1,000,000 SHARES
PERCLOSE, INC.
COMMON STOCK
($0.001 PAR VALUE)
UNDERWRITING AGREEMENT
November , 1997
BT ALEX. XXXXX INCORPORATED
XXXXX XXXXXXX INC.
As Representatives of the Several Underwriters
c/o BT Alex. Xxxxx Incorporated
Xxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Ladies and Gentlemen:
Perclose, Inc., a Delaware corporation (the "Company"), proposes to sell to
the several underwriters (the "Underwriters") named in Schedule I hereto for
whom you are acting as representatives (the "Representatives") an aggregate of
1,000,000 shares of the Company's Common Stock, $0.001 par value (the "Firm
Shares"). The respective amounts of the Firm Shares to be so purchased by the
several Underwriters are set forth opposite their names in Schedule I hereto.
The Company also proposes to sell at the Underwriters' option an aggregate of up
to 150,000 additional shares of the Company's Common Stock (the "Option Shares")
as set forth below. If the firms listed in Schedule I hereto include only the
Representatives, then the terms, "Underwriters" and "Representatives," as used
herein, shall each be deemed to refer to such firms.
As Representatives, you have advised the Company (a) that you are authorized
to enter into this Agreement on behalf of the several Underwriters, and (b) that
the several Underwriters are willing, acting severally and not jointly, to
purchase the numbers of Firm Shares set forth opposite their respective names in
Schedule I, plus their pro rata portion of the Option Shares if you elect to
exercise the over-allotment option in whole or in part for the accounts of the
several Underwriters. The Firm Shares and the Option Shares (to the extent the
aforementioned option is exercised) are herein collectively called the "Shares."
In consideration of the mutual agreements contained herein and of the
interests of the parties in the transactions contemplated hereby, the parties
hereto agree as follows:
1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
(a) The Company represents and warrants as follows:
(i) A registration statement on Form S-3 (File No. 333- ) with
respect to the Shares has been carefully prepared by the Company in
conformity with the requirements of the Securities Act of 1933, as
amended (the "Act"), and the Rules and Regulations (the "Rules and
Regulations") of the Securities and Exchange Commission (the
"Commission") thereunder and has been filed with the Commission under the
Act. The Incorporated Documents (as defined) heretofore filed, when they
were filed (or, if any amendment with respect to any such document was
filed, when such amendment was filed), conformed in all material respects
with the requirements of the Exchange Act (as defined) and the rules and
regulations of the Commission thereunder. The Company has complied with
the conditions for the use of Form S-3. Copies of such registration
statement, including any amendments thereto, the preliminary prospectuses
(meeting the requirements of Rule 430A of the Rules and Regulations)
contained therein and the exhibits, financial statements and schedules,
as finally amended and revised through the
date hereof, have heretofore been delivered by the Company to you. The
term "Registration Statement" as used in this Agreement shall mean the
registration statement and the prospectus, including all financial
statements, schedules and exhibits, included or incorporated by reference
therein (the "Incorporated Documents") that the Company has filed with
the Securities Exchange Act of 1934 ("Exchange Act") the form in which it
became or becomes, as the case may be, effective (including, if the
Company omitted information from the registration statement pursuant to
Rule 430A of the Rules and Regulations, the information deemed to be a
part of the registration statement at the time it became effective
pursuant to Rule 430A of the Rules and Regulations) and, in any a term
sheet used pursuant to Rule 434, and in the event of any amendment
thereto after the effective date of such registration statement, shall
also mean (from and after the effectiveness of such amendment) such
registration statement as so amended. If the Company has filed an
abbreviated registration statement to register additional shares of
Common Stock pursuant to Rule 462(b) under the Securities Act (the "Rule
462 Registration Statement"), then any reference herein to the term
"Registration Statement" shall also be deemed to include such Rule 462
Registration Statement. The Registration Statement has been declared
effective by the Commission under the Act, and no post-effective
amendment to the Registration Statement has been filed as of the date of
this Agreement. The form of prospectus filed by the Company with the
Commission pursuant to its Rule 424(b) and Rule 430A is herein referred
to as the "Prospectus." Each preliminary prospectus included in the
Registration Statement prior to the time it becomes effective is herein
referred to as a "Preliminary Prospectus."
(ii) The Company has been duly organized and is validly existing as
a corporation in good standing under the laws of the State of Delaware,
with corporate power and authority to own its properties and conduct its
business as described in the Registration Statement; and is duly
qualified to transact business in all jurisdictions in which the conduct
of its business requires such qualification and in which the failure so
to qualify would materially adversely affect the business, condition
(financial or otherwise) results of operations or prospects for the
future of the Company. The Company has no subsidiaries.
(iii) The Company has authorized and outstanding capital stock as set
forth under the heading "Capitalization" in the Prospectus and such
capital stock conforms in all material respects to the statements
relating thereto contained in the Registration Statement and the
Prospectus and any Incorporated Document (and such statements correctly
state the substance of the instruments defining the capitalization of the
Company; the outstanding shares of Common Stock of the Company, have been
duly authorized and validly issued, are fully paid and non-assessable and
have been issued in compliance with all applicable federal and state
securities laws; the shares of Common Stock to be sold by the Company
have been duly authorized and, when issued hereunder, will be validly
issued, fully paid and non-assessable and will have been issued in
compliance with all federal and state securities laws; no shareholder of
the Company has any right pursuant to any agreement which has not been
waived to require the Company to register the sale of any shares owned by
such shareholder under the Act in the public offering contemplated
hereby; all necessary and proper corporate proceedings have been taken in
order validly to authorize and issue such authorized Common Stock and no
further approval or authority of the shareholders or the Board of
Directors of the Company is required for the sale of the Shares to be
sold by the Company as contemplated hereby.
(iv) The Shares conform with the statements concerning them in the
Registration Statement in all material respects. Except as specifically
disclosed in the Registration Statement and the financial statements of
the Company and the related notes thereto, the Company does not have
outstanding any options to purchase, or any preemptive rights or other
rights to subscribe for or to purchase, any securities or obligations
convertible into, or any contacts or commitments to issue or sell shares
of its capital stock or any such options, rights, convertible securities
or obligations. The descriptions of the Company's stock option, stock
purchase and other stock-
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based plans, and of the options or other rights granted and exercised
thereunder, set forth in the Prospectus or incorporated therein, are
accurate summaries and fairly present the information required to be
shown with respect to such plans and rights in all material respects.
(v) The Commission has not issued any order preventing or suspending
the use of any Preliminary Prospectus or instituted proceedings for that
purpose, and each such Preliminary Prospectus has conformed in all
material respects to the requirements of the Act and the Rules and
Regulations and, as of its date, has not included any untrue statement of
a material fact or omitted to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they
were made, not misleading; and at the time the Registration Statement
became or becomes, as the case may be, effective and at all times
subsequent thereto up to and on the Closing Date (hereinafter defined)
and on any later date on which Option Shares are to be purchased, (A) the
Registration Statement and the Prospectus, and any amendments or
supplements thereto, contained and will contain all material information
required to be included therein by the Act and the Rules and Regulations
and will in all material respects conform to the requirements of the Act
and the Rules and Regulations, (B) the Registration Statement, and any
amendments or supplements thereto, did not and will not include 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 (C) the Prospectus, and any amendments or supplements
thereto, did not and will not include 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 none of the representations and
warranties contained in this subparagraph (v) shall apply to information
contained in or omitted from the Registration Statement or Prospectus, or
any amendment or supplement thereto, in reliance upon, and in conformity
with, written information relating to any Underwriter furnished to the
Company by such Underwriter specifically for use in the preparation
thereof. No Incorporated Document when it was filed (or, if an
amendment), amendment with respect to any such document was filed, when
such amendment was filed), contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; and no such
further amendment will 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.
(vi) The financial statements of the Company, together with related
notes and schedules as set forth in the Registration Statement, present
fairly the financial position and results of operations of the Company,
at the indicated dates and for the indicated periods. Such financial
statements, schedules and related notes have been prepared in accordance
with generally accepted accounting principles, consistently applied
throughout the periods involved, and all adjustments necessary for a fair
presentation of results for such periods have been made. The summary
financial and statistical data and schedules included in the Registration
Statement present fairly the information shown therein and have been
compiled on a basis consistent with the financial statements presented
therein. No other financial statements or schedules are required to be
included in the Registration Statement.
