EXHIBIT 1.1
[ ] SHARES
NETGEAR, INC.
COMMON STOCK
UNDERWRITING AGREEMENT
[ ], 2004
XXXXXX BROTHERS INC.
XXXXXXX, SACHS & CO.
XXXXXXX & COMPANY, INC.
JMP SECURITIES LLC
PACIFIC GROWTH EQUITIES, LLC
As Representatives of the several
Underwriters named in Schedule 1,
c/x Xxxxxx Brothers Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Dear Sirs:
Certain stockholders of NETGEAR, Inc., a Delaware corporation (the
"COMPANY") named in Schedule 2 hereto (the "SELLING STOCKHOLDERS") propose to
sell an aggregate of [ ] shares (the "FIRM STOCK")of the Company's Common Stock,
par value $0.001 per share (the "COMMON STOCK").
It is understood that, subject to the conditions hereinafter stated, [
] shares of the Firm Stock will be sold to the several Underwriters named in
Schedule 1 hereto (the "UNDERWRITERS") in connection with the offering and sale
of such Firm Stock. Xxxxxx Brothers Inc., Xxxxxxx, Sachs & Co., Xxxxxxx &
Company, Inc., JMP Securities LLC and Pacific Growth Equities, LLC shall act as
representatives (the "REPRESENTATIVES") of the several Underwriters.
In addition, the Selling Stockholders (the "OPTION SELLING
STOCKHOLDERS") propose to grant to the Underwriters an option to purchase up to
an aggregate of an additional [ ] shares of the Common Stock (the "OPTION
Stock"), as set forth more specifically in Section 3 of this Agreement. The Firm
Stock and the Option Stock, if purchased, are hereinafter collectively called
the "STOCK." This is to confirm the agreement concerning the purchase of the
Stock from the Selling Stockholders by the Underwriters.
1. Representations, Warranties and Agreements of the Company. The
Company represents, warrants and agrees that:
(a) A registration statement on Form S-1, and amendments
hereto, with respect to the Company, the Selling Stockholders and the
Stock has (i) been prepared by the Company in conformity with the
requirements of the Securities Act of 1933, as amended (the "SECURITIES
ACT") and the rules and regulations (the "RULES AND REGULATIONS") of
the Securities and Exchange Commission (the "COMMISSION") thereunder,
(ii) been filed with the Commission under the Securities Act and (iii)
become effective under the Securities Act. Copies of such registration
statement and each of the amendments thereto have been delivered by the
Company to you as the Representatives. As used in this Agreement,
"EFFECTIVE TIME" means the date and the time as of which such
registration statement, or the most recent post-effective amendment
thereto, if any, was declared effective by the Commission; "EFFECTIVE
DATE" means the date of the Effective Time; "PRELIMINARY PROSPECTUS"
means each prospectus included in such registration statement, or
amendments thereof, before it became effective under the Securities Act
and any prospectus filed with the Commission by the Company with the
consent of the Representatives pursuant to Rule 424(a) of the Rules and
Regulations; "REGISTRATION STATEMENT" means such registration
statement, as amended at the Effective Time, including all information
contained in the final prospectus filed with the Commission pursuant to
Rule 424(b) of the Rules and Regulations and deemed to be a part of the
registration statement as of the Effective Time pursuant to Rule 430A
of the Rules and Regulations; and "PROSPECTUS" means the prospectus in
the form first used to confirm sales of Stock. If the Company has filed
an abbreviated registration statement to register additional shares of
Common Stock pursuant to Rule 462(b) under the Securities Act (the
"RULE 462 REGISTRATION STATEMENT"), then any reference herein to the
term "Registration Statement" shall be deemed to include such Rule 462
Registration Statement. The Commission has not issued any order
preventing or suspending the use of any Preliminary Prospectus.
(b) The Registration Statement conforms, and the Prospectus
and any further amendments or supplements to the Registration Statement
or the Prospectus will, when they become effective or are filed with
the Commission, as the case may be, conform in all material respects to
the requirements of the Securities Act and the Rules and Regulations
and the Registration Statement and any amendment thereto does not and
will not, as of the applicable effective date, contain an untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading, and the Prospectus and any amendment or supplement thereto
will not, as of the applicable filing date and each Delivery Date
contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein, in light of the
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circumstances under which they were made, not misleading; provided that
no representation or warranty is made as to information contained in or
omitted from the Registration Statement or the Prospectus in reliance
upon and in conformity with written information furnished to the
Company through the Representatives by or on behalf of any Underwriter
specifically for inclusion therein.
(c) The Company and each of its subsidiaries (as defined in
Section 17) have been duly incorporated or organized and are validly
existing as corporations or partnerships, as the case may be, in good
standing under the laws of their respective jurisdictions of
incorporation, are duly qualified to do business and are in good
standing as foreign corporations or partnerships in each jurisdiction
in which their respective ownership or lease of property or the conduct
of their respective businesses requires such qualification, and have
all power and authority necessary to own or hold their respective
properties and to conduct the businesses in which they are engaged; and
none of the subsidiaries of the Company other than Netgear
International, Inc. and Netgear Deutschland GmbH is a "significant
subsidiary," as such term is defined in Rule 405 of the Rules and
Regulations.
(d) The Company has an authorized capitalization as set forth
in the Prospectus, and all of the issued shares of capital stock of the
Company (including the Stock being sold hereunder by the Selling
Stockholders) have been duly and validly authorized and issued, are
fully paid and non-assessable and conform to the description thereof
contained in the Prospectus. All of the issued shares of capital stock
of each subsidiary of the Company that is a corporation, and all of the
partnership interests of each subsidiary of the Company that is a
partnership have been duly and validly authorized and issued and are
fully paid and non-assessable and are owned directly or indirectly by
the Company, free and clear of all liens, encumbrances, equities or
claims. Except as set forth in the Prospectus, no options, warrants or
other rights to purchase, agreements or other obligations to issue, or
rights to convert any obligations into or exchange any securities for,
shares of capital stock of or ownership interests in the Company are
outstanding as of the date set forth therein. All options, warrants and
other rights to purchase shares of capital stock in the Company have
been duly and validly authorized and issued, were issued in compliance
with federal and state securities laws, including, but not limited to,
compliance with the California Corporations Code, and conform to the
description thereof contained in the Prospectus.
(e) This Agreement has been duly authorized, executed and
delivered by the Company.
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(f) The execution, delivery and performance of this Agreement
by the Company and the consummation of the transactions contemplated
hereby will not conflict with or result in a breach or violation of any
of the terms or provisions of, or constitute a default under, any
indenture, mortgage, deed of trust, loan agreement or other agreement
or instrument to which the Company or any of its subsidiaries is a
party or by which the Company or any of its subsidiaries is bound or to
which any of the property or assets of the Company or any of its
subsidiaries is subject except for such conflicts, breaches, violations
or defaults that would not have or be reasonably expected to have,
individually or in the aggregate, a material adverse effect on the
general affairs, management, consolidated financial position,
stockholders' equity, results of operations, business or prospects of
the Company and its subsidiaries, nor will such actions result in any
violation of the provisions of the charter or by-laws or other
constitutional document of the Company or any of its subsidiaries or
any statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Company or any
of its subsidiaries or any of their properties or assets; and except
for the registration of the Stock under the Securities Act and such
consents, approvals, authorizations, registrations or qualifications as
may be required under the Securities Exchange Act of 1934, as amended
(the "EXCHANGE ACT") and applicable state or foreign securities laws in
connection with the purchase and distribution of the Stock by the
Underwriters, no consent, approval, authorization or order of, or
filing or registration with, any such court or governmental agency or
body is required for the execution, delivery and performance of this
Agreement, by the Company and the consummation of the transactions
contemplated hereby.
(g) There are no contracts, agreements or understandings
between the Company and any person granting such person the right
(other than rights which have been waived or satisfied) to require the
Company to include such securities in the securities registered
pursuant to the Registration Statement. Except as described in the
Prospectus, there are no contracts, agreements or understandings
between the Company and any person granting such person the right to
require the Company to file a registration statement under the
Securities Act with respect to any securities of the Company owned or
to be owned by such person or to require the Company to include such
securities in any securities being registered pursuant to any other
registration statement filed by the Company under the Securities Act.
The holders of outstanding shares of the Company's capital stock are
not entitled to preemptive or other rights to subscribe for the Stock.
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(h) The Company has not sold or issued any shares of Common
Stock during the six-month period preceding the date of the Prospectus,
including any sales pursuant to Rule 144A under, or Regulations D or S
of, the Securities Act, other than shares issued pursuant to employee
benefit plans, qualified stock options plans or other employee
compensation plans or pursuant to outstanding options, rights or
warrants.
(i) Neither the Company nor any of its subsidiaries has
sustained, since the date of the latest audited financial statements
included in the Prospectus, any material loss or interference with its
business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or
governmental action, order or decree, otherwise than as set forth or
contemplated in the Prospectus; and, since such date, there has not
been any change in the capital stock or long-term debt of the Company
or any of its subsidiaries or any material adverse change, or any
development involving a prospective material adverse change, in or
affecting the general affairs, management, consolidated financial
position, stockholders' equity, results of operations, business or
prospects of the Company and its subsidiaries, otherwise than as set
forth or contemplated in the Prospectus.
(j) The financial statements (including the related notes and
supporting schedules) filed as part of the Registration Statement or
included in the Prospectus present fairly the financial condition and
results of operations of the entities purported to be shown thereby, at
the dates and for the periods indicated, and have been prepared in
conformity with generally accepted accounting principles applied on a
consistent basis throughout the periods involved.
(k) PricewaterhouseCoopers LLP, who has certified certain
financial statements of the Company, whose reports appear in the
Prospectus and who has delivered the initial letters referred to in
Section 9(h) hereof, are independent public accountants as required by
the Securities Act and the Rules and Regulations. Except as described
in the Prospectus and as preapproved in accordance with the
requirements set forth in Section 10A of the Exchange Act,
Pricewaterhousecoopers LLP has not engaged in any "prohibited
activities" (as defined in Section 10A of the Exchange Act) on behalf
of the Company.
(l) The Company and each of its subsidiaries have good and
marketable title in fee simple to all real property and good and
marketable title to all personal property owned by them, in each case
free and clear of all liens, encumbrances and defects except such as do
not materially affect the value of such property and do not materially
interfere with the use made and proposed to be made of such property by
the Company and its
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subsidiaries; and all assets held under lease by the Company and its
subsidiaries are held by them under valid, subsisting and enforceable
leases, with such exceptions as are not material and do not interfere
with the use made and proposed to be made of such property and
buildings by the Company and its subsidiaries.
(m) The Company and each of its subsidiaries carry, or are
covered by, insurance in such amounts and covering such risks as is
adequate for the conduct of their respective businesses and the value
of their respective properties and as is customary for companies
engaged in similar businesses in similar industries.
(n) Except as set forth in the Prospectus, the Company and
each of its subsidiaries own or possess adequate rights to use all
material patents, patent applications, trademarks, service marks, trade
names, trademark registrations, service xxxx registrations, copyrights,
inventions, trade secrets, know-how, mask work rights and other
intellectual property (collectively, the "INTELLECTUAL PROPERTY")
necessary for the conduct of their respective businesses, and the
conduct of their respective businesses will not infringe or violate,
and there has been no receipt of any notice of any claim of
infringement or violation of, any such rights of others. Except as set
forth in the Prospectus, or as would not, individually or in the
aggregate have a material adverse effect on the general affairs,
management, consolidated financial position, stockholders' equity,
results of operations, business or prospects of the Company and its
subsidiaries (a) there is, to the best of the Company's knowledge, no
material infringement by third parties of any such Intellectual
Property; (b) there is no pending or, to the Company's knowledge,
threatened action, suit, proceeding or claim by others challenging the
Company's rights in or to any such Intellectual Property, and the
Company is unaware of any facts which would form a reasonable basis for
any such claim; (c) there is no pending or, to the Company's knowledge,
threatened action, suit, proceeding or claim by others challenging the
validity of any such Intellectual Property, and the Company is unaware
of any facts which would form a reasonable basis for any such claim;
(d) there is no pending or, to the Company's knowledge, threatened
action, suit, proceeding or claim by others that the Company infringes
or otherwise violates any patent, trademark, copyright, trade secret or
other proprietary rights of others, and the Company is unaware of any
other fact which would form a reasonable basis for any such claim; (e)
there is no U.S. patent or published U.S. patent application which
contains claims that dominate or may dominate any Intellectual Property
described in the Prospectus as being owned by or licensed to the
Company or that interferes with the issued or pending claims of any
such Intellectual Property; and (f) there is no prior art of which the
Company is aware that is likely to render any
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U.S. patent held by the Company invalid or any U.S. patent application
held by the Company unpatentable which has not been disclosed to the
U.S. Patent and Trademark Office.
(o) Except as set forth in the Prospectus, there are no legal
or governmental proceedings pending to which the Company or any of its
subsidiaries is a party or of which any property or assets of the
Company or any of its subsidiaries is the subject which, if determined
adversely to the Company or any of its subsidiaries, would reasonably
be expected to have a material adverse effect on the general affairs,
management, consolidated financial position, stockholders' equity,
results of operations, business or prospects of the Company and its
subsidiaries; and to the best of the Company's knowledge, no such
proceedings are threatened or contemplated by governmental authorities
or threatened by others.
