1,900,000 Shares
Common Stock
MGi2, INC.
(a Delaware corporation)
AGREEMENT AMONG UNDERWRITERS
April ___, 2000
Capital West Securities, Inc., as Representative
Xxx Xxxxxxxxxx Xxxxxx, 0xx Xxxxx
000 Xxxxx Xxxxxxxx
Xxxxxxxx Xxxx, Xxxxxxxx 00000
Gentlemen:
This letter confirms the agreement among you, I-Bankers Securities,
Inc., Westport Resources Investment Services, Inc., APS Financial Corporation,
and other members of the Underwriting Group named in Schedule "1" attached
hereto and made a part hereof (individually, the "Underwriter", and
collectively, the "Underwriters"), with respect to the purchase by the
Underwriters severally from MGi2, Inc. (the "Company") of 1,900,000 shares of
Common Stock (the "Securities") pursuant to the Underwriting Agreement of even
date herewith between the Company and you, as the managing underwriter (the
"Underwriting Agreement"). The number of Securities to be purchased by each
Underwriter from the Company will be determined in accordance with paragraph 3
and Schedule "1" of the Underwriting Agreement. It is understood that changes
may be made by those who are to be Underwriters and in the respective numbers of
Securities to be purchased by them, but that the Underwriting Agreement will not
be changed without our consent, except as provided herein and in the
Underwriting Agreement. The obligations of the Underwriters to purchase the
number of Securities set opposite their respective names in Schedule "1" to the
Underwriting Agreement, are herein called their "underwriting obligations." The
number of Securities set opposite our respective names in Schedule "1" to the
Underwriting Agreement are herein called "our Securities."
1. DEFINITIONS. For purposes of this Agreement the following definitions
will be applicable:
1.1 MANAGER'S CONCESSION. The term "Manager's Concession" means
the compensation to you for acting as Manager, as provided in
paragraph 2 of this letter of not less than ____% of the
underwriting discount. The Manager's Concession will include
the right to a portion of the warrants to be issued pursuant
to the Underwriting Agreement and the right to the full
non-accountable expenses to be paid pursuant to the
Underwriting Agreement.
1.2 UNDERWRITING CONCESSION. The term "Underwriting Concession"
means compensation to the Underwriters for assuming the
underwriting risk of not less than ____% of the underwriting
discount.
1.3 DEALER'S CONCESSION. The term "Dealer's Concession" means
compensation to Dealers, who are members of the Selling Group
and will, as to Dealers who have executed an agreement with
you, be not less than ____% of the underwriting discount.
1.4 DEALER'S REALLOWANCE CONCESSION. The term "Dealer's
Reallowance Concession" means the compensation allowed Dealers
by Underwriters, other than you, and will be one-half of the
Dealer's Concession.
1.5 UNDERWRITING DISCOUNT. It is contemplated that the
underwriting discount will be 9% of the Offering Price (as
defined below). You, in your absolute discretion, will
determine, within the foregoing limitations, the precise
allocation of the underwriting discount and will notify us of
same at least 24 hours prior to the execution of the
Underwriting Agreement.
2. AUTHORITY AND COMPENSATION OF REPRESENTATIVE.
2.1 AUTHORITY. We hereby authorize you, as our Representative and
on our behalf, (a) to enter into the Underwriting Agreement
with the Company substantially in the form of Exhibit "A"
attached hereto, but with such changes therein as in your
judgment are not materially adverse to the Underwriters; (b)
to exercise all the authority and discretion vested in the
Underwriters and in you by the provisions of the Underwriting
Agreement; and (c) to take all such action as you, in your
discretion, may deem necessary or advisable in order to carry
out the provisions of the Underwriting Agreement and this
Agreement and the sale and distribution of the Securities.
Notwithstanding the foregoing, the time within which the
Registration Statement is required to become effective
pursuant to the Underwriting Agreement will not be extended
more than 48 hours without the approval of a majority in
interest of the Underwriters (including you). We authorize
you, in executing the Underwriting Agreement on our behalf, to
set forth in Schedule "1" of the Underwriting Agreement as our
commitment to purchase the number of Securities (which will
not be substantially in excess of the number of Securities
included in your invitation to participate unless we have
agreed otherwise) included in a wire, telex, or similar means
of communication transmitted by you to us at least 24 hours
prior to the commencement of the offering as our finalized
underwriting participation.