(vii) There is no material action, suit or proceeding pending or, to
the knowledge of the Company, after due inquiry, threatened against the
Company before any court or regulatory, governmental or administrative
agency or body which might result in any material adverse change in the
business or condition (financial or otherwise) or results of operation or
prospects for the future of the Company except as set forth in the
Registration Statement. The Company is not a party or subject to the
provisions of any injunction, judgment, order, decree or of any court, or
any regulatory, administrative or governmental body or agency.
(viii) The Company has good and marketable title to all of the
properties and assets owned by the Company reflected in either the
financial statements or as described in the Registration
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Statement and is subject to no lien, mortgage, security interest, pledge
or encumbrance of any kind, except those reflected in such financial
statements or as described in the Registration Statement and except for
such encumbrances that, individually or in the aggregate, would not have
a material adverse effect on the Company. The Company occupies its leased
properties under valid and binding leases conforming to the description
thereof set forth in the Registration Statement.
(ix) The Company has filed all foreign, federal, state and local
income tax returns which have been required to be filed and has paid all
taxes indicated by said returns and all assessments received by it. There
is no tax deficiency which has been or might reasonably be expected to be
asserted or threatened against the Company which could materially
adversely affect the business, operations or property of the Company. The
Company has paid all sales, user and transfer taxes applicable to it and
its business and operations which were or are due. The Company has not
received any notice or deficiency or claim for payment from any
governmental or regulatory body with respect to such sales, user or
transfer taxes.
(x) Since the respective dates as of which information is given in
the Registration Statement and Prospectus, as it may be amended or
supplemented, (A) there has not been any material adverse change or
development involving a prospective material adverse change in or
affecting the business management, condition (financial or otherwise),
results of operations or prospects for the future of the Company whether
or not occurring in the ordinary course of business, (B) there has not
been any transaction entered into by the Company, other than transactions
in the ordinary course or transactions specifically described in the
Registration Statement, as it may be amended or supplemented, (C) the
Company has not sustained any material loss or interference with its
businesses or properties from fire, flood, windstorm, accident or other
calamity, not covered by insurance, (D) the Company has not paid or
declared any dividends or other distribution with respect to its capital
stock, except as described in the Registration Statement, and the Company
is not in default in the payment of principal of or interest on any
outstanding debt obligations and (E) there has not been any change in the
capital stock (other than the sale of the Shares, the conversion of the
Preferred Stock into Common Stock or the exercise of outstanding stock
options pursuant to the Company's stock option plan described in the
Registration Statement) or material increase in indebtedness of the
Company. The Company does not have any material contingent obligation
which is not disclosed in the Registration Statement (or contained in the
financial statements or related notes thereto), as such may be amended or
supplemented.
(xi) The Company is not in violation or default under any provision
of its Certificate of Incorporation or bylaws, or any of its agreements,
leases, licenses, contracts, franchises, mortgages, permits, deeds of
trust, indentures or other instruments or obligations to which the
Company is a party or by which it or any of its properties is or may be
bound or affected, except where such violation or default would not have
a material adverse effect on the business, condition (financial or
otherwise) or results of operations of the Company.
(xii) The execution, delivery and performance of this Agreement and
the consummation of the transactions herein contemplated do not and will
not conflict with or result in a breach of, or violation of, any of the
terms or provisions of, or constitute, either by itself or the giving of
notice or the passage of time or both, a default under, any indenture,
license, mortgage, lease, franchise, permit, deed of trust or other
agreement or instrument to which the Company is a party or by which the
Company or any of its property is or may be bound or affected, except
where such breach, violation or default would not have a material adverse
effect on the business, condition (financial or otherwise) or results of
operations of the Company, or violate any of the provisions of the
Certificate of Incorporation or bylaws of the Company or violate any
injunction, judgment, order, decree, statute, rule or regulation
applicable to the Company of any court or of any regulatory,
administrative or governmental body or agency having jurisdiction over
the Company or any of its property.
4
(xiii) The Company has the legal right, corporate power and authority
to enter into this Agreement and perform the transactions contemplated
hereby. This Agreement has been duly authorized, executed and delivered
by the Company.
(xiv) Each approval, registration, qualification, license, permit,
consent, order, authorization, designation, declaration or filing by or
with any regulatory, administrative or other governmental body or agency
necessary in connection with the execution and delivery by the Company of
this Agreement and the consummation of the transactions herein
contemplated (except such additional steps as may be required by the
National Association of Securities Dealers, Inc. (the "NASD") or may be
necessary to qualify the Shares for public offering by the Underwriters
under state securities or Blue Sky laws) has been obtained or made and
each is in full force and effect.
(xv) Except as otherwise expressly described in the Registration
Statement, the Company owns or possesses adequate and sufficient rights
to use all patents, patent rights, trade secrets, licenses or royalty
arrangements, trademarks and trademark rights, service marks, trade
names, copyrights, know how or proprietary techniques or rights thereto
of others, and governmental, regulatory or administrative authorizations,
order, permits certificates and consents necessary for the conduct of the
business of the Company, except where the failure to possess such would
not have a material adverse effect on the business, condition (financial
or otherwise) or results of operations of the Company; the Company is not
aware of any material pending or threatened action, suit, proceeding or
claim by others, either domestically or internationally, that the Company
is violating any patents, patent rights, copyrights, trademarks or
trademark rights, inventions, service marks, tradenames, licenses or
royalty arrangements, trade secrets, know how or proprietary techniques
or rights thereto of others, or governmental, regulatory or
administrative authorizations, orders, permits, certificates and
consents; except as otherwise expressly described in the Registration
Statement, the Company is not aware of any rights of third parties to, or
any infringement of, any of the Company's trademarks or trademark rights,
copyrights, licenses or royalty arrangements, trade secrets, know how or
proprietary techniques, including processes and substances, or rights
thereto of others, which could materially adversely affect the use
thereof by the Company; the Company is not aware of any pending or
threatened material action, suit, proceeding or claim by others
challenging the validity or scope of any of such trademarks or trademark
rights, copyrights, licenses or royalty arrangements, trade secrets, know
how, or proprietary techniques or rights thereto of others.
(xvi) There are no contracts or other documents required to be
described in the Registration Statement or to be filed as exhibits to or
incorporated by reference the Registration Statement by the Act or by the
Rules and Regulations or the Exchange Act which have not been described
or filed as required.
(xvii) The Company is conducting business in compliance with all
applicable laws, rules and regulations, of the jurisdictions in which it
is conducting business including, without limitation, all applicable
local, state, federal and foreign medical devise and environmental laws
and regulations, except where the failure to so comply would not have a
material adverse effect on the business, condition (financial or
otherwise) or results of operations of the Company.
(xviii) The Company has not, directly or indirectly, at any time during
the past five years (A) made any unlawful contribution to any candidate
for public office, or failed to disclose fully any contribution in
violation of laws, or (B) made any payment to any federal, state or local
governmental officer or official, or other person charged with similar
public or quasi-public duties, other than payments required or permitted
by the laws of the United States of any jurisdiction thereof.
(xix) The Company maintains insurance of the types and in the amounts
which it deems adequate for its business, including, but not limited to,
general liability insurance and insurance
5
governing all real and personal property owned or leased by the Company
against theft, damage, destruction, acts of vandalism and all other risk
customarily insured against, all of which insurance is in full force and
effect.
(xx) Ernst & Young, LLP, who have certified the financial statements
filed with the Commission as part of the Registration Statement, are
independent public accountants as required by the Act and the Rules and
Regulations.
(xxi) No offering, sales or other disposition of any Common Stock of
the Company will be made for a period of 90 days after the date of this
Agreement, directly or indirectly, by the Company, otherwise than
hereunder or with the prior written consent of the Representatives or
pursuant to the grant by the Company of stock options or stock purchase
rights or the exercise of outstanding stock options or stock purchase
rights under the Company's Incentive Stock Plans described in the
Registration Statement.
(xxii) The Common Stock is registered pursuant to Section 12(g) of the
Exchange Act and is listed on the Nasdaq National Market, and the Company
has taken no action designed to, or likely to have the effect of,
terminating the registration of the Common Stock under the Exchange Act
or delisting the Common Stock from the Nasdaq National Market, nor has
the Company received any notification that the Commission or the National
Association of Securities Dealers, Inc. ("NASD") is contemplating
terminating such registration or listing.
