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EXHIBIT 1.1
Curon Medical, Inc.
5,750,000 Shares
Common Stock
($.001 Par Value)
UNDERWRITING AGREEMENT
________ __, 2000
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UNDERWRITING AGREEMENT
________ __, 2000
UBS Warburg LLC
CIBC World Markets Corp.
SG Cowen Securities Corporation
As representatives of the several Underwriters
named in Schedule A hereto
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c/o UBS Warburg LLC
299 Park Avenue
New York, New York 10171-0026
Ladies and Gentlemen:
Curon Medical, Inc., a Delaware corporation (the "Company"), proposes
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to issue and sell to the Underwriters named in Schedule A annexed hereto (the
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"Underwriters") an aggregate of 5,750,000 shares (the "Firm Shares") of Common
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Stock, $.001 par value per share, of the Company (the "Common Stock"). In
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addition, solely for the purpose of covering over-allotments, the Company
proposes to grant to the Underwriters the option to purchase from the Company up
to an additional 862,500 shares of Common Stock (the "Additional Shares"). The
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Firm Shares and the Additional Shares are hereinafter collectively sometimes
referred to as the "Shares". The Shares are described in the Prospectus which
is referred to below.
The Company hereby acknowledges that in connection with the proposed
offering of the Shares, it has requested UBS Warburg LLC ("UBSW") to administer
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a directed share program (the "Directed Share Program") under which up to
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287,500 Firm Shares, or 5% of the Firm Shares, to be purchased by you (the
"Reserved Shares") shall be reserved for sale by you at the initial public
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offering price to the Company's officers, directors, employees, and consultants
and others having a relationship with the Company (the "Directed Share
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Participants") as part of the distribution of the Shares by the Underwriters,
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subject to the terms of this Agreement, the applicable rules, regulations and
interpretations of the National Association of Securities Dealers, Inc. ("NASD")
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and all other applicable laws, rules and regulations. The number of Shares
available for sale to the general public will be reduced to the extent that
Directed Share Participants purchase Reserved Shares. You may offer any Reserved
Shares not purchased by Directed Share Participants to the general public on the
same basis as the other Shares being issued and sold hereunder. The Company has
supplied UBSW with the names, addresses and telephone numbers of the individuals
or other entities which the Company has designated to be participants in the
Directed Share Program. It is understood that any number of those designated to
participate in the Directed Share Program may decline to do so.
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The Company has filed, in accordance with the provisions of the
Securities Act of 1933, as amended, and the rules and regulations thereunder
(collectively, the "Act"), with the Securities and Exchange Commission (the
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"Commission") a registration statement on Form S-1 (File No. 333-37866)
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including a prospectus, relating to the Shares. The Company has furnished to
you, for use by the Underwriters and by dealers, copies of one or more
preliminary prospectuses (each thereof being herein called a "Preliminary
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Prospectus") relating to the Shares. Except where the context otherwise
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requires, the registration statement, as amended when it becomes effective,
including all documents filed as a part thereof, and including any information
contained in a prospectus subsequently filed with the Commission pursuant to
Rule 424(b) under the Act and deemed to be part of the registration statement at
the time of effectiveness pursuant to Rule 430(A) under the Act, and also
including any registration statement filed pursuant to Rule 462(b) under the Act
with respect to the offering contemplated by the Registration Statement, is
herein called the "Registration Statement", and the prospectus, in the form
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filed by the Company with the Commission pursuant to Rule 424(b) under the Act
on or before the second business day after the date hereof (or such earlier time
as may be required under the Act) or, if no such filing is required, the form of
final prospectus included in the Registration Statement at the time the
Registration Statement became effective, is herein called the "Prospectus".
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The Company and the Underwriters agree as follows:
1. Sale and Purchase. Upon the basis of the representations and
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warranties and subject to the terms and conditions herein set forth, the Company
agrees to sell to the respective Underwriters and each of the Underwriters,
severally and not jointly, agrees to purchase from the Company the aggregate
number of Firm Shares set forth opposite the name of such Underwriter in
Schedule A attached hereto, in each case at a purchase price of $____ per Share.
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The Company is advised by you that the Underwriters intend (i) to make a public
offering of their respective portions of the Firm Shares as soon after the
effective date of the Registration Statement as in your judgment is advisable
and (ii) initially to offer the Firm Shares upon the terms set forth in the
Prospectus. You may from time to time increase or decrease the public offering
price after the initial public offering to such extent as you may determine.
In addition, upon the basis of the representations and warranties and
subject to the terms and conditions herein set forth, the Company hereby grants
to the several Underwriters the option to purchase, and, the Underwriters shall
have the right to purchase, severally and not jointly, from the Company, ratably
in accordance with the number of Firm Shares to be purchased by each of them,
all or a portion of the Additional Shares as may be necessary to cover over-
allotments made in connection with the offering of the Firm Shares, at the same
purchase price per share to be paid by the Underwriters to the Company for the
Firm Shares. This option may be exercised by you on behalf of the several
Underwriters at any time and from time to time on or before the thirtieth day
following the date hereof, by written notice to the Company. Such notice shall
set forth the aggregate number of Additional Shares as to which the option is
being exercised and the date and time when the Additional Shares are to be
delivered (such date and time being herein referred to as the "additional time
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of purchase"); provided, however, that the additional time of purchase shall not
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be earlier than the time of purchase (as
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defined below) nor earlier than the second business day after the date on which
the option shall have been exercised nor later than the tenth business day after
the date on which the option shall have been exercised. The number of Additional
Shares to be sold to each Underwriter shall be the number which bears the same
proportion to the aggregate number of Additional Shares being purchased as the
number of Firm Shares set forth opposite the name of such Underwriter on
Schedule A hereto bears to the total number of Firm Shares (subject, in each
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case, to such adjustment as you may determine to eliminate fractional shares).
2. Payment and Delivery. Payment of the purchase price for the Firm
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Shares shall be made to the Company by Federal Funds wire transfer against
delivery of the certificates for the Firm Shares to you through the facilities
of the Depository Trust Company ("DTC") for the respective accounts of the
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Underwriters. Such payment and delivery shall be made at 10:00 A.M., New York
City time, on _________ __, 2000 (unless another time shall be agreed to by you
and the Company or unless postponed in accordance with the provisions of Section
9 hereof). The time at which such payment and delivery are actually made is
hereinafter sometimes called the "time of purchase". Certificates for the Firm
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Shares shall be delivered to you in definitive form in such names and in such
denominations as you shall specify on the second business day preceding the time
of purchase. For the purpose of expediting the checking of the certificates for
the Firm Shares by you, the Company agrees to make such certificates available
to you for such purpose at least one full business day preceding the time of
purchase.
Payment of the purchase price for the Additional Shares shall be made
at the additional time of purchase in the same manner and at the same office as
the payment for the Firm Shares. Certificates for the Additional Shares shall
be delivered to you in definitive form in such names and in such denominations
as you shall specify no later than the second business day preceding the
additional time of purchase. For the purpose of expediting the checking of the
certificates for the Additional Shares by you, the Company agrees to make such
certificates available to you for such purpose at least one full business day
preceding the additional time of purchase.
Deliveries of the documents described in Section 7 below with respect
to the purchase of the Shares shall be made at the offices of Dewey Ballantine
LLP, 1301 Avenue of the Americas, New York, New York at 9:00 a.m., New York
time, on the date of the closing of the purchase of the Firm Shares or the
Additional Shares, as the case may be.
3. Representations and Warranties of the Company. The Company
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represents and warrants to each of the Underwriters that:
(a) The Company has not received, and has no notice of, any order of
the Commission preventing or suspending the use of any Preliminary
Prospectus, or instituting proceedings for that purpose, and each
Preliminary Prospectus, at the time of filing thereof, conformed in all
material respects to the requirements of the Act. When the Registration
Statement became or becomes effective, the Registration Statement and the
Prospectus complied or will comply in all material respects with the
provisions of the
_________________________
/1/ As used herein "business day" shall mean a day on which the
New York Stock Exchange is open for trading.
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Act, and the Registration Statement did not or will not contain an untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading, and the Prospectus did not or will not contain an untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading and the
Prospectus, any Preliminary Prospectus and any supplement thereto or
prospectus wrapper prepared in connection therewith, at their respective
times of issuance and at the time of closing, complied and will comply in
all material respects with any applicable laws or regulations of
jurisdictions in which the Prospectus and such preliminary prospectus, as
amended or supplemented, if applicable, are distributed in connection with
the offer and sale of the Shares, provided, however, that the Company makes
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no representation or warranty with respect to any statement contained in
the Registration Statement or the Prospectus in reliance upon and in
conformity with information concerning the Underwriters and furnished in
writing by or on behalf of any Underwriter through you to the Company
expressly for use in the Registration Statement or the Prospectus. The
Company has not distributed directly or indirectly any offering material in
connection with the offering or sale of the Shares other than the
Registration Statement, the Preliminary Prospectus, the Prospectus or any
other materials, if any, permitted by the Act.
