EXHIBIT 1.1
ZENGINE, INC.
_____ Shares Common Stock(1)
UNDERWRITING AGREEMENT
_______________, 2000
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Company, L.L.C.
Friedman, Billings, ▇▇▇▇▇▇ & Co., Inc.
E*OFFERING Corp.
▇▇▇▇▇▇ ▇▇▇▇▇▇ & Company, Inc.
As Representatives of the Several
Underwriters Named in Schedule A
c/o ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Company, L.L.C.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
SECTION 1. INTRODUCTORY. Zengine, Inc. ("COMPANY"), a Delaware
corporation, has an authorized capital stock consisting of 20,000,000 shares of
Preferred Stock, no par value, of which no shares were outstanding as of
____________, 2000 and 100,000,000 shares, no par value, of Common Stock
("COMMON STOCK"), of which [1,800,000 PRE-SPLIT] shares were outstanding as of
such date. The Company proposes to issue and sell _______ shares of its
authorized but unissued Common Stock to the several underwriters named in
Schedule A as it may be amended by the Pricing Agreement hereinafter defined
("UNDERWRITERS"), who are acting severally and not jointly. Such total of
___________ shares of Common Stock proposed to be sold by the Company is
hereinafter referred to as the "FIRM SHARES." In addition, the Company proposes
to grant to the Underwriters an option to purchase up to ________ additional
shares of Common Stock ("OPTION SHARES") as provided in Section 4 hereof. The
Firm Shares and, to the extent such option is exercised, the Option Shares, are
hereinafter collectively referred to as the "SHARES." ▇▇▇▇▇▇▇ ▇▇▇▇▇ and Company,
L.L.C. ("▇▇▇▇▇") has the authority, subject to the terms and conditions
contained herein, to act on behalf of the several Underwriters and the
Representatives hereunder.
The Company also proposes to issue and sell an aggregate of ___________
shares ("MCSI SHARES") of Common Stock directly to certain stockholders of MCSi,
Inc., a Maryland corporation and parent of the Company ("MCSI"), or, if all such
MCSi Shares are not a so purchased by MCSi stockholders, then the Company shall
issue and sell such unpurchased MCSi Shares to MCSi ("MCSi SUBSCRIPTION
PROGRAM").
You have advised the Company that the Underwriters propose to make a
public offering (the "Offering") of their respective portions of the Shares as
soon as you deem advisable after the
------------------------
(1) Plus an option to acquire up to ____ additional shares to cover
overallotments.
1
registration statement hereinafter referred to becomes effective, if it has not
yet become effective, and the Pricing Agreement hereinafter defined has been
executed and delivered.
Prior to the purchase and public offering of the Shares by the several
Underwriters, the Company and the Representatives, acting on behalf of the
several Underwriters, shall enter into an agreement substantially in the form of
Exhibit A hereto ("PRICING AGREEMENT"). The Pricing Agreement may take the form
of an exchange of any standard form of written telecommunication between the
Company and the Representatives and shall specify such applicable information as
is indicated in Exhibit A hereto. The offering of the Shares will be governed by
this Agreement, as supplemented by the Pricing Agreement. From and after the
date of the execution and delivery of the Pricing Agreement, this Agreement
shall be deemed to incorporate the Pricing Agreement.
The Company hereby confirms its agreement with the Underwriters as
follows:
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND MCSi. Each
of the Company and MCSi represents and warrants to the several Underwriters that
as of the date hereof:
(a) A registration statement on Form S-1 (File No. 333-36312)
and a related preliminary prospectus with respect to the Shares have
been prepared and filed with the Securities and Exchange Commission
("COMMISSION") by the Company in conformity with the requirements of
the Securities Act of 1933, as amended, and the rules and regulations
of the Commission thereunder (collectively, the "1933 ACT;" unless
indicated to the contrary, all references herein to specific rules are
rules promulgated under the ▇▇▇▇ ▇▇▇); and the Company has so prepared
and has filed such amendments thereto, if any, and such amended
preliminary prospectuses as may have been required to the date hereof
and will file such additional amendments thereto and such amended
prospectuses as may hereafter be required. There have been or will
promptly be delivered to you a signed copy of such registration
statement and amendments, a copy of each exhibit filed therewith, and
conformed copies of such registration statement and amendments (but
without exhibits) and of the related preliminary prospectus or
prospectuses and final forms of prospectus for each of the
Underwriters.
Such registration statement (as amended, if applicable) at the
time it becomes effective and the prospectus constituting a part
thereof (including the information, if any, deemed to be part thereof
pursuant to Rule 430A(b) and/or Rule 434), as from time to time amended
or supplemented, are hereinafter referred to as the "REGISTRATION
STATEMENT," and the "PROSPECTUS," respectively, except that if any
revised prospectus shall be provided to the Underwriters by the Company
for use in connection with the offering of the Shares which differs
from the Prospectus on file at the Commission at the time the
Registration Statement became or becomes effective (whether or not such
revised prospectus is required to be filed by the Company pursuant to
Rule 424(b)), the term Prospectus shall refer to such revised
prospectus from and after the time it was provided to the Underwriters
for such use. If the Company elects to rely on Rule 434 of the 1933
Act, all references to "Prospectus" shall be deemed to include, without
limitation, the form of prospectus and the term sheet, taken together,
provided to the
2
Underwriters by the Company in accordance with Rule 434 of the 1933 Act
("RULE 434 PROSPECTUS"). Any registration statement (including any
amendment or supplement thereto or information which is deemed part
thereof) filed by the Company under Rule 462(b) ("RULE 462(B)
REGISTRATION STATEMENT") shall be deemed to be part of the
"Registration Statement" as defined herein, and any prospectus
(including any amendment or supplement thereto or information which is
deemed part thereof) included in such Rule 462(b) Registration
Statement shall be deemed to be part of the "Prospectus", as defined
herein, as appropriate. The Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission thereunder are
hereinafter collectively referred to as the "EXCHANGE ACT."
(b) The Commission has not issued any order preventing or
suspending the use of any preliminary prospectus, and each preliminary
prospectus has conformed in all material respects with the requirements
of the 1933 Act and, as of its date, has not included any untrue
statement of a material fact or omitted to state a material fact
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading; and when the Registration
Statement became or becomes effective, and at all times subsequent
thereto, up to the First Closing Date or the Second Closing Date
hereinafter defined, as the case may be, the Registration Statement,
including the information deemed to be part of the Registration
Statement at the time of effectiveness pursuant to Rule 430A(b), if
applicable, and the Prospectus and any amendments or supplements
thereto, contained or will contain all statements that are required to
be stated therein in accordance with the 1933 Act and in all material
respects conformed or will in all material respects conform to the
requirements of the 1933 Act, and neither the Registration Statement
nor the Prospectus, nor any amendment or supplement thereto, included
or will include any untrue statement of a material fact or omitted or
will omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading; provided, however, that the
Company makes no representation or warranty as to information contained
in or omitted from any preliminary prospectus, the Registration
Statement, 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
Representatives specifically for use in the preparation thereof.
(c) The Company has been duly incorporated 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 its properties
and conduct its business as described in the Prospectus; the Company is
duly qualified to do business as a foreign corporation under the
corporation law of, and are in good standing as such in, each
jurisdiction in which it owns or leases properties, has an office, or
in which business is conducted and such qualification is required
except in any such case where the failure to so qualify or be in good
standing would not have a material adverse effect upon the business,
condition (financial or otherwise) or results of operations of the
Company taken as a whole (a "MATERIAL ADVERSE EFFECT"); and no
proceeding of which the Company has knowledge has been instituted in
any such jurisdiction, revoking, limiting or curtailing, or seeking to
revoke, limit or curtail, such power and authority or qualification.
MCSi has been duly
3
incorporated and is validly existing as a corporation in good standing
under the laws of the State of Maryland.
