EXHIBIT 1.1
6,000,000 Shares/1/ of Common Stock
THERASENSE, INC.
PURCHASE AGREEMENT
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__________________, 2001
U.S. BANCORP ▇▇▇▇▇ ▇▇▇▇▇▇▇ INC .
▇▇ ▇▇▇▇▇ SECURITIES CORPORATION
▇▇▇▇▇▇ ▇▇▇▇▇▇ PARTNERS LLC
as Representatives of the several
Underwriters named in Schedule I hereto
c/o U. S. Bancorp ▇▇▇▇▇ ▇▇▇▇▇▇▇ Inc.
U.S. Bancorp Center
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
TheraSense, Inc., a Delaware corporation (the "Company"), proposes to sell
to the several underwriters named in Schedule I hereto (the "Underwriters") an
aggregate of 6,000,000 shares (the "Firm Shares") of the common stock, $0.001
par value per share (the "Common Stock"), of the Company. The Company has also
granted to the Underwriters an option to purchase up to 900,000 additional
shares of Common Stock on the terms and for the purposes set forth in Section 3
hereof (the "Option Shares"). The Firm Shares and any Option Shares purchased
pursuant to this Purchase Agreement are herein collectively called the
"Securities."
The Company hereby confirms its agreement with respect to the sale of the
Securities to the several Underwriters, for whom you are acting as
representatives (the "Representatives").
1. Registration Statement and Prospectus. A registration statement on Form
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S-1 (File No. 333-64456) with respect to the Securities, including a preliminary
form of prospectus, has been prepared by the Company in conformity with the
requirements of the Securities Act of 1933, as amended (the "Act"), and the
rules and regulations ("Rules and Regulations") of the Securities and Exchange
Commission (the "Commission") thereunder and has been filed with the Commission;
one or more amendments to such registration statement have also been so prepared
--------------------
/1/ Plus an option to purchase up to 900,000 additional shares to cover
over-allotments.
and have been, or will be, so filed; and, if the Company has elected to rely
upon Rule 462(b) of the Rules and Regulations to increase the size of the
offering registered under the Act, the Company will prepare and file with the
Commission a registration statement with respect to such increase pursuant to
Rule 462(b). Copies of such registration statement(s) and amendments and each
related preliminary prospectus have been delivered to you.
If the Company has elected not to rely upon Rule 430A of the Rules and
Regulations, the Company has prepared and will promptly file an amendment to the
registration statement and an amended prospectus (including a term sheet meeting
the requirements of Rule 434 of the Rules and Regulations). If the Company has
elected to rely upon Rule 430A of the Rules and Regulations, it will prepare and
file a prospectus (or a term sheet meeting the requirements of Rule 434)
pursuant to Rule 424(b) that discloses the information previously omitted from
the prospectus in reliance upon Rule 430A. Such registration statement as
amended at the time it is or was declared effective by the Commission, and, in
the event of any amendment thereto after the effective date and prior to the
First Closing Date (as hereinafter defined), such registration statement as so
amended (but only from and after the effectiveness of such amendment), including
a registration statement (if any) filed pursuant to Rule 462(b) of the Rules and
Regulations increasing the size of the offering registered under the Act and
information (if any) deemed to be part of the registration statement at the time
of effectiveness pursuant to Rules 430A(b) and 434(d) of the Rules and
Regulations, is hereinafter called the "Registration Statement." The prospectus
included in the Registration Statement at the time it is or was declared
effective by the Commission is hereinafter called the "Prospectus," except that
if any prospectus (including any term sheet meeting the requirements of Rule 434
of the Rules and Regulations provided by the Company for use with a prospectus
subject to completion within the meaning of Rule 434 in order to meet the
requirements of Section 10(a) of the Act) filed by the Company with the
Commission pursuant to Rule 424(b) (and Rule 434, if applicable) of the Rules
and Regulations or any other such prospectus provided to the Underwriters by the
Company for use in connection with the offering of the Securities (whether or
not required to be filed by the Company with the Commission pursuant to Rule
424(b) of the Rules and Regulations) differs from the prospectus on file at the
time the Registration Statement is or was declared effective by the Commission,
the term "Prospectus" shall refer to such differing prospectus (including any
term sheet within the meaning of Rule 434 of the Rules and Regulations) from and
after the time such prospectus is filed with the Commission or transmitted to
the Commission for filing pursuant to such Rule 424(b) (and Rule 434, if
applicable) or from and after the time it is first provided to the Underwriters
by the Company for such use. The term "Preliminary Prospectus" as used herein
means any preliminary prospectus included in the Registration Statement prior to
the time it becomes or became effective under the Act and any prospectus subject
to completion as described in Rule 430A or 434 of the Rules and Regulations.
2. Representations and Warranties of the Company.
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(a) The Company represents and warrants to, and agrees with, the
Underwriters as follows:
(i) No order preventing or suspending the use of any
Preliminary Prospectus has been issued by the Commission and each Preliminary
Prospectus, at the time of filing thereof, did not contain an untrue statement
of a material
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fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in the light of the circumstances under which
they were made, not misleading; except that the foregoing shall not apply to
statements in or omissions from any Preliminary Prospectus in reliance upon, and
in conformity with, written information furnished to the Company by you, or by
any Underwriter through you (as limited by Section 6(g)), specifically for use
in the preparation thereof.
(ii) As of the time the Registration Statement (or any post-
effective amendment thereto, including a registration statement (if any) filed
pursuant to Rule 462(b) of the Rules and Regulations increasing the size of the
offering registered under the Act) is or was declared effective by the
Commission, upon the filing or first delivery to the Underwriters of the
Prospectus (or any supplement to the Prospectus (including any term sheet
meeting the requirements of Rule 434 of the Rules and Regulations)) and at the
First Closing Date and Second Closing Date (as hereinafter defined), (A) the
Registration Statement and Prospectus (in each case, as so amended and/or
supplemented) conformed or will conform in all material respects to the
requirements of the Act and the Rules and Regulations, (B) the Registration
Statement (as so amended) did not or will not include an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, and (C) the Prospectus
(as so supplemented) did not or will not include an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances in which
they are or were made, not misleading; except that the foregoing shall not apply
to statements in or omissions from any such document in reliance upon, and in
conformity with, written information furnished to the Company by you, or by any
Underwriter through you, specifically for use in the preparation thereof (as
limited by Section 6(g)). If the Registration Statement has been declared
effective by the Commission, no stop order suspending the effectiveness of the
Registration Statement has been issued, and no proceeding for that purpose has
been initiated or, to the Company's knowledge, threatened by the Commission.
(iii) The financial statements of the Company, together with
the related notes, set forth in the Registration Statement and Prospectus comply
in all material respects with the requirements of the Act and fairly present the
financial condition of the Company as of the dates indicated and the results of
operations and changes in cash flows for the periods therein specified in
conformity with generally accepted accounting principles consistently applied
throughout the periods involved; and the supporting schedules included in the
Registration Statement present fairly the information required to be stated
therein. No other financial statements or schedules are required to be included
in the Registration Statement or Prospectus. PricewaterhouseCoopers LLP, which
has expressed its opinion with respect to the financial statements and schedules
filed as a part of the Registration Statement and included in the Registration
Statement and Prospectus, are independent public accountants as required by the
Act and the Rules and Regulations.
(iv) The Company has been duly organized and is validly
existing as a corporation in good standing under the laws of Delaware. The
Company has full corporate power and corporate authority to own its properties
and conduct its business as currently being carried on and as described in the
Registration Statement and Prospectus, and is duly qualified to do business as a
foreign corporation in good standing in each jurisdiction in which it owns or
leases real property or in which the conduct of its business makes such
qualification necessary,
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except to the extent that the failure to so qualify or be in good standing would
not have a material adverse effect upon the business, prospects, properties,
operations, condition (financial or otherwise) or results of operations of the
Company, taken as a whole ("Material Adverse Effect").
(v) Except as described in the Registration Statement and
the Prospectus and except for rights that have been effectively waived in
writing (complete and accurate copies of which have been provided to counsel for
the Underwriters prior to the date of this Agreement) which waivers are in full
force and effect, no holder of securities of the Company has any rights to cause
the Company to issue to it, or register pursuant to the Act, any securities of
the Company because of the filing of the Registration Statement or the sale of
the Securities contemplated hereby. No holder of securities of the Company has
preemptive rights or other rights to purchase any of the Securities.
(vi) The Company is not, and upon consummation of the
transactions contemplated hereby and the application of the proceeds therefrom
as described in the Prospectus will not be, subject to registration as an
"investment company" under the Investment Company Act of 1940.
(vii) Except as contemplated in the Prospectus, subsequent to
the respective dates as of which information is given in the Registration
Statement and the Prospectus, the Company has not incurred any material
liabilities or obligations, direct or contingent, or entered into any material
transactions, or declared or paid any dividends or made any distribution of any
kind with respect to its capital stock; and there has not been any change in the
capital stock (other than a change in the number of outstanding shares of Common
Stock due to the issuance of shares upon the exercise of outstanding options or
warrants), or any material change in the short-term or long-term debt, or any
issuance of options, warrants, convertible securities or other rights to
purchase the capital stock of the Company (other than issuances of options in
the ordinary course of business under existing plans described in the
Prospectus, not to exceed the shares available for issuance or grant as set
forth in the Prospectus), or any material adverse change in the business,
prospects, properties, operations, condition (financial or otherwise) or results
of operations of the Company, taken as a whole ("Material Adverse Change"), or
any development involving a prospective Material Adverse Change.
(viii) Except as set forth in the Prospectus, there is not
pending or, to the knowledge of the Company, threatened or contemplated, any
action, suit or proceeding to which the Company is a party or of which any
property or assets of the Company is the subject before or by any court or
governmental agency, authority or body, or any arbitrator, which, individually
or in the aggregate, could reasonably be expected to result in any Material
Adverse Change.
(ix) There are no contracts or documents that are required to
be filed as exhibits to the Registration Statement by the Act or by the Rules
and Regulations that have not been so filed.
(x) This Agreement has been duly authorized, executed and
delivered by the Company, and constitutes a valid, legal and binding obligation
of the Company, enforceable in accordance with its terms, except as rights to
indemnity hereunder may be limited
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by federal or state securities laws and except as such enforceability may be
limited by bankruptcy, insolvency, reorganization or similar laws affecting the
rights of creditors generally and subject to general principles of equity. The
execution, delivery and performance of this Agreement and the consummation of
the transactions herein contemplated will not result in a breach or violation of
any of the terms and provisions of, or constitute a default under, any statute,
any material agreement or instrument to which the Company is a party or by which
it is bound or to which any of its property is subject, the Company's charter or
by-laws, or any order, rule, regulation or decree of any court or governmental
agency or body having jurisdiction over the Company or any of its properties; no
consent, approval, authorization or order of, or filing with, any court or
governmental agency or body is required for the execution, delivery and
performance of this Agreement or for the consummation of the transactions
contemplated hereby, including the issuance or sale of the Securities by the
Company, except such as may be required under the Act, the rules of the NASD,
the rules of The Nasdaq National Market or state securities or blue sky laws;
and the Company has full power and authority to enter into this Agreement and to
authorize, issue and sell the shares of the Securities by the Company as
contemplated by this Agreement.
