Shares SUCCESSFACTORS, INC. COMMON STOCK, PAR VALUE $0.001 PER SHARE UNDERWRITING AGREEMENT
Exhibit 1.1
______________ Shares
COMMON STOCK, PAR VALUE $0.001 PER SHARE
______________, 2008
_____________, 2008
Xxxxxx Xxxxxxx & Co. Incorporated
Xxxxxxx, Xxxxx & Co.
Deutsche Bank Securities Inc.
Wachovia Capital Markets, LLC
Xxxxxxxxxxx & Co. Inc
Pacific Crest Securities Inc.
JMP Securities LLC
ThinkPanmure LLC
Broadpoint Capital, Inc.
c/o Morgan Xxxxxxx & Co. Incorporated
0000 Xxxxxxxx
Xxx Xxxx, XX 00000
Xxxxxxx, Xxxxx & Co.
Deutsche Bank Securities Inc.
Wachovia Capital Markets, LLC
Xxxxxxxxxxx & Co. Inc
Pacific Crest Securities Inc.
JMP Securities LLC
ThinkPanmure LLC
Broadpoint Capital, Inc.
c/o Morgan Xxxxxxx & Co. Incorporated
0000 Xxxxxxxx
Xxx Xxxx, XX 00000
Ladies and Gentlemen:
SuccessFactors, Inc., a Delaware corporation (the “Company”), proposes to issue and sell to
the several Underwriters named in Schedule II hereto (the “Underwriters”), and certain Stockholders
of the Company (the “Selling Stockholders”) named in Schedule I hereto severally propose to sell to
the several Underwriters, an aggregate of 7,540,612 shares of the common stock, par value $0.001
per share of the Company (the “Firm Shares”), of which 2,500,000 shares are to be issued and sold
by the Company and 5,040,612 shares are to be sold by the Selling Stockholders, each Selling
Stockholder selling the amount set forth opposite such Selling Stockholder’s name in Schedule I
hereto.
The Company also proposes to issue and sell to the several Underwriters, and the Selling
Stockholders severally propose to sell to the several Underwriters, not more than an additional
1,131,091 shares of its common stock, par value $0.001 per share, in the aggregate (the “Additional
Shares”), of which up to 885,380 shares are to be issued and sold by the Company (the “Company
Additional Shares”) and up to 245,711 shares are to be sold by the Selling Stockholders, each
Selling Stockholder selling up to the amount set forth opposite such Selling Stockholder’s name in
Schedule I hereto, if and to the extent that Xxxxxx Xxxxxxx & Co. Incorporated (“Xxxxxx Xxxxxxx”)
and Xxxxxxx, Xxxxx & Co., as managers of the offering (collectively, the “Managers”), shall have
determined to exercise, on behalf of the Underwriters, the right to purchase such shares of common
stock granted to the Underwriters in Section 3 hereof. The Firm Shares and the Additional Shares
are hereinafter collectively referred to as the “Shares.” The shares of common stock, par value
$0.001 per share, of the Company to be outstanding after giving effect to the sales contemplated
hereby are hereinafter referred to as the “Common Stock.” The Company and the
Selling Stockholders are hereinafter sometimes collectively referred to as the “Sellers.”
The Company has filed with the Securities and Exchange Commission (the “Commission”) a
registration statement, 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 (or in
the form first made available to the Underwriters by the Company to meet requests of purchasers
pursuant to Rule 173 under the Securities Act) is hereinafter referred to as the “Prospectus.” If
the Company has filed an abbreviated 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.
For purposes of this Agreement, “free writing prospectus” has the meaning set forth in Rule
405 under the Securities Act, “Time of Sale Prospectus” means the preliminary prospectus together
with the free writing prospectuses, if any, each identified in Schedule III hereto, and “road show”
means a “road show” as defined in Rule 433(h)(4) under the Securities Act that has been made
available without restriction to any person. As used herein, the terms “Registration Statement,”
“preliminary prospectus,” “Time of Sale Prospectus” and “Prospectus” shall include the documents,
if any, incorporated by reference therein.
1. Representations and Warranties of the Company. The Company represents and warrants to and
agrees with each of the Underwriters that:
(a) The Registration Statement has become effective; no stop order suspending the
effectiveness of the Registration Statement is in effect, and no proceedings for such purpose are
pending before or, to the Company’s knowledge, threatened by the Commission.
(b) (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, (iii) the Time of Sale Prospectus
does not, and at the time of each sale of the Shares in connection with the offering when the
Prospectus is not yet available to prospective purchasers and at the Closing Date (as defined in
Section 5), the Time of Sale Prospectus, as then amended or supplemented by the
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Company, 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, (iv) each road show, if any, when considered together
with the Time of Sale Prospectus, does 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, (v) 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 and (vi) each document filed by the
Company pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”), including
all documents incorporated by reference in the Registration Statement, the Time of Sale Prospectus
and the Prospectus, complied or will comply in all material respects with the Exchange Act and
applicable rules and regulations of the Commission thereunder, except that the representations and
warranties set forth in this paragraph do not apply to statements or omissions in the Registration
Statement, the Time of Sale Prospectus or the Prospectus based upon information relating to any
Underwriter furnished to the Company in writing by such Underwriter through the Managers expressly
for use therein.
(c) The Company is not an “ineligible issuer” in connection with the offering pursuant to
Rules 164, 405 and 433 under the Securities Act. Any free writing prospectus that the Company is
required to file pursuant to Rule 433(d) under the Securities Act has been, or will be, filed with
the Commission in accordance with the requirements of the Securities Act and the applicable rules
and regulations of the Commission thereunder. Each free writing prospectus that the Company has
filed, or is required to file, pursuant to Rule 433(d) under the Securities Act or that was
prepared by or behalf of or used or referred to by the Company complies or will comply in all
material respects with the requirements of the Securities Act and the applicable rules and
regulations of the Commission thereunder. Except for the free writing prospectuses, if any,
identified in Schedule III hereto, and electronic road shows, if any, each furnished to the
Managers before first use, the Company has not prepared, used or referred to, and will not, without
the Managers’ prior consent, prepare, use or refer to, any free writing prospectus.
(d) The Company has been duly incorporated, is validly existing as a corporation in good
standing under the laws of the State of Delaware, has the corporate power and authority to own its
property and to conduct its business as described in the Time of Sale Prospectus and is duly
qualified to transact business and is in good standing in each jurisdiction, to the extent that the
concept of “good standing” is applicable under the laws of such jurisdiction, in which the conduct
of its business or its ownership or leasing of property requires such qualification, except to the
extent that the failure to be so qualified or be in good standing would not have a material adverse
effect on the Company and its subsidiaries, taken as a
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whole. The Company has no subsidiaries that are “significant subsidiaries.” For purposes of
this Section (d) a “significant subsidiary” shall be deemed to include a subsidiary in which (i)
the assets of the subsidiary exceed five percent (5%) of the total assets of the Company and its
subsidiaries on a consolidated basis, (ii) the revenues of the subsidiary for the most recently
completed fiscal year exceed five percent (5%) of the total revenues of the Company and its
subsidiaries on a consolidated basis for the most recently completed fiscal year or (iii) the
number of employees of the subsidiary exceed five percent (5%) of the total number of employees of
the Company and its subsidiaries on a consolidated basis.
(e) Each subsidiary of the Company has been duly incorporated, is validly existing as a
corporation in good standing under the laws of the jurisdiction of its incorporation, to the extent
that the concept of “good standing” is applicable under the laws of such jurisdiction, has the
corporate power and authority to own its property and to conduct its business as described in the
Time of Sale Prospectus and is duly qualified to transact business and is in good standing in each
jurisdiction, to the extent that the concept of “good standing” is applicable under the laws of
such jurisdiction, in which the conduct of its business or its ownership or leasing of property
requires such qualification, except to the extent that the failure to be so qualified or be in good
standing would not have a material adverse effect on the Company and its subsidiaries, taken as a
whole; all of the issued shares of capital stock 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 (except for directors’ qualifying or substantially similar shares), and, except as
described in the Time of Sale Prospectus and the Prospectus, are free and clear of all liens,
encumbrances, equities or claims.
(f) This Agreement has been duly authorized, executed and delivered by the Company.
(g) The authorized capital stock of the Company conforms as to legal matters to the
description thereof contained in the Section entitled “Description of Capital Stock” in each of the
Time of Sale Prospectus and the Prospectus.
(h) The shares of Common Stock (including the Shares to be sold by the Selling Stockholders)
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.
(i) The Shares to be sold by the Company have been duly authorized and, when issued and
delivered in accordance with the terms of this Agreement, will be validly issued, fully paid and
non-assessable, and the issuance of such Shares will not be subject to any preemptive or similar
rights.
