1
2,300,000 Shares
NEW ERA OF NETWORKS, INC.
Common Stock
UNDERWRITING AGREEMENT
____________ __, 1997
UBS Securities LLC
Xxxxx & Company
As Representatives of the Several Underwriters
c/o UBS Securities LLC
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Ladies and Gentlemen:
New Era of Networks, Inc., a Delaware corporation (the "Company"),
proposes to issue and sell 2,300,000 shares (the "Firm Shares") of its
authorized but unissued Common Stock, $.0001 par value per share (the "Common
Stock"), to the several underwriters listed on Schedule A to this Agreement
(collectively, the "Underwriters"). The Company also proposes to grant to the
Underwriters an option to purchase up to 345,000 additional shares (the "Option
Shares") of Common Stock on the terms and for the purposes set forth in Section
3(c). The Firm Shares and the Option Shares are hereinafter collectively
referred to as the "Shares."
The Company wishes to confirm as follows its agreements with you (the
"Representatives") and the other Underwriters on whose behalf you are acting in
connection with the several purchases by the Underwriters of the Shares.
1. REGISTRATION STATEMENT. A registration statement on Form S-1 (File No.
333- 20169 including a prospectus relating to the Shares and each amendment
thereto has been prepared by the Company in conformity with the requirements of
the Securities Act of 1933, as amended (the "Act"), and the rules and
regulations (the "Rules and Regulations") of the Securities and Exchange
Commission (the "Commission") thereunder, and has been filed with the
Commission. There have been delivered to you three signed copies of such
registration statement and amendments, together with three copies of each
exhibit filed therewith. Copies of such registration statement and amendments
(but without exhibits) and of the related preliminary prospectus have been
delivered to you in such reasonable quantities as you have requested for each
of the Underwriters. If such registration statement has not become effective,
a further amendment to such registration statement, including a form of final
prospectus, necessary to
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permit such registration statement to become effective will be filed promptly
by the Company with the Commission. If such registration statement has become
effective, a final prospectus containing all Rule 430A information (as
hereinafter defined) will be filed by the Company with the Commission in
accordance with Rule 424(b) of the Rules and Regulations on or before the
second business day after the date hereof (or such earlier time as may be
required by the Rules and Regulations).
The term "Registration Statement" as used in this Agreement shall mean
such registration statement (including all exhibits and financial statements,
at the time such registration statement becomes or became effective and, in the
event any post-effective amendment thereto becomes effective prior to the
Closing Date (as hereinafter defined), shall also mean such registration
statement as so amended; provided, however, that such term shall include all
Rule 430A information deemed to be included in such registration statement at
the time such registration statement becomes effective as provided by Rule 430A
of the Rules and Regulations and shall also mean any registration statement
filed pursuant to Rule 462(b) of the Rules and Regulations with respect to the
Shares. The term "Preliminary Prospectus" shall mean any preliminary
prospectus referred to in the preceding paragraph and any preliminary
prospectus included in the Registration Statement at the time it becomes
effective that omits Rule 430A information. The term "Prospectus" as used in
this Agreement shall mean the prospectus relating to the Shares in the form in
which it is first filed with the Commission pursuant to Rule 424(b) of the
Rules and Regulations or, if no filing pursuant to Rule 424(b) of the Rules and
Regulations is required, shall mean the form of final prospectus included in
the Registration Statement at the time such registration statement becomes
effective. The term "Rule 430A Information" means information with respect to
the Shares and the offering thereof permitted to be omitted from the
Registration Statement when it becomes effective pursuant to Rule 430A of the
Rules and Regulations.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants as follows:
(a) The Company has not received, and has no notice of, any order of
the Commission preventing or suspending the use of any Preliminary Prospectus,
or instituted proceedings for that purpose, and each Preliminary Prospectus, at
the time of filing thereof, conformed in all material respects to the
requirements of the Act and the Rules and Regulations. When the Registration
Statement became or becomes, as the case may be, effective (the "Effective
Date") and at all times subsequent thereto up to and at the Closing Date (as
hereinafter defined), any later date on which Option Shares are to be purchased
(the "Option Closing Date") and when any post-effective amendment to the
Registration Statement becomes effective or any amendment or supplement to the
Prospectus is filed with the Commission, (i) the Registration Statement and
Prospectus, and any amendments or supplements thereto, will contain all
statements which are required to be stated therein by, and will comply with the
requirements of, the Act and the Rules and Regulations, and (ii) neither the
Registration Statement nor the Prospectus, nor any amendment or supplement
thereto, will include any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading. The foregoing representations and warranties
in this Section 2(a) do not apply to any statements or omissions made in
reliance on and in conformity with the information contained in Paragraph 1,
inclusive of the list of underwriters set forth
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thereunder, in the section of the Prospectus entitled "Underwriting" and the
information in the last paragraph on the front cover page of the Prospectus.
The Company has not distributed any offering material in connection with the
offering or sale of the Shares other than the Registration Statement, the
Preliminary Prospectus, the Prospectus or any other materials, if any,
permitted by the Act.
(b) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware, with full
corporate power and authority to own, lease and operate its properties and
conduct its business as described in the Registration Statement. The Company is
duly qualified to do business as a foreign corporation in good standing in each
jurisdiction where the ownership or leasing of its properties or the conduct of
its business requires such qualification, except where the failure to so
qualify would not have a material adverse effect on the business, properties,
financial condition or results of operations of the Company and Subsidiary (as
hereinafter defined) taken as a whole (a "Material Adverse Effect"). The
Company has no subsidiaries (as defined in the Rules and Regulations) other
than NEON Limited (the "Subsidiary"). The Company owns one hundred percent
(100%) of the outstanding common stock of Subsidiary. Other than Subsidiary,
the Company does not own, directly or indirectly, any shares of stock or any
other equity or long-term debt securities of any corporation or have any equity
interest in any firm, partnership, joint venture, association or other entity.
Complete and correct copies of the certificates of incorporation and of the
bylaws of the Company and Subsidiary and all amendments thereto have been
delivered to the Representatives, and except as set forth in the exhibits to
the Registration Statement no changes therein will be made subsequent to the
date hereof and prior to the Closing Date or, if later, the Option Closing
Date. Subsidiary has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation, with full corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the
Registration Statement. Subsidiary is duly qualified to do business as a
foreign corporation in good standing in each jurisdiction where the ownership
or leasing of the properties or the conduct of its business requires such
qualification, except where the failure to so qualify would not have a Material
Adverse Effect. All of the outstanding shares of capital stock of Subsidiary
have been duly authorized and validly issued, are fully paid and non-assessable
and (except as otherwise described in this Section 1(b)) are owned by the
Company subject to no security interest, other encumbrance or adverse claims.
No options, warrants or other rights to purchase, agreements or other
obligation to issue or other rights to convert any obligation into shares of
capital stock or ownership interests in the Subsidiary are outstanding.
(c) The Company has full power and authority (corporate and otherwise)
to enter into this Agreement and to perform the transactions contemplated
hereby. This Agreement has been duly authorized, executed and delivered by the
Company and is a valid and binding agreement on the part of the Company,
enforceable against the Company in accordance with its terms, except as rights
to indemnity and contribution hereunder may be limited by applicable laws or
equitable principles and except as enforcement hereof may be limited by
applicable bankruptcy, insolvency, reorganization or other similar laws
relating to or affecting creditors' rights generally or by general equitable
principles. The performance of this Agreement by the Company and the
consummation by the Company of the transactions herein contemplated will not
result in a breach or violation of any of the terms and provisions of, or
constitute a default under, (i) any indenture,
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mortgage, deed of trust, loan agreement, bond, debenture, note agreement or
other evidence of indebtedness, or any lease, contract or other agreement or
instrument to which the Company or any Subsidiary is a party or by which its
properties are bound, or (ii) the certificate of incorporation, as amended, or
bylaws of the Company or Subsidiary or (iii) any law, order, rule, regulation,
writ, injunction or decree of any court or governmental agency or body to which
the Company or any Subsidiary is subject. The Company is not required to
obtain or make (as the case may be) any consent, approval, authorization,
order, designation or filing by or with any court or regulatory, administrative
or other governmental agency or body as a requirement for the consummation by
the Company of the transactions herein contemplated, except such as may be
required under the Act, the Securities Exchange Act of 1934, as amended (the
"Exchange Act") or under state securities or blue sky ("Blue Sky") laws or
under the rules and regulations of the National Association of Securities
Dealers, Inc. ("NASD").
(d) There is not pending or, to the Company's knowledge, threatened,
any action, suit, claim, proceeding or investigation against the Company or
Subsidiary or any of their respective officers or any of their respective
properties, assets or rights before any court or governmental agency or body or
otherwise which might result in a Material Adverse Effect or have a material
adverse effect on the Company's properties, assets or rights, or prevent
consummation of the transactions contemplated hereby. There are no statutes,
rules, regulations, agreements, contracts, leases or documents that are
required to be described in the Prospectus, or to be filed as exhibits to the
Registration Statement by the Act or by the Rules and Regulations that have not
been accurately described in all material respects in the Prospectus or filed
as exhibits to the Registration Statement.
