<PAGE>
As filed with the Securities and Exchange Commission on November 11, 1999
Registration No. 333-86445
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- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------
AMENDMENT NO. 4
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------
RAINMAKER SYSTEMS, INC.
(Exact Name of Registrant as Specified in Its Charter)
--------------
<TABLE>
<S> <C> <C>
California 7379 33-0442860
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Number) Identification No.)
</TABLE>
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1800 Green Hills Road, Scotts Valley, California 95066
(831) 430-3800
(Address, Including Zip Code and Telephone Number, Including Area Code, of
Registrant's Principal Executive Offices)
--------------
Michael Silton
Chief Executive Officer
RAINMAKER SYSTEMS, INC.
1800 Green Hills Road, Scotts Valley, California 95066
(831) 430-3800
(Name, Address, Including Zip Code and Telephone Number, Including Area Code,
of Agent for Service)
--------------
Copies to:
<TABLE>
<S> <C>
Bruce R. Hallett, Esq. Richard D. Harroch, Esq.
Scott R. Santagata, Esq. Peter Lillevand, Esq.
Ryan S. Hong, Esq. Brett E. Cooper, Esq.
Joo Ryung Kang, Esq. Thomas R. Brida, Esq.
Brobeck, Phleger & Harrison LLP Orrick, Herrington & Sutcliffe LLP
38 Technology Drive, Irvine, California 92618 Old Federal Reserve Bank Building
(949) 790-6300 400 Sansome Street, San Francisco, California 94111
(415) 392-1122
</TABLE>
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Approximate date of commencement of proposed sale to the public: As soon as
practicable after this Registration Statement becomes effective.
--------------
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
--------------
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Company shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section
8(a), may determine.
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<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution
The following table sets forth the costs and expenses, other than
underwriting fees, payable in connection with the sale and distribution of the
securities being registered. All amounts are estimated except the Securities
and Exchange Commission and NASD registration fees. All of the expenses below
will be paid by Rainmaker.
<TABLE>
<CAPTION>
Item
----
<S> <C>
Registration fee................................................. $ 15,985
NASD filing fee.................................................. 6,825
Nasdaq National Market listing fee............................... 95,000
Blue sky fees and expenses....................................... 10,000
Printing and engraving expenses.................................. 200,000
Legal fees and expenses.......................................... 460,000
Accounting fees and expenses..................................... 425,000
Transfer Agent and Registrar fees................................ 2,000
Miscellaneous.................................................... 27,190
----------
Total.......................................................... $1,242,000
==========
</TABLE>
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* To be filed by amendment.
Item 14. Indemnification of Directors and Officers.
Under Section 145 of the Delaware General Corporation Law, we can indemnify
our directors and officers against liabilities they may incur in such
capacities, including liabilities under the Securities Act of 1933, as amended
(the "Securities Act"). Our certificate of incorporation will further provide
that we are authorized to indemnify our directors and officers to the fullest
extent permitted by law through the bylaws, agreement, vote of stockholders or
disinterested directors, or otherwise. Our bylaws will provide that we will
indemnify our directors and officers to the fullest extent permitted by law and
require us to advance litigation expenses upon our receipt of an undertaking by
the director or officer to repay such advances if it is ultimately determined
that the director or officer is not entitled to indemnification. Our bylaws
will further provide that rights conferred under such bylaws do not exclude any
other right such persons may have or acquire under any bylaw, agreement, vote
of stockholders or disinterested directors or otherwise.
We also have directors' and officers' liability insurance. In addition,
concurrently with this offering, we will enter into agreements to indemnify our
directors and certain of our officers in addition to the indemnification
provided for in the certificate of incorporation and bylaws. These agreements
will, among other things, indemnify our directors and certain of our officers
for certain expenses (including attorneys fees), judgments, fines and
settlement amounts incurred by such person in any action or proceeding,
including any action by or in our right, on account of services by that person
as a director or officer of Rainmaker or as a director or officer of any
subsidiary of Rainmaker, or as a director or officer of any other company or
enterprise that the person provides services to at the request of Rainmaker.
Our certificate of incorporation will provide that, pursuant to Delaware
Law, our directors shall not be liable for monetary damages for breach of the
directors' fiduciary duty of care to Rainmaker and our stockholders. This
provision in the certificate of incorporation does not eliminate the duty of
care, and in appropriate circumstances equitable remedies such as injunctive or
other forms of non-monetary relief will remain available under Delaware Law. In
addition, each director will continue to
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<PAGE>
be subject to liability for breach of the director's duty of loyalty to
Rainmaker or our stockholders, for acts or omissions not in good faith or
involving intentional misconduct or knowing violations of law, for actions
leading to improper personal benefit to the director, and for payment of
dividends or approval of stock repurchases or redemptions that are unlawful
under Delaware Law. The provision also does not affect a director's
responsibilities under any other law, such as the federal securities laws or
state or federal environmental laws.
The Underwriting Agreement provides for indemnification by the underwriters
of Rainmaker and its officers and directors, and by Rainmaker of the
underwriters, for certain liabilities arising under the Securities Act or
otherwise.
Item 15. Recent Sales of Unregistered Securities
The following is a summary of transactions by Rainmaker during the past
three years involving sales of our securities that were not registered under
the Securities Act of 1933, as amended:
In March 1994, we issued a warrant to Silicon Valley Bank to purchase 22,750
shares of Series B preferred stock at an exercise price of $1.03 per share in
consideration of a line of credit to borrow funds with an expiration date of
March 1999. We extended the expiration date of this warrant to March 8, 2000 in
consideration of an amendment to the credit facility dated as of April 15,
1998.
On February 12, 1999, we issued 8,536,585 shares of Series C preferred stock
at $1.64 per share for an aggregate price of approximately $14 million to
certain accredited investors.
On February 12, 1999, we issued 5,717,470 shares of Series D preferred stock
to The Santa Cruz Operation, Inc. ("SCO") in exchange for all of the securities
previously held by SCO, including a convertible debenture in the principal
amount of $995,529, warrants to purchase 2,844,370 shares of common stock and
Series A preferred stock convertible into 2,873,100 shares of common stock.
Since January 1, 1996, we have granted options to purchase an aggregate of
4,945,696 shares of common stock to our directors, executive officers,
employees and consultants at exercise prices of $0.06 to $9.00 per share. Since
January 1, 1996, options to purchase 1,371,396 shares at a weighted exercise
price of $0.28 per share had been exercised.
In April and May 1999, we granted put rights to six existing stockholders to
sell back to us up to 1,164,537 shares of common stock at $1.64 per share. One
stockholder, SCO, subsequently exercised its put right, and we purchased from
SCO 540,642 shares in June 1999 and 540,642 shares in August 1999, at a price
of $1.64 per share. The remaining put rights to 83,253 shares of common stock
expired on September 30, 1999.
In connection with the reincorporation of Rainmaker from California to
Delaware immediately prior to this offering, the surviving Delaware corporation
will issue 17,965,016 shares of its common stock and 334,889, 8,536,585 and
4,286,186 shares of its Series B, C, and D preferred stock, respectively in
exchange for the issued and outstanding shares of capital stock of the
predecessor corporation. In addition, in connection with such reincorporation,
all options to purchase shares of common stock of the predecessor corporation
shall be converted into options to purchase common stock of the surviving
Delaware corporation, and all warrants to purchase Series B preferred stock of
the predecessor corporation will be converted into warrants to purchase Series
B preferred stock of the surviving Delaware corporation.
The sale and issuance of securities in the above transactions were deemed to
be exempt from registration under the Securities Act by virtue of Section 4(2)
or Rule 701 thereof, or Regulation D, as transactions by an issuer not
involving a public offering, or, with respect to issuances in connection
II-2
<PAGE>
with the reincorporation, in reliance on Rule 145(a)(2) under the Securities
Act. Appropriate legends are affixed to the stock certificates issued in such
transactions. Similar legends were imposed in connection with any subsequent
sales of any such securities. All recipients either received adequate
information about Rainmaker or had access, through employment or other
relationships, to such information.
Item 16. Exhibits and Financial Statement Schedules
The following Exhibits are attached hereto and incorporated herein by
reference.
<TABLE>
<C> <S>
1.1 Form of Underwriting Agreement.
3.1 *Certificate of Incorporation of Rainmaker Systems, Inc. to be filed
with the Delaware Secretary of State in October 1999.
3.2 *Bylaws of Rainmaker Systems, Inc. to be adopted in October 1999.
4.1 *Specimen certificate representing shares of common stock of
Rainmaker Systems, Inc.
4.2 *Registration Rights Agreement dated March 8, 1994 between UniDirect
Corporation and Silicon Valley Bank.
4.3 *Registration Rights Agreement dated February 12, 1999 among
Rainmaker Systems, Inc., ABS Capital Partners III, L.P., H & Q
Rainmaker Investors, L.P., Hambrecht & Quist California, Hambrecht
& Quist Employee Venture Fund, L.P. II and The Santa Cruz
Operation, Inc.
5.1 *Opinion of Brobeck, Phleger & Harrison LLP.
10.1 *Form of Indemnification Agreement.
10.2 *1999 Stock Incentive Plan.
10.3 *1999 Stock Purchase Plan.
10.4 *Amended and Restated Loan and Security Agreement dated May 9, 1997
between UniDirect Corporation and Silicon Valley Bank, as amended
on September 22, 1997, April 15, 1998 and September 14, 1998.
10.5 *1995 Stock Option/Stock Issuance Plan, together with form of Notice
of Grant of Stock Option, Stock Option Agreement, Stock Purchase
Agreement and Stock Issuance Agreement.
10.6 *1998 Stock Option/Stock Issuance Plan, together with form of Notice
of Grant of Stock Option, Stock Option Agreement, Stock Purchase
Agreement and Stock Issuance Agreement.
10.7 *Net Lease Agreement dated July 29, 1996 between UniDirect
Corporation and Borland International, Inc., together with
amendments dated February 27, 1997, April 14, 1998 and November 15,
1998.
10.8 *Net Lease Agreement dated November 5, 1998 between UniDirect
Corporation and Inprise Corporation.
10.9 *Warrant to Purchase Stock dated March 8, 1994 issued to Silicon
Valley Bank, as amended by letter agreement dated April 15, 1998.
10.10 *Stock Purchase Agreement dated January 29, 1999 among Rainmaker
Systems, Inc., ABS Capital Partners III, L.P., H & Q Rainmaker
Investors, L.P., Hambrecht & Quist California and Hambrecht & Quist
Employee Venture Fund, L.P. II.
10.11 *Exchange Agreement dated January 29, 1999 between Rainmaker Systems,
Inc. and The Santa Cruz Operation, Inc.
10.12 *Asset Purchase Agreement dated May 18, 1998 between UniDirect
Corporation and Savoir Technology Group, Inc.
</TABLE>
II-3
<PAGE>
<TABLE>
<C> <S>
10.13 *Master Lease Agreement dated May 5, 1999 between Rainmaker Systems,
Inc. and Celtic Leasing Corp.
10.14 *Loan and Security Agreement dated October 28, 1997 between UniDirect
Corporation and MetLife Capital Corporation, together with related
agreements dated May 5, 1999.
10.15 *Compensation Agreement dated January 1, 1995 between UniDirect
Corporation and Richard Marotta, together with Notice of Grant of
Stock Option and Stock Option Agreement.
10.16 *Compensation Agreement dated November 1, 1995 between UniDirect
Corporation and Richard Marotta, together with Notice of Grant of
Stock Option and Stock Option Agreement.
10.17 *Separation Agreement and Release dated September 30, 1997 between
UniDirect Corporation and Bernard Jubb, together with Amendment No.
1 dated January 27, 1997 and the Promissory Note and Security
Agreement dated February 5, 1999.
10.18 *Separation Agreement and Release dated April 8, 1999 between
Rainmaker Systems, Inc. and Chris Sterbenc.
10.19 *+Distributor Agreement dated January 24, 1995 between UniDirect
Corporation and The Santa Cruz Operation, Inc., together with
amendments dated April 8, 1996, November 5, 1997, March 16, 1999
and May 17, 1999.
10.20 *+Sun Software Subscription Services Outsourcing and Distribution
Agreement dated March 18, 1997 between UniDirect Corporation and
SunSoft, Inc., together with amendments dated May 20, 1997, June
16, 1997, April 30, 1999, May 19, 1999 and Assignment dated August
25, 1998.
10.21 +Outsourcing Services Agreement dated July 21, 1997 between UniDirect
Corporation and FTP Software, Inc., together with amendments dated
September 12, 1997, October 1, 1997, November 11, 1997, January 21,
1998, January 28, 1998, May 26, 1998 and August 1998.
10.22 +Outsource Services Agreement dated March 26, 1999 between Rainmaker
Systems, Inc. and Novell, Inc., together with amendment dated
September 8, 1999.
23.1 *Consent of Ernst & Young LLP.
23.2 *Consent of Brobeck, Phleger & Harrison LLP (contained in Exhibit
5.1).
24.1 *Power of Attorney (contained on the signature page hereof).
27.1 *Financial Data Schedule.
</TABLE>
- --------
* Previously filed.
+ Confidential treatment is being sought with respect to certain portions of
this agreement. Such portions have been omitted from this filing and have
been filed separately with the Securities and Exchange Commission.
(b) Financial Statement Schedules
The following financial statement schedule for the three years in the period
ended December 31, 1998 should be read in conjunction with the financial
statements of Rainmaker Systems, Inc. filed as part of this Registration
Statement.
. Schedule II--Valuation and qualifying accounts
Schedules other than that listed above have been omitted because the
information required to be set forth therein is not applicable or is shown in
the financial statements or notes thereto.
II-4
<PAGE>
Item 17. Undertakings
The Registrant hereby undertakes to provide to the Underwriters at the
closing specified in the Underwriting Agreement certificates in such
denominations and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit, or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act of
1933, each post-effective amendment that contains a form of prospectus shall be
deemed to be a new registration statement relating to the securities offered
therein, and this offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Amendment to the Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of Scotts
Valley, State of California, on the 8th day of November, 1999.
RAINMAKER SYSTEMS, INC.
/s/ Michael Silton
By: ____________________________________
Michael Silton,
Chairman of the Board, President
and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to the Registration Statement on Form S-1 has been signed by the following
persons in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Michael Silton Chairman of the Board, November 8, 1999
____________________________________ President and Chief
Michael Silton Executive Officer
(principal executive
officer)
* Secretary and Chief November 8, 1999
____________________________________ Financial Officer
Martin Hernandez (principal financial and
accounting officer)
* Director November 8, 1999
____________________________________
Robert Leff
Director
____________________________________
Alok Mohan
* Director November 8, 1999
____________________________________
Peter Silton
* Director November 8, 1999
____________________________________
Andrew Sheehan
</TABLE>
/s/ Michael Silton
*By: _______________________________
Michael Silton, attorney-in-fact
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<PAGE>
Schedule II-Valuation and Qualifying Accounts
A schedule of the allowance for sales returns and doubtful accounts is
presented below (in thousands):
<TABLE>
<CAPTION>
Balance Additions
at Charged Write-offs Balance at
Beginning to Costs and End
Description of Period and Expenses Recoveries of Period
----------- --------- ------------ ---------- ----------
<S> <C> <C> <C> <C>
Allowance for sales returns and
doubtful accounts:
Year ended December 31, 1998..... $298 $286 $270 $314
Year ended December 31, 1997..... $156 $338 $196 $298
Year ended December 31, 1996..... $145 $278 $267 $156
</TABLE>
S-1
<PAGE>
EXHIBIT INDEX
<TABLE>
<C> <S>
1.1 Form of Underwriting Agreement.
3.1 *Certificate of Incorporation of Rainmaker Systems, Inc. to be filed
with the Delaware Secretary of State in October 1999.
3.2 *Bylaws of Rainmaker Systems, Inc. to be adopted in October 1999.
4.1 *Specimen certificate representing shares of common stock of
Rainmaker Systems, Inc.
4.2 *Registration Rights Agreement dated March 8, 1994 between UniDirect
Corporation and Silicon Valley Bank.
4.3 *Registration Rights Agreement dated February 12, 1999 among
Rainmaker Systems, Inc., ABS Capital Partners III, L.P., H & Q
Rainmaker Investors, L.P., Hambrecht & Quist California, Hambrecht
& Quist Employee Venture Fund, L.P. II and The Santa Cruz
Operation, Inc.
5.1 *Opinion of Brobeck, Phleger & Harrison LLP.
10.1 *Form of Indemnification Agreement.
10.2 *1999 Stock Incentive Plan.
10.3 *1999 Stock Purchase Plan.
10.4 *Amended and Restated Loan and Security Agreement dated May 9, 1997
between UniDirect Corporation and Silicon Valley Bank, as amended
by letter agreement dated April 15, 1998.
10.5 *1995 Stock Option/Stock Issuance Plan, together with form of Notice
of Grant of Stock Option, Stock Option Agreement, Stock Purchase
Agreement and Stock Issuance Agreement.
10.6 *1998 Stock Option/Stock Issuance Plan, together with form of Notice
of Grant of Stock Option, Stock Option Agreement, Stock Purchase
Agreement and Stock Issuance Agreement.
10.7 *Net Lease Agreement dated July 29, 1996 between UniDirect
Corporation and Borland International, Inc., together with
amendments dated February 27, 1997, April 14, 1998 and November 15,
1998.
10.8 *Net Lease Agreement dated November 5, 1998 between UniDirect
Corporation and Inprise Corporation.
10.9 *Warrant to Purchase Stock dated March 8, 1994 issued to Silicon
Valley Bank, as amended by letter agreement dated April 15, 1998.
10.10 *Stock Purchase Agreement dated January 29, 1999 among Rainmaker
Systems, Inc., ABS Capital Partners III, L.P., H & Q Rainmaker
Investors, L.P., Hambrecht & Quist California and Hambrecht & Quist
Employee Venture Fund, L.P. II.
10.11 *Exchange Agreement dated January 29, 1999 between Rainmaker Systems,
Inc. and The Santa Cruz Operation, Inc.
10.12 *Asset Purchase Agreement dated May 18, 1998 between UniDirect
Corporation and Savoir Technology Group, Inc.
10.13 *Master Lease Agreement dated May 5, 1999 between Rainmaker Systems,
Inc. and Celtic Leasing Corp.
</TABLE>
<PAGE>
<TABLE>
<C> <S>
10.14 *Loan and Security Agreement dated October 28, 1997 between UniDirect
Corporation and MetLife Capital Corporation.
10.15 *Compensation Agreement dated January 1, 1995 between UniDirect
Corporation and Richard Marotta, together with Notice of Grant of
Stock Option and Stock Option Agreement.
10.16 *Compensation Agreement dated November 1, 1995 between UniDirect
Corporation and Richard Marotta, together with Notice of Grant of
Stock Option and Stock Option Agreement.
10.17 *Separation Agreement and Release dated September 30, 1997 between
UniDirect Corporation and Bernard Jubb, together with Amendment No.
1 to Separation Agreement and Release dated January 27, 1997 and
the Promissory Note and Security Agreement dated February 5, 1999.
10.18 *Separation Agreement and Release dated April 8, 1999 between
Rainmaker Systems, Inc. and Chris Sterbenc.
10.19 *+Distributor Agreement dated January 24, 1995 between UniDirect
Corporation and The Santa Cruz Operation, Inc., together with
amendments dated April 8, 1996, November 5, 1997, March 16, 1999
and May 17, 1999.
10.20 *+Sun Software Subscription Services Outsourcing and Distribution
Agreement dated March 18, 1997 between UniDirect Corporation and
SunSoft, Inc., together with amendments dated May 20, 1997, June
16, 1997, April 30, 1999, May 19, 1999 and Assignment dated August
25, 1998.
10.21 +Outsourcing Services Agreement dated July 21, 1997 between UniDirect
Corporation and FTP Software, Inc., together with amendments dated
September 12, 1997, October 1, 1997, November 11, 1997, January 21,
1998, January 28, 1998, May 26, 1998 and August 1998.
10.22 +Outsource Services Agreement dated March 26, 1999 between Rainmaker
Systems, Inc. and Novell, Inc., together with amendment dated
September 8, 1999.
23.1 *Consent of Ernst & Young LLP.
23.2 *Consent of Brobeck, Phleger & Harrison LLP (contained in Exhibit
5.1).
24.1 *Power of Attorney (contained on the signature page hereof).
27.1 *Financial Data Schedule.
</TABLE>
- --------
* Previously filed.
+ Confidential treatment is being sought with respect to certain portions of
this agreement. Such portions have been omitted from this filing and have
been filed separately with the Securities and Exchange Commission.
<PAGE>
EXHIBIT 1.1
5,000,000 Shares
RAINMAKER SYSTEMS, INC.
COMMON STOCK
UNDERWRITING AGREEMENT
Dated _________, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY........................................................ 2
(a) Effective Registration Statement............................................................... 2
(b) Contents of Registration Statement............................................................. 2
(c) Distribution of Offering Material By the Company............................................... 2
(d) Due Incorporation.............................................................................. 2
(e) No Subsidiaries................................................................................ 3
(f) Underwriting Agreement......................................................................... 3
(g) Description of Capital Stock and Other Capital Stock Matters................................... 3
(h) Authorized Stock............................................................................... 3
(i) Validly Issued Shares.......................................................................... 3
(j) No Default..................................................................................... 3
(k) No Conflict.................................................................................... 3
(l) No Material Adverse Change..................................................................... 4
(m) Independent Accountants........................................................................ 4
(n) Preparation of the Financial Statements........................................................ 4
(o) Legal Proceedings; Exhibits.................................................................... 4
(p) Compliance with Securities Act................................................................. 4
(q) Not an Investment Company...................................................................... 4
(r) Compliance with Laws........................................................................... 5
(s) No Environmental Costs......................................................................... 5
(t) No Registration Rights......................................................................... 5
(u) Cuban Business Statute......................................................................... 5
(v) Absence of Material Changes.................................................................... 5
(w) Good Title to Properties....................................................................... 5
(x) Intellectual Property Rights................................................................... 6
(y) No Labor Disputes.............................................................................. 6
(z) Insurance...................................................................................... 6
(aa) Governmental Permits........................................................................... 6
(bb) Accounting Controls............................................................................ 6
(cc) Stock Exchange Listing......................................................................... 6
(dd) Year 2000 Compliance........................................................................... 7
(ee) Tax Law Compliance............................................................................. 7
(ff) Related Party Transactions..................................................................... 7
2. PURCHASE AND SALE AGREEMENTS......................................................................... 7
(a) Firm Shares.................................................................................... 7
(b) Additional Shares.............................................................................. 7
(c) Market Standoff Provision...................................................................... 8
(d) Terms of Public Offering....................................................................... 8
3. PAYMENT AND DELIVERY................................................................................. 8
(a) Firm Shares.................................................................................... 8
(b) Additional Shares.............................................................................. 8
(c) Delivery of Certificates....................................................................... 8
</TABLE>
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<PAGE>
TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
Page
<S> <C>
4. COVENANTS OF THE COMPANY............................................................................ 9
(a) Furnish Copies of Registration Statement and Prospectus....................................... 9
(b) Notification of Amendments or Supplements..................................................... 9
(c) Filings of Amendments or Supplements.......................................................... 9
(d) Blue Sky Laws................................................................................. 9
(e) Earnings Statement............................................................................ 9
(f) Use of Proceeds............................................................................... 10
(g) Transfer Agent................................................................................ 10
(h) Periodic Reporting Obligations................................................................ 10
(i) Exchange Act Compliance....................................................................... 10
5. CONDITIONS TO THE UNDERWRITERS' OBLIGATIONS......................................................... 10
(a) Effective Registration Statement.............................................................. 10
(b) Rule 462 Registration Statement............................................................... 10
(c) Prospectus Filed with Commission.............................................................. 10
(d) No Stop Order................................................................................. 10
(e) No NASD Objection............................................................................. 11
(f) No Debt Downgrading........................................................................... 11
(g) No Material Adverse Change.................................................................... 11
(h) Officer's Certificate......................................................................... 11
(i) Opinion of Company Counsel.................................................................... 11
(j) Opinion of Underwriters Counsel............................................................... 11
(k) Accountant's Comfort Letter................................................................... 11
(l) Lock-Up Agreements............................................................................ 12
(m) Additional Documents.......................................................................... 12
6. EXPENSES............................................................................................ 12
7. INDEMNITY AND CONTRIBUTION.......................................................................... 13
(a) Indemnification of the Underwriters........................................................... 13
(b) Indemnification by the Underwriters........................................................... 13
(c) Indemnification Procedures.................................................................... 14
(d) Indemnification for Directed Share Program.................................................... 15
(e) Contribution Agreement........................................................................ 15
(f) Contribution Amounts.......................................................................... 16
(g) Survival of Provisions........................................................................ 16
</TABLE>
-ii-
<PAGE>
TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
Page
<S> <C>
8. EFFECTIVENESS.................................................................... 16
9. TERMINATION...................................................................... 17
10. DEFAULTING UNDERWRITERS.......................................................... 17
11. COUNTERPARTS..................................................................... 18
12. HEADINGS; TABLE OF CONTENTS...................................................... 18
13. NOTICES.......................................................................... 18
14. SUCCESSORS....................................................................... 19
15. PARTIAL UNENFORCEABILITY......................................................... 19
16. GOVERNING LAW.................................................................... 19
17. ENTIRE AGREEMENT................................................................. 19
18. AMENDMENTS....................................................................... 19
19. SOPHISTICATED PARTIES............................................................ 19
</TABLE>
Schedule A
- ----------
List of Underwriters
Exhibits
- --------
Exhibit A - Form of Legal Opinion of Company Counsel
Exhibit B - Form of Lockup Agreement
-iii-
<PAGE>
___________________, 1999
Donaldson, Lufkin & Jenrette
Securities Corporation
Thomas Weisel Partners LLC
SG Cowen Securities Corporation
DLJdirect Inc.