(xi) All of the issued and outstanding shares of capital stock
of the Company are duly authorized and validly issued, fully paid and
nonassessable, have been issued in compliance with all federal and state
securities laws, were not issued in violation of or subject to any preemptive
rights or other rights to subscribe for or purchase securities that have not
been waived in writing (a copy of which have been delivered to counsel to the
Representatives), and the holders thereof are not subject to personal liability
by reason of being such holders; the Securities which may be sold hereunder by
the Company have been duly authorized and, when issued, delivered and paid for
in accordance with the terms of this Agreement, will have been validly issued
and will be fully paid and nonassessable, and the holders thereof will not be
subject to personal liability by reason of being such holders; and the capital
stock of the Company conforms to the description thereof in the Registration
Statement and Prospectus. Except as otherwise stated in the Registration
Statement and Prospectus, there are no preemptive rights or other rights to
subscribe for or to purchase, or any restriction upon the voting or transfer of,
any shares of Common Stock pursuant to the Company's charter, by-laws or any
agreement or other instrument to which the Company is a party or by which the
Company is bound. Except as described in the Registration Statement and the
Prospectus, there are no options, warrants, agreements, contracts or other
rights in existence to purchase or acquire from the Company any shares of the
capital stock of the Company. The Company has an authorized and outstanding
capitalization as set forth in the Registration Statement and the Prospectus as
of the date set forth therein and under the stated assumptions. The description
of the Company's equity plans contained in the Registration Statement and the
Prospectus are accurate in all material respects.
(xii) Except where it would not have a Material Adverse Effect:
(i) the Company is in compliance with all applicable federal, state, local or
foreign laws, regulations, rules, ordinances, orders or directives relating to
pollution, protection of human health and safety, the environment (including,
without limitation, ambient air, surface water, groundwater, land surface or
subsurface strata) or wildlife, including, without limitation, laws and
regulations relating to the release or threatened release of chemicals,
pollutants, contaminants, wastes, toxic substances, hazardous substances,
petroleum or petroleum products (collectively, "Hazardous Materials") or to the
manufacture, processing, distribution, use, treatment, storage, disposal,
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transport or handling of Hazardous Materials (collectively, "Environmental
Laws"); (ii) to the Company's knowledge, no material expenditures are or will be
required to comply with the Environmental Laws, and the Company holds all
applicable permits, licenses and approvals required to conduct its business
thereunder and is in compliance with all terms and conditions of any such
permit, license or approval; (iii) to the Company's knowledge, all properties
and assets leased or owned, including, without limitation, all structures,
contents, soil, subsoil and groundwater, do not contain Hazardous Materials; and
(iv) the Company has no liability or obligation, whether to any governmental
authority or to any other person or entity, for damages, claims, penalties,
forfeitures or otherwise, as a consequence of the generation, transportation or
disposal of any Hazardous Materials under the Environmental Laws.
(xiii) As of the date of this Agreement and except as described
in the Registration Statement and the Prospectus, the Company is not required to
file or obtain any registration, application, license, request for exemption,
permit or other regulatory authorization with the U.S. Food and Drug
Administration (the "FDA") or any other federal, state, local or foreign
regulatory body in order to conduct its business as described in the
Registration Statement and Prospectus.
(xiv) The human clinical trials and other preclinical tests
conducted by or on behalf of the Company that are described in the Registration
Statements and the Prospectus (the "Company Studies"), have been conducted in
accordance with experimental protocols, procedures and controls generally used
by qualified experts in preclinical or clinical trials and the Company has no
knowledge of any other trials, studies or tests, the results of which reasonably
call into question the results of the Company Studies.
(xv) As of the date of this Agreement and except for the
matters disclosed in "Risk Factors- If the FDA does not clear our recent
FreeStyle labeling changes, we may be required to include significantly more
restrictive labeling, cease marketing FreeStyle under this labeling or recall
FreeStyle" and in "Business-Government Regulation-Pending 510(k) for New
FreeStyle Labeling" in the Registration Statement and the Prospectus (the "FDA
Disclosure"), the Company holds, and is operating in compliance in all material
respects with, all franchises, grants, authorizations, licenses, permits,
easements, consents, certificates and orders of any governmental or self-
regulatory body required for the conduct of its business and all such
franchises, grants, authorizations, licenses, permits, easements, consents,
certifications and orders are valid and in full force and effect; and, as of the
date of this Agreement and except as described in the FDA Disclosure, the
Company is in compliance in all material respects with all applicable federal,
state, local and foreign laws, regulations, orders and decrees. Without limiting
the foregoing, as of the date of this Agreement and except as described in the
FDA Disclosure, the Company is in compliance with the provisions of the Federal
Food, Drug, and Cosmetic Act ("FDC Act") relating to medical devices except
where such noncompliance would not result in a Material Adverse Effect. As of
the date of this Agreement and except as described in the FDA Disclosure, each
device that the Company manufactures, causes to be manufactured and distributes
or causes to be distributed for sale to the general public (the "Company
Devices") is the subject of a 510(k) premarket notification which resulted in a
finding of substantial equivalence by FDA or such device qualifies for exemption
from 510(k) premarket notification requirements. As of the date of this
Agreement and except as described in the FDA Disclosure, none of the Company
Devices found substantially equivalent by the FDA have been modified in
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such a manner as to require the submission of a new 510(k) premarket
notification. As of the date of this Agreement and except as described in the
FDA Disclosure, the Company believes that none of the Company Devices have been
labeled or promoted in such a manner as to require the submission of a new
510(k) notification. All the Company Devices being commercialized are listed
with the FDA and have been manufactured in a facility registered by the Company
with FDA. All the Company Devices manufactured by the Company or which the
Company causes to be manufactured by third parties are manufactured in
accordance with applicable Quality Systems Regulations, 21 C.F.R. Part 820,
except where such failure to be in accordance would not have a Material Adverse
Effect. The Company believes it has submitted all reports necessary to be
submitted in accordance with the Medical Device Reporting regulations, 21 C.F.R.
Part 803. As of the date of this Agreement and except as described in the FDA
Disclosure, the Company has labeled and promoted the Company Devices in
accordance with the provisions of the FDC Act and FDA's implementing
regulations, except where such failure to be in accordance would not have a
Material Adverse Effect. As of the date of this Agreement and except as
described in the FDA Disclosure, the Company Devices are not misbranded,
adulterated, or otherwise in violation of the FDC Act or FDA's regulations, or
any foreign regulatory law, regulation, order or rule governing the Company's
current business except where such misbranding, adulteration or other violation
would not have a Material Adverse Effect.
(xvi) The Company or one of its distribution partners have
submitted all reports and other documentation necessary to be submitted in
accordance with applicable foreign regulatory orders, laws and regulations in
jurisdictions in which the Company or a distribution partner are offering
Company Devices for sale to the general public, except where such failure would
not have a Material Adverse Effect. Neither the Company nor its distribution
partners have received notification of the violation of any applicable statute,
rule, regulation or order administered or issued by any foreign administrative
agency, regulatory body, government or governmental agency in foreign
jurisdictions in which the Company or a distribution partner is offering Company
Devices for sale to the general public.
(xvii) As of the date of this Agreement and except as
described in the FDA Disclosure, there are no actions, suits, or proceedings
pending or, to the knowledge of the Company, threatened by the FDA against the
Company seeking limitations, suspension or revocation of any license, permit,
approval or authorization required by the Company to conduct its business as
described in the Registration Statement and the Prospectus. As of the date of
this Agreement and except as described in the FDA Disclosure, to the Company's
knowledge, there are no-rule-making or similar proceedings before the FDA or
comparable federal, state, local or foreign government bodies which involve or
affect the Company which, if the subject of an action unfavorable to the Company
or its distributors, would have a Material Adverse Effect.
(xviii) The Company has good and marketable title to all
properties (real and personal) owned by the Company, free and clear of all
mortgages, pledges, liens, security interests, claims, restrictions or
encumbrances of any kind except such as do not, singly or in the aggregate,
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
all properties held under lease or license by the Company are held under valid,
existing and enforceable leases or licenses, free and clear of all liens,
security interests, claims, restrictions or encumbrances of any kind; provided,
however, the Company has entered into equipment leases in the ordinary course
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of business under which the equipment lessor has a security interest solely in
the leased equipment.
(xix) The Company owns or possesses valid and enforceable
licenses or other rights to use all inventions, patents, patent applications,
trademarks, service marks, trade names, copyrights, technology, software,
databases, Internet domain names, know-how (including trade secrets and other
unpatented and/or unpatentable proprietary or confidential information, systems
or procedures), proprietary techniques (including processes and substances) and
other intellectual property rights used in, or necessary to conduct, the
business now conducted by the Company or presently contemplated to be conducted
as described in the Registration Statement and the Prospectus ("Intellectual
Property"), free and clear of all liens, claims and encumbrances, other than as
described in the Registration Statement and the Prospectus: (i) there are no
third parties who have any rights in the Intellectual Property that could
preclude the Company from conducting its business as currently conducted or as
presently contemplated to be conducted as described in the Registration
Statement and the Prospectus; (ii) there are no pending or threatened actions,
suits, proceedings, investigations or claims by others challenging the rights of
the Company or (if the Intellectual Property is licensed) the licensor thereof
in any Intellectual Property owned or licensed to the Company; (iii) neither the
Company nor (if the Intellectual Property is licensed) the licensor thereof has
infringed, or received any notice of infringement of or conflict with, any
rights of others with respect to the Intellectual Property; and (iv) there is no
dispute between it and any licensor with respect to any Intellectual Property.
The Company has taken all reasonable steps to protect, maintain and safeguard
the Intellectual Property for which improper or unauthorized disclosure would
impair its value or validity and has entered into appropriate nondisclosure and
confidentiality agreements and made appropriate filings and registrations in
connection with the foregoing. True and correct copies of all licenses and other
agreements between the Company and any third party relating to the Intellectual
Property, and all amendments and supplements thereto, have been provided to the
Underwriters.
(xx) The Company is not in violation of its charter or by-
laws. The Company is not in breach of or otherwise in default, and no event has
occurred which, with notice or lapse of time or both, would constitute such a
default in the performance of any material obligation, agreement or condition
contained in any bond, debenture, note, indenture, loan agreement or any other
material contract, lease or other instrument to which it is subject or by which
it may be bound, or to which any of the material property or assets of the
Company is subject.
(xxi) The Company has filed all federal, state, local and
foreign income and franchise tax returns required to be filed and is not in
default in the payment of any taxes which were payable pursuant to said returns
or any assessments with respect thereto, other than any which the Company is
contesting in good faith.
(xxii) The Company has not distributed and will not distribute
any prospectus or other offering material in connection with the offering and
sale of the Securities other than any Preliminary Prospectus or the Prospectus
or other materials permitted by the Act to be distributed by the Company.