(j) 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 (i) applicable law, (ii) the
certificate of incorporation
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or by-laws of the Company, (iii) 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
(iv) any judgment, order or decree of any governmental body, agency or court having jurisdiction
over the Company or any subsidiary, except for any such contravention described in clauses (iii) or
(iv) as would not have a material adverse effect or a prospective material adverse effect on the
condition, financial or otherwise, or in the earnings, business or operations of the Company and
its subsidiaries taken as a whole (a “material adverse effect”), and no consent, approval,
authorization or order of, or qualification with, any governmental body or agency is required to be
obtained by the Company or any of its subsidiaries 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.
(k) There has not occurred any material adverse change, or any development involving a
prospective 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 Time of Sale Prospectus.
(l) There are no legal or governmental proceedings pending or, to the Company’s knowledge,
threatened to which the Company or any of its subsidiaries is a party or to which any of the
properties of the Company or any of its subsidiaries is subject (i) other than proceedings
accurately described in all material respects in the Time of Sale Prospectus and proceedings that
would not have a material adverse effect on the Company and its subsidiaries, taken as a whole, or
on the power or ability of the Company to perform its obligations under this Agreement or to
consummate the transactions contemplated by the Time of Sale Prospectus or (ii) that are required
to be described in the Registration Statement, the Time of Sale Prospectus or the Prospectus and
are not so described; and there are no statutes, regulations, contracts or other documents that are
required to be described in the Registration Statement, the Time of Sale Prospectus or the
Prospectus or to be filed as exhibits to the Registration Statement that are not described or filed
as required.
(m) 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.
(n) 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, required to
register as an “investment company” as such term is defined in the Investment Company Act of 1940,
as amended.
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(o) The Company and its subsidiaries (i) are in compliance with any and all applicable
foreign, federal, state and local laws and regulations relating to the protection of human health
and safety, the environment or hazardous or toxic substances or wastes, pollutants or contaminants
(“Environmental Laws”), (ii) 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, singly or in the aggregate, have a material adverse effect on the Company and its
subsidiaries, taken as a whole.
(p) 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, singly or in the
aggregate, have a material adverse effect on the Company and its subsidiaries, taken as a whole.
(q) There are no contracts, agreements or understandings between the Company and any person
granting such person the right to require the Company to file a registration statement under the
Securities Act with respect to any securities of the Company or to require the Company to include
such securities with the Shares registered pursuant to the Registration Statement, except as
otherwise have been waived in connection with the issuance and sale of the Shares contemplated
hereby.
(r) Subsequent to the respective dates as of which information is given in each of the
Registration Statement, the Time of Sale Prospectus 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; (ii) the Company has not purchased any of its outstanding
capital stock, nor declared, paid or otherwise made any dividend or distribution of any kind on its
capital stock other than (x) ordinary and customary dividends and (y) the repurchase of options or
shares of Common Stock by the Company at cost that were granted to employees, officers, directors,
advisors or consultants of the Company pursuant to employee benefit plans described in the Time of
Sale Prospectus or agreements to provide employment or consulting services to the Company and that
are not material in amount; and (iii) there has not been any material change in the capital stock,
short-term debt or long-term debt of the Company and its subsidiaries, except in each case as
described in each of the Registration Statement, the Time of Sale Prospectus and the Prospectus,
respectively.
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(s) The Company and its subsidiaries have good and marketable title in fee simple to all real
property and good and marketable title to all tangible 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 Time of Sale 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 materially
interfere with the use made and proposed to be made of such property and buildings by the Company
and its subsidiaries, in each case except as described in the Time of Sale Prospectus.
(t) Except as described in the Time of Sale Prospectus, the Company and its subsidiaries own
or possess, or can acquire on reasonable terms, all material patents, patent rights, licenses,
inventions, copyrights, know-how (including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures), trademarks, service marks and
trade names currently employed by them in connection with the business now operated by them, and
neither the Company nor any of its subsidiaries has received any notice of infringement of or
conflict with asserted rights of others with respect to any of the foregoing which, singly or in
the aggregate, if the subject of an unfavorable decision, ruling or finding, would reasonably be
expected to have a material adverse effect on the Company and its subsidiaries, taken as a whole.
(u) No material labor dispute with the employees of the Company or any of its subsidiaries
exists, except as described in the Time of Sale Prospectus, or, to the knowledge of the Company, is
imminent; and the Company is not aware of any existing, threatened or imminent labor disturbance by
the employees of any of its principal suppliers, manufacturers or contractors that could have a
material adverse effect on the Company and its subsidiaries, taken as a whole.
(v) The Company and each of its subsidiaries are insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as are in the reasonable opinion
of management prudent and customary in the businesses in which they are engaged; neither the
Company nor any of its subsidiaries has been refused any insurance coverage sought or applied for;
and neither the Company nor any of its subsidiaries 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 reasonably be expected to have a material adverse effect on the Company and its
subsidiaries, taken as a whole, except as described in the Time of Sale Prospectus.
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(w) 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 obtain such certificate, authorization or
permit would not individually or in the aggregate have 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, singly 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, except as described in the Time of Sale Prospectus.
(x) The Company and each of its subsidiaries maintain a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions are executed in accordance with
management’s general or specific authorizations; (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally accepted accounting
principles in the United States 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. Except as described in the Time of
Sale Prospectus, since the end of the Company’s most recent audited fiscal year, there has been (i)
no material weakness in the Company’s internal control over financial reporting (whether or not
remediated) and (ii) no change in the Company’s internal control over financial reporting that has
materially affected, or is reasonably likely to materially affect, the Company’s internal control
over financial reporting.
(y) The Company maintains a system of “disclosure controls and procedures” (as defined in Rule
13a-15(e) of the Exchange Act) that is designed to ensure that information required to be disclosed
by the Company in reports that it files or submits under the Exchange Act is recorded, processed,
summarized and controls and procedures designed to ensure that such information is accumulated and
communicated to the Company’s management as appropriate to allow timely decision regarding required
disclosure; and such disclosure controls and procedures are effective.
(z) Except as described in the Time of Sale Prospectus or the Registration Statement, the
Company has not sold, issued or distributed any shares of Common Stock during the six-month period
preceding the date hereof, including any sales pursuant to Rule 144A under, or Regulation D or S
of, the Securities Act, other than shares issued pursuant to employee benefit plans, qualified
stock option plans or other employee compensation plans or pursuant to outstanding options, rights
or warrants.
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(aa) Xxxxx & Young LLP, which has expressed its opinion with respect to certain of the
financial statements of the Company filed with the Commission as a part of the Registration
Statement and included in each of the Time of Sale Prospectus and the Prospectus, is a registered
public accounting firm as required by the Securities Act.
(bb) The financial statements of the Company filed with the Commission as a part of the
Registration Statement and included in each of the Time of Sale Prospectus and the Prospectus
present fairly in all material respects the consolidated financial position of the Company and its
Subsidiaries as of the dates indicated and the results of their operations and cash flows for the
periods specified. Such financial statements have been prepared in conformity with generally
accepted accounting principles as applied in the United States applied on a consistent basis
throughout the periods involved. The financial data set forth in the Prospectus under the captions
“Prospectus Summary — Summary Consolidated Financial Data”, “Capitalization”, “Selected
Consolidated Financial Data” and “Management’s Discussion and Analysis of Financial Condition and
Results of Operations — Quarterly Results of Operations” present fairly the information set forth
therein on a basis consistent with that of the audited financial statements contained in the
Registration Statement, the Time of Sale Prospectus and the Prospectus.
(cc) There are no transactions or loans between the Company and any holder of 5% or more of
the Common Stock, any director, any director nominee or any executive officer, or members of such
individuals’ immediate families, or any enterprise in which a substantial interest in the voting
power is owned, directly or indirectly, by any of such individuals that are required to be
disclosed in the Time of Sale Prospectus other than those described in the Time of Sale Prospectus.
In particular, to the Company’s knowledge, no such person or entity (i) has any direct or indirect
ownership interest in, or any employment or consulting agreement with, any firm or corporation that
competes with the Company, (ii) is directly or indirectly interested in any contract with the
Company, except for compensation and standard benefits for services as a director, officer or
employee that is disclosed in the Time of Sale Prospectus (to the extent it is required to be
disclosed), (iii) has any ownership interest in any property, real or personal, tangible or
intangible, used in the Company’s business, except for the normal rights of a stockholder, or (iv)
has, either directly or indirectly, a material interest in any person which purchases from or
sells, licenses or furnishes to Company any goods, property, technology or intellectual or other
property rights or services (except in the case of (i) — (iv) above, with respect to any interest
of less than 5% of the outstanding voting shares of any corporation whose stock is publicly traded.