(xxiii) The Company has been advised concerning the Investment Company
Act of 1940, as amended (the "1940 Act"), and the rules and regulations
thereunder, and has in the past conducted, and intends in the future to
conduct, its affairs in such a manner as to ensure that it will not
become an "investment company" or a company "controlled" by an
"investment company" within the meaning of the 1940 Act and such rules
and regulations.
(xxiv) The Company has not distributed and will not distribute prior to
the later of (i) the Closing Date, or any date on which Option Shares are
to be purchased, as the case may be, and (ii) completion of the
distribution of the Shares, any offering material in connection with the
offering and sale of the Shares other than any Preliminary Prospectuses,
the Prospectus, the Registration Statement and other materials, if any,
permitted by the Act.
(xv) The Company has not taken and will not take, directly or
indirectly, any action designed to or that might reasonably be expected
to cause or result in stabilization or manipulation of the price of the
Common Stock to facilitate the sale or resale of the Shares.
2. PURCHASE, SALE AND DELIVERY OF THE FIRM SHARES. On the basis of the
representations, warranties and covenants herein contained, and subject to the
conditions herein set forth, the Company agrees to sell to the Underwriters, and
each Underwriter agrees, severally and not jointly, to purchase, at a price of
$ per share, the number of Firm Shares set forth opposite the name of
each Underwriter in Schedule I hereof, subject to adjustments in accordance with
Section 9 hereof.
Payment for the Firm Shares to be sold hereunder is to be made in same day
federal funds against delivery of certificates therefor to the Representatives
for the several accounts of the Underwriters. Such payment and delivery are to
be made at the offices of BT Alex. Xxxxx Incorporated, Xxx Xxxxx Xxxxxx,
Xxxxxxxxx, Xxxxxxxx 00000 at 10:00 a.m. Baltimore time, on the third business
day after the date of this Agreement or at such other time and date not later
than three business days thereafter as you and the Company shall agree upon in
writing, such time and date being herein referred to as the "Closing Date." (As
used herein, "business day" means a day on which the New York Stock Exchange is
open for trading and on which banks in New York are open for business and are
not permitted by law or executive order to be closed.) The certificates for the
Firm Shares will be delivered in such denominations and in such registrations as
the Representatives request in writing not later than the third business day
prior to the Closing Date, and will be made available for inspection by the
Representatives at least one business day prior to the Closing Date.
6
In addition, on the basis of the representations and warranties herein
contained and subject to the terms and conditions herein set forth, the Company
hereby grants an option to the several Underwriters to purchase the Option
Shares at the price per share as set forth in the first paragraph of this
Section 2. The option granted hereby may be exercised in whole or in part but
only once and at any time upon written notice given within 30 days after the
date of this Agreement, by you, as Representatives of the several Underwriters,
to the Company setting forth the number of Option Shares as to which the several
Underwriters are exercising the option, the names and denominations in which the
Option Shares are to be registered and the time and date at which such
certificates are to be delivered. The time and date at which certificates for
Option Shares are to be delivered shall be determined by the Representatives but
shall not be earlier than three nor later than 10 full business days after the
exercise of such option, nor in any event prior to the Closing Date (such time
and date being herein referred to as the "Option Closing Date"). If the date of
exercise of the option is three or more days before the Closing Date, the notice
of exercise shall set the Closing Date as the Option Closing Date. The number of
Option Shares to be purchased by each Underwriter shall be in the same
proportion to the total number of Option Shares being purchased as the number of
Firm Shares being purchased by such Underwriter bears to 1,000,000, adjusted by
you in such manner as to avoid fractional shares. The option with respect to the
Option Shares granted hereunder may be exercised only to cover over-allotments
in the sale of the Firm Shares by the Underwriters. You, as Representatives of
the several Underwriters, may cancel such option at any time prior to its
expiration by giving written notice of such cancellation to the Company. To the
extent, if any, that the option is exercised, payment for the Option Shares
shall be made on the Option Closing Date in same day federal funds against
delivery of certificates therefor at the offices of BT Alex. Xxxxx Incorporated,
Xxx Xxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxx 00000.
3. OFFERING BY THE UNDERWRITERS. It is understood that the several
Underwriters are to make a public offering of the Firm Shares as soon as the
Representatives deem it advisable to do so. The Firm Shares are to be offered to
the public at the initial public offering price set forth in the Prospectus. The
Representatives may from time to time thereafter change the public offering
price and other selling terms. To the extent, if at all, that any Option Shares
are purchased pursuant to Section 2 hereof, the Underwriters will offer them to
the public on the foregoing terms.
It is further understood that you will act as the Representatives for the
Underwriters in the offering and sale of the Shares in accordance with a Master
Agreement Among Underwriters entered into by you and the several other
Underwriters.
4. COVENANTS OF THE COMPANY.
(a) The Company covenants and agrees with the several Underwriters that:
(i) The Company will use its best efforts to cause the Registration
Statement and any amendment thereof, if not effective at the time and
date that this Agreement is executed and delivered by the parties hereto,
to become effective as promptly as possible; the Company will use its
best efforts to cause any abbreviated registration statement pursuant to
Rule 462(b) of the Rules and Regulations as may be required subsequent to
the date the Registration Statement is declared effective to become
effective as promptly as possible; the Company will notify you, promptly
after it shall receive notice thereof, of the time when the Registration
Statement, any subsequent amendment to the Registration Statement or any
abbreviated registration statement has become effective or any supplement
to the Prospectus has been filed; if the Company omitted information from
the Registration Statement at the time it was originally declared
effective in reliance upon Rule 430A(a) of the Rules and Regulations, the
Company will provide evidence satisfactory to you that the Prospectus
contains such information and has been filed, within the time period
prescribed, with the Commission pursuant to subparagraph (1) or (4) of
Rule 424(b) of the Rules and Regulations or as part of a post-effective
amendment to such Registration Statement as originally declared effective
which is declared effective by the Commission; if the Company files a
term sheet pursuant to Rule 434 of the Rules and Regulations, the Company
will provide evidence satisfactory to you that the Prospectus and term
sheet
7
meeting the requirements of Rule 434(b) or (c), as applicable, of the
Rules and Regulations, have been filed, within the time period
prescribed, with the Commission pursuant to subparagraph (7) of Rule
424(b) of the Rules and Regulations; if for any reason the filing of the
final form of Prospectus is required under Rule 424(b)(3) of the Rules
and Regulations, it will provide evidence satisfactory to you that the
Prospectus contains such information and has been filed with the
Commission within the time period prescribed; it will notify you promptly
of any request by the Commission for the amending or supplementing of the
Registration Statement or the Prospectus or for additional information;
promptly upon your request, it will prepare and file with the Commission
any amendments or supplements to the Registration Statement or Prospectus
which, in the opinion of counsel for the several Underwriters
("Underwriters' Counsel"), may be necessary or advisable in connection
with the distribution of the Shares by the Underwriters; it will promptly
prepare and file with the Commission, and promptly notify you of the
filing of, any amendments or supplements to the Registration Statement or
Prospectus which may be necessary to correct any statements or omissions,
if, at any time when a prospectus relating to the Shares is required to
be delivered under the Act, any event shall have occurred as a result of
which the Prospectus or any other prospectus relating to the Shares as
then in effect would include 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; in case any Underwriter is required to deliver a prospectus
nine (9) months or more after the effective date of the Registration
Statement in connection with the sale of the Shares, it will prepare
promptly upon request, but at the expense of such Underwriter, such
amendment or amendments to the Registration Statement and such prospectus
or prospectuses as may be necessary to permit compliance with the
requirements of Section 10(a)(3) of the Act; and it will file no
amendment or supplement to the Registration Statement or Prospectus or
the Incorporated Documents, or, prior to the end of the period of time in
which a prospectus relating to the Shares is required to be delivered
under the Act, file any document which upon filing becomes an
Incorporated Document, which shall not previously have been submitted to
you a reasonable time prior to the proposed filing thereof or to which
you shall reasonably object in writing, subject, however, to compliance
with the Act and the Rules and Regulations , the Exchange Act and the
rules and regulations of the Commission thereunder and the provisions of
this Agreement.
