EXHIBIT 1.1
_______________ SHARES
NETGEAR, INC.
COMMON STOCK
UNDERWRITING AGREEMENT
June ____, 2003
▇▇▇▇▇▇ BROTHERS INC.
▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ & ▇▇▇▇▇ INCORPORATED
UBS WARBURG LLC
As Representatives of the several
Underwriters named in Schedule 1,
c/▇ ▇▇▇▇▇▇ Brothers Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Dear Sirs:
NetGear, Inc., a Delaware corporation (the "COMPANY"), proposes to
sell an aggregate of _________ shares (the "FIRM STOCK") of the Company's common
stock par value $0.001 per share (the "COMMON STOCK"). In addition, the Company
proposes to grant to the Underwriters named in Schedule 1 hereto (the
"UNDERWRITERS") an option to purchase up to an additional _______ shares of the
Common Stock on the terms and for the purposes set forth in Section 2 (the
"OPTION STOCK"). 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 Company by the Underwriters named
in Schedule 1 hereto (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 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 (the "REPRESENTATIVES") of
the Underwriters. 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 paragraph (b) of Rule 430A of the
Rules and Regulations, and including any registration registering
additional shares of Common Stock filed with the Commission pursuant
to Rule 462(b) of the Rules and Regulations; and "PROSPECTUS" means
such final prospectus, as first filed with the Commission pursuant
to paragraph (1) or (4) of Rule 424(b) of the Rules and Regulations.
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
respects to the requirements of the Securities Act and the Rules and
Regulations and do not and will not, as of the applicable effective
date (as to the Registration Statement and any amendment thereto)
and as of the applicable filing date (as to the Prospectus and any
amendment or supplement thereto) 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;
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 16) 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
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Company [other than ______________________________________] 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 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. 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) The shares of the Stock to be issued and sold by the
Company to the Underwriters hereunder have been duly and validly
authorized and, when issued and delivered against payment therefor
in accordance with this Agreement, will be duly and validly issued,
fully paid and non-assessable; and the Stock will conform to the
descriptions thereof contained in the Prospectus. Upon payment for
and delivery of the Stock pursuant to this Agreement, the
underwriters will acquire good and valid title to such Stock, free
and clear of all liens, encumbrances, equities, preemptive rights,
subscription rights, other rights to purchase, voting or transfer
restrictions and other claims.
(f) This Agreement has been duly authorized, executed and
delivered by the Company.
(g) 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, nor
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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.
(h) 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 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 the securities registered pursuant to the Registration
Statement or 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.
(i) 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.
(j) 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,
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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.
(k) 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.
(l) Each of Deloitte & Touche LLP and PricewaterhouseCoopers
LLP, who have certified certain financial statements of the Company,
whose reports appear in the Prospectus and who have delivered the
initial letters referred to in Section 8(f) 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.
(m) 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 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.
(n) 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.
(o) 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 ▇▇▇▇ registrations, copyrights and licenses necessary for
the conduct of
5
their respective businesses and have no reason to believe that the
conduct of their respective businesses will conflict with, and have
not received any notice of any claim of conflict with, any such
rights of others.
(p) 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 the best of the Company's knowledge, no such
proceedings are threatened or contemplated by governmental
authorities or threatened by others.
(q) 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.
(r) 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.
(s) 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.
(t) The Company is in compliance in all material respects with
all currently applicable provisions of the Employee Retirement
Income Security Act of 1974, as amended, including the regulations
and published interpretations thereunder ("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 liability; the Company has not incurred and does not expect
to incur liability under (i) Title IV of ERISA with respect to
termination 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
6
would have any liability that is intended to be qualified under
Section 401(a) of the Code is so qualified in all material respects
and nothing has occurred, whether by action or by failure to act,
which would cause the loss of such qualification.
(u) 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.
(v) 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.
(w) The Company and each of its subsidiaries (i) makes and
keeps accurate books and records and (ii) maintains 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.