(d) The Company does not, directly or indirectly, (i) own, of
record or beneficially, any outstanding voting securities or other
equity interests in any corporation, partnership, limited liability
company, joint venture or other entity or (ii) control any corporation,
partnership, limited liability company, joint venture or other entity.
(e) The issued and outstanding shares of capital stock of the
Company as set forth in the Prospectus have been duly authorized and
validly issued, are fully paid and nonassessable, and conform in all
material respects to the description thereof contained in the
Prospectus.
(f) The Shares and the MCSi Shares to be sold by the Company
have been duly authorized and when issued, delivered and paid for
pursuant to this Agreement, will be validly issued, fully paid and
nonassessable, and will conform in all material respects to the
description thereof contained in the Prospectus.
(g) The making and performance by the Company and MCSi of this
Agreement, the Pricing Agreement and all agreements relating to the
obligations of the Company and MCSi under the MCSi Subscription Program
(the "MCSi SUBSCRIPTION AGREEMENTS") have been duly authorized by all
necessary corporate action and (i) will not violate any provision of
the charter or bylaws of the Company or MCSi and (ii) except for such
violations, breaches or defaults which would not have a Material
Adverse Effect on the Company, taken as a whole, will not result in the
breach, or be in contravention, of any provision of any agreement,
franchise, license, indenture, mortgage, deed of trust, or other
instrument to which the Company or MCSi is a party or by which the
Company, MCSi or the property of either of them may be bound or
affected, or any order, rule or regulation applicable to the Company or
MCSi of any court or regulatory body, administrative agency or other
governmental body having jurisdiction over the Company or MCSi or any
of their respective properties, or any order of any court or
governmental agency or authority entered in any proceeding to which the
Company or MCSi was or is now a party or by which it is bound. No
consent, approval, authorization or other order of any court,
regulatory body, administrative agency or other governmental body is
required for the execution and delivery of this Agreement, the Pricing
Agreement or the MCSi Subscription Agreements or the consummation of
the transactions contemplated herein or therein, except for compliance
with the 1933 Act, the declaration of the effectiveness of the
Registration Statement by the Commission, and blue sky laws and
clearance of such offering with the National Association of Securities
Dealers, Inc. ("NASD"). This Agreement and the MCSi Subscription
Agreements have been duly executed and delivered by the Company and
MCSi.
(h) The accountants who have expressed their opinions with
respect to the audited financial statements included in the Prospectus
are independent accountants as required by the 1933 Act.
4
(i) The financial statements of the Company included in the
Registration Statement present fairly the financial position of the
Company as of the respective dates of such financial statements, and
the statements of operations, cash flows and changes in stockholders'
equity of the Company for the respective periods covered thereby, all
in conformity with generally accepted accounting principles
consistently applied throughout the periods involved, except as
disclosed in the Prospectus, The historical financial information set
forth in the Prospectus under "Selected Historical Financial Data"
presents fairly, on the basis stated in the Prospectus, the information
set forth therein.
(j) The Company is not in violation of its certificate of
incorporation or in default under any consent decree, or in default
with respect to any material provision of any lease, loan agreement,
franchise, license, permit or other contract obligation to which it is
a party; and there does not exist any state of facts which constitutes
an event of default as defined in such documents or which, with notice
or lapse of time or both, would constitute such an event of default, in
each case, except for defaults which neither singly nor in the
aggregate would have a Material Adverse Effect.
(k) There are no material legal or governmental proceedings
pending, or to the Company's knowledge, threatened to which the Company
is or may be a party or of which material property owned or leased by
the Company is or may be the subject, or related to environmental or
discrimination matters which are not disclosed in the Prospectus, or
which question the validity of this Agreement or the Pricing Agreement
or any action taken or to be taken pursuant hereto or thereto.
(l) There are no holders of securities of the Company having
rights to registration thereof or preemptive rights to purchase Common
Stock except as disclosed in the Prospectus. Holders of registration
rights have waived such rights with respect to the offering being made
by the Prospectus.
(m) The Company has good and marketable title to all the
properties and assets reflected as owned in the financial statements
hereinabove described (or elsewhere in the Prospectus), subject to no
lien, mortgage, pledge, charge or encumbrance of any kind except those,
if any, reflected in such financial statements (or elsewhere in the
Prospectus) or which are not material to the Company. To the Company's
knowledge, the Company holds its leased properties which are material
to the Company under valid and binding leases.
(n) The Company has not taken and will not take during the
Offering (including any time after the effective date of the
Registration Statement during which the Underwriters are deemed to be
making a public offering), directly or indirectly, any action designed
to or which has constituted or which might reasonably be expected to
cause or result, under the Exchange Act or otherwise, in stabilization
or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Shares (provided, however, that
the Company may purchase shares under the 2000 Employee Stock Purchase
Plan and any 401(k) plan instituted by the Company in the future, and
to the extent that the offering is not a "Qualified Initial Public
Offering" under the Stockholders Agreement by and among Wilblairco
Associates, At Home Corporation,
5
MCSi and Messrs. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ dated September 29,
1999, MCSi may be required to exercise its put agreement dated
September 29, 1999 with Wilblairco Associates and At Home Corporation).
(o) Subsequent to the respective dates as of which information
is given in the Registration Statement and Prospectus, and except as
contemplated by the Prospectus, to the date hereof, the Company has not
incurred any material liabilities or obligations, direct or contingent,
nor entered into any material transactions not in the ordinary course
of business and there has not been any material adverse change in its
condition (financial or otherwise) or results of operations taken as a
whole nor any material change in its capital stock, short-term debt or
long-term debt.
(p) There is no material document of a character required by
the 1933 Act to be described in the Registration Statement or the
Prospectus or to be filed as an exhibit to the Registration Statement
which is not described or filed as required.
(q) The Company owns and possesses all right, title and
interest in and to, or has duly licensed from third parties, all
trademarks, copyrights and other proprietary rights ("TRADE RIGHTS")
material to the business of the Company as described in the Prospectus.
Except as disclosed in the Prospectus, the Company has not received any
notice of infringement, misappropriation or conflict from any third
party as to such material Trade Rights which has not been resolved or
disposed of, and the Company has not infringed, misappropriated or
otherwise conflicted with material Trade Rights of any third parties,
which infringement, misappropriation or conflict would have a Material
Adverse Effect on the Company taken as a whole.
(r) The conduct of the business of the Company is in
compliance in all respects with applicable federal, state, local and
foreign laws and regulations, except where the failure to be in
compliance would not have a Material Adverse Effect on the Company
taken as a whole.
(s) All offers and sales of the Company's capital stock prior
to the date hereof were at all relevant times exempt from the
registration requirements of the 1933 Act and were duly registered with
or the subject of an available exemption from the registration
requirements of the applicable state securities or blue sky laws.
(t) The Company has filed all necessary federal and state
income and franchise tax returns and has paid all taxes shown as due
thereon, and there is no tax deficiency that has been asserted in
writing, or to the knowledge of the Company may be, asserted against
the Company or any of its properties or assets that if adversely
determined to the Company would or could be expected to have a Material
Adverse Effect.
(u) The Company has filed a registration statement pursuant to
Section 12(g) of the Exchange Act to register the Common Stock
thereunder, has filed an application to list the Shares on the Nasdaq
National Market, and has received notification that the
6
listing has been approved, subject to notice of issuance or sale of the
Shares, as the case may be.
(v) The Company is not, and does not intend to conduct its
business in a manner in which it would become, an "investment company"
as defined in Section 3(a) of the Investment Company Act of 1940, as
amended ("INVESTMENT COMPANY ACT").
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE UNDERWRITERS. The
Representatives, on behalf of the several Underwriters, represent and warrant to
the Company that the information set forth (a) on the cover page of the
Prospectus with respect to price, underwriting discount and terms of the
offering and (b) paragraphs 1, 2, 3, 4, 5, 6, 10, 11, 12, 13, 16 and 17 under
"Plan of Distribution - Underwritten Public Offering" in the Prospectus was
furnished to the Company by and on behalf of the Underwriters for use in
connection with the preparation of the Registration Statement and is correct and
complete in all material respects.