(p) There are no contracts or other documents which are
required to be described in the Prospectus or filed as exhibits to the
Registration Statement by the Securities Act or by the Rules and
Regulations which have not been described in the Prospectus or filed as
exhibits to the Registration Statement.
(q) No relationship, direct or indirect, exists between or
among the Company or any subsidiary on the one hand, and the directors,
officers, stockholders, customers or suppliers of the Company on the
other hand, which is required to be described in the Prospectus which
is not so described. The Company has not, directly or indirectly,
including through any subsidiary, extended or maintained credit, or
arranged for the extension of credit, or renewed an extension of
credit, in the form of a personal loan to or for any of its directors
or executive officers.
(r) No labor disturbance by the employees of the Company or
any of its subsidiaries exists or, to the knowledge of the Company, is
imminent which might be expected to have a material adverse effect on
the general affairs, management, consolidated financial position,
stockholders' equity, results of operations, business or prospects of
the Company and its subsidiaries.
(s) Each Company "employee benefit plan" within the meaning of
the Employee Retirement Income Security Act of 1974, as amended,
including the regulations and published interpretations thereunder
("ERISA") has been established and maintained in all material respects
in accordance with ERISA; no "reportable event" (as defined in ERISA)
has occurred with respect to any "pension plan" (as defined in ERISA)
for which the Company would have any material liability; the Company
has not incurred and does not reasonably expect to incur material
liability under (i) Title IV of ERISA with respect to termination
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of, or withdrawal from, any "pension plan" or (ii) Sections 412 or 4971
of the Internal Revenue Code of 1986, as amended, including the
regulations and published interpretations thereunder (the "CODE"); and
each "pension plan" for which the Company would have any liability that
is intended to be qualified under Section 401(a) of the Code has
received a favorable determination, notification, advisory and/or
opinion letter with respect to such status from the Internal Revenue
Service (the "IRS") or has time remaining to apply under applicable
Treasury Regulation or IRS pronouncement for a determination,
notification, advisory and/or opinion letter and to make any necessary
amendments, and nothing has occurred, whether by action or by failure
to act, which would reasonably be expected to cause the loss of such
qualification.
(t) The Company has filed all federal, state and local income
and franchise tax returns required to be filed through the date hereof
and has paid all taxes due thereon, and no tax deficiency has been
determined adversely to the Company or any of its subsidiaries which
has had (nor does the Company have any knowledge of any tax deficiency
which, if determined adversely to the Company or any of its
subsidiaries, might have a material adverse effect on the general
affairs, management, consolidated financial position, stockholders'
equity, results of operations, business or prospects of the Company and
its subsidiaries.
(u) Since the date as of which information is given in the
Prospectus through the date hereof, and except as may otherwise be
disclosed in the Prospectus, the Company has not (i) issued or granted
any securities, (ii) incurred any liability or obligation, direct or
contingent, other than non-material liabilities and obligations which
were incurred in the ordinary course of business, (iii) entered into
any transaction not in the ordinary course of business or (iv) declared
or paid any dividend on its capital stock.
(v) The Company and its subsidiaries (i) make and keep
accurate books and records and (ii) maintain internal accounting
controls which provide reasonable assurance that (A) transactions are
executed in accordance with management's authorization, (B)
transactions are recorded as necessary to permit preparation of its
financial statements and to maintain accountability for its assets, (C)
access to its assets is permitted only in accordance with management's
authorization and (D) the reported accountability for its assets is
compared with existing assets at reasonable intervals.
(w) Neither the Company nor any of its subsidiaries (i) is in
violation of its charter or by-laws or other constitutional document,
(ii) is in default in any material respect, and no event has occurred
which, with notice or lapse of time or both, would constitute such a
default, in the due
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performance or observance of any term, covenant or condition contained
in any material indenture, mortgage, deed of trust, loan agreement or
other agreement or instrument to which it is a party or by which it is
bound or to which any of its properties or assets is subject, and
which, individually or in the aggregate, would or would reasonably be
expected to have a material adverse effect on the general affairs,
management, consolidated financial position, stockholders' equity,
results of operations, business or prospects of the Company and its
subsidiaries or (iii) is in violation of any law, ordinance,
governmental rule, regulation or court decree to which it or its
property or assets may be subject or has failed to obtain any material
license, permit, certificate, franchise or other governmental
authorization or permit necessary to the ownership of its property or
to the conduct of its business, where such violation or failure would
have or would reasonably be expected to have, individually or in the
aggregate, a material adverse effect on the general affairs,
management, consolidated financial position, stockholders' equity,
results of operations, business or prospects of the Company and its
subsidiaries.
(x) Neither the Company nor any of its subsidiaries, nor any
director, officer, agent, employee or other person associated with or
acting on behalf of the Company or any of its subsidiaries, has used
any corporate funds for any unlawful contribution, gift, entertainment
or other unlawful expense relating to political activity; made any
direct or indirect unlawful payment to any foreign or domestic
government official or employee from corporate funds; violated or is in
violation of any provision of the Foreign Corrupt Practices Act of
1977; or made any bribe, rebate, payoff, influence payment, kickback or
other unlawful payment.
(y) There has been no storage, disposal, generation,
manufacture, refinement, transportation, handling or treatment of toxic
wastes, medical wastes, hazardous wastes or hazardous substances by the
Company or any of its subsidiaries (or, to the knowledge of the
Company, any of their predecessors in interest) at, upon or from any of
the property now or previously owned or leased by the Company or its
subsidiaries in violation of any applicable law, ordinance, rule,
regulation, order, judgment, decree or permit or which would require
remedial action under any applicable law, ordinance, rule, regulation,
order, judgment, decree or permit, except for any violation or remedial
action which would not have, or could not be reasonably likely to have,
singularly or in the aggregate with all such violations and remedial
actions, a material adverse effect on the general affairs, management,
consolidated financial position, stockholders' equity, results of
operations, business or prospects of the Company and its subsidiaries;
there has been no material spill, discharge, leak, emission, injection,
escape, dumping or release of any kind onto such property or into the
environment surrounding such property of any toxic
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wastes, medical wastes, solid wastes, hazardous wastes or hazardous
substances due to or caused by the Company or any of its subsidiaries
or with respect to which the Company or any of its subsidiaries have
knowledge, except for any such spill, discharge, leak, emission,
injection, escape, dumping or release which would not have or would not
be reasonably likely to have, singularly or in the aggregate with all
such spills, discharges, leaks, emissions, injections, escapes,
dumpings and releases, a material adverse effect on the general
affairs, management, consolidated financial position, stockholders'
equity, results of operations, business or prospects of the Company and
its subsidiaries; and the terms "hazardous wastes," "toxic wastes,"
"hazardous substances" and "medical wastes" shall have the meanings
specified in any applicable local, state, federal and foreign laws or
regulations with respect to environmental protection.
(z) Neither the Company nor any subsidiary is, or, as of the
Delivery Date (as defined in Section 5 hereof) after giving effect to
the offering and sale of the Stock will be, an "investment company"
within the meaning of such term under the Investment Company Act of
1940, as amended.
(aa) The Company has established and maintains disclosure
controls and procedures (as such term is defined in Rule 13a-15 under
the Exchange Act), which (i) are designed to ensure that material
information relating to the Company, including its consolidated
subsidiaries, is made known to the Company's principal executive
officer and its principal financial officer by others within those
entities, particularly during the periods in which the periodic reports
required under the Exchange Act are being prepared; (ii) provide for
the periodic evaluation of the effectiveness of such disclosure
controls and procedures as of the end of the period covered by the
Company's most recent annual or quarterly report filed with the
Commission; and (iii) are effective in all material respects to perform
the functions for which they were established.
(bb) Based on the evaluation of its disclosure controls and
procedures, the Company is not aware of (i) any significant deficiency
in the design or operation of internal controls which could adversely
affect the Company's ability to record, process, summarize and report
financial data or any material weakness in internal controls; or (ii)
any fraud, whether or not material, that involves management or other
employees who have a significant role in the Company's internal
controls.
(cc) Since the date of the most recent evaluation of such
disclosure controls and procedures, there has been no change in
internal control over financial reporting that occurred during the most
recent fiscal quarter included in the Prospectus that has materially
affected, or is
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reasonably likely to materially affect, the Company's internal control
over financial reporting, including any corrective actions with regard
to significant deficiencies and material weaknesses.
(dd) Except as described in the Prospectus, there are no
material off-balance sheet transactions, arrangements, obligations
(including contingent obligations), or any other relationships with
unconsolidated entities or other persons, that may have a material
current or future effect on the Company's financial condition, changes
in financial condition, results of operations, liquidity, capital
expenditures, capital resources, or significant components of revenues
or expenses.
(ee) There are no contracts, agreements or understandings
between the Company and any person that would give rise to a valid
claim against the Company or any Underwriter for a brokerage
commission, finder's fee or the like payment in connection with this
offering.
(ff) The statistical and market-related data included in the
Prospectus and the Registration Statement are based on or derived from
sources which the Company believes to be reliable and accurate.
(gg) The Company's Board of Directors has validly appointed an
audit committee whose composition satisfies the requirements of Rule
4350(d)(2) of the Rules of the National Association of Securities
Dealers, Inc. (the "NASD RULES") and the Board of Directors and/or the
audit committee has adopted a charter that satisfies the requirements
of Rule 4350(d)(1) of the NASD Rules. The audit committee has reviewed
the adequacy of its charter within the past twelve months. Neither the
Board of Directors nor the audit committee has been informed, nor is
any director of the Company aware, of (1) any significant deficiencies
in the design or operation of the Company's internal controls which
could adversely affect the Company's ability to record, process,
summarize and report financial data or any material weakness in the
Company's internal controls; or (2) any fraud, whether or not material,
that involves management or other employees of the Company who have a
significant role in the Company's internal controls.
(hh) There is and has been no failure on the part of the
Company and any of the Company's officers or directors, in their
capacities as such, to comply with any applicable provisions of the
Sarbanes Oxley Act of 2002 and the rules and regulations promulgated in
connection therewith.
Each certificate signed by any officer of the Company and delivered to
the Underwriters or counsel to the Underwriters shall be deemed to be a
representation and warranty by the Company to the Underwriters as to the matters
covered thereby.
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2. Representations, Warranties and Agreements of the Selling
Stockholders. Each Selling Stockholder, severally and not jointly, represents,
warrants and agrees that:
(a) The Selling Stockholder has and immediately prior to the
applicable Delivery Date (as defined in Section 5) the Selling
Stockholder will have good and valid title to the Stock to be sold by
the Selling Stockholder hereunder on such date, free and clear of all
liens, encumbrances, equities or claims (except for such claims as may
arise under this Agreement or the Irrevocable Power of Attorney and
Custody Agreement entered into in connection herewith); and upon
delivery of such shares and payment therefor pursuant hereto, good and
valid title to such shares, free and clear of all liens, encumbrances,
equities or claims, will pass to the several Underwriters.
(b) The Selling Stockholder has placed in custody under an
Irrevocable Power of Attorney and Custody Agreement (the "CUSTODY
AGREEMENT" and, together with all other similar agreements executed by
the other Selling Stockholders, the "CUSTODY AGREEMENTS") with
Computershare Trust Company, Inc., as custodian (the "CUSTODIAN"), for
delivery under this Agreement, certificates representing the Stock, to
be sold by the Selling Stockholder hereunder.
(c) The Selling Stockholder has duly and irrevocably executed
and delivered a power of attorney (the "POWER OF ATTORNEY" and,
together with all other similar instruments executed by the other
Selling Stockholders, the "POWERS OF ATTORNEY"), contained within the
Custody Agreement, appointing the persons named therein as
attorneys-in-fact, with full power of substitution, and with full
authority (exercisable by any one or more of them) to execute and
deliver this Agreement on such Selling Stockholder's behalf and to take
such other action as may be necessary or desirable to carry out the
provisions hereof on behalf of the Selling Stockholder.
(d) The Selling Stockholder has full right, power and
authority to enter into this Agreement and the Custody Agreement and
the execution, delivery and performance of this Agreement and the
Custody Agreement by the Selling Stockholder and the consummation by
the Selling Stockholder of the transactions contemplated hereby and
thereby will not conflict with or result in a breach or violation of
any of the terms or provisions of, or constitute a default under, any
indenture, mortgage, deed of trust, loan agreement or other agreement
or instrument to which the Selling Stockholder is a party or by which
the Selling Stockholder is bound or to which any of the property or
assets of the Selling Stockholder is subject, nor, for each Selling
Stockholder that is not a natural person, will such actions result in
any violation of the provisions of any
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partnership or limited liability company agreement, certificate of
incorporation, by-laws, operating agreement, deed of trust or other
similar agreement or organizational document of the Selling Stockholder
or any statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Selling
Stockholder or the property or assets of the Selling Stockholder; and
except for the registration of the Stock under the Securities Act and
such consents, approvals, authorizations, registrations or
qualifications as may be required under the Exchange Act and applicable
state securities laws in connection with the purchase and distribution
of the Stock by the Underwriters, no consent, approval, authorization
or order of, or filing or registration with, any such court or
governmental agency or body is required for the execution, delivery and
performance of this Agreement or the Custody Agreement by the Selling
Stockholder and the consummation of the transactions contemplated
hereby and thereby.