(dd) The Company is in compliance with all provisions of the Xxxxxxxx-Xxxxx Act of 2002 and
all rules and regulations promulgated thereunder or implementing the provisions thereof (the
“Xxxxxxxx-Xxxxx Act”) that are
9
currently in effect and which the Company is required to comply with as of the date hereof,
and the Company is actively taking steps to ensure that it will be in compliance with other
provisions of the Xxxxxxxx-Xxxxx Act not currently in effect, upon the effectiveness of such
provisions, or which will become applicable to the Company at all times after the date hereof.
(ee) All United States federal income tax returns of the Company and its subsidiaries required
by law to be filed have been filed and all taxes shown by such returns or otherwise assessed, which
are due and payable, have been paid, except assessments against which appeals have been or will be
promptly taken and as to which adequate reserves have been provided. The Company has not been
notified by the Internal Revenue Service (the “IRS”) that any of its United States federal income
tax returns are being audited or otherwise reviewed by the IRS. The Company and its subsidiaries
have filed all other tax returns that are required to have been filed by them pursuant to
applicable foreign, state, local or other law except insofar as the failure to file such returns
would not, singly or in the aggregate, result in a material adverse effect on the Company and its
subsidiaries taken as a whole, and has paid all taxes due pursuant to such returns or pursuant to
any assessment received by the Company and its subsidiaries, except for such taxes, if any, as are
being contested in good faith and as to which adequate reserves have been provided. The charges,
accruals and reserves on the books of the Company in respect of any income and corporation tax
liability for any years not finally determined are adequate to meet any assessments or
re-assessments for additional income tax for any years not finally determined, except to the extent
of any inadequacy that would not, singly or in the aggregate, have a material adverse effect on the
Company and its subsidiaries taken as a whole.
(ff) Any statistical and market-related data included in the Registration Statement, the Time
of Sale Prospectus and the Prospectus are based on or derived from sources that the Company
reasonably believes to be reliable and accurate, and is consistent with the sources from which they
are derived.
(gg) Neither the Company nor, to the knowledge of the Company, any director, officer, agent,
employee, affiliate or other person acting on behalf of the Company or any of its subsidiaries is
aware of or has taken any action, directly or indirectly, that would reasonably be expected to
result in a violation, by such persons of the Foreign Corrupt Practices Act of 1977, as amended,
and the rules and regulations thereunder (the “FCPA”), including, without limitation, making use of
the mails or any means or instrumentality of interstate commerce corruptly in furtherance of an
offer, payment, promise to pay or authorization of the payment of any money, or other property,
gift, promise to give, or authorization of the giving of anything of value to any “foreign
official” (as such term is defined in the FCPA) or any foreign political party or official thereof
or any candidate for foreign political office, in contravention of the FCPA and the Company and, to
the knowledge of the Company, its affiliates have conducted their businesses in compliance with the
FCPA and have instituted and maintain
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policies and procedures designed to ensure, and which are reasonably expected to continue to
ensure, continued compliance therewith.
(hh) The operations of the Company are and have been conducted at all times in compliance with
applicable financial recordkeeping and reporting requirements of the Currency and Foreign
Transactions Reporting Act of 1970, as amended, the money laundering statutes of all jurisdictions,
the rules and regulations thereunder and any related or similar rules, regulations or guidelines,
issued, administered or enforced by any governmental agency (collectively, the “Money Laundering
Laws”) and no action, suit or proceeding by or before any court or governmental agency, authority
or body or any arbitrator involving the Company with respect to the Money Laundering Laws is
pending or, to the best knowledge of the Company, threatened.
(ii) Neither the Company nor, to the knowledge of the Company, any director, officer, agent,
employee, affiliate or person acting on behalf of the Company is currently subject to any U.S.
sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury Department
(“OFAC”); and the Company will not directly or indirectly use the proceeds of the offering, or
lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture partner
or other person or entity, for the purpose of financing the activities of any person currently
subject to any U.S. sanctions administered by OFAC.
(jj) The Company is eligible to incorporate by reference documents filed by the Company
pursuant to the Exchange Act in accordance with General Instruction VII of Form S-1 for the purpose
of registering the Shares under the Securities Act.
2. Representations and Warranties of the Selling Stockholders. Each Selling Stockholder
represents and warrants to and agrees with each of the Underwriters that:
(a) This Agreement has been duly authorized, executed and delivered by or on behalf of such
Selling Stockholder.
(b) The execution and delivery by such Selling Stockholder of, and the performance by such
Selling Stockholder of its obligations under, this Agreement, the Custody Agreement signed by such
Selling Stockholder and Computershare Trust Company, N.A., as Custodian, relating to the deposit of
the Shares to be sold by such Selling Stockholder (the “Custody Agreement”) and the Power of
Attorney appointing certain individuals as such Selling Stockholder’s attorneys-in-fact to the
extent set forth therein, relating to the transactions contemplated hereby and by the Registration
Statement (the “Power of Attorney”) will not contravene any provision of applicable law, or the
certificate of incorporation or by-laws of such Selling Stockholder (if such Selling Stockholder is
a corporation), or any agreement or other instrument binding upon such Selling Stockholder or any
judgment, order or decree of any governmental
11
body, agency or court having jurisdiction over such Selling Stockholder, and no consent,
approval, authorization or order of, or qualification with, any governmental body or agency is
required for the performance by such Selling Stockholder of its obligations under this Agreement or
the Custody Agreement or Power of Attorney of such Selling Stockholder, 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.
(c) Such Selling Stockholder has, and on the Closing Date will have, valid title to, or a
valid “security entitlement” within the meaning of Section 8-501 of the New York Uniform Commercial
Code in respect of, the Shares to be sold by such Selling Stockholder free and clear of all
security interests, claims, liens, equities or other encumbrances and the legal right and power,
and all authorization and approval required by law, to enter into this Agreement, the Custody
Agreement and the Power of Attorney and to sell, transfer and deliver the Shares to be sold by such
Selling Stockholder or a security entitlement in respect of such Shares.
(d) The Custody Agreement and the Power of Attorney have been duly authorized, executed and
delivered by such Selling Stockholder and are valid and binding agreements of such Selling
Stockholder.
(e) Upon payment for the Shares to be sold by such Selling Stockholder pursuant to this
Agreement, delivery of such Shares, as directed by the Underwriters, to Cede & Co. (“Cede”) or such
other nominee as may be designated by the Depository Trust Company (“DTC”), registration of such
Shares in the name of Cede or such other nominee and the crediting of such Shares on the books of
DTC to securities accounts of the Underwriters (assuming that neither DTC nor any such Underwriter
has notice of any adverse claim (within the meaning of Section 8-105 of the New York Uniform
Commercial Code (the “UCC”)) to such Shares), (A) DTC shall be a “protected purchaser” of such
Shares within the meaning of Section 8-303 of the UCC, (B) under Section 8-501 of the UCC, the
Underwriters will acquire a valid security entitlement in respect of such Shares and (C) no action
based on any “adverse claim”, within the meaning of Section 8-102 of the UCC, to such Shares may be
asserted against the Underwriters with respect to such security entitlement; for purposes of this
representation, such Selling Stockholder may assume that when such payment, delivery and crediting
occur, (x) such Shares will have been registered in the name of Cede or another nominee designated
by DTC, in each case on the Company’s share registry in accordance with its certificate of
incorporation, bylaws and applicable law, (y) DTC will be registered as a “clearing corporation”
within the meaning of Section 8-102 of the UCC and (z) appropriate entries to the accounts of the
several Underwriters on the records of DTC will have been made pursuant to the UCC.
12
(f) Such Selling Stockholder is not prompted to sell the Shares to be sold by him hereunder by
any information concerning the Company or its subsidiaries which is not set forth in the Time of
Sale Prospectus to sell its Shares pursuant to this Agreement.
(g) (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, (iii) the Time of Sale Prospectus
does not, and at the time of each sale of the Shares in connection with the offering when the
Prospectus is not yet available to prospective purchasers and at the Closing Date (as defined in
Section 5), the Time of Sale Prospectus, as then amended or supplemented by the Company, 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, (iv) each broadly available road show, if any, when considered together
with the Time of Sale Prospectus, does 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 and (v) 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 only apply to statements or omissions in the Registration
Statement, the Time of Sale Prospectus or the Prospectus based upon information relating to such
Selling Stockholder furnished to the Company in writing by such Selling Stockholder expressly for
use therein.
