Exhibit 1.1
MCSi, INC.
SHARES OF COMMON STOCK
UNDERWRITING AGREEMENT
August 14, 2001
FRIEDMAN, BILLINGS, XXXXXX & CO., INC.
XXXXXXX XXXXX & COMPANY, L.L.C.
as Representative of the several Underwriters
c/o Friedman, Billings, Xxxxxx & Co., Inc.
0000 00xx Xxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Dear Sirs:
MCSI, INC., a Maryland corporation (the "Company"), confirms
its agreement with Friedman, Billings, Xxxxxx & Co., Inc. and Xxxxxxx Xxxxx &
Company, L.L.C. (collectively, the "Underwriters"), for whom Friedman, Billings,
Xxxxxx & Co., Inc. is acting as Representative (in such capacity, the
"Representative"), with respect to (i) the sale by the Company of 4,000,000
shares (the "Initial Shares") of Common Stock, without par value, of the Company
("Common Stock") and the purchase by the Underwriters, acting severally and not
jointly, of the respective number of shares of Common Stock set forth opposite
the names of the Underwriters in Schedule I hereto, and (ii) the grant of the
option described in Section 1(b) hereof to purchase all or any part of 600,000
additional shares of Common Stock to cover over-allotments (the "Option
Shares"), if any, from the Company to the Underwriters, acting severally and not
jointly, in the respective numbers of shares of Common Stock set forth opposite
the names of the Underwriters in Schedule I hereto. The 4,000,000 shares of
Common Stock to be purchased by the Underwriters and all or any part of the
600,000 shares of Common Stock subject to the option described in Section l(b)
hereof are hereinafter called, collectively, the "Shares." Friedman, Billings,
Xxxxxx & Co., Inc. has been authorized to act on behalf of Xxxxxxx Xxxxx &
Company, L.L.C.
The Company understands that the Underwriters propose to make
a public offering of the Shares as soon as the Underwriters deem advisable after
this Agreement has been executed and delivered.
The Company has filed with the Securities and Exchange
Commission (the "Commission"), a registration statement on Form S-3 (No.
333-90259) and a prospectus for the registration of the issuance of certain of
its securities, including the Shares, under the Securities Act of 1933, as
amended (the "Securities Act"), and the rules and regulations thereunder (the
"Securities Act Regulations"). The Company has prepared and filed such
amendments thereto, if any, and such prospectus supplements, if any, as may have
been required to the date hereof, and will file such additional amendments and
such prospectus supplements thereto as may hereafter be required. The
registration
statement has been declared effective under the Securities Act by the
Commission. The registration statement as amended at the time it became
effective (including all information deemed (whether by incorporation by
reference or otherwise) to be a part of the registration statement at the time
it became effective pursuant to Rule 430A(b) of the Securities Act Regulations)
is hereinafter called the "Registration Statement," except that, if any
post-effective amendment to such registration statement is effective prior to
the Closing Time (as defined below), "Registration Statement" shall refer to
such registration statement as so amended. As used herein, the term "Base
Prospectus" means the prospectus included in the Registration Statement in the
form filed with the Commission on November 3, 1999, as amended by Post Effective
Amendment No. 1 thereto filed with the Commission on December 10, 1999, as
amended by Post Effective Amendment No. 2 thereto filed with the Commission on
January 5, 2001, as may be further amended from time to time, including the
information incorporated by reference therein. The term "Preliminary Prospectus"
means any preliminary form of the Prospectus (as defined herein) specifically
relating to the Shares, in the form first filed with, or transmitted for filing
to, the Commission pursuant to Rule 424 of the Securities Act Regulations; the
term "Prospectus Supplement" means any prospectus supplement specifically
relating to the Shares, in the form first filed with, or transmitted for filing
to, the Commission pursuant to Rule 424 under the Securities Act; the term
"Prospectus" means the Base Prospectus, including, in each case, the Prospectus
Supplement. The Commission has not issued any order preventing or suspending the
use of any Preliminary Prospectus, the Prospectus or any Prospectus Supplement.
The Company and the Underwriters agree as follows:
1. SALE AND PURCHASE:
(a) INITIAL SHARES. Upon the basis of the warranties and
representations and other terms and conditions herein set forth, at the purchase
price per share of $10.925, the Company agrees to sell to the Underwriters the
number of Initial Shares set forth in Schedule I opposite its name, and each
Underwriter agrees, severally and not jointly, to purchase from the Company the
number of Initial Shares set forth in Schedule I opposite such Underwriter's
name, plus any additional number of Initial Shares which such Underwriter may
become obligated to purchase pursuant to the provisions of Section 8 hereof,
subject in each case, to such adjustments among the Underwriters as the
Representative in its sole discretion shall make to eliminate any sales or
purchases of fractional shares.
(b) OPTION SHARES. In addition, upon the basis of the warranties
and representations and other terms and conditions herein set forth, at the
purchase price per share set forth in paragraph (a), the Company hereby grants
an option to the Underwriters, acting severally and not jointly, to purchase
from the Company, all or any part of the Option Shares, plus any additional
number of Option Shares which such Underwriter may become obligated to purchase
pursuant to the provisions of Section 8 hereof. The option hereby granted will
expire 30 days after the date hereof and may be
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exercised in whole or in part from time to time only for the purpose of covering
over-allotments which may be made in connection with the offering and
distribution of the Initial Shares upon notice by the Representative to the
Company setting forth the number of Option Shares as to which the several
Underwriters are then exercising the option and the time and date of payment and
delivery for such Option Shares. Any such time and date of delivery (a "Date of
Delivery") shall be determined by the Representative, but shall not be later
than three full business days (or earlier, without the consent of the Company,
than two full business days) after the exercise of such option, nor in any event
prior to the Closing Time, as hereinafter defined. If the option is exercised as
to all or any portion of the Option Shares, the Company will sell that
proportion of the total number of Option Shares then being purchased which the
number of Initial Shares set forth in Schedule I opposite the name of the
Company bears to the total number of Initial Shares, and each of the
Underwriters, acting severally and not jointly, will purchase that proportion of
the total number of Option Shares then being purchased which the number of
Initial Shares set forth in Schedule I opposite the name of such Underwriter
bears to the total number of Initial Shares, subject in each case to such
adjustments among the Underwriters as the they in their sole discretion shall
make to eliminate any sales or purchases of fractional shares.
2. PAYMENT AND DELIVERY
(a) INITIAL SHARES. The Shares to be purchased by each Underwriter
hereunder, in definitive form, and in such authorized denominations and
registered in such names as the Representative may request upon at least
forty-eight hours' prior notice to the Company, shall be delivered by or on
behalf of the Company to the Representative, including, at the option of the
Representative, through the facilities of The Depository Trust Company ("DTC")
for the account of such Underwriter, with any transfer taxes payable in
connection with the transfer to the Underwriters of the Initial Shares duly paid
by the Company, against payment by or on behalf of such Underwriter of the
purchase price therefor by wire transfer of Federal (same-day) funds to the
account specified to the Representative by the Company upon at least forty-eight
hours' prior notice. The Company will cause the certificates representing the
Initial Shares to be made available for checking and packaging at least
twenty-four hours prior to the Closing Time (as defined below) with respect
thereto at the office of the Representative, 0000 00xx Xxxxxx Xxxxx, Xxxxxxxxx,
Xxxxxxxx 00000, or at the office of DTC or its designated custodian, as the case
may be (the "Designated Office"). The time and date of such delivery and payment
shall be 9:30 a.m., New York City time, on the third (fourth, if pricing occurs
after 4:30 p.m., New York City time) business day after the date hereof (unless
another time and date shall be agreed to by the Representative and the Company).
The time at which such payment and delivery are actually made or at which
payment and delivery of any Option Shares are actually made is hereinafter
sometimes called the "Closing Time" and the date of delivery of both Initial
Shares and Option Shares is hereinafter sometimes called the "Date of Delivery."