2.2 COMPENSATION. As our share of the compensation for your
services hereunder, we will pay you, and we authorize you to
charge to our account, a sum equal to the Manager's Concession
relating to that particular Group Sale or sale to the Dealers.
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3. PUBLIC OFFERING.
3.1 OFFERING PRICE; COMMENCEMENT OF OFFERING. A public offering of
the Securities is to be made, as herein provided, as soon
after the Registration Statement relating thereto becomes
effective as in your judgment is advisable. The Securities
will be initially offered to the public at the public offering
price of $____ per share. You will advise us by telegraph or
telephone when the Securities are released for offering. We
authorize you, as Representative of the Underwriters, after
the initial public offering, to vary the public offering
price, in your sole discretion, by reason of changes in
general market conditions or otherwise. The public offering
price of the Securities at any time in effect is herein called
the "Offering Price."
3.2 PROSPECTUS DELIVERY. We hereby agree to deliver all
preliminary and final Prospectuses as required for compliance
with the provisions of Rule 15c2-8 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and
Section 5(b) of the Securities Act of 1933, as amended (the
"Securities Act"). You have heretofore delivered to us such
preliminary Prospectuses as have been requested by us, receipt
of which is hereby acknowledged, and will deliver such final
Prospectuses as will be requested by us.
4. OFFERING TO DEALERS AND GROUP SALES.
4.1 GROUP SALES. We authorize you to reserve for offering and
sale, and on our behalf to sell, to institutions or other
retail purchasers (the "Group Sales") and to dealers selected
by you (the "Dealers") all, or any part of, our Securities as
you may determine. Such sales of Securities, if any, will be
made (a) in the case of Group Sales, at the Offering Price,
and (b) in the case of sales to Dealers, at the Offering Price
less the Dealer's Concession.
4.2 PROPORTION AND CONCESSION. Any Group Sales will be, as nearly
as practicable, in proportion to the underwriting obligations
of the respective Underwriters. Any sales to Dealers made for
our account will be, as nearly as practicable, in the ratio
that the Securities reserved for our account for offering to
Dealers bears to the aggregate of all Securities of all
Underwriters, including you, so reserved. On any Group Sales
or sales to Dealers made by you on our behalf, we will be
entitled to receive only the Underwriter's Concession relating
to that particular Group Sale or sale to the Dealers.
4.3 DIRECT SALES; UNSOLD SECURITIES. You agree to notify us not
less than 24 hours prior to the commencement of the public
offering as to the number of Securities, if any, which we may
retain for direct sale. Prior to the termination of this
Agreement, you may reserve for offering and sale, as herein
before provided, any Securities remaining unsold theretofore
retained by us and we may, with your consent, retain any
Securities remaining unsold theretofore reserved by you.
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4.4 AGREEMENTS WITH DEALERS. Sales to Dealers shall be made under
a Selected Dealers Agreement, attached hereto as Exhibit "B"
and by this reference incorporated herein. We authorize you to
determine the form and manner of any communications with
Dealers, and to make such changes in the Selected Dealers
Agreement, as you may deem appropriate. In the event that
there will be any such agreements with Dealers, you are
authorized to act as manager thereunder, and we agree, in such
event, to be governed by the terms and conditions of such
agreements. Each Underwriter agrees that it will not offer any
of the Securities for sale at a price below the Offering Price
or allow any concession therefrom, except as herein otherwise
provided. We, as to our Securities, may enter into agreements
with Dealers, but any Dealer's Reallowance Concession will not
exceed half of the Dealer's Concession.
4.5 NASD MEMBERS. It is understood that any person to whom an
offer may be made pursuant to paragraph 4, will be a member of
the National Association of Securities Dealers, Inc. (the
"NASD") or dealers or institutions with their principal place
of business located outside of the United States, its
territories or possessions, and who are not eligible for
membership under Section 1 of the Bylaws of the NASD who agree
to make no sales within the United States, its territories or
possessions, or to persons who are nationals thereof, or
residents therein, and, in making sales, to comply with the
NASD's Rules of Fair Practice.
