer required to file reports under
Section 12 of the Exchange Act.
(j) The Company has caused each officer and director to
furnish to you, on or prior to the date of this agreement, a letter or letters,
in form and substance satisfactory to the Underwriters ("Lockup Agreements"),
pursuant to which each such person has agreed not to offer, sell, sell short or
otherwise dispose of any shares of Common Stock or other capital stock
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<PAGE>
of the Company, or any other securities convertible, exchangeable or exercisable
for Common Stock or derivatives of Common Stock owned by such person or request
the registration for the offer or sale of any of the foregoing (or as to which
such person has the right to direct the disposition) for a period of ninety days
after the date of this Agreement, directly or indirectly, except with the prior
written consent of the Representative.
(k) The Company shall apply the net proceeds of its sale
of the Units as set forth in the Prospectus and shall file such reports with the
Commission with respect to the sale of the Units and the application of the
proceeds therefrom as may be required in accordance with Rule 463 under the Act.
(l) The Company shall not invest, or otherwise use the
proceeds received by the Company from its sale of the Units in such a manner as
would require the Company to register as an investment company under the
Investment Company Act of 1940, as amended (the "1940 Act").
(m) The Company will maintain a transfer agent and, if
necessary under the jurisdiction of incorporation of the Company, a registrar
for the Common Stock, and shall comply with the provisions of the Warrant
Agreement with respect to the appointment and maintenance of a Warrant Agent for
the Warrants.
(n) The Company will not take, directly or indirectly,
any action designed to cause or result in, or that has constituted or might
reasonably be expected to constitute, the stabilization or manipulation of the
price of any securities of the Company.
5. Costs and Expenses.
(a) The Representative shall be entitled to reimbursement
from the Company, for itself alone and not as Representative of the
Underwriters, to a non-accountable expense allowance equal to 2% of the
aggregate initial public offering price of the Firm Units and any Option Units
purchased by the Underwriters. The Representative shall be entitled to withhold
this allowance (less any portion of the allowance prepaid by the Company) on the
Closing Date related to the purchase of the Firm Units or the Option Units, as
the case may be.
(b) In addition to the payment described in Paragraph (a)
of this Section 5, the Company will pay all costs, expenses and fees incident to
the performance of the obligations of the Company under this Agreement,
including, without limitation, the following: accounting fees of the Company;
the fees and disbursements of counsel for the Company; the cost of printing and
delivering to, or as requested by, the Underwriters copies of the Registration
Statement, Preliminary Prospectuses, and the Prospectus; the AMEX additional
listing application; the costs of due diligence investigation of the principals
of the Company; the filing fees of the Commission; the filing fees and expenses
of the underwriting terms and arrangements; any AMEX listing fee; and the
expenses incurred in connection with the qualification of the Units under state
securities or Blue Sky laws. Any transfer taxes imposed on the sale of the Units
to the several Underwriters will be paid by the Company. The Company agrees to
pay all costs and expenses of the Underwriters, including the fees and
disbursements of counsel for the Underwriters, incident to the offer and sale of
directed Units by the Underwriters to employees
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and persons having business relationships with the Company. The Company shall
not, however, be required to pay for any of the Underwriters' expenses (other
than as described above) except that, if this Agreement shall not be
consummated, then the Company shall reimburse (less any advances paid to the
Underwriter or its counsel) the several Underwriters for accountable
out-of-pocket expenses up to $100,000, including fees and disbursements of
counsel, reasonably incurred in connection with investigating, marketing and
proposing to market the Units or in contemplation of performing their
obligations hereunder; but the Company shall not in any event be liable to any
of the several Underwriters for damages on account of loss of anticipated
profits from the sale by them of the Units.
6. Conditions of Obligations of the Underwriters. The several
obligations of the Underwriters to purchase the Firm Units on the Closing Date
and the Option Units, if any, on the Option Closing Date are subject to the
accuracy, as of the Closing Date or the Option Closing Date, as the case may be,
of the representations and warranties of the Company contained herein, and to
the performance by the Company of their covenants and obligations hereunder and
to the following additional conditions:
(a) The Registration Statement and all post-effective
amendments thereto shall have become effective and any and all filings required
by Rule 424 and Rule 430A of the Rules and Regulations shall have been made, and
any request of the Commission for additional information (to be included in the
Registration Statement or otherwise) shall have been disclosed to the
Representative and complied with to their reasonable satisfaction. No stop order
suspending the effectiveness of the Registration Statement, as amended from time
to time, shall have been issued and no proceedings for that purpose shall have
been taken or, to the knowledge of the Company, shall be contemplated by the
Commission and no injunction, restraining order, or order of any nature by a
Federal or state court of competent jurisdiction shall have been issued as of
the Closing Date which would prevent the issuance of the Units.
(b) The Representative shall have received on the Closing
Date or the Option Closing Date, as the case may be, the opinion of Porter &
Hedges, L.L.P., counsel for the Company, dated the Closing Date or the Option
Closing Date, as the case may be, addressed to the Underwriters (and stating
that it may be relied upon by counsel to the Underwriters) to the 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 Delaware, with corporate power and authority to own or lease its properties
and conduct its business as described in the Registration Statement.
(ii) Each Subsidiary has been duly organized and
is validly existing as a business entity in good standing under the laws of its
jurisdiction of formation with all requisite power and authority under the laws
governing such entities to own or lease its properties and conduct its business
as described in the Registration Statement.
(iii) The Company and each Subsidiary is duly
qualified to transact business in all jurisdictions identified to us by the
Company as those in which the conduct of its business requires such
qualification, except where the failure to qualify would not have a
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<PAGE>
Material Adverse Effect upon the business of the Company, and nothing has come
to our attention that causes us to believe that our reliance on the information
provided by the Company regarding the jurisdictions in which it conducts
business is not reasonable under the circumstances.
(iv) The Company has authorized capital stock as
set forth under the caption "Capitalization" in the Prospectus; the outstanding
shares of Common Stock have been duly authorized and validly issued and are
fully paid and non-assessable and conform to the description thereof contained
in the Prospectus in all material respects; the certificates for the Common
Stock, the Units and the Warrants are in due and proper form under the General
Corporation Law of Delaware; no preemptive rights of shareholders exist with
respect to the issuance or sale of Common Stock of the Company pursuant to any
applicable statute or the provisions of the Company's Certificate of
Incorporation or Bylaws or pursuant to any contractual obligation known to such
counsel. The Company's ownership interest of record in each Subsidiary is, in
all material respects, as described in the Registration Statement, and to the
knowledge of such counsel, the Company's ownership interest of record is
accurate.
(v) Except as described in or contemplated by
the Prospectus, to the knowledge of such counsel, there are no outstanding
securities of the Company convertible or exchangeable into or evidencing the
right to purchase or subscribe for any shares of capital stock of the Company
and there are no outstanding or authorized options, warrants or rights of any
character obligating the Company to issue any shares of its capital stock or any
securities convertible or exchangeable into or evidencing the right to purchase
or subscribe for any shares of such stock.
(vi) Except as described in the Prospectus, to
the knowledge of such counsel, no holder of any securities of the Company or any
other person has the contractual right, which has not been satisfied or
effectively waived, to cause the Company to sell or otherwise issue to them, or
to permit them to underwrite the sale of, any of the Units or the contractual
right to have any Common Stock or other securities of the Company included in
the Registration Statement or the right, as a result of the filing of the
Registration Statement, to require registration under the Act of any shares of
Common Stock or other securities of the Company.
(vii) The Warrant Agreement and the Warrants have
been duly authorized by the Company. When duly executed, authenticated, issued,
delivered and paid for as contemplated in the Registration Statement and the
Warrant Agreement, the Warrant Agreement and the Warrants will constitute
legally binding obligations of the Company, enforceable against it in accordance
with their terms and, in the case of the Warrants, entitled to the benefits of
the Warrant Agreement subject, as to enforcement, to bankruptcy, insolvency,
reorganization and other laws of general applicability relating to or affecting
creditors' rights and to general principles of equity and limitations on the
remedy of specific performance.
(viii) The shares of Common Stock initially
issuable upon exercise of the Warrants (including Warrants comprising the Option
Units and Warrants issuable on exercise of the Representative's Warrants) have
been duly authorized and reserved for issuance upon such conversion or exercise,
as the case may be, and, when issued upon such conversion or exercise in
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accordance with the terms of the Warrant Agreement will be validly issued, fully
paid and nonassessable.
(ix) The Representative's Warrants have been duly
authorized by the Company. When duly executed, issued and delivered as
contemplated in the Registration Statement, the Representative's Warrants will
constitute the legally binding obligation of the Company, enforceable against it
in accordance with its terms subject, as to enforcement, to bankruptcy,
insolvency, reorganization and other laws of general applicability relating to
or affecting creditors' rights and to general principles of equity and
limitations on the remedy of specific performance and provided, however, that
such counsel need not express an opinion as to the enforceability of the
indemnification provisions contained in section 7 of the Representative's
Warrants to the extent those provisions would require indemnity or contribution
toward the liability of a person for such person's own wrongful or negligent
acts or where indemnification or contribution would be contrary to public policy
or prohibited by law. (For purposes of this opinion, Porter & Hedges, L.L.P. may
assume that Oregon law is the same as Texas law.)
(x) The Registration Statement has become
effective under the Act and, to the knowledge of such counsel, no stop order
proceedings with respect thereto have been instituted or are pending or
threatened under the Act.
(xi) The Registration Statement, the Prospectus
and each amendment or supplement thereto comply as to form in all material
respects with the requirements of the Act and the applicable rules and
regulations thereunder (except that such counsel need express no opinion as to
the financial statements and related schedules or financial data therein).
(xii) The statements under the captions "Shares
Eligible for Future Sale" and "Description of Securities" in the Prospectus and
in Item 15 of the Registration Statement, insofar as such statements constitute
a summary of documents referred to therein or matters of law, fairly summarize
in all material respects the information called for with respect to such
documents under the published rules and regulations of the Commission.
(xiii) Such counsel does not know of any contracts
or documents required to be filed as exhibits to the Registration Statement or
described in the Registration Statement or the Prospectus which are not so filed
or described as required, and such contracts and documents as are summarized in
the Registration Statement or the Prospectus are fairly summarized in all
material respects.
(xiv) Such counsel knows of no legal or
governmental proceedings pending or threatened against the Company or any
Subsidiary, except as (a) described in the Prospectus, (b) described in the
letter from The Law Offices of Michael S. Narsete, P.C. to Grant Thornton LLP of
February 6, 2004, (c) described in the letter from Baird, Holm, McSachen,
Pedersen, Mamann & Strasheim LLP to The Law Offices of Michael S. Narsete, P.C.
of March 9, 2004, (d) described in the letter from Deborah Gambone, General
Counsel of Epixtar Corp., to Grant Thornton LLP of March 9, 2004, or (e)
described in the letter from Porter & Hedges, L.L.P. to Grant Thornton LLP of
March 11, 2004.
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(xv) The execution and delivery of this Agreement
and the consummation of the transactions herein contemplated do not and will not
conflict with or result in a breach of any of the terms or provisions of, or
constitute a default under, (i) the Certificate of Incorporation of the Company,
(ii) the Bylaws of the Company, or (iii) any agreement or instrument known to
such counsel to which the Company is a party or by which the Company may be
bound, except in the case of clause (iii) for conflicts, breaches or defaults
which would not have a Material Adverse Effect.
(xvi) Each of this Agreement and the Warrant
Agreement has been duly authorized, executed and delivered by the Company.