As representatives of the several Underwriters
c/o Donaldson, Lufkin & Jenrette Thomas Weisel Partners LLC
Securities Corporation One Montgomery Street, Suite 3700
277 Park Avenue San Francisco, California 94104
New York, New York 10172
Ladies and Gentlemen:
Introduction. Rainmaker Systems, Inc., a Delaware corporation (the
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"Company"), proposes to issue and sell to the several underwriters named in
Schedule A hereto (the "Underwriters") an aggregate of 5,000,000 shares of the
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common stock, par value $0.001 per share, of the Company (the "Firm Shares").
The Company also proposes to issue and sell to the several
Underwriters not more than an additional 750,000 shares of its common stock, par
value $0.001 per share (the "Additional Shares"), if and to the extent that you
shall have determined to exercise, on behalf of the Underwriters, the right to
purchase such shares of common stock granted to the Underwriters in Section 3
hereof. The Firm Shares and the Additional Shares are hereinafter collectively
referred to as the "Shares". The shares of common stock, par value $0.001 per
share, of the Company to be outstanding after giving effect to the sales
contemplated hereby are hereinafter referred to as the "Common Stock".
Donaldson, Lufkin & Jenrette Securities Corporation, Thomas Weisel Partners LLC
and SG Cowen Securities Corporation have agreed to act as representatives of the
several Underwriters (in such capacity, the "Representatives") in connection
with the offering and sale of the Shares.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-1 (file no. 333-86445),
including a prospectus, relating to the Shares. The registration statement as
amended at the time it becomes effective, including the information (if any)
deemed to be part of the registration statement at the time of effectiveness
pursuant to Rule 430A under the Securities Act of 1933, as amended (the
"Securities Act"), is hereinafter referred to as the "Registration Statement";
the prospectus in the form first used to confirm sales of Shares is hereinafter
referred to as the "Prospectus". If the Company has filed a registration
statement to register additional shares of Common Stock pursuant to Rule 462(b)
under the Securities Act (the "Rule 462 Registration Statement"), then
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any reference herein to the term "Registration Statement" shall be deemed to
include such Rule 462 Registration Statement. All references in this Agreement
to the Registration Statement, the Rule 462 Registration Statement, a
preliminary prospectus, the Prospectus, or any amendments or supplements to any
of the foregoing, shall include any copy thereof filed with the Commission
pursuant to its Electronic Data Gathering, Analysis and Retrieval System
("EDGAR").
As part of the offering contemplated by this Agreement, Thomas Weisel
Partners has agreed to reserve out of the Shares set forth opposite its name on
Schedule A to this Agreement, up to 250,000 shares, for sale to the Company's
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employees, officers, and directors and other parties associated with the Company
(collectively, "Participants"), as set forth in the Prospectus under the heading
"Underwriting" (the "Directed Share Program"). The Shares to be sold by Thomas
Weisel Partners pursuant to the Directed Share Program (the "Directed Shares")
will be sold by Thomas Weisel Partners pursuant to this Agreement at the public
offering price. Any Directed Shares not orally confirmed for purchase by any
Participants by the end of the first business day after the date on which this
Agreement is executed will be offered to the public by Thomas Weisel Partners as
set forth in the Prospectus.
1. Representations and Warranties of the Company. The Company represents
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and warrants to and agrees with each of the Underwriters that:
(a) Effective Registration Statement. The Registration Statement
--------------------------------
has become effective; no stop order suspending the effectiveness of the
Registration Statement is in effect, and no proceedings for such purpose are
pending before or, to the Company's knowledge, threatened by the Commission.
(b) Contents of Registration Statement. (i) The Registration
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Statement, when it became effective, did not contain and, as amended or
supplemented, if applicable, will not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading, (ii) the Registration Statement
and the Prospectus comply and, as amended or supplemented, if applicable, will
comply in all material respects with the Securities Act and the applicable rules
and regulations of the Commission thereunder and (iii) the Prospectus does not
contain and, as amended or supplemented, if applicable, will not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements therein, in the light of the circumstances under which
they were made, not misleading, except that the representations and warranties
set forth in this paragraph do not apply to statements or omissions in the
Registration Statement or the Prospectus based upon information relating to any
Underwriter furnished to the Company in writing by such Underwriter through you
expressly for use therein.
(c) Distribution of Offering Material By the Company. The
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Company has not distributed and will not distribute, prior to the later of the
Option Closing Date (as defined below) and the completion of the Underwriters'
distribution of the Shares, any offering material in connection with the
offering and sale of the Shares other than a preliminary prospectus, the
Prospectus or the Registration Statement.
(d) Due Incorporation. The Company has been duly incorporated,
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is validly existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation,
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has the corporate power and authority to own its property and to conduct its
business as described in the Prospectus and is duly qualified to transact
business and is in good standing in each jurisdiction in which the conduct of
its business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so qualified or be in
good standing would not have a material adverse effect on the Company.
(e) No Subsidiaries. The Company has no subsidiaries.
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(f) Underwriting Agreement. This Agreement has been duly
----------------------
authorized, executed and delivered by the Company, and is a valid and binding
agreement of the Company, enforceable in accordance with its terms, except as
rights to indemnification hereunder may be limited by applicable law and except
as the enforcement hereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting the
rights and remedies of creditors or by general equitable principles.
(g) Description of Capital Stock and Other Capital Stock
----------------------------------------------------
Matters. The authorized capital stock of the Company conforms as to legal
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matters to the description thereof contained in the Prospectus. There are no
outstanding subscriptions, rights, warrants, options, calls, convertible
securities, commitments of sale or liens granted or issued by the Company
relating to or entitling any person to purchase or otherwise to acquire any
shares of the capital stock of the Company, except as otherwise disclosed in the
Registration Statement or options granted after September 30, 1999.
(h) Authorized Stock. All of the outstanding shares of capital
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stock of the Company prior to the issuance of the Shares to be sold by the
Company have been duly authorized and are validly issued, fully paid, non-
assessable and were not issued in violation of any preemptive or similar rights.
(i) Validly Issued Shares. The Shares to be sold by the Company
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have been duly authorized and, when issued and delivered in accordance with the
terms of this Agreement, will be validly issued, fully paid and non-assessable,
and the issuance of such Shares will not be subject to any preemptive or similar
rights.
(j) No Default. The Company is not in violation of its charter
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or by-laws or in default in the performance of any obligation, agreement,
covenant or condition contained in any indenture, loan agreement, mortgage,
lease or other agreement or instrument that is material and to the Company to
which the Company is a party or by which the Company or its property is bound.
(k) No Conflict. The execution and delivery by the Company of,
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and the performance by the Company of its obligations under, this Agreement will
not contravene any provision of applicable law or the certificate of
incorporation or by-laws of the Company or any agreement or other instrument
binding upon the Company that is material to the Company or any judgment, order
or decree of any governmental body, agency or court having jurisdiction over the
Company, and no consent, approval, authorization or order of, or qualification
with, any governmental body or agency is required for the performance by the
Company of its obligations under this Agreement, except such as may be required
by the securities or Blue Sky laws of the
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various states or the National Association of Securities Dealers, Inc. in
connection with the offer and sale of the Shares.
(l) No Material Adverse Change. There has not occurred any
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material adverse change, or any development which would reasonably be expected
to result in a prospective material adverse change, in the condition, financial
or otherwise, or in the earnings, business, operations or prospects of the
Company from that set forth in the Prospectus (exclusive of any amendments or
supplements thereto subsequent to the date of this Agreement).
(m) Independent Accountants. Ernst & Young LLP, who have
-----------------------
expressed their opinion with respect to the financial statements (which term as
used in this Agreement includes the related notes thereto) and supporting
schedules filed with the Commission as a part of the Registration Statement and
included in the Prospectus, are independent public or certified public
accountants as required by the Securities Act.
(n) Preparation of the Financial Statements. The financial
---------------------------------------
statements filed with the Commission as a part of the Registration Statement and
included in the Prospectus present fairly the financial position of the Company
as of and at the dates indicated and the results of its operations and cash
flows for the periods specified (subject, in the case of unaudited financial
statements, to normal year-end adjustments). The supporting schedules included
in the Registration Statement present fairly the information required to be
stated therein. Such financial statements and supporting schedules have been
prepared in conformity with generally accepted accounting principles applied on
a consistent basis throughout the periods involved, except as may be expressly
stated in the related notes thereto (subject, in the case of unaudited financial
statements, to normal year-end adjustments). No other financial statements or
supporting schedules are required to be included in the Registration Statement.
The financial data set forth in the Prospectus under the captions "Prospectus
Summary-Summary Financial Data," "Selected Financial Data" and "Capitalization"
fairly present the information set forth therein on a basis consistent with that
of the audited financial statements contained in the Registration Statement.
(o) Legal Proceedings; Exhibits. There are no legal or
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governmental proceedings pending or, to the Company's knowledge, threatened to
which the Company is a party or to which any of the properties of the Company is
subject that are required to be described in the Registration Statement or the
Prospectus and are not so described or any statutes, regulations, contracts or
other documents that are required to be described in the Registration Statement
or the Prospectus or to be filed as exhibits to the Registration Statement that
are not described or filed as required.
(p) Compliance with Securities Act. Each preliminary prospectus
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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.
(q) Not an Investment Company. The Company is not and, after
-------------------------
giving effect to the offering and sale of the Shares and the application of the
proceeds thereof as described in
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the Prospectus, will not be an "investment company" as such term is defined in
the Investment Company Act of 1940, as amended.
(r) Compliance with Laws. The Company (i) is in compliance with
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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) has received all permits, licenses or other
approvals required of them under applicable Environmental Laws to conduct their
respective businesses and (iii) is in compliance with all terms and conditions
of any such permit, license or approval, except where such noncompliance with
Environmental Laws, failure to receive required permits, licenses or other
approvals or failure to comply with the terms and conditions of such permits,
licenses or approvals would not, individually or in the aggregate, have a
material adverse effect on the Company.
(s) No Environmental Costs. There are no costs or liabilities
----------------------
associated with Environmental Laws (including, without limitation, any capital
or operating expenditures required for clean-up, closure of properties or
compliance with Environmental Laws or any permit, license or approval, any
related constraints on operating activities and any potential liabilities to
third parties) which would, individually or in the aggregate, have a material
adverse effect on the Company.
(t) No Registration Rights. 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 other than as described in the Registration Statement and
as have been waived in writing in connection with the offering contemplated
hereby.
(u) Cuban Business Statute. The Company has complied with all
----------------------
provisions of Section 517.075, Florida Statutes relating to doing business with
the Government of Cuba or with any person or affiliate located in Cuba.
(v) Absence of Material Changes. Subsequent to the respective
---------------------------
dates as of which information is given in the Registration Statement and the
Prospectus, (i) the Company has not incurred any material liability or
obligation, direct or contingent, nor entered into any material transaction not
in the ordinary course of business; (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 ordinary and
customary dividends; and (iii) there has not been any material change in the
capital stock, short-term debt or long-term debt of the Company, except in each
case as described in the Prospectus.
(w) Good Title to Properties. The Company has good and
------------------------
marketable title in fee simple to all real property and good and marketable
title to all personal property owned by it which is material to the business of
the Company, in each case free and clear of all liens, encumbrances and defects
except such as are described in the Prospectus or such as do not materially
affect the value of such property and do not interfere with the use made and
proposed
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to be made of such property by the Company; and any real property and buildings
held under lease by the Company are held by it under valid, subsisting leases
which are enforceable against the Company and, to the Company's knowledge, other
parties thereto, with such exceptions as are not material and do not interfere
with the use made and proposed to be made of such property and buildings by the
Company.
(x) Intellectual Property Rights. The Company owns, possesses or
----------------------------
has the right 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 it in connection with the business now operated by it, and
the Company has not received any notice of infringement of or conflict with
asserted rights of others with respect to any of the foregoing which,
individually or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, would have a material adverse effect on the Company.
(y) No Labor Disputes. No material labor dispute with the
-----------------
employees of the Company exists or, to the knowledge of the Company, is
imminent; and the Company is not aware of any existing, threatened or imminent
labor disturbance by the employees of any of its principal suppliers,
manufacturers or contractors that could have a material adverse effect on the
Company.
(z) Insurance. The Company is insured by the insurers of
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recognized financial responsibility against such losses and risks and in such
amounts as are prudent and customary in the businesses in which it is engaged;
and the Company has no 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 on the Company.
(aa) Governmental Permits. The Company possesses all
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certificates, authorizations and permits issued by the appropriate federal,
state or foreign regulatory authorities material to the conduct of its business,
and the Company has not received any notice of proceedings relating to the
revocation or modification of any such certificate, authorization or permit
which, individually or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, would have a material adverse effect on the
Company.
(bb) Accounting Controls. The Company maintains a system of
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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 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.
(cc) Stock Exchange Listing. The Common Stock has been approved
----------------------
for listing on the Nasdaq National Market, subject only to official notice of
issuance.
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(dd) Year 2000 Compliance. The Company has reviewed its
--------------------
operations and contacted each of its clients with which the Company has a
material relationship to evaluate the extent to which the business or operations
of the Company will be affected by the Year 2000 Problem. As a result of such
review and except as disclosed in the Registration Statement, the Company has no
reason to believe, and does not believe, that the Year 2000 Problem will have a
material adverse effect on the Company or result in any material loss or
interference with the Company's business or operations. The "Year 2000 Problem"
as used herein means any significant risk that computer hardware or software
used in the receipt, transmission, processing, manipulation, storage, retrieval,
retransmission or other utilization of data or in the operation of mechanical or
electrical systems of any kind will not, in the case of dates or time periods
occurring after December 31, 1999, function at least as effectively as in the
case of dates or time periods occurring prior to January 1, 2000.
(ee) Tax Law Compliance. The Company has filed all material
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federal, state and foreign income and franchise tax returns or has properly
requested extensions thereof and has paid all material taxes required to be paid
by it and, if due and payable, any related or similar assessment, fine or
penalty levied against it, other than those payments being contested in good
faith or for which adequate reserves have been provided. The Company has made
adequate charges, accruals and reserves in the applicable financial statements
referred to in Section 1(n) above in respect of all federal, state and foreign
income and franchise taxes for all periods as to which the tax liability of the
Company has not been finally determined.
(ff) Related Party Transactions. There are no business
--------------------------
relationships or related-party transactions involving the Company or, to the
Company's knowledge, any other person required to be described in the Prospectus
which have not been described as required.
2. Purchase and Sale Agreements.
----------------------------
(a) Firm Shares. The Company 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 the
Company at $______ a share (the "Purchase Price") the number of Firm Shares
(subject to such adjustments to eliminate fractional shares as you may
determine) set forth opposite the name of such Underwriter in Schedule A hereto.
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(b) Additional Shares. On the basis of the representations and
-----------------
warranties contained in this Agreement, and subject to its terms and conditions,
the Company agrees to sell to the Underwriters the Additional Shares, and the
Underwriters shall have a one-time right to purchase, severally and not jointly,
up to 750,000 Additional Shares at the Purchase Price. If you, on behalf of the
Underwriters, elect to exercise such option, you shall so notify the Company in
writing not later than thirty (30) days after the date of this Agreement, which
notice shall specify the number of Additional Shares to be purchased by the
Underwriters and the date on which such shares are to be purchased. Such date
may be the same as the Closing Date (as defined below) but not earlier than the
Closing Date nor later than ten (10) business days after the date of such
notice. Additional Shares may be purchased as provided in Section 3 hereof
solely for the purpose of covering over-allotments made in connection with the
offering of the Firm Shares. If any Additional Shares are to be purchased, each
Underwriter agrees, severally
7
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and not jointly, to purchase the number of Additional Shares (subject to such
adjustments to eliminate fractional shares as you may determine) that bears the
same proportion to the total number of Additional Shares to be purchased as the
number of Firm Shares set forth in Schedule A hereto opposite the name of such
----------
Underwriter bears to the total number of Firm Shares.
(c) Market Standoff Provision. The Company hereby agrees that,
-------------------------
without the prior written consent of Donaldson, Lufkin & Jenrette Securities
Corporation and Thomas Weisel Partners, it will not, during the period ending
180 days after the date of the Prospectus, (i) offer, pledge, sell, contract to
sell, sell any option or contract to purchase, purchase any option or contract
to sell, grant any option, right or warrant to purchase, lend, or otherwise
transfer or dispose of, directly or indirectly, any shares of Common Stock or
any securities convertible into or exercisable or exchangeable for Common Stock
or (ii) enter into any swap or other arrangement that transfers to another, in
whole or in part, any of the economic consequences of ownership of the Common
Stock, whether any such transaction described in clause (i) or (ii) above is to
be settled by delivery of Common Stock or such other securities, in cash or
otherwise. The foregoing sentence shall not apply to (A) the Shares to be sold
hereunder, (B) the issuance by the Company of shares of Common Stock upon the
exercise of options or warrants or the conversion of a security outstanding on
the date hereof of which the Underwriters have been advised in writing and which
is described in the Prospectus or (C) the issuance of stock options pursuant to
the Company's stock plans described in the Registration Statement.
(d) Terms of Public Offering. The Company is advised by you that
------------------------
the Underwriters propose to make a public offering of their respective portions
of the Shares as soon after the Registration Statement and this Agreement have
become effective as in your judgment is advisable.
3. Payment and Delivery.
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(a) Firm Shares. Payment for the Firm Shares to be sold by the
-----------
Company shall be made to the Company in immediately available funds against
delivery of such Firm Shares for the respective accounts of the several
Underwriters at 10:00 a.m., New York City time, on ____________, 1999, or at
such other time on the same or such other date, not later than _________, 1999,
as shall be designated in writing by you. The time and date of such payment are
hereinafter referred to as the "Closing Date".
(b) Additional Shares. Payment for any Additional Shares shall
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be made to the Company in immediately available funds in New York City against
delivery of such Additional Shares for the respective accounts of the several
Underwriters at 10:00 a.m., New York City time, on the date specified in the
notice described in Section 2(b) or at such other time on the same or on such
other date, in any event not later than ____________, 1999, as shall be
designated in writing by you. The time and date of such payment are hereinafter
referred to as the "Option Closing Date".
(c) Delivery of Certificates. Certificates for the Firm Shares
------------------------
and Additional Shares shall be in definitive form and registered in such names
and in such denominations as you shall request in writing not later than one (1)
full business day prior to the Closing Date or the
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<PAGE>
Option Closing Date, as the case may be. The certificates evidencing the Firm
Shares and Additional Shares shall be delivered to you on the Closing Date or
the Option Closing Date, as the case may be, for the respective accounts of the
several Underwriters, with any transfer taxes payable in connection with the
transfer of the Shares to the Underwriters duly paid, against payment of the
Purchase Price therefor.
4. Covenants of the Company. In further consideration of the agreements
------------------------
of the Underwriters herein contained, the Company covenants with each
Underwriter as follows:
(a) Furnish Copies of Registration Statement and Prospectus. To
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furnish to you, without charge, four (4) signed copies of the Registration
Statement (including exhibits thereto) and for delivery to each other
Underwriter a conformed copy of the Registration Statement (without exhibits
thereto) and to furnish to you in New York City, without charge, prior to 10:00
a.m. New York City time on the business day next succeeding the date of this
Agreement and during the period mentioned in Section 4(c) below, as many copies
of the Prospectus and any supplements and amendments thereto or to the
Registration Statement as you may reasonably request.
(b) Notification of Amendments or Supplements. Before amending
-----------------------------------------
or supplementing the Registration Statement or the Prospectus, to furnish to you
a copy of each such proposed amendment or supplement and not to file any such
proposed amendment or supplement to which you reasonably object, and to file
with the Commission within the applicable period specified in Rule 424(b) under
the Securities Act any prospectus required to be filed pursuant to such rule.
(c) Filings of Amendments or Supplements. If, during such period
------------------------------------
after the first date of the public offering of the Shares as in the reasonable
opinion of counsel for the Underwriters the Prospectus is required by law to be
delivered in connection with sales by an Underwriter or dealer (the "Prospectus
Delivery Period"), any event shall occur or condition exist as a result of which
it is necessary to amend or supplement the Prospectus in order to make the
statements therein, in the light of the circumstances when the Prospectus is
delivered to a purchaser, not misleading, or if, in the reasonable opinion of
counsel for the Underwriters, it is necessary to amend or supplement the
Prospectus to comply with applicable law, forthwith to prepare, file with the
Commission and furnish, at its own expense, to the Underwriters and to the
dealers (whose names and addresses you will furnish to the Company) to which
Shares may have been sold by you on behalf of the Underwriters and to any other
dealers upon request, either amendments or supplements to the Prospectus so that
the statements in the Prospectus as so amended or supplemented will not, in the
light of the circumstances when the Prospectus is delivered to a purchaser, be
misleading or so that the Prospectus, as amended or supplemented, will comply
with law.
