EXHIBIT 1.1
5,000,000 Shares
RAINMAKER SYSTEMS, INC.
COMMON STOCK
UNDERWRITING AGREEMENT
Dated _________, 1999
TABLE OF CONTENTS
Page
1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY........................................................ 2
(a) Effective Registration Statement............................................................... 2
(b) Contents of Registration Statement............................................................. 2
(c) Distribution of Offering Material By the Company............................................... 2
(d) Due Incorporation.............................................................................. 2
(e) No Subsidiaries................................................................................ 3
(f) Underwriting Agreement......................................................................... 3
(g) Description of Capital Stock and Other Capital Stock Matters................................... 3
(h) Authorized Stock............................................................................... 3
(i) Validly Issued Shares.......................................................................... 3
(j) No Default..................................................................................... 3
(k) No Conflict.................................................................................... 3
(l) No Material Adverse Change..................................................................... 4
(m) Independent Accountants........................................................................ 4
(n) Preparation of the Financial Statements........................................................ 4
(o) Legal Proceedings; Exhibits.................................................................... 4
(p) Compliance with Securities Act................................................................. 4
(q) Not an Investment Company...................................................................... 4
(r) Compliance with Laws........................................................................... 5
(s) No Environmental Costs......................................................................... 5
(t) No Registration Rights......................................................................... 5
(u) Cuban Business Statute......................................................................... 5
(v) Absence of Material Changes.................................................................... 5
(w) Good Title to Properties....................................................................... 5
(x) Intellectual Property Rights................................................................... 6
(y) No Labor Disputes.............................................................................. 6
(z) Insurance...................................................................................... 6
(aa) Governmental Permits........................................................................... 6
(bb) Accounting Controls............................................................................ 6
(cc) Stock Exchange Listing......................................................................... 6
(dd) Year 2000 Compliance........................................................................... 7
(ee) Tax Law Compliance............................................................................. 7
(ff) Related Party Transactions..................................................................... 7
2. PURCHASE AND SALE AGREEMENTS......................................................................... 7
(a) Firm Shares.................................................................................... 7
(b) Additional Shares.............................................................................. 7
(c) Market Standoff Provision...................................................................... 8
(d) Terms of Public Offering....................................................................... 8
3. PAYMENT AND DELIVERY................................................................................. 8
(a) Firm Shares.................................................................................... 8
(b) Additional Shares.............................................................................. 8
(c) Delivery of Certificates....................................................................... 8
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TABLE OF CONTENTS
(continued)
Page
4. COVENANTS OF THE COMPANY............................................................................ 9
(a) Furnish Copies of Registration Statement and Prospectus....................................... 9
(b) Notification of Amendments or Supplements..................................................... 9
(c) Filings of Amendments or Supplements.......................................................... 9
(d) Blue Sky Laws................................................................................. 9
(e) Earnings Statement............................................................................ 9
(f) Use of Proceeds............................................................................... 10
(g) Transfer Agent................................................................................ 10
(h) Periodic Reporting Obligations................................................................ 10
(i) Exchange Act Compliance....................................................................... 10
5. CONDITIONS TO THE UNDERWRITERS' OBLIGATIONS......................................................... 10
(a) Effective Registration Statement.............................................................. 10
(b) Rule 462 Registration Statement............................................................... 10
(c) Prospectus Filed with Commission.............................................................. 10
(d) No Stop Order................................................................................. 10
(e) No NASD Objection............................................................................. 11
(f) No Debt Downgrading........................................................................... 11
(g) No Material Adverse Change.................................................................... 11
(h) Officer's Certificate......................................................................... 11
(i) Opinion of Company Counsel.................................................................... 11
(j) Opinion of Underwriters Counsel............................................................... 11
(k) Accountant's Comfort Letter................................................................... 11
(l) Lock-Up Agreements............................................................................ 12
(m) Additional Documents.......................................................................... 12
6. EXPENSES............................................................................................ 12
7. INDEMNITY AND CONTRIBUTION.......................................................................... 13
(a) Indemnification of the Underwriters........................................................... 13
(b) Indemnification by the Underwriters........................................................... 13
(c) Indemnification Procedures.................................................................... 14
(d) Indemnification for Directed Share Program.................................................... 15
(e) Contribution Agreement........................................................................ 15
(f) Contribution Amounts.......................................................................... 16
(g) Survival of Provisions........................................................................ 16
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TABLE OF CONTENTS
(continued)
Page
8. EFFECTIVENESS.................................................................... 16
9. TERMINATION...................................................................... 17
10. DEFAULTING UNDERWRITERS.......................................................... 17
11. COUNTERPARTS..................................................................... 18
12. HEADINGS; TABLE OF CONTENTS...................................................... 18
13. NOTICES.......................................................................... 18
14. SUCCESSORS....................................................................... 19
15. PARTIAL UNENFORCEABILITY......................................................... 19
16. GOVERNING LAW.................................................................... 19
17. ENTIRE AGREEMENT................................................................. 19
18. AMENDMENTS....................................................................... 19
19. SOPHISTICATED PARTIES............................................................ 19
Schedule A
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List of Underwriters
Exhibits
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Exhibit A - Form of Legal Opinion of Company Counsel
Exhibit B - Form of Lockup Agreement
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___________________, 1999
Xxxxxxxxx, Xxxxxx & Xxxxxxxx
Securities Corporation
Xxxxxx Xxxxxx Partners LLC
XX Xxxxx Securities Corporation
DLJdirect Inc.
As representatives of the several Underwriters
c/x Xxxxxxxxx, Xxxxxx & Xxxxxxxx Xxxxxx Xxxxxx Partners LLC
Securities Corporation One Xxxxxxxxxx Street, Suite 3700
000 Xxxx Xxxxxx Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Introduction. Rainmaker Systems, Inc., a Delaware corporation (the
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"Company"), proposes to issue and sell to the several underwriters named in
Schedule A hereto (the "Underwriters") an aggregate of 5,000,000 shares of the
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common stock, par value $0.001 per share, of the Company (the "Firm Shares").
The Company also proposes to issue and sell to the several
Underwriters not more than an additional 750,000 shares of its common stock, par
value $0.001 per share (the "Additional Shares"), if and to the extent that you
shall have determined to exercise, on behalf of the Underwriters, the right to
purchase such shares of common stock granted to the Underwriters in Section 3
hereof. The Firm Shares and the Additional Shares are hereinafter collectively
referred to as the "Shares". The shares of common stock, par value $0.001 per
share, of the Company to be outstanding after giving effect to the sales
contemplated hereby are hereinafter referred to as the "Common Stock".
Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation, Xxxxxx Xxxxxx Partners LLC
and XX Xxxxx Securities Corporation have agreed to act as representatives of the
several Underwriters (in such capacity, the "Representatives") in connection
with the offering and sale of the Shares.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-1 (file no. 333-86445),
including a prospectus, relating to the Shares. The registration statement as
amended at the time it becomes effective, including the information (if any)
deemed to be part of the registration statement at the time of effectiveness
pursuant to Rule 430A under the Securities Act of 1933, as amended (the
"Securities Act"), is hereinafter referred to as the "Registration Statement";
the prospectus in the form first used to confirm sales of Shares is hereinafter
referred to as the "Prospectus". If the Company has filed a registration
statement to register additional shares of Common Stock pursuant to Rule 462(b)
under the Securities Act (the "Rule 462 Registration Statement"), then
any reference herein to the term "Registration Statement" shall be deemed to
include such Rule 462 Registration Statement. All references in this Agreement
to the Registration Statement, the Rule 462 Registration Statement, a
preliminary prospectus, the Prospectus, or any amendments or supplements to any
of the foregoing, shall include any copy thereof filed with the Commission
pursuant to its Electronic Data Gathering, Analysis and Retrieval System
("XXXXX").
As part of the offering contemplated by this Agreement, Xxxxxx Xxxxxx
Partners has agreed to reserve out of the Shares set forth opposite its name on
Schedule A to this Agreement, up to 250,000 shares, for sale to the Company's
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employees, officers, and directors and other parties associated with the Company
(collectively, "Participants"), as set forth in the Prospectus under the heading
"Underwriting" (the "Directed Share Program"). The Shares to be sold by Xxxxxx
Xxxxxx Partners pursuant to the Directed Share Program (the "Directed Shares")
will be sold by Xxxxxx Xxxxxx Partners pursuant to this Agreement at the public
offering price. Any Directed Shares not orally confirmed for purchase by any
Participants by the end of the first business day after the date on which this
Agreement is executed will be offered to the public by Xxxxxx Xxxxxx Partners as
set forth in the Prospectus.