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(xxiii) The Securities have been approved for quotation on The
Nasdaq National Market upon official notice of issuance and, on the date the
Registration Statement became or becomes effective, the Company's Registration
Statement on Form 8-A or other applicable form under the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), became or will become effective.
(xxiv) The Company does not have any "subsidiaries" as
defined in Rule 405 of the Rules and Regulations. The Company, directly or
indirectly, owns no capital stock or other equity or ownership or proprietary
interest in any corporation, partnership, association, trust or other entity.
(xxv) The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurances that (i) transactions are
executed in accordance with management's general or specific authorization; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain accountability for assets; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(xxvi) Other than as contemplated by this Agreement, the
Company has not incurred any liability for any finder's or broker's fee or
agent's commission in connection with the execution and delivery of this
Agreement or the consummation of the transactions contemplated hereby.
(xxvii) The Company carries, or is covered by, insurance (with
insurers of recognized financial responsibility) in such amounts and covering
such risks as is (i) adequate for the conduct of its business and the value of
its properties and as is customary for companies engaged in similar businesses
in similar industries and (ii) required under any of the Company's material
agreements, licenses or other contracts all of which insurance is in full force
and effect.
(xxviii) None of the Directed Stock (as defined below)
distributed in connection with the Directed Stock Program (as defined below)
will be offered or sold outside of the United States.
(xxix) No labor dispute with the employees of the Company is
pending, or, to the Company's knowledge, is imminent; and the Company is not
aware of, any existing, threatened or imminent labor disturbance by the
employees of any of its principal suppliers, strategic partners, manufacturers
or contractors that could result in any Material Adverse Effect.
(xxx) Each employee benefit plan, within the meaning of
Section 3(3) of the Employee Retirement Income Securities Act of 1974, as
amended ("ERISA"), that is maintained, administered or contributed to by the
Company for employees or former employees of the Company has been maintained in
compliance with its respective terms and the requirements of any applicable
statutes, orders, rules and regulations, including but not limited to ERISA and
the Internal Revenue Code of 1986, as amended (the "Code"). No prohibited
transaction, within the meaning of Section 406 of ERISA or Section 4975 of the
Code, has
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occurred with respect to any such plan that could result in liability to the
Company, excluding transactions effected pursuant to a statutory or
administrative exemption. For each such plan that is subject to the funding
rules of Section 412 of the Code or Section 302 of ERISA, no "accumulated
funding deficiency," as defined in Section 412 of the Code, has been incurred,
whether or not waived, and the fair market value of the assets of each such plan
(excluding for these purposes accrued but unpaid contributions) exceeds the
present value of all benefits accrued under such plan determined using
reasonable actuarial assumptions.
(xxxi) No relationship, direct or indirect, exists between or
among the Company or any of its affiliates 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 Registration Statement and the
Prospectus that is not so described.
(xxxii) Neither the Company nor any of its affiliates is
presently doing business with the government of Cuba or with any person or
affiliate located in Cuba.
(b) Any certificate signed by any officer of the Company and
delivered to you or to counsel for the Underwriters as required by the terms and
conditions of this Agreement shall be deemed a representation and warranty by
the Company to each Underwriter as to the matters covered thereby.
3. Purchase, Sale and Delivery of Securities.
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(a) On the basis of the representations, warranties and agreements
herein contained, but subject to the terms and conditions herein set forth, the
Company agrees to issue and sell 6,000,000 Firm Shares to the several
Underwriters, and each Underwriter agrees, severally and not jointly, to
purchase from the Company the number of Firm Shares set forth opposite the name
of such Underwriter in Schedule I hereto. The purchase price for each Firm Share
shall be $____ per share. Except as provided in paragraph (c) of this Section 3
and in Section 8 hereof, the agreement of each Underwriter (contracting
severally and not jointly) is to purchase only the respective number of Firm
Shares specified in Schedule I.
It is understood that 300,000 shares of the Firm Shares ("Directed
Stock") will initially be reserved by the Underwriters for offer and sale to
employees, directors and persons having business relationships with or otherwise
related to the Company ("Directed Stock Participants") subject to the terms and
conditions set forth in the Prospectus and in accordance with the rules and
regulations of the National Association of Securities Dealers and all other
applicable laws, rules and regulations ("Directed Stock Program"). Under no
circumstance will the Representatives or any Underwriter be liable to the
Company or to any Directed Stock Participant for any action taken or omitted to
be taken in good faith in connection with such Directed Stock Program. To the
extent that any shares of Directed Stock are not affirmatively reconfirmed for
purchase by any Directed Stock Participant orally on or by the end of the
business day following the date of this Agreement, such Directed Stock may be
offered to the public as part of the public offering contemplated hereby.
The Firm Shares will be delivered by the Company to you for the
accounts of the several Underwriters against payment of the purchase price
therefor by wire same-day funds
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payable to the order of the Company at the offices of U. S. Bancorp ▇▇▇▇▇
▇▇▇▇▇▇▇ Inc., U.S. Bancorp Center, ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, or
such other location as may be mutually acceptable, at 9:00 a.m. Central time on
the third (or if the Securities are priced, as contemplated by Rule 15c6-1(c)
under the Exchange Act, after 4:30 p.m. Eastern time, the fourth) full business
day following the date hereof, or at such other time and date as you and the
Company determine pursuant to Rule 15c6-1(a) under the Exchange Act, such time
and date of delivery being herein referred to as the "First Closing Date."
Delivery of the Firm Shares will be made by credit through full fast transfer to
the accounts at The Depository Trust Company designated by the Representatives.
Certificates representing the Firm Shares, in definitive form and in such
denominations and registered in such names as you may request upon at least two
business days' prior notice to the Company, will be made available for checking
and packaging not later than 10:30 a.m., Central time, on the business day next
preceding the First Closing Date at the offices of U. S. Bancorp ▇▇▇▇▇ ▇▇▇▇▇▇▇
Inc., U.S. Bancorp Center, ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, or such
other location as may be mutually acceptable.
(b) On the basis of the representations, warranties and agreements
herein contained, but subject to the terms and conditions herein set forth, the
Company hereby grants to the several Underwriters an option to purchase all or
any portion of the Option Shares at the same purchase price as the Firm Shares,
for use solely in covering any over-allotments made by the Underwriters in the
sale and distribution of the Firm Shares. The option granted hereunder may be
exercised in whole or in part at any time (but not more than once) within 30
days after the effective date of this Agreement upon notice (confirmed in
writing) by the Representatives to the Company setting forth the aggregate
number of Option Shares as to which the several Underwriters are exercising the
option, the names and denominations in which the certificates for the Option
Shares are to be registered and the date and time, as determined by you, when
the Option Shares are to be delivered, such time and date being herein referred
to as the "Second Closing" and "Second Closing Date", respectively; provided,
however, that the Second Closing Date shall not be earlier than the First
Closing Date nor earlier than the second business day after the date on which
the option shall have been exercised. The number of Option Shares to be
purchased by each Underwriter shall be the same percentage of the total number
of Option Shares to be purchased by the several Underwriters as the number of
Firm Shares to be purchased by such Underwriter is of the total number of Firm
Shares to be purchased by the several Underwriters, as adjusted by the
Representatives in such manner as the Representatives deem advisable to avoid
fractional shares. No Option Shares shall be sold and delivered unless the Firm
Shares previously have been, or simultaneously are, sold and delivered.
The Option Shares will be delivered by the Company, as appropriate,
to you for the accounts of the several Underwriters against payment of the
purchase price therefor by wire same-day funds payable to the order of the
Company, as appropriate, at the offices of U.S. Bancorp ▇▇▇▇▇ ▇▇▇▇▇▇▇ Inc., U.S.
Bancorp Center, ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, or such other
location as may be mutually acceptable at 9:00 a.m., Central time, on the Second
Closing Date. Delivery of the Option Shares will be made by credit through full
fast transfer to the accounts at The Depository Trust Company designated by the
Representatives. Certificates representing the Option Shares in definitive form
and in such denominations and registered in such names as you have set forth in
your notice of option exercise, will be made available for checking and
packaging not later than 10:30 a.m., Central time, on the business day next
preceding the Second Closing Date at the office of U.S. Bancorp
-11-
▇▇▇▇▇ ▇▇▇▇▇▇▇ Inc., U.S. Bancorp Center, ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, or such other location as may be mutually acceptable.
(c) It is understood that you, individually and not as
Representatives of the several Underwriters, may (but shall not be obligated to)
make payment to the Company on behalf of any Underwriter for the Securities to
be purchased by such Underwriter. Any such payment by you shall not relieve any
such Underwriter of any of its obligations hereunder. Nothing herein contained
shall constitute any of the Underwriters an unincorporated association or
partner with the Company.
4. Covenants.
---------
(a) The Company covenants and agrees with the several Underwriters as
follows:
(i) If the Registration Statement has not already been
declared effective by the Commission, the Company will use its best efforts to
cause the Registration Statement and any post-effective amendments thereto to
become effective as promptly as possible; the Company will notify you promptly
of the time when the Registration Statement or any post-effective amendment to
the Registration Statement has become effective or any supplement to the
Prospectus (including any term sheet within the meaning of Rule 434 of the Rules
and Regulations) has been filed and of any request by the Commission for any
amendment or supplement to the Registration Statement or Prospectus or
additional information relating thereto; if the Company has elected to rely on
Rule 430A of the Rules and Regulations, the Company will prepare and file a
Prospectus (or term sheet within the meaning of Rule 434 of the Rules and
Regulations) containing the information omitted therefrom pursuant to Rule 430A
of the Rules and Regulations with the Commission within the time period required
by, and otherwise in accordance with the provisions of, Rules 424(b), 430A and
434, if applicable, of the Rules and Regulations; if the Company has elected to
rely upon Rule 462(b) of the Rules and Regulations to increase the size of the
offering registered under the Act, the Company will prepare and file a
registration statement with respect to such increase with the Commission within
the time period required by, and otherwise in accordance with the provisions of,
Rule 462(b); the Company will prepare and file with the Commission, promptly
upon your request, any amendments or supplements to the Registration Statement
or Prospectus (including any term sheet within the meaning of Rule 434 of the
Rules and Regulations) that, in your opinion, may be necessary or advisable in
connection with the distribution of the Securities by the Underwriters; and the
Company will not file any amendment or supplement to the Registration Statement
or Prospectus (including any term sheet within the meaning of Rule 434 of the
Rules and Regulations) to which you shall reasonably object by notice to the
Company after having been furnished a copy a reasonable time prior to the
filing.
(ii) The Company will advise you, promptly after it shall
receive notice or obtain knowledge thereof, of the issuance by the Commission of
any stop order suspending the effectiveness of the Registration Statement, of
the suspension of the qualification of the Securities for offering or sale in
any jurisdiction, or of the initiation or threatening of any proceeding for any
such purpose; and the Company will promptly use its best efforts to prevent the
issuance of any stop order or to obtain its withdrawal if such a stop order
should be issued.