(b) As of the date of this Agreement, the Company has an authorized
and outstanding capital stock as set forth under the heading entitled
"Actual" in the section of the Registration Statement and the Prospectus
entitled "Capitalization" and, as of the time of purchase, and assuming the
receipt and application of the net proceeds as described under the section
of the Registration Statement and the Prospectus entitled "Use of
Proceeds," the Company shall have an authorized and outstanding capital
stock as set forth under the heading entitled "Pro Forma As Adjusted" in
the section of the Registration Statement and the Prospectus entitled
"Capitalization." All of the outstanding shares of capital stock have been
duly and validly authorized and issued and are fully paid and non-
assessable, have been issued in material compliance with all federal and
state securities laws and have not have been issued in violation of any
preemptive right, resale right, right of first refusal or similar right.
(c) The Company has been duly organized and is validly existing as a
corporation and is in good standing under the laws of the State of
Delaware, with full power and authority to own, lease and operate its
properties and conduct its business as described in the Registration
Statement;
(d) The Company is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction in which the
ownership or leasing of its properties or the conduct of its business
requires such qualification, except where the failure to so qualify in any
such jurisdiction would not individually or in the aggregate have a
material adverse effect on the business, prospects, properties, financial
condition or results of operation of the Company and the Subsidiary (as
defined herein), taken as a whole (a "Material Adverse Effect"). The
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Company does not have any subsidiaries (as defined in the Act) other than
Conway Stuart Medical Pty Limited (the "Subsidiary"). The Company owns 100%
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of the outstanding capital stock of the Subsidiary. Other than the
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Subsidiary, the Company does not own, directly or indirectly, any shares of
stock or any other equity or long-term debt securities of any corporation
or have any equity interest in any firm, partnership, limited liability
company, joint venture, association or other entity except as contemplated
by the Prospectus and set forth in the Registration Statement and the
Prospectus. Complete and correct copies of the certificate of incorporation
and bylaws or other organizational documents of the Company and all
amendments thereto have been delivered to you, and except as described in
the Prospectus and set forth in the exhibits to the Registration Statement,
no changes therein will be made subsequent to the date hereof and prior to
the time of purchase or, if later, the additional time of purchase. The
Subsidiary has not and is not engaged in any business activities or
operations and has not had and does not have any material assets or
liabilities. All of the outstanding capital stock of the Subsidiary has
been duly authorized and validly issued, is fully paid and non-assessable
and is owned by the Company subject to no security interest, other
encumbrance or adverse claims.
(e) The Company is not in violation of any law, ordinance,
administrative or governmental rule or regulation applicable to it or of
any decree of any court or governmental agency or body having jurisdiction
over it, which violation could, individually or in the aggregate, have a
Material Adverse Effect.
(f) The Company is not in breach of, or in default under (and no
event has occurred which with notice, lapse of time, or both would result
in any breach of, or constitute a default under), its charter or by-laws or
other organizational documents or in the performance or observance of any
obligation, agreement, covenant or condition contained in any indenture,
mortgage, deed of trust, bank loan or credit agreement or other evidence of
indebtedness, or any lease, contract or other agreement or instrument to
which the Company is a party or by which the Company or any of its
properties is bound, the effect of which would individually or in the
aggregate have a Material Adverse Effect. The execution, delivery and
performance of this Agreement and the issuance and sale of the Shares
contemplated hereby and by the Registration Statement will not conflict
with, or result in any breach of or constitute a default under (nor
constitute any event which with notice, lapse of time, or both would result
in any breach of, or constitute a default under), any provisions of the
charter or by-laws or other organizational documents of the Company or
under any provision of any license, permit, franchise, indenture, mortgage,
deed of trust, bank loan or credit agreement or other evidence of
indebtedness, or any lease, contract or other agreement or instrument to
which the Company is a party or by which the Company or its properties may
be bound, or under any federal, state, local or foreign law, regulation or
rule or any decree, judgment or order applicable to it, the result of which
would individually or in the aggregate have a Material Adverse Effect.
(g) This Agreement has been duly authorized, executed and delivered
by the Company and is a legal, valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms.
(h) The capital stock of the Company, including the Shares, conforms
in all material respects to the description thereof contained in the
Registration Statement and
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Prospectus. The certificates for the Shares are in due and proper form and
conform in all material respects to the requirements of the Delaware
General Corporation Law. The holders of the Shares will not be subject to
personal liability by reason of being such holders.
(i) The Shares have been duly and validly authorized and, when issued
and delivered against payment therefor as provided herein, will be duly and
validly issued, fully paid and non-assessable.
(j) No approval, authorization, consent or order of or filing with
any national, state or local governmental or regulatory commission, board,
body, authority or agency is required in connection with the execution,
delivery and performance by the Company of this Agreement, the issuance and
sale of the Shares contemplated hereby and by the Registration Statement,
other than registration of the Shares under the Act, which has been or will
be effected by the Company, and any necessary qualification under the
securities or blue sky laws of the various jurisdictions in which the
Shares are being offered by the Underwriters or under the rules and
regulations of the NASD.
(k) Except as set forth in the Registration Statement and the
Prospectus: no person has, either contractual or pursuant to the
organizational documents of the Company, (i) the right to cause the Company
to register pursuant to the Act, any shares of capital stock or other
equity interests; and (ii) preemptive rights, co-sale rights, rights of
first refusal or other rights to purchase any shares of Common Stock. No
person has the right, either contractual or pursuant to the organizational
documents of the Company, to cause the Company to register under the Act
any shares of capital stock or other equity interests as a result of the
filing or effectiveness of the Registration Statement or the sale of the
Shares as contemplated thereby.
(l) PricewaterhouseCoopers LLP, whose report on the financial
statements of the Company are filed with the Commission as part of the
Registration Statement and Prospectus, are independent public accountants
as required by the Act.
(m) The Company has all necessary licenses, permits, franchises,
authorizations, consents and approvals, and made all necessary filings
required under any federal, state, local or foreign law, regulation or
rule, and has obtained, other than as would not have, individually or in
the aggregate, a Material Adverse Effect, all authorizations, consents and
approvals from other persons, in order to conduct its business; and the
Company is not in violation of, or in default under, any such license,
permit, franchise, authorization, consent or approval, the effect of which
could individually or in the aggregate have a Material Adverse Effect.
(n) All legal or governmental proceedings, all statutes and
regulations and all contracts, leases or documents of a character required
to be described in the Registration Statement or the Prospectus or to be
filed as an exhibit to the Registration Statement have been so described or
filed as required.
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(o) There are no private or governmental actions, suits, claims,
investigations or proceedings pending, or, to the knowledge of the Company,
threatened or contemplated, to which the Company or any of its officers is
subject or of which any of its properties is subject, whether at law, in
equity or before or by any federal, state, local or foreign governmental or
regulatory commission, board, body, authority or agency, and which would
have a Material Adverse Effect, either individually or in the aggregate.
(p) The audited financial statements of the Company included in the
Registration Statement and the Prospectus present fairly the financial
position and results of operations of the Company as of the dates and for
the periods indicated; such financial statements have been prepared in
conformity with generally accepted accounting principles applied on a
consistent basis during the periods involved; the pro forma financial data
included in the Registration Statement and the Prospectus comply as to form
in all material respects with the applicable accounting requirements of
Regulation S-X of the Securities Act, and the pro forma adjustments have
been properly applied to the historical amounts in the compilation of those
statements; and the other financial and statistical data set forth in the
Registration Statement and the Prospectus are accurately presented and
prepared on a basis consistent with such financial statements and the books
and records of the Company.
(q) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, there has not been
(i) any event that has had a Material Adverse Effect, or any event that
would have a Material Adverse Effect, (ii) any transaction which is
material to the Company, (iii) the incurrence by the Company of any
obligation, direct or contingent, and whether or not in the ordinary course
of business, which is material to the Company, (iv) any material change in
the capital stock or other equity interest or outstanding indebtedness of
the Company, or (v) any dividend or distribution of any kind declared, paid
or made on the capital stock or other equity interest of the Company. The
Company does not have any contingent obligations which are material to it
and are not disclosed in the Registration Statement.
(r) The Company has obtained for the benefit of the Underwriters the
agreement (a "Lock-Up Agreement") of each of its officers and directors and
the holders of Common Stock and securities convertible into or exchangeable
or exercisable for Common Stock (including options and warrants) relating
to, in the aggregate, __% of the Company's outstanding Common Stock on a
fully diluted basis and pursuant to which each such officer, director and
holder has agreed not to sell, offer to sell, contract to sell,
hypothecate, pledge, grant any option to sell or otherwise dispose of,
directly or indirectly, any shares of Common Stock or securities
convertible into or exchangeable or exercisable for Common Stock for a
period of one hundred and eighty (180) days after the date of the
Prospectus without the prior written consent of UBSW.
(s) The Company has good and marketable title to all property (real
and personal) described in the Prospectus as being owned by it, free and
clear of all liens, claims, security interests or other encumbrances except
such as are described in the Registration Statement and the Prospectus or
except as would not individually or in the aggregate have a Material
Adverse Effect. To the Company's knowledge, all the property
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being held under lease by the Company is held thereby under valid,
subsisting and enforceable leases.