3. Agreements to Sell and Purchase. Each Seller, severally and not jointly, hereby agrees to
sell to the several Underwriters, and each Underwriter, upon the basis of the representations and
warranties herein contained, but subject to the conditions hereinafter stated, agrees, severally
and not jointly, to purchase from such Seller at $___a share (the “Purchase Price”) the number
of Firm Shares (subject to such adjustments to eliminate fractional shares as you may determine)
that bears the same proportion to the number of Firm Shares to be sold by such Seller as the number
of Firm Shares set forth in Schedule II hereto opposite the name of such Underwriter bears to the
total number of Firm 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 Company Additional
Shares and certain Selling Stockholders (the “Option Stockholders”) agree to sell to the
Underwriters the
13
number of Additional Shares set forth opposite such Selling Stockholders’ names on Schedule I
hereto, and the Underwriters shall have the right to purchase, severally and not jointly, up to
1,131,091 Additional Shares at the Purchase Price. Xxxxxx Xxxxxxx may exercise this right on
behalf of the Underwriters in whole or from time to time in part by giving written notice not later
than 30 days after the date of this Agreement. Any exercise 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. Each purchase date must be at least one business day after the written notice is given
and may not be earlier than the closing date for the Firm Shares nor later than ten business days
after the date of such notice. Additional Shares may be purchased as provided in Section 5 hereof
solely for the purpose of covering over-allotments made in connection with the offering of the Firm
Shares. On each day, if any, that Additional Shares are to be purchased (an “Option Closing
Date”), each Underwriter agrees, severally and not jointly, to purchase the number of Additional
Shares (subject to such adjustments to eliminate fractional shares as Xxxxxx Xxxxxxx may determine)
that bears the same proportion to the total number of Additional Shares to be purchased on such
Option Closing Date as the number of Firm Shares set forth in Schedule II hereto opposite the name
of such Underwriter bears to the total number of Firm Shares. In the event of a partial exercise
of the over-allotment option, the Option Stockholders shall sell, severally and not jointly,
Additional Shares to the Underwriters prior to the sale of any Company Additional Shares and
ratably in proportion to the maximum number of Additional Shares that may be sold by the Option
Stockholders to the Underwriters hereunder, and the Company shall sell the Company Additional
Shares to the Underwriters only after the sale of all Additional Shares by the Option Stockholders.
Each Seller hereby agrees that, without the prior written consent of Xxxxxx Xxxxxxx on behalf
of the Underwriters, it will not, during the period ending 90 days after the date of 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 or (3) file any registration statement with the Commission relating to the offering of
any shares of Common Stock or any securities convertible into or exercisable or exchangeable for
Common Stock.
The restrictions contained in the preceding paragraph 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 an
option or warrant or the conversion of a security outstanding on the date hereof, which are
disclosed in the Prospectus,
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(c) the issuance by the Company of shares of, or options to purchase shares of, Common Stock to
employees, officers, directors, advisors or consultants of the Company pursuant to employee benefit
plans described in the Prospectus, provided that, prior to the issuance of any such shares or the
grant of any such options where the shares subject to such option vest within the period ending 90
days after the date of the Prospectus, the Company shall cause each recipient of such grant or
issuance to execute and deliver to you a “lock-up” agreement, substantially in the form of Exhibit
A hereto, (d) the filing by the Company of registration statements on Form S-8, (e) transactions by
a Selling Stockholder relating to shares of Common Stock or other securities acquired in open
market transactions, provided that no filing under Section 16(a) of the Exchange Act, shall be
required or shall be voluntarily made in connection with subsequent sales of Common Stock or other
securities acquired in such open market transactions, (f) transfers by a Selling Stockholder of
shares of Common Stock or any security convertible into Common Stock as a bona fide gift; provided
that in the case of any transfer or distribution pursuant to clause (f), (1) each donee shall enter
into a written agreement accepting the restrictions set forth in the preceding paragraph and this
paragraph as if it were a Selling Stockholder and (2) no filing under Section 16(a) of the Exchange
Act, reporting a reduction in beneficial ownership of shares of Common Stock, shall be required or
shall be voluntarily made in respect of the transfer during the 90-day restricted period, (g) the
establishment of a trading plan pursuant to Rule 10b5-1 under the Exchange Act, for the transfer of
shares of Common Stock, provided that such plan does not provide for the transfer of Common Stock
during the 90-day restricted period, or (h) sales of Common Stock by the undersigned pursuant to
any such trading plan established before the date hereof, provided that the formula, algorithm or
computer program is not modified during the restricted period so as to increase the number of
shares of Common Stock that can be sold pursuant to the plan during the 90-day restricted period.
In addition, each Selling Stockholder, agrees that, without the prior written consent of the
Managers on behalf of the Underwriters, it will not, during the period ending 90 days after the
date of the Prospectus, make any demand for, or exercise any right with respect to, the
registration of any shares of Common Stock or any security convertible into or exercisable or
exchangeable for Common Stock. Each Selling Stockholder consents to the entry of stop transfer
instructions with the Company’s transfer agent and registrar against the transfer of any Shares
held by such Selling Stockholder except in compliance with the foregoing restrictions.
Notwithstanding the foregoing, if (1) during the last 17 days of the 90-day restricted period the
Company issues an earnings release or material news or a material event relating to the Company
occurs; or (2) prior to the expiration of the 90-day restricted period, the Company announces that
it will release earnings results during the 16-day period beginning on the last day of the 90-day
period, the restrictions imposed by this agreement shall continue to apply until the expiration of
the 18-day period beginning on the issuance of the earnings release or the occurrence of the
material news or material event. The Company shall promptly notify the Managers of any earnings
release, news or event that may give rise to an extension of the initial 90-day restricted period.
15
4. Terms of Public Offering. The Sellers are advised by the Managers 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 the Managers’ judgment is
advisable. The Sellers are further advised by the Managers that the Shares are to be offered to
the public initially at $___a share (the “Public Offering Price”) and to certain dealers
selected by the Managers at a price that represents a concession not in excess of $___a share
under the Public Offering Price.
5. Payment and Delivery. Payment for the Firm Shares to be sold by each Seller shall be made
to such Seller in Federal or other funds immediately available in New York City against delivery of
such Firm Shares for the respective accounts of the several Underwriters at 10:00 a.m., New York
City time, on ___, 2008, or at such other time on the same or such other date, not later
than ___, 2008, as shall be designated in writing by the Managers. The time and date of
such payment are hereinafter referred to as the “Closing Date.”
Payment for any Additional Shares shall be made to the Company and the Option Stockholders in
Federal or other funds immediately available 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 corresponding notice described in Section 3 or at such other time on
the same or on such other date, in any event not later than ___, 2008, as shall be
designated in writing by Xxxxxx Xxxxxxx.
The Firm Shares and Additional Shares shall be registered in such names and in such
denominations as the Managers or Xxxxxx Xxxxxxx, as applicable, shall request in writing not later
than one full business day prior to the Closing Date or the applicable Option Closing Date, as the
case may be. The Firm Shares and Additional Shares shall be delivered to the Managers or Xxxxxx
Xxxxxxx, as applicable, on the Closing Date or an Option Closing Date, as the case may be, for the
respective accounts of the several Underwriters, with any transfer taxes payable in connection with
the transfer of the Shares to the Underwriters duly paid, against payment of the Purchase Price
therefor.
6. Conditions to the Underwriters’ Obligations. The obligations of the Sellers to sell the
Shares to the Underwriters and the several obligations of the Underwriters to purchase and pay for
the Shares on the Closing Date are subject to the condition that the Registration Statement shall
have become effective not later than ___(New York City time) on the date hereof.
The several obligations of the Underwriters are subject to the following further conditions:
(a) Subsequent to the execution and delivery of this Agreement and prior to the Closing Date:
16
(i) there shall not have occurred any downgrading, nor shall any notice have been
given of any intended or potential downgrading or of any review for a possible change that
does not indicate the direction of the possible change, in the rating accorded any of the
securities of the Company or any of its subsidiaries by any “nationally recognized
statistical rating organization,” as such term is defined for purposes of Rule 436(g)(2)
under the Securities Act; and
(ii) 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 Time of Sale Prospectus as of the date of this Agreement that, in the Managers’
judgment, is material and adverse and that makes it, in the Managers’ judgment,
impracticable and inadvisable to market the Shares on the terms and in the manner
contemplated in the Time of Sale Prospectus.
(b) The Underwriters shall have received on the Closing Date a certificate, dated the Closing
Date and signed by an executive officer of the Company, to the effect set forth in Section 6(a)(i)
above 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.
