EXHIBIT 1.1
8,330,000 SHARES
PHASE FORWARD INCORPORATED
COMMON STOCK, PAR VALUE $0.01 PER SHARE
UNDERWRITING AGREEMENT
DATED ____________________, 2004
TABLE OF CONTENTS
PAGE
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1. Representations and Warranties of the Company......................................... 2
1.1. Effective Registration Statement............................................... 2
1.2. Contents of Registration Statement............................................. 2
1.3. Due Incorporation.............................................................. 2
1.4. Subsidiaries................................................................... 2
1.5. Underwriting Agreement......................................................... 3
1.6. Description of Capital Stock................................................... 3
1.7. Authorized Stock............................................................... 3
1.8. Validly Issued Shares.......................................................... 3
1.9. No Conflict.................................................................... 3
1.10. No Material Adverse Change..................................................... 3
1.11. Legal Proceedings; Exhibits; Agreements........................................ 3
1.12. Compliance with Securities Act................................................. 4
1.13. Not an Investment Company...................................................... 4
1.14. Compliance with Environmental Laws............................................. 4
1.15. No Environmental Costs......................................................... 4
1.16. No Registration Rights......................................................... 4
1.17. Absence of Material Charges.................................................... 4
1.18. Good Title to Properties....................................................... 5
1.19. Intellectual Property Rights................................................... 5
1.20. No Labor Disputes.............................................................. 5
1.21. Insurance...................................................................... 5
1.22. Governmental Permits........................................................... 6
1.23. Compliance with Laws; No Violations............................................ 6
1.24. Internal Accounting Controls................................................... 6
1.25. Disclosure Controls and Procedures............................................. 6
1.26. Auditor Independence........................................................... 6
1.27. Audit Committee................................................................ 7
1.28. Financial Statements........................................................... 7
1.29. Relationships.................................................................. 7
1.30. Books and Records.............................................................. 7
1.31. ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act Compliance.................................................. 7
1.32. ERISA.......................................................................... 8
1.33. No Price Stabilization or Manipulation......................................... 8
1.34. Statistical Data............................................................... 8
1.35. No Unlawful Payments........................................................... 8
1.36. Tax Returns.................................................................... 8
1.37. Stock Exchange Listing......................................................... 8
1.38. No Broker's Fees............................................................... 8
2. Purchase and Sale Agreements.......................................................... 8
2.1. Firm Shares.................................................................... 8
2.2. Additional Shares.............................................................. 9
2.3. Market Standoff Provision...................................................... 9
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2.4. Terms of Public Offering....................................................... 9
3. Payment and Delivery.................................................................. 9
3.1. Firm Shares.................................................................... 9
3.2. Additional Shares.............................................................. 10
3.3. Delivery of Certificates....................................................... 10
4. Covenants of the Company.............................................................. 10
4.1. Furnish Copies of Registration Statement and Prospectus........................ 10
4.2. Notification of Amendments or Supplements and Certain Other
Matters; Stop Orders and Suspensions........................................... 10
4.3. Filings of Amendments or Supplements........................................... 10
4.4. Blue Sky Laws.................................................................. 11
4.5. Earnings Statement............................................................. 11
4.6. Use of Proceeds................................................................ 11
4.7. Registrar and Transfer Agent................................................... 11
4.8. Periodic Reporting Obligations................................................. 11
4.9. Exchange Act Compliance........................................................ 11
5. Conditions to the Underwriters' Obligations........................................... 11
5.1. Effective Registration Statement............................................... 11
5.2. Rule 462 Registration Statement................................................ 11
5.3. Prospectus Filed with Commission............................................... 12
5.4. No Stop Order.................................................................. 12
5.5. No NASD Objection.............................................................. 12
5.6. No Material Adverse Change..................................................... 12
5.7. Officer's Certificate.......................................................... 12
5.8. Opinion of Company Counsel..................................................... 12
5.9. Opinion of Intellectual Property Counsel....................................... 12
5.10. Opinion of Underwriters Counsel................................................ 12
5.11. Accountant's Comfort Letter.................................................... 12
5.12. Lock-Up Agreements............................................................. 13
5.13. Legal Matters.................................................................. 13
5.14. Additional Documents........................................................... 13
6. Expenses.............................................................................. 13
7. Indemnity, Contribution and Survival.................................................. 14
7.1. Indemnification of the Underwriters............................................ 14
7.2. Indemnification by the Underwriters............................................ 14
7.3. Indemnification of a Qualified Independent Underwriter......................... 15
7.4. Indemnification Procedures..................................................... 15
7.5. Contribution Agreement......................................................... 16
7.6. Contribution Amounts........................................................... 16
7.7. Survival of Provisions......................................................... 17
8. Effectiveness......................................................................... 17
9. Termination........................................................................... 17
10. Defaulting Underwriters............................................................... 17
11. Counterparts.......................................................................... 18
12. Headings; Table of Contents........................................................... 18
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13. Notices............................................................................... 18
14. Successors............................................................................ 19
15. Partial Unenforceability.............................................................. 19
16. Governing Law......................................................................... 19
17. Consent to Jurisdiction............................................................... 19
18. Entire Agreement...................................................................... 20
19. Amendments............................................................................ 20
20. Sophisticated Parties................................................................. 20
21. Information Furnished by the Underwriters............................................. 20
SCHEDULE A - List of Underwriters
EXHIBIT A - Form of Legal Opinion of Company Counsel
EXHIBIT B - Form of Legal Opinion of Intellectual Property Counsel
EXHIBIT C - Form of Lock-Up Agreement
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_____________, 2004
▇▇▇▇▇▇ ▇▇▇▇▇▇ Partners LLC
▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co.
