<PAGE>
As filed with the Securities and Exchange Commission on November 5, 1999
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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FUSION MEDICAL TECHNOLOGIES, INC.
(Exact name of Registrant as specified in its charter)
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<TABLE>
<S> <C>
Delaware 96662349
(State of (I.R.S. Employer
incorporation) Identification Number)
</TABLE>
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
PHILIP M. SAWYER
President and Chief Executive Officer
Fusion Medical Technologies, Inc.
1615 Plymouth Street
Mountain View, California 94043
(650) 903-4000
(Name, address, including zip code, and telephone number, including area code
of agent for service)
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Copies to:
J. CASEY McGLYNN, ESQ.
DAVID SAUL, ESQ.
Wilson Sonsini Goodrich & Rosati
Professional Corporation
650 Page Mill Road
Palo Alto, California 94304
(650) 493-9300
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Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this Registration Statement.
If only the securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [_]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
CALCULATION OF REGISTRATION FEE
<TABLE>
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<CAPTION>
Proposed Proposed
Amount Maximum Maximum Amount of
Title of Each Class of to be Offering Price Aggregate Registration
Securities to be Registered Registered per Share(1) Offering Price Fee
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<S> <C> <C> <C> <C>
Common Stock $.001 Par Value 872,000 $10.10 $8,807,200.00 $2,448.41
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</TABLE>
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(1) Estimated solely for the purpose of computing the amount of the
registration fee pursuant to Rule 457 (c) promulgated under the Securities
Act of 1933 by using the average of the high and low prices of the
Company's Securities on November 1, 1999.
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+Information contained herein is subject to completion or amendment. A +
+registration statement relating to these securities has been filed with the +
+Securities and Exchange Commission. These securities may not be sold nor may +
+offers to buy be accepted prior to the time the registration statement +
+becomes effective. This prospectus shall not constitute an offer to sell or +
+the solicitation of an offer to buy nor shall there be any sale of these +
+securities in any State in which such offer, solicitation or sale would be +
+unlawful prior to the registration or qualification under the securities laws +
+of any such State. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED NOVEMBER 5, 1999
PROSPECTUS
FUSION MEDICAL TECHNOLOGIES, INC.
872,000 Shares of Common Stock
We have prepared this prospectus to allow the selling stockholders we
identify herein to sell up to 872,000 shares of our common stock. We will not
receive any of the proceeds from the sale of common stock by the selling
stockholders.
Our common stock is traded on the Nasdaq National Market under the symbol
"FSON." On November 4, 1999, the last reported sale price of our common stock
on the Nasdaq National Market was $11.125 per share.
-----------
Investing in our common stock involves a high degree of risk. See "Risk
Factors" beginning on page 2.
-----------
Neither the SEC nor any state securities commission has approved the common
stock, nor have these organizations determined that this prospectus is accurate
or complete. Any representation to the contrary is a criminal offense.
The date of this prospectus is November , 1999.
<PAGE>
FUSION MEDICAL TECHNOLOGIES, INC.
We are developing and commercializing proprietary collagen gel-based
products for use in controlling bleeding in a variety of surgeries. Our lead
product is FloSeal(TM) Matrix Hemostatic Sealant ("FloSeal"), which combines a
gel derived from collagen with thrombin, a potent clotting agent, to control
surgical bleeding. We have designed FloSeal to complement sutures and staples
and to overcome limitations of existing products used to control bleeding,
including topical hemostats, fibrin glues and other types of surgical sealants
and adhesives.
In November 1998, we completed enrollment in a 309-patient U.S. pivotal
clinical trial for FloSeal in patients undergoing cardiac, vascular and spinal
surgery. The pivotal trial was designed primarily to test whether FloSeal
stopped bleeding within ten minutes at least as frequently as the Gelfoam plus
thrombin control. Gelfoam plus thrombin is a product widely used to control
surgical bleeding. We anticipate FloSeal competing against Gelfoam plus
thrombin. In a subset analysis, the trial showed that FloSeal stopped patients'
bleeding within ten minutes in 96% of all patients treated with FloSeal,
whereas Gelfoam plus thrombin stopped patients' bleeding within ten minutes in
77% of all patients in the control group. The trial also showed that FloSeal
stopped patients' bleeding at least two times more quickly than Gelfoam plus
thrombin.
In April 1999 the premarket approval ("PMA") application for FloSeal was
accepted by the U.S. Food and Drug Administration ("FDA"). We have been
informed by the FDA that advisory panel review will not be required. We have
received the CE mark which will allow us to commercialize FloSeal in the
European Union. We have reported revenues of $81,000 in European sales for the
second and third quarters of 1999. European revenues are projected to increase,
and assuming FDA approval, we project revenues from U.S. sales as well. We also
anticipate, however, incurring increased expenses relating to FloSeal sales and
marketing, research and development, manufacturing and general and
administrative expenses. We have not achieved, nor do we expect to achieve,
profitability before 2001.
We are also developing additional bleeding control products based upon the
core technology underlying FloSeal. These products include SinuSeal, for use in
ear, nose and throat surgeries, a femoral artery puncture sealing device for
use following vascular interventional procedures and the FloSeal sponge, a dry,
sponge-like formulation of FloSeal requiring no mixing, for use in trauma,
ambulance and battlefield applications. We expect to file a PMA supplement for
SinuSeal shortly after obtaining FloSeal FDA approval. We expect to begin
pivotal clinical trials for the femoral artery closure device in 2000. Our
address is 1615 Plymouth Street, Mountain View, California 94043, and our
telephone number is (650) 903-4000.
<PAGE>
RISK FACTORS
You should carefully consider the risks described below before making an
investment decision. If any of the following risks actually occur, our
business, financial condition or results of operations could be materially
adversely affected. As a result, the trading price of our common stock could
decline, and you may lose all or part of your investment. This prospectus also
contains forward-looking statements that involve risks and uncertainties.
We did not generate any revenues in 1998 and only modest revenues in 1999. We
have a history of losses and we expect losses to continue in the future.
We did not generate any revenues in 1998 and have generated only limited
revenues so far in 1999. We have a history of losses and we expect losses to
continue in the future. We have not achieved, nor do we expect to achieve,
profitability before 2001. We incurred net losses of $7.0 million, $9.9 million
and $7.7 million for the years ended December 31, 1996, 1997 and 1998,
respectively. As of September 30, 1999, we had an accumulated deficit of $34.9
million. We have reported revenues of $81,000 in European sales for the second
and third quarters of 1999. We have not had significant revenues in any period
since our inception. We expect to increase our operating expenses in the near
future, including sales and marketing, manufacturing and research and
development expenses, as we approach U.S. commercialization of FloSeal and
continue development of our other products. As a result, we will need to
generate significant revenues to achieve and maintain profitability. The amount
of future net losses and the time required to achieve profitability are highly
uncertain. If we do achieve profitability in any period, we cannot be certain
that we will sustain or increase such profitability on a quarterly or annual
basis.
If we do not obtain FDA approval, we cannot sell FloSeal in the United States,
which would significantly harm our business.
FloSeal is considered to be a medical device and is regulated by the Center
for Devices and Radiological Health, a division of the FDA, and, as such will
be subject to extensive regulation in the United States. Before we can market
FloSeal or any of our other products under development in the United States, we
must show in clinical trials our products are safe and effective, and obtain
approval from the FDA, which cannot be guaranteed.
We must obtain premarket approval from the FDA for FloSeal before we can
market it. In 1998, we conducted a ten-center, 309-patient pivotal clinical
trial to demonstrate the safety and effectiveness of FloSeal. Our PMA for
FloSeal was accepted for filing by the FDA and given streamlined review status
on April 19, 1999. We cannot guarantee either the timing or receipt of
approval. The FDA may also limit the commercial claims and uses of FloSeal or
any of our other products. Delays in the FloSeal approval process, limitation
of labeling claims or denial of our PMA would cause our business to be
materially and adversely affected. We will face a similar process and similar
risks for any new product we wish to market.
If we do not successfully commercialize FloSeal, our business will suffer.
We are dependent upon the success of our lead product under development,
FloSeal. We have not yet received necessary regulatory approval for the
commercial sale of FloSeal in the United States. We received the European CE
mark on April 20, 1999 and, as required by statute, have notified the FDA that
we have begun to export FloSeal to Europe. Our PMA application for FloSeal was
accepted for filing by the FDA and given streamlined review status on April 19,
1999. Our success after regulatory approval, if any, will depend on the medical
community's acceptance of FloSeal and our ability to successfully scale up
commercial manufacturing and develop an effective sales, marketing and
distribution capability. We cannot predict how quickly, if at all, the medical
community will accept FloSeal, or if accepted, the extent of its use. A
surgeon's use of FloSeal will require the surgeon to change from his or her
usage of more familiar currently available products. For FloSeal to achieve
market acceptance, it will have to be priced competitively and offer clinically
significant
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<PAGE>
advantages over other commercially available products. Even if the market
generally accepts FloSeal, surgeons may choose to use it in fewer procedures
than projected. If FloSeal does not achieve significant market adoption, our
business will be materially and adversely affected.
Significant increases in operating expenses in the future may adversely affect
our operating results and financial condition.
We plan to significantly increase our operating expenses to expand our sales
and marketing operations and broaden our customer support capabilities as we
approach commercial introduction of FloSeal and fund greater levels of product
development. Our operating expenses, which include sales and marketing,
research and development and general and administrative expenses, are based on
our expectations of future revenues and are relatively fixed in the short term.
If revenues fall below our expectations, we will not be able to quickly reduce
our spending in response, which would materially adversely affect our operating
results and financial condition.
Our limited operating history, dependence upon an unapproved product and lack
of experience in manufacturing and marketing FloSeal may result in significant
fluctuations of our financial results.
