1
3,000,000 Shares
NEW ERA OF NETWORKS, INC.
Common Stock
UNDERWRITING AGREEMENT
, 1998
---------------
UBS Securities LLC
Xxxxx & Company
BancAmerica Xxxxxxxxx Xxxxxxxx
SoundView Financial Group, Inc.
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 [1,900,000] shares of its authorized but unissued
Common Stock, $.0001 par value per share (the "Common Stock"), and the
stockholders of the Company listed on Schedule B hereto (collectively, the
"Selling Securityholders") propose to sell an aggregate of [1,100,000] shares of
Common Stock (collectively, such 3,000,000 shares of Common Stock are
hereinafter referred to as the "Firm Shares") 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 450,000
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 and the Selling Securityholders severally wish to confirm
as follows 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- __________ 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
1.
2
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 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 and
all documents incorporated by reference therein), 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 AND THE SELLING
SECURITYHOLDERS.
(a) The Company hereby represents and warrants as follows:
(i) 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
2.
3
statements which are required to be stated therein by, and will comply with the
requirements of, the Act and the Rules and Regulations, (ii) neither the
Registration Statement nor any amendment 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 and
(iii) neither the Prospectus nor any supplement thereto, will include any untrue
statement of a material fact omit to state a material fact required to be stated
therein or necessary to make the statement made therein, in light of the
circumstances under which they were made 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 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.
(ii) 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
Subsidiaries (as hereinafter defined) taken as a whole (a "Material Adverse
Effect"). Complete and correct copies of the certificates of incorporation and
of the bylaws of the Company 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. The Company has
no subsidiaries (as defined in the Rules and Regulations) other than New Era of
Networks Limited, NEON (Australia) Pty. Limited and Menhir Limited (the
"Subsidiaries"). Other than the Subsidiaries, 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.
(iii) 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, mortgage, deed of trust, loan agreement, bond, debenture,
note agreement or other evidence of indebtedness that is material to the
Company, or any lease, contract or other agreement or instrument that is
material to the Company to which the
3.
4
Company is a party or by which its properties are bound, or (ii) the certificate
of incorporation, as amended, or bylaws of the Company or (iii) any law, order,
rule, regulation, writ, injunction or decree of any court or governmental agency
or body to which the Company 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").
(iv) Other than as fairly and accurately described in the
Prospectus, there is not pending or, to the Company's knowledge, threatened, any
action, suit, claim, proceeding or investigation against the Company 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 if
determined adversely would 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.
(v) 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 to be sold by
the Company 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. The Shares to be sold by
the Selling Securityholders are duly authorized, validly issued, 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. With the
exception of the Selling Securityholders, no holder of securities of the Company
has the right to cause the Company to include such holder's securities in the
Registration Statement which right, if any, has not been expressly waived prior
to the date hereof. 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
4.
5
securities or obligations convertible into, or any contracts or commitments to
issue or sell, shares of its capital stock or any such options, 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.
(vi) 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.
(vii) 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 Subsidiaries taken as a whole, (ii)
any transaction which is material to the Company and its Subsidiaries taken as a
whole, except transactions in the ordinary course of business, (iii) any
obligation, which is material to the Company and its Subsidiary taken as a
whole, incurred by the Company or Subsidiaries, except obligations incurred in
the ordinary course of business, (iv) any change in the capital stock or
outstanding indebtedness of the Company or Subsidiaries or (v) any dividend or
distribution of any kind declared, paid or made on the capital stock of the
Company.
(viii) Except as set forth in the Prospectus, (i) the Company
and Subsidiaries have good and valid 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 which are not individually or in the aggregate material to the
Company, (ii) the agreements to which the Company is a party described in the
Prospectus are valid agreements, enforceable against the Company or Subsidiaries
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 except where the inability to enforce such agreements would
not individually or in the aggregate have a Material Adverse Effect, 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
has valid and enforceable leases for the 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.
(ix) The Company now holds 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
5.
