EXHIBIT 10.12
CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED BASED UPON A REQUEST FOR
CONFIDENTIAL TREATMENT.
SUCH OMITTED PORTIONS HAVE BEEN SEPARATELY FILED WITH THE COMMISSION.
WIT CAPITAL CORPORATION
000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
FORM OF E-DEALER AGREEMENT
[Date]
Ladies and Gentlemen:
From time to time we may invite you (and others) to participate on the
terms set forth herein as dealer in connection with certain public offerings of
securities by one or more underwriters ("Underwriters") in which we are the
manager or a co-manager. If we invite you to participate in a specific offering
(an "Offering") to which this Agreement shall apply, we will give you an express
notice (an "Advice") by e-mail, telecopy or otherwise in writing which will
specify (i) the securities to be offered (the "Securities") and the issuer
thereof, (ii) the offering terms, including, if applicable, the public offering
price, concession and reallowance with respect to such securities, (iii) the Web
site location at which will be posted the current Preliminary Prospectus and
Prospectus (as such terms are hereinafter defined) and any notice of the
Offering (a "Notice") complying with Rule 134 or Rule 135 under the Securities
Act of 1933, (iv) any limit on the amount of Securities which may be sold to you
and your customers, based upon our credit analysis, and (v) the extent to which
the general provisions of the Agreement shall be applicable. In addition to the
terms of this Agreement, in any public offering in which we are not the lead
manager, but in which you participate as a dealer at our invitation, you agree
to comply with the terms and conditions, and to make the representations and
warranties, applicable to participating dealers, as established by the
respective lead manager in its standard agreement with dealers and, if
applicable, in any advice or notice it issues to dealers participating in such
offerings (copies of which will be furnished to you upon request).
Except to the extent that the applicable Advice provides otherwise, you
hereby agree as follows with respect to each Offering to which we invite you to
and in which you participate as a dealer. For purposes of the following
provisions, with respect to any Offering, the term Preliminary Prospectus means
any preliminary prospectus relating to the offering of the Securities or any
preliminary prospectus supplement together with a prospectus relating to the
offering of the Securities; the term Prospectus means the prospectus, together
with the final prospectus supplement, if any, relating to the offering of the
Securities, filed pursuant to Rule
424 under the Securities Act of 1933; and the terms Public Offering Price and
Reallowance shall mean, respectively, the public offering price and reallowance,
if any, then in effect with respect to the Securities.
Article 1
1.1 All offers of Securities are made subject to prior sale of the
Securities, when, as and if such Securities are delivered to and accepted by the
Underwriters and subject to the approval of legal matters by their counsel. Any
order from you or any customer of yours for Securities will be strictly subject
to confirmation and we reserve the right in our sole discretion to reject any
order in whole or in part.
1.2 You shall promptly offer the Securities to retail purchasers only, who
are existing customers of yours, upon the terms set forth in the Prospectus and
the Advice. Orders for Securities must be posted with our electronic order book
by you or directly by your customers, as you may elect. Such orders will
generally be accepted by us on a first-come, first-served basis, subject to our
right to specify minimum and maximum numbers of shares to be purchased in any
order and to establish such other terms, conditions and priorities as we believe
are reasonable and appropriate for an Offering.
1.3 If the Securities are shares of common stock ("Common Stock") of the
issuer thereof (the "Issuer") or securities of the Issuer that may be exchanged
for or converted into Common Stock, you agree that you will not, without our
approval in advance, at any time prior to the completion of the Offering, buy,
sell, deal or trade in (i) any Common Stock, (ii) any securities of the Issuer
convertible into Common Stock or (iii) any right or option to acquire or sell
Common Stock or any security of the Issuer convertible into Common Stock, for
your own account or for the account of a customer, except:
(1) as provided for in this Agreement, the applicable Advice, the
agreement among underwriters, if any, or the underwriting agreement
relating to the Securities;
(2) that you may convert any security of the Issuer convertible into
Common Stock owned by you and sell the Common Stock acquired upon such
conversion and that you may deliver Common Stock owned by you upon the
exercise of any option written by you as permitted by the provisions set
forth herein; and
(3) in brokerage transactions on unsolicited orders which have not
resulted from activities on your part in connection with the solicitation
of purchases and which are executed by you in the ordinary course of your
brokerage business.