Our limited operating history, dependence upon FloSeal to provide future
revenue and our lack of experience in manufacturing and marketing FloSeal in
commercial quantities may likely cause our operating results to fluctuate
dramatically. As a result of these fluctuations and uncertainties in our
operating results, we believe quarter-to-quarter or annual comparisons of our
operating results are not a good indication of our future performance. In
addition at some point in the future, these fluctuations may likely cause us to
perform below the expectations of public market analysts and investors. If our
results were to fall below market expectations, the price of our common stock
would likely fall. Our limited operating results have varied widely in the
past, and we expect they will continue to vary significantly from quarter-to-
quarter as we attempt to commercially produce and establish our products in the
market after the appropriate governmental approvals are received.
We may need to raise additional money before we expect to achieve
profitability. If we fail to raise any such needed additional money, our
business will suffer.
We expect to receive net proceeds of approximately $7.6 million from the
private offering of common stock under which the selling stockholders obtained
the shares. In addition to our current cash and cash equivalents, these
proceeds should be sufficient to fund our planned operations through 2001. If
we fail to achieve profitability by 2002 we would need to raise additional
funds in order to be successful. Future financing strategies may include, but
are not limited to:
. partnering relationships with larger medical device companies,
. bank facilities, or
. debt or additional equity offerings.
If we are unable to raise additional funds when needed, we may not be able
to market FloSeal as planned, or continue development of our other products,
which would materially and adversely affect our business.
Additional funding may not be available to us or, if available, may not be
available on commercially reasonable terms.
If we need to raise additional money to fund our operations, we cannot be
certain that funding from any source will be available to us on acceptable
terms, or at all. The amount and the timing of raising additional funds will
depend primarily upon our ability to obtain needed regulatory clearances and
generate revenues from the sale of FloSeal. Our inability to obtain any needed
additional funding on reasonable terms will materially and adversely affect our
business.
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<PAGE>
We may have to incur significant costs in attaining and maintaining compliance
with regulations governing our manufacturing operations.
We are required to demonstrate compliance with the good manufacturing
practice requirements for medical devices incorporated into the FDA's Quality
System Regulations ("QSR") before approval of FloSeal, and maintain compliance
after approval. The QSR are similar to good manufacturing practices and relate
to product testing and quality assurance, as well as the maintenance of records
and documentation. The FDA enforces the QSR through pre-approval and periodic
post-approval inspections. We can provide no assurance we will be able to
maintain compliance on an ongoing basis. If we or any third party manufacturer
of our products does not conform to the QSR and cannot be brought up to such a
standard, we will be required to find alternative manufacturers that do
conform. This may be a long and difficult process. Those manufacturers must be
approved by the FDA before they can commercially manufacture our products. We
may have to incur significant costs to comply with such laws and regulations
and our failure to comply with them could lead to penalties that could have a
material and adverse affect on our business.
International sales of our products will also be subject to extensive
regulation.
Marketing of FloSeal in jurisdictions outside of the U.S. requires
compliance with additional local regulations. We cannot guarantee we will be
able to comply with such local regulations and thus cannot guarantee that we
will be allowed to sell FloSeal to any or all of these markets.
If we fail to maintain regulatory approvals after FloSeal is commercialized,
our business will suffer.
After regulatory approval of FloSeal, we will continue to be subject to
extensive regulatory requirements. These regulations are wide-ranging and
govern, among other things:
. product changes or modifications,
. product manufacturing,
. Quality System requirements,
. Medical Device Reporting regulations,
. FDA's restrictions on promoting products for unapproved, off-label uses,
and
. product sales and distribution.
If we fail to comply or maintain compliance with medical device laws or
regulations, we may be fined and barred from selling our products. If the FDA
believes that we are not in compliance with the law, it can:
. detain or seize our products,
. issue a recall,
. enjoin future violations, and
. assess civil and criminal penalties against us.
Our failure to comply with regulatory requirements could have a material
adverse effect on our business. Regulations are also subject to change. We
cannot predict the effect, if any, that such changes might have on our
business.
Our ability to achieve any significant revenue will depend on our ability to
establish effective sales, marketing and distribution capabilities.
If we fail to establish a sufficient marketing and distribution or direct
sales force to commercialize FloSeal or any of our other products, our ability
to enter new or existing markets will be impaired. Our inability to
4
<PAGE>
effectively enter these markets would materially and adversely affect our
business. The alternatives for selling our products are:
. distribution agreements,
. collaborative arrangements with corporate strategic partners, or
. our own direct sales force.
Although we entered into a multiyear distribution agreement with Sulzer
Spine-Tech, Inc. in June 1999, we cannot be certain we will be able to enter
into additional distribution agreements or collaborative arrangements on a
timely basis or at all, or that these relationships will be successful. We have
only limited experience in establishing and managing a direct sales force, from
selling the RapiSeal patch, a discontinued product line, and we cannot be
certain we can establish and manage a direct sales force for FloSeal. Our
ability to achieve any significant revenue will depend heavily upon our success
in establishing effective sales and marketing capabilities, through a
combination of distribution or collaboration arrangements and a direct sales
force.
We may be unable to effectively commercialize FloSeal because the market for
surgical bleeding control products is highly competitive.
The market for products that control surgical bleeding is highly
competitive. A wide variety of approved products such as Gelfoam plus thrombin
and fibrin glues, exist today and will compete directly with FloSeal, which has
not yet received approval for U.S. sale. Many competitive products are produced
by companies that have competitive advantages over us, such as:
. greater name recognition,
. broader product lines,
. greater distribution capabilities,
. substantially greater capital resources, and
. larger marketing, research and development staffs and facilities.
Such companies include, for example Pharmacia & Upjohn AB and Johnson &
Johnson. We cannot be certain FloSeal or our other products will be able to
successfully compete against these products and companies, or any other
companies which may enter the marketplace. In addition, we cannot be certain
that current competitors or other companies will not succeed in developing
technologies and other products that are more effective or that would render
our technology or products obsolete or unable to compete.
We have one issued patent and five pending patent applications. Our failure to
obtain additional issued patents and, consequently, to protect our proprietary
technology, could impair our competitive position.
We regard elements of FloSeal as proprietary and we attempt to protect them
through patent and trade secret laws and restrictions, as well as licenses and
contractual confidentiality provisions. Any steps we take to protect our
intellectual property may be inadequate and expensive. Despite our efforts, we
may be unable to prevent third parties from infringing upon or misappropriating
our intellectual property. We have one issued U.S. patent and five pending U.S.
patent applications relating to FloSeal and other products under development.
We also have two corresponding international patent applications filed under
the Patent Cooperation Treaty and may file additional patent applications
outside the United States at a later date. Obtaining foreign patents may be
more difficult than obtaining U.S. patents because of differences in patent
laws. Protection provided by foreign patents, if obtained, and any other
foreign intellectual property protection may be weaker than provided
domestically. Any existing or new patent applications, domestic or
international, may not result in:
. the priority of our patent applications over others' applications or
issued patents,
5
<PAGE>
. the issuance of any patents, or
. any competitive advantage.
Furthermore, our competitors may independently develop similar technology in
the future that substantially limits the value of our intellectual property.
We may not be able to commercialize FloSeal or our other products under
development if they infringe existing patents or patents that have not yet
issued, which would materially harm our business.
We have conducted searches to determine whether our patent applications
interfere with existing patents. Based upon these searches, we believe that our
patent applications and products do not interfere with existing patents.
However, we cannot be sure that relevant patents have not been issued that
could block our ability to obtain patents or commercialize our products.
Moreover, since U.S. patent applications are not a matter of public record, a
patent application could currently be on file that would stand in our way of
obtaining an issued patent. In addition, a number of medical device and other
companies, universities and research institutions have filed patent
applications or have issued patents relating to compositions and methods for
surgical sealing. The issuance of any of these potentially competing patents
could materially and adversely affect our business.
The European fear of "mad cow disease" could adversely impact acceptance of our
products in Europe.
There is uncertainty as to the European acceptance of products that
incorporate elements derived from cows. This uncertainty is due to concerns
over transmission of disease from cows to humans. This disease in cows is
commonly referred to as "mad cow disease." Transmission of this disease to
humans may cause serious illness or death. FloSeal and our other products under
development contain thrombin and gelatin derived from bovine tissue only from
traceable U.S. herds. There have been no cases of mad cow disease associated
with cattle from traceable U.S. herds. Despite this fact, concerns over
transmission of this disease to humans may prevent or substantially delay the
acceptance of FloSeal in Europe. A delay could materially and adversely affect
our business.
We cannot be certain that we will be able to manufacture FloSeal in high
volumes at commercially reasonable costs.
We have produced FloSeal for use in Europe and our clinical trials. However,
we have no experience manufacturing FloSeal or any of our other products under
development in the amounts necessary to achieve significant commercial sales.
We have expanded our manufacturing capacity, but we cannot be certain we will
be capable of reliable, high-volume manufacturing at commercially reasonable
costs. We could encounter problems related to:
. capacity constraints,
. production yields,
. quality control, and
. shortages of qualified personnel.
Such problems could affect our ability to adequately scale-up production of
our products and fulfill customer orders on a timely basis, which could
materially and adversely affect our business.
Our manufacturing facilities will be subject to QSR, international quality
standards and other regulatory requirements, including pre-approval inspection
for FloSeal and periodic post-approval inspections for all products. Our
failure to implement and maintain our facilities in accordance with these
regulatory requirements and standards will result in a delay or termination of
production. Any delay or termination of production would materially and
adversely affect our business.
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We do not have long-term supply arrangements with our key suppliers. There is a
risk we could lose one or more of our key suppliers, which would disrupt our
business.