(x) 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 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 or (iii) is in
violation in any material respect 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
7
governmental authorization or permit necessary to the ownership of
its property or to the conduct of its business.
(y) 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.
(z) 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 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.
8
(aa) 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 and the application of the net
proceeds therefrom will be, an "investment company" within the
meaning of such term under the Investment Company Act of 1940, as
amended.
(bb) The Company has taken no action to offer or sell the
Directed Shares (as defined in Section 4) distributed in connection
with the Directed Share Program outside of the United States.
(cc) The Company has established and maintains disclosure
controls and procedures (as such term is defined in Rule 13a-14
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) have been evaluated for effectiveness as of a date within 90
days prior to the filing of 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.
(dd) 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 weaknesses 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.
(ee) Since the date of the most recent evaluation of such
disclosure controls and procedures, there have been no significant
changes in internal controls or in other factors that could
significantly affect internal controls, including any corrective
actions with regard to significant deficiencies and material
weaknesses.
(ff) 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.
(gg) There are no contracts, agreements or understandings
between the Company and any person that would give rise to a valid
claim
9
against the Company or any Underwriter for a brokerage commission,
finder's fee or the like payment in connection with this offering.
(hh) 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.
(ii) 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.
2. 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, the Company agrees to sell _______ shares of the
Firm Stock to the several Underwriters and each of the Underwriters, severally
and not jointly, agrees to purchase the number of shares of the Firm Stock set
forth opposite that Underwriter's name in Schedule 1 hereto. Each Underwriter
shall be obligated to purchase from the Company, that number of shares of the
Firm Stock which represents the same proportion of the number of shares of the
Firm Stock to be sold by the Company, as the number of shares of the Firm Stock
set forth opposite the name of such Underwriter in Schedule 1 represents of the
total number of shares of the Firm Stock to be purchased by all of the
Underwriters pursuant to this Agreement. 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 Company grants to the Underwriters an option to
purchase 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 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
10
than in 100 share amounts. The price of both the Firm Stock and any Option Stock
shall be $_____ per share.
The Company shall not 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.
3. 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.
4. Directed Share Program. It is understood that approximately
______________ shares of the Firm Stock ("DIRECTED SHARES") will initially be
reserved by the Underwriters for offer and sale to employees and persons having
business relationships with the Company and its subsidiaries ("DIRECTED SHARE
PARTICIPANTS") upon the terms and conditions set forth in the Prospectuses and
in accordance with the rules and regulations of the National Association of
Securities Dealers, Inc. Under no circumstances will ▇▇▇▇▇▇ Brothers Inc. or any
Underwriter be liable to the Company or to any Directed Share Participant for
any action taken or omitted to be taken in good faith in connection with such
Directed Share Program. To the extent that any Directed Shares are not
affirmatively reconfirmed for purchase by any Directed Share Participant on or
immediately after the date of this Agreement, such Directed Shares may be
offered to the public as part of the public offering contemplated hereby.
The Company agrees to pay all fees and disbursements incurred by the
Underwriters in connection with the Directed Share Program, and any stamp duties
or other taxes incurred by the Underwriters in connection with the Directed
Share Program.
5. Delivery of and Payment for the Stock. Delivery of and payment
for the Firm Stock shall be made at the office of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, at 10:00 A.M., New York City time,
on the [fourth] 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, the Company 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 Company 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, the Company shall make the certificates
representing the Firm Stock available for
11
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 2 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 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 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, the Company 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 Company 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, the Company
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
12
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
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 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 judgment of the Company or the
Representatives, be required by the Securities Act or requested by
the Commission;
13
(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 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 180 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), 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
14
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 ▇▇▇▇▇▇ Brothers
Inc. on behalf of the Underwriters; and to cause each officer,
director and shareholder of the Company 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 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 ▇▇▇▇▇▇ Brothers Inc. on behalf of the
Underwriters;
(j) Prior to the Effective Date, to apply for the inclusion of
the Stock on the Nasdaq National Market System and to use its best
efforts to effect that quotation, subject only to official notice of
issuance and evidence of satisfactory distribution, prior to the
First Delivery Date;
(k) To apply the net proceeds from the sale of the Stock
being sold by the Company as set forth in the Prospectus;
(l) 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
(m) In connection with the Directed Share Program, to use its
best efforts to ensure that the Directed Shares will be restricted
to the extent required by the National Association of Securities
Dealers, Inc. or the rules of such association from sale, transfer,
assignment, pledge or hypothecation for a period of three months
following the date of the effectiveness of the Registration
Statement; and ▇▇▇▇▇▇ Brothers Inc. will notify the Company as to
which Directed Share Participants will need to be so restricted. At
the request of ▇▇▇▇▇▇ Brothers Inc., the Company will direct the
transfer agent to place stop transfer restrictions upon such
securities for such period of time.