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Associates, Inc.
As Representatives of the several Underwriters
c/o Thomas ▇▇▇▇▇▇ Partners LLC
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Introduction. Phase Forward Incorporated, a Delaware corporation
(the "COMPANY"), proposes to issue and sell to the several underwriters named in
Schedule A hereto (the "UNDERWRITERS") an aggregate of 8,330,000 shares of the
Common Stock, par value $0.01 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 1,249,500 shares of its common stock
par value $0.01 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 $0.01 per
share, of the Company to be outstanding after giving effect to the sales
contemplated hereby are hereinafter referred to as the "COMMON STOCK". ▇▇▇▇▇▇
▇▇▇▇▇▇ Partners LLC ("▇▇▇▇▇▇ ▇▇▇▇▇▇ PARTNERS"), ▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. and ▇▇▇▇▇▇▇
▇▇▇▇▇ & Associates, Inc. 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. 333-113594),
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 ("▇▇▇▇▇").
The Company hereby confirms its engagement of ▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co.
and ▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. hereby confirms its agreement with the Company to render
services as a "qualified independent underwriter" within the meaning of Rule
2720 of the Conduct Rules of the National Association of Securities Dealers,
Inc. ("NASD") with respect to the offering of the Shares. ▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co.,
solely in its capacity
as the "qualified independent underwriter" with respect to the offering of the
Shares, and not otherwise, is referred to herein as the "QIU."
1. Representations and Warranties of the Company. The Company
represents and warrants to and agrees with each of the Underwriters that:
1.1. 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 best knowledge of the Company, threatened by the
Commission.
1.2. Contents of Registration Statement. (i) The Registration
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.
1.3. Due Incorporation. 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,
lease and operate 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, leasing
or operation of property requires such qualification, except to the extent that
the failure to be so qualified or be in good standing would not have,
individually or in the aggregate, a material adverse effect on the Company and
its subsidiaries, taken as a whole.
1.4. Subsidiaries. Each subsidiary of the Company has been duly
incorporated, is validly existing as a corporation or other legal entity in good
standing (or the foreign equivalent thereof) under the laws of the jurisdiction
of its incorporation or organization, has the power and authority to own, lease
and operate 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, leasing
or operation of property requires such qualification, except to the extent that
the failure to be so qualified or be in good standing would not have,
individually or in the aggregate, a material adverse effect on the Company and
its subsidiaries, taken as a whole. Except as otherwise required by law, all of
the issued shares of capital stock or other equity interests of each subsidiary
of the Company have been duly and validly authorized and issued, are fully paid
and non-assessable and are owned directly by the Company or through its wholly
owned subsidiaries, free and clear of all liens, encumbrances, equities or
claims. There is no outstanding option, right or agreement of any kind relating
to the issuance, sale or transfer of any capital stock or other equity
securities of the subsidiaries to any person or entity except the Company, and
none of the outstanding shares of capital stock of any subsidiary was issued in
violation of the preemptive or similar rights of any securityholder of such
subsidiary. Except for the subsidiaries, the Company owns no beneficial
interest, directly or indirectly, in any corporation, partnership, joint venture
or other business entity.
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1.5. 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.
1.6. Description of Capital Stock. The authorized capital stock of
the Company conforms as to legal matters to the description thereof contained in
the Prospectus.
1.7. Authorized Stock. The shares of the Company's common stock, par
value $0.01 per share, outstanding prior to the issuance of the Shares to be
sold by the Company have been duly authorized and are validly issued, fully paid
and non-assessable.
1.8. 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 will be issued in compliance with all applicable laws (including, but not
limited to, federal and state securities laws). The issuance of such Shares will
not be subject to any preemptive right, right of first refusal, subscription
right or similar rights which has not been validly waived. Except as disclosed
in the Prospectus, there are no outstanding (i) securities or obligations of the
Company convertible into or exchangeable for any capital stock of the Company;
(ii) warrants, rights or options to subscribe for or purchase from the Company
any such capital stock or any such convertible or exchangeable securities or
obligations; (iii) obligations of the Company to issue any shares of capital
stock, any such convertible or exchangeable securities or obligation, or any
such warrants, rights or options; or (iv) contractual obligation of the Company
to repurchase, redeem or otherwise acquire any shares of capital stock of the
Company or to provide funds to make any investment in any other person or
entity. None of the Company's outstanding capital stock was issued in violation
of any preemptive rights, rights of first refusal or similar rights. Upon the
closing of the offering of the Shares pursuant to this Agreement, all of the
Company's outstanding shares of preferred stock will be converted into an equal
number of shares of Common Stock and neither the Company nor its subsidiaries
will be required to make any payments to any of the holders of such shares of
preferred stock in connection with such conversion or otherwise.
