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[Draft -- 6/9/00]
EXHIBIT 1.1
▇▇▇▇ Medical Systems, Inc.
[ ] Shares/1/
Common Stock
($.001 par value)
Underwriting Agreement
New York, New York
, 2000
▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney Inc.
FleetBoston ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Inc.
As Representatives of the several Underwriters,
c/o ▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
▇▇▇▇ Medical Systems, Inc., a corporation organized under the
laws of Delaware (the "Company"), proposes to sell to the several
underwriters named in Schedule I hereto (the "Underwriters"), for whom you
(the "Representatives") are acting as representatives, [ ]
shares of Common Stock, $.001 par value ("Common Stock") of the Company
(said shares to be issued and sold by the Company being hereinafter called
the "Underwritten Securities"). The Company also proposes to grant to the
Underwriters an option to purchase up to [ ] additional shares
of Common Stock to cover over-allotments (the "Option Securities"; the
Option Securities, together with the Underwritten Securities, being
hereinafter called the "Securities"). To the extent there are no
additional Underwriters listed on Schedule I other than you, the term
Representatives as used herein shall mean you, as Underwriters, and the
terms Representatives and Underwriters shall mean either the singular or
plural as the context requires. Certain terms used herein are defined in
Section 17 hereof.
___________________
/1/ / Plus an option to purchase from the Company, up to [ ]
additional Securities to cover over-allotments
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As part of the offering contemplated by this Agreement, ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ Inc. has agreed to reserve out of the Securities set forth
opposite its name on the Schedule II to this Agreement, up to [ ]
shares, for sale to the Company's employees, officers, and directors and
other parties associated with the Company (collectively, "Participants"),
as set forth in the Prospectus under the heading "Underwriting" (the
"Directed Share Program"). The Securities to be sold by ▇▇▇▇▇▇▇ ▇▇▇▇▇
Barney Inc. pursuant to the Directed Share Program (the "Directed Shares")
will be sold by ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc. pursuant to this Agreement at the
public offering price. Any Directed Shares not orally confirmed for
purchase by any Participants by the end of the business day on which this
Agreement is executed will be offered to the public by ▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney
Inc. as set forth in the Prospectus.
1. Representations and Warranties. The Company represents and
warrants to, and agrees with, each Underwriter as set forth below in this
Section 1.
(a) The Company has prepared and filed with the Commission a
registration statement (file number ) on Form S-1, including a
related preliminary prospectus, for registration under the Act of the
offering and sale of the Securities. The Company may have filed one
or more amendments thereto, including a related preliminary
prospectus, each of which has previously been furnished to you. The
Company will next file with the Commission either (1) prior to the
Effective Date of such registration statement, a further amendment to
such registration statement (including the form of final prospectus)
or (2) after the Effective Date of such registration statement, a
final prospectus in accordance with Rules 430A and 424(b). In the case
of clause (2), the Company has included in such registration
statement, as amended at the Effective Date, all information (other
than Rule 430A Information) required by the Act and the rules
thereunder to be included in such registration statement and the
Prospectus. As filed, such amendment and form of final prospectus, or
such final prospectus, shall contain all Rule 430A Information,
together with all other such required information, and, except to the
extent the Representatives shall agree in writing to a modification,
shall be in all substantive respects in the form furnished to you
prior to the Execution Time or, to the extent not completed at the
Execution Time, shall contain only such specific additional
information and other changes (beyond that contained in the latest
Preliminary Prospectus) as the Company has advised you, prior to the
Execution Time, will be included or made therein.
(b) On the Effective Date, the Registration Statement did or
will, and when the Prospectus is first filed (if required) in
accordance with Rule 424(b) and on the Closing Date (as defined
herein) and on any date on which Option Securities are purchased, if
such date is not the Closing Date (a "settlement date"), the
Prospectus (and any supplements thereto) will, comply in all material
respects with the applicable requirements of the Act and the rules
thereunder; on the Effective Date and at the Execution Time, the
Registration Statement did not or will not contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the
statements therein not misleading; and, on the Effective Date, the
Prospectus, if not filed pursuant to Rule 424(b), will not, and on the
date of any filing pursuant
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to Rule 424(b) and on the Closing Date and any settlement date, the
Prospectus (together with any supplement thereto) will not, include
any untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading;
provided, however, that the Company makes no representations or
warranties as to the information contained in or omitted from the
Registration Statement, or the Prospectus (or any supplement thereto)
in reliance upon and in conformity with information furnished in
writing to the Company by or on behalf of any Underwriter through the
Representatives specifically for inclusion in the Registration
Statement or the Prospectus (or any supplement thereto).
(c) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of California, with full corporate power and authority to own or
lease, as the case may be, and to operate its properties and conduct
its business as described in the Registration Statement and Prospectus
(and any amendment or supplement thereto), and is duly qualified to do
business as a foreign corporation and is in good standing under the
laws of each jurisdiction which requires such qualification.
(d) The Company does not have any subsidiaries.
(e) The Company's authorized equity capitalization is as set
forth in the Prospectus and the capital stock of the Company conforms
in all material respects to the description thereof contained in the
Prospectus; the outstanding shares of Common Stock have been duly and
validly authorized and issued and are fully paid and nonassessable;
the Securities have been duly and validly authorized, and, when issued
and delivered to and paid for by the Underwriters pursuant to this
Agreement, will be fully paid and nonassessable; the Securities are
duly quoted, and admitted and authorized for trading, subject to
official notice of issuance and evidence of satisfactory distribution,
on the Nasdaq National Market; the certificates for the Securities
comply with the requirements of Delaware law; the holders of
outstanding shares of capital stock of the Company are not entitled to
preemptive or other rights to subscribe for the Securities; and 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.
(f) There is no franchise, contract or other document of a
character required to be described in the Registration Statement or
Prospectus, or to be filed as an exhibit thereto, which is not
described or filed as required; and the statements in the Prospectus
insofar as such statements summarize legal matters, agreements,
documents, or proceedings discussed therein, are accurate and fair
summaries of such legal matters, agreements, documents or proceedings.
(g) This Agreement has been duly authorized, executed and
delivered by the Company and constitutes a valid and binding
obligation of the Company enforceable in accordance with its terms.
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(h) The Company is not and, after giving effect to the offering
and sale of the Securities and the application of the proceeds thereof
as described in the Prospectus, will not be an "investment company" as
defined in the Investment Company Act of 1940, as amended.
(i) No consent, approval, authorization, filing with or order of
any court or governmental agency or body is required in connection
with the transactions contemplated herein, except such as have been
obtained under the Act and such as may be required under the blue sky
laws of any jurisdiction in connection with the purchase and
distribution of the Securities by the Underwriters in the manner
contemplated herein and in the Prospectus.
(j) Neither the issue and sale of the Securities nor the
consummation of any other of the transactions herein contemplated nor
the fulfillment of the terms hereof will conflict with, result in a
breach or violation or imposition of any lien, charge or encumbrance
upon any property or assets of the Company pursuant to (1) the charter
or bylaws of the Company, (2) the terms of any indenture, contract,
lease, mortgage, deed of trust, note agreement, loan agreement or
other agreement, obligation, condition, covenant or instrument to
which the Company is a party or bound or to which its property is
subject or (3) any statute, law, rule, regulation, judgment, order or
decree applicable to the Company of any court, regulatory body,
administrative agency, governmental body, arbitrator or other
authority having jurisdiction over the Company or any of its
properties.
(k) Except as disclosed in the Prospectus, no holders of
securities of the Company have rights to the registration of such
securities under the Registration Statement.
(l) The historical financial statements and schedules of the
Company included in the Prospectus and the Registration Statement
present fairly in all material respects the financial condition,
results of operations and cash flows of the Company as of the dates
and for the periods indicated, comply as to form with the applicable
accounting requirements of the Act and have been prepared in
conformity with generally accepted accounting principles applied on a
consistent basis throughout the periods involved (except as otherwise
noted therein). The selected financial data set forth under the
caption "Selected Financial Data" in the Prospectus and Registration
Statement fairly present, on the basis stated in the Prospectus and
the Registration Statement, the information included therein.
(m) No action, suit or proceeding by or before any court or
governmental agency, authority or body or any arbitrator involving the
Company or its property is pending or, to the best knowledge of the
Company, threatened that (1) could reasonably be expected to have a
material adverse effect on the performance of this Agreement or the
consummation of any of the transactions contemplated hereby or (2)
could reasonably be expected to have a material adverse effect on the
condition (financial or otherwise), prospects, earnings, business or
properties of the Company, whether or not arising from transactions in
the ordinary course of
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business, except as set forth in or contemplated in the Prospectus
(exclusive of any supplement thereto).