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(b) OPTION SHARES. Any Option Shares to be purchased by each
Underwriter hereunder, in definitive form, and in such authorized denominations
and registered in such names as the Representative may request upon at least
forty-eight hours' prior notice to the Company shall be delivered by or on
behalf of the Company to the Representative, including, at the option of the
Representative, through the facilities of DTC for the account of such
Underwriter, with any transfer taxes payable in connection with the transfer to
the Underwriter of the Option Shares duly paid by the Company, against payment
by or on behalf of such Underwriter of the purchase price therefor by wire
transfer of Federal (same-day) funds to the account specified to the
Representative by the Company upon at least forty-eight hours' prior notice. The
Company will cause the certificates representing the Option Shares to be made
available for checking and packaging at least twenty-four hours prior to the
Date of Delivery with respect thereto at the Designated Office. The time and
date of such delivery and payment shall be 9:30 a.m., New York City time, on the
date specified by the Representative in the notice given by the Representative
to the Company of the Underwriters' election to purchase such Option Shares or
on such other time and date as the Company and the Representative may agree upon
in writing.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY:
The Company represents and warrants to the Underwriters that:
(a) the Company has an authorized capitalization as set forth in
the Prospectus; the outstanding shares of capital stock of the Company and each
"subsidiary" (as defined for purposes of Rule 1-02 of Regulation S-X of the
Commission) of the Company (each, a "Subsidiary") have been duly and validly
authorized and issued and are fully paid and non-assessable, and all of the
outstanding shares of capital stock of the Subsidiaries are directly or
indirectly owned of record and beneficially by the Company; all of the
membership interests in each LLC Subsidiary have been duly and validly
authorized and issued and fully paid; except as disclosed in the Prospectus,
there are no outstanding (i) securities or obligations of the Company or any of
the Subsidiaries convertible into or exchangeable for any capital stock of the
Company or any such Subsidiary, (ii) warrants, rights or options to subscribe
for or purchase from the Company or any such Subsidiary any such capital stock
or any such convertible or exchangeable securities or obligations, or (iii)
obligations of the Company or any such Subsidiary to issue any shares of capital
stock, any such convertible or exchangeable securities or obligation, or any
such warrants, rights or options, except for the Company's obligations to pay
the deferred portion of the purchase price for certain acquired entities in
shares of its Common Stock;
(b) each of the Company and each of its "significant subsidiaries"
as defined in Rule 1-02(w) of Regulation S-X of the Commission (all of which are
named in Exhibit A hereto) has been duly incorporated (or organized) and is
validly existing as a corporation (or general or limited partnership or limited
liability company) in good standing under the laws of its respective
jurisdiction of incorporation (or organization)
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with full corporate or other applicable power and authority to own its
respective properties and to conduct its respective businesses as described in
the Registration Statement and Prospectus and, in the case of the Company, to
execute and deliver this Agreement and to consummate the transactions
contemplated herein;
(c) the Company and all of the Subsidiaries are duly qualified or
licensed and are in good standing in each jurisdiction in which they conduct
their respective businesses or in which they own or lease real property or
otherwise maintain an office and in which the failure, individually or in the
aggregate, to be so qualified or licensed could have a material adverse effect
on the assets, business, operations, earnings, properties or condition
(financial or otherwise), present or prospective, of the Company and the
Subsidiaries taken as a whole, (any such effect or change, where the context so
requires, is hereinafter called a "Material Adverse Effect" or "Material Adverse
Change"); except as disclosed in the Prospectus, and except for certain loan
restrictions relating to certain foreign borrowings, no Subsidiary is prohibited
or restricted, directly or indirectly, from paying dividends to the Company, or
from making any other distribution with respect to such Subsidiary's capital
stock or from repaying to the Company or any other Subsidiary any amounts which
may from time to time become due under any loans or advances to such Subsidiary
from the Company or such other Subsidiary, or from transferring any such
Subsidiary's property or assets to the Company or to any other Subsidiary; other
than as disclosed in the Prospectus and except for the shares of ISA
International plc, the Company does not own, directly or indirectly, any capital
stock or other equity securities of any other corporation or any ownership
interest in any partnership, joint venture or other association;
(d) the Company and the Subsidiaries are in compliance in all
material respects with all applicable laws, rules, regulations, orders, decrees
and judgments, including those relating to transactions with affiliates;
(e) neither the Company nor any Subsidiary is in breach of or in
default (nor has any event occurred which with notice, lapse of time, or both
would constitute a breach of, or default), (i) under its respective
organizational documents, or (ii) in the performance or observance of any
obligation, agreement, covenant or condition contained in any license,
indenture, mortgage, deed of trust, loan or credit agreement or other agreement
or instrument to which the Company or any Subsidiary is a party or by which any
of them or their respective properties is bound, except, in the case of clause
(ii), for such breaches or defaults which could not have a Material Adverse
Effect;
(f) the execution, delivery and performance of this Agreement, and
consummation of the transactions contemplated herein will not (A) conflict with,
or result in any breach of, or constitute a default under (nor constitute any
event which with notice, lapse of time, or both would constitute a breach of, or
default under), (i) any provision of the organizational documents of the Company
or any Subsidiary, or (ii) any provision of any license, indenture, mortgage,
deed of trust, loan or credit agreement or other agreement or instrument to
which the Company or any Subsidiary is a party or by
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which any of them or their respective properties may be bound or affected, or
under any federal, state, local or foreign law, regulation or rule or any
decree, judgment or order applicable to the Company or any Subsidiary, except in
the case of this clause (ii) for such breaches or defaults which could not have
a Material Adverse Effect; or (B) result in the creation or imposition of any
lien, charge, claim or encumbrance upon any property or asset of the Company or
any Subsidiary;
(g) this Agreement has been duly authorized, executed and
delivered by the Company and is a legal, valid and binding agreement of the
Company enforceable in accordance with its terms, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors' rights generally, and by general equitable principles, and except to
the extent that the indemnification and contribution provisions of Section 9
hereof may be limited by federal or state securities laws and public policy
considerations in respect thereof;
(h) no approval, authorization, consent or order of or filing with
any federal, state or local governmental or regulatory commission, board, body,
authority or agency is required in connection with the Company's execution,
delivery and performance of this Agreement, its consummation of the transactions
contemplated herein, and its sale and delivery of the Shares, other than (A)
such as have been obtained, or will have been obtained at the Closing Time or
the relevant Date of Delivery, as the case may be, under the Securities Act and
the Securities Exchange Act of 1934 (the "Exchange Act"), (B) such approvals as
have been obtained in connection with the approval of the quotation of the
Shares on the Nasdaq National Market and (C) based on the "blue sky" survey
prepared by counsel for the Underwriters, any necessary qualification under the
securities or blue sky laws of the various jurisdictions in which the Shares are
being offered by the Underwriters;
(i) each of the Company and the Subsidiaries has all necessary
licenses, authorizations, consents and approvals and has made all necessary
filings required under any federal, state or local law, regulation or rule, and
has obtained all necessary authorizations, consents and approvals from other
persons, required in order to conduct their respective businesses as described
in the Prospectus, except to the extent that any failure to have any such
licenses, authorizations, consents or approvals, to make any such filings or to
obtain any such authorizations, consents or approvals could not, individually or
in the aggregate, have a Material Adverse Effect; neither the Company nor any of
the Subsidiaries is required by any applicable law to obtain accreditation or
certification from any governmental agency or authority in order to provide the
products and services which it currently provides or which it proposes to
provide as set forth in the Prospectus; neither the Company nor any of the
Subsidiaries is in violation of, in default under, or has received any notice
regarding a possible violation, default or revocation of any such license,
authorization, consent or approval or any federal, state, local or foreign law,
regulation or rule or any decree, order or judgment applicable to the Company or
any of the Subsidiaries the effect of which could result in a Material Adverse
Change; and no such license, authorization, consent or approval contains a
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materially burdensome restriction that is not adequately disclosed in the
Registration Statement and the Prospectus;
(j) each of the Registration Statement and any Rule 462(b)
Registration Statement has become effective under the Securities Act and no stop
order suspending the effectiveness of the Registration Statement or any Rule
462(b) Registration Statement has been issued under the Securities Act and no
proceedings for that purpose have been instituted or are pending or, to the
knowledge of the Company, are threatened by the Commission, and the Company has
complied to the Commission's satisfaction with any request on the part of the
Commission for additional information;
(k) the Preliminary Prospectus and the Registration Statement
comply, and the Prospectus and any further amendments or supplements thereto
will, when they have become effective or are filed with the Commission, as the
case may be, comply, in all material respects with the requirements of the
Securities Act and the Securities Act Regulations; the Registration Statement
did not, and any amendment thereto will not, in each case as of the applicable
effective date, contain an untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; and the Preliminary Prospectus does not, and the
Prospectus or any amendment or supplement thereto will not, as of the applicable
filing date and at the Closing Time and on each Date of Delivery (if any),
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading;
provided, however, that the Company makes no warranty or representation with
respect to any statement contained in the Registration Statement or the
Prospectus in reliance upon and in conformity with the information concerning
the Underwriters and furnished in writing by or on behalf of the Underwriters
through the Representative to the Company expressly for use in the Registration
Statement or the Prospectus (that information being limited to that described in
the penultimate sentence of the first paragraph of Section 9(b) hereof);
(l) each document incorporated by reference in the Prospectus,
when it became effective or was filed with the Commission, as the case may be,
conformed in all material respects to the requirements of the Securities Act or
the Exchange Act, as applicable, and the Securities Act Regulations and the
Exchange Act Regulations, and none of such documents contained an untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading; and any
further documents so filed and incorporated by reference in the Prospectus or
any further amendment or supplement thereto, when such documents become
effective or are filed with the Commission, as the case may be, will conform in
all material respects to the requirements of the Securities Act or the Exchange
Act, as applicable, and the Securities Act Regulations and the Exchange Act
Regulations and will not include an untrue statement of a material fact or omit
to state a material fact
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required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading;
(m) the Preliminary Prospectus was and the Prospectus delivered to
the Underwriters for use in connection with this offering will be identical to
the versions of the Preliminary Prospectus and Prospectus created to be
transmitted to the Commission for filing via the Electronic Data Gathering
Analysis and Retrieval System ("XXXXX"), except to the extent permitted by
Regulation S-T;
(n) there are no actions, suits, proceedings, inquiries or
investigations pending or, to the knowledge of the Company, threatened against
the Company or any Subsidiary or any of their respective officers and directors
or to which the properties, assets or rights of any such entity are subject, at
law or in equity, before or by any federal, state, local or foreign governmental
or regulatory commission, board, body, authority, arbitral panel or agency which
could result in a judgment, decree, award or order having a Material Adverse
Effect;
(o) the financial statements, including the related notes thereto,
included in (or incorporated by reference into) the Registration Statement and
the Prospectus present fairly the consolidated financial position of the
entities to which such financial statements relate (the "Covered Entities") as
of the dates indicated and the consolidated results of operations and changes in
financial position and cash flows of the Covered Entities for the periods
specified; such financial statements have been prepared in conformity with
generally accepted accounting principles as applied in the United States and on
a consistent basis during the periods involved and in accordance with Regulation
S-X promulgated by the Commission; the financial statement schedules included in
the Registration Statement and the amounts in the Prospectus under the captions
"Selected Consolidated Financial Data" and "Prospectus Supplement Summary -
Recent Developments" fairly present the information shown therein and have been
compiled on a basis consistent with the financial statements included in the
Registration Statement and the Prospectus; no other financial statements or
supporting schedules are required to be included in the Registration Statement;
the unaudited pro forma financial information included in the Prospectus and any
Preliminary Prospectus complies as to form in all material respects with the
applicable accounting requirements of the Securities Act and the Securities Act
Regulations, and management of the Company believes that the assumptions
underlying the pro forma adjustments are reasonable; such pro forma adjustments
have been properly applied to the historical amounts in the compilation of the
information and such information fairly presents with respect to the Company and
the Subsidiaries, the results of operations and other information purported to
be shown therein for the respective periods specified; no other pro forma
financial information is required to be included in the Registration Statement;
(p) PricewaterhouseCoopers LLP, whose reports on the consolidated
financial statements of the Company and the Subsidiaries are filed with the
Commission as part of the Registration Statement and Prospectus or are
incorporated by reference therein and
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any other accounting firm that has certified Company financial statements and
delivered its reports with respect thereto, are, and were during the periods
covered by their reports, independent public accountants as required by the
Securities Act and the Securities Act Regulations;
(q) subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, and except as may be