(e) On the Effective Date and at the time and date of
execution and delivery of this Agreement, the Registration Statement
did not or will not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or
necessary in order to make the statements therein not misleading, and
on the Effective Time, the Prospectus, if not filed pursuant to Rule
424(b), will not and on the date any filing pursuant to Rule 424(b) and
on any Delivery Date (as defined in Section 5 hereof) and any
settlement date, the Prospectus (together with any supplement or
amendment thereto) will not, include any untrue statement of a material
fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading.
(f) The Selling Stockholder has not taken and will not take,
directly or indirectly, any action (i) designed to or which has
constituted or which might reasonably be expected to cause or result in
the stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Stock or (ii)
prohibited by Regulation M under the Securities Act.
(g) The Selling Stockholder has carefully reviewed the
Registration Statement and the Prospectus and is not prompted to sell
shares of Common Stock by any material information concerning the
Company or any of its subsidiaries that is not set forth in the
Registration Statement and the Prospectus or any supplement thereto.
(h) This Agreement has been duly authorized, executed and
delivered by or on behalf of the Selling Stockholder.
13
(i) The Selling Stockholder has no actual knowledge (without
independent inquiry or investigation) that the representations and
warranties of the Company contained in this Section 2 are not true and
correct and if the Selling Stockholder is an executive officer or
director of the Company, is familiar with the Registration Statement
and (without independent inquiry or investigation) has no knowledge of
any material fact, condition or information not disclosed in the
Prospectus or any supplement thereto which has adversely affected or
may adversely affect the business of the Company or any of its
subsidiaries.
(j) The Selling Stockholder does not have any registration or
other similar rights to have any equity or debt securities registered
for sale by the Company under the Registration Statement or included in
the offering contemplated by this Agreement, except for such rights as
have been satisfied or waived.
Any certificate signed by any officer or Attorney-in-fact of any
Selling Stockholder and delivered to the Representatives or counsel for the
Underwriters in connection with the offering of the Stock shall be deemed a
representation and warranty by such Selling Stockholder, as to matters covered
thereby, to each Underwriter. Such Selling Stockholder acknowledges that the
Underwriters and, for purposes of the opinion to be delivered pursuant to
Section 9 hereof, counsel to the Company and counsel to the Underwriters, will
rely upon the accuracy and truthfulness of the foregoing representations and
hereby consents to such reliance.
3. Purchase of the Stock by the Underwriters. On the basis of the
representations and warranties contained in, and subject to the terms and
conditions of, this Agreement, each Selling Stockholder agrees, severally and
not jointly, to sell the amount of Firm Stock set forth opposite such Selling
Stockholder's name in Schedule 2 hereto to the several Underwriters and each of
the Underwriters, severally and not jointly, agrees to purchase from the Selling
Stockholders the number of shares of the Firm Stock set forth opposite that
Underwriter's name in Schedule 1 hereto. The respective purchase obligations of
the Underwriters with respect to the Firm Stock shall be rounded among the
Underwriters to avoid fractional shares, as the Representatives may determine.
In addition, the Selling Stockholders hereby grant to the several
Underwriters an option to purchase, severally and not jointly, up to [ ] shares
of Option Stock. Such option is granted for the purpose of covering
over-allotments in the sale of Firm Stock and is exercisable as provided in
Section 5 hereof. Shares of Option Stock shall be purchased severally for the
account of the Underwriters in proportion to the number of shares of Firm Stock
set forth opposite the name of such Underwriters in Schedule 1 hereto. The
maximum number of Option Stock that each Selling Stockholder agrees to sell is
set forth in Schedule 2 hereto. In the event that the Underwriters exercise less
than their full over-allotment option, the number of Option Stock to be sold by
each Selling Stockholder listed on Schedule 2 shall be, as nearly as
practicable, in the same proportion as the maximum number of Option Stock to be
sold by each Selling
14
Stockholder and the number of Option Stock to be sold. The respective purchase
obligations of each Underwriter with respect to the Option Stock shall be
adjusted by the Representatives so that no Underwriter shall be obligated to
purchase Option Stock other than in 100 share amounts. The price of both the
Firm Stock and any Option Stock shall be $[ ] per share.
No Selling Stockholder shall be obligated to deliver any of the Stock
to be delivered on any Delivery Date (as hereinafter defined), as the case may
be, except upon payment for all the Stock to be purchased on such Delivery Date
as provided herein.
4. Offering of Stock by the Underwriters.
Upon authorization by the Representatives of the release of the Firm
Stock, the several Underwriters propose to offer the Firm Stock for sale upon
the terms and conditions set forth in the Prospectus.
5. Delivery of and Payment for the Stock. Delivery of and payment
for the Firm Stock shall be made at the office of Xxxxxx & Xxxxxxx LLP, 000
Xxxxxxxxxxxx Xxxxx, Xxxxx Xxxx, Xxxxxxxxxx, at 10:00 A.M., New York City time,
on the [ ] full business day following the date of this Agreement or at such
other date or place as shall be determined by agreement between the
Representatives and the Company. This date and time are sometimes referred to as
the "FIRST DELIVERY DATE." On the First Delivery Date, each Selling Stockholder
shall deliver or cause to be delivered certificates representing the Firm Stock
to the Representatives for the account of each Underwriter against payment to or
upon the order of the Selling Stockholders of the purchase price by wire
transfer in immediately available funds. Time shall be of the essence, and
delivery at the time and place specified pursuant to this Agreement is a further
condition of the obligation of each Underwriter hereunder. Upon delivery, the
Firm Stock shall be registered in such names and in such denominations as the
Representatives shall request in writing not less than two full business days
prior to the First Delivery Date. For the purpose of expediting the checking and
packaging of the certificates for the Firm Stock, each Selling Stockholder shall
make the certificates representing the Firm Stock available for inspection by
the Representatives in Menlo Park, California, not later than 2:00 P.M., New
York City time, on the business day prior to the First Delivery Date.
The option granted in Section 3 will expire 30 days after the date of
this Agreement and may be exercised in whole or in part from time to time by
written notice being given to the Company and the Selling Stockholders by the
Representatives. Such notice shall set forth the aggregate number of shares of
Option Stock as to which the option is being exercised, the names in which the
shares of Option Stock are to be registered, the denominations in which the
shares of Option Stock are to be issued and the date and time, as determined by
the Representatives, when the shares of Option Stock are to be delivered;
provided, however, that this date and time shall not be earlier than the First
Delivery Date nor earlier than the second business day after the date on which
the option shall have been exercised nor later than the fifth business day after
the date on
15
which the option shall have been exercised. The date and time the shares of
Option Stock are delivered are sometimes referred to as a "SECOND DELIVERY DATE"
and the First Delivery Date and any Second Delivery Date are sometimes each
referred to as a "DELIVERY DATE."
Delivery of and payment for the Option Stock shall be made at the place
specified in the first sentence of the first paragraph of this Section 5 (or at
such other place as shall be determined by agreement between the Representatives
and the Company) at 10:00 A.M., New York City time, on such Second Delivery
Date. On such Second Delivery Date, each Selling Stockholder shall deliver or
cause to be delivered the certificates representing the Option Stock to the
Representatives for the account of each Underwriter against payment to or upon
the order of the Selling Stockholders of the purchase price by wire transfer in
immediately available funds. Time shall be of the essence, and delivery at the
time and place specified pursuant to this Agreement is a further condition of
the obligation of each Underwriter hereunder. Upon delivery, the Option Stock
shall be registered in such names and in such denominations as the
Representatives shall request in the aforesaid written notice. For the purpose
of expediting the checking and packaging of the certificates for the Option
Stock, each Selling Stockholder shall make the certificates representing the
Option Stock available for inspection by the Representatives in Menlo Park,
California, not later than 2:00 P.M., New York City time, on the business day
prior to such Second Delivery Date.
6. Further Agreements of the Company. The Company agrees:
(a) To prepare the Prospectus in a form approved by the
Representatives and to file such Prospectus pursuant to Rule 424(b)
under the Securities Act not later than Commission's close of business
on the second business day following the execution and delivery of this
Agreement or, if applicable, such earlier time as may be required by
Rule 430A(a)(3) under the Securities Act; to make no further amendment
or any supplement to the Registration Statement or to the Prospectus
except as permitted herein; to advise the Representatives, promptly
after it receives notice thereof, of the time when any amendment to the
Registration Statement has been filed or becomes effective or any
supplement to the Prospectus or any amended Prospectus has been filed
and to furnish the Representatives with copies thereof; to advise the
Representatives, promptly after it receives notice thereof, of the
issuance by the Commission of any stop order or of any order preventing
or suspending the use of any Preliminary Prospectus or the Prospectus,
of the suspension of the qualification of the Stock for offering or
sale in any jurisdiction, of the initiation or threatening of any
proceeding for any such purpose, or of any request by the Commission
for the amending or supplementing of the Registration Statement or the
Prospectus or for additional information; and, in the event of the
issuance of any stop order or of any order preventing or suspending the
use of any Preliminary
16
Prospectus or the Prospectus or suspending any such qualification, to
use promptly its best efforts to obtain its withdrawal;
(b) To furnish promptly to each of the Representatives and to
counsel for the Underwriters a signed copy of the Registration
Statement as originally filed with the Commission, and each amendment
thereto filed with the Commission, including all consents and exhibits
filed therewith;
(c) To deliver promptly to the Representatives such number of
the following documents as the Representatives shall reasonably
request: (i) conformed copies of the Registration Statement as
originally filed with the Commission and each amendment thereto (in
each case excluding exhibits), and (ii) each Preliminary Prospectus,
the Prospectus and any amended or supplemented Prospectus; and, if the
delivery of a prospectus is required at any time after the Effective
Time in connection with the offering or sale of the Stock or any other
securities relating thereto and if at such time any events shall have
occurred as a result of which the Prospectus as then amended or
supplemented would include an untrue statement of a material fact or
omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made when such Prospectus is delivered, not misleading, or, if for
any other reason it shall be necessary to amend or supplement the
Prospectus in connection with the offering or sale of the Stock
hereunder in order to comply with the Securities Act, to notify the
Representatives and, upon their request, to prepare and furnish without
charge to each Underwriter and to any dealer in securities as many
copies as the Representatives may from time to time reasonably request
of an amended or supplemented Prospectus which will correct such
statement or omission or effect such compliance;
(d) To file promptly with the Commission any amendment to the
Registration Statement or the Prospectus or any supplement to the
Prospectus that may, in the reasonable judgment of the Company or the
Representatives, be required by the Securities Act or requested by the
Commission;
(e) Prior to filing with the Commission any amendment to the
Registration Statement or supplement to the Prospectus or any
Prospectus pursuant to Rule 424 of the Rules and Regulations, to
furnish a copy thereof to the Representatives and counsel for the
Underwriters and obtain the consent of the Representatives to the
filing;
(f) As soon as practicable after the Effective Date, to make
generally available to the Company's security holders and to deliver to
the Representatives an earnings statement of the Company and its
subsidiaries (which need not be audited) complying with Section 11(a)
of the
17
Securities Act and the Rules and Regulations (including, at the option
of the Company, Rule 158);
(g) For a period of five years following the Effective Date,
to furnish to the Representatives copies of all materials furnished by
the Company to its shareholders and all public reports and all reports
and financial statements furnished by the Company to the principal
national securities exchange upon which the Common Stock may be listed
pursuant to requirements of or agreements with such exchange or to the
Commission pursuant to the Exchange Act or any rule or regulation of
the Commission thereunder;
(h) Promptly from time to time to take such action as the
Representatives may reasonably request to qualify the Stock for
offering and sale under the securities laws of such jurisdictions as
the Representatives may request and to comply with such laws so as to
permit the continuance of sales and dealings therein in such
jurisdictions for as long as may be necessary to complete the
distribution of the Stock; provided that in connection therewith the
Company shall not be required to qualify as a foreign corporation or to
file a general consent to service of process in any jurisdiction;
(i) For a period of 90 days from the date of the Prospectus,
not to, directly or indirectly, (1) offer for sale, sell, pledge or
otherwise dispose of (or enter into any transaction or device which is
designed to, or could be expected to, result in the disposition by any
person at any time in the future of) any shares of Common Stock or
securities convertible into or exchangeable for Common Stock (other
than the Stock and shares issued pursuant to employee benefit plans,
qualified stock option plans or other employee compensation plans
existing on the date hereof or pursuant to currently outstanding
options, warrants or rights), or sell or grant options, rights or
warrants with respect to any shares of Common Stock or securities
convertible into or exchangeable for Common Stock (other than the grant
of options pursuant to option plans existing on the date hereof,
including the Company's 2003 Stock Option Plan and Employee Stock
Purchase Plan), or (2) enter into any swap or other derivatives
transaction that transfers to another, in whole or in part, any of the
economic benefits or risks of ownership of such shares of Common Stock,
whether any such transaction described in clause (1) or (2) above is to
be settled by delivery of Common Stock or other securities, in cash or
otherwise, in each case without the prior written consent of Xxxxxx
Brothers Inc. on behalf of the Underwriters; and to cause each of its
officers and directors to furnish to the Representatives, prior to the
First Delivery Date, a letter or letters, substantially in the form of
Exhibit A hereto, pursuant to which each such person shall agree not
to, directly or indirectly, (1) offer for sale, sell, pledge or
otherwise dispose of (or enter into any transaction or device
18
which is designed to, or could be expected to, result in the
disposition by any person at any time in the future of) any shares of
Common Stock or securities convertible into or exchangeable for Common
Stock or (2) enter into any swap or other derivatives transaction that
transfers to another, in whole or in part, any of the economic benefits
or risks of ownership of such shares of Common Stock, whether any such
transaction described in clause (1) or (2) above is to be settled by
delivery of Common Stock or other securities, in cash or otherwise, in
each case for a period of 180 days from the date of the Prospectus,
without the prior written consent of Xxxxxx Brothers Inc. on behalf of
the Underwriters;
(j) To submit a Nasdaq Notification Form: Listing of
Additional Shares no later than 10 days prior to the First Delivery
Date;
(k) To take such steps as shall be necessary to ensure that
neither the Company nor any of its subsidiaries shall become an
"investment company" within the meaning of such term under the
Investment Company Act of 1940, as amended; and
(l) To allow access as of the Effective Date to the Company's
annual reports on Form 10-K, quarterly reports on Form 10-Q, current
reports on Form 8-K, and amendments to those reports filed or furnished
pursuant to the Exchange Act with the Commission free of charge at the
Company's web site as soon as reasonably practicable after such
material is electronically filed with, or furnished to, the Commission.