We currently purchase bovine hides and thrombin, essential elements of
FloSeal, as well as sterilization services for the end product, from single
suppliers. We purchase bovine hides from Spear Products and thrombin from
GenTrac, Inc. We do not have long-term supply arrangements with any of these
suppliers. In the event any of our current single source suppliers become
unavailable for any reason, we will be required to obtain regulatory approval
of alternative suppliers and our business would be disrupted. Any disruption
caused by a loss of one of these suppliers could materially and adversely
affect our business.
Failure of our end-users to obtain adequate third party reimbursement for the
procedures utilizing FloSeal or our other products could adversely affect our
business.
In the United States, health care providers that purchase medical devices,
such as FloSeal and our other products under development, generally rely on
third party payors, such as federal Medicare, state Medicaid and private health
insurance plans, to reimburse some or all of the cost of the procedure in which
the medical device was used. We expect in a prospective payment system, such as
the one utilized by the Health Care Financing Administration which manages the
federal Medicare program, and whose polices are followed by state Medicaid and
private third party payors, our products' costs will be incorporated into the
overall cost of the procedures, and there will not be separate reimbursement
for our products. Our success depends, in part, upon health care providers
obtaining satisfactory reimbursement from third party payors for surgical
procedures that may use FloSeal and our other products under development.
Failure by our products' users to obtain sufficient reimbursement from third
party payors for procedures in which our products are used or adverse changes
in governmental and private third party payors' policies toward reimbursement
for such procedures could mean that they reduce or eliminate purchases of our
products, which would materially and adversely affect our business.
If we obtain the necessary foreign regulatory approvals, international
market acceptance of our products would be dependent, in part, upon the
availability of reimbursement for our products or procedures that use our
products by the prevailing health care payment systems. Reimbursement and
health care payment systems in international markets vary significantly by
country and include both government-sponsored health care and private
insurance. We intend to seek international reimbursement approvals where
applicable. We cannot be certain any such approvals will be obtained in a
timely manner, if at all. Failure to receive international reimbursement
approvals could materially and adversely affect our business.
We may face product liability claims related to the use or misuse of our
products.
We face an inherent business risk of product liability claims in the event
the use or misuse of our products results in personal injury or death. We have
not experienced any such claims to date, but we cannot be certain, in
particular after commercial introduction of our products, that we will not
experience losses due to product liability claims. We currently maintain
liability insurance with combined coverage limits of $3.0 million on a claims-
made basis. We cannot be certain that the insurance policies' coverage limits
are adequate. The insurance is expensive, difficult to obtain and may not be
available in the future on acceptable terms, or at all. Any claims against us,
regardless of their merit, could materially and adversely affect our business.
Trading in our shares could be subject to extreme price fluctuations which
could adversely affect your investment.
The market price of our common stock has fluctuated widely in the past and
is likely to fluctuate in the future. The stock prices of medical device
companies over the last few years have been volatile and difficult to predict.
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<PAGE>
We have implemented anti-takeover provisions, any of which may reduce the
market price of our common stock.
Provisions of our Certificate of Incorporation and Bylaws and Delaware law,
as well as our Preferred Shares Rights Agreement could make it more difficult
for a third party to acquire us, even if the acquisition would be beneficial to
our stockholders. We discuss these provisions in detail in the section entitled
"Description of Capital Stock" in our Annual Report on Form 10-K.
The issuance of preferred stock with special voting and dividend privileges
under the terms of the Preferred Shares Rights Agreement may have the effect of
delaying, deferring or preventing a change in control without any further
action by the stockholders. Any such issuance may materially and adversely
affect the price of the common stock. The preferred stock may also result in
the loss of the voting control of the holders of common stock to the holders of
the preferred stock.
We also have a staggered board of directors. The board of directors consists
of seven authorized members and three classes with only one class being elected
in any one year. This staggered board could make it more difficult for a third
party to acquire us, even if the acquisition would be beneficial to our
stockholders.
The Year 2000 Computer Problem
We may be adversely affected by the Year 2000 computer problem. Beginning on
January 1, 2000, computer systems and software will produce erroneous results
or fail unless they have been modified or upgraded to process date information
correctly. Our primary exposure with respect to this problem involves third
party software we have purchased or licensed for our financial systems, network
and telecommunications equipment. Our financial systems software is Year 2000
compliant. We have implemented the software needed to make our network Year
2000 compliant. We have analyzed the Year 2000 risk with regard to our
telecommunications equipment and have concluded that there is no material Year
2000 risk.
We have surveyed all our major vendors and have found their preparedness to
be sufficient. We have expended approximately $25,000 in our internal review
and will continue to make certain investments, estimated not to exceed $50,000,
in our software systems and applications to ensure our information systems are
ready for the year 2000. The necessary funds to support these renovations have
come from our operating budget and we do not anticipate that we will need to
allocate special future funding outside of historical levels for this item. The
financial impact of our year 2000 readiness effort has not been and is not
anticipated to be material to our financial position or results of operations
in any given year. To date, we have not encountered any material Year 2000
problems with software and information systems provided to us by third parties.
We have contacted our suppliers of bovine hides and thrombin, the two essential
materials we require for FloSeal and have confirmed that there is no material
Year 2000-associated risk of a delay in supply from these sources. We could be
materially adversely affected if third parties, upon whom we depend in order to
run our day-to-day business, experience Year 2000 problems. A worst case
scenario would involve a complete disruption in the delivery of materials,
power, heat and water to our facilities, which would prevent us from being able
to manufacture and ship our products. We have not developed contingency plans
for operation of our business in the event of a complete disruption of
utilities and other services nor do we believe it is feasible to do so. Other
than problems that would be experienced by businesses generally, we do not
anticipate any Year 2000 problems unique to our company.
Our actual results could differ materially from those anticipated in our
forward-looking statements.
This prospectus contains forward-looking statements that involve risks and
uncertainties. Discussions containing forward-looking statements may be found
in the material set forth under the sections entitled "Fusion Medical
Technologies, Inc." as well as in the prospectus generally. We used words such
as "believes," "intends," "expects," "anticipates," "plans," and similar
expressions identify forward-looking statements. This prospectus also contains
third party estimates regarding the size and growth of the cardiovascular,
spinal and vascular surgery markets, as well as the size of the suture and
staples market and topical hemostat market. You should not place undue reliance
on these forward-looking statements. Our actual results could differ materially
from those anticipated in the forward-looking statements for the reasons
described above and elsewhere in this prospectus.
8
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USE OF PROCEEDS
We will not receive any proceeds from the sale of the shares by the selling
stockholders under this prospectus.
9
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SELLING STOCKHOLDERS
We are registering all 872,000 shares covered by this prospectus on behalf
of the selling stockholders named in the table below. We have registered the
shares to permit the selling stockholders and their pledgees, donees,
transferees or other successors-in-interest that receive their shares from
selling stockholders as a gift, partnership distribution or another non-sale
related transfer after the date of this prospectus to resell the shares when
they deem appropriate. We refer to all of these possible sellers as selling
stockholders in this prospectus.
The table below sets forth the following information with respect to each
selling stockholder as of November 1, 1999: (i) name and, if applicable, the
address of the selling stockholder; (ii) the number and percentage of total
outstanding shares of Fusion common stock each selling stockholder beneficially
owned before this offering; (iii) the number of shares of common stock the
selling stockholder is offering; and (iv) the number and percentage of total
outstanding shares of Fusion common stock that the selling stockholder will own
after the selling stockholder sells all of the shares in this offering. Except
as set forth in the table below, none of the selling stockholders has had a
material relationship with us within the last three years other than as a
result of the ownership of the shares or other securities of Fusion. We do not
know how long the selling stockholders will hold the shares before selling them
and we currently have no agreements, arrangements or understandings with any of
the selling stockholders regarding the sale of any of the shares. The shares
offered by this prospectus may be offered from time to time by the selling
stockholders named below.
<TABLE>
<CAPTION>
Percentage of Total Fusion
Number of Shares Number of Outstanding Shares
Name of Selling Beneficially Owned Number of Shares Shares Owned Beneficially Owned
Stockholder Before the Offering Offered After the Offering After the Offering(1)
--------------- ------------------- ---------------- ------------------ --------------------------
<S> <C> <C> <C> <C>
Franklin Advisers...... 200,000 200,000 0 0%
777 Mariners Island
Blvd.
San Mateo, CA 94404
Stephens -- Medical
Technology LLC........ 200,000 200,000 0 0
111 Center Street
Little Rock, Arkansas
72201
Par Investments........ 298,600 150,000 148,600 1.49%
One Financial Center,
Suite 1600
Boston, MA 02111
Dietche & Field
Advisors.............. 112,000 112,000 0 0
437 Madison Avenue,
28th Floor
New York, NY 10022
Kensington Partners
LP.................... 74,675 74,675 0 0
200 Park Avenue, Suite
3900
New York, New York
10166
Westfield Performance
Fund L.P.............. 50,000 50,000 0 0
One Financial Ctr.
Boston, Massachusetts
02111
Westfield Capital
Growth Fund L.P....... 25,000 25,000 0 0
One Financial Ctr.
Boston, Massachusetts
02111
Pace Partners.......... 129,500 20,000 109,500 1.10%
981 Madison Ave. 2nd
Floor
New York, NY 10021
Bald Eagle Fund........ 17,350 17,350 0 0
200 Park Avenue, Suite
3900
New York, New York
10166
Westfield Capital
Growth Fund II L.P.... 10,000 10,000 0 0
One Financial Ctr.
Boston, Massachusetts
02111
Anthony Pace........... 16,700 5,000 11,700 *
981 Madison Ave. 2nd
Floor
New York, NY 10021
Charles Nirenberg...... 4,175 4,175 0 0
200 Park Avenue, Suite
3900
New York, NY 10166
Kensington Partners II
LP ................... 3,800 3,800 0 0
200 Park Avenue, Suite
3900
New York, New York
10166
</TABLE>
- --------
* less than 1%.