otherwise stated in the Registration Statement or Prospectus, there has not been
as of or prior to a Closing Time (A) any Material Adverse Change or any
development that could reasonably be expected to result in a Material Adverse
Change, whether or not arising in the ordinary course of business, (B) any
transaction that is material to the Company and the Subsidiaries taken as a
whole, contemplated or entered into by the Company or any of the Subsidiaries,
(C) any obligation, contingent or otherwise, directly or indirectly incurred by
the Company or any Subsidiary that is material to the Company and Subsidiaries
taken as a whole or (D) any dividend or distribution of any kind declared, paid
or made by the Company on any class of its capital stock or (E) any change in
the capital stock, short-term debt or long-term debt of the Company or any of
its consolidated Subsidiaries;
(r) the Shares, when issued in accordance with the terms and
conditions of this Agreement, will conform in all material respects to the
description thereof contained in the Registration Statement and the Prospectus;
(s) except as disclosed in the Prospectus, there are no persons
with registration or other similar rights to have any equity or debt securities,
including securities which are convertible into or exchangeable for equity
securities, required to be registered pursuant to the Registration Statement or
otherwise required to be registered by the Company under the Securities Act in
connection with the offer and sale of the Shares;
(t) the Shares have been duly authorized and, when issued and duly
delivered against payment therefor as contemplated by this Agreement, will be
validly issued, fully paid and non-assessable, and the Underwriters will acquire
good and marketable title to the Shares, free and clear of any pledge, lien,
encumbrance, security interest or other claim (other than any such pledge, lien,
encumbrance, security interest or other claim created by any of the Underwriters
or against any of the Underwriters by any third party), and the issuance and
sale of the Shares by the Company is not subject to preemptive or other similar
rights arising by operation of law, under the organizational documents of the
Company or under any agreement to which the Company or any Subsidiary is a party
or otherwise;
(u) the Shares have been approved for quotation on the Nasdaq
National Market, subject to official notice of issuance;
(v) the Company has not taken, and will not take, directly or
indirectly, any action which is designed to or which has constituted or which
might reasonably be expected to cause or result in stabilization or manipulation
of the price of any security of
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the Company to facilitate the sale or resale of the Shares (provided, however,
that the Company may purchase shares under the 1998 Employee Payroll Deduction
Stock Purchase Plan and the 401(k) Plan);
(w) neither the Company nor any of its affiliates (i) is required
to register as a "broker" or "dealer" in accordance with the provisions of the
Exchange Act, or the rules and regulations thereunder (the "Exchange Act
Regulations"), or (ii) directly, or indirectly through one or more
intermediaries, controls or has any other association with (within the meaning
of Article I of the By-laws of the National Association of Securities Dealers,
Inc. (the "NASD")) any member firm of the NASD;
(x) except with respect to the qualification of the Shares under
applicable "Blue Sky" laws, the Company has not relied upon the Representative
or legal counsel for the Representative for any legal, tax or accounting advice
in connection with the offering and sale of the Shares;
(y) any certificate which, at the request of the Underwriters, is
signed by any officer of the Company or any Subsidiary delivered to the
Representative or to counsel for the Underwriters pursuant to or in connection
with a Closing under this Agreement shall be deemed a representation and
warranty by the Company to each Underwriter as to the matters covered thereby;
(z) the form of certificate used to evidence the Common Stock
complies in all material respects with all applicable statutory requirements,
with any applicable requirements of the organizational documents of the Company
and the requirements of the Nasdaq National Market;
(aa) the Company and the Subsidiaries have good and marketable
title in fee simple to all real property, if any, and good title to all personal
property owned by them, in each case free and clear of all liens, security
interests, pledges, charges, encumbrances, mortgages and defects, except such as
are disclosed in the Prospectus or such as do not materially and adversely
affect the value of such property and do not interfere with the use made or
proposed to be made of such property by the Company and the Subsidiaries; and to
the Company's knowledge, any real property and buildings held under lease by the
Company or any Subsidiary are held under valid, existing and enforceable leases,
with such exceptions as are disclosed in the Prospectus or are not material and
do not interfere with the use made or proposed to be made of such property and
buildings by the Company or such Subsidiary;
(bb) the descriptions in the Registration Statement and the
Prospectus of the legal or governmental proceedings, contracts, leases and other
legal documents therein described present fairly the information required to be
shown, and there are no legal or governmental proceedings, contracts, leases, or
other documents of a character required to be described in the Registration
Statement or the Prospectus or to be filed as exhibits to the Registration
Statement which are not described or filed as required; all agreements between
the Company or any of the Subsidiaries and third parties expressly referenced in
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the Prospectus are legal, valid and binding obligations of the Company or one or
more of the Subsidiaries, enforceable in accordance with their respective terms,
except to the extent enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights generally
and by general equitable principles;
(cc) The Company owns, possesses or has such other valid rights to
use all trade and service marks, trade and service xxxx registrations, trade
names, copyrights, licenses (including software and design licenses),
inventions, trade secrets, manufacturing process, technology, know-how and other
intellectual property (collectively, the "Intellectual Property") reasonably
necessary for the Company and each Subsidiary to conduct their respective
businesses as now conducted and (i) to the Company's knowledge, there is no
material infringement by third parties of any such material Intellectual
Property; (ii) there is no pending or, to the Company's knowledge, threatened
action, suit, proceeding or claim by others challenging the Company's rights in
or to any such material Intellectual Property, and the Company is unaware of any
facts which would form a reasonable basis for any such claim; (iii) there is no
pending or, to the Company's knowledge, threatened action, suit, proceeding or
claim by others challenging the validity or scope of any such material
Intellectual Property, and the Company is unaware of any facts which would form
a reasonable basis for any such claim which could have a Material Adverse
Effect; (iv) there is no pending or, to the Company's knowledge, threatened
action, suit, proceeding or claim by others that the Company infringes, or
otherwise violates any patent, trademark, copyright, trade secret or other
proprietary rights of others, and the Company is unaware of any other fact which
would form a reasonable basis for concluding that any such claim will be
asserted, or if asserted, would be successful, or if successfully asserted,
could have a Material Adverse Effect; (v) the Company and the Subsidiaries do
not in the conduct of their business as now described in the Prospectus infringe
or conflict with any right or patent of any third party, or any discovery,
invention, product or process which is the subject of a patent application filed
by any third party, known to the Company or any of the Subsidiaries without
investigation, which such infringement or conflict is reasonably likely to
result in a Material Adverse Change; (vi) the Company does not own (or have any
applications pending with respect to), and does not have any exclusive licenses
with respect to, any U.S. patent; (viii) to the Company's knowledge, no security
interests have been recorded in the U.S. Patent and Trademark Office with
respect to any Intellectual Property and no liens have been recorded against the
Company with respect to any Intellectual Property and (ix) the Company has taken
and will take all steps reasonably necessary to maintain any trade and service
xxxx registrations that it may own;
(dd) the Company and each of the Subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurance that (i)
transactions related to the business of the Company are executed in accordance
with management's general or specific authorizations; (ii) such transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles as applied in the
United States and to maintain asset
-11-
accountability; (iii) access to assets is permitted only in accordance with
management's general or specific authorization; and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences;
(ee) each of the Company and the Subsidiaries has filed on a timely
basis all necessary federal, state, local and foreign income and franchise tax
returns required to be filed and have paid all taxes shown as due thereon and
all assessments received by them or any of them to the extent that such taxes
have become due and are not being contested in good faith; and no tax deficiency
has been asserted against any such entity, nor does any such entity know of any
tax deficiency which is reasonably likely to be asserted against any such entity
which, if determined adversely to any such entity, could have a Material Adverse
Effect; all tax liabilities are adequately provided for on the respective books
of such entities;
(ff) each of the Company and the Subsidiaries maintains insurance
(issued by insurers of recognized financial responsibility) of the types and in
the amounts it reasonably believes to be generally adequate for their respective
businesses, including, but not limited to, insurance covering real and personal
property owned or leased by the Company and the Subsidiaries against theft,
damage, destruction, acts of vandalism and all other risks customarily insured
against, all of which insurance is in full force and effect;
(gg) neither the Company nor any of the Subsidiaries is in
violation, or has received written notice of any violation with respect to, any
applicable environmental, safety or similar law applicable to the business of
the Company or any of the Subsidiaries; the Company and the Subsidiaries have
received all permits, licenses or other approvals required of them under
applicable federal and state occupational safety and health and environmental
laws and regulations to conduct their respective businesses, and the Company and
the Subsidiaries are in compliance with all terms and conditions of any such
permit, license or approval, except any such violation of law or regulation,
failure to receive required permits, licenses or other approvals or failure to
comply with the terms and conditions of such permits, licenses or approvals
which could not, individually or in the aggregate, result in a Material Adverse
Change;
(hh) neither the Company nor any Subsidiary is in violation of or
has received written notice of any violation with respect to any federal or
state law relating to discrimination in the hiring, promotion or pay of
employees, nor any applicable federal or state wages and hours law, the
violation of any of which could have a Material Adverse Effect;
(ii) the Company and each of the Subsidiaries are in compliance in
all material respects with all presently applicable provisions of the Employee
Retirement Income Security Act of 1974, as amended, including the regulations
and published interpretations thereunder ("ERISA"); no "reportable event" (as
defined in ERISA Section 4043) has occurred with respect to any "pension plan"
(as defined in ERISA
-12-
Section 3(2)) for which the Company or any of the Subsidiaries would have any
liability; the Company and each of the Subsidiaries have not incurred and do not
reasonably expect to incur liability under (i) the termination of, or withdrawal
from, any "pension plan" subject to Title IV of ERISA or (ii) Section 412 or
4971 of the Internal Revenue Code of 1986, as amended, including the regulations
and published interpretations thereunder ("Code"); and (iii) each "pension plan"
for which the Company and each of its Subsidiaries would have any liability that
is intended to be qualified under Section 401(a) of the Code is so qualified in
all material respects;
(jj) neither the Company nor any of the Subsidiaries nor any
officer or director purporting to act on behalf of the Company or any of the
Subsidiaries has at any time (i) made any contributions to any candidate for
political office, or failed to disclose fully any such contributions, in
violation of law, (ii) made any payment to any state, federal or foreign
governmental officer or official, or other person charged with similar public or
quasi-public duties, other than payments required or allowed by applicable law,
(iii) made any payment outside the ordinary course of business to any investment
officer or loan broker or person charged with similar duties of any entity to
which the Company or any of the Subsidiaries sells or from which the Company or
any of the Subsidiaries buys loans or servicing arrangements for the purpose of
influencing such agent, officer, broker or person to buy loans or servicing
arrangements from or sell loans to the Company or any of the Subsidiaries, or
(iv) engaged in any transactions, maintained any bank account or used any
corporate funds except for transactions, bank accounts and funds which have been
and are reflected in the normally maintained books and records of the Company
and the Subsidiaries;
(kk) except as otherwise disclosed in the Prospectus, there are no
material outstanding loans or advances or material guarantees of indebtedness by
the Company or any of the Subsidiaries to or for the benefit of any of the
officers or directors of the Company or any of the Subsidiaries or any of the
members of the families of any of them;
(ll) neither the Company nor any of the Subsidiaries nor, to the
knowledge of the Company, any employee or agent of the Company or any of the
Subsidiaries, has made any payment of funds of the Company or of any Subsidiary
or received or retained any funds in violation of any law, rule or regulation or
of a character required to be disclosed in the Prospectus;
(mm) all securities issued by the Company, any of the Subsidiaries
or any trusts established by the Company or any Subsidiary, have been issued and
sold in compliance with (i) all applicable federal and state securities laws,
(ii) the laws of the applicable jurisdiction of incorporation of the issuing
entity and, (iii) to the extent applicable to the issuing entity, the
requirements of the Nasdaq National Market;
(nn) in connection with this offering, the Company has not offered
and will not offer its Common Stock or any other securities convertible into or
exchangeable or exercisable for Common Stock in a manner in violation of the
Securities Act; the
-13-
Company has not distributed and will not distribute any Prospectus or other
offering material in connection with the offer and sale of the Shares;
(oo) except as set forth herein or in the engagement letter with
Friedman, Billings, Xxxxxx & Co., Inc., the Company has not incurred any
liability for any finder's fees or similar payments in connection with the
transactions herein contemplated;
(pp) no relationship, direct or indirect, exists between or among
the Company or any of the Subsidiaries on the one hand, and the directors,
officers, stockholders, customers or suppliers of the Company or any of the
Subsidiaries on the other hand, which is required by the Securities Act and the
Securities Act Regulations to be described in the Registration Statement and the
Prospectus and which is not so described;
(qq) neither the Company nor any of the Subsidiaries is and, after
giving effect to the offering and sale of the Shares, will be an "investment
company" or an entity "controlled" by an "investment company", as such terms are
defined in the Investment Company Act of 1940, as amended (the "Investment
Company Act"); and
(rr) there are no existing or, to the knowledge of the Company,
threatened labor disputes with the employees of the Company or any of the
Subsidiaries which are likely to have individually or in the aggregate a
Material Adverse Effect.
