EXHIBIT 99.1
STANDBY STOCK PURCHASE AGREEMENT
BY AND BETWEEN
MCSi, INC.
AND
ZENGINE, INC.
DATED SEPTEMBER 20, 2000
STANDBY STOCK PURCHASE AGREEMENT
THIS STANDBY STOCK PURCHASE AGREEMENT (the "Agreement") is made and
entered into on this September 20, 2000 between MCSi, Inc., a Maryland
corporation ("MCSi"), and Zengine Inc., a Delaware corporation (the "Company").
BACKGROUND
A. The Company is contemplating an initial public offering (the "Public
Offering") of its common stock, no par value (the "Common Stock"), through an
underwritten public offering lead by William Blair & Company as the
representative of the several underwriters (the "Underwriters").
B. In connection with the Public Offering the Company will offer 390,000
shares of its Common Stock (the "Program Shares") directly to the shareholders
of MCSi pursuant to a share subscription program (the "Program").
C. If and to the extent any of the Program Shares are not subscribed for
or, if subscribed for, are not purchased by the shareholders of MCSi under the
Program, MCSi has agreed to purchase all such Program Shares directly from the
Company for its own account for investment purposes only on the terms and
subject to the conditions set forth herein.
D. Registrar and Transfer Company ("R&T") will act as the offering agent
for the Program and as the Company's transfer agent. The offering agent will
determine the record date shareholders eligible to participate in the Program
and will collect subscriptions and subscription payments from eligible MCSi
shareholders until 5:00 p.m. on the third business day following the date the
Company determines the initial public offering price for the Common Stock.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and for good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, intending to be legally bound hereby, the
parties hereto hereby agree as follows:
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ARTICLE 1
THE TRANSACTION
1.1. Purchase and Purchase Price.
(a) In the event that any of the Program Shares are not subscribed for
or, if subscribed for are not purchased by the shareholders of MCSi
under the Program, MCSi shall, or shall cause any of its wholly
owned subsidiaries to, purchase these remaining shares.
(b) The purchase price for the Program Shares (the "Purchase Price")
shall be equal to the product of multiplying (i) the aggregate
number of Program Shares, by (ii) the price per share of Common
Stock sold pursuant to the Public Offering (the "IPO Price").
(c) MCSi shall transfer, or MCSi shall cause its wholly owned
subsidiary, to transfer, or shall cause R&T to pay out of
subscription funds received on behalf of MCSi's shareholders
participating in the Program, to the Company, an amount equal to
the Purchase Price on the day of the closing of the Public
Offering by wire transfer.
1.2. Closing.
(a) Time and Place. The closing under this Agreement (the "Closing")
will take place on the same date as the closing of the Public
Offering, at the offices of Elias, Matz, Tiernan & Herrick L.L.P.,
or at such other time, date or place as the parties shall mutually
agree. The date on which the Closing occurs is sometimes referred
to herein as the "Closing Date."
(b) Deliveries and Proceedings to the Offering Agent. On the Closing
Date, the Company shall instruct R&T to accept instructions from
Sharmila Rao, or her designee at MCSi, for:
(i) delivery of the subscription funds collected by the offering
agent to the extent not paid to the Company at the Closing.
(c) Deliveries and Proceedings to the Transfer Agent. On the Closing
Date, the Company shall instruct R&T to accept instructions from
Sharmila Rao, or her designee at MCSi, for:
(i) delivery of the shares of Program Shares purchased in the
Program; and
(ii) delivery to MCSi of the Program Shares not purchased by MCSi
shareholders.
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ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to MCSi as follows:
2.1. Organization. The Company is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Delaware.
2.2. Power and Authority. The Company has full corporate power and authority
to make, execute, deliver and perform this Agreement and the
transactions contemplated hereby.
2.3. Authorization and Enforceability. The execution, delivery and
performance of this Agreement by the Company have been duly authorized
by all necessary corporate action on the part of the Company, and this
Agreement constitutes the legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms.
