<PAGE> 1
EXHIBIT 1.1
______________ Shares
ISTA PHARMACEUTICALS, INC.
Common Stock
UNDERWRITING AGREEMENT
[-], 2000
CIBC World Markets Corp.
Prudential Securities Incorporated
Thomas Weisel Partners LLC
c/o CIBC World Markets Corp.
One World Financial Center
New York, New York 10281
As Representatives of the
Several Underwriters named on
Schedule I attached hereto
Ladies and Gentlemen:
Ista Pharmaceuticals, Inc., a Delaware corporation (the "Company"),
proposes, subject to the terms and conditions contained herein, to sell to you
and the other underwriters named on Schedule I to this Agreement (the
"Underwriters"), for whom you are acting as Representatives (the
"Representatives"), an aggregate of [-] shares (the "Firm Shares") of the
Company's common stock, $.01 par value (the "Common Stock"). The respective
amounts of the Firm Shares to be purchased by each of the several Underwriters
are set forth opposite their names on Schedule I hereto. In addition, the
Company proposes to grant to the Underwriters an option to purchase up to an
additional [-] shares (the "Option Shares") of Common Stock from it for the
purpose of covering over-allotments in connection with the sale of the Firm
Shares. The Firm Shares and the Option Shares are together called the "Shares."
<PAGE> 2
1. Sale and Purchase of the Shares.
On the basis of the representations, warranties and agreements contained
in, and subject to the terms and conditions of, this Agreement:
(1) The Company agrees to sell to each of the Underwriters, and each
of the Underwriters agrees, severally and not jointly, to purchase from the
Company, at a price of $[-] per share (the "Initial Price"), the number of Firm
Shares set forth opposite the name of such Underwriter under the column "Number
of Firm Shares" on Schedule I to this Agreement, subject to adjustment in
accordance with Section 10 hereof.
(2) The Company grants to the several Underwriters an option to
purchase, severally and not jointly, all or any part of the Option Shares at the
Initial Price. The number of Option Shares to be purchased by each Underwriter
shall be the same percentage (adjusted by the Representatives to eliminate
fractions) of the total number of Option Shares to be purchased by the
Underwriters as such Underwriter is purchasing of the Firm Shares. Such option
may be exercised only to cover over-allotments in the sales of the Firm Shares
by the Underwriters and may be exercised in whole or in part at any time on or
before 12:00 noon, New York City time, on the business day before the Firm
Shares Closing Date (as defined below), and from time to time thereafter within
30 days after the date of this Agreement, in each case upon written, facsimile
or telegraphic notice, or verbal or telephonic notice confirmed by written,
facsimile or telegraphic notice, by the Representatives to the Company no later
than 12:00 noon, New York City time, on the business day before the Firm Shares
Closing Date or at least two business days before the Option Shares Closing Date
(as defined below), as the case may be, setting forth the number of Option
Shares to be purchased and the time and date (if other than the Firm Shares
Closing Date) of such purchase.
2. Delivery and Payment. Delivery by the Company of the Firm Shares to
the Representatives for the respective accounts of the Underwriters, and payment
of the purchase price in immediately available funds by wire transfer or by
certified or official bank check or checks payable in New York Clearing House
(same day) funds drawn to the order of the Company for the Firm Shares, against
delivery of the certificates therefor to the Representatives, shall take place
at the offices of Wilson Sonsini Goodrich & Rosati, Professional Corporation,
650 Page Mill Road, Palo Alto, California, at 10:00 a.m., Pacific Standard Time,
on the third business day following the date of this Agreement, or at such time
on such other date, not later than 10 business days after the date of this
Agreement, as shall be agreed upon by the Company and the Representatives (such
time and date of delivery and payment are called the "Firm Shares Closing
Date").
2
<PAGE> 3
In the event the option with respect to the Option Shares is exercised
in whole or in part on one or more occasions, delivery by the Company of the
Option Shares to the Representatives for the respective accounts of the
Underwriters and payment of the purchase price thereof in immediately available
funds by wire transfer or by certified or official bank check or checks payable
in New York Clearing House (same day) funds to the Company shall take place at
the offices of Wilson Sonsini Goodrich & Rosati, Professional Corporation
specified above at the time and on the date (which may be the same date as, but
in no event shall be earlier than, the Firm Shares Closing Date) specified in
the notice referred to in Section 1(b) hereof (such time and date of delivery
and payment are called the "Option Shares Closing Date"). The Firm Shares
Closing Date and the Option Shares Closing Date are called, individually, a
"Closing Date" and, together, the "Closing Dates."
Certificates evidencing the Shares shall be registered in such names and
shall be in such denominations as the Representatives shall request at least two
full business days before the Firm Shares Closing Date or, in the case of Option
Shares, on the day of notice of exercise of the option as described in Section
l(b) hereof and shall be made available to the Representatives for checking and
packaging, at such place as is designated by the Representatives, on the full
business day before the Firm Shares Closing Date (or the Option Shares Closing
Date, in the case of the Option Shares).
3. Registration Statement and Prospectus; Public Offering. The Company
has prepared and filed in conformity with the requirements of the Securities Act
of 1933, as amended (the "Securities Act"), and the published rules and
regulations thereunder (the "Rules") adopted by the Securities and Exchange
Commission (the "Commission") a Registration Statement (as hereinafter defined)
on Form S-1 (Registration No. 333-34120), including a preliminary prospectus
relating to the Shares, and such amendments thereof as may have been required to
the date of this Agreement. Copies of such Registration Statement (including all
amendments thereof) and of the related Preliminary Prospectus (as hereinafter
defined) have heretofore been delivered by the Company to the Representatives.
The term "Preliminary Prospectus" means any preliminary prospectus (as described
in Rule 430 of the Rules) included at any time as a part of the Registration
Statement or filed with the Commission by the Company with the consent of the
Representatives pursuant to Rule 424(a) of the Rules. The term "Registration
Statement" as used in this Agreement means the initial registration statement
(including all exhibits, financial schedules and information deemed to be a part
of the Registration Statement through incorporation by reference or otherwise),
as amended at the time and on the date it becomes effective (the "Effective
Date") including the information (if any) deemed to be part thereof at the time
of effectiveness pursuant to Rule 430A of the Rules. If the Company has filed an
abbreviated registration
3
<PAGE> 4
statement to register additional Shares pursuant to Rule 462(b) under the Rules
(the "462(b) Registration Statement"), then any reference herein to the
Registration Statement shall also be deemed to include such 462(b) Registration
Statement. The term "Prospectus" as used in this Agreement means the prospectus
in the form included in the Registration Statement at the time of effectiveness
or, if Rule 430A of the Rules is relied on, the term Prospectus shall also
include the final prospectus filed with the Commission pursuant to Rule 424(b)
of the Rules.
The Company understands that the Underwriters propose to make a public
offering of the Shares, as set forth in and pursuant to the Prospectus, as soon
after the Effective Date and the date of this Agreement as the Representatives
deem advisable. The Company hereby confirms that the Underwriters and dealers
have been authorized to distribute or cause to be distributed each Preliminary
Prospectus and are authorized to distribute the Prospectus (as from time to time
amended or supplemented if the Company furnishes amendments or supplements
thereto to the Underwriters).
