EXHIBIT 1.1
SOMNUS MEDICAL TECHNOLOGIES, INC.
4,000,000 Shares of Common Stock
Underwriting Agreement
, 1997
X.X. Xxxxxx Securities Inc.
UBS Securities LLC
Xxxxx Xxxxxx Inc.
As Representatives of the several underwriters
listed in Schedule I hereto
c/o X.X. Xxxxxx Securities Inc.
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Somnus Medical Technologies, Inc., a Delaware corporation (the
"Company"), proposes to issue and sell to the several Underwriters listed in
Schedule I hereto (the "Underwriters"), for whom you are acting as
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representatives (the "Representatives"), an aggregate of 4,000,000 shares of
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Common Stock, par value $.001 per share (the "Common Stock"), of the Company
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(the "Underwritten Shares") and, for the sole purpose of covering over-
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allotments in connection with the sale of the Underwritten Shares, at the option
of the Underwriters, an additional 600,000 shares of Common Stock (the "Option
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Shares"). The Underwritten Shares and the Option Shares are herein referred to
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as the "Shares." The shares of Common Stock of the Company to be outstanding
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after giving effect to the sale of the Shares are herein referred to as the
"Stock."
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The Company has prepared and filed with the Securities and Exchange
Commission (the "Commission") in accordance with the provisions of the
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Securities Act of 1933, as amended, and the rules and regulations of the
Commission thereunder (collectively, the "Securities Act"), a registration
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statement on Form S-1 (No. 333-35401), including a prospectus, relating to the
Shares. The registration statement as amended at the time of its effectiveness,
including information (if any) deemed to be part of the registration statement
at the time of effectiveness pursuant to Rule 430A under the Securities Act, is
referred to in this Agreement as the "Registration Statement," and the
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prospectus in the form first used to confirm sales of
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Shares is referred to in this Agreement as the "Prospectus." If the Company has
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filed an abbreviated registration statement pursuant to Rule 462(b) under the
Securities Act (the "Rule 462 Registration Statement"), then any reference
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herein to the term "Registration Statement" shall be deemed to include such Rule
462 Registration Statement.
The Company hereby agrees with the Underwriters as follows:
1.
The Company agrees to issue and sell the Shares to the several
Underwriters as hereinafter provided, and each Underwriter, on the basis of the
representations and warranties herein contained, but subject to the conditions
hereinafter stated, agrees to purchase, severally and not jointly, from the
Company the respective number of Underwritten Shares set forth opposite such
Underwriter's name in Schedule I hereto at a purchase price per share of $
(the "Purchase Price").
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In addition, the Company agrees to issue and sell the Option Shares to
the several Underwriters as hereinafter provided, and the Underwriters, on the
basis of the representations and warranties herein contained, but subject to the
conditions hereinafter stated, shall have the option to purchase, severally and
not jointly, from the Company up to an aggregate of 600,000 Option Shares at the
Purchase Price, for the sole purpose of covering over-allotments (if any) in the
sale of Underwritten Shares by the several Underwriters.
If any Option Shares are to be purchased, the number of Option Shares
to be purchased by each Underwriter shall be the number of Option Shares which
bears the same ratio to the aggregate number of Option Shares being purchased as
the number of Underwritten Shares set forth opposite the name of such
Underwriter in Schedule I hereto (or such number increased as set forth in
Section 9 hereof) bears to the aggregate number of Underwritten Shares being
purchased from the Company by the several Underwriters, subject, however, to
such adjustments to eliminate any fractional Shares as the Representatives in
their sole discretion shall make.
The Underwriters may exercise the option to purchase the Option Shares
at any time (but not more than once) on or before the thirtieth day following
the date of this Agreement, by written notice from the Representatives to the
Company. Such notice shall set forth the aggregate number of Option Shares as
to which the option is being exercised and the date and time when the Option
Shares are to be delivered and paid
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for, which may be the same date and time as the Closing Date (as hereinafter
defined), but shall not be earlier than the Closing Date or later than the tenth
full Business Day (as hereinafter defined) after the date of such notice (unless
such time and date are postponed in accordance with the provisions of Section 9
hereof). Any such notice shall be given at least two Business Days prior to the
date and time of delivery specified therein.
2.
The Company understands that the Underwriters intend (i) to make a
public offering of the Shares as soon after (A) the Registration Statement has
become effective and (B) the parties hereto have executed and delivered this
Agreement as in the judgment of the Representatives is advisable and (ii)
initially to offer the Shares upon the terms set forth in the Prospectus.
3.
Payment for the Shares shall be made by wire transfer in immediately
available funds to the account specified by the Company to the Representatives
(which account shall be specified no later than noon the Business Day prior to
the Closing Date), on , 1997, or at such other time on the
same or such other date, not later than the fifth Business Day thereafter, as
the Representatives and the Company may agree upon in writing or, in the case of
the Option Shares, on the date and time specified by the Representatives in the
written notice of the Underwriters' election to purchase such Option Shares. The
time and date of such payment for the Underwritten Shares are referred to herein
as the "Closing Date" and the time and date of such payment for the Option
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Shares, if other than the Closing Date, are herein referred to as the
"Additional Closing Date." As used herein, the term "Business Day" means any
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day other than a day on which banks are permitted or required to be closed in
New York City.
Payment for the Shares to be purchased on the Closing Date or the
Additional Closing Date, as the case may be, shall be made against delivery to
the Representatives for the respective accounts of the several Underwriters
(including, without limitation, by "full-fast" electronic transfer by the
Company) of the Shares to be purchased on such date registered in such names and
in such denominations as the Representatives shall request in writing not later
than two full Business Days prior to the Closing Date, with any transfer taxes
payable in connection with the transfer to the Underwriters of the Shares duly
paid by the Company. The certificates for the Shares will be made available for
inspection and packaging by the Representatives at the office of X.X. Xxxxxx
Securities Inc. ("J.P. Mor-
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gan Securities") set forth above not later than 1:00 P.M., New York City time,
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on the Business Day prior to the Closing Date or the Additional Closing Date, as
the case may be.
4.