(n) The Company owns or leases all such real property as are
necessary to the conduct of its operations as presently conducted.
(o) The Company is not in violation or default of (1) any
provision of its charter or bylaws, (2) the terms of any indenture,
contract, lease, mortgage, deed of trust, note agreement, loan
agreement or other agreement, obligation, condition, covenant or
instrument to which it is a party or bound or to which its property is
subject, or (3) any statute, law, rule, regulation, judgment, order or
decree of any court, regulatory body, administrative agency,
governmental body, arbitrator or other authority having jurisdiction
over the Company or any of its properties, as applicable, except, in
the case of clauses (2) and (3) above, for such violations or
defaults, which would not, individually or in the aggregate, have a
material adverse effect on the condition (financial or otherwise),
prospects, earnings, business or properties of the Company.
(p) PricewaterhouseCoopers LLP, who have certified certain
financial statements of the Company and delivered their report with
respect to the audited consolidated financial statements and schedules
included in the Prospectus, are independent public accountants with
respect to the Company within the meaning of the Act and the
applicable published rules and regulations thereunder.
(q) There are no transfer taxes or other similar fees or charges
under Federal law or the laws of any state, or any political
subdivision thereof, required to be paid in connection with the
execution and delivery of this Agreement or the issuance by the
Company or sale by the Company of the Securities.
(r) The Company has filed all foreign, federal, state and local
tax returns that are required to be filed or has requested extensions
thereof (except in any case in which the failure so to file would not
have a material adverse effect on the condition (financial or
otherwise), prospects, earnings, business or properties of the Company
whether or not arising from transactions in the ordinary course of
business, except as set forth in or contemplated in the Prospectus
(exclusive of any supplement thereto) and has paid all taxes required
to be paid by it and any other assessment, fine or penalty levied
against it, to the extent that any of the foregoing is due and
payable, except for any such assessment, fine or penalty that is
currently being contested in good faith or as would not have a
material adverse effect on the condition (financial or otherwise),
prospects, earnings, business or properties of the Company, taken as a
whole, whether or not arising from transactions in the ordinary course
of business, except as set forth in or contemplated in the Prospectus
(exclusive of any supplement thereto).
(s) No labor problem or dispute with the employees of the
Company exists or is threatened or imminent, and the Company is not
aware of any existing or imminent labor disturbance by the employees
of any of its principal suppliers, contractors or customers, that
could have a material adverse effect on the
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condition (financial or otherwise), prospects, earnings, business or
properties of the Company, whether or not arising from transactions in
the ordinary course of business, except as set forth in or
contemplated in the Prospectus (exclusive of any supplement thereto).
(t) The Company is insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as
are prudent and customary in the business in which it engages; all
policies of insurance and fidelity or surety bonds insuring the
Company or its respective businesses, assets, employees, officers and
directors are in full force and effect; the Company is in compliance
with the terms of such policies and instruments in all material
respects; and there are no claims by the Company under any such policy
or instrument as to which any insurance company is denying liability
or defending under a reservation of rights clause; and the Company has
no reason to believe that it will not be able to renew its existing
insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue
its business at a cost that would not have a material adverse effect
on the condition (financial or otherwise), prospects, earnings,
business or properties of the Company whether or not arising from
transactions in the ordinary course of business, except as set forth
in or contemplated in the Prospectus (exclusive of any supplement
thereto).
(u) The Company possesses all licenses, certificates, permits
and other authorizations issued by the appropriate federal, state or
foreign regulatory authorities necessary to conduct its respective
businesses, and the Company has not received any notice of proceedings
relating to the revocation or modification of any such certificate,
authorization or permit which, singly or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would have a
material adverse effect on the condition (financial or otherwise),
prospects, earnings, business or properties of the Company whether or
not arising from transactions in the ordinary course of business,
except as set forth in or contemplated in the Prospectus (exclusive of
any supplement thereto).
(v) The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurance that (1)
transactions are executed in accordance with management's general or
specific authorizations; (2) transactions are recorded as necessary to
permit preparation of financial statements in conformity with
generally accepted accounting principles and to maintain asset
accountability; (3) access to assets is permitted only in accordance
with management's general or specific authorization; and (4) the
recorded accountability for assets is compared with the existing
assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(w) The Company has not taken, directly or indirectly, any
action that has constituted or that was designed to or might
reasonably be expected to cause or result in, under the Exchange Act
or otherwise, the stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the
Securities.
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(x) The Company (i) is in compliance with any and all applicable
foreign, federal, state and local laws and regulations relating to the
protection of human health and safety, the environment or hazardous or
toxic substances or wastes, pollutants or contaminants ("Environmental
Laws"), (ii) has received and is in compliance with all permits,
licenses or other approvals required of them under applicable
Environmental Laws to conduct its businesses and (iii) to its
knowledge, has not received notice of any actual or potential
liability for the investigation or remediation of any disposal or
release of hazardous or toxic substances or wastes, pollutants or
contaminants, except where such non-compliance with Environmental
Laws, failure to receive required permits, licenses or other
approvals, or liability would not, individually or in the aggregate,
have a material adverse change in the condition (financial or
otherwise), prospects, earnings, business or properties of the
Company, whether or not arising from transactions in the ordinary
course of business, except as set forth in or contemplated in the
Prospectus (exclusive of any supplement thereto). The Company has not
been named as a "potentially responsible party" under the
Comprehensive Environmental Response, Compensation, and Liability Act
of 1980, as amended.
(y) In the ordinary course of its business, the Company
periodically reviews the effect of Environmental Laws on the business,
operations and properties of the Company in the course of which it
identifies and evaluates associated costs and liabilities (including,
without limitation, any capital or operating expenditures required for
clean-up, closure of properties or compliance with Environmental Laws,
or any permit, license or approval, any related constraints on
operating activities and any potential liabilities to third parties).
On the basis of such review, the Company has reasonably concluded that
such associated costs and liabilities would not, singly or in the
aggregate, have a material adverse effect on the condition (financial
or otherwise), prospects, earnings, business or properties of the
Company, whether or not arising from transactions in the ordinary
course of business, except as set forth in or contemplated in the
Prospectus (exclusive of any supplement thereto).
(z) The Company has fulfilled its obligations, if any, under
the minimum funding standards of ▇▇▇▇▇▇▇ ▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
Employee Retirement Income Security Act of 1974 ("ERISA") and the
regulations and published interpretations thereunder with respect to
each "plan" (as defined in Section 3(3) of ERISA and such regulations
and published interpretations) in which employees of the Company are
eligible to participate and each such plan is in compliance in all
material respects with the presently applicable provisions of ERISA
and such regulations and published interpretations. The Company has
not incurred any unpaid liability to the Pension Benefit Guaranty
Corporation (other than for the payment of premiums in the ordinary
course) or to any such plan under Title IV of ERISA.
(aa) The Company owns, possesses, licenses or has other rights to
use, on reasonable terms, all patents, patent applications, trade and
service marks, trade
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and service ▇▇▇▇ registrations, trade names, copyrights, licenses,
inventions, trade secrets, technology, know-how and other intellectual
property (collectively, the "Intellectual Property") necessary for the
conduct of the Company's business as now conducted or as proposed in
the Prospectus to be conducted. With respect to such Intellectual
Property, other than as described in the Prospectus (exclusive of any
supplement thereto) under the headings "Risk Factors--We are currently
involved in a patent interference action and if we do not prevail in
this action, our business could suffer," "--Patents and other
proprietary rights provide uncertain protections, and we may be unable
to protect our intellectual property," "--Because the medical device
industry is characterized by competing intellectual property, we may
be sued for violating the intellectual property rights of others,"
"Business-Patents and Proprietary Technology" and "--Legal
Proceedings," (1) there are no rights of third parties to any such
Intellectual Property; (2) there is no material infringement by third
parties of any such Intellectual Property; (3) there is no pending or
threatened action, suit, proceeding or claim by others challenging the
Company's rights in or to any such Intellectual Property, and the
Company is unaware of any facts which would form a reasonable basis
for any such claim; (4) there is no pending or threatened action,
suit, proceeding or claim by others challenging the validity or scope
of any such Intellectual Property, and the Company is unaware of any
facts which would form a reasonable basis for any such claim; (5)
there is no pending or threatened action, suit, proceeding or claim by
others that the Company infringes or otherwise violates any patent,
trademark, copyright, trade secret or other proprietary rights of
others, and the Company is unaware of any other fact which would form
a reasonable basis for any such claim; (6) there is no U.S. patent or
published U.S. patent application which contains claims that dominate
or may dominate any Intellectual Property described in the Prospectus
as being owned by or licensed to the Company or that interferes with
the issued or pending claims of any such Intellectual Property; and
(7) there is no prior art of which the Company is aware that may
render any U.S. patent held by the Company invalid or any U.S. patent
application held by the Company unpatentable which has not been
disclosed to the U.S. Patent and Trademark Office.