4. CERTAIN COVENANTS:
The Company hereby agrees with each Underwriter:
(a) to furnish such information as may be required by, and
otherwise to cooperate in qualifying the Shares for offering and sale under, the
securities or blue sky laws of such jurisdictions (both domestic and foreign) as
the Representative may designate and to maintain such qualifications in effect
as long as requested by the Representative for the distribution of the Shares,
provided that the Company shall not be required to qualify as a foreign
corporation or to consent to the service of process under the laws of any such
state (except service of process with respect to the offering and sale of the
Shares);
(b) if, at the time this Agreement is executed and delivered, it
is necessary for a post-effective amendment to the Registration Statement to be
declared effective before the offering of the Shares may commence, the Company
will endeavor to cause such post-effective amendment to become effective as soon
as possible and will advise the Representative promptly and, if requested by the
Representative, will confirm such advice in writing, when such post-effective
amendment has become effective;
(c) to prepare the Prospectus in a form approved by the
Underwriters and file such Prospectus with the Commission pursuant to Rule
424(b) under the Securities Act not later than 10:00 a.m. (New York City time),
on the day following the execution and
-14-
delivery of this Agreement (or on such other day as the parties may mutually
agree) and to furnish promptly (and with respect to the initial delivery of such
Prospectus) not later than 10:00 a.m. (New York City time) on the day following
the execution and delivery of this Agreement (or on such other day as the
parties may mutually agree) to the Underwriters copies of the Prospectus (or of
the Prospectus as amended or supplemented if the Company shall have made any
amendments or supplements thereto after the effective date of the Registration
Statement) in such quantities and at such locations as the Underwriters may
reasonably request for the purposes contemplated by the Securities Act
Regulations, which Prospectus and any amendments or supplements thereto
furnished to the Underwriters will be identical in substance (except with
respect to pictures and graphics, which shall be summarized in the XXXXX
version) to the version created to be transmitted to the Commission for filing
via XXXXX, except to the extent permitted by Regulation S-T;
(d) to advise the Representative immediately, confirming such
advice in writing, of (i) the receipt of any comments from, or any request by,
the Commission for amendments or supplements to the Registration Statement or
Prospectus or for additional information with respect thereto, (ii) the issuance
by the Commission of any stop order suspending the effectiveness of the
Registration Statement or of any order preventing or suspending the use of any
Preliminary Prospectus or the Prospectus, or of the suspension of the
qualification of the Shares for offering or sale in any jurisdiction, or of the
initiation or threatening of any proceedings for any of such purposes and, if
the Commission or any other government agency or authority should issue any such
order, to make every reasonable effort to obtain the lifting or removal of such
order as soon as possible; to advise the Representative promptly of any proposal
to amend or supplement the Registration Statement or Prospectus and to file no
such amendment or supplement to which the Representative shall reasonably object
in writing or (iii) of the receipt by the Company or any notification with
respect to any suspension of the qualification of the Shares for offer and sale
in any jurisdiction or the initiation or threatening of any proceeding for such
purpose;
(e) to furnish to the Underwriters for a period of five years from
the date of this Agreement (i) as soon as available, copies of all annual,
quarterly and current reports or other communications supplied to holders of
shares of Common Stock, (ii) as soon as practicable after the filing thereof,
copies of all reports filed by the Company with the Commission, the NASD or any
securities exchange and (iii) such other publicly available information as the
Underwriters may reasonably request regarding the Company and the Subsidiaries;
(f) to advise the Underwriters promptly of the happening of any
event known to the Company or the discovery of any facts or circumstances known
to the Company within the time during which a Prospectus relating to the Shares
is required to be delivered under the Securities Act Regulations which, in the
judgment of the Company would require the making of any change in the Prospectus
then being used so that the Prospectus would not include an untrue statement of
a material fact or omit to state a
-15-
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 or supplement the
Prospectus to comply with any law and, during such time, to promptly prepare and
furnish to the Underwriters copies of the proposed amendment or supplement
before filing any such amendment or supplement with the Commission and
thereafter promptly furnish at the Company's own expense to the Underwriters and
to dealers, copies in such quantities and at such locations as the
Representative may from time to time reasonably request of an appropriate
amendment to the Registration Statement or supplement to the Prospectus so that
the Prospectus as so amended or supplemented will not, in the light of the
circumstances when it is so delivered, be misleading, or so that the Prospectus
will comply with the law;
(g) to file promptly with the Commission any amendment to the
Registration Statement or the Prospectus or any supplement to the Prospectus
that may, in the judgment of the Company or the Representative, be required by
the Securities Act or requested by the Commission;
(h) prior to filing with the Commission any amendment to the
Registration Statement or supplement to the Prospectus or any Prospectus
pursuant to Rule 424 under the Securities Act, to furnish a copy thereof to the
Representative and counsel for the Underwriters and obtain the consent of the
Representative to the filing (which consent shall not be unreasonably withheld,
conditioned or delayed);
(i) to furnish promptly to each Representative a signed copy
(i.e., the XXXXX version with facsimile signatures) of the Registration
Statement, as initially filed with the Commission, and of all amendments or
supplements thereto (including all exhibits filed therewith or incorporated by
reference therein) and such number of conformed copies of the foregoing as the
Representative may reasonably request;
(j) to furnish to each Representative, not less than one business
day after filing with the Commission subsequent to the effective date of the
Prospectus and during the period referred to in paragraph (e) above, a copy of
any document proposed to be filed with the Commission pursuant to Section 13,
14, or 15(d) of the Exchange Act and during such period to file all such
documents in the manner and within the time periods required by the Exchange Act
and the Exchange Act Regulations;
(k) to apply the net proceeds of the sale of the Shares in
accordance with its statements under the caption "Use of Proceeds" in the
Prospectus;
(l) to make generally available to its security holders and to
deliver to the Representative as soon as practicable, but in any event not later
than the end of the fiscal quarter first occurring after the first anniversary
of the effective date of the Registration Statement an earnings statement
complying with the provisions of Section 11(a) of the Securities Act (in form,
at the option of the Company, complying with the provisions of Rule 158 of the
Securities Act Regulations,) covering a period of 12 months beginning after the
effective date of the Registration Statement;
-16-
(m) to use its best efforts to maintain the quotation of the
Shares on the Nasdaq National Market and to file with the Nasdaq National Market
all documents and notices required by the Nasdaq National Market of companies
that have securities that are quoted on the Nasdaq National Market;
(n) to engage and maintain, at its expense, a registrar and
transfer agent for the Shares;
(o) for a period of 90 days from the date of the final Prospectus,
without the prior written consent of the Representative, which shall not be
unreasonably withheld, conditioned or delayed, not to, directly or indirectly,
(i) offer, pledge, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option for the sale
of, or otherwise dispose of or transfer (or entering into any transaction or
device which is designed to, or could be expected to, result in the disposition
by any person at any time in the future of), any share of Common Stock or any
securities convertible into or exercisable or exchangeable for Common Stock, or
file any registration statement under the Securities Act with respect to any of
the foregoing, or (ii) enter into any swap or any other agreement or any
transaction that transfers, in whole or in part, directly or indirectly, the
economic consequence of ownership of the Common Stock, whether any such swap or
transaction described in clause (i) or (ii) above is to be settled by delivery
of Common Stock or such other securities, in cash or otherwise. The foregoing
sentence shall not apply to (A) the Shares to be sold hereunder, or (B) any
shares of Common Stock issued by the Company pursuant to any employee benefit
plan existing on the date hereof and referred to in the Prospectus or (C) any
acquisition of all or substantially all of the stock or assets of any other
entity;
(p) except for stock repurchases under its employee benefit plans,
not to, and to use its best efforts to cause its officers, directors and
affiliates not to, (i) take, directly or indirectly prior to termination of the
underwriting syndicate contemplated by this Agreement, any action designed to
stabilize or manipulate the price of any security of the Company, or which may
cause or result in, or which might in the future reasonably be expected to cause
or result in, the stabilization or manipulation of the price of any security of
the Company, to facilitate the sale or resale of any of the Shares, (ii) sell,
bid for, purchase or pay anyone any compensation for soliciting purchases of the
Shares or (iii) pay or agree to pay to any person any compensation for
soliciting any order to purchase any other securities of the Company;
(q) to cause each executive officer and director of the Company to
furnish to the Representative, prior to the first Date of Delivery, a letter or
letters, substantially in the form of Exhibit B hereto, pursuant to which each
such person shall agree not to, directly or indirectly, (1) offer for sale,
sell, pledge or otherwise dispose of (or enter into any transaction or device
which is designed to, or could be expected to, result in the disposition by any
person at any time in the future of), except for shares pledged as of the date
hereof, any shares of Common Stock or securities convertible into or
exchangeable for Common Stock or (2) enter into any swap or other derivatives
-17-
transaction that transfers to another, in whole or in part, any of the economic
benefits or risks of ownership of such shares of Common Stock, whether any such
transaction described in clause (1) or (2) above is to be settled by delivery of
Common Stock or other securities, in cash or otherwise, in each case for a
period of 90 days from the date of the final Prospectus, without the prior
written consent of the Representative on behalf of the Underwriters, which
consent shall not be unreasonably withheld, conditioned or delayed;
(r) that the Company shall obtain or maintain, as appropriate,
Directors and Officers liability insurance in the minimum amount of $10 million
which shall apply to the offering contemplated herein;
(s) if at any time during the 30-day period after the date of the
final Prospectus, any rumor, publication or event relating to or affecting the
Company shall occur as a result of which, in the reasonable opinion of the
Representative, the market price of the Common Stock has been or is likely to be
materially affected (regardless of whether such rumor, publication or event
necessitates a supplement to or amendment of the Prospectus) and after written
notice from the Representative advising the Company to the effect set forth
above, to forthwith prepare, consult with the Representative concerning the
substance of, and, upon the reasonable request of the Representative, unless
deemed inappropriate in the Company's reasonable judgment in consultation with
outside legal counsel, disseminate a press release or other public statement,
reasonably satisfactory to the Representative, responding to or commenting on
such rumor, publication or event; and
(t) that the Company will comply with all of the provisions of any
undertakings in the Registration Statement.