(e) All outstanding shares of capital stock of the Company have been
duly authorized and validly issued and are fully paid and nonassessable, have
been issued in compliance with all federal and state securities laws, were not
issued in violation of any preemptive right, resale right, right of first
refusal or similar right. The authorized and outstanding capital stock of the
Company conforms in all material respects to the description thereof contained
in the Registration Statement and the Prospectus (and such description
correctly states the substance of the provisions of the instruments defining
the capital stock of the Company). The Shares have been duly authorized for
issuance and sale to the Underwriters pursuant to this Agreement and, when
issued and delivered by the Company against payment therefor in accordance with
the terms of this Agreement, will be duly and validly issued and fully paid and
nonassessable. Except as set forth in the Prospectus, no preemptive right,
co-sale right, right of first refusal or other similar rights of
securityholders exists with respect to any of the Shares or the issue and sale
thereof other than those that have been expressly waived prior to the date
hereof. No holder of securities of the Company has the right to cause the
Company to include such holder's securities in the Registration Statement. No
further approval or authorization of any security holder, the Board of
Directors or any duly appointed committee thereof or others is required for the
issuance and sale or transfer of the Shares, except as may be required under
the Act, the Exchange Act or under state securities or Blue Sky laws. Except as
disclosed in or contemplated by the Prospectus and the financial statements of
the Company, and the related notes thereto, included in the Prospectus the
Company does not have outstanding any options or warrants to purchase, or any
preemptive rights or other rights to subscribe for or to purchase, any
securities or obligations convertible into, or any contracts or commitments to
issue or sell, shares of its capital stock or any such options,
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rights, convertible securities or obligations. The description of the
Company's stock option and other plans or arrangements, and the options or
other rights granted and exercised thereunder, set forth in the Prospectus
accurately and fairly presents, in all material respects, the information
required to be shown with respect to such plans, arrangements, options and
rights.
(f) Xxxxxx Xxxxxxxx LLP (the "Accountants") who have examined the
financial statements, together with the related schedules and notes, of the
Company filed with the Commission as a part of the Registration Statement,
which are included in the Prospectus, are independent public accountants within
the meaning of the Act and the Rules and Regulations. The financial statements
of the Company, together with the related schedules and notes, forming part of
the Registration Statement and the Prospectus, fairly present the financial
position and the results of operations of the Company at the respective dates
and for the respective periods to which they apply. All financial statements,
together with the related schedules and notes, filed with the Commission as
part of the Registration Statement have been prepared in accordance with
generally accepted accounting principles as in effect in the United States
consistently applied throughout the periods involved except as may be otherwise
stated in the Registration Statement. The selected and summary financial and
statistical data included in the Registration Statement present fairly the
information shown therein and have been compiled on a basis consistent with the
financial statements presented therein. No other financial statements or
schedules are required by the Act or the Rules and Regulations to be included
in the Registration Statement.
(g) Subsequent to the respective dates as of which information is given
in the Registration Statement and the Prospectus, there has not been (i) any
material adverse change, or any development which, in the Company's reasonable
judgment, is likely to cause a material adverse change, in the business,
properties or assets described or referred to in the Registration Statement, or
the results of operations, condition (financial or otherwise), business or
operations of the Company and Subsidiary taken as a whole, (ii) any transaction
which is material to the Company or Subsidiary, except transactions in the
ordinary course of business, (iii) any obligation, direct or contingent, which
is material to the Company and its Subsidiary taken as a whole, incurred by the
Company or Subsidiary, except obligations incurred in the ordinary course of
business, (iv) any change in the capital stock or outstanding indebtedness of
the Company or Subsidiary or (v) any dividend or distribution of any kind
declared, paid or made on the capital stock of the Company. Neither the Company
nor its Subsidiary has any material contingent obligation which is not
disclosed in the Registration Statement.
(h) Except as set forth in the Prospectus, (i) the Company and
Subsidiary have good and marketable title to all material properties and assets
described in the Prospectus as owned by them, free and clear of any pledge,
lien, security interest, charge, encumbrance, claim, equitable interest, or
restriction, (ii) the agreements to which the Company or the Subsidiary is a
party described in the Prospectus are valid agreements, enforceable against the
Company or Subsidiary in accordance with their terms, except as enforcement may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws relating to or affecting creditors' rights generally or by
general equitable principles, and, to the Company's knowledge, the other
contracting party or parties thereto are not in material breach or default
under any of such agreements and (iii) the Company and Subsidiary have valid
and enforceable leases for the
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properties described in the Prospectus as leased by it, and such leases conform
in all material respects to the description thereof, if any, set forth in the
Registration Statement.
(i) The Company and Subsidiary now hold and at the Closing Date and any
later Option Closing Date, as the case may be, will hold, all licenses,
certificates, approvals and permits from all state, United States, foreign and
other regulatory authorities that are material to the conduct of the business
of the Company (as such business is currently conducted), except for such
licenses, certificates, approvals and permits the failure of which to hold
would not have a Material Adverse Effect), all of which are valid and in full
force and effect (and there is no proceeding pending or, to the knowledge of
the Company, threatened which may cause any such license, certificate, approval
or permit to be withdrawn, canceled, suspended or not renewed). Neither the
Company nor Subsidiary is in violation of its certificate of incorporation or
bylaws, or, except for defaults or violations which would not have a Material
Adverse Effect, in default in the performance or observance of any obligation,
agreement, covenant or condition contained in any bond, debenture, note or
other evidence of indebtedness or in any contract, indenture, mortgage, loan
agreement, joint venture or other agreement or instrument to which it is a
party or by which it or any of its properties are bound, or in violation of any
law, order, rule, regulation, writ, injunction or decree of any court or
governmental agency or body.
(j) The Company and Subsidiary have filed on a timely basis all
necessary federal, state and foreign income, franchise and other tax returns
and has paid all taxes shown thereon as due, and the Company has no knowledge
of any tax deficiency which has been or might be asserted against the Company
or Subsidiary which might have a Material Adverse Effect. All material tax
liabilities are adequately provided for within the financial statements of the
Company.
(k) The Company and Subsidiary maintain insurance of the types and in
the amounts adequate for their business and consistent with insurance coverage
maintained by similar companies in similar businesses, including, but not
limited to, insurance covering product liability and real and personal property
owned or leased against theft, damage, destruction, acts of vandalism and all
other risks customarily insured against, all of which insurance is in full
force and effect.
(l) Neither the Company nor Subsidiary is involved in any labor dispute
or disturbance nor, to the knowledge of the Company, is any such dispute or
disturbance threatened.
(m) Except as described in the Prospectus, the Company and Subsidiary
own or possess adequate licenses or other rights to use all patents, patent
applications, trademarks, trademark applications, service marks, service xxxx
applications, tradenames, copyrights, manufacturing processes, formulae, trade
secrets, know-how, franchises, and other material intangible property and
assets (collectively, "Intellectual Property") necessary to the conduct of
their businesses as conducted and as proposed to be conducted as described in
the Prospectus. The Company has no knowledge of any facts which would preclude
it from having rights to its patent applications referenced in the Prospectus.
The Company has no knowledge that it or Subsidiary lacks or will be unable to
obtain any rights or licenses to use any of the Intellectual Property necessary
to conduct the business now conducted or proposed to be conducted by it as
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described in the Prospectus, except as described in the Prospectus. The
Prospectus fairly and accurately describe the Company's rights with respect to
the Intellectual Property. The Company has not received any notice of
infringement or of conflict with rights or claims of others with respect to any
Intellectual Property, except to the extent such notices or claims are fairly
and accurately described in the Prospectus. The Company is not aware of any
patents of others which are existing or infringed upon by potential products
referred to in the Prospectus in such a manner as to materially and adversely
affect the Company and Subsidiary taken as a whole.
(n) The Company and Subsidiary are conducting their businesses in
compliance with all of the laws, rules and regulations of the jurisdictions in
which it is conducting business.
(o) The Company is not an "investment company," or a "promoter" or
"principal underwriter" for a registered investment company, as such terms are
defined in the Investment Company Act of 1940, as amended.
(p) Neither the Company nor Subsidiary has incurred any liability for a
fee, commission, or other compensation on account of the employment of a broker
or finder in connection with the transactions contemplated by this Agreement
other than the underwriting discounts and commissions contemplated hereby.
(q) Each of the Company and Subsidiary is (i) in compliance with any
and all applicable United States, state and local environmental laws, rules,
regulations, treaties, statutes and codes promulgated by any and all
governmental authorities relating to the protection of human health and safety,
the environment or toxic substances or wastes, pollutants or contaminants
("Environmental Laws"), (ii) has received all permits, licenses or other
approvals required of it under applicable Environmental Laws to conduct its
business as currently conducted, 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 permit
licenses or other approvals would not, individually or in the aggregate, have a
Material Adverse Effect. No action, proceeding, revocation proceeding, writ,
injunction or claim is pending or threatened relating to the Environmental Laws
or to the Company's or its Subsidiaries' activities involving Hazardous
Materials. "Hazardous Materials" means any material or substance (i) that is
prohibited or regulated by any environmental law, rule, regulation, order,
treaty, statute or code promulgated by any governmental authority, or any
amendment or modification thereto, or (ii) that has been designated or
regulated by any governmental authority as radioactive, toxic, hazardous or
otherwise a danger to health, reproduction or the environment.
(r) Neither the Company nor Subsidiary has engaged in the generation,
use, manufacture, transportation or storage of any Hazardous Materials on any
of the Company's or its Subsidiary's properties or former properties, except
where such use, manufacture, transportation or storage is in compliance with
Environmental Laws. No Hazardous Materials have been treated or disposed of on
any of the Company's or Subsidiary's properties or on properties formerly owned
or leased by the Company or any Subsidiary during the time of such ownership or
lease, except in compliance with Environmental Laws. No spills, discharges,
releases, deposits, emplacements, leaks or disposal of any Hazardous Materials
have occurred on
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or under or have emanated from any of the Company's or Subsidiary's properties
or former properties.
(s) Neither the Company nor Subsidiary has at any time during the last
five years (i) made any unlawful contribution to any candidate for foreign
office, or failed to disclose fully any contribution in violation of law, or
(ii) made any payment to any foreign, United States or state governmental
officer or official, or other person charged with similar public of
quasi-public duties, other than payments required or permitted by the laws of
the United States.
(t) The Common Stock is registered pursuant to Section 12(g) of the
Exchange Act. The Shares have been duly authorized for quotation on the
National Association of Securities Dealers, Inc. Automated Quotation System
National Market System ("Nasdaq National Market"). The Company has taken no
action designed to, or likely to have the effect of, terminating the
registration of the Common Stock under the Exchange Act or delisting the Common
Stock from the Nasdaq National Market, nor has the Company received any
notification that the Commission or the Nasdaq National Market is contemplating
terminating such registration or listing.