1. Representations and Warranties of the Company. The Company represents
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and warrants to and agrees with each of the Underwriters that:
(a) Effective Registration Statement. The Registration Statement
--------------------------------
has become effective; no stop order suspending the effectiveness of the
Registration Statement is in effect, and no proceedings for such purpose are
pending before or, to the Company's knowledge, threatened by the Commission.
(b) Contents of Registration Statement. (i) The Registration
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Statement, when it became effective, did not contain and, as amended or
supplemented, if applicable, will not contain 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 not misleading, (ii) the Registration Statement
and the Prospectus comply and, as amended or supplemented, if applicable, will
comply in all material respects with the Securities Act and the applicable rules
and regulations of the Commission thereunder and (iii) the Prospectus does not
contain and, as amended or supplemented, if applicable, will not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements therein, in the light of the circumstances under which
they were made, not misleading, except that the representations and warranties
set forth in this paragraph do not apply to statements or omissions in the
Registration Statement or the Prospectus based upon information relating to any
Underwriter furnished to the Company in writing by such Underwriter through you
expressly for use therein.
(c) Distribution of Offering Material By the Company. The
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Company has not distributed and will not distribute, prior to the later of the
Option Closing Date (as defined below) and the completion of the Underwriters'
distribution of the Shares, any offering material in connection with the
offering and sale of the Shares other than a preliminary prospectus, the
Prospectus or the Registration Statement.
(d) Due Incorporation. The Company has been duly incorporated,
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is validly existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation,
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has the corporate power and authority to own its property and to conduct its
business as described in the Prospectus and is duly qualified to transact
business and is in good standing in each jurisdiction in which the conduct of
its business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so qualified or be in
good standing would not have a material adverse effect on the Company.
(e) No Subsidiaries. The Company has no subsidiaries.
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(f) Underwriting Agreement. This Agreement has been duly
----------------------
authorized, executed and delivered by the Company, and is a valid and binding
agreement of the Company, enforceable in accordance with its terms, except as
rights to indemnification hereunder may be limited by applicable law and except
as the enforcement hereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting the
rights and remedies of creditors or by general equitable principles.
(g) Description of Capital Stock and Other Capital Stock
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Matters. The authorized capital stock of the Company conforms as to legal
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matters to the description thereof contained in the Prospectus. There are no
outstanding subscriptions, rights, warrants, options, calls, convertible
securities, commitments of sale or liens granted or issued by the Company
relating to or entitling any person to purchase or otherwise to acquire any
shares of the capital stock of the Company, except as otherwise disclosed in the
Registration Statement or options granted after September 30, 1999.
(h) Authorized Stock. All of the outstanding shares of capital
----------------
stock of the Company prior to the issuance of the Shares to be sold by the
Company have been duly authorized and are validly issued, fully paid, non-
assessable and were not issued in violation of any preemptive or similar rights.
(i) Validly Issued Shares. The Shares to be sold by the Company
---------------------
have been duly authorized and, when issued and delivered in accordance with the
terms of this Agreement, will be validly issued, fully paid and non-assessable,
and the issuance of such Shares will not be subject to any preemptive or similar
rights.
(j) No Default. The Company is not in violation of its charter
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or by-laws or in default in the performance of any obligation, agreement,
covenant or condition contained in any indenture, loan agreement, mortgage,
lease or other agreement or instrument that is material and to the Company to
which the Company is a party or by which the Company or its property is bound.
(k) No Conflict. The execution and delivery by the Company of,
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and the performance by the Company of its obligations under, this Agreement will
not contravene any provision of applicable law or the certificate of
incorporation or by-laws of the Company or any agreement or other instrument
binding upon the Company that is material to the Company or any judgment, order
or decree of any governmental body, agency or court having jurisdiction over the
Company, and no consent, approval, authorization or order of, or qualification
with, any governmental body or agency is required for the performance by the
Company of its obligations under this Agreement, except such as may be required
by the securities or Blue Sky laws of the
3
various states or the National Association of Securities Dealers, Inc. in
connection with the offer and sale of the Shares.
(l) No Material Adverse Change. There has not occurred any
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material adverse change, or any development which would reasonably be expected
to result in a prospective material adverse change, in the condition, financial
or otherwise, or in the earnings, business, operations or prospects of the
Company from that set forth in the Prospectus (exclusive of any amendments or
supplements thereto subsequent to the date of this Agreement).
(m) Independent Accountants. Ernst & Young LLP, who have
-----------------------
expressed their opinion with respect to the financial statements (which term as
used in this Agreement includes the related notes thereto) and supporting
schedules filed with the Commission as a part of the Registration Statement and
included in the Prospectus, are independent public or certified public
accountants as required by the Securities Act.
(n) Preparation of the Financial Statements. The financial
---------------------------------------
statements filed with the Commission as a part of the Registration Statement and
included in the Prospectus present fairly the financial position of the Company
as of and at the dates indicated and the results of its operations and cash
flows for the periods specified (subject, in the case of unaudited financial
statements, to normal year-end adjustments). The supporting schedules included
in the Registration Statement present fairly the information required to be
stated therein. Such financial statements and supporting schedules have been
prepared in conformity with generally accepted accounting principles applied on
a consistent basis throughout the periods involved, except as may be expressly
stated in the related notes thereto (subject, in the case of unaudited financial
statements, to normal year-end adjustments). No other financial statements or
supporting schedules are required to be included in the Registration Statement.
The financial data set forth in the Prospectus under the captions "Prospectus
Summary-Summary Financial Data," "Selected Financial Data" and "Capitalization"
fairly present the information set forth therein on a basis consistent with that
of the audited financial statements contained in the Registration Statement.
(o) Legal Proceedings; Exhibits. There are no legal or
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governmental proceedings pending or, to the Company's knowledge, threatened to
which the Company is a party or to which any of the properties of the Company is
subject that are required to be described in the Registration Statement or the
Prospectus and are not so described or any statutes, regulations, contracts or
other documents that are required to be described in the Registration Statement
or the Prospectus or to be filed as exhibits to the Registration Statement that
are not described or filed as required.
(p) Compliance with Securities Act. Each preliminary prospectus
------------------------------
filed as part of the registration statement as originally filed or as part of
any amendment thereto, or filed pursuant to Rule 424 under the Securities Act,
complied when so filed in all material respects with the Securities Act and the
applicable rules and regulations of the Commission thereunder.
(q) Not an Investment Company. The Company is not and, after
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giving effect to the offering and sale of the Shares and the application of the
proceeds thereof as described in
4
the Prospectus, will not be an "investment company" as such term is defined in
the Investment Company Act of 1940, as amended.
(r) Compliance with Laws. The Company (i) is in compliance with
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any and all applicable foreign, federal, state and local laws and regulations
relating to the protection of human health and safety, the environment or
hazardous or toxic substances or wastes, pollutants or contaminants
("Environmental Laws"), (ii) has received all permits, licenses or other
approvals required of them under applicable Environmental Laws to conduct their
respective businesses and (iii) is in compliance with all terms and conditions
of any such permit, license or approval, except where such noncompliance with
Environmental Laws, failure to receive required permits, licenses or other
approvals or failure to comply with the terms and conditions of such permits,
licenses or approvals would not, individually or in the aggregate, have a
material adverse effect on the Company.
(s) No Environmental Costs. There are no costs or liabilities
----------------------
associated with Environmental Laws (including, without limitation, any capital
or operating expenditures required for clean-up, closure of properties or
compliance with Environmental Laws or any permit, license or approval, any
related constraints on operating activities and any potential liabilities to
third parties) which would, individually or in the aggregate, have a material
adverse effect on the Company.
(t) No Registration Rights. There are no contracts, agreements
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or understandings between the Company and any person granting such person the
right to require the Company to file a registration statement under the
Securities Act with respect to any securities of the Company or to require the
Company to include such securities with the Shares registered pursuant to the
Registration Statement other than as described in the Registration Statement and
as have been waived in writing in connection with the offering contemplated
hereby.