(1) Based upon a total of 9,976,716 shares outstanding after the offering.
10
<PAGE>
PLAN OF DISTRIBUTION
The selling stockholders may sell the common stock from time to time. The
selling stockholders will act independently of us in making decisions regarding
the timing, manner and size of each sale. The selling stockholders may make
these sales on one or more exchanges, in the over-the-counter market or
otherwise, at prices and terms that are then-prevailing or at prices related to
the then-current market price, or in privately negotiated transactions. The
selling stockholders may use one or more of the following methods to sell the
common stock:
. a block trade in which the selling stockholder's broker or dealer will
attempt to sell the shares as agent, but may position and resell all or a
portion of the block as a principal to facilitate the transaction;
. a broker or dealer may purchase the common stock as a principal and then
resell the common stock for its own account pursuant to this prospectus;
. an exchange distribution in accordance with the rules of the applicable
exchange; and
. ordinary brokerage transactions and transactions in which the broker
solicits purchasers.
To the extent required, this prospectus may be amended or supplemented from
time to time to describe a specific plan of distribution. If the plan of
distribution involves an arrangement with a broker-dealer for the sale of
shares through a block trade, special offering, exchange distribution or
secondary distribution or a purchase by a broker or dealer, the supplement will
disclose:
. the name of each selling stockholder and of the participating broker-
dealer(s);
. the number of shares involved;
. the price at which the shares were sold;
. the commissions paid or discounts or concessions allowed to such broker-
dealer(s), where applicable;
. that such broker-dealer(s) did not conduct any investigation to verify
the information set out or incorporated by reference in this prospectus;
and
. other facts material to the transaction.
In effecting sales, broker-dealers engaged by the selling stockholders may
arrange for other broker-dealers to participate in the resales.
The selling stockholders may enter into hedging transactions with broker-
dealers in connection with distributions of the shares or otherwise. In these
transactions, broker-dealers may engage in short sales of the shares in the
course of hedging the positions they assume with selling stockholders. The
selling stockholders may also sell shares short and redeliver the shares to
close out such short positions. The selling stockholders may enter into options
or other transactions with broker-dealers which require the delivery to the
broker-dealer of the shares. The broker-dealer may then resell or otherwise
transfer such shares pursuant to this prospectus. The selling stockholders also
may loan or pledge the shares to a broker-dealer. The broker-dealer may sell
the shares so loaned, or upon default, the broker-dealer may sell the pledged
shares pursuant to this prospectus.
Broker-dealers or agents may receive compensation in the form of
commissions, discounts or concessions from selling stockholders. Broker-dealers
or agents may also receive compensation from the purchasers of the shares for
whom they act as agents or to whom they sell as principal, or both.
Compensation as to a particular broker-dealer might be in excess of customary
commissions and will be in amounts to be negotiated in connection with the
sale. Broker-dealers or agents and any other participating broker-dealers or
the selling stockholders may be deemed to be "underwriters" within the meaning
of section 2(11) of the Securities Act of 1933 in connection with sales of the
shares. Accordingly, any such commission, discount or concession received by
them and any profit on the resale of the shares purchased by them may be deemed
to be
11
<PAGE>
underwriting discounts or concessions under the Securities Act. Because selling
stockholders may be deemed "underwriters" within the meaning of section 2(11)
of the Securities Act, the selling stockholders will be subject to the
prospectus delivery requirements of the Securities Act.
Any shares covered by this prospectus which qualify for sale pursuant to
Rule 144 under the Securities Act may be sold under Rule 144 rather than
pursuant to this prospectus.
The shares will be sold only through registered or licensed brokers or
dealers if required under applicable state securities laws. In addition, in
certain states the shares may not be sold unless they have been registered or
qualified for sale in the applicable state or an exemption from the
registration or qualification requirement is available and is complied with.
Under applicable rules and regulations under the Exchange Act, any person
engaged in the distribution of the shares may not simultaneously engage in
market making activities with respect to our common stock for a period of two
business days prior to the commencement of such distribution. In addition, each
selling stockholder will be subject to applicable provisions of the Exchange
Act and the associated rules and regulations under the Exchange Act, including
Regulation M, which provisions may limit the timing of purchases and sales of
shares of our common stock by the selling stockholders. We will make copies of
this prospectus available to the selling stockholders and have informed them of
the need to deliver copies of this prospectus to purchasers at or prior to the
time of any sale of the shares.
We will bear all costs, expense and fees in connection with the registration
of the shares. The selling stockholders will bear all commissions and
discounts, if any, attributable to the sale of the shares. The selling
stockholders may agree to indemnify any broker-dealer or agent that
participates in transactions involving sales of the shares against certain
liabilities, including liabilities arising under the Securities Act. We have
agreed to indemnify the selling stockholders against certain liabilities in
connection with their offering of the shares, including liabilities arising
under the Securities Act.
LEGAL MATTERS
The validity of the common stock offered hereby has been passed upon for us
by Wilson Sonsini Goodrich & Rosati, Palo Alto, California.
EXPERTS
Our consolidated financial statements incorporated in this Prospectus by
reference to the Annual Report on Form 10-K for the year ended December 31,
1998 have been so incorporated in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on their authority
as experts in accounting and auditing.
12
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. Our SEC filings are available to the public over the
Internet at the SEC's web site at http://www.sec.gov. You may also read and
copy any document we file at the SEC's public reference rooms in Washington,
D.C., New York, New York and Chicago, Illinois. Please call the SEC at 1-800-
732-0330 for further information on the public reference rooms.
The SEC allows us to "incorporate by reference" the information we file with
them, which means that we can disclose important information to you by
referring you to these documents. The information incorporated by reference is
an important part of this prospectus, and information that we file later with
the SEC will automatically update and supersede this information. We
incorporate by reference the documents listed below (and any amendments
thereto) and any future filings made with the SEC under Section 13(a), 13(c),
14 or 15(d) of the Securities Exchange Act of 1934 until the selling
stockholders sell all of their common stock:
. Annual report on Form 10-K for the fiscal year ended December 31, 1998;
. Quarterly report on Form 10-Q for the fiscal quarter ended March 31,
1999;
. Quarterly report on Form 10-Q for the fiscal quarter ended June 30, 1999;
. Quarterly report on Form 10-Q for fiscal quarter ended September 30,
1999;
. Current report on Form 8-K, filed April 8, 1999;
. The description of our common stock contained in Forms 8-A filed on
November 5, 1997 and on April 4, 1996, as amended on June 5, 1996.
To obtain a copy of these filings at no cost, you may write or telephone us
at the following address:
Chief Financial Officer
Fusion Medical Technologies, Inc.
1615 Plymouth Street
Mountain View, CA 94043
(650) 903-4021
13
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
You should rely on the information contained in this document or to which
we have referred you. We have not authorized anyone to provide you with
information that is different. This document may only be used where it is legal
to sell these securities. The information in this document may only be accurate
on the date of this document. This document may be used only where it is legal
to sell these securities. The information in this document may only be accurate
on the date of this document.
----------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Fusion Medical Technologies, Inc. ......................................... 1
Risk Factors............................................................... 2
Use of Proceeds............................................................ 9
Selling Stockholders....................................................... 10
Plan of Distribution....................................................... 11
Legal Matters.............................................................. 12
Experts.................................................................... 12
Where You Can Find More Information........................................ 13
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
872,000 Shares
Common Stock
----------------
PROSPECTUS
----------------
, 1999
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The following table sets forth the costs and expenses, other than the
underwriting commission, payable by the Registrant in connection with the sale
of common stock being registered. All amounts are estimates except the SEC
Registration Fee and the Nasdaq National Market Application Fee.
<TABLE>
<S> <C>
SEC Registration Fee............................................... $ 2,449
Nasdaq National Market Application Fee............................. 17,440
Printing and Engraving Expenses ................................... 5,000
Legal Fees and Expenses............................................ 50,000
Accounting Fees and Expenses....................................... 25,000
Transfer Agent and Registrar Fees.................................. 5,000
Miscellaneous Expenses............................................. 20,111
--------
Total............................................................ $125,000
========
</TABLE>
Item 15. Indemnification of Directors and Officers.
Section 145 of the Delaware General Corporation Law permits a corporation to
indemnify its directors, officers, employees and other agents in terms
sufficiently broad to permit indemnification (including reimbursement for
expenses) under certain circumstances for liabilities arising under the
Securities Act. The Registrant's Certificate of Incorporation and bylaws
contain provisions covering indemnification of corporate directors, officers
and other agents against certain liabilities and expenses incurred as a result
of proceedings involving such persons in their capacities as directors,
officers, employees or agents, including proceedings under the Securities Act
or the Securities Exchange Act of 1934, as amended.
The Registrant's Certificate of Incorporation provides for the
indemnification of directors to the fullest extent permissible under Delaware
law.
The Registrant's Bylaws provide for the indemnification of officers,
directors and third parties acting on behalf of the corporation if such person
acted in good faith and in a manner reasonably believed to be in and not
opposed to the best interest of the corporation, and, with respect to any
criminal action or proceeding, the indemnified party had no reason to believe
his conduct was unlawful.
The Registrant has entered into indemnification agreements with its
directors and executive officers, in addition to indemnification provided for
in the Registrant's Bylaws, and intends to enter into indemnification
agreements with any new directors and executive officers in the future.
At present, there is no pending litigation or proceeding involving a
director, officer, employee or other agent of the Registrant in which
indemnification is being sought, nor is the Registrant aware of any threatened
litigation that may result in a claim for indemnification by any director,
officer, employee or other agent of the Registrant.
II-1
<PAGE>
Item 16. Exhibits and Financial Statement Schedules.
(a) Exhibits
<TABLE>
<C> <S>
3.1+ Amended and Restated Certificate of Incorporation of Registrant.