(t) The Company is insured by insurers of recognized financial
responsibility against such losses and risks and in such amount as are
customary in the business in which it is engaged. All policies of insurance
insuring the Company or any of its businesses, assets, employees, officers
and directors are in full force and effect, and the Company is in
compliance with the terms of such policies in all material respects. There
are no claims by the Company under any such policy or instrument as to
which any insurance company is denying liability or defending under a
reservation of rights clause.
(u) The Company has not either sent or received any notice of
termination of any of the contracts or agreements referred to or described
in, or filed as an exhibit to, the Registration Statement, and no such
termination has been threatened by the Company or, to the Company's
knowledge, by any other party to any such contract or agreement.
(v) All statistical and market-related data included in the
Prospectus are based on or derived from sources that the Company believes
to be reliable and accurate, and the Company has obtained the written
consent to the use of such data from such sources to the extent required.
(w) Neither the Company nor any of its affiliates has taken, directly
or indirectly, any action designed to or which has constituted or which
might reasonably be expected to cause or result, under the Securities
Exchange Act of 1934, as amended, and the rules and regulations thereunder
(collectively, the "Exchange Act") or otherwise, in stabilization or
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manipulation of the price of any security of the Company to facilitate the
sale or resale of the Shares.
(x) The Company owns or has obtained licenses (which such licenses
are enforceable against the Company and, to the Company's knowledge, the
other parties thereto) for the patents, patent applications, inventions,
technology, trademarks, trademark registrations, service marks, service
mark registrations, trade names, copyrights, trade secrets and rights
described in the Prospectus as being owned or used by or licensed to it or
necessary for the conduct of its business as described in the Prospectus
(collectively, the "Intellectual Property"). Except as set forth in the
Prospectus and except as would not have a Material Adverse Effect, (i) to
the Company's knowledge, there are no rights of third parties to any such
Intellectual Property; (ii) to the Company's knowledge there is no
infringement by third parties of any such Intellectual Property; (iii)
there is no pending or, to the Company's knowledge, threatened action,
suit, proceeding or claim by others challenging the Company's rights in or
to any such Intellectual Property, and the Company is unaware of any facts
which would form a reasonable basis for any such claim; (iv) there is no
pending or, to the Company's knowledge, threatened action, suit, proceeding
or claim by others challenging the validity or scope of any such
Intellectual Property, and the Company is unaware of any facts which would
form a reasonable basis for any such claim; (v) there is no pending or, to
the Company's knowledge, threatened action, suit, proceeding or claim by
others that the Company infringes or otherwise violates, or would infringe
or otherwise violate upon commercialization of its products and product
candidates described in the
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Prospectus, any patent, trademark, copyright, trade secret or other
proprietary rights of others, and the Company is unaware of any facts which
would form a reasonable basis for any such claim; (vi) to the Company's
knowledge, there is no patent or patent application which contains claims
that dominate or may dominate any Intellectual Property described in the
Prospectus as being owned by or licensed to the Company or that is
necessary for the conduct of their respective businesses as currently or
contemplated to be conducted and described in the Prospectus or that
interferes with the issued or pending claims of any such Intellectual
Property; and (vii) there is no prior art of which the Company is aware
that may render any patent held by the Company invalid or any patent
application held by the Company unpatentable which has not been disclosed
to the U.S. Patent and Trademark Office. The commercial products and
product candidates of the Company described in the Prospectus read on the
claims contained in the patents and patent applications described in the
Prospectus.
(y) The Company has not sustained since the date of the latest
audited financial statements included in the Prospectus any loss or
interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor dispute or
court or governmental action, order or decree, otherwise than as disclosed
in the Prospectus or other than any loss or interference which individually
or in the aggregate would not have a Material Adverse Effect.
(z) The Company has not violated any foreign, federal, state or local
law or regulation relating to the protection of human health and safety,
the environment or hazardous or toxic substances or wastes, pollutants or
contaminants, nor any federal or state law relating to discrimination in
the hiring, promotion or pay of employees nor any applicable federal or
state wages and hours laws, nor any provisions of the Employee Retirement
Income Security Act or the rules and regulations promulgated thereunder,
which individually or in the aggregate would result in a Material Adverse
Effect.
(aa) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurances that (i) transactions are
executed in accordance with management's general or specific authorization;
(ii) transactions are recorded as necessary to permit preparation of
financial statements in conformity with generally accepted accounting
principles and to maintain accountability for assets; (iii) access to
assets is permitted only in accordance with management's general or
specific authorization; and (iv) the recorded accountability for assets is
compared with existing assets at reasonable intervals and appropriate
action is taken with respect to any differences.
(bb) Each of the Company and the Subsidiary has filed all federal,
state, local and foreign tax returns and tax forms required to be filed.
Such returns and forms are complete and correct in all material respects,
and all taxes shown by such returns or otherwise assessed that are due or
payable have been paid, except such taxes as are being contested in good
faith and as to which adequate reserves have been provided. All payroll
withholdings required to be made by the Company with respect to employees
have been made. The charges, accruals and reserves on the books of the
Company in respect of any tax liability for any year not finally determined
are adequate to meet any assessments or reassessments for additional taxes.
There have been no tax deficiencies asserted and, to the
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knowledge of the Company, no tax deficiency might be reasonably asserted or
threatened against the Company or the Subsidiary that could individually or
in the aggregate have a Material Adverse Effect.
(cc) The clinical, pre-clinical and other studies and tests conducted
by or on behalf of or sponsored by the Company or in which the Company or
its products or product candidates have participated that are described in
the Prospectus or the results of which are referred to in the Prospectus
were and, if still pending, are being conducted in accordance with standard
medical and scientific research procedures. The descriptions in the
Prospectus of the results of such studies and tests are accurate and
complete in all material respects and fairly present the data derived from
such studies and tests, and the Company has no knowledge of any other
studies or tests the results of which are inconsistent with or otherwise
call into question the results described or referred to in the Prospectus.
Except to the extent disclosed in the Registration Statement and the
Prospectus, the Company has operated and currently is in compliance in all
material respects with all applicable United States Food and Drug
Administration ("FDA") rules, regulations and policies. Except to the
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extent disclosed in the Registration Statement and the Prospectus, the
Company has not received any notices or other correspondence from the FDA
or any other governmental agency requiring the termination, suspension or
modification of any clinical or pre-clinical studies or tests that are
described in the Prospectus or the results of which are referred to in the
Prospectus.
(dd) Immediately after the issuance and sale of the Shares to the
Underwriters, no shares of preferred stock of the Company shall be issued
and outstanding, and no holder of any shares of capital stock, securities
convertible into or exchangeable or exercisable for capital stock or
options, warrants or other rights to purchase capital stock or any other
securities of the Company shall have any existing or future right to
acquire any shares of preferred stock of the Company.
(ee) The Company is not, and after the offering and sale of the
Shares, will not be, an "investment company" or a "promoter" or a
"principal underwriter" for or an entity "controlled" by an "investment
company," as such terms are defined in the Investment Company Act of 1940,
as amended (the "Investment Company Act").
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In addition, any certificate signed by any officer of the Company and
delivered to the Representatives or counsel for the Underwriters in connection
with the offering of the Shares shall be deemed to be a representation and
warranty by the Company, as to matters covered thereby, to each Underwriter.
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4. Representations and Warranties of the Underwriters. You, on
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behalf of the several Underwriters, represent and warrant to the Company that
the information provided by you and set forth in the fifth, sixth, eighth,
ninth, tenth, eleventh and twelfth paragraphs under the caption "Underwriting"
in the Prospectus constitute the only information provided by or on behalf of
the Underwriters through you for use in the Registration Statement and the
Prospectus. You represent and warrant that you have been authorized by each of
the other Underwriters to enter into this Agreement on behalf of each of the
other Underwriters and to act for each of them in the manner herein provided.