4.6 PUBLIC ADVERTISEMENT. We authorize you to determine the form
and manner of any public advertisement of the Securities.
4.7 OFFERS PRIOR TO EFFECTIVENESS. Nothing contained in this
Agreement will be deemed to restrict our right, subject to the
provisions of this paragraph 4, to offer our Securities prior
to the effective date of the Registration Statement.
Notwithstanding the foregoing, any such offer will be made in
compliance with any applicable requirements of the Securities
Act and the Exchange Act and the rules and regulations of the
Securities and Exchange Commission (the "Commission")
thereunder, and of any applicable state securities laws.
5. REPURCHASES IN THE OPEN MARKET. Any Securities sold by us (otherwise than
through you) which, prior to the termination of this Agreement, or such earlier
date as you may determine, shall be contracted for or purchased in the open
market by you on behalf of any Underwriter or Underwriters, shall be repurchased
by us on demand at a price equal to the cost of such purchase plus commissions
and taxes, if any, on redelivery. Any Securities delivered on such repurchase
need not be the identical Securities originally sold by us. In lieu of delivery
of such Securities to us, you may (a) sell such Securities in any manner for our
account and charge us with the amount of any loss or expense, or credit us with
the amount of any profit, less any expense, resulting from such sale, or (b)
charge our account with an amount not in excess of the concession to Dealers on
such Securities.
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6. DELIVERY AND PAYMENT. We agree to deliver to you, at or before 9:00 a.m.
Oklahoma City Time, on the Closing Date referred to in the Underwriting
Agreement, at your office, a certified or bank cashier's check payable to your
order for the Offering Price of the Securities less Dealer's Concession of the
Securities which we retained for direct sale by us, the proceeds of which check
will be delivered to you, in the manner provided in the Underwriting Agreement,
to or for the account of the Company against delivery of certificates for such
Securities to you for our account. You are authorized to accept such delivery
and to give receipts therefor. You may advance funds for Securities which have
been sold or reserved for sale to retail purchasers or Dealers for our account.
If we fail (whether or not such failure shall constitute a default hereunder) to
deliver to you, or you fail to receive, our check and/or payment for sales made
by you for our account for the Securities which we have agreed to purchase, you,
individually and not as Representative of the Underwriters, are authorized (but
will not be obligated) to make payment, in the manner provided in the
Underwriting Agreement to, or for the account of, the Company for such
Securities for our account. Any such payment by you will not relieve us of any
of our obligations under the Underwriting Agreement or under this Agreement, and
we agree to repay you on demand the amount so advanced for our account. We
further agree as follows:
(a) We agree, on demand, to take up and pay for, or to deliver to,
you funds sufficient to pay at cost any Securities of the
Company purchased by you for our account pursuant to the
provisions of paragraph 10 hereof, and to deliver to you on
demand any Securities sold by you for our account, pursuant to
any provision of this Agreement;
(b) We authorize you to deliver our Securities, and any other
Securities purchased by you for our account, pursuant to the
provisions of paragraph 10 hereof, against sales made by you
for our account pursuant to any provision of this Agreement;
(c) Upon receipt by you of payment for the Securities sold by us
and/or through you for our account, you will remit to us
promptly an amount equal to the Underwriting Concession on
such Securities. You agree to cause to be delivered to us, as
soon as practicable after the Closing Date referenced in the
Underwriting Agreement, such part of our Securities purchased
on such Closing Date as will not have been sold or reserved
for sale by you for our account; and
(d) If any Securities reserved for sale in Group Sales or to
Dealers will not be purchased and paid for in due course as
contemplated hereby, we agree to accept delivery when tendered
by you of any Securities so reserved for our account and not
so purchased and pay you the Offering Price less the Dealer's
and Underwriting Concessions.
7. AUTHORITY TO BORROW. We authorize you to advance your funds for our account
(charging current interest rates) and to arrange loans for our account for the
purpose of carrying out this Agreement, and in connection therewith, to execute
and deliver any notes or other instruments, and to hold, or pledge as security
therefor, all or any part of our Securities of the Company purchased hereunder
for our account. Any lending bank is hereby authorized to accept your
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instructions as Representative in all matters relating to such loans. Any part
of our Securities held by you, may be delivered to us for carrying purposes, and
if so delivered, will be redelivered to you upon demand.
