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Exhibit 1.1
August __, 2000
ServiceWare Technologies, Inc.
333 Allegheny Avenue
Oakmont, Pennsylvania 15139
C.E. Unterberg, Towbin
Swiss Bank Tower
10 E. 50th Street, 22nd Floor
New York, New York 10022
Re: Agreement to Act as "Qualified Independent Underwriter"
Ladies and Gentlemen:
You have advised us that ServiceWare Technologies, Inc. (the
"Corporation"), a Delaware corporation, has filed with the Securities and
Exchange Commission (the "Commission") a registration statement on Form S-1
(Reg. No. 333-33818) (the "S-1"), relating to the offering by the Corporation of
4,500,000 shares (the "Shares") of its common stock, $0.01 par value per Share,
or such other number of Shares as you may determine. In connection with the
public offering of the Shares (the "Offering"), C.E. Unterberg, Towbin will be
the underwriter (the "Underwriter"). Subject to the terms and conditions of the
underwriting agreement (the "Underwriting Agreement") to be entered into between
the Corporation and the Underwriter, the Underwriter will agree to purchase from
the Corporation, and the Corporation will agree to sell to the Underwriter, all
of the Shares.
We understand that, as a member of the National Association of
Securities Dealers, Inc. ("NASD"), the Underwriter may participate in the
Offering only if the price at which the Shares are to be offered to the public
in the Offering is no higher than the price recommended by a "Qualified
Independent Underwriter" (as such term is defined in Rule 2720(b)(15) of the
Conduct Rules of the NASD) and such Qualified Independent Underwriter
participates in the preparation of the registration statement and prospectus
relating to the Offering and exercises the usual standards of due diligence with
respect thereto. This Agreement describes the terms on which Burnham Securities
Inc. ("Burnham") agrees to serve as such a Qualified Independent Underwriter in
connection with the Offering. In connection with the services to be provided by
Burnham hereunder and based upon the representations and warranties of, and
subject to the performance of the covenants by, the Corporation herein set forth
and Burnham's satisfaction with the results of its due diligence review, Burnham
agrees to deliver to the Corporation and the Underwriter, and file with the
NASD, a letter (the "Letter") substantially in the form of Appendix A hereto on
the date the Registration Statement (as hereinafter defined) is first declared
effective by the Commission (the "Effective Date") or, if the Offering is not
priced on the Effective Date, on the date of the pricing of the Offering (the
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"Pricing Date"). As a condition to the delivery of the Letter, the Registration
Statement and each amendment thereto will include any revisions that in the
reasonable judgment of Burnham and its legal counsel are required to enable
Burnham to deliver the Letter.
As hereinafter used, except as the context may otherwise
require, the term "Registration Statement" means the S-1 (including the related
prospectuses, financial statements, exhibits, schedules, term sheets and all
other documents filed as parts thereof or incorporated therein) for the
registration of the Shares under the Securities Act of 1933, as amended (the
"1933 Act"), in the form declared effective, filed with the Commission and any
post-effective amendments thereto. The term "Prospectus" means the prospectus,
including any preliminary or final prospectus (including the form of prospectus
or term sheet first filed with the Commission pursuant to Rule 424(b) or 430A
under the 1933 Act after the Registration Statement becomes effective or, if no
such filing is required, each prospectus in the form included in the
Registration Statement at the time it is first declared effective), and any
amendment or supplement thereto (including any form of prospectus or term sheet
filed with the Commission pursuant to Rule 424(b) under the 1933 Act), to be
used in connection with the Offering.
1. NASD Conduct Rule Requirement. Burnham hereby confirms its
agreement to act in connection with the Offering as a "Qualified Independent
Underwriter" within the meaning of Rule 2720(b)(15) of the Conduct Rules of the
NASD and represents that Burnham satisfies and will satisfy at the times
designated in such Rule the requirements set forth therein.