The officer signing and delivering such certificate on behalf of the Company may rely upon of
his or her knowledge as to proceedings threatened.
(c) The Underwriters shall have received on the Closing Date an opinion of Xxxxxxx & West,
LLP, outside counsel for the Company, dated the Closing Date, to the effect that:
(i) the Company has been duly incorporated, is validly existing as a corporation in
good standing under the laws of the State of Delaware, has the corporate power and
authority to own its property and to conduct its business as described in the Time of Sale
Prospectus and is duly qualified to transact business and is in good standing in each
jurisdiction in which the conduct of its business or its ownership or leasing of property
requires such qualification, except to the extent that the failure to be so qualified or
be in good standing would not have a material adverse effect on the Company and its
subsidiaries, taken as a whole;
(ii) the authorized capital stock of the Company conforms as to legal matters to the
description thereof contained in each of the Time of Sale Prospectus and the Prospectus
under the captions “Capitalization” and “Description of Capital Stock;”
17
(iii) the shares of Common Stock (including the Shares to be sold by the Selling
Stockholders) outstanding prior to the issuance of the Shares to be sold by the Company
have been duly authorized and are validly issued and non-assessable and, to such counsel’s
knowledge, fully-paid;
(iv) the Shares to be sold by the Company have been duly authorized and, when issued
and delivered in accordance with the terms of this Agreement, will be validly issued,
fully paid and non-assessable, and the issuance of such Shares will not be subject to any
preemptive or similar rights set forth in the Company’s certificate or incorporation or
bylaws or any agreement filed or incorporated by reference as an exhibit to the
Registration Statement;
(v) this Agreement has been duly authorized by all requisite corporate action on the
part of the Company, executed and delivered by the Company;
(vi) the execution and delivery by the Company of, and the performance by the Company
of its obligations under, this Agreement will not contravene any provision of United
States federal law, California law or the DGCL or the certificate of incorporation or
by-laws of the Company or any agreement or other instrument binding upon the Company or
any of its subsidiaries that is filed or incorporated by reference as an exhibit to the
Registration Statement, or, to such counsel’s knowledge, 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;
(vii) the statements relating to legal matters, documents or proceedings included in
(A) the Time of Sale Prospectus and the Prospectus under the captions “Certain
Relationships and Related Party Transactions” and “Description of Capital Stock,” (B) the
Company’s Definitive Proxy Statement filed with the Commission on April 22, 2008 under the
captions “Membership and Meetings of Board of Directors and Board Committees” (solely as
it relates to summaries of the responsibilities of the committees), “Executive
Compensation — Employment and Change of Control Arrangements,” and “Transactions with
Related Persons,” and (C) the Prospectus under the caption “Underwriters” and (D) the
Registration Statement in Items 14 and 15, in each case fairly summarize in all material
respects such matters, documents or proceedings;
18
(viii) To such counsel’s knowledge, there are no legal or governmental proceedings
pending or threatened to which the Company or any of 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, the Time of Sale Prospectus or the
Prospectus and there are no statutes, regulations, contracts or other documents that are
required to be described in the Registration Statement, the Time of Sale Prospectus or the
Prospectus or to be filed as exhibits to the Registration Statement that are not described
or filed as required;
(ix) 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, required to register as an “investment company” as such term is defined in the
Investment Company Act of 1940, as amended; and
(x) the Registration Statement and the Prospectus (except for the financial
statements and financial schedules and other financial and statistical data included
therein, as to which such counsel need not express any opinion) appear on their face to be
appropriately responsive in all material respects to the requirements of the Securities
Act and the applicable rules and regulations of the Commission thereunder.
In addition, the opinion shall include a statement from such counsel to the effect
that nothing has come to the attention of such counsel that causes such counsel to believe
that (1) the Registration Statement or the prospectus included therein (except for the
financial statements and financial schedules and other financial and accounting data
included therein, as to which such counsel need not express any belief) at the time the
Registration Statement became effective contained any untrue statement of a material fact
or omitted to state a material fact required to be stated therein or necessary to make the
statements therein not misleading, (2) the Time of Sale Prospectus (except for the
financial statements and financial schedules and other financial and accounting data
included therein, as to which such counsel need not express any belief) as of the date of
this Agreement or as amended or supplemented, if applicable, as of the Closing Date
contained or contains any untrue statement of a material fact or omitted or omits to state
a material fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading or (3) the Prospectus (except for
the financial statements and financial schedules and other financial and accounting data
included therein, as to which such counsel need not express any belief) as of its date or
as amended or supplemented, if applicable, as of the Closing Date contained or contains
any untrue statement of a material fact or omitted or omits to state a
19
material fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(d) The Underwriters shall have received on the Closing Date an opinion of Xxxxxxx & West,
LLP, counsel for the Selling Stockholders, dated the Closing Date, to the effect that:
(i) this Agreement has been duly authorized, executed and delivered by or on behalf
of each of the Selling Stockholders
(ii) the Custody Agreement and the Power of Attorney of each Selling Stockholder have
been duly authorized, executed and delivered by such Selling Stockholder and are valid and
binding agreements of such Selling Stockholder;
(iii) the execution and delivery by each Selling Stockholder of, and the performance
by such Selling Stockholder of its obligations under, this Agreement and the Custody
Agreement and Powers of Attorney of such Selling Stockholder will not contravene any
provision of applicable law, or the certificate of incorporation or by-laws of such
Selling Stockholder (if such Selling Stockholder is a corporation), or, to such counsel’s
knowledge, any agreement or other instrument binding upon such Selling Stockholder or, to
such counsel’s knowledge, any judgment, order or decree of any governmental body, agency
or court having jurisdiction over such Selling Stockholder, and no consent, approval,
authorization or order of, or qualification with, any governmental body or agency is
required for the performance by such Selling Stockholder of its obligations under this
Agreement or the Custody Agreement or Power of Attorney of such Selling Stockholder,
except such as may be required by the securities or Blue Sky laws of the various states in
connection with offer and sale of the Shares;
(iv) each of the Selling Stockholders has the legal right and power, and all
authorization and approval required by law, to enter into this Agreement and the Custody
Agreement and Power of Attorney of such Selling Stockholder and to sell, transfer and
deliver the Shares to be sold by such Selling Stockholder or a security entitlement in
respect of such Shares;
(v) upon payment for the Shares to be sold by the Selling Stockholders pursuant to
this Agreement, delivery of such Shares, as directed by the Underwriters, to Cede or such
other nominee as may be designated by DTC, registration of such Shares in the name of Cede
or such other nominee and the crediting of such Shares on the books of DTC to securities
accounts of the Underwriters (assuming that neither DTC nor any such Underwriter has
notice of any adverse claim within the meaning of Section 8-105 of the UCC to such
Shares), (A) DTC shall be a
20
“protected purchaser” of such Shares within the meaning of Section 8-303 of the UCC,
(B) under Section 8-501 of the UCC, the Underwriters will acquire a valid security
entitlement in respect of such Shares and (C) no action based on any “adverse claim”
(within the meaning of Section 8-102 of the UCC) to such Shares may be asserted against
the Underwriters with respect to such security entitlement; in giving such opinion,
counsel for the Selling Stockholders may assume that when such payment, delivery and
crediting occur, (x) such Shares will have been registered in the name of Cede or another
nominee designated by DTC, in each case on the Company’s share registry in accordance with
its certificate of incorporation, bylaws and applicable law, (y) DTC will be registered as
a “clearing corporation” within the meaning of Section 8-102 of the UCC and (z)
appropriate entries to the accounts of the several Underwriters on the records of DTC will
have been made pursuant to the UCC; and
(e) The Underwriters shall have received on the Closing Date an opinion of Xxxxxxxxx Xxxxxxx
Xxxxxx Xxxxxxxxxx Xxxxxxxx & Xxxxxxxxx, LLP, counsel for the Underwriters, dated the Closing Date,
covering the matters referred to in Sections 6(c)(iv), 6(c)(v) and 6(c)(vii) (but only as to the
statements in each of the Time of Sale Prospectus and the Prospectus under “Description of Capital
Stock” and “Underwriters”) and the statement of such firm set forth in the last paragraph of
Section 6(c).