(xvii) No approval, consent, order, authorization,
designation, declaration or filing by or with any regulatory, administrative or
other governmental body is necessary in connection with the execution and
delivery of this Agreement and the consummation of the transactions herein
contemplated (other than as may be required by the NASD or Blue Sky laws, as to
which such counsel need express no opinion) except such as have been obtained or
made, specifying the same.
(xviii) The Company is not required to register as
an investment company under the 1940 Act.
In rendering such opinion, such counsel may rely as to matters governed
by the laws of states other than Texas, or federal laws on local counsel in such
jurisdictions, provided that in each case such counsel shall state that they
believe that they and the Underwriters are justified in relying on such other
counsel. In addition to the matters set forth above, the opinion of Porter &
Hedges, L.L.P. shall also include a statement to the effect that, based on such
counsels' examination of the registration statement and the Prospectus and their
investigation made in connection with the preparation of the Registration
Statement and Prospectus and conferences with certain officers and employees of
the Company, and without passing on or assuming any responsibility for the
accuracy, completeness or fairness of the statements contained in the
Registration Statement or the Prospectus or any document incorporated by
reference therein (and relying as to materiality to a large extent upon
statements of officers and employees of the Company), nothing has come to the
attention of such counsel that has caused them to believe that (i) the
Registration Statement, at the time it became effective under the Act (but after
giving effect to any modifications incorporated therein pursuant to Rule 430A
under the Act) and as of the Closing Date or the Option Closing Date, as the
case may be, contained an 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, and (ii) the Prospectus, including any
supplement thereto, on the date it was filed pursuant to the Rules and
Regulations and as of the Closing Date or the Option Closing Date, as the case
may be, contained an untrue statement of a material fact or omitted to state a
material fact necessary in order to make the statements, in the light of the
circumstances under which they are made, not misleading (except that such
counsel need express no view as to (1) financial statements, financial data, and
schedules therein or (2) statistical information in the form of market data or
number of employees).
(c) The Representative shall have received from Stoel
Rives LLP, counsel for the Underwriters, an opinion dated the Closing Date or
the Option Closing Date, as the case may
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be, substantially to the effect specified in subparagraphs (ix) and (x) of
Paragraph (b) of this Section 6. In rendering such opinion Stoel Rives LLP may
rely as to all matters governed other than by the laws of the State of Oregon or
Federal laws on the opinion of counsel referred to in Paragraph (b) of this
Section 6. In addition to the matters set forth above, such opinion shall also
include a statement to the effect that nothing has come to the attention of such
counsel that has caused them to believe that (i) the Registration Statement, or
any amendment thereto, as of the time it became effective under the Act (but
after giving effect to any modifications incorporated therein pursuant to Rule
430A under the Act) and as of the Closing Date or the Option Closing Date, as
the case may be, contained an 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, and (ii) the Prospectus, or any supplement
thereto, on the date it was filed pursuant to the Rules and Regulations and as
of the Closing Date or the Option Closing Date, as the case may be, contained an
untrue statement of a material fact or omitted to state a material fact
necessary in order to make the statements, in the light of the circumstances
under which they are made, not misleading (except that such counsel need express
no view as to financial statements, schedules and statistical information
therein). With respect to such statement, Stoel Rives LLP may state that their
belief is based upon the procedures set forth therein, but is without
independent check and verification.
(d) Unless the offer and sale of the Units are not
subject to qualification in any state as a result of preemption by Section 18 of
the Act, the Representative shall have received at or prior to the Closing Date
from Stoel Rives LLP a memorandum or summary, in form and substance satisfactory
to the Representative, with respect to the qualification for offering and sale
by the Underwriters of the Units under the state securities or Blue Sky laws of
such jurisdictions as the Representative may reasonably have designated to the
Company.
(e) The Representative, on behalf of the several
Underwriters, shall have received, on each of the dates hereof, the Closing Date
and the Option Closing Date, as the case may be, a letter dated the date hereof,
the Closing Date or the Option Closing Date, as the case may be, in form and
substance satisfactory to the Representative, of Grant Thornton LLP confirming
that they are independent public accountants within the meaning of the Act and
the applicable published Rules and Regulations thereunder and stating that in
their opinion the financial statements and schedules examined by them and
included in the Registration Statement comply in form in all material respects
with the applicable accounting requirements of the Act and the related published
Rules and Regulations and containing such other statements and information as is
ordinarily included in accountants' "comfort letters" to Underwriters with
respect to the financial statements and certain financial and statistical
information contained in the Registration Statement and Prospectus.
(f) The Representative shall have received on the Closing
Date or the Option Closing Date, as the case may be, a certificate or
certificates of the Chief Executive Officer and the Chief Financial Officer of
the Company to the effect that, as of the Closing Date or the Option Closing
Date, as the case may be, each of them severally represents as follows:
(i) The Registration Statement has become
effective under the Act and no stop order suspending the effectiveness of the
Registration Statement has been issued,
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and no proceedings for such purpose have been taken or are, to his knowledge,
contemplated by the Commission;
(ii) The representations and warranties of the
Company contained in Section 1 hereof are true and correct as of the Closing
Date or the Option Closing Date, as the case may be;
(iii) All filings required to have been made
pursuant to Rules 424 or 430A under the Act have been made;
(iv) He has carefully examined the Registration
Statement and the Prospectus and, in his or her opinion, as of the effective
date of the Registration Statement, the statements contained in the Registration
Statement were true and correct, and such Registration Statement and Prospectus
did not omit to state a material fact required to be stated therein or necessary
in order to make the statements therein not misleading, and since the effective
date of the Registration Statement, no event has occurred which should have been
set forth in a supplement to or an amendment of the Prospectus which has not
been so set forth in such supplement or amendment; and
(v) Since the respective dates as of which
information is given in the Registration Statement and Prospectus, there has not
been any material adverse change or any development involving a prospective
material adverse change in or affecting the condition, financial or otherwise,
of the Company or the earnings, business, management, properties, assets,
rights, operations, condition (financial or otherwise) or prospects of the
Company, whether or not arising in the ordinary course of business.
(g) The Company shall have furnished to the
Representative such further certificates and documents confirming the
representations and warranties, covenants and conditions contained herein and
related matters as the Representative may reasonably have requested.
(h) The Units, the Common Stock and the Warrants have
been approved for listing upon notice of issuance of the Units on the AMEX.
(i) The Lockup Agreements described in Section 4(j) are
in full force and effect.
The opinions and certificates mentioned in this Agreement shall be
deemed to be in compliance with the provisions hereof only if they are in all
material respects satisfactory to the Representative and to Stoel Rives LLP,
counsel for the Underwriters.
If any of the conditions hereinabove provided for in this Section 6
shall not have been fulfilled when and as required by this Agreement to be
fulfilled, the obligations of the Underwriters hereunder may be terminated by
the Representative by notifying the Company of such termination in writing or by
telegram at or prior to the Closing Date or the Option Closing Date, as the case
may be.
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In such event, the Company and the Underwriters shall not be under any
obligation to each other (except to the extent provided in Sections 5 and 8
hereof).
7. Conditions of the Obligations of the Company. The obligations
of the Company to sell and deliver the portion of the Units required to be
delivered as and when specified in this Agreement are subject to the conditions
that at the Closing Date or the Option Closing Date, as the case may be, no stop
order suspending the effectiveness of the Registration Statement shall have been
issued and in effect or proceedings therefor initiated or threatened.
8. Indemnification.
(a) The Company agrees to indemnify and hold harmless
each Underwriter and each person, if any, who controls any Underwriter within
the meaning of the Act, against any losses, claims, damages or liabilities to
which such Underwriter or any such controlling person may become subject under
the Act or otherwise, insofar as such losses, claims, damages or liabilities (or
actions or proceedings in respect thereof) arise out of or are based upon (i)
any untrue statement or alleged untrue statement of any material fact contained
in the Registration Statement, any Preliminary Prospectus, the Prospectus or any
amendment or supplement thereto, or (ii) the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading; and will reimburse each Underwriter and
each such controlling person upon demand for any legal or other expenses
reasonably incurred by such Underwriter or such controlling person in connection
with investigating or defending any such loss, claim, damage or liability,
action or proceeding or in responding to a subpoena or governmental inquiry
related to the offering of the Units, whether or not such Underwriter or
controlling person is a party to any action or proceeding; provided, however,
that the Company will not be liable in any such case to the extent that any such
loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement, or omission or alleged omission made in
the Registration Statement, any Preliminary Prospectus, the Prospectus, or such
amendment or supplement, in reliance upon and in conformity with written
information furnished to the Company by or through the Representative
specifically for use in the preparation thereof; provided, however, that the
foregoing indemnification with respect to the Preliminary Prospectus shall not
inure to the benefit of any Underwriter from which the person asserting any such
loss, claim, damage or liability, action or proceeding purchased Units if (1) a
copy of the Prospectus (as then amended or supplemented) was required by law to
be delivered to such person at or prior to the written confirmation of the sale
of Units to such person, (2) a copy of the Prospectus (as then amended or
supplemented) was not sent or given to such person by or on behalf of such
Underwriter and such failure was not due to the Company's failure to make
available sufficient quantities of the Prospectus to such Underwriters, and (3)
the Prospectus (as so amended or supplemented) would have cured the defect
giving rise to such loss, claim, damage or liability, action or proceeding. This
indemnity agreement will be in addition to any liability which the Company may
otherwise have.
(b) Each Underwriter severally and not jointly will
indemnify and hold harmless the Company, each of its directors, each of its
officers who have signed the Registration Statement and each person, if any, who
controls the Company within the meaning of the Act, against any losses, claims,
damages or liabilities to which the Company or any such director, officer or
controlling person may become subject under the Act or otherwise, insofar as
20
<PAGE>
such losses, claims, damages or liabilities (or actions or proceedings in
respect thereof) arise out of or are based upon (i) any untrue statement or
alleged untrue statement of any material fact contained in the Registration
Statement, any Preliminary Prospectus, the Prospectus or any amendment or
supplement thereto, or (ii) the omission or the alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; and will reimburse any legal or other expenses reasonably
incurred by the Company or any such director, officer or controlling person in
connection with investigating or defending any such loss, claim, damage,
liability, action or proceeding; provided, however, that each Underwriter will
be liable in each case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission has been
made in the Registration Statement, any Preliminary Prospectus, the Prospectus
or such amendment or supplement, in reliance upon and in conformity with written
information furnished to the Company by or through the Representative
specifically for use in the preparation thereof. This indemnity agreement will
be in addition to any liability which such Underwriter may otherwise have.