7. Expenses. The Company agrees to pay (a) the costs incident to the
authorization, issuance, sale and delivery of the Stock and any taxes payable in
that
15
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; (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, including the fees and disbursements of counsel for the
Underwriters, incident to the offer and sale of shares of the Stock by the
Underwriters to employees and persons having business relationships with the
Company and its subsidiaries, as described in Section 4; (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 with the prior approval of the
Company, 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; and (j) all other costs and expenses incident to
the performance of the obligations of the Company under this Agreement; provided
that, except as provided in this Section 7 and in Section 12 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.
8. 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
contained herein, to the performance by the Company of its 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
Stock, the
16
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 shall have furnished
to such counsel all documents and information that they may
reasonably request to enable them to pass upon such matters.
(c) ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ 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 subsidiaries have been
duly incorporated 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 or
formation, 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 engaged;
(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 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 issued and
outstanding partnership interests of each subsidiary of the
Company that is a partnership have been duly and validly
authorized and issued 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;
17
(iii) The shares of Stock being delivered on the
Delivery Date to the Underwriters have been duly and validly
authorized and, when issued and delivered against payment
therefore in accordance with this Agreement will be duly and
validly issued, fully paid and non-assessable;
(iv) 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;
(v) The Company and each of its subsidiaries have good
and marketable title in fee simple to all real property owned
by them, in each case free and clear of all liens,
encumbrances and defects except such as are described in the
Prospectus or such as do not materially affect the value of
such property and do not materially interfere with the use
made and proposed to be made of such property by the Company
and its subsidiaries; and all real property and buildings 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;
(vi) To the best of 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 the best of 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 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;
18
(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 "Risk Factors," "Business," "Certain
Relationships and Related Transactions," "Description of
Capital Stock," and ________________________, insofar as they
describe federal statutes, rules and regulations or
agreements, constitute a fair summary thereof and the opinion
of such counsel filed as Exhibit 5.1 to the Registration
Statement is confirmed and the Underwriters may rely upon such
opinion as if it were addressed to them;
(x) To the best of 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 issue and sale of the shares of Stock being
delivered on such Delivery Date by the Company pursuant to
this Agreement, and the execution, delivery and compliance by
the Company 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, nor will such actions result in any
violation of the provisions of the charter or by-laws or other
constitutional documents of the Company or any of its
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
19
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 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 the best of 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 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 the securities registered
pursuant to the Registration Statement or in any securities
being registered pursuant to any other registration statement
filed by the Company under the Securities Act; 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 or the Delivery 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 (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
20
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) The Representatives shall have received from ▇▇▇▇▇▇ &
▇▇▇▇▇▇▇ LLP, counsel for the Underwriters, such opinion or opinions,
dated such Delivery Date, with respect to the issuance and 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.
(e) 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.
(f) 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.
21
(g) 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 8(a) and 8(h) 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.
(h) 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 such
Delivery Date on the terms and in the manner contemplated in the
Prospectus.
(i) 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
22
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.
(j) The Nasdaq National Market shall have approved the Stock
for listing, subject only to official notice of issuance and
evidence of satisfactory distribution.