(u) Neither the Company nor, to its knowledge, any of its officers,
directors or affiliates has taken, and at the Closing Date and at any later
Option Closing Date, neither the Company nor, to its knowledge, any of its
officers, directors or affiliates will have taken, directly or indirectly, any
action which has constituted, or might reasonably be expected to constitute,
the stabilization or manipulation of the price of sale or resale of the Shares.
(v) The Company has timely and properly filed with the Commission all
reports and other documents required to have been filed by it with the
Commission pursuant to the Act and the Rules and Regulations. True and complete
copies of all such reports and other documents have been delivered to you.
3. PURCHASE OF THE SHARES BY THE UNDERWRITERS.
(a) On the basis of the representations and warranties and subject to
the terms and conditions herein set forth, the Company agrees to issue and sell
the Firm Shares to the several Underwriters, and each of the Underwriters
agrees to purchase from the Company the respective aggregate number of Firm
Shares set forth opposite its name on Schedule A, plus such additional number
of Firm Shares which such Underwriter may become obligated to purchase pursuant
to Section 3(b) hereof. The price at which such Firm Shares shall be sold by
the Company and purchased by the several Underwriters shall be $_____ per
share. In making this Agreement, each Underwriter is contracting severally and
not jointly; except as provided in paragraphs (b) and (c) of this Section 3,
the agreement of each Underwriter is to purchase only the respective number of
Firm Shares specified on Schedule A.
(b) If for any reason one or more of the Underwriters shall fail or
refuse (otherwise than for a reason sufficient to justify the termination of
this Agreement under the provisions of Section 10 hereof) to purchase and pay
for the number of Shares agreed to be purchased by such Underwriter or
Underwriters, the non-defaulting Underwriters shall have the
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right within twenty four (24) hours after such default to purchase, or procure
one or more other Underwriters to purchase, in such proportions as may be
agreed upon between you and such purchasing Underwriter or Underwriters and
upon the terms herein set forth, all or any part of the Shares which such
defaulting Underwriter or Underwriters agreed to purchase. If the
non-defaulting Underwriters fail so to make such arrangements with respect to
all such Shares and portion, the number of Shares which each non defaulting
Underwriter is otherwise obligated to purchase under this Agreement shall be
automatically increased on a pro rata basis (as adjusted by you in such manner
as you deem advisable to avoid fractional shares) to absorb the remaining
shares and portion which the defaulting Underwriter or Underwriters agreed to
purchase; provided, however, that the non-defaulting Underwriters shall not be
obligated to purchase the Shares and portion which the defaulting Underwriter
or Underwriters agreed to purchase if the aggregate number of such Shares
exceeds ten percent (10%) of the total number of Shares which all Underwriters
agreed to purchase hereunder. If the total number of Shares which the
defaulting Underwriter or Underwriters agreed to purchase shall not be
purchased or absorbed in accordance with the two preceding sentences, the
Company shall have the right, within twenty-four (24) hours next succeeding the
24-hour period referred to above, to make arrangements with other underwriters
or purchasers reasonably satisfactory to you for purchase of such Shares and
portion on the terms herein set forth. In any such case, either you or the
Company shall have the right to postpone the Closing Date determined as
provided in Section 5 hereof for not more than seven business days after the
date originally fixed as the Closing Date pursuant to said Section 5 in order
that any necessary changes in the Registration Statement, the Prospectus or any
other documents or arrangements may be made. If the aggregate number of Shares
which the defaulting Underwriter or Underwriters agreed to purchase exceeds 10%
of the total number of Shares which all Underwriters agreed to purchase
hereunder, and if neither the non-defaulting Underwriters nor the Company shall
make arrangements within the 24-hour periods stated above for the purchase of
all the Shares which the defaulting Underwriter or Underwriters agreed to
purchase hereunder, this Agreement shall be terminated without further act or
deed and without any liability on the part of the Company to any non defaulting
Underwriter and without any liability on the part of any non-defaulting
Underwriter to the Company. Nothing in this paragraph (b), and no action taken
hereunder, shall relieve any defaulting Underwriter from liability in respect
of any default of such Underwriter under this Agreement.
(c) On the basis of the representations, warranties and covenants
herein contained, and subject to the terms and conditions herein set forth, the
Company grants an option to the several Underwriters to purchase all or any
portion of the Option Shares from the Company at the same price per share as
the Underwriters shall pay for the Firm Shares. Said option may be exercised
only to cover over-allotments in the sale of the Firm Shares by the
Underwriters and may be exercised in whole or in part at any time (but not more
than once) on or before the 30th day after the date of this Agreement upon
written or telegraphic notice by you to the Company setting forth the aggregate
number of shares of the Option Shares as to which the several Underwriters are
exercising the option. Delivery of certificates for the shares of Option
Shares, and payment therefor, shall be made as provided in Section 5 hereof.
Each Underwriter will purchase such percentage of the Option Shares as is equal
to the percentage of Firm Shares that such Underwriter is purchasing, the exact
number of shares to be adjusted by you in such manner as you deem advisable to
avoid fractional shares.
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4. OFFERING BY UNDERWRITERS.
(a) The terms of the initial public offering of the Shares by the
Underwriters shall be as set forth in the Prospectus. The Underwriters may from
time to time change the public offering price after the closing of the initial
public offering and increase or decrease the concessions and discounts to
dealers as they may determine.
(b) You, on behalf of the Underwriters, represent and warrant that (i)
the information set forth in Paragraph 1, inclusive of the list of underwriters
set forth thereunder, contained under the caption "Underwriting" in the
Registration Statement, any Preliminary Prospectus and the Prospectus relating
to the Shares (insofar as such information relates to the Underwriters)
constitutes the only information furnished by the Underwriters to the Company
for inclusion in the Registration Statement, any Preliminary Prospectus, and
the Prospectus, and that the statements made therein are correct and do not
omit to state any material fact required to be stated therein or necessary to
make the statements made therein in light of the circumstances under which they
were made not misleading, and (ii) the Underwriters have not distributed and
will not distribute prior to the Closing Date or on any Option Closing Date, as
the case may be, any of offering material in connection with the offering and
sale of the shares other than the Preliminary Prospectus, the Prospectus, the
Registration Statement and other materials permitted by the Act.
5. DELIVERY OF AND PAYMENT FOR THE SHARES.
(a) Delivery of certificates for the Firm Shares and the Option Shares
(if the option granted pursuant to Section 3(c) hereof shall have been
exercised not later than 11:00 a.m., Denver time, on the date at least two
business days preceding the Closing Date), and payment therefor, shall be made
at the offices of Xxxxxx Godward LLP, 0000 Xxxxxx Xxxxxxxxx, Xxxxx 000,
Xxxxxxx, Xxxxxxxx 00000 6737 (or at such other place as may be agreed upon by
the Company and you) at 7:00 a.m., Denver time (a) on the third (3rd) full
business day following the first day that Shares are traded, (b) if this
Agreement is executed and delivered after 2:30 p.m., Denver time, the fourth
(4th) full business day following the day that this Agreement is executed and
delivered or (c) at such time on such other day, not later than seven (7) full
business days following the first day that Shares are traded, as shall be
agreed upon in writing by the Company and you (the "Closing Date").
(b) If the option granted pursuant to Section 3(c) hereof shall be
exercised after 11:00 a.m., Denver time, on the date two business days
preceding the Closing Date, and on or before the 30th day after the date of
this Agreement, delivery of certificates for the Option Shares, and payment
therefor, shall be made at the offices of Xxxxxx Godward LLP, 0000 Xxxxxx
Xxxxxxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxxx 00000 6737 at 7:00 a.m., Denver time,
on the third (3rd) business day after the exercise of such option.
(c) Payment for the Shares purchased from the Company shall be made to
the Company or its order, by either a same day funds check or Federal Funds
wire transfer. Such payment shall be made upon delivery of certificates for the
Shares to you for the respective accounts of the several Underwriters against
receipt therefor signed by you. Certificates for the
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Shares to be delivered to you shall be registered in such name or names and
shall be in such denominations as you may request at least two business days
before the Closing Date, in the case of Firm Shares, and at least two business
days prior to the Option Closing Date, in the case of the Option Shares. Such
certificates will be made available to the Underwriters for inspection,
checking and packaging at a location in New York, New York, designated by the
Underwriters not less than one full business day prior to the Closing Date or,
in the case of the Option Shares, by 3:00 p.m., New York time, on the business
day preceding the Option Closing Date.
It is understood that you, individually and not on behalf of the
Underwriters, may (but shall not be obligated to) make payment to the Company
for shares to be purchased by any Underwriter whose check shall not have been
received by you on the Closing Date or any later Option Closing Date. Any such
payment by you shall not relieve such Underwriter from any of its obligations
hereunder.
6. FURTHER AGREEMENTS OF THE COMPANY. The Company covenants and agrees as
follows:
(a) The Company will use its best efforts to cause the Registration
Statement and any amendment thereof, if not effective at the time and date that
this Agreement is executed and delivered by the parties hereto, to become
effective as promptly as possible; it will notify you, promptly after it shall
receive notice thereof, of the time when the Registration Statement or any
subsequent amendment to the Registration Statement has become effective or any
supplement to the Prospectus has been filed. If the Company omitted information
from the Registration Statement at the time it was originally declared
effective in reliance upon Rule 430A(a), the Company will provide evidence
satisfactory to you that the Prospectus contains such information and has been
filed, within the time period prescribed, with the Commission pursuant to
subparagraph (1) or (4) of Rule 424(b) of the Rules and Regulations or as part
of a post-effective amendment to such Registration Statement as originally
declared effective which is declared effective by the Commission. If for any
reason the filing of the final form of Prospectus is required under Rule
424(b)(3) of the Rules and Regulations, it will provide evidence satisfactory
to you that the Prospectus contains such information and has been filed with
the Commission within the time period prescribed. The Company will notify you
promptly of any request by the Commission for the amending or supplementing of
the Registration Statement or the Prospectus or for additional information.