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of which
indemnity may be sought pursuant to this Section 8, such person (the
"indemnified party") shall promptly notify the person against whom such
indemnity may be sought (the "indemnifying party") in writing. No
indemnification provided for in Section 8(a) or (b) shall be available to any
party who shall fail to give notice as provided in this Section 8(c) if the
party to whom notice was not given was unaware of the proceeding to which such
notice would have related and was materially prejudiced by the failure to give
such notice, but the failure to give such notice shall not relieve the
indemnifying party or parties from any liability which it or they may have to
the indemnified party for contribution or otherwise than on account of the
provisions of Section 8(a) or (b). In case any such 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
therein and, to the extent that it shall wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel satisfactory to such indemnified party and shall pay as incurred the
fees and disbursements of such counsel related to such proceeding. In any such
proceeding, any indemnified party shall have the right to retain its own counsel
at its own expense. Notwithstanding the foregoing, the indemnifying party shall
pay as incurred (or within 30 days of presentation) the fees and expenses of the
counsel retained by the indemnified party in the event (i) the indemnifying
party and the indemnified party shall have mutually agreed to the retention of
such counsel, (ii) the named parties to any such proceeding (including any
impleaded parties) include both the indemnifying party and the indemnified party
and representation of both parties by the same counsel would be inappropriate
due to actual or potential differing interests between them or (iii) the
indemnifying party shall have failed to assume the defense and employ counsel
acceptable to the indemnified party within a reasonable period of time after
notice of commencement of the action. It is understood that the indemnifying
party shall not, in connection with any proceeding or related proceedings in the
same jurisdiction, be liable for the reasonable fees and expenses of more than
one separate firm for all such indemnified parties. Such firm shall be
designated in writing by you in the case of parties indemnified pursuant to
Section 8(a) and by the Company in the case of parties indemnified pursuant to
Section 8(b). The indemnifying party shall not be liable for any settlement of
any proceeding effected without its written consent but if settled with such
consent or if there be a
21
<PAGE>
final judgment for the plaintiff, the indemnifying party agrees to indemnify the
indemnified party from and against any loss or liability by reason of such
settlement or judgment. In addition, the indemnifying party will not, without
the prior written consent of the indemnified party, settle or compromise or
consent to the entry of any judgment in any pending or threatened claim, action
or proceeding of which indemnification may be sought hereunder (whether or not
any indemnified party is an actual or potential party to such claim, action or
proceeding) unless such settlement, compromise or consent includes an
unconditional release of each indemnified party from all liability arising out
of such claim, action or proceeding.
(d) If the indemnification provided for in this Section 8
is unavailable to or insufficient to hold harmless an indemnified party under
Section 8(a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) referred to therein,
then each indemnifying party shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) in such proportion as
is appropriate to reflect the relative benefits received by the Company on the
one hand and the Underwriters on the other from the offering of the Units. If,
however, the allocation provided by the immediately preceding sentence is not
permitted by applicable law then each indemnifying party shall contribute to
such amount paid or payable by such indemnified party in such proportion as is
appropriate to reflect not only such relative benefits but also the relative
fault of the Company on the one hand and the Underwriters on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities, (or actions or proceedings in respect thereof),
as well as any other relevant equitable considerations. The relative benefits
received by the Company on the one hand and the Underwriters on the other shall
be deemed to be in the same proportion as the total net proceeds from the
offering (before deducting expenses) received by the Company bears to the total
underwriting discounts and commissions received by the Underwriters, in each
case as set forth in the table on the cover page of the Prospectus. The relative
fault shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the Company
on the one hand or the Underwriters on the other and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
The Company and the Underwriters agree that it would not be just and
equitable if contributions pursuant to this Section 8(d) 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 in this Section 8(d). The amount paid
or payable by an indemnified party as a result of the losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) referred to above in
this Section 8(d) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
Section 8(d), (i) no Underwriter shall be required to contribute any amount in
excess of the underwriting discounts and commissions applicable to the Units
purchased by such Underwriter, and (ii) no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations in this
22
<PAGE>
Section 8(d) to contribute are several in proportion to their respective
underwriting obligations and not joint.
(e) In any proceeding relating to the Registration
Statement, any Preliminary Prospectus, the Prospectus or any supplement or
amendment thereto, each party against whom contribution may be sought under this
Section 8 hereby consents to the jurisdiction of any court having jurisdiction
over any other contributing party, agrees that process issuing from such court
may be served upon him or it by any other contributing party and consents to the
service of such process and agrees that any other contributing party may join
him or it as an additional defendant in any such proceeding in which such other
contributing party is a party.
(f) Any losses, claims, damages, liabilities or expenses
for which an indemnified party is entitled to indemnification or contribution
under this Section 8 shall be paid by the indemnifying party to the indemnified
party as such losses, claims, damages, liabilities or expenses are incurred. The
indemnity and contribution agreements contained in this Section 8 and the
representations and warranties of the Company set forth in this Agreement shall
remain operative and in full force and effect, regardless of (i) any
investigation made by or on behalf of any Underwriter or any person controlling
any Underwriter, the Company, its directors or officers or any persons
controlling the Company, (ii) acceptance of any Units and payment therefor
hereunder, and (iii) any termination of this Agreement. A successor to any
Underwriter, or to the Company, its directors or officers, or any person
controlling the Company, shall be entitled to the benefits of the indemnity,
contribution and reimbursement agreements contained in this Section 8.
9. Default by Underwriters. If on the Closing Date or the Option
Closing Date, as the case may be, any Underwriter shall fail to purchase and pay
for the portion of the Units which such Underwriter has agreed to purchase and
pay for on such date (otherwise than by reason of any default on the part of the
Company), you, as Representative of the Underwriters, shall use reasonable
efforts to procure within 36 hours thereafter one or more of the other
Underwriters, or any others, to purchase from the Company such amounts as may be
agreed upon and upon the terms set forth herein, the Firm Units or Option Units,
as the case may be, which the defaulting Underwriter or Underwriters failed to
purchase. If during such 36 hours you, as such Representative, shall not have
procured such other Underwriters, or any others, to purchase the Firm Units or
Option Units, as the case may be, agreed to be purchased by the defaulting
Underwriter or Underwriters, then (a) if the aggregate number of Units with
respect to which such default shall occur does not exceed 10% of the Firm Units
or Option Units, as the case may be, covered hereby, the other Underwriters
shall be obligated, severally, in proportion to the respective numbers of Firm
Units or Option Units, as the case may be, which they are obligated to purchase
hereunder, to purchase the Firm Units or Option Units, as the case may be, which
such defaulting Underwriter or Underwriters failed to purchase, or (b) if the
aggregate number of Firm Units or Option Units, as the case may be, with respect
to which such default shall occur exceeds 10% of the Firm Units or Option Units,
as the case may be, covered hereby, the Company or you as the Representative of
the Underwriters will have the right, by written notice given within the next
36-hour period to the parties to this Agreement, to terminate this Agreement
without liability on the part of the non-defaulting Underwriters or of the
Company except to the extent provided in Section 8 hereof. In the event of a
default by any Underwriter or Underwriters, as set forth in this Section 9, the
Closing Date or Option Closing Date, as the case
23
<PAGE>
may be, may be postponed for such period, not exceeding seven days, as you, as
Representative, may determine in order that the required changes in the
Registration Statement or in the Prospectus or in any other documents or
arrangements may be effected. The term "Underwriter" includes any person
substituted for a defaulting Underwriter. Any action taken under this Section 9
shall not relieve any defaulting Underwriter from liability in respect of any
default of such Underwriter under this Agreement.
10. Notices.
All communications hereunder shall be in writing and, except as
otherwise provided herein, will be mailed, delivered, faxed and confirmed as
follows:
if to the Underwriters, to
Paulson Investment Company, Inc.
811 SW Naito Parkway
Portland, Oregon 97204
Facsimile: (503) 243-6018
Attention: Chester L.F. Paulson
with a copy, which shall not constitute notice, to
Stoel Rives LLP
900 SW Fifth Avenue, Suite 2300
Portland, Oregon 97204
Facsimile: (503) 220-2480
Attention: John J. Halle
if to the Company, to
I-Sector Corporation
6401 Southwest Freeway
Houston, Texas 77074
Facsimile: (713) 795-2049
Attention: James H. Long
with copy, which shall not constitute notice, to
Porter & Hedges, L.L.P.
700 Louisiana, 35th Floor
Houston, Texas 77002
Facsimile: (713) 226-0237
Attention: Nick D. Nicholas
11. Termination. This Agreement may be terminated by you by notice
to the Company as follows:
24
<PAGE>
(a) at any time prior to the earlier of (i) the time the
Units are released by you for sale by notice to the Underwriters, or (ii) 11:30
a.m. on the first business day following the date of this Agreement;
(b) at any time prior to the Closing Date if any of the
following has occurred: (i) since the respective dates as of which information
is given in the Registration Statement and the Prospectus, any material adverse
change or any development involving a prospective material adverse change in or
affecting the condition, financial or otherwise, of the Company, the earnings,
business, management, properties, assets, rights, operations, condition
(financial or otherwise) or prospects of the Company, whether or not arising in
the ordinary course of business, (ii) any outbreak or escalation of hostilities
or declaration of war or national emergency or other national or international
calamity or crisis or change in economic or political conditions if the effect
of such outbreak, escalation, declaration, emergency, calamity, crisis or change
on the financial markets of the United States would, in your reasonable
judgment, make it impracticable to market the Units or to enforce contracts for
the sale of the Units, (iii) the Dow Jones Industrial Average shall have fallen
by 15 percent or more from its closing price on the day immediately preceding
the date that the Registration Statement is declared effective by the
Commission, (iv) suspension of trading in securities generally on the New York
Stock Exchange or the AMEX or limitation on prices (other than limitations on
hours or numbers of days of trading) for securities on either such Exchange, (v)
the enactment, publication, decree or other promulgation of any statute,
regulation, rule or order of any court or other governmental authority which in
your opinion materially and adversely affects or may materially and adversely
affect the business or operations of the Company, (vi) declaration of a banking
moratorium by United States or New York State authorities, (vii) any downgrading
in the rating of the Company's debt securities by any "nationally recognized
statistical rating organization" (as defined for purposes of Rule 436(g) under
the Exchange Act); (viii) the suspension of trading of the Common Stock or the
Warrants by the Commission or AMEX, or (ix) the taking of any action by any
governmental body or agency in respect of its monetary or fiscal affairs which
in your reasonable opinion has a material adverse effect on the securities
markets in the United States; or
(c) as provided in Sections 6 and 9 of this Agreement.
12. Successors. This Agreement has been and is made solely for the
benefit of the Underwriters, the Company and their respective successors,
executors, administrators, heirs and assigns, and the officers, directors and
controlling persons referred to herein, and no other person will have any right
or obligation hereunder. No purchaser of any of the Units from any Underwriter
shall be deemed a successor or assign merely because of such purchase.
13. Information Provided by Underwriters. The Company and the
Underwriters acknowledge and agree that the only information furnished or to be
furnished by any Underwriter to the Company for inclusion in the Prospectus or
the Registration Statement consists of the information set forth in the last
paragraph on the front cover page (insofar as such information relates to the
Underwriters), legends required by Item 502(b) of Regulation S-K under the Act
and the information under the caption "Underwriting" in the Prospectus.
25
<PAGE>
14. Miscellaneous. The reimbursement, indemnification and
contribution agreements contained in this Agreement and the representations,
warranties and covenants in this Agreement shall remain in full force and effect
regardless of (a) any termination of this Agreement, (b) any investigation made
by or on behalf of any Underwriter or controlling person thereof, or by or on
behalf of the Company or its directors or officers and (c) delivery of and
payment for the Units under this Agreement.
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument. A facsimile copy or other accurate copy of this
letter or any counterpart of this letter is binding as an original.
This Agreement shall be governed by, and construed in accordance with,
the laws of the State of Oregon. All disputes relating to this Underwriting
Agreement shall be adjudicated before a court located in Multnomah County,
Oregon to the exclusion of all other courts that might have jurisdiction.
(Remainder of page intentionally left blank; signature page follows)
26
<PAGE>
If the foregoing letter is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicates hereof,
whereupon it will become a binding agreement among the Company and the several
Underwriters in accordance with its terms.
Very truly yours,
I-SECTOR CORPORATION
By: _____________________________________
James H. Long
Chief Executive Officer
The foregoing Underwriting Agreement is hereby confirmed and accepted
as of the date first above written.
PAULSON INVESTMENT COMPANY, INC.