(bb) The statements contained in the Prospectus under the
captions "Risk Factors--We are currently involved in a patent
interference action and if we do not prevail in this action, our
business could suffer," "--Patents and other proprietary rights
provide uncertain protections, and we may be unable to protect our
intellectual property," "--Complying with the FDA and other domestic
and international regulatory authorities is an expensive and time-
consuming process, and any failure to comply could result in
substantial penalties," "--Product introductions or modifications may
be delayed or cancelled as a result of the FDA regulatory process
which could cause our revenues to be below expectations," "--Our
certificate of incorporation and bylaws and Delaware law contain
provisions that would discourage a takeover," "Business--Patents and
Proprietary Technology," "--Government Regulation," "--Legal
Proceedings," "Management--Employment Agreements," "Stock Plans,"
"Description of Capital Stock," "Shares Eligible for Future Sale" and
"United States Tax Consequence to Non-United States Holders", insofar
as such statements summarize legal matters, agreements,
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documents, or proceedings discussed therein, are accurate and fair
summaries of such legal matters, agreements, documents or proceedings.
(cc) The Company has such permits, licenses, franchises,
authorizations and clearances ("Permits") of governmental or
regulatory authorities, including, without limitation, the Food and
Drug Administration (the "FDA") of the U.S. Department of Health and
Human Services and/or any committee thereof, as are reasonably
necessary to own, lease and operate its properties and to conduct its
business in the manner described in the Prospectus, subject to such
qualifications as may be set forth in the Prospectus, except where
such failure to receive such Permits would not, individually or in the
aggregate, have a material adverse effect on the condition (financial
or otherwise), prospects, earnings, business or properties of the
Company whether or not arising from transactions in the ordinary
course of business, except as set forth in or contemplated in the
Prospectus (exclusive of any supplement thereto); subject to such
qualifications as may be set forth in the Prospectus, the Company has
fulfilled and performed all its material obligations with respect to
the Permits, and no event has occurred which allows, or after notice
or lapse of time would allow, revocation or termination thereof or
results in any other material impairment of the rights of the holder
of any Permit, subject in each case to such qualification as may be
set forth in the Prospectus. Except as described in the Prospectus,
none of the Permits contains any restriction that is materially
burdensome to the Company.
(dd) Except to the extent disclosed in the Registration Statement
and the Prospectus (or any amendment or supplement thereto), the
clinical, pre-clinical and other studies and tests conducted by or on
behalf of or sponsored by the Company or in which the Company or the
Company's products under development have participated that are
described in the Prospectus or the results of which are referred to in
the Prospectus were and, if still pending, are being conducted in
accordance with standard medical and scientific research procedures.
The descriptions of the results of such studies and tests are accurate
and complete in all material respects and fairly present the data
derived from such studies and tests, and the Company has no knowledge
of any other studies or tests the results of which are inconsistent
with or otherwise call into question the results described or referred
to in the Prospectus. Except to the extent disclosed in the
Registration Statement and the Prospectus (or any amendment or
supplement thereto), the Company has operated and currently is in
compliance in all material respects with all applicable FDA rules,
regulations and policies. Except to the extent disclosed in the
Registration Statement and the Prospectus (or any amendment or
supplement thereto), the Company has not received any notices or other
correspondence from the FDA or any other governmental agency requiring
the termination, suspension or modification of any clinical or pre-
clinical studies or tests that are described in the Prospectus or the
results of which are referred to in the Prospectus.]
(ee) The Company (1) does not have any material lending or other
relationship with any bank or lending affiliate of ▇▇▇▇▇▇▇ ▇▇▇▇▇
Barney Holdings Inc. or any other underwriter and (2) does not intend
to use any of the proceeds
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from the sale of the Securities hereunder to repay any outstanding
debt owed to any affiliate of ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Holding Inc. or any
other underwriter.
(ff) The Company has not offered, or caused the Underwriters to
offer, Securities to any person pursuant to the Direct Share Program
with the specific intent to unlawfully influence (i) a customer or
supplier of the Company to alter the customer's or supplier's level or
type of business with the Company, or (ii) a trade journalist or
publication to write or publish favorable information about the
company or its products.
Furthermore, the Company represents and warrants to ▇▇▇▇▇▇▇ ▇▇▇▇▇
Barney Inc. that (i) the Registration Statement, the Prospectus and any
preliminary prospectus comply, and any further amendments or supplements
thereto will comply, with any applicable laws or regulations of foreign
jurisdictions in which the Prospectus or any preliminary prospectus, as
amended or supplemented, if applicable, are distributed in connection with
the Directed Share Program, and that (ii) no authorization, approval,
consent, license, order, registration or qualification of or with any
government, governmental instrumentality or court, other than such as have
been obtained, is necessary under the securities laws and regulations of
foreign jurisdictions in which the Directed Shares are offered outside the
United States.
Any certificate signed by any officer of the Company and
delivered to the Representatives or counsel for the Underwriters in
connection with the offering of the Securities shall be deemed a
representation and warranty by the Company, as to matters covered thereby,
to each Underwriter.
2. Purchase and Sale. (a) Subject to the terms and conditions
and in reliance upon the representations and warranties herein set forth,
the Company agrees to sell to each Underwriter, and each Underwriter
agrees, severally and not jointly, to purchase from the Company, at a
purchase price of $[ ] per share, the amount of the Underwritten
Securities set forth opposite such Underwriter's name in Schedule I hereto.
(b) Subject to the terms and conditions and in reliance upon the
representations and warranties herein set forth, the Company hereby grants
an option to the several Underwriters to purchase, severally and not
jointly, up to [ ] Option Securities at the same purchase price per
share as the Underwriters shall pay for the Underwritten Securities. Said
option may be exercised only to cover over-allotments in the sale of the
Underwritten Securities by the Underwriters. Said option may be exercised
in whole or in part at any time (but not more than once) on or before the
30th day after the date of the Prospectus upon written or telegraphic
notice by the Representatives to the Company setting forth the number of
shares of the Option Securities as to which the several Underwriters are
exercising the option and the settlement date. The number of Option
Securities to be purchased by each Underwriter shall be the same percentage
of the total number of shares of the Option Securities to be purchased by
the several Underwriters as such Underwriter is purchasing of the
Underwritten Securities, subject to such adjustments as you in your
absolute discretion shall make to eliminate any fractional shares.
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3. Delivery and Payment. Delivery of and payment for the
Underwritten Securities and the Option Securities (if the option provided
for in Section 2(b) hereof shall have been exercised on or before the third
Business Day prior to the Closing Date) shall be made at 10:00 AM, New York
City time, on [ ], 2000 , or at such time on such later date not more
than three Business Days after the foregoing date as the Representatives
shall designate, which date and time may be postponed by agreement between
the Representatives and the Company or as provided in Section 9 hereof
(such date and time of delivery and payment for the Securities being herein
called the "Closing Date"). Delivery of the Securities shall be made to the
Representatives for the respective accounts of the several Underwriters
against payment by the several Underwriters through the Representatives of
the purchase price thereof to or upon the order of the Company by wire
transfer payable in same-day funds to an account specified by the Company.
Delivery of the Underwritten Securities and the Option Securities shall be
made through the facilities of The Depository Trust Company unless the
Representatives shall otherwise instruct.
If the option provided for in Section 2(b) hereof is exercised
after the third Business Day prior to the Closing Date, the Company will
deliver the Option Securities (at the expense of the Company) to the
Representatives, at ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ the date
specified by the Representatives (which shall be within three Business Days
after exercise of said option) for the respective accounts of the several
Underwriters, against payment by the several Underwriters through the
Representatives of the purchase price thereof to or upon the order of the
Company by wire transfer payable in same-day funds to an account specified
by the Company. If settlement for the Option Securities occurs after the
Closing Date, the Company will deliver to the Representatives on the
settlement date for the Option Securities, and the obligation of the
Underwriters to purchase the Option Securities shall be conditioned upon
receipt of, supplemental opinions, certificates and letters confirming as
of such date the opinions, certificates and letters delivered on the
Closing Date pursuant to Section 6 hereof.