The Company represents and warrants to each Underwriter that:
(a) no order preventing or suspending the use of any preliminary
prospectus has been issued by the Commission, and each preliminary
prospectus filed as part of the Registration Statement as originally filed
or as part of any amendment thereto, or filed pursuant to Rule 424 under
the Securities Act, complied when so filed in all material respects with
the Securities Act and did not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, other than any such
noncompliance, untrue statement or omission in a preliminary prospectus
which has been corrected in the Prospectus; provided, however, that this
representation and warranty shall not apply to any statements or omissions
made in reliance upon and in conformity with information relating to any
Underwriter furnished to the Company in writing by such Underwriter through
the Representatives expressly for use therein;
(b) 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 best of the Company's knowledge, threatened by the
Commission; and the Registration Statement and Prospectus and any amendment
or supplement thereto comply, or will comply, as the case may be, in all
material respects with the Securities Act and do not and will not, as of
the applicable effective date as to the Registration Statement and any
amendment thereto and as of the date of the Prospectus and any amendment or
supplement thereto, 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, at the
Closing Date or the Additional Closing Date, as the case may be, will not
contain any 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 under which they were made, not misleading; provided,
however, that the foregoing representations and warranties shall not apply
to statements or omissions in
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the Registration Statement or the Prospectus made in reliance upon and in
conformity with information relating to any Underwriter furnished to the
Company in writing by such Underwriter through the Representatives
expressly for use therein;
(c) the financial statements, and the related notes thereto, included in
the Registration Statement and the Prospectus present fairly the
consolidated financial position of the Company as of the dates indicated
and the consolidated results of its operations and changes in its
consolidated cash flow and stockholders' equity for the periods specified,
and said financial statements have been prepared in conformity with
generally accepted accounting principles applied on a consistent basis, and
the supporting schedule included in the Registration Statement presents
fairly the information required to be stated therein;
(d) the statistical and market-related data included in the Prospectus
are based on or derived from sources that the Company believes are reliable
and accurate;
(e) since the respective dates as of which information is given in the
Prospectus, there has not been any change in the capital stock or long-term
debt of the Company or any material adverse change, or any development
involving a prospective material adverse change, in or affecting the
general affairs, business, prospects, management, financial position,
stockholders' equity or results of operations of the Company (a "Material
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Adverse Change" or a "Prospective Material Adverse Change"), otherwise than
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as set forth or contemplated in the Prospectus; and except as set forth or
contemplated in the Prospectus the Company has not entered into any
transaction or agreement (whether or not in the ordinary course of
business) material to the Company;
(f) the Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of its jurisdiction of
incorporation, with power and authority (corporate and other) to own and
lease its properties and conduct its business as described in the
Prospectus, and has been duly qualified as a foreign corporation for the
transaction of business and is in good standing under the laws of each
other jurisdiction in which it owns or leases properties, or conducts any
business, so as to require such qualification, other than where the failure
to be so qualified or in good standing,
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singly or in the aggregate, would not have a material adverse effect on the
general affairs, business, prospects, management, financial position,
stockholders' equity or results of operations of the Company (a "Material
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Adverse Effect");
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(g) Somnus Medical Technologies Pty. Ltd., an Australian corporation
which has no material assets or material liabilities, is the only
subsidiary of the Company;
(h) this Agreement has been duly authorized, executed and delivered by
the Company;
(i) as of the Closing Date or the Additional Closing Date, as the case
may be, the Company has an authorized capitalization as set forth in the
Prospectus and such authorized capital stock will conform as to legal
matters to the description thereof set forth in the Prospectus; all of the
outstanding shares of capital stock of the Company have been duly
authorized and validly issued, are fully paid and non-assessable and are
not subject to any preemptive or similar rights; and, except as described
in or expressly contemplated by the Prospectus, there are no outstanding
rights (including, without limitation, preemptive rights), warrants or
options to acquire, or instruments convertible into or exchangeable for,
any shares of capital stock or other equity interest in the Company, or any
contract, commitment, agreement, understanding or arrangement of any kind
to which the Company is a party relating to the issuance of any capital
stock of the Company, any such convertible or exchangeable securities or
any such rights, warrants or options;
(j) the Shares have been duly authorized and, when issued and delivered
to and paid for by the Underwriters in accordance with the terms of this
Agreement, will be validly issued and will be fully paid and non-assessable
and will conform to the description thereof in the Prospectus; and the
issuance of the Shares is not subject to any preemptive or similar rights;
(k) except as described in the Prospectus, the Company is not, nor with
the giving of notice or lapse of time or both would be, in violation of or
in default under its Amended and Restated Certificate of Incorporation or
By-Laws or any indenture, mortgage, deed of trust, loan agreement,
franchise agreement or other agreement or instrument to which the Company
is a party or by which it or
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any of its respective properties is bound, except for violations and
defaults which singly and in the aggregate are not material to the Company;
the issuance and sale of the Shares and the performance by the Company of
its obligations under this Agreement and the consummation of the
transactions contemplated herein will not conflict with or result in a
breach of any of the terms or provisions of, or constitute a default under,
any indenture, mortgage, deed of trust, loan agreement, franchise agreement
or other agreement or instrument to which the Company is a party or by
which the Company is bound or to which any of the property or assets of the
Company is subject, and will not result in any violation of any applicable
law or statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Company or any of
its respective properties, that, singly or in the aggregate, would have a
Material Adverse Effect, and will not result in any violation of the
provisions of the Amended and Restated Certificate of Incorporation or By-
Laws of the Company; and no consent, approval, authorization, order,
license, registration or qualification of or with any such court or
governmental agency or body is required for the issuance and sale of the
Shares or the consummation by the Company of the transactions contemplated
by this Agreement, except such consents, approvals, authorizations, orders,
licenses, registrations or qualifications as have been obtained under the
Securities Act and as may be required by the National Association of
Securities Dealers, Inc. (the "NASD") and as may be required under state
securities or Blue Sky Laws in connection with the purchase and
distribution of the Shares by the Underwriters;
(l) other than as set forth or contemplated in the Prospectus, there are
no legal or governmental investigations, actions, suits or proceedings
(collectively, "Proceedings") pending or, to the Company's knowledge,
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threatened against or affecting the Company or any of its respective
properties or to which the Company is a party or of which any property of
the Company is the subject which, singly or in the aggregate, could have,
or reasonably could be expected to have, a Material Adverse Effect and, to
the Company's knowledge, no such Proceedings are threatened or contemplated
by governmental authorities or threatened by others; and there are no
statutes, regulations, contracts or other documents that are required to be
described in the Registration Statement or Prospectus
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or to be filed as exhibits to the Registration Statement that are not