2. Consent. Burnham hereby consents to be named in the
Registration Statement and Prospectus as having acted as the Qualified
Independent Underwriter and to the filing of this Agreement as an exhibit to the
Registration Statement. All references to Burnham in the Registration Statement
or Prospectus or in any other filing, report, document, release or other
communication prepared, issued or transmitted in connection with the Offering by
the Corporation or the Underwriter or any entity controlling, controlled by or
under common control with, or by any of them, shall be subject to Burnham's
prior consent with respect to form and substance. Burnham's obligation to act as
a Qualified Independent Underwriter hereunder shall terminate if the Corporation
shall breach in any material respect any representation, warranty or covenant
hereunder and such breach shall not be cured within 10 days of written notice
thereof to the Corporation, provided such breach would adversely affect
Burnham's ability to meet its obligations hereunder or impose, in Burnham's
reasonable judgment, additional liability on Burnham.
3. Fee and Expenses. The Corporation agrees to pay Burnham a
fee of $50,000 for its services hereunder, payable on the date on which payment
for and delivery of the Shares are made (the "Closing Date"). The Corporation
also agrees to reimburse Burnham for all reasonable out-of-pocket expenses,
including all reasonable fees and expenses of Burnham's counsel, incurred by
Burnham in connection with this Agreement and the Offering. Burnham will be
entitled to retain the full amount of such fee and receive payment of such
expenses regardless of the price of the Shares that Burnham recommends pursuant
to this Agreement. If, for whatsoever reason, it is determined that the Offering
shall not commence or will not be consummated, Burnham shall be entitled to
receive $25,000 of its fee and to be paid in full for
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the above-mentioned expenses, promptly following such determination, and shall
continue to be entitled to any amount payable to Burnham under Section 6.
4. Representations, Warranties and Covenants of the
Corporation.
(a) The Corporation agrees that all of its
representations and warranties contained in the Underwriting
Agreement, when made, shall be deemed to be incorporated by
reference herein and made to Burnham hereunder, in each case
as of the date each such representation and warranty is made
in the Underwriting Agreement. The Corporation agrees that its
execution of the Underwriting Agreement shall constitute
confirmation to Burnham that, on such date, the
representations and warranties of the Corporation included in
the Underwriting Agreement are true, correct and complete in
all material respects.
(b) The Corporation represents and warrants that this
Agreement has been duly authorized, executed and delivered by
the Corporation; the performance of this Agreement and the
consummation of the transactions contemplated hereby will not
result in the creation or imposition of any material lien,
charge or encumbrance upon any of the assets of the
Corporation pursuant to the terms or provisions of, or result
in a material breach or violation of any of the terms or
provisions of or constitute a default under, any indenture,
mortgage, deed of trust, voting trust agreement, loan
agreement, bond, debenture, note agreement or other evidence
of indebtedness, lease, contract or other agreement or
instrument to which the Corporation or any of its properties
is bound, or under the certificate of incorporation or by-laws
of the Corporation or under any statute or under any order,
rule or regulation of any court or governmental body
applicable to the business or properties of the Corporation;
and no consent, approval, authorization or order of any court
or governmental agency or body is required for the
consummation by the Corporation of the transactions on its
part herein contemplated which has not been duly obtained.
(c) The Corporation agrees that all of its covenants
and other agreements contained in the Underwriting Agreement,
when made, shall be deemed to be incorporated by reference
herein and made with Burnham hereunder. The Corporation agrees
that its execution of the Underwriting Agreement shall
constitute confirmation to Burnham of the Corporation's
performance in all material respects of its covenants and
other agreements contained in the Underwriting Agreement.
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5. Availability of Information.
(a) The Corporation hereby agrees to provide Burnham,
at the Corporation's sole cost and expense, with all
information and documentation with respect to its business,
financial condition and other matters as Burnham may
reasonably deem relevant and shall reasonably request in
connection with its performance under this Agreement,
including, without limitation, copies of all correspondence
with the Commission or the NASD, certificates of its officers,
opinions of its counsel and comfort letters from its auditors.