Promptly upon your request, it will prepare and file with the Commission any
amendments or supplements to the Registration Statement or Prospectus which, in
the reasonable opinion of counsel to the several Underwriters ("Underwriters'
Counsel"), may be necessary or advisable in connection with the distribution of
the Shares by the Underwriters. The Company will promptly prepare and file with
the Commission, and promptly notify you of the filing of, any amendments or
supplements to the Registration Statement or Prospectus which may be necessary
to correct any statements or omissions, if, at any time when a prospectus
relating to the Shares is required to be delivered under the Act, any event
shall have occurred as a result of which the Prospectus or any other prospectus
relating to the Shares as then in effect would include an untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. In case any Underwriter is required to deliver a prospectus
within the nine-month period referred to in Section 10(a)(3) of the Act in
connection with the sale of the Shares, the Company will
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prepare promptly upon request, but at the expense of such Underwriter, such
amendment or amendments to the Registration Statement and such prospectus or
prospectuses as may be necessary to permit compliance with the requirements of
Section 10(a)(3) of the Act. The Company will file no amendment or supplement
to the Registration Statement or Prospectus that shall not previously have been
submitted to you a reasonable time prior to the proposed filing thereof or to
which you shall reasonably object in writing or which is not in compliance with
the Act and Rules and Regulations or the provisions of this Agreement.
(b) The Company will advise you, promptly after it shall receive notice
or obtain knowledge thereof of the issuance of any stop order by the Commission
suspending the effectiveness of the Registration Statement or the use of the
Prospectus or of the initiation or threat of any proceeding for that purpose;
and it will promptly use its best efforts to prevent the issuance of any such
stop order or to obtain its withdrawal at the earliest possible moment if such
stop order should be issued.
(c) The Company will cooperate with you in endeavoring to qualify the
Shares for offering and sale under the securities laws of such jurisdictions as
you may designate and to continue such qualifications in effect for so long as
may be required for purposes of the distribution of the Shares, except that the
Company shall not be required in connection therewith or as a condition thereof
to qualify as a foreign corporation, or to execute a general consent to service
of process in any jurisdiction, or to make any undertaking with respect to the
conduct of its business. In each jurisdiction in which the Shares shall have
been qualified, the Company will make and file such statements, reports and
other documents in each year as are or may be reasonably required by the laws
of such jurisdictions so as to continue such qualifications in effect for so
long a period as you may reasonably request for distribution of the Shares, or
as otherwise may be required by law.
(d) The Company will furnish to you, as soon as available, copies of
the Registration Statement (three of which will be signed and which will
include all exhibits), each Preliminary Prospectus, the Prospectus and any
amendments or supplements to such documents, including any prospectus prepared
to permit compliance with Section 10(a)(3) of the Act, all in such quantities
as you may from time to time reasonably request.
(e) The Company will make generally available to its stockholders as
soon as practicable, but in any event not later than the 45th day following the
end of the fiscal quarter first occurring after the first anniversary of the
effective date of the Registration Statement, an earnings statement (which will
be in reasonable detail but need not be audited) complying with the provisions
of Section 11(a) of the Act and Rule 158 of the Rules and Regulations and
covering a twelve-month period beginning after the effective date of the
Registration Statement, and will advise you in writing when such statement has
been made available.
(f) During a period of five years after the date hereof, the Company,
as soon as practicable after the end of each respective period, will furnish to
its stockholders annual reports (including financial statements audited by
independent certified public accountants) and will furnish to its stockholders
unaudited quarterly reports of operations for each of the first three quarters
of the fiscal year, and will, upon request, furnish to you and the other
several
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Underwriters hereunder (i) concurrently with making such reports available to
its stockholders, statements of operations of the Company for each of the first
three quarters in the form made available to the Company's stockholders; (ii)
concurrently with the furnishing thereof to its stockholders, a balance sheet
of the Company as of the end of such fiscal year, together with statements of
operations, of stockholders' equity and of cash flow of the Company for such
fiscal year, accompanied by a copy of the certificate or report thereon of
nationally recognized independent certified public accountants; (iii)
concurrently with the furnishing of such reports to its stockholders, copies of
all reports (financial or other) mailed to stockholders; (iv) as soon as they
are available, copies of all reports and financial statements furnished to or
filed with the Commission, any securities exchange or the Nasdaq National
Market by the Company (except for documents for which confidential treatment is
requested); and (v) every material press release and every material news item
or article in respect of the Company or its affairs which was generally
released to stockholders or prepared for general release by the Company. During
such five-year period, if the Company shall have any active subsidiaries, the
foregoing financial statements shall be on a consolidated basis to the extent
that the accounts of the Company are consolidated with any subsidiaries, and
shall be accompanied by similar financial statements for any significant
subsidiary that is not so consolidated.
(g) Prior to or simultaneously with the execution and delivery of this
Agreement, the Company will obtain agreement from each beneficial owner of the
Company's Common Stock listed on Schedule B to this Agreement providing that
such person will not, for a period of 180 days after the date of the
Prospectus, without the prior written consent of UBS Securities LLC, directly
or indirectly, offer to sell, sell, hypothecate, contract to sell, grant any
option to purchase, or otherwise dispose of, any shares of Common Stock
beneficially owned as of the date such lockup agreement is executed (including,
without limitation, shares of Common Stock which may be deemed to be
beneficially owned in accordance with the Rules and Regulations and shares of
Common Stock which may be issued upon exercise of a stock option or warrant) or
any securities convertible into or exercisable or exchangeable for such Common
Stock except (a) by operation of law, (b) pursuant to a bona fide gift or by
will or intestacy to any person or other entity which agrees in writing to be
bound by this restriction or (c) pursuant to a transfer by a partnership to a
partner or retired partner of such partnership or by a corporation to a
shareholder of such corporation which agrees in writing to be bound by this
restriction. Each such person or entity shall also agree and consent to the
entry of stop transfer instructions with the Company's transfer agent against
the transfer of shares of Common Stock held by such person or entity, except in
compliance with the foregoing restriction.
(h) The Company shall not, during the 180 days following the effective
date of the Registration Statement, except with your prior written consent as
Representatives, file a registration statement covering any of its shares of
capital stock, except that one or more registration statements on Form S 8 may
be filed at any time following the effective date of the Registration
Statement.
(i) The Company shall not, during the 180 days following the effective
date of the Registration Statement, except with your prior written consent as
Representatives, issue, sell, offer or agree to sell, grant, distribute or
otherwise dispose of, directly or indirectly, any shares of Common Stock, or
any options, rights or warrants with respect to shares of Common Stock, or
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any securities convertible into or exchangeable for Common Stock, other than
(i) the sale of Shares hereunder, (ii) the grant of options or the issuance of
shares of Common Stock under the Company's stock option plans or stock purchase
plan, as the case may be, existing on the date hereof, (iii) the issuance of
shares of Common Stock upon exercise of the currently outstanding options or
warrants described in the Registration Statement.
(j) The Company will apply the net proceeds from the sale of the Shares
being sold by it in the manner set forth under the caption "Use of Proceeds" in
the Prospectus.
(k) The Company will maintain a Transfer Agent and, if necessary under
the jurisdiction of incorporation of the Company, a Registrar (which may be the
same entity as the Transfer Agent) for its Common Stock.
(l) The Company will use its best efforts to maintain listing of its
shares of Common Stock on the Nasdaq National Market.
(m) The Company is familiar with the Investment Company Act of 1940, as
amended, and the rules and regulations thereunder, and has in the past
conducted its affairs, and will in the future conduct its affairs, in such a
manner so as to ensure that the Company was not and will not be an "investment
company" within the meaning of the Investment Company Act of 1940, as amended,
and the rules and regulations thereunder.
(n) If at any time during the 180-day period after the Registration
Statement becomes effective, any rumor, publication or event relating to or
affecting the Company shall occur as a result of which in your reasonable
opinion the market price of the Common Stock has been or is likely to be
materially affected (regardless of whether such rumor, publication or event
necessitates a supplement to or amendment of the Prospectus), the Company will,
after written notice from you advising the Company to the effect set forth
above consult with you in good faith regarding the necessity of disseminating a
press release or other public statement responding to or commenting on such
rumor, publication or event and, if the Company in its reasonable judgment
determines that such a press release or other public statement is appropriate,
the substance of any press release or other public statement.
7. EXPENSES.
The Company agrees with each Underwriter that:
(a) The Company will pay and bear all costs, fees and expenses in
connection with the preparation, printing and filing of the Registration
Statement (including financial statements, schedules and exhibits), Preliminary
Prospectuses and the Prospectus and any amendments or supplements thereto; the
reproduction of this Agreement, the Master Agreement Among Underwriters, the
Master Selected Dealer Agreement, the Preliminary Blue Sky Memoranda and any
Supplemental Blue Sky Memoranda and any instruments related to any of the
foregoing; the issuance and delivery of the Shares hereunder to the several
Underwriters, including transfer taxes, if any; the cost of all stock
certificates representing the Shares and Transfer Agents' and Registrars' fees;
the fees and disbursements of corporate, patent and
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regulatory counsel for the Company; all fees and other charges of the Company's
independent public accountants; the cost of furnishing to the several
Underwriters copies of the Registration Statement (including appropriate
exhibits), Preliminary Prospectuses and the Prospectus, and any amendments or
supplements to any of the foregoing; NASD filing fees and expenses incident to
securing any required review and the cost of qualifying the Shares under the
laws of such jurisdictions within the United States as you may designate
(including filing fees and fees and disbursements of Underwriters' Counsel in
connection with such NASD filings and Blue Sky qualifications); listing
application fees of the Nasdaq National Market; and all other expenses directly
incurred by the Company in connection with the performance of its obligations
hereunder.