4. Representations and Warranties of the Company. The Company hereby
represents and warrants to each Underwriter as follows:
(1) On the Effective Date, the Registration Statement complied, and
on the date of the Prospectus, the date any post-effective amendment to the
Registration Statement becomes effective, the date any supplement or amendment
to the Prospectus is filed with the Commission and each Closing Date, the
Registration Statement (and any amendment thereof or supplement thereto) will
comply, in all material respects, with the applicable provisions of the
Securities Act and the Rules and did not and will not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein not
misleading. The Prospectus, and any amendment thereof or supplement thereto,
will not, at the date of the Prospectus, at the date of any such supplements or
amendments thereto or at any Closing Date, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. When any Preliminary
Prospectus was first filed with the Commission (whether filed as part of the
Registration Statement or any amendment thereto or pursuant to Rule 424(a) of
the Rules) and when any amendment thereof or supplement thereto was first filed
with the Commission, such Preliminary Prospectus as amended or supplemented
complied in all material respects with the applicable provisions of the
Securities Act and the Rules and did not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. If applicable, each
Preliminary Prospectus and
4
<PAGE> 5
the Prospectus delivered to the Underwriters for use in connection with this
offering was identical to the electronically transmitted copies thereof filed
with the Commission pursuant to EDGAR, except to the extent permitted by
Regulation S-T. If Rule 434 is used, the Company will comply with the
requirements of Rule 434 and the Prospectus shall not be "materially different,"
as such term is used in Rule 434, from the Prospectus included in the
Registration Statement at the time it became effective. Notwithstanding the
foregoing, none of the representations and warranties in this paragraph 4(a)
shall apply to statements in, or omissions from, the Registration Statement or
the Prospectus relating to any Underwriter made in reliance upon, and in
conformity with, information herein or otherwise furnished in writing by the
Representatives on behalf of the several Underwriters expressly for use in the
Registration Statement or the Prospectus. With respect to the preceding
sentence, the Company acknowledges that the only information furnished in
writing by the Representatives on behalf of the several Underwriters expressly
for use in the Registration Statement or the Prospectus consists of the
statements contained under the caption "Underwriting" in the Prospectus. The
Company has not distributed any offering materials in connection with the
offering or sale of the Shares other than the Registration Statement, the
Preliminary Prospectus or the Prospectus or any other materials, if any,
permitted by the Securities Act or the Rules.
(2) The Registration Statement is effective under the Securities Act
and no stop order preventing or suspending the effectiveness of the Registration
Statement or suspending or preventing the use of the Prospectus has been issued
and no proceedings for that purpose have been instituted or are threatened under
the Securities Act. Any required filing of the Prospectus and any supplement
thereto pursuant to Rule 424(b) of the Rules has been or will be made in the
manner and within the time period required by such Rule 424(b).
(3) The financial statements of the Company (including all notes and
schedules thereto) included in the Registration Statement and Prospectus present
fairly the financial position, the results of operations, the statements of cash
flows and the statements of stockholders' equity and the other information
purported to be shown therein of the Company at the respective dates and for the
respective periods to which they apply; and such financial statements and
related schedules and notes have been prepared in conformity with generally
accepted accounting principles, consistently applied throughout the periods
involved, and all adjustments necessary for a fair presentation of the results
for such periods have been made. The summary and selected financial data
included in the Prospectus present fairly the information shown therein as at
the respective dates and for the respective periods specified, and the summary
and selected financial data have been presented on a basis consistent with the
financial statements of the Company so set forth in the Prospectus.
5
<PAGE> 6
(4) Ernst & Young LLP, whose reports are filed with the Commission as
a part of the Registration Statement, are and, during the periods covered by
their reports, were independent public accountants as required by the Securities
Act and the Rules.
(5) The Company and each of its Subsidiaries (as hereinafter defined)
is a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation. Except as described in the
Prospectus, the Company has no subsidiaries and does not control, directly or
indirectly, any corporation, partnership, joint venture, association or other
business organization. The Company and each such subsidiary or other entity
controlled directly or indirectly by the Company (collectively, "Subsidiaries")
is duly qualified to do business and is in good standing as a foreign
corporation in each jurisdiction in which the nature of the business conducted
by it or location of the assets or properties owned, leased or licensed by it
requires such qualification, except for such jurisdictions where the failure to
so qualify would not have a material adverse effect on the assets or properties,
business, results of operations or financial condition of the Company and its
Subsidiaries (a "Material Adverse Effect"). Except as described in the
Prospectus, the Company does not own, lease or license any asset or property or
conduct any business outside the United States of America. The Company and each
of its Subsidiaries has all requisite corporate power and authority, and all
necessary authorizations, approvals, consents, orders, licenses, certificates
and permits of and from all governmental or regulatory bodies or any other
person or entity (collectively, the "Permits"), to own, lease and license its
assets and properties and conduct its business, all of which are valid and in
full force and effect, as described in the Registration Statement and the
Prospectus, except where the lack of such Permits, individually or in the
aggregate, would not have a Material Adverse Effect. The Company and each of its
Subsidiaries has fulfilled and performed in all material respects all of its
material obligations with respect to such Permits, and no event has occurred
that allows, or after notice or lapse of time would allow, revocation or
termination thereof or that resulted in any other material impairment of the
rights of the Company or such Subsidiary thereunder. Except as may be required
under the Securities Act and state and foreign Blue Sky laws, no other Permits
are required for the Company to enter into, deliver and perform this Agreement
and to issue and sell the Shares.
(6) The Company and each of its Subsidiaries own or license adequate
and enforceable rights to use all patents, trademarks, trademark applications,
trade names, service marks, copyrights, copyright applications, licenses,
know-how and other similar rights and proprietary knowledge (collectively,
"Intangibles") described in the Prospectus as being owned or licensed by any of
them necessary for the conduct of their businesses as now conducted and proposed
to be conducted. The description of
6
<PAGE> 7
the Company's and its Subsidiaries' Intangibles contained in the Prospectus is
correct in all material respects and fairly and correctly describes the
Company's and its Subsidiaries' rights with respect thereto. Neither the Company
nor any of its Subsidiaries has received any notice of, or is aware of, any
infringement of or conflict with asserted rights of others with respect to any
Intangibles of the Company or any of its Subsidiaries. No claims have been
asserted by any person with respect to the validity of the Company's or any of
its Subsidiary's ownership or right to use any Intangibles and, to the Company's
knowledge, there is no reason for any such claim to be successful. There are no
pending or, to the Company's knowledge, threatened legal or governmental
proceedings relating to the Intangibles of the Company and its Subsidiaries [,
and no such proceedings are threatened or contemplated.] The Intangibles of the
Company and its Subsidiaries are valid and enforceable, and no registration
relating thereto has lapsed, expired, been abandoned or cancelled or is the
subject of cancellation or other adversarial proceedings, and all applications
therefor are pending and are in good standing. Neither the Company nor any of
its Subsidiaries is infringing or otherwise violating any Intangibles of any
persons and, to the Company's knowledge, no person is infringing or otherwise
violating any of the Company's or its Subsidiaries' Intangibles. All licenses of
the Company and its Subsidiaries to Intangibles are duly executed, validly
binding and enforceable in accordance with their terms and, to the Company's
knowledge, neither the Company nor any of its Subsidiaries is in default
(declared or undeclared) of any material provision of any of such licenses. The
Company and its Subsidiaries take security measures adequate to assert trade
secret protection in their non-patented technology. The agreements executed by
the Company's and its Subsidiaries' employees, consultants and other advisors
respecting trade secrets, confidentiality or intellectual property rights are
valid, binding and enforceable in accordance with their terms.
