•] Shares ARCSIGHT, INC. COMMON STOCK, PAR VALUE $0.00001 PER SHARE UNDERWRITING AGREEMENT
Exhibit 1.1
[•] Shares
ARCSIGHT, INC.
COMMON STOCK, PAR VALUE $0.00001 PER SHARE
[•], 2007
[•], 2007
Xxxxxx Xxxxxxx & Co. Incorporated
Xxxxxx Brothers Inc.
Wachovia Capital Markets, LLC
RBC Capital Markets Corporation
Xxxxxx Brothers Inc.
Wachovia Capital Markets, LLC
RBC Capital Markets Corporation
c/o | Morgan Xxxxxxx & Co. Incorporated 0000 Xxxxxxxx Xxx Xxxx, Xxx Xxxx 00000 |
Ladies and Gentlemen:
ArcSight, 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 [•] shares of common stock of the Company, par value
$0.00001 per share (the “Firm Shares”), of which [•] shares are to be issued and sold by the
Company and [•] 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 and the Selling Stockholders also propose to issue and sell to the several
Underwriters not more than an additional [•] shares of the Company’s common stock, par value
$0.00001 per share (the “Additional Shares”), of which up to [•] shares are to be issued and sold
by the Company (the “Company Additional Shares”) the and up to [•] shares are to be sold by the
Selling Stockholders (the “Selling Stockholder Additional Shares”), as set forth in Section 3, if
and to the extent that you, as the managers of the offering, 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 $0.00001 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, “preliminary prospectus” means any preliminary prospectus relating to
the Shares included in the Registration Statement, “Time of Sale Prospectus” means the preliminary
prospectus together with the free writing prospectuses, if any, each identified in Schedule III
hereto, and “broadly available road show” means a “bona fide electronic road show” as defined in
Rule 433(h)(5) 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. 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 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
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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 do not apply to
statements or omissions in the Registration Statement (or any amendment or supplement thereto), 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 you 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 you before
first use, the Company has not prepared, used or referred to, and will not, without your 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 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”).
(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, 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
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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; 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 or indirectly through other subsidiaries by the Company (except for directors’ qualifying
shares or substantially similar shares), free and clear of all liens, encumbrances, equities or
claims. None of the subsidiaries of the Company are “significant subsidiaries” under the
“investment test” of Regulation S-X Rule 1-02 (“Rule 1-02”), subsection (w)(1) promulgated under
the Securities Act and “asset test” of Rule 1-02 (w)(2) (excluding the “income test” of Rule 1-02
(w)(3)). The revenues of the subsidiaries of the Company did not individually or in the aggregate
represent more than 10% of the Company’s consolidated revenues for the fiscal year ended April 30,
2007.
(f) This Agreement has been duly authorized by all necessary corporate action on the part of
the Company, and 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 immediately 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, which have not otherwise been waived.
(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 or by-laws of the Company as in effect as of the Closing Date, (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 clause (iii) as would not have a
Material Adverse Effect or prospective Material Adverse Effect, and the execution and delivery by
the Company of this Agreement will not contravene the certificate of incorporation or by-laws of
the Company as currently in effect. No consent, approval, authorization or order of, or
qualification with, any governmental body
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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,
overtly 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, 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 or the
Prospectus and are not so described; and there are no statutes, regulations, contracts or other
documents to which the Company is subject or by which the Company is bound that are required to be
described in the Registration Statement or the Prospectus or to be filed as exhibits to the
Registration Statement that are not described or filed as required.
(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.
(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
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terms and conditions of such permits, licenses or approvals
would not, singly or in the aggregate, have a Material Adverse Effect.
(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.
(q) Except as described in the Time of Sale Prospectus, 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 such securities are otherwise subject to
exclusion from the Shares registered pursuant to the Registration Statement in the sole discretion
of the Underwriters or such rights as have otherwise 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
(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.