(b) If the transactions contemplated hereby are not consummated by
reason of any failure, refusal or inability on the part of the Company to
perform any agreement on its part to be performed hereunder or to fulfill any
condition of the Underwriters' obligations hereunder, the Company will, in
addition to paying the expenses described in clause (a) above, reimburse the
several Underwriters for all out-of-pocket expenses (including reasonable fees
and disbursements of Underwriters' Counsel) incurred by the Underwriters in
reviewing the Registration Statement and the Prospectus and in otherwise
investigating, preparing to market or marketing the Shares. The Company will in
no event be liable to any of the several Underwriters for any loss of
anticipated profits from the sale by them of the Shares.
8. CONDITIONS OF UNDERWRITERS' OBLIGATIONS.
The obligations of the several Underwriters to purchase and pay for the
Shares, as provided herein, shall be subject to the accuracy, as of the date
hereof and the Closing Date and any later Option Closing Date, as the case may
be, of the representations and warranties of the Company herein, to the
performance by the Company of its obligations hereunder and to the following
additional conditions:
(a) The Registration Statement shall have become effective not later
than 9:00 a.m., New York City time, on the date following the date of this
Agreement, or such later time or date as shall be consented to in writing by
you. If the filing of the Prospectus, or any supplement thereto, is required
pursuant to Rule 424(b) and Rule 430A of the Rules and Regulations, the
Prospectus shall have been filed in the manner and within the time period
required by Rule 424(b) and Rule 430A of the Rules and Regulations. No stop
order suspending the effectiveness of the Registration Statement shall have
been issued and no proceeding for that purpose shall have been initiated or, to
the knowledge of the Company or any Underwriter, threatened by the Commission,
and any request of the Commission for additional information (to be included in
the Registration Statement or the Prospectus or otherwise) shall have been
complied with to the reasonable satisfaction of Underwriters' Counsel.
(b) All corporate proceedings and other legal matters in connection
with this Agreement, the form of Registration Statement and the Prospectus, and
the registration, authorization, issue, sale and delivery of the Shares shall
have been reasonably satisfactory to Underwriters' Counsel, and such counsel
shall have been furnished with such papers and information as they may
reasonably have requested to enable them to pass upon the matters referred to
in this subsection.
15.
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(c) You shall have received, at no cost to you, on the Closing Date and
on any later Option Closing Date, as the case may be, the opinion of Wilson,
Sonsini, Xxxxxxxx & Xxxxxx, Professional Corporation, corporate counsel to the
Company, dated the Closing Date or such later Option Closing Date, in the form
attached hereto on Appendix A, addressed to the Underwriters and with
reproduced copies of signed counterparts thereof for each of the
Representatives.
(d) You shall have received, at no cost to you, on the Closing Date and
on any later Option Closing Date, as the case may be, the opinion of trademark
counsel to the Company, dated the Closing Date or such later Option Closing
Date, in the form attached hereto as Appendix B, addressed to the Underwriters
and with reproduced copies of signed counterparts thereof for each of the
Representatives.
(e) You shall have received, at no cost to you, on the Closing Date and
on any later Option Closing Date, as the case may be, the opinion of patent
counsel to the Company, dated the Closing Date or such later Option Closing
Date, in the form attached hereto as Appendix C, addressed to the Underwriters
and with reproduced copies of signed counterparts thereof for each of the
Representatives.
(f) You shall have received from Xxxxxx Godward LLP, Underwriters'
Counsel, an opinion or opinions, dated the Closing Date or on any later Option
Closing Date, as the case may be, in form and substance reasonably satisfactory
to you, with respect to the sufficiency of all corporate proceedings undertaken
by the Company and other legal matters relating to this Agreement and the
transactions contemplated hereby as you may reasonably require, and the Company
shall have furnished to such counsel such documents as it may have reasonably
requested for the purpose of enabling it to pass upon such matters.
(g) You shall have received on the Closing Date and on any later Option
Closing Date, as the case may be, a letter from the Accountants addressed to
the Company and the Underwriters, dated the Closing Date or such later Option
Closing Date, as the case may be, confirming that it is an independent
certified public accountant with respect to the Company within the meaning of
the Act and the Rules and Regulations thereunder and based upon the procedures
described in its letter delivered to you concurrently with the execution of
this Agreement (herein called the "Original Letter"), but carried out to a date
not more than three days prior to the Closing Date or any such later Option
Closing Date, as the case may be, (i) confirming that the statements and
conclusions set forth in the Original Letter are accurate as of the Closing
Date or such later Option Closing Date, as the case may be; and (ii) setting
forth any revisions and additions to the statements and conclusions set forth
in the Original Letter that are necessary to reflect any changes in the facts
described in the Original Letter since the date of such letter, or to reflect
the availability of more recent financial statements, data or information. The
letter shall not disclose any change, or any development involving a
prospective change, in or affecting the business or properties of the Company
which, in your reasonable judgment, makes it impracticable or inadvisable to
proceed with the public offering of the Shares as contemplated by the
Prospectus. In addition, you shall have received from the Accountants a letter
addressed to the Company and made available to you for the use of the
Underwriters stating that its review of the Company's system of internal
accounting controls, to the extent it deemed necessary in
16.
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establishing the scope of its latest examination of the Company's financial
statements, did not disclose any weaknesses in internal controls that it
considered to be material weaknesses. All such letters shall be in a form
reasonably satisfactory to the Representatives and their counsel.
(h) You shall have received on the Closing Date and on any later Option
Closing Date, as the case may be, a certificate of the President and the Chief
Financial Officer of the Company, dated the Closing Date or such later date, to
the effect that as of such date (and you shall be satisfied that as of such
date):
(i) The representations and warranties of the Company in this
Agreement are true and correct, as if made on and as of the Closing Date or any
later Option Closing Date, as the case may be; and the Company has complied
with all of the agreements and satisfied all of the conditions on its part to
be performed or satisfied at or prior to the Closing Date or any later Option
Closing Date, as the case may be;
(ii) The Registration Statement has become effective under the Act
and no stop order suspending the effectiveness of the Registration Statement or
preventing or suspending the use of the Prospectus has been issued, and no
proceedings for that purpose have been instituted or are pending or, to the
best of their knowledge, threatened under the Act;
(iii) They have carefully reviewed the Registration Statement and
the Prospectus; and, when the Registration Statement became effective and at
all times subsequent thereto up to the delivery of such certificate, the
Registration Statement and the Prospectus and any amendments or supplements
thereto contained all statements and information required to be included
therein or necessary to make the statements therein not misleading; and when
the Registration Statement became effective, and at all times subsequent
thereto up to the delivery of such certificate, none of the Registration
Statement, the Prospectus or any amendment or supplement thereto included any
untrue statement of a material fact or omitted to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading; and, since the effective date of the Registration Statement, there
has occurred no event required to be set forth in an amended or supplemented
Prospectus that has not been so set forth; and
(iv) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, there has not been (a)
any material adverse change in the properties or assets described or referred
to in the Registration Statement and the Prospectus or in the condition
(financial or otherwise), operations, business or prospects of the Company and
Subsidiary, (b) any transaction which is material to the Company and
Subsidiary, except transactions entered into in the ordinary course of
business, (c) any obligation, direct or contingent, incurred by the Company or
Subsidiary, which is material to the Company and Subsidiary taken as a whole,
(d) any change in the capital stock or outstanding indebtedness of the Company
or Subsidiary which is material to the Company and Subsidiary taken as a whole
or (e) any dividend or distribution of any kind declared, paid or made on the
capital stock of the Company.
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(i) The Company shall have furnished to you such further certificates
and documents as you shall reasonably request as to the accuracy of the
representations and warranties of the Company herein, as to the performance by
the Company of its obligations hereunder and as to the other conditions
concurrent and precedent to the obligations of the Underwriters hereunder.
(j) The Firm Shares and the Option Shares, if any, shall have been
approved for designation upon notice of issuance on the Nasdaq National Market.
All such opinions, certificates, letters and documents will be in
compliance with the provisions hereof only if they are reasonably satisfactory
to Underwriters' Counsel. The Company will furnish you with such number of
conformed copies of such opinions, certificates, letters and documents as you
shall reasonably request.
9. INDEMNIFICATION AND CONTRIBUTION.
(a) Subject to the provisions of paragraph (f) below, the Company
agrees to indemnify and hold harmless each Underwriter and each person
(including each partner or officer thereof) who controls any Underwriter within
the meaning of Section 15 of the Act from and against any and all losses,
claims, damages or liabilities, joint or several, to which such indemnified
parties or any of them may become subject under the Act, the Exchange Act, or
the common law or otherwise, and the Company agrees to reimburse each such
Underwriter and controlling person for any legal or other out-of-pocket
expenses (including, except as otherwise hereinafter provided, reasonable fees
and disbursements of counsel) incurred by the respective indemnified parties in
connection with defending against any such losses, claims, damages or
liabilities or in connection with any investigation or inquiry of, or other
proceeding which may be brought against, the respective indemnified parties, in
each case arising out of or based upon (i) any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement
(including the Prospectus as part thereof and any 462(b) registration
statement) or any post effective amendment thereto (including any 462(b)
registration statement), or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, or (ii) any untrue statement or alleged untrue
statement of a material fact contained in any Preliminary Prospectus or the
Prospectus (as amended or as supplemented if the Company shall have filed with
the Commission any amendment thereof or supplement thereto) or the omission or
alleged omission to state therein a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they were
made, not misleading; provided, however, that (1) the indemnity agreements of
the Company contained in this paragraph (a) shall not apply to any such losses,
claims, damages, liabilities or expenses if such statement or omission is
contained in Paragraph 1, inclusive of the list of underwriters set forth
thereunder, in the section of the Prospectus entitled "Underwriting" or the
last paragraph of text on the cover page of the Prospectus, and (2) the
indemnity agreement contained in this paragraph (a) with respect to any
Preliminary Prospectus not inure to the benefit of any Underwriter from whom
the person asserting any such losses, claims, damages, liabilities or expenses
purchased the Shares which is the subject thereof (or to the benefit of any
person controlling such Underwriter) if at or prior to the written confirmation
of the sale of such Shares a copy of the Prospectus (or the Prospectus as
amended or
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supplemented) was not sent or delivered to such person and the untrue statement
or omission of a material fact contained in such Preliminary Prospectus was
corrected in the Prospectus (or the Prospectus as amended or supplemented)
unless the failure is the result of noncompliance by the Company with paragraph
(a) of Section 6 hereof. The indemnity agreements of the Company contained in
this paragraph (a) and the representations and warranties of the Company
contained in Section 2 hereof shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of any indemnified
party and shall survive the delivery of any payment for the Shares.