With respect to the statement set forth in the last paragraph of Section 6(c), Fenwick & West,
LLP and Xxxxxxxxx Xxxxxxx Xxxxxx Xxxxxxxxxx Xxxxxxxx & Xxxxxxxxx, LLP and with respect to Section
6(d)(v) above Fenwick & West, LLP may state that their opinions and beliefs are based upon their
participation in the preparation of the Registration Statement, the Time of Sale Prospectus and the
Prospectus and any amendments or supplements thereto and review and discussion of the contents
thereof, but are without independent check or verification, except as specified. With respect to
Section 6(d) above, Xxxxxxx & West, LLP may rely upon an opinion or opinions of counsel for any
Selling Stockholders and, with respect to factual matters and to the extent such counsel deems
appropriate, upon the representations of each Selling Stockholder contained herein and in the
Custody Agreement and Power of Attorney of such Selling Stockholder and in other documents and
instruments; provided that (A) each such counsel for the Selling Stockholders is satisfactory to
your counsel, (B) a copy of each opinion so relied upon is delivered to you and is in form and
substance satisfactory to your counsel, (C) copies of such Custody Agreements and Powers of
Attorney and of any such other documents and instruments shall be delivered to you and shall be in
form and substance satisfactory to your counsel and (D) Fenwick & West, LLP shall state in their
opinion that they are justified in relying on each such other opinion.
The opinions of Xxxxxxx & West, LLP described in Section 6(c) and 6(d) above (and any opinions
of counsel for any Selling Stockholder referred to in the
21
immediately preceding paragraph) shall be rendered to the Underwriters at the request of the
Company or one or more of the Selling Stockholders, as the case may be, and shall so state therein.
(f) 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 & Xxxxx, LLP, independent public accountants,
containing statements and information of the type ordinarily included in accountants’ “comfort
letters” to underwriters with respect to the financial statements and certain financial information
contained in the Registration Statement, the Time of Sale Prospectus and the Prospectus; provided
that the letter delivered on the Closing Date shall use a “cut-off date” within five (5) calendar
days of the Closing Date.
(g) The “lock-up” agreements, each substantially in the form of Exhibit A hereto, between the
Managers and certain stockholders, officers and directors of the Company relating to sales and
certain other dispositions of shares of Common Stock or certain other securities, delivered to the
Managers on or before the date hereof, shall be in full force and effect on the Closing Date.
The several obligations of the Underwriters to purchase Additional Shares hereunder are
subject to the delivery to Xxxxxx Xxxxxxx on the applicable Option Closing Date of such documents
as Xxxxxx Xxxxxxx may reasonably request with respect to the good standing of the Company, the due
authorization and issuance of the Additional Shares to be sold on such Option Closing Date and
other matters related to the issuance of such Additional Shares.
7. Covenants of the Company. The Company covenants with each Underwriter as follows:
(a) To furnish to the Managers, without charge, [seven] signed copies of the Registration
Statement (including exhibits thereto and documents incorporated by reference) and for delivery to
each other Underwriter a conformed copy of the Registration Statement (without exhibits thereto or
documents incorporated by reference) and to furnish to the Managers 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 7(e) or 7(f) below, as many copies of the Time
of Sale Prospectus, the Prospectus and any supplements and amendments thereto or to the
Registration Statement as the Managers may reasonably request.
(b) Before amending or supplementing the Registration Statement, the Time of Sale Prospectus
or the Prospectus, to furnish to the Managers a copy of each such proposed amendment or supplement
and not to file any such proposed amendment or supplement to which the Managers 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.
22
(c) To furnish to the Managers a copy of each proposed free writing prospectus or press
release relating to the Shares to be prepared by or on behalf of, used by, or referred to by the
Company and not to use or refer to any proposed free writing prospectus or press release relating
to the Shares to which the Managers reasonably object.
(d) Not to take any action that would result in an Underwriter or the Company being required
to file with the Commission pursuant to Rule 433(d) under the Securities Act a free writing
prospectus prepared by or on behalf of the Underwriter that the Underwriter otherwise would not
have been required to file thereunder.
(e) If the Time of Sale Prospectus is being used to solicit offers to buy the Shares at a time
when the Prospectus is not yet available to prospective purchasers and any event shall occur or
condition exist as a result of which it is necessary to amend or supplement the Time of Sale
Prospectus in order to make the statements therein, in the light of the circumstances, not
misleading, or if any event shall occur or condition exist as a result of which the Time of Sale
Prospectus conflicts with the information contained in the Registration Statement then on file, or
if, in the opinion of counsel for the Underwriters, it is necessary to amend or supplement the Time
of Sale Prospectus to comply with applicable law, forthwith to prepare, file with the Commission
and furnish, at its own expense, to the Underwriters and to any dealer upon request, either
amendments or supplements to the Time of Sale Prospectus so that the statements in the Time of Sale
Prospectus as so amended or supplemented will not, in the light of the circumstances when the Time
of Sale Prospectus is delivered to a prospective purchaser, be misleading or so that the Time of
Sale Prospectus, as amended or supplemented, will no longer conflict with the Registration
Statement, or so that the Time of Sale Prospectus, as amended or supplemented, will comply with
applicable law.
(f) 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 (or in lieu thereof the notice referred to
in Rule 173(a) of the Securities Act) is required by law to be delivered in connection with sales
by an Underwriter or dealer, any event shall occur or condition exist as a result of which it is
necessary to amend or supplement the Prospectus in order to make the statements therein, in the
light of the circumstances when the Prospectus (or in lieu thereof the notice referred to in Rule
173(a) of the Securities Act) 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 the Managers will furnish to the
Company) to which Shares may have been sold by the Managers 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
23
amended or supplemented will not, in the light of the circumstances when the Prospectus (or in
lieu thereof the notice referred to in Rule 173(a) of the Securities Act) is delivered to a
purchaser, be misleading or so that the Prospectus, as amended or supplemented, will comply with
applicable law.
(g) To endeavor to qualify the Shares for offer and sale under the securities or Blue Sky laws
of such jurisdictions as the Managers shall reasonably request.
(h) To make generally available to the Company’s security holders and to the Managers as soon
as practicable an earning statement covering a period of at least twelve months beginning with the
first fiscal quarter of the Company occurring after the date of this Agreement which shall satisfy
the provisions of Section 11(a) of the Securities Act and the rules and regulations of the
Commission thereunder.
8. Expenses. Whether or not the transactions contemplated in this Agreement are consummated
or this Agreement is terminated, the Sellers agree 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 and counsel for the Selling
Stockholders 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 Time of Sale Prospectus, the Prospectus,
any free writing prospectus prepared by or on behalf of, used by, or referred to by the Company 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 provided in Section
7(g) 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 and the reasonable fees and disbursements of counsel to
the Underwriters incurred in connection with the review and qualification of the offering of the
Shares by the Financial Industry Regulatory Authority, Inc., (v) all costs and expenses incident to
listing the Shares on the NASDAQ Global 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 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 preparation
24
or dissemination of any electronic road show, 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, provided that the Company, on
the one hand, and the Underwriters, on the other hand, shall each pay one half of the cost of any
aircraft chartered in connection with the road show, (ix) the document production charges and
expenses associated with printing this Agreement, 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
10 entitled “Indemnity and Contribution”, and the last paragraph of Section 12 below, the
Underwriters will pay all of their costs and expenses, including fees and disbursements of their
counsel, stock transfer taxes payable on resale of any of the Shares by them and any advertising
expenses connected with any offers they may make.
The provisions of this Section shall not supersede or otherwise affect any agreement that the
Sellers may otherwise have for the allocation of such expenses among themselves.
9. Covenants of the Underwriters. Each Underwriter severally covenants with the Company not
to take any action that would result in the Company being required to file with the Commission
under Rule 433(d) a free writing prospectus prepared by or on behalf of such Underwriter that
otherwise would not be required to be filed by the Company thereunder, but for the action of the
Underwriter.
10. Indemnity and Contribution. (a) The Company, agrees to indemnify and hold harmless each
Underwriter, 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 and each affiliate of any Underwriter
within the meaning of Rule 405 under the Securities 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, the Time of Sale
Prospectus, any issuer free writing prospectus as defined in Rule 433(h) under the Securities Act,
any Company information that the Company has filed, or is required to file, pursuant to Rule 433(d)
under the Securities Act, or the Prospectus or any amendment or supplement thereto, or caused by
any omission or alleged omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as such losses, claims,
damages or liabilities are caused by any such untrue statement or omission or alleged untrue
statement or omission based upon information relating to any Underwriter
25
furnished to the Company in writing by such Underwriter through the Managers expressly for use
therein.