(ii) The Company will advise the Representatives promptly of any
request of the Commission for amendment of the Registration Statement or
for supplement to the Prospectus or for any additional information, or of
the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or the use of the Prospectus
or of the institution of any proceedings for that purpose, and the
Company will use its best efforts to prevent the issuance of any such
stop order preventing or suspending the use of the Prospectus and to
obtain as soon as possible the lifting thereof, if issued.
(iii) The Company will cooperate with the Representatives in
endeavoring to qualify the Shares for sale under the securities laws of
such jurisdictions as the Representatives may reasonably have designated
in writing and will make such applications, file such documents, and
furnish such information as may be reasonably required for that purpose,
provided the Company shall not be required to qualify as a foreign
corporation or to file a general consent to service of process in any
jurisdiction where it is not now so qualified or required to file such a
consent. The Company will, from time to time, prepare and file such
statements, reports, and other documents, as are or may be required to
continue such qualifications in effect for so long a period as the
Representatives may reasonably request for distribution of the Shares.
(iv) The Company will furnish to you, as soon as available, and, in
the case of the Prospectus and any term sheet or abbreviated term sheet
under Rule 434, in no event later than the first (1st) full business day
following the first day that Shares are traded, copies of the
Registration Statement (three of which will be signed and which will
include all exhibits), each Preliminary
8
Prospectus, the Prospectus and any amendments or supplements to such
documents, including any prospectus prepared to permit compliance with
Section 10(a)(3) of the Act, and the Incorporated Documents (three of
which will include all exhibits,) all in such quantities as you may from
time to time reasonably request. Notwithstanding the foregoing, BT Alex.
Xxxxx Incorporated, on behalf of the several Underwriters, shall agree to
the utilization of Rule 434 of the Rules and Regulations, the Company
shall provide to you copies of a Preliminary Prospectus updated in all
respects through the date specified by you in such quantities as you may
from time to time reasonably request.
(v) If during the period in which a prospectus is required by law to
be delivered by an Underwriter or dealer any event shall occur as a
result of which, in the judgment of the Company or in the reasonable
opinion of counsel for the Underwriters, it becomes necessary to amend or
supplement the Prospectus in order to make the statements therein, in the
light of the circumstances existing at the time the Prospectus is
delivered to a purchaser, not misleading, or, if it is necessary at any
time to amend or supplement the Prospectus to comply with any law, the
Company promptly will prepare and file with the Commission an appropriate
amendment to the Registration Statement or supplement to the Prospectus
so that the Prospectus as so amended or supplemented will not, in the
light of the circumstances when it is so delivered, be misleading, or so
that the Prospectus will comply with the law.
(vi) [The Company will make generally available to its security
holders, as soon as it is practicable to do so, but in any event not
later than 15 months after the effective date of the Registration
Statement, an earnings statement (which need not be audited) in
reasonable detail, covering a period of at least 12 consecutive months
beginning after the effective date of the Registration Statement, which
earnings statement shall satisfy the requirements of Section 11(a) of the
Act and Rule 158 of the Rules and Regulations and will advise you in
writing when such statement has been so made available.]
(vii) No offering, sale or other disposition of any Common Stock of
the Company will be made for a period of 90 days after the date of this
Agreement, directly or indirectly, by the Company otherwise than
hereunder or with the prior written consent of the Representatives except
that the Company may, without such consent, issue shares (A) upon the
exercise of options outstanding on the date of this Agreement issued
pursuant to the Company's 1992 Stock Plan or 1995 Director Option Plan or
pursuant to the Company's 1995 Employee Stock Purchase Plan, and (B) in
any transaction in which the shares issued are not eligible for sale in
the public market during such 90 day period.
5. COSTS AND EXPENSES. The Company will pay all costs, expenses and fees
incident to the performance of the obligations of the Company under this
Agreement, including, without limiting the generality of the foregoing, the
following: accounting fees of the Company; the fees and disbursements of counsel
for the Company; the cost of printing and delivering to, or as requested by, the
Underwriters copies of the Registration Statement, Preliminary Prospectuses, the
Prospectus, this Agreement, the Master Agreement Among Underwriters, the
Underwriters' Selling Memorandum, the Underwriters' Questionnaire, the
Invitation Letter, the Blue Sky Survey and any supplements or amendments
thereto; the filing fees of the Commission; the filing fees and expenses
incident to securing any required review by the NASD of the terms of the sale of
the Shares; the listing fee of the Nasdaq National Market; and the expenses,
including the fees and disbursements of counsel for the Underwriters, incurred
in connection with the qualification of the Shares under state securities or
blue sky laws. Any transfer taxes imposed on the sale of the shares to the
several Underwriters will be paid by the Company. The Company shall not,
however, be required to pay for any of the Underwriters' expenses (other than
those related to qualification under state securities or blue sky laws) except
that, if this Agreement shall not be consummated because the conditions in
Section 7 hereof are not satisfied, or because this Agreement is terminated by
the Representatives pursuant to Section 6 hereof, or by reason of any failure,
refusal or inability on the part of the Company to perform any undertaking or
satisfy any condition of this Agreement or to comply with any of the terms
hereof on the Company's part to be performed, unless such failure to satisfy
said
9
condition or to comply with said terms be due to the default or omission of any
Underwriter, then the Company shall reimburse the several Underwriters for
reasonable out-of-pocket expenses, including fees and disbursements of counsel,
reasonably incurred in connection with investigating, marketing and proposing to
market the Shares or in contemplation of performing their obligations hereunder;
but the Company shall not in any event be liable to any of the several
Underwriters for damages on account of loss of anticipated profits from the sale
by them of the Shares.
6. CONDITIONS OF OBLIGATIONS OF THE UNDERWRITERS. The several obligations
of the Underwriters to purchase the Firm Shares on the Closing Date and the
Option Shares, if any, on the Option Closing Date are subject to the accuracy,
as of the Closing Date or the Option Closing Date, as the case may be, of the
representations and warranties of the Company contained herein, and to the
performance by the Company of its covenants and obligations hereunder and to the
following additional conditions:
(a) No stop order suspending the effectiveness of the Registration
Statement, as amended from time to time, shall have been issued and no
proceedings for that purpose shall have been taken or, to the knowledge of
the Company, shall be contemplated by the Commission.
(b) The Representatives shall have received on the Closing Date or the
Option Closing Date, as the case may be, the opinion of Wilson, Sonsini,
Xxxxxxxx & Xxxxxx, Professional Corporation, counsel for the Company, dated
the Closing Date or the Option Closing Date, as the case may be, addressed
to the Underwriters 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 the State of Delaware,
with full corporate power and authority to own its properties and conduct
its business as described in the Prospectus, and the Company is duly
qualified to transact business in all jurisdictions in which the
ownership and leasing of property or the conduct of their business
requires such qualification, except where the failure so to qualify would
not have a material adverse effect upon the business, condition
(financial or other) of the Company. The Company has full corporate power
and authority to own its properties and conduct its business as described
in the Prospectus.
(ii) The Company has authorized and outstanding capital stock as set
forth under the caption "Capitalization" in the Prospectus as of the
dates stated therein, and such counsel shall specify the number of shares
of Common Stock issued and outstanding as of the date of such opinion;
the authorized shares of its Capital Stock have been duly authorized; all
of the outstanding shares of its Common Stock and Preferred Stock have
been duly authorized and validly issued and are fully paid and
non-assessable; the Shares (including the Firm Shares and Option Shares,
if any) to be sold by the Company pursuant to this Agreement have been
duly authorized and, when issued and paid for as contemplated by this
Agreement, will be validly issued, fully paid and non-assessable; no
preemptive rights of shareholders set forth in the Company's Certificate
of Incorporation or, to the knowledge of such counsel, similar
contractual rights to purchase, exist with respect to any of the Shares
or the issue and sale thereof; and, to the knowledge of such counsel, no
registration rights exist with respect to the capital stock of the
Company which have not been satisfied or waived in connection with the
offering of the Shares; the public offering contemplated hereby will
cause a conversion of the outstanding shares of Preferred Stock into
Common Stock pursuant to the Company's Certificate of Incorporation; all
necessary and proper corporate proceedings have been taken in order to
validly authorize the Common Stock issuable upon the conversion of such
Preferred Stock into Common Stock, and no further approval or authority
of the stockholders or the Board of Directors of the Company is required
for the sale of the Shares to be sold by the Company as contemplated
hereby.