(u) Cuban Business Statute. The Company has complied with all
----------------------
provisions of Section 517.075, Florida Statutes relating to doing business with
the Government of Cuba or with any person or affiliate located in Cuba.
(v) Absence of Material Changes. Subsequent to the respective
---------------------------
dates as of which information is given in the Registration Statement and the
Prospectus, (i) the Company has not incurred any material liability or
obligation, direct or contingent, nor entered into any material transaction not
in the ordinary course of business; (ii) the Company has not purchased any of
its outstanding capital stock, nor declared, paid or otherwise made any dividend
or distribution of any kind on its capital stock other than ordinary and
customary dividends; and (iii) there has not been any material change in the
capital stock, short-term debt or long-term debt of the Company, except in each
case as described in the Prospectus.
(w) Good Title to Properties. The Company has good and
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marketable title in fee simple to all real property and good and marketable
title to all personal property owned by it which is material to the business of
the Company, in each case free and clear of all liens, encumbrances and defects
except such as are described in the Prospectus or such as do not materially
affect the value of such property and do not interfere with the use made and
proposed
5
to be made of such property by the Company; and any real property and buildings
held under lease by the Company are held by it under valid, subsisting leases
which are enforceable against the Company and, to the Company's knowledge, other
parties thereto, with such exceptions as are not material and do not interfere
with the use made and proposed to be made of such property and buildings by the
Company.
(x) Intellectual Property Rights. The Company owns, possesses or
----------------------------
has the right to use, or can acquire on reasonable terms, all material patents,
patent rights, licenses, inventions, copyrights, know-how (including trade
secrets and other unpatented and/or unpatentable proprietary or confidential
information, systems or procedures), trademarks, service marks and trade names
currently employed by it in connection with the business now operated by it, and
the Company has not received any notice of infringement of or conflict with
asserted rights of others with respect to any of the foregoing which,
individually or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, would have a material adverse effect on the Company.
(y) No Labor Disputes. No material labor dispute with the
-----------------
employees of the Company exists or, to the knowledge of the Company, is
imminent; and the Company is not aware of any existing, threatened or imminent
labor disturbance by the employees of any of its principal suppliers,
manufacturers or contractors that could have a material adverse effect on the
Company.
(z) Insurance. The Company is insured by the insurers of
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recognized financial responsibility against such losses and risks and in such
amounts as are prudent and customary in the businesses in which it is engaged;
and the Company has no reason to believe that it will not be able to renew its
existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue its
business at a cost that would not have a material adverse effect on the Company.
(aa) Governmental Permits. The Company possesses all
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certificates, authorizations and permits issued by the appropriate federal,
state or foreign regulatory authorities material to the conduct of its business,
and the Company has not received any notice of proceedings relating to the
revocation or modification of any such certificate, authorization or permit
which, individually or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, would have a material adverse effect on the
Company.
(bb) Accounting Controls. The Company maintains a system of
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internal accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or specific
authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset 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.
(cc) Stock Exchange Listing. The Common Stock has been approved
----------------------
for listing on the Nasdaq National Market, subject only to official notice of
issuance.
6
(dd) Year 2000 Compliance. The Company has reviewed its
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operations and contacted each of its clients with which the Company has a
material relationship to evaluate the extent to which the business or operations
of the Company will be affected by the Year 2000 Problem. As a result of such
review and except as disclosed in the Registration Statement, the Company has no
reason to believe, and does not believe, that the Year 2000 Problem will have a
material adverse effect on the Company or result in any material loss or
interference with the Company's business or operations. The "Year 2000 Problem"
as used herein means any significant risk that computer hardware or software
used in the receipt, transmission, processing, manipulation, storage, retrieval,
retransmission or other utilization of data or in the operation of mechanical or
electrical systems of any kind will not, in the case of dates or time periods
occurring after December 31, 1999, function at least as effectively as in the
case of dates or time periods occurring prior to January 1, 2000.
(ee) Tax Law Compliance. The Company has filed all material
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federal, state and foreign income and franchise tax returns or has properly
requested extensions thereof and has paid all material taxes required to be paid
by it and, if due and payable, any related or similar assessment, fine or
penalty levied against it, other than those payments being contested in good
faith or for which adequate reserves have been provided. The Company has made
adequate charges, accruals and reserves in the applicable financial statements
referred to in Section 1(n) above in respect of all federal, state and foreign
income and franchise taxes for all periods as to which the tax liability of the
Company has not been finally determined.
(ff) Related Party Transactions. There are no business
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relationships or related-party transactions involving the Company or, to the
Company's knowledge, any other person required to be described in the Prospectus
which have not been described as required.
2. Purchase and Sale Agreements.
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(a) Firm Shares. The Company hereby agrees to sell to the
-----------
several Underwriters, and each Underwriter, upon the basis of the
representations and warranties herein contained, but subject to the conditions
hereinafter stated, agrees, severally and not jointly, to purchase from the
Company at $______ a share (the "Purchase Price") the number of Firm Shares
(subject to such adjustments to eliminate fractional shares as you may
determine) set forth opposite the name of such Underwriter in Schedule A hereto.
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(b) Additional Shares. On the basis of the representations and
-----------------
warranties contained in this Agreement, and subject to its terms and conditions,
the Company agrees to sell to the Underwriters the Additional Shares, and the
Underwriters shall have a one-time right to purchase, severally and not jointly,
up to 750,000 Additional Shares at the Purchase Price. If you, on behalf of the
Underwriters, elect to exercise such option, you shall so notify the Company in
writing not later than thirty (30) days after the date of this Agreement, which
notice shall specify the number of Additional Shares to be purchased by the
Underwriters and the date on which such shares are to be purchased. Such date
may be the same as the Closing Date (as defined below) but not earlier than the
Closing Date nor later than ten (10) business days after the date of such
notice. Additional Shares may be purchased as provided in Section 3 hereof
solely for the purpose of covering over-allotments made in connection with the
offering of the Firm Shares. If any Additional Shares are to be purchased, each
Underwriter agrees, severally
7
and not jointly, to purchase the number of Additional Shares (subject to such
adjustments to eliminate fractional shares as you may determine) that bears the
same proportion to the total number of Additional Shares to be purchased as the
number of Firm Shares set forth in Schedule A hereto opposite the name of such
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Underwriter bears to the total number of Firm Shares.
(c) Market Standoff Provision. The Company hereby agrees that,
-------------------------
without the prior written consent of Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities
Corporation and Xxxxxx Xxxxxx Partners, it will not, during the period ending
180 days after the date of the Prospectus, (i) offer, pledge, sell, contract to
sell, sell any option or contract to purchase, purchase any option or contract
to sell, grant any option, right or warrant to purchase, lend, or otherwise
transfer or dispose of, directly or indirectly, any shares of Common Stock or
any securities convertible into or exercisable or exchangeable for Common Stock
or (ii) enter into any swap or other arrangement that transfers to another, in
whole or in part, any of the economic consequences of ownership of the Common
Stock, whether any such 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, (B) the issuance by the Company of shares of Common Stock upon the
exercise of options or warrants or the conversion of a security outstanding on
the date hereof of which the Underwriters have been advised in writing and which
is described in the Prospectus or (C) the issuance of stock options pursuant to
the Company's stock plans described in the Registration Statement.
(d) Terms of Public Offering. The Company is advised by you that
------------------------
the Underwriters propose to make a public offering of their respective portions
of the Shares as soon after the Registration Statement and this Agreement have
become effective as in your judgment is advisable.
3. Payment and Delivery.
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(a) Firm Shares. Payment for the Firm Shares to be sold by the
-----------
Company shall be made to the Company in immediately available funds against
delivery of such Firm Shares for the respective accounts of the several
Underwriters at 10:00 a.m., New York City time, on ____________, 1999, or at
such other time on the same or such other date, not later than _________, 1999,
as shall be designated in writing by you. The time and date of such payment are
hereinafter referred to as the "Closing Date".
(b) Additional Shares. Payment for any Additional Shares shall
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be made to the Company in immediately available funds in New York City against
delivery of such Additional Shares for the respective accounts of the several
Underwriters at 10:00 a.m., New York City time, on the date specified in the
notice described in Section 2(b) or at such other time on the same or on such
other date, in any event not later than ____________, 1999, as shall be
designated in writing by you. The time and date of such payment are hereinafter
referred to as the "Option Closing Date".