(m) To pay the costs and expenses set forth in Section 8
hereof on written demand of the Underwriters to the extent the Selling
Stockholders fail to satisfy their obligations thereunder. If the
Company is required to make any payments under Section 8, the Selling
Stockholders pro rata in proportion to the percentage of securities to
be sold by each shall reimburse the Company on demand for all amounts
so paid.
(n) To comply, in all material respects, with all effective
applicable provisions of the Xxxxxxxx-Xxxxx Act of 2002.
7. Further Agreements of the Selling Stockholders. Each Selling
Stockholder agrees:
(a) For a period of 90 days from the date hereof, such Selling
Stockholder shall not, directly or indirectly, (i) offer for sale,
sell, pledge or otherwise dispose of (or enter into any transaction or
device which is designed to, or could be expected to, result in the
disposition by any person at any time in the future of) any shares of
Common Stock or securities convertible into or exchangeable for Common
Stock (other than the Stock) or (ii) enter into any swap or other
derivatives transaction that
19
transfers to another, in whole or in part, any of the economic benefits
or risks of ownership of such shares of Common Stock, whether any such
transaction described in clause (i) or (ii) above is to be settled by
delivery of Common Stock or other securities, in cash or otherwise, in
each case without the prior written consent of Xxxxxx Brothers Inc. on
behalf of the Underwriters, subject in each case to the exceptions set
forth in Exhibit A; provided that if (1) during the last 17 days of the
90-day restricted period the Company issues an earnings release or
material news or a material event relating to the Company occurs; or
(2) prior to the expiration of the 90-day restricted period, the
Company announces that it will release earnings results during the
16-day period beginning on the last day of the 90-day period, the
restrictions imposed by this Agreement shall continue to apply until
the expiration of the 18-day period beginning on the issuance of the
earnings release or the occurrence of the material news or material
event.
(b) Such Selling Stockholder will not take, directly or
indirectly, any action designed to or that would constitute or that
might reasonably be expected to cause or result in, under the Exchange
Act or otherwise, stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the Stock.
(c) Such Selling Stockholder will advise you promptly, and if
requested by you, will confirm such advice in writing, so long as
delivery of a prospectus relating to the Stock by an underwriter or
dealer may be required under the Securities Act, of (i) any change in
information in the Registration Statement or the Prospectus relating to
such Selling Stockholder and (ii) if such person is a Company Selling
Stockholder, any material change in the Company's condition (financial
or otherwise), prospects, earnings, business or properties and any new
material information relating to the Company or relating to any matter
stated in the Prospectus which comes to the attention of such Company
Selling Stockholder.
(d) The Stock to be sold by the Selling Stockholder hereunder,
which is represented by certificates held in custody for the Selling
Stockholder is subject to the interest of the Underwriters and the
other Selling Stockholders thereunder, that the arrangements made by
the Selling Stockholder for such custody are to that extent
irrevocable, and that the obligations of the Selling Stockholder
hereunder shall not be terminated by any act of the Selling
Stockholder, by operation of law, by the death or incapacity of any
individual Selling Stockholder or, in the case of a trust, by the death
or incapacity of any executor or trustee or the termination of such
trust, or the occurrence of any other event.
20
(e) Such Selling Stockholder shall deliver to the
Representatives prior to the First Delivery Date a properly completed
and executed applicable United States Treasury Department Form W-8 (if
the Selling Stockholder is a non-United States person) or Form W-9 (if
the Selling Stockholder is a United States person).
(f) To cooperate with the Company and the Underwriters and to
execute and deliver, or use its best efforts to cause to be executed
and delivered, all such other instruments, and take all such other
actions as such party may reasonably be requested to take by the
Company and the Underwriters from time to time, in order to effectuate
the sale of the Stock in the offering contemplated hereby.
8. Expenses. The Selling Stockholders (in proportion to the
number of shares of Stock being offered by each of them, including any Option
Stock that the Underwriters shall have elected to purchase) agree to pay (a) the
costs incident to the authorization, issuance, sale and delivery of the Stock
and any taxes payable in that connection; (b) the costs incident to the
preparation, printing and filing under the Securities Act of the Registration
Statement and any amendments and exhibits thereto; (c) the costs of distributing
the Registration Statement as originally filed and each amendment thereto and
any post-effective amendments thereof (including, in each case, exhibits), any
Preliminary Prospectus, the Prospectus and any amendment or supplement to the
Prospectus, all as provided in this Agreement; (d) the costs of producing and
distributing this Agreement and any other related documents in connection with
the offering, purchase, sale and delivery of the Stock; (e) the filing fees
incident to securing the review by the National Association of Securities
Dealers, Inc. of the terms of sale of the Stock (including related fees and
expenses of counsel to the Underwriters); (f) any applicable listing or other
fees; (g) the fees and expenses (not in excess, in the aggregate, of $10,000) of
qualifying the Stock under the securities laws of the several jurisdictions as
provided in Section 6(h) and of preparing, printing and distributing a Blue Sky
Memorandum (including related fees and expenses of counsel to the Underwriters);
(h) all costs and expenses of the Underwriters; (i) the costs and expenses of
the Company relating to investor presentations on any "ROAD SHOW" undertaken in
connection with the marketing of the offering of the Stock, including, without
limitation, expenses associated with the production of road show slides and
graphics, fees and expenses of any consultants engaged in connection with the
road show presentations, travel and lodging expenses of the representatives and
officers of the Company and any such consultants, and the cost of any aircraft
chartered in connection with the road show; (j) the fees and expenses of the
Company's accountants and the fees and expenses of counsel (including local and
special counsel) for the Company incurred in connection with the transactions
contemplated hereby; (k) the fees and expenses of counsel (including local and
special counsel) for the Selling Stockholders incurred in connection with the
transactions contemplated hereby; (l) the fees and expenses of the Custodian
relating to the performance by the Custodian of its obligations under the
Custody Agreements; and (m) all other costs and expenses incident to the
performance of the obligations of the
21
Company and Selling Stockholders under this Agreement; provided that, except as
provided in this Section 8 and in Section 13 the Underwriters shall pay their
own costs and expenses, including the costs and expenses of their counsel, any
transfer taxes on the Stock which they may sell and the expenses of advertising
any offering of the Stock made by the Underwriters.
9. Conditions of Underwriters' Obligations. The respective
obligations of the Underwriters hereunder are subject to the accuracy, when made
and on each Delivery Date, of the representations and warranties of the Company
and the Selling Stockholders contained herein, to the performance by the Company
and the Selling Stockholders of their respective obligations hereunder, and to
each of the following additional terms and conditions:
(a) The Prospectus shall have been timely filed with the
Commission in accordance with Section 6(a); no stop order suspending
the effectiveness of the Registration Statement or any part thereof
shall have been issued and no proceeding for that purpose shall have
been initiated or threatened by the Commission; and any request of the
Commission for inclusion of additional information in the Registration
Statement or the Prospectus or otherwise shall have been complied with.
(b) All corporate proceedings and other legal matters incident
to the authorization, form and validity of this Agreement, the Custody
Agreements, the Stock, the Registration Statement and the Prospectus,
and all other legal matters relating to this Agreement and the
transactions contemplated hereby shall be reasonably satisfactory in
all material respects to counsel for the Underwriters, and the Company
and the Selling Stockholders shall have furnished to such counsel all
documents and information that they may reasonably request to enable
them to pass upon such matters.
(c) Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, PC, shall have furnished
to the Representatives its written opinion, as counsel to the Company,
addressed to the Underwriters and dated such Delivery Date, in form and
substance reasonably satisfactory to the Representatives, to the effect
that:
(i) The Company and each of its domestic subsidiaries
have been duly incorporated and are validly existing as
corporations in good standing under the laws of their
respective jurisdictions of incorporation, are duly qualified
to do business and are in good standing as foreign
corporations in each jurisdiction in which their respective
ownership or lease of property or the conduct of their
respective businesses requires such qualification and have all
power and authority necessary to own or hold their respective
properties and conduct the businesses in which they are
22
engaged, except where the failure to be so qualified or be in
good standing would not have a material adverse effect on the
Company and its subsidiaries;
(ii) The Company has an authorized capitalization as
set forth in the Prospectus, and all of the issued shares of
capital stock of the Company have been duly and validly
authorized and issued, were issued in compliance with the
requirements of federal and state securities laws, are fully
paid and non-assessable and conform to the description thereof
contained in the Prospectus. All of the issued shares of
capital stock of each domestic subsidiary of the Company that
is a corporation have been duly and validly authorized and
issued and are fully paid, non-assessable and are owned
directly or indirectly by the Company, free and clear of all
liens, encumbrances, equities or claims. All of the Company's
outstanding options and warrants to purchase shares of the
Company's capital stock have been duly and validly authorized
and issued, were issued in compliance with the requirements of
federal and state securities laws, and conform to the
description thereof contained in the Prospectus. All other
rights to purchase or exchange any securities for shares of
the Company's capital stock have been duly and validly
authorized and conform to the description thereof in the
Prospectus;
(iii) The shares of Stock being delivered on the
Delivery Date to the Underwriters have been duly and validly
authorized and, when delivered against payment therefore in
accordance with this Agreement will be duly and validly
issued, fully paid and non-assessable;
(iv) Upon (A) payment for the Shares in accordance
with the terms of this Agreement, (B) physical delivery of the
Share to the Company's transfer agent, with stock powers duly
endorsed in blank by an effective endorsement, (C)
registration of the Stock in the name of DTC or its nominee
("DTC") by book-entry in the stock records of the transfer
agent, (D) registration by book-entry of the credit to the
Underwriter's securities accounts with DTC of the purchase of
Stock in the records of DTC and (E) registration by book-entry
of the credit to the Underwriter's securities accounts of the
purchase of Stock in the records of any other "securities
intermediary" (as defined in Section 8-102(a)(14) of the New
York UCC) which acts as a "clearing corporation" (as defined
in Section 8-102(a)(5) of the New York UCC) or maintains
"securities accounts" (as defined in Section 8-501(a) of the
New York UCC) with respect to the transfer of the Stock to the
Underwriters, then the Underwriters will become the
"entitlement
23
holders" (as defined in Section 8-102(a)(7) of the New York
UCC) of the Stock, free of any "adverse claims" (as defined in
Section 8-102(a)(1) of the New York UCC).