(iii) All of the Shares conform in all material respects to the
description thereof contained in the Prospectus, and the certificates
evidencing the Shares are in due and proper form under the Delaware
General Corporation Law.
10
(iv) Except as specifically disclosed in the Registration Statement
and the financial statements of the Company, and the related notes
thereto, to such counsel's knowledge, the Company does not have
outstanding any options to purchase, or any preemptive rights or other
rights to subscribe for or to purchase, any securities or obligations
convertible into, or any contracts or commitments to issue or sell shares
of its capital stock or any such options, rights, convertible securities
or obligations. The descriptions of the Company's stock option and other
stock-based plans set forth in the Prospectus are accurate summaries and
fairly present in all material respects the information required to be
shown with respect to such plans and rights.
(v) The Registration Statement has become effective under the Act
and, to the knowledge of such counsel, any required filing of the
Prospectus and any supplement thereto pursuant to the Rules and
Regulations has been made in the manner and within the time period
required by such Rule 424(b).
(vi) The Registration Statement, the Prospectus, the Incorporated
Documents and each amendment or supplement thereto comply as to form in
all material respects with the requirements of the Act or the Exchange
Act, as applicable, and the applicable Rules and Regulations thereunder
(except that such counsel need express no opinion as to (A) the financial
statements, notes thereto and related schedules and other financial
information and statistical data included therein or (B) any information
furnished in writing by or through the Representatives specifically for
use in the preparation thereof).
(vii) The statements incorporated by reference into the Registration
Statement and the Prospectus insofar as such statements constitute a
summary of documents referred to therein or matters of law, are in all
material respects, accurate summaries and fairly and correctly present
the information called for with respect to such documents and matters of
law.
(viii) Such counsel does not know of any contracts or documents
required to be filed as exhibits to the Registration Statement or
described in the Registration Statement or the Prospectus or incorporated
by reference which are not so filed, or described as required, and such
contracts and documents as are described in the Registration Statement,
the Prospectus or the Incorporated Documents are accurately described in
all material respects.
(ix) To such counsel's knowledge, there is no legal action, suit or
proceeding pending or threatened against the Company of a character
required to be disclosed in the Registration Statement, the Prospectus or
the Incorporated Documents pursuant to the Act and the Rules and
Regulations or the Exchange Act, as applicable; to such counsel's
knowledge, the Company is not a party or subject to provisions of any
injunction, judgment, decree or order of any court, regulatory body,
administrative agency or other governmental body or agency the effect of
which could be material and adverse to the business, condition (financial
or otherwise) or results of operations of the Company.
(x) To such counsel's knowledge, the execution, delivery and
performance of this Agreement and the consummation of the transactions
herein contemplated do not and will not: (a) violate any of the
provisions of the Certificate of Incorporation or bylaws of the Company;
(b) to such counsel's knowledge, violate any material statute,
injunction, judgment, order, decree, rule or regulation of any court or
any governmental, regulatory or administrative body or agency having
jurisdiction over the Company or any of its property (other than as may
be required by the NASD with respect to compensation of underwriters or
as required by state securities or Blue Sky laws as to which such counsel
need express no opinion); and (c) conflict with or result in the breach
of, or violation of, any of the terms or provisions of, or constitute,
either by itself or with the giving of notice or the passage of time or
both, a default under, any agreement, mortgage, deed of trust, lease,
franchise, license, indenture, permit or other instrument known to such
counsel to which the Company is a party or by which the Company or any
11
of its property known to such counsel is or may be bound or affected,
except where such breach, violation or default would not have material
adverse effect on the business, financial condition or results of
operations of the Company.
(xi) The Company has the corporate power and authority to enter into
this agreement and to perform the transactions contemplated hereby. This
Agreement has been duly authorized, executed and delivered by the
Company.
(xii) No approval, consent, order, authorization, designation,
declaration or filing by or with any regulatory, administrative or other
governmental body is necessary in connection with the execution and
delivery of this Agreement and the consummation of the transactions
herein contemplated (other than as may be required by the NASD with
respect to compensation of the Underwriters and compliance with
Regulation M of the Exchange Act or as required by state securities and
blue sky laws as to which such counsel need express no opinion) except
such as have been obtained or made and are in full force and effect,
specifying the same.
In rendering such opinion, such counsel may rely as to matters
governed by laws other than the General Corporation Law of the State of
Delaware, the laws of the State of California and the federal laws of the
United States, on local counsel in such jurisdictions, PROVIDED that in
each case such counsel shall state that they believe that they and the
Underwriters are justified in relying on such other counsel. In addition
to the matters set forth above, such opinion shall also include a
statement to the effect that nothing has come to the attention of such
counsel which causes them to believe that the Registration Statement, or
any amendment thereto, at the time the Registration Statement or
amendment became effective, contained an untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, or that the
Prospectus or any amendment or supplement thereto, at the time it was
filed pursuant to Rule 424(b) or at the Closing Date or the Option
Closing Date, as the case may be, contained an untrue statement of a
material fact or omitted to state a 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 (except that
such counsel need express no view as to financial statements, notes
thereto and related schedules and the other financial information and
statistical data included therein or information supplied by the
Underwriters for use therein). With respect to such statement, such
counsel may state that their belief is based upon the procedures set
forth in their opinion, but is without independent check and
verification.
(c) The Representatives shall have received on the Closing Date or the
Option Closing Date, as the case may be, the opinion of Xxxxx &. Xxxxxxx,
LLP, special regulatory counsel for the Company, dated the Closing Date or
the Option Closing Date, as the case may be, addressed to the Underwriters
to the effect that the statements in the Prospectus under the captions "Risk
Factors--Government Regulation," "Risk Factors--Uncertainty Relating to
Third Party Reimbursement," "Business-- Government Regulation--United
States," and "Business--Third Party Reimbursement," insofar as such
statements purport to summarize applicable provisions of the Federal Food,
Drug, and Cosmetic Act, as amended, and the regulations promulgated
thereunder, and Title XVIII of the Social Security Act, as amended, and the
regulations promulgated thereunder, have been reviewed by such counsel and
are accurate summaries in all material respects of the provisions purported
to be summarized under such captions in the Prospectus. In rendering such
opinion, such counsel may state that they have not independently verified
nor do they take any responsibility for nor are they addressing in any way
any advents of fact, any statements concerning state or foreign law or any
legal conclusions or statements of belief attributable to the Company.
(d) The Representatives shall have received on the Closing Date or the
Option Closing Date, as the case may be, the opinion of Medical Technology
Consultants Europe Ltd., special international regulatory counsel for the
Company dated the Closing Date or the Option Closing Date, as the case may
be, addressed the Underwriters, to the effect that the statements in the
Registration Statement
12
and the Prospectus under the captions "Risk Factors--Government Regulation"
and "Business-- Government Regulation--International," insofar as such
statements purport to summarize applicable provisions of international
regulatory requirements have been reviewed by such counsel and are accurate
summaries in all material respects of the provisions purported to be
summarized under such captions in the Registration Statement and the
Prospectus. In rendering such opinion, such counsel may state that they have
not independently verified nor do they take any responsibility for nor are
they addressing in any way any advents of fact, any statements concerning
state or foreign law or any legal conclusions or statements of belief
attributable to the Company.
(e) The Representatives shall have received on the Closing Date or the
Option Closing Dated, as the case may be, the opinion of Xxxxxxxx and
Xxxxxxxx and Crew, special patent counsel for the Company, dated the Closing
Date or the Option Closing Date, as the case may be, addressed to the
Underwriters to the effect that:
(i) The statements in the Registration Statement under the captions
"Risk Factors-- Reliance on Patents and Protection of Proprietary
Technology" and Business--Patents and Proprietary Rights" and other
statements in the Registration Statement and Prospectus that discuss
patents, patent rights and other proprietary rights, to the extent that
they constitute matters of law, summaries of legal matters, documents or
proceedings, or legal conclusions, are accurate and complete statements
or summaries of the matters therein set forth.
(ii) Such counsel is not aware of any patent, patent right or other
proprietary right of others which would prevent the conduct of the
business of the Company now being or currently proposed to be conducted
by the Company as described in the Prospectus; and such counsel is not
aware of any rights of third parties to, or any infringement by third
parties of, any of the Company's patents, patent rights or other
proprietary rights.