(c) Delivery of Certificates. Certificates for the Firm Shares
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and Additional Shares shall be in definitive form and registered in such names
and in such denominations as you shall request in writing not later than one (1)
full business day prior to the Closing Date or the
8
Option Closing Date, as the case may be. The certificates evidencing the Firm
Shares and Additional Shares shall be delivered to you on the Closing Date or
the Option Closing Date, as the case may be, for the respective accounts of the
several Underwriters, with any transfer taxes payable in connection with the
transfer of the Shares to the Underwriters duly paid, against payment of the
Purchase Price therefor.
4. Covenants of the Company. In further consideration of the agreements
------------------------
of the Underwriters herein contained, the Company covenants with each
Underwriter as follows:
(a) Furnish Copies of Registration Statement and Prospectus. To
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furnish to you, without charge, four (4) signed copies of the Registration
Statement (including exhibits thereto) and for delivery to each other
Underwriter a conformed copy of the Registration Statement (without exhibits
thereto) and to furnish to you in New York City, without charge, prior to 10:00
a.m. New York City time on the business day next succeeding the date of this
Agreement and during the period mentioned in Section 4(c) below, as many copies
of the Prospectus and any supplements and amendments thereto or to the
Registration Statement as you may reasonably request.
(b) Notification of Amendments or Supplements. Before amending
-----------------------------------------
or supplementing the Registration Statement or the Prospectus, to furnish to you
a copy of each such proposed amendment or supplement and not to file any such
proposed amendment or supplement to which you reasonably object, and to file
with the Commission within the applicable period specified in Rule 424(b) under
the Securities Act any prospectus required to be filed pursuant to such rule.
(c) Filings of Amendments or Supplements. If, during such period
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after the first date of the public offering of the Shares as in the reasonable
opinion of counsel for the Underwriters the Prospectus is required by law to be
delivered in connection with sales by an Underwriter or dealer (the "Prospectus
Delivery Period"), any event shall occur or condition exist as a result of which
it is necessary to amend or supplement the Prospectus in order to make the
statements therein, in the light of the circumstances when the Prospectus is
delivered to a purchaser, not misleading, or if, in the reasonable opinion of
counsel for the Underwriters, it is necessary to amend or supplement the
Prospectus to comply with applicable law, forthwith to prepare, file with the
Commission and furnish, at its own expense, to the Underwriters and to the
dealers (whose names and addresses you will furnish to the Company) to which
Shares may have been sold by you on behalf of the Underwriters and to any other
dealers upon request, either amendments or supplements to the Prospectus so that
the statements in the Prospectus as so amended or supplemented will not, in the
light of the circumstances when the Prospectus is delivered to a purchaser, be
misleading or so that the Prospectus, as amended or supplemented, will comply
with law.
(d) Blue Sky Laws. To endeavor to qualify the Shares for offer
-------------
and sale under the securities or Blue Sky laws of such jurisdictions as you
shall reasonably request.
(e) Earnings Statement. To make generally available to its
------------------
securityholders as soon as practicable, but in any event not later than eighteen
(18) months after the effective date of the Registration Statement (as defined
in Rule 158(c) under the Securities Act), an earnings
9
statement of the Company (which need not be audited) complying with Section
11(a) of the Securities Act and the rules and regulations thereunder (including,
at the option of the Company, Rule 158).
(f) Use of Proceeds. The Company shall apply the net proceeds
---------------
from the sale of the Shares sold by it in the manner described under the caption
"Use of Proceeds" in the Prospectus.
(g) Transfer Agent. The Company shall engage and maintain, at
--------------
its expense, a registrar and transfer agent for the Common Stock.
(h) Periodic Reporting Obligations. During the Prospectus
------------------------------
Delivery Period, the Company shall file, on a timely basis, with the Commission
and the Nasdaq National Market all reports and documents required to be filed
under the Exchange Act. Additionally, the Company shall file with the Commission
such information on Form 10-Q or Form 10-K as may be required by Rule 463 under
the Securities Act.
(i) Exchange Act Compliance. During the Prospectus Delivery
-----------------------
Period, the Company will file all documents required to be filed with the
Commission pursuant to Section 13, 14 or 15 of the Exchange Age in the manner
and within the time periods required by the Exchange Act.
5. Conditions to the Underwriters' Obligations. The obligations of the
-------------------------------------------
Company to sell the Shares to the several Underwriters and the several
obligations of the Underwriters to purchase and pay for the Shares on the
Closing Date are subject to the following conditions:
(a) Effective Registration Statement. The Registration Statement
--------------------------------
shall have become effective not later than 4:00 p.m. (New York City time) on the
date hereof.
(b) Rule 462 Registration Statement. If the Company elects to
-------------------------------
rely upon Rule 462(b), the Company shall file a Rule 462 Registration Statement
with the Commission in compliance with Rule 462(b) by 10:00 P.M., Washington,
D.C. time, on the date of this Agreement, and the Company shall at the time of
filing either pay to the Commission the filing fee for the Rule 462 Registration
Statement or give irrevocable instructions for the payment of such fee pursuant
to Rule 111(b) under the Securities Act.
(c) Prospectus Filed with Commission. The Company shall have
--------------------------------
filed the Prospectus with the Commission (including the information required by
Rule 430A under the Securities Act) in the manner and within the time period
required by Rule 424(b) under the Securities Act; or the Company shall have
filed a post-effective amendment to the Registration Statement containing the
information required by such Rule 430A, and such post-effective amendment shall
have become effective; or, if the Company elected to rely upon Rule 434 under
the Securities Act and obtained the Representative's consent thereto, the
Company shall have filed a Term Sheet with the Commission in the manner and
within the time period required by such Rule 424(b).
(d) No Stop Order. No stop order suspending the effectiveness of
-------------
the Registration Statement, any Rule 462 Registration Statement, or any post-
effective amendment
10
to the Registration Statement, shall be in effect and no proceedings for such
purpose shall have been instituted or threatened by the Commission.
(e) No NASD Objection. The NASD shall have raised no objection to
-----------------
the fairness and reasonableness of the underwriting terms and arrangements.
(f) No Debt Downgrading. There shall not have occurred any
-------------------
downgrading, nor shall any notice have been given of any intended or potential
downgrading or of any review for a possible change that does not indicate the
direction of the possible change, in the rating accorded any of the Company's
securities by any "nationally recognized statistical rating organization," as
such term is defined for purposes of Rule 436(g)(2) under the Securities Act.
(g) No Material Adverse Change. There shall not have occurred any
--------------------------
change, or any development involving a prospective change, in the condition,
financial or otherwise, or in the earnings, business, operations or prospects of
the Company from that set forth in the Prospectus (exclusive of any amendments
or supplements thereto subsequent to the date of this Agreement) that, in your
judgment, is material and adverse and that makes it, in your judgment,
impracticable to market the Shares on the terms and in the manner contemplated
in the Prospectus.
(h) Officer's Certificate. The Underwriters shall have received on
---------------------
the Closing Date a certificate, dated the Closing Date and signed by the Chief
Executive Officer or President of the Company, to the effect set forth in
Sections 5(d) and 5(g) above and to the effect that the representations and
warranties of the Company contained in this Agreement are true and correct in
all material respects as of the Closing Date and that the Company has complied
with all of the agreements and satisfied all of the conditions on its part to be
performed or satisfied hereunder on or before the Closing Date.
(i) Opinion of Company Counsel. The Underwriters shall have received
--------------------------
on the Closing Date an opinion of Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP, counsel for
the Company, dated the Closing Date, the form of which is attached hereto as
Exhibit A. The opinion shall be rendered to the Underwriters at the request of
---------
the Company and shall so state therein.
(j) Opinion of Underwriters Counsel. The Underwriters shall have
-------------------------------
received on the Closing Date an opinion of Xxxxxx, Xxxxxxxxxx & Xxxxxxxxx LLP,
counsel for the Underwriters, dated the Closing Date, covering the matters
referred to in Exhibit A, paragraphs (iv), (v), (viii) (but only as to the
---------
statements in the Prospectus under "Description of Capital Stock" and
"Underwriting") and (xiii). With respect to paragraph (xiii) of Exhibit A,
---------
such counsel may state that their opinion and belief are based upon their
participation in the preparation of the Registration Statement and Prospectus
and any amendments or supplements thereto and review and discussion of the
contents thereof, but are without independent check or verification, except as
specified.