described or filed as required;
(m) other than as set forth or contemplated in the Prospectus, the
Company owns or possesses adequate licenses or other rights to use all
patents, copyrights, trademarks, service marks, trade names, technology and
know-how (collectively, the "Company's Intellectual Property") necessary
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(in any material respect) to conduct its business in the manner described
in the Prospectus, the Company is not obligated to pay a royalty, grant a
license or provide other consideration to any third party in connection
with its patents, copyrights, trademarks, services marks, trade names or
technology, and, the Company has not received any notice of infringement or
conflict with (and the Company knows of no infringement or conflict with)
asserted rights of others with respect to the Company's Intellectual
Property which could reasonably be expected to result in any Material
Adverse Effect, the discoveries, inventions, products or processes of the
Company referred to in the Prospectus do not, to the knowledge of the
Company, infringe or conflict with any right or patent of any third party,
or any discovery, invention, product or process which is the subject of a
patent application filed by any third party, known to the Company which
could have a Material Adverse Effect. No third party, including any
academic or governmental organization, possesses rights to the Company's
Intellectual Property which, if exercised, could enable such third party to
develop products competitive to those of the Company or could have a
material adverse effect on the ability of the Company to conduct its
business in the manner described in the Prospectus;
(n) since the respective dates as of which information is given in the
Prospectus and in the Registration Statement, the human clinical trials
conducted by the Company or in which the Company has participated that are
described in the Registration Statement and Prospectus, or the results of
which are referred to in the Registration Statement and Prospectus, and to
the Company's knowledge, such studies and tests conducted on behalf of the
Company, were and, if still pending, are being conducted in accordance with
experimental protocols, procedures and controls pursuant to, where
applicable, accepted professional scientific standards; the descriptions of
the results of such studies, tests and trials contained in the Registration
Statement and Prospectus are accurate and complete in all material
respects; and the Company has not received any
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notices or correspondence from the United States Food and Drug
Administration ("FDA") or any other governmental agency requiring the
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termination, suspension or material modification of any clinical trials
conducted by, or on behalf of, the Company or in which the Company has
participated that are described in the Registration Statement and
Prospectus or the result of which are referred to in the Registration
Statement and Prospectus;
(o) the Company has good and marketable title to all personal property
described in the Prospectus as owned by it, in each case free and clear of
all liens, encumbrances and defects except such as are described or
referred to in the Prospectus and except to the extent as would not, singly
or in the aggregate, have a Material Adverse Effect; and any real property
and buildings held under lease by the Company is held by it under valid,
existing and enforceable leases with such exceptions as would not, singly
or in the aggregate, have a Material Adverse Effect;
(p) no relationship, direct or indirect, exists between or among the
Company on the one hand, and the directors, officers, stockholders,
customers or suppliers of the Company on the other hand, which is required
by the Securities Act to be described in the Prospectus which is not so
described;
(q) no person has the right to require the Company to register any
securities of the Company for offering and sale under the Securities Act by
reason of the filing of the Registration Statement with the Commission or
the issuance and sale of the Shares or the transactions in connection
therewith, except for such rights as have been duly waived;
(r) the Company is not and, after giving effect to the offering and sale
of the Shares, will not be an "investment company" or entity "controlled"
by an "investment company," as such terms are defined in the Investment
Company Act of 1940, as amended (the "Investment Company Act");
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(s) Ernst & Young LLP, who have certified certain financial statements
of the Company, are independent public accountants as required by the
Securities Act;
(t) the Company has filed all federal, state, local and foreign tax
returns which have been required to be
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filed and has paid all taxes shown thereon and all assessments received by
it to the extent that such taxes have become due and are not being
contested in good faith, except such amounts that are not, singly or in the
aggregate, material to the Company; and there is no tax deficiency which
has been or, to the Company's knowledge, might reasonably be expected to be
asserted or threatened against the Company, other than such tax
deficiencies in such amounts that are not, singly or in the aggregate,
material to the Company;
(u) the Company has not taken nor will it take, directly or indirectly,
any action designed to, or that might be reasonably expected to, cause or
result in stabilization or manipulation of the price of the Stock;
(v) the Company owns, possesses or has obtained all material licenses,
franchises, permits, certificates, consents, orders, approvals and other
authorizations (collectively, "Permits") from, and has made all
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declarations and filings with, all federal, state, local and other
governmental authorities (including foreign regulatory agencies), all self-
regulatory organizations, all domestic or foreign courts and other
tribunals necessary to own or lease, as the case may be, and to operate its
properties and to carry on its business as conducted as of the date hereof,
and the Company has not received any actual notice of any proceeding
relating to revocation or modification of any such Permit, except as
described in the Prospectus; and the Company is in compliance with all laws
and regulations relating to the conduct of its business as conducted as of
the date hereof, except to the extent that failure to so comply would not,
singly or in the aggregate, have a Material Adverse Effect; the Company is
not in violation of any foreign, state or local law, order, rule,
regulation, writ, injunction or decree of any court or governmental agency
or body including but not limited to, the FDA; all of the descriptions in
the Registration Statement and Prospectus of the legal and governmental
procedures by or before the FDA or any foreign, state or local government
body exercising comparable authority are true, complete and accurate in all
material respects;
(w) there are no existing or, to the best of the Company's knowledge,
threatened labor disputes with the employees of the Company which, singly
or in the aggregate, would have a Material Adverse Effect;
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(x) the Company (i) is in compliance with any and all applicable
foreign, federal, state and local laws and regulations relating to the
protection of human health and safety, the environment or hazardous or
toxic substances or wastes, pollutants or contaminants ("Environmental
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Laws"), (ii) has received all permits, licenses or other approvals
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required of it under applicable Environmental Laws to conduct its business
and (iii) is in compliance with all terms and conditions of any such
permit, license or approval, except, in each case, where such noncompliance
with Environmental Laws, failure to receive required permits, licenses or
other approvals or failure to comply with the terms and conditions of such
permits, licenses or approvals would not, singly or in the aggregate, have
a Material Adverse Effect; and
(y) each employee benefit plan, within the meaning of Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
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that is maintained, administered or contributed to by the Company or any of
its affiliates for employees or former employees of the Company and its
affiliates has been maintained in compliance with its 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"), except to the extent non-compliance, singly or in
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the aggregate, would not have a Material Adverse Effect. No prohibited
transaction, within the meaning of Section 406 of ERISA or Section 4975 of
the Code, has occurred with respect to any such plan excluding transactions
effected pursuant to a statutory or administrative exemption. For each
such plan which 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) exceeded the present value of
all benefits accrued under such plan determined using reasonable actuarial
assumptions.