(iii) To such counsel's knowledge, there is no pending or threatened
action, suit, proceeding or claim by others, either domestically or
internationally, that the Company is violating any patents, patent
rights, rights thereto or other proprietary rights of others; or
otherwise challenging the validity or scope of any such patents, patent
rights, rights, patent rights and other proprietary rights thereto of
others or other proprietary rights.
In addition, such counsel shall state that, although they have not
verified the accuracy or completeness of the statements contained in the
Registration Statement or the Prospectus, nothing has come to the
attention of such counsel that caused them to believe that, at the time
the Registration Statement became effective the description of the
Company's patents, patent rights and other proprietary rights matters and
the statements made under the captions "Risk Factors--Reliance on Patents
and Protection of Proprietary Rights" and "Business--Patents and
Proprietary Rights" in the Registration Statements and Prospectus
contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading, or at the Closing Date or the Option
Closing Date, as the case may be, the description of the patent, patent
rights and other proprietary rights, situation of the Company and the
statements made under the captions "Risk Factors--Reliance on Patents and
Protection of Proprietary Rights" and Business--Patents and Proprietary
Rights" in the Registration Statement and Prospectus contained any untrue
statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements made therein, in
the light of the circumstances under which they were made, not
misleading.
(f) The Representatives shall have received from Venture Law Group, A
Professional Corporation, counsel for the Underwriters, an opinion dated the
Closing Date or the Option Closing Date, as the case may be, substantially
to the effect that: (i) the Company is a validly organized and existing
corporation under the laws of the State of Delaware, with corporate power
and corporate authority to own its property and conduct its business as
described in the Prospectus; (ii) the authorized shares of the Company's
Common Stock have been duly authorized; the outstanding shares of the
13
Company's Common Stock, have been duly authorized and will be validly issued
and are fully paid and non-assessable; all of the Shares conform to the
description thereof contained in the Prospectus; the shares of Common Stock
including the Option Shares, if any, to be sold by the Company pursuant to
this Agreement have been duly authorized and will be validly issued, fully
paid and nonassessable when issued and paid for as contemplated by this
Agreement; (iii) the Registration Statement has become effective under the
Act, and to such counsel's knowledge, no stop order proceedings with respect
thereto have been instituted or are pending or threatened under the Act;
(iv) the Registration Statement, all Preliminary Prospectuses, the
Prospectus and each amendment or supplement thereto comply as to form in all
material respects with the requirements of the Act and the applicable Rules
and Regulations thereunder (except that such counsel need express no opinion
as to the financial statements, notes thereto and related schedules and the
other financial information and statistical data included therein); and (v)
this Agreement has been duly authorized, executed and delivered by the
Company. In addition to the matters set forth above, such opinion shall also
include a statement to the effect that nothing has come to the attention of
such counsel which causes them to believe that the Registration Statement,
the Prospectus or any amendment thereto contains an untrue statement of a
material fact or omits to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, or that
the Prospectus or any amendment or supplement thereto, at the time it was
filed pursuant to Rule 424(b) or at the Closing Date or the Option Closing
Date, as the case may be, contained an untrue statement of a material fact
or omitted to state a 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 (except that such counsel need
express no view as to the financial statements, notes thereto and related
schedules and the other financial information and statistical data included
therein). With respect to such statement, such counsel may state that their
belief is based upon the procedures set forth therein, but is without
independent check and verification.
(g) The Representatives shall have received at or prior to the Closing
Date from Venture Law Group, A Professional Corporation, a memorandum or
summary, in form and substance satisfactory to the Representatives, with
respect to the qualification for offering and sale by the Underwriters of
the Shares under the state securities or blue sky laws of such jurisdictions
as the Representatives may reasonably have designated to the Company.
(h) The Representatives shall have received on the effective date of the
Registration Statement, the Closing Date or the Option Closing Date, as the
case may be, a signed letter from Ernst & Young LLP, dated the effective
date of the Registration Statement, the Closing Date or the Option Closing
Date, as the case may be, which shall confirm, on the basis of a review in
accordance with the procedures set forth in the letter signed by such firm
and dated and delivered to the Representatives on the date hereof, that
nothing has come to their attention during the period from the date five
days prior to the date hereof, to a date not more than five days prior to
the Closing Date or the Option Closing Date, as the case may be, which would
require any change in their letter dated the date hereof if it were required
to be dated and delivered on the Closing Date or the Option Closing Date, as
the case may be. All such letters shall be in form and substance
satisfactory to the Representatives.
(i) The Representatives shall have received on the Closing Date or the
Option Closing Date, as the case may be, a certificate or certificates of
the Chief Executive Officer and the Chief Financial Officer of the Company
to the effect that, as of the Closing Date or the Option Closing Date, as
the case may be, each of them as an officer of the Company severally
represents as follows:
(A) The Registration Statement has become effective under the Act and
no stop order suspending the effectiveness of the Registration Statement
has been issued, and, to his knowledge, no proceedings for such purpose
have been taken or are contemplated by the Commission.
(B) He does not know of any litigation instituted or threatened
against the Company of a character required to be disclosed in the
Registration Statement which is not so disclosed; he
14
does not know of any material contract required to be filed as an exhibit
to the Registration Statement or the Incorporated Documents, which is not
so filed; and the representations and warranties of the Company contained
in Section 1 hereof are true and correct as of the Closing Date or the
Option Closing Date, as the case may be.
(C) When the Registration Statement became effective and at all times
subsequent thereto up to the delivery of such certificate, the
Registration Statement and the Prospectus, and any amendments or
supplements thereto and the Incorporated Documents, when such
Incorporated Documents became effective or were filed with the
Commission, contained all material information required to be included
therein by the Act and the Rules and Regulations or the Exchange Act and
the applicable rules and regulations of the Commission thereunder, as the
case may be, and in all material respects conformed to the requirements
of the Act and the Rules and Regulations or the Exchange Act and the
applicable rules and regulations of the Commission thereunder, as the
case may be, the Registration Statement, and any amendment or supplement
thereto, did not and does not include 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, the Prospectus,
and any amendment or supplement thereto, did not and does not include 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, and, 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; and
(D) Subsequent to the respective dates as of which information is
given in the Registration Statement and Prospectus, there has not been
(a) any material adverse change in the condition (financial or
otherwise), earnings, operations, business or business prospects of the
Company and its subsidiaries considered as one enterprise, (b) any
transaction that is material to the Company and its subsidiaries
considered as one enterprise, except transactions entered into in the
ordinary course of business, (c) any obligation, direct or contingent,
that is material to the Company and its subsidiaries considered as one
enterprise, incurred by the Company or its subsidiaries, except
obligations incurred in the ordinary course of business, (d) any change
in the capital stock or outstanding indebtedness of the Company or any of
its subsidiaries that is material to the Company and its subsidiaries
considered as one enterprise, (e) any dividend or distribution of any
kind declared, paid or made on the capital stock of the Company or any of
its subsidiaries, or (f) any loss or damage (whether or not insured) to
the property of the Company or any of its subsidiaries which has been
sustained or will have been sustained which has a material adverse effect
on the condition (financial or otherwise), earnings, operations, business
or business prospects of the Company and its subsidiaries considered as
one enterprise.
(j) The Company shall have furnished to the Representatives such further
certificates and documents confirming the representations and warranties
contained herein and related matters as the Representatives may reasonably
have requested.
(k) The Firm Shares and the Option Shares, if any, have been approved
for quotation on the Nasdaq National Market.