(v) There are no preemptive or other rights to
subscribe for or to purchase, nor any restriction upon the
voting or transfer of, any shares of the Stock pursuant to the
Company's charter or by-laws or any agreement or other
instrument known to such counsel;
(vi) To such counsel's knowledge and other than as
set forth in the Prospectus, there are no legal or
governmental proceedings pending to which the Company or any
of its subsidiaries is a party or of which any property or
assets of the Company or any of its subsidiaries is the
subject which, if determined adversely to the Company or any
of its subsidiaries, might have a material adverse effect on
the consolidated financial position, stockholders' equity,
results of operations, business or prospects of the Company
and its subsidiaries; and, to such counsel's knowledge, no
such proceedings are threatened or contemplated by
governmental authorities or threatened by others;
(vii) The Registration Statement was declared
effective under the Securities Act as of the date and time
specified in such opinion, the Prospectus was filed with the
Commission pursuant to the subparagraph of Rule 424(b) of the
Rules and Regulations specified in such opinion on the date
specified therein and, based solely upon telephonic
confirmation from a representative of the Commission, such
counsel confirms that no stop order suspending the
effectiveness of the Registration Statement has been issued
and, to the knowledge of such counsel, no proceeding for that
purpose is pending or threatened by the Commission;
(viii) The Registration Statement and the Prospectus
and any further amendments or supplements thereto made by the
Company prior to such Delivery Date (other than the financial
statements and financial schedules and other financial and
statistical data included therein, as to which such counsel
need express no belief) comply as to form in all material
respects with the requirements of the Securities Act and the
Rules and Regulations;
(ix) The statements contained in the Prospectus under
the captions "Business - Legal Proceedings," "Certain
Relationships and Related Transactions," "Description of
Capital Stock," and "Shares Eligible for Future Sale," insofar
as they
24
describe federal statutes, rules and regulations or
agreements, constitute a fair summary thereof. The statements
contained in the Prospectus in the [fifth, sixth, seventh and
tenth] paragraphs under the caption "Management's Discussion
and Analysis of Financial Condition and Results of Operations
- Liquidity and Capital Resources," insofar as they describe
agreements, constitute a fair summary thereof. The statements
under the caption "Material United States Federal Income Tax
Consequences to Non-United States Holders," to the extent that
they constitute matters of U.S. federal income tax law and
legal conclusions with respect thereto, are accurate in all
material respects;
(x) To such counsel's knowledge, there are no
contracts or other documents which are required to be
described in the Prospectus or filed as exhibits to the
Registration Statement by the Securities Act or by the Rules
and Regulations which have not been described or filed as
exhibits to the Registration Statement;
(xi) This Agreement has been duly authorized,
executed and delivered by the Company;
(xii) The sale of the shares of Stock being delivered
on such Delivery Date by the Selling Stockholders pursuant to
this Agreement, and the execution, delivery and compliance by
the Company and the Selling Stockholders with all of the
provisions of this Agreement and the consummation of the
transactions contemplated hereby, will not conflict with or
result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, loan agreement or other agreement or
instrument known to such counsel to which the Company or any
of its subsidiaries is a party or by which the Company or any
of its subsidiaries is bound or to which any of the property
or assets of the Company or any of its subsidiaries is
subject, except for such breaches, violations or defaults that
would not individually or in the aggregate cause or be
reasonably likely to cause a material adverse effect on the
general affairs, management, consolidated financial position,
stockholders' equity, results of operations, business or
prospects of the Company and its subsidiaries nor will such
actions result in any violation of the provisions of the
charter or by-laws of the Company or any of its domestic
subsidiaries or any statute or any order, rule or regulation
known to such counsel of any court or governmental agency or
body having jurisdiction over the Company or any of its
domestic subsidiaries or any of their properties or assets;
and, except for the registration of the Stock under the
Securities Act and such consents, approvals, authorizations,
registrations or
25
qualifications as may be required under the Exchange Act and
applicable state or foreign securities laws in connection with
the purchase and distribution of the Stock by the
Underwriters, no consent, approval, authorization or order of,
or filing or registration with, any such court or governmental
agency or body is required for the execution, delivery and
performance of this Agreement by the Company and the
consummation of the transactions contemplated hereby;
(xiii) To such counsel's knowledge, there are no
contracts, agreements or understandings between the Company
and any person granting such person the right (other than
rights which have been waived or satisfied) to include any
securities of the Company owned or to be owned by such person
in the securities registered pursuant to the Registration
Statement; and
(xiv) Neither the Company nor any of its subsidiaries
is an "investment company" as defined in the Investment
company Act of 1940, as amended.
In rendering such opinion, such counsel may state that their opinion is
limited to matters governed by the Federal laws of the United States of
America, the laws of the state of California and the General
Corporation Law of the State of Delaware. Such opinion shall also be to
the effect that (x) such counsel has acted as counsel to the Company in
connection with the preparation of the Registration Statement, and (y)
based on the foregoing, no facts have come to the attention of such
counsel which lead them to believe that the Registration Statement
(except for the financial statements and financial schedules and other
financial and statistical data, included therein, as to which such
counsel need express no belief), as of the Effective Date, contained
any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the
statements therein not misleading, or that the Prospectus as of its
Date or as of the Delivery Date (except as stated above) contains any
untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were
made, not misleading. The foregoing opinion and statement may be
qualified by a statement to the effect that such counsel does not
assume any responsibility for the accuracy, completeness or fairness of
the statements contained in the Registration Statement or the
Prospectus (other than as set forth in clause (ix) above).
(d) Xxxxx & XxXxxxxx shall have furnished to the
Representatives its written opinion, as counsel to the Company,
addressed to the Underwriters and dated such Delivery Date, in form and
substance
26
reasonably satisfactory to the Representatives substantially in the
form attached hereto as Exhibit B.
(e) The respective counsel for the Selling Stockholders each
shall have furnished to the Representatives their written opinion, as
counsel to each of the Selling Stockholders for whom they are acting as
counsel, addressed to the Underwriters and dated such Delivery Date, in
form and substance reasonably satisfactory to the Representatives, to
the effect that.
(i) The Selling Stockholder is the sole record owner
of the shares of Stock to be sold by it, and has full power,
right and authority to sell such Stock;
(ii) This Agreement has been duly authorized,
executed and delivered by or on behalf of the Selling
Stockholder;
(iii) A Custody Agreement has been duly authorized,
executed and delivered by the Selling Stockholder and
constitutes a valid and binding agreement of such Selling
Stockholder in accordance with its terms; and
(iv) The execution and delivery by the Selling
Stockholder of this Agreement and the Custody Agreement and
the consummation by the Selling Stockholder of the
transactions contemplated hereby and thereby will not conflict
with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, loan agreement or other agreement or
instrument known to such counsel to which the Selling
Stockholder is a party or by which the Selling Stockholder is
bound or to which any of the property or assets of the Selling
Stockholder is subject, nor will such actions result in any
violation of the provisions of any partnership or limited
liability company agreement, certificate of incorporation,
by-laws, operating agreement or similar agreement or
organizational document of the Selling Stockholder or any
statute or any order, rule or regulation known to such counsel
of any court or governmental agency or body having
jurisdiction over the Selling Stockholder or any of its
properties or assets; and, except for the registration of the
Stock under the Securities Act and such consents, approvals,
authorizations, registrations or qualifications as may be
required under the Exchange Act and applicable state
securities laws in connection with the purchase and
distribution of the Stock by the Underwriters, no consent,
approval, authorization or order of, or filing or registration
with, any such court or governmental agency or body is
required for the execution,
27
delivery and performance of this Agreement, the Power of
Attorney and the Custody Agreement and the consummation by the
Selling Stockholder of the transactions contemplated hereby
and thereby.
(f) The Representatives shall have received from Xxxxxx &
Xxxxxxx LLP, counsel for the Underwriters, such opinion or opinions,
dated such Delivery Date, with respect to the sale of the Stock, the
Registration Statement, the Prospectus and other related matters as the
Representatives may reasonably require, and the Company shall have
furnished to such counsel such documents as they reasonably request for
the purpose of enabling them to pass upon such matters.
(g) At the time of execution of this Agreement, the
Representatives shall have received from each of PricewaterhouseCoopers
LLP [and Deloitte & Touche LLP], a letter, in form and substance
satisfactory to the Representatives, addressed to the Underwriters and
dated the date hereof (i) confirming that they are independent public
accountants within the meaning of the Securities Act and are in
compliance with the applicable requirements relating to the
qualification of accountants under Rule 2-01 of Regulation S-X of the
Commission, and (ii) stating, as of the date hereof (or, with respect
to matters involving changes or developments since the respective dates
as of which specified financial information is given in the Prospectus,
as of a date not more than five days prior to the date hereof), the
conclusions and findings of such firms with respect to the financial
information and other matters ordinarily covered by accountants'
"comfort letters" to underwriters in connection with registered public
offerings.
(h) With respect to the letters of PricewaterhouseCoopers LLP
[and Deloitte & Touche LLP] referred to in the preceding paragraph and
delivered to the Representatives concurrently with the execution of
this Agreement (the "INITIAL LETTERS"), the Company shall have
furnished to the Representatives letters (the "BRING-DOWN LETTERS") of
such accountants, addressed to the Underwriters and dated such Delivery
Date (i) confirming that they are independent public accountants within
the meaning of the Securities Act and are in compliance with the
applicable requirements relating to the qualification of accountants
under Rule 2-01 of Regulation S-X of the Commission, (ii) stating, as
of the date of the bring-down letters (or, with respect to matters
involving changes or developments since the respective dates as of
which specified financial information is given in the Prospectus, as of
a date not more than five days prior to the date of the bring-down
letters), the conclusions and findings of such firms with respect to
the financial information and other matters covered by the initial
letters and (iii) confirming in all material respects the conclusions
and findings set forth in the initial letters.
28
(i) The Company shall have furnished to the Representatives a
certificate, dated such Delivery Date, of its Chairman of the Board,
its President or a Vice President and its Chief Financial Officer
stating that:
(i) The representations, warranties and agreements of
the Company in Section 1 are true and correct as of such
Delivery Date; the Company has complied with all its
agreements contained herein; and the conditions set forth in
Sections 9(a) and 9(k) have been fulfilled; and
(ii) They have carefully examined the Registration
Statement and the Prospectus and, in their opinion (A) as of
the Effective Date, the Registration Statement did not and, as
of its date and as of the Delivery Date, the Prospectus did
not and does not include any untrue statement of a material
fact and did not and does not omit to state a material fact
required to be stated therein or necessary to make the
statements therein not misleading, and (B) since the Effective
Date no event has occurred which should have been set forth in
a supplement or amendment to the Registration Statement or the
Prospectus.
(j) Each Selling Stockholder (or the Custodian or one or more
attorneys-in-fact on behalf of such Selling Stockholder) shall have
furnished to the Representatives on the relevant Delivery Date a
certificate, dated such Delivery Date, signed by, or on behalf of, such
Selling Stockholder stating that the representations, warranties and
agreements of such Selling Stockholder contained herein are true and
correct as of such Delivery Date and that such Selling Stockholder has
complied with all agreements contained herein to be performed by such
Selling Stockholder at or prior to such Delivery Date.
(k) Neither the Company nor any of its subsidiaries shall have
sustained since the date of the latest audited financial statements
included in the Prospectus (i) any loss or interference with its
business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or
governmental action, order or decree, otherwise than as set forth or
contemplated in the Prospectus or (ii) since such date there shall not
have been any change in the capital stock or long-term debt of the
Company or any of its subsidiaries or any change, or any development
involving a prospective change, in or affecting the general affairs,
management, financial position, stockholders' equity or results of
operations of the Company and its subsidiaries, otherwise than as set
forth or contemplated in the Prospectus, the effect of which, in any
such case described in clause (i) or (ii), is, in the judgment of the
Representatives, so material and adverse as to make it impracticable or
inadvisable to proceed with the public offering or the delivery of the
Stock being delivered on
29
such Delivery Date on the terms and in the manner contemplated in the
Prospectus.
(l) Subsequent to the execution and delivery of this Agreement
there shall not have occurred any of the following: (i) trading in
securities generally on the New York Stock Exchange or the American
Stock Exchange or in the over-the-counter market, or trading in any
securities of the Company on any exchange or in the over-the-counter
market, shall have been suspended or the settlement of such trading
generally shall have been materially disrupted or minimum prices shall
have been established on any such exchange or such market by the
Commission, by such exchange or by any other regulatory body or
governmental authority having jurisdiction, (ii) a banking moratorium
shall have been declared by Federal or state authorities, (iii) the
United States shall have become engaged in hostilities, there shall
have been an escalation in hostilities involving the United States or
there shall have been a declaration of a national emergency or war by
the United States or (iv) there shall have occurred such a material
adverse change in general economic, political or financial conditions,
including without limitation as a result of terrorist activities after
the date hereof (or the effect of international conditions on the
financial markets in the United States shall be such), or any other
calamity or crisis as to make it, in the judgment of the
Representatives, impracticable or inadvisable to proceed with the
public offering or delivery of the Stock being delivered on such
Delivery Date on the terms and in the manner contemplated in the
Prospectus.
(m) The Nasdaq National Market shall have approved the Stock
for listing, subject only to official notice of issuance and evidence
of satisfactory distribution.
(n) The Company shall have furnished to the Representatives
certificates dated such Delivery Date and executed by its Chief
Executive Officer and Chief Financial Officer, in the form attached
hereto as Exhibit C.
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably satisfactory
to counsel for the Underwriters.
10. Indemnification and Contribution.
(a) The Company shall indemnify and hold harmless each
Underwriter, its officers, employees and agents and each person, if
any, who controls any Underwriter within the meaning of either Section
15 of the Securities Act or Section 20 of the Exchange Act, from and
against
30
any loss, claim, damage or liability, joint or several, or any action
in respect thereof (including, but not limited to, any loss, claim,
damage, liability or action relating to purchases and sales of Stock),
to which that Underwriter, officer, employee, agent or controlling
person may become subject, under the Securities Act or otherwise,
insofar as such loss, claim, damage, liability or action arises out of,
or is based upon, (i) any untrue statement or alleged untrue statement
of a material fact contained (A) in any Preliminary Prospectus, the
Registration Statement or the Prospectus or in any amendment or
supplement thereto, or (B) in any materials or information provided to
investors by, or with the approval of, the Company in connection with
the marketing of the offering of the Stock, including any roadshow or
investor presentations made to investors by the Company (whether in
person or electronically) ("MARKETING MATERIALS"), including any road
show or investor presentations made to investors by the Company
(whether in person or electronically), (ii) the omission or alleged
omission to state in any Preliminary Prospectus, the Registration
Statement or the Prospectus, or in any amendment or supplement thereto,
or in any Marketing Materials, any material fact required to be stated
therein or necessary to make the statements therein not misleading or
(iii) any act or failure to act or any alleged act or failure to act by
any Underwriter in connection with, or relating in any manner to, the
Stock or the offering contemplated hereby, and that is included as part
of or referred to in any loss, claim, damage, liability or action
arising out of or based upon matters covered by clause (i) or (ii)
above (provided that the Company shall not be liable under this clause
(iii) to the extent that it is determined in a final judgment by a
court of competent jurisdiction that such loss, claim, damage,
liability or action resulted directly from any such acts or failures to
act undertaken or omitted to be taken by such Underwriter through its
gross negligence or willful misconduct), and shall reimburse each
Underwriter and each such officer, employee, agent or controlling
person promptly upon demand for any legal or other expenses reasonably
incurred by that Underwriter, officer, employee, agent or controlling
person in connection with investigating or defending or preparing to
defend against any such loss, claim, damage, liability or action as
such expenses are incurred; provided, however, that (1) the Company
shall not be liable in any such case to the extent that any such loss,
claim, damage, liability or action arises out of, or is based upon, any
untrue statement or alleged untrue statement or omission or alleged
omission made in any Preliminary Prospectus, the Registration Statement
or the Prospectus, or in any such amendment or supplement, in reliance
upon and in conformity with written information concerning such
Underwriter furnished to the Company through the Representatives by or
on behalf of any Underwriter specifically for inclusion therein which
information consists solely of the information specified in Section
10(f) and (2) the Company shall not be liable to any Underwriter under
the
31
indemnity agreement in this Section 10(a) to the extent, but only to
the extent, that (W) such loss, claim, damage, or liability of such
Underwriter results from an untrue statement of a material fact or an
omission of a material fact contained in the Preliminary Prospectus,
which untrue statement or omission was completely corrected in the
Prospectus dated the Effective Date (the "FINAL PROSPECTUS") and (X)
the Company sustains the burden of proving that such Underwriter sold
shares of Stock to the person alleging such loss, claim, liability,
expense or damage without sending or giving, at or prior to written
confirmation of such sale, a copy of the Final Prospectus and (Y) the
Company had previously furnished sufficient quantities of the Final
Prospectus to the Underwriters within a reasonable amount of time prior
to such sale or such confirmation, and (Z) such Underwriter failed to
deliver the Final Prospectus, if required by law to have so delivered
it, and such delivery would have been a complete defense against the
person asserting such loss, claim, liability, expense or damage. The
foregoing indemnity agreement is in addition to any liability that the
Company may otherwise have to any Underwriter or to any officer,
employee, agent or controlling person of that Underwriter.