5. PAYMENT OF EXPENSES:
(a) The Company agrees to pay all costs and expenses incident to
the performance of its obligations under this Agreement, whether or not the
transactions contemplated hereunder are consummated or this Agreement is
terminated, including expenses, fees and taxes in connection with (i) the
preparation and filing of the Registration Statement, each Preliminary
Prospectus, the Prospectus, and any amendments or supplements thereto, and the
printing and furnishing of copies of each thereof to the Underwriters and to
dealers (including costs of mailing and shipment), (ii) the preparation,
issuance and delivery of the certificates for the Shares to the Underwriters,
including any stock or other transfer taxes or duties payable upon the sale of
the Shares to the Underwriters, (iii) the printing of this Agreement and any
dealer agreements and furnishing of copies of each to the Underwriters and to
dealers (including costs of mailing and shipment), (iv) the qualification of the
Shares for offering and sale under state laws that the Company and the
Representative have mutually agreed are appropriate and the determination of
their eligibility for investment under state law as aforesaid (including the
legal fees and other disbursements of counsel for the Underwriters which fees
shall not exceed $5,000.00) and
-18-
the printing and furnishing of copies of any blue sky surveys or legal
investment surveys to the Underwriters and to dealers, (v) filing fees of the
NASD for review of the public offering of the Shares by the NASD, (vi) the fees
and expenses of any transfer agent or registrar for the Shares and miscellaneous
expenses referred to in the Registration Statement, (vii) the fees and expenses
incurred in connection with the inclusion of the Shares in the Nasdaq National
Market, (viii) making road show presentations with respect to the offering of
the Shares, (ix) preparing and distributing bound volumes of transaction
documents for the Representative and its legal counsel and (x) the performance
of the Company's other obligations hereunder; PROVIDED that the applicable
Underwriter(s) shall not be entitled to reimbursement of such amounts expended
by it or them, as the case may be, in connection herewith if the transactions
are not consummated or this Agreement is terminated, in either case, as a result
of a material breach of this Agreement by such Underwriter(s) or the gross
negligence, intentional misconduct or violation of applicable law or regulation
by such Underwriter(s). Upon the request of the Representative, the Company will
provide funds in advance for filing fees.
(b) The Company agrees to reimburse the Representative for its
reasonable and documented out-of-pocket expenses in connection with the
performance of its activities under this Agreement, including, but not limited
to, costs such as printing, facsimile, courier service, direct computer
expenses, accommodations and travel, but excluding the fees and expenses of the
Underwriters' outside legal counsel and any other advisors, accountants,
appraisers, etc. (other than the fees and expenses of counsel with respect to
state securities or blue sky laws and obtaining the filing for review of the
public offering of the Shares by the NASD, all of which shall be reimbursed by
the Company pursuant to the provisions of subsection (a) above).
6. CONDITIONS OF THE UNDERWRITERS' OBLIGATIONS:
(a) The obligations of the Underwriters hereunder to purchase
Shares at the Closing Time or on each Date of Delivery, as applicable, are
subject to the accuracy of the representations and warranties on the part of the
Company hereunder on the date hereof and at the Closing Time and on each Date of
Delivery, as applicable, the performance by the Company of its obligations
hereunder and to the satisfaction of the following further conditions at the
Closing Time or on each Date of Delivery, as applicable:
(b) The Company shall furnish to the Underwriters at the Closing
Time and on each Date of Delivery an opinion of Elias, Matz, Xxxxxxx & Xxxxxxx
L.L.P., special counsel for the Company and the Subsidiaries, addressed to the
Underwriters and dated the Closing Time and each Date of Delivery and in form
satisfactory to Wachtell, Lipton, Xxxxx & Xxxx, counsel for the Underwriters,
stating that:
(i) the Company has an authorized capitalization as
of the dates indicated as set forth in the Prospectus; the
outstanding shares of capital stock or other ownership
interests of the Company and the Subsidiaries have been duly
and validly authorized and issued and are
-19-
fully paid and non-assessable, and all of the outstanding
shares of capital stock or other ownership interests of the
Subsidiaries are directly or indirectly owned of record and
beneficially by the Company; except as disclosed in the
Prospectus, there are no outstanding (i) securities or
obligations of the Company or any of the Subsidiaries
convertible into or exchangeable for any capital stock of
the Company or any such Subsidiary, (ii) warrants, rights or
options to subscribe for or purchase from the Company or any
such Subsidiary any such capital stock or any such
convertible or exchangeable securities or obligations, or
(iii) except for shares issuable to certain former owners of
businesses acquired by the Company and with respect to the
Company's employee benefit plans, obligations of the Company
or any such Subsidiary to issue any shares of capital stock,
any such convertible or exchangeable securities or
obligation, or any such warrants, rights or options;
(ii) each of the Company and the Subsidiaries (which
are named in Exhibit A hereto) has been duly incorporated or
organized and is validly existing as a corporation or
limited liability company in good standing under the laws of
its respective jurisdiction of incorporation or organization
with full power and authority to own its respective
properties and to conduct its respective business as
described in the Registration Statement and Prospectus and,
in the case of the Company, to execute and deliver this
Agreement and to consummate the transactions described in
this Agreement;
(iii) the Company and the Subsidiaries are duly
qualified, and are in good standing, in each jurisdiction in
which they own or lease real property or maintain an office
or in which such qualification is necessary except where the
failure to be so qualified and in good standing would not
reasonably be expected to have a Material Adverse Effect;
except as disclosed in the Prospectus, and except for
certain loan restrictions relating to certain foreign
borrowings, no Subsidiary is prohibited or restricted,
directly or indirectly, from paying dividends to the
Company, or from making any other distribution with respect
to such Subsidiary's capital stock or from repaying to the
Company or any other Subsidiary any amounts which may from
time to time become due under any loans or advances to such
Subsidiary from the Company or such other Subsidiary, or
from transferring any such Subsidiary's property or assets
to the Company or to any other Subsidiary; other than as
disclosed in the Prospectus, except for shares of ISA
International plc, the Company does not own, directly or
indirectly, any capital stock or other equity securities of
any other corporation or any ownership interest in any
partnership, joint venture or other association;
-20-
(iv) to such counsel's knowledge, neither the
Company nor any of the Subsidiaries is in violation of any
term or provision of its organizational documents, is in
breach of, or in default under (nor has any event occurred
which with notice, lapse of time, or both would constitute a
breach of, or default under), any indenture, mortgage, deed
of trust, loan or credit agreement or any other agreement or
instrument to which the Company or any of the Subsidiaries
is a party or by which any of them or their respective
properties may be bound or affected and which are set forth
as Exhibits 10.1 to 10.43 of the Registration Statement, or
under any decree, judgment or order applicable to the
Company or any of the Subsidiaries known to such counsel,
except such breaches or defaults which would not have a
material adverse effect on the assets, business, operations,
earnings, properties, or condition (financial or otherwise)
of the Company and its Subsidiaries taken as a whole;
(v) the execution, delivery and performance of this
Agreement by the Company and the consummation by the Company
of the transactions contemplated by this Agreement do not
and will not (A) conflict with, or result in any breach of,
or constitute a default under (nor constitute any event
which with notice, lapse of time, or both would constitute a
breach of or default under), (i) any provisions of the
articles of incorporation or organization, operating
agreement, charter or bylaws of the Company or any
Subsidiary, (ii) any provision of any indenture, mortgage,
deed of trust, loan, credit or other agreement or instrument
to which the Company or any Subsidiary is a party or by
which any of them or their respective properties or assets
may be bound or affected and which are set forth as Exhibits
10.1 to 10.43 of the Registration Statement, or (iii)
decree, judgment or order applicable to the Company or any
Subsidiary known to counsel; or (B) result in the creation
or imposition of any material lien, charge, claim or
encumbrance upon any property or assets of the Company or
the Subsidiaries; except, other than in the case of part (i)
of clause (A), for any conflict, breach or default that
would not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect on the Company
and its Subsidiaries taken as a whole;
(vi) to such counsel's knowledge neither the Company
nor any Subsidiary has received any written notice regarding
a violation, default or revocation of any license,
authorization, consent or approval under any federal or
state law or regulation applicable to the Company or any of
its Subsidiaries, which has had or would reasonably be
expected to have a Material Adverse Effect on the Company
and its Subsidiaries taken as a whole;
(vii) this Agreement has been duly authorized,
executed and delivered by the Company and is a legal, valid
and binding agreement of
-21-
the Company enforceable in accordance with its terms, except
as may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors' rights
generally, and by general principles of equity, and except
that enforceability of the indemnification and contribution
provisions set forth in Section 9 of this Agreement may be
limited by the federal or state securities laws of the
United States or public policy underlying such laws;
(viii) no approval, authorization, consent or order
of or filing with any federal or state governmental or
regulatory commission, board, body, authority or agency is
required in connection with the execution, delivery and
performance of this Agreement, the consummation of the
transactions contemplated herein, and the sale and delivery
of the Shares by the Company as contemplated herein, other
than such as have been obtained or made under the Securities
Act and the Securities Act Regulations, and except that such
counsel need express no opinion as to any necessary
qualification under the state securities or blue sky laws of
the various jurisdictions in which the Shares are being
offered by the Underwriters or any approval of the
underwriter terms and arrangements by the NASD;
(ix) the Company is not subject to registration as
an investment company under the Investment Company Act of
1940, as amended, and the transactions contemplated by this
Agreement will not cause the Company to become an investment
company subject to registration under such Act;
(x) the Shares have been duly authorized and when
the Shares have been issued and duly delivered against
payment therefor as contemplated by this Agreement, the
Shares will be validly issued, fully paid and