(d) Blue Sky Laws. To endeavor to qualify the Shares for offer
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and sale under the securities or Blue Sky laws of such jurisdictions as you
shall reasonably request.
(e) Earnings Statement. To make generally available to its
------------------
securityholders as soon as practicable, but in any event not later than eighteen
(18) months after the effective date of the Registration Statement (as defined
in Rule 158(c) under the Securities Act), an earnings
9
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statement of the Company (which need not be audited) complying with Section
11(a) of the Securities Act and the rules and regulations thereunder (including,
at the option of the Company, Rule 158).
(f) Use of Proceeds. The Company shall apply the net proceeds
---------------
from the sale of the Shares sold by it in the manner described under the caption
"Use of Proceeds" in the Prospectus.
(g) Transfer Agent. The Company shall engage and maintain, at
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its expense, a registrar and transfer agent for the Common Stock.
(h) Periodic Reporting Obligations. During the Prospectus
------------------------------
Delivery Period, the Company shall file, on a timely basis, with the Commission
and the Nasdaq National Market all reports and documents required to be filed
under the Exchange Act. Additionally, the Company shall file with the Commission
such information on Form 10-Q or Form 10-K as may be required by Rule 463 under
the Securities Act.
(i) Exchange Act Compliance. During the Prospectus Delivery
-----------------------
Period, the Company will file all documents required to be filed with the
Commission pursuant to Section 13, 14 or 15 of the Exchange Age in the manner
and within the time periods required by the Exchange Act.
5. Conditions to the Underwriters' Obligations. The obligations of the
-------------------------------------------
Company to sell the Shares to the several Underwriters and the several
obligations of the Underwriters to purchase and pay for the Shares on the
Closing Date are subject to the following conditions:
(a) Effective Registration Statement. The Registration Statement
--------------------------------
shall have become effective not later than 4:00 p.m. (New York City time) on the
date hereof.
(b) Rule 462 Registration Statement. If the Company elects to
-------------------------------
rely upon Rule 462(b), the Company shall file a Rule 462 Registration Statement
with the Commission in compliance with Rule 462(b) by 10:00 P.M., Washington,
D.C. time, on the date of this Agreement, and the Company shall at the time of
filing either pay to the Commission the filing fee for the Rule 462 Registration
Statement or give irrevocable instructions for the payment of such fee pursuant
to Rule 111(b) under the Securities Act.
(c) Prospectus Filed with Commission. The Company shall have
--------------------------------
filed the Prospectus with the Commission (including the information required by
Rule 430A under the Securities Act) in the manner and within the time period
required by Rule 424(b) under the Securities Act; or the Company shall have
filed a post-effective amendment to the Registration Statement containing the
information required by such Rule 430A, and such post-effective amendment shall
have become effective; or, if the Company elected to rely upon Rule 434 under
the Securities Act and obtained the Representative's consent thereto, the
Company shall have filed a Term Sheet with the Commission in the manner and
within the time period required by such Rule 424(b).
(d) No Stop Order. No stop order suspending the effectiveness of
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the Registration Statement, any Rule 462 Registration Statement, or any post-
effective amendment
10
<PAGE>
to the Registration Statement, shall be in effect and no proceedings for such
purpose shall have been instituted or threatened by the Commission.
(e) No NASD Objection. The NASD shall have raised no objection to
-----------------
the fairness and reasonableness of the underwriting terms and arrangements.
(f) No Debt Downgrading. 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 Company's
securities by any "nationally recognized statistical rating organization," as
such term is defined for purposes of Rule 436(g)(2) under the Securities Act.
(g) No Material Adverse Change. There shall not have occurred any
--------------------------
change, or any development involving a prospective change, in the condition,
financial or otherwise, or in the earnings, business, operations or prospects of
the Company from that set forth in the Prospectus (exclusive of any amendments
or supplements thereto subsequent to the date of this Agreement) that, in your
judgment, is material and adverse and that makes it, in your judgment,
impracticable to market the Shares on the terms and in the manner contemplated
in the Prospectus.
(h) Officer's Certificate. The Underwriters shall have received on
---------------------
the Closing Date a certificate, dated the Closing Date and signed by the Chief
Executive Officer or President of the Company, to the effect set forth in
Sections 5(d) and 5(g) above and to the effect that the representations and
warranties of the Company contained in this Agreement are true and correct in
all material respects as of the Closing Date and that the Company has complied
with all of the agreements and satisfied all of the conditions on its part to be
performed or satisfied hereunder on or before the Closing Date.
(i) Opinion of Company Counsel. The Underwriters shall have received
--------------------------
on the Closing Date an opinion of Brobeck, Phleger & Harrison LLP, counsel for
the Company, dated the Closing Date, the form of which is attached hereto as
Exhibit A. The opinion shall be rendered to the Underwriters at the request of
- ---------
the Company and shall so state therein.
(j) Opinion of Underwriters Counsel. The Underwriters shall have
-------------------------------
received on the Closing Date an opinion of Orrick, Herrington & Sutcliffe LLP,
counsel for the Underwriters, dated the Closing Date, covering the matters
referred to in Exhibit A, paragraphs (iv), (v), (viii) (but only as to the
---------
statements in the Prospectus under "Description of Capital Stock" and
"Underwriting") and (xiii). With respect to paragraph (xiii) of Exhibit A,
---------
such counsel may state that their opinion and belief are based upon their
participation in the preparation of the Registration Statement and 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.
(k) Accountant's Comfort Letter. The Underwriters shall have
---------------------------
received, on each of the date hereof and the Closing Date, a letter dated the
date hereof or the Closing Date, as the case may be, in form and substance
satisfactory to the Underwriters, from Ernst & Young LLP, independent public
accountants, containing statements and information of the type
11
<PAGE>
ordinarily included in accountants' "comfort letters" to underwriters with
respect to the financial statements and certain financial information contained
in the Registration Statement and the Prospectus; provided that the letter
delivered on the Closing Date shall use a "cut-off date" not earlier than the
date hereof.
(l) Lock-Up Agreements. The "lock up" agreements, each substantially
------------------
in the form of Exhibit B hereto, between you and certain stockholders, officers
---------
and directors of the Company, delivered to you on or before the date hereof,
shall be in full force and effect on the Closing Date.
(m) Additional Documents. On the Closing Date, the Representatives
--------------------
and counsel for the Underwriters shall have received such information, documents
and opinions as they may reasonably require for the purposes of enabling them to
pass upon the issuance and sale of the Shares as contemplated herein, or in
order to evidence the accuracy of any of the representations and warranties, or
the satisfaction of any of the conditions or agreements, herein contained.
The several obligations of the Underwriters to purchase Additional
Shares hereunder are subject to the satisfaction of each of the above conditions
on or prior to the Option Closing Date and to the delivery to you on the Option
Closing Date of such documents as you may reasonably request with respect to the
good standing of the Company, the due authorization and issuance of the
Additional Shares and other matters related to the issuance of the Additional
Shares.
6. Expenses. Whether or not the transactions contemplated in this
--------
Agreement are consummated or this Agreement is terminated, the Company agrees to
pay or cause to be paid all expenses incident to the performance of its
obligations under this Agreement, including: (i) the fees, disbursements and
expenses of the Company's counsel and the Company's accountants in connection
with the registration and delivery of the Shares under the Securities Act and
all other fees or expenses in connection with the preparation and filing of the
Registration Statement, any preliminary prospectus, the Prospectus and
amendments and supplements to any of the foregoing, including all printing costs
associated therewith, and the mailing and delivering of copies thereof to the
Underwriters and dealers, in the quantities hereinabove specified, (ii) all
costs and expenses related to the transfer and delivery of the Shares to the
Underwriters, including any transfer or other taxes payable thereon, (iii) the
cost of printing or producing any Blue Sky or legal investment memorandum in
connection with the offer and sale of the Shares under state securities laws and
all expenses in connection with the qualification of the Shares for offer and
sale under state securities laws as contemplated by Section 4(d) hereof,
including filing fees and the reasonable fees and disbursements, in an amount
not to exceed $10,000, 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, in
an amount not to exceed $10,000, of counsel to the Underwriters incurred in
connection with the review and qualification of the offering of the Shares by
the NASD, (v) all fees and expenses in connection with the preparation and
filing of the registration statement on Form 8-A relating to the Common Stock
and all costs and expenses incident to listing the Shares on the Nasdaq National
Market, (vi) the cost of printing certificates representing the Shares, (vii)
the costs and charges of any transfer agent, registrar or depositary, (viii) the
costs and expenses of the
12
<PAGE>
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 production of road show slides and
graphics, fees and expenses of any consultants engaged in connection with the
road show presentations with the prior approval of the Company, travel and
lodging expenses of the representatives and officers of the Company and any such
consultants, (ix) all expenses in connection with any offer and sale of the
Shares outside of the United States, including filing fees and the reasonable
fees and disbursements of counsel for the Underwriters in connection with offers
and sales outside of the United States and (x) all other costs and expenses
incident to the performance of the obligations of the Company hereunder for
which provision is not otherwise made in this Section. It is understood,
however, that except as provided in this Section, Section 7 entitled "Indemnity
and Contribution", and the last paragraph of Section 10 below, the Underwriters
will pay all of their costs and expenses, including fees and disbursements of
their counsel and any advertising expenses connected with any offers they may
make.
7. Indemnity and Contribution.
--------------------------
(a) Indemnification of the Underwriters. The Company agrees to
-----------------------------------
indemnify and hold harmless each Underwriter and each person, if any, who
controls any Underwriter within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act, from and against any and all
losses, claims, damages and liabilities (including, without limitation, any
legal or other expenses reasonably incurred in connection with defending or
investigating any such action or claim) caused by any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement or any amendment thereof, any preliminary prospectus or the Prospectus
(as amended or supplemented if the Company shall have furnished any amendments
or supplements thereto), or caused by any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, except (i) insofar as such losses, claims,
damages or liabilities are caused by any such untrue statement or omission or
alleged untrue statement or omission based upon information relating to any
Underwriter furnished to the Company in writing by such Underwriter through you
expressly for use therein and (ii) that with respect to any preliminary
prospectus, the foregoing indemnity agreement shall not inure to the benefit of
any Underwriter from whom the person asserting any loss, claim, damage or
liability purchased Shares, or any person controlling such Underwriter, if
copies of the Prospectus were timely delivered to the Underwriter pursuant to
Section 4 and a copy of the Prospectus (as then amended or supplemented if the
Company shall have furnished any amendments or supplements thereto) was not sent
or given by or on behalf of such Underwriter to such person, if required by law
so to have been delivered, at or prior to the written confirmation of the sale
of the Shares to such person, and if the Prospectus (as so amended or
supplemented) would have cured the defect giving rise to such loss, claim,
damage, liability or expense.
(b) Indemnification by the Underwriters. Each Underwriter
-----------------------------------
agrees, severally and not jointly, to indemnify and hold harmless the Company,
the directors of the Company, the officers of the Company who sign the
Registration Statement and each person, if any, who controls the Company within
the meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act from and against any and all losses, claims, damages and
liabilities (including, without limitation, any legal or other expenses
reasonably incurred in connection
13
<PAGE>
with defending or investigating any such action or claim) caused by any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement or any amendment thereof, any preliminary prospectus or
the Prospectus (as amended or supplemented if the Company shall have furnished
any amendments or supplements thereto), or caused by any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, but only with reference
to information relating to such Underwriter furnished to the Company in writing
by such Underwriter through you expressly for use in the Registration Statement,
any preliminary prospectus, the Prospectus or any amendments or supplements
thereto.
(c) Indemnification Procedures. In case any proceeding (including any
--------------------------
governmental investigation) shall be instituted involving any person in respect
of which indemnity may be sought pursuant to this Section 7, such person (the
"indemnified party") shall promptly notify the person against whom such
indemnity may be sought (the "indemnifying party") in writing and the
indemnifying party, upon request of the indemnified party, shall retain counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party and any others the indemnifying party may designate in such proceeding and
shall pay the fees and disbursements of such counsel related to such proceeding.
In any such proceeding, any indemnified party shall have the right to retain its
own counsel, but the fees and expenses of such counsel shall be at the expense
of such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the indemnifying party
shall not, in respect of the legal expenses of any indemnified party in
connection with any proceeding or related proceedings in the same jurisdiction,
be liable for (i) the fees and expenses of more than one separate firm (in
addition to any local counsel) for all Underwriters and all persons, if any, who
control any Underwriter within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act and (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 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 of any Underwriters, such firm shall be designated in writing by
Thomas Weisel Partners. In the case of any such separate firm for the Company,
and such directors, officers and control persons of the Company, such firm shall
be designated in writing by the Company. The indemnifying party shall not be
liable for any settlement of any proceeding effected without its written
consent, but if settled with such consent or if there be a final judgment for
the plaintiff, the indemnifying party agrees to indemnify the indemnified party
from and against any loss or liability by reason of such settlement or judgment.
Notwithstanding the foregoing sentence, if at any time an indemnified party
shall have requested an indemnifying party to reimburse the indemnified party
for fees and expenses of counsel as contemplated by the second and third
sentences of this paragraph, the indemnifying party agrees that it shall be
liable for any settlement of any proceeding effected without its written consent
if (i) such settlement is entered into more than 30 days after receipt by such
indemnifying party of the aforesaid request and (ii) such indemnifying party
shall not have reimbursed the indemnified party in accordance with such request
prior to the date of such settlement. No indemnifying party shall, without the
14
<PAGE>
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.
Notwithstanding anything contained herein to the contrary, if
indemnity may be sought pursuant to Section 7(d) hereof in respect of such
action or proceeding, then in addition to such separate firm for the indemnified
parties, the indemnifying party shall be liable for the reasonable fees and
expenses of not more than one separate firm (in addition to any local counsel)
for Thomas Weisel Partners for the defense of any losses, claims, damages and
liabilities arising out of the Directed Share Program, and all persons, if any,
who control Thomas Weisel Partners within the meaning of either Section 15 of
the Act or Section 20 of the Exchange Act (collectively, the "Thomas Weisel
Partners Controlling Persons"); provided that representation of Thomas Weisel
Partners and the Thomas Weisel Partners Controlling Persons for the defense of
any losses, claims, damages or liabilities arising out of the Directed Share
Program by the same counsel representing all other Indemnified Parties ("Other
Indemnified Parties") would be inappropriate due to actual or potential
differing interests between Thomas Weisel Partners and the Thomas Weisel
Partners Controlling Persons, on the one hand, and the Other Indemnified
Parties, on the other hand.
(d) Indemnification for Directed Share Program. The Company agrees to
------------------------------------------
indemnify and hold harmless Thomas Weisel Partners and each person, if any, who
controls Thomas Weisel Partners within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act ("Thomas Weisel Partners
Entities"), 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) (i)
caused by any untrue statement or alleged untrue statement of a material fact
contained in the prospectus wrapper material prepared by or with the consent of
the Company for distribution in foreign jurisdictions in connection with the
Directed Share Program attached to the Prospectus or any preliminary prospectus,
or caused by any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statement therein, when
considered in conjunction with the Prospectus or any applicable preliminary
prospectus, not misleading or (ii) related to, arising out of, or in connection
with the Directed Share Program, provided that, the Company shall not be
responsible under this subparagraph (iii) for any losses, claim, damages or
liabilities (or expenses relating thereto) that are finally judicially
determined to have resulted from the bad faith, willful misconduct or gross
negligence of Thomas Weisel Partners Entities.
(e) Contribution Agreement. To the extent the indemnification
----------------------
provided for in this Section 7 is unavailable to an indemnified party or
insufficient in respect of any losses, claims, damages or liabilities referred
to therein, then each indemnifying party under such paragraph, in lieu of
indemnifying such indemnified party thereunder, shall contribute to the amount
paid or payable by such indemnified party as a result of such losses, claims,
damages or liabilities (i) in such proportion as is appropriate to reflect the
relative benefits received by the indemnifying party or parties on the one hand
and the indemnified party or parties on the other hand from the offering of the
Shares or (ii) if the allocation provided by clause 7(e)(i) above is
15
<PAGE>
not permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause 7(e) above but also the
relative fault of the indemnifying party or parties on the one hand and of the
indemnified party or parties on the other hand in connection with the statements
or omissions that resulted in such losses, claims, damages or liabilities, as
well as any other relevant equitable considerations. The relative benefits
received by the Company on the one hand and the Underwriters on the other hand
in connection with the offering of the Shares shall be deemed to be in the same
respective proportions as the net proceeds from the offering of the Shares
(before deducting expenses) received by the Company and the total underwriting
discounts and commissions received by the Underwriters, in each case as set
forth in the table on the cover of the Prospectus, bear to the aggregate price
to the public of the Shares. The relative fault of the Company 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 Company or by the Underwriters and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Underwriters' respective obligations to
contribute pursuant to this Section 7 are several in proportion to the
respective number of Shares they have purchased hereunder, and not joint.
(f) Contribution Amounts. The Company and the Underwriters agree that
--------------------
it would not be just or equitable if contribution pursuant to this Section 7
were determined by pro rata allocation (even if the Underwriters were treated as
one entity for such purpose) or by any other method of allocation that does not
take account of the equitable considerations referred to in Section 7(e). The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages and liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such indemnified party
in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 7, no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Shares underwritten by it and distributed to the public were
offered to the public 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 7 are
not exclusive and shall not limit any rights or remedies which may otherwise be
available to any indemnified party at law or in equity.
(g) Survival of Provisions. The indemnity and contribution provisions
----------------------
contained in this Section 7 and the representations, warranties and other
statements of the Company contained in this Agreement shall remain operative and
in full force and effect regardless of (i) any termination of this Agreement,
(ii) any investigation made by or on behalf of any Underwriter or any person
controlling any Underwriter or the Company, its officers or directors or any
person controlling the Company and (iii) acceptance of and payment for any of
the Shares.
8. Effectiveness. This Agreement shall become effective upon the
-------------
execution and delivery hereof by the parties hereto.
16
<PAGE>
9. Termination. This Agreement shall be subject to termination by notice
-----------
given by you to the Company, if (a) after the execution and delivery of this
Agreement and prior to the 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 National Association of
Securities Dealers, Inc., the Chicago Board of Options Exchange, the Chicago
Mercantile Exchange or the Chicago Board of Trade, (ii) trading of any
securities of the Company shall have been suspended on any exchange or in any
over-the-counter market, (iii) a general moratorium on commercial banking
activities in New York or California shall have been declared by either federal
or New York or California state authorities or (iv) there shall have occurred
any outbreak or escalation of hostilities or any change in financial markets or
any calamity or crisis that, in your judgment, is material and adverse, and (b)
in the case of any of the events specified in clauses 9(a)(i) through 9(a)(iv),
such event, individually or together with any other such event, makes it, in
your judgment, impracticable to market the Shares on the terms and in the manner
contemplated in the Prospectus.
10. Defaulting Underwriters. If, on the Closing Date or the Option Closing
-----------------------
Date, as 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 A bears to the aggregate number of Firm Shares set forth opposite the
- ----------
names of all such non-defaulting Underwriters, or in such other proportions as
you may specify, to purchase the Shares which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase on such date; provided
that in no event shall the number of Shares that any Underwriter has agreed to
purchase pursuant to this Agreement be increased pursuant to this Section 10 by
an amount in excess of one-ninth of such number of Shares without the written
consent of such Underwriter. If, on the Closing Date, any Underwriter or
Underwriters shall fail or refuse to purchase Firm Shares and the aggregate
number of Firm Shares with respect to which such default occurs is more than
one-tenth of the aggregate number of Firm Shares to be purchased, and
arrangements satisfactory to you and the Company for the purchase of such Firm
Shares are not made within 36 hours after such default, this Agreement shall
terminate without liability on the part of any non-defaulting Underwriter or the
Company. In any such case either you or the Company shall have the right to
postpone the Closing Date, but in no event for longer than seven (7) days, in
order that the required changes, if any, in the Registration Statement and in
the Prospectus or in any other documents or arrangements may be effected. If, on
the Option Closing Date, any Underwriter or Underwriters shall fail or refuse to
purchase Additional Shares and the aggregate number of Additional Shares with
respect to which such default occurs is more than one-tenth of the aggregate
number of Additional Shares to be purchased, the non-defaulting Underwriters
shall have the option to (i) terminate their obligation hereunder to purchase
Additional Shares or (ii) purchase not less than the number of Additional Shares
that such non-defaulting Underwriters would have been obligated to purchase in
the absence of such default. Any action taken under this paragraph shall not
relieve any defaulting Underwriter from liability in respect of any default of
such Underwriter under this Agreement.
17
<PAGE>
If this Agreement shall be terminated by the Underwriters, or any of
them, because of any failure or refusal on the part of the Company to comply
with the terms or to fulfill any of the conditions of this Agreement, or if for
any reason the Company shall be unable to perform its obligations under this
Agreement, the Company will reimburse the Underwriters or such Underwriters as
have so terminated this Agreement with respect to themselves, severally, for all
out-of-pocket expenses (including the fees and disbursements of their counsel)
reasonably incurred by such Underwriters in connection with this Agreement or
the offering contemplated hereunder.
11. Counterparts. This Agreement may be signed in counterparts, each of
------------
which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument.
12. Headings; Table of Contents. The headings of the sections of this
---------------------------
Agreement and the table of contents have been inserted for convenience of
reference only and shall not be deemed a part of this Agreement.
13. Notices. All communications hereunder shall be in writing and shall be
-------
mailed, hand delivered or telecopied and confirmed to the parties hereto as
follows:
If to the Representatives:
Donaldson, Lufkin & Jenrette
Securities Corporation
277 Park Avenue
New York, New York 10172
Facsimile: (212) 892-3966
Attention: Syndicate Department
Thomas Weisel Partners LLC
One Montgomery Street, Suite 3700
San Francisco, California 94104
Facsimile: (415) 364-2694
Attention: Andy Sessions
with a copy to:
Donaldson, Lufkin & Jenrette
Securities Corporation
277 Park Avenue
New York, New York 10172
Facsimile: (212) 892-8215
Attention: Sarah Jeffries, Esq.
18
<PAGE>
Thomas Weisel Partners LLC
One Montgomery Street, Suite 3700
San Francisco, California 94104
Facsimile: (415) 364-2694
Attention: David A. Baylor, Esq.
If to the Company:
Rainmaker Systems, Inc.
1800 Green Hills Road
Scotts Valley, California 95066
Facsimile: (831) 430-9641
Attention: Michael Silton
Any party hereto may change the address for receipt of communications
by giving written notice to the others.
14. Successors. This Agreement will inure to the benefit of and be
----------
binding upon the parties hereto, including any substitute Underwriters pursuant
to Section 10 hereof, and to the benefit of the officers and directors and
controlling persons referred to in Section 7, and in each case their respective
successors, and no other person will have any right or obligation hereunder. The
term "successors" shall not include any purchaser of the Shares as such from any
of the Underwriters merely by reason of such purchase.
15. Partial Unenforceability. The invalidity or unenforceability of any
------------------------
Section, paragraph or provision of this Agreement shall not affect the validity
or enforceability of any other Section, paragraph or provision hereof. If any
Section, paragraph or provision of this Agreement is for any reason determined
to be invalid or unenforceable, there shall be deemed to be made such minor
changes (and only such minor changes) as are necessary to make it valid and
enforceable.
16. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
-------------
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK APPLICABLE TO
AGREEMENTS MADE AND TO BE PERFORMED IN SUCH STATE.
17. Entire Agreement. This Agreement constitutes the entire agreement of
----------------
the parties to this Agreement and supersedes all prior written or oral and all
contemporaneous oral agreements, understandings and negotiations with respect to
the subject matter hereof.
18. Amendments. This Agreement may only be amended or modified in writing,
----------
signed by all of the parties hereto, and no condition herein (express or
implied) may be waived unless waived in writing by each party whom the condition
is meant to benefit.
19. Sophisticated Parties. Each of the parties hereto acknowledges that
---------------------
it is a sophisticated business person who was adequately represented by counsel
during negotiations regarding the provisions hereof, including, without
limitation, the indemnification and
19
<PAGE>
contribution provisions of Section 7, and is fully informed regarding said
provisions. Each of the parties hereto further acknowledges that the provisions
of Section 7 hereto fairly allocate the risks in light of the ability of the
parties to investigate the Company, its affairs and its business in order to
assure that adequate disclosure has been made in the Registration Statement, any
preliminary prospectus and the Prospectus (and any amendments and supplements
thereto), as required by the Securities Act and the Exchange Act.
20
<PAGE>
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to the Company the enclosed copies hereof,
whereupon this instrument, along with all counterparts hereof, shall become a
binding agreement in accordance with its terms.
Very truly yours,
Rainmaker Systems, Inc.
By:_________________________________________
Name: Michael Silton
Title: Chairman, President and
Chief Executive Officer
Accepted as of the date hereof
Donaldson, Lufkin & Jenrette Securities Corporation
Thomas Weisel Partners LLC
SG Cowen Securities Corporation
Acting severally on behalf
of themselves and the
several Underwriters named
in Schedule A hereto.
----------
By: Donaldson, Lufkin & Jenrette
Securities Corporation
By:_______________________________
Name:
Title:
By: Thomas Weisel Partners LLC
By:______________________________
Name:
Title:
21
<PAGE>
SCHEDULE A
----------
<TABLE>
<CAPTION>
Number of
Firm Shares
Underwriter To Be Purchased
- ----------- ---------------
<S> <C>
Donaldson, Lufkin & Jenrette
Securities Corporation..............................................................
Thomas Weisel Partners LLC.............................................................
SC Cowen Securities Corporation........................................................
DLJdirect Inc..........................................................................
Total....................................................................... 5,000,000
=========
</TABLE>
<PAGE>
EXHIBIT A
---------
Form of Legal Opinion of Company Counsel
(i) 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 Prospectus and is duly qualified to
transact business and is in good standing in each jurisdiction in which the
conduct of its business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so qualified or be in
good standing would not have a material adverse effect on the Company.
(ii) The authorized capital stock of the Company conforms as to
legal matters to the description thereof contained under the caption
"Description of Capital Stock" in the Prospectus.
(iii) All of the outstanding shares of capital stock of the Company
prior to the issuance of the Shares to be sold by the Company have been duly
authorized and are validly issued, non-assessable and, to our knowledge, fully
paid.
(iv) The Shares to be sold by the Company have been duly authorized
and, when issued and delivered to the Underwriters against payment therefor in
accordance with the terms of the Underwriting Agreement, will be validly issued,
fully paid and non-assessable, and the issuance of such Shares will not be
subject to any preemptive rights arising under the Certificate of Incorporation
or the Delaware General Corporation Law or, to such counsel's knowledge, any
similar rights that entitle or will entitle any person to acquire any shares of
capital stock of the Company upon the issuance and sale of the Shares by the
Company.
(v) The Underwriting Agreement has been duly authorized, executed
and delivered by the Company.
(vi) The execution and delivery by the Company of, and the
performance by the Company of its obligations under, the Underwriting Agreement
will not (A) violate the certificate of incorporation or by-laws of the Company,
or (B) to such counsel's knowledge, constitute a breach of, or a default under,
any agreement, indenture, lease or other instrument binding upon the Company
that is an exhibit to the Registration Statement, which breach or default would
reasonably be expected to have a material adverse effect on the Company or (C)
result in any violation of any existing California, Delaware or federal law or
regulation (other than applicable state securities and Blue Sky laws, as to
which such counsel need express no opinion), or any ruling, judgment,
injunction, order or decree known to us and applicable to the Company or any of
its properties.
(vii) No consent, approval, authorization or other order of, or
qualification with, any governmental body or agency is required on the part of
the Company for the valid issuance and sale of the Shares to the Underwriters as
contemplated by the Underwriting Agreement, except (A) as have been obtained
under the Securities Act and the Exchange Act or
A-1
<PAGE>
(B) such as may be required under the state securities or Blue Sky laws
governing the purchase and distribution of the Shares, as to which such counsel
need express no opinion.
(viii) The statements (A) in the Prospectus under the captions
"Description of Capital Stock," "Shares Eligible for Future Sale" and
"Underwriting" and (B) in the Registration Statement in Items 14 and 15, in each
case insofar as such statements constitute summaries of the legal matters,
documents or proceedings referred to therein, fairly present the information
called for with respect to such legal matters, documents and proceedings and
fairly summarize such legal matters, documents and proceedings in all material
respects.
(ix) To such counsel's knowledge, there are no legal or
governmental proceedings pending or threatened to which the Company is a party
or to which any of the properties of the Company is subject that are required to
be described in the Registration Statement or the Prospectus and are not so
described or of any California, Delaware or federal statutes or regulations,
contracts or other documents that are required to be described in the
Registration Statement or the Prospectus or to be filed as exhibits to the
Registration Statement that are not described or filed as required.
(x) The Company is not and, after giving effect to the offering
and sale of the Shares and the application of the proceeds thereof as described
in the Prospectus, will not be an "investment company" as such term is defined
in the Investment Company Act of 1940, as amended.
(xi) To such counsel's knowledge, the Registration Statement has
been declared effective by the Commission under the Securities Act. To such
counsel's knowledge, no stop order suspending the effectiveness of the
Registration Statement has been issued under the Securities Act and no
proceedings for such purpose have been instituted or are pending or are
contemplated or threatened by the Commission. Any required filing of the
Prospectus and any supplement thereto pursuant to Rule 424(b) under the
Securities Act has been in the manner and within the time period required by
such Rule 424(b).
(xii) Except as disclosed in the Prospectus, to such counsel's
knowledge, there are no persons with registration or other similar rights to
have any equity or debt securities registered for sale under the Registration
Statement or included in the offering contemplated by the Underwriting
Agreement, except for such rights as have been duly waived.
(xiii) Such counsel (A) is of the opinion that the Registration
Statement and Prospectus (except for financial statements and schedules and
other financial and statistical data included therein as to which such counsel
need not express any opinion) comply as to form in all material respects with
the Securities Act and the applicable rules and regulations of the Commission
thereunder, (B) has no reason to believe that (except for financial statements
and schedules and other financial and statistical data as to which such counsel
need not express any belief) the Registration Statement and the prospectus
included therein at the time the Registration Statement became effective
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading and (C) has no reason to believe that (except for financial
statements and schedules and other financial and statistical data as to which
such counsel need not express any belief) the
A-2
<PAGE>
Prospectus, as of its date and on the date hereof, contains any untrue statement
of a material fact or omits to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they were
made, not misleading.
With respect to paragraph (xiii) of Exhibit A, such counsel may state
---------
that their opinion and belief are based upon their participation in the
preparation of the Registration Statement and 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.
A-3
<PAGE>
EXHIBIT B
---------
Form of Lockup Agreement
__________________, 1999
Donaldson, Lufkin & Jenrette
Securities Corporation
Thomas Weisel Partners LLC
SG Cowen Securities Corporation
As Representatives of the Several Underwriters
c/o Donaldson, Lufkin & Jenrette Thomas Weisel Partners LLC
Securities Corporation One Montgomery Street, Suite 3700
277 Park Avenue San Francisco, California 94104
New York, New York 10172
Re: Lock-Up Agreement (the "Agreement")
-----------------------------------
Ladies and Gentlemen:
The undersigned is an owner of record or beneficially of certain
shares of Common Stock, par value $0.001 per share (the "Common Stock"), of
Rainmaker Systems, Inc., a California corporation (the "Company"), or securities
convertible into or exchangeable or exercisable for Common Stock. The
undersigned understands that you, as representatives (the "Representatives"),
propose to enter into an Underwriting Agreement on behalf of the several
Underwriters named in Schedule A to such agreement (collectively, the
----------
"Underwriters"), with the Company providing for a public offering of the Common
Stock of the Company pursuant to a Registration Statement on Form S-1 to be
filed with the Securities and Exchange Commission (the "Public Offering"). The
undersigned recognizes that the Public Offering will be of benefit to the
undersigned and will benefit the Company by, among other things, raising
additional capital for its operations. The undersigned acknowledges that you
and the other Underwriters are relying on the representations and agreements of
the undersigned contained in this letter in carrying out the Public Offering and
in entering into underwriting arrangements with the Company with respect to the
Public Offering.
To induce the Underwriters that may participate in the Public Offering
to continue their efforts in connection with the Public Offering, the
undersigned hereby agrees that, without the prior written consent of each of
Donaldson, Lufkin & Jenrette Securities Corporation and Thomas Weisel Partners
(which consent may be withheld in its sole discretion), it will not, during the
period commencing on the date hereof and ending 180 days after the date of the
final prospectus relating to the Public Offering (the "Prospectus"), (1) offer,
pledge, sell, contract to
B-1
<PAGE>
sell, sell any option or contract to purchase, purchase any option or contract
to sell, grant any option, right or warrant to purchase, lend, or otherwise
transfer or dispose of, directly or indirectly, any shares of Common Stock or
any securities convertible into or exercisable or exchangeable for Common Stock,
or (2) enter into any swap or other arrangement that transfers to another, in
whole or in part, any of the economic consequences of ownership of the Common
Stock, whether any such transaction described in clause (1) or (2) above is to
be settled by delivery of Common Stock or such other securities, in cash or
otherwise. In addition, the undersigned agrees that, without the prior written
consent of each of Donaldson, Lufkin & Jenrette Securities Corporation and
Thomas Weisel Partners (which consent may be withheld in its sole discretion),
it will not, during the period commencing on the date hereof and ending 180 days
after the date of the Prospectus, make any demand for or exercise any right with
respect to, the registration of any shares of Common Stock or any security
convertible into or exercisable or exchangeable for Common Stock. With respect
to the Public Offering, the undersigned waives any registration rights relating
to registration under the Securities Act of any Common Stock owned either of
record or beneficially by the undersigned, including any rights to receive
notice of the Public Offering.
The foregoing restrictions are expressly agreed to preclude the
undersigned from engaging in any hedging or other transaction which is designed
to or reasonably expected to lead to or result in a sale or disposition of the
Common Stock even if such Common Stock would be disposed of by someone other
than the undersigned. Such prohibited hedging or other transactions would
include without limitation any short sale or any purchase, sale or grant of any
right (including without limitation any put option or put equivalent position or
call option or call equivalent position) with respect to any of the Common Stock
or with respect to any security that includes, relates to, or derives any
significant part of its value from such Common Stock.
Notwithstanding the foregoing, the undersigned may transfer shares of
Common Stock or securities convertible into or exchangeable or exercisable for
Common Stock (i) as a bona fide gift or gifts, provided that the donee or donees
thereof agree to be bound by the restrictions set forth herein, (ii) to any
trust for the direct or indirect benefit of the undersigned or the immediate
family of the undersigned, provided that the trustee of the trust agrees to be
bound by the restrictions set forth herein, and provided further that any such
transfer shall not involve a disposition for value, (iii) to the Underwriters
pursuant to the Underwriting Agreement, (iv) in connection with the
reincorporation of the Company in the State of Delaware, (v) pursuant to the
exercise of put options previously granted by the Company which expire on
September 30, 1999, or (vi) in transactions relating to shares of Common Stock
acquired by the undersigned in open market transactions after the completion of
the Public Offering. For purposes of this Agreement, "immediate family" shall
mean any relationship by blood, marriage or adoption, not more remote than first
cousin. In addition, notwithstanding the foregoing, if the undersigned is a
corporation, the corporation may transfer the capital stock of the Company to
any wholly-owned subsidiary of such corporation; provided, however, that in any
such case, it shall be a condition to the transfer that the transferee execute
an agreement stating that the transferee is receiving and holding such capital
stock subject to the provisions of this Agreement and there shall be no further
transfer of such capital stock except in accordance with this Agreement, and
provided further that any such transfer shall not involve a disposition for
value.
B-2
<PAGE>
The undersigned understands that whether or not the Public Offering
actually occurs depends on a number of factors, including stock market
conditions. The Public Offering will only be made pursuant to an Underwriting
Agreement, the terms of which are subject to negotiation among the Company and
the Underwriters.
The undersigned agrees and consents to the entry of stop transfer
instructions with the Company's transfer agent and registrar against the
transfer of shares of Common Stock or securities convertible into or
exchangeable or exercisable for Common Stock held by the undersigned except in
compliance with the foregoing restrictions.
This agreement is irrevocable and will be binding on the undersigned
and the respective successors, heirs, personal representatives, and assigns of
the undersigned.
Very truly yours,
_______________________________________________
(Name)
_______________________________________________
(Address)
B-3
<PAGE>
EXHIBIT 10.21
UNIDIRECT CORPORATION
OUTSOURCING SERVICES AGREEMENT
This Outsourcing Services Agreement ("Agreement") is entered as of
July 21, 1997 ("Effective Date") by and between UniDirect Corporation
("UniDirect"), a California corporation, with its principal place of business at
1800 Greenhills Road, Suite 201, Scotts Valley, California 95066, and FTP
Software, Inc. ("FTP"), a Massachusetts corporation, with its principal place of
business at 100 Brickstone Square, Fifth Floor, Andover, Massachusetts 01810.
AGREEMENT
---------
In consideration of the mutual covenants contained in this Agreement
and for other good and valuable consideration, the adequacy and receipt of which
are hereby acknowledged, the parties agree as follows:
1. Definitions.
-----------
a. "Business Unit" shall mean FTP'S VIP Network(TM) Applications
Business Unit, through which copies of Products, including Support Services and
Subscription Services, are sold.
b. "FTP Gross Sales" shall mean the Business Unit's gross
sales in the Territory of Subscription Services, Support Services and Upgrades.
c. "Net Sales" shall mean UniDirect's gross sales made pursuant to
this Agreement less all applicable discounts actually given and returns actually
made.
d. "Products" shall mean, collectively, all software products,
Support Services and Subscription Services offered by the Business Unit for
commercial sale as of the Effective Date or during the term of this Agreement.
e. "Retail Prices" shall mean the prices for the Subscription
Services, Support Services and Upgrades as set forth on Attachment A hereto. FTP
------------
may amend the Retail Prices from time to time by attaching an amended Attachment
----------
A and providing such amended attachment to UniDirect, such amendment to be
- -
effective thirty (30) days after UniDirect's receipt thereof.
f. "Subscription Services" shall mean Business Unit Product
update services whereby the purchaser shall receive from FTP, or an authorized
FTP agent, during the period specified therein, all new versions of the Products
including major releases (including, without limitation, incremented version
numbers to the left of a decimal point), minor releases (i.e., incremented
version numbers to the right of a decimal point), all new or previously released
versions of
<PAGE>
the Product for different computer platforms (i.e., different hardware and
system software) and eligibility to participate in certain promotional offers
made by FTP (i.e., any upgrade promotions for new FTP products).
g. "Support Services" shall mean Business Unit Product support
services whereby the purchaser is entitled to receive from FTP, or an authorized
FTP agent, for the period specified therein and during FTP's normal business
hours, technical assistance for the Products. Such support shall be available by
telephone, U.S. mail, electronic mail and fax.
h. "Territory" shall mean the United States and Canada.
i. "Upgrade" shall mean a one-time Product upgrade whereby the
purchaser shall receive from FTP, or an authorized FTP agent, all new versions
of the Products made commercially available by FTP as of the Effective Date
including major releases (including, without limitation, incremented version
numbers to the left of a decimal point), minor releases (i.e., incremented
version numbers to the right of a decimal point), all new or previously released
versions of the Product for different computer platforms (i.e., different
hardware and system software) and eligibility to participate in certain then
effective promotional offers made by FTP (i.e., any upgrade promotion for new
FTP products).
2. Outsourcing Services.
---------------------
a. FTP hereby grants to UniDirect for the term of this Agreement,
and UniDirect accepts, a non-sublicenseable, non-assignable, non-transferable
appointment and license to market, sell and distribute Support Services,
Subscription Services and Upgrades to end users of the Products.
b. Beginning thirty (30) days after the Outsource Start Date, the
license granted by FTP to UniDirect in Section 2.a above shall be exclusive with
regard to all sales during the term of this Agreement of Support Services and
Subscription Services which do not occur upon the initial Product license
grants. Such license is non-exclusive with regard to all other sales. During the
thirty (30) days described above, the parties will work in good faith to
transition the outsource services described herein and UniDirect will receive
from FTP payment for the full value of UniDirect's fulfillment discount (as set
forth in Section 4 below) for all FTP sales pursuant to this Section 2.b which,
following such thirty (30) day period, would have been within UniDirect's
exclusive rights hereunder.
c. UniDirect will use its best efforts to successfully market
(including, without limitation, maintaining a well-staffed and Product educated
sales force, adequate inventory and prompt creation of appropriate promotional
materials), sell and distribute the Support Services, Subscription Services and
Upgrades on a continuing basis and to comply with good business practices,
2
<PAGE>
industry standards and all laws and regulations relevant to this Agreement or
the subject matter hereof.
d. The Support Services, Subscription Services and Upgrades shall be
in every way identical to the support services, subscription services and
upgrades made commercially available by the Business Unit to its customers for
the software Products.
e. FTP acknowledges and agrees that the Support Services and
Subscription Services sold by UniDirect to end user customer hereunder contain
certain terms and conditions between FTP and an end user customer upon such
customer's acceptance thereof. FTP agrees to honor and be bound by the terms and
conditions of all such agreements.
3. FTP Software Services.
---------------------
a. FTP hereby grants, and UniDirect accepts, a non-exclusive,
non-sublicenseable, non-assignable, non-transferable, personal, royalty-free
license to use FTP's trademarks, service marks, logos and the trade name "FTP
Software" (collectively the "Marks") in connection with the outsourcing services
performed by UniDirect hereunder in accordance with the license terms set forth
in this Section 3. UniDirect shall submit all materials bearing the Marks,
including without limitation, advertisements, promotional materials and
invoices, to FTP for review and written approval prior to initial release, which
approval shall not be unreasonably withheld or delayed. UniDirect shall
initially perform the services described in this Agreement using the name "FTP
Software Services" ("FTPSS"). UniDirect shall not use any marks confusingly
similar to the Marks during or after the term of this Agreement. It is the
parties' intention that UniDirect will begin performance hereunder as FTPSS six
(6) weeks following the Effective Date, or the earliest commercially reasonable
date, if later (hereinafter, the date on which UniDirect begins its outsourcing
performance as FTPSS shall be referred to as the "Outsource Start Date")).
b. (i) UniDirect shall comply with reasonable standards regarding
the Marks supplied to UniDirect by FTP from time to time in order to maintain
the quality set by, and under the control of, FTP. At FTP's request, UniDirect
shall provide FTP with samples and specimens of all materials bearing the Marks
for FTP's inspection. UniDirect acknowledges FTP's representation of its
ownership of the Marks, agrees that UniDirect shall do nothing inconsistent with
such ownership and agrees that all use of the Marks shall inure to the benefit
of FTP. UniDirect agrees that neither by virtue of this Agreement nor
performance contemplated hereunder does UniDirect acquire any rights, title, or
interest in or to the Marks other than the license granted in this Section 3.
UniDirect shall not attack FTP's title to the Marks. Upon termination or
expiration of this Agreement, the license granted in this section shall
terminate and UniDirect shall immediately
3
<PAGE>
discontinue all use of the Marks including, without limitation, within
UniDirect's catalog, not later than UniDirect's next printing of its catalog,
which shall in no event occur no later than six (6) months from the date of such
termination or expiration, and shall destroy all printed or other materials
bearing any of the Marks. The goodwill associated therewith shall remain the
property of FTP and shall not be derogated by UniDirect.
(ii) UniDirect shall not remove any FTP or FTP supplier's
markings, logos, colors or other insignia which are affixed to Products at the
time of FTP's shipment. Only Products licensed from FTP shall bear FTP's
markings, logos or other insignia. UniDirect shall not add any additional logos,
markings or other insignia to the Products.
(iii) FTP expressly prohibits any other direct or indirect use,
registration or reference to FTP's name, trademarks, trade names, logos or other
insignia, or any name, trademark, trade name, logo or other insignia confusingly
similar thereto, except as may be explicitly authorized by FTP herein.
4. Fulfillment Discount.
--------------------
a. Within ten (10) business days of the Effective Date, the parties
will agree on a "Baseline." For purposes of this Agreement, the Baseline shall
be the average quarterly FTP Gross Sales of Subscription Services and Support
Services during the previous four (4) consecutive quarters calculated by adding
such quarterly FTP Gross Sales figures for the period beginning July 1, 1996 and
ending June 30, 1997 and dividing the result by four (4). To the extent the FTP
Gross Sales figure relied upon by the parties in calculating the Baseline is
subsequently determined to be overstated, the Baseline shall be recalculated
using the FTP Gross Sales for such period as reduced by the overstated amount.
b. Beginning on the Outsource Start Date and continuing until such
time as UniDirect's Net Sales of Subscription Services and Support Services
during a particular calendar quarter exceed the Baseline, UniDirect shall
receive the following discounts from the Retail Prices for the remainder of such
quarter:
(i) For UniDirect's first [***] of Net Sales of Support Services
per calendar month, [***] off the Retail Price; this discount shall increase to
[***] for all sales of Support Services during such month which exceed [***]
(ii) For UniDirect's first [***] combined Net Sales of
Subscription Services and Upgrades per calendar month, [***] off the Retail
Price; this discount shall increase to [***] for all sales of Subscription
Services and
4
__________
[***] Confidential treatment has been requested for the bracketed portions. The
confidential redacted portion has been omitted and filed separately with the
Securities & Exchange Commission.
<PAGE>
Upgrades during such month which exceed [***]
(iii) In furtherance of the foregoing, UniDirect shall submit to
FTP monthly reports within five (5) days after the end of such month, which
reports shall each specify, by end user, the Support Services, Subscription
Services and Upgrades sold during such month. Each such report shall be in a
form mutually acceptable to both parties.
c. Beginning on the first day of the first quarter following a
quarter in which UniDirect's Net Sales of Subscription Services and Support
Services exceed the Baseline, and continuing thereafter for duration of this
Agreement, UniDirect shall receive the following discounts from the Retail
Prices:
(i) For UniDirect's first [***] Net Sales of Support Services
per month, [***] off the Retail Price; this discount shall increase to [***] for
all sales of Support Services during such month which exceed [***]
(ii) For UniDirect's first [***] Net Sales of Subscription
Services and Upgrades combined per month, [***] off the Retail Price; this
discount shall increase to [***] for all sales of Subscription Services and
Upgrades during such month which exceed [***]
d. Within six (6) months after the Outsource Start Date and
continuing thereafter, [***] Failure to achieve this milestone at any six (6)
month interval after the Effective Date shall be a material breach of the
Agreement pursuant to which FTP may terminate the Agreement or remove
exclusivity, at its option.
e. (i) For the period beginning on the first (1st) day of the
seventh (7th) month following the Outsource Start Date and ending on the last
day of the twelfth (12th) month following the Outsource Start Date, [***]
Failure to achieve this milestone shall be a material breach of the Agreement
pursuant to which FTP may terminate the Agreement or remove exclusivity, at its
option.