(b) Each of the Selling Stockholders, severally in proportion
to the number of shares of Stock to be sold by each of them hereunder,
shall indemnify and hold harmless each Underwriter, its officers,
employees and agents and each person, if any, who controls any
Underwriter within the meaning of either Section 15 of the Securities
Act or Section 20 of the Exchange Act, from and against any loss,
claim, damage or liability, joint or several, or any action in respect
thereof (including, but not limited to, any loss, claim, damage,
liability or action relating to purchases and sales of Stock), to which
that Underwriter, officer, employee, agent or controlling person may
become subject, under the Securities Act or otherwise, insofar as such
loss, claim, damage, liability or action arises out of, or is based
upon, (i) any untrue statement or alleged untrue statement of a
material fact contained in any Preliminary Prospectus, the Registration
Statement or the Prospectus or in any amendment or supplement thereto,
(ii) the omission or alleged omission to state in any Preliminary
Prospectus, the Registration Statement or the Prospectus, or in any
amendment or supplement thereto, any material fact required to be
stated therein or necessary to make the statements therein not
misleading or (iii) the breach by any such Selling Stockholder of any
of the representations and warranties made by such Selling Stockholder
in Section 2 hereof; and shall reimburse each Underwriter and each such
officer, employee, agent or controlling person promptly upon demand for
any legal or other expenses reasonably incurred by that Underwriter,
officer, employee, agent or controlling person in connection with
investigating or defending or preparing to defend against any such
loss, claim, damage, liability or action as such expenses are incurred;
provided,
32
however, that (1) the Selling Stockholders shall not be liable in any
such case to the extent that any such loss, claim, damage, liability or
action arises out of, or is based upon, any untrue statement or alleged
untrue statement or omission or alleged omission made in any
Preliminary Prospectus, the Registration Statement or the Prospectus,
or in any such amendment or supplement, in reliance upon and in
conformity with written information concerning such Underwriter
furnished to the Selling Stockholders through the Representatives by or
on behalf of any Underwriter specifically for inclusion therein which
information consists solely of the information specified in Section
10(f) and (2) the Selling Stockholders shall not be liable to any
Underwriter under the indemnity agreement in this Section 10(b) to the
extent, but only to the extent, that (W) such loss, claim, damage, or
liability of such Underwriter results from an untrue statement of a
material fact or an omission of a material fact contained in the
Preliminary Prospectus, which untrue statement or omission was
completely corrected in the Final Prospectus and (X) the Selling
Stockholders sustain the burden of proving that such Underwriter sold
shares of Stock to the person alleging such loss, claim, liability,
expense or damage without sending or giving, at or prior to written
confirmation of such sale, a copy of the Final Prospectus and (Y) the
Company had previously furnished sufficient quantities of the Final
Prospectus to the Underwriters within a reasonable amount of time prior
to such sale or such confirmation, and (Z) such Underwriter failed to
deliver the Final Prospectus, if required by law to have so delivered
it, and such delivery would have been a complete defense against the
person asserting such loss, claim, liability, expense or damage. The
foregoing indemnity agreement is in addition to any liability that the
Selling Stockholders may otherwise have to any Underwriter or to any
officer, employee, agent or controlling person of that Underwriter.
(c) Each Underwriter, severally and not jointly, shall
indemnify and hold harmless the Company, each Selling Stockholder, and
each of their respective officers and employees, each of their
respective directors (including any person who, with his or her
consent, is named in the Registration Statement as about to become a
director of the Company), and each person, if any, who controls the
Company or such Selling Stockholder within the meaning of the
Securities Act, from and against any loss, claim, damage or liability,
joint or several, or any action in respect thereof, to which the
Company, Selling Stockholder or any such director, officer or
controlling person may become subject, under the Securities Act or
otherwise, insofar as such loss, claim, damage, liability or action
arises out of, or is based upon, (i) any untrue statement or alleged
untrue statement of a material fact contained in any Preliminary
Prospectus, the Registration Statement or the Prospectus or in any
amendment or supplement thereto, or (ii) the omission or alleged
omission
33
to state in any Preliminary Prospectus, the Registration Statement or
the Prospectus, or in any amendment or supplement thereto, any material
fact required to be stated therein or necessary to make the statements
therein not misleading, but in each case only to the extent that the
untrue statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with written
information concerning such Underwriter furnished to the Company
through the Representatives by or on behalf of that Underwriter
specifically for inclusion therein, and shall reimburse the Company and
any such director, officer or controlling person for any legal or other
expenses reasonably incurred by the Company or any such director,
officer or controlling person in connection with investigating or
defending or preparing to defend against any such loss, claim, damage,
liability or action as such expenses are incurred. The foregoing
indemnity agreement is in addition to any liability which any
Underwriter may otherwise have to the Company, any Selling Stockholder
or any such director, officer, employee or controlling person.
(d) Promptly after receipt by an indemnified party under this
Section 10 of notice of any claim or the commencement of any action,
the indemnified party shall, if a claim in respect thereof is to be
made against the indemnifying party under Section 10(a), 10(b) or 10(c)
hereof, notify the indemnifying party in writing of the claim or the
commencement of that action; provided, however, that the failure to
notify the indemnifying party shall not relieve it from any liability
which it may have under Section 10(a), 10(b) or 10(c) except to the
extent it has been materially prejudiced by such failure and, provided
further, that the failure to notify the indemnifying party shall not
relieve it from any liability which it may have to an indemnified party
otherwise than under Section 10(a), 10(b) or 10(c). If any such claim
or action shall be brought against an indemnified party, and it shall
notify the indemnifying party thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it wishes,
jointly with any other similarly notified indemnifying party, to assume
the defense thereof with counsel reasonably satisfactory to the
indemnified party. After notice from the indemnifying party to the
indemnified party of its election to assume the defense of such claim
or action, the indemnifying party shall not be liable to the
indemnified party under this Section 10 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the
defense thereof other than reasonable costs of investigation; provided,
however, that the Representatives shall have the right to employ
counsel to represent jointly the Representatives and those other
Underwriters and their respective officers, employees, agents and
controlling persons who may be subject to liability arising out of any
claim in respect of which indemnity may be sought by the Underwriters,
on the one hand, against the Company or
34
Selling Stockholders, on the other hand, under this Section 10 if, in
the reasonable judgment of the Representatives, it is advisable for the
Representatives and those Underwriters, officers, employees, agents and
controlling persons to be jointly represented by separate counsel, and
in that event the reasonable fees and expenses of such separate counsel
shall be paid by the Company or Selling Stockholders, respectively. No
indemnifying party shall (i) without the prior written consent of the
indemnified parties (which consent shall not be unreasonably withheld),
settle or compromise or consent to the entry of any judgment with
respect to any pending or threatened claim, action, suit or proceeding
in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified parties are actual or
potential parties to such claim or action) unless such settlement,
compromise or consent includes an unconditional release of each
indemnified party from all liability arising out of such claim, action,
suit or proceeding, or (ii) be liable for any settlement of any such
action effected without its written consent (which consent shall not be
unreasonably withheld), but if settled with the consent of the
indemnifying party or if there be a final judgment of the plaintiff in
any such action, the indemnifying party agrees to indemnify and hold
harmless any indemnified party from and against any loss or liability
by reason of such settlement or judgment.
(e) If the indemnification provided for in this Section 10
shall for any reason be unavailable to or insufficient to hold harmless
an indemnified party under Section 10(a), 10(b) or 10(c) in respect of
any loss, claim, damage or liability, or any action in respect thereof,
referred to therein, 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 such loss, claim,
damage or liability, or action in respect thereof, (i) in such
proportion as shall be appropriate to reflect the relative benefits
received by the Company and the Selling Stockholders, on the one hand,
and the Underwriters, on the other hand, from the offering of the Stock
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 the Company and the Selling Stockholders, on the one
hand, and the Underwriters, on the other hand, with respect to the
statements or omissions which resulted in such loss, claim, damage or
liability, or action in respect thereof, as well as any other relevant
equitable considerations. The relative benefits received by the Company
and the Selling Stockholders, on the one hand, and the Underwriters, on
the other hand, with respect to such offering shall be deemed to be in
the same proportion as the total net proceeds from the offering of the
Stock purchased under this Agreement (before deducting expenses)
received by the Company and Selling Stockholders, on the one
35
hand, and the total underwriting discounts and commissions received by
the Underwriters with respect to the shares of the Stock purchased
under this Agreement, on the other hand, bear to the total gross
proceeds from the offering of the shares of the Stock under this
Agreement, in each case as set forth in the table on the cover page of
the Prospectus. The relative fault shall be determined by reference to
whether the untrue or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact relates to
information supplied by the Company, the Selling Stockholders or the
Underwriters, the intent of the parties and their relative knowledge,
access to information and opportunity to correct or prevent such
statement or omission. The Company, the Selling Stockholders and the
Underwriters agree that it would not be just and equitable if
contributions pursuant to this Section 10(e) 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
herein. The amount paid or payable by an indemnified party as a result
of the loss, claim, damage or liability, or action in respect thereof,
referred to above in this Section 10 shall be deemed to include, for
purposes of this Section 10(e), any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or
defending any such action or claim. Notwithstanding the provisions of
this Section 10(e), no Underwriter shall be required to contribute any
amount in excess of the amount by which the total price at which the
Stock underwritten by it and distributed to the public was offered to
the public exceeds the amount of any damages which such Underwriter has
otherwise paid or become liable to pay by reason of any untrue or
alleged untrue statement or omission or alleged omission. No person
guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. The
Underwriters' obligations to contribute as provided in this Section
10(e) are several in proportion to their respective underwriting
obligations and not joint.
(f) The Underwriters severally confirm and the Company and
each Selling Stockholder acknowledges that the statements with respect
to the public offering of the Stock by the Underwriters set forth on
cover page of, and the concession and reallowance figures appearing
under the caption "Underwriting," the paragraphs under the heading
"Underwriting -- Stabilization, Short Positions and Penalty Bids" and
the second paragraph under the heading "Underwriting -- Commissions and
Expenses" in the Prospectus are correct and constitute the only
information concerning such Underwriters furnished in writing to the
Company by or on behalf of the Underwriters specifically for inclusion
in the Registration Statement and the Prospectus.
36
11. Defaulting Underwriters.
If, on either Delivery Date, any Underwriter defaults in the
performance of its obligations under this Agreement, the remaining
non-defaulting Underwriters shall be obligated to purchase the Stock which the
defaulting Underwriter agreed but failed to purchase on such Delivery Date in
the respective proportions which the number of shares of the Firm Stock set
opposite the name of each remaining non-defaulting Underwriter in Schedule 1
hereto bears to the total number of shares of the Firm Stock set opposite the
names of all the remaining non-defaulting Underwriters in Schedule 1 hereto;
provided, however, that the remaining non-defaulting Underwriters shall not be
obligated to purchase any of the Stock on such Delivery Date if the total number
of shares of the Stock which the defaulting Underwriter or Underwriters agreed
but failed to purchase on such date exceeds 9.09% of the total number of shares
of the Stock to be purchased on such Delivery Date, and any remaining
non-defaulting Underwriter shall not be obligated to purchase more than 110% of
the number of shares of the Stock which it agreed to purchase on such Delivery
Date pursuant to the terms of Section 3. If the foregoing maximums are exceeded,
the remaining non-defaulting Underwriters, or those other underwriters
satisfactory to the Representatives who so agree, shall have the right, but
shall not be obligated, to purchase, in such proportion as may be agreed upon
among them, all the Stock to be purchased on such Delivery Date. If the
remaining Underwriters or other underwriters satisfactory to the Representatives
do not elect to purchase the shares which the defaulting Underwriter or
Underwriters agreed but failed to purchase on such Delivery Date, this Agreement
(or, with respect to the Second Delivery Date, the obligation of the
Underwriters to purchase, and of the Company to sell, the Option Stock) shall
terminate without liability on the part of any non-defaulting Underwriter or the
Company, except that the Company will continue to be liable for the payment of
expenses to the extent set forth in Sections 8 and 13. As used in this
Agreement, the term "Underwriter" includes, for all purposes of this Agreement
unless the context requires otherwise, any party not listed in Schedule 1 hereto
who, pursuant to this Section 13, purchases Firm Stock which a defaulting
Underwriter agreed but failed to purchase.