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In addition, you will***********************************************************
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*************************************** prior to the sixtieth (60th) day
following the date of the Prospectus relating thereto (or such earlier date as
we may stipulate to you).
1.4 If the Securities are not shares of Common Stock or securities of the
Issuer that may be exchanged for or converted into Common Stock, you agree that
you will not bid for or purchase, or attempt to induce any other person to
purchase, any Securities or any other securities of the Issuer designated in the
Advice other than (i) as provided in this Agreement, the agreement among
underwriters, if any, or the underwriting agreement relating to the Securities
or (ii) as a broker in executing unsolicited orders.
1.5 You represent that you have not participated, since the date you were
invited to participate in the Offering of the Securities, in any transaction
prohibited by Section 1.3 and that you have at all times complied with the
provisions of Regulation M of the Securities and Exchange Commission applicable
to such Offering.
1.6 You agree to provide us from time to time upon request information as
to the distribution of Securities sold by or through you including, without
limitation, the number of retail customers to whom you have sold Securities and
those customers, if any, who have resold or transferred from their accounts with
you any or all of the Securities they purchased prior to the sixtieth (60th) day
following the date of the Prospectus (or such earlier date as we may have
specified)**********************************************************************
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1.7 If prior to the termination of this Agreement as it applies to the
offering of the Securities (or prior to such earlier date as we have determined)
we (or any manager or co-manager of the Offering) purchase or contract to
purchase in the open market or otherwise any Securities which were purchased by
you or your customers (including any Securities which may have been issued on
transfer or in exchange for such Securities), and which Securities were
therefore not effectively placed for investment by you, you authorize us (or
such manager or co-manager) either to charge your account with an amount equal
to the concession from the Public Offering Price at which you purchased such
Securities, which shall be credited against the cost of
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*CONFIDENTIAL INFORMATION REQUESTED
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such Securities, or to require you to repurchase such Securities at a price
equal to the total cost of such purchase, including any commissions and transfer
taxes on redelivery.
Article 2
2.1 If you or your customers purchase any Securities from us in connection
with your participation as dealer in an Offering, you agree that such purchases
will be evidenced by an e-mail or written confirmation and will be subject to
the terms and conditions set forth in the confirmation and in the Prospectus.
2.2 As soon as practical, we will notify you of the number of Securities
to be sold to you and to your customers (including, in the case of sales to your
customers, the identification of each order to be filled and the time and date
of receipt thereof). Securities purchased from us by you or your customers in
connection with your participation as dealer in such Offering shall be paid for
in full by you at (i) the Public Offering Price, (ii) such price less the
applicable concession or (iii) the price set forth or indicated in the Advice,
as we shall advise, at the office of Wit Capital Corporation, 000 Xxxxxxxx, Xxx
Xxxx, Xxx Xxxx 00000, at such time and on such day as we may advise you, by
certified or official bank check payable in New York Clearing House funds (or
such other funds as we may specify) to the order of Wit Capital Corporation, 000
Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, against delivery of the Securities. If you
are called upon to pay the Public Offering Price for the Securities purchased by
you, the applicable concession will be paid to you, less any amounts charged to
your account pursuant to Article 1 above, after termination of this Agreement as
it applies to the offering of the Securities. Unless you promptly give us
written instructions otherwise, if transactions in the Securities may be settled
through the facilities of The Depository Trust Company, payment for and delivery
of Securities purchased by you will be made through such facilities, if you are
a member, or, if you are not a member, settlement may be made through your
ordinary correspondent who is a member.
Article 3
3.1 We will advise you of the date and time of termination of this
Agreement as it applies to the offering of the Securities or of any designated
provisions hereof. This Agreement shall, in any event, terminate with respect
to the offering of the Securities 30 days after the date of the initial public
offering of the Securities unless sooner terminated by us. This Agreement shall,
in any event, terminate with respect to the offering of the Securities unless
sooner terminated by us in writing delivered to you as soon as practical. This
Agreement may be terminated by either party for any or no reason upon six months
prior written notice or upon 30 days prior written notice, in the event the
other party has breached the terms of this Agreement (or any Advice) and such
breach has not promptly cured to the satisfaction of the non-breaching party.