8. ALLOCATION OF EXPENSE AND LIABILITY. We authorize you to charge our account
with, and we agree to pay (a) all transfer taxes on sales made by you for our
account, except as herein otherwise provided, and (b) our proportionate share
(based on our underwriting obligations) of all expenses in excess of those
reimbursed by the Company incurred by you in connection with the purchase,
carrying and distribution, or proposed purchase and distribution, of the
Securities and all other expenses arising under the terms of the Underwriting
Agreement or this Agreement. Your determination of all such expenses and your
allocation thereof will be final and conclusive. Funds for our account at any
time in your hands, as our Representative, may be held in your general funds
without accountability for interest. As soon as practicable after the
termination of this Agreement, the net credit or debit balance in our account,
after proper charge and credit for all interim payments and receipts, will be
paid to or paid by us. However, you may reserve from distribution an amount to
cover possible additional expenses chargeable to the several Underwriters.
9. LIABILITY FOR FUTURE CLAIMS. Neither any statement by you, as Representative
of the Underwriters, of any credit or debit balance in our account nor any
reservation from distribution to cover possible additional expenses relating to
the Securities will constitute any representation by you as to the existence or
nonexistence of possible unforeseen expenses or liabilities of or charges
against the several Underwriters. Notwithstanding the distribution of any net
credit balance to us or the termination of this Agreement, or both, we will be,
and remain liable for, and will pay on demand (a) our proportionate share (based
on our underwriting obligations) of all expenses and liabilities which may be
incurred by, or for the accounts of the Underwriters, including any liability
which may be incurred by the Underwriters or any of them, and (b) any transfer
taxes paid after such settlement on account of any sale or transfer for our
account.
10. STABILIZATION. We authorize you, until the termination of this Agreement,
(a) to make purchases and sales of the Securities, in the open market or
otherwise, for long or short account, and on such terms, and at such prices as
you, in your discretion, may deem desirable, (b) in arranging for sales of
Securities, to over-allot, and (c) either before or after the termination of
this Agreement, to cover any short position incurred pursuant to this paragraph
10, subject, however, to the applicable rules and regulations of the Commission
under the Exchange Act. All such purchases, sales and over-allotments will be
made for the accounts of the several Underwriters as nearly as practicable in
proportion to their respective underwriting obligations.
10.1 NOTIFICATION. If you engage in any stabilizing transactions as
representative of the underwriters, you will promptly notify
us of that fact and in like manner you agree to promptly
notify and file with us any stabilizing transaction in
accordance with the requirements of Rule 17a-2(d) under the
Exchange Act.
10.2 UNSOLD SECURITIES. We agree to advise you from time to time,
upon request, until the settlement of accounts hereunder, of
the number of Securities at the time
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retained by us unsold, and we will upon request sell to you,
for the accounts of one or more of the several Underwriters,
such number of our unsold Securities as you may designate, at
the Offering Price less such amount, not in excess of the
concession to Dealers, as you may determine.
11. OPEN MARKET TRANSACTIONS. We agree that, except with your consent and except
as herein provided upon advice from you, we will not make purchases or sales on
the open market or otherwise, or attempt to induce others to make purchases or
sales, either before or after the purchase of the Securities, and prior to the
completion (as defined in Regulation M of the Exchange Act) of our participation
in the distribution, we will otherwise comply with Regulation M. Nothing
contained in this paragraph 11 will prohibit us from acting as broker or agent
in the execution of unsolicited orders of customers for the purchase or sale of
any securities of the Company.
12. BLUE SKY. Prior to the initial offering by the Underwriters, you will inform
us as to the states under the respective securities or Blue Sky laws of which it
is believed that the Securities have been qualified or are exempt for sale, but
you do not assume any responsibility or obligation as to the accuracy of such
information or as to the right of any Underwriter or Dealer to sell the
Securities in any jurisdiction. We will not sell any Securities in any other
state or jurisdiction, and we will not sell Securities in any state or
jurisdiction unless we are qualified or licensed to sell securities in such
state or jurisdiction. We authorize you, if you deem it inadvisable in arranging
sales of Securities for our account hereunder, to sell any of our Securities to
any particular Dealer or other buyer, because of the securities or Blue Sky laws
of any jurisdiction, to sell our Securities to one or more other Underwriters at
the Offering Price less, in the case of a sale to any Dealer, such amount, not
in excess of the concession to Dealers thereon, as you may determine. The
transfer tax on any such sales among Underwriters shall be treated as an expense
and charged to the respective accounts of the several Underwriters, in
proportion to their respective underwriting obligations.