-12-
(iii) Within the time during which a prospectus (including
any term sheet within the meaning of Rule 434 of the Rules and Regulations)
relating to the Securities is required to be delivered under the Act, the
Company will comply as far as it is able with all requirements imposed upon it
by the Act, as now and hereafter amended, and by the Rules and Regulations, as
from time to time in force, so far as necessary to permit the continuance of
sales of or dealings in the Securities as contemplated by the provisions hereof
and the Prospectus. If during such period any event occurs as a result of which
the Prospectus would include an untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in the light of
the circumstances then existing, not misleading, or if during such period it is
necessary to amend the Registration Statement or supplement the Prospectus to
comply with the Act, the Company will promptly notify you and will amend the
Registration Statement or supplement the Prospectus (at the expense of the
Company) so as to correct such statement or omission or effect such compliance.
(iv) The Company will use its best efforts to qualify the
Securities for sale under the securities laws of such jurisdictions as you
reasonably designate and to continue such qualifications in effect so long as
required for the distribution of the Securities, except that the Company shall
not be required in connection therewith to qualify as a foreign corporation,
subject itself to taxation or to execute a general consent to service of process
in any state. The Company shall use every reasonable effort to obtain the
withdrawal of any order of suspension of the qualification of the Shares for
sale in any jurisdiction as soon as possible. The Company shall use its best
efforts to cause the Securities to be quoted on The Nasdaq National Market, and
to maintain such quotation so long as any of the Securities are outstanding.
(v) The Company will furnish to the Underwriters and
counsel for the Underwriters copies of the Registration Statement (three of
which will be signed and will include all consents and exhibits filed
therewith), each Preliminary Prospectus, the Prospectus, and all amendments and
supplements (including any term sheet within the meaning of Rule 434 of the
Rules and Regulations) to such documents, in each case as soon as available and
in such quantities as you may from time to time reasonably request.
(vi) During a period of five years commencing with the date
hereof, the Company will furnish to the Representatives, and to each Underwriter
who may so request in writing, copies of all periodic and special reports
furnished to the stockholders of the Company and all information, documents and
reports filed with the Commission, the National Association of Securities
Dealers, Inc., The Nasdaq National Market or any securities exchange.
(vii) The Company will make generally available to its
security holders as soon as practicable, but in any event not later than 15
months after the end of the Company's current fiscal quarter, an earnings
statement (which need not be audited) covering a 12-month period beginning after
the effective date of the Registration Statement that shall satisfy the
provisions of Section 11(a) of the Act and Rule 158 of the Rules and
Regulations.
(viii) The Company, whether or not the transactions
contemplated hereunder are consummated or this Agreement is prevented from
becoming effective under the provisions of Section 9(a) hereof or is terminated,
will pay or cause to be paid (A) all expenses (including transfer taxes
allocated to the respective transferees) incurred in connection with the
-13-
delivery to the Underwriters of the Securities, (B) all expenses and fees
(including, without limitation, fees and expenses of the Company's accountants
and counsel but, except as otherwise provided below, not including fees of the
Underwriters' counsel) in connection with the preparation, printing, filing,
delivery, and shipping of the Registration Statement (including the financial
statements therein and all amendments, schedules, and exhibits thereto), the
Securities, each Preliminary Prospectus, the Prospectus, and any amendment
thereof or supplement thereto, and the printing, delivery, and shipping of this
Agreement and other underwriting documents, including Blue Sky Memoranda (as
defined below), (C) all filing fees and reasonable fees and disbursements of the
Underwriters' counsel incurred in connection with the qualification of the
Securities for offering and sale by the Underwriters or by dealers under the
securities or blue sky laws of the states and other jurisdictions which you
shall designate, (D) the fees and expenses of any transfer agent or registrar,
(E) the filing fees incident to any required review by the National Association
of Securities Dealers, Inc. of the terms of the sale of the Securities, (F) the
fees for quotation of the Securities on The Nasdaq National Market, (G) the cost
of printing certificates representing the Securities, (H) all costs and expenses
of the Underwriters, including fees and disbursements of counsel for the
Underwriters and any stamp duties or other taxes incurred by the Underwriters,
in connection with matters related to the Directed Stock, and (G) all other
costs and expenses incident to the performance of its obligations hereunder that
are not otherwise specifically provided for herein. If the sale of the
Securities provided for herein is not consummated by reason of action by the
Company pursuant to Section 9(a) hereof which prevents this Agreement from
becoming effective, or 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
several Underwriters for all out-of-pocket disbursements (including fees and
disbursements of counsel) incurred by the Underwriters in connection with their
investigation, preparing to market and marketing the Securities or in
contemplation of performing their obligations hereunder. The Company shall not
in any event be liable to any of the Underwriters for loss of anticipated
profits from the transactions covered by this Agreement.
(ix) The Company will apply the net proceeds from the sale
of the Securities to be sold by it hereunder for the purposes set forth in the
Prospectus and will file such reports with the Commission with respect to the
sale of the Securities and the application of the proceeds therefrom as may be
required in accordance with Rule 463 of the Rules and Regulations.
(x) The Company will not, without the prior written consent
of U.S. Bancorp ▇▇▇▇▇ ▇▇▇▇▇▇▇ Inc., from the date of execution of this Agreement
and continuing to and including the date 180 days after the date of the
Prospectus (the "Lock-Up Period") offer for sale; sell; contract to sell;
pledge; grant any option for the sale of; 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; or otherwise issue or
dispose of, directly or indirectly (or publicly disclose the intention to make
any such offer, sale, pledge, grant, issuance or other disposition), any Common
Stock or any securities convertible into or exchangeable for, or any options or
rights to purchase or acquire, Common Stock, except to the Underwriters pursuant
to this Agreement. The Company agrees not to accelerate the vesting of any
option or warrant or the
-14-
lapse of any repurchase right prior to the expiration of the Lock-Up Period. The
Company agrees further not to waive its rights under or release any holder of
Common Stock or options, warrants or notes exercisable and/or convertible for
Common Stock from any contractual lock-up or market stand-off provision between
the Company and such holder. Notwithstanding the foregoing, the Company may (i)
issue shares of its Common Stock or grant options to purchase shares of its
Common Stock (or issues shares of its Common Stock upon exercise of such
options), in the ordinary course of business, pursuant to its 1997 and 2001
Stock Plans or 2001 Employee Stock Purchase Plan described in the Prospectus,
not to exceed the shares available for issuance or grant under such plans as set
forth in the Prospectus, not to exceed the shares available for issuance or
grant as set forth in the Prospectus, (ii) issue shares of Common Stock upon
exercise of outstanding options, warrants, convertible notes or other
arrangements described in the Prospectus, (iii) file a registration statement on
Form S-8 under the Act to register shares then available for issuance or grant
pursuant to its 1997 and 2001 Stock Plans or 2001 Employee Stock Purchase Plan
described in the Prospectus and (iv) file a registration statement on Form ▇-▇/
▇-▇ under the Act to register shares issued upon the exercise of options granted
pursuant to its 1997 Stock Plan; provided, however, that the Company must (a)
obtain an executed lock-up agreement in the form attached hereto as Exhibit B
---------
from the holders of all shares of Common Stock issued or options granted
pursuant to item (i) of this sentence and (b) use its best efforts to obtain an
executed lock-up agreement in the form attached hereto as Exhibit B from the
---------
holders of all shares of Common Stock issued pursuant to items (ii) and (iv) of
this sentence.
(xi) The Company either has caused to be delivered to you or
will cause to be delivered to you prior to the effective date of the
Registration Statement (i) an executed lock-up agreement in the form attached
hereto as Exhibit B from each of the Company's directors and officers and (ii)
---------
an executed lock-up agreement in the form attached hereto as Exhibit B from each
---------
of its stockholders, warrantholders and convertible noteholders, except for
those stockholders, warrantholders and convertible noteholders listed on
Schedule II to this Agreement. With respect to each Lock-Up Agreement, the
Company will issue stop-transfer instructions to the transfer agent for the
Common Stock with respect to any transaction or contemplated transaction that
would constitute a breach of or default under the applicable Lock-Up Agreement.
(xii) The Company has not taken and will not take, directly
or indirectly, any action designed to or which might reasonably be expected to
cause or result in, or which has constituted, the stabilization or manipulation
of the price of any security of the Company to facilitate the sale or resale of
the Securities, and has not effected any sales of Common Stock which are
required to be disclosed in response to Item 701 of Regulation S-K under the Act
which have not been so disclosed in the Registration Statement.
(xiii) The Company will not incur any liability for any
finder's or broker's fee or agent's commission in connection with the execution
and delivery of this Agreement or the consummation of the transactions
contemplated hereby.
(xiv) In connection with the Directed Stock Program to ensure
that the Directed Stock will be restricted to the extent required by the
National Association of Securities Dealers or the rules of such association from
sale, transfer, assignment, pledge or hypothecation
-15-
for a period of three months following the date of the effectiveness of the
Registration Statement, the Company will direct the transfer agent to place
stop-transfer restrictions upon such securities for such period of time. Should
the Company release, or seek to release, from such restrictions any of the
Directed Stock, the Company agrees to reimburse the Underwriters for any
reasonable expense (including, without limitation, legal expenses) they incur
with such release.
(xv) The Company will file with the Commission such periodic
and special reports as required by the Rules and Regulations.
5. Conditions of Underwriters' Obligations. The obligations of the several
---------------------------------------
Underwriters hereunder are subject to the accuracy, as of the date hereof and at
each of the First Closing Date and the Second Closing Date (as if made at such
Closing Date), of and compliance with all representations, warranties, covenants
and agreements of the Company contained herein, to the performance by the
Company of its obligations hereunder and to the following additional conditions:
(a) The Registration Statement shall have become effective not later
than 5:00 p.m., Central time, on the date of this Agreement, or such later time
and date as you, as Representatives of the several Underwriters, shall approve
and all filings required by Rules 424, 430A and 434 of the Rules and Regulations
shall have been timely made; no stop order suspending the effectiveness of the
Registration Statement or any amendment thereof shall have been issued; no
proceedings for the issuance of such an order shall have been initiated or
threatened; and any request of the Commission for additional information (to be
included in the Registration Statement or the Prospectus or otherwise) shall
have been complied with to your satisfaction.
(b) No Underwriter shall have advised the Company that the
Registration Statement or the Prospectus, or any amendment thereof or supplement
thereto (including any term sheet within the meaning of Rule 434 of the Rules
and Regulations), contains an untrue statement of fact which, in your opinion,
is material, or omits to state a fact which, in your opinion, is material and is
required to be stated therein or necessary to make the statements therein not
misleading.