(s) The Company and its subsidiaries own no real property and have good and marketable title
to all personal property (other than the Company Intellectual Property (as defined below), which is
covered by Section 1(t) below) 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 materially 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
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Company and its subsidiaries are held by them under valid, subsisting and enforceable leases
(except as such enforceability may be subject to the laws of general application relating to
bankruptcy and the relief of debtors and laws governing specific performance, injunctive relief or
other equitable remedies) 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,
possess, have valid rights to use or can acquire on reasonable terms, all material patents, patent
rights, licenses, inventions, copyrights, know-how (including trade secrets and other unpatented
and/or unpatentable proprietary or confidential information, systems or procedures), trademarks,
service marks and trade names currently employed by them in connection with the business now
operated by them (collectively, the “Company Intellectual Property”), 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.
(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 would have a
Material Adverse Effect.
(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 have a Material Adverse Effect, except as described in the Time of Sale Prospectus.
(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 reasonably be expected to have a Material Adverse
Effect, and neither the Company nor any of its subsidiaries has received
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any notice of proceedings
relating to the revocation or modification of any such certificate, authorization or permit that,
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, except as described in the Time of Sale
Prospectus.
(x) Except as described in the Time of Sale Prospectus, 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 as applied 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 financial statements of the Company (together with the related notes thereto) included
in the Registration Statement, the Time of Sale Prospectus and the Prospectus present fairly, in
all material respects, the consolidated financial position and results of the operations of the
Company and its subsidiaries as of the dates indicated and for the periods specified; and such
financial statements (together with the related notes thereto) have been prepared in material
conformity with generally accepted accounting principles as applied in the United States,
consistently applied throughout the periods involved except as otherwise stated therein. The
financial data set forth in the Registration Statement, Time of Sale Prospectus and the Prospectus
under the captions “Prospectus Summary—Summary of Consolidated Financial Data” and “Selected
Consolidated Financial Data” present fairly the information shown therein and have been compiled on
a basis consistent with that of the audited financial information included in the Registration
Statement, the Time of Sale Prospectus and the Prospectus.
(z) Except as described in the Time of Sale Prospectus, 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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2. Representations and Warranties of the Selling Stockholders. Each Selling Stockholder
severally and not jointly 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 or on behalf of, as the case may be, 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 [•], 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 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 applicable 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 or on behalf of, as the case may be, 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
9
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, registration
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.
(f) Such Selling Stockholder is not prompted by any material 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 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, (iii) 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 (iv) 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,
provided that the representations and warranties set forth in this paragraph are limited to
statements or omissions made in reliance upon information relating to such Selling Stockholder
furnished to the Company in writing by such Selling Stockholder expressly for use in the
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Registration Statement, any preliminary prospectus, the Time of Sale Prospectus, any issuer free
writing prospectus as defined in Rule 433(h) under the Securities Act, or the Prospectus or any
amendments or supplements thereto (the “Selling Stockholder Information”).
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 Sellers agree to sell to the Underwriters the Additional Shares, and
the Underwriters shall have the right to purchase, severally and not jointly, up to [•] Additional
Shares at the Purchase Price as follows: (A) until the Underwriters have purchased [•] Additional
Shares, the Selling Stockholders shall sell the number of Additional Shares (subject to such
adjustments to eliminate fractional shares as you may determine) that bears the same proportion to
the aggregate number of Additional Shares to be sold at such Option Closing Date (as defined below)
as the number of Additional Shares set forth in Schedule I hereto opposite the name of such Selling
Stockholder bears to the total number of Selling Stockholder Additional Shares, and (B) in the
event that the Underwriters elect to purchase more than [•] Additional Shares, the Company agrees
to sell to the Underwriters the Company Additional Shares.
You 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 you 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.
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The Company hereby agrees that, without the prior written consent of Xxxxxx Xxxxxxx & Co.