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*CONFIDENTIAL INFORMATION REQUESTED
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Article 4
4.1 In purchasing Securities, you will rely only on the Prospectus and on
no other statements whatsoever, written or oral. Unless you otherwise
specifically request and we agree thereto, delivery of each Preliminary
Prospectus and each Prospectus shall be made by our posting of the same at the
Web site location identified in the Advice and you will not offer or sell any
Securities to any customer of yours who has not consented, prior to such offer
or sale, to such delivery by e-mail containing a hyperlink to the appropriate
Web site locations. You will promptly notify, by e-mailing the Notice relating
to the Offering, each customer to whom you wish to offer or sell any Securities;
such notice will contain a hyperlink to the Web site location of the current
preliminary Prospectus and the Prospectus. You will not provide by electronic
mail or otherwise to any customer of yours any information relating to any
Securities or the issuer thereof other than the Web site location of the current
Preliminary Prospectus, the Prospectus and any information we may post on a Web
site location for distribution to prospective purchasers of the Securities. Any
contacts with the issuer of any Securities in an Offering for due diligence or
other purposes will be coordinated through us.
4.2 You represent that you are a member in good standing of the NASD or
that you are a foreign bank or dealer, not eligible for membership in the NASD,
which agrees not to offer or sell any Securities in, or to persons who are
nationals or residents of, the United States. In making sales of Securities, if
you are such a member, you agree to comply with all applicable rules of the
NASD, including, without limitation, the NASD's Interpretation with Respect to
Free-Riding and Withholding and Section 24 of Article III of the NASD's Rules of
Fair Practice, or, if you are such a foreign bank or dealer, you agree to comply
with such Interpretation and Sections 8 and 36 of such Article as though you
were such a member and Section 25 of such Article as it applies to a nonmember
broker or dealer in a foreign country.
4.3 If you are a foreign bank or dealer, you represent that in connection
with sales and offers to sell Securities made by you outside the United States
you will advise each person to whom any such sale or offer is made of the Web
site location of the then current preliminary prospectus, if any, or of the
Prospectus (as then amended or supplemented). Any offering material in addition
to the then current preliminary prospectus or the Prospectus furnished by you to
any person in connection with any offers or sales referred to in the preceding
sentence (i) shall be prepared and so furnished at your sole risk and expense
and (ii) shall not contain information relating to the Securities or the Issuer
which is inconsistent in any respect with the information contained in the then
current preliminary prospectus, if any, or in the Prospectus (as then amended or
supplemented), as the case may be. It is understood that no action has been
taken by us or the Issuer to permit a public offering in any jurisdiction other
than the United States where action would be required for such purpose.
4.4 You will not give any information or make any representations other
than those contained in the Prospectus, or act as agent for the Issuer, any
Underwriter or us. You will not
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offer or sell any Securities in any jurisdiction except in compliance with
applicable laws and subject to such customer screening processes as we may
specify.
4.5 You agree that we, as manager or co-manager of the offering of the
Securities, have full authority to take such action as may seem advisable to us
in respect of all matters pertaining to such offering.
4.6 Neither we, as manager, nor any Underwriter shall be under any
liability to you for any act or omission, except for obligations expressly
assumed by us in this Agreement.
4.7 All communications to us relating to the offering of the Securities
shall be e-mailed to the Syndicate Department, Wit Capital Corporation at
xxxxxxxxx@xxxxxxxxxx.xxx. Unless you have otherwise notified us in writing, any
notices to your shall be deemed to have been duly given if e-mailed, postal
mailed, telecopied or delivered to you at the address shown below.
Article 5
5.1 Neither we, as manager, nor any Underwriter will have any
responsibility with respect to the right of any dealer to sell Securities in any
jurisdiction, notwithstanding any information we may furnish in that connection.