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.
9. 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 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
23
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 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 9(e). 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) The Company agrees to indemnify and hold harmless ▇▇▇▇▇▇
Brothers Inc. (including its officers and employees) and each
person, if any, who controls ▇▇▇▇▇▇ Brothers Inc. within the meaning
of the Securities Act ("▇▇▇▇▇▇ BROTHERS ENTITIES"), from and against
any loss, claim, damage or liability or any action in respect
thereof to which any of the ▇▇▇▇▇▇ Brothers Entities 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 material prepared by or with the
approval of the Company for distribution to Directed Share
Participants in connection with the Directed Share Program or any
omission or alleged omission to state therein a material
24
fact required to be stated therein or necessary to make the
statements therein not misleading, (ii) the failure of any Directed
Share Participant to pay for and accept delivery of the Directed
Shares sold pursuant to the Directed Share Program which,
immediately following the effectiveness of the Registration
Statement, were subject to a properly confirmed agreement to
purchase or (iii) is otherwise related to the Directed Share
Program, provided that, the Company shall not be responsible under
this subparagraph (iii) for any loss, claim, damage, liability or
action that is finally judicially determined to have resulted from
the gross negligence or willful misconduct of the ▇▇▇▇▇▇ Brothers
Entities. The Company shall reimburse the ▇▇▇▇▇▇ Brothers Entities
promptly upon demand for any legal or other expenses reasonably
incurred by them in connection with investigating or defending or
preparing to defend against any such loss, claim, damage, liability
or action as such expenses are incurred.
(c) Each Underwriter, severally and not jointly, shall
indemnify and hold harmless the Company, its officers and employees,
each of its 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 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 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 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 or
any such director, officer, employee or controlling person.
25
(d) Promptly after receipt by an indemnified party under this
Section 9 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 9(a) or 9(b)
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 9(a) or 9(b), 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 9(a) or 9(b). 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 9
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 against the
Company under this Section 9 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
fees and expenses of such separate counsel shall be paid by the
Company. Notwithstanding anything contained herein to the contrary,
if indemnity may be sought pursuant to Section 9(a) hereof in
respect of such claim or action, then in addition to such separate
firm for the indemnified parties, the indemnifying party shall be
liable for the fees and expenses of not more than one separate firm
(in addition to any local counsel) for the ▇▇▇▇▇▇ Brothers Entities
for the defense of any loss, claim, damage, liability or action
arising out of the Directed Share Program. 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
26
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 9
shall for any reason be unavailable to or insufficient to hold
harmless an indemnified party under Section 9(a) or 9(b) 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 on the one hand and the
Underwriters on the other 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, on the one hand and the
Underwriters on the other 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, on the one hand and the Underwriters on the other 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, on the one 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, 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, and the
Underwriters agree that it would not be just and equitable if
contributions pursuant to this Section 9(d) were to be determined by
pro rata allocation (even if the Underwriters were treated as one
entity for such purpose) or by any other method of allocation which
does not take into account the equitable considerations referred to
herein.
27
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 9 shall be deemed to include, for
purposes of this Section 9(d), 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 9(d), 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
9(d) are several in proportion to their respective underwriting
obligations and not joint.
(f) The Underwriters severally confirm and the Company
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" 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.
10. 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 2. 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
28
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 7 and 12. 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 10, 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 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.
11. 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 8(h) or 8(i), shall have occurred,
or the event described in Section 8(j) has not occurred, or if the Underwriters
shall decline to purchase the Stock for any reason permitted under this
Agreement.
12. Reimbursement of Underwriters' Expenses. If the Company 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 to perform any
agreement on its part to be performed, or because any other condition of the
Underwriters' obligations hereunder required to be fulfilled by the Company is
not fulfilled, 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 10 by
reason of the default of one or more Underwriters, the Company shall not be
obligated to reimburse any defaulting Underwriter on account of those expenses.