13. DEFAULT BY UNDERWRITERS.
13.1 DEFAULT. Default by one or more Underwriters, in respect to
their obligations under the Underwriting Agreement shall not
release us from any of our obligations. In case of such
default by one or more Underwriters, you are authorized to
increase, pro rata, with the other non-defaulting
Underwriters, the number of defaulted Securities which we will
be obligated to purchase from the Company. Notwithstanding the
foregoing, the aggregate amount of all such increases for all
Underwriters will not exceed 10% of such Securities. If the
aggregate number of the Securities not taken up by such
defaulting Underwriters exceeds 10%, you are further
authorized, but are not be obligated, to arrange for the
purchase by other persons, who may include yourselves, of all
or a portion of the Securities not taken up by such
Underwriters. In the event any such increases or arrangements
are made, the respective numbers of Securities to be purchased
by the non-defaulting Underwriters and by any such other
person or persons shall be taken as the basis for the
underwriting obligations under this Agreement. However, this
will not, in
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any way, affect the liability of any defaulting Underwriters
to the other Underwriters for damages resulting from such
default.
13.2 PROPORTIONATE SHARES. In the event of default by one or more
Underwriters in respect of their obligations under this
Agreement to take up and pay for any Securities purchased by
you for their respective accounts, pursuant to paragraph 10
hereof, or to deliver any such Securities sold or
over-allotted by you for their respective accounts pursuant to
any provisions of this Agreement, and to the extent that
arrangements will not have been made by you for other persons
to assume the obligations of such defaulting Underwriter or
Underwriters, each non-defaulting Underwriter will assume its
proportionate share of the aforesaid obligations of each such
defaulting Underwriter without relieving any such Underwriter
of its liability therefor.
14. TERMINATION OF AGREEMENT. Unless earlier terminated by you, the provisions
of paragraphs 3, 4, 5, 7, 10, and 11 of this Agreement will, except as otherwise
provided therein, terminate 30 full business days after the effective date of
the Registration Statement herein referenced, but may be extended by you for an
additional period or periods not exceeding 30 full business days in the
aggregate. You may, however, terminate this Agreement, or any provisions hereof,
at any time by written or telegraphic notice to us.
15. GENERAL POSITION OF THE REPRESENTATIVE. In taking action under this
Agreement, you will act only as agent of the several Underwriters. Your
authority as Representative of the several Underwriters will include the taking
of such action as you may deem advisable in respect of all matters pertaining to
any and all offers and sales of the Securities, including the right to make any
modifications which you consider necessary or desirable in the arrangements with
Dealers or others. You shall be under no liability for, or in respect of, the
value of the Securities or the validity or the form thereof, the Registration
Statement, the Prospectus, the Underwriting Agreement, or other instruments
executed by the Company or others of any agreement on its or their part; nor
will you, as such Representative or otherwise, be liable under any of the
provisions hereof, or for any matters connected herewith, except for want of
good faith, and except for any liability arising under the Securities Act; and
no obligation not expressly assumed by you as such Representative herein will be
implied from this Agreement. In representing the Underwriters hereunder, you
shall act as the representative of each of them respectively. Nothing herein
contained will constitute the several Underwriters partners with you or with
each other, or render any Underwriter liable for the commitments of any other
Underwriter, except as otherwise provided in paragraph 13 hereof. The
commitments and liabilities of each of the several Underwriters are several in
accordance with their respective underwriting obligations and are not joint.