5. Certain Covenants. The Company hereby agrees:
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(a) to furnish such information as may be reasonably required and
otherwise to reasonably cooperate in qualifying the Shares for offering and
sale under the securities or blue sky laws of such states as you may
designate and to maintain such qualifications in effect so long as required
for the distribution of the Shares; provided, however, that the Company
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shall not be required to register or qualify as a foreign corporation or to
take any action which would subject it to the service of process in suits,
other than as to matters and transactions relating to the offer and sale of
the Shares, in any jurisdiction where it is not now so subject; and to
promptly advise you of the receipt of any notification with respect to the
suspension of the qualification of the Shares for sale in any jurisdiction
or the initiation or threatening of any proceeding for such purpose;
(b) to make available to the Underwriters in New York City, as soon
as reasonably practicable after the Registration Statement becomes
effective, and thereafter from time to time to furnish to the Underwriters,
as many copies of the Prospectus (or of the Prospectus as amended or
supplemented if the Company shall have made any amendments or supplements
thereto after the effective date of the Registration Statement) as the
Underwriters may reasonably request for the purposes contemplated by the
Act; in case any Underwriter is required to deliver a prospectus beyond the
nine-month period referred to in Section 10(a)(3) of the Act in connection
with the sale of the Shares, the Company will prepare promptly upon
request, but at the cost of the Underwriters, such amendment or amendments
to the Registration Statement and such prospectuses as may be necessary to
permit compliance with the requirements of Section 10(a)(3) of the Act;
(c) to advise you promptly and (if requested by you) to confirm such
advice in writing, (i) when the Registration Statement has become effective
and when any post-effective amendment thereto becomes effective and (ii) if
Rule 430A under the Act is used, when the Prospectus is filed with the
Commission pursuant to Rule 424(b) under the Act (which the Company agrees
to file in a timely manner under such Rules);
(d) to advise you promptly, and to confirm such advice in writing, of
any request by the Commission for amendments or supplements to the
Registration Statement or Prospectus or for additional information with
respect thereto, or of notice of institution of proceedings for, or the
entry of a stop order suspending the effectiveness of the Registration
Statement and, if the Commission should enter a stop order suspending the
effectiveness of the Registration Statement, to use its best commercial
efforts to obtain the lifting or removal of such order as soon as possible;
to advise you promptly of any
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proposal to amend or supplement the Registration Statement or Prospectus
and to file no such amendment or supplement to which you shall reasonably
object in writing;
(e) subject to Section 5(o) hereof, to file promptly all reports and
any definitive proxy or information statement required to be filed by the
Company with the Commission in order to comply with the Exchange Act
subsequent to the date of the Prospectus and for so long as the delivery of
a prospectus is required in connection with the offering or sale of the
shares, and to promptly notify you of such filing;
(f) if necessary or appropriate, to file in a timely fashion a
registration statement pursuant to Rule 462(b) under the Act;
(g) to furnish to you and, upon request, to each of the other
Underwriters for a period of three years from the date of this Agreement
(i) copies of any reports or other communications which the Company shall
send to its stockholders or shall from time to time publish or publicly
disseminate and (ii) such other information as you may reasonably request
regarding the Company or the Subsidiary as soon as such communications,
documents or information becomes available;
(h) to advise the Underwriters promptly of the occurrence of any
event known to the Company within the time during which a Prospectus
relating to the Shares is required to be delivered under the Act which
would require the making of any change in the Prospectus then being used so
that the Prospectus would not include an untrue statement of a material
fact or omit to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they are made, not
misleading, and, during such time, to prepare, file (subject to Section
5(d) hereof) and furnish promptly to the Underwriters, at the Company's
expense, such amendments or supplements to such Prospectus as may be
necessary to reflect any such change and to furnish you a copy of such
proposed amendment or supplement before filing any such amendment or
supplement with the Commission;
(i) to make generally available to its security holders, and to
deliver to you, as soon as reasonably practicable an earnings statement of
the Company (which will satisfy the provisions of Section 11(a) of the Act)
covering a period of twelve months beginning after the effective date of
the Registration Statement (as defined in Rule 158(c) of the Act) and
ending not later than fifteen (15) months thereafter;
(j) to furnish to its stockholders as soon as reasonably practicable
after the end of each fiscal year an annual report (including a balance
sheet and statements of income, stockholders' equity and of cash flow of
the Company for such fiscal year, accompanied by a copy of the certificate
or report thereon of nationally recognized independent certified public
accountants);
(k) to furnish to you such number of conformed copies of the
Registration Statement, as initially filed with the Commission, and of all
amendments thereto (including all exhibits thereto) as you shall reasonably
request;
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(l) to furnish to you as early as practicable prior to the time of
purchase and the additional time of purchase, as the case may be, but not
later than two (2) business days prior thereto, a copy of the latest
available quarterly (if available) or monthly unaudited interim financial
statements, if any, of the Company which have been read by the Company's
independent certified public accountants, as stated in their letter to be
furnished pursuant to Section 7(e) hereof;
(m) to apply the net proceeds from the sale of the Shares in the
manner set forth under the caption "Use of Proceeds" in the Prospectus;
(n) to pay all costs, expenses, fees and taxes in connection with (i)
the preparation and filing of the Registration Statement, each Preliminary
Prospectus, the Prospectus, and any amendments or supplements thereto, and
the printing and furnishing of copies of each thereof to the Underwriters
and to dealers (including costs of mailing and shipment), (ii) the
registration, issue, sale and delivery of the Shares, (iii) the producing,
word processing and/or printing of this Agreement, any agreement among
Underwriters, any dealer agreements, any powers of attorney and any closing
documents (including compilations thereof) and the reproduction and/or
printing and furnishing of copies of each thereof to the Underwriters and
(except closing documents) to dealers (including costs of mailing and
shipment), (iv) the qualification of the Shares for offering and sale under
state laws and the determination of their eligibility for investment under
state law as aforesaid (including the reasonable legal fees and filing fees
and other disbursements of counsel for the Underwriters) and the printing
and furnishing of copies of any blue sky surveys or legal investment
surveys to the Underwriters and to dealers, (v) any listing of the Shares
on any securities exchange or qualification of the Shares for quotation on
the National Association of Securities Dealers Automated Quotation National
Market System ("NASDAQ") and any registration thereof under the Exchange
------
Act, (vi) the review of the public offering of the Shares by the NASD,
including the associated filing fees and the reasonable fees and
disbursements of counsel for the Underwriters, and (vii) the performance of
the Company's other obligations hereunder; provided that, except as
-------------
specifically set forth in this Agreement, the Underwriters shall pay all of
their own expenses, including the fees and disbursements of their counsel.
(o) to furnish to you, before filing with the Commission subsequent to
the effective date of the Registration Statement and during the period
referred to in paragraph (h) above, a copy of any document proposed to be
filed pursuant to Section 13, 14 or 15(d) of the Exchange Act;
(p) not to sell, offer to sell, contract to sell, hypothecate, pledge,
grant any option to sell or otherwise dispose of, directly or indirectly,
any shares of Common Stock or securities convertible into or exchangeable
or exercisable for Common Stock or options, warrants or other rights to
purchase Common Stock or any other shares of the Company that are
substantially similar to Common Stock or file a registration statement
under the Act relating to the offer and sale of any shares of Common Stock
or securities convertible into or exchangeable or exercisable for Common
Stock or options, warrants or other rights to purchase Common Stock or any
other shares of the Company that are substantially similar to Common Stock
for a period of one hundred and eighty (180) days
13
<PAGE>
after the date hereof (the "Lock-up Period"), without the prior written
--------------
consent of UBSW, except for (i) the registration of the Shares and the
sales to the Underwriters pursuant to this Agreement, (ii) issuances of
Common Stock upon the exercise of outstanding options or warrants as
disclosed in the Registration Statement and the Prospectus to persons who
have entered into Lock-Up Agreements with the Underwriters and (iii) the
issuance of employee stock options not exercisable during the Lock-up
Period pursuant to stock option plans described in the Registration
Statement and the Prospectus; and
(q) to use its best efforts to cause the Common Stock to be listed
for quotation on the NASDAQ.
6. Reimbursement of Underwriters' Expenses. The Company agrees that
---------------------------------------
if the Shares are not delivered for any reason other than the termination of
this Agreement pursuant to subsections (ii), (iii) or (iv) of the second
paragraph of Section 8 hereof or the last paragraph of Section 9 hereof or the
default by one or more of the Underwriters in its or their respective
obligations hereunder, the Company shall, in addition to paying the amounts
described in Section 5(n) hereof, reimburse the Underwriters for all of the out-
of-pocket accountable expenses actually and reasonably incurred by the
Underwriters, including the reasonable fees and disbursements of their counsel.