4. Offering by Underwriters. It is understood that the several
Underwriters propose to offer the Securities for sale to the public as set
forth in the Prospectus.
5. Agreements. The Company agrees with the several
Underwriters that:
(a) The Company will use its best efforts to cause the
Registration Statement, if not effective at the Execution Time, and
any amendment thereof, to become effective. Prior to the termination
of the offering of the Securities, the Company will not file any
amendment of the Registration Statement or supplement to the
Prospectus or any Rule 462(b) Registration Statement unless the
Company has furnished you a copy for your review prior to filing and
will not file any such proposed amendment or supplement to which you
reasonably object. Subject to the foregoing sentence, if the
Registration Statement has become or becomes effective pursuant to
Rule 430A, or filing of the Prospectus is otherwise required under
Rule 424(b), the Company will cause the Prospectus, properly
completed, and any supplement thereto to be filed with the Commission
pursuant
12
to the applicable paragraph of Rule 424(b) within the time period
prescribed and will provide evidence satisfactory to the
Representatives of such timely filing. The Company will promptly
advise the Representatives (1) when the Registration Statement, if not
effective at the Execution Time, shall have become effective, (2) when
the Prospectus, and any supplement thereto, shall have been filed (if
required) with the Commission pursuant to Rule 424(b) or when any Rule
462(b) Registration Statement shall have been filed with the
Commission, (3) when, prior to termination of the offering of the
Securities, any amendment to the Registration Statement shall have
been filed or become effective, (4) of any request by the Commission
or its staff for any amendment of the Registration Statement, or any
Rule 462(b) Registration Statement, or for any supplement to the
Prospectus or for any additional information, (5) of the issuance by
the Commission of any stop order suspending the effectiveness of the
Registration Statement or the institution or threatening of any
proceeding for that purpose and (6) of the receipt by the Company of
any notification with respect to the suspension of the qualification
of the Securities for sale in any jurisdiction or the institution or
threatening of any proceeding for such purpose. The Company will use
its best efforts to prevent the issuance of any such stop order or the
suspension of any such qualification and, if issued, to obtain as soon
as possible the withdrawal thereof.
(b) If, at any time when a prospectus relating to the Securities
is required to be delivered under the Act, any event occurs as a
result of which the Prospectus as then supplemented would include any
untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein in the light of the
circumstances under which they were made not misleading, or if it
shall be necessary to amend the Registration Statement or supplement
the Prospectus to comply with the Act or the rules thereunder, the
Company promptly will (1) notify the Representatives of any such
event, (2) prepare and file with the Commission, subject to the second
sentence of paragraph (a) of this Section 5, an amendment or
supplement which will correct such statement or omission or effect
such compliance; and (3) supply any supplemented Prospectus to you in
such quantities as you may reasonably request.
(c) As soon as practicable, the Company will make generally
available to its security holders and to the Representatives an
earnings statement or statements of the Company which will satisfy the
provisions of Section 11(a) of the Act and Rule 158 under the Act.
(d) The Company will furnish to the Representatives and counsel
for the Underwriters signed copies of the Registration Statement
(including exhibits thereto) and to each other Underwriter a copy of
the Registration Statement (without exhibits thereto) and, so long as
delivery of a prospectus by an Underwriter or dealer may be required
by the Act, as many copies of each Preliminary Prospectus and the Pro
spectus and any supplement thereto as the Representatives may
reasonably request.
(e) The Company will arrange, if necessary, for the
qualification of the Securities for sale under the laws of such
jurisdictions as the Representatives may
13
designate and will maintain such qualifications in effect so long as
required for the distribution of the Securities; provided that in no
event shall the Company be obligated to qualify to do business in any
jurisdiction where it is not now so qualified or to take any action
that would subject it to service of process in suits, other than those
arising out of the offering or sale of the Securities, in any
jurisdiction where it is not now so subject.
(f) The Company will not, without the prior written consent of
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc., offer, sell, contract to sell, pledge, or
otherwise dispose of, (or enter into any transaction which is designed
to, or might reasonably be expected to, result in the disposition
(whether by actual disposition or effective economic disposition due
to cash settlement or otherwise) by the Company or any affiliate of
the Company or any person in privity with the Company or any affiliate
of the Company) directly or indirectly, including the filing (or
participation in the filing) of a registration statement with the
Commission in respect of, or establish or increase a put equivalent
position or liquidate or decrease a call equivalent position within
the meaning of Section 16 of the Exchange Act, any other shares of
Common Stock or any securities convertible into, or exercisable, or
exchangeable for, shares of Common Stock; or publicly announce an
intention to effect any such transaction, for a period of 180 days
after the date of the Underwriting Agreement, provided, however, that
the Company may issue and sell Common Stock pursuant to any employee
stock option plan, stock ownership plan or dividend reinvestment plan
of the Company in effect at the Execution Time and the Company may
issue Common Stock issuable upon the conversion of securities or the
exercise of warrants outstanding at the Execution Time.
(g) The Company will not take, directly or indirectly, any
action designed to or which has constituted or which might reasonably
be expected to cause or result, under the Exchange Act or otherwise,
in stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Securities.
(h) The Company agrees to pay the costs and expenses relating to
the following matters: (1) the preparation, printing or reproduction
and filing with the Commission of the Registration Statement
(including financial statements and exhibits thereto), each
Preliminary Prospectus, the Prospectus, and each amendment or
supplement to any of them; (2) the printing (or reproduction) and
delivery (including postage, air freight charges and charges for
counting and packaging) of such copies of the Registration Statement,
each Preliminary Prospectus, the Prospectus, and all amendments or
supplements to any of them, as may, in each case, be reasonably
requested for use in connection with the offering and sale of the
Securities; (3) the preparation, printing, authentication, issuance
and delivery of certificates for the Securities, including any stamp
or transfer taxes in connection with the original issuance and sale of
the Securities; (4) the printing (or reproduction) and delivery of
this Agreement, any blue sky memorandum and all other agreements or
documents printed (or reproduced) and delivered in connection with the
offering of the Securities; (5) the registration of the Securities
under the Exchange Act and the quoting of the Securities on the
14
Nasdaq National Market; (6) any registration or qualification of the
Securities for offer and sale under the securities or blue sky laws of
the several states (including filing fees and the reasonable fees and
expenses of counsel for the Underwriters relating to such registration
and qualification); (7) any filings required to be made with the
National Association of Securities Dealers, Inc. (including filing
fees and the reasonable fees and expenses of counsel for the
Underwriters relating to such filings); (8) the transportation and
other expenses incurred by or on behalf of Company representatives in
connection with presentations to prospective purchasers of the
Securities; (9) the fees and expenses of the Company's accountants and
the fees and expenses of counsel (including local and special counsel)
for the Company; and (10) all other costs and expenses incident to the
performance by the Company of its obligations hereunder.
(i) In connection with the Directed Share Program, the Company
will ensure that the Directed Shares will be restricted to the extent
required by the National Association of Securities Dealers, Inc. (the
"NASD") or the NASD rules from sale, transfer, assignment, pledge or
hypothecation for a period of three months following the date of the
effectiveness of the Registration Statement. ▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney
Inc. will notify the Company as to which Participants will need to be
so restricted. The Company will direct the removal of such transfer
restrictions upon the expiration of such period of time.
(j) The Company will pay all fees and disbursements of counsel
incurred by the Underwriters in connection with the Directed Share
Program and stamp duties, similar taxes or duties or other taxes, if
any, incurred by the Underwriters in connection with the Directed
Share Program.
Furthermore, the Company covenants with ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc.
that the Company will comply with all applicable securities and other
applicable laws, rules and regulations in each foreign jurisdiction in
which the Directed Shares are offered in connection with the Directed
Share Program.