Nothing contained herein shall relieve a defaulting Underwriter of any
liability it may have to the Company or Selling Stockholders for damages caused
by its default. If other underwriters are obligated or agree to purchase the
Stock of a defaulting or withdrawing Underwriter, either the Representatives or
the Company may postpone the Delivery Date for up to seven full business days in
order to effect any changes that in the opinion of counsel for the Company or
counsel for the Underwriters may be necessary in the Registration Statement, the
Prospectus or in any other document or arrangement.
12. Termination. The obligations of the Underwriters hereunder may
be terminated by the Representatives by notice given to and received by the
Company prior to delivery of and payment for the Firm Stock if, prior to that
time, any of the events described in Sections 9(j) or 9(k), shall have occurred,
or the event described in Section 9(l) has not occurred, or if the Underwriters
shall decline to purchase the Stock for any reason permitted under this
Agreement.
37
13. Reimbursement of Underwriters' Expenses. If any Selling
Stockholder shall fail to tender the Stock for delivery to the Underwriters by
reason of any failure, refusal or inability on the part of the Company or any
Selling Stockholder 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 or the Selling Stockholders (including, without
limitation, with respect to the transactions) is not fulfilled, the Company will
reimburse the Underwriters for all reasonable out-of-pocket expenses (including
fees and disbursements of counsel) incurred by the Underwriters in connection
with this Agreement and the proposed purchase of the Stock, and upon demand the
Company shall pay the full amount thereof to the Representatives. If this
Agreement is terminated pursuant to Section 11 by reason of the default of one
or more Underwriters, neither the Company nor the Selling Stockholders shall be
obligated to reimburse any defaulting Underwriter on account of those expenses.
14. Notices, etc. All statements, requests, notices and agreements
hereunder shall be in writing, and:
(a) if to the Underwriters, shall be delivered or sent by
mail, or facsimile transmission to Xxxxxx Brothers Inc., 000 Xxxxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Syndicate Registration
Department (Fax: 000-000-0000), with a copy, in the case of any notice
pursuant to Section 10(c), to the Director of Litigation, Office of the
General Counsel, Xxxxxx Brothers Inc., 000 Xxxx Xxxxxx, 00xx Xxxxx, Xxx
Xxxx, XX 00000, and
with a copy to Xxxxxx & Xxxxxxx LLP, 000 Xxxxxxxxxxxx Xxxxx, Xxxxx
Xxxx, XX 00000, Attention: Xxxxxxx X. Xxxxxx (Fax: 000-000-0000);
(b) if to the Company, shall be delivered or sent by mail, or
facsimile transmission to the address of the Company set forth in the
Registration Statement, Attention: Xxxxxxx X.X. Lo (Fax: 000-000-0000),
and
with a copy to Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, 000 Xxxx Xxxx Xxxx,
Xxxx Xxxx, XX 00000, Attention: Xxxx Xxxxxxxx (Fax: (000) 000-0000);
and
(c) if to any Selling Stockholder, shall be delivered or sent
by mail, or facsimile transmission to the address set forth in Schedule
2.
provided, however, that any notice to an Underwriter pursuant to Section 10
shall be delivered or sent by mail, or facsimile transmission to such
Underwriter at its address set forth in its acceptance to the Representatives,
which address will be supplied to any other party hereto by the Representatives
upon request. Any such statements, requests, notices or agreements shall take
effect at the time of receipt thereof. The Company shall be entitled to act and
rely upon any request, consent, notice or agreement given or made on
38
behalf of the Underwriters by Xxxxxx Brothers Inc. on behalf of the
Representatives and the Company.
15. Persons Entitled to Benefit of Agreement. This Agreement shall
inure to the benefit of and be binding upon the Underwriters, the Company and
the Selling Stockholders and their respective successors. This Agreement and the
terms and provisions hereof are for the sole benefit of only those persons,
except that (A) the representations, warranties, indemnities and agreements of
the Company and Selling Stockholders contained in this Agreement shall also be
deemed to be for the benefit of the person or persons, if any, who control any
Underwriter within the meaning of Section 15 of the Securities Act and (B) the
indemnity agreement of the Underwriters contained in Section 10(c) of this
Agreement shall be deemed to be for the benefit of directors of the Company,
officers of the Company who have signed the Registration Statement and any
person controlling the Company within the meaning of Section 15 of the
Securities Act. Nothing in this Agreement is intended or shall be construed to
give any person, other than the persons referred to in this Section 15, any
legal or equitable right, remedy or claim under or in respect of this Agreement
or any provision contained herein.
16. Survival. The respective indemnities, representations,
warranties and agreements of the Company, the Selling Stockholders and the
Underwriters contained in this Agreement or made by or on behalf on them,
respectively, pursuant to this Agreement, shall survive the delivery of and
payment for the Stock and shall remain in full force and effect, regardless of
any investigation made by or on behalf of any of them or any person controlling
any of them.
17. Definition of the Terms "Business Day" and "Subsidiary." For
purposes of this Agreement, (a) "BUSINESS DAY" means each Monday, Tuesday,
Wednesday, Thursday or Friday which is not a day on which banking institutions
in New York are generally authorized or obligated by law or executive order to
close and (b) "SUBSIDIARY" has the meaning set forth in Rule 405 of the Rules
and Regulations.
18. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of New York.
19. Consent to Jurisdiction. Each party irrevocably agrees that
any legal suit, action or proceeding arising out of or based upon this Agreement
or the transactions contemplated hereby ("RELATED PROCEEDINGS") may be
instituted in the federal courts of the United States of America located in the
City of New York or the courts of the State of New York in each case located in
the Borough of Manhattan in the City of New York (collectively, the "SPECIFIED
COURTS"), and irrevocably submits to the exclusive jurisdiction (except for
proceedings instituted in regard to the enforcement of a judgment of any such
court (a "RELATED JUDGMENT"), as to which such jurisdiction is non-exclusive) of
such courts in any such suit, action or proceeding. The parties further agree
that service of any process, summons, notice or document by mail to such party's
address set forth above shall be effective service of process for any lawsuit,
action or
39
other proceeding brought in any such court. The parties hereby irrevocably and
unconditionally waive any objection to the laying of venue of any lawsuit,
action or other proceeding in the Specified Courts, and hereby further
irrevocably and unconditionally waive and agree not to plead or claim in any
such court that any such lawsuit, action or other proceeding brought in any such
court has been brought in an inconvenient forum.
20. Waiver of Immunity. With respect to any Related Proceeding,
each party irrevocably waives, to the fullest extent permitted by applicable
law, all immunity (whether on the basis of sovereignty or otherwise) from
jurisdiction, service of process, attachment (both before and after judgment)
and execution to which it might otherwise be entitled in the Specified Courts,
and with respect to any Related Judgment, each party waives any such immunity in
the Specified Courts or any other court of competent jurisdiction, and will not
raise or claim or cause to be pleaded any such immunity at or in respect of any
such Related Proceeding or Related Judgment, including, without limitation, any
immunity pursuant to the United States Foreign Sovereign Immunities Act of 1976,
as amended.
21. Counterparts. This Agreement may be executed in one or more
counterparts and, if executed in more than one counterpart, the executed
counterparts shall each be deemed to be an original but all such counterparts
shall together constitute one and the same instrument.
22. Headings. The headings herein are inserted for convenience of
reference only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.
40
If the foregoing correctly sets forth the agreement among the Company,
the Selling Stockholders and the Underwriters, please indicate your acceptance
in the space provided for that purpose below.
Very truly yours,
NETGEAR, INC.
By ________________________________________
Name: Xxxxxxx X.X. Lo
Title: Chairman and Chief Executive Officer
THE SELLING STOCKHOLDERS SET
FORTH IN SCHEDULE 2 HERETO
By ________________________________________
Name:
Title: Attorney-in-Fact
Accepted:
XXXXXX BROTHERS INC.
XXXXXXX, XXXXX & CO.
XXXXXXX & COMPANY, INC.
JMP SECURITIES LLC
PACIFIC GROWTH EQUITIES, LLC
For themselves and as Representatives
of the several Underwriters named
in Schedule 1 hereto
By XXXXXX BROTHERS INC.
By:____________________
Authorized Representative
SCHEDULE 1
Final List of Underwriters - [ ], 2004
[ ] Shares
NETGEAR, INC.
Common Stock
NUMBER OF
UNDERWRITERS SHARES
------------- ------
Xxxxxx Brothers Inc.
Xxxxxxx, Sachs & Co.
Xxxxxxx & Company, Inc.
JMP Securities LLC
Pacific Growth Equities, LLC
Total
42
SCHEDULE 2
Final List of Selling Stockholders - [ ], 2004
Name of Selling Firm Stock to be Sold Option Stock to be Sold if
Stockholder(1) Option is Exercised
TOTAL
------------------
(1) Each Selling Stockholder has appointed [ ] and [ ] and each of them, as
Attorneys-in-Fact for such Selling Stockholder.
43
Exhibit A
LOCK-UP LETTER AGREEMENT
XXXXXX BROTHERS INC.
XXXXXXX, XXXXX & CO.
XXXXXXX & COMPANY, INC.
JMP SECURITIES LLC
PACIFIC GROWTH EQUITIES, LLC
As Representatives of the several
Underwriters named in Schedule 1,
c/x Xxxxxx Brothers Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Dear Sirs:
The undersigned understands that you and certain other firms propose to
enter into an Underwriting Agreement (the "UNDERWRITING AGREEMENT") providing
for the purchase by you and such other firms (the "UNDERWRITERS") of shares (the
"SHARES") of Common Stock, par value $0.001 per share (the "COMMON STOCK"), of
NETGEAR, Inc., a Delaware corporation (the "COMPANY"), and that the Underwriters
propose to reoffer the Shares to the public (the "OFFERING").
In consideration of the execution of the Underwriting Agreement by the
Underwriters, and for other good and valuable consideration, the undersigned
hereby irrevocably agrees that, without the prior written consent of Xxxxxx
Brothers Inc., on behalf of the Underwriters, the undersigned will not, directly
or indirectly, (1) offer for sale, sell, pledge, or otherwise dispose of (or
enter into any transaction or device that is designed to, or could be expected
to, result in the disposition by any person at any time in the future of) any
shares of Common Stock (including, without limitation, shares of Common Stock
that may be deemed to be beneficially owned by the undersigned in accordance
with the rules and regulations of the Securities and Exchange Commission and
shares of Common Stock that may be issued upon exercise of any option or
warrant) or securities convertible into or exchangeable for Common Stock (other
than any of the Shares) owned by the undersigned on the date of execution of
this Lock-Up Letter Agreement or on the date of the completion of the Offering,
or (2) enter into any swap or other derivatives transaction that transfers to
another, in whole or in part, any of the economic benefits or risks of ownership
of such shares of Common Stock, whether any such transaction described in clause
(1) or (2) above is to be settled by delivery of Common Stock or other
securities, in cash or otherwise, for a period of 90 days after the date of the
final Prospectus relating to the Offering.
44
In furtherance of the foregoing, the Company and its Transfer Agent are
hereby authorized to decline to make any transfer of securities if such transfer
would constitute a violation or breach of this Lock-Up Letter Agreement.
The foregoing restrictions shall not apply to bona fide gifts or other
transfers of shares of Common Stock, in each case that are made exclusively
between and among the undersigned or members of the undersigned's family, or
affiliates of the undersigned, including its partners (if a partnership) or
members (if a limited liability company); provided that it shall be a condition
to any such transfer that (i) the transferee agrees to be bound by the terms of
this Lock-Up Letter Agreement to the same extent as if the transferee were a
party hereto, and (ii) no filing by any party (donor, donee, transferor or
transferee) under the Securities Exchange Act of 1934, as amended, shall be
required or shall be voluntarily made in connection with such transfer or
distribution (other than a filing on a Form 5 made after the expiration of the
90-day period referred to above).
Notwithstanding anything herein to the contrary, if (i) during the last
17 days of the 90-day restricted period, the Company issues an earnings release
or material news or a material event relating to the Company occurs; or (ii)
prior to the expiration of the 90-day restricted period, the Company announces
that it will release earnings results during the 16-day period beginning on the
last day of the 90-day period, the restrictions imposed by this Agreement shall
continue to apply until the expiration of the 18-day period beginning on the
issuance of the earnings release or the occurrence of the material news or
material event.
It is understood that, if the Company notifies you that it does not
intend to proceed with the Offering, if the Underwriting Agreement does not
become effective, or if the Underwriting Agreement (other than the provisions
thereof which survive termination) shall terminate or be terminated prior to
payment for and delivery of the Shares, the undersigned will be released from
its obligations under this Lock-Up Letter Agreement. Furthermore, it is
understood that the obligations accepted pursuant to this Lock-Up Letter
Agreement are in addition to, and do not supercede, any similar obligations to
which the undersigned may be bound.