5. The Company covenants and agrees with each of the several
Underwriters as follows:
(a) to use its best efforts to cause the Registration Statement to
become effective at the earliest possible time and, if required, to file
the Prospectus with the Commission within the time periods specified by
Rule
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424(b) and Rule 430A under the Securities Act; and to furnish copies of the
Prospectus to the Underwriters in New York City prior to 10:00 a.m., New
York City time, on the Business Day next succeeding the date of this
Agreement in such quantities as the Representatives may reasonably request;
(b) to deliver, at the expense of the Company, to the Representatives
four copies of the Registration Statement (as originally filed) and each
amendment thereto, in each case including exhibits, and to each other
Underwriter a copy of the Registration Statement (as originally filed) and
each amendment thereto, in each case without exhibits, and, during the
period mentioned in paragraph (e) below, to each of the Underwriters as
many copies of the Prospectus (including all amendments and supplements
thereto) as the Representatives may reasonably request;
(c) before filing any amendment or supplement to the Registration
Statement or the Prospectus, whether before or after the time the
Registration Statement becomes effective, to furnish to the Representatives
a copy of the proposed amendment or supplement for review and not to file
any such proposed amendment or supplement to which the Representatives
reasonably object;
(d) to advise the Representatives promptly, and to confirm such advice
in writing, (i) when the Registration Statement has become effective, (ii)
when any amendment to the Registration Statement has been filed or becomes
effective, (iii) when any supplement to the Prospectus or any amended
Prospectus has been filed and to furnish the Representatives with copies
thereof, (iv) of any request by the Commission for any amendment to the
Registration Statement or any amendment or supplement to the Prospectus or
for any additional information, (v) of the issuance by the Commission of
any stop order suspending the effectiveness of the Registration Statement
or of any order preventing or suspending the use of any preliminary
prospectus or the Prospectus or the initiation or threatening of any
proceeding for that purpose, (vi) of the occurrence of any event, within
the period referenced in paragraph (e) below, as a result of which the
Prospectus as then amended or supplemented would include an untrue
statement of a material fact or omit to state any material fact necessary
in order to make the statements therein, in the light of the circumstances
when the Prospectus is delivered to a purchaser, not misleading, and (vii)
of the receipt by the
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Company of any notification with respect to any suspension of the
qualification of the Shares for offer and sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose; and to use
its best efforts to prevent the issuance of any such stop order, or of any
order preventing or suspending the use of any preliminary prospectus or the
Prospectus, or of any order suspending any such qualification of the
Shares, or notification of any such order thereof and, if issued, to obtain
as soon as possible the withdrawal thereof;
(e) if, during such period of time after the first date of the public
offering of the Shares as in the judgment of the Company or in the opinion
of counsel for the Underwriters a prospectus relating to the Shares is
required by law to be delivered in connection with sales by the
Underwriters or any dealer, any event shall occur as a result of which it
is necessary to amend or supplement the Prospectus in order to make the
statements therein, in the light of the circumstances when the Prospectus
is delivered to a purchaser, not misleading, or if it is necessary to amend
or supplement the Prospectus to comply with law, forthwith to prepare and
furnish, at the expense of the Company, to the Underwriters and to the
dealers (whose names and addresses the Representatives will furnish to the
Company) to which Shares may have been sold by the Representatives on
behalf of the Underwriters and to any other dealers upon request, such
amendments or supplements to the Prospectus as may be necessary so that the
statements in the Prospectus as so amended or supplemented will not, in the
light of the circumstances when the Prospectus is delivered to a purchaser,
be misleading or so that the Prospectus will comply with law;
(f) to endeavor to qualify the Shares for offer and sale under the
securities or Blue Sky laws of such jurisdictions as the Representatives
shall reasonably request and to continue such qualification in effect so
long as reasonably required for distribution of the Shares; provided,
however, that the Company shall not be required to register or qualify as a
foreign corporation or to take any action which would subject it to the
service of process in suits, other than as to matters and transactions
relating to the offer and sale of the Shares, in any jurisdiction where it
is not now so subject;
(g) to make generally available to its security holders and to the
Representatives as soon as reasonably
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practicable an earnings statement covering a period of at least twelve
months beginning with the first fiscal quarter of the Company occurring
after the effective date of the Registration Statement, which shall satisfy
the provisions of Section 11(a) of the Securities Act and Rule 158 of the
Commission promulgated thereunder;
(h) during the period of five years after the date of this Agreement, to
furnish to the Representatives copies of all reports or other
communications (financial or other) furnished to holders of the Shares, and
copies of any reports and financial statements furnished to or filed with
the Commission or any national securities exchange or the Nasdaq National
Market (as hereinafter defined);
(i) (i) for a period of 180 days after the date of the Prospectus not to
(x) offer, pledge, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option, right
or warrant to purchase or otherwise transfer or dispose of, directly or
indirectly, any shares of Stock or any securities convertible into or
exercisable or exchangeable for Stock or (y) enter into any swap or other
agreement that transfers, in whole or in part, any of the economic
consequences of ownership of the Stock, whether any such transaction
described in clause (x) or (y) above is to be settled by delivery of Stock
or such other securities, in cash or otherwise, or (z) register under the
Securities Act of any shares of capital stock of the Company, in each case,
without the prior written consent of X.X. Xxxxxx Securities; provided,
however, that the foregoing shall not prohibit (i) the issuance of stock
options granted under existing director or employee stock option or stock
purchase plans and (ii) the issuance of any shares of Stock issued upon the
exercise of options or warrants outstanding on the date hereof or granted
under existing director or employee stock option or stock purchase plans;
(j) to use the net proceeds received by the Company from the sale of the
Shares pursuant to this Agreement in the manner specified in the Prospectus
under the caption "Use of Proceeds";
(k) to use its best efforts to list for quotation the Shares on the
National Association of Securities Dealers Automated Quotations National
Market (the "Nasdaq National Market");
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(l) whether or not the transactions contemplated in this Agreement are
consummated or this Agreement is terminated, to pay or cause to be paid all
costs and expenses incident to the performance of its obligations hereunder
including, without limiting the generality of the foregoing, all costs and
expenses (i) incident to the preparation, issuance, execution and delivery
of the Shares, (ii) incurred by the Company incident to the preparation,
printing and filing under the Securities Act of the Registration Statement,
the Prospectus and any preliminary prospectus (including in each case all
exhibits, amendments and supplements thereto), (iii) incurred in connection
with the registration or qualification of the Shares under the laws of such
jurisdictions as the Representatives may designate (including fees of
counsel for the Underwriters and its disbursements), (iv) in connection
with the approval of the Shares for quotation on the Nasdaq National
Market, (v) related to the filing with, and clearance of the offering by,
the NASD, (vi) in connection with the printing (including word processing
and duplication costs) and delivery of the Blue Sky Survey and the
furnishing to the Underwriters and dealers of copies of the Registration
Statement and the Prospectus, including mailing and shipping, as herein
provided, (vii) any expenses incurred by the Company in connection with a
"road show" presentation to potential investors, (viii) the cost of
preparing stock certificates and (ix) the cost and charges of any transfer
agent and any registrar. Except as provided in this paragraph (l) and in
sections 7 and 10 hereof, the Underwriters shall pay all of their own
expenses, including the fees and disbursements of their counsel.