(c) Except as contemplated in the Prospectus, subsequent to the
respective dates as of which information is given in the Registration Statement
and the Prospectus, the Company shall not have incurred any material liabilities
or obligations, direct or contingent, or entered into any material transactions,
or declared or paid any dividends or made any distribution of any kind with
respect to its capital stock; and there shall not have been any change in the
capital stock (other than a change in the number of outstanding shares of Common
Stock due to the issuance of shares upon the exercise of outstanding options or
warrants or due to the issuances contemplated by Section 4(a)(x) of this
Agreement), or any material change in the short-term or long-term debt of the
Company, or any issuance of options, warrants, convertible securities or other
rights to purchase the capital stock of the Company (other than in accordance
with Section 4(a)(x)), or any Material Adverse Change or any development
involving a prospective Material Adverse Change (whether or not arising in the
ordinary course of business), that, in your judgment, makes it impractical or
inadvisable to offer or deliver the Securities on the terms and in the manner
contemplated in the Prospectus.
-16-
(d) On each Closing Date, there shall have been furnished to you, as
Representatives of the several Underwriters, the opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ Professional Corporation, counsel for the Company, dated such
Closing Date and addressed to you, to the effect that:
(i) The Company has been duly organized and is validly existing
as a corporation in good standing under the laws of Delaware. The Company has
full corporate power and authority to own its properties and conduct its
business as currently being carried on and as described in the Registration
Statement and Prospectus, and is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction in which it owns or
leases real property or in which the conduct of its business makes such
qualification necessary and in which the failure to so qualify would have a
Material Adverse Effect.
(ii) The capital stock of the Company conforms as to legal
matters to the description thereof contained in the Prospectus under the caption
"Description of Capital Stock." All of the issued and outstanding shares of the
capital stock of the Company have been duly authorized and validly issued and
are fully paid and nonassessable, and the holders thereof are not subject to
personal liability by reason of being such holders. The Securities to be issued
and sold by the Company hereunder have been duly authorized and, when issued,
delivered and paid for in accordance with the terms of this Agreement, will have
been validly issued and will be fully paid and nonassessable, and the holders
thereof will not be subject to personal liability by reason of being such
holders. Except as otherwise stated in the Registration Statement and
Prospectus, there are no preemptive rights or other rights to subscribe for or
to purchase, or any restriction upon the voting or transfer of, any shares of
Common Stock pursuant to the Company's charter, by-laws or any agreement or
other instrument known to such counsel to which the Company is a party or by
which the Company is bound. To the best of such counsel's knowledge, neither the
filing of the Registration Statement nor the offering or sale of the Securities
as contemplated by this Agreement gives rise to any rights for or relating to
the registration of any shares of Common Stock or other securities of the
Company.
(iii) To the best of such counsel's knowledge, except as described
in the Registration Statement and Prospectus or waived in writing, there are no
options, warrants, agreements, contracts or other rights in existence to
purchase or acquire from the Company any shares of the capital stock of the
Company.
(iv) The Registration Statement has become effective under the
Act and, to the best of such counsel's knowledge, no stop order suspending the
effectiveness of the Registration Statement has been issued and no proceeding
for that purpose has been instituted or, to the knowledge of such counsel,
threatened by the Commission.
(v) The descriptions in the Registration Statement and
Prospectus of statutes, regulations, legal and governmental proceedings,
contracts and other documents are accurate and fairly present the information
required to be shown; and such counsel does not know of any statutes,
regulations, legal or governmental proceedings or contracts or other documents
required to be described in the Prospectus or included as exhibits to the
Registration Statement that are not described or included as required.
-17-
(vi) The Company has full corporate power and authority to enter
into this Agreement, and this Agreement has been duly authorized, executed and
delivered by the Company and constitutes a valid, legal and binding obligation
of the Company enforceable in accordance with its terms (except as rights to
indemnity hereunder may be limited by federal or state securities laws and
except as such enforceability may be limited by bankruptcy, insolvency,
reorganization or similar laws affecting the rights of creditors generally and
subject to general principles of equity); the execution, delivery and
performance of this Agreement and the consummation of the transactions herein
contemplated will not result in a breach or violation of any of the terms and
provisions of, or constitute a default under, any statute, rule or regulation,
any agreement or instrument known to such counsel to which the Company is a
party or by which it is bound or to which any of its property is subject, the
Company's charter or by-laws, or any order or decree known to such counsel of
any court or governmental agency or body having jurisdiction over the Company or
any of its respective properties; and no consent, approval, authorization or
order of, or filing with, any court or governmental agency or body is required
for the execution, delivery and performance of this Agreement or for the
consummation of the transactions contemplated hereby, including the issuance or
sale of the Securities by the Company, except such as may be required under the
Act or state securities laws.
(vii) The Registration Statement and the Prospectus, and any
amendment thereof or supplement thereto including any term sheet within the
meaning of Rule 434 of the Rules and Regulations (other than the financial
statements and schedules and other financial data and statistical date derived
therefrom, as to which such counsel expresses no opinion), comply as to form in
all material respects with the requirements of the Act and the Rules and
Regulations.
(viii) The Securities have been approved (upon issuance as
contemplated by this Agreement) for quotation on the Nasdaq National Market.
(ix) We do not know of any litigation or governmental or other
action, suit, proceeding or investigation before any court or before or by any
public, regulatory or governmental agency or body pending or to the best of such
counsel's knowledge, threatened against, or involving the properties or business
of, the Company or any of its subsidiaries, which is of a character required to
be disclosed in the Registration Statement and the Prospectus which has not been
properly disclosed therein, or of any statute, regulation, contract or other
document that is required to be described in the Registration Statement or the
Prospectus or to be filed as an exhibit to the Registration Statement that is
not described or filed as required.
(x) The Company is not an "investment company" or a person
"controlled" by an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
In addition, such opinion shall also contain a statement that such
counsel has participated in conferences with officers and representatives of the
Company, intellectual property counsel for the Company, representatives of the
independent public accountants for the Company, counsel to the Underwriters and
the Underwriters at which the contents of the Registration Statement and the
Prospectus and related matters were discussed and, no facts have
-18-
come to the attention of such counsel which would cause such counsel to believe
that either the Registration Statement at the time it became effective
(including the information deemed to be part of the Registration Statement at
the time of effectiveness pursuant to Rule 430A(b) or Rule 434, if applicable),
or any amendment thereof made prior to each Closing Date as of the date of such
amendment, contained an 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 (or any
amendment thereof or supplement thereto made prior to such Closing Date as of
the date of such amendment or supplement) and as of each Closing Date contained
or contains an untrue statement of a material fact or omitted or omits to state
any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading (it being understood that such counsel need express no belief or
opinion with respect to the financial statements and schedules and other
financial data and statistical data derived therefrom or matters to be covered
in the opinion of intellectual property counsel).
In rendering such opinion such counsel may rely (i) as to matters of
law other than the laws of the United States and jurisdictions in which they are
admitted, upon the opinion or opinions of local counsel provided that the extent
of such reliance is specified in such opinion and that such counsel shall state
that such opinion or opinions of local counsel are satisfactory to them and that
they believe they and you are justified in relying thereon and (ii) as to
matters of fact, to the extent such counsel deems reasonable upon certificates
of officers of the Company provided that the extent of such reliance is
specified in such opinion.
(e) On each Closing Date, you shall have received the opinion of
Merchant & ▇▇▇▇▇, LLP, patent counsel for the Company, dated such Closing Date,
addressed to you and in the form as attached hereto as Exhibit A.
---------
(f) On each Closing Date, there shall have been furnished to you, as
Representatives of the several Underwriters, such opinion or opinions from
▇▇▇▇▇▇▇, Phleger & ▇▇▇▇▇▇▇▇ LLP, counsel for the several Underwriters, dated
such Closing Date and addressed to you, with respect to the formation of the
Company, the validity of the Securities, the Registration Statement, the
Prospectus and other related matters as you reasonably may request, and such
counsel shall have received such papers and information as they request to
enable them to pass upon such matters.
(g) At the time this Agreement is executed and at each Closing Date,
you shall have received a letter from PricewaterhouseCoopers LLP, independent
public accountants for the Company, dated, respectively, as of the date of this
Agreement and as of each Closing Date addressed to the Underwriters and the
Company and in form and substance satisfactory to you, to the effect that: (i)
they are independent certified public accountants with respect to the Company
within the meaning of the Act and the Regulations; (ii) stating that, in their
opinion, the financial statements and schedules of the Company included in the
Registration Statement and the Prospectus and covered by their opinion therein
comply as to form in all material respects with the applicable accounting
requirements of the Act and the applicable published rules and regulations of
the Commission thereunder; (iii) on the basis of procedures consisting of a
reading of the latest available unaudited interim financial statements of the
Company and of the latest available unaudited monthly financial statements of
the Company (which, in the case of the letter
-19-
delivered on the First Closing Date, shall be at least as of June 30, 2001), a
reading of the minutes of meetings and consents of the stockholders and boards
of directors of the Company and the committees of such boards subsequent to June
30, 2001, inquiries of officers and other employees of the Company who have
responsibility for financial and accounting matters of the Company with respect
to transactions and events subsequent to June 30, 2001 and other specified
procedures and inquiries to a date not more than five days prior to the date of
such letter (provided that the letter delivered on the First Closing Date shall
use a "cut-off" date not earlier than the date hereof), nothing has come to
their attention that would cause them to believe that: (A) the unaudited
financial statements and schedules of the Company presented in the Registration
Statement and the Prospectus do not comply as to form in all material respects
with the applicable accounting requirements of the Act and the applicable
published rules and regulations of the Commission thereunder or that such
unaudited financial statements are not in conformity with generally accepted
accounting principles applied on a basis substantially consistent with that of
the audited financial statements included in the Registration Statement and the
Prospectus; (B) with respect to the period subsequent to June 30, 2001 there
were, as of the date of the most recent available monthly financial statements
of the Company, if any, and as of a specified date not more than five days prior
to the date of such letter (provided that the letter delivered on the First
Closing Date shall use a "cut-off" date not earlier than the date hereof), any
changes in the capital stock or long-term indebtedness of the Company or any
decrease in the current assets or shareholders' equity of the Company, in each
case as compared with the amounts shown in the most recent balance sheet
presented in the Registration Statement and the Prospectus, except for changes
or decreases which the Registration Statement and the Prospectus disclose have
occurred or may occur or which are set forth in such letter; or (C) that during
the period from June 30, 2001 to the date of the most recent available monthly
financial statements of the Company, if any, and to a specified date not more
than five days prior to the date of such letter (provided that the letter
delivered on the First Closing Date shall use a "cut-off" date not earlier than
the date hereof), there was any decrease, as compared with the corresponding
period in the prior fiscal year, in revenues from product sales, or increase in
net loss, except for decreases or increases, as the case may be, which the
Registration Statement and the Prospectus disclose have occurred or may occur or
which are set forth in such letter; and (iv) stating that they have compared
specific dollar amounts, numbers of shares, percentages of revenues and
earnings, and other financial information pertaining to the Company set forth in
the Registration Statement and the Prospectus, which have been specified by you
prior to the date of this Agreement, to the extent that such amounts, numbers,
percentages, and information may be derived from the general accounting and
financial records of the Company or from schedules furnished by the Company, and
excluding any questions requiring an interpretation by legal counsel, with the
results obtained from the application of specified readings, inquiries, and
other appropriate procedures specified by you set forth in such letter, and
found them to be in agreement.