non-assessable, free and clear of any pledge, lien,
encumbrance, security interest, or other claim (other than
any such pledge, lien, encumbrance, security interest, or
claim created by any of the Underwriters or against any of
the Underwriters by any third party);
(xi) the issuance and sale of the Shares by the
Company is not subject to preemptive or other similar rights
arising by operation of law, under the articles of
incorporation, charter or bylaws of the Company, or to such
counsel's knowledge, under any agreement to which the
Company is a party;
(xii) to such counsel's knowledge, there are no
persons with registration or other similar rights to have
any equity or debt securities, including securities that are
convertible into or exchangeable for equity securities,
required to be registered pursuant to the Registration
Statement or otherwise registered by the Company under the
Securities Act, except
-22-
for those registration or similar rights which are not
required to be complied with in connection with the offering
contemplated by this Agreement as a result of the receipt by
the Company of the letter from Friedman, Billings, Xxxxxx &
Co., Inc. dated August 13, 2001;
(xiii) the legal attributes of the Shares, when issued
in accordance with the terms and conditions of this
Agreement, will conform in all material respects to the
descriptions thereof contained in the Registration Statement
and Prospectus;
(xiv) the form of certificate used to evidence the
Common Stock complies in all material respects with all
applicable statutory requirements, with any applicable
requirements of the articles of incorporation and bylaws of
the Company and the requirements of the Nasdaq Stock Market;
(xv) the Registration Statement has become
effective under the Securities Act and no stop order
suspending the effectiveness of the Registration Statement
has been issued and, to such counsel's knowledge, no
proceedings with respect thereto have been commenced or
threatened;
(xvi) as of the effective date of the Registration
Statement, the Registration Statement and the Prospectus
(except as to the financial statements (including the notes
thereto) and other financial, tabular and statistical data
and the information from the Underwriters contained therein,
as to which such counsel need express no opinion) complied
as to form in all material respects with the requirements of
the Securities Act and the Securities Act Regulations, and
the Exchange Act material incorporated by reference therein
complied as to form in all material respects with the
requirements of the Exchange Act and the Exchange Act
Regulations;
(xvii) the statements under the captions
"Capitalization" and "Description of Capital Stock" in the
Registration Statement and the Prospectus, insofar as such
statements constitute a summary of the legal matters
referred to therein, constitute accurate summaries thereof
in all material respects;
(xviii) at the date of its filing, the 8-A
Registration Statement complied as to form in all material
respects with the requirements of the Exchange Act; the 8-A
Registration Statement has become effective under the
Exchange Act; and the Shares have been validly registered
under the Securities Act, the Exchange Act and the
Securities Act Regulations and the Exchange Act Regulations;
(xix) to such counsel's knowledge, there are no
actions, suits or proceedings, inquiries, or investigations
pending or threatened against the
-23-
Company or any of the Subsidiaries or any of their
respective officers and directors or to which the
properties, assets or rights of any such entity are subject,
at law or in equity, before or by any federal, state, local
or foreign governmental or regulatory commission, board,
body, authority, arbitral panel or agency which are required
to be described in the Prospectus but are not so described;
(xx) to such counsel's knowledge, there are no
contracts or documents of a character which are required to
be filed as exhibits to the Registration Statement or
required to be described or summarized in the Prospectus
which have not been so filed, summarized or described, and
all such summaries and descriptions, in all material
respects, fairly and accurately set forth the material
provisions of such contracts and documents; and
In rendering such opinion, such counsel may rely, as to
matters of fact, on certificates of officers of the Company and of governmental
officials, in which case the opinion shall state that they are so doing and
copies of such certificates shall be attached to the opinion. With respect to
opinions relating to the "good standing" of an entity, counsel may rely solely
upon a certificate of a governmental official. Such counsel's opinion shall be
limited to matters governed by federal securities laws and by the General
Corporation Law of the State of Maryland. 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"). Whenever any opinion expressed
with respect to any matter is qualified by the phrase "to such counsel's
knowledge," "to the knowledge of such counsel" or "known by such counsel" or any
similar phrase, such language shall be interpreted pursuant to the Accord. For
purposes of such opinion, no proceedings shall be deemed to be pending, no order
to stop order shall be deemed to be issued, and no action shall be deemed to be
instituted unless, in each case, an appropriate officer of the Company shall
have received a copy of such proceedings, order, stop order or action and
counsel shall have been informed of such receipt. 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 an appropriate officer of
the Company or to counsel thereof a present intention to initiate such
litigation or proceedings and this counsel shall have been informed of such
receipt following inquiry of the appropriate executive officers of the Company.
In addition, such opinion may be limited to present statutes, regulations and
judicial interpretations and to facts as they presently exist as of 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 assume that
any agreement is the valid and binding obligation of any parties to such
agreement other than the Company or its Subsidiaries. In addition, such counsel
shall, in a separate letter, confirm that in connection with the preparation of
the Registration Statement and the Prospectus, they have participated in
conferences with officers and other representatives of the Company, independent
public accountants of the Company, representatives of the
-24-
Underwriters and counsel for the Underwriters, at which the contents of the
Registration Statement and Prospectus were discussed and, although such counsel
for the Company and the Subsidiaries 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 (except as and only to the
extent stated in subparagraphs (xvii) and (xx) above) and has not made any
independent check or verification thereof, on the basis of the foregoing, they
have no reason to believe that the Registration Statement, the Preliminary
Prospectus or the Prospectus, as of their respective effective or issue date,
and as of the date of such counsel's opinion, contained or contains an untrue
statement of a material fact or omitted or omits to state a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading (it
being understood that, in each case, such counsel need express no view with
respect to the financial statements (including the notes thereto) and other
financial, tabular and statistical data or the information provided by the
Underwriters included in the Registration Statement, Preliminary Prospectus or
Prospectus).
(c) The Representative shall have received an opinion of Pillsbury
Winthrop LLP addressed to the Underwriters and dated the Closing Time and each
Date of Delivery, stating that: To the best of the undersigned counsel's
knowledge, the Company owns, possesses or has other valid rights to use all
Intellectual Property necessary to enable the Company and its Subsidiaries to
conduct their respective businesses as now conducted and the Company has
received no notice of infringement of or conflict with (and knows of no such
infringement of or conflict with) asserted rights of others with respect to any
such Intellectual Property that would reasonably be expected to have a Material
Adverse Effect on the Company.
(d) The Representative shall have received from
PricewaterhouseCoopers LLP, letters dated, respectively, as of the date of this
Agreement, the Closing Time and each Date of Delivery, as the case may be,
addressed to the Representative, in form and substance satisfactory to the
Representative, relating to the financial statements, including any pro forma
financial statements, of the Company and the Subsidiaries, and such other
matters customarily covered by comfort letters issued in connection with
registered public offerings.
In the event that the letters referred to above set forth any
changes in indebtedness, decreases in total assets or retained earnings or
increases in borrowings, it shall be a further condition to the obligations of
the Underwriters that (A) such letters shall be accompanied by a written
explanation of the Company as to the significance thereof, unless the
Representative deems such explanation unnecessary, and (B) such changes,
decreases or increases do not, in the sole judgment of the Representative, make
it impractical or inadvisable to proceed with the purchase and delivery of the
Shares as contemplated by the Registration Statement.
-25-
(e) The Representative shall have received at the Closing Time and
on each Date of Delivery the favorable opinion of Wachtell, Lipton, Xxxxx &
Xxxx, dated the Closing Time or such Date of Delivery, addressed to the
Representative and in form and substance satisfactory to the Representative.
(f) No amendment or supplement to the Registration Statement or
Prospectus shall have been filed to which the Underwriters shall have objected
in writing.
(g) Prior to the Closing Time and each Date of Delivery (i) no
stop order suspending the effectiveness of the Registration Statement or any
order preventing or suspending the use of any Preliminary Prospectus or
Prospectus has been issued, and no proceedings for such purpose shall have been
initiated or threatened, by the Commission, and no suspension of the
qualification of the Shares for offering or sale in any jurisdiction, or the
initiation or threatening of any proceedings for any of such purposes, has
occurred; (ii) all requests for additional information on the part of the
Commission shall have been complied with to the reasonable satisfaction of the
Representative; and (iii) the Registration Statement and the Prospectus shall
not contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading.
(h) All filings with the Commission required by Rule 424 under the
Securities Act to have been filed by the Closing Time shall have been made
within the applicable time period prescribed for such filing by such Rule.
(i) Between the time of execution of this Agreement and the
Closing Time or the relevant Date of Delivery there shall not have been any
Material Adverse Change, and (ii) no transaction which is material and
unfavorable to the Company shall have been entered into by the Company or any of
the Subsidiaries, in each case, which in the Representative' sole judgment,
makes it impracticable or inadvisable to proceed with the public offering of the
Shares as contemplated by the Registration Statement.
(j) The Shares shall have been approved for inclusion in the
Nasdaq National Market.
(k) The NASD shall not have raised any objection with respect to
the fairness and reasonableness of the underwriting terms and arrangements.
(l) The Representative shall have received lock-up agreements from
each executive officer and director of the Company, in the form of Exhibit B
attached hereto, and such letter agreements shall be in full force and effect.