6. The several obligations of the Underwriters hereunder to purchase the
Shares on the Closing Date or the Additional Closing Date, as the case may be,
are subject to the performance by the Company of its obligations hereunder and
to the following additional conditions:
(a) The Registration Statement shall have become effective (or if a
post-effective amendment is required to be filed under the Securities Act,
such post-effective amendment shall have become effective) not later than
5:30 P.M., New York City time, on the date hereof; and no stop order
suspending the effectiveness of the Registration Statement or any post-
effective amendment shall be in effect, and no proceedings for such purpose
shall be pending before or threatened by the Commission; the Prospectus
shall have been filed with the Commission pursuant to
-16-
Rule 424(b) within the applicable time period prescribed for such filing by
the rules and regulations under the Securities Act and in accordance with
Section 5(a) hereof; and all requests from the Commission for additional
information shall have been complied with to the satisfaction of the
Representatives.
(b) The representations and warranties of the Company contained herein
are true and correct in all material respects on and as of the Closing Date
or the Additional Closing Date, as the case may be, as if made on and as of
the Closing Date or the Additional Closing Date, as the case may be, and
the Company shall have complied in all material respects with all
agreements and all conditions on its part to be performed or satisfied
hereunder at or prior to the Closing Date or the Additional Closing Date,
as the case may be.
(c) Since the respective dates as of which information is given in the
Prospectus, there shall not have been any change in the capital stock or
long-term debt of the Company or any Material Adverse Change, or any
development involving a Prospective Material Adverse Change, otherwise than
as set forth or contemplated in the Prospectus, the effect of which in the
judgment of the Representatives makes it impracticable or inadvisable to
proceed with the public offering or the delivery of the Shares on the
Closing Date or the Additional Closing Date, as the case may be, on the
terms and in the manner contemplated in the Prospectus; and the Company has
not sustained since the date of the latest financial statements included in
the Registration Statement and the Prospectus any material loss or
interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor dispute or
court or governmental action, order or decree, otherwise than as set forth
or contemplated in the Prospectus.
(d) The Representatives shall have received, on and as of the Closing
Date or the Additional Closing Date, as the case may be, a certificate of
two executive officers of the Company, with specific knowledge about the
Company's financial matters, satisfactory to the Representatives, to the
effect set forth in subsections (a) through (c) of this Section and to the
further effect that there has not occurred any Material Adverse Change or
any development involving a Prospective Material Adverse Change.
-17-
(e) Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, Professional Corporation, counsel
for the Company, shall have furnished to the Representatives their written
opinion, dated the Closing Date or the Additional Closing Date, as the case
may be, in form and substance satisfactory to the Representatives, to the
effect that:
(i) the Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of its
jurisdiction of incorporation, with power and authority to own and
lease its properties and conduct its business as described in the
Prospectus;
(ii) other than as set forth or contemplated in the
Prospectus, to such counsel's knowledge, there are no Proceedings
pending or threatened against or affecting the Company or any of its
properties or to which the Company is a party or to which any property
of the Company is the subject which, singly or in the aggregate, could
have a Material Adverse Effect and, to such counsel's knowledge, no
such Proceedings are threatened or contemplated by governmental
authorities or threatened by others; and to such counsel's knowledge,
there are no statutes, regulations, contracts or other documents that
are required to be described in the Registration Statement or
Prospectus or to be filed as exhibits to the Registration Statement
that are not described or filed as required;
(iii) this Agreement has been duly authorized, executed and
delivered by the Company;
(iv) all of the shares of capital stock of the Company (other
than the Shares) issued or to be issued (including by conversion or
exchange) and outstanding on the Closing Date or the Additional
Closing Date, as the case may be, have been duly authorized and, if
issued, are validly issued, fully paid and non-assessable or when
issued, will be validly issued, fully paid and non-assessable; all of
such shares of capital stock of the Company have been, or will have
been, issued without registration under the Securities Act pursuant to
an exemption therefrom;
(v) the Shares have been duly authorized, and when delivered
to and paid for by the Underwriters in accordance with the terms of
this Agreement,
-18-
will be validly issued, fully paid and non-assessable, and the
issuance of the Shares is not subject to any preemptive or similar
rights under any contract, agreement or instrument known to such
counsel or under applicable law;
(vi) to such counsel's knowledge, the filing of the
Registration Statement, the offer and sale of the Shares to the
Underwriters in the manner contemplated in this Agreement and the
transactions in connection herewith do not give rise to any rights for
or relating to the registration under the Securities Act of any other
securities of the Company, except for such rights as have been duly
waived;
(vii) the statements in the Prospectus under "Business--Product
Liability and Insurance", "Management--Employment Agreements",
"Management--Incentive Stock Plans", "Management--Employee Retirement
Plans", "Certain Transactions", "Description of Capital Stock",
"Shares Eligible for Future Sale" and "Underwriting" and in Items 14
and 15 of Part II of the Registration Statement, insofar as such
statements constitute a summary of the terms of the capital stock of
the Company, legal matters, documents or proceedings referred to
therein, fairly present the information called for with respect to
such terms, legal matters, documents or proceedings;
(viii) the Registration Statement has been declared effective
under the Securities Act, and to the best of such counsel's knowledge,
no stop order proceedings with respect thereto are pending or
threatened under the Securities Act; the registration statement on
Form 8-A registering the Stock under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), has been declared effective by
-------------
the Commission;
(ix) to such counsel's knowledge, the issuance and sale of the
Shares, the performance by the Company of its obligations hereunder
and the consummation of the transactions contemplated herein will not
conflict with or result in a breach of any of the terms or provisions
of, or constitute a default under, any indenture, mortgage, deed of
trust, loan agreement, franchise agreement or other agreement or
instrument, in each case, known to such counsel, to
-19-
which the Company is a party or by which the Company is bound or to
which any of the property or assets of the Company is subject, or the
terms of any applicable law or statute or any order, rule or
regulation of any court or governmental agency or body having
jurisdiction over the Company or any of its properties, except for
such conflicts, breaches or defaults that, singly or in the aggregate,
would not have a Material Adverse Effect, nor will any such action
result in any violation of the provisions of the Amended and Restated
Certificate of Incorporation or By-Laws of the Company;
(x) no consent, approval, authorization, order, license,
registration or qualification of or with any court or governmental