(7) The Company and each of its Subsidiaries have good and marketable
title in fee simple to all items of real property and good and marketable title
to all personal property described in the Prospectuses as being owned by any of
them. Any buildings or other real property described in the Prospectuses as
being held under lease by the Company or any of its Subsidiaries is held by the
Company or such Subsidiary, as the case may be, under valid, existing and
enforceable leases, free and clear of all liens, encumbrances, claims, security
interests and defects, except as are described in the Registration Statement and
the Prospectus or except as would not have a Material Adverse Effect.
(8) There are no actions, suits or governmental proceedings to which
the Company or any of its Subsidiaries is subject or that is pending or, to the
knowledge of the Company, threatened against or affecting the Company or any of
its Subsidiaries that, individually or in the aggregate, could have a Material
Adverse Effect,
7
<PAGE> 8
affect the consummation of this Agreement or that are required to be disclosed
in the Registration Statement and the Prospectus that are not so disclosed.
(9) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, except as described
therein, (i) there has not been any material adverse change or any development
involving a prospective material adverse change in or affecting the assets or
properties, business, results of operations or financial condition of the
Company and its Subsidiaries; (ii) neither the Company nor any of its
Subsidiaries has sustained any loss or interference with its assets, businesses
or properties (whether owned or leased) from fire, explosion, earthquake, flood
or other calamity, whether or not covered by insurance, or from any labor
dispute or any court or legislative or other governmental action, order or
decree that would have a Material Adverse Effect; and (iii) since the date of
the latest balance sheet included in the Registration Statement and the
Prospectus, except as reflected therein, neither the Company nor any of its
Subsidiaries has (A) issued any securities or incurred any liability or
obligation, direct or contingent, for borrowed money, except for liabilities and
obligations incurred in the ordinary course of business, (B) entered into any
transaction not in the ordinary course of business, or (C) declared or paid any
dividend or made any distribution on any shares of its stock or redeemed,
purchased or otherwise acquired or agreed to redeem, purchase or otherwise
acquire any shares of its stock. Neither the Company nor any of its Subsidiaries
has any material contingent obligations that are not disclosed in the
Registration Statement.
(10) There is no document, contract or other agreement of a character
required to be described in the Registration Statement or Prospectus or to be
filed as an exhibit to the Registration Statement that is not described or filed
as required by the Securities Act or Rules. Each description of a contract,
document or other agreement in the Registration Statement and the Prospectus
accurately reflects in all respects the terms of the underlying document,
contract or agreement. Each agreement described in the Registration Statement
and Prospectus or listed in the Exhibits to the Registration Statement is in
full force and effect and is valid and enforceable by and against the Company or
its Subsidiary, as the case may be, in accordance with its terms. Neither the
Company nor any of its Subsidiaries, if such Subsidiary is a party, nor to the
Company's knowledge, any other party is in default in the observance or
performance of any term or obligation to be performed by it under any such
agreement, and no event has occurred that, with notice or lapse of time or both,
would constitute such a default, in any such case which default or event,
individually or in the aggregate, would have a Material Adverse Effect. No
default exists, and no event has occurred that, with notice or lapse of time or
both, would constitute a default in the due performance and observance of any
term, covenant or condition by the Company or any of its
8
<PAGE> 9
Subsidiaries, if such Subsidiary is a party thereto, of any other agreement or
instrument to which the Company or any of its Subsidiaries is a party or by
which the Company, any of its Subsidiaries or their respective properties,
assets or businesses may be bound or affected except for such defaults or events
that, individually or in the aggregate, would not have a Material Adverse
Effect.
(11) Neither the Company nor any of its Subsidiaries is in violation
of any term or provision of (i) its charter or by-laws or (ii) any franchise,
license, permit, judgment, decree, order, statute, rule or regulation, except in
the case of clause (ii) for such violations that, individually or in the
aggregate, would not have a Material Adverse Effect.
(12) Neither the execution, delivery and performance of this
Agreement by the Company nor the consummation of any of the transactions
contemplated hereby (including, without limitation, the issuance and sale by the
Company of the Shares) will give rise to a right to terminate or accelerate the
due date of any payment due under, or conflict with or result in the breach of
any term or provision of, or constitute a default (or an event that, with notice
or lapse of time or both, would constitute a default) under, or require any
consent or waiver under, or result in the execution or imposition of any lien,
charge or encumbrance upon any properties or assets of the Company or any of its
Subsidiaries pursuant to the terms of, any indenture, mortgage, deed of trust or
other agreement or instrument to which the Company or any of its Subsidiaries is
a party or by which either the Company or any of its Subsidiaries or any of
their properties or businesses is bound, or any franchise, license, permit,
judgment, decree, order, statute, rule or regulation applicable to the Company
or any of its Subsidiaries or violate any provision of the charter or by-laws of
the Company or any of its Subsidiaries, except for such consents or waivers that
have already been obtained and are in full force and effect.
(13) The Company has authorized, issued and outstanding capital stock
as set forth under the caption "Capitalization" in the Prospectus. The
certificates evidencing the Shares are in due and proper legal form and have
been duly authorized for issuance by the Company. All of the issued and
outstanding shares of Common Stock have been duly and validly issued and are
fully paid and nonassessable. There are no statutory preemptive or other similar
rights to subscribe for or to purchase or acquire any shares of Common Stock of
the Company or any capital stock of any of its Subsidiaries or any such rights
pursuant to its charter or by-laws or any agreement or instrument to or by which
the Company or any of its Subsidiaries is a party or bound. The Shares, when
issued and sold pursuant to this Agreement, will be duly and validly issued,
fully paid and nonassessable, and none of the Shares will be issued in violation
of any preemptive or other similar right. Except as disclosed in the
Registration
9
<PAGE> 10
Statement and the Prospectus, there is no outstanding option, warrant or other
right calling for the issuance of, and there is no commitment, plan or
arrangement to issue, any share of stock of the Company or any of its
Subsidiaries or any security convertible into, or exercisable or exchangeable
for, such stock. The Common Stock and the Shares conform in all material
respects to all statements relating thereto contained in the Registration
Statement and the Prospectus. All outstanding shares of capital stock of each of
the Company's Subsidiaries have been duly authorized and validly issued, are
fully paid and nonassessable and are owned directly by the Company or by another
wholly-owned Subsidiary of the Company free and clear of any security interests,
liens, encumbrances, equities or claims, other than those described in the
Prospectus.
(14) No holder of any security of the Company has the right to have
any security owned by such holder included in the Registration Statement or to
demand registration of any security owned by such holder during the period
ending 180 days after the date of this Agreement. Each stockholder, director and
executive officer of the Company has delivered to the Representatives his
enforceable written lock-up agreement in the form attached to this Agreement as
Exhibit A (the "Lock-up Agreement").
(15) All necessary corporate action has been duly and validly taken
by the Company to authorize the execution, delivery and performance of this
Agreement and the issuance and sale of the Shares by the Company. This Agreement
has been duly and validly authorized, executed and delivered by the Company and
constitutes and will constitute the legal, valid and binding obligation of the
Company enforceable against the Company in accordance with its terms, except as
the enforceability thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles.
(16) Neither the Company nor any of its Subsidiaries is involved in
any labor dispute nor, to the knowledge of the Company, is any such dispute
threatened, except for any such dispute that would not have a Material Adverse
Effect. The Company is not aware of any existing or imminent labor disturbance
by employees of any of its principal suppliers or contractors that would have a
Material Adverse Effect. There is no pending, nor to the knowledge of the
Company, threatened litigation between the Company or its Subsidiaries and any
of its executive officers that, if adversely determined, could have a Material
Adverse Effect, and the Company has no reason to believe that such officers will
not remain in the employment of the Company.