Incorporated on behalf of the Underwriters, it will not, during the period ending 180 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, warrant or other right to acquire shares of Common Stock or the conversion of a security
outstanding on the date of the Prospectus of which the Underwriters have been advised in writing,
(c) the issuance by the Company of shares, options or other rights to purchase shares of Common
Stock to employees, officers, directors, advisors or consultants pursuant to any stock option or
similar equity incentive or compensation plan disclosed in the Time of Sale Prospectus, (d) the
issuance by the Company of shares of Common Stock, or securities convertible into or exercisable or
exchangeable for the Common Stock, in connection with mergers or acquisitions (irrespective of
whether in the form of an acquisition of securities, businesses, properties or assets), or joint
ventures, commercial relationships or strategic transactions (including but not limited to
marketing or distribution arrangements, collaboration agreements or intellectual property license
agreements) with, another company or the securityholders of another company in an aggregate amount
not to exceed 10% of the number of shares of Common Stock issued and outstanding immediately
following the completion of the transactions contemplated by this Agreement, provided that the
recipient of the shares of Common Stock pursuant to this clause (d) executes a lock-up agreement
substantially in the form of Exhibit A hereto and (e) the filing with the Commission of any
registration statement (1) on Form S-8 in respect of any shares issued under or the grant of any
award pursuant to any employee benefit plan described in the Time of Sale Prospectus, or (2) in
connection with mergers or acquisitions (irrespective of whether in the form of an acquisition of
securities, businesses, properties or assets), or joint ventures, commercial relationships or
strategic transactions (including but not limited to marketing or distribution arrangements,
collaboration agreements or intellectual property license agreements) with, another company or the
securityholders of another company in an aggregate amount not to exceed 10% of the number of shares
of Common Stock issued and outstanding
12
immediately following completion of the transactions
contemplated by this Agreement. Notwithstanding the foregoing, if (1) during the last 17 days of
the 180-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 180-day restricted
period, the Company announces that it will release earnings results during the 16-day period
beginning on the last day of the 180-day period, the restrictions imposed by the fourth paragraph
of this Section 3 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 Xxxxxx Xxxxxxx & Co. Incorporated of any earnings release, news or
event that may give rise to an extension of the initial 180-day restricted period.
Each of the Selling Stockholders hereby agrees that for the period specified in the lock-up
agreement that such Selling Stockholder has executed (the “Selling Stockholder Lock-Up Agreement”),
such Selling Stockholder will not take any action in contravention of such Selling Stockholder
Lock-Up Agreement. 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 Selling Stockholder Lock-Up Agreement.
4. Terms of Public Offering. The Sellers are advised by you that the Underwriters propose to
make a public offering of their respective portions of the Shares as soon after the Registration
Statement and this Agreement have become effective as in your judgment is advisable. The Sellers
are further advised by you that the Shares are to be offered to the public initially at $[•] a
share (the “Public Offering Price”) and to certain dealers selected by you at a price that
represents a concession not in excess of $[•] a share under the Public Offering Price, and that any
Underwriter may allow, and such dealers may reallow, a concession, not in excess of $[•] a share,
to any Underwriter or to certain other dealers.
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 [•], 2007, or at such other time on the same or such other date, not later than [•].
2007, as shall be designated in writing by you. 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 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 [•], 2007, as shall be designated in writing by
you.
13
The Firm Shares and Additional Shares shall be registered in such names and in such
denominations as you 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 you 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:
(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 (excluding any amendments or supplements thereto) that, in
your judgment, is material and adverse and that makes it, in your judgment, impracticable
to market the Shares on the terms and in the manner contemplated in the 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 in all
material respects with all of the agreements and satisfied in all material respects all of the
conditions on its part to be performed or satisfied hereunder on or before the Closing Date.
14
The officer signing and delivering such certificate on behalf of the Company may rely upon the
best of his or her knowledge as to proceedings threatened.
(c) The Underwriters shall have received on the Closing Date an opinion of Fenwick & West LLP,
outside counsel for the Company, dated the Closing Date in the form attached hereto as Exhibit B.
(d) The Underwriters shall have received on the Closing Date an opinion of [•] and [•],
counsels for the Selling Stockholders (“Selling Stockholder Counsels”), dated the Closing Date, in
the form attached hereto as Exhibit C.