(b) Each Selling Stockholder agrees, severally and not jointly, to indemnify and hold harmless
each Underwriter, 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, and each affiliate of any
Underwriter within the meaning of Rule 405 under the Securities 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 or incorporated by
reference in the Registration Statement or any amendment thereof, any preliminary prospectus, Time
of Sale Prospectus, any issuer free writing prospectus as defined in Rule 433(h) under the
Securities Act, any Company information that the Company has filed, or is required to file,
pursuant to Rule 433(d) of the Securities Act, or the Prospectus or any amendment or supplement
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 to the
extent that such untrue statement or alleged untrue statement or omission or alleged omission was
made in reliance upon and in conformity with written information relating to the Selling
Stockholder and furnished by or on behalf of the Selling Stockholder specifically for use therein;
provided, however, that the liability of a Selling Stockholder pursuant to this subsection (b)
hereof shall be limited to an amount equal to the aggregate Public Offering Price, less the
underwriting discount, of the Shares sold by such Selling Stockholder under this Agreement.
(c) Each Underwriter agrees, severally and not jointly, to indemnify and hold harmless the
Company, the Selling Stockholders, the directors of the Company, the officers of the Company who
sign the Registration Statement and each person, if any, who controls the Company or any Selling
Stockholder 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, the Time of Sale Prospectus, any issuer free writing prospectus as defined
in Rule 433(h) under the Securities Act, any Company information that the Company has filed, or is
required to file, pursuant to Rule 433(d) under the Securities Act, or the Prospectus (as amended
or supplemented if the Company shall have furnished any amendments or supplements thereto), or
caused by any omission or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, but only with reference to
information relating to such Underwriter furnished to the Company in writing by such Underwriter
through the Managers expressly for use in the
26
Registration Statement, any preliminary prospectus, the Time of Sale Prospectus, any issuer
free writing prospectus or the Prospectus or any amendment or supplement thereto.
(d) In case any proceeding (including any governmental investigation) shall be instituted
involving any person in respect of which indemnity may be sought pursuant to Section 10(a), 10(b)
or 10(c), 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 or who are affiliates of any Underwriter within the meaning of Rule 405 under the
Securities 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 and (iii) the
fees and expenses of more than one separate firm (in addition to any local counsel) for all Selling
Stockholders and all persons, if any, who control any Selling Stockholder within the meaning of
either such Section, and that all such fees and expenses shall be reimbursed as they are incurred.
In the case of any such separate firm for the Underwriters and such control persons and affiliates
of any Underwriters, such firm shall be designated in writing by Xxxxxx Xxxxxxx. 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 Selling Stockholders and such control persons of any Selling Stockholders, such firm
shall be designated in writing by the persons named as attorneys-in-fact for the Selling
Stockholders under the Powers of Attorney. 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
27
reason of such settlement or judgment. Notwithstanding the foregoing sentence, if at any time
an indemnified party shall have requested an indemnifying party to reimburse the indemnified party
for fees and expenses of counsel as contemplated by the second and third sentences of this
paragraph, the indemnifying party agrees that it shall be liable for any settlement of any
proceeding effected without its written consent if (i) such settlement is entered into more than 30
days after receipt by such indemnifying party of the aforesaid request and (ii) such indemnifying
party shall not have reimbursed the indemnified party in accordance with such request prior to the
date of such settlement. No indemnifying party shall, without the 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 (i) includes an unconditional release
of such indemnified party from all liability on claims that are the subject matter of such
proceeding and (ii) does not include a statement as to or an admission of fault, culpability or a
failure to act, by or on behalf of any indemnified party.
(e) To the extent the indemnification provided for in Section 10(a), 10(b) or 10(c) 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 10(e)(i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the relative benefits
referred to in clause 10(e)(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 Sellers
on the one hand and the Underwriters on the other hand in connection with the offering of the
Shares shall be deemed to be in the same respective proportions as the net proceeds from the
offering of the Shares (before deducting expenses) received by each Seller 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. The relative fault of the Sellers on the one hand and the Underwriters on the other hand
shall be determined by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a material fact relates
to information supplied by the Sellers or by the Underwriters and the parties’ relative intent,
knowledge, access to information and opportunity to correct or prevent such statement or omission.
The Underwriters’ respective obligations to contribute
28
pursuant to this Section 10 are several in proportion to the respective number of Shares they
have purchased hereunder, and not joint. The liability of each Selling Stockholder under the
contribution agreement contained in this paragraph shall be limited to an amount equal to the
aggregate Public Offering Price, less the underwriting discount, of the Shares sold by such Selling
Stockholder under this Agreement.
(f) The Sellers and the Underwriters agree that it would not be just or equitable if
contribution pursuant to this Section 10 were determined by pro rata allocation (even if the
Underwriters were treated as one entity for such purpose) or by any other method of allocation that
does not take account of the equitable considerations referred to in Section 10(e). The amount
paid or payable by an indemnified party as a result of the losses, claims, damages and liabilities
referred to in Section 10(e) 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 10, no Underwriter shall be required to contribute any amount in excess of the amount by
which the total price at which the Shares underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages that such Underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The remedies provided for in this Section 10 are not exclusive and
shall not limit any rights or remedies which may otherwise be available to any indemnified party at
law or in equity.
(g) The indemnity and contribution provisions contained in this Section 10 and the
representations, warranties and other statements of the Company and the Selling Stockholders
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,
any person controlling any Underwriter or any affiliate of any Underwriter, any Selling Stockholder
or any person controlling any Selling Stockholder, or the Company, its officers or directors or any
person controlling the Company and (iii) acceptance of and payment for any of the Shares.
11. Termination. The Underwriters may terminate this Agreement by notice given by the
Managers to the Company, if after the execution and delivery of this Agreement and prior to the
Closing Date (i) trading generally shall have been suspended or materially limited on, or by, as
the case may be, any of the New York Stock Exchange, the American Stock Exchange, the NASDAQ Global
Market, 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
29
market, (iii) a material disruption in securities settlement, payment or clearance services in
the United States shall have occurred, (iv) any moratorium on commercial banking activities shall
have been declared by Federal or New York State authorities or (v) there shall have occurred any
outbreak or escalation of hostilities, or any change in financial markets or any calamity or crisis
that, in the Managers’ judgment, is material and adverse and which, singly or together with any
other event specified in this clause (v), makes it, in the Managers’ judgment, impracticable or
inadvisable to proceed with the offer, sale or delivery of the Shares on the terms and in the
manner contemplated in the Time of Sale Prospectus or the Prospectus.
12. Effectiveness; Defaulting Underwriters. This Agreement shall become effective upon the
execution and delivery hereof by the parties hereto.
If, on the Closing Date or an Option Closing Date, as the case may be, any one or more of the
Underwriters shall fail or refuse to purchase Shares that it has or they have agreed to purchase
hereunder on such date, and the aggregate number of Shares which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase is not more than one-tenth of the aggregate
number of the Shares to be purchased on such date, the other Underwriters shall be obligated
severally in the proportions that the number of Firm Shares set forth opposite their respective
names in Schedule II 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 the Managers 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 12 by an
amount in excess of one-ninth of such number of Shares without the written consent of such
Underwriter. If, on the Closing Date, any Underwriter or Underwriters shall fail or refuse to
purchase Firm Shares and the aggregate number of Firm Shares with respect to which such default
occurs is more than one-tenth of the aggregate number of Firm Shares to be purchased on such date,
and arrangements satisfactory to the Managers, the Company and the Selling Stockholders 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, the Company or the
Selling Stockholders. In any such case either the Managers or the relevant Sellers shall have the
right to postpone the Closing Date, but in no event for longer than seven days, in order that the
required changes, if any, in the Registration Statement, in the Time of Sale Prospectus, in the
Prospectus or in any other documents or arrangements may be effected. If, on an 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 on such Option Closing Date,
the non-defaulting Underwriters shall have the option to (i) terminate their obligation hereunder
to purchase the Additional Shares to be sold
30
on such Option Closing Date 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 any Seller to comply with the terms or to fulfill any of the
conditions of this Agreement, or if for any reason any Seller shall be unable to perform its
obligations under this Agreement, the Sellers 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.
13. Entire Agreement. (a) This Agreement, together with any contemporaneous written
agreements and any prior written agreements (to the extent not superseded by this Agreement) that
relate to the offering of the Shares, represents the entire agreement between the Company and the
Selling Stockholders, on the one hand, and the Underwriters, on the other, with respect to the
preparation of any preliminary prospectus, the Time of Sale Prospectus, the Prospectus, the conduct
of the offering, and the purchase and sale of the Shares.
(b) The Company acknowledges that in connection with the offering of the Shares: (i) the
Underwriters have acted at arms length, are not agents of, and owe no fiduciary duties to, the
Company or any other person, (ii) the Underwriters owe the Company only those duties and
obligations set forth in this Agreement and prior written agreements (to the extent not superseded
by this Agreement), if any, and (iii) the Underwriters may have interests that differ from those of
the Company. The Company waives to the full extent permitted by applicable law any claims it may
have against the Underwriters arising from an alleged breach of fiduciary duty in connection with
the offering of the Shares.