(k) Accountant's Comfort Letter. The Underwriters shall have
---------------------------
received, on each of the date hereof and the Closing Date, a letter dated the
date hereof or the Closing Date, as the case may be, in form and substance
satisfactory to the Underwriters, from Ernst & Young LLP, independent public
accountants, containing statements and information of the type
11
ordinarily included in accountants' "comfort letters" to underwriters with
respect to the financial statements and certain financial information contained
in the Registration Statement and the Prospectus; provided that the letter
delivered on the Closing Date shall use a "cut-off date" not earlier than the
date hereof.
(l) Lock-Up Agreements. The "lock up" agreements, each substantially
------------------
in the form of Exhibit B hereto, between you and certain stockholders, officers
---------
and directors of the Company, delivered to you on or before the date hereof,
shall be in full force and effect on the Closing Date.
(m) Additional Documents. On the Closing Date, the Representatives
--------------------
and counsel for the Underwriters shall have received such information, documents
and opinions as they may reasonably require for the purposes of enabling them to
pass upon the issuance and sale of the Shares as contemplated herein, or in
order to evidence the accuracy of any of the representations and warranties, or
the satisfaction of any of the conditions or agreements, herein contained.
The several obligations of the Underwriters to purchase Additional
Shares hereunder are subject to the satisfaction of each of the above conditions
on or prior to the Option Closing Date and to the delivery to you on the Option
Closing Date of such documents as you may reasonably request with respect to the
good standing of the Company, the due authorization and issuance of the
Additional Shares and other matters related to the issuance of the Additional
Shares.
6. Expenses. Whether or not the transactions contemplated in this
--------
Agreement are consummated or this Agreement is terminated, the Company agrees to
pay or cause to be paid all expenses incident to the performance of its
obligations under this Agreement, including: (i) the fees, disbursements and
expenses of the Company's counsel and the Company's accountants in connection
with the registration and delivery of the Shares under the Securities Act and
all other fees or expenses in connection with the preparation and filing of the
Registration Statement, any preliminary prospectus, the Prospectus and
amendments and supplements to any of the foregoing, including all printing costs
associated therewith, and the mailing and delivering of copies thereof to the
Underwriters and dealers, in the quantities hereinabove specified, (ii) all
costs and expenses related to the transfer and delivery of the Shares to the
Underwriters, including any transfer or other taxes payable thereon, (iii) the
cost of printing or producing any Blue Sky or legal investment memorandum in
connection with the offer and sale of the Shares under state securities laws and
all expenses in connection with the qualification of the Shares for offer and
sale under state securities laws as contemplated by Section 4(d) hereof,
including filing fees and the reasonable fees and disbursements, in an amount
not to exceed $10,000, of counsel for the Underwriters in connection with such
qualification and in connection with the Blue Sky or legal investment
memorandum, (iv) all filing fees and the reasonable fees and disbursements, in
an amount not to exceed $10,000, of counsel to the Underwriters incurred in
connection with the review and qualification of the offering of the Shares by
the NASD, (v) all fees and expenses in connection with the preparation and
filing of the registration statement on Form 8-A relating to the Common Stock
and all costs and expenses incident to listing the Shares on the Nasdaq National
Market, (vi) the cost of printing certificates representing the Shares, (vii)
the costs and charges of any transfer agent, registrar or depositary, (viii) the
costs and expenses of the
12
Company relating to investor presentations on any "road show" undertaken in
connection with the marketing of the offering of the Shares, including, without
limitation, expenses associated with the production of road show slides and
graphics, fees and expenses of any consultants engaged in connection with the
road show presentations with the prior approval of the Company, travel and
lodging expenses of the representatives and officers of the Company and any such
consultants, (ix) all expenses in connection with any offer and sale of the
Shares outside of the United States, including filing fees and the reasonable
fees and disbursements of counsel for the Underwriters in connection with offers
and sales outside of the United States and (x) all other costs and expenses
incident to the performance of the obligations of the Company hereunder for
which provision is not otherwise made in this Section. It is understood,
however, that except as provided in this Section, Section 7 entitled "Indemnity
and Contribution", and the last paragraph of Section 10 below, the Underwriters
will pay all of their costs and expenses, including fees and disbursements of
their counsel and any advertising expenses connected with any offers they may
make.
7. Indemnity and Contribution.
--------------------------
(a) Indemnification of the Underwriters. The Company agrees to
-----------------------------------
indemnify and hold harmless each Underwriter and each person, if any, who
controls any Underwriter within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act, from and against any and all
losses, claims, damages and liabilities (including, without limitation, any
legal or other expenses reasonably incurred in connection with defending or
investigating any such action or claim) caused by any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement or any amendment thereof, any preliminary prospectus or the Prospectus
(as amended or supplemented if the Company shall have furnished any amendments
or supplements thereto), or caused by any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, except (i) insofar as such losses, claims,
damages or liabilities are caused by any such untrue statement or omission or
alleged untrue statement or omission based upon information relating to any
Underwriter furnished to the Company in writing by such Underwriter through you
expressly for use therein and (ii) that with respect to any preliminary
prospectus, the foregoing indemnity agreement shall not inure to the benefit of
any Underwriter from whom the person asserting any loss, claim, damage or
liability purchased Shares, or any person controlling such Underwriter, if
copies of the Prospectus were timely delivered to the Underwriter pursuant to
Section 4 and a copy of the Prospectus (as then amended or supplemented if the
Company shall have furnished any amendments or supplements thereto) was not sent
or given by or on behalf of such Underwriter to such person, if required by law
so to have been delivered, at or prior to the written confirmation of the sale
of the Shares to such person, and if the Prospectus (as so amended or
supplemented) would have cured the defect giving rise to such loss, claim,
damage, liability or expense.
(b) Indemnification by the Underwriters. Each Underwriter
-----------------------------------
agrees, severally and not jointly, to indemnify and hold harmless the Company,
the directors of the Company, the officers of the Company who sign the
Registration Statement and each person, if any, who controls the Company within
the meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act from and against any and all losses, claims, damages and
liabilities (including, without limitation, any legal or other expenses
reasonably incurred in connection
13
with defending or investigating any such action or claim) caused by any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement or any amendment thereof, any preliminary prospectus or
the Prospectus (as amended or supplemented if the Company shall have furnished
any amendments or supplements thereto), or caused by any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, but only with reference
to information relating to such Underwriter furnished to the Company in writing
by such Underwriter through you expressly for use in the Registration Statement,
any preliminary prospectus, the Prospectus or any amendments or supplements
thereto.
(c) Indemnification Procedures. In case any proceeding (including any
--------------------------
governmental investigation) shall be instituted involving any person in respect
of which indemnity may be sought pursuant to this Section 7, such person (the
"indemnified party") shall promptly notify the person against whom such
indemnity may be sought (the "indemnifying party") in writing and the
indemnifying party, upon request of the indemnified party, shall retain counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party and any others the indemnifying party may designate in such proceeding and
shall pay the fees and disbursements of such counsel related to such proceeding.
In any such proceeding, any indemnified party shall have the right to retain its
own counsel, but the fees and expenses of such counsel shall be at the expense
of such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the indemnifying party
shall not, in respect of the legal expenses of any indemnified party in
connection with any proceeding or related proceedings in the same jurisdiction,
be liable for (i) the fees and expenses of more than one separate firm (in
addition to any local counsel) for all Underwriters and all persons, if any, who
control any Underwriter within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act and (ii) the fees and expenses
of more than one separate firm (in addition to any local counsel) for the
Company, its directors, its officers who sign the Registration Statement and
each person, if any, who controls the Company within the meaning of either such
Section, and that all such fees and expenses shall be reimbursed as they are
incurred. In the case of any such separate firm for the Underwriters and such
control persons of any Underwriters, such firm shall be designated in writing by
Xxxxxx Xxxxxx Partners. In the case of any such separate firm for the Company,
and such directors, officers and control persons of the Company, such firm shall
be designated in writing by the Company. The indemnifying party shall not be
liable for any settlement of any proceeding effected without its written
consent, but if settled with such consent or if there be a final judgment for
the plaintiff, the indemnifying party agrees to indemnify the indemnified party
from and against any loss or liability by reason of such settlement or judgment.