1.9. No Conflict. The execution and delivery by the Company of, 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 (with or without notice or lapse of time or both)
any agreement or other instrument binding upon the Company or any of its
subsidiaries that is material to the Company and its subsidiaries, taken as a
whole, or any judgment, order or decree of any governmental body, agency or
court having jurisdiction over the Company or any subsidiary, 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 various states in connection with the offer and sale of the
Shares.
1.10. No Material Adverse Change. There has not occurred any
material adverse change, or any development that could be reasonably expected to
result in a material adverse change, in the condition, financial or otherwise,
or in the earnings, business or operations of the Company and its subsidiaries,
taken as a whole, from that set forth in the Prospectus (exclusive of any
amendments or supplements thereto subsequent to the date of this Agreement).
1.11. Legal Proceedings; Exhibits; Agreements. There are no legal or
governmental proceedings pending or, to the best knowledge of the Company,
threatened to which the Company or any of
3
its subsidiaries is a party or to which any of the properties of the Company or
any of its subsidiaries 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.
1.12. 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.
1.13. Not an Investment Company. 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" or an entity controlled by an "investment company" as such terms are
defined in the Investment Company Act of 1940, as amended.
1.14. Compliance with Environmental Laws. The Company and its
subsidiaries (i) are in compliance with any and all applicable foreign, federal,
state and local laws, orders, rules, regulations, directives, decrees and
judgments relating to the protection of human health and safety, the environment
or hazardous or toxic substances or wastes, pollutants or contaminants
("ENVIRONMENTAL LAWS"), (ii) have received all permits, licenses or other
approvals required of them under applicable Environmental Laws to conduct their
respective businesses and (iii) are 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 have, individually or in the aggregate, a
material adverse effect on the Company and its subsidiaries, taken as a whole.
1.15. 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 have, individually or in the aggregate, a material
adverse effect on the Company and its subsidiaries, taken as a whole.
1.16. No Registration Rights. There are no contracts, agreements or
understandings between the Company and any person or entity granting such person
or entity the right, contractually or otherwise, 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.
1.17. Absence of Material Charges. Subsequent to the respective
dates as of which information is given in the Registration Statement and the
Prospectus, (i) the Company and its subsidiaries have not incurred any material
liability or obligation, direct or contingent, nor entered into any material
transaction not in the ordinary course of business; (ii) neither the Company nor
its subsidiaries has purchased any of the Company's outstanding capital stock,
nor declared, paid or otherwise made any dividend or distribution of any kind on
the Company's capital stock; and (iii) there has not been any material change in
the capital stock, short-term debt or long-term debt of the Company or any of
its subsidiaries, except in each case as described in the Prospectus.
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1.18. Good Title to Properties. The Company and its subsidiaries do
not own any real property. The Company and its subsidiaries have good and
marketable title to all personal property owned by them which is material to the
business of the Company and its subsidiaries, 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 to be made of such property by the
Company and its subsidiaries; and any real property and buildings held under
lease by the Company and its subsidiaries are held by them under valid,
subsisting and enforceable leases 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 and its subsidiaries.
1.19. Intellectual Property Rights. The Company and its subsidiaries
own or possess, or can acquire on commercially reasonable terms, legally
enforceable rights to use all trademarks, service marks, trade names, domain
names, copyrights, patents, inventions, know how (including trade secrets and
other unpatented and/or unpatentable proprietary or confidential information,
systems or procedures), computer software, and other intellectual property
rights ("INTELLECTUAL PROPERTY") as are necessary for the conduct of their
respective businesses as described in the Prospectus, except where failure to
own, possess or acquire such rights would not have, individually or in the
aggregate, a material adverse effect on the Company and its subsidiaries, taken
as a whole. Except as described in the Registration Statement and Prospectus,
(i) to the knowledge of the Company, there is no infringement, misappropriation
or violation by third parties of any such Intellectual Property; (ii) there is
no pending or, to the knowledge of the Company, threatened action, suit,
proceeding or claim by others challenging the Company's or any of its
subsidiaries' rights in or to any such Intellectual Property; (iii) the
Intellectual Property owned by the Company and its subsidiaries and to the
knowledge of the Company, the Intellectual Property licensed to the Company and
its subsidiaries has not been adjudged invalid or unenforceable, in whole or in
part, and there is no pending or threatened action, suit, proceeding or claim by
others challenging the validity or scope of any such Intellectual Property; (iv)
there is no pending or, to the knowledge of the Company, threatened action,
suit, proceeding or claim by others against the Company or any of its
subsidiaries that the Company or any of its subsidiaries infringes,
misappropriates or otherwise violates any Intellectual Property or other
proprietary rights of others, neither the Company nor any of its subsidiaries
has received any written notice of such claim; and (v) to the Company's
knowledge, no employee of the Company or any of its subsidiaries is the subject
of any claim or proceeding involving a violation of any term of any employment
contract, patent disclosure agreement, invention assignment agreement,
non-competition agreement, non-solicitation agreement, nondisclosure agreement
or any restrictive covenant to or with a former employer where the basis of such
violation relates to such employee's employment with the Company or any of the
Company's subsidiaries or actions undertaken by the employee while employed with
the Company or any of the Company's subsidiaries, except, in each case, for any
instances which would not have, individually or in the aggregate, a material
adverse effect on the Company and its subsidiaries, taken as a whole.