6. Conditions to the Obligations of the Underwriters. The
obligations of the Underwriters to purchase the Underwritten Securities and
the Option Securities, as the case may be, shall be subject to the accuracy
of the representations and warranties on the part of the Company contained
herein as of the Execution Time, the Closing Date and any settlement date
pursuant to Section 3 hereof, to the accuracy of the statements of the
Company made in any certificates pursuant to the provisions hereof, to the
performance by the Company of its obligations hereunder and to the
following additional conditions:
(a) If the Registration Statement has not become effective prior
to the Execution Time, unless the Representatives agree in writing to
a later time, the Registration Statement will become effective not
later than (1) 6:00 PM New York City time on the date of determination
of the public offering price, if such determination occurred at or
prior to 3:00 PM New York City time on such date or (2) 9:30 AM on the
Business Day following the day on which the public offering price was
determined, if such determination occurred after 3:00 PM New York City
time on such date; if filing of the Prospectus, or any supplement
15
thereto, is required pursuant to Rule 424(b), the Prospectus, and any
such supplement, will be filed in the manner and within the time
period required by Rule 424(b); and no stop order suspending the
effectiveness of the Registration Statement shall have been issued and
no proceedings for that purpose shall have been instituted or
threatened.
(b) The Company shall have requested and caused Venture Law
Group, counsel for the Company, to have furnished to the
Representatives their opinion, dated the Closing Date and addressed to
the Representatives, to the effect that:
(1) the Company is duly incorporated and is validly existing
as a corporation in good standing under the laws of the
jurisdiction in which it is chartered or organized, with full
corporate power and authority to own or lease, as the case may
be, and to operate its properties and conduct its business as
described in the Prospectus; and the Company is duly qualified to
do business as a foreign corporation and is in good standing
under the laws of each jurisdiction which requires such
qualification;
(2) the Company's authorized equity capitalization is as set
forth in the Prospectus; the capital stock of the Company
conforms in all material respects to the description thereof
contained in the Prospectus; the outstanding shares of Common
Stock have been duly and validly authorized and issued and are
fully paid and nonassessable; the Securities have been duly and
validly authorized, and, when issued and delivered to and paid
for by the Underwriters pursuant to this Agreement, will be fully
paid and nonassessable; the Securities have been approved to be
included for quotation on the Nasdaq National Market upon
issuance as contemplated by this Agreement; the certificates for
the Securities are in valid and sufficient form and conform in
all material respects to the requirements of Delaware law; the
holders of outstanding shares of capital stock of the Company are
not entitled to preemptive or other rights to subscribe for the
Securities; and, 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;
(3) to the knowledge of such counsel, there is no pending or
threatened action, suit or proceeding by or before any court or
governmental agency, authority or body or any arbitrator
involving the Company or its property of a character required to
be disclosed in the Registration Statement which is not
adequately disclosed in the Prospectus, and there is no
franchise, contract or other document of a character required to
be described in the Registration Statement or Prospectus (or any
amendment or supplement thereto), or to be filed as an exhibit
thereto, which is not described or filed as required; and the
statements included in the Prospectus insofar as such statements
summarize legal matters, agreements, documents, or proceedings
16
discussed therein, are accurate and fair summaries of such legal
matters, agreements, documents or proceedings;
(4) the Registration Statement has become effective under
the Act; any required filing of the Prospectus, and any
supplements thereto, pursuant to Rule 424(b) has been made in the
manner and within the time period required by Rule 424(b); to the
knowledge of such counsel, no stop order suspending the
effectiveness of the Registration Statement has been issued, no
proceedings for that purpose have been instituted or threatened
and the Registration Statement and the Prospectus (other than the
financial statements and other financial information contained
therein, as to which such counsel need express no opinion) comply
as to form in all material respects with the applicable
requirements of the Act and the rules thereunder; and such
counsel has no reason to believe that on the Effective Date or
the date the Registration Statement was last deemed amended the
Registration Statement contained any untrue statement of a
material fact or omitted to state any material fact required to
be stated therein or necessary to make the statements therein not
misleading or that the Prospectus as of its date and on the
Closing Date included or includes any untrue statement of a
material fact or omitted or omits to state a material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading (in each
case, other than the financial statements and other financial
information contained therein, as to which such counsel need
express no opinion);
(5) this Agreement has been duly authorized, executed and
delivered by the Company;
(6) the Company is not and, after giving effect to the
offering and sale of the Securities and the application of the
proceeds thereof as described in the Prospectus, will not be, an
"investment company" as defined in the Investment Company Act of
1940, as amended;
(7) no consent, approval, authorization, filing with or
order of any court or governmental agency or body is required in
connection with the transactions contemplated herein, except such
as have been obtained under the Act and such as may be required
under the blue sky laws of any jurisdiction in connection with
the purchase and distribution of the Securities by the
Underwriters in the manner contemplated in this Agreement and in
the Prospectus and such other approvals (specified in such
opinion) as have been obtained;
(8) neither the issue and sale of the Securities, nor the
consummation of any other of the transactions herein contemplated
nor the fulfillment of the terms hereof will conflict with,
result in a breach or violation of or imposition of any lien,
charge or encumbrance upon any property or assets of the Company
pursuant to, (i) the charter or bylaws of the Company, (ii) the
terms of any indenture, contract, lease, mortgage,
17
deed of trust, note agreement, loan agreement or other agreement,
obligation, condition, covenant or instrument to which the
Company is a party or bound or to which its or their property is
subject, or (iii) any statute, law, rule, regulation, judgment,
order or decree applicable to the Company of any court,
regulatory body, administrative agency, governmental body,
arbitrator or other authority having jurisdiction over the
Company or any of its properties; and
(9) Except as disclosed in the Prospectus, no holders of
securities of the Company have rights to the registration of such
securities under the Registration Statement.
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws of any jurisdiction other than the
State of California or the Federal laws of the United States, to the
extent they deem proper and specified in such opinion, upon the
opinion of other counsel of good standing whom they believe to be
reliable and who are satisfactory to counsel for the Underwriters and
(B) as to matters of fact, to the extent they deem proper, on
certificates of responsible officers of the Company and public
officials. References to the Registration Statement or Prospectus in
this paragraph (b) include any amendments or supplements thereto at
the Closing Date.
(c) The Representatives shall have received from Cravath, Swaine
& ▇▇▇▇▇, counsel for the Underwriters, such opinion or opinions, dated
the Closing Date and addressed to the Representatives, with respect to
the issuance and sale of the Securities, the Registration Statement,
the Prospectus (together with any amendment or supplement thereto) and
other related matters as the Representatives may reasonably require,
and the Company shall have furnished to such counsel such documents as
they request for the purpose of enabling them to pass upon such
matters.
(d) The Company shall have furnished to the Representatives a
certificate of the Company, signed by the President and the principal
financial or accounting officer of the Company, dated the Closing
Date, to the effect that the signers of such certificate have
carefully examined the Registration Statement, any amendments to the
Registration Statement, the Prospectus, any supplements to the
Prospectus and this Agreement and that:
(1) the representations and warranties of the Company in
this Agreement are true and correct on and as of the Closing Date
with the same effect as if made on the Closing Date and the
Company has complied with all the agreements and satisfied all
the conditions on its part to be performed or satisfied at or
prior to the Closing Date;
(2) no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for
that purpose have been instituted or, to the Company's knowledge,
threatened; and
18
(3) since the date of the most recent financial statements
included in the Prospectus (exclusive of any supplement thereto),
there has been no material adverse effect on the condition
(financial or otherwise), prospects, earnings, business or
properties of the Company, whether or not arising from
transactions in the ordinary course of business, except as set
forth in or contemplated in the Prospectus (exclusive of any
supplement thereto).