Notwithstanding the foregoing sentence, if at any time an indemnified party
shall have requested an indemnifying party to reimburse the indemnified party
for fees and expenses of counsel as contemplated by the second and third
sentences of this paragraph, the indemnifying party agrees that it shall be
liable for any settlement of any proceeding effected without its written consent
if (i) such settlement is entered into more than 30 days after receipt by such
indemnifying party of the aforesaid request and (ii) such indemnifying party
shall not have reimbursed the indemnified party in accordance with such request
prior to the date of such settlement. No indemnifying party shall, without the
14
prior written consent of the indemnified party, effect any settlement of any
pending or threatened proceeding in respect of which any indemnified party is or
could have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release of
such indemnified party from all liability on claims that are the subject matter
of such proceeding.
Notwithstanding anything contained herein to the contrary, if
indemnity may be sought pursuant to Section 7(d) hereof in respect of such
action or proceeding, then in addition to such separate firm for the indemnified
parties, the indemnifying party shall be liable for the reasonable fees and
expenses of not more than one separate firm (in addition to any local counsel)
for Xxxxxx Xxxxxx Partners for the defense of any losses, claims, damages and
liabilities arising out of the Directed Share Program, and all persons, if any,
who control Xxxxxx Xxxxxx Partners within the meaning of either Section 15 of
the Act or Section 20 of the Exchange Act (collectively, the "Xxxxxx Xxxxxx
Partners Controlling Persons"); provided that representation of Xxxxxx Xxxxxx
Partners and the Xxxxxx Xxxxxx Partners Controlling Persons for the defense of
any losses, claims, damages or liabilities arising out of the Directed Share
Program by the same counsel representing all other Indemnified Parties ("Other
Indemnified Parties") would be inappropriate due to actual or potential
differing interests between Xxxxxx Xxxxxx Partners and the Xxxxxx Xxxxxx
Partners Controlling Persons, on the one hand, and the Other Indemnified
Parties, on the other hand.
(d) Indemnification for Directed Share Program. The Company agrees to
------------------------------------------
indemnify and hold harmless Xxxxxx Xxxxxx Partners and each person, if any, who
controls Xxxxxx Xxxxxx Partners within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act ("Xxxxxx Xxxxxx Partners
Entities"), from and against any and all losses, claims, damages and liabilities
(including, without limitation, any legal or other expenses reasonably incurred
in connection with defending or investigating any such action or claim) (i)
caused by any untrue statement or alleged untrue statement of a material fact
contained in the prospectus wrapper material prepared by or with the consent of
the Company for distribution in foreign jurisdictions in connection with the
Directed Share Program attached to the Prospectus or any preliminary prospectus,
or caused by any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statement therein, when
considered in conjunction with the Prospectus or any applicable preliminary
prospectus, not misleading or (ii) related to, arising out of, or in connection
with the Directed Share Program, provided that, the Company shall not be
responsible under this subparagraph (iii) for any losses, claim, damages or
liabilities (or expenses relating thereto) that are finally judicially
determined to have resulted from the bad faith, willful misconduct or gross
negligence of Xxxxxx Xxxxxx Partners Entities.
(e) Contribution Agreement. To the extent the indemnification
----------------------
provided for in this Section 7 is unavailable to an indemnified party or
insufficient in respect of any losses, claims, damages or liabilities referred
to therein, then each indemnifying party under such paragraph, in lieu of
indemnifying such indemnified party thereunder, shall contribute to the amount
paid or payable by such indemnified party as a result of such losses, claims,
damages or liabilities (i) in such proportion as is appropriate to reflect the
relative benefits received by the indemnifying party or parties on the one hand
and the indemnified party or parties on the other hand from the offering of the
Shares or (ii) if the allocation provided by clause 7(e)(i) above is
15
not permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause 7(e) above but also the
relative fault of the indemnifying party or parties on the one hand and of the
indemnified party or parties on the other hand in connection with the statements
or omissions that resulted in such losses, claims, damages or liabilities, as
well as any other relevant equitable considerations. The relative benefits
received by the Company on the one hand and the Underwriters on the other hand
in connection with the offering of the Shares shall be deemed to be in the same
respective proportions as the net proceeds from the offering of the Shares
(before deducting expenses) received by the Company and the total underwriting
discounts and commissions received by the Underwriters, in each case as set
forth in the table on the cover of the Prospectus, bear to the aggregate price
to the public of the Shares. The relative fault of the Company on the one hand
and the Underwriters on the other hand shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the Company or by the Underwriters and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Underwriters' respective obligations to
contribute pursuant to this Section 7 are several in proportion to the
respective number of Shares they have purchased hereunder, and not joint.
(f) Contribution Amounts. The Company and the Underwriters agree that
--------------------
it would not be just or equitable if contribution pursuant to this Section 7
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 that does not
take account of the equitable considerations referred to in Section 7(e). The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages and liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such indemnified party
in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 7, no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Shares underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages that such Underwriter
has otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The remedies provided for in this Section 7 are
not exclusive and shall not limit any rights or remedies which may otherwise be
available to any indemnified party at law or in equity.
(g) Survival of Provisions. The indemnity and contribution provisions
----------------------
contained in this Section 7 and the representations, warranties and other
statements of the Company contained in this Agreement shall remain operative and
in full force and effect regardless of (i) any termination of this Agreement,
(ii) any investigation made by or on behalf of any Underwriter or any person
controlling any Underwriter or the Company, its officers or directors or any
person controlling the Company and (iii) acceptance of and payment for any of
the Shares.
8. Effectiveness. This Agreement shall become effective upon the
-------------
execution and delivery hereof by the parties hereto.
16
9. Termination. This Agreement shall be subject to termination by notice
-----------
given by you to the Company, if (a) after the execution and delivery of this
Agreement and prior to the Closing Date (i) trading generally shall have been
suspended or materially limited on or by, as the case may be, any of the New
York Stock Exchange, the American Stock Exchange, the National Association of
Securities Dealers, Inc., the Chicago Board of Options Exchange, the Chicago
Mercantile Exchange or the Chicago Board of Trade, (ii) trading of any
securities of the Company shall have been suspended on any exchange or in any
over-the-counter market, (iii) a general moratorium on commercial banking
activities in New York or California shall have been declared by either federal
or New York or California state authorities or (iv) there shall have occurred
any outbreak or escalation of hostilities or any change in financial markets or
any calamity or crisis that, in your judgment, is material and adverse, and (b)
in the case of any of the events specified in clauses 9(a)(i) through 9(a)(iv),
such event, individually or together with any other such event, makes it, in
your judgment, impracticable to market the Shares on the terms and in the manner
contemplated in the Prospectus.
10. Defaulting Underwriters. If, on the Closing Date or the Option Closing
-----------------------
Date, as the case may be, any one or more of the Underwriters shall fail or
refuse to purchase Shares that it has or they have agreed to purchase hereunder
on such date, and the aggregate number of Shares which such defaulting
Underwriter or Underwriters agreed but failed or refused to purchase is not more
than one-tenth of the aggregate number of the Shares to be purchased on such
date, the other Underwriters shall be obligated severally in the proportions
that the number of Firm Shares set forth opposite their respective names in
Schedule A bears to the aggregate number of Firm Shares set forth opposite the
----------
names of all such non-defaulting Underwriters, or in such other proportions as
you may specify, to purchase the Shares which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase on such date; provided
that in no event shall the number of Shares that any Underwriter has agreed to
purchase pursuant to this Agreement be increased pursuant to this Section 10 by
an amount in excess of one-ninth of such number of Shares without the written
consent of such Underwriter. If, on the Closing Date, any Underwriter or
Underwriters shall fail or refuse to purchase Firm Shares and the aggregate
number of Firm Shares with respect to which such default occurs is more than
one-tenth of the aggregate number of Firm Shares to be purchased, and
arrangements satisfactory to you and the Company for the purchase of such Firm
Shares are not made within 36 hours after such default, this Agreement shall
terminate without liability on the part of any non-defaulting Underwriter or the
Company. In any such case either you or the Company shall have the right to
postpone the Closing Date, but in no event for longer than seven (7) days, in
order that the required changes, if any, in the Registration Statement and in
the Prospectus or in any other documents or arrangements may be effected. If, on
the Option Closing Date, any Underwriter or Underwriters shall fail or refuse to
purchase Additional Shares and the aggregate number of Additional Shares with
respect to which such default occurs is more than one-tenth of the aggregate
number of Additional Shares to be purchased, the non-defaulting Underwriters
shall have the option to (i) terminate their obligation hereunder to purchase
Additional Shares or (ii) purchase not less than the number of Additional Shares
that such non-defaulting Underwriters would have been obligated to purchase in
the absence of such default. Any action taken under this paragraph shall not
relieve any defaulting Underwriter from liability in respect of any default of
such Underwriter under this Agreement.