1.20. No Labor Disputes. No material labor dispute with the
employees of the Company or any of its subsidiaries 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, individually
or in the aggregate, a material adverse effect on the Company and its
subsidiaries, taken as a whole.
1.21. Insurance. The Company and its subsidiaries are insured by the
insurers of recognized financial responsibility against such losses and risks
and in such amounts as are prudent and customary in the businesses in which they
are engaged; all policies insuring the Company or any of its subsidiaries are in
full force and effect and the Company and its subsidiaries, as applicable, are
in compliance with the terms of such policies in all material respects; and
neither the Company nor any of its subsidiaries
5
has any 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, individually or in the aggregate, a material adverse
effect on the Company and its subsidiaries, taken as a whole.
1.22. Governmental Permits. The Company and its subsidiaries possess
all certificates, authorizations and permits issued by the appropriate federal,
state or foreign regulatory authorities necessary to conduct their respective
businesses, except where the failure to possess any such certificate,
authorization or permit would not have, individually or in the aggregate, a
material adverse effect on the Company and its subsidiaries, taken as a whole,
and neither the Company nor any of its subsidiaries has 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 and its subsidiaries, taken as a whole.
1.23. Compliance with Laws; No Violations. The Company and each of
its subsidiaries is conducting their respective businesses in compliance with
applicable federal, state, local and foreign laws, rules and regulations, except
where the failure to be so in compliance would not have, individually or in the
aggregate, a material adverse effect on the Company and its subsidiaries, taken
as a whole. The Company and its subsidiaries are not in breach of, or in default
(nor has any event occurred which with notice, lapse of time, or both would
result in any breach of, or constitute a default) (i) under their respective
certificates of incorporation or by-laws (or analogous governing instruments) or
(ii) in the performance or observance of any obligation, agreement, covenant or
condition contained in any license, indenture, mortgage, deed of trust, bank
loan or credit agreement or other evidence of indebtedness, or any lease,
contract or other agreement or instrument to which the Company or any of its
subsidiaries is a party or by which they or any of their respective properties
are bound, except for any such breach or default which would not have,
individually or in the aggregate, a material adverse effect on the Company and
its subsidiaries, taken as a whole.
1.24. Internal Accounting Controls. The Company maintains a system
of internal accounting controls with regard to the Company and its subsidiaries
which is 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.
1.25. Disclosure Controls and Procedures. (i) The Company is not
aware of (A) any significant deficiency in the design or operation of internal
controls which could adversely affect the Company's or any of its subsidiaries'
ability to record, process, summarize and report financial data or any material
weaknesses in internal controls; or (B) any fraud, whether or not material, that
involves management or other employees who have a significant role in the
Company's or any of its subsidiaries' internal controls; and (ii) since December
31, 2003, there have been no significant changes in internal controls or in
other factors that could significantly affect internal controls, including any
corrective actions with regard to significant deficiencies and material
weaknesses.
1.26. Auditor Independence. Ernst & Young LLP, which has expressed
its opinion with respect to the financial statements (and notes relating
thereto) filed as a part of the Registration Statement pertaining to the years
2002 and 2003 and included in the Registration Statement and Prospectus, is an
independent public accounting firm within the meaning of the Securities Act and
the rules and regulations
6
promulgated thereunder and, to the knowledge of the Company, such accountants
are not in violation of the auditor independence requirements of the
▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 and the rules and regulations promulgated in
connection therewith (collectively, the "▇▇▇▇▇▇▇▇-▇▇▇▇▇ ACT") with regard to
such accountant's engagement by the Company. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP which has
expressed its opinion with respect to the financial statements (and notes
relating thereto) filed as a part of the Registration Statement pertaining to
the year 2001 and included in the Registration Statement and Prospectus, was at
the time of rendering such opinion an independent public accounting firm within
the meaning of the Securities Act and the rules and regulations promulgated
thereunder.
1.27. Audit Committee. The Company maintains an audit committee that
meets the listing standards imposed by the Nasdaq National Market for companies
whose stock is approved for quotation in that market and the Securities Act and
the rules and regulations thereunder. The members of such audit committee are
independent of the Company to the extent required by such listing standards and
the Securities Act and the applicable rules and regulations of the Commission
thereunder.
1.28. Financial Statements. The consolidated financial statements of
the Company included in the Registration Statement and the Prospectus, together
with related notes, present fairly in all material respects the financial
position of the Company and its subsidiaries as of the dates indicated and the
results of operations, stockholders' equity, and cash flows of the Company and
its subsidiaries for the periods specified; such financial statements have been
prepared in conformity with generally accepted accounting principles as applied
in the United States and on a consistent basis during the periods involved; the
financial statement schedules included in the Registration Statement and the
Prospectus fairly present in all material respects the information required to
be shown therein; the selected financial data and the summary financial
information included in the Prospectus present fairly the information shown
therein and have been compiled on a basis consistent with that of the audited
financial statements included in the Registration Statement and Prospectus; the
pro forma financial statements and other pro forma financial information
included in the Registration Statement and the Prospectus present fairly the
information shown therein, have been prepared in accordance with the
Commission's rules and guidelines for pro forma financial statements, have been
properly compiled on the pro forma bases set forth therein and, in the opinion
of the Company, the assumptions used in the preparation thereof are reasonable
and the adjustments used therein are appropriate to reflect the transaction or
circumstances referred to therein.