agency or body is legally required for the issuance and sale of the
Shares or the consummation of the other transactions contemplated
hereby, except such consents, approvals, authorizations, orders,
licenses, registrations or qualifications as have been obtained under
the Securities Act and except as may be required under state
securities or Blue Sky laws in connection with the purchase and
distribution of the Shares by the Underwriters, as to which such
counsel need express no opinion;
(xi) the Company owns, possesses or has obtained all licenses,
permits, certificates, consents, orders, approvals and other
authorizations from, and has made all declarations and filings with,
all federal, state, local and other governmental authorities
(including, without limitations, the FDA and all foreign regulatory
agencies), all self-regulatory organizations and all courts and other
tribunals, domestic or foreign, necessary to own or lease, as the case
may be, and to operate its properties and to carry on its business as
conducted as of the date hereof, and the Company has not received any
actual notice of any proceeding relating to revocation or modification
of such license, permit, certificate, consent, order, approval or
other authorization, except as described in the Registration Statement
and the Prospectus; and the Company is in compliance with all laws and
regulations relating to the conduct of its business as conducted as of
the date of the Prospectus;
-20-
(xii) to such counsel's knowledge, the Company owns, possesses
or has the right to use the Company's Intellectual Property employed
by it in connection with the business conducted by it as of the date
hereof; to such counsel's knowledge, there are no infringements of or
conflicts with asserted rights of others with respect to any of the
Company's Intellectual Property rights that, if determined adversely
to the Company, would, individually or in the aggregate, have a
Material Adverse Effect;
(xiii) the Company is not and, after giving effect to the
offering and sale of the Shares, will not be an "investment company"
or entity "controlled" by an "investment company," as such terms are
defined in the Investment Company Act; and
(xiv) the Registration Statement and the Prospectus and any
amendments and supplements thereto (other than the financial
statements and related schedule and financial and statistical data
derived therefrom and included therein, as to which such counsel need
express no opinion) comply as to form in all material respects with
the requirements of the Securities Act; such counsel believes that
(other than the financial statements and related schedule, as to which
such counsel need express no belief) the Registration Statement and
the prospectus included therein at the time the Registration Statement
became effective did not contain any 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 that
neither the Prospectus nor any amendment or supplement thereto
contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not
misleading.
In rendering such opinions, such counsel may rely (A) as to matters
involving the application of laws other than the laws of the United States
and the State of California and the General Corporation Law of the State of
Delaware, to the extent such counsel deems proper and to the extent
specified in such opinion, if at all, upon an opinion or opinions (in form
and substance reasonably satisfactory to Underwriters' counsel) of other
counsel reasonably accept-
-21-
able to Underwriters' counsel, familiar with the applicable laws; (B) as to
matters of fact, to the extent such counsel deems proper, on certificates
of responsible officers of the Company and certificates or other written
statements of officials of jurisdictions having custody of documents
respecting the corporate existence or good standing of the Company. The
opinion of such counsel for the Company shall state that the opinion of any
such other counsel upon which they relied is in form satisfactory to such
counsel and, in such counsel's opinion, the Underwriters and they are
justified in relying thereon. With respect to the matters to be covered in
subparagraph (xiv) above counsel may state their opinion and belief is
based upon their participation in the preparation of the Registration
Statement and the Prospectus and any amendment or supplement thereto and
review and discussion of the contents thereof but is without independent
check or verification except as specified.
The opinion of Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, Professional
Corporation described above and the opinions of Xxxxxx Xxxxxxx Xxxxxxxx &
Xxxxxx, Professional Corporation, patent counsel for the Company, and Xxxxx
& Xxxxxxx, regulation counsel for the Company, described below each shall
be rendered to the Underwriters at the request of the Company and shall so
state therein.
(f) Wilson, Sonsini, Xxxxxxxx & Xxxxxx, Professional Corporation, patent
counsel for the Company, shall have furnished to the Representatives their
written opinion, dated the Closing Date or the Additional Closing Date, as
the case may be, in form and substance satisfactory to the Representatives,
to the effect that the statements in the Prospectus and the Registration
Statement under "Risk Factors-Dependence upon Patents and Proprietary
Technology: Risk of Infringement" and "Business-Patents and Proprietary
Rights" and other references to the Company's Intellectual Property Rights
therein insofar as such statements constitute a summary of the terms of
legal matters, documents or proceedings referred to therein, fairly
represent the information called for with respect to such terms, legal
matters, documents and proceedings.
(g) Xxxxx & Xxxxxxx, regulatory counsel for the Company, shall have
furnished to the Representatives their written opinion, dated the Closing
Date or the Additional Closing Date, as the case may be, in form and
substance satisfactory to the Representatives, to the effect that
-22-
the statements in the Prospectus and the Registration Statement under "Risk
Factors--Uncertainty of FDA or Other Regulatory Clearances or Approval;
Government Regulation" and "Business Government Regulation" insofar as such
statements purport to summarize applicable provisions of the Federal Food,
Drug and Cosmetic Act and the regulations promulgated thereunder, are
correct summaries in all material respects of the provisions purported to
be summarized;
(h) On the effective date of the Registration Statement and the
effective date of the most recently filed post-effective amendment to the
Registration Statement and also on the Closing Date or the Additional
Closing Date, as the case may be, Ernst & Young LLP shall have furnished to
you letters, dated the respective dates of delivery thereof, in form and
substance satisfactory to you, containing statements and information of the
type customarily included in accountants' "comfort letters" to underwriters
with respect to the financial statements and certain financial information
contained in the Registration Statement and the Prospectus.
(i) The Representatives shall have received on and as of the Closing
Date or the Additional Closing Date, as the case may be, an opinion of
Xxxxxx Xxxxxx & Xxxxxxx, counsel to the Underwriters, with respect to the
due authorization and valid issuance of the Shares, the Registration
Statement, the Prospectus and other related matters as the Representatives
may reasonably request, and such counsel shall have received such papers
and information as they may reasonably request to enable them to pass upon
such matters.
(j) The Shares to be delivered on the Closing Date or the Additional
Closing Date, as the case may be, shall have been approved for listing on
the Nasdaq National Market, subject to official notice of issuance.
(k) The "lock-up" agreements of each of the Company's directors,
executive officers and stockholders relating to sales and certain other
dispositions of shares of Stock or certain other securities shall be in
full force and effect on the Closing Date or the Additional Closing Date,
as the case may be.