SECTION 4. PURCHASE, SALE AND DELIVERY OF SHARES. On the basis of the
representations, warranties and agreements herein contained, but subject to the
terms and conditions herein set forth, the Company agrees to sell to the
Underwriters named in Schedule A hereto, and the Underwriters agree, severally
and not jointly, to purchase from the Company _________ Firm Shares at the price
per share set forth in the Pricing Agreement. The obligation of each Underwriter
to the Company shall be to purchase from the Company that number of full shares
which (as nearly as practicable, as determined by you) bears to ______________,
the same proportion as the number of Shares set forth opposite the name of such
Underwriter in Schedule A hereto bears to the total number of Firm Shares to be
purchased by all Underwriters under this Agreement. The initial public offering
price and the purchase price shall be set forth in the Pricing Agreement.
At 9:00 A.M., Chicago Time, on the fourth business day, if permitted
under Rule 15c6-1 under the Exchange Act, (or the third business day if required
under Rule 15c6-1 under the Exchange Act or unless postponed in accordance with
the provisions of Section 11) following the date the Registration Statement
becomes effective (or, if the Company has elected to rely upon Rule 430A, the
fourth business day, if permitted under Rule 15c6-1 under the Exchange Act, (or
the third business day if required under Rule 15c6-1 under the Exchange Act)
after execution of the Pricing Agreement), or such other time not later than ten
business days after such date as shall be agreed upon by the Representatives and
the Company, the Company will deliver to you at the offices of counsel for the
Underwriters or through the facilities of The Depository Trust Company for the
accounts of the several Underwriters, certificates representing the Firm Shares
to be sold by it against payment of the purchase price therefor in immediately
available funds via wire transfer to an account of the Company given to the
Underwriters not more than 48 hours prior thereto. Such time of delivery and
payment is herein referred to as the "FIRST CLOSING DATE." The certificates for
the Firm Shares so to be delivered will be in such denominations and registered
in such names as you request by notice to the Company prior to 10:00 A.M.,
Chicago Time, on the second business day preceding the First Closing Date, and
will be made available in New York City at the Company's expense for checking
and packaging by the Representatives at 10:00 A.M., New York Time, on the
business day preceding the First Closing Date. Payment for the Firm Shares so to
be delivered shall be made at the time and in
7
the manner described above to an account designated by the Company prior to the
First Closing Date.
In addition, on the basis of the representations, warranties and
agreements herein contained, but subject to the terms and conditions herein set
forth, the Company hereby grants an option to the several Underwriters to
purchase, severally and not jointly, up to an aggregate of _______ Option
Shares, at the same purchase price per share to be paid for the Firm Shares, for
use solely in covering any over-allotments made by the Underwriters in the sale
and distribution of the Firm Shares. The option granted hereunder may be
exercised at any time (but not more than once) within 30 days after the date of
the initial public offering upon written notice by you to the Company setting
forth the aggregate number of Option Shares as to which the Underwriters are
exercising the option, the names and denominations in which the certificates for
such shares are to be registered and the time and place at which such
certificates will be delivered. Such time of delivery (which may not be earlier
than the First Closing Date), being herein referred to as the "SECOND CLOSING
DATE," shall be determined by you, but if at any time other than the First
Closing Date, shall not be earlier than three nor later than 10 full business
days after delivery of such notice of exercise. The number of Option Shares to
be purchased by each Underwriter shall be determined by multiplying the number
of Option Shares to be sold by the Company pursuant to such notice of exercise
by a fraction, the numerator of which is the number of Firm Shares to be
purchased by such Underwriter as set forth opposite its name in Schedule A and
the denominator of which is the total number of Firm Shares (subject to such
adjustments to eliminate any fractional share purchases as you in your absolute
discretion may make). Certificates for the Option Shares will be made available
at the Company's expense for checking and packaging in New York City at 10:00
A.M., New York Time, on the business day preceding the Second Closing Date. The
manner of payment for and delivery of the Option Shares shall be the same as for
the Firm Shares as specified in the preceding paragraph.
You have advised the Company that each Underwriter has authorized you
to accept delivery of its Shares, to make payment and to receipt therefor. You,
individually and not as the Representatives of the Underwriters, may make
payment for any Shares to be purchased by any Underwriter whose funds shall not
have been received by you by the First Closing Date or the Second Closing Date,
as the case may be, for the account of such Underwriter, but any such payment
shall not relieve such Underwriter from any obligation hereunder.
SECTION 5. COVENANTS OF THE COMPANY AND MCSi. The Company and MCSi
covenant and agree that:
(a) The Company will advise you promptly of the issuance by
the Commission of any stop order suspending the effectiveness of the
Registration Statement or of the institution of any proceedings for
that purpose, or of any notification of the suspension of qualification
of the Shares for sale in any jurisdiction or the initiation or
threatening of any proceedings for that purpose, and will also advise
you promptly of any request of the Commission for amendment or
supplement of the Registration Statement, of any preliminary prospectus
or of the Prospectus, or for additional information.
(b) The Company will give you notice of its intention to file
or prepare any amendment to the Registration Statement (including any
post-effective amendment) or
8
any Rule 462(b) Registration Statement or any amendment or supplement
to the Prospectus (including any revised prospectus which the Company
proposes for use by the Underwriters in connection with the offering of
the Shares which differs from the prospectus on file at the Commission
at the time the Registration Statement became or becomes effective,
whether or not such revised prospectus is required to be filed pursuant
to Rule 424(b) and any term sheet as contemplated by Rule 434) and will
furnish you with copies of any such amendment or supplement a
reasonable amount of time prior to such proposed filing or use, as the
case may be, and will not file any such amendment or supplement or use
any such prospectus to which you or counsel for the Underwriters shall
reasonably object in writing.
(c) If the Company elects to rely on Rule 434 of the 1933 Act,
the Company will prepare a term sheet that complies with the
requirements of Rule 434. If the Company elects not to rely on Rule
434, the Company will provide the Underwriters with copies of the form
of prospectus, in such numbers as the Underwriters may reasonably
request, and file with the Commission such prospectus in accordance
with Rule 424(b) of the 1933 Act by the close of business in New York
City on the second business day immediately succeeding the date of the
Pricing Agreement. If the Company elects to rely on Rule 434, the
Company will provide the Underwriters with copies of the form of Rule
434 Prospectus, in such numbers as the Underwriters may reasonably
request, by the close of business in New York City on the business day
immediately succeeding the date of the Pricing Agreement.
(d) If at any time when a prospectus relating to the Shares is
required to be delivered under the 1933 Act any event occurs as a
result of which the Prospectus, including any amendments or
supplements, would include an untrue statement of a material fact, or
omit to state any material fact required to be stated therein or
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or if it is
necessary at any time to amend the Prospectus, including any amendments
or supplements thereto and including any revised prospectus which the
Company proposes for use by the Underwriters in connection with the
offering of the Shares which differs from the prospectus on file with
the Commission at the time of effectiveness of the Registration
Statement, whether or not such revised prospectus is required to be
filed pursuant to Rule 424(b) to comply with the 1933 Act, the Company
promptly will advise you thereof and will promptly prepare and file
with the Commission an amendment or supplement which will correct such
statement or omission or an amendment which will effect such
compliance; and, in case any Underwriter is required to deliver a
prospectus nine months or more after the effective date of the
Registration Statement, the Company upon request, but at the expense of
such Underwriter, will prepare promptly such prospectus or prospectuses
as may be necessary to permit compliance with the requirements of
Section 10(a)(3) of the 1933 Act.
(e) The Company will not, prior to the earlier of the Second
Closing Date or termination or expiration of the related option, incur
any liability or obligation, direct or contingent, or enter into any
material transaction, other than in the ordinary course of business,
except as contemplated by the Prospectus.