ARTICLE 3
REPRESENTATION AND WARRANTIES OF MCSi
MCSi represents and warrants to the Company as follows:
3.1. Organization. MCSi is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Maryland.
3.2. Power and Authority. MCSi has full corporate power and authority to
make, execute, deliver and perform this Agreement and the transactions
contemplated hereby.
3.3. Authorization and Enforceability. The execution, delivery and
performance of this Agreement by MCSi have been duly authorized by all
necessary corporate action on the part of MCSi, and this Agreement
constitutes the legal, valid and binding obligation of MCSi, enforceable
against MCSi in accordance with its terms.
3.4. Authorization and Approvals. All consents, approvals, authorizations and
orders necessary for the execution and delivery of this Agreement; and
MCSi, or an affiliate have full rights, power and authority to enter
into this Agreement as provided hereunder.
3.5. Investment Intent. MCSi represents, warrants and covenants that it is
acquiring the Program Shares for its own account, as a long-term
investment, and not with the view to resale or redistribution.
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ARTICLE 4
CONDITIONS TO CLOSING; TERMINATION
4.1. Conditions Precedent to Obligations of MCSi. The obligations of MCSi to
proceed with the Closing are subject to the fulfillment prior to or at
Closing of the following conditions (any one or more of which may be
waived in whole or in part by MCSi at MCSi's option):
(a) Bringdown of Representations and Warranties. The representations and
warranties of the Company contained in this Agreement shall be true and
correct on and as of the time of Closing, with the same force and effect
as though such representations and warranties had been made on, as of
and with reference to such time, and MCSi shall have received a
certificate, signed by an executive officer of the Company, to such
effect.
(b) Performance and Compliance. The Company shall have performed all of
the covenants and complied with all of the provisions required by this
Agreement to be performed or complied with by it on or before the
Closing, and MCSi shall have received a certificate, signed by any
executive officer, to such effect.
(c) Public Offering. The Closing of the Public Offering shall have
occurred.
4.2. Conditions Precedent to the Obligations of the Company. The obligations
of the Company to proceed with the Closing hereunder are subject to the
fulfillment prior to or at Closing of the following conditions (any one
or more of which may be waived in whole or in part by the Company at the
Company's option):
(a) Bringdown of Representations and Warranties. The representations and
warranties of MCSi contained in this Agreement shall be true and correct
on and as of the time of Closing, with the same force and effect as
though such representations and warranties had been made on, as of and
with reference to such time, and MCSi shall have delivered to the
Company a certificate, signed by an executive officer of MCSi, to such
effect.
(b) Performance and Compliance. MCSi shall have performed all of the
covenants and complied with all the provisions required by this
Agreement to be performed or complied with by it on or before the
Closing and MCSi shall have delivered to the Company a certificate,
signed by any executive officer of MCSi, to such effect.
(c) Public Offering. The closing of the Public Offering shall have
occurred.
4.3. Termination.
(a) When Agreement May Be Terminated. This Agreement may be terminated at
any time prior to Closing:
(i) by mutual consent of MCSi and the Company; or
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(ii) by MCSi or the Company, if the Company shall have withdrawn its
Registration Statement on Form S-1 relating to the Public Offering.
(b) Effect of Termination. In the event of termination of this Agreement
by either MCSi or the Company, as provided above, this Agreement shall
forthwith terminate and there shall be no liability on the part of
either MCSi or the Company, except for liabilities arising from a breach
of this Agreement prior to such termination; provided, however, that the
obligations set forth in Article 5 hereof shall survive such
termination.
ARTICLE 5
CERTAIN ADDITIONAL COVENANTS
5.1. Indemnification.
(a) MCSi hereby agrees to indemnify the Company and its underwriters,
affiliates, officers, employees, representatives and directors (the
"Indemnified Persons") against, and hold them harmless from, any loss,
liability, claim, damage or expense, joint or several ("Losses"),
arising directly or indirectly, out of or in connection with, the
Program, including, without limitation,
(i) costs and expenses associated with the failure of any shareholders
of MCSi to consummate purchases of Program Shares for which they
have subscribed and (ii) any claims by shareholders of MCSi or
other persons arising from the Program, and expenses, arising from
the establishment, execution and performance of the Program.