6
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). The Company is not 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.
(x) The Company has 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 which might
have a Material Adverse Effect. All material tax liabilities are adequately
provided for within the financial statements of the Company.
(xi) The Company maintains insurance of the types and in the
amounts adequate for their business and consistent with insurance coverage
maintained by similar companies in similar businesses covering all risks
customarily insured against, all of which insurance is in full force and effect.
(xii) The Company is not involved in any labor dispute or
disturbance nor, to the knowledge of the Company, is any such dispute or
disturbance threatened.
(xiii) The Company owns or possesses 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 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 described in the Prospectus (the "Claims"). The description of the
Claims set forth in the Registration Statement does not include any untrue
statement of material fact and does not omit to state a material fact necessary
to make the statements made therein, not misleading. The Company is not aware of
any patents, trademarks or proprietary rights of others which are existing or
infringed upon by products or potential products referred to in the Prospectus
in such a manner as to have a Material Adverse Affect.
(xiv) The Company is conducting their businesses in compliance
with all of the laws, rules and regulations of the jurisdictions in which it is
conducting business except were the Company's failure to comply would not have a
Material Adverse Affect.
6.
7
(xv) 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.
(xvi) The Company has not 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.
(xvii) The Company 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.
(xviii) Neither the Company nor Subsidiaries 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.
(xix) 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. 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.
(xx) Neither the Company nor, to the Company's knowledge, the
Selling Securityholders or any of the Company's officers, directors or
affiliates has taken, and at the Closing Date and at any later Option Closing
Date, neither the Company nor the Selling Securityholders nor, to either of
their knowledge, any of the Company's officers, directors or affiliates will
have taken, directly or indirectly, any action which has constituted, or might
7.
8
reasonably be expected to constitute, the stabilization or manipulation of the
price of sale or resale of the Shares.
(xxi) 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 the Regulations. True
and complete copies of all such reports and other documents have been delivered
to you.
(b) Each of the Selling Securityholders hereby represents and warrants
as follows:
(i) Such Selling Securityholder has good and marketable title
to all of the Shares to be sold by such Selling Securityholder hereunder, free
and clear of all liens, encumbrances, equities, security interests and claims
whatsoever, with full right and authority to deliver the same hereunder,
subject, in the case of each Selling Securityholder, to the rights of First
National Bank of Boston, as Custodian (herein called the Custodian), and that
upon the delivery of and payment for such Shares hereunder, the several
Underwriters will receive good and marketable title thereto, free and clear of
all liens, encumbrances, equities, security interests and claims whatsoever.
(ii) Certificates in negotiable form for the Shares to be sold
by such Selling Securityholder have been placed in custody under a Custody
Agreement for delivery under this Agreement with the Custodian; such Selling
Securityholder specifically agrees that the Shares represented by the
certificates so held in custody for such Selling Securityholder are subject to
the interests of the several Underwriters and the Company, that the arrangements
made by such Selling securityholder for such custody, including the Power of
Attorney provided for in such Custody Agreement, are to that extent irrevocable,
and that the obligations of such Selling Securityholder shall not be terminated
by any act of such Selling Securityholder or by operation of law, whether by the
death or incapacity of such Selling Securityholder (or, in the case of a Selling
Securityholder that is not an individual, the dissolution or liquidation of such
Selling Securityholder) or the occurrence of any other event; if any such death,
incapacity, dissolution liquidation or other such event should occur before the
delivery of such Shares hereunder, certificates for such Shares shall be
delivered by the Custodian in accordance with the terms and conditions of this
Agreement as if such death, incapacity, dissolution, liquidation or other event
had not occurred, regardless of whether the Custodian shall have received notice
of such death, incapacity, dissolution, liquidation or other event.