1.29. Relationships. No relationship, direct or indirect, exists
between or among the Company or any of its subsidiaries, on the one hand, and
the directors, officers, stockholders, customers or suppliers of the Company or
any of its subsidiaries, on the other hand, which is required to be described in
the Registration Statement or Prospectus which is not so described.
1.30. Books and Records. The minute books of the Company and each of
its subsidiaries have been made available to the Underwriters and counsel for
the Underwriters, and such books (i) contain a complete summary in all material
respects of all meetings and actions of the board of directors (including each
board committee) and stockholders of the Company and each of its subsidiaries
since the time of its respective incorporation or formation through the date of
the latest meeting and action and (ii) accurately in all material respects
reflect all transactions referred to in such minutes.
1.31. ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act Compliance. The Company is in compliance
with all currently effective provisions of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act that are
applicable, or will be applicable as of the date of payment for and delivery of
the Firm Shares pursuant hereto, to the Company.
7
1.32. ERISA. No "prohibited transaction" (as defined in Section 406
of the Employee Retirement Income Security Act of 1974, as amended, including
the regulations and published interpretations thereunder ("ERISA"), or Section
4975 of the Internal Revenue Code of 1986, as amended (the "CODE")) or
"accumulated funding deficiency" (as defined in Section 302 of ERISA) or any of
the events set forth in Section 4043(b) of ERISA (other than events with respect
to which the 30-day notice requirement under Section 4043 of ERISA has been
waived) has occurred with respect to any employee benefit plan which could have,
individually or in the aggregate, a material adverse effect on the Company and
its subsidiaries, taken as a whole; each employee benefit plan of the Company
and its subsidiaries is in compliance in all material respects with applicable
law, including ERISA and the Code; the Company has not incurred and does not
expect to incur liability under Title IV of ERISA with respect to the
termination of, or withdrawal from, any "pension plan"; and each "pension plan"
(as defined in ERISA) for which the Company would have any liability that is
intended to be qualified under Section 401(a) of the Code is so qualified in all
material respects and nothing has occurred, whether by action or by failure to
act, which could cause the loss of such qualification.
1.33. No Price Stabilization or Manipulation. Neither the Company
nor any of its subsidiaries has taken, directly or indirectly, any action
designed to or that could reasonably be expected to cause or result in any
stabilization or manipulation of the price of the Shares.
1.34. Statistical Data. Nothing has come to the attention of the
Company that has caused the Company to believe that the statistical and
market-related data included in the Registration Statement and the Prospectus is
not based on or derived from sources that are reliable and accurate in all
material respects.
1.35. No Unlawful Payments. Neither the Company, its subsidiaries,
nor any other person associated with or acting on behalf of the Company or its
subsidiaries, has, directly or indirectly, (i) used any corporate funds for any
unlawful contribution, gift, entertainment or other unlawful expense relating to
political activity; (ii) made any unlawful payment to foreign or domestic
government officials or employees or to foreign or domestic political parties or
campaigns from corporate funds; (iii) violated any provision of the Foreign
Corrupt Practices Act of 1977, as amended; or (iv) made any other unlawful
payment.
1.36. Tax Returns. The Company and its subsidiaries have timely
filed all material federal, state, local and foreign income and franchise tax
returns required to be filed and is not in default in the payment of any taxes
which were payable pursuant to said returns or any assessments with respect
thereto, other than any which the Company or its subsidiaries are contesting in
good faith.
1.37. Stock Exchange Listing. The Shares have been approved for
inclusion on the Nasdaq National Market, subject only to official notice of
issuance.
1.38. No Broker's Fees. Except as provided herein, there are no
contracts, agreements or understandings between the Company and any person that
would give rise to a valid claim against the Company or any Underwriter for a
brokerage commission, finder's fee or other like payment in connection with the
issuance and sale of the Shares.
2. Purchase and Sale Agreements.
2.1. Firm Shares. The Company hereby agrees to issue and 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 respective number of Firm
Shares set forth opposite its name on Schedule A hereto.
8
2.2. 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 1,249,500 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 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 Underwriter bears to the total
number of Firm Shares.
2.3. Market Standoff Provision. The Company hereby agrees that,
without the prior written consent of ▇▇▇▇▇▇ ▇▇▇▇▇▇ Partners, it will not, during
the period ending 180 days after the date of the Prospectus (the "RESTRICTED
PERIOD"), (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 and
which is described in the Prospectus or (C) shares of Common Stock issued under
the Company's stock option or employee stock purchase plans. Notwithstanding the
foregoing, if (1) during the last eighteen (18) days of the Restricted Period
the Company issues an earnings release or (2) prior to the expiration of the
Restricted Period the Company announces that it will release earnings results
during the 16-day period beginning on the last day of the Restricted Period, the
restrictions imposed by this Section 2.3 shall continue to apply until the
expiration of the 19-day period beginning on the issuance of the earnings
release.