Notwithstanding the foregoing, MCSi shall not indemnify the Company
against liabilities arising from any untrue or allegedly untrue
statement of a material fact, or omission or alleged omission of a
material fact required to be stated to make the statements not
misleading, in the prospectus contained in the Company's
Registration Statement on Form S-1 (the "Prospectus"), except for
statements or omissions regarding the Program and except for any
materials related to the Program delivered to MCSi's shareholders
and not to other recipients of the Prospectus generally. MCSi
agrees to reimburse the Indemnified Persons, as incurred, for any
reasonable legal or other expenses reasonably incurred by them in
connection with investigating or defending any Losses.
(b) Promptly after receipt by an Indemnified Person of notice of the
commencement of any action for which indemnification or contribution may
be sought hereunder, such Indemnified Person will notify MCSi in writing
of the commencement thereof. The failure to so notify MCSi will not
relieve MCSi from liability under Section 5.1(a) above unless and to the
extent that MCSi did not otherwise learn of such action and such failure
results in the forfeiture of substantial rights and defenses. MCSi shall
be entitled to appoint counsel at MCSi's expense to represent the
Indemnified Person in any action for which indemnification is sought (in
which case MCSi shall not thereafter be liable for the fees and expenses
of separate counsel retained by the Indemnified Person except as set
forth below); provided,
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however, that such counsel shall be reasonably satisfactory to the
Indemnified Person. Notwithstanding MCSi's election to appoint counsel
to represent the Indemnified Person in an action, the Indemnified Person
shall have the right to employ separate counsel (including local
counsel), and MCSi shall bear the reasonable fees, costs and expenses
of such counsel if (i) the use of counsel chosen by MCSi to represent
the Indemnified Person would present such counsel with a conflict of
interest, (ii) the actual or potential defendants in, or targets of,
any such action include both MCSi and the Indemnified Person and the
Indemnified Person shall have reasonably concluded that there may be
legal defenses available to it that are different from or in addition
to those available to MCSi, (iii) MCSi shall not have employed
counsel reasonably satisfactory to the Indemnified Person within a
reasonable time after notification of the commencement of such action or
(iv) MCSi shall have authorized the Indemnified Person to employ
separate counsel at the expense of MCSi.
(c) MCSi shall not, without the prior written consent of the relevant
Indemnified Person, settle or compromise or consent to the entry of any
judgment with respect to any pending or threatened claim, action, suit
or proceeding in respect of which indemnification or contribution may be
sought hereunder unless such settlement, compromise or consent includes
an unconditional release of such Indemnified Person from all liability
arising from such claim, action, suit or proceeding. An Indemnified
Person may not settle or compromise or consent to the entry of any
judgment with respect to any pending or threatened claim, action, suit
or proceeding in respect of which indemnification or contribution may be
sought hereunder without the consent of MCSi, such consent not to be
unreasonably withheld.
(d) In the event that the indemnity provided for in this Article 5 is
unavailable to or insufficient to hold harmless an Indemnified Person
for any reason, the Indemnified Persons and MCSi shall contribute to the
Losses (including the legal and other expenses attributable to
investigating or defending same) to which the Indemnified Person may be
subject in such proportion as is appropriate to reflect the relative
fault of the Indemnified Person and MCSi in connection with the
statements or omissions that resulted in such Losses as well as any
other relevant equitable considerations, including that the Company
performed the Program as an accommodation to MCSi without any legal
obligation to do so. Relative fault shall be determined by reference to,
among other things, whether any untrue or allegedly untrue statement of
a material fact or the omission or alleged omission to state a material
fact relates to information provided by the Indemnified Person or MCSi,
the intent of the Indemnified Person and MCSi, and their relative
knowledge, access to information and opportunity to correct or prevent
such untrue statement or omission. The parties agree that it would not
be just and equitable if contribution was determined by any method of
allocation that does not take into account the equitable considerations
discussed above.