(e) The Underwriters shall have received on the Closing Date an opinion of Xxxxx Xxxx &
Xxxxxxxx, counsel for the Underwriters, dated the Closing Date, covering (A) the matters referred
to in paragraphs (iv), (v) and (vii) of the opinion referred to in (6)(c) above (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 (B) a negative assurance letter substantially in the form of
paragraph (x) of the opinion referred to in (6)(c) above.
With respect to paragraph (x) of the opinion referred to in (6)(c) above, Fenwick & West LLP
and Xxxxx Xxxx & Xxxxxxxx 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, Selling Stockholder Counsels 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], and (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.
The opinions of Fenwick & West LLP and Selling Stockholder Counsels described in Sections 6(c)
and 6(d) above, respectively, [(and any opinions of counsel for any Selling Stockholder referred to
in the 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.
15
(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 & Young 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” not earlier than the date
hereof.
(g) The “lock-up” agreements, each substantially in the form of Exhibit A hereto, between you
and certain stockholders, including the Selling 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 you 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 you on the applicable Option Closing Date of such documents as you may
reasonably request with respect to the good
standing of the Company, the due authorization and issuance of the Additional Shares 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 you, without charge, 5 signed copies of the Registration Statement
(including exhibits thereto) and for delivery to each other Underwriter a conformed copy of the
Registration Statement (without exhibits thereto) and to furnish to you in New York City, without
charge, prior to 10:00 a.m. New York City time on the business day next succeeding the date of this
Agreement and during the period mentioned in Sections 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 you may reasonably request.
(b) Before amending or supplementing the Registration Statement, the Time of Sale Prospectus
or the Prospectus, to furnish to you a copy of each such proposed amendment or supplement and not
to file any such proposed amendment or supplement to which you reasonably object, and to file with
the Commission within the applicable period specified in Rule 424(b) under the Securities Act any
prospectus required to be filed pursuant to such Rule.
(c) To furnish to you a copy of each proposed free writing prospectus to be prepared by or on
behalf of, used by, or referred to by the Company and not
16
to use or refer to any proposed free
writing prospectus to which you 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) under 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) under 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 you will furnish to the
Company) to which Shares may have been sold by you on behalf of the Underwriters and to any other
dealers upon request, either amendments or supplements to the Prospectus so that the statements in
the Prospectus as so amended or supplemented will not, in the light of the circumstances when the
Prospectus (or in lieu thereof the notice referred to in Rule 173(a) under the
17
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 you shall reasonably request.
(h) To make generally available to the Company’s security holders and to you 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 their respective 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, (v) all fees and expenses in connection with the preparation and filing of the
registration statement on Form 8-A relating to the Common Stock and all costs and expenses incident
to listing the Shares on the NASDAQ 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 or dissemination of any electronic
roadshow, expenses associated with the production of road show slides
18
and graphics, fees and
expenses of any consultants engaged in connection with the road show presentations with the prior
approval of the Company, travel and lodging expenses of the representatives and officers of the
Company and any such consultants, and the Company’s proportional share 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 and all incurred travel and lodging expenses of the
representatives and employees of Underwriters and their proportional share of the cost of any
aircraft chartered in connection with the roadshow.
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 Securities Exchange Act of 1934, as amended (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
19
statement or omission based upon information
relating to any Underwriter furnished to the Company in writing by such Underwriter through you
expressly for use therein.
(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 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, only to the extent that the untrue
statement or alleged untrue statement or omission or alleged omission was made in reliance upon and
in conformity with the Selling Stockholder Information. The total liability of each Selling
Stockholder under the indemnity agreement contained in this paragraph and under the contribution
agreement contained in paragraphs (e) and (f) below shall be limited to an amount equal to the
gross proceeds from sales of the Shares
sold by such Selling Stockholder under this Agreement after deducting underwriting discounts
and commissions.