2.4. 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. The Company is further
advised by you that the Shares are to be offered to the public initially at
$_____________ a share (the "PUBLIC OFFERING PRICE") and to certain dealers
selected by you at a price that represents a concession not in excess of $______
a share under the Public Offering Price, and that any Underwriter may allow, and
such dealers may reallow, a concession, not in excess of $_____ a share, to any
Underwriter or to certain other dealers.
3. Payment and Delivery.
3.1. 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 ____________, _____, or at
such other time on the same or such other date, not later than _________, _____,
as shall be designated in writing by you. The time and date of such payment are
hereinafter referred to as the "CLOSING DATE".
9
3.2. Additional Shares. Payment for any Additional Shares shall 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 2.2 or at such other time on the same or on such
other date, in any event not later than _______, _____, as shall be designated
in writing by you. The time and date of such payment are hereinafter referred to
as the "OPTION CLOSING DATE".
3.3. Delivery of Certificates. Certificates for the Firm Shares 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 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 by the Company, 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:
4.1. Furnish Copies of Registration Statement and Prospectus. To
furnish to you, without charge, four 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 4.3 below, as many copies of the
Prospectus and any supplements and amendments thereto or to the Registration
Statement as you may reasonably request.
4.2. Notification of Amendments or Supplements and Certain Other
Matters; Stop Orders and Suspensions. 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. In addition, during
the Prospectus Delivery Period (as defined in Section 4.3 hereof), the Company
will promptly advise the Representatives (i) of any communications (written or
oral) with the Commission with regard to the Prospectus, the Registration
Statement, any amendments or supplements of the Prospectus or Registration
Statement or any other matters in connection with the offering of the Shares;
(ii) of any filings made by the Company with the Commission in connection with
the offering of the Shares, (iii) when any amendment to the Registration
Statement relating to the Shares shall have become effective, (iv) of the
issuance by the Commission of any stop order suspending the effectiveness of the
Registration Statement or the institution or threatening of any proceeding for
that purpose and (v) of the receipt by the Company of any notification with
respect to the suspension of the approval of the Shares for quotation in the
Nasdaq National Market or qualification of the Shares for sale in any
jurisdiction or the initiation or threatening of any proceeding for such
purpose. The Company will use its reasonable best efforts to prevent the
issuance or invocation of any such stop order or suspension and, if any such
stop order or suspension is so issued or invoked, to obtain as soon as possible
the withdrawal or removal thereof.
4.3. Filings of Amendments or Supplements. If, during such period
after the first date of the public offering of the Shares as in the 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
10
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 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.
4.4. 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; provided, however, that the Company will not be required to
qualify as a foreign corporation or to file a general consent to service of
process in any such jurisdiction where it is not now so qualified or required to
file such consent.
4.5. 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 statement of the Company
and its subsidiaries (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).
4.6. 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.
4.7. Registrar and Transfer Agent. The Company shall engage and
maintain, at its expense, a registrar and transfer agent for the Common Stock.
4.8. 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
Securities Exchange Act of 1934, as amended (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.
4.9. Exchange Act Compliance. During the Prospectus Delivery Period,
the Company will file all documents required to be filed with the Commission
pursuant to Sections 13, 14 or 15 of the Exchange Act in the manner and within
the time periods required by the Exchange Act.
5. Conditions to the Underwriters' Obligations. The obligation of
the Company to issue and sell the Shares to the Underwriters on the Closing Date
is subject to the conditions contained in Sections 5.1, 5.4 and 5.5. The several
obligations of the Underwriters to purchase and pay for the Shares on the
Closing Date are subject to the accuracy, when made and on the Closing Date and
the Option Closing Date, if applicable, (as if made on such date) of the
representations and warranties of the Company contained herein, to the accuracy
of the statements of the Company made in any certificates pursuant to the
provisions hereof, to the performance by the Company of its obligations
hereunder, and to each of the following conditions:
5.1. Effective Registration Statement. The Registration Statement
shall have become effective.
5.2. 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
11
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.
5.3. 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.
5.4. No Stop Order. No stop order suspending the effectiveness of
the Registration Statement, any Rule 462 Registration Statement, or any
post-effective amendment to the Registration Statement, shall be in effect and
no proceedings for such purpose shall have been instituted or threatened by the
Commission.
5.5. No NASD Objection. The NASD shall have raised no objection to
the fairness and reasonableness of the underwriting terms and arrangements.
5.6. 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 or operations of the
Company and its subsidiaries, taken as a whole, 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.
5.7. 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 5.4 and 5.6 and to the effect that the representations and warranties
of the Company contained in this Agreement are true and correct 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.
5.8. Opinion of Company Counsel. The Underwriters shall have
received on the Closing Date an opinion of ▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, 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.
5.9. Opinion of Intellectual Property Counsel. The Underwriters
shall have received on the Closing Date an opinion of Weingarten, Schurgin,
▇▇▇▇▇▇▇▇ & Lebovici LLP, counsel for the Company, dated the Closing Date, the
form of which is attached hereto as Exhibit B. The opinion shall be rendered to
the Underwriters at the request of the Company and shall so state therein.
5.10. Opinion of Underwriters Counsel. The Underwriters shall have
received on the Closing Date an opinion of Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇
LLP, counsel for the Underwriters, dated the Closing Date, in form and substance
reasonably satisfactory to the Underwriters.