(iii) Such Selling Securityholder has reviewed the
representations and warranties contained in this Agreement and the Registration
Statement and Prospectus. Based on the foregoing, nothing has come to the
attention of such Selling Securityholder that would lead such Selling
Securityholder to believe that (i) the representations and warranties of the
Company contained in this Agreement are not true and correct in all material
respects, (ii) on the Effective Date, the Registration Statement contained any
untrue statement of a material fact or omitted to state any material fact
required to be stated therein or necessary in order to make the statements
therein not misleading or (iii) on the Effective Date the Prospectus contained
and, on the Closing Date contains any untrue statement of a material fact or
omitted or omits to state any material
8.
9
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
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 and the
Selling Securityholders agrees to issue and sell the Firm Shares to the several
Underwriters, each Selling Securityholder agrees to sell to the several
Underwriters the number of Firm Shares set forth in Schedule B opposite the name
of such Selling Securityholder, and each of the Underwriters agrees to purchase
from the Company and the Selling Securityholders 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 the Selling Securityholders and purchased by the several
Underwriters shall be $_____ per share. The obligation of each Underwriter to
the Company and each of the Selling Securityholders shall be to purchase from
the Company and the Selling Securityholders that number of the Firm Shares which
represents the same proportion of the total number of the Firm shares to be sold
by each of the Company and the Selling Securityholders pursuant to this
Agreement as the number of the Firm Shares set forth opposite the name of such
Underwriter in Schedule A hereto represents of the total number of the Firm
Shares to be purchased by all Underwriters pursuant to this Agreement, as
adjusted by you in such manner as you deem advisable to avoid fractional shares.
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
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 and the Selling Securityholders 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
9.
10
you for purchase of such Shares and portion on the terms herein set forth. In
any such case, either you or the Company and the Selling Securityholders 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 and the Selling Securityholders
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 or the Selling
Securityholders to any non defaulting Underwriter and without any liability on
the part of any non-defaulting Underwriter to the Company or the Selling
Securityholders. 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.
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
10.
11
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, and payment for the Shares purchased from the
Selling Securityholders shall be made to the Custodian for the account of the
Selling Securityholders, 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 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.
11.
12
6. FURTHER AGREEMENTS OF THE COMPANY AND THE SELLING SECURITYHOLDERS.
Each of the Company and the Selling Securityholders covenant and agree 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 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.
12.
13
(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 three 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 to the extent required by
applicable law, and will, upon request, furnish to you and the other several
Underwriters hereunder such reports to its stockholders and copies of all other
reports (financial or other) mailed to stockholders; and 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). During such three-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.
(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 C 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, sell or
otherwise dispose of or encumber any shares of Common Stock beneficially owned
by such parties as more explicitly described in the form of Lock-Up Agreement
approved by you.
13.
14
(h) The Company shall not, during the 180 days following the
effective date of the Registration Statement, except with UBS Securities' prior
written consent, 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) Neither the Company nor any Selling Securityholder shall,
during the 180 days following the effective date of the Registration Statement,
except with UBS Securities' prior written consent, 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 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
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.
7. EXPENSES.
The Company and the Selling Securityholders agree with each Underwriter
that:
(a) The Company and the Selling Securityholders 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 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 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
14.
15
by the Company or the Selling Securityholders in connection with the performance
of its obligations hereunder. The Selling Securityholders will pay any transfer
taxes incident to the transfer to the Underwriters of the Shares being sold by
the Selling Securityholders.
(b) If the transactions contemplated hereby are not
consummated by reason of any failure or refusal on the part of the Company and
the Selling Securityholders to perform any agreement on its part to be performed
hereunder or to fulfill any condition of the Underwriters' obligations
hereunder, the Company and the Selling Securityholders 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. Neither the Company
nor the Selling Securityholders will in any event be liable to any of the
several Underwriters for any loss of anticipated profits from the sale by them
of the Shares.
(c) The provisions of paragraphs (a) and (b) of this Section
are intended to relieve the Underwriters from the payment of the expenses and
costs which the Company and the Selling Securityholders hereby agree to pay and
shall not affect any agreement which the Company and the Selling Securityholders
make, or may have made, for the sharing of any such expenses and costs.