(ii) For the period beginning on the first (1st) day of the
thirteenth (13th) month following the Outsource Start Date and ending on the
last day of each six (6) month period thereafter, [***]
5
__________
[***] Confidential treatment has been requested for the bracketed portions. The
confidential redacted portion has been omitted and filed separately with the
Securities & Exchange Commission.
<PAGE>
[***] For each such six (6) month period, failure to achieve this milestone over
the course of such period shall be a material breach of the Agreement pursuant
to which FTP may terminate the Agreement or remove exclusivity, at its option.
5. Payment and Supply Terms.
------------------------
a. Each month UniDirect shall order from FTP and store such
quantities of Upgrades and Products required in UniDirect's normal performance
of outsourcing services under this Agreement as are anticipated by UniDirect to
fulfill one (1) month of customer orders; provided, however, that UniDirect
shall limit its orders of such Upgrades and Products from FTP to four (4) such
orders per month during the first six (6) months following the Outsource Start
Date and to three (3) such orders per month thereafter. All such purchases are
on a consignment basis. All right, title and interest in and to the consigned
inventory shall, at all times, remain with FTP. UniDirect shall have no right,
title or interest in such consigned inventory. UniDirect shall have no right to
pledge, mortgage or otherwise encumber, and UniDirect shall keep free of any
pledge mortgage or other encumbrance, all of the Products received by UniDirect.
Except as disclosed prior to FTP, UniDirect will not store or hold any of the
consigned Products at any location other than the UniDirect facility to which
FTP ships such inventory and UniDirect will not locate its executive offices
outside the United States. UniDirect shall keep all Products segregated (whether
physically or electronically) from all other goods and property held by
UniDirect, including, without limitation, any other FTP products which UniDirect
may possess pursuant to other, separate agreements with FTP. UniDirect shall not
open or remove the shrink wrap or other license from the Products. UniDirect
shall deliver to FTP, within five (5) business days after the end of each
calendar month, a purchase order for all such Upgrades and Products sold by
UniDirect during the previous month.
b. For each Upgrade or other Product returned to and accepted by
UniDirect in compliance with FTP's policies and procedures for product returns,
including without limitation, appropriate FTP approvals, UniDirect shall receive
a credit from FTP for such return in an amount equal to UniDirect's Net Sale for
such Upgrade or other Product. FTP shall credit the aggregate amount of returns
for such previous month against amounts due FTP from UniDirect and FTP shall
accordingly reduce FTP's invoice to UniDirect by a corresponding amount.
c. All payments hereunder shall be due and payable thirty (30) days
after the date of FTP invoice and shall be paid in U.S. dollars drawn on a U.S.
bank. All shipments to UniDirect shall be made F.O.B. FTP Collect. Each party
shall be responsible for all taxes (except taxes based on the other party's
income), duties and other governmental assessments applicable to such party.
6
__________
[***] Confidential treatment has been requested for the bracketed portions. The
confidential redacted portion has been omitted and filed separately with the
Securities & Exchange Commission.
<PAGE>
6. Cooperative Sales and Marketing.
-------------------------------
a. FTP shall provide UniDirect, within three (3) weeks of the end of
each calendar quarter, with a cooperative marketing advertising credit in the
amount of [***] of UniDirect's Net Sales for copies of Product sold
by Unidirect as reported pursuant to Section 4(b)(iii) and for which UniDirect
has submitted payment to FTP, to be used by UniDirect within one hundred twenty
(120) days after the beginning of the calendar quarter for which the credit was
provided and solely for marketing and promoting the Support Services,
Subscription Services and Upgrades consistent with FTP's Cooperative Marketing
Guidelines. In addition to these advertising credits, FTP may, from time to time
and subject to its prior written approval, provide UniDirect with market
development funds to assist UniDirect in achieving the milestones set forth in
Section 4 above. No later than thirty (30) days after the Effective Date, FTP
shall approve and pay to UniDirect an initial market development fund of [***].
b. UniDirect will keep accurate records of leads forwarded to it by
FTP technical support personnel, including the name of the referring person and
whether or not such referral resulted in a sale by UniDirect. UniDirect shall
deliver such reports to FTP on a monthly basis (within five (5) days after the
end of each month) for FTP's use in connection with its business.
7. Customer/Lead Databases and Information.
---------------------------------------
a. The parties acknowledge that access to certain Business Unit's
customer information is critical to UniDirect's ability to meet its obligations
under this Agreement. FTP therefore shall deliver to UniDirect, within four (4)
weeks after the Effective Date, copies of (i) all relevant Business Unit
customer and lead/prospect databases that FTP maintains in connection with the
Business Unit's sales, marketing and promotional activities, including but not
limited to the Business Unit's service, registration, customer, lead/prospect
and credit databases and (ii) all other documents and information relating to
such databases which are reasonably necessary or appropriate for UniDirect's use
of the database information. FTP shall transfer the information specified in
this Section 7.a to UniDirect in electronic format (such format to be as
mutually agreed upon by the parties in good faith). FTP shall provide UniDirect
with reasonable and appropriate assistance in implementing such databases on
UniDirect's data processing system. All information provided by FTP to UniDirect
pursuant to this Section 7.a shall be Proprietary Information (defined below);
provided, however, that such information shall not be deemed Proprietary
Information of FTP to the extent it (a) is or becomes (through no improper
action or inaction of UniDirect) generally available to the public, (b) was
rightfully disclosed to UniDirect by a third party, or (c) was independently
developed by UniDirect's employees who had no access to such information.
7
__________
[***] Confidential treatment has been requested for the bracketed portions. The
confidential redacted portion has been omitted and filed separately with the
Securities & Exchange Commission.
<PAGE>
b. In connection with obligations under this Section 7, FTP will
assist UniDirect, and in good faith, in generating and acquiring names,
addresses, telephone numbers and other information regarding new customers and
leads/prospects. FTP shall regularly (at such intervals as agreed upon in good
faith by the parties) update its customer and lead/prospect databases and shall
provide such updated information to UniDirect at such times and in such formats
as requested by UniDirect.
c. Promptly after the Effective Date, the parties will implement a
program and/or process for the exchange of updated information from their
respective customer and lead/prospect databases.
d. Upon termination of this Agreement pursuant to Section 14:
(i) Each party shall retain ownership of the customer and
lead/prospect databases, records and related information which that party
possessed and owned prior to the effectiveness of this Agreement. Each of
UniDirect and FTP shall destroy all records and other information not co-owned
by such party as specified in Section 7.d(ii), below and which are owned by the
other party;
(ii) The parties shall jointly own all records and databases (a)
pertaining to customers who purchase from UniDirect any Support Service,
Subscription Service or Upgrade during the term of this Agreement, where such
customers were not under contract for or did not purchase any Support Services,
Subscription Services and/or Upgrades during the six (6) months prior to the
Effective Date, and (b) which UniDirect creates or modifies as a result of its
performance of outsourcing services under this Agreement during the term of the
Agreement with FTP's prior written consent. UniDirect shall not use any
information in the records and databases described in this Section d(ii) to
solicit or sell products which are competitive with the Products. No further
rights to records or databases as contained in the paragraph shall accrue upon
expiration or other termination of this Agreement.
8. Other Obligations of the Parties.
--------------------------------
a. During the term of this Agreement, UniDirect shall promptly
forward all customer inquiries and requests in connection with the Products to
FTP or an authorized FTP agent or reseller, as designated by FTP. FTP shall
forward all appropriate customer inquiries regarding the Support Services,
Subscription Services and Upgrades to UniDirect. In addition, FTP shall maintain
its toll-free customer service telephone number, (800) 282-4FTP, and shall
provide in connection therewith a recorded customer service greeting and an
automatic forwarding option to UniDirect (directly to such telephone number(s)
designated by
8
<PAGE>
UniDirect or as otherwise agreed to by the parties) for orders for and inquiries
about Support Services, Subscription Services and Upgrades.
b. UniDirect shall be available a minimum of 6:00 a.m. to 5:00 p.m.,
Pacific time, Monday through Friday, on normal business days. UniDirect shall
answer the telephone as "FTP Software Services" and obtain all appropriate
customer information.
c. Upon receipt of a telephone order from an FTP customer, UniDirect
shall process the order, including credit card verification. UniDirect shall be
responsible for all credit card discounts and charge back fees. UniDirect shall
then ship the Products within one (1) business day of such order in accordance
with good commercial practices to, among other things, avoid damage to the
Product. UniDirect shall be solely responsible for all costs and expenses
associated therewith.
d. UniDirect shall not, without FTP's prior written consent, use any
Proprietary Information or Product (including, without limitation, transfers or
use between, by or among UniDirect or any affiliate) received pursuant to this
Agreement regarding FTP customers for any purpose other than as contemplated by
this Agreement. During the term of this Agreement, UniDirect may not sell other
FTP products or other entities' products to FTP prospects and customers without
the prior written consent of FTP.
e. The parties shall each designate on Attachment B a contact person
------------
("Contact Person"); a party may amend its designation of its Contact Person from
time to time by attaching an amended Attachment B signed by such party and
------------
providing the amended Attachment B to the other party in accordance with the
------------
notice provisions of Section 17.d, such amendment to be effective upon receipt
by the party to whom it is being noticed. Each Contact Person shall communicate
on a regular basis with the other Contact Person regarding the marketing, sales
and distribution activities of the parties' hereto and shall seek to determine
ways in which to coordinate the respective marketing, sales and distribution
activities of the parties.
f. For no fewer than sixty (60) days following the Effective Date,
FTP shall designate a product manager or other highly skilled, qualified and
knowledgeable individual capable of providing technical support for and training
regarding the Products and who will, at such times as mutually agreed upon by
the parties, provide Product technical support and training to UniDirect's
employees and contractors.
9
<PAGE>
g. FTP shall provide and license to UniDirect with a reasonable
number of copies of the Products (as mutually determined by the parties) for use
exclusively in support of UniDirect's performance hereunder and subject to all
the terms and conditions of FTP's end user license as provided therewith.
h. FTP may, in its discretion, make its current and any future
electronic point-of-sale system and electronic distribution system available to
UniDirect in connection with UniDirect's activities hereunder.
i. FTP shall provide, maintain and display on its worldwide web page
a "Buy Button" for the Support Services, Subscription Services and Upgrades. For
purposes of this Agreement, a "Buy Button" means an appropriately labeled
graphical image which may be selected by a user using a worldwide web browser
such as Netscape Navigator or Microsoft Internet Explorer and which contains a
hyperlink to a worldwide web page provided and maintained by UniDirect. FTP
acknowledges and agrees that the Buy Button shall be the exclusive non-point of
sale means for purchasing Support Services, Subscription Services and Upgrades
electronically.
9. Limited Liability; Force Majeure. IN NO EVENT SHALL FTP BE
--------------------------------
LIABLE FOR INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES INCLUDING WITHOUT
LIMITATION LOSS OF INCOME, DATA, USE OR INFORMATION EVEN IF FTP HAS BEEN ADVISED
OF THE POSSIBILITY OF SUCH DAMAGES. IN NO EVENT SHALL THE LIABILITY OF FTP
EXCEED TWENTY-FIVE THOUSAND DOLLARS ($25,000) OR THE AMOUNT PAID FOR THE PRODUCT
OR SERVICE GIVING RISE TO THE CLAIM, WHICHEVER IS GREATER, REPAIR, REPLACEMENT
OR REFUND (AT FTP'S OPTION) IS THE EXCLUSIVE REMEDY FOR A DEFECT. EXCEPT FOR
PAYMENT OBLIGATIONS HEREUNDER, NEITHER PARTY SHALL BE LIABLE FOR ANY FAILURE OR
DELAY DUE TO MATTERS BEYOND ITS REASONABLE CONTROL.
10. Reports; Examination of Books. No later than the fifth (5th)
-----------------------------
business day of each month, UniDirect shall submit to FTP a written report
detailing UniDirect's FTPSS activities during the previous month, including
UniDirect's sales of Support Services, Subscription Services and Upgrades.
UniDirect shall submit all such reports to FTP in electronic form and in the
ASCII format specified in Attachment C hereto or as otherwise agreed. FTP may,
------------
at its sole expense, during UniDirect's normal business hours and with seventy
two (72) business hours' prior written notice, but in no event more than two (2)
times each calendar year, have an independent certified public accountant
examine the relevant books and records of UniDirect to verify UniDirect's
compliance with its obligations under this Agreement; provided such accountant
is bound in writing to maintain in strict confidence and not to disclose or use
any UniDirect information except as necessary to disclose to FTP for the above
purposes. Prior to the
10
<PAGE>
Outsource Start Date, UniDirect shall permit FTP or the authorized
representative to perform an inventory audit consistent with the terms described
above.
11. Indemnification.
---------------
a. Notwithstanding Section 9 above, FTP will indemnify UniDirect for
reasonable costs, damages, and attorney's fees finally awarded against UniDirect
or agreed to by FTP in any settlement resulting from any claim that the Products
infringe a valid United States and/or Canada patent, copyright, trademark or
trade secret, and FTP will, at its option and expense, (i) procure for UniDirect
the right to continue distributing the Products, (ii) replace or modify the
Products so they become non-infringing, or (iii) refund the license fee for the
infringing Products prorated on a straight line basis over five (5) years,
provided UniDirect (a) promptly notifies FTP of the action, (b) immediately
discontinues distributing the Products, and (c) allows FTP sole control of such
action and gives FTP reasonable assistance in the defense of the action. FTP
shall have no liability for any claim based upon (1) the combination, operation
or use of the Products with products not furnished by FTP to the extent such
claim results from such combination or (2) modifications to the Products not
made by FTP or made in compliance with UniDirect's instructions. FTP's
obligation to indemnify UniDirect under this Section 11.a shall be limited to
two hundred fifty thousand dollars ($250,000). This Section 11.a sets forth
FTP's entire liability and sole obligation and UniDirect's exclusive remedy in
the event of any claim of intellectual property infringement.
b. Subject to Section 9 above, FTP will indemnify UniDirect for
reasonable costs, damages, and attorney's fees incurred by UniDirect in
connection with any claim or action brought or threatened against UniDirect due
to its doing business as FTPSS, where such action or claim does not otherwise
arise from the acts or omissions of UniDirect; provided, however, that FTP shall
have no obligations under this Section 11.b unless UniDirect (i) promptly
notifies FTP of the claim or action and (ii) allows FTP sole control of such
claim or action and gives FTP reasonable assistance in the defense thereof.
c. Subject to Section 9 above, UniDirect shall indemnify FTP for
reasonable costs, damages and attorney's fees finally awarded FTP, or agreed to
in any settlement (subject to UniDirect's prior written consent to such
settlement), arising from a claim of UniDirect's negligence or willful
misconduct with respect to its distribution of Products; provided, however, that
the indemnification provided by this Section 9.c shall be conditioned upon FTP
(i) promptly notifying UniDirect of the action and (ii) allowing UniDirect sole
control of such action and gives UniDirect reasonable assistance in the defense
of the action. UniDirect shall have no obligation under this Section 11.c to
indemnify FTP for any claim based upon or arising from any claimed defect in a
Product, Upgrade, Support Service or Subscription Service.
11
<PAGE>
12. Relationship of Parties. The parties hereto expressly understand
-----------------------
and agree that UniDirect is an independent contractor in the performance of each
and every part of this Agreement, is solely responsible for all of its employees
and agents and its labor costs and expenses arising in connection therewith and
is responsible for any and all claims, liabilities, damages, debts, settlements,
costs, attorneys' fees, expenses and liabilities of any type whatsoever that may
arise on account of UniDirect's activities, or those of its employees or agents.
FTP is in no manner associated with or otherwise connected with the actual
performance of this Agreement on the part of UniDirect, nor with UniDirect's
employment of other persons or incurring of other expenses.
13. Assignment. Neither party may assign or transfer, in whole or in
----------
part, this Agreement or its rights and obligations hereunder without the prior
written consent of the non-assigning party, except for an assignment by FTP to
any parent or affiliate of FTP or transferee of all or substantially all of the
Business Unit's assets.
14. Term and Termination.
--------------------
a. Unless terminated earlier as provided herein, this Agreement
shall have a three (3) year term commencing with the Effective Date. The Parties
may agree to renew the term of this Agreement for additional one (1) year terms,
by providing the other party written notice ninety (90) days prior to the third
anniversary date or any subsequent anniversary date hereof. If the parties
continue to do business with each other after such termination without full
documentation, the relevant terms hereof will continue to govern the
relationship unless otherwise expressly agreed in writing and except that the
relationship may be terminated (except with regard to payment) unilaterally by
either party merely by ceasing to do business with the other.
b. This Agreement may be terminated by a party for cause immediately
by written notice upon the occurrence of any of the following events:
(i) if the other ceases to do business, or otherwise
terminates its business operations;
(ii) if UniDirect breaches Section 4.d and e hereof; or
(iii) if the other materially breaches any material provision of
this Agreement and fails to fully cure such breach within thirty (30) days of
written notice describing the breach; or
(iv) if the other becomes insolvent or seeks protection under
any bankruptcy, receivership, trust deed, creditors arrangement, composition or
comparable proceeding, or if any such proceeding is instituted against the
other.
12
<PAGE>
c. Each party understands that the rights of termination hereunder
are absolute. Neither party shall incur any liability whatsoever for any damage,
loss or expenses of any kind suffered or incurred by the other arising from or
incident to any termination of this Agreement by such party that complies with
the terms of this Agreement whether or not such party is aware of any such
damage, loss or expenses.
d. Termination is not the sole remedy under this Agreement and,
whether or not termination is effected, all other remedies will remain
available.
e. In addition to any provisions that survive termination according
to their terms, the following sections shall survive termination of this
Agreement: Sections 1, 9 through 12 and 14 through 17.
15. Confidentiality.
---------------
a. Each party understands that the other party has disclosed or may
disclose information relating to the disclosing party's business including,
without limitation, business, financial, customer and service development,
plans, forecasts and strategies ("Proprietary Information"). Each receiving
party hereby agrees: (i) to treat the disclosing party's Proprietary Information
as strictly confidential and to hold such information in confidence and to take
reasonable precautions to protect such Proprietary Information; and (ii) not to
divulge any Proprietary Information to any third party; and (iii) not to make
any use whatsoever at any time of such Proprietary Information except as
required in the execution of such receiving party's obligations under this
Agreement. Each party agrees that it has or shall obtain written agreements with
all employees and consultants who are, in accordance with the terms of this
Agreement, permitted access to Proprietary Information which agreements impose
confidential obligations sufficient to meet the obligations set forth in this
Section 15. The terms of this Agreement shall be Proprietary Information.
b. Without granting any right or license, the disclosing party agrees
that the obligations of the receiving party in Section 15.a above shall not
apply with respect to any information following three (3) years after such
information's disclosure to the receiving party or which the receiving party can
document: (i) is or becomes (through no improper action or inaction of the
receiving party) generally available to the public; or (ii) was rightfully
disclosed to it by a third party; or (iii) was independently developed by
employees of the receiving party who had no use of or access to the disclosing
party's Proprietary Information.
16. Arbitration. Except that either party may seek equitable or
-----------
similar relief from a court, any dispute, controversy or claim arising out of or
in relation to this Agreement or at law, or the breach, termination or
invalidity
13
<PAGE>
thereof, that cannot be settled amicably by agreement of the parties hereto,
shall be finally settled by "expedited arbitration" in accordance with the
arbitration rules of the American Arbitration Association ("AAA"), then in
force; provided, however, that arbitration proceedings may not be instituted
until the party alleging breach of this Agreement by the other party has given
the other party not more than thirty (30) days to remedy any alleged breach and
the other party has failed to do so. Such arbitration must result in a final
binding decision, without a right of appeal, in no more than thirty (30) days
from the date of the notice of a dispute under this section from any party to
another. Such arbitration shall be conducted in English by three (3)
arbitrators. Such arbitrators shall be selected by the mutual agreement of the
parties or, failing such agreement, shall be selected according to the relevant
AAA rules. The parties shall bear the costs of such arbitrators equally. The
prevailing party in any such arbitration or in any judicial enforcement or
review proceeding shall be entitled to its reasonable attorneys' fees and costs
in addition to any other amount of recovery ordered by such arbitrator or court.
The arbitrator may not award punitive or multiple damages. The arbitration will
take place in Santa Clara County, California (if instituted by FTP) or Boston,
Massachusetts (if instituted by UniDirect). The award rendered shall be final
and binding upon both parties. Judgment upon the award may be entered in any
court having jurisdiction, or application may be made to such court for judicial
acceptance of the award and/or an order of enforcement as the case may be.
17. General.
-------
a. Amendment and Waiver - Except as otherwise expressly provided
herein, any provision of this Agreement may be amended and the observance of any
provision of this Agreement may be waived (either generally or any particular
instance and either retroactively or prospectively) only with the written
consent of the parties.
b. Governing Law and Legal Actions - This Agreement shall be governed
by and construed under the laws of the State of California and the United States
without regard to conflicts of laws provisions thereof. The sole jurisdiction
and venue for actions related to the subject matter hereof shall be the state
and U.S. federal courts located in Santa Clara County, California (if such
action instituted by FTP) or Boston, Massachusetts (if such action is instituted
by UniDirect). Both parties consent to the jurisdiction of such courts and agree
that process may be served as allowed by applicable state and U.S. federal law.
In any action or proceeding to enforce rights under this Agreement, the
prevailing party shall be entitled to recover costs and reasonable attorneys'
fees.
c. Headings - Headings and captions are for convenience only and are
not to be used in the interpretation of this Agreement.
14
<PAGE>
d. Notices - Notices under this Agreement shall be sufficient only if
personally delivered, delivered by a major commercial rapid delivery courier
service or mailed by certified or registered mail, return receipt requested to a
party at its addresses first set forth herein or as amended by notice pursuant
to this subsection. If not received sooner, notice by mail shall be deemed
received five (5) days after deposit in the U.S. mails.
e. Entire Agreement - This Agreement supersedes all proposals, oral
or written, all negotiations, conversations, or discussions between or among
parties relating to the subject matter of this Agreement and all past dealing or
industry custom.
f. Severability - If any provision of this Agreement is held by a
court of competent jurisdiction to be illegal, invalid or unenforceable, that
provision shall be limited or eliminated to the minimum extent necessary so that
this Agreement shall otherwise remain in full force and effect and enforceable.
15
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the Effective Date set forth above.
UNIDIRECT CORPORATION
By: /s/ Bernard Jubb
-----------------------------------
Name: Bernard Jubb
---------------------------------
Title: PRESIDENT, UNIDIRECT CORP.
--------------------------------
FTP SOFTWARE, INC.