3.2+ Amended and Restated Bylaws of the Registrant.
4.1+ Form of Common Stock Certificate.
4.2 Stock purchase agreement dated November 1, 1999.
5.1 Opinion of Wilson Sonsini Goodrich & Rosati, Professional Corporation.
23.1 Consent of PricewaterhouseCoopers LLP, independent accountants.
24.1 Power of Attorney (see page II-4).
</TABLE>
- --------
+ Incorporated by reference to our Registration Statement on Form SB-2 (File
No. 33-3990-LA) filed with the Securities and Exchange Commission on April
22, 1996.
Item 17. Undertakings.
The undersigned Registrant hereby undertakes that:
(a) Insofar as indemnification for liabilities arising under the
Securities Act, may be permitted to directors, officers and controlling
persons of the Registrant, the Registrant has been advised that in the
opinion of the Securities and Exchange Commission, such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer of controlling person of the Registrant in
the successful defense of any action, suit proceeding) is asserted by such
director, officer or controlling person in connection with the securities
being registered the Registrant will, unless in the opinion of counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction in the question whether such indemnification by it
is against public policy as expressed in the Securities Act and will be
governed by the final adjudication of such issue.
(c) For purposes of determining any liability under the Securities Act,
the information omitted from the form of prospectus filed as part of a
registration statement in reliance upon Rule 430A and contained in the form
of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Act shall be deemed to be part of the registration
statement as of the time it was declared effective.
(d) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein.
The undersigned Registrant hereby undertakes:
1. To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement to include any
material information with respect to the plan of distribution not
previously disclosed in the registration statement or any material change
to such information in the registration statement.
2. That, for the purpose of determining any liability under the
Securities Act of 1933, the information omitted from the form of prospectus
filed as part of this registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the Registrant pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act of 1933 shall be deemed
to be part of this registration statement as of the time it was declared
effective.
3. That, for purposes of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement
II-2
<PAGE>
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof.
4. For purposes of determining any liability under the Securities Act of
1933, each filing of the Registrant's annual report pursuant to Section
13(a) or Section 15(d) of the Securities Exchange Act of 1934 that is
incorporated by reference in the registration statement shall be deemed to
be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
5. To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant has duly
caused this Registrant Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Mountain View, State of California,
on the 3rd day of November, 1999.
FUSION MEDICAL TECHNOLOGIES, INC.
/s/ Philip M. Sawyer
By: _________________________________
Philip M. Sawyer
President and Chief Executive
Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Philip M. Sawyer and Larry J. Strauss and each
of them, his attorneys-in-fact, each with the power of substitution, for him
and in his name, place and stead, in any and all capacities, to sign any and
all amendments (including post-effective amendments) to this Registration
Statement, and to sign any registration statement for the same offering covered
by this Registration Statement that is to be effective upon filing pursuant to
Rule 462(b) promulgated under the Securities Act of 1933, and all post-
effective amendments thereto, and to file the same, with all exhibits thereto
in all documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every Act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that such attorneys-in-fact and agents or any of them, or his or
their substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Act, this Registration Statement has
been signed by the following persons in the capacities and on the dates
indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Philip M. Sawyer President, Chief Executive November 3, 1999
____________________________________ Officer and Director
Philip M. Sawyer (Principal Executive
Officer)
/s/ Gordon Russell Chairman of the Board of November 3, 1999
____________________________________ Directors
Gordon Russell
/s/ Olav B. Bergheim Director November 3, 1999
____________________________________
Olav B. Bergheim
/s/ Vaughn Bryson Director November 3, 1999
____________________________________
Vaughn Bryson
Director
____________________________________
Douglas Kelly, M.D.
/s/ J. Michael Egan Director November 3, 1999
____________________________________
J. Michael Egan
</TABLE>
II-4
<PAGE>
Exhibit Index
<TABLE>
<CAPTION>
Exhibit
Number Exhibit Description
------- -------------------
<C> <S>
3.1+ Amended and Restated Certificate of Incorporation of Registrant.
3.2+ Amended and Restated Bylaws of the Registrant.
4.1+ Form of Common Stock Certificate.
4.2 Stock purchase agreement dated November 1, 1999.
5.1 Opinion of Wilson Sonsini Goodrich & Rosati, Professional Corporation.
23.1 Consent of PricewaterhouseCoopers LLP, independent accountants.
24.1 Power of Attorney (see page II-4).
</TABLE>
- --------
+ Incorporated by reference to our Registration Statement on Form SB-2 (File
No. 33-3990-LA) filed with the Securities and Exchange Commission on April
22, 1996
<PAGE>
EXHIBIT 4.2
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT is made as of the 1st day of November, 1999,
by and between Fusion Medical Technologies, Inc. (the "Company"), a corporation
organized under the laws of the State of Delaware, with its principal offices at
1615 Plymouth Street, Mountain View, California 94043, and the purchaser whose
name and address is set forth on the signature page hereof (the "Purchaser").
IN CONSIDERATION of the mutual covenants contained in this Agreement, the
Company and the Purchaser agree as follows:
SECTION 1. Authorization of Sale of the Shares. Subject to the terms and
-----------------------------------
conditions of this Agreement, the Company has authorized the sale of up to
1,200,000 shares of common stock (the "Shares"), par value $0.001 per share (the
"Common Stock"), of the Company.
SECTION 2. Agreement to Sell and Purchase the Shares. At the Closing (as
-----------------------------------------
defined in Section 3), the Company will sell to the Purchaser, and the Purchaser
will buy from the Company, upon the terms and conditions hereinafter set forth,
the number of Shares (at the purchase price) shown below:
<TABLE>
<CAPTION>
<S> <C> <C>
Price Per
Number Shares to Be Share In Aggregate
Purchased Dollars Price
--------- -------- -----
________________ __________________ _________________
</TABLE>
The Company proposes to enter into agreements in substantially identical
form to this Agreement with certain other Purchasers for Shares (the "Other
Purchasers") and expects to complete sales of Shares to them. The Purchaser and
the Other Purchasers are hereinafter sometimes collectively referred to as the
"Purchasers," and this Agreement and the agreements executed by the Other
Purchasers are hereinafter sometimes collectively referred to as the
"Agreements." The term "Placement Agent" shall mean Stephens Inc.
SECTION 3. Delivery of the Shares at the Closing. The completion of the
-------------------------------------
purchase and sale of the portion of the Shares to be purchased by Purchaser (the
"Closing") shall occur as soon as practicable and as agreed by the parties
hereto following notification by the staff of the Securities and Exchange
Commission (the "Commission") to the Company of the staff's willingness to grant
acceleration of effectiveness of the registration statement to be filed by the
Company pursuant to Section 6.1 hereof (the "Registration Statement") at the
offices of Wilson Sonsini Goodrich & Rosati, 650 Page Mill Road, Palo Alto,
California at such time and date to be agreed upon by the Company and the
Placement Agent (the "Closing Date") and of which the Purchasers will be
notified by facsimile transmission or otherwise.
At the Closing, the Company shall deliver to the Purchaser one or more
stock certificates registered in the name of the Purchaser, or in such nominee
name(s) as designated by the Purchaser in writing, representing the number of
Shares set forth in Section 2 above. The name(s) in which the stock
certificates are to be registered are set forth in the Stock Certificate
Questionnaire attached hereto as part of Appendix I. The Company's obligation
to complete the purchase and sale of the Shares and deliver such stock
certificate(s) to the Purchaser at the Closing shall be subject to the following
conditions: (a)
-1-
<PAGE>
receipt by the Company of same-day funds in the full amount of the purchase
price for the Shares being purchased hereunder; (b) completion of the purchases
and sales under the Agreements with all of the Other Purchasers; and (c) the
accuracy of the representations and warranties made by the Purchaser as if made
on the day of such Closing and the fulfillment of those undertakings of the
Purchaser to be fulfilled prior to the Closing. The Purchaser's obligation to
accept delivery of such stock certificate(s) and to pay for the Shares evidenced
thereby shall be subject only to the following conditions: (a) the staff of the
Commission having notified the Company of the staff's willingness to accelerate
the effectiveness of the Registration Statement on or prior to the 60th day
after the date the Registration Statement was filed by the Company; and (b) the
accuracy in all material respects of the representations and warranties made by
the Company herein and the fulfillment in all material respects of those
undertakings of the Company to be fulfilled prior to Closing. The Purchaser's
obligations hereunder are expressly not conditioned on the purchase by any or
all of the Other Purchasers of Shares that they have agreed to purchase from the
Company.
3.1 Legal Opinion. At the Closing, Wilson Sonsini Goodrich & Rosati,
-------------
counsel to the Company, will deliver its legal opinion to the Purchasers in the
form and substance reasonably satisfactory to the Placement Agent.
SECTION 4. Representations, Warranties and Covenants of the Company. The
---------------------------------------------------------
Company hereby represents and warrants to, and covenants with, the Purchaser, as
of the date hereof, as follows:
4.1 Organization and Standing. The Company is a corporation duly
-------------------------
organized and validly existing under the laws of the State of Delaware and is in
good standing under such laws. The Company has all requisite corporate power to
own and operate its properties and assets, and to carry on its business as
presently conducted. The Company is qualified to do business as a foreign
corporation in the State of California. Such qualification is not presently
required in any other jurisdiction where a failure to so qualify would have a
material adverse effect on the business, financial position, or results of
operations of the Company ("Material Adverse Effect").