As Representative of the several
Underwriters listed on Schedule I
By: _____________________________________
Name:
Title:
27
<PAGE>
SCHEDULE I
Schedule of Underwriters
<TABLE>
<CAPTION>
Number of Firm Units
Underwriter to Be Purchased
- -------------------------------- --------------------
<S> <C>
Paulson Investment Company, Inc.
S.W. Bach & Company
Pali Capital, Inc.
----------------------------
Total
============================
</TABLE>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.3
<SEQUENCE>3
<FILENAME>h13383a3exv4w3.txt
<DESCRIPTION>FORM OF WARRANT AGREEMENT
<TEXT>
<PAGE>
EXHIBIT 4.3
WARRANT AGREEMENT
BETWEEN
I-SECTOR CORPORATION
AND
AMERICAN STOCK TRANSFER & TRUST COMPANY
DATED AS OF MAY __, 2004
<PAGE>
WARRANT AGREEMENT
This Agreement, dated as of May __, 2004, is between I-Sector
Corporation, a Delaware corporation (the "Company") and American Stock Transfer
& Trust Company, a New York corporation (the "Warrant Agent").
RECITALS
A. The Company, at or about the time that it is entering into
this Agreement, proposes to issue and sell to public investors up to 575,000
Units (together with the additional units issuable as provided herein, the
"Units"). Each Unit consists of two shares of common stock, $0.01 par value, of
the Company (the "Common Stock") and one warrant (a "Warrant"). Each Warrant is
exercisable to purchase one share of Common Stock upon the terms and conditions
and subject to adjustment in certain circumstances, all as set forth in this
Agreement.
B. The Company proposes to issue to the Representative of the
Underwriters in the public offering of Units referred to above warrants to
purchase up to 50,000 additional Units.
C. The Company wishes to retain the Warrant Agent to act on
behalf of the Company, and the Warrant Agent is willing so to act, in connection
with the issuance, transfer, exchange and replacement of the certificates
evidencing the Warrants to be issued under this Agreement (the "Warrant
Certificates") and the exercise of the Warrants;
D. The Company and the Warrant Agent wish to enter into this
Agreement to set forth the terms and conditions of the Warrants and the rights
of the holders thereof ("Warrantholders") and to set forth the respective rights
and obligations of the Company and the Warrant Agent. Each Warrantholder is an
intended beneficiary of this Agreement with respect to the rights of
Warrantholders herein.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereto agree as follows:
1. Appointment of Warrant Agent. The Company appoints the Warrant
Agent to act as agent for the Company in accordance with the instructions in
this Agreement and the Warrant Agent accepts such appointment.
2. Date, Denomination and Execution of Warrant Certificates.
(a) The Warrant Certificates (and the Form of Election to
Purchase and the Form of Assignment to be printed on the reverse thereof) shall
be in registered form only and shall be substantially of the tenor and purport
recited in Exhibit A hereto, and may have such letters, numbers or other marks
of identification or designation and such legends, summaries or endorsements
printed, lithographed or engraved thereon as the Company may deem appropriate
and as are not inconsistent with the provisions of this Agreement, or as may be
required to comply with any law, or with any rule or regulation made pursuant
thereto, or with any rule or regulation of any stock exchange on which the
Common Stock or the Warrants may be listed or
1
<PAGE>
any automated quotation system, or to conform to usage. Each Warrant Certificate
shall entitle the registered holder thereof, subject to the provisions of this
Agreement and of the Warrant Certificate, to purchase, on or after ____________,
2004 and on or before the close of business on _________, 2009 (the "Expiration
Date"), one fully paid and non-assessable share of Common Stock for each Warrant
evidenced by such Warrant Certificate for $_____. The exercise price of the
Warrants (the "Exercise Price") is subject to adjustments as provided in Section
6 hereof. Each Warrant Certificate issued as a part of a Unit offered to the
public as described in the recitals, above, shall be dated _____________, 2004;
each other Warrant Certificate shall be dated the date on which the Warrant
Agent receives valid issuance instructions from the Company or a transferring
holder of a Warrant Certificate or, if such instructions specify another date,
such other date.
(b) For purposes of this Agreement, the term "close of
business" on any given date shall mean 5:00 p.m., Eastern time, on such date;
provided, however, that if such date is not a business day, it shall mean 5:00
p.m., Eastern time, on the next succeeding business day. For purposes of this
Agreement, the term "business day" shall mean any day other than a Saturday,
Sunday, or a day on which banking institutions in New York, New York or in the
State in which the Warrant Agent maintains the principal office in which it
conducts business related to the Warrants are authorized or obligated by law to
be closed.
(c) Each Warrant Certificate shall be executed on behalf
of the Company by the Chairman of the Board, is Chief Executive Officer, its
President or a Vice President, either manually or by facsimile signature printed
thereon, and have affixed thereto the Company's seal or a facsimile thereof
which shall be attested by the Secretary or an Assistant Secretary of the
Company, either manually or by facsimile signature. Each Warrant Certificate
shall be countersigned (either manually or by facsimile signature printed
thereon) by the Warrant Agent and shall not be valid for any purpose unless so
countersigned. In case any officer of the Company who shall have signed any
Warrant Certificate shall cease to be such officer of the Company before
countersignature by the Warrant Agent and issue and delivery thereof by the
Company, such Warrant Certificate, nevertheless, may be countersigned by the
Warrant Agent, issued and delivered with the same force and effect as though the
person who signed such Warrant Certificate had not ceased to be such officer of
the Company.
3. Subsequent Issue of Warrant Certificates. Subsequent to their
original issuance, no Warrant Certificates shall be reissued except (i) Warrant
Certificates issued upon transfer thereof in accordance with Section 4 hereof,
(ii) Warrant Certificates issued upon any combination, split-up or exchange of
Warrant Certificates pursuant to Section 4 hereof, (iii) Warrant Certificates
issued in replacement of mutilated, destroyed, lost or stolen Warrant
Certificates pursuant to Section 5 hereof, (iv) Warrant Certificates issued upon
the partial exercise of Warrant Certificates pursuant to Section 7 hereof, and
(v) Warrant Certificates issued to reflect any adjustment or change in the
Exercise Price or the number or kind of shares purchasable thereunder pursuant
to Section 22 hereof. The Warrant Agent is hereby irrevocably authorized to
countersign and deliver, in accordance with the provisions of said Sections 4,
5, 7 and 22, the new Warrant Certificates required for purposes thereof, and the
Company, whenever required by the Warrant Agent, will supply the Warrant Agent
with Warrant Certificates duly executed on behalf of the Company for such
purposes.
2
<PAGE>
4. Transfers and Exchanges of Warrant Certificates.
(a) The Warrant Agent will keep or cause to be kept books
for registration of ownership and transfer of the Warrant Certificates issued
hereunder. Such registers shall show the names and addresses of the respective
holders of the Warrant Certificates and the kind and number of Warrants
evidenced by each such Warrant Certificate.
(b) The Warrant Agent shall, from time to time, register
the transfer of any outstanding Warrants upon the books to be maintained by the
Warrant Agent for that purpose, upon surrender of the Warrant Certificate
evidencing such Warrants, with the Form of Assignment duly filled in and
executed with such signature guaranteed by an eligible institution (banks,
stockbrokers, savings and loan associations and credit unions with membership in
an approved signature guarantee medallion program pursuant to SEC Rule 17Ad-15)
or NASD member and such supporting documentation as the Warrant Agent or the
Company may reasonably require, to the Warrant Agent at its stock transfer
office in Manhattan, New York, at any time on or before the Expiration Date of
such Warrant, and upon payment to the Warrant Agent for the account of the
Company of an amount equal to any applicable transfer tax. Payment of the amount
of such tax may be made in cash, or by certified or official bank check, payable
in lawful money of the United States of America to the order of the Company.
(c) Upon receipt of a Warrant Certificate, with the Form
of Assignment duly filled in and executed, accompanied by payment of an amount
equal to any applicable transfer tax, the Warrant Agent shall promptly cancel
the surrendered Warrant Certificate and countersign and deliver to the
transferee a new Warrant Certificate for the number of full Warrants transferred
to such transferee; provided, however, that in case the registered holder of any
Warrant Certificate shall elect to transfer fewer than all of the Warrants
evidenced by such Warrant Certificate, the Warrant Agent in addition shall
promptly countersign and deliver to such registered holder a new Warrant
Certificate or Certificates for the number of full Warrants not so transferred.
(d) Any Warrant Certificate or Certificates may be
exchanged at the option of the holder thereof for another Warrant Certificate or
Certificates of different denominations, of like tenor and representing in the
aggregate the same kind and number of Warrants, upon surrender of such Warrant
Certificate or Certificates, with the Form of Assignment duly filled in and
executed, to the Warrant Agent, at any time or from time to time after the close
of business on the date hereof and prior to the close of business on the
Expiration Date relating to such Warrant. The Warrant Agent shall promptly
cancel the surrendered Warrant Certificate and deliver the new Warrant
Certificate pursuant to the provisions of this Section.
5. Mutilated, Destroyed, Lost or Stolen Warrant Certificates.
Upon receipt by the Company and the Warrant Agent of evidence reasonably
satisfactory to them of the loss, theft, destruction or mutilation of any
Warrant Certificate, and in the case of loss, theft or destruction, of indemnity
or security reasonably satisfactory to them, and reimbursement to them of all
reasonable expenses incidental thereto, and, in the case of mutilation, upon
surrender and cancellation of the Warrant Certificate, the Warrant Agent shall
countersign and deliver a new Warrant Certificate of like tenor for the same
kind and number of Warrants.
3
<PAGE>
6. Adjustments of Number and Kind of Shares Purchasable and
Exercise Price. The number and kind of securities or other property purchasable
upon exercise of a Warrant shall be subject to adjustment from time to time upon
the occurrence, after the date hereof, of any of the following events:
(a) in case the Company shall (1) pay a dividend in, or
make a distribution of, shares of capital stock on its outstanding Common Stock,
(2) subdivide its outstanding shares of Common Stock into a greater number of
such shares or (3) combine its outstanding shares of Common Stock into a smaller
number of such shares, the total number of shares of Common Stock purchasable
upon the exercise of each Warrant outstanding immediately prior thereto shall be
adjusted so that the holder of any Warrant Certificate thereafter surrendered
for exercise shall be entitled to receive at the same aggregate Exercise Price
the number of shares of capital stock (of one or more classes) which such holder
would have owned or have been entitled to receive immediately following the
happening of any of the events described above had such Warrant been exercised
in full immediately prior to the record date with respect to such event.
Notwithstanding the provisions of the foregoing sentence, and in lieu of any
other adjustment, if any dividend or distribution described in clause (1) or any
subdivision described in clause (2) of this Section 6(a) results in an increase
in the number of outstanding shares of Common Stock that is 50% or greater, the
number of Warrants evidenced by each Warrant Certificate shall be adjusted to
cause the number of outstanding Warrants to be increased to that whole number
(rounding one half upwards) of Warrants that is closest to the number obtained
by increasing the number of such Warrants by the same percentage as the increase
in the outstanding Common Stock (each Warrant continuing to be exercisable to
purchase the number of shares of Common Stock for which it had been exercisable
prior to the dividend distribution or subdivision) and the exercise price per
share of each Warrant shall be correspondingly reduced. In that event, the
Company shall take such action as may be required to cause quotations for the
Warrants on each exchange on which the Warrants trade to reflect such increase
in the number of outstanding Warrants. Any adjustment made pursuant to this
Subsection shall, in the case of a stock dividend or distribution, become
effective as of the record date therefor and, in the case of a subdivision or
combination, be made as of the effective date thereof. If, as a result of an
adjustment made pursuant to this Subsection, the holder of any Warrant
Certificate thereafter surrendered for exercise shall become entitled to receive
shares of two or more classes of capital stock of the Company, the Board of
Directors of the Company (whose determination shall be conclusive and shall be
evidenced by a Board resolution filed with the Warrant Agent) shall determine
the allocation.