7. Conditions of Underwriters' Obligations. The several obligations
---------------------------------------
of the Underwriters hereunder are subject to the accuracy of the representations
and warranties of the Company on the date hereof and at the time of purchase as
if made at the time of purchase (and the several obligations of the Underwriters
at the additional time of purchase are subject to the accuracy of the
representations and warranties of the Company on the date hereof and at the time
of purchase (unless previously waived) and at the additional time of purchase,
as the case may be, as if made at such time), the timely performance by the
Company of its obligations hereunder and to the following additional conditions
precedent:
(a) The Company shall furnish to you at the time of purchase and at
the additional time of purchase, as the case may be, an opinion of Wilson
Sonsini Goodrich & Rosati, counsel for the Company, addressed to the
Underwriters, and dated the time of purchase or the additional time of
purchase, as the case may be, with reproduced copies for each of the other
Underwriters and in form reasonably satisfactory to Dewey Ballantine LLP,
counsel for the Underwriters, stating that:
(i) the Company has been duly incorporated and is validly
existing as a corporation and is in good standing under the laws of
the State of Delaware, with full corporate power and authority to own,
lease and operate its properties and conduct its business as described
in the Registration Statement and the Prospectus, to execute and
deliver this Agreement and to issue, sell and deliver the Shares as
herein contemplated;
(ii) the Company is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction in which the
ownership or leasing of its properties or the conduct of its business
requires such qualification,
14
<PAGE>
except where the failure to so qualify would not individually or in
the aggregate have a Material Adverse Effect;
(iii) this Agreement has been duly authorized, executed and
delivered by the Company;
(iv) the Shares have been duly authorized and, when issued and
delivered to and paid for by the Underwriters, will be validly issued,
fully paid and non-assessable;
(v) the Company has authorized and outstanding shares of
capital stock as set forth in the Registration Statement and the
Prospectus; the outstanding shares of capital stock of the Company
have been duly and validly authorized and issued and are fully paid,
nonassessable and have not been issued in violation of or subject to
any preemptive rights or other rights to subscribe for or purchase
securities arising (i) by operation of the charter or by-laws of the
Company or the General Corporation Law of the State of Delaware or
(ii) to our knowledge, under any agreement to which the Company is a
party. The certificates evidencing the Shares to be delivered
hereunder are in due and proper form under Delaware law, and when duly
countersigned by the Company's transfer agent and registrar, and
delivered to you or upon your order against payment of the agreed
consideration therefor in accordance with the provisions of this
Agreement, the Shares represented thereby will be duly authorized and
validly issued, fully paid and nonassessable, will not have been
issued in violation of or subject to any preemptive rights or other
rights to subscribe for or purchase securities arising (i) by
operation of the charter or by-laws of the Company or the General
Corporation Law of the State of Delaware or (ii) to our knowledge,
under any agreement to which the Company is a party, and the holders
of the Shares will not be subject to personal liability by reason of
being such holders;
(vi) all of the outstanding shares of capital stock of the
Subsidiary have been duly authorized and validly issued, are fully
paid and non-assessable, are owned by the Company and are not subject
to any perfected security interest or, to such counsel's knowledge,
any other encumbrance or adverse claim;
(vii) the capital stock of the Company, including the Shares,
conforms in all material respects to the description thereof contained
in the Prospectus;
(viii) the Registration Statement and the Prospectus (except as
to the financial statements and schedules and other financial and
statistical data derived therefrom or contained therein, as to which
such counsel need express no opinion) comply as to form in all
material respects with the requirements of the Act;
(ix) the Registration Statement has become effective under the
Act and, to such counsel's knowledge, no stop order proceedings with
respect thereto are pending or threatened under the Act and any
required filing of the Prospectus, and
15
<PAGE>
any supplement thereto pursuant to Rule 424 under the Act has been
made in the manner and within the time period required by such Rule
424;
(x) no approval, authorization, consent or order of or filing
with any national, state or local governmental or regulatory
commission, board, body, authority or agency is legally required in
connection with the execution and delivery of this Agreement, the
issuance and sale of the Shares and the consummation of the
transactions contemplated hereby and by the Registration Statement,
other than those that have been obtained under the Act, the Exchange
Act, or from the NASD and other than any necessary qualification under
the state securities or blue sky laws of the various jurisdictions in
which the Shares are being offered by the Underwriters, as to which
such qualification such counsel need express no opinion;
(xi) the execution, delivery and performance of this Agreement
by the Company and the transactions contemplated hereby and by the
Registration Statement do not and will not result in any material
breach of, or constitute a material default under (nor constitute any
event which with notice, lapse of time, or both, would result in such
a breach of, or default under) (A) any provisions of the charter or
by-laws or other organizational documents of the Company, (B) any
provision of any license, permit, franchise, indenture, mortgage, deed
of trust, bank loan or credit agreement or other evidence of
indebtedness, or any lease, contract or other agreement or instrument
that is described in or filed as an exhibit to the Registration
Statement or (C) any federal, state or local law, regulation or rule
(except to the extent any such law, regulation or rule concerns patent
or FDA regulatory matters, as to which such counsel need express no
opinion), or any decree, judgment or order pursuant to which the
Company is legally bound and which is known to us;
(xii) to such counsel's knowledge, there are no contracts,
licenses, agreements, leases or documents of a character which are
required to be filed as exhibits to the Registration Statement or to
be described in the Prospectus which have not been so filed or
described;
(xiii) to such counsel's knowledge, there are no private or
governmental actions, suits, claims, investigations or proceedings
pending, threatened or contemplated to which the Company or any of its
officers is subject or of which any of its properties is subject,
which are required to be described in the Prospectus, which are not
described as required;
(xiv) the Company is not, and after the offering and sale of the
Shares, will not be, an "investment company," or a "promoter,"
"principal underwriter" for or an entity controlled by an "investment
company," as such terms are defined in the Investment Company Act,
assuming that, pending their uses identified in the Prospectus, the
net proceeds of the offering contemplated by the Prospectus will be
invested in "government securities" within the meaning of the
Investment Company Act;
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<PAGE>
(xv) except as to regulatory and patent matters, as to which
such counsel need express no opinion, the statements in the
Registration Statement and Prospectus, insofar as they are
descriptions of contracts, agreements or other legal documents, or
refer to statements of law or legal conclusions, are accurate in all
material respects and present fairly the information required to be
shown;
(xvi) immediately after the issuance and sale of the Shares to
the Underwriters, no holder of any shares of capital stock or other
securities (including options and warrants) of the Company described in
the Registration Statement shall have any right to acquire any shares
of preferred stock of the Company; and
(xvii) no person has the right, pursuant to the terms of any
contract, agreement or other instrument described in or filed as an
exhibit to the Registrations Statement, to cause the Company to
register under the Act any shares of capital stock or other securities
as a result of the filing or effectiveness of the Registration
Statement or the sale of the Shares as contemplated hereby; and to the
knowledge of such counsel, except as described in the Registration
Statement and Prospectus, no person is entitled to registration rights
with respect to shares of capital stock or other securities of the
Company pursuant to any contracts or agreements filed as exhibits to
the Registration Statement.
In rendering such opinion, such counsel may rely as to matters of law
of any jurisdiction other than that of the States of Delaware and
California and the federal securities law, on opinions of local counsel,
and as to matters of fact, on certificates of officers of the Company and
of governmental officials, in which case their opinion is to state that
they are so doing and that the Underwriters are justified in relying on
such opinions or certificates and copies of said opinions or certificates
are to be attached to the opinion. Such counsel shall also include a
statement to the effect that although they have not independently verified
the accuracy and completeness of the statements contained in the
Registration Statement and/or Prospectus, based upon their participation in
the preparation of the Registration Statement and Prospectus and their
review and discussion of the contents thereof, nothing has come to such
counsel's attention that would lead such counsel to believe that at the
effective date of the Registration Statement, at the date of the Prospectus
or at the time of purchase or additional time of purchase, the Registration
Statement or the Prospectus, or any such amendment or supplement except for
the financial statements and schedules and other financial data and the
matters referred to in subparagraph (vii) hereof, as to which such counsel
need not express any statement, contained or contains any untrue statement
of a material fact or omitted or omits to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading;
(b) You shall have received at the time of purchase and at the
additional time of purchase, as the case may be, the opinion of Ryan
Kromholz & Manion, S.C., special counsel to the Company with respect to
patents and proprietary rights, dated the time of purchase or the
additional time of purchase, as the case may be, with reproduced copies
17
<PAGE>
for each of the other Underwriters and in form reasonably satisfactory to
Dewey Ballantine LLP, counsel for the Underwriters, stating that:
(i) To such counsel's knowledge, except as described in the
Prospectus, (A) the Company has valid license rights or clear title to
the Intellectual Property referenced in the Prospectus, and there are
no rights of third parties to any such Intellectual Property; (B)
there is no infringement or other violation by third parties of any of
the Intellectual Property of the Company referenced in the Prospectus;
(C) there is no infringement or other violation by the Company of any
Intellectual Property of others; (D) there is no pending or threatened
action, suit proceeding or claim by governmental authorities or others
that the Company infringes or otherwise violates any Intellectual
Property of others, and such counsel is unaware of any facts which
would form a reasonable basis for any such claim; and (E) there is no
pending or threatened action, suit, proceeding or claim by
governmental authorities or others challenging the rights of the
Company in or to, or challenging the scope of, any Intellectual
Property of the Company referenced in the Prospectus, and such counsel
is unaware of any facts which would form a reasonable basis for any
such claim;
(ii) to such counsel's knowledge, the patent applications of
the Company presently on file disclose patentable subject matter, and
such counsel is not aware of any inventorship challenges, any
interference which has been declared or provoked, or any other
material fact with respect to the patent applications of the Company
presently on file that (A) would preclude the issuance of patents with
respect to such applications, or (B) would lead such counsel to
conclude that such patents, when issued, would not be valid and
enforceable in accordance with applicable regulations; and
(iii) the statements in the Registration Statement and the
Prospectus referencing Intellectual Property matters, insofar as such
statements constitute summaries of legal matters, contracts,
agreements, documents or proceedings referred to therein, or refer to
statements of law or legal conclusions, are in all material respects
accurate and complete statements or summaries of the matters therein
set forth. Nothing has come to such counsel's attention that causes
them to believe that such above described portions of the Registration
Statement, at the time such Registration Statement became effective,
contained an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading, or that such above described
portions of the Prospectus and at the date of the Prospectus and at
all times leading up to and including the time of purchase and the
additional time of purchase, as the case may be, contained an untrue
statement of material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
(c) You shall have received at the time of purchase and at the
additional time of purchase, as the case may be, the opinion of Hogan &
Hartson, L.L.P., regulatory
18
<PAGE>
counsel to the Company, dated the time of purchase or the additional time
of purchase, as the case may be, with reproduced copies for each of the
other Underwriters and in form reasonably satisfactory to Dewey Ballantine
LLP, counsel for the Underwriters, stating that the statements in the
Registration Statement and the Prospectus referencing regulatory matters,
insofar as such statements constitute summaries of food and drug regulatory
matters with respect to the Company, as of the date of the Registration
Statement and the Prospectus and as of the date of such opinion, are in all
material respects accurate and complete statements or summaries of the
matters therein set forth; and nothing has come to such counsel's attention
that causes such counsel to believe that the above-described portions of
the Registration Statement and the Prospectus, at the date of the
Registration Statement and the Prospectus or at the date of such opinion,
contained or contains an untrue statement of material fact or omitted or
omits to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which
they were made, not misleading.