The Corporation represents and warrants to Burnham that all
such information and documentation provided pursuant to this
Section 5 will not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the
statements therein not misleading in light of the
circumstances under which they were made. The above-mentioned
certificates, opinions of counsel and comfort letters shall be
provided to Burnham, to the extent available, as Burnham may
request on or prior to the Effective Date, on or prior to the
Pricing Date and on or prior to the Closing Date. The
Corporation will make reasonably available to Burnham its
auditors, counsel and officers and directors to discuss with
Burnham any aspect of the Corporation which Burnham may deem
relevant. In addition, the Corporation will cause to be
delivered to Burnham, when delivered to the Underwriter,
copies of all certificates, opinions, comfort letters, reports
and other documents delivered to the Underwriter pursuant to
the Underwriting Agreement and shall cause the person issuing
such certificate, opinion, comfort letter, report or other
document to authorize Burnham to rely thereon to the same
extent as if addressed directly to Burnham. In addition, the
Underwriter and the Corporation will promptly advise Burnham
of all telephone conversations with the NASD or the Commission
which relate to or may affect the Offering or the S-1.
(b) Paul, Hastings, Janofsky & Walker LLP will
provide, at the Underwriter's expense, to Burnham the opinion
said counsel shall deliver to the Underwriter, under the
Underwriting Agreement, which opinion shall be addressed to
Burnham and shall be dated the Closing Date (or any other date
on which an opinion is delivered by such counsel pursuant to
the Underwriting Agreement).
(c) Burnham hereby agrees to cooperate in all
reasonable respects with the Underwriter and its counsel in
responding to any comments made by the NASD with respect to
the Offering, this Agreement or Burnham's role as "Qualified
Independent Underwriter".
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6. Indemnification and Contribution.
(a) The Corporation agrees to indemnify and hold
harmless Burnham from and against any and all losses, claims,
damages, liabilities or actions, joint or several (including
reasonable investigation, legal and other expenses incurred in
connection with, and, subject to the provisions of Section
6(b) hereof, any amount paid in settlement of, any action,
suit or proceeding commenced or any claim asserted), to which
Burnham may become subject under the 1933 Act, the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), or
other Federal or state statutory law or regulation, at common
law or otherwise, insofar as such losses, claims, damages,
liabilities or actions arise out of, or are based upon, (i) an
untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement or any amendment
thereto, or the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to
make the statements therein not misleading, (ii) an untrue
statement or alleged untrue statement of a material fact
contained in the Prospectus, or the omission or alleged
omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not
misleading, (iii) any breach or alleged breach by the
Corporation of its representations, warranties and agreements
contained in this Agreement or (iv) Burnham's performance of
its duties under this Agreement; provided, however, that the
Corporation will have no obligation under this Section 6(a) to
the extent that any such loss, claim, damage, liability or
action pursuant to clause (iv) above shall have been
determined in a final judgment of a court of competent
jurisdiction to have been due to the willful misconduct or
gross negligence of Burnham.
Burnham agrees to indemnify and hold harmless the
Corporation, its directors and officers, and each person, if
any, who controls the Corporation within the meaning of either
Section 15 of the 1933 Act or Section 20 of the Exchange Act
to the same extent as the foregoing indemnity from the
Corporation to Burnham, but only with respect to information
relating to Burnham furnished in writing by Burnham expressly
for use in the Registration Statement, the Prospectus, or any
amendment or supplement thereto, or any preliminary
prospectus; provided, however, that the foregoing indemnity by
Burnham shall not apply to any untrue statement or omission
contained in any preliminary prospectus which is not contained
in the Prospectus.