9
(f) The Company will not acquire any capital stock of the
Company prior to the earlier of the Second Closing Date or termination
or expiration of the related option nor will the Company declare or pay
any dividend or make any other distribution upon the Common Stock
payable to stockholders of record on a date prior to the earlier of the
Second Closing Date or termination or expiration of the related option,
except in either case as contemplated by the Prospectus.
(g) Not later than ______________, 2001 the Company will make
generally available to its security holders an earnings statement
(which need not be audited) covering a period of at least 12 months
beginning after the effective date of the Registration Statement, which
will satisfy the provisions of the last paragraph of Section 11(a) of
the 1933 Act.
(h) During such period as a prospectus is required by law to
be delivered in connection with offers and sales of the Shares by an
Underwriter or dealer, the Company will furnish to you at its expense,
subject to the provisions of subsection (d) hereof, copies of the
Registration Statement, the Prospectus, each preliminary prospectus and
all amendments and supplements to any such documents in each case as
soon as available and in such quantities as you may reasonably request,
for the purposes contemplated by the 1933 Act.
(i) The Company will cooperate with the Underwriters in
qualifying or registering the Shares for sale under the blue sky laws
of such jurisdictions as you designate, and will continue such
qualifications in effect so long as reasonably required for the
distribution of the Shares. The Company shall not be required to
qualify as a foreign corporation or to file a general consent to
service of process in any such jurisdiction where it is not currently
qualified or where it would be subject to taxation as a foreign
corporation.
(j) During the period of five years hereafter, the Company
will furnish you and each of the other Underwriters with a copy (i) as
soon as practicable after the filing thereof, of each report filed by
the Company with the Commission, any securities exchange or the NASD;
(ii) as soon as practicable after the release thereof, of each material
press release in respect of the Company; and (iii) as soon as
available, of each report of the Company mailed to stockholders.
(k) The Company will use the net proceeds received by it from
the sale of the Shares being sold by it in the manner specified in the
Prospectus.
(l) If, at the time of effectiveness of the Registration
Statement, any information shall have been omitted therefrom in
reliance upon Rule 430A and/or Rule 434, then immediately following the
execution of the Pricing Agreement, the Company will prepare, and file
or transmit for filing with the Commission in accordance with such Rule
430A, Rule 424(b) and/or Rule 434, copies of an amended Prospectus, or,
if required by such Rule 430A and/or Rule 434, a post-effective
amendment to the Registration Statement (including an amended
Prospectus), containing all information so omitted. If required, the
Company will prepare and file, or transmit for filing, a Rule
10
462(b) Registration Statement not later than the date of the execution
of the Pricing Agreement. If a Rule 462(b) Registration Statement is
filed, the Company shall make payment of, or arrange for payment of,
the additional registration fee owing to the Commission required by
Rule 111.
(m) The Company will comply with all registration, filing and
reporting requirements of the Exchange Act and the Nasdaq National
Market and will file with the Commission all information required by
Rule 463.
(n) The Company agrees not to, directly or indirectly, sell,
offer, contract to sell, transfer the economic risk of ownership in,
make any short sale, pledge or otherwise dispose of any shares of
Common Stock or securities convertible into Common Stock (except Common
Stock issued pursuant to currently outstanding options, warrants or
convertible securities and except for options to be granted under the
Amended and Restated 1999 Stock Option Plan in the ordinary course) for
a period of 180 days after this Agreement becomes effective without the
prior written consent of the Representatives. The Company has obtained
similar agreements from each of its officers and directors, any holder
of at least 1% of its outstanding equity and MCSi.
SECTION 6. PAYMENT OF EXPENSES. Whether or not the transactions
contemplated hereunder are consummated or this Agreement becomes effective as to
all of its provisions or is terminated, the Company agrees to pay (i) all costs,
fees and expenses (other than legal fees and disbursements of counsel for the
Underwriters and the expenses incurred by the Underwriters) incurred in
connection with the performance of the Company's obligations hereunder,
including without limiting the generality of the foregoing, all fees and
expenses of legal counsel for the Company and of the Company's independent
accountants, all costs and expenses incurred in connection with the preparation,
printing, filing and distribution of the Registration Statement, each
preliminary prospectus and the Prospectus (including all exhibits and financial
statements) and all amendments and supplements provided for herein, this
Agreement, the Pricing Agreement and the Blue Sky Memorandum, (ii) all costs,
fees and expenses (including legal fees not to exceed $12,000 and disbursements
of counsel for the Underwriters) incurred by the Underwriters in connection with
qualifying or registering all or any part of the Shares for offer and sale under
blue sky laws and clearance of such offering with the NASD; and (iii) all fees
and expenses of the Company's transfer agent, printing of the certificates for
the Shares and all transfer taxes, if any, with respect to the sale and delivery
of the Shares to the several Underwriters.
The provisions of this Section shall not affect any agreement which the
Company may make for the allocation or sharing of such expenses and costs.
SECTION 7. CONDITIONS OF THE OBLIGATIONS OF THE UNDERWRITERS. The
obligations of the several Underwriters to purchase and pay for the Firm Shares
on the First Closing Date and the Option Shares on the Second Closing Date shall
be subject to the accuracy of the representations and warranties on the part of
the Company and MCSi herein set forth as of the date hereof and as of the First
Closing Date or the Second Closing Date, as the case may be, to the accuracy of
the statements of officers of the Company made pursuant to the provisions
11
hereof, to the performance by the Company of its obligations hereunder, and to
the following additional conditions:
(a) The Registration Statement shall have become effective
either prior to the execution of this Agreement or not later than 1:00
P.M., Chicago Time, on the first full business day after the date of
this Agreement, or such later time as shall have been consented to by
you but in no event later than 1:00 P.M., Chicago Time, on the third
full business day following the date hereof; and prior to the First
Closing Date or the Second Closing Date, as the case may be, no stop
order suspending the effectiveness of the Registration Statement shall
have been issued and no proceedings for that purpose shall have been
instituted or shall be pending or, to the knowledge of the Company or
you, shall be contemplated by the Commission. If the Company has
elected to rely upon Rule 430A and/or Rule 434, the information
concerning the initial public offering price of the Shares and
price-related information shall have been transmitted to the Commission
for filing pursuant to Rule 424(b) within the prescribed period and the
Company will provide evidence satisfactory to the Representatives of
such timely filing (or a post-effective amendment providing such
information shall have been filed and declared effective in accordance
with the requirements of Rules 430A and 424(b)). If a Rule 462(b)
Registration Statement is required, such Registration Statement shall
have been transmitted to the Commission for filing and become effective
within the prescribed time period and, prior to the First Closing Date,
the Company shall have provided evidence of such filing and
effectiveness in accordance with Rule 462(b).
(b) The Shares shall have been qualified for sale under the
blue sky laws of such states as shall have been specified by the
Representatives.
(c) The legality and sufficiency of the authorization,
issuance and sale or transfer and sale of the Shares hereunder, the
validity and form of the certificates representing the Shares, the
execution and delivery of this Agreement and the Pricing Agreement, and
all corporate proceedings and other legal matters incident thereto, and
the form of the Registration Statement and the Prospectus (except
financial statements) shall have been approved by counsel for the
Underwriters exercising reasonable judgment.
(d) You shall not have advised the Company that the
Registration Statement or the Prospectus or any amendment or supplement
thereto, contains an untrue statement of fact, which, in the opinion of
counsel for the Underwriters, is material or omits to state a fact
which, in the opinion of such counsel, is material and is required to
be stated therein or necessary to make the statements therein not
misleading.
(e) Subsequent to the execution and delivery of this
Agreement, there shall not have occurred any change, or any development
involving a prospective change, in or affecting particularly the
business or properties of the Company, whether or not arising in the
ordinary course of business, which, in the judgment of the
Representatives, makes it impractical or inadvisable to proceed with
the public offering or purchase of the Shares as contemplated hereby.