(17) No transaction has occurred between or among the Company and any
of its officers or directors or stockholders or any affiliate or affiliates
10
<PAGE> 11
of any such officer or director or stockholders that is required to be described
in and is not described in the Registration Statement and the Prospectus.
(18) Neither the Company nor, to its knowledge, any of its officers,
directors or affiliates, has taken, directly or indirectly, any action designed
to or that might reasonably be expected to cause or result in, or that has
constituted or that might reasonably be expected to constitute, the
stabilization or manipulation of the price of the Common Stock to facilitate the
sale or resale of any of the Shares.
(19) The Company and its Subsidiaries have filed all federal, state,
local and foreign tax returns that are required to be filed through the date
hereof, which returns are true and correct in all material respects, or have
received extensions in respect thereof, and have paid all taxes shown on such
returns and all assessments received by any of them to the extent that the same
are material and have become due. There are no tax audits or investigations
pending or, to the knowledge of the Company, threatened that, if adversely
determined, could have a Material Adverse Effect; nor are there any material
proposed additional tax assessments against the Company or any of its
Subsidiaries.
(20) The Common Stock is registered pursuant to Section 12(g) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). The Shares
have been duly authorized for quotation on the National Association of
Securities Dealers Automated Quotation ("Nasdaq") National Market System,
subject to official Notice of Issuance. The Company has filed a registration
statement on Form 8-A pursuant to Section 12 of the Exchange Act, and such
registration statement complies in all material respects with the applicable
provisions of the Exchange Act and the rules and regulations of the Commission
thereunder. The Company has taken no action designed to, or likely to have the
effect of, terminating the registration of the Common Stock under the Exchange
Act or quotation of the Common Stock on the Nasdaq National Market, nor has the
Company received any notification that the Commission or the Nasdaq National
Market is contemplating terminating such registration or quotation.
(21) The Company has complied with all of the requirements and filed
the required forms as specified in Section 517.075 of the Florida Statutes and
all regulations thereunder.
(22) The books, records and accounts of the Company and its
Subsidiaries accurately and fairly reflect, in reasonable detail, the
transactions in, and dispositions of, the assets of, and the results of
operations of, the Company and its Subsidiaries.
11
<PAGE> 12
(23) The Company and its Subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks and in such
amounts as are customary in the businesses in which they are engaged or propose
to engage after giving effect to the transactions described in the Prospectus,
including, without limitation, insurance covering clinical trial liability,
product liability and real or personal property owned or leased against theft,
damage, destruction, act of vandalism and all other risks customarily insured
against. All policies of insurance and fidelity or surety bonds insuring the
Company or any of its Subsidiaries or the Company's or its Subsidiaries'
respective businesses, assets, employees, officers and directors are in full
force and effect, the Company and each of its Subsidiaries are in compliance
with the terms of such policies and instruments in all material respects, and
neither the Company nor any of its Subsidiaries has any reason to believe that
it will not be able to renew its existing insurance coverage as and when such
coverage expires or to obtain similar coverage from similar insurers as may be
necessary to continue its respective business at a cost substantially the same
as the cost of such existing insurance coverage. Neither the Company nor any of
its Subsidiaries has been denied any insurance coverage that it has sought or
for which it has applied.
(24) Each approval, consent, order, authorization, designation,
declaration or filing of, by or with any regulatory, administrative or other
governmental body necessary in connection with the execution and delivery by the
Company of this Agreement and the consummation of the transactions herein
contemplated required to be obtained or performed by the Company (except such
additional steps as may be required by the National Association of Securities
Dealers, Inc. (the "NASD") or may be necessary to qualify the Shares for public
offering by the Underwriters under the state securities or Blue Sky laws) has
been obtained or made and is in full force and effect.
(25) There are no affiliations with the NASD among the Company's
officers, directors or, to the best of the knowledge of the Company, any
stockholder of the Company, except as set forth in the Registration Statement or
otherwise disclosed in writing to the Representatives.
(26) (i) The Company and its Subsidiaries are in compliance in all
material respects with all rules, laws, ordinances, codes, policies, rules of
common law and regulations, and any judicial or administrative interpretation
thereof, relating to the use, treatment, storage and disposal of toxic
substances and protection of health or the environment (each, an "Environmental
Law") that are applicable to their businesses; (ii) neither the Company nor any
of its Subsidiaries has received any notice from any governmental authority or
third party of an asserted claim under any Environmental Law; (iii) the Company
and its Subsidiaries have received all permits,
12
<PAGE> 13
licenses or other approvals required of them under applicable Environmental Laws
to conduct their businesses and are in compliance with all terms and conditions
of any such permit, license or approval; (iv) to the Company's knowledge, no
facts currently exist that will require the Company or any of its Subsidiaries
to make material capital expenditures to comply with Environmental Laws; (v) no
property that is or has been owned, leased or occupied by the Company or any of
its Subsidiaries has been designated as a Superfund site pursuant to the
Comprehensive Environmental Response, Compensation of Liability Act of 1980, as
amended (42 U.S.C. Section 9601, et. seq., "CERCLA") or otherwise designated as
a contaminated site under applicable state or local law; and (vi) neither the
Company nor any of its Subsidiaries has been named as a "potentially responsible
party" under the CERCLA.
(27) In the ordinary course of its business, the Company periodically
reviews the effect of Environmental Laws on the business, operations and
properties of the Company and its Subsidiaries, in the course of which the
Company identifies and evaluates associated costs and liabilities (including,
without limitation, any capital or operating expenditures required for clean-up,
closure of properties or compliance with Environmental Laws, any required
permit, license or approval, any related constraints on operating activities and
any potential liabilities to third parties). On the basis of such review, the
Company has reasonably concluded that such associated costs and liabilities
would not, individually or in the aggregate, have a Material Adverse Effect.
(28) The Company is not and, after giving effect to the offering and
sale of the Shares and the application of proceeds thereof as described in the
Prospectus, will not be an "investment company" within the meaning of the
Investment Company Act of 1940, as amended (the "Investment Company Act").
(29) Neither the Company, any of its Subsidiaries nor any other
person associated with or acting on behalf of the Company or any of its
Subsidiaries, including, without limitation, any director, officer, agent or
employee of the Company or any of its Subsidiaries, has, directly or indirectly,
while acting on behalf of the Company or any of its Subsidiaries (i) used any
corporate funds for unlawful contributions, gifts, entertainment or other
unlawful expenses relating to political activity; (ii) made any unlawful payment
to foreign or domestic government officials or employees or to foreign or
domestic political parties or campaigns from corporate funds; (iii) violated any
provision of the Foreign Corrupt Practices Act of 1977, as amended; or (iv) made
any other unlawful payment.