(b) Any party which proposes to assert the right to
be indemnified under Section 6 will, promptly after receipt of
notice of commencement of any action, suit or proceeding
against such party in respect of which a claim is to be made
against the indemnifying party under Section 6, notify each
such indemnifying party of the commencement of such action,
suit or proceeding, but the omission so to notify an
indemnified party of any such action, suit or proceeding shall
not relieve it from any liability which it may have to any
indemnified party otherwise than under Section 6(a). In case
any such action, suit or proceeding shall be
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brought against any indemnified party and it shall notify the
indemnifying party of the commencement thereof, each
indemnifying party shall be entitled to participate in and, to
the extent that it shall wish, jointly with any other
indemnifying party similarly notified, to assume the defense
thereof, with counsel reasonably satisfactory to such
indemnified party, and after notice from the indemnifying
parties to such indemnified party of their election so to
assume the defense thereof, the indemnifying party shall not
be liable to such indemnified party for any legal or other
expenses, other than reasonable costs of investigation
subsequently incurred by such indemnified party in connection
with the defense thereof, except as provided below. The
indemnified party shall have the right to employ its counsel
in any such action, but the fees and expenses of such counsel
shall be at the expense of such indemnified party unless (i)
the employment of counsel by such indemnified party has been
authorized by the indemnifying parties, (ii) the indemnified
party reasonably shall have concluded on the basis of the
advice of counsel that there may be a conflict of interest
between the indemnifying parties and the indemnified party in
the conduct of the defense of such action (in which case the
indemnifying parties shall not have the right to direct the
defense of such action on behalf of the indemnified party), or
(iii) the Corporation shall not in fact have employed counsel
to assume the defense of the indemnified party, in each of
which cases the fees and expenses of counsel shall be at the
expense of the indemnifying parties. An indemnifying party
shall not be liable for any settlement of any action or claim
effected without its written consent. Each indemnifying party
shall pay all legal and other expenses for which it is liable
under Section 6(a) from time to time (but not more frequently
than monthly) within 30 days after its receipt of a bill
therefor.
(c) If the indemnification provided for in Section
6(a) is unavailable to, or insufficient to hold harmless any
indemnified party under Section 6(a), in respect of any loss,
claim, damage, liability or action referred to therein, then
each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of such losses,
claims, damages, liabilities and actions (i) in such
proportion as is appropriate to reflect the relative benefits
received from the Offering by the Corporation, on the one
hand, and Burnham, on the other, pursuant to the provisions of
this Agreement or (ii) if the allocation provided by clause
(i) above is not permitted by applicable law, or if the
indemnified party failed to give the notice required under
Section 6(b), in such proportion as is appropriate to reflect
not only the relative benefits but also the relative fault of
the Corporation, on the one hand, and Burnham, on the other,
in connection with Burnham's activities under this Agreement
or the statements or omissions that resulted in such losses,
claims, damages, liabilities or actions, as well as any other
relevant equitable considerations. The relative benefits
received by the Corporation, on the one hand, and Burnham, on
the other, shall be deemed to be in the same proportion as the
total net proceeds from the Offering (before deducting
expenses) bears to the total fee received by Burnham pursuant
to Section 3. The relative fault of the Corporation, on the
one hand, and of Burnham, on the other, shall be determined by
reference to, among other things,
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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 Corporation or by
Burnham, and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such
statement or omission. The Corporation and Burnham agree that
it would not be just and equitable if contribution pursuant to
this Section 6(c) were determined by pro rata allocation or by
any other method of allocation which does not take account of
the equitable considerations referred to in this Section 6(c).
The amount paid or payable by an indemnified party as a result
of the losses, claims, damages, liabilities or actions
referred to in this Section 6(c) shall be deemed to include
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 6(c), Burnham shall not be required
to contribute any amount in excess of the amount by which the
fee paid to Burnham pursuant to Section 3 exceeds the amount
of any damages Burnham has otherwise been required to pay by
reason of such activities under this Agreement or 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 1933 Act) shall be entitled to
contribution from any person who was not guilty of such
fraudulent misrepresentation.