(b) In the event of a capital reorganization or a
reclassification of the Common Stock (except as provided in Subsection (a) above
or Subsection (d) below), any Warrantholder, upon exercise of Warrants, shall be
entitled to receive, in substitution for the Common Stock to which he would have
become entitled upon exercise immediately prior to such reorganization or
reclassification, the shares (of any class or classes) or other securities or
property of the Company (or cash) that he would have been entitled to receive at
the same aggregate Exercise Price upon such reorganization or reclassification
if such Warrants had been exercised immediately prior to the record date with
respect to such event; and in any such case, appropriate provision (as
determined by the Board of Directors of the Company, whose determination shall
be conclusive and shall be evidenced by a certified Board resolution filed with
the Warrant Agent) shall be made for the application of this Section 6 with
respect to the rights and interests thereafter of the Warrantholders (including
but not limited to the allocation of the Exercise Price between or among shares
of classes of capital stock), to the end that this Section 6 (including the
adjustments of the number of shares of Common Stock or other securities
purchasable and the Exercise Price thereof) shall thereafter be reflected, as
nearly as reasonably practicable, in all subsequent exercises of the Warrants
for any shares or securities or other property (or cash) thereafter deliverable
upon the exercise of the Warrants.
(c) Whenever the number of shares of Common Stock or
other securities purchasable upon exercise of a Warrant is adjusted as provided
in this Section 6, the Company will promptly file with the Warrant Agent a
certificate signed by a Chairman or co-Chairman of the Board or the President or
a Vice President of the Company and by the Treasurer or Chief Financial Officer
or an Assistant Treasurer or the Secretary or an Assistant Secretary of the
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Company setting forth the number and kind of securities or other property
purchasable upon exercise of a Warrant, as so adjusted, stating that such
adjustments in the number or kind of shares or other securities or property
conform to the requirements of this Section 6, and setting forth a brief
statement of the facts accounting for such adjustments. Promptly after receipt
of such certificate, the Company, or the Warrant Agent at the Company's request,
will deliver, by first-class, postage prepaid mail, a brief summary thereof (to
be supplied by the Company) to the registered holders of the outstanding Warrant
Certificates; provided, however, that failure to file or to give any notice
required under this Subsection, or any defect therein, shall not affect the
legality or validity of any such adjustments under this Section 6; and provided,
further, that, where appropriate, such notice may be given in advance and
included as part of the notice required to be given pursuant to Section 12
hereof.
(d) In case of any consolidation of the Company with, or
merger of the Company into, another corporation (other than a consolidation or
merger which does not result in any reclassification or change of the
outstanding Common Stock), or in case of any sale or conveyance to another
corporation of the property of the Company as an entirety or substantially as an
entirety, the corporation formed by such consolidation or merger or the
corporation which shall have acquired such assets, as the case may be, shall
execute and deliver to the Warrant Agent a supplemental warrant agreement
providing that the holder of each Warrant then outstanding shall have the right
thereafter (until the expiration of such Warrant) to receive, upon exercise of
such Warrant, solely the kind and amount of shares of stock and other securities
and property (or cash) receivable upon such consolidation, merger, sale or
transfer by a holder of the number of shares of Common Stock of the Company for
which such Warrant might have been exercised immediately prior to such
consolidation, merger, sale or transfer. Such supplemental warrant agreement
shall provide for adjustments which shall be as nearly equivalent as may be
practicable to the adjustments provided in this Section. The above provision of
this Subsection shall similarly apply to successive consolidations, mergers,
sales or transfers.
The Warrant Agent shall not be under any responsibility to determine
the correctness of any provision contained in any such supplemental warrant
agreement relating to either the kind or amount of shares of stock or securities
or property (or cash) purchasable by holders of Warrant Certificates upon the
exercise of their Warrants after any such consolidation, merger, sale or
transfer or of any adjustment to be made with respect thereto, but subject to
the provisions of Section 20 hereof, may accept as conclusive evidence of the
correctness of any such provisions, and shall be protected in relying upon, a
certificate of a firm of independent certified public accountants (who may be
the accountants regularly employed by the Company) with respect thereto.
(e) Irrespective of any adjustments in the number or kind
of shares issuable upon exercise of Warrants, Warrant Certificates theretofore
or thereafter issued may continue to express the same price and number and kind
of shares as are stated in the similar Warrant Certificates initially issuable
pursuant to this Warrant Agreement.
(f) The Company may retain a firm of independent public
accountants of recognized standing, which may be the firm regularly retained by
the Company, selected by the Board of Directors of the Company or the Executive
Committee of said Board, and not disapproved by the Warrant Agent, to make any
computation required under this Section, and a
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certificate signed by such firm shall, in the absence of fraud or gross
negligence, be conclusive evidence of the correctness of any computation made
under this Section.
(g) For the purpose of this Section, the term "Common
Stock" shall mean (i) the Common Stock or (ii) any other class of stock
resulting from successive changes or reclassifications of such Common Stock
consisting solely of changes in par value, or from par value to no par value, or
from no par value to par value. In the event that at any time as a result of an
adjustment made pursuant to this Section, the holder of any Warrant thereafter
surrendered for exercise shall become entitled to receive any shares of capital
stock of the Company other than shares of Common Stock, thereafter the number of
such other shares so receivable upon exercise of any Warrant shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the Common Stock contained in this
Section, and all other provisions of this Agreement, with respect to the Common
Stock, shall apply on like terms to any such other shares.
(h) The Company may, from time to time and to the extent
permitted by law, reduce the Exercise Price of the Warrants by any amount for a
period of not less than 20 days. If the Company so reduces the Exercise Price of
such Warrants, it will give not less than 15 days' notice of such decrease,
which notice may be in the form of a press release, and shall take such other
steps as may be required under applicable law in connection with any offers or
sales of securities at the reduced price. The Company may also, from time to
time and to the extent permitted by law, extend the Expiration Date of the
Warrants. If the Company so extends the Expiration Date of such Warrants, it
will give not less than 30 days' notice of such extension, which notice may be
in the form of a press release, and shall take such steps as may be required
under applicable law in connection with such extension.
7. Exercise and Redemption of Warrants. Unless the Warrants have
been redeemed as provided in this Section 7, the registered holder of any
Warrant Certificate may exercise the Warrants evidenced thereby, in whole at any
time or in part from time to time at or prior to the close of business, on the
Expiration Date relating to such Warrant, subject to the provisions of Section
8, at which time the Warrant Certificates shall be and become wholly void and of
no value. Warrants may be exercised by their holders or redeemed by the Company
as follows:
(a) Exercise of Warrants shall be accomplished upon
surrender of the Warrant Certificate evidencing such Warrants, with the Form of
Election to Purchase on the reverse side thereof duly filled in and executed, to
the Warrant Agent at its stock transfer office in Manhattan, New York, together
with payment to the Company of the Exercise Price (as of the date of such
surrender) of the Warrants then being exercised and an amount equal to any
applicable transfer tax and, if requested by the Company, any other taxes or
governmental charges which the Company may be required by law to collect in
respect of such exercise. Payment of the Exercise Price and other amounts may be
made by wire transfer of good funds, or by certified or bank cashier's check,
payable in lawful money of the United States of America to the order of the
Company. No adjustment shall be made for any cash dividends, whether paid or
declared, on any securities issuable upon exercise of a Warrant.
(b) Upon receipt of a Warrant Certificate, with the Form
of Election to Purchase duly filled in and executed, accompanied by payment of
the Exercise Price of the Warrants being exercised (and of an amount equal to
any applicable taxes or government charges as aforesaid), the Warrant Agent
shall promptly request from the Transfer Agent with respect to the securities to
be issued and deliver to or upon the order of the registered holder of such
Warrant Certificate, in such name or names as such registered holder may
designate, a certificate
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or certificates for the number of full shares of the securities to be purchased,
together with cash made available by the Company pursuant to Section 8 hereof in
respect of any fraction of a share of such securities otherwise issuable upon
such exercise. If the Warrant is then exercisable to purchase property other
than securities, the Warrant Agent shall take appropriate steps to cause such
property to be delivered to or upon the order of the registered holder of such
Warrant Certificate. In addition, if it is required by law and upon instruction
by the Company, the Warrant Agent will deliver to each Warrantholder a
prospectus which complies with the provisions of Section 10 of the Securities
Act of 1933 and the Company agrees to supply Warrant Agent with sufficient
number of prospectuses to effectuate that purpose.
(c) In case the registered holder of any Warrant
Certificate shall exercise fewer than all of the Warrants evidenced by such
Warrant Certificate, the Warrant Agent shall promptly countersign and deliver to
the registered holder of such Warrant Certificate, or to his duly authorized
assigns, a new Warrant Certificate or Certificates evidencing the number of
Warrants that were not so exercised.
(d) Each person in whose name any certificate for
securities is issued upon the exercise of Warrants shall for all purposes be
deemed to have become the holder of record of the securities represented thereby
as of, and such certificate shall be dated, the date upon which the Warrant
Certificate was duly surrendered in proper form and payment of the Exercise
Price (and of any applicable taxes or other governmental charges) was made;
provided, however, that if the date of such surrender and payment is a date on
which the stock transfer books of the Company are closed, such person shall be
deemed to have become the record holder of such shares as of, and the
certificate for such shares shall be dated, the next succeeding business day on
which the stock transfer books of the Company are open (whether before, on or
after the Expiration Date relating to such Warrant) and the Warrant Agent shall
be under no duty to deliver the certificate for such shares until such date. The
Company covenants and agrees that it shall not cause its stock transfer books to
be closed for a period of more than 20 consecutive business days except upon
consolidation, merger, sale of all or substantially all of its assets,
dissolution or liquidation or as otherwise provided by law.
(e) At any time after the date that is 180 days after the
date of this Warrant Agreement, the Warrants outstanding at the time of a
redemption may be redeemed at the option of the Company, in whole or in part on
a pro-rata basis, by giving not less than 30 days prior notice as provided in
Section 7(f) below, which notice may not be given before, but may be given at
any time after, the last reported sale price of the Common Stock on the
principal exchange on which it is then traded has equaled or exceeded $______
per share on each of five consecutive trading days. The price at which Warrants
may be redeemed (the "Redemption Price") is $0.25 per Warrant. On and after the
redemption date the holders of record of redeemed Warrants shall be entitled to
payment of the Redemption Price upon surrender of such redeemed Warrants to the
Company at the office of the Warrant Agent designated for that purpose.
(f) Notice of redemption of Warrants shall be given at
least 30 days prior to the redemption date by mailing by first class mail,
postage prepaid, a copy of such notice to the Warrant Agent and to all of the
holders of record of Warrants at their respective addresses appearing on the
books or transfer records of the Company or such other address designated in
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writing by the holder of record to the Warrant Agent not less than 40 days prior
to the redemption date.
(g) From and after the redemption date, all rights of the
Warrantholders (except the right to receive the Redemption Price) shall
terminate, but only if (i) no later than one day prior to the redemption date
the Company shall have irrevocably deposited with the Warrant Agent as paying
agent a sufficient amount to pay on the redemption date the Redemption Price for
all Warrants called for redemption and (ii) the notice of redemption shall have
stated the name and address of the Warrant Agent and the intention of the
Company to deposit such amount with the Warrant Agent no later than one day
prior to the redemption date.