(30) The Company has reviewed its operations and that of its
Subsidiaries to evaluate the extent to which the business or operations of the
Company
13
<PAGE> 14
or any of its Subsidiaries will be affected by the Year 2000 Problem (that is,
any significant risk that computer hardware or software applications used by the
Company and its Subsidiaries will not, in the case of dates or time periods
occurring after December 31, 1999, function at least as effectively as in the
case of dates or time periods occurring prior to January 1, 2000); as a result
of such review, (i) the Company has no reason to believe, and does not believe,
that (A) there are any issues related to the Company's preparedness to address
the Year 2000 Problem that are of a character required to be described or
referred to in the Registration Statement or Prospectus that have not been
accurately described in the Registration Statement and Prospectus and (B) the
Year 2000 Problem will have a Material Adverse Effect, or result in any material
loss or interference with the business or operations of the Company and its
Subsidiaries; and (ii) the Company reasonably believes, after due inquiry, that
the suppliers, vendors, customers or other material third parties used or served
by the Company and its Subsidiaries are addressing or will address the Year 2000
Problem in a timely manner, except to the extent that a failure to address the
Year 2000 by a supplier, vendor, customer or material third party would not have
a Material Adverse Effect.
(31) The Company and each of its Subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurances that
(i) transactions are executed in accordance with management's general or
specific authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted
accounting principles and to maintain asset accountability; (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
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(32) Except as described in the Registration Statement and the
Prospectus, to the best of the Company's knowledge, there are no rulemaking or
similar proceedings before the United States Food and Drug Administration or
comparable federal, state, local or foreign governmental bodies that involve or
affect the Company or any of its Subsidiaries that, if the subject of an action
unfavorable to the Company or any such Subsidiary, could have a Material Adverse
Effect.
(33) Neither the Company nor any of its Subsidiaries has received any
communication (whether written or oral) relating to the termination or
threatened termination, or modification or threatened modification, of any
consulting, licensing, marketing, research and development, cooperative or any
similar agreement, including, without limitation, the collaborative agreements
listed under the sections of the Prospectus entitled, "Business - Collaboration
with Allergan."
14
<PAGE> 15
(34) To the Company's knowledge, if any full-time employee identified
in the Prospectus has entered into any non-competition, non-disclosure,
confidentiality or other similar agreement with any party other than the Company
or any of its Subsidiaries, such employee is neither in violation thereof nor is
expected to be in violation thereof as a result of the business conducted or
expected to be conducted by the Company or any of its Subsidiaries as described
in the Registration Statement and the Prospectus or such person's performance of
his obligations to the Company or any of its Subsidiaries. Neither the Company
nor any of its Subsidiaries has received written notice that any consultant or
scientific advisor of the Company or any of its Subsidiaries is in violation of
any non-competition, non-disclosure, confidentiality or similar agreement.
5. Conditions of the Underwriters' Obligations. The obligations of the
Underwriters under this Agreement are several and not joint. The respective
obligations of the Underwriters to purchase the Shares are subject to each of
the following terms and conditions:
(1) Notification that the Registration Statement has become effective
shall have been received by the Representatives, and the Prospectus shall have
been timely filed with the Commission in accordance with Section 6(a) hereof.
(2) No order preventing or suspending the use of any Preliminary
Prospectus or the Prospectus shall have been or shall be in effect and no order
suspending the effectiveness of the Registration Statement shall be in effect
and no proceedings for such purpose shall be pending before or threatened by the
Commission, and any requests for additional information on the part of the
Commission (to be included in the Registration Statement or the Prospectus or
otherwise) shall have been complied with to the satisfaction of the Commission
and the Representatives. If the Company has elected to rely upon Rule 430A, Rule
430A information previously omitted from the effective Registration Statement
pursuant to Rule 430A shall have been transmitted to the Commission for filing
pursuant to Rule 424(b) within the prescribed time period and the Company shall
have provided evidence satisfactory to the Underwriters of such timely filing,
or a post-effective amendment providing such information shall have been
promptly filed and declared effective in accordance with the requirements of
Rule 430A. If the Company has elected to rely upon Rule 434, a term sheet shall
have been transmitted to the Commission for filing pursuant to Rule 424(b)
within the prescribed time period.
(3) The representations and warranties of the Company contained in
this Agreement and in the certificate delivered pursuant to Section 5(d) hereof
shall be true and correct when made and on and as of each Closing Date as if
15
<PAGE> 16
made on such date, and the Company shall have performed all covenants and
agreements and satisfied all the conditions contained in this Agreement required
to be performed or satisfied by it on or before such Closing Date.
(4) The Representatives shall have received on each Closing Date a
certificate, addressed to the Representatives and dated such Closing Date, of
the chief executive or chief operating officer and the chief financial officer
or chief accounting officer of the Company to the effect that (i) the signers of
such certificate have carefully examined the Registration Statement, the
Prospectus and this Agreement, and the representations and warranties of the
Company in this Agreement are true and correct on and as of such Closing Date
with the same effect as if made on such Closing Date, and the Company has
performed all covenants and agreements and satisfied all conditions contained in
this Agreement required to be performed or satisfied by it at or prior to such
Closing Date and (ii) no stop order suspending the effectiveness of the
Registration Statement has been issued and, to the best of their knowledge, no
proceedings for that purpose have been instituted or are pending under the
Securities Act.
(5) The Representatives shall have received, at the time this
Agreement is executed and on each Closing Date, a signed letter from Ernst &
Young LLP addressed to the Representatives and dated, respectively, the date of
this Agreement and each such Closing Date, in form and substance reasonably
satisfactory to the Representatives, confirming that they are independent
accountants within the meaning of the Securities Act and the Rules, that the
response to Item 10 of the Registration Statement is correct insofar as it
relates to them and stating in effect that:
(1) In their opinion, the audited financial statements and
financial statement schedules included or incorporated by reference in
the Registration Statement and the Prospectus and reported on by them
comply as to form in all material respects with the applicable
accounting requirements of the Securities Act and the Rules.
(2) On the basis of a reading of the amounts included in the
Registration Statement and the Prospectus under the headings "Summary
Financial Information" and "Selected Financial Data," carrying out
certain procedures (but not an examination in accordance with generally
accepted auditing standards) which would not necessarily reveal matters
of significance with respect to the comments set forth in such letter, a
reading of the minutes of the meetings of the stockholders and directors
of the Company, and inquiries of certain officials of the Company who
have responsibility for financial and
16
<PAGE> 17
accounting matters of the Company as to transactions and events
subsequent to the date of the latest audited financial statements,
except as disclosed in the Registration Statement and the Prospectus,
nothing came to their attention which caused them to believe that:
(1) the amounts in "Summary Financial Information," and
"Selected Financial Data" included in the Registration Statement
and the Prospectus do not agree with the corresponding amounts
in the audited financial statements from which such amounts were
derived; or
(2) with respect to the Company, there were, at a
specified date not more than three business days prior to the
date of the letter, any increases in the current liabilities and
long-term liabilities of the Company or any decreases in net
assets or in working capital or the stockholders' equity of the
Company, as compared with the amounts shown on the Company's
audited balance sheet for the fiscal year ended 1999 included in
the Registration Statement.
(3) They have performed certain other procedures as may be
permitted under generally accepted auditing standards as a result of
which they determined that certain information of an accounting,
financial or statistical nature (which is limited to accounting,
financial or statistical information derived from the general accounting
records of the Company) set forth in the Registration Statement and the
Prospectus and reasonably specified by the Representatives agrees with
the accounting records of the Company.