(d) You shall have received at the time of purchase and at the
additional time of purchase, as the case may be, the favorable opinion of
Dewey Ballantine LLP, counsel for the Underwriters, dated the time of
purchase or the additional time of purchase, as the case may be, with
respect to the issuance and sale of the Shares by the Company, the
Registration Statement, the Prospectus (together with any supplement
thereto) and such other related matters as the Underwriters may require.
(e) You shall have received from Pricewaterhouse Coopers LLP, letters
dated, respectively, the date of this Agreement and the time of purchase
and additional time of purchase, as the case may be, and addressed to the
Underwriters (with reproduced copies for each of the Underwriters) in the
forms heretofore reasonably acceptable to Dewey Ballantine LLP, counsel for
the Underwriters.
(f) No amendment or supplement to the Registration Statement or
Prospectus shall be filed prior to the time the Registration Statement
becomes effective to which you object in writing.
(g) The Registration Statement shall become effective, or if Rule
430A under the Act is used, the Prospectus shall have been filed with the
Commission pursuant to Rule 424(b) under the Act, at or before 5:30 P.M.,
New York City time, on the date of this Agreement, unless a later time (but
not later than 5:30 P.M., New York City time, on the second full business
day after the date of this Agreement) shall be agreed to by the Company and
you in writing or by telephone, confirmed in writing; provided, however,
-------- -------
that the Company and you and any group of Underwriters, including you, who
have agreed hereunder to purchase in the aggregate at least fifty percent
(50%) of the Firm Shares may from time to time agree on a later date.
(h) Prior to the time of purchase or the additional time of purchase,
as the case may be, (i) no stop order with respect to the effectiveness of
the Registration Statement shall have been issued under the Act or
proceedings initiated under Section 8(d) or 8(e) of the Act; (ii) the
Registration Statement and all amendments thereto, or modifications
thereof, if any, shall not contain an untrue statement of a material fact
or omit to state a
19
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material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances under which
they were made; and (iii) the Prospectus and all amendments or supplements
thereto, or modifications thereof, if any, shall not contain an untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in the light
of the circumstances under which they are made, not misleading.
(i) Between the time of execution of this Agreement and the time of
purchase or the additional time of purchase, as the case may be, no event
shall have occurred that has had a Material Adverse Effect or that would be
expected to have a Material Adverse Effect (other than as specifically
identified in the Registration Statement or Prospectus).
(j) The Company will, at the time of purchase or additional time of
purchase, as the case may be, deliver to you a certificate of its President
and its Chief Financial Officer to the effect that the representations and
warranties of the Company as set forth in this Agreement are true and
correct as of each such date, that the Company has performed such of their
obligations under this Agreement as are to be performed at or before the
time of purchase and at or before the additional time of purchase, as the
case may be, and the conditions set forth in paragraphs (g), (h) and (i) of
this Section 7 have been met.
(k) You shall have received signed Lock-Up Agreements, dated the date
of this Agreement, from each of the officers and directors of the Company
and the holders of Common Stock and securities convertible into or
exchangeable or exercisable for Common Stock (including options and
warrants) relating to, in the aggregate, __% of the Company's outstanding
Common Stock on a fully diluted basis stating that such persons will not
sell, offer to sell, contract to sell, hypothecate, pledge, grant any
option to sell or otherwise dispose of, directly or indirectly, any shares
of Common Stock or securities convertible into or exchangeable or
exercisable for Common Stock or options, warrants or other rights to
purchase Common Stock or any other securities of the Company that are
substantially similar to Common Stock for a period of one hundred and
eighty (180) days after the date of the Prospectus without the prior
written consent of UBSW.
(l) The Company shall have furnished to you such other documents and
certificates as to the accuracy and completeness of any statement in the
Registration Statement and the Prospectus as of the time of purchase and
the additional time of purchase, as the case may be, as you may reasonably
request.
(m) The Shares shall have been approved for listing for quotation on
NASDAQ, subject only to notice of issuance at or prior to the time of
purchase or the additional time of purchase, as the case may be.
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8. Effective Date of Agreement; Termination. This Agreement shall
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become effective (i) if Rule 430A under the Act is not used, when you shall have
received notification of the effectiveness of the Registration Statement, or
(ii) if Rule 430A under the Act is used, when the parties hereto have executed
and delivered this Agreement.
The obligations of the several Underwriters hereunder shall be subject
to termination in the absolute discretion of you or any group of Underwriters
(which may include you) which has agreed to purchase in the aggregate at least
fifty percent (50%) of the Firm Shares, (i) if, since the time of execution of
this Agreement or the respective dates as of which information is given in the
Registration Statement and Prospectus, there has been any event that has had a
Material Adverse Effect or that is reasonably likely to have a Material Adverse
Effect (other than as specifically identified in the Registration Statement and
Prospectus) which would, in your judgment or in the judgment of such group of
Underwriters, make it impracticable to market the Shares, or, (ii) if, at any
time prior to the time of purchase or, with respect to the purchase of any
Additional Shares, the additional time of purchase, as the case may be, trading
in securities on the New York Stock Exchange, the American Stock Exchange or the
Nasdaq National Market shall have been suspended or limitations or minimum
prices shall have been established on the New York Stock Exchange, the American
Stock Exchange or the Nasdaq National Market, or (iii) if a banking moratorium
shall have been declared either by the United States or New York State
authorities, or (iv) if the United States shall have declared war in accordance
with its constitutional processes or there shall have occurred any material
outbreak or escalation of hostilities or other national or international
calamity or crisis of such magnitude in its effect on the financial markets of
the United States as, in your judgment or in the judgment of such group of
Underwriters, to make it impracticable to market the Shares.
If you or any group of Underwriters elects to terminate this Agreement
as provided in this Section 8, the Company and each other Underwriter shall be
notified promptly by letter or telegram.
If the sale to the Underwriters of the Shares, as contemplated by this
Agreement, is not carried out by the Underwriters for any reason permitted under
this Agreement or if such sale is not carried out because the Company shall be
unable to comply with any of the terms of this Agreement, the Company shall not
be under any obligation or liability under this Agreement (except to the extent
provided in Sections 5(n), 6 and 10 hereof), and the Underwriters shall be under
no obligation or liability to the Company under this Agreement (except to the
extent provided in Section 10 hereof) or to one another hereunder.
9. Increase in Underwriters' Commitments. Subject to Sections 7 and
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8, if any Underwriter shall default in its obligation to take up and pay for the
Firm Shares to be purchased by it hereunder (otherwise than for a reason
sufficient to justify the termination of this Agreement under the provisions of
Section 8 hereof) and if the number of Firm Shares which all Underwriters so
defaulting shall have agreed but failed to take up and pay for does not exceed
ten percent (10%) of the total number of Firm Shares, the non-defaulting
Underwriters shall take up and pay for (in addition to the aggregate number of
Firm Shares they are obligated to purchase pursuant to Section 1 hereof) the
number of Firm Shares agreed to be purchased by all such defaulting
Underwriters, as hereinafter provided. Such Shares shall be taken up and paid
for by such non-defaulting Underwriter or Underwriters in such amount or amounts
as you may
21
<PAGE>
designate with the consent of each Underwriter so designated or, in the event no
such designation is made, such Shares shall be taken up and paid for by all non-
defaulting Underwriters pro rata in proportion to the aggregate number of Firm
Shares set opposite the names of such non-defaulting Underwriters in Schedule A.
----------
Without relieving any defaulting Underwriter from its obligations
hereunder, the Company agrees with the non-defaulting Underwriters that it will
not sell any Firm Shares hereunder unless all of the Firm Shares are purchased
by the Underwriters (or by substituted Underwriters selected by you with the
approval of the Company or selected by the Company with your approval).
If a new Underwriter or Underwriters are substituted by the
Underwriters or by the Company for a defaulting Underwriter or Underwriters in
accordance with the foregoing provision, the Company or you shall have the right
to postpone the time of purchase for a period not exceeding five (5) business
days in order that any necessary changes in the Registration Statement and
Prospectus and other documents may be effected.
The term "Underwriter" as used in this Agreement shall refer to and
-----------
include any Underwriter substituted under this Section 9 with like effect as if
such substituted Underwriter had originally been named in Schedule A.
----------
If the aggregate number of Shares which the defaulting Underwriter or
Underwriters agreed to purchase exceeds ten percent (10%) of the total number of
Shares which all Underwriters agreed to purchase hereunder, and if neither the
non-defaulting Underwriters nor the Company shall make arrangements within the
five (5) business day period stated above for the purchase of all the Shares
which the defaulting Underwriter or Underwriters agreed to purchase hereunder,
this Agreement shall be terminated without further act or deed and without any
liability on the part of the Company to any non-defaulting Underwriter and
without any liability on the part of any non-defaulting Underwriter to the
Company. Nothing in this paragraph, and no action taken hereunder, shall
relieve any defaulting Underwriter from liability in respect of any default of
such Underwriter under this Agreement.