17
If this Agreement shall be terminated by the Underwriters, or any of
them, because of any failure or refusal on the part of the Company to comply
with the terms or to fulfill any of the conditions of this Agreement, or if for
any reason the Company shall be unable to perform its obligations under this
Agreement, the Company will reimburse the Underwriters or such Underwriters as
have so terminated this Agreement with respect to themselves, severally, for all
out-of-pocket expenses (including the fees and disbursements of their counsel)
reasonably incurred by such Underwriters in connection with this Agreement or
the offering contemplated hereunder.
11. Counterparts. This Agreement may be signed in counterparts, each of
------------
which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument.
12. Headings; Table of Contents. The headings of the sections of this
---------------------------
Agreement and the table of contents have been inserted for convenience of
reference only and shall not be deemed a part of this Agreement.
13. Notices. All communications hereunder shall be in writing and shall be
-------
mailed, hand delivered or telecopied and confirmed to the parties hereto as
follows:
If to the Representatives:
Xxxxxxxxx, Lufkin & Xxxxxxxx
Securities Corporation
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Syndicate Department
Xxxxxx Xxxxxx Partners LLC
Xxx Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxx Xxxxxxxx
with a copy to:
Xxxxxxxxx, Lufkin & Xxxxxxxx
Securities Corporation
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxx Xxxxxxxx, Esq.
18
Xxxxxx Xxxxxx Partners LLC
Xxx Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxxx, Esq.
If to the Company:
Rainmaker Systems, Inc.
0000 Xxxxx Xxxxx Xxxx
Xxxxxx Xxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx Xxxxxx
Any party hereto may change the address for receipt of communications
by giving written notice to the others.
14. Successors. This Agreement will inure to the benefit of and be
----------
binding upon the parties hereto, including any substitute Underwriters pursuant
to Section 10 hereof, and to the benefit of the officers and directors and
controlling persons referred to in Section 7, and in each case their respective
successors, and no other person will have any right or obligation hereunder. The
term "successors" shall not include any purchaser of the Shares as such from any
of the Underwriters merely by reason of such purchase.
15. Partial Unenforceability. The invalidity or unenforceability of any
------------------------
Section, paragraph or provision of this Agreement shall not affect the validity
or enforceability of any other Section, paragraph or provision hereof. If any
Section, paragraph or provision of this Agreement is for any reason determined
to be invalid or unenforceable, there shall be deemed to be made such minor
changes (and only such minor changes) as are necessary to make it valid and
enforceable.
16. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
-------------
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK APPLICABLE TO
AGREEMENTS MADE AND TO BE PERFORMED IN SUCH STATE.
17. Entire Agreement. This Agreement constitutes the entire agreement of
----------------
the parties to this Agreement and supersedes all prior written or oral and all
contemporaneous oral agreements, understandings and negotiations with respect to
the subject matter hereof.
18. Amendments. This Agreement may only be amended or modified in writing,
----------
signed by all of the parties hereto, and no condition herein (express or
implied) may be waived unless waived in writing by each party whom the condition
is meant to benefit.
19. Sophisticated Parties. Each of the parties hereto acknowledges that
---------------------
it is a sophisticated business person who was adequately represented by counsel
during negotiations regarding the provisions hereof, including, without
limitation, the indemnification and
19
contribution provisions of Section 7, and is fully informed regarding said
provisions. Each of the parties hereto further acknowledges that the provisions
of Section 7 hereto fairly allocate the risks in light of the ability of the
parties to investigate the Company, its affairs and its business in order to
assure that adequate disclosure has been made in the Registration Statement, any
preliminary prospectus and the Prospectus (and any amendments and supplements
thereto), as required by the Securities Act and the Exchange Act.
20
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to the Company the enclosed copies hereof,
whereupon this instrument, along with all counterparts hereof, shall become a
binding agreement in accordance with its terms.
Very truly yours,
Rainmaker Systems, Inc.
By:_________________________________________
Name: Xxxxxxx Xxxxxx
Title: Chairman, President and
Chief Executive Officer
Accepted as of the date hereof
Xxxxxxxxx, Lufkin & Xxxxxxxx Securities Corporation
Xxxxxx Xxxxxx Partners LLC
XX Xxxxx Securities Corporation
Acting severally on behalf
of themselves and the
several Underwriters named
in Schedule A hereto.
----------
By: Xxxxxxxxx, Xxxxxx & Xxxxxxxx
Securities Corporation
By:_______________________________
Name:
Title:
By: Xxxxxx Xxxxxx Partners LLC
By:______________________________
Name:
Title:
21
SCHEDULE A
----------
Number of
Firm Shares
Underwriter To Be Purchased
----------- ---------------
Xxxxxxxxx, Lufkin & Xxxxxxxx
Securities Corporation..............................................................
Xxxxxx Xxxxxx Partners LLC.............................................................
SC Xxxxx Securities Corporation........................................................
DLJdirect Inc..........................................................................
Total....................................................................... 5,000,000
=========
EXHIBIT A
---------
Form of Legal Opinion of Company Counsel
(i) The Company has been duly incorporated, is validly existing as
a corporation in good standing under the laws of the jurisdiction of its
incorporation, has the corporate power and authority to own its property and to
conduct its business as described in the Prospectus and is duly qualified to
transact business and is in good standing in each jurisdiction in which the
conduct of its business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so qualified or be in
good standing would not have a material adverse effect on the Company.
(ii) The authorized capital stock of the Company conforms as to
legal matters to the description thereof contained under the caption
"Description of Capital Stock" in the Prospectus.
(iii) All of the outstanding shares of capital stock of the Company
prior to the issuance of the Shares to be sold by the Company have been duly
authorized and are validly issued, non-assessable and, to our knowledge, fully
paid.
(iv) The Shares to be sold by the Company have been duly authorized
and, when issued and delivered to the Underwriters against payment therefor in
accordance with the terms of the Underwriting Agreement, will be validly issued,
fully paid and non-assessable, and the issuance of such Shares will not be
subject to any preemptive rights arising under the Certificate of Incorporation
or the Delaware General Corporation Law or, to such counsel's knowledge, any
similar rights that entitle or will entitle any person to acquire any shares of
capital stock of the Company upon the issuance and sale of the Shares by the
Company.
(v) The Underwriting Agreement has been duly authorized, executed
and delivered by the Company.
(vi) The execution and delivery by the Company of, and the
performance by the Company of its obligations under, the Underwriting Agreement
will not (A) violate the certificate of incorporation or by-laws of the Company,
or (B) to such counsel's knowledge, constitute a breach of, or a default under,
any agreement, indenture, lease or other instrument binding upon the Company
that is an exhibit to the Registration Statement, which breach or default would
reasonably be expected to have a material adverse effect on the Company or (C)
result in any violation of any existing California, Delaware or federal law or
regulation (other than applicable state securities and Blue Sky laws, as to
which such counsel need express no opinion), or any ruling, judgment,
injunction, order or decree known to us and applicable to the Company or any of
its properties.
(vii) No consent, approval, authorization or other order of, or
qualification with, any governmental body or agency is required on the part of
the Company for the valid issuance and sale of the Shares to the Underwriters as
contemplated by the Underwriting Agreement, except (A) as have been obtained
under the Securities Act and the Exchange Act or
A-1
(B) such as may be required under the state securities or Blue Sky laws
governing the purchase and distribution of the Shares, as to which such counsel
need express no opinion.
(viii) The statements (A) in the Prospectus under the captions
"Description of Capital Stock," "Shares Eligible for Future Sale" and
"Underwriting" and (B) in the Registration Statement in Items 14 and 15, in each
case insofar as such statements constitute summaries of the legal matters,
documents or proceedings referred to therein, fairly present the information
called for with respect to such legal matters, documents and proceedings and
fairly summarize such legal matters, documents and proceedings in all material
respects.