(m) The Company will, at the Closing Time and on each Date of
Delivery, deliver to the Underwriters a certificate of its Chairman of the
Board, Chief Executive Officer and President, or Vice President and Chief
Accounting Officer or Chief Financial Officer, to the effect that:
-26-
(i) the representations and warranties of the
Company in this Agreement are true and correct, as if made
on and as of the date hereof, 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 the
date hereof;
(ii) to their knowledge, no stop order suspending
the effectiveness of the Registration Statement or any
post-effective amendment thereto and no order directed at
any document incorporated by reference therein
("Incorporated Document") has been issued and no proceedings
for that purpose have been instituted or are pending or
threatened under the Securities Act;
(iii) when the Registration Statement became
effective and at all times subsequent thereto up to the date
hereof, the Registration Statement and the Prospectus, and
any amendments or supplements thereto and any Incorporated
Documents, when such Incorporated Documents became effective
or were filed with the Commission, contained all material
information required to be included therein by the
Securities Act or the Exchange Act and the applicable rules
and regulations of the Commission thereunder, as the case
may be, and in all material respects conformed to the
requirements of the Securities Act or the Exchange Act and
the applicable rules and regulations of the Commission
thereunder, as the case may be; the Registration Statement
and the Prospectus, and any amendments or supplements
thereto, did not and do not include any untrue statement of
a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they
were made, not misleading; and, since the effective date of
the Registration Statement, there has occurred no event
required to be set forth in an amendment or supplemented
Prospectus which has not been so set forth; and
(iv) subsequent to the respective dates as of
which information is given in the Registration Statement and
Prospectus, there has not been (a) any Material Adverse
Change, (b) any transaction that is material to the Company
and the Subsidiaries considered as one enterprise, except
transactions entered into in the ordinary course of
business, (c) any obligation, direct or contingent, that is
material to the Company and the Subsidiaries considered as
one enterprise, incurred by the Company or the Subsidiaries,
except obligations incurred in the ordinary course of
business, (d) any change in the capital stock or outstanding
indebtedness of the Company or any Subsidiary that is
material to the Company and the Subsidiaries considered as
one enterprise, (e) any dividend or distribution of any kind
declared, paid or made on the capital stock of the Company
or any Subsidiary, or (f) any loss or damage (whether or not
insured) to the
-27-
property of the Company or any subsidiary which has been
sustained or will have been sustained which has a Material
Adverse Effect.
(n) The Company shall have furnished to the Underwriters such
other documents and certificates as to the accuracy and completeness of any
statement in the Registration Statement and the Prospectus, the representations,
warranties and statements of the Company contained herein, and the performance
by the Company of its covenants contained herein, and the fulfillment of any
conditions contained herein as of the Closing Time or any Date of Delivery, as
the Underwriters may reasonably request.
7. TERMINATION:
The obligations of the several Underwriters hereunder shall be subject
to termination in the absolute discretion of the Representative, at any time
prior to the Closing Time or any Date of Delivery, (i) if any of the conditions
specified in Section 6 shall not have been fulfilled when and as required by
this Agreement to be fulfilled, or (ii) if there has been since the respective
dates as of which information is given in the Registration Statement, any
Material Adverse Change, or any development reasonably likely to involve a
prospective Material Adverse Change, or material change in management of the
Company or any Subsidiary, whether or not arising in the ordinary course of
business, or (iii) if there has occurred any outbreak or escalation of
hostilities or other national or international calamity or crisis or change in
economic, political or other conditions the effect of which on the financial
markets of the United States is such as to make it, in the judgment of the
Representative, impracticable to market the Shares or enforce contracts for the
sale of the Shares, or (iv) if trading in any securities of the Company has been
suspended by the Commission or by Nasdaq National Market, or if trading
generally on the New York Stock Exchange or in the Nasdaq National Market has
been suspended (including an automatic halt in trading pursuant to
market-decline triggers, other than those in which solely program trading is
temporarily halted), or limitations on prices for trading (other than
limitations on hours or numbers of days of trading) have been fixed, or maximum
ranges for prices for securities have been required, by such exchange or the
NASD or the Nasdaq Stock Market or by order of the Commission or any other
governmental authority, or (v) any federal or state statute, regulation, rule or
order of any court or other governmental authority has been enacted, published,
decreed or otherwise promulgated which, in the reasonable opinion of the
Representative, materially adversely affects or will materially adversely affect
the business or operations of the Company, or (vi) any action has been taken by
any federal, state or local government or agency in respect of its monetary or
fiscal affairs which, in the reasonable opinion of the Representative, has a
material adverse effect on the securities markets in the United States.
If the Representative elects to terminate this Agreement as provided in
this Section 7, the Company and the Underwriters shall be notified promptly by
telephone, promptly confirmed by facsimile.
-28-
If the sale to the Underwriters of the Shares, as contemplated by this
Agreement, is not carried out by the Underwriters for any reason permitted under
this Agreement or if such sale is not carried out because the Company shall be
unable to comply in all material respects with any of the terms of this
Agreement, the Company shall not be under any obligation or liability under this
Agreement (except to the extent provided in Sections 5 and 9 hereof) and the
Underwriters shall be under no obligation or liability to the Company under this
Agreement (except to the extent provided in Section 9 hereof) or to one another
hereunder.
8. INCREASE IN UNDERWRITERS' COMMITMENTS:
If any Underwriter shall default at the Closing Time or on a Date of
Delivery in its obligation to take up and pay for the Shares to be purchased by
it under this Agreement on such date, the Representative shall have the right,
within 36 hours after such default, to make arrangements for one or more of the
non-defaulting Underwriters, or any other underwriters, to purchase all, but not
less than all, of the Shares which such Underwriter shall have agreed but failed
to take up and pay for (the "Defaulted Shares"). Absent the completion of such
arrangements within such 36-hour period, (i) if the total number of Defaulted
Shares does not exceed 10% of the total number of Shares to be purchased on such
date, each non-defaulting Underwriter shall take up and pay for (in addition to
the number of Shares which it is otherwise obligated to purchase on such date
pursuant to this Agreement) the portion of the total number of Shares agreed to
be purchased by the defaulting Underwriter on such date in the proportion that
its underwriting obligations hereunder bears to the underwriting obligations of
all non-defaulting Underwriters; and (ii) if the total number of Defaulted
Shares exceeds 10% of such total, the Representative may terminate this
Agreement by notice to the Company, without liability of any party to any other
party except that the provisions of Sections 5 and 9 hereof shall at all times
be effective and shall survive such termination.
Without relieving any defaulting Underwriter from its obligations
hereunder, the Company agrees with the non-defaulting Underwriters that it will
not sell any Shares hereunder on such date unless all of the Shares to be
purchased on such date are purchased on such date by the Underwriters (or by
substituted Underwriters selected by the Representative with the approval of the
Company or selected by the Company with the approval of the Representative).
If a new Underwriter or Underwriters are substituted for a defaulting
Underwriter in accordance with the foregoing provision, the Company or the
non-defaulting Underwriters shall have the right to postpone the Closing Time or
the relevant Date of Delivery for a period not exceeding five business days in
order that any necessary changes in the Registration Statement and Prospectus
and other documents may be effected.
The term "Underwriter" as used in this Agreement shall refer to and
include any Underwriter substituted under this Section 8 with the same effect as
if such substituted Underwriter had originally been named in this Agreement.
-29-
9. INDEMNITY AND CONTRIBUTION BY THE COMPANY AND THE UNDERWRITERS:
(a) The Company agrees to indemnify, defend and hold harmless each
Underwriter and any person who controls any Underwriter within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act, from and
against any loss, expense, liability, damage or claim (including the reasonable
cost of investigation) which, jointly or severally, any such Underwriter or
controlling person may incur under the Securities Act, the Exchange Act or
otherwise, insofar as such loss, expense, liability, damage or claim arises out
of or is based upon (A) any breach of any representation, warranty or covenant
of the Company contained herein, (B) any failure on the part of the Company to
comply with any applicable law, rule or regulation relating to the offering of
securities being made pursuant to the Prospectus, (C) any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement (or in the Registration Statement as amended by any post-effective
amendment thereof by the Company), the Prospectus (the term Prospectus for the
purpose of this Section 9 being deemed to include any Preliminary Prospectus,
the Prospectus and the Prospectus Supplement, in each case as amended or
supplemented by the Company), (D) any application or other document, or any
amendment or supplement thereto, executed by the Company or based upon written
information furnished by or on behalf of the Company filed in any jurisdiction
(domestic or foreign) in order to qualify the Shares under the securities or
blue sky laws thereof or filed with the Commission or any securities association
or securities exchange (each an "Application") or (E) any omission or alleged
omission to state a material fact required to be stated in any such Registration
Statement, Prospectus or any Application or necessary to make the statements
made therein, in the light of the circumstances under which they were made, not
misleading, except to the extent that any such loss, expense, liability, damage
or claim arises out of or is based upon any untrue statement or alleged untrue
statement or omission or alleged omission of a material fact contained in and in
conformity with information furnished in writing by the Underwriters through the
Representative to the Company expressly for use in such Registration Statement
or Prospectus; PROVIDED HOWEVER, that the indemnity agreement contained in this
subsection (a) with respect to the Preliminary Prospectus or the Prospectus
shall not inure to the benefit of an Underwriter (or to the benefit of any
person controlling such Underwriter) with respect to any person asserting such
loss, expense, liability, damage or claim which is the subject thereof if the
Prospectus or any supplement thereto prepared with the consent of the
Representative and furnished to the Underwriters prior to the Closing Time
corrected any such alleged untrue statement or omission and if such Underwriter
was required to, but failed to, send or give a copy of such Prospectus or
supplement thereto to such person at or prior to the written confirmation of the
sale of Shares to such person, to the extent that such delivery would have
prevented such loss, expense, liability, damage or claim. The indemnity
agreement set forth in this Section 9(a) shall be in addition to any liability
which the Company may otherwise have.
If any action is brought against an Underwriter or controlling person
in respect of which indemnity may be sought against the Company pursuant to
subsection (a) above,
-30-
such Underwriter shall promptly notify the Company in writing of the institution
of such action, and the Company shall assume the defense of such action,
including the employment of counsel not reasonably objected to by the
indemnified party and payment of expenses; provided, however, that any failure
or delay to so notify the Company will not relieve the Company of any obligation
hereunder, except to the extent that its ability to defend is actually impaired
by such failure or delay. Such Underwriter or controlling person shall have the
right to employ its or their own counsel in any such case, but the fees and
expenses of such counsel shall be at the expense of such Underwriter or such
controlling person unless the employment of such counsel shall have been
authorized in writing by the Company in connection with the defense of such
action, or the Company shall not have employed counsel (not reasonably objected
to by the indemnified party) to have charge of the defense of such action within
a reasonable time or such indemnified party or parties shall have reasonably
concluded (based on the advice of counsel) that there may be defenses available
to it or them which are different from or additional to those available to the
Company and which counsel to the Underwriter is of the opinion that it presents
an actual or potential conflict for counsel representing the Company and the
Underwriter (in which case the Company shall not have the right to direct the
defense of such action on behalf of the indemnified party or parties), in any of
which events such fees and expenses shall be borne by the Company and paid as
incurred (it being understood, however, that the Company shall not be liable for
the expenses of more than one separate firm of attorneys for the Underwriters or
controlling persons in any one action or series of related actions in the same
jurisdiction (other than local counsel in any such jurisdiction) representing
the indemnified parties who are parties to such action). Anything in this
paragraph to the contrary notwithstanding, the Company shall not be liable for
any settlement of any such claim or action effected without its written consent
(which consent shall not be unreasonably withheld).