By: /s/ Dennis Leibl
-----------------------------------
Name: Dennis Leibl
---------------------------------
Title: President, Network Applications Business Unit
------------------------------------------------
16
<PAGE>
ATTACHMENT A
RETAIL PRICES
[to be provided]
17
<PAGE>
ATTACHMENT B
CONTACT PERSONS
[to be provided]
18
<PAGE>
ATTACHMENT C
ASCII FORMAT FOR REPORTS
[to be provided]
19
<PAGE>
Amendment No. 1 to UniDirect Corporation
Outsourcing Services Agreement dated July 21, 1997
THIS AMENDMENT No.1 entered into as of September 12, 1997 ("Amendment") to
the Outsourcing Services Agreement by and between FTP Software, Inc., a
Massachusetts corporation, with a principal place of business at 100 Brickstone
Square, Fifth Floor, Andover, Massachusetts 01810 U.S.A. ("FTP"), and UniDirect
Corporation, a California corporation, with its principal place of business at
1800 Greenhills Road, Suite 201, Scotts Valley, CA 95066 ("UniDirect").
WHEREAS, the parties desire to amend the Outsourcing Services Agreement
entered as of July 21, 1997 by and between FTP and UniDirect (the "Agreement")
to, among other things, allow UniDirect to fulfill orders for software product.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained and intending to be legally bound, the parties hereby agree as
follows:
1.The Agreement is hereby amended as follows:
a. Section 1(e): Replace "Support Services and Subscription Services" with
------------
"Products".
b. Delete "Upgrades" wherever it appears.
c. Section 2(a): Delete Section 2(a) in its entirety and replace with the
------------
following: "FTP hereby grants to UniDirect for the term of this
Agreement, and UniDirect accepts, a non-sublicenseable, non-assignable,
non-transferable appointment and license to market, sell and distribute
to end users of the Products (i) Support Services and Subscription
Services and (ii) volume licenses for software Products, in accordance
with FTP's then-current policies. Notwithstanding the foregoing,
UniDirect shall not sell copies of software Product to the named
corporations forwarded to UniDirect in writing by FTP or its resellers
("Protected Accounts"). Should UniDirect fulfill an order for software
Product for any Protected Account, it shall immediately forward any
revenue or purchase orders received from such Protected Account to FTP
or the appropriate reseller. Any breach of the above-mentioned
requirement shall be a material breach of the Agreement with respect to
the outsource of software Product, for which UniDirect shall have thirty
(30) days to cure. In connection with the sale of volume licenses as
described above, UniDirect shall issue license certificates in the form
and format provided by FTP to UniDirect, which form shall not be
modified in any way without FTP's prior written approval, other than to
fill in customer-specific information as required by the form."
d. Section 2(b): Add the following after the first sentence: "Any sale of
------------
Support Services and/or Subscription Services which occur within thirty
(30) days of the initial Product license grant shall be deemed to have
occurred upon the initial Product license grant."
e. Section 2(c): Replace "Support Services, Subscription Services and
------------
Upgrades" with "Products". Add the following at the end of this section:
"Each individual working within the FTPSS operation shall have signed an
employee confidentiality agreement which obligates such individual to
maintain the confidentiality of Proprietary Information."
f. Section 4(b): Add the following as new subclause (iii) and renumber
------------
accordingly: "For all licenses of software Products by UniDirect in
accordance with this Agreement, UniDirect shall receive a discount equal
to [***].
20
__________
[***] Confidential treatment has been requested for the bracketed portions. The
confidential redacted portion has been omitted and filed separately with the
Securities & Exchange Commission.
<PAGE>
g. Section 4(b)(iv): Replace "Support Services, Subscription Services and
----------------
Upgrades" with "Products".
h. Section 4(d): Add the following after "UniDirect" in the second line
------------
thereof: "for sales of Support Services and Subscription Services
i. Section 4(e): Add the following after "Net Sales" wherever it appears:
------------
"for the sale of Support Services and Subscription Services
j. New Section 4(f): "On or before October 15, 1997, the parties will agree
----------------
on performance milestones to be achieved by UniDirect in connection with
the sale of copies of software Products. The performance milestones shall
be measured at [***] after the Effective Date. Failure to achieve the
performance milestones at any [***] shall be a material breach of this
Agreement."
k. Section 5(a): In the sixth sentence, add the following after the initial
------------
clause: "UniDirect will maintain appropriate insurance on the consigned
Products consistent with industry standards and". Replace "Products" with
"Support Services and Subscription Services" in the last sentence."
1. Section 5(c): Add the following after "invoice" in the second line: "or
------------
sales out report, as the case may be".
m. Section 6(a): Replace "Product" in the third line thereof with "Support
------------
Services and Subscription Services".
n. Section 10: Replace "Support Services, Subscription Services and
----------
Upgrades" in the fourth line thereof and replace it with "Products".
o. Section 14(a): Replace the first sentence of this section with the
-------------
following: "Unless terminated earlier as provided herein, this Agreement
shall have a three (3) year term with respect to the outsource of Support
Services and Subscription Services and a one (1) year term with respect
to the outsource of software Products, in each case commencing on the
Effective Date."
p. Section 14(b): Add the following immediately preceding the colon: "A
-------------
breach of the software Product outsource shall not automatically be
deemed a breach of the Support Services and Subscription Services
outsource."
q. New Sections 17-20: Add the following before current Section 17 and
------------------
renumber accordingly:
17. Title to Product: UniDirect agrees that the Product contains
----------------
valuable proprietary trade secrets of FTP and/or its suppliers.
Title, ownership and all rights in and to copyrights, patents,
trademarks, trade secrets and all other proprietary rights in the
Products remain in FTP and/or its suppliers. No source code rights
are granted under this Agreement. UniDirect agrees not to (a)
modify, translate, reverse engineer or otherwise alter the Product
or (b) use the Product for any purpose other than as authorized by
this Agreement. Localization or translation of the Product
requires a separate written agreement between the parties.
18. Product Warranty: End User warranties are addressed in the
----------------
applicable FTP license agreement contained within the Product
and/or packaging. EXCEPT AS PROVIDED IN FTP'S LICENSE AGREEMENT,
THE PRODUCT IS PROVIDED
21
__________
[***] Confidential treatment has been requested for the bracketed portions. The
confidential redacted portion has been omitted and filed separately with the
Securities & Exchange Commission.
<PAGE>
"AS IS." FTP MAKES NO REPRESENTATIONS OR WARRANTY OF ANY KIND, AND
HEREBY DISCLAIMS ANY AND ALL WARRANTIES, EXPRESS OR IMPLIED AS TO
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, OR ANY OTHER
MATTER WITH RESPECT TO THE PRODUCT, WHETHER USED ALONE OR IN
CONJUNCTION WITH ANY OTHER SOFTWARE OR PRODUCT.
19. U.S. Government Restricted Rights: Products described or
---------------------------------
referenced in this Agreement are commercial computer software
programs developed at private expense. Use, duplication or
disclosure by the U.S. Government are subject to the provisions of
the license agreement contained in or with the software product as
prescribed by the applicable provisions of the DOD FAR supplement
and similar regulations of other U.S. Federal agencies applicable
to the delivery of commercial software including the restrictions
set forth in FAR 52.227-19(c)(2).
20. International/Export: UniDirect agrees to comply with U.S. export
--------------------
laws and, in that regard, shall not export or re-export any
Product, including software, documentation or technical data
received from FTP or any direct product thereof, directly or
indirectly, to any country, entity or person prohibited by the
U.S. Government. UniDirect acknowledges that compliance with U.S.
export laws may cause delays in shipments and/or prohibit FTP from
exporting certain Products to certain countries and entities for
certain uses. In no event shall FTP be liable for any such delays
or prohibition. UniDirect shall also comply with the laws and
regulations of other applicable countries which prohibit export or
diversion of certain technical products to certain countries and
individuals and any other applicable law. UniDirect shall comply
with the U.S. Foreign Corrupt Practices Act. The parties expressly
agree that the U.N. Convention on the International Sale of Goods
shall not apply to this Agreement. English shall be the governing
language of this Agreement.
2. All other terms and conditions of the Agreement remain in full force and
effect.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year set forth above.
UNIDIRECT CORPORATION FTP SOFTWARE, INC.
By: /s/ Bernard Jubb By: /s/ [ILLEGIBLE]
---------------------------- ----------------------------
Name: BERNARD JUBB Name: /s/ [ILLEGIBLE]
---------------------------- ----------------------------
Title: President & CEO Title: C.O.O., Net. Apps. By
---------------------------- ----------------------------
22
<PAGE>
IP Technology Business Unit Addendum to UniDirect Corporation
Outsourcing Services Agreement dated July 21, 1997
THIS ADDENDUM entered into as of October 1, 1997 ("Addendum") to the
Outsourcing Services Agreement by and between FTP Software, Inc., a
Massachusetts corporation, with a principal place of business at 100 Brickstone
Square, Fifth Floor, Andover, Massachusetts 01810 U.S.A ("FTP"), and UniDirect
Corporation, a California corporation, with its principal place of business at
1800 Greenhills Road, Suite 201, Scotts Valley, CA 95066 ("UniDirect"). The
Effective Date for purposes of this Addendum, and the Agreement as amended
hereby, shall be October 1, 1997.
WHEREAS, the parties desire to amend the Outsourcing Services Agreement
entered as of July 21, 1997 by and between FTP and UniDirect (the "Agreement")
to allow UniDirect to fulfill orders for maintenance and conversion products
relating to software products offered by the IP Technology Group Business Unit
of FTP.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained and intending to be legally bound, the parties hereby agree as
follows:
1. This Addendum shall apply to the IP Technology Group Business Unit of FTP
only and not to any other business unit or division of FTP. This Addendum
shall not affect the Agreement, as amended, as it applies to the VIP
Network(TM) Applications Business Unit. To that end, UniDirect represents
that the activities and services performed by it under the Agreement, as
modified by this Addendum (including without limitation, the UniDirect
employees chosen to perform the services described in this Addendum) shall
be separate and distinct from the other activities and services performed
by UniDirect on behalf the VIP Network(TM) Applications Business Unit of
FTP under the Agreement, as amended by Amendment No. 1 or otherwise.
2. The Agreement is hereby amended as follows:
a. For purposes of the Agreement, as amended by the IP Technology
Group Business Unit Addendum, the "Outsource Start Date" shall
mean the date that computer and other systems are fully
operational, which the parties expect to occur on or before
October 31, 1997.
b. Section 1(a): Delete Section 1(a) in its entirety and replace
------------
with the following; "'Business Unit' shall mean FTP's IP
Technology Group Business Unit through which copies of Products,
including Maintenance and Conversions, are sold."
c. Replace "Subscription Services, Support Services and Upgrades"
wherever they appear with "Maintenance and Conversions".
d. Section 1(d): Delete Section 1(d) in its entirety and replace
------------
with the following; "'Products' shall mean the software products,
Maintenance and Conversions offered by the Business Unit for
commercial sale as of the Effective Date or during the term of
this Agreement, as further described on Attachment 2 hereto as
incorporated herewith."
e. Section 1(e): Replace "Attachment A" thereto with Attachment 2
------------
hereto as incorporated herewith.
f. Section 1(f), Section 1(g) and Section 1(i): Delete these
-------------------------------------------
sections in their entirety.
1
<PAGE>
g. New Section 1(i): "Conversions" shall mean the software products
----------------
that convert any Nov*ix or Internet Gateway Product to the latest
Internet Gateway version 2.0 product.
h. New Section 1(k): "Maintenance" shall mean the combined telephone
----------------
support and upgrade subscription services which maintain the
Nov*ix or Internet Gateway Products or Conversions, as further
described on Attachment 3 hereto as incorporated herewith."
i. Section 2(b): Replace Section 2(b) in its entirety and replace
------------
with the following: "The license granted by FTP to UniDirect in
Section 2(a) above shall be exclusive with regard to all sales of
Maintenance renewals within the Territory to FTP's installed base
of end users which do not occur within thirty (30) days of the
initial Product license grants. Such license shall be non-
exclusive with regard to all other sales, including without
limitation, all sales of Conversions within the Territory.
Notwithstanding the foregoing, UniDirect shall not sell
Conversions to the named corporations forwarded to UniDirect in
writing by FTP or its resellers ("Protected Accounts"). Should
UniDirect fulfill an order for Conversions for any Protected
Account, it shall immediately forward any revenue or purchase
orders received from such Protected Account to FTP or the
appropriate reseller. Any breach of the above-mentioned
requirement shall be a material breach of the Agreement, for
which UniDirect shall have thirty (30) days to cure."
j. Section 2(c): Add the following at the end of this section: "Each
------------
individual working within the FTPSS operation shall have signed
an employee confidentiality agreement which obligates such
individual to maintain the confidentiality of Proprietary
Information."
k. Section 2(e): Delete this section in its entirety.
------------
l. Section 4(a), Section 4(b)(i) and (ii) and Section 4(c): Delete
-------------------------------------------------------
these sections in their entirety and replace with the following:
"4(a) For the initial term of this Agreement, the "Maintenance
Baseline" shall be $230,000. The "Conversion Baseline" shall be
$70,000. The Maintenance Baseline and the Conversion Baseline
shall be collectively referred to as "Baseline".
4(b) Beginning on the Effective Date and continuing until such time as
UniDirect's Net Sales of Maintenance during a particular calendar
quarter exceed the applicable Baseline, UniDirect shall receive
the following discounts from the Retail Prices for the remainder
of such quarter:
(i) Until UniDirect achieves the Maintenance Baseline, [***];
this discount shall [***] to [***] for UniDirect's
achievement of the Maintenance Baseline. Once UniDirect has
first achieved the Maintenance Baseline, for succeeding
quarters, the initial discount shall be [***], which
discount shall [***] to [***] upon UniDirect again achieving
the Maintenance Baseline in a particular quarter.
(ii) Until UniDirect achieves the Conversion Baseline, [***];
this discount shall [***] to [***] for UniDirect's
achievement of the Conversion Baseline. For succeeding
quarters, the initial discount shall be [***], which
discount shall [***] to [***] upon UniDirect again achieving
the Conversion Baseline in that particular quarter.
4(c) This section is deleted in its entirety.
j. Section 4(e): This section is deleted in its entirety.
------------
k. Section 5(a): In the sixth sentence, add the following after the
------------
initial clause: "UniDirect will maintain appropriate insurance on
the consigned Products consistent with industry standards"
2
__________
[***] Confidential treatment has been requested for the bracketed portions. The
confidential redacted portion has been omitted and filed separately with the
Securities & Exchange Commission.
<PAGE>
l. Section 5(c): Add the following after "invoice" in the second
------------
line; "or sales out report, as the case may be".
m. Section 6(a): Replace this section with the following; "FTP shall
------------
provide UniDirect, within one hundred twenty (120) days of the
start of each calendar quarter, with a cooperative marketing
credit in the amount of [***] of UniDirect's Net Sales of
Maintenance and Conversions sold by UniDirect as reported
pursuant to Section 4(b)(iii) and for which UniDirect has
submitted payment to FTP, to be applied solely for marketing and
promoting Maintenance and Conversion in the Territory within one
hundred twenty (120) days from the beginning of the calendar
quarter for which the credit was provided. FTP may, at its
option, provide input and content to the marketing and
promotional activities conducted by UniDirect, which input and
content UniDirect shall reasonably include in any such
activities."
n. Section 6(e): Replace "Attachment B" thereto with Attachment 4
------------
hereto as incorporated herewith.
o. Section 14(a): Replace the first sentence of this section with
-------------
the following; "Unless terminated earlier as provided herein,
this Agreement shall have a one (1) year/term commencing on the
Effective Date."
p. Section 14(b): Add the following immediately preceding the colon:
-------------
"A breach of the Agreement, as amended by Amendment No. 1,
between UniDirect and the VIP Network(TM) Applications Business
Unit, shall not automatically be deemed a breach of the
Agreement, as amended by the Addendum dated October 1, 1997
between UniDirect and the IP Technology Group Business Unit."
q. New Sections 17-20: Add the following before current Section 17
------------------
and renumber accordingly:
17. Title to Product: UniDirect agrees that the Product
----------------
contains valuable proprietary trade secrets of FTP
and/or its suppliers. Title, ownership and all rights
in and to copyrights, patents, trademarks, trade
secrets and all other proprietary rights in the
Products remain in FTP and/or its suppliers. No source
code rights are granted under this Agreement. UniDirect
agrees no to (a) modify, translate, reverse engineer or
otherwise alter the Product or (b) use the Product for
any purpose other than as authorized by this Agreement.
Localization or translation of the Product requires a
separate written agreement between the parties.
18. Product Warranty: End User warranties are addressed in
----------------
the applicable FTP license agreement contained within
the Product and/or packaging. EXCEPT AS PROVIDED IN
FTP'S LICENSE AGREEMENT, THE PRODUCT IS PROVIDED "AS
IS," FTP MAKES NO REPRESENTATIONS OR WARRANTY OF ANY
KIND, AND HEREBY DISCLAIMS ANY AND ALL WARRANTIES,
EXPRESS OR IMPLIED AS TO MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE, OR ANY OTHER MATTER WITH RESPECT TO
THE PRODUCT, WHETHER USED ALONE OR IN CONJUNCTION WITH
ANY OTHER SOFTWARE OR PRODUCT.
19. U.S. Government Restricted Rights: Products described
---------------------------------
or referenced in this Agreement are commercial computer
software programs developed at private expense. Use,
duplication or disclosure by the U.S. Government are
subject to the provisions of the license agreement
contained in or with the software product as prescribed
by the applicable provisions of the DOD PAR supplement
and similar
3
__________
[***] Confidential treatment has been requested for the bracketed portions. The
confidential redacted portion has been omitted and filed separately with the
Securities & Exchange Commission.
<PAGE>
regulations of other U.S. Federal agencies applicable to the
delivery of commercial software including the restrictions set
forth in FAR 52.227-19(c)(2).
20. International/Export: UniDirect agrees to comply with U.S. export
--------------------
laws and, in that regard, shall not export or re-export any
Product, including software, documentation or technical data
received from FTP or any direct product thereof, directly or
indirectly, to any country, entity or person prohibited by the
U.S. Government. UniDirect acknowledges that compliance with U.S.
export laws may cause delays in shipments and/or prohibit FTP
from exporting certain Products to certain countries and entities
for certain uses. In no event shall FTP be liable for any such
delays or prohibition. UniDirect shall also comply with the laws
and regulations of other applicable countries which prohibit
export or diversion of certain technical products to certain
countries and individuals and any other applicable law. UniDirect
shall comply with the U.S.Foreign Corrupt Practices Act. The
parties expressly agree that the U.N. Convention on the
International Sale of Goods shall not apply to this Agreement.
English shall be the governing language of this Agreement.
3. All other terms and conditions of the Agreement remain in full force
and effect.
IN WITNESS WHEREOF, the parties hereto have caused this Addendum
to be duly executed as of the day and year set forth above.
UNIDIRECT CORPORATION FTP SOFTWARE, INC.
By: /s/ Michael Silton By: /s/ David Traynor
--------------------------- -----------------------------
Name: Michael Silton Name: David Traynor
------------------------- ---------------------------
Title: Chairman Title: VP NASales IP Tech Bu.
------------------------ --------------------------
4
<PAGE>
Effective January 1, 1998
September 13, 1994
Amendment 1
Pricing program adjustments
To encourage the early renewal process to occur, we propose that a late renewal
fee be imposed upon certain levels of delinquency of renewal. This will help to
encourage a sense of urgency from the FTP Customer base, and help increase the
overall renewal rate. Our experience has showed to us the fact that building
these types of re-occurring compelling events are paramount to the success of
any subscription based program. Given the proactive posture of FTPSS in sales,
we feel that we can touch and educate all identified renewable revenue long
before the expiration of the contract. With this "sooner than later" based
program, we should increase the closure rate.
We would like to run the following program, and pricing scheme with an ongoing
90 day review process, where both FTP and FTPSS can determine the success of the
program, and make adjustments to it accordingly.
FTP Maintenance Renewal Matrix
<TABLE>
<CAPTION>
---------------------------------------------------------
Renewal Sales Program
One
Time
Time Parameters Discount Structure charge
---------------------------------------------------------
<S> <C> <C> <C>
Regular Renewal Up To Exp Date [***] [***]
Lapsed Renewal Exp +1 to 90 days [***] [***]
Re-Adoption 91 days + [***] [***]
</TABLE>
Submitted Approved
Date: 11-11-97 Date: 11-11-97
- ------------------------ ----------------------------
/s/ Chris Sterbenc /s/
- ------------------------ ----------------------------
Chris Sterbenc FTP Software Authorized Signature
__________
[***] Confidential treatment has been requested for the bracketed portions. The
confidential redacted portion has been omitted and filed separately with the
Securities & Exchange Commission.
<PAGE>
Amendment No.2 to UniDirect Corporation
Outsourcing Services Agreement dated July 21, 1997
THIS AMENDMENT No.2 entered into as of January 21, 1998 ("Amendment") to
the Outsourcing Services Agreement by and between FTP Software, Inc., a
Massachusetts corporation, with a principal place of business at 2 High Street,
North Andover, Massachusetts 01845 U.S.A. ("FTP"), and UniDirect Corporation, a
California corporation, with its principal place of business at 1800 Greenhills
Road, Suite 201, Scotts Valley, CA 95066 ("UniDirect").
WHEREAS, the parties desire to amend the Outsourcing Services Agreement
entered as of July 21, 1997 by and between FTP and UniDirect, as amended (the
"Agreement") to, among other things, allow UniDirect to fulfill orders in
competitive and promotional situations.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained and intending to be legally bound, the parties hereby agree as
follows:
1. The parties acknowledge that, as of the date of this Amendment, FTP sells
Support Services and Subscription Services as one product known as
"maintenance" for the Retail Price set forth on the current Suggested Retail
Price List. Accordingly, all references in the Agreement to Support Services
and Subscription Services shall mean "maintenance
2. The Agreement is hereby amended as follows:
a. Section 2(a): Delete subclause (ii) in the first sentence thereof and
------------
the second sentence in its entirety with the following: "(ii) volume
licenses for software Products only where such sale is incidental to,
and a part of, a sale of Support Services and Subscription Services, in
accordance with FTP's then-current policies. In no event shall UniDirect
sell copies of software Product to the named corporations forwarded to
UniDirect in writing by FTP or its resellers ("Protected Accounts")."
b. Section 4(b)(i) and (ii): Delete subclauses (i) and(ii) in their
------------------------
entirety and replace them with the following: "(i) For UniDirect's first
[***] of Net Sales of Subscription and Support Services per calendar
month, [***]; this discount shall [***] to [***] for all sales of
Subscription and Support Services during such month which exceed [***].
c. Section 4(c): Delete subclauses (i) and (ii) in their entirety and
------------
replace them with the following: "(i) For UniDirect's [***] of Net Sales
of Subscription and Support Services per calendar month, [***]; this
discount shall [***] to [***] for all sales of Subscription and Support
Services during such month which exceed [***]."
d. Section 4(f): Delete this section in its entirety.
------------
e. Section 6(a): Replace "Support Services and Subscription Services" with
------------
"Products".
3. The parties acknowledge and agree that the only sale of Support or
Subscription Services permitted to be made by UniDirect to a federal, state
or local government entity or agency under the terms and conditions of the
Agreement shall be on a non-exclusive basis.
4. All other terms and conditions of the Agreement remain in full force and
effect.