(b) Each Underwriter severally agrees to indemnify and hold harmless
the Company, each of its executive officers, each of its directors, each other
Underwriter and each person (including each partner or officer thereof) who
controls the Company or any such other Underwriter within the meaning of
Section 15 of the Act, from and against any and all losses, claims, damages or
liabilities, joint or several, to which such indemnified parties or any of them
may become subject under the Act, the Exchange Act, or the common law or
otherwise and to reimburse each of them for any legal or other expenses
including, except as otherwise hereinafter provided, reasonable fees and
disbursements of counsel) incurred by the respective indemnified parties in
connection with defending against any such losses, claims, damages or
liabilities or in connection with any investigation or inquiry of, or other
proceeding which may be brought against, the respective indemnified parties, in
each case arising out of or based upon (i) any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement
(including the Prospectus as part thereof and any Rule 462(b) registration
statement) or any post effective amendment thereto (including any 462(b)
registration statement) or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading or (ii) any untrue statement or alleged untrue statement
of a material fact contained in any Preliminary Prospectus or the Prospectus
(as amended or as supplemented if the Company shall have filed with the
Commission any amendment thereof or supplement thereto) or the omission or
alleged omission to state therein a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they were
made, not misleading; provided, however, that in the cases of clauses (i) and
(ii) above, such statement or omission is contained in Paragraph 1, inclusive
of the list of underwriters set forth thereunder, in the section of the
Prospectus entitled "Underwriting" or the last paragraph on the cover page of
the Prospectus. The indemnity agreement of each Underwriter contained in this
paragraph (b) shall remain operative and in full force and effect regardless of
any investigation made by or on behalf of any indemnified party and shall
survive the delivery of and payment for the Shares.
(c) Each party indemnified under the provision of paragraphs (a) and
(b) of this Section 9 agrees that, upon the service of a summons or other
initial legal process upon it in any action or suit instituted against it or
upon its receipt of written notification of the commencement of any
investigation or inquiry of, or proceeding against it, in respect of which
indemnity may be sought on account of any indemnity agreement contained in such
paragraphs, it will promptly give written notice (a "Notice") of such service
or notification to the party or parties from whom indemnification may be sought
hereunder. No indemnification provided for in such paragraphs shall be
available to any party who shall fail so to give the Notice if the party to
whom such Notice was not given was unaware of the action, suit, investigation,
inquiry or
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proceeding to which the Notice would have related and was prejudiced by the
failure to give the Notice, but the omission so to notify such indemnifying
party or parties of any such service or notification shall not relieve such
indemnifying party or parties from any liability which it or they may have to
the indemnified party for contribution or otherwise than on account of such
indemnity agreement. Any indemnifying party shall be entitled at its own
expense to participate in the defense of any action, suit or proceeding
against, or investigation or inquiry of, an indemnified party. Any
indemnifying party shall be entitled, if it so elects within a reasonable time
after receipt of the Notice by giving written notice (the "Notice of Defense")
to the indemnified party, to assume (alone or in conjunction with any other
indemnifying party or parties) the entire defense of such action, suit,
investigation, inquiry or proceeding, in which event such defense shall be
conducted, at the expense of the indemnifying party or parties, by counsel
chosen by such indemnifying party or parties and reasonably satisfactory to the
indemnified party or parties; provided, however, that (i) if the indemnified
party or parties reasonably determine that there may be a conflict between the
positions of the indemnifying party or parties and of the indemnified party or
parties in conducting the defense of such action, suit, investigation, inquiry
or proceeding or that there may be legal defenses available to such indemnified
party or parties different from or in addition to those available to the
indemnifying party or parties, then counsel for the indemnified party or
parties shall be entitled to conduct the defense to the extent reasonably
determined by such counsel to be necessary to protect the interests of the
indemnified party or parties and (ii) in any event, the indemnified party or
parties shall be entitled, at its or their own expense to have counsel chosen
by such indemnified party or parties participate in, but not conduct, the
defense. It is understood that the indemnifying parties shall not, in respect
of the legal defenses of any indemnified party in connection with any
proceeding or related proceedings in the same jurisdiction, be liable for (a)
the fees and expenses of more than one separate firm (in addition to any local
counsel) for all of the Underwriters and each person, if any, who controls any
Underwriter within the meaning of Section 15 of the Act, and (b) 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 Section
15 of the Act. If, within a reasonable time after receipt of the Notice, an
indemnifying party gives a Notice of Defense and the counsel chosen by the
indemnifying party or parties is reasonably satisfactory to the indemnified
party or parties, the indemnifying party or parties will not be liable under
paragraphs (a) through (c) of this Section 9 for any legal or other expenses
subsequently incurred by the indemnified party or parties in connection with
the defense of the action, suit, investigation, inquiry or proceeding, except
that (a) the indemnifying party or parties shall bear the legal and other
expenses incurred in connection with the conduct of the defense as referred to
in clause (i) of the proviso to the preceding sentence and (b) the indemnifying
party or parties shall bear such other expenses as it or they have authorized
to be incurred by the indemnified party or parties. If, within a reasonable
time after receipt of the Notice, no Notice of Defense has been given, the
indemnifying party or parties shall be responsible for any legal or other
expenses incurred by the indemnified party or parties in connection with the
defense of the action, suit, investigation, inquiry or proceeding. The
indemnifying party or parties shall not be liable for any settlement of any
proceeding effected without its or their written consent, provided such consent
has not been unreasonably withheld.
20.
21
(d) If the indemnification provided for in this Section 9 is
unavailable or insufficient to hold harmless an indemnified party under
paragraph (a) or (b) of this Section 9, then each indemnifying party shall, in
lieu of indemnifying such indemnified party, contribute to the amount paid or
payable by such indemnified party as a result of the losses, claims, damages or
liabilities referred to in paragraph (a) or (b) of this Section 9 (i) in such
proportion as is appropriate to reflect the relative benefits received by each
indemnifying party from the offering of the Shares or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of each indemnifying party
in connection with the statements or omissions that resulted in such losses,
claims, damages or liabilities, or actions in respect thereof, 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, shall be deemed
to be in the same respective proportions as the total net proceeds from the
offering of the Shares received by the Company and the total underwriting
discount received by the Underwriters, as set forth in the table on the cover
page of the Prospectus, bear to the aggregate public offering price of the
Shares. Relative fault 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 each indemnifying party and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
untrue statement or omission.
The parties agree that it would not be just and equitable if
contributions pursuant to this paragraph (d) were to be determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take into account
the equitable considerations referred to in the first sentence of this
paragraph (d). The amount paid by an indemnified party as a result of the
losses, claims, damages or liabilities, or actions in respect thereof, referred
to in the first sentence of this paragraph (d) shall be deemed to include any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigation, preparation to defend or defense against any
action or claim which is the subject of this paragraph (d). Notwithstanding the
provisions of this paragraph (d), no Underwriter shall be required to
contribute any amount in excess of the underwriting discount applicable to the
Shares purchased by such Underwriter. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations in this paragraph (d) to
contribute are several in proportion to their respective underwriting
obligations and not joint.
Each party entitled to contribution agrees that upon the service of a
summons or other initial legal process upon it in any action instituted against
it in respect of which contribution may be sought, it will promptly give
written notice of such service to the party or parties from whom contribution
may be sought, but the omission so to notify such party or parties of any such
service shall not relieve the party from whom contribution may be sought from
any obligation it may have hereunder or otherwise (except as specifically
provided in paragraph (c) of this Section 9).
21.
22
(e) The Company will not, without the prior written consent of each
Underwriter, settle or compromise or consent to the entry of any judgment in
any pending or threatened claim, action, suit or proceeding in respect of which
indemnification may be sought hereunder (whether or not such Underwriter or any
person who controls such Underwriter within the meaning of Section 15 of the
Act or Section 20 of the Exchange Act is a party to such claim, action, suit or
proceeding) unless such settlement, compromise or consent includes an
unconditional release of such Underwriter and each such controlling person from
all liability arising out of such claim, action, suit or proceeding.
(f) The parties to this Agreement hereby acknowledge that they are
sophisticated business persons who were represented by counsel during the
negotiations regarding the provisions hereof, including without limitation the
provisions of this Section 9 and are fully informed regarding said provisions.
They further acknowledge that the provisions of this Section 9 fairly allocate
the risks in light of the ability of the parties to investigate the Company and
its business in order to assure that adequate disclosure is made in the
Registration Statement and Prospectus as required by the Act and the Exchange
Act.