(b) Each Underwriter agrees, severally and not jointly, to
indemnify, defend and hold harmless the Company, the Company's directors,
officers, and any person who controls the Company within the meaning of Section
15 of the Securities Act or Section 20 of the Exchange Act, from and against any
loss, expense, liability, damage or claim (including the reasonable cost of
investigation) which, jointly or severally, the Company, or any such person may
incur under the Securities Act, the Exchange Act or otherwise, but only insofar
as such loss, expense, liability, damage or claim arises out of or is based upon
(A) any untrue statement or alleged untrue statement of a material fact
contained in and in conformity with information furnished in writing by such
Underwriter through the Representative to the Company expressly for use in the
Registration Statement (or in the Registration Statement as amended by any
post-effective amendment thereof by the Company), the Prospectus, or any
Application, or (B) any failure on the part of the applicable Underwriter to
comply with any applicable law, rule or regulation, or (C) any omission or
alleged omission to state a material fact in connection with such information
required to be stated either in such Registration Statement, Prospectus or any
Application or necessary to make such information, in the light of the
circumstances under which made, not misleading. The statements set forth in the
table in paragraph 1, the third, eleventh and thirteenth paragraphs under the
caption "Underwriting" in the
-31-
Preliminary Prospectus (to the extent such statements relate to the
Underwriters) and in the final Prospectus constitute the only information
furnished by or on behalf of any Underwriter through the Representative to the
Company for purposes of Section 3(k) and this Section 9. The indemnity agreement
set forth in this Section 9(b) shall be in addition to any liabilities that such
Underwriter may otherwise have.
If any action is brought against the Company, or any such person in
respect of which indemnity may be sought against any Underwriter pursuant to the
foregoing paragraph, the Company, or such person shall promptly notify the
Representative in writing of the institution of such action and the
Representative, on behalf of the Underwriters, shall assume the defense of such
action, including the employment of counsel not reasonably objected to by the
indemnified party and payment of expenses; PROVIDED, HOWEVER, that any failure
or delay to so notify the Representative will not relieve the Underwriters of
any obligations hereunder, except to the extent that their ability to defend is
actually impaired by such failure or delay. The Company, or such person shall
have the right to employ its own counsel in any such case, but the fees and
expenses of such counsel shall be at the expense of the Company, or such person
unless the employment of such counsel shall have been authorized in writing by
the Representative in connection with the defense of such action or the
Representative shall not have employed counsel not reasonably objected to by the
indemnified party to have charge of the defense of such action within a
reasonable time or such indemnified party or parties shall have reasonably
concluded (based on the advice of counsel) that there may be defenses available
to it or them which are different from or additional to those available to the
Underwriters and which counsel to the Company is of the opinion that it presents
an actual or potential conflict for counsel representing the Company and the
Underwriter (in which case the Representative shall not have the right to direct
the defense of such action on behalf of the indemnified party or parties), in
any of which events such fees and expenses shall be borne by such Underwriter
and paid as incurred (it being understood, however, that the Underwriters shall
not be liable for the expenses of more than one separate firm of attorneys in
any one action or series of related actions in the same jurisdiction (other than
local counsel in any such jurisdiction) representing the indemnified parties who
are parties to such action). Anything in this paragraph to the contrary
notwithstanding, no Underwriter shall be liable for any settlement of any such
claim or action effected without the written consent of the Representative
(which shall not be unreasonably withheld).
(c) If the indemnification provided for in this Section 9 is
unavailable or insufficient to hold harmless an indemnified party under
subsections (a) and (b) of this Section 9 in respect of any losses, expenses,
liabilities, damages or claims 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, expenses, liabilities, damages or claims (i) in such proportion
as is appropriate to reflect the relative benefits received by the Company, and
the Underwriters from the offering of the Shares or (ii) if (but only if) the
allocation provided by clause (i) above is not permitted by applicable law, in
such proportion as is
-32-
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company and of the Underwriters in
connection with the statements or omissions which resulted in such losses,
expenses, liabilities, damages or claims, as well as any other relevant
equitable considerations. The relative benefits received by the Company and the
Underwriters shall be deemed to be in the same proportion as the total proceeds
from the offering (net of underwriting discounts and commissions but before
deducting expenses) received by the Company bear to the underwriting discounts
and commissions received by the Underwriters. The relative fault of the Company
and of the Underwriters shall be determined by reference to, among other things,
whether the untrue statement or alleged untrue statement of a material fact or
omission or alleged omission relates to information supplied by the Company 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 claim or action.
(d) The Company and the Underwriters agree that it would not be
just and equitable if contribution pursuant to this Section 9 were determined by
pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation which does not take account
of the equitable considerations referred to in subsection (c)(i) and, if
applicable (ii), above. Notwithstanding the provisions of this Section 9, no
Underwriter shall be required to contribute any amount in excess of the
underwriting discounts and commissions applicable to the Shares purchased by
such Underwriter. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute pursuant to this
Section 9 are several in proportion to their respective underwriting commitments
and not joint.
10. SURVIVAL:
The indemnity and contribution agreements contained in Section 9 and
the covenants, warranties and representations of the Company contained in
Sections 3, 4 and 5 of this Agreement shall remain in full force and effect
regardless of any investigation made by or on behalf of any Underwriter, or any
person who controls any Underwriter within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, or by or on behalf of the
Company, its directors and officers, or any person who controls the Company
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act, and shall survive any termination of this Agreement or the sale
and delivery of the Shares for a period of three years thereafter. The Company
and each Underwriter agree promptly to notify the others of the commencement of
any litigation or proceeding against it and, in the case of the Company, against
any of the Company's
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officers and directors, in connection with the sale and delivery of the Shares,
or in connection with the Registration Statement or Prospectus.
11. NOTICES:
Except as otherwise herein provided, all statements, requests, notices
and agreements shall be in writing or by telegram and, if to the Underwriters,
shall be sufficient in all respects if delivered to Friedman, Billings, Xxxxxx &
Co., Inc., 0000 00xx Xxxxxx Xxxxx, Xxxxxxxxx, Xxxxxxxx 00000, Attention:
Syndicate Department; if to the Company, shall be sufficient in all respects if
delivered to the Company at the offices of the Company at 0000 Xxxxxxxxx Xxxxxxx
Xx., Xxxxxx, Xxxx 00000, Attention: President and Chief Executive Officer.
12. GOVERNING LAW; HEADINGS:
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD TO CONFLICTS OF LAWS
PRINCIPLES. The section headings in this Agreement have been inserted as a
matter of convenience of reference and are not a part of this Agreement.
13. PARTIES AT INTEREST:
The Agreement herein set forth has been and is made solely for the
benefit of the Underwriters, the Company and the controlling persons, directors
and officers referred to in Sections 9 and 10 hereof, and their respective
successors, assigns, executors and administrators. No other person, partnership,
association or corporation (including a purchaser, as such purchaser, from any
of the Underwriters) shall acquire or have any right under or by virtue of this
Agreement.
14. ENTIRE AGREEMENT; AMENDMENT.
This Agreement (including the exhibits and schedules hereto and
documents delivered pursuant hereto) is intended by the parties to and does
constitute the entire agreement between the Company, on the one hand, and the
Underwriters, on the other hand, with respect to the transactions contemplated
by this Agreement. This Agreement supersedes and terminates any and all prior
understandings, written or oral, between the parties, including the letter by
and between the Company and Friedman, Billings, Xxxxxx & Co., Inc., dated as of
August 1, 2001, except for sections 2 and 6 thereof. If there is any question of
interpretation or if there are or appear to be inconsistencies between this
Agreement and any schedule or exhibit hereto, the terms of this Agreement shall
govern. This Agreement may not be amended, modified, waived, discharged or
terminated orally, but only by an instrument in writing signed by an authorized
executive officer of the Company and Friedman, Billings, Xxxxxx & Co., Inc. No
waiver of the breach of any provision or term of this Agreement shall be deemed
or construed to be a waiver of other or subsequent breaches.
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15. COUNTERPARTS AND FACSIMILE SIGNATURES:
This Agreement may be signed by the parties in counterparts which
together shall constitute one and the same agreement among the parties. A
facsimile signature shall constitute an original signature for all purposes.
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If the foregoing correctly sets forth the understanding among the
Company and the Underwriters, please so indicate in the space provided below for
the purpose, whereupon this Agreement shall constitute a binding agreement among
the Company and the Underwriters.
Very truly yours,
MCSi, INC.
By:
--------------------------------
Name:
Title:
Accepted and agreed to as
of the date first above written:
FRIEDMAN, BILLINGS, XXXXXX & CO., INC.
By:
---------------------------------
Name:
Title:
For itself and as Representative of the Underwriters.
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Schedule I
Number of Initial
Underwriter Shares to be Purchased
--------------------------------------------------------------------------------
Friedman, Billings, Xxxxxx & Co., Inc. 2,400,000
Xxxxxxx Xxxxx & Company L.L.C. 1,600,000
Total.......................................... 4,000,000
=========
EXHIBIT A
Consolidated
Subsidiaries of MCSi, Inc.
3692116 Canada Inc.
Incorporated in Canada
Audio-Visual Systems, Inc.
Incorporated in the state of Ohio
C & G Marketing, Inc.
Incorporated in the state of Alabama
Computer Showcase, Inc.
Incorporated in the state of Georgia
Consolidated Media Systems, Inc.
Incorporated in the state of Tennessee
Digital Networks Corporation
Incorporated in the state of Maryland
Diversified Data Products, Inc.
Incorporated in the state of Michigan
Fairview - AFX, Inc.
Incorporated in the state of Oklahoma
MCSi-California, Inc.
Incorporated in the state of Maryland
MCSi Canada Inc.
Incorporated in the province of Ontario, Canada
MCSi-Florida, Inc.
Incorporated in the state of Florida
MCSi Purchasing L.L.C.
a Maryland limited liability company
MCSi-Texas, Inc.
Incorporated in the state of Texas
Midwest Visual Equipment Co., Inc.
Incorporated in the state of Illinois
Technical Industries, Inc.
Incorporated in the state of Georgia
Exhibit A
Page 2
Video Images, Inc.
Incorporated in the state of Wisconsin
Westek Presentation Systems, Inc.
Incorporated in the state of California