1
__________
[***] Confidential treatment has been requested for the bracketed portions. The
confidential redacted portion has been omitted and filed separately with the
Securities & Exchange Commission.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year set forth above.
UNIDIRECT CORPORATION FTP SOFTWARE, INC.
By:/s/ Michael Silton By:/s/
------------------------ -----------------------------
Name: Michael Silton Name:
---------------------- ---------------------------
Title: CEO Title:
--------------------- --------------------------
2
<PAGE>
[LETTERHEAD OF UNIDIRECT APPEARS HERE]
January 27, 1998
Pricing program adjustments
CHANGE IN PRICING NOMENCLATURE
------------------------------
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
One
Time
Time Parameters Discount Structure Charge Current Proposed
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Up To Exp Date [***] [***] [***] [***]
Exp +1 to 90 days [***] [***] [***] [***]
91 days + [***] [***] [***] [***]
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
[***]
Effective January 27, 1998
Submitted Approved
Date: 1/28/98 Date: 1-28-98
------------------------------------ --------------------------
/s/ Michael Silton, President /s/
- ----------------------------------------- ------------------------------
UniDirect Corporation Authorized Signature FTP Software Authorized Signature
__________
[***] Confidential treatment has been requested for the bracketed portions. The
confidential redacted portion has been omitted and filed separately with the
Securities & Exchange Commission.
<PAGE>
[LETTERHEAD OF UNIDIRECT APPEARS HERE]
January 27, 1998
FTP Software Services Guidelines
1.) Any "special pricing" requests must be sent through Ian Milne via email or
fax and sent to and approved by Robin Mercer. Any order that is processed
without written approval will be invoiced at list price less FTPSS standard
discount.
2.) All daily transactions where maintenance or additional seats to an existing
site are sold must contain the site license number. This must be reported
nightly through the daily transactions report.
3.) Add-on licenses may only be sold in conjunction with the maintenance
renewal sales motion. Due to the nature of our renewal process, potential
renewal opportunities will be contacted up to 60 days prior to the
expiration and the renewal process often extends out 30 days after the
expiration date when the customer does not renew in a timely fashion.
4.) FTP Software Services will sell product (add-on licenses) during this 90-
day window (60 days prior to expiration and 30 days after) and will
reference the maintenance renewal related to the sale in an email to Ian
Milne and Anne Formalerie.
All potential product opportunities identified by FTPSS that do not meet
the above criteria will be sent out to the channel partners as leads.
Effective January 1, 1998
Submitted Approved
Date: 1/28/98 Date: 1/28/98
------------------------------------ ----------------------------
/s/ Michael Silton, President /s/
- ----------------------------------------- ---------------------------------
UniDirect Corporation Authorized Signature FTP Software Authorized Signature
<PAGE>
[LETTERHEAD OF FTP SOFTWARE SERVICES APPEARS HERE]
26 May, 1998
Mr. Dennis Leibl
FTP Software
2 High Street
North Andover, Ma 01845
Dear Dennis,
Thank you for taking the time to speak with Michael Silton and me on
Friday. I am sending this letter to follow up on our discussion. In that
discussion, you agreed to move UniDirect to the [***] margin structure
laid out in the contract (more detail below) in recognition of the revenue
run rate established by UniDirect over the last few quarters. We agreed
that the effective date for the new margin levels was to be June 1, 1998.
Per the contract, (section 4(c)), going forward, the discount for the sales
of Subscription and Support Services will be [***]. The discount for all
Sales of Subscription and Support Services which exceed [***] in a given
month will be [***]. This discount structure shall be in effect June 1,
1998.
Please acknowledge your agreement by signing below
Sincerely,
/s/ Chris A.J. Sterbenc
Chris A.J. Sterbenc
Vice President of Sales
Acknowledged: /s/ Dennis Leibl 5/26/98
---------------------- -------
Dennis Leibl Date
__________
[***] Confidential treatment has been requested for the bracketed portions. The
confidential redacted portion has been omitted and filed separately with the
Securities & Exchange Commission.
<PAGE>
August 11, 1998
Rainmaker Systems Inc.
1800 Green Hills Rd.
Scotts Valley, CA 95066
Re: Amendment No. 3
Attention: Michael Silton
Dear Mr. Silton:
Please find following Amendment No. 3 to the agreement between FTP Software Inc.
and UniDirect Corp., regarding the Internet Technology Group Business Unit.
Due to the sale of the Internet Technology Group product line by FTP Software
Inc. to Network Designers Ltd., as of August 1, 1998 FTP Software Services will
no longer sell the Internet Technology product line.
Sincerely,
/s/ Ian Milne
Ian Milne
Sales Manager
FTP Software Services
<PAGE>
Amendment No. 3 to UniDirect Corporation
Outsourcing Services Agreement dated July 21, 1997
THIS AMENDMENT No. 3 entered into as of____, 1998 ("Amendment") to the
Outsourcing Services Agreement by and between FTP Software, Inc., a
Massachusetts corporation, with a principal place of business at 2 High Street,
North Andover, Massachusetts 01845 U.S.A. ("FTP"), and UniDirect Corporation, a
California corporation, with its principal place of business at 1800 Greenhills
Road, Suite 201, Scotts Valley, CA 95066 ("UniDirect").
WHEREAS, the parties desire to amend the Outsourcing Services Agreement
entered as of July 21, 1997 by and between FTP and UniDirect, as amended by
Amendment Number One dated September 12, 1998, IP Technology Business Unit
Addendum dated October 1, 1997 and Amendment Number Two dated January 21, 1998
(the "Agreement") to delete FTP IP Technology Group Business Unit products as
set forth in IP Technology Business Unit Addendum dated October l, 1997;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained and intending to be legally bound, the parties hereby agree as
follows:
1. Reference: IP Technology Group Business Unit Addendum dated October 1, 1997
a. Delete all terms and conditions of the Addenddum in its entirety.
----------------------------------------------------------------
2. All other terms and conditions of the Agreement remain in full force and
effect.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment Number
Three to be duly executed as of the day and year set forth above.
UNIDIRECT CORPORATION FTP SOFTWARE, INC.
By: Michael Silton By:________________________
--------------
Name. Michael Silton Name:______________________
--------------
Title: President Title:_____________________
---------
<PAGE>
EXHIBIT 10.22
Confidential Execution original
- --------------------------------------------------------------------------------
Outsource Services Agreement
between
Novell, Inc. and Rainmaker Systems, Inc.
This Outsource Services Agreement is entered by Novell, Inc., with offices 1555
North Technology Way, Orem, Utah 84097 ("Novell") and Rainmaker Systems, Inc.
with offices at 1800 Green Hills, Suite 201, Scotts Valley, CA 95066
("Rainmaker").
1. Purpose. The purpose of this Agreement is to establish the terms on which
Rainmaker will perform certain sales, marketing and fulfillment functions of
Novell's Subscription Services on behalf of Novell. Rainmaker will operate under
the name "Novell Subscription Services" and will adopt, to the extent
reasonable, such practices and programs as Novell directs Rainmaker to use from
time to time as apply to the development and support of the Novell sales
organization and the channels of distribution. All customer invoices, billing
documentation and dunning notices will have the "Novell Subscription Services"
look and feel, however they will also carry the disclaimer "under license to
Rainmaker from Novell Inc."
This Agreement replaces the Outsource Services Agreement between Novell, Inc.
and UniDirect, as amended which shall terminate on the Commencement date hereof.
2. Definitions.
a. Average Street Price means the price of a product as calculated in Schedule 3
--------------------
hereof.
b. Eligible Customers means any Novell product user who is not under a Novell
------------------
licensing contract or upgrade protection contract (e.g. MLA, CLA, VLA, etc.)
with Novell or a Novell subsidiary for the purchase of Novell products.
c. Licensed Trademark means "Novell Subscription Services".
------------------
d. Novell Products or Products means the products listed on Schedule 1 hereto.
---------------------------
Novell may add products to or subtract products from Schedule 1 upon thirty
days notice to Rainmaker.
e. OutSource Activities means all of the rights and duties related to
--------------------
Rainmaker's provision of the Novell Subscription Services granted under this
Agreement.
f. Recommended End User Prices for the Subscription Services and other Products
---------------------------
sold hereunder are (i) the Average Street Price for the Upgrade portion of a
bundle containing Upgrades and Subscription Services, and (ii) Novell
Suggested List Price for a) the Subscription Services portion of a bundle
containing Upgrades and Subscription Services, b) stand-alone Subscription
Services, and c) stand-alone Upgrades and other Novell Products authorized
hereunder.
g. Subscription Services Program Description means a written description of the
-----------------------------------------
Subscription Services program, prepared by Novell and updated from time to
time.
h. Sell, Sale or Sold. The parties understand and acknowledge that end users
------------------
receive only a license to use the Novell Products. No end user, reseller, or
distributor receives ownership of the Novell Products. Therefore, any
occurrence in this Agreement of the words sale, sell, or sold, in connection
with a Novell Product means a grant of a license to use the Product and not a
sale of a Product.
i. Subscription Services means a Novell Upgrade Protection product. This does
---------------------
not include upgrade protection as offered by Novell's MLA, VLA, CLA, or any
other upgrade protection program offered by Novell from time to time.
j. Resellers means resellers authorized by Novell to sell Novell products.
---------
1
<PAGE>
Confidential Execution original
- --------------------------------------------------------------------------------
k. Territory means the United States of America and Canada.
---------
3. Authorization and Ownership. Novell grants Rainmaker a limited, non-
transferable, non-assignable, non-exclusive right to sell Subscription Services
and certain other Novell Products to Eligible Customers and Resellers in the
Territory. All of the marketing materials, sales brochures, advertising and
other collateral materials referencing the Novell Products or incorporating the
Novell name or logo including materials placed on web sites, marketing
collateral, or other documentation developed by Rainmaker, that is specifically
prepared for and directly related to the Outsource Services shall be works made
for hire and therefore the property of Novell. If for any reason Rainmaker
writes or develops any such materials while performing the Outsource Activities
that are not considered a work made for hire, Rainmaker agrees to assign and
hereby assigns to Novell all right, title and interest therein, including all
rights of patent and copyright, and agrees to execute at Novell's request a
subsequent document as further evidence of this assignment. Notwithstanding the
foregoing, any databases, code, processes, business plans and other documents
that Rainmaker prepares or writes for its general business purposes or for other
customers will not be works for hire and shall remain the property of Rainmaker.
4. Term. This Agreement will commence on the date signed by both parties and
will continue for a period of two years unless terminated as provided herein.
5. Subscription Services Programs. The Novell Subscription Services will contain
the following programs and any other programs that are added to this Agreement
by written amendment. Additional details on these programs, products eligible
under these programs, and applicable fee structures will be provided in the
Subscription Services Program Description.
a. Point of Sale Program. Under the Point of Sale ("POS") program, Rainmaker is
---------------------
authorized to work with Novell Authorized Resellers to sell subscriptions at
the point of sale of Novell Products. The Reseller will sell a subscription
along with a product or product upgrade. If the Reseller goes to the
point-of-sale web site and transacts the purchase on behalf of the customer,
Rainmaker will pay direct to the Reseller a rebate equal to [***] of the
value of the Subscription purchase price. If the Customer goes to the web
site and transacts the purchase directly, Rainmaker will pay to the
Customer's designated Reseller a rebate equal to [***] of the value of the
Subscription purchase price. Novell will provide upgrades to subscribers when
qualifying upgrades are available. The parties understand and acknowledge
that Novell intends to bring the entire POS program in-house within the next
9 months. Rainmaker agrees to discontinue its participation in the POS
Program upon 30 days notice by Novell. Novell will honor Rainmaker's returns
as further provided herein and will bear the credit risk under POS.
b. Rescue Program. Under the Rescue Program, Rainmaker is authorized to deal
--------------
with end users directly or to work with Novell Authorized Resellers to sell
subscriptions, product upgrades, or subscriptions and upgrades bundled
together to Novell customers who have rightfully acquired products more than
120 days earlier. Rainmaker will pay participating Resellers rebates equal to
[***] of the value of the upgrade and subscription price. Novell will provide
upgrades to subscribers when qualifying upgrades are available.
c. Reseller Rebate. In the Rescue program, if a reseller is not involved in the
---------------
sale to the customer, Rainmaker agrees to pay a rebate equal to [***]to a
reseller named by the customer, or, if the customer does not designate a
reseller, to a reseller designated by Novell. Novell will provide Rainmaker a
list of preferred resellers and a simple entitlement matrix.
6. Responsibilities of Rainmaker.
a. Subscription Service Outsource Team. Rainmaker will dedicate a team of sales
-----------------------------------
and marketing personnel to the sales of the Novell Subscription Services. The
project team will have the full support of Rainmaker management, marketing,
MIS and financial services. Staffing will include a director, sales manager,
product manager, and dedicated sales representatives. Rainmaker will add
2
__________
[***] Confidential treatment has been requested for the bracketed portions. The
confidential redacted portion has been omitted and filed separately with the
Securities & Exchange Commission.
<PAGE>
Confidential Execution original
- --------------------------------------------------------------------------------
dedicated sales staff as sales increase. Generally, one new sales
representative will be added for each 1.6 million dollars of additional
revenue.
b. Sales of Subscription Services. Rainmaker will actively market Subscription
------------------------------
Services into the entire Novell installed customer base except as limited by
this Agreement. In addition, Rainmaker will be responsible for the renewal
process for each Subscription Services. Rainmaker is responsible for and will
make its best efforts to create demand for the Subscription Services and
Novell products sold under this Agreement. All such customer lists developed
by Rainmaker are the sole and exclusive property of Novell.
c. Reporting. Rainmaker will provide Novell with detailed reporting of its
---------
activities hereunder as required in Schedule 2 hereof. All reports shall be
submitted in a form prescribed from time to time by Novell.
d. Lead dissemination. Rainmaker agrees to submit to Novell or to resellers in a
------------------
manner described in the Program Description all leads of potential customers
for sales and services of such Novell products that are not covered by this
Agreement. This includes, but is not limited to, customers that purchase
Novell Products, services or subscriptions from Rainmaker. Novell will
provide Rainmaker a list of preferred resellers and a simple entitlement
matrix.
7. Responsibilities of Novell.
a. Novell Project Manager. Novell will make available a highly skilled employee
----------------------
familiar with the products and market. Such employee will be available during
normal business hours as reasonably requested by Rainmaker. This person will
assist in training processes reasonably required by Rainmaker personnel, and
will facilitate any organizational coordination necessary between Rainmaker
and Novell.
b. Accessibility of personnel and access to decision making authorities.
--------------------------------------------------------------------
Rainmaker's Novell Subscription Services Business Unit Manager will have
access to the Novell Project Manager. The Novell Project Manager will
coordinate and make available the appropriate resources and personnel.
c. Promotion. Novell will work in good faith with Rainmaker to promote the
---------
Novell Subscription Services programs and any subsequent Novell products
offered through Novell Subscription Services.
d. Non-solicit. If, during any term hereof, Novell offers employment to any
-----------
Rainmaker employee, and hires the employee, Novell will pay Rainmaker a fee
of [***] to offset the recruitment and training fees of replacement
employees. This provision will not apply to any Rainmaker employee who
responds to a general advertisement by Novell for positions other than sales
and marketing positions.
e. Support Process. Novell and Rainmaker will work together to coordinate data,
---------------
channel support processes etc. as will be further defined in a Subscription
Services Program Description. Novell and Rainmaker will implement an ongoing
communications link to exchange updated information in both directions.
Upon termination of the Agreement, ownership of the customer records and all
modifications or additions shall be determined as follows:
Original Data: Each party shall retain ownership of the customer records
existing in their respective databases prior to the merger of the parties'
data (including records which are found in both parties' databases).
Subsequent Additions and modifications. All customer records which are
created, modified, and entered through Rainmaker's database as a result of
the marketing programs associated with the Outsource Activities shall be
owned by Novell. Rainmaker may obtain a copy of these records exclusively for
legal and tax purposes only.
f. Access to Novell databases. Access to customer information is critical to
--------------------------
Rainmaker's ability to sell into the customer base. Novell will work with
Rainmaker in good faith to acquire new names, and update customer records
and/or profiles.
3
__________
[***] Confidential treatment has been requested for the bracketed portions. The
confidential redacted portion has been omitted and filed separately with the
Securities & Exchange Commission.
<PAGE>
Confidential Execution original
- --------------------------------------------------------------------------------
8. Inventory Management, Delivery, Shipping.
a. Delivery. Products may either be drop-shipped to end users by Novell at
--------
addresses provided by Rainmaker or delivered to Rainmaker for delivery to
customers.
i. For Products drop-shipped to customers, payment will be by customer to
Rainmaker and will be, at customer's choice, either (i) by credit card
when the order is placed, or (ii) per the terms of an invoice
accompanying the product. Delivery in the United States will be made
F.O.B. Novell's Dock, Customer's carrier, ground only, prepaid by
Novell to Customer's destination. All other freight arrangements will
be billed to Customer. For delivery outside the U.S., Novell will
select a carrier to transport deliverables to the port of entry and
will prepay shipping and handling charges. Customer will be
responsible for all applicable import duties and value added tax,
goods and services tax, or other similar taxes and fees.
ii. For delivery to Rainmaker, delivery in the United States will be made
CPT, Rainmaker's facility, Novell's preferred carrier, ground only.
For delivery to Rainmaker outside the United States, (if Rainmaker is
authorized in this Agreement to distribute Novell Product outside the
United States) will be made DDU, Port of Entry, Novell's preferred
carrier, ground only. All other U.S. freight arrangements will be
prepaid and billed to, or third party billed to the Rainmaker's
account.
b. Title and Risk of Loss.
----------------------
i. United States. In the case of shipments to shipping destinations in
-------------
the United States, title (but only to the extent title passes) to the
Novell Products, exclusive of the rights retained under the Agreement
(Marks, patents, copyrights, trade names, trade secrets and other
intellectual property) and all risk of loss shall pass to Customer or
Rainmaker upon delivery at Novell's designated shipping facility to
the carrier. If Rainmaker is authorized in this Agreement or any
amendment hereto to distribute Novell Products outside the United
States, title and risk of loss to the Novell Products for any sale
consummated between Novell and Rainmaker will pass as in subsection
8.b.ii below. The parties agree that the passage of title and risk of
loss will pass from Novell to Customer or Rainmaker off the shores of
the United States.
ii. Outside the US. Reference in this Section to title passage with
--------------
respect to all shipments of Novell Products from Rainmaker to
destinations in Canada or Latin America means title to the Novell
Products exclusive of all rights retained by Novell under the
Agreement in Marks, patents, copyrights, trade names, trade secrets
and intellectual property. The parties agree that beneficial and legal
title to, ownership of, right to possession of, control over, and
risks of loss and damage to, the Novell Products remains with Novell
until the shipment physically arrives at the port of entry in the
importing country. The time of payment, whether before or after
shipment, the method of shipment, the manner of consignment, whether
to Novell or its agent, to Rainmaker or Rainmaker's agent, or both,
or any document in relation to any sale under the Agreement will in no
way limit or modify the right of Novell as the legal and beneficial
owner of the Novell Products, its right to control and its right to
possession of the goods until they physically arrive at the port of
entry of the importing country. Any use of the terms "F. 0. B .,
""F. A. S.," "C.&F.," or "CFR" in the Agreement applies only to price
and not to title. It is expressly understood that the foregoing will
not be construed to mean that Novell has merely retained bare legal
title for security purposes, but rather retains legal title and full
beneficial ownership until the shipment arrives at the port of entry
of the country of destination. If Rainmaker insures the shipment,
insurance policies will protect the interest of Novell as the legal
owner of the merchandise until title transfers as set forth above.
4
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Confidential Execution original
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iii. Nothing in sections 8.a or 8.b authorizes Rainmaker to distribute
Novell Product outside the United States and Canada. If such
authorization is granted, it shall be granted in the definition of
the Territory.
c. Inventory Balancing. Once, during each Fiscal Quarter, Rainmaker may
-------------------
return for credit a quantity of excess inventory, the value of which
shall not exceed [***] of Rainmaker's net dollar sales invoiced by Novell
during the immediately preceding Fiscal Quarter for Novell Products. The
credit issued for the returned inventory will be the actual purchase
price paid by Rainmaker. This quarterly return may include defective
product and new and upgrade product not designated by Novell as Exception
Rotations in Section 8.e. In the event inventory was purchased on a
promotional price basis, credit issued will be based on the promotional
price Rainmaker paid for that Novell Product. This inventory balancing
privilege shall apply only if:
i. Rainmaker obtains a Novell Return Material Authorization (RMA)
prior to returning the Novell Products;
ii. Rainmaker fills out and submits a stock rotation request;
iii. Rainmaker returns the Novell Products no later than the end of the
second month of the Fiscal Quarter;
iv. At the time of the return, Rainmaker places an order for new
product in a volume equal to or greater than the return.
Novell reserves the right to make partial approvals of any stock rotation
request. Rainmaker will not return, and Novell will have no obligation to
accept, any product after one year past an announced obsolete date.
d. Debit Memos. In the event Rainmaker believes there is a discrepancy in
-----------
connection with an invoice or inventory balancing, or relating to
marketing fund accruals or grants issued by Novell, Rainmaker agrees to
give Novell written notice of the discrepancy within 90 days from the
date of the applicable invoice, inventory balancing or funding grant.
These discrepancies include but are not limited to short shipments, mis-
shipments, pricing variations or other discrepancies. If Rainmaker fails
to give such notice within the required time period, Rainmaker agrees
that Novell may conclusively presume the invoice, inventory balancing or
fund grant to have been accurate. Rainmaker also agrees not to use or
attempt to use a debit memo as a mechanism to resolve financial disputes
with Novell. Rainmaker agrees that any debit memo relating to any dispute
must be preceded by a credit memo issued by Novell covering that dispute.
e. Exception Rotations. From time to time, Novell will release new products
-------------------
or new versions of existing products that will render obsolete an
existing Novell product. Rainmaker shall have the right to return certain
of such obsoleted products to Novell for credit against an order of equal
volume placed at the time of the return. Products which qualify for
Exception Rotation under this Section and the associated rotation window
shall be listed in Novell Product Announcements. Exception Rotations
shall not be counted against Inventory Balancing set forth in Section
8.c. This exception rotation privilege shall apply only if:
i. Rainmaker obtains a Novell Return Material Authorization (RMA)
prior to returning the Novell Products;
ii. Rainmaker fills out and submits a stock rotation request; and
iii. Rainmaker returns the Novell Products no later than the end of the
second month of the Fiscal Quarter.
Novell reserves the right to make partial approvals of any stock rotation
request. Rainmaker agrees to pay a 15% handling fee on returns of
previously obsoleted products not returned within the announced exception
return window. Rainmaker will not return, and Novell will have no
obligation to accept, any product after one year past an announced
obsolete date.
9. Discounts, Reporting and Payment
a. Discount. Rainmaker will receive following discounts off the Recommended
--------
End User Prices for Novell Subscription Services and Novell Product sales
as follows:
POS [***]
5
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confidential redacted portion has been omitted and filed separately with the
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[***]
Novell reserves the right to change these discounts at any time upon with
30 days written notification to Rainmaker. Subscription Services are
licensed only for two-year terms and directly to end users. Novell and
Rainmaker may, from time to time, engage in special, limited-time
discount programs in addition to those provided herein. All such programs
must be approved in writing by the parties.
b. Calculation of Discounts. Rainmaker's discounts for Outsource Activities
------------------------
are calculated off the Recommended End User Price for each customer type.