(e) The Company shall have requested and caused
PricewaterhouseCoopers LLP to have furnished to the Representatives,
at the Execution Time and at the Closing Date, letters, dated
respectively as of the Execution Time and as of the Closing Date, in
form and substance satisfactory to the Representatives, confirming
that they are independent accountants within the meaning of the Act
and the applicable rules and regulations adopted by the Commission
thereunder and that they have performed a review of the unaudited
interim financial information of the Company for the 3-month period
ended March 31, 2000, and as at March 31, 2000, in accordance with
Statement on Auditing Standards No. 71 and stating in effect that:
(1) in their opinion the audited financial statements and
financial statement schedules included in the Registration
Statement and the Prospectus and reported on by them comply as to
form in all material respects with the applicable accounting
requirements of the Act and the related rules and regulations
adopted by the Commission;
(2) on the basis of a reading of the latest unaudited
financial statements made available by the Company and its
subsidiaries; their limited review in accordance with standards
established under Statement on Auditing Standards No. 71, of the
unaudited interim financial information for the 3-month period
ended March 31, 2000, and as at March 31, 2000, as indicated in
their report dated , 2000, carrying out certain
specified procedures (but not an examination in accordance with
generally accepted auditing standards) which would not
necessarily reveal matters of significance with respect to the
comments set forth in such letter; a reading of the minutes of
the meetings of the stockholders, directors and audit and
compensation committees of the Company; and inquiries of certain
officials of the Company who have responsibility for financial
and accounting matters of the Company and its subsidiaries as to
transactions and events subsequent to December 31, 1999, nothing
came to their attention which caused them to believe that:
(i) any unaudited financial statements included in the
Registration Statement and the Prospectus do not comply as
to form in all material respects with applicable accounting
requirements of the Act and with the related rules and
regulations adopted by the Commission with respect to
registration statements on Form S-1; and said unaudited
financial statements are not in conformity with generally
accepted accounting principles applied on a basis
substantially consistent with that of the audited financial
19
statements included in the Registration Statement and the
Prospectus;
(ii) with respect to the period subsequent to March
31, 2000, there were any changes, at a specified date not
more than five days prior to the date of the letter, in the
working capital of the Company and its subsidiaries or total
assets of the Company or decreases in the stockholders'
equity of the Company as compared with the amounts shown on
the December 31, 1999, balance sheet included in the
Registration Statement and the Prospectus, or for the period
from April 1, 2000, to such specified date there were any
decreases, as compared with the corresponding period in the
preceding quarter, in revenues, or increases, as compared
with the corresponding period in the preceding quarter, in
loss from operations, net loss or basic and diluted loss per
share for the Company and its subsidiaries, except in all
instances for changes, decreases or increases set forth in
such letter, in which case the letter shall be accompanied
by an explanation by the Company as to the significance
thereof unless said explanation is not deemed necessary by
the Representatives;
(iii) the information included in the Registration
Statement and Prospectus in response to Regulation S-K, Item
301 (Selected Financial Data), Item 302 (Supplementary
Financial Information) and Item 402 (Executive Compensation)
is not in conformity with the applicable disclosure
requirements of Regulation S-K; and
(iv) the unaudited amounts included under "Prospectus
Summary--Summary Financial Data" and "Selected Financial
Data" do not agree with the amounts set forth in the
unaudited financial statements for the same periods or were
not determined on a basis substantially consistent with that
of the corresponding amounts in the audited financial
statements included in the Registration Statement and the
Prospectus; and
(3) they have performed certain other specified procedures
as a result of which they determined that certain information of
an accounting, financial or statistical nature (which is limited
to accounting, financial or statistical information derived from
the general accounting records of the Company and its
subsidiaries) set forth in the Registration Statement and the
Prospectus, including the information set forth under the
captions "Prospectus Summary," "Capitalization," Selected
Financial Data," "Management's Discussion and Analysis of
Financial Condition and Results of Operations" in the Prospectus,
agrees with the accounting records of the Company and its
subsidiaries, excluding any questions of legal interpretation.
20
References to the Prospectus in this paragraph (e) include any
supplement thereto at the date of the letter.
The Company shall have received from PricewaterhouseCoopers LLP
(and furnished to the Representatives) a report with respect to a review of
unaudited interim financial information in the Management's Discussion and
Analysis of Financial Condition and Results of Operations of the Company
for the four quarters ending March 31, 2000 in accordance with Statement on
Auditing Standards No. 71.
(f) Subsequent to the Execution Time or, if earlier, the dates
as of which information is given in the Registration Statement
(exclusive of any amendment thereof) and the Prospectus (exclusive of
any supplement thereto), there shall not have been (i) any change or
decrease specified in the letter or letters referred to in paragraph
(e) of this Section 6 or (ii) any change, or any development involving
a prospective change, in or affecting the condition (financial or
otherwise), earnings, business or properties of the Company, whether
or not arising from transactions in the ordinary course of business,
except as set forth in or contemplated in the Prospectus (exclusive of
any supplement thereto) the effect of which, in any case referred to
in clause (i) or (ii) above, is, in the sole judgment of the
Representatives, so material and adverse as to make it impractical or
inadvisable to proceed with the offering or delivery of the Securities
as contemplated by the Registration Statement (exclusive of any
amendment thereof) and the Prospectus (exclusive of any supplement
thereto).
(g) The Company shall have requested and caused ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, a Professional Corporation, patent counsel to the
Company, and ▇▇▇▇▇▇, ▇▇▇▇▇ and ▇▇▇▇▇, P.C., regulatory counsel to the
Company, to have furnished to the Representatives their opinions,
dated the Closing Date and addressed to the Representatives, in forms
satisfactory to the Representatives.
(h) Prior to the Closing Date, the Company shall have furnished
to the Representatives such further information, certificates and
documents as the Repre sentatives may reasonably request.
If any of the conditions specified in this Section 6 shall not
have been fulfilled in all material respects when and as provided in this
Agreement, or if any of the opinions and certificates mentioned above or
elsewhere in this Agreement shall not be in all material respects
reasonably satisfactory in form and substance to the Representatives and
counsel for the Underwriters, this Agreement and all obligations of the
Underwriters hereunder may be canceled at, or at any time prior to the
Closing Date by the Representatives. Notice of such cancelation shall be
given to the Company in writing or by telephone or facsimile confirmed in
writing.
The documents required to be delivered by this Section 6 shall be
delivered at the offices of Cravath, Swaine & ▇▇▇▇▇, counsel for the
Underwriters, at Worldwide Plaza, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇, on the Closing Date.
21
7. Reimbursement of Underwriters' Expenses. If the sale of the
Securities provided for herein is not consummated because any condition to
the obligations of the Underwriters set forth in Section 6 hereof is not
satisfied, because of any termination pursuant to Section 10 hereof or
because of any refusal, inability or failure on the part of the Company to
perform any agreement herein or comply with any provision hereof other than
by reason of a default by any of the Underwriters, the Company will
reimburse the Underwriters severally through ▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney Inc. on
demand for all out-of-pocket expenses (including reasonable fees and
disbursements of counsel) that shall have been incurred by them in
connection with the proposed purchase and sale of the Securities.
8. Indemnification and Contribution. (a) The Company agrees to
indemnify and hold harmless each Underwriter, the directors, officers,
employees and agents of each Underwriter and each person who controls any
Underwriter within the meaning of either the Act or the Exchange Act
against any and all losses, claims, damages or liabilities, joint or
several, to which they or any of them may become subject under the Act, the
Exchange Act or other Federal or state statutory law or regulation, at
common law or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement for the registration of the
Securities as originally filed or in any amendment thereof, or in any
Preliminary Prospectus or the Prospectus, or in any amendment thereof or
supplement thereto, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and
agrees to reimburse each such indemnified party, as incurred, for any legal
or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or
action; provided, however, that the Company will not be liable in any such
case to the extent that any such loss, claim, damage or liability arises
out of or is based upon any such untrue statement or alleged untrue
statement or omission or alleged omission made therein in reliance upon and
in conformity with written information furnished to the Company by or on
behalf of any Underwriter through the Representatives specifically for
inclusion therein. This indemnity agreement will be in addition to any
liability which the Company may otherwise have.
(b) The Company agrees to indemnify and hold harmless ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ Inc., the directors, officers, employees and agents of ▇▇▇▇▇▇▇ ▇▇▇▇▇
Barney Inc. and each person, who controls ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc. within
the meaning of either the Act or the Exchange Act ("▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney
Inc. Entities"), from and against any and all losses, claims, damages and
liabilities to which they may become subject under the Act, the Exchange
Act or other Federal or state statutory law or regulation, at common law or
otherwise (including, without limitation, any legal or other expenses
reasonably incurred in connection with defending or investigating any such
action or claim), insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) (i) arise out of or are based upon any
untrue statement or alleged untrue statement of a material fact contained
in the prospectus wrapper material prepared by or with the consent of the
Company for distribution in foreign jurisdictions in connection with the
Directed Share Program attached to the Prospectus or any preliminary
prospectus, or arise out of or are based upon
22
the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statement therein, when
considered in conjunction with the Prospectus or any applicable preliminary
prospectus, not misleading; (ii) caused by the failure of any Participant
to pay for and accept delivery of the securities which immediately
following the Effective Date of the Registration Statement, were subject to
a properly confirmed agreement to purchase; or (iii) related to, arising
out of, or in connection with the Directed Share Program, provided that,
the Company will not be liable in any such case to the extent that any such
loss, claim, damage, or liability arises out of or is based upon any such
untrue statement or alleged untrue statement or omission or alleged
omission made therein in reliance upon and in conformity with written
information furnished to the Company by or on behalf of ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ Inc. specifically for inclusion therein.