12
find me
(f) The Company shall have received payment in full for the
MCSi Shares at the price per share set forth in the Pricing Agreement
prior to the purchase of the Firm Shares.
(g) There shall have been furnished to you, as Representatives
of the Underwriters, on the First Closing Date or the Second Closing
Date, as the case may be, except as otherwise expressly provided below:
(i) An opinion of Elias, Matz, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P.,
counsel for the Company, addressed to the Underwriters and dated
the First Closing Date or the Second Closing Date, as the case may
be, to the effect that:
(1) the Company has been duly incorporated 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 its properties and conduct its business as
described in the Prospectus;
(2) MCSi has been duly incorporated and is validly
existing as a corporation in good standing under the laws of
the State of Maryland;
(3) the authorized capital stock of the Company, of
which there is outstanding the amount set forth in the
Registration Statement and Prospectus (except for subsequent
issuances, if any, pursuant to stock options or other rights
referred to in the Prospectus), conforms as to legal matters
in all material respects to the description thereof in the
Registration Statement and Prospectus;
(4) the issued and outstanding capital stock of the
Company has been duly authorized and validly issued and is
fully paid and nonassessable;
(5) the certificates for the Shares to be delivered
hereunder are in due and proper form, and when duly
countersigned by the Company's transfer agent and delivered to
you or upon your order against payment of the agreed
consideration therefor in accordance with the provisions of
this Agreement and the Pricing Agreement, the Shares
represented thereby will be duly authorized and validly
issued, fully paid and nonassessable;
(6) To the best knowledge of such counsel, the
Registration Statement has become effective under the 1933
Act, and no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for
that purpose have been instituted or are pending or
contemplated under the 1933 Act, and the Registration
Statement (including the information deemed to be part of the
Registration Statement at the time of effectiveness pursuant
to Rule 430A(b) and/or Rule 434, if applicable), the
Prospectus and each amendment or supplement thereto (except
for the financial statements and other statistical or
financial data and schedules and information provided by the
Underwriters as described
13
in Section 3 included therein as to which such counsel need
express no opinion) comply as to form in all material respects
with the requirements of the 1933 Act; the statements in the
Registration Statement and the Prospectus summarizing
statutes, rules and regulations are accurate and fairly and
correctly present the information required to be presented by
the 1933 Act or the rules and regulations thereunder relating
to such statutes, rules and regulations, in all material
respects and such counsel does not know of any statutes, rules
and regulations required to be described or referred to in the
Registration Statement or the Prospectus that are not
described or referred to therein as required; and such counsel
does not know of any legal or governmental proceedings pending
or threatened required to be described in the Prospectus which
are not described as required, nor of any contracts or
documents of a character required to be described in the
Registration Statement or Prospectus or to be filed as
exhibits to the Registration Statement which are not described
or filed, as required;
(7) the statements under the captions "Management -
1999 Stock Option Plan, - Employee Stock Purchase Plan"
"Certain Transactions," "Description of Capital Stock" and
"Shares Eligible for Future Sale" in the Prospectus, insofar
as such statements constitute a summary of documents referred
to therein or matters of law, are accurate summaries and
fairly and correctly present, in all material respects, the
information called for with respect to such documents and
matters;
(8) this Agreement and the Pricing Agreement and the
performance of the obligations of the Company and MCSi
hereunder and thereunder have been duly authorized by all
necessary corporate action and this Agreement and the Pricing
Agreement have been duly executed and delivered by and on
behalf of the Company and MCSi, and are legal, valid and
binding agreements of the Company and MCSi, except as
enforceability of the same may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights and by the exercise of judicial
discretion in accordance with general principles applicable to
equitable and similar remedies and except as to those
provisions relating to indemnities for liabilities arising
under the 1933 Act as to which no opinion need be expressed;
and no approval, authorization or consent of any public board,
agency, or instrumentality of the United States or of any
state or other jurisdiction is necessary in connection with
the issue or sale of the Shares by the Company pursuant to
this Agreement (other than under the 1933 Act, applicable blue
sky laws and the rules of the NASD) or the consummation by the
Company or MCSi of any other transactions described herein;
(9) the execution and performance of this Agreement
and the issuance of the Shares and the MCSi Shares by the
Company will not contravene any of the provisions of, or
result in a default under, any
14
agreement, franchise, license, indenture, mortgage, deed of
trust, or other instrument known to such counsel and set forth
as an Exhibit to the Registration Statement, of the Company or
MCSi or by which the property of any of them is bound and
which contravention or default would be material to either the
Company or MCSi; or violate any of the provisions of the
charter or bylaws of the Company or MCSi or, so far as is
known to such counsel, violate any statute, order, rule or
regulation of any regulatory or governmental body having
jurisdiction over the Company or MCSi except such breaches or
defaults which would not have a Material Adverse Effect on the
Company taken as a whole;
(10) to such counsel's knowledge, all offers and
sales of the Company's capital stock since the Company's
inception to the effective date of the Registration Statement
were at all relevant times exempt from the registration
requirements of the 1933 Act and were duly registered or the
subject of an available exemption from the registration
requirements of the applicable state securities or blue sky
laws;
In rendering such opinion, such counsel may rely and state
that they are relying upon the certificate of the transfer agent for
the Common Stock as to the number of shares of Common Stock at any time
or times outstanding, and that insofar as their opinion under clause
(7) above relates to the accuracy and completeness of the Prospectus
and Registration Statement, it is based upon a general review with the
Company's representatives and independent accountants of the
information contained therein, without independent verification by such
counsel of the accuracy or completeness of such information. Such
counsel may also rely upon the opinions of other competent counsel and,
as to factual matters, on certificates of officers of the Company and
of governmental officials, in which case their opinion is to state that
they are so doing and copies of said opinions or certificates are to be
attached to the opinion unless said opinions or certificates (or, in
the case of certificates, the information therein) have been furnished
to the Representatives in other form.
Such counsel's opinion shall be limited to matters governed by
federal securities laws and by the General Corporation Law of the
States of Delaware (as to the Company) and Maryland (as to MCSi). The
opinion shall be interpreted according to the Legal Opinion Accord of
the Section of Business Law of The American Bar Association (1991) (the
"ACCORD"). For purposes of such opinions, no proceedings shall be
deemed to be pending, no order or stop order shall be deemed to be
issued, and no action shall be deemed to be instituted unless, in each
case, a director or executive officer of the Company shall have
received a copy of such proceedings, order, stop order or action. For
purposes of such opinion, no proceedings shall be deemed to be
threatened unless the potential litigant or government authority has
manifested in writing to the directors or management of the Company, or
to counsel thereof, a present intention to initiate such litigation or
proceedings. In addition, such opinion may be limited to present
statutes, regulations and judicial interpretations and to facts as they
presently exist as of
15
the date of such opinion, In rendering such opinion, such counsel need
assume no obligation to revise or supplement it should the present laws
be changed by legislative or regulatory action, judicial action or
otherwise. Such counsel may make certain customary assumptions relating
to parties other than the Company or MCSi.
In addition, such counsel shall confirm in a separate letter
that in connection with the preparation of the Registration Statement,
they have participated in conferences with officers, employees and
other representatives of the Company and MCSi, independent accountants
of the Company, the Underwriters and counsel for the Underwriters, at
which the contents of the Registration Statement and Prospectus were
discussed and, although such counsel is not passing upon and does not
assume responsibility for the accuracy, completeness or fairness of the
statements contained in the Registration Statement or Prospectus, and
has not made any independent check or verification thereof, on the
basis of the foregoing (relying as to materiality to a large extent
upon the statements of officers, employees and other representatives of
the Company), such counsel have no reason to believe that either the
Registration Statement (including the information deemed to be part of
the Registration Statement at the time of effectiveness pursuant to
Rule 430A(b) and/or Rule 434, if applicable) or the Prospectus, or the
Registration Statement or the Prospectus as amended or supplemented
(except as aforesaid), as of their respective effective dates,
contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading or that the Prospectus as amended or supplemented,
if applicable, as of the First Closing Date or the Second Closing Date,
as the case may be, contained any untrue statement of a material fact
or omitted to state any material fact necessary to make the statements
therein not misleading in light of the circumstances under which they
were made (it being understood that, in each case, such counsel need
express no view with respect to the financial statements and other
financial and statistical data and schedules included in the
Registration Statement or Prospectus or the information from the
Underwriters in the Prospectus as described in Section 3).