This margin encompasses all standard services including personnel
staffing, demand generation activities including but not limited to
direct mail, telemarketing, telephone charges, outsource infrastructure,
outsource information reporting structures, and on-going MIS
consolidation and database synchronization, etc. Customized and/or
incremental MIS projects may be made available to Novell under a separate
fee structure.
c. Quarterly Quotas. Rainmaker and Novell will mutually determine quarterly
----------------
revenue objectives. The parties may establish additional fees on an
ongoing basis, if mutually agreed, for revenues in excess of the quotas.
d. Reporting and Payment
---------------------
i. Rainmaker will submit to Novell on a monthly basis reports of its
activities hereunder as required in Schedule 2.
ii. Rainmaker agrees to pay Novell for Novell Products within 45 days
of invoice and in accordance with such further credit and payment
terms as may be provided by Novell on the invoice or otherwise. In
the event of any inconsistencies between an invoice and this
agreement, the terms of this agreement will prevail. Novell
reserves the right to change credit and payment terms upon 60 days
notice.
iii. All payments hereunder shall be made in form and to such location
as directed from time to time by Novell. Payments made by check
from customers inside the United States and Canada must be made in
USD and sent to:
Novell, Inc.
P.O. Box 31001-0024
Pasadena CA 91110-0024
e. Sales Tax. Rainmaker is responsible for all applicable sales tax
---------
associated with the sale of the Products to an Eligible Customer.
f. Returns By Customers. Rainmaker agrees to accept all Products returns
--------------------
(not including Subscription Services) appropriately made by customers
under terms of the end user license agreement accompanying the Product.
All returns from Rainmaker to Novell must be accompanied by a standard
Novell Return Material Authorization (RMA) prior to return and made
within 45 days of Rainmaker's receipt of the product from customers. All
returns must reference the original purchase order and the RMA number.
All returns must be in their entirety. Novell agrees to refund to
Rainmaker an amount equal to the refunds Rainmaker makes to customers
under this paragraph.
10. Marketing.
a. Marketing Fund. Novell will make available an amount to be determined
--------------
quarter by quarter by Novell but in no event to exceed [***] per
quarter of Market Development Funds to help fund sales generation
programs. With those Funds, Novell will reimburse Rainmaker at a rate of
[***] for qualified expenses provided Rainmaker (a) submits written
proposals for each sales generation program, and (b) receives written
approval by Novell for the program.
11. Trademark License.
a. License Grant. Subject to the terms and conditions of this Agreement,
-------------
Novell grants Rainmaker a non-exclusive, indivisible, non-transferable
limited license to use the Licensed Trademark to the extent required
under this Agreement (as determined in Novell's sole discretion) and in
the manner or quality as
6
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confidential redacted portion has been omitted and filed separately with the
Securities & Exchange Commission.
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determined by Novell's trademark usage guidelines or otherwise in
Novell's sole discretion.
b. No Conflicting Marks. Rainmaker represents and warrants that it does not
--------------------
currently and will not in the future claim any Novell trademark as a
trademark, service mark or other proprietary right.
c. Defense.
-------
i. Novell and Rainmaker will at all times use their commercially
reasonable efforts to preserve the value and validity of the
Licensed Trademark. Nothing in this Agreement shall be construed to
give Rainmaker any right, title, or interest in the Licensed
Trademark or any Novell trademark, except as expressly provided
herein. The right of Rainmaker to use the Licensed Trademark is
only by virtue of the license granted herein. Any trademark rights
accruing through the use of the Licensed Trademark by Rainmaker
shall accrue to the benefit of Novell alone.
ii. Rainmaker shall notify Novell of all infringements of the Licensed
Trademark or other Novell trademarks or of applications to register
trademarks which conflict with the Licensed Trademark of which
Rainmaker acquires actual knowledge. Novell shall have the sole
right to bring any action for or take any actions regarding
infringement of the Licensed Trademark, and Rainmaker shall render
any assistance required by Novell, at Novell's expense, in
enforcing or preserving the validity of the Licensed Trademark. Any
damages recovered for the infringement of The Licensed Trademark
shall belong solely to Novell.
12. Termination.
a. For Convenience. Either party may terminate this Agreement for
---------------
convenience by providing the other party written notice of not less than
ninety (90) days. In the event of a change of the discount by Novell as
provided in paragraph 9.a, Rainmaker may terminate this Agreement for
convenience by providing Novell written notice of not less than thirty
(30) days.
b. For Cause. Either party may terminate this Agreement for cause if the
---------
other party fails to observe any term or condition under this Agreement
and such failure continues for 30 days following receipt of written
notice from non-breaching party.
13. Confidentiality. The parties agree that any Confidential Information
provided under this Agreement shall be held and maintained in strict confidence.
Each party agrees to protect the confidentiality of such information in a manner
consistent with the way a reasonable person would protect similar Confidential
Information. "Confidential Information" means the information and materials
marked by a party as confidential and proprietary. "Confidential Information"
does not include information that (i) is already known to the receiving party at
the time it is disclosed and has not been obtained wrongfully, (ii) becomes
publicly known without fault of the receiving party, (iii) is independently
developed by the receiving party, (iv) is approved for release in writing by the
disclosing party, (v) is disclosed without restriction by the disclosing party
to a third party, or (vi) is disclosed pursuant to legal obligations beyond the
control of the disclosing and receiving parties.
14. Indemnification. Novell agrees to indemnify, defend and hold Rainmaker
harmless from any and all damages, liabilities, costs and expenses incurred by
Rainmaker as a result of any claim, judgment or adjudication against Rainmaker
which provides that the Novell Products, trade names or the Licensed Trademark
appropriately used by Rainmaker in connection with marketing the Novell Products
infringe any copyright, trademark, or US patent of any third party, provided:
(i) Rainmaker promptly notifies Novell in writing of the claim; and (ii)
Rainmaker agrees that Novell shall have the sole control of the defense of any
action and all negotiations for settlement and compromise. Novell's agreement to
provide a defense under this Section includes the hiring of counsel. Therefore,
costs and expenses to be borne by Novell do not include separate attorneys' fees
incurred by Rainmaker in defense of any claim unless Novell has requested in
writing the additional assistance of counsel. Novell's liability under this
Section will not exceed the greater of US $3,000,000 or the aggregate amount of
payments Rainmaker has made during the four quarters preceeding the claim,
judgement or adjudication referred to above.
7
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Rainmaker agrees to indemnify, defend and hold Novell harmless from any and all
damages, liabilities, costs and expenses incurred by Novell and its officers,
directors, agents and employees resulting from the Rainmaker's sales and
distribution of Product arising from Rainmaker's negligence or willful
misconduct provided: (i) Novell promptly notifies Rainmaker in writing of the
claim; and (ii) Novell agrees that Rainmaker shall have the sole control of the
defense of any action and all negotiations for settlement and compromise.
Rainmaker's agreement to provide a defense under this Section includes the
hiring of counsel. Therefore, costs and expenses to be borne by Rainmaker do not
include separate attorneys' fees incurred by Novell in defense of any claim
unless Rainmaker has requested in writing the additional assistance of counsel.
Rainmaker's liability under this Section will not exceed the greater of
US $3,000,000 or the aggregate amount of payments Rainmaker has made during the
four quarters preceding the claim, judgement or adjudication referred to
above.
15. WARRANTIES.
a. Limited Warranty. Novell provides, to End Users only, warranties for
----------------
Novell Products in the software license agreement which accompanies each
Novell Product. Novell does not warrant non-Novell products. They are
provided by Novell on an "AS IS" basis. Any warranty service for such
products will be provided by the manufacturer of the products in
accordance with the applicable manufacturer's warranty.
b. Year 2000 Warranty. Novell warrants that the latest and any subsequent
------------------
versions of NetWare Software, and those other products which are listed
as Y2000 Ready on Novell's Year 2000 site at
http://www.novell.com/p2000/product.html. are Year 2000 Compatible when
-----------------------------------------
used in accordance with the Documentation provided (i) the Software is
not modified unless by Novell or as authorized by Novell in writing, and
(ii) the Software is installed in a compatible system environment. Year
2000 Compatible means a Software product will, when all updates and fixes
as made available by Novell have been installed, and provided all other
products used with the Software properly exchange accurate date data with
it:
(1) Accurately process data involving dates beginning with January 1,
2000 through December 31, 2034, and,
(2) provide that date related functionalities and data fields include
the indication of century and millennium and perform calculations which
involve a four-digit year field, except that a date element may be
represented without a century and millennium if the correct century is
unambiguous for all manipulations involving that element.
This term of this warranty will begin when Rainmaker licenses the covered
Software products and ends the earlier of expiration of the Agreement or
March 31, 2000. Novell's only obligation under this warranty shall be
that if Rainmaker notifies Novell of a warranty breach during the
warranty term, Novell will at its option either remedy the problem with a
fix to the Software or by providing an upgrade to the Software that is
Year 2000 Compatible, or offer Licensee a refund of the Software purchase
price upon return of the Software. This warranty does not apply to third
party products supplied by Novell whether or not bundled with Novell
products.
c. Warranty Representations. Rainmaker is not authorized to make any
------------------------
warranty commitment on Novell's behalf, whether written or oral, other
than those contained in the applicable software license agreement.
d. LIMITATION OF WARRANTIES. THE WARRANTIES DESCRIBED IN THE APPLICABLE
------------------------
NOVELL SOFTWARE LICENSE AGREEMENT AND SECTION ARE IN LIEU OF ALL OTHER
WARRANTIES, EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, THE
IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR
PURPOSE.
16. LIMITATION OF REMEDIES. NOVELL'S ENTIRE LIABILITY AND RAINMAKER'S
EXCLUSIVE
8
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confidential redacted portion has been omitted and filed separately with the
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REMEDY FOR ANY CLAIMS CONCERNING THE AGREEMENT AND NOVELL PRODUCTS ACQUIRED
UNDER THE AGREEMENT ARE SET FORTH IN THIS SECTION AND SECTION 14.
NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THE AGREEMENT, NEITHER PARTY SHALL
BE LIABLE TO THE OTHER (WHETHER IN CONTRACT, TORT OR UNDER ANY OTHER THEORY OF
LIABILITY) FOR ANY INDIRECT, INCIDENTAL, OR CONSEQUENTIAL DAMAGES (INCLUDING
LOST PROFITS) SUSTAINED OR INCURRED IN CONNECTION WITH THE AGREEMENT AND THE
NOVELL PRODUCTS THAT ARE SUBJECT TO THE AGREEMENT, WHETHER OR NOT SUCH DAMAGES
ARE FORESEEABLE.
17. Assignment. The Agreement shall be binding upon and inure to the benefit of
the legal representatives, assigns, and successors-in-interest of the parties.
Rainmaker may not assign this Agreement or any of its rights or obligations
hereunder without the prior written consent of Novell.
18. Entire Agreement. This Agreement constitutes the entire agreement among the
parties pertaining to the subject matter set forth herein and supersedes all
drafts and other communications and any other instrument purporting to be an
agreement of the parties hereto.
19. Expenses. Each party will bear its own expenses in the negotiation and
completion of this Agreement.
20. Applicable Law. This Agreement shall be subject to and governed by the laws
of the state of Utah. The parties consent to the jurisdiction and venue of the
state and federal courts sitting in the State of Utah.
21. Survival of Terms. The provisions of the Agreement which by their nature
extend beyond the Expiration Date or other termination of the Agreement will
survive and remain in effect until all obligations are satisfied.
22. Waiver. No waiver of any right or remedy on one occasion by either party
shall be deemed a waiver of such right or remedy on any other occasion.
23. Attorneys' Fees. If either party initiates legal proceedings to enforce a
term of the Agreement, the prevailing party will be entitled to recover
reasonable attorneys' fees and costs.
24. Notice. Unless otherwise agreed to by the parties, all notices required
under the Agreement shall be deemed effective when sent in writing by either (i)
registered mail, (ii) certified mail, return receipt requested, (iii) overnight
mail, properly addressed, or (iv) by telephone facsimile transfer appropriately
directed to the attention of the party executing the Agreement or that person's
successor.
25. U.S. Export Laws and Regulations. Rainmaker agrees to comply with all
applicable United States and foreign export/import laws and regulations.
Rainmaker agrees not to export any Novell Product directly or indirectly,
separately or as part of a system, without first obtaining proper authority to
do so from the appropriate governmental agencies or entities, as may be required
by law. Rainmaker acknowledges that U.S. export control laws and regulations
apply to technology and software supplied by Novell. If Novell's shipping
documents indicate that technology and/or software has been exported to
Rainmaker under License Exception TSR (Technical Software Restricted), Customer
agrees Section i. below applies. If Novell's shipping documents indicate that
software has been exported to Rainmaker under License Exception TMP (Temporary),
Customer agrees Section ii. below applies.
i. Rainmaker will not knowingly export or re-export the technology and/or
software supplied by Novell to any country or entity or for any use
prohibited by the U.S. Export Administration Regulations ("EAR")
unless authorized by the U.S. Government.
ii. Rainmaker certifies that this beta test software will only be used for
beta testing purposes, and will not be leased, sub-licensed, assigned
or otherwise transferred, or export any product, process or services
that is the direct product of the beta test software.
26. Records Examinations. During the term of this Agreement and for one year
thereafter, Rainmaker agrees to keep and maintain, in a true and accurate
9
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Confidential Execution original
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manner, all usual and proper records and books of account. Rainmaker agrees to
allow Novell to examine its accounts and records to determine Rainmaker's
compliance or noncompliance with the Agreement. Any examination shall be at the
expense of Novell and shall be solely for the purpose of ensuring compliance
with the Agreement. However, if any such examination discloses underpayment by
Rainmaker by [***] or more, the cost of such examination shall be paid by
Rainmaker. Any examination shall be conducted only by an authorized
representative(s) of Novell, or its designee, and shall occur during regular
business hours at Rainmaker's offices and shall not interfere unreasonably with
Rainmaker's business activities. Examinations shall be made no more frequently
twice each year and Novell shall give Rainmaker 10 days or more prior written
notice of the date of each such examination and the name of the Novell
authorized representative who will be conducting the examination. All
information obtained by the Novell authorized representative conducting the
audit shall be maintained confidential by such representative. Notwithstanding,
the examiner shall give the parties an examination report containing only the
information necessary to indicate compliance or non-compliance with the
Agreement. To the extent that an audit reveals non-compliance with terms of the
Agreement or Program Description, Novell shall have the right to recover or
withhold as a set-off the amount lost.
27. Government Rights. Rainmaker agrees to (i) identify the Novell Products in
all proposals and agreements with the United States Government or any contractor
for the United States Government; and (ii) identify or mark the Novell Products
provided pursuant to any agreement with the United States Government or any
contractor for the United States Government as necessary to obtain protection
substantially equivalent to that afforded commercial computer software and
related documentation developed at private expense and provided with Restricted
Rights as defined in DOD FAR Supplement 48 C.F.R. 252.227-7013(c)(1)(ii) in
effect as of May 18, 1987 or any successor regulation.
10
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[***] Confidential treatment has been requested for the bracketed portions. The
confidential redacted portion has been omitted and filed separately with the
Securities & Exchange Commission.
<PAGE>
Confidential Execution original
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In witness whereof, the parties have caused this Agreement to be executed by
their duly authorized representatives.
Novell, Inc. Rainmaker Corporation
Signature /s/ Dave Trotter Signature /s/ Michael Silton
-------------------------- -------------------------
Name Dave Trotter Name Michael Silton
------------------------------ -----------------------------
Title VP Sales Title CEO
------------------------------ -----------------------------
Date 3/26/99 Date 3-19-99
------------------------------ -----------------------------
11
<PAGE>
Schedule 1
Upgrades and Subscription Services for:
NetWare
12
<PAGE>
Schedule 2
Reports
Rainmaker will prepare and submit the following reports in form and medium
prescribed by Novell from time to time on the time tables listed below.
1. Weekly Sales Report
-------------------
A Weekly Sales report will be due each Monday for the preceding week. This
report will include a sales summary by product classification and a detailed
report by SKU numbers. This report will be sent to Barbara Sauer in Excel
format.
2. Monthly Sales Report
--------------------
The Monthly Sales Report will contain all sales activities for the previous
month. This report will be due on the 10th day each month in ASCII format and
will be equal to Rainmaker's purchase order total below. This report will be
sent to ______________.
Monthly Sales Report
--------------------
. Contract Number
. Customer Name
. Customer Address, City, State County, Zip/Postal Code
. Novell part number/SKU
. Product Serial Number (if provided to Rainmaker by reseller or end user)
. Novell product description
. retail sales price
Discounted amount due Novell
. quantity sold/shipped
. start date of subscription period
. End Date of subscription period
. Customer Contact Name
Customer Contact Title
Customer Contact Phone
Customer Contact Fax
3. Purchase Orders
---------------
The purchase order will contain the following summarized by unique part
number/SKU and subscription billing periods (when applicable):
. Total Units sold
. List Price
. Discount Amount
Discount Percent
. Start Date of subscription period
End Date of subscription period
Each purchase order will clearly identify the reporting month and year.
4. Customer Commitment Information Report.
--------------------------------------
The Customer Commitment Information Report will contain all Customer
subscription information (as
- --------------------------------------------------------------------------------
13
<PAGE>
prescribed by Novell and as identified in addition to the above) gathered during
the previous month. The report shall be due by the 10/th/ day of each month.
5. Management Report.
-----------------
The Management Report will be due the 10/th/ of each month and will contain the
following:
. a six-month rolling forecast of sales activities and revenues.
6. Multiple-Server Customer Report.
-------------------------------
The Multiple-Server Customer Report will be due the 10/th/ of each month and
will contain subscription deliverable requirement for Customers who have
multiple serves and forecasts of Customer requirements for the fulfillment of
each Product update.
- --------------------------------------------------------------------------------
14
<PAGE>
Schedule 3
Average Street Price of Upgrades
[To be provided by Rainmaker]
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
NW5 NW5
Upgrade Upgrade NW5 Upgrade NW5 Upgrade NW5 Upgrade NW5 Upgrade NW5 Upgrade
NW5 Base 5-user 10-user 25-user 50-user 100-user 250-user 500-user
Server Additive Lic. Additive Lic. Additive Lic. Additive Lic. Additive Lic. Additive Lic. Additive Lic.
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Upgrade Pricing
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
CDW $ [***] $ [***] $ [***] $ [***] $ [***] $ [***]
- ------------------------------------------------------------------------------------------------------------------------------------
** $ [***] $ [***] $ [***] $ [***] $ [***] $ [***] $ [***]
- ------------------------------------------------------------------------------------------------------------------------------------
Microwarehouse $ [***] $ [***] $ [***] $ [***] $ [***] $ [***]
- ------------------------------------------------------------------------------------------------------------------------------------
** $ [***] $ [***] $ [***] $ [***] $ [***] $ [***]
- ------------------------------------------------------------------------------------------------------------------------------------
Insight $ [***] $ [***] $ [***] $ [***] $ [***] $ [***] $ [***] $ [***]
- ------------------------------------------------------------------------------------------------------------------------------------
** $ [***] $ [***] $ [***] $ [***] $ [***] $ [***] $ [***] $ [***]
- ------------------------------------------------------------------------------------------------------------------------------------
NecxDirect $ [***]
- ------------------------------------------------------------------------------------------------------------------------------------
** $ [***] $ [***] $ [***] $ [***] $ [***] $ [***] $ [***]
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Average $ [***] $ [***] $ [***] $ [***] $ [***] $ [***] $ [***] $ [***]
- ------------------------------------------------------------------------------------------------------------------------------------
Avg Call-in Price $ [***] $ [***] $ [***] $ [***] $ [***] $ [***] $ [***] $ [***]
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Avg. Street Price $ [***] $ [***] $ [***] $ [***] $ [***] $ [***] $ [***] $ [***]
- ------------------------------------------------------------------------------------------------------------------------------------
MSRP $ [***] $ [***] $ [***] $ [***] $ [***] $ [***] $ [***] $ [***]
- ------------------------------------------------------------------------------------------------------------------------------------
Avg. Discount
off Full Retail [***] [***] [***] [***] [***] [***] [***] [***]
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- -----------------------------
Average discount
across all
stratifications [***]
- -----------------------------
15
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[***] Confidential treatment has been requested for the bracketed portions. The
confidential redacted portion has been omitted and filed separately with the
Securities & Exchange Commission.
<PAGE>
Schedule 4
Projected Revenue
- --------------------------------------------------------------------------------
16
<PAGE>
Amendment to the
Outsource Services Agreement
between
Novell, Inc. and Rainmaker Systems, Inc.
This is an Amendment ("Amendment") to the Outsource Services Agreement
("Agreement") between Novell, Inc., with offices 1555 North Technology Way,
Orem, Utah 84097 ("Novell") and Rainmaker Systems, Inc. with offices at 1800
Green Hills, Suite 201, Scotts Valley, CA 95066 ("UniDirect"). It becomes
effective when signed by authorized representatives of both parties.
This Amendment amends certain terms contained in the Agreement as set forth
below. All terms of the Agreement not amended hereby shall remain in force. If
there is any inconsistency between the Agreement and this Amendment, this
Amendment shall control. The parties therefore agree as follows:
1. Paragraph 9.a. is amended to read as follows:
"9. Discounts, Reporting and Payment
a. Discount. Rainmaker will receive the following discounts off the
Recommended End User Prices for Novell Subscription Services and
Novell Product sales as follows:
<TABLE>
<S> <C>
POS [***]
Rescue [***]
Full License Product [***]
Education [***]
</TABLE>
Novell reserves the right to change these discounts at any time upon
with 30 days written notification to Rainmaker. Subscription Services
are licensed only for two-year terms and directly to end users.
Novell and Rainmaker may, from time to time, engage in special,
limited-time discount programs in addition to those provided herein.
All such programs must be approved in writing by the parties."
2. Schedule 1 is replaced with the attached new Schedule 1.
All other terms of the Agreement remain unchanged.
<TABLE>
<S> <C>
NOVELL, INC. RAINMAKER SYSTEMS, INC.
Signature /s/ JANICE WISSLER Signature /s/ BARBARA SAUER
---------------------------- -----------------------
Print Name Janice Wissler Print Name Barbara Sauer
---------------------------- -----------------------
Title Executive VP WW Sales and Mrktg Title Channel Account Manager
-------------------------------- ----------------------------
Date 9/8/99 Date 9/3/99
-------------------------------- ----------------------------
</TABLE>
[***] Confidential treatment has been requested for the bracketed portions. The
confidential redacted portion has been omitted and filed separately with the
Securities & Exchange Commission.
<PAGE>
Schedule 1
Upgrades and Subscription Services for:
NetWare
GroupWise
BorderManager
ManageWise
ZENworks
NetWare 3.2 Enhancement Pack
GroupWise 5.5 Enhancement Pack
Additive User Licenses:
NetWare
Bordermanager
Full License Products:
ZENworks
Education:
NetWare 5 CNE Self-Study Kit
NetWare 4.11 to NetWare 5 Update
NetWare 5 Administration
Online Mentoring
Networking Technologies
NetWare 5 Advanced Administration
NDS Design and Implementation
Integrating NetWare and Windows NT
NetWare Service and Support