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 and the Selling
Securityholders herein, to the performance by the Company and the Selling
Securityholders 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.
16
(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
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, Professional Corporation, 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
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, 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. Such counsel shall state the specific items reviewed by
such counsel and may rely upon the opinion of Xxxxxx & Xxxxxxxx; provided, that,
such counsel state that it is reasonable for them to rely on such opinion.
(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
16.
17
deemed necessary in 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.
17.
18
(i) The Company and the Selling Securityholders 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
and the Selling Securityholders herein, as to the performance by the Company and
the Selling Securityholders of their 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 or the Selling Securityholders, as the
case may be, 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 and the Selling Securityholders severally agree 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
and the Selling Securityholders severally agree 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) reasonably 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
and the Selling Securityholders 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, (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
18.
19
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 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 and (3) each Selling Securityholder shall only be liable under this
paragraph with respect to information pertaining to such Selling Securityholder
furnished by or on behalf of such Selling Securityholder expressly for use in
any Preliminary Prospectus or the Registration Statement or the Prospectus or
any such amendment thereof or supplement thereto. The indemnity agreements of
the Company and the Selling Securityholders contained in this paragraph (a) and
the representations and warranties of the Company and the Selling
Securityholders 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) reasonably 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
19.
20
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
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,
20.
21
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.
(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 and the Selling Securityholders, 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 Selling Securityholders 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
21.
22
may have hereunder or otherwise (except as specifically provided in paragraph
(c) of this Section 9).
(e) Neither the Company nor the Selling Securityholders will,
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.
(g) The liability of each Selling Securityholder under such
Selling Securityholder's representations and warranties contained in Section 2
hereof and under the indemnity and reimbursement agreements contained in the
provisions of this Section 9 and Section 11 hereof shall be limited to an amount
equal to the initial public offering price of the stock sold by such Selling
Securityholder to the Underwriters; provided, that, no Selling Securityholder
shall be required to provide indemnification hereunder until the Underwriters or
controlling persons seeking indemnification shall have first made a written
demand for payment on the Company with respect to any loss, claim, damage or
liability and the Company shall have either rejected such demand or failed to
make such requested payment within sixty (60) days after receipt thereof. In the
event that the Company rejects any such demand or fails to make any such
requested payment, the Underwriters or controlling persons seeking
indemnification agree to concurrently make demand for indemnification against
all Selling Securityholders; provided, that, such Underwriters or controlling
persons shall have sole discretion as to whether to take any further action
against any Selling Securityholder and no failure by an Underwriter or
controlling person to take further action against a Selling Securityholder shall
prejudice such Underwriter's or controlling person's rights with respect to
other Selling Securityholders. The Company and the Selling Securityholders may
agree, as among themselves and without limiting the rights of the Underwriters
under this Agreement, as to the respective amounts of such liability for which
they each shall be responsible.
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, by giving written notice to the Company and the Selling
Securityholders (i) if the Company or the Selling Securityholders 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
22.
23
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 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 reasonable 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 and the Selling Securityholders hereby agree 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
23.
24
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 and the Selling Securityholders 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 and the Selling Securityholders
shall promptly refund it and (ii) the Company and the Selling Securityholders
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 Selling Securityholders and the
several Underwriters and, with respect to the provisions of Section 9 hereof,
the several parties (in addition to the Company and the Selling Securityholders
and the several Underwriters) indemnified under the provisions of said Section
9, and their respective personal representatives, 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.
24.
25
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, as Representatives, or by UBS
Securities LLC 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 California.
[INTENTIONALLY LEFT BLANK]
25.
26
Please sign and return to the Company and to the Selling Securityholders the
enclosed copies of this letter, whereupon this letter will become a binding
agreement among the Company, the Selling Securityholders 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
SELLING SECURITYHOLDERS
[List Names]
By:
----------------------------------
[Attorney-in-Fact]
The foregoing Agreement
is hereby confirmed and
accepted as of the date
first above written.