(h) On each Closing Date, there shall have been furnished to you, as
Representatives of the Underwriters, a certificate, dated such Closing Date and
addressed to you, signed by the chief executive officer and by the chief
financial officer of the Company, to the effect that:
(i) The representations and warranties of the Company in this
Agreement are true and correct, in all material respects, as if made at and as
of such Closing
-20-
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 such Closing
Date;
(ii) No stop order or other order suspending the effectiveness of
the Registration Statement or any amendment thereof or the qualification of the
Securities for offering or sale has been issued, and no proceeding for that
purpose has been instituted or, to their knowledge, is contemplated by the
Commission or any state or regulatory body; and
(iii) The signers of said certificate have carefully examined the
Registration Statement and the Prospectus, and any amendments thereof or
supplements thereto (including any term sheet within the meaning of Rule 434 of
the Rules and Regulations), and (A) such documents contain all statements and
information required to be included therein, the Registration Statement, or any
amendment thereof, does not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein not misleading, and the Prospectus, as amended or
supplemented, does not include any untrue statement of material fact or omit to
state a material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, (B) since the
effective date of the Registration Statement, there has occurred no event
required to be set forth in an amended or supplemented prospectus which has not
been so set forth, (C) subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus, the
Company has not incurred any material liabilities or obligations, direct or
contingent, or entered into any material transactions, not in the ordinary
course of business, or declared or paid any dividends or made any distribution
of any kind with respect to its capital stock, and except as disclosed in the
Prospectus, there has not been any change in the capital stock (other than a
change in the number of outstanding shares of Common Stock due to the issuance
of shares upon the exercise of outstanding options or warrants or due to the
issuances contemplated by Section 4(a)(x) of this Agreement), or any material
change in the short-term or long-term debt, or any issuance of options,
warrants, convertible securities or other rights to purchase the capital stock
(other than in accordance with Section 4(a)(x) of this Agreement), of the
Company, or any Material Adverse Change or any development involving a
prospective Material Adverse Change (whether or not arising in the ordinary
course of business), and (D) except as stated in the Registration Statement and
the Prospectus, there is not pending, or, to the knowledge of the Company,
threatened or contemplated, any action, suit or proceeding to which the Company
is a party before or by any court or governmental agency, authority or body, or
any arbitrator, which might result in any Material Adverse Change.
(i) As of the time of the closing of the sale of the Firm Shares
hereunder at the Closing Date, you shall have received from all of the Company's
officers and directors and from all of the Company's stockholders,
warrantholders and convertible noteholders, except for those stockholders,
warrantholders and convertible noteholders listed on Schedule II, an executed
lock-up agreement in the form attached hereto as Exhibit B.
---------
(j) The Company shall have furnished to you and counsel for the
Underwriters such additional documents, certificates and evidence as you or they
may have reasonably requested, including but not limited to, good standing
certificates from each jurisdiction in which the nature of its properties or
conduct of its business makes such qualification necessary.
-21-
(k) At the Closing Date of the sale of the Firm Shares, the Securities
shall have been quoted on The NASDAQ National Market.
All such opinions, certificates, letters and other documents will be in
compliance with the provisions hereof only if they are satisfactory in form and
substance to you and counsel for the Underwriters. The Company will furnish you
with such conformed copies of such opinions, certificates, letters and other
documents as you shall reasonably request.
6. Indemnification and Contribution.
---------------------------------
(a) The Company agrees to indemnify and hold harmless each Underwriter
against any losses, claims, damages or liabilities, joint or several, to which
such Underwriter may become subject, under the Act or otherwise (including in
settlement of any claim or litigation if such settlement is effected with the
written consent of the Company), insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon (i)
an untrue statement or alleged untrue statement of a material fact contained in
the Registration Statement, including the information deemed to be a part of the
Registration Statement at the time of effectiveness pursuant to Rules 430A and
434(d) of the Rules and Regulations, if applicable, any Preliminary Prospectus,
the Prospectus, or any amendment or supplement thereto (including any term sheet
within the meaning of Rule 434 of the Rules and Regulations), or in any
materials or information provided to investors by, or with the review and
approval of, the Company in connection with the marketing of the offering of the
Common Stock ("Marketing Materials"), including any roadshow or investor
presentations made to investors by the Company (whether in person or
electronically) or which 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 or (ii) any untrue
statement or alleged untrue statement of a material fact included in the
supplement or prospectus wrapper material distributed in connection with the
reservation and sale of the Directed Stock to eligible Directed Stock
Participants or the ommission or alleged omission therefrom of a material fact
necessary to make the statements therein, when considered in conjunction with
the Proposectus or Preliminary Prospectus, not misleading, and will reimburse
each Underwriter for any legal or other expenses reasonably incurred by it in
connection with investigating or defending against such loss, claim, damage,
liability or action; 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 an untrue statement or alleged untrue
statement or omission or alleged omission made in the Registration Statement,
any Preliminary Prospectus, the Prospectus, or any such amendment or supplement,
or in any Marketing Materials, in reliance upon and in conformity with written
information furnished to the Company by you, or by any Underwriter through you,
specifically for use in the preparation thereof (as limited by Section 6(g)
below). This indemnity agreement will be in addition to any liability which the
Company may otherwise have including under this Agreement. The foregoing
indemnity agreement with respect to any preliminary prospectus shall not inure
to the benefit of any Underwriter who failed to deliver a Prospectus (as then
amended or supplemented, provided by the Company to the several Underwriters in
the requisite quantity and on a timely basis to permit proper delivery on or
prior to the Closing Date) to the person asserting any losses, claims, damages
and liabilities and judgments caused by any untrue statement or alleged untrue
statement of a material fact contained in any Preliminary Prospectus, or caused
by any omission or alleged omission to state therein a material fact required to
be
-22-
stated therein or necessary to make the statements therein not misleading, if
such material misstatement or omission or alleged material misstatement or
omission was cured, as determined by a court of competent jurisdiction in a
decision not subject to further appeal, in such Prospectus and such Prospectus
was required by law to be delivered at or prior to the written confirmation of
sale to such person.
In addition to its other obligations under this Section 6(a), the
Company agrees that, as an interim measure during the pendency of any claim,
action, investigation, inquiry or other proceeding arising out of or based upon
any statement or omission, or any alleged statement or omission, described in
this Section 6(a), it will reimburse each Underwriter on a monthly basis for all
reasonable legal fees or other expenses incurred in connection with
investigating or defending any such claim, action, investigation, inquiry or
other proceeding, notwithstanding the absence of a judicial determination as to
the propriety and enforceability of the Company's obligation to reimburse the
Underwriters for such expenses and the possibility that such payments might
later be held to have been improper by a court of competent jurisdiction. To
the extent that any such interim reimbursement payment is so held to have been
improper, the Underwriter that received such payment shall promptly return it to
the party or parties that made such payment, together with interest, compounded
daily, determined on the basis of the prime rate (or other commercial lending
rate for borrowers of the highest credit standing) announced from time to time
by U.S. Bank (the "Prime Rate"). Any such interim reimbursement payments which
are not made to an Underwriter within 30 days of a request for reimbursement
shall bear interest at the Prime Rate from the date of such request. This
indemnity agreement shall be in addition to any liabilities which the Company
may otherwise have including under this Agreement.
(b) Each Underwriter severally, and not jointly, agrees to indemnify
and hold harmless the Company against any losses, claims, damages or liabilities
to which the Company may become subject, under the Act or otherwise (including
in settlement of any litigation, if such settlement is effected with the written
consent of such Underwriter), insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in the
Registration Statement, any Preliminary Prospectus, the Prospectus, or any
amendment or supplement thereto (including any term sheet within the meaning of
Rule 434 of the Rules and Regulations), 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, in
each case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in the
Registration Statement, any Preliminary Prospectus, the Prospectus, or any such
amendment or supplement, in reliance upon and in conformity with written
information furnished to the Company by you, or by such Underwriter through you,
specifically for use in the preparation thereof, and will reimburse the Company
for any legal or other expenses reasonably incurred by the Company in connection
with investigating or defending against any such loss, claim, damage, liability
or action; provided, however, that in no case shall any Underwriter be liable or
responsible for any amount of in excess of the underwriting discount and
commission applicable to the Securities purchased by such Underwriter hereunder.
This indemnity will be in addition to any liability which any Underwriter may
otherwise have including under this Agreement.
-23-
(c) In connection with the offer and sale of the Directed Stock, the
Company agrees, promptly upon a request in writing, to indemnify and hold
harmless the Underwriters from and against any and all losses, liabilities,
claims, damages and expenses incurred by them as a result of the failure of the
Directed Stock Participants, who makes an oral agreement to purchase Directed
Stock within twenty-four hours of establishing the public offering price, to pay
for and accept delivery of the Directed Stock; provided, however, the Company
shall have the express right to mitigate any such losses, liabilities, claims,
damages and expenses through the re-allocation of any such Directed Stock to
other Direct Stock Participants.
(d) Promptly after receipt by an indemnified party under subsection
(a), (b) or (c) above of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify the indemnifying party in
writing of the commencement thereof; but the omission so to notify the
indemnifying party shall not relieve the indemnifying party from any liability
that it may have to any indemnified party except to the extent such indemnifying
party has been materially prejudiced by such failure. In case any such action
shall be brought against any indemnified party, and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate in, and, to the extent that it shall wish, jointly with
any other indemnifying party similarly notified, to assume the defense thereof,
with counsel satisfactory to such indemnified party, and after notice from the
indemnifying party to such indemnified party of the indemnifying party's
election so to assume the defense thereof, the indemnifying party shall not be
liable to such indemnified party under such subsection for any legal or other
expenses subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation; provided, however,
that if the defendants in any such action include both the indemnified party or
parties and the indemnifying party, and the indemnified party or parties shall
have reasonably concluded that there may be legal defenses or claims available
to it or them which are different from or additional to those available to the
indemnifying party, or if there is a conflict of interest which would prevent
counsel for the indemnifying party or parties from also representing the
indemnified party or parties, and that it is advisable for the indemnified party
or parties to be represented by separate counsel, then the indemnified party or
parties shall have the right to employ a single counsel (in addition to any
local counsel) to represent the indemnified party or the indemnified parties as
a group, in which event the reasonable fees and expenses of the separate counsel
shall be borne by the indemnifying party or parties. An indemnifying party shall
not be obligated under any settlement agreement relating to any action under
this Section 6 to which it has not agreed in writing; unless such settlement
includes an unconditional release of such indemnified party from all liability
on all claims that are the subject matter of the proceeding.