ARTICLE 6
MISCELLANEOUS
6.1. Nature and Survival of Representations. The representations, warranties,
covenants and agreements of MCSi and the Company contained in this
Agreement, and all statements contained in this Agreement or any
exhibit hereto or any certificate or other document
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delivered pursuant to this Agreement or in connection with the transactions
contemplated hereby, shall be deemed to constitute representations,
warranties, covenants and agreements of the respective party delivering
the same. All such representations, warranties, covenants and agreements
shall survive the Closing.
6.2. Notices. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly
given if personally delivered or, if mailed, when mailed by United
States first-class, certified or registered mail, postage prepaid, to
the other party at the following addresses (or at such other address as
shall be given in writing by any party to the other):
(a) If to MCSi, to:
MCSi, Inc.
4750 Hempstead Drive
Dayton, Ohio 45429
Attention: Michael E. Peppel
(b) If to the Company, to:
Zengine, Inc.
6100 Stewart Avenue
Fremont, California 94538
Attention: Joseph M. Savarino
With a required copy to:
Elias, Matz, Tiernan & Herrick LLP
734 15th Street, N.W..
Washington, DC 20005
Attention: Jeffrey A. Koeppel
6.3. Third Party Beneficiaries. MCSi acknowledges that each of the
Underwriters of the Public Offering shall be a third party beneficiary
entitled to exercise the rights and remedies provided for herein
directly against MCSi. The Company shall cooperate with and assist each
of the Underwriters of the Public Offering with respect to any action
such Underwriters take to exercise such rights and remedies directly
against MCSi.
6.4. Successors and Assigns. This Agreement, and all rights and powers
granted hereby, will bind and inure to the benefit of the parties hereto
and their respective successors and permitted assigns but shall not be
assignable or delegable by any party without the prior written consent
of the other party.
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6.5. Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws of Delaware, without giving effect to
its principles of conflicts of laws or choice of forum.
6.6. Headings. The headings preceding the text of the sections and
subsections hereof are inserted solely for convenience of reference, and
shall not constitute a part of this Agreement, nor shall they affect its
meaning, construction or effect.
6.7. Counterparts. This Agreement may be executed in two counterparts, each
of which shall be deemed an original, but which together shall
constitute one and the same instrument. Each such copy shall be deemed
an original and it shall not be necessary in making proof of this
Agreement to produce or account for more than one such counterpart.
6.8. Further Assurances. Each party shall cooperate and take such action as
may be reasonably requested by the other party in order to carry out the
provisions and purposes of this Agreement and the transactions
contemplated hereby.
6.9. Amendment and Waiver. The parties may by mutual agreement amend this
Agreement in any respect, and either party, as to such party, may (a)
extend the time for the performance of any of the obligations of the
other party, (b) waive any inaccuracies in representations by the other
party, (c) waive compliance by the other party with any of the
agreements contained herein and performance of any obligations by the
other party, and (d) waive the fulfillment of any condition that is
precedent to the performance by such party of any of its obligations
under this Agreement. To be effective, any such amendment or waiver must
be in writing and be signed by the party against whom enforcement of the
same is sought.
6.10.Entire Agreement. This Agreement sets forth all of the promises,
covenants, agreements, conditions and undertakings between the parties
hereto with respect to the subject matter hereof, and supersedes all
prior and contemporaneous agreements and understandings, inducements or
conditions, express or implied, oral or written.
6.11.Interpretations. No party to this Agreement shall be considered the
draftsman. This Agreement has been reviewed, negotiated and accepted by
all parties and their attorneys and shall be construed and interpreted
according to the ordinary meaning of the words used so as fairly to
accomplish the purposes and intentions of all parties hereto.
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the day and year first above written.
MCSi, INC.
By: /s/ Michael E. Peppel
---------------------
Name: Michael E. Peppel
Title: President and Chief Executive Officer
ZENGINE, INC.
By: /s/ Joseph M. Savarino
----------------------
Name: Joseph M. Savarino
Title: President and Chief Executive Officer
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