14. Counterparts. This Agreement may be signed in two or more counterparts, each of which
shall be an original, with the same effect as if the signatures thereto and hereto were upon the
same instrument.
15. Applicable Law. This Agreement shall be governed by and construed in accordance with the
internal laws of the State of New York.
16. Headings. The headings of the sections of this Agreement have been inserted for
convenience of reference only and shall not be deemed a part of this Agreement.
31
17. Notices. All communications hereunder shall be in writing and effective only upon receipt
and if to the Underwriters shall be delivered, mailed or sent to the Managers in care of Xxxxxx
Xxxxxxx & Co. Incorporated, 0000 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Equity Syndicate
Desk, with a copy to the Legal Department; if to the Company shall be delivered, mailed or sent to
0000 Xxxxxxx Xxxxxx Xxxx., Xxxxx 000, Xxx Xxxxx, Xxxxxxxxxx 00000 and if to the Selling
Stockholders shall be delivered, mailed or sent to 0000 Xxxxxxx Xxxxxx Xxxx., Xxxxx 000, Xxx Xxxxx,
Xxxxxxxxxx 00000.
| Very truly yours, | ||||||
| SUCCESSFACTORS, INC. | ||||||
| By: | ||||||
| Name: | Xxxx Xxxxxxxx | |||||
| Title: | President and Chief Executive Officer | |||||
| The Selling Stockholders named in | ||||||
| Schedule I hereto, acting | ||||||
| severally | ||||||
| By: | ||||||
| Xxxx Xxxxxxxx | ||||||
| Attorney-in Fact | ||||||
| Accepted as of the date hereof | ||||
| Xxxxxx Xxxxxxx & Co. Incorporated | ||||
| Xxxxxxx, Xxxxx & Co. | ||||
| Deutsche Bank Securities Inc. | ||||
| Wachovia Capital Markets, LLC | ||||
| Xxxxxxxxxxx & Co. Inc | ||||
| Pacific Crest Securities Inc. | ||||
| JMP Securities LLC | ||||
| ThinkPanmure LLC | ||||
| Broadpoint Capital, Inc. | ||||
| Acting severally on behalf of themselves | ||||
| and the several Underwriters named | ||||
| in Schedule II hereto. | ||||
By:
|
Xxxxxx Xxxxxxx & Co. Incorporated | |||
By: |
||||
| Name: | ||||
| Title: | ||||
32
SCHEDULE I
| Number of Firm | Number of Additional | |||||||
| Selling Stockholder | Shares To Be Sold | Shares To Be Sold | ||||||
Total: |
5,040,612 | |||||||
I-1
SCHEDULE II
| Number of Firm Shares | ||||
| Underwriter | To Be Purchased | |||
Xxxxxx Xxxxxxx & Co. Incorporated |
||||
Xxxxxxx, Xxxxx & Co. |
||||
Deutsche Bank Securities Inc. |
||||
Wachovia Capital Markets, LLC |
||||
Xxxxxxxxxxx & Co. Inc |
||||
Pacific Crest Securities Inc. |
||||
JMP Securities LLC |
||||
ThinkPanmure LLC |
||||
Broadpoint Capital, Inc. |
||||
Total: |
7,540,612 | |||
II-1
SCHEDULE III
Time of Sale Prospectus
| 1. | Preliminary Prospectus issued ___, 2008 | |
| 2. | Pricing Information: |
| Price to public: | $ per share | |||||
| Number of shares: | ||||||
III-1
EXHIBIT A
[FORM OF LOCK-UP LETTER]
[FORM OF LOCK-UP LETTER]
_____________, 2008
Xxxxxx Xxxxxxx & Co. Incorporated
Xxxxxxx, Xxxxx & Co.
c/o Morgan Xxxxxxx & Co. Incorporated
0000 Xxxxxxxx
Xxx Xxxx, XX 00000
c/o Morgan Xxxxxxx & Co. Incorporated
0000 Xxxxxxxx
Xxx Xxxx, XX 00000
Ladies and Gentlemen:
The undersigned understands that Xxxxxx Xxxxxxx & Co. Incorporated (“Xxxxxx Xxxxxxx”) and
Xxxxxxx, Xxxxx & Co. (“Xxxxxxx Xxxxx” and together with Xxxxxx Xxxxxxx, the “Representatives”)
propose to enter into an Underwriting Agreement (the “Underwriting Agreement”) with SuccessFactors,
Inc., a Delaware corporation (the “Company”), providing for the public offering (the “Public
Offering”) by the several Underwriters, including the Representatives (the “Underwriters”), of ___
shares (the “Shares”) of the common stock, par value $0.001 per share, of the Company (the “Common
Stock”).
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 the Representatives on behalf of the Underwriters, it will not, during the
period commencing on the date hereof and ending 90 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. The foregoing sentence shall not apply to (a) sales
of Common Stock by the undersigned in the Public Offering, (b) transactions relating to shares of
Common Stock or other securities acquired in open market transactions after the completion of the
Public Offering, provided that no filing under Section 16(a) of the Securities Exchange
Act of 1934, as amended (the “Exchange Act”), shall be required or shall be voluntarily made
in connection with subsequent sales of Common Stock or other securities acquired in such open
market transactions, (c) exercise by the undersigned of any option or warrant to acquire Common
Stock or conversion of any of the undersigned’s convertible securities into Common Stock, provided
that any shares of Common Stock obtained by such exercise or conversion shall remain subject to the
terms of this Lock-Up Letter Agreement, (d) transfers of shares of Common Stock or any security
convertible into Common Stock as a bona fide gift that do not involve a disposition for value, (e)
distributions of shares of Common Stock or any security convertible into Common Stock that do not
involve a disposition for value to limited partners, members or stockholders of the undersigned;
provided that in the case of any transfer or distribution pursuant to clause (d) or (e), (i) each
donee or distributee shall sign and deliver a lock-up letter substantially in the form of this
letter and (ii) no filing under Section 16(a) of the Exchange Act, reporting a reduction in
beneficial ownership of shares of Common Stock, shall be required or shall be voluntarily made
during the restricted period referred to in the foregoing sentence, (f) the establishment of a
trading plan pursuant to Rule 10b5-1 under the Exchange Act for the transfer of shares of Common
Stock, provided that such plan does not provide for the transfer of Common Stock during the
restricted period, or (g) sales of Common Stock by the undersigned pursuant to any such trading
plan established before the date hereof, provided that the formula, algorithm or computer program
is not modified during the restricted period so as to increase the number of shares of Common Stock
that can be sold pursuant to the plan during the restricted period. In addition, the undersigned
agrees that, without the prior written consent of the Representatives on behalf of the
Underwriters, it will not, during the period commencing on the date hereof and ending 90 days after
the date of the Prospectus, make any demand for or exercise any right with respect to, the
registration of any shares of Common Stock or any security convertible into or exercisable or
exchangeable for Common Stock. The undersigned also agrees and consents to the entry of stop
transfer instructions with the Company’s transfer agent and registrar against the transfer of the
undersigned’s shares of Common Stock except in compliance with the foregoing restrictions.
If:
(1) during the last 17 days of the restricted period the Company issues an earnings release or
material news or a material event relating to the Company occurs; 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 agreement shall continue to apply until the expiration of the
18-day period beginning on the issuance of the earnings release or the occurrence of the material
news or material event.
2
The undersigned shall not engage in any transaction that may be restricted by this agreement
during the 34-day period beginning on the last day of the initial restricted period unless the
undersigned requests and receives prior written confirmation from the Company or the
Representatives that the restrictions imposed by this agreement have expired.
The undersigned understands that the Company and the Underwriters are relying upon this
agreement in proceeding toward consummation of the Public Offering. The undersigned further
understands that this agreement is irrevocable and shall be binding upon the undersigned’s heirs,
legal representatives, successors and assigns.
Whether or not the Public Offering actually occurs depends on a number of factors, including
market conditions. Any Public Offering will only be made pursuant to an Underwriting Agreement,
the terms of which are subject to negotiation between the Company and the Underwriters.
It is understood that, if (i) the Company notifies the Underwriters that it does not intend to
proceed with the Public Offering, (ii) the Underwriting Agreement is entered into and terminated
(other than the provisions thereof which survive termination) prior to payment for and delivery of
the Common Stock or (iii) the Public Offering is not consummated by August 31, 2008, the
undersigned will be released from its obligations under this Lock-Up Letter Agreement.
| Very truly yours, | ||
| (Name) | ||
| (Address) |
3