5.11. 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 ordinarily
included in accountants' "comfort
12
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.
5.12. Lock-Up Agreements. The "lock-up" agreements, each
substantially in the form of Exhibit C 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.
5.13. Legal Matters. All corporate proceedings and other legal
matters incident to the authorization, form and validity of this Agreement, the
Shares, the Registration Statement and the Prospectus, and all other legal
matters relating to this Agreement and the transactions contemplated hereby
shall be reasonably satisfactory in all material respects to counsel for the
Underwriters, and the Company shall have furnished to such counsel all documents
and information that they may reasonably request to enable them to pass upon
such matters.
5.14. 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 obligation of the Company to issue and sell the Additional
Shares to the Underwriters, if applicable, is subject to the satisfaction of the
conditions contained in Sections 5.1, 5.4 and 5.5 on or prior to the Option
Closing Date. 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, 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 4.4 hereof,
including filing fees and the reasonable fees and disbursements 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 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 Company relating to
13
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, and the cost of any aircraft chartered in connection with the road
show, (ix) all expenses in connection with any offer and sale of the Shares
outside of the United States including filing fees 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, Contribution
and Survival", 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, Contribution and Survival.
7.1. 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) (a) 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 (b) 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, in the case of any preliminary prospectus or the
Prospectus in light of the circumstances under which they were made, 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 furnished to the Company in writing by an
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.
7.2. 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 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
14
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.
7.3. Indemnification of a Qualified Independent Underwriter. Without
limitation of and in addition to its obligations under the other subsections of
this Section 7, the Company agrees to indemnify and hold harmless the QIU and
each person, if any, who controls the QIU within the meaning of Section 15 of
the Securities Act or Section 20 of the Exchange Act from and against 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), as incurred, arising out of or based
upon the QIU's acting as a "qualified independent underwriter" (within the
meaning of Rule 2720 to the NASD's Conduct Rules) in connection with the
offering contemplated by this Agreement; provided, however, that the Company
shall not be liable under this Section 7.3 for any losses, claims, damages,
liabilities or expenses to the extent that any such loss, claim, damage,
liability or expense results from the gross negligence or bad faith of the QIU.
7.4. 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, (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 15 of
the Securities Act or Section 20 of the Exchange Act and (iii) the fees and
expenses of more than one separate firm (in addition to any local counsel) for
the QIU and all persons, if any, who control the QIU within the meaning of
either Section 15 of the Securities Act or Section 20 of the Exchange Act. 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 ▇▇▇▇▇▇ ▇▇▇▇▇▇
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. In the case of any such separate firm for
the QIU and such control persons of any the QIU, such firm shall be designated
in writing by the QIU. 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 45 days after receipt by such
15
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
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.
7.5. 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 (i) of this Section 7.5 is
not permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) above but also the
relative fault of the 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 or the QIU in its
capacity as QIU with respect to the offering of the Shares, as the case may be,
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 Public Offering Price of the Shares. Each of the parties to this
Agreement acknowledges that ▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co., in its capacity as the
"qualified independent underwriter" within the meaning of Rule 2720 of the
NASD's Conduct Rules with respect to the offering of the Shares, will not
benefit from the offering of the Shares other than from the underwriting
discounts and commissions it receives in its capacity as Underwriter. The
relative fault of the Company on the one hand and the Underwriters or the QIU,
as the case may be, 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 or the QIU, as the
case may be, 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.
7.6. Contribution Amounts. The Company, the Underwriters and the QIU
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 and
the QIU 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 7.5. 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, and the QIU shall not be required to
contribute any amount in excess of the amount by which the total price at which
the Shares underwritten by ▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. and distributed to the public
were offered to the public, exceeds the
16
amount of any damages that such Underwriter has otherwise been required to pay
by reason of any 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.
7.7. Survival of Provisions. The indemnity and contribution
provisions contained in this Section 7 and the covenants, agreements,
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 the QIU or any person controlling any Underwriter
or the QIU, 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.
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 delivery of and payment for the Firm Shares (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 NASD, 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, Delaware or California shall have been declared by
either federal or New York, Delaware or California state authorities, (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, (v) in the judgment of the Representatives, there shall have
occurred any material adverse change, or any development that could reasonably
be expected to result in a material adverse change, in the condition, financial
or otherwise, or in the earnings, business, operations or prospects, whether or
not arising from transactions in the ordinary course of business, of the Company
and its subsidiaries, taken as a whole or (vi) there shall be 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 the Company shall for any reason be unable
to perform its obligations under this Agreement and (b) in the case of any of
the events specified in clauses 9(a)(i) through 9(a)(vi), 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 applicable, 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
17
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.
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:
▇▇▇▇▇▇ ▇▇▇▇▇▇ Partners LLC
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇, Partner
with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇ Partners LLC
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇, Esq.