(d) The statements with respect to Burnham in the
seventh paragraph under the caption "Underwriting" in the
Prospectus constitute the only information furnished to the
Corporation in writing on behalf of Burnham expressly for use
in the Registration Statement, the Prospectus or any amendment
or supplement thereto, or any preliminary prospectus.
(e) For purposes of this Section 6, each person, if
any, who controls Burnham or the Corporation within the
meaning of Section 15 of the 1933 Act shall have the same
rights to indemnification and contribution as Burnham and the
Corporation. Any successor of Burnham or the Corporation, or
of any person who controls Burnham or the Corporation, as the
case may be, shall be entitled to the benefit of such
respective indemnity and contribution agreements.
(f) The indemnity and contribution agreements
contained in this Section 6, and the covenants,
representations and warranties of the Corporation set forth in
this Agreement, shall remain operative and in full force and
effect regardless of (i) any investigation made by Burnham or
on its behalf or by or on behalf of any person who controls
Burnham or (ii) any termination of this Agreement or the
Offering.
7. Successors and Assigns. The benefits of this Agreement
shall inure to the respective successors and assigns of the parties hereto and
the obligations and liabilities assumed in this Agreement by the parties hereto
shall be binding upon their respective successors and assigns.
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8. Amendments and Waivers. The provisions of this Agreement
may not be amended, modified or supplemented unless the Corporation, the
Underwriter and Burnham consent in writing to such amendment, modification or
supplement.
9. Notice. Whenever notice is required to be given pursuant to
this Agreement, such notice shall be in writing and shall be delivered by hand
or by commercial messenger service or mailed by first class mail, postage
prepaid, addressed (a) if to Burnham, at the address set forth at the head of
this Agreement, Attention: Richard Lewisohn III, (b) if to the Corporation, at
333 Allegheny Avenue, Oakmont, Pennsylvania 15139, Attention: President or (c)
if to the Underwriter, at C.E. Unterberg, Towbin, Swiss Bank Tower, 10 E. 50th
Street, 22nd Floor, New York, New York 10022, Attention: Mark Hughes, with a
copy to Paul, Hastings, Janofsky & Walker LLP, 399 Park Avenue, 31st Floor, New
York, New York 10022, Attention: Marie Censoplano, Esq., or such other address
as to which any party shall notify the other parties hereto in writing.
10. Governing Law. This Agreement shall be construed (both as
to validity and performance) and enforced in accordance with and governed by the
laws of the State of New York applicable to agreements made and to be performed
wholly within such jurisdiction. Each of the Corporation and the Underwriter
irrevocably consents that any legal action or proceeding against it under,
arising out of or in any manner relating to this Agreement may be brought in any
court of the State of New York, County of New York, or in the United States
District Court for the Southern District of New York. Each of the Corporation
and the Underwriter, by the execution and delivery of this Agreement, expressly
and irrevocably assents and submits to the personal jurisdiction of any of such
courts in any such action or proceeding. Each of the Corporation and the
Underwriter irrevocably consents to the service of any complaint, summons,
notice or other process relating to any such action or proceeding by delivery
thereof to it in the manner provided for in Section 9 hereof.
11. Counterparts. This Agreement may be signed in two or more
counterparts with the same force and effect as if the signatures thereto and
hereto were upon the same instrument.
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If the above terms are in accordance with your understanding
of our agreement, please sign the enclosed copy of this Agreement and return
such copy to us.
Very truly yours,
BURNHAM SECURITIES INC.
By: ________________________________
Richard Lewisohn III
Managing Director
CONFIRMED AND AGREED TO AS OF
THE DATE FIRST ABOVE WRITTEN:
SERVICEWARE TECHNOLOGIES, INC.
By: ___________________________________
Name:
Title:
C.E. UNTERBERG, TOWBIN
By: ___________________________________
Name:
Title: General Partner
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