(l) You shall have received on the Closing Date and on any later date on
which Option Shares are to be purchased, as the case may be, a letter from
Ernst & Young LLP addressed to the Company and the Underwriters, dated the
Closing Date or such later date on which Option Shares are to be purchased,
as the case may be, confirming that they are independent certified public
accountants with respect to the Company within the meaning of the Act and
the applicable published Rules and Regulations and based upon the procedures
described in such letter delivered to you concurrently with the execution of
this Agreement (herein called the "Original Letter"), but carried out to a
date not more than five (5) business days prior to the Closing Date or such
later date on which Option Shares are to be purchased, as the case may be,
(i) confirming, to the extent true, that the statements
15
and conclusions set forth in the Original Letter are accurate as of the
Closing Date or such later date on which Option Shares are to be purchased,
as the case may be, and (ii) setting forth any revisions and additions to
the statements and conclusions set forth in the Original Letter which are
necessary to reflect any changes in the facts described in the Original
Letter since the date of such letter, or to reflect the availability of more
recent financial statements, data or information. The letter shall not
disclose any change in the condition (financial or otherwise), earnings,
operations, business or business prospects of the Company and its
subsidiaries considered as one enterprise from that set forth in the
Registration Statement or Prospectus, which, in your sole judgment, is
material and adverse and that makes it, in your sole judgment, impracticable
or inadvisable to proceed with the public offering of the Shares as
contemplated by the Prospectus. The Original Letter from Ernst & Young LLP
shall be addressed to or for the use of the Underwriters in form and
substance satisfactory to the Underwriters and shall (i) represent, to the
extent true, that they are independent certified public accountants with
respect to the Company within the meaning of the Act and the applicable
published Rules and Regulations, (ii) set forth their opinion with respect
to their examination of the balance sheets of the Company for the periods
from inception to March 31, 1993 and for the periods for years ended March
31, 1994 to March 31, 1997 and related statements of operations,
shareholders' equity, and cash flows for the periods from inception to 1993
and for the twelve (12) months each of the periods ended March 31, 1994 to
Xxxxx 00, 0000, (xxx) state that Ernst & Young LLP has performed the
procedure set out in Statement on Auditing Standards No. 71 ("SAS 71") for a
review of interim financial information and providing the report of Ernst &
Young LLP as described in SAS 71 on the financial statements for each of the
quarters ended September 30, 1996 and 1997, and (iv) address other matters
agreed upon by Ernst & Young LLP and you. In addition, you shall have
received from Ernst & Young LLP a letter addressed to the Company and made
available to you for the use of the Underwriters stating that their review
of the Company's system of internal accounting controls, to the extent they
deemed necessary in establishing the scope of their examination of the
Company's financial statements as of March 31, , did not disclose any
weaknesses in internal controls that they considered to be material
weaknesses.
The opinions and certificates mentioned in this Agreement shall be deemed to
be in compliance with the provisions hereof only if they are in all material
respects satisfactory to the Representatives and to Venture Law Group, A
Professional Corporation, counsel for the Underwriters.
If any of the conditions herein above provided for in this Section 6 shall
not have been fulfilled when and as required by this Agreement to be fulfilled,
the obligations of the Underwriters hereunder may be terminated by the
Representatives by notifying the Company of such termination in writing or by
telegram at or prior to the Closing Date or the Option Closing Date, as the case
may be.
In such event, the Company and the Underwriters shall not be under any
obligation to each other (except to the extent provided in Sections 5 and 8
hereof).
7. CONDITIONS OF THE OBLIGATIONS OF THE COMPANY. The obligations of the
Company to sell and deliver the portion of the Shares required to be delivered
as and when specified in this Agreement are subject to the conditions that at
the Closing Date or the Option Closing Date, as the case may be, no stop order
suspending the effectiveness of the Registration Statement shall have been
issued and in effect or proceedings therefor initiated or threatened.
8. INDEMNIFICATION.
(a) The Company agrees to indemnify and hold harmless each Underwriter
and each person, if any, who controls any Underwriter within the meaning of
the Act against any losses, claims, damages or liabilities to which such
Underwriter or such controlling person may become subject under the Act or
the Exchange Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) arise out of or
are based upon (i) any untrue statement or alleged untrue statement of any
material fact contained in or incorporated by reference into the
Registration Statement, any Preliminary Prospectus, the Prospectus or any
amendment or supplement thereto, or (ii) the omission or alleged omission to
state therein a material fact required to be stated therein or
16
necessary to make the statements therein not misleading, and will reimburse
each Underwriter and each such controlling person for any legal or other
expenses reasonably incurred by such Underwriter or such controlling person
in connection with investigating or defending any such loss, claim, damage,
liability, action or proceeding; PROVIDED, HOWEVER, that (i) the Company
will not be liable in any such case to the extent that any such loss, claim,
damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement, or omission or alleged omission, made in or
incorporated by reference into 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
or through the Representatives specifically for use in the preparation
thereof (which the parties hereto agree is limited solely to that
information contained on the cover page of the Preliminary Prospectus or
Prospectus or in the section thereof entitled "Underwriting"); and (ii) that
the Company shall not be liable to any Underwriter with respect to any
Preliminary Prospectus to the extent that any loss, claim, damage or
liability of such Underwriter results from the fact that such Underwriter
sold Shares to a person to whom there was not given or sent, at or prior to
the written confirmation of such sale, a copy of the Prospectus or of the
Prospectus as then amended or supplemented in any case where such delivery
is required by the Act if the Company has previously furnished copies
thereof to such Underwriter and the loss, claim, damage or liability of such
Underwriter results from an untrue statement or omission of a material fact
contained in the Preliminary Prospectus which was corrected in the
Prospectus (or the Prospectus as amended or supplemented). This indemnity
agreement will be in addition to any liability which the Company may
otherwise have.
(b) Each Underwriter will indemnify and hold harmless the Company, each
of its directors, each of its officers who have signed the Registration
Statement and each person, if any, who controls the Company within the
meaning of the Act, against any losses, claims, damages or liabilities to
which the Company or any such director, officer or controlling person may
become subject under the Act or the Exchange Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions or proceedings in
respect thereof) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in or incorporated
by reference into the Registration Statement, any Preliminary Prospectus,
the Prospectus or any amendment or supplement thereto, or arise out of or
are based upon the omission or the alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading; and will reimburse any legal or other
expenses reasonably incurred by the Company or any such director, officer or
controlling person in connection with investigating or defending any such
loss, claim, damage, liability, action or proceeding; PROVIDED, HOWEVER,
that each Underwriter will be liable in each case to the extent, but only to
the extent, that such untrue statement or alleged untrue statement or
omission or alleged omission has been made in or incorporated by reference
into the Registration Statement, any Preliminary Prospectus, the Prospectus
or such amendment or supplement, in reliance upon and in conformity with
written information furnished to the Company by or through the
Representatives specifically for use in the preparation thereof (which the
parties hereto agree is limited solely to that information contained on the
cover page of the Preliminary Prospectus or Prospectus or in the section
thereof entitled "Underwriting"). This indemnity agreement will be in
addition to any liability which such Underwriter may otherwise have.
(c) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may
be sought pursuant to this Section 8, such person (the "indemnified party")
shall promptly notify the person against whom such indemnity may be sought
(the "indemnifying party") in writing. No indemnification provided for in
Section 8(a) or (b) shall be available to any party who shall fail to give
notice as provided in this Section 8(c) if the party to whom notice was not
given was unaware of the proceeding to which such notice would have related
and was prejudiced by the failure to give such notice, but the failure to
give such notice shall not relieve the indemnifying party or parties from
any liability which it or they may have to the indemnified party for
contribution or otherwise than on account of the provisions of Section 8(a)
or (b). In case any such proceeding shall be brought against any indemnified
party and it shall notify the
17
indemnifying party of the commencement thereof, the indemnifying party shall
be entitled to participate therein 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 (in the
reasonable judgment of such indemnified party) and shall pay as incurred the
fees and disbursements of such counsel related to such proceeding. In any
such proceeding, any indemnified party shall have the right to retain its
own counsel at its own expense. Notwithstanding the foregoing, the
indemnifying party shall pay as incurred the fees and expenses of the
counsel retained by the indemnified party in the event (i) the indemnifying
party and the indemnified party shall have mutually agreed to the retention
of such counsel or (ii) the named parties to any such proceeding (including
any impleaded parties) include both the indemnifying party and the
indemnified party and representation of both parties by the same counsel
would be inappropriate due to actual or potential differing interests
between them (based on advise of counsel to the indemnified party). It is
understood that the indemnifying party shall not, in connection with any
proceeding or related proceedings in the same jurisdiction, be liable for
the reasonable fees and expenses of more than one separate firm for all such
indemnified parties. Such firm shall be designated in writing by you in the
case of parties indemnified pursuant to Sections 8(a) and by the Company in
the case of parties indemnified pursuant to Section 8(b). The indemnifying
party 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 party agrees to
indemnify the indemnified party from and against any loss or liability by
reason of such settlement or judgment.
(d) If the indemnification provided for in this Section 8 is unavailable
to or insufficient to hold harmless an indemnified party under Section 8(a)
or (b) above in respect of any losses, claims, damages or liabilities (or
actions or proceedings in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities
(or actions or proceedings in respect thereof) 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 Shares.