Article 6
6.1 You agree that, for a period of ************* years following the date
of this Agreement, other than at our invitation, you will not participate as
manager or a co-manager of, nor as an underwriter or dealer in, any public
offering syndicate or dealer group, or sub-syndicate or sub-dealer group, which
aggregates, or plans to aggregate, retail customer orders from more than one
member firm of the NASD in a central electronic order book in a manner similar
to the manner contemplated by this Agreement (an "e-syndicate"). The provisions
of this Section 6.1 shall not prohibit or restrict your participation in
traditional underwriting syndicates or selling groups where allocations or
retentions are made to each dealer on an individual or stand alone basis as
opposed to some other basis such as a first-come, first-served basis or an
affinity group basis. The restrictive covenant set forth in the first sentence
of this paragraph (the "Exclusivity Provision") shall become null and void as of
any [Month] 1 commencing ___________ (each such date a "Termination Date") if as
of such date any of the triggering events as defined below is satisfied:
Termination Date Triggering Events
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[_____________] (i) in respect of the twelve months ended
____________ ("Year One"), we have failed
to
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*CONFIDENTIAL INFORMATION REQUESTED
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offer you participation in at least "x"
qualified public offerings ("QPOs") in which
we have commanded an allocation of 250,000
shares or more, where "x" equals the number
of QPOs completed during such year period
times **** percent
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where a QPO is defined as a domestic public
offering of not less than $35 million lead
managed by a nationally recognized major or
bulge bracket investment bank (whether or
not we participate in the transaction); or
(ii) in respect of Year One, both (a) "Your
Average Demand" (as defined) exceeded *****
percent of the "Average Wit Capital
Allocation" and (b) "Your Average
Allocation" (as defined) as a percentage of
the Wit Capital Allocation was less than
***** percent. "Your Average Demand" means
the average of the number of shares covered
by conditional orders submitted to us by you
on behalf of your customers in QPOs offered
through us. The "Average Wit Capital
Allocation" means the average number of
shares allocated to us by the lead managers
in QPOs in which we have acted as manager.
"Your Average Allocation" means the average
number of shares allocated to customers of
you in QPOs offered through us.
[_____________] (i) in respect of the twelve months ended
__________ ("Year Two"), we have failed to
offer you participation in at least "x" QPOs
in which we have commanded an allocation of
500,000 shares or more, where "x" equals the
number of QPOs completed during such year
period times ** percent
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********************************; or (ii) in
respect of Year Two, both (a) Your Average
Demand exceeded **** percent of the Average
Wit Capital Allocation and (b) Your Average
Allocation as a percentage of the Wit
Capital Allocation was less than ****
percent.
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*CONFIDENTIAL INFORMATION REQUESTED
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Notwithstanding the satisfaction of the triggering event described in sub-
paragraph (i) above as of any Termination Date, the restrictive covenants shall
not become null and void if, as of such Termination Date, in respect of the
twelve months ending on such Termination Date, we have been the leading manager
of e-syndicates in the domestic underwriting market in terms of both the numbers
of deals managed and the total number of shares allocated. Notwithstanding the
satisfaction of the triggering event described in sub-paragraph (ii) above as of
any Termination Date, the restrictive covenants shall not become null and void
if, as of such Termination Date, you shall have failed to make efforts on your
part as have been reasonably recommended by us for the purposes of facilitating
the dissemination of offering materials to your customers and the expeditious
filtering and transmittal of such orders to us. ********************************
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6.2 We agree, for a period of two/three years, provided we have obtained
the consent of the lead manager to invite you, and provided you are in
compliance with the terms and conditions of this Agreement, to invite you to
participate as a dealer in connection with each and every public offering of
securities in which we are the lead manager or a co-manager. For such
******** year period, we also agree to use our best efforts to obtain such lead
manager consent. We further agree that the selling concession offered by us to
you in any transaction shall not be (i) less than *** of the selling concession
in total or (ii) less than the selling concession offered by us to any other
member of our electronic syndicate.
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6.4 **********************************************************************
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6.5 You shall not be liable to pay for any Security to the extent that, in
response to an order from you or your customers, we (or any manager or
co-manager) fill such order with less than *** shares of such Security,
notwithstanding anything to the contrary herein.
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*CONFIDENTIAL INFORMATION REQUESTED
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6.6 This Agreement and each Advice shall be governed by and construed in
accordance with the laws of the State of New York.
Please confirm your acceptance of this Agreement by signing and returning
to us the enclosed duplicate copy hereof.
Very truly yours,
WIT CAPITAL CORPORATION
Confirmed and accepted
as of the date first written above
E-Mail Address:
Telephone:
Telecopy:
By:_____________________________
Title:
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*CONFIDENTIAL INFORMATION REQUESTED
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