(e) If the indemnification provided for in this Section 6 is
unavailable or insufficient to hold harmless an indemnified party under
subsections (a), (b) or (c) above, then each indemnifying party shall contribute
to the amount paid or payable by such indemnified party as a result of the
losses, claims, damages or liabilities referred to in subsections (a), (b) or
(c) above, (i) in such proportion as is 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 Securities 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 in
-24-
connection with the statements or omissions that resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one hand
and the Underwriters on the other shall be deemed to be in the same proportion
as the total net proceeds from the offering (before deducting expenses) received
by the Company bear to the total underwriting discounts and commissions received
by the Underwriters, 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, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Company or the Underwriters and the parties'
relevant intent, 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 contributions pursuant to this
subsection (e) were to be determined by pro rata allocation (even if the
Underwriters were treated as one entity for such purpose) or by any other method
of allocation which does not take account of the equitable considerations
referred to in the first sentence of this subsection (e) (except as described in
subsection (d) of this Section 6 with respect to an indemnified party's
assumption of the defense of an indemnifiable claim). The amount paid by an
indemnified party as a result of the losses, claims, damages or liabilities
referred to in the first sentence of this subsection (e) shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending against any action or claim
which is the subject of this subsection (e). Notwithstanding the provisions of
this subsection (e), no Underwriter shall be required to contribute any amount
in excess of the amount by which the total price at which the Securities
underwritten by it and distributed to the public were offered to the public
exceeds the amount of any damages that such Underwriter has otherwise been
required to pay by reason of such 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 Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. The
Underwriters' obligations in this subsection (e) to contribute are several in
proportion to their respective underwriting obligations and not joint.
(f) The obligations of the Company under this Section 6 shall be in
addition to any liability which the Company may otherwise have and shall extend,
upon the same terms and conditions, to each person, if any, who controls any
Underwriter within the meaning of the Act; and the obligations of the
Underwriters under this Section 6 shall be in addition to any liability that the
respective Underwriters may otherwise have and shall extend, upon the same terms
and conditions, to each director of the Company (including any person who, with
his consent, is named in the Registration Statement as about to become a
director of the Company), to each officer of the Company who has signed the
Registration Statement and to each person, if any, who controls the Company
within the meaning of the Act.
(g) The Underwriters severally confirm that the statements with respect
to the public offering of the Securities by the Underwriters set forth in (i)
the table of underwriters participating in the offering immediately following
the first paragraph, (ii) the second paragraph (which begins "The underwriters
have advised . . ."), (iii) the eighth paragraph (which begins "The underwriters
have informed . . ."), (iv) the thirteenth paragraph (which begins "To
facilitate the offering, . . ."), (v) the fourteenth paragraph (which begins "In
addition, the underwriters . . ."), and (vi) the fifteenth paragraph (which
begins "▇▇▇▇▇▇ ▇▇▇▇▇▇ Partners . . .") under the
-25-
caption "Underwriting" in the Prospectus are correct. The Underwriters severally
confirm and the Company acknowledges that the statements described in the
immediately preceding sentence constitute the only information the Underwriters
furnished in writing to the Company by or on behalf of the Underwriters
specifically for inclusion in the Registration Statement and the Prospectus.
7. Representations and Agreements to Survive Delivery. All
--------------------------------------------------
representations, warranties and agreements of the Company herein or in
certificates delivered pursuant hereto, and the agreements of the several
Underwriters and the Company contained in Section 6 hereof, shall remain
operative and in full force and effect regardless of any investigation made by
or on behalf of any Underwriter or any controlling person thereof, or the
Company or any of its officers, directors, or controlling persons, and shall
survive delivery of, and payment for, the Securities to and by the Underwriters
hereunder.
8. Substitution of Underwriters.
-----------------------------
(a) If any Underwriter or Underwriters shall fail to take up and pay
for the amount of Firm Shares agreed by such Underwriter or Underwriters to be
purchased hereunder, upon tender of such Firm Shares in accordance with the
terms hereof, and the amount of Firm Shares not purchased does not aggregate
more than 10% of the total amount of Firm Shares set forth in Schedule I hereto,
the remaining Underwriters shall be obligated to take up and pay for (in
proportion to their respective underwriting obligations hereunder as set forth
in Schedule I hereto except as may otherwise be determined by you) the Firm
Shares that the withdrawing or defaulting Underwriters agreed but failed to
purchase.
(b) If any Underwriter or Underwriters shall fail to take up and pay
for the amount of Firm Shares agreed by such Underwriter or Underwriters to be
purchased hereunder, upon tender of such Firm Shares in accordance with the
terms hereof, and the amount of Firm Shares not purchased aggregates more than
10% of the total amount of Firm Shares set forth in Schedule I hereto, and
arrangements satisfactory to you for the purchase of such Firm Shares by other
persons are not made within 36 hours thereafter, this Agreement shall terminate.
In the event of any such termination the Company shall not be under any
liability to any Underwriter (except to the extent provided in Section
4(a)(viii) and Section 6 hereof) nor shall any Underwriter (other than an
Underwriter who shall have failed, otherwise than for some reason permitted
under this Agreement, to purchase the amount of Firm Shares agreed by such
Underwriter to be purchased hereunder) be under any liability to the Company
(except to the extent provided in Section 6 hereof).
(c) If Firm Shares to which a default relates are to be purchased by
the non-defaulting Underwriters or by any other party or parties, the
Representatives or the Company shall have the right to postpone the First
Closing Date for not more than seven business days in order that the necessary
changes in the Registration Statement, Prospectus and any other documents, as
well as any other arrangements, may be effected. As used herein, the term
"Underwriter" includes any person substituted for an Underwriter under this
Section 8 with like effect as if it had originally been a party to this
Agreement.
9. Effective Date of this Agreement and Termination.
-------------------------------------------------
-26-
(a) This Agreement shall become effective at 10:00 a.m., Central time,
on the first full business day following the effective date of the Registration
Statement, or at such earlier time after the effective time of the Registration
Statement as you in your discretion shall first release the Securities for sale
to the public; provided, that if the Registration Statement is effective at the
time this Agreement is executed, this Agreement shall become effective at such
time as you in your discretion shall first release the Securities for sale to
the public. For the purpose of this Section 9, the Securities shall be deemed to
have been released for sale to the public upon release by you of the publication
of a newspaper advertisement relating thereto or upon release by you of telexes
offering the Securities for sale to securities dealers, whichever shall first
occur. By giving notice as hereinafter specified before the time this Agreement
becomes effective, you, as Representatives of the several Underwriters, or the
Company may prevent this Agreement from becoming effective without liability of
any party to any other party, except that the provisions of this Section 9 and
of Section 4(a)(viii) and Section 6 hereof shall at all times be effective, and
shall survive the termination of this Agreement, including a termination
pursuant to this Section 9 hereof.
(b) You, as Representatives of the several Underwriters, shall have the
right to terminate this Agreement by giving notice as hereinafter specified at
any time at or prior to the First Closing Date, and the option referred to in
Section 3(b), if exercised, may be cancelled at any time prior to the Second
Closing Date, if (i) the Company shall have failed, refused or been unable, at
or prior to such Closing Date, to perform any agreement on its part to be
performed hereunder, (ii) any other condition of the Underwriters' obligations
hereunder is not fulfilled, (iii) trading on The NASDAQ National Market, the New
York Stock Exchange or the American Stock Exchange shall have been wholly
suspended, (iv) minimum or maximum prices for trading shall have been fixed, or
maximum ranges for prices for securities shall have been required, on The NASDAQ
National Market, the New York Stock Exchange or the American Stock Exchange, by
such Exchange or by order of the Commission or any other governmental authority
having jurisdiction, (v) a banking moratorium shall have been declared by
federal, New York, Minnesota or California authorities or if any new restriction
materially adversely affecting the distribution of the Securities shall have
become effective, or (vi) there has occurred any material adverse change in the
financial markets in the United States or an outbreak of major hostilities (or
an escalation thereof) in which the United States is involved, a declaration of
war by Congress, any other substantial national or international calamity or any
other event or occurrence of a similar character shall have occurred since the
execution of this Agreement that, in your judgment, makes it impractical or
inadvisable to proceed with the completion of the sale of and payment for the
Securities. Any such termination shall be without liability of any party to any
other party except that the provisions of this Section 9 and of Section
4(a)(viii) and Section 6 hereof shall at all times be effective, and shall
survive the termination of this Agreement, including a termination pursuant to
this Section 9 hereof.
(c) If you elect to prevent this Agreement from becoming effective or
to terminate this Agreement as provided in this Section 9, the Company shall be
notified promptly by you by telephone or telegram, confirmed by letter. If the
Company elects to prevent this Agreement from becoming effective, you shall be
notified by the Company by telephone or telegram, confirmed by letter.
-27-
(d) If this Agreement shall be terminated pursuant to any of the
provisions hereof (otherwise than pursuant to (i) Section 8(b) hereof, (ii)
notification by you as provided in Section 9(a) hereof or (iii) Section 9(b)
items (iii) to (vi) hereof), or if the sale of the Shares provided for herein is
not consummated because any condition to the obligations of the Underwriters set
forth herein is not satisfied 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, the Company shall, subject to demand by you, reimburse the
Underwriters for all out-of-pocket expenses (including the fees and expenses of
their counsel) incurred by the Underwriters in connection herewith.
10. Default by the Company. If the Company shall fail at the First Closing
----------------------
Date to sell and deliver the number of Securities which it is obligated to sell
hereunder, then this Agreement shall terminate without any liability on the part
of any non-defaulting party. No action taken pursuant to this Section 10 shall
relieve the Company from liability, if any, in respect of such default.
11. Notices. Except as otherwise provided herein, all communications
-------
hereunder shall be in writing or by telegraph and, if to the Underwriters, shall
be mailed, telegraphed or delivered to the Representatives c/o U. S. Bancorp
▇▇▇▇▇ ▇▇▇▇▇▇▇ Inc., U.S. Bancorp Center, ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, except that notices given to an Underwriter pursuant to Section
6 hereof shall be sent to such Underwriter at the address stated in the
Underwriters' Questionnaire furnished by such Underwriter in connection with
this offering; and if to the Company, shall be mailed, telegraphed or delivered
to it at TheraSense, Inc., ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
Attention: Chief Executive Officer. All notices given by telegram shall be
promptly confirmed by letter. Any party to this Agreement may change such
address for notices by sending to the parties to this Agreement written notice
of a new address for such purpose.
12. Persons Entitled to Benefit of Agreement. This Agreement shall inure
----------------------------------------
to the benefit of and be binding upon the parties hereto and their respective
successors and assigns and the controlling persons, officers, directors,
employees and agents referred to in Section 6. Nothing in this Agreement is
intended or shall be construed to give to any other person, firm or corporation
any legal or equitable remedy or claim under or in respect of this Agreement or
any provision herein contained. The term "successors and assigns" as herein used
shall not include any purchaser, as such purchaser, of any of the Securities
from any of the several Underwriters.
13. Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the State of Minnesota, but without regard to
principles of conflicts of law.
14. Headings. The headings of the sections of this Agreement have been
--------
inserted for convenience of reference only and shall not be deemed a part of
this Agreement.