(l) On or prior to the Closing Date or the Additional Closing Date, as
the case may be, the Company shall
-23-
have furnished to the Representatives such further certificates and
documents as the Representatives shall reasonably request.
7. The Company agrees to indemnify and hold harmless each Underwriter
and each person, if any, who controls any Underwriter within the meaning of
either Section 15 of the Securities Act or Section 20 of the Exchange Act, from
and against any and all losses, claims, damages and liabilities (including,
without limitation, the reasonable legal fees and other expenses incurred in
connection with any suit, action or proceeding or any claim asserted) caused by
any untrue statement or alleged untrue statement of a material fact contained in
the Registration Statement or any preliminary prospectus or the Prospectus or
any amendment or supplement thereto, or caused by any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as such
losses, claims, damages or liabilities are caused by any untrue statement or
omission or alleged untrue statement or omission made in reliance upon and in
conformity with information relating to any Underwriter furnished to the Company
in writing by any Underwriter through the Representatives expressly for use
therein; provided, however, that the foregoing indemnity agreement with respect
to any preliminary prospectus shall not inure to the benefit of any Underwriter
from whom the person asserting any such losses, claims, damages or liabilities
purchased Shares, or any person controlling such Underwriter, if a copy of the
Prospectus was not sent or given by or on behalf of such Underwriter to such
person, if required by law so to have delivered, at or prior to the written
confirmation of the sale of the Shares to such person, and if the Prospectus
would have cured the defect giving rise to such loss, claim, damage or
liability.
Each Underwriter agrees, severally and not jointly, to indemnify and
hold harmless the Company, its directors, its officers who sign the Registration
Statement and each person, if any, who controls the Company within the meaning
of Section 15 of the Securities Act or Section 20 of the Exchange Act to the
same extent as the foregoing indemnity from the Company to each Underwriter, but
only with reference to information relating to any Underwriter furnished to the
Company in writing by such Underwriter through the Representatives expressly for
use in the Registration Statement, the Prospectus, any amendment or supplement
thereto, or any preliminary prospectus.
-24-
If any suit, action, proceeding (including any governmental or
regulatory investigation), claim or demand shall be brought or asserted against
any person in respect of which indemnity may be sought pursuant to any of the
two preceding paragraphs, such person (the "Indemnified Person") shall promptly
------------------
notify the person against whom such indemnity may be sought (the "Indemnifying
------------
Person") in writing, and the Indemnifying Person, upon request of the
------
Indemnified Person, shall retain counsel reasonably satisfactory to the
Indemnified Person to represent the Indemnified Person and any others the
Indemnifying Person may designate in such proceeding and shall pay the fees and
expenses of such counsel related to such proceeding. In any such proceeding,
any Indemnified Person shall have the right to retain its own counsel, but the
fees and expenses of such counsel shall be at the expense of such Indemnified
Person unless (i) the Indemnifying Person and the Indemnified Person shall have
mutually agreed to the retention of such counsel, (ii) the Indemnifying Person
has failed within a reasonable time to retain counsel reasonably satisfactory to
the Indemnified Person or (iii) the named parties in any such proceeding
(including any impleaded parties) include both the Indemnifying Person and the
Indemnified Person and representation of both parties by the same counsel would
be inappropriate due to actual or potential differing interests between them. It
is understood that the Indemnifying Person shall not, in connection with any
proceeding or related proceeding in the same jurisdiction, be liable for the
fees and expenses of more than one separate firm (in addition to any local
counsel) for all Indemnified Persons, and that all such fees and expenses shall
be promptly reimbursed as they are incurred. Any such separate firm for the
Underwriters and such control persons of Underwriters shall be designated in
writing by X.X. Xxxxxx Securities and any such separate firm for the Company,
its directors, its officers who sign the Registration Statement and such control
persons of the Company shall be designated in writing by the Company. The
Indemnifying Person shall not be liable for any settlement of any proceeding
effected without its written consent, but if settled with such consent or if
there be a final judgment for the plaintiff, the Indemnifying Person agrees to
indemnify any Indemnified Person from and against any loss or liability by
reason of such settlement or judgment. Notwithstanding the foregoing sentence,
if at any time an Indemnified Person shall have requested an Indemnifying Person
to reimburse the Indemnified Person for fees and expenses of counsel as
contemplated by the second and third sentences of this paragraph, the
Indemnifying Person agrees that it shall be liable for any settlement of any
proceeding effected without its written consent if (i) such settlement is
entered into more than 30 days
-25-
after receipt by such Indemnifying Person of the aforesaid request and (ii) such
Indemnifying Person shall not have reimbursed the Indemnified Person in
accordance with such request prior to the date of such settlement. No
Indemnifying Person shall, without the prior written consent of the Indemnified
Person, effect any settlement of any pending or threatened proceeding in respect
of which any Indemnified Person is or could have been a party and indemnity
could have been sought hereunder by such Indemnified Person, unless such
settlement includes an unconditional release of such Indemnified Person from all
liability on claims that are the subject matter of such proceeding.
If the indemnification provided for in the first or second paragraphs
of this Section 7 is unavailable to an Indemnified Person in respect of any
losses, claims, damages or liabilities referred to therein, then each
Indemnifying Person under such paragraph, in lieu of indemnifying such
Indemnified Person thereunder, shall contribute to the amount paid or payable by
such Indemnified Person as a result of such losses, claims, damages or
liabilities (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 hand from the offering of the Shares or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company on the one hand and the
Underwriters on the other hand in 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 hand shall be deemed
to be in the same respective proportions as the net proceeds from the offering
(before deducting expenses) received by the Company and the total underwriting
discounts and the commissions received by the Underwriters, in each case as set
forth in the table on the cover of the Prospectus, bear to the aggregate public
offering price of the Shares. The relative fault of the Company on the one hand
and the Underwriters on the other hand 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 by the Underwriters and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
-26-
The Company and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 7 were determined by pro rata
--- ----
allocation (even if the Underwriters were treated as one entity for such
purposes) or by any other method of allocation that does not take account of the
equitable considerations referred to in the immediately preceding paragraph. The
amount paid or payable by an Indemnified Person as a result of the losses,
claims, damages and liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such Indemnified
Person in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 7, in no event shall an
Underwriter be required to contribute any amount in excess of the amount by
which the total price at which the Shares 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
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Underwriters' obligations to
contribute pursuant to this Section 7 are several in proportion to the
respective number of Shares set forth opposite their names in Schedule I hereto,
and not joint.