16. ACKNOWLEDGMENT OF REGISTRATION STATEMENT, ETC. We hereby confirm that we
have examined the Registration Statement (including all amendments thereto)
relating to the Securities as heretofore filed with the Commission, that we are
familiar with the amendment(s) to the Registration Statement and the final form
of Prospectus proposed to be filed, that we are willing to accept the
responsibilities of an underwriter thereunder, and that we are willing to
proceed as
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therein contemplated. We further confirm that the statements made under the
heading "Underwriting" in such proposed final form of Prospectus are correct and
we authorize you so to advise the Company on our behalf. We understand that the
aforementioned documents are subject to further change and that we will be
supplied with copies of any amendment or amendments to the Registration
Statement and of any amended Prospectus promptly, if and when received by you,
but the making of such changes and amendments will not release us or affect our
obligations hereunder or under the Underwriting Agreement.
17. INDEMNIFICATION. Each Underwriter, including you, agrees to indemnify and
hold harmless each other Underwriter and each person who controls any other
Underwriter within the meaning of Section 15 of the Securities Act to the extent
of their several commitments under the Underwriting Agreement and upon the terms
that such Underwriter agrees to indemnify and hold harmless the Company as set
forth in paragraph 9 of the Underwriting Agreement. The Agreement contained in
this paragraph 17 will survive any termination of this Agreement Among
Underwriters.
18. CAPITAL REQUIREMENTS. We confirm that our ratio of aggregate indebtedness to
net capital is such that we may, in accordance with and pursuant to Rule 15c3-1,
promulgated by the Commission under the Exchange Act, agree to purchase the
number of Securities we may be obligated to purchase under any provision of the
Underwriting Agreement or this Agreement.
19. MISCELLANEOUS.
19.1 QUESTIONNAIRE. We have transmitted herewith a completed
Underwriters' Questionnaire on the form thereof supplied by
you.
19.2 NOTICE. Any notice hereunder from you to us or from us to you
will be deemed to have been duly give if sent by registered
mail, telegram, teletype, telex, telecopier, graphic scan, or
other written form of telecommunication. Notices to us shall
be directed to our at address as set forth in the Underwriting
Agreement. Notices to you shall be directed to Xxxxxx X.
XxXxxxxx, Xxxxxx X. Xxxxx, or Xxxxxxx X. Xxxxx, at Capital
West Securities, Inc., 000 Xxxxx Xxxxxxxx, 0xx Xxxxx, Xxx
Xxxxxxxxxx Xxxxxx, Xxxxxxxx Xxxx, Xxxxxxxx 00000.
19.3 NASD MEMBERSHIP. You hereby confirm that you are registered as
a broker-dealer with the Commission and that you are a member
of the NASD and we confirm that we are either a member of the
NASD or a foreign broker-dealer not eligible for membership
under Section I of the Bylaws of the NASD, who agrees to make
no sales within the United States, its territories or
possessions, or to persons who are nationals thereof or
residents therein, and, in making sales, to comply with the
requirements of the NASD's Interpretation with Respect to Free
Riding and Withholding, and with Sections 2730, 2740 and 2420
to the extent applicable to foreign nonmember brokers or
dealers, and Section 2750 of the NASD's Rules of Fair
Practice.
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19.4 COMPLIANCE WITH LAWS. We will comply with all applicable
federal laws, the laws of the states or other jurisdictions
concerned and the Rules and Regulations of the NASD,
including, but not limited to, Section 2740 of the Rules of
Fair Practice.
19.5 COUNTERPARTS. This instrument may be signed by the
Underwriters in various counterparts which together will
constitute one and the same agreement among all the
Underwriters and will become effective as between us at such
time as you confirm same by returning an executed copy to us,
and thereafter, as to us and the other Underwriters, upon
execution by them of counterparts which are confirmed by you.
In no event, however, will we have any liability under this
Agreement if the Underwriting Agreement is not executed.
Please confirm that the foregoing correctly states the understanding
between us by signing and returning to us a counterpart hereof.
Very truly yours,
I-BANKERS SECURITIES, INC.
By
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Name:
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Title:
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WESTPORT RESOURCES INVESTMENT
SERVICES, INC.
By
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Name:
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Title:
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APS FINANCIAL CORPORATION
By
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Name:
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Title:
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By
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Name:
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Title:
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By
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Name:
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Title:
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By
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Name:
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Title:
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Confirmed as of the date first above written.
CAPITAL WEST SECURITIES, INC.
As Representative
By
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Xxxxxx X. XxXxxxxx, Chairman
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