15. 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 and all such counterparts
shall together constitute one and the same instrument.
[Signature Page Follows]
-28-
Please sign and return to the Company the enclosed duplicates of this
letter whereupon this letter will become a binding agreement between the Company
and the several Underwriters in accordance with its terms.
Very truly yours,
THERASENSE, INC.
By
------------------------------------
W. ▇▇▇▇ ▇▇▇▇▇, President and CEO
Confirmed as of the date first
above mentioned, on behalf of
themselves and the other several
Underwriters named in Schedule I
hereto.
U. S. Bancorp ▇▇▇▇▇ ▇▇▇▇▇▇▇ inc.
By
--------------------------------
Name:
Title: Managing Director
▇▇ ▇▇▇▇▇ SECURITIES CORPORATION
By
--------------------------------
Name:
Title: Managing Director
▇▇▇▇▇▇ ▇▇▇▇▇▇ PARTNERS LLC
By
--------------------------------
Name:
Title: Managing Director
-29-
SCHEDULE I
----------
Underwriter Number of Firm Shares (1)
----------- -------------------------
U.S. BanCorp ▇▇▇▇▇ ▇▇▇▇▇▇▇ Inc.
▇▇ ▇▇▇▇▇ Securities Corporation
▇▇▇▇▇▇ ▇▇▇▇▇▇ Partners LLC
-------------------------
Total......................................... 6,000,000
=========================
_________________
(1) The Underwriters may purchase up to an additional 900,000 Option Shares, to
the extent the option described in Section 3(b) of the Agreement is
exercised, in the proportions and in the manner described in the Agreement.
SCHEDULE II
-----------
LIST OF STOCKHOLDERS, WARRANTHOLDERS AND NOTEHOLDERS
EXHIBIT A
Statement of Intellectual Property Counsel
(i) Merchant & ▇▇▇▇▇ P.C. is a law firm of approximately 120 attorneys
specializing in the practice of Intellectual Property Law. Merchant & ▇▇▇▇▇
currently provides legal services to TheraSense, Inc. in the area of patent
matters. It is our understanding that TheraSense, Inc. is represented by other
counsel for Trademark and corporate legal matters.
(ii) As counsel for patent matters, Merchant & ▇▇▇▇▇, PC is familiar with the
technology used by TheraSense, Inc. in its business and has read the
Registration Statement and the Prospectus, including those portions referring to
patents, trade secrets, and other proprietary information, as the document
existed on __________________;
(iii) As of the date of signature below, we are not aware of any untrue
statement of a material fact or omission of any material fact, or of any
misleading statement or omission within the Registration Statement and
Prospectus, as the document existed on ______________________;
(iv) We are not aware of any material action, suit, claim, or proceeding, or
of any correspondence threatening action, suit, claim, or proceeding, relating
to the patents, patent rights or licenses, trademarks or trademark rights,
service marks or service ▇▇▇▇ rights, copyrights, collaborative research,
licenses, royalty arrangements, agreements, trade secrets, know-how, or
proprietary techniques, including processes and substances, owned by or
affecting the business or operations of TheraSense, Inc. that are pending or
threatened against TheraSense, Inc. or any of its officers or directors.
(v) Assignments have been filed for recordation in the United States Patent
and Trademark Office designating TheraSense, Inc. as the holder of record title
for each of the U.S. patents ("Patents") and patent applications
("Applications") listed in the attached Schedule 1. To the best of our
knowledge, subject to the interests of the University of Texas and of the U.S.
Government as disclosed in the University of Texas Agreements dated August 1,
1991 and March 19, 1998, there are no claims of third parties to any ownership
interest or lien with respect to any of the Patents or Applications. Merchant &
▇▇▇▇▇ is not aware of any material defect in form in the preparation or filing
of the Applications on behalf of TheraSense, Inc. To the best of our knowledge,
the Applications are being pursued by the Company. To the knowledge of such
counsel, the Company holds title to the Patents and the Applications, subject to
the interests of the University of Texas and the U.S. Government as disclosed in
the University of Texas Agreements.
(vi) Documents have been filed in the appropriate foreign patent offices to
list TheraSense, Inc. as the sole holder of title to each of the foreign patents
("Foreign Patents") and foreign patent applications ("Foreign Applications")
listed in Schedule 1. To the best of our knowledge, subject to the interests of
the University of Texas and of the U.S. Government as disclosed in the
University of Texas Agreements dated August 1, 1991 and March 19, 1998, there
are no claims of third parties to any ownership interest or lien with respect to
any of the Foreign Patents or Foreign Applications. Merchant & ▇▇▇▇▇ is not
aware of any material defect in form in the preparation or filing of the
1
Foreign Applications. To the best of our knowledge, the Foreign Applications are
being pursued by TheraSense, Inc. To the knowledge of such counsel, the Company
holds title to the Foreign Patents and the Foreign Applications, subject to the
interests of the University of Texas and the U.S. Government as disclosed in the
University of Texas Agreements.
(vii) To the best of our knowledge and belief, the Patents and Foreign Patents
listed in Schedule 1 are valid and enforceable as issued. We have no reason to
believe that patents to be issued from the pending Applications or Foreign
Applications would be invalid or unenforceable.
Merchant & ▇▇▇▇▇ P.C.
by:__________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇
for the firm.
2
EXHIBIT B
LOCK-UP AGREEMENT
June 20, 2001
U.S. Bancorp ▇▇▇▇▇ ▇▇▇▇▇▇▇ Inc.
▇▇ ▇▇▇▇▇ Securities Corporation
▇▇▇▇▇▇ ▇▇▇▇▇▇ Partners LLC
c/o U.S. Bancorp ▇▇▇▇▇ ▇▇▇▇▇▇▇ Inc.
U.S. Bancorp Center
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Re: TheraSense, Inc. - Initial Public Offering
Ladies and Gentlemen:
The undersigned understands that you will act as representatives for a
group of underwriters (the "Underwriters") who propose to enter into a Purchase
Agreement (the "Purchase Agreement") with TheraSense, Inc., a Delaware
corporation (the "Company") providing for the public offering (the "Offering")
by the Underwriters of common stock of the Company (the "Common Stock") pursuant
to the Company's Registration Statement on Form S-1 to be filed with the
Securities and Exchange Commission.
In consideration of the Underwriters' agreement to purchase and make
the Offering of the Common Stock, and for other good and valuable consideration,
receipt of which is hereby acknowledged, the undersigned hereby agrees, during
the period from the date hereof until 180 days after the date of the Purchase
Agreement (the "Lock-Up Period"), not to, without the prior written consent of
U.S. Bancorp ▇▇▇▇▇ ▇▇▇▇▇▇▇ Inc. (which consent may be withheld in its sole
discretion), directly or indirectly, offer for sale, sell, contract to sell,
grant any option for the sale of (including without limitation any short sale),
pledge, borrow, transfer, establish an open "put equivalent position" within the
meaning of Rule 16a-1(h), establish a "call equivalent position" within the
meaning of Rule 16a-1(b) or otherwise dispose of any shares of Common Stock,
options or warrants to acquire shares of Common Stock or any security or
instrument related to such Common Stock, options or warrants, whether now owned
or hereafter acquired, or publicly announce the undersigned's intention to do
any of the foregoing.
Notwithstanding the foregoing, the undersigned may sell or otherwise
transfer shares of Common Stock (i) by gift, will, or intestate succession to
his or her immediate family or to a trust, the beneficiaries of which are
exclusively the undersigned and/or a member or members of his or her immediate
family; provided that the undersigned provides prior written notice of such
transfer to you and such transferees agree in writing to be bound by the
restrictions set forth herein, (ii) as a bona fide gift or gifts, provided that
the undersigned provides prior written notice of such gift or gifts to you and
the donee or donees thereof agree to be bound by the restrictions set forth
herein, (iii) if the undersigned is a partnership or corporation or similar
entity, as a distribution to partners or stockholders of the undersigned, if
any, provided that the distributee or distributees thereof agree in writing to
be bound by the restrictions set forth herein, or (iv) acquired in the public
market on or after the date of the Purchase Agreement, other than shares
acquired through the Directed Share Program which shall be subject to the
restrictions set forth herein.
The undersigned hereby further agrees that, during the Lock-Up Period,
the undersigned (x) will not file or participate in the filing with the
Securities and Exchange Commission of any registration statement, or circulate
or participate in the circulation of any preliminary or final prospectus or
other disclosure
TheraSense, Inc.
Lock-Up Agreement
Page 2
document with respect to any proposed offering or sale of Common Stock and (y)
will not exercise any rights the undersigned may have to require registration
with the Securities and Exchange Commission of any proposed offering or sale of
Common Stock. Upon request, the undersigned will execute any additional
documents necessary in connection with the enforcement of any of the provisions
contained herein.
Furthermore, the undersigned hereby agrees and consents to the entry
of stop transfer instructions with the Company's transfer agent against the
transfer of securities of the Company held by the undersigned except in
compliance with this Lock-Up Agreement.
The undersigned recognizes that the Offering will be of benefit to the
undersigned and will benefit the Company by, among other things, raising
additional capital for its operations. The undersigned acknowledges that the
Underwriters are relying on the representations and agreements of the
undersigned contained in this Lock-Up Agreement in carrying out the Offering and
in entering into underwriting arrangements with respect to the Offering. This
Lock-Up Agreement is irrevocable and will be binding on the undersigned and the
respective successors, heirs, personal representatives and assigns of the
undersigned. If the Offering does not close by December 31, 2001, this Lock-Up
Agreement shall terminate immediately upon such date and be of no further force
and effect.
The undersigned hereby represents and warrants that the undersigned
has full power and authority to enter into this Lock-Up Agreement. All
authority herein conferred or agreed to be conferred shall survive the death or
incapacity of the undersigned and any obligations of the undersigned shall be
binding upon the heirs, personal representatives, successors and assigns of the
undersigned. Delivery of a signed copy of this letter by telecopier or
facsimile transmission shall be effective as delivery of the original hereof.
By:_____________________________________________________
Stockholder
Printed Name:___________________________________________
Title:__________________________________________________
(Indicate capacity of person signing if
signing as custodian or trustee or on behalf
of an entity)
Address: ____________________________________
____________________________________
Share Ownership:
Common Stock: Common
Series A Preferred Stock: SeriesA
Series B Preferred Stock: SeriesB
Series C Preferred Stock: SeriesC
Series D Preferred Stock: SeriesD
Warrants for Preferred Stock: WarrantsPS
TheraSense, Inc.
Lock-Up Agreement
Page 3
Accepted as of the date
first set forth above:
U.S. BANCORP ▇▇▇▇▇ ▇▇▇▇▇▇▇ INC.
▇▇ ▇▇▇▇▇ SECURITIES CORPORATION
▇▇▇▇▇▇ ▇▇▇▇▇▇ PARTNERS LLC
By: U.S. BANCORP ▇▇▇▇▇ ▇▇▇▇▇▇▇ INC.
By:_______________________________
Name:_____________________________
Title:____________________________