(ix) To such counsel's knowledge, there are no legal or
governmental proceedings pending or threatened to which the Company is a party
or to which any of the properties of the Company is subject that are required to
be described in the Registration Statement or the Prospectus and are not so
described or of any California, Delaware or federal statutes or regulations,
contracts or other documents that are required to be described in the
Registration Statement or the Prospectus or to be filed as exhibits to the
Registration Statement that are not described or filed as required.
(x) The Company is not and, after giving effect to the offering
and sale of the Shares and the application of the proceeds thereof as described
in the Prospectus, will not be an "investment company" as such term is defined
in the Investment Company Act of 1940, as amended.
(xi) To such counsel's knowledge, the Registration Statement has
been declared effective by the Commission under the Securities Act. To such
counsel's knowledge, no stop order suspending the effectiveness of the
Registration Statement has been issued under the Securities Act and no
proceedings for such purpose have been instituted or are pending or are
contemplated or threatened by the Commission. Any required filing of the
Prospectus and any supplement thereto pursuant to Rule 424(b) under the
Securities Act has been in the manner and within the time period required by
such Rule 424(b).
(xii) Except as disclosed in the Prospectus, to such counsel's
knowledge, there are no persons with registration or other similar rights to
have any equity or debt securities registered for sale under the Registration
Statement or included in the offering contemplated by the Underwriting
Agreement, except for such rights as have been duly waived.
(xiii) Such counsel (A) is of the opinion that the Registration
Statement and Prospectus (except for financial statements and schedules and
other financial and statistical data included therein as to which such counsel
need not express any opinion) comply as to form in all material respects with
the Securities Act and the applicable rules and regulations of the Commission
thereunder, (B) has no reason to believe that (except for financial statements
and schedules and other financial and statistical data as to which such counsel
need not express any belief) the Registration Statement and the prospectus
included therein at the time the Registration Statement became effective
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading and (C) has no reason to believe that (except for financial
statements and schedules and other financial and statistical data as to which
such counsel need not express any belief) the
A-2
Prospectus, as of its date and on the date hereof, contains any untrue statement
of a material fact or omits to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they were
made, not misleading.
With respect to paragraph (xiii) of Exhibit A, such counsel may state
---------
that their opinion and belief are based upon their participation in the
preparation of the Registration Statement and Prospectus and any amendments or
supplements thereto and review and discussion of the contents thereof, but are
without independent check or verification, except as specified.
A-3
EXHIBIT B
---------
Form of Lockup Agreement
__________________, 1999
Xxxxxxxxx, Xxxxxx & Xxxxxxxx
Securities Corporation
Xxxxxx Xxxxxx Partners LLC
XX Xxxxx Securities Corporation
As Representatives of the Several Underwriters
c/x Xxxxxxxxx, Xxxxxx & Xxxxxxxx Xxxxxx Xxxxxx Partners LLC
Securities Corporation One Xxxxxxxxxx Street, Suite 3700
000 Xxxx Xxxxxx Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Xxx Xxxx, Xxx Xxxx 00000
Re: Lock-Up Agreement (the "Agreement")
-----------------------------------
Ladies and Gentlemen:
The undersigned is an owner of record or beneficially of certain
shares of Common Stock, par value $0.001 per share (the "Common Stock"), of
Rainmaker Systems, Inc., a California corporation (the "Company"), or securities
convertible into or exchangeable or exercisable for Common Stock. The
undersigned understands that you, as representatives (the "Representatives"),
propose to enter into an Underwriting Agreement on behalf of the several
Underwriters named in Schedule A to such agreement (collectively, the
----------
"Underwriters"), with the Company providing for a public offering of the Common
Stock of the Company pursuant to a Registration Statement on Form S-1 to be
filed with the Securities and Exchange Commission (the "Public Offering"). The
undersigned recognizes that the Public Offering will be of benefit to the
undersigned and will benefit the Company by, among other things, raising
additional capital for its operations. The undersigned acknowledges that you
and the other Underwriters are relying on the representations and agreements of
the undersigned contained in this letter in carrying out the Public Offering and
in entering into underwriting arrangements with the Company with respect to the
Public Offering.
To induce the Underwriters that may participate in the Public Offering
to continue their efforts in connection with the Public Offering, the
undersigned hereby agrees that, without the prior written consent of each of
Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation and Xxxxxx Xxxxxx Partners
(which consent may be withheld in its sole discretion), it will not, during the
period commencing on the date hereof and ending 180 days after the date of the
final prospectus relating to the Public Offering (the "Prospectus"), (1) offer,
pledge, sell, contract to
B-1
sell, sell any option or contract to purchase, purchase any option or contract
to sell, grant any option, right or warrant to purchase, lend, or otherwise
transfer or dispose of, directly or indirectly, any shares of Common Stock or
any securities convertible into or exercisable or exchangeable for Common Stock,
or (2) enter into any swap or other arrangement that transfers to another, in
whole or in part, any of the economic consequences of ownership of the Common
Stock, whether any such transaction described in clause (1) or (2) above is to
be settled by delivery of Common Stock or such other securities, in cash or
otherwise. In addition, the undersigned agrees that, without the prior written
consent of each of Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation and
Xxxxxx Xxxxxx Partners (which consent may be withheld in its sole discretion),
it will not, during the period commencing on the date hereof and ending 180 days
after the date of the Prospectus, make any demand for or exercise any right with
respect to, the registration of any shares of Common Stock or any security
convertible into or exercisable or exchangeable for Common Stock. With respect
to the Public Offering, the undersigned waives any registration rights relating
to registration under the Securities Act of any Common Stock owned either of
record or beneficially by the undersigned, including any rights to receive
notice of the Public Offering.
The foregoing restrictions are expressly agreed to preclude the
undersigned from engaging in any hedging or other transaction which is designed
to or reasonably expected to lead to or result in a sale or disposition of the
Common Stock even if such Common Stock would be disposed of by someone other
than the undersigned. Such prohibited hedging or other transactions would
include without limitation any short sale or any purchase, sale or grant of any
right (including without limitation any put option or put equivalent position or
call option or call equivalent position) with respect to any of the Common Stock
or with respect to any security that includes, relates to, or derives any
significant part of its value from such Common Stock.
Notwithstanding the foregoing, the undersigned may transfer shares of
Common Stock or securities convertible into or exchangeable or exercisable for
Common Stock (i) as a bona fide gift or gifts, provided that the donee or donees
thereof agree to be bound by the restrictions set forth herein, (ii) to any
trust for the direct or indirect benefit of the undersigned or the immediate
family of the undersigned, provided that the trustee of the trust agrees to be
bound by the restrictions set forth herein, and provided further that any such
transfer shall not involve a disposition for value, (iii) to the Underwriters
pursuant to the Underwriting Agreement, (iv) in connection with the
reincorporation of the Company in the State of Delaware, (v) pursuant to the
exercise of put options previously granted by the Company which expire on
September 30, 1999, or (vi) in transactions relating to shares of Common Stock
acquired by the undersigned in open market transactions after the completion of
the Public Offering. For purposes of this Agreement, "immediate family" shall
mean any relationship by blood, marriage or adoption, not more remote than first
cousin. In addition, notwithstanding the foregoing, if the undersigned is a
corporation, the corporation may transfer the capital stock of the Company to
any wholly-owned subsidiary of such corporation; provided, however, that in any
such case, it shall be a condition to the transfer that the transferee execute
an agreement stating that the transferee is receiving and holding such capital
stock subject to the provisions of this Agreement and there shall be no further
transfer of such capital stock except in accordance with this Agreement, and
provided further that any such transfer shall not involve a disposition for
value.
B-2
The undersigned understands that whether or not the Public Offering
actually occurs depends on a number of factors, including stock market
conditions. The Public Offering will only be made pursuant to an Underwriting
Agreement, the terms of which are subject to negotiation among the Company and
the Underwriters.
The undersigned agrees and consents to the entry of stop transfer
instructions with the Company's transfer agent and registrar against the
transfer of shares of Common Stock or securities convertible into or
exchangeable or exercisable for Common Stock held by the undersigned except in
compliance with the foregoing restrictions.
This agreement is irrevocable and will be binding on the undersigned
and the respective successors, heirs, personal representatives, and assigns of
the undersigned.
Very truly yours,
_______________________________________________
(Name)
_______________________________________________
(Address)
B-3