13. 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 ▇▇▇▇▇▇ Brothers Inc., ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Syndicate
Registration Department (Fax: ▇▇▇-▇▇▇-▇▇▇▇), with a copy, in the
case of any notice
29
pursuant to Section 9(c), to the Director of Litigation, Office of
the General Counsel, ▇▇▇▇▇▇ Brothers Inc., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇; and
(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: _________ (Fax:
_________).
provided, however, that any notice to an Underwriter pursuant to Section 9 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 behalf of the
Underwriters by ▇▇▇▇▇▇ Brothers Inc. on behalf of the Representatives and the
Company.
14. Persons Entitled to Benefit of Agreement. This Agreement shall
inure to the benefit of and be binding upon the Underwriters, the Company 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 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 9(b) 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 14, any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provision contained herein.
15. Survival. The respective indemnities, representations,
warranties and agreements of the Company 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.
16. 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.
30
17. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of New York.
18. 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 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.
19. 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.
20. 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.
21. 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.
31
If the foregoing correctly sets forth the agreement among the
Company and the Underwriters, please indicate your acceptance in the space
provided for that purpose below.
Very truly yours,
NETGEAR, INC.
By ______________________________________
Name: ▇▇▇▇▇▇▇ ▇.▇. Lo
Title: Chairman and Chief Executive
Officer
Accepted:
▇▇▇▇▇▇ BROTHERS INC.
▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ & ▇▇▇▇▇ INCORPORATED
UBS WARBURG LLC
For themselves and as Representatives
of the several Underwriters named
in Schedule 1 hereto
By ▇▇▇▇▇▇ BROTHERS INC.
By:____________________
Authorized Representative
32
SCHEDULE 1
Number of
Underwriters Shares
------------ ------
▇▇▇▇▇▇ Brothers Inc.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated
UBS Warburg LLC
Total
======
33
Exhibit A
LOCK-UP LETTER AGREEMENT
▇▇▇▇▇▇ Brothers Inc.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated
UBS Warburg LLC
As Representatives of the several
Underwriters named in Schedule 1
to the Underwriting Agreement,
c/▇ ▇▇▇▇▇▇ Brothers Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
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, and any successor (by merger or
otherwise) thereto (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 ▇▇▇▇▇▇
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 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 180 days after the date of the final Prospectus
relating to the Offering.
34
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.
Notwithstanding the foregoing, the undersigned may transfer the
undersigned's shares of Common Stock (i) as a bona fide gift or gifts, provided
that the donee or donees thereof agree to be bound in writing by the
restrictions set forth herein, (ii) to any trust for the direct or indirect
benefit of the undersigned or the immediate family of the undersigned, provided
that the trustee of the trust agrees to be bound in writing by the restrictions
set forth herein, and provided further that any such transfer shall not involve
a disposition for value, or (iii) with the prior written consent of ▇▇▇▇▇▇
Brothers Inc. on behalf of the Underwriters. For purposes of this Lock-Up Letter
Agreement, "immediate family" shall mean any relationship by blood, marriage or
adoption, not more remote than first cousin. In addition, if the undersigned is
a corporation, the corporation may transfer the capital stock of the Company to
any wholly-owned subsidiary of such corporation, and, if the undersigned is a
limited liability company, the limited liability company may transfer the
capital stock of the Company to a member or affiliated limited liability
company, and, if the undersigned is a partnership, the partnership may transfer
the capital stock of the Company to a partner or affiliated partnership;
provided, however, that in any such case, it shall be a condition to the
transfer that the transferee execute an agreement stating that the transferee is
receiving and holding such capital stock subject to the provisions of this
Lock-Up Letter Agreement and there shall be no further transfer of such capital
stock except in accordance with this agreement, and provided further that any
such transfer shall not involve a disposition for value.
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, we will be released from our obligations under this
Lock-Up Letter Agreement.
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 and the Underwriters.
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 documents necessary in
connection with the
35
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 August 31, 2003.
Very truly yours,
By: __________________________________
Name:
Title:
Dated: _______________________
36