(ii) Such opinion or opinions of Sidley & Austin, counsel for
the Underwriters, dated the First Closing Date or the Second Closing
Date, as the case may be, with respect to the incorporation of the
Company, the validity of the Shares to be sold by the Company, the
Registration Statement and the Prospectus and other related matters as
you may reasonably require, and the Company shall have furnished to
such counsel such documents and shall have exhibited to them such
papers and records as they request for the purpose of enabling them to
pass upon such matters.
(iii) A certificate of the chief executive officer and the
principal financial officer of the Company, dated the First Closing
Date or the Second Closing Date, as the case may be, to the effect
that:
16
(1) the representations and warranties relating to
the Company set forth in Section 2 of this Agreement are true
and correct as of the date of this Agreement and as of the
First Closing Date or the Second Closing Date, as the case may
be, and the Company has complied with all the agreements and
satisfied all the conditions on its part to be performed or
satisfied at or prior to such Closing Date; and
(2) the Commission has not issued an order preventing
or suspending the use of the Prospectus or any preliminary
prospectus filed as a part of the Registration Statement or
any amendment thereto; no stop order suspending the
effectiveness of the Registration Statement has been issued;
and to the best knowledge of the respective signers, no
proceedings for that purpose have been instituted or are
pending or contemplated under the 1933 Act.
The delivery of the certificate provided for in this
subparagraph shall be and constitute a representation and warranty of
the Company as to the facts required in the immediately foregoing
clauses (1) and (2) of this subparagraph to be set forth in said
certificate.
(iv) At the time the Pricing Agreement is executed and also on
the First Closing Date or the Second Closing Date, as the case may be,
there shall be delivered to you a letter addressed to you, as
Representatives of the Underwriters, from PricewaterhouseCoopers LLP,
independent accountants, the first one to be dated the date of the
Pricing Agreement, the second one to be dated the First Closing Date
and the third one (in the event of a second closing) to be dated the
Second Closing Date, in such form reasonably satisfactory to Sidley &
Austin, counsel for the Underwriters. There shall not have been any
change specified in the letters referred to in this subparagraph which
makes it impractical or inadvisable in the judgment of the
Representatives to proceed with the public offering or purchase of the
Shares as contemplated hereby.
(v) Such further certificates and documents as you may
reasonably request.
All such opinions, certificates, letters and documents shall
be in compliance with the provisions hereof only if they are
satisfactory to you and to Sidley & Austin, counsel for the
Underwriters, which approval shall not be unreasonably withheld. The
Company shall furnish you with such manually signed or conformed copies
of such opinions, certificates, letters and documents as you request.
If any condition to the Underwriters' obligations hereunder to be
satisfied prior to or at the First Closing Date is not so satisfied, this
Agreement at your election will terminate upon notification to the Company
without liability on the part of any Underwriter or the Company or MSCi, except
for the expenses to be paid or reimbursed by the Company pursuant to Sections 6
and 9 hereof and except to the extent provided in Section 10 hereof.
17
SECTION 8. REIMBURSEMENT OF UNDERWRITERS' EXPENSES. If the sale to the
Underwriters of the Shares on the First Closing Date is not consummated because
any condition of the Underwriters' obligations hereunder is not satisfied or
because of any refusal, inability or failure on the part of the Company to
perform any agreement herein or to comply with any provision hereof, unless such
failure to satisfy such condition or to comply with any provision hereof is due
to the default or omission of any Underwriter, the Company agrees to reimburse
you and the other Underwriters upon demand for all out-of-pocket expenses
(including reasonable fees and disbursements of counsel) that shall have been
reasonably incurred by you and them in connection with the proposed purchase and
the sale of the Shares. Any such termination shall be without liability of any
party to any other party except that the provisions of this Section, Section 6
and Section 10 shall at all times be effective and shall apply.
SECTION 9. EFFECTIVENESS OF REGISTRATION STATEMENT. You, the Company
and MCSi will use your, its and their respective its best efforts to cause the
Registration Statement to become effective, if it has not yet become effective,
and to prevent the issuance of any stop order suspending the effectiveness of
the Registration Statement and, if such stop order be issued, to obtain as soon
as possible the lifting thereof.
SECTION 10. INDEMNIFICATION.
(a) The Company and MSCi, jointly and severally, agree to
indemnify and hold harmless each Underwriter and each person, if any,
who controls any Underwriter within the meaning of the 1933 Act or the
Exchange Act against any losses, claims, damages or liabilities, joint
or several, to which such Underwriter or such controlling person may
become subject under the 1933 Act, the Exchange Act or other federal or
state statutory law or regulation, at common law or otherwise
(including in settlement of any litigation if such settlement is
effected with the written consent of the Company and/or MSCi, as the
case may be), insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact
contained in the Registration Statement, including the information
deemed to be part of the Registration Statement at the time of
effectiveness pursuant to Rule 430A and/or Rule 434, if applicable, any
preliminary prospectus, the Prospectus, any amendment or supplement
thereto, or any written material prepared by or with the consent of the
Company or MCSi for distribution in connection with the MCSi
Subscription Program, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated
in any of the aforementioned documents or necessary to make the
statements therein not misleading, or related to, arising out of, or in
connection with the MCSi Subscription Program; and will reimburse each
Underwriter and each such controlling person 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, liability or action; provided, however, that neither the
Company nor MSCi will be liable in any such case to the extent that (i)
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 any amendment or supplement thereto in
reliance upon and in conformity with the written information with
respect to which the Underwriters have made representations
18
and warranties in Section 3 hereof; or (ii) if such statement or
omission was contained or made in any preliminary prospectus and
corrected in the Prospectus and (1) any such loss, claim, damage or
liability suffered or incurred by any Underwriter (or any person who
controls any Underwriter) resulted from an action, claim or suit by any
person who purchased Shares which are the subject thereof from such
Underwriter in the offering and (2) such Underwriter failed to deliver
or provide a copy of the Prospectus to such person at or prior to the
confirmation of the sale of such Shares in any case where such delivery
is required by the 1933 Act. In addition to their other obligations
under this Section 10(a), the Company and MCSi agree that, as an
interim measure during the pendency of any claim, action,
investigation, inquiry or other proceeding arising out of or based upon
any statement or omission, or any alleged statement or omission,
described in this Section 10(a), they will reimburse the Underwriters
on a monthly basis for all reasonable and documented legal and other
expenses incurred in connection with investigating or defending any
such claim, action, investigation, inquiry or other proceeding,
notwithstanding the absence of a judicial determination as to the
propriety and enforceability of the Company's and MCSi's obligation to
reimburse the Underwriters for such expenses and the possibility that
such payments might later be held to have been improper by a court of
competent jurisdiction. This indemnity agreement will be in addition to
any liability which the Company and MCSi may otherwise have.