(c) Each Underwriter severally and not jointly agrees to indemnify
and hold harmless the Company, each of its directors, each of its officers
who signs the Registration Statement, and each person who controls the
Company within the meaning of either the Act or the Exchange Act, to the
same extent as the foregoing indemnity from the Company to each
Underwriter, but only with reference to written information relating to
such Underwriter furnished to the Company by or on behalf of such
Underwriter through the Representatives specifically for inclusion in the
documents referred to in the foregoing indemnity. This indemnity agreement
will be in addition to any liability which any Underwriter may otherwise
have. The Company acknowledges that the statements set forth in the last
paragraph of the cover page regarding delivery of the Securities and, under
the heading "Underwriting", (i) the list of Underwriters and their
respective participation in the sale of the Securities, (ii) the sentences
related to concessions and reallowances and (iii) the paragraph related to
stabilization, syndicate covering transactions and penalty bids in any
Preliminary Prospectus and the Prospectus constitute the only information
furnished in writing by or on behalf of the several Underwriters for
inclusion in any Preliminary Prospectus or the Prospectus.
(d) Promptly after receipt by an indemnified party under this Section
8 of notice of the commencement of any action, such indemnified party will,
if a claim in respect thereof is to be made against the indemnifying party
under this Section 8, notify the indemnifying party in writing of the
commencement thereof; but the failure so to notify the indemnifying party
(i) will not relieve it from liability under paragraph (a) or (b) above
unless and to the extent it did not otherwise learn of such action and such
failure results in the forfeiture by the indemnifying party of substantial
rights and defenses and (ii) will not, in any event, relieve the
indemnifying party from any obligations to any indemnified party other than
the indemnification obligation provided in paragraph (a) or (b) above. The
indemnifying party shall be entitled to appoint counsel of the indemnifying
party's choice at the indemnifying party's expense to represent the
indemnified party in any action for which indemnification is sought (in
which case the indemnifying party shall not thereafter be responsible for
the fees and expenses of any separate counsel retained by the indemnified
party or parties except as set forth below); provided, however, that such
counsel shall be satisfactory to the indemnified party. Notwithstanding
the indemnifying party's election to appoint counsel to represent the
indemnified party in an action, the indemnified party shall have the right
to employ separate counsel (including local counsel), and the indemnifying
party shall bear the
23
reasonable fees, costs and expenses of such separate counsel if (i) the use
of counsel chosen by the indemnifying party to represent the indemnified
party would present such counsel with a conflict of interest, (ii) the
actual or potential defendants in, or targets of, any such action include
both the indemnified party and the indemnifying party and the indemnified
party shall have reasonably concluded that there may be legal defenses
available to it and/or other indemnified parties which are different from
or additional to those available to the indemnifying party, (iii) the
indemnifying party shall not have employed counsel satisfactory to the
indemnified party to represent the indemnified party within a reasonable
time after notice of the institution of such action or (iv) the
indemnifying party shall authorize the indemnified party to employ separate
counsel at the expense of the indemnifying party. An indemnifying party
will not, without the prior written consent of the indemnified parties,
settle or compromise or consent to the entry of any judgment with respect
to any pending or threatened claim, action, suit or proceeding in respect
of which indemnification or contribution may be sought hereunder (whether
or not the indemnified parties are actual or potential parties to such
claim or action) unless such settlement, compromise or consent includes an
unconditional release of each indemnified party from all liability arising
out of such claim, action, suit or proceeding. Notwithstanding anything
contained herein to the contrary, if indemnity may be sought pursuant to
Section 8(b) hereof in respect of such action or proceeding, then in
addition to such separate firm for the indemnified parties, the
indemnifying party shall be liable for the reasonable fees and expenses of
not more than one separate firm (in addition to any local counsel) for
▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney Inc., the directors, officer, employees and agents of
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc., and all persons, if any, who control ▇▇▇▇▇▇▇
▇▇▇▇▇ Barney Inc. within the meaning of either the Act or the Exchange Act
for the defense of any losses, claims, damages and liabilities arising out
of the Directed Share Program.
(e) In the event that the indemnity provided in paragraph (a) or (b)
of this Section 8 is unavailable to or insufficient to hold harmless an
indemnified party for any reason, the Company and the Underwriters
severally agree to contribute to the aggregate losses, claims, damages and
liabilities (including legal or other expenses reasonably incurred in
connection with investigating or defending same) (collectively "Losses") to
which the Company and one or more of the Underwriters may be subject in
such proportion as is appropriate to reflect the relative benefits received
by the Company on the one hand and by the Underwriters on the other from
the offering of the Securities; provided, however, that in no case shall
any Underwriter (except as may be provided in any agreement among
underwriters relating to the offering of the Securities) be responsible for
any amount in excess of the underwriting discount or commission applicable
to the Securities purchased by such Underwriter hereunder. If the
allocation provided by the immediately preceding sentence is unavailable
for any reason, the Company and the Underwriters severally shall contribute
in such proportion as is appropriate to reflect not only such relative
benefits but also the relative fault of the Company on the one hand and of
the Underwriters on the other in connection with the statements or
omissions which resulted in such Losses as well as any other relevant
equitable considerations. Benefits received by the Company shall be deemed
to be equal to the total net proceeds from the offering (before deducting
expenses) received by it, and benefits received by the Underwriters shall
be deemed to be equal to the total underwriting discounts and commissions,
in each case as set forth on the cover page of
24
the Prospectus. Relative fault shall be determined by reference to, among
other things, whether any untrue or any alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information provided by the Company on the one hand or the
Underwriters on the other, the intent of the parties and their relative
knowledge, access to information and opportunity to correct or prevent such
untrue statement or omission. The Company and the Underwriters agree that
it would not be just and equitable if contribution were determined by pro
rata allocation or any other method of allocation which does not take
account of the equitable considerations referred to above. Notwithstanding
the provisions of this paragraph (d), no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 8, each person
who controls an Underwriter within the meaning of either the Act or the
Exchange Act and each director, officer, employee and agent of an
Underwriter shall have the same rights to contribution as such Underwriter,
and each person who controls the Company within the meaning of either the
Act or the Exchange Act, each officer of the Company who shall have signed
the Registration Statement and each director of the Company shall have the
same rights to contribution as the Company, subject in each case to the
applicable terms and conditions of this paragraph (d).
9. Default by an Underwriter. If any one or more Underwriters
shall fail to purchase and pay for any of the Securities agreed to be
purchased by such Underwriter or Underwriters hereunder and such failure to
purchase shall constitute a default in the performance of its or their
obligations under this Agreement, the remaining Underwriters shall be
obligated severally to take up and pay for (in the respective proportions
which the amount of Securities set forth opposite their names in Schedule I
hereto bears to the aggregate amount of Securities set forth opposite the
names of all the remaining Under writers) the Securities which the
defaulting Underwriter or Underwriters agreed but failed to purchase;
provided, however, that in the event that the aggregate amount of
Securities which the defaulting Underwriter or Underwriters agreed but
failed to purchase shall exceed 10% of the aggregate amount of Securities
set forth in Schedule I hereto, the remaining Underwriters shall have the
right to purchase all, but shall not be under any obligation to purchase
any, of the Securities, and if such nondefaulting Underwriters do not
purchase all the Securities, this Agreement will terminate without
liability to any nondefaulting Underwriter or the Company. In the event of
a default by any Underwriter as set forth in this Section 9, the Closing
Date shall be postponed for such period, not exceeding five Business Days,
as the Representatives shall determine in order that the required changes
in the Registration Statement and the Prospectus or in any other documents
or arrangements may be effected. Nothing contained in this Agreement shall
relieve any defaulting Underwriter of its liability, if any, to the Company
and any nondefaulting Underwriter for damages occasioned by its default
hereunder.