10. TERMINATION. This Agreement may be terminated by you at any time on
or prior to the Closing Date or on or prior to any later Option Closing Date,
as the case may be, (i) if the Company shall have failed, refused or been
unable, at or prior to the Closing Date, or on or prior to any later Option
Closing Date, as the case may be, to perform any agreement on its part to be
performed, or because any other condition of the Underwriters' obligations
hereunder required to be fulfilled by the Company is not fulfilled, or (ii) if
trading on the New York Stock Exchange, the American Stock Exchange or the
Nasdaq National Market shall have been suspended, or minimum or maximum prices
for trading shall have been fixed, or maximum ranges for prices for securities
shall have been required on the New York Stock Exchange, the American Stock
Exchange or the Nasdaq National Market, by such trading exchanges or by order
of the Commission or any other governmental authority having jurisdiction, or
if a banking moratorium shall have been declared by federal or New York
authorities, or (iii) if the Company shall have sustained a loss by strike,
fire, flood, accident or other calamity of such character as to have a Material
Adverse Effect regardless of whether or not such loss shall have been insured,
or (iv) if there shall have been a material adverse change in the general
political or economic conditions or financial markets in the United States as
in the judgment of the Representatives makes it inadvisable or impracticable
to proceed with the offering, sale and delivery of the Shares, or (v) if there
shall have occurred an outbreak or escalation of hostilities between the United
States and any foreign power or of any other insurrection or armed conflict
involving the United States or other national or international calamity,
hostilities or crisis or the declaration by the United States of a national
emergency which, in the judgment of the Representatives, adversely affects the
marketability of the Shares, or (vi) if since the respective dates as of which
information is given in the Registration Statement and the Prospectus, there
shall have occurred any material adverse change or any development involving a
prospective material adverse change in or affecting the condition, financial or
otherwise, of the Company or the business affairs, management, or business
prospects of the Company, whether or not arising in the ordinary course of
business, or (vii) if any foreign, federal or state statute, regulation, rule
or order of any court or other governmental authority shall have been enacted,
published, decreed or otherwise promulgated which in the judgment of the
Representatives materially and adversely affects or will materially and
adversely
22.
23
affect the business or operations of the Company, or trading in the Common
Stock shall have been suspended, or (viii) there shall have occurred a material
adverse decline in the value of securities generally on the New York Stock
Exchange, the American Stock Exchange or the Nasdaq National Market or (ix)
action shall be taken by any foreign, federal, state or local government or
agency in respect of its monetary or fiscal affairs which, in the judgment of
the Representatives, has a material adverse effect on the securities markets in
the United States. If this Agreement shall be terminated in accordance with
this Section 10, there shall be no liability of the Company to the Underwriters
and no liability of the Underwriters to the Company; provided, however, that in
the event of any such termination the Company agrees to indemnify and hold
harmless the Underwriters from all costs or expenses incident to the
performance of the obligations of the Company under this Agreement, including
all costs and expenses referred to in Section 7.
If you elect to terminate this Agreement as provided in this Section 10,
the Company shall be notified promptly by you by telephone, telecopy or
telegram, confirmed by letter.
11. REIMBURSEMENT OF CERTAIN EXPENSES.
(a) In addition to their other obligations under Section 9 of this
Agreement, the Company hereby agrees to reimburse on a quarterly basis the
Underwriters for all reasonable legal and other expenses incurred in connection
with investigating or defending any claim, action, investigation, inquiry or
other proceeding arising out of or based upon any statement or omission, or any
alleged statement or omission, described in paragraph (a) of Section 9 of this
Agreement, notwithstanding the absence of a judicial determination as to the
propriety and enforceability of the obligations under this Section 11 and the
possibility that such payments might later be held to be improper; provided,
however, that (i) to the extent any such payment is ultimately held to be
improper, the persons receiving such payments shall promptly refund them and
(ii) such persons shall provide to the Company, upon request, reasonable
assurances of their ability to effect any refund, when and if due.
(b) In addition to their other obligations under Section 9 of this
Agreement, the Underwriters hereby agree to reimburse on a quarterly basis the
Company for all reasonable legal and other expenses incurred in connection with
investigating or defending any claim, action, investigation, inquiry or other
proceeding arising out of or based upon any statement or omission, or any
alleged statement or omission, described in paragraph (b) of Section 9 of this
Agreement, notwithstanding the absence of a judicial determination as to the
propriety and enforceability of the obligations under this Section 11 and the
possibility that such payments might later be held to be improper; provided,
however, that (i) to the extent any such payment is ultimately held to be
improper, the Company shall promptly refund it and (ii) the Company shall
provide to the Underwriter, upon request, reasonable assurances of its ability
to effect any refund, when and if due.
12. PERSONS ENTITLED TO BENEFIT OF AGREEMENT. This Agreement shall inure
to the benefit of the Company and the several Underwriters and, with respect to
the provisions of Section 9 hereof, the several parties (in addition to the
Company and the several Underwriters) indemnified under the provisions of said
Section 9, and their respective personal representatives,
23.
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successors and assigns. Nothing in this Agreement is intended or shall be
construed to give to any other person, firm or corporation any legal or
equitable remedy or claim under or in respect of this Agreement or any
provision herein contained. The term "successors and assigns" as herein used
shall not include any purchaser, as such purchaser, of any of the Shares from
any of the several Underwriters.
13. NOTICES. Except as otherwise provided herein, all communications
hereunder shall be in writing or by telegraph and, if to the Underwriters,
shall be mailed, telegraphed or delivered to UBS Securities LLC, 000 Xxxx
Xxxxxx, Xxx Xxxx, XX 00000, Attention: Xx. Xxxxxxx Xxxxxxx; and if to the
Company, shall be mailed, telegraphed or delivered to it at its office, 0000
Xxxx Xxxxxxx, Xxxxx 000, Xxxxxxxxx, XX 00000, Attention: Xxxxxx X. Xxxx, Xx.
All notices given by telegraph shall be promptly confirmed by letter.
14. MISCELLANEOUS. The reimbursement, indemnification and contribution
agreements contained in this Agreement and the representations, warranties and
covenants in this Agreement shall remain in full force and effect regardless of
(i) any investigation made by or on behalf of any Underwriter or controlling
person thereof, or by or on behalf of the Company or its respective directors
of officers, and (ii) delivery of and payment for the Shares under this
Agreement.
This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
You will act as Representatives of the several Underwriters in all
dealings with the Company under this Agreement, and any action under or in
respect of this Agreement taken by you jointly or by UBS Securities LLC, as
Representatives, will be binding upon all of the Underwriters.
This Agreement shall be governed by, and construed in accordance with, the
laws of the State of New York.
[INTENTIONALLY LEFT BLANK]
24.
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Please sign and return to the Company the enclosed copies of this letter,
whereupon this letter will become a binding agreement among the Company and the
several Underwriters in accordance with its terms.
Very truly yours,
NEW ERA OF NETWORKS, INC.
By:
-----------------------------------
Xxxxxx X. Xxxx, Xx.
President and Chief Executive Officer
The foregoing Agreement
is hereby confirmed and
accepted as of the date
first above written.
UBS SECURITIES LLC
By:
--------------------------
Title:
--------------------------
XXXXX & COMPANY
By:
--------------------------
Title:
--------------------------
Acting on behalf of the several
Underwriters, including themselves,
named on Schedule A hereto.
26
SCHEDULE A
UNDERWRITERS
Number of
Shares to be
Underwriters Purchased
--------------------------------------------------------------- ------------
UBS Securities LLC.............................................
Xxxxx & Company................................................
Total [ ]
============
27
SCHEDULE B
LOCK-UP AGREEMENTS
Lock-up agreements shall be obtained from each beneficial holder of the
Company's capital stock, including, but not limited to, each holder of an
option or warrant to purchase capital stock.
28
APPENDIX A
1. OPINION OF COUNSEL TO THE COMPANY
Wilson, Sonsini, Xxxxxxxx & Xxxxxx, Professional Corporation, shall opine
to the effect that:
(a) The Company has been duly organized and is validly existing as a
corporation, and is in good standing under, the laws of the State of Delaware;
(b) The Company has the corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the
Prospectus; the Company is duly qualified to do business as a foreign
corporation and is in good standing in all jurisdictions in which the ownership
or leasing of its properties or the conduct of its business requires such
qualification, except where the failure to so qualify would not have a Material
Adverse Effect;
(c) Other than Subsidiary, the Company does not own or control,
directly or indirectly, any corporation, association or other entity.