(b) Each Underwriter will severally indemnify and hold
harmless the Company, each of its directors, each of its officers who
signed the Registration Statement, and each person (including without
limitation MCSi and its controlling persons, directors and officers)
who controls the Company within the meaning of the 1933 Act or the
Exchange Act (a "CONTROLLING PERSON"), against any losses, claims,
damages or liabilities to which the Company, or any such director,
officer, or Controlling Person may become subject under the 1933 Act,
the Exchange Act or other federal or state statutory law or regulation,
at common law or otherwise (including in settlement of any litigation,
if such settlement is effected with the written consent of such
Underwriter), insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based upon any
untrue 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 arise out of or are based
upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or
omission or alleged omission was made in the Registration Statement,
any preliminary prospectus, the Prospectus, or any amendment or
supplement thereto in reliance upon and in conformity with the written
information with respect to which the Underwriters have made
representations and warranties in Section 3 hereof; 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 or
action. In addition to their other obligations under this Section
10(b), the Underwriters agree that, as an interim measure during the
pendency of any claim, action, investigation, inquiry or other
proceeding arising out of or based upon any statement or omission, or
any alleged statement or omission, described in this Section 10(b),
they will reimburse the Company on a monthly basis for all reasonable
and
19
documented legal and other expenses incurred in connection with
investigating or defending any such claim, action, investigation,
inquiry or other proceeding, notwithstanding the absence of a judicial
determination as to the propriety and enforceability of the
Underwriters' obligation to reimburse the Company for such expenses and
the possibility that such payments might later be held to have been
improper by a court of competent jurisdiction. This indemnity agreement
will be in addition to any liability which such Underwriter may
otherwise have.
(c) Promptly after receipt by an indemnified party under this
Section 10 of notice of the commencement of any action, such
indemnified party will, if a claim in respect thereof is to be made
against an indemnifying party under this Section 10, notify the
indemnifying party of the commencement thereof; but the omission so to
notify the indemnifying party will not relieve it from any liability
which it may have to any indemnified party except to the extent that
the indemnifying party was prejudiced by such failure to notify. In
case any such action is brought against any indemnified party, and it
notifies an indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate in, and, to the
extent that it may wish, jointly with all other indemnifying parties
similarly notified, to assume the defense thereof, with counsel
reasonably satisfactory to such indemnified party; PROVIDED, HOWEVER,
if the defendants in any such action include both the indemnified party
and the indemnifying party and counsel for the indemnified party shall
have reasonably advised that there may be legal defenses available to
the indemnified party and/or other indemnified parties which are
different from or additional to those available to the indemnifying
party, or the indemnified and indemnifying parties may have conflicting
interests which would make it inappropriate for the same counsel to
represent both of them, the indemnified party or parties shall have
the right to select separate counsel to assume such legal defense and
otherwise to participate in the defense of such action on behalf of
such indemnified party or parties. Upon receipt of notice from the
indemnifying party to such indemnified party of its election so to
assume the defense of such action and approval by the indemnified party
of counsel, the indemnifying party will not be liable to such
indemnified party under this Section 10 for any legal or other expenses
subsequently incurred by such indemnified party in connection with the
defense thereof unless (i) the indemnified party shall have employed
such counsel in connection with the assumption of legal defense in
accordance with the proviso to the immediately preceding sentence
(it being understood, however, that the indemnifying party shall not
be liable for the expenses of more than one separate counsel, approved
by the Representatives in the case of paragraph (a) representing all
indemnified parties not having different or additional defenses or
potential conflicting interest among themselves who are parties to
such action), (ii) the indemnifying party shall not have employed
counsel reasonably satisfactory to the indemnified party to represent
the indemnified party within a reasonable time after notice of
commencement of the action or (iii) the indemnifying party has
authorized the employment of counsel for the indemnified party at the
expense of the indemnifying party. No indemnifying party shall, without
the prior written consent of the indemnified party, effect any
settlement of any pending or threatened proceeding in respect of which
any indemnified party is or could have been a party and indemnity could
have been sought hereunder by such indemnified party, unless such
settlement includes an
20
unconditional release of such indemnified party from all liability
arising out of such proceeding.
(d) If the indemnification provided for in this Section 10 is
unavailable to an indemnified party under paragraphs (a) or (b) hereof
in respect of any losses, claims, damages or liabilities referred to
therein, then each applicable indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount
paid or payable by such indemnified party as a result of such losses,
claims, damages or liabilities (i) in such proportion as is appropriate
to reflect the relative benefits received by the Company, MSCi and the
Underwriters from the offering of the Shares or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative fault of
the Company, MCSi and the Underwriters in connection with the
statements or omissions which resulted in such losses, claims, damages
or liabilities, as well as any other relevant equitable considerations.
The respective relative benefits received by the Company, MSCi and the
Underwriters shall be deemed to be in the same proportion in the case
of the Company and MCSi as the total price paid to the Company for the
Shares by the Underwriters (net of underwriting discount but before
deducting expenses), and in the case of the Underwriters as the
underwriting discount received by them bears to the total of such
amounts paid to the Company and received by the Underwriters as
underwriting discount, in each case as contemplated by the Prospectus.
The relative fault of the Company and MSCi and the Underwriters shall
be determined by reference to, among other things, whether the untrue
or alleged untrue statement of a material fact or the omission to state
a material fact relates to information supplied by the Company or by
MSCi or by the Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent
such statement or omission. The amount paid or payable by a party as a
result of the losses, claims, damages and liabilities referred to above
shall be deemed to include any legal or other fees or expenses
reasonably incurred by such party in connection with investigating or
defending any action or claim.
The Company, MSCi and the Underwriters each agree that it
would not be just and equitable if contribution pursuant to this
Section 10 were determined by pro rata allocation or by any other
method of allocation which does not take account of the equitable
considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 10, no Underwriter shall
be required to contribute any amount in excess of the amount by which
the total price at which the Shares underwritten by it and distributed
to the public were offered to the public exceeds the amount of any
damages which such Underwriter has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or
alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the ▇▇▇▇ ▇▇▇) shall be entitled
to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute pursuant
to this Section are several in proportion to their respective
underwriting commitments and not joint.
21
(e) The provisions of this Section shall survive any
termination of this Agreement.
SECTION 11. DEFAULT OF UNDERWRITERS. It shall be a condition to the
agreement and obligation of the Company to sell and deliver the Shares
hereunder, and of each Underwriter to purchase the Shares hereunder, that,
except as hereinafter in this paragraph provided, each of the Underwriters shall
purchase and pay for all Shares agreed to be purchased by such Underwriter
hereunder upon tender to the Representatives of all such Shares in accordance
with the terms hereof. If any Underwriter or Underwriters default in their
obligations to purchase Shares hereunder on the First Closing Date and the
aggregate number of Shares which such defaulting Underwriter or Underwriters
agreed but failed to purchase does not exceed 10 percent of the total number of
Shares which the Underwriters are obligated to purchase on the First Closing
Date, the Representatives may make arrangements satisfactory to the Company for
the purchase of such Shares by other persons, including any of the Underwriters,
but if no such arrangements are made by such date, the non-defaulting
Underwriters shall be obligated severally, in proportion to their respective
commitments hereunder, to purchase the Shares which such defaulting Underwriters
agreed but failed to purchase on such date. If any Underwriter or Underwriters
so default and the aggregate number of Shares with respect to which such default
or defaults occur is more than the above percentage and arrangements
satisfactory to the Representatives and the Company for the purchase of such
Shares by other persons are not made within 36 hours after such default, this
Agreement will terminate without liability on the part of any non-defaulting
Underwriter or the Company except for the expenses to be paid by the Company
pursuant to Section 6 hereof (other than SECTION 6(ii)) and except to the extent
provided in Section 10 hereof.
In the event that Shares to which a default relates are to be purchased
by the non-defaulting Underwriters or by another party or parties, the
Representatives or the Company shall have the right to postpone the First
Closing Date for not more than seven business days in order that the necessary
changes in the Registration Statement, Prospectus and any other documents, as
well as any other arrangements, may be effected. As used in this Agreement, the
term "Underwriter" includes any person substituted for an Underwriter under this
Section. Nothing herein will relieve a defaulting Underwriter from liability for
its default.