10. Termination. This Agreement shall be subject to termination
in the absolute discretion of the Representatives, by notice given to the
Company prior to delivery of and payment for the Securities, if at any time
prior to such time (i) trading in the Company's Common Stock shall have
been suspended by the Commission or the Nasdaq National Market or trading
in securities generally on the New York Stock Exchange or the Nasdaq
National Market shall have been suspended or limited or
25
minimum prices shall have been established on such Exchange or the Nasdaq
National Market, (ii) a banking moratorium shall have been declared either
by Federal or New York State authorities or (iii) there shall have occurred
any outbreak or escalation of hostilities, declaration by the United States
of a national emergency or war, or other calamity or crisis the effect of
which on financial markets is such as to make it, in the sole judgment of
the Representatives, impractical or inadvisable to proceed with the
offering or delivery of the Securities as contemplated by the Prospectus
(exclusive of any supplement thereto).
11. Representations and Indemnities to Survive. The respective
agreements, representations, warranties, indemnities and other statements
of the Company or its officers and of the Underwriters set forth in or made
pursuant to this Agreement will remain in full force and effect, regardless
of any investigation made by or on behalf of any Underwriter or the Company
or any of the officers, directors, employees, agents or controlling persons
referred to in Section 8 hereof, and will survive delivery of and payment
for the Securities. The provisions of Sections 7 and 8 hereof shall
survive the termination or cancelation of this Agreement.
12. Notices. All communications hereunder will be in writing
and effective only on receipt, and, if sent to the Representatives, will be
mailed, delivered or telefaxed to the ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc. General
Counsel (fax no.: (▇▇▇) ▇▇▇-▇▇▇▇) and confirmed to the General Counsel,
▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney Inc., at ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇▇▇, Attention: General Counsel; or, if sent to the Company, will be
mailed, delivered or telefaxed to ▇▇▇▇ Medical Systems, Inc., ▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇ and
confirmed to Venture Law Group, A Professional Corporation, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, attention: ▇▇▇▇ ▇. ▇▇▇▇▇.
13. Successors. This Agreement will inure to the benefit of and
be binding upon the parties hereto and their respective successors and the
officers, directors, employees, agents and controlling persons referred to
in Section 8 hereof, and no other person will have any right or obligation
hereunder.
14. Applicable Law. This Agreement will be governed by and
construed in accordance with the laws of the State of New York applicable
to contracts made and to be performed within the State of New York.
15. Counterparts. This Agreement may be signed in one or more
counterparts, each of which shall constitute an original and all of which
together shall constitute one and the same agreement.
16. Headings. The section headings used herein are for
convenience only and shall not affect the construction hereof.
17. Definitions. The terms which follow, when used in this
Agreement, shall have the meanings indicated.
26
"Act" shall mean the Securities Act of 1933, as amended, and the
rules and regulations of the Commission promulgated thereunder.
"Business Day" shall mean any day other than a Saturday, a Sunday
or a legal holiday or a day on which banking institutions or trust
companies are authorized or obligated by law to close in New York City.
"Commission" shall mean the Securities and Exchange Commission.
"Effective Date" shall mean each date and time that the
Registration State ment, any post-effective amendment or amendments thereto
and any Rule 462(b) Registration Statement became or become effective.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission promulgated
thereunder.
"Execution Time" shall mean the date and time that this Agreement
is executed and delivered by the parties hereto.
"Preliminary Prospectus" shall mean any preliminary prospectus
referred to in paragraph 1(a) above and any preliminary prospectus included
in the Registration Statement at the Effective Date that omits Rule 430A
Information.
"Prospectus" shall mean the prospectus relating to the Securities
that is first filed pursuant to Rule 424(b) after the Execution Time or, if
no filing pursuant to Rule 424(b) is required, shall mean the form of final
prospectus relating to the Securities included in the Registration
Statement at the Effective Date.
"Registration Statement" shall mean the registration statement
referred to in paragraph 1(a) above, including exhibits and financial
statements, as amended at the Execution Time (or, if not effective at the
Execution Time, in the form in which it shall become effective) and, in the
event any post-effective amendment thereto or any Rule 462(b) Registration
Statement becomes effective prior to the Closing Date, shall also mean such
registration statement as so amended or such Rule 462(b) Registration
Statement, as the case may be. Such term shall include any Rule 430A
Information deemed to be included therein at the Effective Date as provided
by Rule 430A.
"Rule 424", "Rule 430A" and "Rule 462" refer to such rules under
the Act.
"Rule 430A Information" shall mean information with respect to
the Securities and the offering thereof permitted to be omitted from the
Registration Statement when it becomes effective pursuant to Rule 430A.
"Rule 462(b) Registration Statement" shall mean a registration
statement and any amendments thereto filed pursuant to Rule 462(b) relating
to the offering covered by the registration statement referred to in
Section 1(a) hereof.
27
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicate hereof,
whereupon this letter and your acceptance shall represent a binding
agreement among the Company and the several Underwriters.
Very truly yours,
▇▇▇▇ Medical Systems, Inc.
By: ___________________________
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: President and Chief
Executive Officer
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc.
Fleet Boston ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Inc.
By: ▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney Inc.
By: _______________________
Name:
Title:
For themselves and the other
several Underwriters named in
Schedule I to the foregoing
Agreement.
28
SCHEDULE I
----------
Number of Underwritten
Securities to be
Underwriters Purchased
------------ ----------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc.
FleetBoston ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Inc.
____________
Total . . . . . . . . .
29
SCHEDULE II
-----------
Number of Underwritten
Securities Reserved for
Underwriters Directed Share Program
-----------------------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney Inc.
_____________
Total . . . . . . . . .
EXHIBIT A
[Letterhead of officer, director or major shareholder of
Corporation]
▇▇▇▇ Medical Systems, Inc.
--------------------------
Public Offering of Common Stock
-------------------------------
, 2000
▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney Inc.
FleetBoston ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Inc.
As Representatives of the several Underwriters,
c/o ▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
This letter is being delivered to you in connection with the
proposed Underwriting Agreement (the "Underwriting Agreement"), between
▇▇▇▇ Medical Systems, Inc., a California corporation (the "Company"), and
each of you as representatives of a group of Underwriters named therein,
relating to an underwritten public offering of Common Stock, $0.001 par
value (the "Common Stock"), of the Company.
In order to induce you and the other Underwriters to enter into
the Underwriting Agreement, the undersigned will not, without the prior
written consent of ▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney Inc., offer, sell, contract to
sell, pledge or otherwise dispose of, (or enter into any transaction which
is designed to, or might reasonably be expected to, result in the
disposition (whether by actual disposition or effective economic
disposition due to cash settlement or otherwise) by the undersigned or any
affiliate of the undersigned or any person in privity with the undersigned
or any affiliate of the undersigned), directly or indirectly, including the
filing (or participation in the filing) of a registration statement with
the Securities and Exchange Commission in respect of, or establish or
increase a put equivalent position or liquidate or decrease a call
equivalent position within the meaning of Section 16 of the Securities
Exchange Act of 1934, as amended, and the rules and regulations of the
Securities and Exchange Commission promulgated thereunder with respect to,
any shares of capital stock of the Company or any securities convertible
into, or exercisable or exchangeable for such capital stock, or publicly
announce an intention to effect any such transaction, for a period of 180
days after the date of the Underwriting Agreement. The foregoing sentence
shall not apply to
(a) shares of Common Stock disposed of as bona fide gifts, provided that
the subsequent recipients are subject to an agreement similar to this
agreement that is reasonably acceptable to ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc., (b)
transactions relating to shares of Common Stock and other securities
acquired in open market transactions after the completion of the public
offering, and (c) shares purchased in the reserve share program; provided,
however, that if the undersigned is a[n] (i) officer, (ii) director or
(iii) shareholder that beneficially owns, directly or indirectly, more than
5% of the outstanding Common Stock before or after the acquisition of
Common Stock in the manner described in clauses (b) and (c) above, the
undersigned may not transfer shares of Common Stock acquired in the manner
described in clauses (b) or (c).
If for any reason the Underwriting Agreement shall be terminated
prior to the Closing Date (as defined in the Underwriting Agreement), the
agreement set forth above shall likewise be terminated.
Yours very truly,
(Signature)
(Printed Name)
-----
(Address)
-----
(Address)
------------------ COMPARISON OF FOOTNOTES ------------------
-FOOTNOTE 1-
/ Plus an option to purchase from the Company, up to [ ] additional
Securities to cover over-allotments.
------------------ COMPARISON OF HEADERS ------------------
-HEADER 1-
1
-HEADER 2-
Header Discontinued
------------------ COMPARISON OF FOOTERS ------------------
-FOOTER 1-
[NYCorp; 1052952.3:4775d: 06/09/00-4:38p]
-FOOTER 2-
[Form 01]