(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) of 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
20
reference to information
relating to such Underwriter furnished to the Company in writing by such Underwriter through you
expressly for use in the Registration Statement, any preliminary prospectus, the 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 Sections 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 reasonably incurred 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 & Co. Incorporated. 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
21
party shall not be liable for any settlement of any proceeding effected without its written
consent, but if settled with such consent or if there be a final judgment for the plaintiff, the
indemnifying party agrees to indemnify the indemnified party from and against any loss or liability
by reason of such settlement or judgment. Notwithstanding the foregoing sentence, if at any time
an indemnified party shall have requested an indemnifying party to reimburse the indemnified party
for fees and expenses of counsel as contemplated by the second and third sentences of this
paragraph, the indemnifying party agrees that it shall be liable for any reasonable settlement of
any proceeding effected without its written consent if (i) such settlement is entered into more
than 45 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 includes an unconditional
release of such indemnified party from all liability on claims that are the subject matter of such
proceeding.
(e) To the extent the indemnification provided for in Sections 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,
22
knowledge, access to information and opportunity to correct or prevent such statement or omission.
The Underwriters’ respective obligations to contribute
pursuant to this Section 10 are several in proportion to the respective number of Shares they
have purchased hereunder, and not joint. The total liability of each Selling Stockholder under the
contribution agreement contained in this paragraph and paragraph (f) below and under the indemnity
agreement contained in paragraph (a) above shall be limited to an amount equal to the gross
proceeds from the sales of the Shares sold by such Selling Stockholder under this Agreement after
deducting underwriting discounts and commissions.
(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 you 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
23
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 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 your judgment, is material and adverse and which, singly or together with any other event
specified in this clause (v), makes it, in your 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 you may specify, to purchase
the Shares which such defaulting Underwriter or Underwriters agreed but failed or refused to
purchase on such date; provided that in no event shall the number of Shares that any Underwriter
has agreed to purchase pursuant to this Agreement be increased pursuant to this Section 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 you, 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 you 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
24
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 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.
25
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.
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 you 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;
and if to the Company shall be delivered, mailed or sent to 0 Xxxxxxx Xxx, Xxxxxxxxx, Xxxxxxxxxx
00000, Attention: General Counsel.
26
Very truly yours, ArcSight, Inc. |
||||
By: | ||||
Name: | ||||
Title: | ||||
Selling Stockholders named
in Schedule I hereto, acting severally |
||||
By: | ||||
Name: | ||||
Title: | Attorney-in-Fact | |||
Accepted as of the date hereof Xxxxxx Xxxxxxx & Co. Incorporated Acting severally on behalf of itself and the several Underwriters named in Schedule II hereto. |
||||
By: | ||||
Name: | ||||
Title: |
27
SCHEDULE I
Number of Firm | Number of | |||||||||||
Shares To | Additional Shares | Name of Selling | ||||||||||
Selling Stockholder | Be Sold | To Be Sold | Stockholder Counsel | |||||||||
[NAMES OF SELLING
STOCKHOLDERS] |
||||||||||||
Total: |
||||||||||||
I-1
SCHEDULE II
Underwriter | Number of Firm Shares To Be Purchased | |||
Xxxxxx Xxxxxxx & Co. Incorporated |
||||
Xxxxxx Brothers Inc. |
||||
Wachovia Capital Markets, LLC |
||||
RBC Capital Markets Corporation |
||||
Total: |
||||
II-1
SCHEDULE III
Time of Sale Prospectus
Preliminary Prospectus issued [date]
[identify all free writing prospectuses filed by the Company under Rule 433(d) of the Securities
Act]
[free writing prospectus containing a description of terms that does not reflect final terms, if
the Time of Sale Prospectus does not include a final term sheet]
[orally communicated pricing information to be included on Schedule III if a final term sheet is
not used] [TO BE DISCUSSED]
III-1
EXHIBIT A
FORM OF LOCK-UP LETTER
, 2007
Xxxxxx Xxxxxxx & Co. Incorporated
Xxxxxx Brothers Inc.
Wachovia Capital Markets, LLC
RBC Capital Markets Corporation
Xxxxxx Brothers Inc.