4.2 Capitalization. The authorized capital stock of the Company
--------------
consists of 50,000,000 shares of Common Stock and 5,000,000 shares of Preferred
Stock. 9,104,716 shares of Common Stock are issued and outstanding. No shares of
Preferred Stock are issued and outstanding. All such issued and outstanding
shares have been duly authorized and validly issued, and are fully paid and
nonassessable. Options to purchase 1,259,267 shares of the Company's Common
Stock are outstanding under the Company's 1993 Stock Option Plan and 467,621
shares are available for future grant. 56,668 options to purchase shares of the
Company's Common Stock are outstanding under the Company's 1996 Director Option
Plan and 60,800 shares are available for future grant. The Company has issued
90,141 shares of Common Stock under its Employee Stock Purchase Plan and 189,859
shares are available for future issuance. The Company also has warrants
outstanding for 12,785 shares of its Common Stock. Except as disclosed in the
Company SEC Documents (as defined below), there are no other options, warrants,
conversion privileges, or preemptive or other rights or agreements presently
outstanding to purchase or otherwise acquire any authorized but unissued shares
of the capital stock or other securities of the Company.
4.3 Authority. The Company has full power and authority to execute
---------
and deliver this Agreement, and to consummate the transactions contemplated by
this Agreement. All corporate action on the part of the Company, its officers,
directors and stockholders necessary for the execution and delivery of, and the
consummation of the transactions contemplated by this Agreement and the
performance of all obligations of the Company under this Agreement has been
taken. This Agreement,
-2-
<PAGE>
upon execution and delivery by the Company and assuming the due and proper
execution and delivery by Purchaser, constitutes a legal, valid and binding
obligation of the Company, enforceable in accordance with its respective terms,
except as may be limited by (i) applicable bankruptcy, insolvency,
reorganization or other laws of general application relating to or affecting the
enforcement of creditors rights generally, and (ii) the effect of rules of law
governing the availability of specific performance and other equitable remedies.
4.4 Valid Issuance of Common Stock. The Common Stock to be sold
------------------------------
hereby has been duly authorized and, when issued, delivered and paid for in the
manner set forth in this Agreement, will be duly authorized, validly issued,
fully paid and nonassessable, and will be free of restrictions on transfer other
than restrictions on transfer under this Agreement and under applicable state
and federal securities laws. No preemptive rights or other rights to subscribe
for or purchase exist with respect to the issuance and sale of the Common Stock
by the Company pursuant to this Agreement. No stockholder of the Company has any
right (which has not been waived or has not expired by reason of lapse of time
following the notification of the Company's intent to file the Registration
Statement) to request or require the Company to register the sale of any shares
owned by such stockholder under the Securities Act of 1933, as amended (the
"Securities Act"), in the Registration Statement.
4.5 Governmental Consents. Other than compliance with the Securities
---------------------
Act and other state or federal securities laws, and such filings as may be
required to be made under such laws or with the National Association of
Securities Dealers (the "NASD"), no consent, approval, order or authorization
of, or registration, qualification, designation, declaration or filing with, any
federal, state or local governmental authority on the part of the Company is
required in connection with the consummation of the transactions contemplated by
this Agreement.
4.6 Conflicts. The execution and delivery of this Agreement will not
---------
conflict with or result in a material breach of the terms, conditions or
provisions of, or constitute a material default under, any material contract,
material covenant or material instrument under which the Company is now
obligated.
4.7 SEC Documents; Material Contracts; Financial Statements. The
-------------------------------------------------------
Company has filed each statement, annual, quarterly and other report,
registration statement and definitive proxy statement ("Company SEC Documents")
required to be filed (other than preliminary material) by the Company with the
SEC subsequent to June 6, 1996 (the date of effectiveness of the Company's
registration statement on Form S-1 for the Company's initial public offering of
its Common Stock). As of their respective filing dates, the Company SEC
Documents complied in all material respects with the requirements of the Act or
the Securities Exchange Act of 1934 (the "1934 Act"), as the case may be, and
none of the Company SEC Documents 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 light of the circumstances in
which they were made, not misleading, except to the extent corrected by any
subsequently filed Company SEC Document. The Company's Registration Statement on
Form S-1, which became effective on April 1, 1999, and the Company SEC
Documents, include certain contracts as required by the SEC's rules and
regulations. Neither the Company nor any of its subsidiaries, nor to the
Company's knowledge, any other party is in breach of or default under any of
such contracts, except as to breaches or defaults which, in any single case or
in the aggregate would not have a Material Adverse Effect.
The financial statements of the Company and the notes thereto included in
the Company SEC Documents (collectively, the "Financial Statements") comply as
to form in all material respects with
-3-
<PAGE>
applicable accounting requirements and with the published rules and regulations
of the SEC with respect thereto. The Financial Statements have been prepared in
accordance with generally accepted accounting principles consistently applied
and fairly present the consolidated financial position of the Company and any
subsidiaries at the dates thereof and the consolidated results of operations and
consolidated cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal, recurring adjustments).
4.8 Changes. Since June 30, 1999 (the date of the most recent
-------
Financial Statements), there has not been any event or condition of any
character that would reasonably likely result in a Material Adverse Effect (as
such business is presently conducted and as it is proposed to be conducted).
4.9 Litigation. There is no pending or, to the Company's knowledge,
----------
threatened lawsuit, administrative proceeding, arbitration, labor dispute or
governmental investigation ("Litigation") to which the Company is a party or by
which any material portion of its assets, taken as a whole, may be bound and
which Litigation, if adversely determined, would have a Material Adverse Effect.
4.10 Disclosure. The Company has fully delivered or made available to
----------
the Purchasers or their counsel all of the information (including the Company
SEC Documents) that the Company reasonably believes is necessary for such
Purchasers' purchase decision. Neither this Agreement nor any agreement,
instrument or other documents delivered by the Company to the Purchasers in
connection herewith or filed with the SEC subsequent to June 6, 1996, when read
together, contains any untrue statement of a material fact, or, to the knowledge
of the Company, omits to state a material fact necessary to be stated to make
the statements contained herein or therein not misleading in light of the
circumstances in which they were made.
4.11 Offering Materials. The Company has not distributed and will not
------------------
distribute prior to the Closing Date any offering material in connection with
the offering and sale of the Shares other than the Private Placement Memorandum
or any amendment or supplement thereto. The Company has not nor will it take any
action independent of the Placement Agent to sell, offer for sale or solicit
offers to buy any securities of the Company which would reasonably be expected
to cause the offer or sale of the Shares, as contemplated by this Agreement, to
not be exempted from the provisions of Section 5 of the Securities Act.
4.12 Year 2000 Compliance. The Company has reviewed its operations to
--------------------
evaluate the extent to which the business or operations of the Company might be
affected by the Year 2000 computer problem. As a result of such internal review,
the Company does not believe that Year 2000 computer related problems will have
a Material Adverse Effect.
SECTION 5. Representations and Warranties of the Purchasers. Each Purchaser
------------------------------------------------
hereby represents and warrants to, and covenants, that:
5.1 Authorization. Purchaser has full power and authority to execute
-------------
and deliver, and to consummate the transactions contemplated by the Closing and
this Agreement. All corporate action on the part of such Purchaser, its
officers, directors and stockholders necessary for (i) the execution and
delivery of, and the consummation of the transactions contemplated by, this
Agreement, and (ii) as of the Closing, the performance of all obligations of
such Purchaser under this Agreement, has been taken. This Agreement, upon
execution and delivery by such Purchaser and assuming the due and proper
execution and delivery by the Company, constitutes a legal, valid and binding
obligation of such
-4-
<PAGE>
Purchaser, enforceable in accordance with its terms, except as may be limited by
(i) applicable bankruptcy, insolvency, reorganization or other laws of general
application relating to or affecting the enforcement of creditors rights
generally, and (ii) the effect of rules of law governing the availability of
equitable remedies.
5.2 Purchase Entirely for Own Account. This Agreement is made with
---------------------------------
each Purchaser in reliance upon each Purchaser's representation to the Company,
which by each Purchaser's execution of this Agreement, Purchaser hereby
confirms, that the Common Stock to be received by such Purchaser (collectively,
the "Securities") will be acquired for investment for such Purchaser's own
account, not as a nominee or agent, and not with a view to the distribution of
any part thereof, and that such Purchaser has no present intention of selling,
granting any participation in, or otherwise taking an action that would
constitute a distribution of the same.
5.3 Disclosure of Information. Purchaser has received all the
-------------------------
information it considers necessary or appropriate for deciding whether to
purchase the Common Stock. Purchaser further represents that it has had an
opportunity to ask questions and receive answers from the Company regarding the
terms and conditions of the offering of the Common Stock and the business,
properties, prospects and financial condition of the Company. The foregoing,
however, does not limit or modify the representations and warranties of the
Company in Section 4 of this Agreement or the right of Purchaser to rely
thereon.
5.4 Investment Experience. Purchaser is an investor in securities of
---------------------
companies in the development stage and acknowledges that it is able to fend for
itself, can bear the economic risk of its investment, and has such knowledge and
experience in financial or business matters that it is capable of evaluating the
merits and risks of the investment in the Common Stock. Purchaser has not been
organized for the purpose of acquiring the Common Stock.
5.5 Accredited Purchaser. Purchaser is an "accredited investor"
--------------------
within the meaning of Rule 501 of Regulation D, as presently in effect.
5.6 Restricted Securities. Purchaser understands that the Securities
---------------------
it is purchasing are characterized as "restricted securities" under the federal
securities laws inasmuch as they are being acquired from the Company in a
transaction not involving a public offering and that under such laws and
applicable regulations such securities may be resold without registration under
the Act only in certain limited circumstances. In this connection, Purchaser
represents that it is familiar with SEC Rule 144 or Rule 144A, as presently in
effect, and understands the resale limitations imposed thereby and by the Act.