SECTION 12. EFFECTIVE DATE. This Agreement shall become effective
immediately as to Sections 6, 8, 10, 13 and 19 and as to all other provisions at
10:00 A.M., Chicago Time, on the day following the date upon which the Pricing
Agreement is executed and delivered, unless such a day is a Saturday, Sunday or
holiday (and in that event this Agreement shall become effective at such hour on
the business day next succeeding such Saturday, Sunday or holiday); but this
Agreement shall nevertheless become effective at such earlier time after the
Pricing Agreement is executed and delivered as you may determine on and by
notice to the Company or by release of any Shares for sale to the public. For
the purposes of this Section, the Shares shall be deemed to have been so
released upon the release for publication of any newspaper advertisement
relating to the Shares or upon the release by you of telegrams (i) advising
Underwriters that the Shares are released for public offering, or (ii) offering
the Shares for sale to securities dealers, whichever may occur first.
22
SECTION 13. TERMINATION. Without limiting the right to terminate this
Agreement pursuant to any other provision hereof:
(a) This Agreement may be terminated by the Company by notice
to you or by you by notice to the Company at any time prior to the time
this Agreement shall become effective as to all its provisions, and any
such termination shall be without liability on the part of the Company
or MSCi to any Underwriter (except for the expenses to be paid or
reimbursed pursuant to Section 6 hereof and except to the extent
provided in Section 10 hereof) or of any Underwriter to the Company
(except to the extent provided in Section 10 hereof).
(b) This Agreement may also be terminated by you prior to the
First Closing Date, and the option referred to in the third paragraph
of Section 4 if exercised, may be cancelled at any time prior to the
Second Closing Date, if (i) trading in securities on the New York Stock
Exchange or Nasdaq National Market shall have been suspended or minimum
prices shall have been established on such exchange or market, or (ii)
a banking moratorium shall have been declared by Illinois, New York, or
United States banking authorities, or (iii) there shall have been any
adverse change in financial markets or in political, economic or
financial conditions which, in the opinion of the Representatives,
either renders it impracticable or inadvisable to proceed with the
offering and sale of the Shares on the terms set forth in the
Prospectus or materially and adversely affects the market for the
Shares, or (iv) there shall have been an outbreak of major armed
hostilities between the United States and any foreign power which in
the opinion of the Representatives makes it impractical or inadvisable
to offer or sell the Shares. Any termination pursuant to this paragraph
(b) shall be without liability on the part of any Underwriter to the
Company or MSCi (except to the extent provided in Section 10 hereof) or
on the part of the Company or MSCi to any Underwriter (except for
expenses to be paid or reimbursed pursuant to Section 6 hereof and
except to the extent provided in Section 10 hereof).
SECTION 14. REPRESENTATIONS AND INDEMNITIES TO SURVIVE DELIVERY. The
respective indemnities, agreements, representations, warranties and other
statements of the Company, of its officers, of MSCi and of the several
Underwriters set forth in or made pursuant to this Agreement will remain in full
force and effect, regardless of any investigation made by or on behalf of any
Underwriter or the Company or any of its or their partners, principals, members,
officers or directors or any controlling person, as the case may be, and will
survive delivery of and payment for the Shares sold hereunder.
SECTION 15. NOTICES. All communications hereunder will be in writing
and, if sent to the Underwriters will be mailed, delivered or telegraphed and
confirmed to you c/o ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Company, L.L.C., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, with a copy to ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ c/▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇,
Bank ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇; if sent to the Company will be mailed,
delivered or telegraphed and confirmed to the Company at its corporate
headquarters with a copy to ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ c/o Elias, Matz, ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇ L.L.P., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇; and if sent to
MSCi will be mailed, delivered or telegraphed and confirmed to MCSi at its
corporate headquarters with a copy to ▇▇▇▇▇▇▇ ▇.
23
▇▇▇▇▇▇▇ c/o Elias, Matz, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P. ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇.
SECTION 16. SUCCESSORS. This Agreement and the Pricing Agreement will
inure to the benefit of and be binding upon the parties hereto and their
respective successors, personal representatives and assigns, and to the benefit
of the officers and directors and controlling persons referred to in Section 10,
and no other person will have any right or obligation hereunder. The term
"successors" shall not include any purchaser of the Shares as such from any of
the Underwriters merely by reason of such purchase.
SECTION 17. REPRESENTATION OF UNDERWRITERS. You will act as
Representatives for the several Underwriters in connection with this financing,
and any action under or in respect of this Agreement taken by you will be
binding upon all the Underwriters.
SECTION 18. PARTIAL UNENFORCEABILITY. If any section, paragraph or
provision of this Agreement is for any reason determined to be invalid or
unenforceable, such determination shall not affect the validity or
enforceability of any other section, paragraph or provision hereof.
24
SECTION 19. APPLICABLE LAW. This Agreement and the Pricing Agreement
shall be governed by and construed in accordance with the laws of the State of
Illinois.
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to us the enclosed duplicates hereof,
whereupon it will become a binding agreement among the Company, MCSi and the
several Underwriters including you, all in accordance with its terms.
Very truly yours,
ZENGINE, INC.
By
------------------------------------------
Chief Executive Officer
MSCi, Inc.
By
------------------------------------------
Chief Executive Officer
The foregoing Agreement is hereby confirmed
and accepted as of the date first above
written.
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Company, L.L.C.
Friedman, Billings, ▇▇▇▇▇▇ & Co., Inc.
E*OFFERING Corp.
▇▇▇▇▇▇ ▇▇▇▇▇▇ & Company, Inc.
Acting as Representatives of the
several Underwriters named in
Schedule A.
By ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Company, L.L.C.
By
----------------------------------
Principal
25
SCHEDULE A
Number of
Firm Shares
Underwriter to be Purchased
----------- ---------------
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Company, L.L.C.
Friedman, Billings, ▇▇▇▇▇▇ & Co., Inc.
E*OFFERING Corp.
▇▇▇▇▇▇ ▇▇▇▇▇▇ & Company, Inc.
TOTAL
===============
26
EXHIBIT A
ZENGINE, INC.
_______ Shares Common Stock(2)
PRICING AGREEMENT
_______________, 2000
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Company, L.L.C.
Friedman, Billings, ▇▇▇▇▇▇ & Co., Inc.
E*OFFERING Corp.
▇▇▇▇▇▇ ▇▇▇▇▇▇ & Company, Inc.
As Representatives of the Several
Underwriters
c/o ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Company, L.L.C.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Reference is made to the Underwriting Agreement dated
_________________, 2000 (the "UNDERWRITING AGREEMENT") relating to the sale by
the Company and the purchase by the several Underwriters for whom ▇▇▇▇▇▇▇
▇▇▇▇▇ & Company, L.L.C., Friedman, Billings, ▇▇▇▇▇▇ & Co., Inc., E*OFFERING
Corp. and ▇▇▇▇▇▇ ▇▇▇▇▇▇ & Company, Inc. are acting as representatives (the
"REPRESENTATIVES"), of the above Shares. All terms herein shall have the
definitions contained in the Underwriting Agreement except as otherwise
defined herein.
Pursuant to Section 4 of the Underwriting Agreement, the Company agrees
with the Representatives as follows:
1. The initial public offering price per share for the Shares shall be
$__________.
2. The purchase price per share for the Shares to be paid by the
several Underwriters shall be $_____________, being an amount equal to the
initial public offering price set forth above less $____________ per share.
Schedule A is amended as follows:
----------------------
(2) Plus an option to acquire up to ___ additional shares to cover
overallotments
27
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to us the enclosed duplicates hereof,
whereupon it will become a binding agreement among the Company and the several
Underwriters, including you, all in accordance with its terms.
Very truly yours,
ZENGINE, INC.
By
-----------------------------------------
Chief Executive Officer
The foregoing Agreement is hereby confirmed
and accepted as of the date first above
written.
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Company, L.L.C.
Friedman, Billings, ▇▇▇▇▇▇ & Co., Inc.
E*OFFERING Corp.
▇▇▇▇▇▇ ▇▇▇▇▇▇ & Company, Inc.
Acting as Representatives of the
several Underwriters
By ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Company, L.L.C.
By
--------------------------------
Principal
28