10. Indemnity and Contribution.
--------------------------
(a) The Company agrees to indemnify, defend and hold harmless each
Underwriter, its partners, directors and officers, and any person who controls
any Underwriter within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act, and the successors and assigns of all of the foregoing persons
from and against any loss, damage, reasonable expense, liability or claim
(including the reasonable cost of investigation) which, jointly or severally,
any such Underwriter or any such person may incur under the Act, the Exchange
Act, the common law or otherwise, insofar as such loss, damage, reasonable
expense, liability or claim arises out of or is based upon (i) any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement (or in the Registration Statement as amended by any post-
effective amendment thereof by the Company) or in a Prospectus (the term
Prospectus for the purpose of this Section 10 being deemed to include any
Preliminary Prospectus, the Prospectus and the Prospectus as amended or
supplemented by the Company), or arises out of or is based upon any omission or
alleged omission to state a material
22
<PAGE>
fact required to be stated in either such Registration Statement or Prospectus
or necessary to make the statements made therein not misleading in light of the
circumstance in which they were made, except insofar as any such loss, damage,
reasonable expense, liability or claim arises out of or is based upon any untrue
statement or alleged untrue statement of a material fact contained in and in
conformity with information furnished in writing by or on behalf of any
Underwriter through you to the Company expressly for use with reference to such
Underwriter in such Registration Statement or such Prospectus or arises out of
or is based upon any omission or alleged omission to state a material fact in
connection with such information required to be stated in such Registration
Statement or such Prospectus or necessary to make such information not
misleading in light of the circumstance in which they were made or (ii) any
untrue statement or alleged untrue statement made by the Company in Section 3 of
this Agreement or the failure by the Company to perform when and as required any
agreement or covenant contained herein or (iii) any untrue statement or alleged
untrue statement of any material fact contained in any audio or visual materials
provided by the Company or based upon written information furnished by or on
behalf of the Company including, without limitation, slides, videos, films, tape
recordings, used in connection with the marketing of the Shares, or (iv) the
Directed Share Program, provided that, the Company shall not be responsible for
any loss, damage, expense, liability, or claim that is finally judicially
determined to have resulted from the bad faith or gross negligence of the
Underwriters in conducting the Directed Share Program; provided, however, that
-------- -------
the indemnification contained in this paragraph (a) with respect to any
preliminary prospectus or the Prospectus shall not inure to the benefit of any
Underwriter from whom the person asserting any such losses, claims, damages or
liabilities purchased Shares, or any person controlling such Underwriters, if
(i) a copy of the Prospectus (as then amended or supplemented if the Company
shall have furnished any amendments or supplements thereto) was not sent or
given by or on behalf of such Underwriter to such person, if required by law so
to have delivered, at or prior to the written confirmation of the sale of the
Shares to such person, (ii) the Prospectus (as so amended or supplemented) would
have cured the defect giving rise to such loss, claim, damage or liability and
(iii) the Company delivered the Prospectus to the several Underwriters in
requisite quantity on a timely basis to permit such delivery or sending.
If any action, suit or proceeding (together, a "Proceeding") is
----------
brought against an Underwriter or any such person in respect of which indemnity
may be sought against the Company pursuant to the foregoing paragraph, such
Underwriter or such person shall promptly notify the Company in writing of the
institution of such Proceeding and the Company shall assume the defense of such
Proceeding, including the employment of counsel reasonably satisfactory to such
indemnified party and payment of all fees and expenses; provided, however, that
-------- -------
the omission to so notify the Company shall not relieve the Company from any
liability which the Company may have to any Underwriter or any such person or
otherwise unless such failure materially prejudices, or is reasonably likely to
materially prejudice, the Company. Such Underwriter or such person shall have
the right to employ its or their own counsel in any such case, but the fees and
expenses of such counsel shall be at the expense of such Underwriter or of such
person unless the employment of such counsel shall have been authorized in
writing by the Company in connection with the defense of such Proceeding or the
Company shall not have, within a reasonable period of time in light of the
circumstances, employed counsel to defend such Proceeding or such indemnified
party or parties shall have reasonably concluded based on the advice of counsel
that there may be defenses available to it or them which are different from,
additional to or in conflict with those available to the Company (in which case
the Company
23
<PAGE>
shall not have the right to direct the defense of such Proceeding on behalf of
the indemnified party or parties), in any of which events such reasonable fees
and expenses shall be borne by the Company and paid as incurred (it being
understood, however, that the Company shall not be liable for the expenses of
more than one separate counsel (in addition to local counsel) in any one
Proceeding or series of related Proceedings in the same jurisdiction
representing the indemnified parties who are parties to such Proceeding). The
Company shall not be liable for any settlement of any Proceeding effected
without the written consent of the Company but if settled with the written
consent of the Company, the Company agrees to indemnify and hold harmless any
Underwriter and any such person from and against any loss or liability by reason
of such settlement. Notwithstanding the foregoing sentence, if at any time an
indemnified party shall have requested in writing an indemnifying party to
reimburse the indemnified party for reasonable fees and expenses of counsel as
contemplated by the second sentence of this paragraph, then the indemnifying
party agrees that it shall be liable for any settlement of any Proceeding
effected without its written consent if (i) such settlement is entered into more
than sixty (60) days after receipt by such indemnifying party of the aforesaid
written request, (ii) such indemnifying party shall not have reimbursed the
indemnified party in accordance with such written request prior to the date of
such settlement and (iii) such indemnified party shall have given the
indemnifying party at least thirty (30) days' prior written notice of its
intention to settle. Notwithstanding the foregoing sentence, the indemnified
party will not, under any circumstances without the indemnifying party's prior
written consent, effect a settlement of any pending or threatened Proceeding
unless such settlement includes an unconditional release of the indemnifying
party from all liability claims that relate to the subject matter of such
Proceeding and does not include an admission of fault, culpability, or a failure
to act by or on behalf of such indemnifying party. No indemnifying party shall,
without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened Proceeding in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability on claims
that are the subject matter of such Proceeding and does not include an admission
of fault, culpability or a failure to act, by or on behalf of such indemnified
party.
(b) In connection with the offer and sale of the Reserved Shares, the
Company agrees to purchase from UBSW, at its request, for full purchase price
all Reserved Shares which were subject to a properly confirmed agreement to
purchase and for which any Directed Share Participant failed to pay therefor and
accept delivery thereof.
(c) Each Underwriter severally agrees to indemnify, defend and hold
harmless the Company, its directors and officers, and any person who controls
the Company within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act, and the successors and assigns of all of the foregoing persons
from and against any loss, damage, reasonable expense, liability or claim
(including the reasonable cost of investigation) which, jointly or severally,
the Company or any such person may incur under the Act, the Exchange Act, the
common law or otherwise, insofar as such loss, damage, reasonable expense,
liability or claim arises out of or is based upon any untrue statement or
alleged untrue statement of a material fact contained in and in conformity with
information furnished in writing by or on behalf of such Underwriter through you
to the Company expressly for use with reference to such Underwriter in the
Registration
24
<PAGE>
Statement (or in the Registration Statement as amended by any post-effective
amendment thereof by the Company) or in a Prospectus.
If any Proceeding is brought against the Company or any such person in
respect of which indemnity may be sought against any Underwriter pursuant to the
foregoing paragraph, the Company or such person shall promptly notify such
Underwriter in writing of the institution of such Proceeding and such
Underwriter shall assume the defense of such Proceeding, including the
employment of counsel reasonably satisfactory to such indemnified party and
payment of all fees and expenses; provided, however, that the omission to so
-------- -------
notify such Underwriter shall not relieve such Underwriter from any liability
which such Underwriter may have to the Company or any such person or otherwise.
The Company or such person shall have the right to employ its own counsel in any
such case, but the fees and expenses of such counsel shall be at the expense of
the Company or such person unless the employment of such counsel shall have been
authorized in writing by such Underwriter in connection with the defense of such
Proceeding or such Underwriter shall not have, within a reasonable period of
time in light of the circumstances, employed counsel to have charge of the
defense of such Proceeding or such indemnified party or parties shall have
reasonably concluded that there may be defenses available to it or them which
are different from or additional to or in conflict with those available to such
Underwriter (in which case such Underwriter shall not have the right to direct
the defense of such Proceeding on behalf of the indemnified party or parties,
but such Underwriter may employ counsel and participate in the defense thereof
but the fees and expenses of such counsel shall be at the expense of such
Underwriter), in any of which events such fees and expenses shall be borne by
such Underwriter and paid as incurred (it being understood, however, that such
Underwriter shall not be liable for the expenses of more than one separate
counsel (in addition to any local counsel) in any one Proceeding or series of
related Proceedings in the same jurisdiction representing the indemnified
parties who are parties to such Proceeding). No Underwriter shall be liable for
any settlement of any such Proceeding effected without the written consent of
such Underwriter but if settled with the written consent of such Underwriter,
such Underwriter agrees to indemnify and hold harmless the Company and any such
person from and against any loss or liability by reason of such settlement.