UBS SECURITIES LLC
XXXXX & COMPANY
BANCAMERICA XXXXXXXXX XXXXXXXX
SOUNDVIEW FINANCIAL GROUP, INC.
As Representatives of the
several Underwriters
By: UBS SECURITIES LLC
By:
----------------------------------
Title:
Acting on behalf of the several
Underwriters, including themselves,
named on Schedule A hereto.
27
SCHEDULE A
UNDERWRITERS
Number of
Shares to be
Underwriters Purchased
---------------------------------------------------------- -------------------
UBS Securities LLC........................................
Xxxxx & Company...........................................
BancAmerica Xxxxxxxxx Xxxxxxxx............................
SoundView Financial Group, Inc............................
Total 3,000,000
===================
28
SCHEDULE B
SELLING SECURITYHOLDERS
Name and Address of Key Selling Securityholder Number of Shares to be Sold
---------------------------------------------- ---------------------------
29
APPENDIX A
1. OPINION OF COUNSEL TO THE COMPANY AND THE SELLING SECURITYHOLDERS
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) The authorized, issued and outstanding shares of capital
stock of the Company is as set forth under the caption "Capitalization" in the
Prospectus as of each date stated therein; 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 which has not been subsequently cured
or waived;
(d) 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;
(e) 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;
(f) 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;
(g) The Registration Statement, 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
30
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;
(h) The form of certificate evidencing the Common Stock
complies with the applicable provisions of Delaware law;
(i) 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
be described in the Registration Statement or the Prospectus that are not
described or referred to therein as required;
(j) The statements under the captions "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 or legal
conclusions, are accurate summaries 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;
(k) 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 known to us which is 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 approval,
permit, judgment, order, writ or decree of any court or governmental agency or
body;
(l) 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.
2.
31
(m) 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 Selling Securityholders 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;
(n) 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 filed as
an exhibit to the Registration Statement by which it or any of its properties
may be bound or affected, except where such default would not materially
adversely affect the Company;
(o) 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 that is not so disclosed;
(p) 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; and
(q) The Company will not, upon consummation of the
transactions contemplated by this Agreement, be an "investment company," or
controlled by an "investment company" as such term is defined in the Investment
Company Act of 1940, as amended.
(r) Good and marketable title to the shares of the Shares sold
by the Selling Securityholders under the Agreement, free and clear of all liens,
encumbrances, equities, security interests and claims, have been transferred to
the Underwriters who have severally purchased such shares under the Agreement,
assuming for the purpose of this opinion that the Underwriters purchased the
same in good faith without notice of any adverse claims;
(s) Based insofar as factual matters are concerned solely upon
certificates of the Selling Securityholders, the accuracy of which we have no
reason to question, (A) the Agreement has been duly executed and delivered by or
on behalf of each of the Selling Securityholders and First National Bank of
Boston as Custodian, and the Power of Attorney referred to in such Custody
Agreement have been duly executed and delivered by such Selling
3.
32
Securityholder; (C) the Custody Agreement entered into by, and the Power of
Attorney given by, such Selling Securityholder is valid and binding on such
Selling Securityholder; and (D) each Selling Securityholder has full legal right
and authority to enter into the Agreement and to sell, transfer and deliver in
the manner provided in the Agreement the Shares sold by such Selling
Securityholder hereunder.
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 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.
4.
33
APPENDIX B
OPINION OF TRADEMARK COUNSEL TO THE COMPANY
We have reviewed the statements regarding trademark 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. 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, patent claims 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. 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.
35
SCHEDULE C
LOCK-UP AGREEMENTS
Lock-up agreements shall be obtained from all officers and directors of the
Company, each beneficial holder of the Company's capital stock and each holder
of an option or warrant to purchase in excess of ten thousand (10,000) shares of
the Company's capital stock.