(h) On the Redemption Date, the Warrant Agent shall pay
to the holders of record of redeemed Warrants all monies received by the Warrant
Agent for the redemption of Warrants to which the holders of record of such
redeemed Warrants who shall have surrendered their Warrants are entitled. The
Warrant Agent shall have no obligation to pay for the redemption of the warrants
except to the extent that funds for such payment have been provided to it by the
Company.
(i) Any amounts deposited with the Warrant Agent that are
not required for redemption of Warrants may be withdrawn by the Company. Any
amounts deposited with the Warrant Agent that shall be unclaimed after six
months after the redemption date shall be redelivered back to the Company, and
thereafter the holders of the Warrants called for redemption for which such
funds were deposited shall look solely to the Company for payment. The Company
shall be entitled to the interest, if any, on funds deposited with the Warrant
Agent and the holders of redeemed Warrants shall have no right to any such
interest. At the instruction of the Company, the Warrant agent shall deposit or
invest any and all funds deposited with it by the Company in connection with any
redemption in interest bearing accounts with a financial institution or
institutions typically used by the Warrant Agent for such purpose, and the
Warrant Agent shall have no liability with respect to the performance of any
such investments other than, in the case of funds deposited in accounts
maintained by the Warrant Agent, the liability of the Warrant Agent to its
depositors in such accounts, generally.
(j) If the Company fails to make a sufficient deposit
with the Warrant Agent as provided above, the holder of any Warrants called for
redemption may at the option of the holder, and as such holder's exclusive
remedy, either (i) by notice to the Company declare the notice of redemption a
nullity as to such holder, or (ii) maintain an action against the Company for
the Redemption Price. If the holder brings such an action, the Company will pay
reasonable attorneys' fees of the holder. If the holder fails to bring an action
against the Company for the Redemption Price within 60 days after the redemption
date, the holder shall be deemed to have elected to declare the notice of
redemption to be a nullity as to such holder and such notice shall be without
any force or effect as to such holder. Except as otherwise specifically provided
in this Section 7(j), a notice of redemption, once mailed by the Company as
provided in Section 7(f) shall be irrevocable.
8. Fractional Interests. The Company shall not be required to
issue any Warrant Certificate evidencing a fraction of a Warrant or to issue
fractions of shares of securities on the exercise of the Warrants. If any
fraction (calculated to the nearest one-hundredth) of a Warrant
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or a share of securities would, except for the provisions of this Section, be
issuable on the exercise of any Warrant, the Company shall, at its option,
either purchase such fraction for an amount in cash equal to the current value
of such fraction computed on the basis of the closing market price (as quoted on
the principal exchange on which the Common Stock is traded) on the trading day
immediately preceding the day upon which such Warrant Certificate was
surrendered for exercise in accordance with Section 7 hereof or issue the
required fractional Warrant or share. By accepting a Warrant Certificate, the
holder thereof expressly waives any right to receive a Warrant Certificate
evidencing any fraction of a Warrant or to receive any fractional share of
securities upon exercise of a Warrant, except as expressly provided in this
Section 8.
9. Reservation of Equity Securities. The Company covenants that
it will at all times reserve and keep available, free from any pre-emptive
rights, out of its authorized and unissued equity securities, solely for the
purpose of issue upon exercise of the Warrants, such number of shares of equity
securities of the Company as shall then be issuable upon the exercise of all
outstanding Warrants ("Equity Securities"). The Company covenants that all
Equity Securities which shall be so issuable shall, upon such issue, be duly
authorized, validly issued, fully paid and non-assessable.
The Company covenants that if any equity securities, required to be
reserved for the purpose of issue upon exercise of the Warrants hereunder,
require registration with or approval of any governmental authority under any
federal or state law before such shares may be issued upon exercise of Warrants,
the Company will use all commercially reasonable efforts to cause such
securities to be duly registered, or approved, as the case may be, and, to the
extent practicable, take all such action in anticipation of and prior to the
exercise of the Warrants, including, without limitation, filing or maintaining
an appropriate registration statement, necessary to permit a public offering of
the securities underlying the Warrants at any and all times during the term of
this Agreement, provided, however, that in no event shall such securities be
issued, and the Company is authorized to refuse to honor the exercise of any
Warrant, if such exercise would result in the opinion of the Company's Board of
Directors, upon advice of counsel, in the violation of any law; and provided
further that, in the case of a Warrant exercisable solely for securities listed
on a securities exchange or for which there are at least three independent
market makers, in lieu of obtaining such registration or approval, the Company
may elect to redeem Warrants submitted to the Warrant Agent for exercise for a
price equal to the difference between the aggregate low asked price, or closing
price, as the case may be, of the securities for which such Warrant is
exercisable on the date of such submission and the Exercise Price of such
Warrants; in the event of such redemption, the Company will pay to the holder of
such Warrants the above-described redemption price in cash within 10 business
days after receipt of notice from the Warrant Agent that such Warrants have been
submitted for exercise.
10. Reduction of Conversion Price Below Par Value. Before taking
any action that would cause an adjustment pursuant to Section 6 hereof reducing
the portion of the Exercise Price required to purchase one share of capital
stock below the then par value (if any) of a share of such capital stock, the
Company will use its best efforts to take any corporate action which, in the
opinion of its counsel, may be necessary in order that the Company may validly
and legally issue fully paid and non-assessable shares of such capital stock.
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11. Payment of Taxes. The Company covenants and agrees that it
will pay when due and payable any and all federal and state documentary stamp
and other original issue taxes which may be payable in respect of the original
issuance of the Warrant Certificates, or any shares of Common Stock or other
securities upon the exercise of Warrants. The Company shall not, however, be
required (a) to pay any tax which may be payable in respect of any transfer
involved in the transfer and delivery of Warrant Certificates or the issuance or
delivery of certificates for Common Stock or other securities in a name other
than that of the registered holder of the Warrant Certificate surrendered for
purchase or (b) to issue or deliver any certificate for shares of Common Stock
or other securities upon the exercise of any Warrant Certificate until any such
tax shall have been paid, all such tax being payable by the holder of such
Warrant Certificate at the time of surrender.
12. Notice of Certain Corporate Action. In case the Company after
the date hereof shall propose (a) to offer to the holders of Common Stock,
generally, rights to subscribe to or purchase any additional shares of any class
of its capital stock, any evidences of its indebtedness or assets, or any other
rights or options or (b) to effect any reclassification of Common Stock (other
than a reclassification involving merely the subdivision or combination of
outstanding shares of Common Stock) or any capital reorganization, or any
consolidation or merger to which the Company is a party and for which approval
of any stockholders of the Company is required, or any sale, transfer or other
disposition of its property and assets substantially as an entirety, or the
liquidation, voluntary or involuntary dissolution or winding-up of the Company,
then, in each such case, the Company shall file with the Warrant Agent and the
Company, or the Warrant Agent on its behalf, shall mail (by first-class, postage
prepaid mail) to all registered holders of the Warrant Certificates notice of
such proposed action, which notice shall specify the date on which the books of
the Company shall close or a record be taken for such offer of rights or
options, or the date on which such reclassification, reorganization,
consolidation, merger, sale, transfer, other disposition, liquidation, voluntary
or involuntary dissolution or winding-up shall take place or commence, as the
case may be, and which shall also specify any record date for determination of
holders of Common Stock entitled to vote thereon or participate therein and
shall set forth such facts with respect thereto as shall be reasonably necessary
to indicate any adjustments in the Exercise Price and the number or kind of
shares or other securities purchasable upon exercise of Warrants which will be
required as a result of such action. Such notice shall be filed and mailed in
the case of any action covered by clause (a) above, at least ten days prior to
the record date for determining holders of the Common Stock for purposes of such
action or, if a record is not to be taken, the date as of which the holders of
shares of Common Stock of record are to be entitled to such offering; and, in
the case of any action covered by clause (b) above, at least 20 days prior to
the earlier of the date on which such reclassification, reorganization,
consolidation, merger, sale, transfer, other disposition, liquidation, voluntary
or involuntary dissolution or winding-up is expected to become effective and the
date on which it is expected that holders of shares of Common Stock of record on
such date shall be entitled to exchange their shares for securities or other
property deliverable upon such reclassification, reorganization, consolidation,
merger, sale, transfer, other disposition, liquidation, voluntary or involuntary
dissolution or winding-up.
Failure to give any such notice or any defect therein shall not affect
the legality or validity of any transaction listed in this Section 12.
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13. Disposition of Proceeds on Exercise of Warrant Certificates,
etc. The Warrant Agent shall account promptly to the Company with respect to
Warrants exercised and concurrently pay to the Company all moneys received by
the Warrant Agent for the purchase of securities or other property through the
exercise of such Warrants.
The Warrant Agent shall keep copies of this Agreement available for
inspection by Warrantholders during normal business hours at its stock transfer
office. Copies of this Agreement may be obtained upon written request addressed
to the Warrant Agent at its stock transfer office in Manhattan, New York.
14. Warrantholder Not Deemed a Stockholder. No Warrantholder, as
such, shall be entitled to vote, receive dividends or be deemed the holder of
Common Stock or any other securities of the Company which may at any time be
issuable on the exercise of the Warrants represented thereby for any purpose
whatever, nor shall anything contained herein or in any Warrant Certificate be
construed to confer upon any Warrantholder, as such, any of the rights of a
stockholder of the Company or any right to vote for the election of directors or
upon any matter submitted to stockholders at any meeting thereof, or to give or
withhold consent to any corporate action (whether upon any recapitalization,
issuance of stock, reclassification of stock, change of par value or change of
stock to no par value, consolidation, merger, conveyance or otherwise), or to
receive notice of meetings or other actions affecting stockholders (except as
provided in Section 12 hereof), or to receive dividend or subscription rights,
or otherwise, until such Warrant Certificate shall have been exercised in
accordance with the provisions hereof and the receipt of the Exercise Price and
any other amounts payable upon such exercise by the Warrant Agent.
15. Right of Action. All rights of action in respect to this
Agreement are vested in the respective registered holders of the Warrant
Certificates; and any registered holder of any Warrant Certificate, without the
consent of the Warrant Agent or of any other holder of a Warrant Certificate,
may, in his own behalf for his own benefit, enforce, and may institute and
maintain any suit, action or proceeding against the Company suitable to enforce,
or otherwise in respect of, his right to exercise the Warrants evidenced by such
Warrant Certificate, for the purchase of shares of the Common Stock in the
manner provided in the Warrant Certificate and in this Agreement.
16. Agreement of Holders of Warrant Certificates. Every holder of
a Warrant Certificate by accepting the same consents and agrees with the
Company, the Warrant Agent and with every other holder of a Warrant Certificate
that:
(a) the Warrant Certificates are transferable on the
registry books of the Warrant Agent only upon the terms and conditions set forth
in this Agreement; and
(b) the Company and the Warrant Agent may deem and treat
the person in whose name the Warrant Certificate is registered as the absolute
owner of the Warrant (notwithstanding any notation of ownership or other writing
thereon made by anyone other than the Company or the Warrant Agent) for all
purposes whatever and neither the Company nor the Warrant Agent shall be
affected by any notice to the contrary.
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17. Cancellation of Warrant Certificates. In the event that the
Company shall purchase or otherwise acquire any Warrant Certificate or
Certificates after the issuance thereof, such Warrant Certificate or
Certificates shall thereupon be delivered to the Warrant Agent and be canceled
by it and retired. The Warrant Agent shall also cancel any Warrant Certificate
delivered to it for exercise, in whole or in part, or delivered to it for
transfer, split-up, combination or exchange. Warrant Certificates so canceled
shall be retained by the Warrant Agent as required by law.