(4) Based upon the procedures set forth in clauses (ii) and
(iii) above and a reading of the amounts included in the Registration
Statement under the headings "Summary Financial Information" and
"Selected Financial Data" included in the Registration Statement and
Prospectus and a reading of the financial statements from which certain
of such data were derived, nothing has come to their attention that
gives them reason to believe that the "Summary Financial Information"
and "Selected Financial Data" included in the Registration Statement and
Prospectus do not comply as to form in all material respects with the
applicable accounting requirements of the Securities
17
<PAGE> 18
Act and the Rules or that the information set forth therein is not
fairly stated in relation to the financial statements included in the
Registration Statement or Prospectus from which certain of such data
were derived or not in conformity with generally accepted accounting
principles applied on a basis substantially consistent with that of the
audited financial statements included in the Registration Statement and
Prospectus.
References to the Registration Statement and the Prospectus in
this Section 5(e) are to such documents as amended and supplemented at
the date of the letter.
(6) The Representatives shall have received on each Closing Date from
Wilson Sonsini Goodrich & Rosati, Professional Corporation, counsel for the
Company, an opinion, addressed to the Representatives and dated such Closing
Date, in form and substance satisfactory to counsel for the Underwriters, and
stating in effect that:
(1) Each of the Company and its Subsidiaries has been duly
organized and is validly existing as a corporation in good standing
under the laws of the jurisdiction of its incorporation. Except as
described in the Prospectus, the Company has no Subsidiaries and does
not control, directly or indirectly, any corporation, partnership, joint
venture, association or other business organization. Each of the Company
and its Subsidiaries is duly qualified and in good standing as a foreign
corporation in each jurisdiction in which the character or location of
its assets or properties (owned, leased or licensed) or the nature of
its businesses makes such qualification necessary, except for such
jurisdictions where the failure to so qualify, individually or in the
aggregate, would not have a Material Adverse Effect.
(2) Each of the Company and its Subsidiaries has all requisite
corporate power and authority to own, lease and license its assets and
properties and conduct its business as now being conducted and as
described in the Registration Statement and the Prospectus and, with
respect to the Company, to enter into, deliver and perform this
Agreement and to issue and sell the Shares, other than the authority
required under state and foreign Blue Sky laws.
(3) The Company has authorized and issued capital stock as set
forth in the Registration Statement and the Prospectus
18
<PAGE> 19
under the caption "Capitalization;" the certificates evidencing the
Shares are in due and proper legal form and have been duly authorized
for issuance by the Company; all of the outstanding shares of Common
Stock of the Company have been duly and validly authorized and issued
and are fully paid and nonassessable, and none of them was issued in
violation of any preemptive or other similar right. The Shares, when
issued and sold pursuant to this Agreement, will be duly and validly
issued, outstanding, fully paid and nonassessable, and none of them will
have been issued in violation of any preemptive or other similar right.
To the best of such counsel's knowledge, except as disclosed in the
Registration Statement and the Prospectus, there are no preemptive or
other rights to subscribe for or to purchase or any restriction upon the
voting or transfer of any securities of the Company pursuant to the
Company's charter or by-laws or other governing documents or any
agreements or other instruments to which the Company is a party or by
which it is bound. To the best of such counsel's knowledge, except as
disclosed in the Registration Statement and the Prospectus, there is no
outstanding option, warrant or other right calling for the issuance of,
and no commitment, plan or arrangement to issue, any share of stock of
the Company or any security convertible into, exercisable for, or
exchangeable for stock of the Company. The Common Stock and the Shares
conform in all material respects to the descriptions thereof contained
in the Registration Statement and the Prospectus. The issued and
outstanding shares of capital stock of each of the Company's
Subsidiaries have been duly authorized and validly issued, are fully
paid and nonassessable, and are owned by the Company or by another
wholly owned Subsidiary of the Company, free and clear of any perfected
security interest or, to the knowledge of such counsel, any other
security interests, liens, encumbrances, equities or claims, other than
those described in the Registration Statement and the Prospectus.
(4) Each of the Lock-up Agreements executed by the Company's
stockholders, directors and officers has been duly and validly delivered
by such persons and constitutes the legal, valid and binding obligation
of each such person enforceable against each such person in accordance
with its terms, except as the enforceability thereof may be limited by
applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws affecting the
enforcement of creditors' rights generally and by general equitable
principles.
19
<PAGE> 20
(5) All necessary corporate action has been duly and validly
taken by the Company to authorize the execution, delivery and
performance of this Agreement and the issuance and sale of the Shares.
This Agreement has been duly and validly authorized, executed and
delivered by the Company, and this Agreement constitutes the legal,
valid and binding obligation of the Company enforceable against the
Company in accordance with its terms, except as such enforceability may
be limited by applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws affecting the
enforcement of creditors' rights generally and by general equitable
principles.
(6) Neither the execution, delivery and performance of this
Agreement by the Company nor the consummation of any of the transactions
contemplated hereby (including, without limitation, the issuance and
sale by the Company of the Shares) will give rise to a right to
terminate or accelerate the due date of any payment due under, or
conflict with or result in the breach of any term or provision of, or
constitute a default (or any event that with notice or lapse of time, or
both, would constitute a default) under, or require consent or waiver
under, or result in the execution or imposition of any lien, charge,
claim, security interest or encumbrance upon any properties or assets of
the Company or its Subsidiaries pursuant to the terms of, any indenture,
mortgage, deed trust, note or other agreement or instrument of which
such counsel is aware and to which the Company or any of its
Subsidiaries is a party or by which either the Company or any of its
Subsidiaries or any of their properties or businesses is bound, or any
franchise, license, permit, judgment, decree, order, statute, rule or
regulation of which such counsel is aware or violate any provision of
the charter or by-laws of the Company or any of its Subsidiaries.
(7) To the best of such counsel's knowledge, no default exists
and no event has occurred that, with notice or lapse of time or both,
would constitute a default in the due performance and observance of any
term, covenant or condition by the Company of any indenture, mortgage,
deed of trust, note or any other agreement or instrument to which the
Company is a party or by which it or any of its assets or properties or
businesses may be bound or affected, where the consequences of such
default, individually or in the aggregate, would have a Material Adverse
Effect.
20
<PAGE> 21
(8) To the best of such counsel's knowledge, neither the Company
nor any of its Subsidiaries is in violation of any term or provision of
its respective charter or by-laws or any franchise, license, permit,
judgment, decree, order, statute, rule or regulation, where the
consequences of such violation, individually or in the aggregate, would
have a Material Adverse Effect.
(9) No consent, approval, authorization or order of any court or
governmental agency or regulatory body is required for the execution,
delivery or performance of this Agreement by the Company or the
consummation of the transactions contemplated hereby, except such as
have been obtained under the Securities Act and such as may be required
under state securities or Blue Sky laws in connection with the purchase
and distribution of the Shares by the several Underwriters.
(10) To the best of such counsel's knowledge, there is no
litigation or governmental or other proceeding or investigation before
any court or before or by any public body or board pending or threatened
against, or involving the assets, properties or businesses of, the
Company that would have a Material Adverse Effect.
(11) The statements in (A) the Registration Statement and the
Prospectus under the captions "Business - Legal Proceedings,"
"Management," "Related Party Transactions," "Description of Capital
Stock" and "Shares Eligible for Future Sale" and (B) the Registration
Statement in Item 14, in each case insofar as such statements constitute
a summary of documents referred to therein or matters of law, are fair
summaries in all material respects and accurately present the
information called for with respect to such documents and matters.
Accurate copies of all contracts and other documents required to be
filed as exhibits to, or described in, the Registration Statement and
Prospectus have been so filed with the Commission or are fairly
described in the Registration Statement and Prospectus, as the case may
be.