5.7 Further Limitations on Disposition. Without in any way limiting
----------------------------------
the representations set forth above, Purchaser further agrees not to make any
disposition of all or any portion of the Securities unless and until:
(a) There is then in effect a Registration Statement under the
Act covering such proposed disposition and such disposition is made in
accordance with such Registration Statement; or
(b) If reasonably requested by the Company, Purchaser shall have
furnished the Company with an opinion of counsel, reasonably satisfactory to the
Company, that such disposition will not require registration of such shares
under the Act. It is agreed that the Company will not require opinions of
counsel for transactions made pursuant to Rule 144 except in unusual
circumstances.
-5-
<PAGE>
5.8 Prospectus Delivery. The Purchaser hereby covenants with the
-------------------
Company not to make any sale of the Shares under the Registration Statement
without effectively causing the prospectus delivery requirement under the
Securities Act to be satisfied, and the Purchaser acknowledges and agrees that
such Shares are not transferable on the books of the Company unless the
certificate submitted to the transfer agent evidencing the Shares is accompanied
by a separate officer's certificate, (i) which may be in the form of Appendix II
hereto, (ii) executed by an officer of, or other authorized person designated
by, the Purchaser, and (iii) to the effect that (A) the Shares have been sold in
accordance with the Registration Statement and (B) the requirement of delivering
a current prospectus has been satisfied. The Purchaser acknowledges that there
may occasionally be times when the Company must suspend the use of the
prospectus forming a part of the Registration Statement until such time as an
amendment to the Registration Statement has been filed by the Company and
declared effective by the Commission, or until such time as the Company has
filed an appropriate report with the Commission pursuant to the Exchange Act.
The Purchaser hereby covenants that it will not sell any Shares pursuant to said
prospectus during the period commencing at the time at which the Company gives
Purchaser written notice of the suspension of the use of said prospectus and
ending at the time the Company gives the Purchaser written notice that the
Purchaser may thereafter effect sales pursuant to said prospectus and any
amendments thereto. The Purchaser further covenants to notify the Company
promptly of the sale of all of its Shares.
SECTION 6. Survival of Representations, Warranties and Agreements.
------------------------------------------------------
Notwithstanding any investigation made by any party to this Agreement or by the
Placement Agent, all covenants, agreements, representations and warranties made
by the Company and the Purchaser herein and in the certificates for the Shares
delivered pursuant hereto shall survive the execution of this Agreement, the
delivery to the Purchaser of the Shares being purchased and the payment
therefor.
SECTION 7. Legends. Each certificate or instrument representing Shares
-------
delivered at the Closing shall bear legends in substantially the following
forms:
(i) "THE SECURITIES REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE 'SECURITIES
ACT') AND ARE 'RESTRICTED SECURITIES' AS DEFINED IN RULE 144 PROMULGATED UNDER
THE SECURITIES ACT. THE SECURITIES MAY NOT BE SOLD OR OFFERED FOR SALE OR
OTHERWISE DISTRIBUTED EXCEPT (I) IN CONJUNCTION WITH AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT, OR (II) IN COMPLIANCE
WITH RULE 144, OR (III) PURSUANT TO AN OPINION OF COUNSEL SATISFACTORY TO THE
ISSUER OF THESE SECURITIES THAT SUCH REGISTRATION OR COMPLIANCE IS NOT
REQUIRED AS TO SUCH SALE, OFFER OR DISTRIBUTION."
(ii) Any other legends required by California law or
other applicable blue sky or state securities laws.
The Company need not register a transfer of any Shares, and may also instruct
its transfer agent not to register a transfer of any Shares, unless the
conditions specified in the foregoing legends are satisfied to the extent
applicable.
SECTION 8. Registration of the Shares; Compliance with the Securities Act.
--------------------------------------------------------------
-6-
<PAGE>
8.1 Registration Procedures and Expenses. The Company shall:
(a) as soon as practicable after execution of this Agreement and all
similar agreements with Other Purchasers, prepare and file with the
Commission the Registration Statement on Form S-3 relating to the
sale of the Shares by the Purchaser on the Nasdaq National Market or
the facilities of any national securities exchange on which the
Common Stock is then traded or in privately-negotiated transactions;
(b) use its reasonable efforts, subject to receipt of necessary
information from the Purchasers, to cause the staff of the
Commission to notify the Company of the staff's willingness to grant
acceleration of the effective date of the Registration Statement
within 60 days after the Registration Statement is filed by the
Company;
(c) prepare and file with the Commission such amendments and supplements
to the Registration Statement and the prospectus used in connection
therewith as may be necessary to keep the Registration Statement
effective until the date on which the Shares may be resold by the
Purchasers without registration by reason of Rule 144(k) under the
Securities Act or any other rule of similar effect;
(d) furnish to the Purchaser with respect to the Shares registered under
the Registration Statement (and to each underwriter, if any, of such
Shares) such number of copies of prospectuses and such other
documents as the Purchaser may reasonably request, in order to
facilitate the public sale or other disposition of all or any of the
Shares by the Purchaser; provided, however, that the obligation of
-------- -------
the Company to deliver copies of prospectuses to the Purchaser shall
be subject to the receipt by the Company of reasonable assurances
from the Purchaser that the Purchaser will comply with the
applicable provisions of the Securities Act and of such other
securities or blue sky laws as may be applicable in connection with
any use of such prospectuses;
(e) file documents required of the Company for normal blue sky clearance
in states specified in writing by the Purchaser; provided, however,
-------- -------
that the Company shall not be required to qualify to do business or
consent to service of process in any jurisdiction in which it is not
now so qualified or has not so consented; and
(f) bear all expenses in connection with the procedures in paragraphs
(a) through (e) of this Section 6.1 and the registration of the
Shares pursuant to the Registration Statement, other than fees and
expenses, if any, of counsel or other advisers to the Purchasers or
underwriting discounts, brokerage fees and commissions incurred by
the Purchasers, if any.
8.2 Transfer of Shares After Registration. The Purchaser agrees that it will
-------------------------------------
not effect any disposition of the Shares or its right to purchase the Shares
that would constitute a sale within the meaning of the Securities Act, except as
contemplated in the Registration Statement referred to in
-7-
<PAGE>
Section 6.1, and that it will promptly notify the Company of any changes in the
information set forth in the Registration Statement regarding the Purchaser or
its plan of distribution.
8.3 Indemnification. In the event any securities are included in a
---------------
registration statement under this Section 6:
(a) To the extent permitted by law, the Company will indemnify and
hold harmless each Purchaser and each person, if any, who controls such
Purchaser within the meaning of the Act or the 1934 Act, against any losses,
claims, damages, or liabilities (joint or several) to which they may become
subject under the Act or the 1934 Act or other federal or state law, insofar as
such losses, claims, damages, or liabilities (or actions in respect thereof)
arise out of or are based upon any of the following statements, omissions or
violations (collectively a "Violation"): (i) any untrue statement or alleged
untrue statement of a material fact contained in such Registration Statement,
including any preliminary prospectus or final prospectus contained therein or
any amendments or supplements thereto, (ii) the omission or alleged omission to
state therein a material fact required to be stated therein, or necessary to
make the statements therein not misleading, or (iii) in connection with the sale
or purchase of the Shares, any violation or alleged violation by the Company of
the Act, the 1934 Act, any state securities law or any rule or regulation
promulgated under the Act, or the 1934 Act or any state securities law; and the
Company will pay to each Purchaser or controlling person, as incurred, any legal
or other expenses reasonably incurred by them in connection with investigating
or defending any such loss, claim, damage, liability, or action; provided,
however, that the indemnity agreement contained in this subsection 6.3(a) shall
not apply to amounts paid in settlement of any such loss, claim, damage,
liability, or action if such settlement is effected without the consent of the
Company (which consent shall not be unreasonably withheld), nor shall the
Company be liable in any such case for any such loss, claim, damage, liability,
or action to the extent that it arises out of or is based upon a Violation which
occurs in reliance upon and in conformity with written information furnished
expressly for use in connection with such registration by any Purchaser or
controlling person.
(b) To the extent permitted by law, each Purchaser will indemnify
and hold harmless the Company, each of its directors, each of its officers who
has signed the registration statement, each person, if any, who controls the
Company within the meaning of the Act, any underwriter, and any controlling
person of any such underwriter or Purchaser, against any losses, claims,
damages, or liabilities (joint or several) to which any of the foregoing persons
may become subject, under the Act, or the 1934 Act or other federal or state
law, insofar as such losses, claims, damages, or liabilities (or actions in
respect thereto) arise out of or are based upon any Violation, in each case to
the extent (and only to the extent) that such Violation occurs in reliance upon
and in conformity with written information furnished by each Purchaser expressly
for use in connection with such registration; and each Purchaser will pay, as
incurred, any legal or other expenses reasonably incurred by any person intended
to be indemnified pursuant to this subsection 6.3(b), in connection with
investigating or defending any such loss, claim, damage, liability, or action;
provided, however, that the indemnity agreement contained in this subsection
6.3(b) shall not apply to amounts paid in settlement of any such loss, claim,
damage, liability or action if such settlement is effected without the consent
of such Purchaser, which consent shall not be unreasonably withheld; provided,
that, in no event shall any indemnity under this subsection 6.3(b) exceed the
gross proceeds from the offering received by such Purchaser.
(c) Promptly after receipt by an indemnified party under this
Section 6.3 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 6.3, deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying
-8-
<PAGE>
party shall have the right to participate in, and, to the extent the
indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party
(together with all other indemnified parties which may be represented without
conflict by one counsel) shall have the right to retain one separate counsel,
with the fees and expenses to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action, if prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this Section
6.3, but the omission so to deliver written notice to the indemnifying party
will not relieve it of any liability that it may have to any indemnified party
otherwise than under this Section 6.3.