Notwithstanding the foregoing sentence, if at any time an indemnified party
shall have requested an indemnifying party to reimburse the indemnified party
for fees and expenses of counsel as contemplated by the second sentence of this
paragraph, then the indemnifying party agrees that it shall be liable for any
settlement of any Proceeding effected without its written consent if (i) such
settlement is entered into more than sixty (60) days after receipt by such
indemnifying party of the aforesaid request, (ii) such indemnifying party shall
not have reimbursed the indemnified party in accordance with such request prior
to the date of such settlement and (iii) such indemnified party shall have given
the indemnifying party at least thirty (30) days' prior notice of its intention
to settle. Notwithstanding the foregoing sentence, the indemnified party will
not, under any circumstances without the indemnifying party's prior written
consent, effect a settlement of any pending or threatened Proceeding unless such
settlement includes an unconditional release of the indemnifying party from all
liability claims that relate to the subject matter of such Proceeding and does
not include an admission of fault, culpability, or a failure to act by or on
behalf of such indemnifying party. No indemnifying party shall, without the
prior written consent of the indemnified party, effect any settlement of any
pending or threatened Proceeding in respect of which any indemnified party is or
could have been a party and indemnity could have been sought hereunder by such
indemnified party, unless
25
<PAGE>
such settlement includes an unconditional release of such indemnified party from
all liability on claims that are the subject matter of such Proceeding.
(d) If the indemnification provided for in this Section 10 is
unavailable to an indemnified party under subsections (a), (b) or (c) of this
Section 10 in respect of any losses, damages, expenses, liabilities or claims
referred to therein, then each applicable indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, damages, expenses,
liabilities or claims (i) in such proportion as is appropriate to reflect the
relative benefits received by the Company on the one hand and the Underwriters
on the other hand from the offering of the Shares or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the Company on the one
hand and of the Underwriters on the other in connection with the statements or
omissions which resulted in such losses, damages, expenses, liabilities or
claims, as well as any other relevant equitable considerations. The relative
benefits received by the Company on the one hand and the Underwriters on the
other shall be deemed to be in the same respective proportions as the total
proceeds from the offering (net of underwriting discounts and commissions but
before deducting expenses) received by the Company and the total underwriting
discounts and commissions received by the Underwriters, bear to the aggregate
public offering price of the Shares. The relative fault of the Company on the
one hand and of the Underwriters on the other shall be determined by reference
to, among other things, whether the untrue statement or alleged untrue statement
of a material fact or omission or alleged omission relates to information
supplied by the Company or by the Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The amount paid or payable by a party as a result of the
losses, damages, expenses, liabilities and claims referred to in this subsection
shall be deemed to include any legal or other fees or expenses reasonably
incurred by such party in connection with investigating, preparing to defend or
defending any Proceeding.
(e) The Company and the Underwriters agree that it would not be just
and equitable if contribution pursuant to this Section 10 were determined by pro
rata allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation that does not take account of the
equitable considerations referred to in subsection (c) above. Notwithstanding
the provisions of this Section 10, no Underwriter shall be required to
contribute any amount in excess of the amount by which the total price at which
the Shares underwritten by such Underwriter and distributed to the public were
offered to the public exceeds the amount of any damage which such Underwriter
has otherwise been required to pay by reason of such untrue statement or alleged
untrue statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute pursuant to this
Section 10 are several in proportion to their respective underwriting
commitments and not joint.
(f) The indemnity and contribution agreements contained in this
Section 10 and the covenants, warranties and representations of the Company
contained in this Agreement shall remain in full force and effect regardless of
any investigation made by or on behalf of any Underwriter, its partners,
directors or officers or any person (including each partner, officer or
26
<PAGE>
director of such person) who controls any Underwriter within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act, or by or on behalf of
the Company its directors or officers or any person who controls the Company
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act,
and shall survive any termination of this Agreement or the issuance and delivery
of the Shares. The Company and each Underwriter agree promptly to notify each
other of the commencement of any Proceeding against it and, in the case of the
Company, against any of the Company's officers or directors in connection with
the issuance and sale of the Shares, or in connection with the Registration
Statement or Prospectus.
11. Notices. Except as otherwise herein provided, all statements,
-------
requests, notices and agreements shall be in writing or by telegram and, if to
the Underwriters, shall be sufficient in all respects if delivered or sent to
UBS Warburg LLC, 299 Park Avenue, New York, N.Y. 10171-0026, Attention:
Syndicate Department and, if to the Company, shall be sufficient in all respects
if delivered or sent to the Company at the offices of the Company at 735 Palomar
Ave., Sunnyvale, California, 94086, Attention: John W. Morgan, Chief Executive
Officer. Notwithstanding the foregoing, notices pursuant to this section shall
be directed to any new address/contact person identified in writing to the
notified party.
27
<PAGE>
12. Governing Law; Construction. This Agreement and any claim,
---------------------------
counterclaim or dispute of any kind or nature whatsoever arising out of or in
any way relating to this Agreement ("Claim"), directly or indirectly, shall be
-----
governed by, and construed in accordance with, the laws of the State of New
York. The Section headings in this Agreement have been inserted as a matter of
convenience of reference and are not a part of this Agreement.
13. Submission to Jurisdiction. Except as set forth below, no Claim
--------------------------
may be commenced, prosecuted or continued in any court other than the courts of
the State of New York located in the City and County of New York or in the
United States District Court for the Southern District of New York, which courts
shall have jurisdiction over the adjudication of such matters, and the Company
consents to the jurisdiction of such courts and personal service with respect
thereto. The Company hereby consents to personal jurisdiction, service and venue
in any court in which any Claim arising out of or in any way relating to this
Agreement is brought by any third party against UBSW or any indemnified party.
Each of UBSW and the Company (on their respective behalfs and, to the extent
permitted by applicable law, on behalf of their respective stockholders and
affiliates) waives all right to trial by jury in any action, proceeding or
counterclaim (whether based upon contract, tort or otherwise) in any way arising
out of or relating to this Agreement. The Company agrees that a final judgment
in any such action, proceeding or counterclaim brought in any such court shall
be conclusive and binding upon the Company and may be enforced in any other
courts in the jurisdiction of which the Company is or may be subject, by suit
upon such judgment.
14. Parties at Interest. The Agreement herein set forth has been and
-------------------
is made solely for the benefit of the Underwriters and the Company and to the
extent provided in Section 10 hereof the controlling persons, directors and
officers referred to in such section, and their respective successors, assigns,
heirs, personal representatives and executors and administrators. No other
person, partnership, association or corporation (including a purchaser, as such
purchaser, from any of the Underwriters) shall acquire or have any right under
or by virtue of this Agreement.
15. Counterparts. This Agreement may be signed by the parties in one
------------
or more counterparts which together shall constitute one and the same agreement
among the parties.
16. Successors and Assigns. This Agreement shall be binding upon the
----------------------
Underwriters, the Company and their successors and assigns and any successor or
assign of any substantial portion of the Company's, and any of the Underwriters'
respective businesses and/or assets.
17. Miscellaneous. UBSW, an indirect, wholly owned subsidiary of UBS
-------------
AG, is not a bank and is separate from any affiliated bank, including any U.S.
branch or agency of UBS AG. Because UBSW is a separately incorporated entity, it
is solely responsible for its own contractual obligations and commitments,
including obligations with respect to sales and purchases of securities.
Securities sold, offered or recommended by UBSW are not deposits, are not
insured by the Federal Deposit Insurance Corporation, are not guaranteed by a
branch or agency, and are not otherwise an obligation or responsibility of a
branch or agency.
28
<PAGE>
A lending affiliate of UBSW may have lending relationships with
issuers of securities underwritten or privately placed by UBSW. To the extent
required under the securities laws, prospectuses and other disclosure documents
for securities underwritten or privately placed by UBSW will disclose the
existence of any such lending relationships and whether the proceeds of the
issue will be used to repay debts owed to affiliates of UBSW.
29
<PAGE>
If the foregoing correctly sets forth the understanding among the
Company and the Underwriters, please so indicate in the space provided below
for the purpose, whereupon this letter and your acceptance shall constitute a
binding agreement among the Company and the Underwriters, severally.
Very truly yours,
CURON MEDICAL, INC.
By: _____________________________
Name:
Title:
Accepted and agreed to as of the
date first above written, on behalf of
themselves and the other several Underwriters
named in Schedule A
----------
UBS WARBURG LLC
CIBC WORLD MARKETS CORP.
SG COWEN SECURITIES CORPORATION
By: UBS WARBURG LLC
By: __________________
Name:
Title: Managing Director
By: __________________________
Name:
Title: Director
30
<PAGE>
SCHEDULE A
<TABLE>
<CAPTION>
Number of
Underwriter Firm Shares
----------- -----------
<S> <C>
UBS Warburg LLC...........................................
CIBC World Markets Corp...................................
SG Cowen Securities Corporation...........................
-----------
Total......................................
===========
</TABLE>
31