Subsidiary has been duly incorporated and is validly existing as a corporation
in good standing under the laws of the jurisdiction of its incorporation, with
full corporate power and authority to own, lease and operate its properties and
to conduct its business as described in the Registration Statement. Each
Subsidiary is duly qualified to do business as a foreign corporation in good
standing in each jurisdiction where the ownership or leasing of the properties
or the conduct of its business requires such qualification, except where the
failure to so qualify would not have a Material Adverse Effect. All of the
outstanding shares of capital stock of Subsidiary have been duly authorized and
validly issued, are fully paid and non-assessable and, except as otherwise
stated in the Registration Statement), are owned by the Company, in each case
subject to no security interest, other encumbrance or adverse claim; to the
best of such counsel's knowledge, no options, warrants or other rights to
purchase, agreements or other obligations to issue or other rights to convert
any obligation into shares of capital stock or ownership interests in the
Subsidiaries are outstanding;
(d) Immediately prior to closing, the authorized capital stock of the
Company consisted of ____________ shares of Preferred Stock, .01 par value, of
which __________ shares are designated Series A Preferred Stock, of which
__________ shares are issued and outstanding, __________ shares are designated
Series B Preferred Stock, of which __________ shares are issued and
outstanding, and __________ shares are designated Series C Preferred Stock, of
which __________ shares are issued and outstanding, and __________ shares of
Common Stock, $.001 par value, of which _________ shares are outstanding; the
authorized shares of the Company's Common Stock have been duly authorized; the
issued and outstanding shares of the Company's capital stock have been duly
authorized and validly issued and are fully paid and nonassessable, and have
not been issued in violation of any preemptive right, co-sale right,
registration right, right of first refusal or other similar right known to such
counsel;
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(e) The Shares to be issued by the Company pursuant to this Agreement
have been duly authorized and will be, upon issuance and delivery against
payment therefor in accordance with the terms hereof, validly issued, fully
paid and nonassessable, and, to our knowledge, the stockholders of the Company
do not have any preemptive right, co-sale right, registration right, right of
first refusal or other similar right, which rights have not previously been
waived, in connection with the purchase or sale of any of the Shares;
(f) The Company has full corporate power and authority to enter into
this Agreement and to issue, sell and deliver to the Underwriters the Firm
Shares or the Option Shares, as the case may be, to be issued and sold by it
hereunder;
(g) This Agreement has been duly authorized by all necessary corporate
action on the part of the Company and has been duly 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 indemnity may be limited by
applicable laws and public policy and except as enforcement may be limited by
applicable bankruptcy, insolvency, reorganization, arrangement, moratorium or
other similar laws affecting creditors' rights, and subject to general equity
principles and to limitations on availability of equitable relief, including
specific performance;
(h) The Registration Statement has become effective under the Act and,
to our knowledge, no stop order suspending the effectiveness of the
Registration Statement or suspending or preventing the use of the Prospectus
has been issued and no proceedings for that purpose have been instituted or are
pending or threatened under the Act; any required filing of the Prospectus and
any supplement thereto pursuant to Rule 424(b) of the Rules and Regulations has
been made in the manner and within the time period required by such Rule
424(b);
(i) The Registration Statement, all Preliminary Prospectuses, the
Prospectus, and each amendment or supplement thereto (other than the financial
statements, financial data and supporting schedules included therein, as to
which such counsel need express no opinion), comply as to form in all material
respects with the requirements of the Act and the applicable Rules and
Regulations and to our knowledge, there are no agreements, contracts, leases or
documents of a character required to be described in, or filed as an exhibit
to, the Registration Statement which are not described or filed as required by
the Act and the applicable Rules and Regulations;
(j) The terms and provisions of the capital stock of the Company
conform to the description thereof contained in the Registration Statement and
the Prospectus, and the information in the Prospectus under the caption
"Description of Capital Stock", to the extent that it constitutes matters of
law or legal conclusions, has been reviewed by us and is correct, and the form
of certificate evidencing the Common Stock complies with the applicable
provisions of Delaware law;
(k) The statements in the Registration Statement and the Prospectus
summarizing statutes, rules and regulations, including the Delaware corporation
law and the description of the certificate of incorporation and bylaws are
accurate and fairly and correctly present the information required to be
presented by the Act or the Rules and Regulations in all material respects; and
such counsel does not know of any statutes, rules or regulations required to
2.
30
be described in the Registration Statement or the Prospectus that are not
described or referred to therein as required;
(l) The statements under the captions "Risk Factors - Shares Eligible
for Future Sale," "Management - Employee Benefit Plans," "Management -
Compensation Committee Interlocks and Insider Participation," "Certain
Transactions" and "Description of Capital Stock" in the Prospectus, insofar as
such statements constitute a summary of documents referred to therein or
matters of law, are accurate summaries and fairly and correctly present, in all
material respects, the information called for with respect to such documents
and matters; provided that such counsel shall be entitled to rely on
representations of the Company with respect to certain factual matters
contained in such statements, and provided further that such counsel shall
state that nothing has come to the attention of such counsel which leads them
to believe that such representations are not true and correct in all material
respects;
(m) The information required to be set forth in the Registration
Statement in answer to Items 9, 10 (insofar as it relates to us) and 11(c) of
Form S-1 is to our knowledge accurately and adequately set forth therein in all
material respects or no response is required with respect to such Items;
(n) The execution, delivery and performance of this Agreement and the
consummation of the transactions therein contemplated do not and will not (a)
conflict with or result in a breach of any of the terms or provisions of or,
constitute a default under, the certificate of incorporation, as amended (the
"Certificate of Incorporation"), or bylaws of the Company, any agreement or
document filed as an exhibit to the Registration Statement, or any statute,
rule or regulation applicable to the Company (except that no opinion need to be
expressed with respect to compliance with federal and state securities laws) or
(b) to our knowledge, result in the creation or imposition of any lien or
encumbrance upon any of the assets of the Company pursuant to the terms or
provisions of, or result in a breach or violation of any of the terms or
provisions of, or constitute a default or result in the acceleration of any
obligation under, any indenture, mortgage, deed of trust, loan agreement, bond,
debenture, note agreement, other evidence of indebtedness, lease, contract or
other agreement or instrument to which the Company is a party or by which its
property is bound or (c) to our knowledge, conflict with or result in a
violation or breach of, or constitute a default under, any applicable license,
authorization, approval, permit, judgment, franchise, order, writ or decree of
any court or governmental agency or body;
(o) The Company has the corporate power and authority to own or lease
all of the assets owned or leased by it and to conduct its business, in each
case as described in the Registration Statement and the Prospectus, except
where failure to have such power and authority would not have a Material
Adverse Effect, and has all licenses, permits, consents, orders, approvals and
authorizations of any federal or state government authority that are necessary
to conduct its business as described in the Registration Statement and the
Prospectus, except where failure to have such licenses, permits, consents,
orders, approvals and authorizations would not have a Material Adverse Effect.
3.
31
(p) No authorization, approval, consent, order, designation or
declaration of or filing by or with any governmental authority or agency is
necessary in connection with the execution and delivery of this Agreement by
the Company and the consummation of the transactions therein contemplated
except such as may have been obtained under the Act and the Rules and
Regulations or such as may be required under state securities or Blue Sky laws
or by the bylaws and rules of the NASD in connection with the purchase and
distribution of the Shares by the Underwriters;
(q) The Company is not in violation of its Certificate of Incorporation
or bylaws, and to our knowledge, the Company is not in breach of or default
with respect to any provision of any agreement, mortgage, deed of trust, lease,
franchise, license, indenture, permit or other instrument by which it or any of
its properties may be bound or affected, except where such default would not
materially adversely affect the Company and, to the best of such counsel's
knowledge, the Company is in compliance with all laws, rules, regulations,
judgments, decrees, orders and statutes of any court or jurisdiction to which
it is subject, except where noncompliance would not materially adversely affect
the Company;
(r) To our knowledge, there are no pending or threatened actions,
suits, claims, proceedings or investigations that, if successful, would have a
Material Adverse Effect or would limit, revoke, cancel, suspend, or cause not
to be renewed any existing license, certificate, registration, approval or
permit, known to us, from any state, federal, or regulatory authority that is
material to the conduct of the business of the Company as presently conducted,
or that is of a character otherwise required to be disclosed in the
Registration Statement or the Prospectus under the Act or the applicable Rules
and Regulations;
(s) To our knowledge, except as set forth in the Registration Statement
and Prospectus, no holders of shares of Common Stock or other securities of the
Company have registration rights with respect to securities of the Company and,
except as set forth in the Registration Statement and Prospectus, all holders
of securities of the Company having registration rights with respect to shares
of Common Stock or other securities have, with respect to the offering
contemplated hereby, waived such rights or such rights have otherwise been
waived or such rights have expired by reason of lapse of time following
notification of the Company's intent to file the Registration Statement.
(t) The Company will not, upon consummation of the transactions
contemplated by this Agreement, be an "investment company," or a "promoter" or
"principal underwriter" for, a "registered investment company," as such terms
are defined in the Investment Company Act of 1940, as amended;
In addition, counsel shall include a statement to the effect that such
counsel has participated in conferences with officials and other
representatives of the Company, the Representatives, Underwriters' Counsel and
the independent public accountants of the Company, at which conferences the
contents of the Registration Statement and the Prospectus and related matters
were discussed, and although they have not verified the accuracy or
completeness of the statements contained in the Registration Statement or the
Prospectus, nothing has come to the attention of such counsel which caused them
to believe that, at the time the Registration
4.
32
Statement became effective the Registration Statement (except as to financial
statements, financial and statistical data and supporting schedules contained
therein, as to which such counsel need express no opinion) 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, or
at the Closing Date or any later Option Closing Date, as the case may be, the
Registration Statement or the Prospectus (except as aforesaid) 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, in
light of the circumstances under, which they were made, not misleading.
Counsel rendering the foregoing may rely (i) as to questions of law not
involving the laws of the State of California, the United States or the General
Corporation Law of the State of Delaware upon opinions of local counsel, and
(ii) as to questions of fact upon representations or certificates of officers
of the Company and of governmental officials, as the case may be, in which case
its opinion is to state that it is so doing and that it has no actual knowledge
of any material misstatement or inaccuracy in such opinions, representations or
certificates, and that they believe that they and the Underwriters are
justified in relying on such opinions or certificates. Copies of any opinion,
representation or certificate so relied upon shall be delivered to you, as
Representatives of the Underwriters, and to Underwriters' Counsel.
5.
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APPENDIX B
OPINION OF TRADEMARK COUNSEL TO THE COMPANY
We have reviewed the statements regarding trademarks and the claims from Neon
Systems, Inc. and Neon Software, Inc. set forth in the Registration Statement
and the Prospectus under the captions "Risk Factors -- Protection of
Intellectual Property" and "Business -- Intellectual Property, Proprietary
Rights and Licenses" and such statements accurately summarize the matters
described therein. We participated in the preparation of such sections of the
Registration Statement and the Prospectus, and nothing has come to our
attention that would lead us to believe that either at the effective date of
the Registration Statement or at the date hereof such sections of the
Registration Statement and the Prospectus, or any amendment or supplement,
contained or contain any untrue statement of a material fact or omitted or omit
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading.
34
APPENDIX C
OPINION OF PATENT COUNSEL TO THE COMPANY
We have reviewed the statements regarding patents and the claim from New
Paradigm Software Corp. set forth in the Registration Statement and the
Prospectus under the captions "Risk Factors -- Protection of Intellectual
Property" and "Business -- Intellectual Property, Proprietary Rights and
Licenses" and such statements accurately summarize the matters described
therein. We participated in the preparation of such sections of the
Registration Statement and the Prospectus, and nothing has come to our
attention that would lead us to believe that either at the effective date of
the Registration Statement or at the date hereof such sections of the
Registration Statement and the Prospectus, or any amendment or supplement,
contained or contain any untrue statement of a material fact or omitted or omit
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading.