The remedies provided for in this Section 7 are not exclusive and
shall not limit any rights or remedies which may otherwise be available to any
indemnified party at law or in equity.
The indemnity and contribution agreements contained in this Section 7
and the representations and warranties of the Company set forth in this
Agreement shall remain operative and in full force and effect regardless of (i)
any termination of this Agreement, (ii) any investigation made by or on behalf
of any Underwriter or any person controlling any Underwriter or by or on behalf
of the Company, its officers or directors or any other person controlling the
Company and (iii) acceptance of and payment for any of the Shares.
8. Notwithstanding anything herein contained, this Agreement (or the
obligations of the several Underwriters with respect to the Option Shares) may
be terminated in the absolute discretion of the Representatives, by notice given
to the Company, if after the execution and delivery of this Agreement and
-27-
prior to the Closing Date (i) trading generally shall have been suspended or
materially limited on or by, as the case may be, any of the New York Stock
Exchange or the American Stock Exchange, the Nasdaq National Market, the Chicago
Board Options Exchange, the Chicago Mercantile Exchange or the Chicago Board of
Trade, (ii) trading of any securities of or guaranteed by the Company shall have
been suspended on any exchange or in any over-the-counter market, (iii) a
general moratorium on commercial banking activities in New York shall have been
declared by either federal or New York State authorities, or (iv) there shall
have occurred any outbreak or escalation of hostilities or any change in
financial markets or any calamity or crisis that, in the judgment of the
Representatives, is material and adverse and which, in the judgment of the
Representatives, makes it impracticable to market the Shares on the terms and in
the manner contemplated in the Prospectus.
9. This Agreement shall become effective upon the later of (x) execution
and delivery hereof by the parties hereto and (y) release of notification of the
effectiveness of the Registration Statement (or, if applicable, any post-
effective amendment) by the Commission.
If on the Closing Date or the Additional Closing Date, as the case may
be, any one or more of the Underwriters shall fail or refuse to purchase Shares
which it or they have agreed to purchase hereunder, and the aggregate number of
Shares which such defaulting Underwriter or Underwriters agreed but failed or
refused to purchase is not more than one-tenth of the aggregate number of Shares
to be purchased on such date, the other Underwriters shall be obligated
severally in the proportions that the number of Shares set forth opposite their
respective names in Schedule I bears to the aggregate number of Shares set forth
opposite the names of all such non-defaulting Underwriters, or in such other
proportions as the Representatives may specify, to purchase the Shares which
such defaulting Underwriter or Underwriters agreed but failed or refused to
purchase on such date; provided, however, that in no event shall the number of
Shares that any Underwriter has agreed to purchase pursuant to Section 1 be
increased pursuant to this Section 9 by an amount in excess of one-ninth of such
number of Shares without the written consent of such Underwriter. If on the
Closing Date or the Additional Closing Date, as the case may be, any Underwriter
or Underwriters shall fail or refuse to purchase Shares which it or they have
agreed to purchase hereunder, and the aggregate number of Shares with respect to
which such default occurs is more than one-tenth of the aggregate number of
Shares to be purchased, and arrangements satisfactory
-28-
to the Representatives and the Company for the purchase of such Shares are not
made within 36 hours after such default, this Agreement shall terminate without
liability on the part of any non-defaulting Underwriter or the Company. In any
such case either the Representatives or the Company shall have the right to
postpone the Closing Date or, in the case of the Option Shares, the Additional
Closing Date, but in no event for longer than seven days, in order that the
required changes, if any, in the Registration Statement and in the Prospectus or
in any other documents or arrangements may be effected. Any action taken under
this paragraph shall not relieve any defaulting Underwriter from liability in
respect of any default of such Underwriter under this Agreement.
10. If this Agreement shall be terminated by the Underwriters, or any of
them, because of any failure or refusal on the part of the Company to comply
with its covenants or to fulfill any of the conditions of this Agreement, or if
for any reason the Company shall be unable to perform its obligations under this
Agreement or any condition of the Underwriters' obligations cannot be fulfilled,
the Company agrees to reimburse the Underwriters or such Underwriters as have so
terminated this Agreement with respect to themselves, severally, for all out-of-
pocket expenses (including the reasonable fees and expenses of their counsel)
reasonably incurred by such Underwriters in connection with this Agreement or
the offering contemplated hereunder.
11. This Agreement shall inure to the benefit of and be binding upon the
Company, the Underwriters, any controlling persons referred to herein and their
respective successors and assigns. Nothing expressed or mentioned in this
Agreement is intended or shall be construed to give any other person, firm or
corporation any legal or equitable right, remedy or claim under or in respect of
this Agreement or any provision herein contained. No purchaser of Shares from
any Underwriter shall be deemed to be a successor by reason merely of such
purchase.
12. Any action by the Underwriters hereunder may be taken by the
Representatives jointly or by X.X. Xxxxxx Securities alone on behalf of the
Underwriters, and any such action taken by the Representatives jointly or by
X.X. Xxxxxx Securities alone shall be binding upon the Underwriters. All
notices and other communications hereunder shall be in writing and shall be
deemed to have been duly given if mailed or transmitted by any standard form of
telecommunication. Notices to the Underwriters shall be given to the
Representatives, c/o X.X. Xxxxxx Securities Inc., 00 Xxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx
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10260 (telecopy: 212/648-5121 or 212/648-5951); Attention: Syndicate
Department. Notices to the Company shall be given to it at 000 X. Xxxxx Xxxx,
Xxxxxxxxx, Xxxxxxxxxx 00000 (telecopy: Xxxxxx Xxxxxxx); Attention: Chief
Executive Officer.
13. This Agreement may be signed in counterparts, each of which shall be
an original and all of which together shall constitute one and the same
instrument.
14. This Agreement shall be governed by and construed in accordance with
the laws of the State of New York, without giving effect to the conflicts of
laws provisions thereof.
If the foregoing is in accordance with your understanding, please sign
and return four counterparts hereof.
Very truly yours,
SOMNUS MEDICAL TECHNOLOGIES, INC.
By:
----------------------------
Name:
Title:
Accepted as of the date first
written above:
X.X. XXXXXX SECURITIES INC.
UBS SECURITIES LLC
XXXXX XXXXXX INC.
Acting severally on behalf of
themselves and the several
Underwriters listed in Schedule I
hereto.
By: X.X. XXXXXX SECURITIES INC.
By:
------------------------------
Name:
Title:
SCHEDULE I
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Underwriter Shares
----------- ------
---------
Total 4,000,000
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