18. Concerning the Warrant Agent. The Company agrees to pay to the
Warrant Agent from time to time, on demand of the Warrant Agent, reasonable
compensation for all services rendered by it hereunder and also its reasonable
expenses, including counsel fees, and other disbursements incurred in the
administration and execution of this Agreement and the exercise and performance
of its duties hereunder. The Company also agrees to indemnify the Warrant Agent
for, and to hold it harmless against, any loss, liability or expense, incurred
without gross negligence, bad faith or willful misconduct on the part of the
Warrant Agent, arising out of or in connection with the acceptance and
administration of this Agreement.
19. Merger or Consolidation or Change of Name of Warrant Agent.
Any corporation into which the Warrant Agent may be merged or with which it may
be consolidated, or any corporation resulting from any merger or consolidation
to which the Warrant Agent shall be a party, or any corporation succeeding to
the corporate trust business of the Warrant Agent, shall be the successor to the
Warrant Agent hereunder without the execution or filing of any paper or any
further act on the part of any of the parties hereto, provided that such
corporation would be eligible for appointment as a successor warrant agent under
the provisions of Section 21 hereof. In case at the time such successor to the
Warrant Agent shall succeed to the agency created by this Agreement, any of the
Warrant Certificates shall have been countersigned but not delivered, any such
successor to the Warrant Agent may adopt the countersignature of the original
Warrant Agent and deliver such Warrant Certificates so countersigned; and in
case at that time any of the Warrant Certificates shall not have been
countersigned, any successor to the Warrant Agent may countersign such Warrant
Certificates either in the name of the predecessor Warrant Agent or in the name
of the successor Warrant Agent; and in all such cases such Warrant Certificates
shall have the full force provided in the Warrant Certificates and in this
Agreement.
In case at any time the name of the Warrant Agent shall be changed and
at such time any of the Warrant Certificates shall have been countersigned but
not delivered, the Warrant Agent may adopt the countersignature under its prior
name and deliver Warrant Certificates so countersigned; and in case at that time
any of the Warrant Certificates shall not have been countersigned, the Warrant
Agent may countersign such Warrant Certificates either in its prior name or in
its changed name; and in all such cases such Warrant Certificates shall have the
full force provided in the Warrant Certificates and in this Agreement.
20. Duties of Warrant Agent. The Warrant Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Warrant Certificates,
by their acceptance thereof, shall be bound:
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(a) The Warrant Agent may consult with counsel
satisfactory to it (who may be counsel for the Company), and the opinion of such
counsel shall be full and complete authorization and protection to the Warrant
Agent as to any action taken, suffered or omitted by it in good faith and in
accordance with such opinion; provided, however, that the Warrant Agent shall
have exercised reasonable care in the selection of such counsel. Fees and
expenses of such counsel, to the extent reasonable, shall be paid by the
Company.
(b) Whenever in the performance of its duties under this
Agreement, the Warrant Agent shall deem it necessary or desirable that any fact
or matter be proved or established by the Company prior to taking or suffering
any action hereunder, such fact or matter (unless other evidence in respect
thereof be herein specifically prescribed) may be deemed to be conclusively
proved and established by a certificate signed by a Chairman or co-Chairman of
the Board, the Chief Executive Officer, the President or a Vice President or the
Secretary of the Company and delivered to the Warrant Agent; and such
certificate shall be full authorization to the Warrant Agent for any action
taken or suffered in good faith by it under the provisions of this Agreement in
reliance upon such certificate.
(c) The Warrant Agent shall be liable hereunder only for
its own gross negligence, bad faith or willful misconduct.
(d) The Warrant Agent shall not be liable for or by
reason of any of the statements of fact or recitals contained in this Agreement
or in the Warrant Certificates (except its countersignature on the Warrant
Certificates and such statements or recitals as describe the Warrant Agent or
action taken or to be taken by it) or be required to verify the same, but all
such statements and recitals are and shall be deemed to have been made by the
Company only.
(e) The Warrant Agent shall not be under any
responsibility in respect of the validity of this Agreement or the execution and
delivery hereof (except the due execution hereof by the Warrant Agent) or in
respect of the validity or execution of any Warrant Certificate (except its
countersignature thereof); nor shall it be responsible for any breach by the
Company of any covenant or condition contained in this Agreement or in any
Warrant Certificate; nor shall it be responsible for the making of any change in
the number of shares of Common Stock for which a Warrant is exercisable required
under the provisions of Section 6 or responsible for the manner, method or
amount of any such change or the ascertaining of the existence of facts that
would require any such adjustment or change (except with respect to the exercise
of Warrant Certificates after actual notice of any adjustment of the Exercise
Price); nor shall it by any act hereunder be deemed to make any representation
or warranty as to the authorization or reservation of any shares of Common Stock
to be issued pursuant to this Agreement or any Warrant Certificate or as to
whether any shares of Common Stock will, when issued, be validly issued, fully
paid and non-assessable.
(f) The Warrant Agent shall be under no obligation to
institute any action, suit or legal proceeding or take any other action likely
to involve expense unless the Company or one or more registered holders of
Warrant Certificates shall furnish the Warrant Agent with reasonable security
and indemnity for any costs and expenses which may be incurred. All rights of
action under this Agreement or under any of the Warrants may be enforced by the
Warrant Agent without the possession of any of the Warrants or the production
thereof at any trial or
13
<PAGE>
other proceeding relative thereto, and any such action, suit or proceeding
instituted by the Warrant Agent shall be brought in its name as Warrant Agent,
and any recovery of judgment shall be for the ratable benefit of the registered
holders of the Warrant Certificates, as their respective rights or interests may
appear.
(g) The Warrant Agent and any stockholder, director,
officer or employee of the Warrant Agent may buy, sell or deal in any of the
Warrants or other securities of the Company or become pecuniarily interested in
any transaction in which the Company may be interested, or contract with or lend
money to or otherwise act as fully and freely as though it were not Warrant
Agent under this Agreement. Nothing herein shall preclude the Warrant Agent from
acting in any other capacity for the Company or for any other legal entity.
(h) The Warrant Agent is hereby authorized and directed
to accept instructions with respect to the performance of its duties hereunder
from a Chairman or co-Chairman of the Board, the President, the Chief Financial
Officer, a Vice President or the Secretary of the Company, and to apply to such
officers for advice or instructions in connection with the Warrant Agent's
duties, and it shall not be liable for any action taken or suffered or omitted
by it in good faith in accordance with instructions of any such officer.
(i) The Warrant Agent will not be responsible for any
failure of the Company to comply with any of the covenants contained in this
Agreement or in the Warrant Certificates to be complied with by the Company.
(j) The Warrant Agent may execute and exercise any of the
rights or powers hereby vested in it or perform any duty hereunder either itself
or by or through its attorneys, agents or employees and the Warrant Agent shall
not be answerable or accountable for any act, default, neglect or misconduct of
any such attorneys, agents or employees or for any loss to the Company resulting
from such neglect or misconduct; provided, however, that reasonable care shall
have been exercised in the selection and continued employment of such attorneys,
agents and employees.
(k) The Warrant Agent will not incur any liability or
responsibility to the Company or to any holder of any Warrant Certificate for
any action taken, or any failure to take action, in reliance on any notice,
resolution, waiver, consent, order, certificate, or other paper, document or
instrument reasonably believed by the Warrant Agent to be genuine and to have
been signed, sent or presented by the proper party or parties.
(l) The Warrant Agent will act hereunder solely as agent
of the Company in a ministerial capacity, and its duties will be determined
solely by the provisions hereof. The Warrant Agent will not be liable for
anything which it may do or refrain from doing in connection with this Agreement
except for its own gross negligence, bad faith or willful conduct.
21. Change of Warrant Agent. The Warrant Agent may resign and be
discharged from its duties under this Agreement upon 30 days' prior notice in
writing mailed, by registered or certified mail, to the Company. The Company may
remove the Warrant Agent or any successor warrant agent upon 30 days' prior
notice in writing, mailed to the Warrant Agent or successor warrant agent, as
the case may be, by registered or certified mail. If the Warrant Agent
14
<PAGE>
shall resign or be removed or shall otherwise become incapable of acting, the
Company shall appoint a successor to the Warrant Agent and shall, within 15 days
following such appointment, give notice thereof in writing to each registered
holder of the Warrant Certificates. If the Company shall fail to make such
appointment within a period of 15 days after giving notice of such removal or
after it has been notified in writing of such resignation or incapacity by the
resigning or incapacitated Warrant Agent, then the Company agrees to perform the
duties of the Warrant Agent hereunder until a successor Warrant Agent is
appointed. After appointment and execution of a copy of this Agreement in effect
at that time, the successor Warrant Agent shall be vested with the same powers,
rights, duties and responsibilities as if it had been originally named as
Warrant Agent without further act or deed; but the former Warrant Agent shall
deliver and transfer to the successor Warrant Agent, within a reasonable time,
any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose. Failure to
give any notice provided for in this Section, however, or any defect therein
shall not affect the legality or validity of the resignation or removal of the
Warrant Agent or the appointment of the successor warrant agent, as the case may
be.
22. Issuance of New Warrant Certificates. Notwithstanding any of
the provisions of this Agreement or the several Warrant Certificates to the
contrary, the Company may, at its option, issue new Warrant Certificates in such
form as may be approved by its Board of Directors to reflect any adjustment or
change in the Exercise Price or the number or kind of shares purchasable under
the several Warrant Certificates made in accordance with the provisions of this
Agreement.
23. Notices. Notice or demand pursuant to this Agreement to be
given or made on the Company by the Warrant Agent or by the registered holder of
any Warrant Certificate shall be sufficiently given or made if sent by
first-class or registered mail, postage prepaid, addressed (until another
address is filed in writing by the Company with the Warrant Agent) as follows:
I-Sector Corporation
6401 Southwest Freeway
Houston, TX 77074
Attention: Chief Financial Officer
Subject to the provisions of Section 21, any notice pursuant to this
Agreement to be given or made by the Company or by the holder of any Warrant
Certificate to or on the Warrant Agent shall be sufficiently given or made if
sent by first-class or registered mail, postage prepaid, addressed (until
another address is filed in writing by the Warrant Agent with the Company) as
follows:
American Stock Transfer & Trust Company
59 Maiden Lane, Plaza Level
New York, NY 10038
Attention: Executive Vice President
Any notice or demand authorized to be given or made to the registered
holder of any Warrant Certificate under this Agreement shall be sufficiently
given or made if sent by first-class
15
<PAGE>
or registered mail, postage prepaid, to the last address of such holder as it
shall appear on the registers maintained by the Warrant Agent.
24. Modification of Agreement. The Warrant Agent may, without the
consent or concurrence of the Warrantholders, by supplemental agreement or
otherwise, concur with the Company in making any changes or corrections in this
Agreement that the Warrant Agent shall have been advised by counsel (who may be
counsel for the Company) are necessary or desirable to cure any ambiguity or to
correct any defective or inconsistent provision or clerical omission or mistake
or manifest error herein contained, or to make any other provisions in regard to
matters or questions arising hereunder and which shall not be inconsistent with
the provisions of the Warrant Certificates and which shall not materially and
adversely affect the interests of the Warrantholders. As of the date hereof,
this Agreement contains the entire and only agreement, understanding,
representation, condition, warranty or covenant between the parties hereto with
respect to the matters herein, supersedes any and all other agreements between
the parties hereto relating to such matters, and may be modified or amended only
by a written agreement signed by both parties hereto pursuant to the authority
granted by the first sentence of this Section.