If, however, the allocation provided by the immediately preceding sentence
is not permitted by applicable law or if the indemnified party failed to
give the notice required under Section 8(c) above, then each indemnifying
party shall contribute to such amount paid or payable by such indemnified
party in such proportion as is appropriate to reflect not only such relative
benefits but also the relative fault of the Company on the one hand and the
Underwriters on the other in connection with the statements or omissions
which resulted in such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof), as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one
hand and the Underwriters on the other shall be deemed to be in the same
proportion as the total net proceeds from the offering (before deducting
expenses) received by the Company bears 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 on the one hand or the Underwriters on the other and the parties'
relative intent, knowledge, access to information and opportunity to correct
or prevent such statement or omission.
The Company and the Underwriters agree that it would not be just and
equitable if contributions pursuant to this Section 8(d) were 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 above in this Section
8(d). The amount paid or payable by an indemnified party as a result of the
losses, claims, damages or liabilities (or actions or proceedings in respect
thereof) referred to above in this Section 8(d) shall be deemed to include
any legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Subsection (d), (i) no Underwriter
shall be required to contribute any amount in excess of the underwriting
18
discounts and commissions applicable to the Shares purchased by such
Underwriter, and (ii) 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 Section 8(d) to
contribute are several in proportion to their respective underwriting
obligations and not joint.
(e) In any proceeding relating to the Registration Statement, any
Preliminary Prospectus, the Prospectus or any supplement or amendment
thereto, including any document incorporated by reference therein, each
party against whom contribution may be sought under this Section 8 hereby
consents to the jurisdiction of any court having jurisdiction over any other
contributing party, agrees that process issuing from such court may be
served upon him or it by any other contributing party and consents to the
service of such process and agrees that any other contributing party may
join him or it as an additional defendant in any such proceeding in which
such other contributing party is a party.
9. DEFAULT BY UNDERWRITERS. If on the Closing Date or the Option Closing
Date, as the case may be, any Underwriter shall fail to purchase and pay for the
portion of the Shares which such Underwriter has agreed to purchase and pay for
on such date (otherwise than by reason of any default on the part of the
Company), you, as Representatives of the Underwriters, shall use your best
efforts to procure within 24 hours thereafter one or more of the other
Underwriters, or any others, to purchase from the Company such amounts as may be
agreed upon and upon the terms set forth herein, the Firm Shares or Option
Shares, as the case may be, which the defaulting Underwriter or Underwriters
failed to purchase. If during such 24 hours you, as such Representatives, shall
not have procured such other Underwriters, or any others, to purchase the Firm
Shares or Option Shares, as the case may be, agreed to be purchased by the
defaulting Underwriter or Underwriters, then (a) if the aggregate number of
shares with respect to which such default shall occur does not exceed 10% of the
Firm Shares or Option Shares, as the case may be, covered hereby, the other
Underwriters shall be obligated, severally, in proportion to the respective
numbers of Firm Shares or Option Shares, as the case may be, which they are
obligated to purchase hereunder, to purchase the Firm Shares or Option Shares,
as the case may be, which such defaulting Underwriter or Underwriters failed to
purchase, or (b) if the aggregate number of Firm Shares or Option Shares, as the
case may be, with respect to which such default shall occur exceeds 10% of the
Firm Shares or Option Shares, as the case may be, covered hereby, the Company or
you as the Representatives of the Underwriters will have the right, by written
notice given within the next 24-hour period to the parties to this Agreement, to
terminate this Agreement without liability on the part of the nondefaulting
Underwriters or of the Company except to the extent provided in Section 8
hereof. In the event of a default by any Underwriter or Underwriters, as set
forth in this Section 9, the Closing Date or Option Closing Date, as the case
may be, may be postponed for such period, not exceeding seven days, as you, as
Representatives, may determine in order that the required changes in the
Registration Statement or in the Prospectus or in any other documents or
arrangements may be effected. The term "Underwriter" includes any person
substituted for a defaulting Underwriter. Any action taken under this Section 9
shall not relieve any defaulting Underwriter from liability in respect of any
default of such Underwriter under this Agreement.
10. NOTICES. All communications hereunder shall be in writing and, except
as otherwise provided herein, will be mailed, delivered or telegraphed and
confirmed as follows: if to the Underwriters to BT Alex. Xxxxx Incorporated, Xxx
Xxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxx 00000, Attention: Syndicate; and if to the
Company, to Perclose, Inc., 000 Xxxxxxxxx Xxxxx, Xxxxx Xxxx, Xxxxxxxxxx,
Attention: Xxxxx X. Plain, Jr.
11. TERMINATION. This Agreement may be terminated by you by notice to the
Company as follows:
(a) at any time prior to the earlier of (i) the time the Shares are
released by you for sale by notice to the Underwriters, or (ii) 11:30 A.M.,
Baltimore time, on the first business day following the date of this
Agreement;
(b) at any time prior to the Closing Date if any of the following has
occurred: (i) since the respective dates as of which information is given in
the Registration Statement and the Prospectus, any material adverse change
or any development involving a prospective material adverse change in
19
or affecting the condition, financial or otherwise, of the Company or the
earnings, business affairs, or management of the Company, whether or not
arising in the ordinary course of business, (ii) any outbreak or escalation
of hostilities or declaration of war or national emergency after the date
hereof or other national or international calamity or crisis or change in
economic or political conditions if the effect of such outbreak, escalation,
declaration, emergency, calamity, crisis or change on the financial markets
of the United States would, in your reasonable judgment, make the offering
or delivery of the Shares impracticable, (iii) suspension of trading in
securities on the New York Stock Exchange or the American Stock Exchange or
limitation on prices (other than limitations on hours or number of days of
trading) for securities on either such Exchange, (iv) the enactment,
publication, decree or other promulgation of any federal or state statute,
regulation, rule or order of any court or other governmental authority which
in your reasonable opinion materially and adversely affects or will
materially or adversely affect the business or operations of the Company,
(v) declaration of a banking moratorium by either federal or New York State
authorities, or (vi) the taking of any action by any federal, state or local
government or agency in respect of its monetary or fiscal affairs which in
your reasonable opinion has a material adverse effect on the securities
markets in the United States; or
(c) as provided in Sections 6 and 9 of this Agreement.
This Agreement may also be terminated by you, by notice to the Company, as
to any obligation of the Underwriters to purchase the Option Shares, upon the
occurrence at any time prior to the Option Closing Date of any of the events
described in subparagraph (b) above or as provided in Sections 6 and 9 of this
Agreement.
12. SUCCESSORS. This Agreement has been and is made solely for the benefit
of the Underwriters, and the Company and their respective successors, executors,
administrators, heirs and assigns, and the officers, directors and controlling
persons referred to herein, and no other person will have any right or
obligation hereunder. The term "successors" shall not include any purchaser of
the Shares merely because of such purchase.
13. MISCELLANEOUS. The reimbursement, indemnification and contribution
agreements contained in this Agreement and the representations, warranties and
covenants in this Agreement shall remain in full force and effect regardless of
(a) any termination of this Agreement, (b) any investigation made by or on
behalf of any Underwriter or controlling person thereof, or by or on behalf of
the Company or its directors or officers and (c) delivery of and payment for the
Shares under this Agreement.
This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
This Agreement shall be governed by, and construed in accordance with, the
laws of the State of California.
20
If the foregoing letter is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicates hereof,
whereupon it will become a binding agreement among the Company and the several
Underwriters in accordance with its terms.
Very truly yours,
PERCLOSE, INC.
By:
-----------------------------------
Xxxxx X. Plain, Jr.
President and Chief Executive
Officer
The foregoing Underwriting Agreement
is hereby confirmed and accepted as of
the date first above written.
BT ALEX. XXXXX INCORPORATED
XXXXX XXXXXXX INC.
As Representatives of the
several Underwriters listed
on Schedule I
By: BT ALEX. XXXXX INCORPORATED
By
--------------------------------
Authorized Officer
21
SCHEDULE I
SCHEDULEOF UNDERWRITERS
NUMBER OF
FIRM SHARES
UNDERWRITER TO BE PURCHASED
------------------------------------------------------------------------------------------------ ----------------
BT Alex. Xxxxx Incorporated.....................................................................
Xxxxx Xxxxxxx Inc...............................................................................
----------------
Total......................................................................................... 1,000,000
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