18
If to the Company:
Phase Forward Incorporated
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
D. ▇▇▇ ▇▇▇▇▇▇▇
with a copy to:
▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Any party hereto may change the address or other information 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 assigns, 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. Consent to Jurisdiction. Any legal suit, action or proceeding
arising out of or based upon this Agreement or the transactions contemplated
hereby may be instituted in the federal courts of the United States of America
located in the City and County of New York or the courts of the State of New
York in each case located in the City and County of New York (collectively, the
"SPECIFIED COURTS"), and each party irrevocably submits to the exclusive
jurisdiction (except for proceedings instituted in regard to the enforcement of
a judgment of any such court, as to which such jurisdiction is non-exclusive) of
such courts in any such suit, action or proceeding. Service of any process,
summons, notice or document by mail to such party's address set forth above
shall be effective service of process for any suit, action or other proceeding
brought in any such court. The parties irrevocably and unconditionally waive any
objection to the laying of venue of any suit, action or other proceeding in the
Specified Courts and irrevocably and unconditionally
19
waive and agree not to plead or claim in any such court that any such suit,
action or other proceeding brought in any such court has been brought in an
inconvenient forum.
18. 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.
19. 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. Notwithstanding the foregoing, this Agreement may
be amended without the QIU signing the amendment if the amendment would not
amend any provision of this Agreement in a manner adverse to the QIU's interests
in its capacity as the "qualified independent underwriter" within the meaning of
Rule 2720 of the NASD's Conduct Rules with respect to the offering of the
Shares.
20. 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 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.
21. Information Furnished by the Underwriters. The statements set
forth in the fourth paragraph under the heading "Underwriting" and the
statements set forth under the heading "Underwriting - Discretionary Accounts,"
in each instance, in the Prospectus, constitute the only information furnished
by or on behalf of the Underwriters as such information is referred to in
Sections 1.2 and 7 of this Agreement.
[Remainder of page intentionally left blank]
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,
Phase Forward Incorporated
By: ____________________________
Name:
Title:
Accepted as of the date hereof
▇▇▇▇▇▇ ▇▇▇▇▇▇ Partners LLC
▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co.
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Associates, Inc.
Acting severally on behalf
of themselves and the
several Underwriters named
in Schedule A hereto.
By: ▇▇▇▇▇▇ ▇▇▇▇▇▇ Partners LLC
By: __________________________
Name:
Title:
▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co.,
as Qualified Independent Underwriter
By: _________________________
Name:
Title:
21
SCHEDULE A
NUMBER OF FIRM
SHARES
UNDERWRITER TO BE PURCHASED
▇▇▇▇▇▇ ▇▇▇▇▇▇ Partners LLC
▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co.
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Associates, Inc.
[NAMES OF OTHER UNDERWRITERS]
Total
Sch. A-1
EXHIBIT A
FORM OF LEGAL OPINION OF COMPANY COUNSEL
EXHIBIT B
FORM OF LEGAL OPINION OF INTELLECTUAL PROPERTY COUNSEL
EXHIBIT C
FORM OF LOCK-UP AGREEMENT
____________, 2004
▇▇▇▇▇▇ ▇▇▇▇▇▇ Partners LLC
▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co.
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Associates
As Representatives of the several Underwriters
c/o Thomas ▇▇▇▇▇▇ Partners LLC
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
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 $0.01 per share (the "Common Stock"), of Phase Forward
Incorporated, a Delaware 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 ▇▇▇▇▇▇ ▇▇▇▇▇▇ Partners
(which consent may be withheld in its sole discretion), it will not, during the
period (the "RESTRICTED 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 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 ▇▇▇▇▇▇ ▇▇▇▇▇▇
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
i
for Common Stock. With respect to the Public Offering, the undersigned waives
any registration rights relating to registration under the Securities Act of
1933, as amended, or otherwise, 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.
If:
(1) during the last 18 days of the Restricted Period, the Company issues
an earnings release; or
(2) prior to the expiration of the Restricted Period, the Company
announces that it will release earnings results during the 16-day period
beginning on the last day of the Restricted Period, the restrictions set forth
herein shall continue to apply until the expiration of the 19-day period
beginning on the issuance of the earnings release.
Notwithstanding the foregoing, the undersigned may transfer shares of
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, or (iv) 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, partnership, limited liability company or
other form of business entity, the undersigned may transfer the capital stock of
the Company to any wholly-owned subsidiary, partner or member of the undersigned
or to an affiliate of the undersigned; 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.
Notwithstanding the foregoing, the undersigned may exercise any options or
other rights of the undersigned to purchase shares of Common Stock, subject to
any applicable provisions of the Company's stock option plans.
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.
ii
The undersigned agrees and consents to the entry of stop transfer
instructions with the Company's transfer agent and registrar against, and
authorizes the Company to cause the transfer agent and registrar to decline, 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 shall lapse and become null and void as of the close of
business on August 1, 2004 if the closing (excluding the closing of any
over-allotment option granted to the Underwriters pursuant to the Underwriting
Agreement relating to the Public Offering) of the Public Offering shall not have
occurred on or before such time or, if earlier, as of the date the Company
withdraws the Registration Statement on Form S-1 relating to the Public Offering
with the Securities and Exchange Commission.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to enter into the agreements set forth herein.
The undersigned further understands that this agreement is irrevocable,
and that all authority herein conferred or agreed to be conferred shall survive
death or incapacity of the undersigned and will be binding on the undersigned
and the respective successors, heirs, personal representatives, and assigns of
the undersigned.
Very truly yours,
_______________________________
Signature
_______________________________
Name (Please print)
iii