Wachovia Capital Markets, LLC
RBC Capital Markets Corporation
c/o Morgan Xxxxxxx & Co. Incorporated
0000 Xxxxxxxx
Xxx Xxxx, XX 00000
0000 Xxxxxxxx
Xxx Xxxx, XX 00000
Ladies and Gentlemen:
The undersigned understands that Xxxxxx Xxxxxxx & Co. Incorporated (“Xxxxxx Xxxxxxx”) and
Xxxxxx Brothers Inc. (together, the “Managers”) propose to enter into an Underwriting Agreement
(the “Underwriting Agreement”) with ArcSight, Inc., a Delaware corporation (the “Company”),
providing for the public offering (the “Public Offering”) by the several Underwriters, including
the Managers (the “Underwriters”), of a number of shares (the “Shares”) of the common stock, par
value $0.00001 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 Xxxxxx Xxxxxxx on behalf of the Underwriters, it will not, during the
period commencing on the date hereof and ending 180 days after the date of the final prospectus
relating to the Public Offering (the “Prospectus”) (the “Lock-Up Period”), (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-2
(a) 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;
(b) transfers of shares of Common Stock or any security convertible into or exercisable or
exchangeable for Common Stock as a bona fide gift;
(c) in the case of a non-natural person, distributions of shares of Common Stock or any
security convertible into or exercisable or exchangeable for Common Stock to limited partners,
members or stockholders of the undersigned;
(d) in the case of a natural person, transfers of shares of Common Stock or any security
convertible into or exercisable or exchangeable for Common Stock by will or intestate succession or
to any trust or partnership for the direct or indirect benefit of such person or any member of the
immediate family of the undersigned;
(e) the entry by the undersigned into a trading plan established in accordance with Rule
10b5-1 under the Exchange Act, provided that sales under any such plan may not occur during the
period in which the restictions otherwise imposed by this agreement apply;
(f) the “net” or “cashless” exercise of options, warrants or rights to acquire shares of
Common Stock or any security convertible into Common Stock in accordance with their terms, provided
that no filing under Section 16(a) of the Exchange Act, reporting a disposition of shares of Common
Stock, shall be required or shall be voluntarily made in connection with the exercise;
(g) transfers of shares of Common Stock or any security convertible into or exercisable or
exchangeable for Common Stock to the Company, pursuant to agreements under which the Company has
the option to repurchase such shares or a right of first refusal with respect to transfers of such
shares, provided that such transfers after the date of the Prospectus shall be for less than market
value of the Common Stock at the time of transfer;
(h) the sale of shares of Common Stock to the Underwriters; and
(i) in the case of a non-natural person, transfers of shares of Common Stock to any
wholly-owned subsidiary of the undersigned (including any corporation, partnership, limited
liability company or other entity that is directly or indirectly owned by the undersigned) or to
the parent corporation of the undersigned or any wholly-owned subsidiary of such parent
corporation;
A-3
provided that in the case of any transfer or distribution pursuant to clauses (b), (c), (d) and
(i), each donee, distributee or transferee 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 Lock-Up Period.
In addition, the undersigned agrees that, without the prior written consent of Xxxxxx Xxxxxxx
on behalf of the Underwriters, it will not, during the Lock-Up Period, 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 Lock-Up Period the Company issues a release regarding
earnings or regarding material news or a material event relating to the Company occurs; or
(2) prior to the expiration of the Lock-Up Period, the Company announces that it will release
earnings results during the 16-day period beginning on the last day of the Lock-Up 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 release or the occurrence of the material news or
material event.
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 Xxxxxx Xxxxxxx
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. This Lock-Up Agreement shall automatically terminate
upon the earliest to occur, if any, of (a) the date the Company advises Xxxxxx Xxxxxxx, in writing,
prior to the execution of the Underwriting Agreement, that it has determined not to proceed with
the offering, (b) the date of the termination of the Underwriting Agreement if prior to the closing
of the offering or (c) August 31,
A-4
2008 if, and only if, the Public Offering of the Shares has not
been completed by such date.
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 Underwriter.
A-5
EXHIBIT B
Form of Opinion of Fenwick & West LLP
B-1
EXHIBIT C
Opinion of Selling Stockholder Counsels
C-1