The undersigned understands that the Company and the Underwriters will
proceed with the Offering in reliance on this Lock-Up Letter Agreement.
Whether or not the Offering actually occurs depends on a number of
factors, including market conditions. Any Offering will only be made pursuant to
an Underwriting Agreement, the terms of which are subject to negotiation between
the Company, the Underwriters and the Selling Stockholders named therein.
This Lock-Up Letter Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York. The undersigned hereby
represents and warrants that the undersigned has full power and authority to
enter into this Lock-Up Letter Agreement and that, upon request, the undersigned
will execute any additional
45
documents necessary in connection with the enforcement hereof. Any obligations
of the undersigned shall be binding upon the heirs, personal representatives,
successors and assigns of the undersigned.
This Lock-Up Letter Agreement shall lapse and become null and void if
the Offering shall not have occurred on or before July 31, 2004.
Very truly yours,
Dated: __________________ By: ________________________________________
Name: ______________________________________
(please print)
Title: _____________________________________
(please print)
Stockholder
Name: ______________________________________
(if different from above, please print)
46
Exhibit B
Legal Opinion of Xxxxx & XxXxxxxx, Germany counsel for the Company
Dear Sirs,
By written request of Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, Palo Alto on
behalf of NETGEAR, Inc., dated ___________ (the "Request"), we have been asked
to give a legal opinion, as German attorneys, in respect of Netgear Deutschland
GmbH (the "COMPANY").
We do not act as general counsel for the Company, nor are we generally
familiar with the affairs of the Company. We have been engaged to advise only on
the matters specifically addressed in the opinion expressed herein concerning
the Company. Thus, there may exist, in respect of the Company, documents and/or
matters of a legal nature which may be relevant to the issues addressed herein
but with respect to which we have not been consulted and have no information.
1. For the purposes of this opinion we have examined the following
documents:
(a) a certified excerpt from the Commercial Register in Munich relating to
the Company dated [ ], 2004;
(b) the Articles of Incorporation of the Company dated as of March 1, 2000;
(c) a copy of the list of shareholders of the Company filed with the
Commercial Register in Munich on May 8, 2000;
(d) a certificate from the sole managing director (Geschaftsfuhrer) of the
Company stating that he has not received any notification of a transfer
of shares in the Company pursuant to Section 16 of the German Act on
Limited Liability Companies (Gesetz betreffend die Gesellschaften mit
beschrankter Haftung);
(e) a draft dated [ ], 2004 of the Underwriting Agreement;
(f) Form S-1 Registration Statement under the Securities Act of 1933 as
filed by NETGEAR, Inc. with the Securities and Exchange Commission on [
], 2004 as well as amendments thereto (Form S-1/A) filed on [ ], 2004
and [ ], 2004.
In rendering this opinion, we have relied only upon the above documents and the
assumptions referred to below and we have not made any investigations or
searches of facts other than obtaining the documents set forth in Section 1
above.
2. For the purposes of this opinion we have assumed without further
inquiry:
47
(a) the genuineness of all signatures on the documents that we have
reviewed;
(b) the completeness and conformity to originals of all documents
purporting to be copies of originals and the authenticity of all
documents submitted to us as originals;
(c) that no changes have been made to the Commercial Register entries in
respect of the Company or the Articles of Incorporation referred to in
Section 1 (b) above since the date referred to in Section 1 (a) above;
(d) that there are no agreements to which NETGEAR, Inc. or the Company are
a party or court orders or decrees against NETGEAR, Inc. or the Company
which would affect this opinion;
(e) that the Company has not passed a voluntary winding-up resolution, no
petition has been presented or order made by a court for the
winding-up, dissolution or administration of the Company and no
receiver, trustee, administrator, administrative receiver or similar
officer has been appointed in relation to the Company or any of its
assets or revenues.
(f) that there are no provisions of the laws of any jurisdiction outside
Germany which would have any implication on the opinion we express;
(g) this opinion is confined to and given on the basis of the laws of the
Federal Republic of Germany as currently in effect and as currently
applied by the courts of Germany. We have not investigated, and we do
not express or imply any opinion on, the laws of any other
jurisdiction.
We have not been involved in any aspect of the transactions in connection with
the contemplated stock offering, except for the rendering of this legal opinion
and, accordingly, we have not been requested to review and have not seen any
documents relating to such transactions, except for the limited review of the
Form S-1 Registration Statement and of the draft of the Underwriting Agreement
necessary to render the legal opinion set out herein.
3. Based solely on the above-mentioned documents and in reliance thereon
and on our consideration of such questions of law as we consider
relevant in the circumstances, and subject to the qualifications set
forth herein, we are of the opinion that:
(a) The Company has been duly incorporated and is validly existing and in
good standing as a limited liability company (GmbH) under the laws of
Germany and, to our knowledge, is duly qualified to do business as a
foreign corporation in each jurisdiction in which its ownership or
lease of property or the conduct of its business requires such
qualification and has the corporate power and authority
48
necessary to own, lease, hold and operate its properties and to conduct
the business in which it is engaged.
(b) All of the issued shares of capital stock of the Company have been duly
and validly authorized and issued and are fully paid, non-assessable
and are owned directly by NETGEAR, Inc., free and clear of all liens,
encumbrances, equities or claims.
(c) The issue and sale of the shares of Stock being delivered on the
Delivery Date (as such capitalized terms are defined in the
Underwriting Agreement) by NETGEAR, Inc. pursuant to the Underwriting
Agreement, and the execution, delivery and compliance by NETGEAR, Inc.
with all of the provisions of such Underwriting Agreement and the
consummation of the transactions contemplated thereby, will not
conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any indenture, mortgage,
deed of trust, loan agreement or other agreement or instrument known to
us to which the Company is a party or by which the Company is bound or
to which any of the property or assets of the Company is subject,
except for such breaches, violations or defaults that would not
individually or in the aggregate cause or be reasonably likely to cause
a material adverse effect on the general affairs, management,
consolidated financial positions, stockholders' equity, results of
operations, business or prospects of NETGEAR, Inc. and its subsidiaries
nor will such actions result in any violation of the provisions of the
Articles of Incorporation or other constitutional documents of the
Company or any statute or any order, rule or regulation known to us of
any court or governmental agency or body having jurisdiction over the
Company or any of its properties or assets.
(d) Pursuant to the certified excerpt from the Commercial Register in
Munich dated [ ], 2004, the current capitalization of the Company is
stated by reference to the Company's registered capital in the amount
of EUR 100,000.--.
By "good standing" (a phrase which has no recognized meaning under German law)
we mean that, according to the excerpt from the Commercial Register referred to
in paragraph 1(a) above, the Company has, according to the documents on the file
of the Company in the custody of the Commercial Register, been in continuous and
unbroken existence since the date of its incorporation and no action is
currently being taken by the registrar for striking the Company off the register
and dissolving it as defunct, the Company is not in liquidation or subject to an
administrative order therefore, and no receiver or manager of the Company's
property has been appointed.
By "validly existing", we mean that the Company has not been struck off the
register and that no notice of winding-up order or resolution, or of an
administrative order therefor, or of the appointment of a receiver has been
recorded with the Commercial Register.
4. The opinion set out above is subject to the following qualifications:
49
(a) Unless expressly stated to the contrary, in this legal opinion German
legal concepts are addressed in the English language and not in their
original German terms which may not be identical in their respective
legal understanding. This opinion may, therefore, only be relied upon
under the express condition that any issues of interpretation arising
thereunder will be governed by German law and be brought before a
German court.
(b) The ownership of shares of a company with limited liability (GmbH)
incorporated under German law cannot be proven and/or confirmed with
certainty. For the valid ownership and transfer of such share(s)
neither the registration of the respective shareholder - e. g. in a
company register - nor the physical existence and possession of share
certificates is provided for under German law. We have reviewed the
copies of documents as referred to in Section 1 which show that
NETGEAR, Inc. was a shareholder of the Company at incorporation and
which do not indicate any subsequent transfer of shares in the Company.
Our opinion rendered in Section 3 (b) is based on the documents
referred to in Section 1 above and on the assumption stated under
Section 2 (d) above.
(c) No opinion is expressed on matters of fact.
This opinion is given only on behalf of Xxxxx & XxXxxxxx, Frankfurt am Main, and
not on behalf of any other office or associated firm of Xxxxx & XxXxxxxx. In
this opinion the expressions "we", "us", "our" and like expressions should be
construed accordingly.
This opinion is given as of its date and is rendered for your sole benefit in
connection with the transactions indicated in the Request. This opinion is not
to be disclosed to any other person nor is it to be relied upon by any other
person or for any other purpose or quoted or referred to in any public document
without our prior written consent.
Yours faithfully,
50
Exhibit C
CERTIFICATIONS
I, Xxxxxxx X.X. Lo, on behalf of NETGEAR, certify that:
1. I have reviewed the registration statement, as amended at the
time it is declared effective by the Securities and Exchange Commission (the
"SEC"), including all information contained in the final prospectus filed with
the SEC pursuant to Rule 424(b) of the Securities Act of 1933, as amended and
the rules and regulations thereunder (the "Securities Act"), and deemed to be a
part of the registration statement as of the time it is declared effective by
the SEC pursuant to paragraph (b) of Rule 430A of the Securities Act (the
"Registration Statement") of NETGEAR, Inc. (the "Company");
2. Based on my knowledge, the Registration Statement does not
contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the periods covered by
the Registration Statement;
3. Based on my knowledge, the financial statements, and other
financial information included in the Registration Statement, fairly present in
all material respects the financial condition, results of operations and cash
flows of the Company as of, and for, the periods presented in the Registration
Statement;
4. Xxxxxxxx X. Xxxxxx, the Company's principal financial officer,
and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and
internal control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the Company and we have:
(a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the Company, including its
consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which the Registration Statement is being
prepared;
(b) Designed such internal control over financial reporting, or caused
such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the Company's disclosure controls
and procedures and presented in the Registration Statement our conclusion about
the
51
effectiveness of the disclosure controls and procedures, as of the end of the
most recent period covered by the Registration Statement based on such
evaluation; and
(d) Disclosed in the Registration Statement any change in the Company's
internal control over financial reporting that occurred during the Company's
most recent fiscal quarter included in the Registration Statement that has
materially affected, or is reasonably likely to materially affect, the Company's
internal control over financial reporting; and
5. Xxxxxxxx X. Xxxxxx, the Company's principal financial officer,
and I have disclosed, based on our most recent evaluation of internal control
over financial reporting, to the Company's auditors and the audit committee of
the Company's board of directors:
(a) All significant deficiencies and internal weaknesses in the design
or operation of internal control over financial reporting which are reasonably
likely to adversely affect the Company's ability to record, process, summarize
and report financial information; and
(b) Any fraud, whether or not material, that involves management or
other employees who have a significant role in the Company's internal control
over financial reporting.
Date:
By: ____________________________________
Xxxxxxx X.X. Lo
Chairman and Chief Executive Officer
NETGEAR, Inc.
52
I, Xxxxxxxx X. Xxxxxx, on behalf of NETGEAR, certify that:
1. I have reviewed the registration statement, as amended at the
time it is declared effective by the Securities and Exchange Commission (the
"SEC"), including all information contained in the final prospectus filed with
the SEC pursuant to Rule 424(b) of the Securities Act of 1933, as amended and
the rules and regulations thereunder (the "Securities Act"), and deemed to be a
part of the registration statement as of the time it is declared effective by
the SEC pursuant to paragraph (b) of Rule 430A of the Securities Act (the
"Registration Statement") of NETGEAR, Inc. (the "Company");
2. Based on my knowledge, the Registration Statement does not
contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the periods covered by
the Registration Statement;
3. Based on my knowledge, the financial statements, and other
financial information included in the Registration Statement, fairly present in
all material respects the financial condition, results of operations and cash
flows of the Company as of, and for, the periods presented in the Registration
Statement;
4. Xxxxxxx X.X. Lo, the Company's principal executive officer,
and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and
internal control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the Company and we have:
(a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the Company, including its
consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which the Registration Statement is being
prepared;
(b) Designed such internal control over financial reporting, or caused
such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the Company's disclosure controls
and procedures and presented in the Registration Statement our conclusion about
the effectiveness of the disclosure controls and procedures, as of the end of
the most recent period covered by the Registration Statement based on such
evaluation; and
(d) Disclosed in the Registration Statement any change in the Company's
internal control over financial reporting that occurred during the Company's
most recent
53
fiscal quarter included in the Registration Statement that has materially
affected, or is reasonably likely to materially affect, the Company's internal
control over financial reporting; and
5. Xxxxxxx X.X. Lo, the Company's principal executive officer,
and I have disclosed, based on our most recent evaluation of internal control
over financial reporting, to the Company's auditors and the audit committee of
the Company's board of directors:
(a) All significant deficiencies and internal weaknesses in the design
or operation of internal control over financial reporting which are reasonably
likely to adversely affect the Company's ability to record, process, summarize
and report financial information; and
(b) Any fraud, whether or not material, that involves management or
other employees who have a significant role in the Company's internal control
over financial reporting.
Date:
By: ____________________________________
Xxxxxxxx X. Xxxxxx
Vice President and Chief Financial
Officer NETGEAR, Inc.
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