(d) If the indemnification provided for in this Section 6.3 is held
by a court of competent jurisdiction to be unavailable to an indemnified party
with respect to any loss, liability, claim, damage, or expense referred to
therein, then the indemnifying party, in lieu of indemnifying such indemnified
party hereunder, shall contribute to the amount paid or payable by such
indemnified party as a result of such loss, liability, claim, damage, or expense
in such proportion as is appropriate to reflect the relative fault of the
indemnifying party on the one hand and of the indemnified party on the other in
connection with the statements or omissions that resulted in such loss,
liability, claim, damage, or expense as well as any other relevant equitable
considerations. The relative fault of the indemnifying party and of the
indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties' relative intent,
knowledge, access to information, and opportunity to correct or prevent such
statement or omission.
(e) The obligations of the Company and Purchaser under this Section
6.3 shall survive the completion of any offering of securities in a registration
statement under this Section 6, and otherwise.
8.4 Termination of Conditions and Obligations. The conditions precedent
-----------------------------------------
imposed by Section 5 or this Section 6 upon the transferability of the Shares
shall cease and terminate as to any particular number of the Shares on the date
all such Shares (i) are eligible for sale under Rule 144(k), (ii) have been
effectively registered under the Securities Act and sold or otherwise disposed
of in accordance with the intended method of disposition set forth in the
Registration Statement, or (iii) the Company receives an opinion of counsel
satisfactory in form and substance to the Company to the effect that such
conditions are not necessary in order to comply with the Securities Act.
8.5 Information Available. So long as the Registration Statement is
---------------------
effective covering the resale of Shares owned by the Purchaser, the Company will
furnish to the Purchaser:
(a) as soon as practicable after the Company has made such
information available to the public through submission to the
SEC (but in the case of the Company's Annual Report to
Stockholders, within 120 days after the end of each fiscal year
of the Company), one copy of (i) its Annual Report to
Stockholders (which Annual Report shall contain financial
statements audited in accordance with generally accepted
accounting
-9-
<PAGE>
principles by a national firm of certified public
accountants), (ii) if not included in substance in the Annual
Report to Stockholders, its Annual Report on Form 10-K, (iii)
its Quarterly Reports on Form 10-Q, (iv) its Current Reports
on Form 8-K, and (v) a full copy of the particular
Registration Statement covering the Shares (the foregoing, in
each case, excluding exhibits);
(b) upon the written request of the Purchaser, all exhibits
excluded by the parenthetical to subparagraph (a)(v) of this
Section 6.5; and
(c) upon the written request of the Purchaser, a reasonable
number of copies of the prospectuses to supply to any other
party requiring such prospectuses in connection with the
Purchaser's prospectus delivery requirements under the
Securities Act;
and the Company, upon the reasonable request of the Purchaser, will meet with
the Purchaser or a representative thereof at the Company's headquarters to
discuss information relevant for disclosure in the Registration Statement
covering the Shares, subject to appropriate confidentiality limitations as the
Company may require.
SECTION 9. Broker's Fee. The Purchaser acknowledges that the Company intends
------------
to pay to the Placement Agent a fee in respect of the sale of the Shares to the
Purchaser. Each of the parties hereto hereby represents that, on the basis of
any actions and agreements by it, there are no other brokers or finders entitled
to compensation in connection with the sale of the Shares to the Purchaser. The
purchaser also acknowledges that an affiliate of the Placement Agent may have an
opportunity to purchase Shares on substantially the same terms and conditions as
the Purchaser and the Other Purchasers.
SECTION 10. Notices. All notices, requests, consents and other communications
-------
hereunder shall be in writing, shall be mailed by first-class registered or
certified airmail, confirmed facsimile or nationally recognized overnight
express courier postage prepaid, and shall be deemed given when so mailed and
shall be delivered as addressed as follows:
-10-
<PAGE>
(a) if to the Company, to:
Fusion Medical Technologies, Inc.
1615 Plymouth Street
Mountain View, CA 94043
Attention: Larry J. Strauss
Facsimile: 650-903-4081
with a copy to:
Wilson Sonsini Goodrich & Rosati
Professional Corporation
650 Page Mill Road
Palo Alto, CA 94304
Attention: Joseph D. Fuqua, Esq.
Facsimile: 650-493-6811
or to such other person at such other place as the Company shall
designate to the Purchaser in writing; and
(b) if to the Purchaser, at its address as set forth at the end
of this Agreement, or at such other address or addresses as may
have been furnished to the Company in writing.
SECTION 11. Changes. This Agreement may not be modified or amended except
-------
pursuant to an instrument in writing signed by the Company and the Purchaser.
SECTION 12. Headings. The headings of the various sections of this Agreement
--------
have been inserted for convenience of reference only and shall not be deemed to
be part of this Agreement.
SECTION 13. Severability. In case any provision contained in this Agreement
------------
should be invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein shall
not in any way be affected or impaired thereby.
SECTION 14. Governing Law. This Agreement shall be governed by and construed
-------------
under the laws of the State of California as applied to agreements among
California residents entered into and performed entirely within California
without regard to conflict of laws principals.
-11-
<PAGE>
SECTION 15. Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall constitute an original, but all of which, when
taken together, shall constitute but one instrument, and shall become effective
when one or more counterparts have been signed by each party hereto and
delivered to the other parties.
-12-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their duly authorized representatives as of the day and year
first above written.
FUSION MEDICAL TECHNOLOGIES, INC.
By:_________________________________
Name:
Title:
Print or Type:
Name of Purchaser
(Individual or Institution):
_________________________________
Name of Individual representing
Purchaser (if an Institution):
_________________________________
Title of Individual representing
Purchaser (if an Institution):
_________________________________
Signature by:
Individual Purchaser or Individual
representing Purchaser:
_________________________________
Address: ___________________________
Telephone: ___________________________
Facsimile: ___________________________
-13-
<PAGE>
Appendix I
(one of two)
FUSION MEDICAL TECHNOLOGIES, INC.
STOCK CERTIFICATE QUESTIONNAIRE
- -------------------------------
Pursuant to Section 3 of this Agreement,
please provide us with the following
information:
1. The exact name that your Shares are to be
registered in (this is the name
that will appear on your stock certificate(s)).
You may use a nominee name if
appropriate: __________________
2. The relationship between the Purchaser of the
Shares and the Registered Holder listed in
response to item 1 above: __________________
3. The mailing address of the Registered Holder
listed in response to item 1 above: __________________
__________________
__________________
__________________
4. The Social Security Number or Tax Identification
Number of the Registered Holder listed in response
to item 1 above: __________________
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<PAGE>
Appendix I
(two of two)
FUSION MEDICAL TECHNOLOGIES, INC.
REGISTRATION STATEMENT QUESTIONNAIRE
------------------------------------
In connection with the preparation of the Registration Statement, please
provide us with the following information:
1. Pursuant to the "Selling Stockholder" section of the Registration
Statement, please state your or your organization's name exactly as it should
appear in the Registration Statement:
---------------------------------------------------------------------
2. Please provide the number of shares that you will beneficially own
immediately after Closing, including those Shares purchased by you pursuant to
this Agreement and those shares purchased by you or your affiliates through
other transactions:
---------------------------------------------------------------------
3. Have you or your organization had any position, office or other
material relationship within the past three years with the Company or its
affiliates?
_____ Yes _____ No
If yes, please indicate the nature of any such relationships below:
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
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<PAGE>
APPENDIX II
Attention:
PURCHASER'S CERTIFICATE OF SUBSEQUENT SALE
------------------------------------------
The undersigned, [an officer of, or other person duly authorized by]
_____________________________________________________________
[fill in official name of individual or institution]
hereby certifies that he/she [said institution] is the Purchaser of
the shares evidenced by the attached certificate, and as such,
sold such shares on __________________ in accordance with
[date]
Registration Statement number _____________________________________
[fill in the number of or otherwise
________________________________ and the requirement of delivering a
identify Registration Statement]
current prospectus by the Company has been complied with in connection with such
sale.
Print or Type:
Name of Purchaser
(Individual or
Institution): ______________________
Name of Individual
representing
Purchaser (if an
Institution) ______________________
Title of Individual
representing
Purchaser (if an
Institution): ______________________
Signature by:
Individual Purchaser
or Individual
representing Purchaser: ______________________
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<PAGE>
EXHIBIT 5.1
[LETTERHEAD OF WILSON SONSINI GOODRICH & ROSATI]
November 5, 1999
Fusion Medical Technologies, Inc.
1615 Plymouth Street
Mountain View, CA 94043
Re: Registration Statement on Form S-3
Ladies and Gentlemen:
We have examined the Registration Statement on Form S-3 filed with the
Securities and Exchange Commission on November 5, 1999 (the "Registration
Statement"), in connection with the registration under the Securities Act of
1933, as amended, of 872,000 shares of Common Stock of Fusion Medical
Technologies, Inc. (the "Shares"). The Shares, are to be sold by the selling
shareholders as described in such Registration Statement for the sale to the
public. As your counsel in connection with this transaction, we have examined
the proceedings proposed to be taken in connection with said sale and issuance
of the Shares.
It is our opinion that, upon approval by the Fusion Board of Directors, the
Shares are legally and validly issued, fully paid and nonassessable.
We consent to the use of this opinion as an exhibit to the Registration
Statement, and further consent to the use of our name wherever appearing in the
Registration Statement, including the prospectus constituting a part hereof, and
any amendment thereto.
Very truly yours,
WILSON SONSINI GOODRICH & ROSATI
Professional Corporation
/s/ Wilson Sonsini Goodrich & Rosati
<PAGE>
EXHIBIT 23.1
Consent of Independent Accountants
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-3 of our report dated January 28, 1999 relating to the
financial statements, which appear in the Fusion Medical Technologies, Inc.
Annual Report on Form 10-K for the year ended December 31, 1998. We also
consent to the reference to us under the heading "Experts" in such Registration
Statement.
/s/ PricewaterhouseCoopers LLP
November 5, 1999