25. Successors. All the covenants and provisions of this Agreement
by or for the benefit of the Company or the Warrant Agent shall bind and inure
to the benefit of their respective successors and assigns hereunder.
26. Delaware Contract. This Agreement and each Warrant Certificate
issued hereunder shall be deemed to be a contract made under the laws of the
State of Delaware and for all purposes shall be construed in accordance with the
laws of said State.
27. Termination. This Agreement shall terminate as of the close of
business on the Expiration Date, or such earlier date upon which all Warrants
shall have been exercised or redeemed, except that the Warrant Agent shall
account to the Company as to all Warrants outstanding and all cash held by it as
of the close of business on the Expiration Date.
28. Benefits of this Agreement. Nothing in this Agreement or in
the Warrant Certificates shall be construed to give to any person or corporation
other than the Company, the Warrant Agent, and their respective successors and
assigns hereunder and the registered holders of the Warrant Certificates any
legal or equitable right, remedy or claim under this Agreement; but this
Agreement shall be for the sole and exclusive benefit of the Company, the
Warrant Agent, their respective successors and assigns hereunder and the
registered holders of the Warrant Certificates.
29. Descriptive Headings. The descriptive headings of the several
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
30. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but such counterparts shall
together constitute one and the same instrument.
16
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, all as of the day and year first above written.
I-SECTOR CORPORATION
By: _____________________________________
Name:
Title:
AMERICAN STOCK TRANSFER & TRUST COMPANY
By: _____________________________________
Name:
Title:
17
<PAGE>
EXHIBIT A
VOID AFTER 5 P.M. PACIFIC TIME ON _________________, 2009
WARRANTS TO PURCHASE COMMON STOCK
W_____ _________ Warrants
I-SECTOR CORPORATION
(a Delaware corporation)
CUSIP 45031W 11 5
THIS CERTIFIES THAT
or registered assigns, is the registered holder of the number of Warrants
("Warrants") set forth above. Each Warrant, unless and until redeemed by the
Company as provided in the Warrant Agreement, hereinafter more fully described
(the "Warrant Agreement") entitles the holder thereof to purchase from I-Sector
Corporation, a corporation incorporated under the laws of the State of Delaware
("Company"), subject to the terms and conditions set forth hereinafter and in
the Warrant Agreement, at any time on or after ___________, 2004 and before the
close of business on ________, 2009 ("Expiration Date"), one fully paid and
non-assessable share of Common Stock of the Company ("Common Stock") upon
presentation and surrender of this Warrant Certificate, with the instructions
for the registration and delivery of Common Stock filled in, at the stock
transfer office in Manhattan, New York, of American Stock Transfer & Trust
Company, Warrant Agent of the Company ("Warrant Agent") or of its successor
warrant agent or, if there be no successor warrant agent, at the corporate
offices of the Company, and upon payment of the Exercise Price (as defined in
the Warrant Agreement) and any applicable taxes paid either in cash, or by
certified or official bank check, payable in lawful money of the United States
of America to the order of the Company. Each Warrant initially entitles the
holder to purchase one share of Common Stock for $____. The number and kind of
securities or other property for which the Warrants are exercisable are subject
to adjustment in certain events, such as mergers, splits, stock dividends,
splits and the like, to prevent dilution. The Company may redeem any or all
outstanding and unexercised warrants by giving not less than 30 days prior
notice at any time after _____________, _____ and after the closing price of the
Common Stock on the principal exchange on which it is traded has equaled or
exceeded $______ per share on each of five consecutive trading days. The
Redemption Price is $0.25 per Warrant. All Warrants not theretofore exercised
will expire on the Expiration Date.
1
<PAGE>
This Warrant Certificate is subject to all of the terms, provisions and
conditions of the Warrant Agreement, dated as of ________________, 2004, between
the Company and the Warrant Agent, to all of which terms, provisions and
conditions the registered holder of this Warrant Certificate consents by
acceptance hereof. The Warrant Agreement is incorporated herein by reference and
made a part hereof and reference is made to the Warrant Agreement for a full
description of the rights, limitations of rights, obligations, duties and
immunities of the Warrant Agent, the Company and the holders of the Warrant
Certificates. Copies of the Warrant Agreement are available for inspection at
the stock transfer office of the Warrant Agent or may be obtained upon written
request addressed to the Company at I-Sector Corporation, 6401 Southwest
Freeway, Houston, TX 77074, Attention: Chief Financial Officer.
The Company shall not be required upon the exercise of the Warrants
evidenced by this Warrant Certificate to issue fractions of Warrants, Common
Stock or other securities, but shall make adjustment therefor in cash on the
basis of the current market value of any fractional interest as provided in the
Warrant Agreement.
In certain cases, the sale of securities by the Company upon exercise
of Warrants would violate the securities laws of the United States, certain
states thereof or other jurisdictions. The Company has agreed to use all
commercially reasonable efforts to cause a registration statement to continue to
be effective during the term of the Warrants with respect to such sales under
the Securities Act of 1933, and to take such action under the laws of various
states as may be required to cause the sale of securities upon exercise to be
lawful. However, the Company will not be required to honor the exercise of
Warrants if, in the opinion of the Board of Directors, upon advice of counsel,
the sale of securities upon such exercise would be unlawful. In certain cases,
the Company may, but is not required to, purchase Warrants submitted for
exercise for a cash price equal to the difference between the market price of
the securities obtainable upon such exercise and the exercise price of such
Warrants.
This Warrant Certificate, with or without other Certificates, upon
surrender to the Warrant Agent, any successor warrant agent or, in the absence
of any successor warrant agent, at the corporate offices of the Company, may be
exchanged for another Warrant Certificate or Certificates evidencing in the
aggregate the same number of Warrants as the Warrant Certificate or Certificates
so surrendered. If the Warrants evidenced by this Warrant Certificate shall be
exercised in part, the holder hereof shall be entitled to receive upon surrender
hereof another Warrant Certificate or Certificates evidencing the number of
Warrants not so exercised.
No holder of this Warrant Certificate, as such, shall be entitled to
vote, receive dividends or be deemed the holder of Common Stock or any other
securities of the Company which may at any time be issuable on the exercise
hereof for any purpose whatever, nor shall anything contained in the Warrant
Agreement or herein be construed to confer upon the holder of this Warrant
Certificate, as such, any of the rights of a stockholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof or give or withhold consent to any corporate
action (whether upon any matter submitted to stockholders at any meeting
thereof, or give or withhold consent to any merger, recapitalization, issuance
of stock, reclassification of stock, change of par value or change of stock to
no par value, consolidation, conveyance or otherwise) or to receive notice of
meetings or other actions affecting stockholders (except as provided in the
Warrant Agreement) or to receive
2
<PAGE>
dividends or subscription rights or otherwise until the Warrants evidenced by
this Warrant Certificate shall have been exercised and the Common Stock
purchasable upon the exercise thereof shall have become deliverable as provided
in the Warrant Agreement.
If this Warrant Certificate shall be surrendered for exercise within
any period during which the transfer books for the Company's Common Stock or
other class of stock purchasable upon the exercise of the Warrants evidenced by
this Warrant Certificate are closed for any purpose, the Company shall not be
required to make delivery of certificates for shares purchasable upon such
transfer until the date of the reopening of said transfer books.
Every holder of this Warrant Certificate by accepting the same consents
and agrees with the Company, the Warrant Agent, and with every other holder of a
Warrant Certificate that:
(a) this Warrant Certificate is transferable on the registry books of
the Warrant Agent only upon the terms and conditions set forth in the Warrant
Agreement, and
(b) the Company and the Warrant Agent may deem and treat the person in
whose name this Warrant Certificate is registered as the absolute owner hereof
(notwithstanding any notation of ownership or other writing thereon made by
anyone other than the Company or the Warrant Agent) for all purposes whatever
and neither the Company nor the Warrant Agent shall be affected by any notice to
the contrary. The Company shall not be required to issue or deliver any
certificate for shares of Common Stock or other securities upon the exercise of
Warrants evidenced by this Warrant Certificate until any tax which may be
payable in respect thereof by the holder of this Warrant Certificate pursuant to
the Warrant Agreement shall have been paid, such tax being payable by the holder
of this Warrant Certificate at the time of surrender.
This Warrant Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Warrant Agent.
(Remainder of page intentionally left blank; signature page follows)
3
<PAGE>
WITNESS the facsimile signatures of the proper officers of the Company
and its corporate seal.
Dated: _______________
I-SECTOR CORPORATION
By: _____________________________________
Name:
Title: Chief Executive Officer
Attest: _________________________________
Secretary
Countersigned:
By: ______________________________________
Authorized Officer
4
<PAGE>
[TO BE PRINTED ON BACK OF CERTIFICATE]
FORM OF ELECTION TO PURCHASE
The undersigned holder hereby exercises the right to purchase _________________
of the shares of common stock (the "Warrant Shares") of I-SECTOR CORPORATION, a
Delaware corporation (the "Company"), evidenced by the attached Warrant (the
"Warrant"). Capitalized terms used herein and not otherwise defined have the
respective meanings set forth in the Warrant.
1. Payment of Warrant Exercise Price. The holder has paid in
connection with this exercise the sum of $______ to the Company in accordance
with the terms of the Warrant.
2. Delivery of Warrant Shares. The Company shall deliver to the
holder __________ Warrant Shares in accordance with the terms of the Warrant.
Dated: _____________ __, ______
_________________________________________
(Name of Registered Holder)
By: ________________________________
Name:
Title:
FORM OF ASSIGNMENT
FOR VALUE RECEIVED, the undersigned does hereby assign and transfer to
________________, Federal Identification No. __________, a warrant to purchase
____________ shares of the common stock of I-SECTOR CORPORATION, a Delaware
corporation, represented by warrant certificate no. _____, standing in the name
of the undersigned on the books of said corporation. The undersigned does hereby
irrevocably constitute and appoint ______________, attorney to transfer the
warrants of said corporation, with full power of substitution in the premises.
Dated: _____________ __, ______
_________________________________________
(Name of Registered Holder)
By: ________________________________
Name:
Title:
5
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23.1
<SEQUENCE>4
<FILENAME>h13383a3exv23w1.txt
<DESCRIPTION>CONSENT OF GRANT THORNTON LLP
<TEXT>
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We have issued our reports dated February 6, 2004 accompanying the consolidated
financial statements of I-Sector Corporation and subsidiaries appearing in the
2003 Annual Report of the Company to its shareholders and accompanying the
schedule included in the Annual Report on Form 10-K for the year ended December
31, 2003 which are incorporated by reference or contained in this Registration
Statement and Prospectus. We consent to the incorporation by reference and the
use of the aforementioned reports in the Registration Statement and Prospectus,
and to the use of our name as it appears under the caption "Experts."
GRANT THORNTON LLP
Houston, Texas
May 6, 2004
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23.2
<SEQUENCE>5
<FILENAME>h13383a3exv23w2.txt
<DESCRIPTION>CONSENT OF DELOITTE & TOUCHE LLP
<TEXT>
<PAGE>
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Amendment No. 3 to Registration
Statement No. 333-113575 of I-Sector Corporation ("I-Sector") on Form S-2 of our
reports dated March 21, 2003, on the consolidated financial statements and
financial statement schedule of I-Sector as of December 31, 2002, and for each
of the two years in the period ended December 31, 2002, included in the Annual
Report on Form 10-K of I-Sector for the year ended December 31, 2003, and to the
use of our report dated March 21, 2003 appearing in the Prospectus, which is
part of this Registration Statement. We also consent to the reference to us
under the heading "Experts" in such Prospectus.
/s/ DELOITTE & TOUCHE LLP
Houston, Texas
May 6, 2004
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
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