(12) The Registration Statement, all Preliminary Prospectuses
and the Prospectus, and each amendment or supplement thereto (except for
the financial statements and schedules and other financial and
statistical data included therein, as to which such counsel need express
no opinion), comply as to form in all material respects with the
requirements of the Securities Act and the Rules.
21
<PAGE> 22
(13) The Registration Statement is effective under the
Securities Act, and no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that
purpose have been instituted or are threatened, pending or contemplated.
Any required filing of the Prospectus and any supplement thereto
pursuant to Rule 424(b) under the Securities Act has been made in the
manner and within the time period required by such Rule 424(b).
(14) The Shares have been approved for quotation on the Nasdaq
National Market.
(15) The capital stock of the Company conforms in all material
respects to the description thereof contained in the Registration
Statement and the Prospectus under the caption "Description of Capital
Stock."
(16) The Company is not an "investment company" or an entity
controlled by an "investment company," as such terms are defined in the
Investment Company Act of 1940, as amended.
To the extent deemed advisable by such counsel, they may rely as to
matters of fact on certificates of responsible officers of the Company and
public officials and on the opinions of other counsel satisfactory to the
Representatives as to matters governed by laws other than the laws of the State
of New York, the General Corporation Law of the State of Delaware and the
federal laws of the United States, provided that such counsel shall state that
in their opinion the Underwriters and they are justified in relying on such
other opinions. Copies of such certificates and other opinions shall be
furnished to the Representatives and counsel for the Underwriters, together with
the opinion required by this Section 5(f), on each Closing Date.
In addition, such counsel shall state that such counsel has participated
in conferences with officers and other representatives of the Company,
representatives of the Representatives and representatives of the independent
certified public accountants of the Company, at which conferences the contents
of the Registration Statement and the Prospectus and related matters were
discussed and, although such counsel is not passing upon and does not assume any
responsibility for the accuracy, completeness or fairness of the statements
contained in the Registration Statement and the Prospectus (except as specified
in the foregoing opinion), on the basis of the foregoing, no facts have come to
the attention of such counsel that lead such counsel to believe that the
Registration Statement, at the time it became effective (except with respect to
the
22
<PAGE> 23
financial statements and notes and schedules thereto and other financial data,
as to which such counsel need express no belief), contained any untrue statement
of a material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, or that the
Prospectus, as amended or supplemented (except with respect to the financial
statements, notes and schedules thereto and other financial data, as to which
such counsel need make no statement), on the date thereof contained any untrue
statement of a material fact or omitted to state a material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading.
(7) The Representatives shall have received on each Closing Date from
Knobbe, Martens, Olson & Bear, patent counsel for the Company, an opinion,
addressed to the Representatives and dated such Closing Date, and stating in
effect that:
(1) To the best of such counsel's knowledge, the information in
the Prospectus under "Risk Factors-- We are dependent on our patents and
proprietary rights, the validity, enforceability and commercial value of
which are highly uncertain. We may be required to bring litigation to
enforce our intellectual property rights, which may result in
substantial expense," and "Business-- Patents and Proprietary Rights,"
to the extent that it constitutes matters of law, summaries of legal
matters, documents or proceedings, or legal conclusions, has been
reviewed by them and is correct in all material respects and fairly and
correctly presents the information called for with respect thereto.
(2) To the best of such counsel's knowledge, there are no
pending or threatened legal or governmental proceedings, nor allegations
on the part of any person of infringement, relating to patent rights,
trade secrets, trademarks, service marks, copyrights or other
proprietary information or know-how of the Company or any of its
Subsidiaries, and no such proceedings are threatened or contemplated.
(3) To the best of such counsel's knowledge, neither the Company
nor any of its Subsidiaries is infringing or otherwise violating any
patents, trade secrets, trademarks, service marks, copyrights or other
proprietary information or know-how of any persons and, to such
counsel's knowledge, no person is infringing or otherwise violating any
of the Company's or any of its Subsidiaries' patents, trade
23
<PAGE> 24
secrets, trademarks, service marks, copyrights or other proprietary
information or know-how of the Company and its Subsidiaries.
(4) To the best of such counsel's knowledge, each of the Company
and its Subsidiaries owns or possesses sufficient licenses or other
rights to use all technology covered by patents or trade secrets and to
use all trademarks, service marks or other proprietary information or
know-how necessary to conduct the business now being or proposed to be
conducted by the Company and its Subsidiaries, as described in the
Prospectus.
(5) To the best of such counsel's knowledge, the Company's
United States and foreign patents (the "Patents") are valid and
enforceable and are entitled to a statutory presumption of validity of
ownership by the assignee. To the best of such counsel's knowledge,
there are no asserted or unasserted claims of any persons relating to
the scope or ownership of any of the Patents or any of the Company's or
any of its Subsidiaries' patent applications, whether United States or
foreign (collectively, the "Applications"), there are no liens that have
been filed against any of the Patents or the Applications, there are no
material defects of form in the preparation or filing of the
Applications, the Applications are being diligently prosecuted, and none
of the Applications has been finally rejected or abandoned. The Company
and its Subsidiaries are listed on the records of the United States
Patent and Trademark Office ("PTO") or appropriate foreign patent
offices as the sole assignee of record of the Patents and the
Applications.
(6) Nothing has come to such counsel's attention that leads them
to believe that any of the Applications will not eventuate in issued
patents or that any patents issued in respect of any the Applications
will not be valid or will not afford the Company or its Subsidiaries the
patent protection described by the claims.
(7) All licenses of the Company and its Subsidiaries to Patents
and Applications, whether United States or foreign, are duly executed,
validly binding and enforceable in accordance with their terms and, to
such counsel's knowledge, neither the Company nor any of its
Subsidiaries is in default (declared or undeclared) of any material
provision of any of such licenses.
24
<PAGE> 25
(8) To the best of such counsel's knowledge, all pertinent prior
art references known to the Company or its Subsidiaries or their counsel
during the prosecution of the Patents and the Applications were
disclosed to the PTO and, to the best of such counsel's knowledge,
neither such counsel nor the Company or its Subsidiaries made any
misrepresentation to, or concealed any material fact from, the PTO
during such prosecution.
(9) To the best of such counsel's knowledge, there are no
asserted or unasserted claims of any persons relating to the scope or
ownership of any trademark application of the Company or any of its
Subsidiaries, there are no liens that have been filed against any of
such applications, there are no material defects of form in the
preparation or filing of such applications, such applications are being
diligently prosecuted, and none of such applications has been finally
rejected or abandoned.
(10) Nothing has come to such counsel's attention that leads
them to believe that any trademark application of the Company or any of
its Subsidiaries filed with the PTO will not eventuate in registered
trademarks or that any trademark registrations issued in respect of any
such applications will not be valid or will not afford the Company or
its Subsidiaries reasonable trademark protection relative to the subject
matter thereof.
(11) To the best of such counsel's knowledge, the Company and
its Subsidiaries take security measures adequate to assert trade secret
protection in its non-patented technology.
(12) The agreements executed by the Company's and its
Subsidiaries' employees, consultants and other advisors respecting trade
secrets, confidentiality or intellectual property rights are valid,
binding and enforceable in accordance with their terms.
In addition, such counsel shall state that such counsel has participated
in conferences with officers and other representatives of the Company,
representatives of the Representatives and representatives of the independent
public accountants of the Company, at which conferences the contents of the
Registration Statement and the Prospectus as they related to the matters set
forth in the foregoing opinion were discussed. While such counsel has not
undertaken to independently verify and does not assume any responsibility for
the accuracy, completeness or fairness of the statements
25
<PAGE> 26
contained in the Registration Statement and the Prospectus (except as specified
in the foregoing opinion), on the basis of the foregoing, no facts have come to
the attention of such counsel with respect to the matters set forth in the
foregoing opinion that lead such counsel to believe that the Registration
Statement at the time it became effective (except with respect to the financial
statements and notes and schedules thereto and other financial data, as to which
such counsel need express no belief) contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading, or that the
Prospectus as amended or supplemented (except with respect to the financial
statements, notes and schedules thereto and other financial data, as to which
such counsel need make no statement) on the date thereof and the date of such
opinion contained any untrue statement of a material fact or omitted to state a
material fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(8) All proceedings taken in connection with the sale of the Firm Shares
and the Option Shares as herein contemplated shall be reasonably satisfactory in
form and substance to the Representatives and their counsel, and the
Underwriters shall have received from Skadden, Arps, Slate, Meagher & Flom LLP a
favorable opinion, addressed to the Representatives and dated such Closing Date,
with respect to the Shares, the Registration Statement and the Prospectus and
such other related matters as the Representatives may reasonably request, and
the Company shall have furnished to Skadden, Arps, Slate, Meagher & Flom LLP
such documents as they may reasonably request for the purpose of enabling them
to pass upon such matters.
(9) If the Shares have been qualified for sale in Florida, the
Representatives shall have received on each Closing Date certificates, addressed
to the Representatives and dated such Closing Date, of an executive officer of
the Company to the effect that the signer of such certificate has reviewed and
understands the provisions of Section 517.075 of the Florida Statutes and
represents that the Company has complied, and at all times will comply, with all
provisions of said Section 517.075, and further that, as of such Closing Date,
neither the Company nor any of its affiliates does business with the government
of Cuba or with any person or affiliate located in Cuba.
(10) The Representatives shall have received copies of the Lock-up
Agreements executed by each entity or person described in Section 4(n) hereof.
(11) The Company shall have furnished or caused to be furnished to the
Representatives such further certificates or documents as the Representatives
shall have reasonably requested.
26
<PAGE> 27
6. Covenants of the Company.
(1) The Company covenants and agrees as follows:
(1) The Company shall use its best efforts to cause the Registration
Statement, if not effective at the time of execution of this Agreement, and any
amendments thereto to become effective as promptly as possible. The Company
shall prepare the Prospectus in a form approved by the Representatives and file
such Prospectus pursuant to Rule 424(b) under the Securities Act not later than
the Commission's close of business on the second business day following the
execution and delivery of this Agreement, or, if applicable, such earlier time
as may be required by Rule 430A(a)(3) under the Securities Act.
(2) The Company shall promptly advise the Representatives in writing
(A) when the Registration Statement and any amendment thereto shall have become
effective, (B) of the receipt of any comments from the Commission or of any
request by the Commission for any amendment of the Registration Statement or the
Prospectus or for any additional information, (C) of the prevention or
suspension of the use of any Preliminary Prospectus or the Prospectus or of the
issuance by the Commission of any stop order suspending the effectiveness of the
Registration Statement or the suspension of the qualification of the Shares for
offering or sale in any jurisdiction or the institution or threatening of any
proceeding for that purpose, and (D) of the receipt by the Company 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. The Company shall give notice to the Representatives of its
intent to file any amendment of the Registration Statement or supplement to the
Prospectus, and the Company shall not file any such amendment or supplement
unless the Company has furnished the Representatives a copy thereof for its
review prior to filing and shall not file any such proposed amendment or
supplement to which the Representatives reasonably object. The Company shall use
its best efforts to prevent the issuance of any stop order suspending the
effectiveness of the Registration Statement or any order suspending the
qualification or exemption of the Shares under any state securities or Blue Sky
laws and, if any such order is issued, to obtain as soon as possible the
withdrawal thereof.
27
<PAGE> 28
(3) The Company shall promptly advise the Representatives in writing
if, at any time when a prospectus relating to the Shares is required to be
delivered under the Securities Act and the Rules or the Exchange Act, any
change, event, or occurrence that could result in such a change, in the
Company's condition, financial or otherwise, or the earnings, business affairs
or business prospects of the Company or the happening of any event occurs as a
result of which the Prospectus, as then amended or supplemented, would include
any untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, or if it shall be necessary to amend
or supplement the Prospectus to comply with the Securities Act or the Rules, the
Company promptly shall prepare and file with the Commission, subject to the
second sentence of paragraph (ii) of this Section 6(a), an amendment or
supplement that shall correct such statement or omission or an amendment that
shall effect such compliance.
(4) The Company shall make generally available to its security
holders and to the Representatives as soon as practicable, but not later than 45
days after the end of the 12-month period beginning at the end of the fiscal
quarter of the Company during which the Effective Date occurs (or 90 days if
such 12-month period coincides with the Company's fiscal year), an earnings
statement (which need not be audited) of the Company covering such 12-month
period that satisfies the provisions of Section 11(a) of the Securities Act or
Rule 158 of the Rules.
(5) The Company shall furnish to the Representatives and counsel for
the Underwriters, without charge, as many signed copies of the Registration
Statement (including all exhibits thereto and amendments thereof) as the
Representatives may reasonably request and to each other Underwriter a copy of
the Registration Statement (without exhibits thereto) and all amendments thereof
and, so long as delivery of a prospectus by an Underwriter or dealer may be
required by the Securities Act or the Rules, as many copies of any Preliminary
Prospectus and the Prospectus and any amendments thereof and supplements thereto
as the Representatives may reasonably request. If applicable, the copies of the
Registration Statement and Prospectus and each amendment thereof and supplement
thereto furnished to the
28
<PAGE> 29
Underwriters will be identical to the electronically transmitted copies thereof
filed with the Commission pursuant to EDGAR, except to the extent permitted by
Regulation S-T.
(6) During the period of five years immediately following the date
hereof, the Company shall furnish to the Representatives (A) as soon as
available a copy of each report of the Company mailed to its stockholders or
filed with the Commission and (ii) from time to time such other information
concerning the Company as the Representatives will reasonably request.
(7) The Company shall cooperate with the Representatives and their
counsel in endeavoring to qualify the Shares for offer and sale in connection
with the offering under the laws of such jurisdictions as the Representatives
may designate and shall maintain such qualifications in effect so long as
required for the distribution of the Shares; provided, however, that the Company
shall not be required in connection therewith, as a condition thereof, to
qualify as a foreign corporation or to execute a general consent to service of
process in any jurisdiction or subject itself to taxation as doing business in
any jurisdiction.
(8) The Company, during the period when the Prospectus is required
to be delivered under the Securities Act and the Rules or the Exchange Act,
shall file all documents required to be filed with the Commission pursuant to
Section 13, 14 or 15 of the Exchange Act within the time periods required by the
Exchange Act and the regulations promulgated thereunder.
(9) Without the prior written consent of CIBC World Markets Corp.,
for a period of 180 days after the date of the Prospectus, the Company and each
of its individual directors and executive officers shall not issue, sell or
register with the Commission (other than on Form S-8 or on any successor form)
or otherwise dispose of, directly or indirectly, any equity securities of the
Company (or any securities convertible into, exercisable for or exchangeable for
equity securities of the Company), except for the issuance of the Shares
pursuant to the Registration Statement and the issuance of shares pursuant to
the Company's existing stock option plan or bonus plan, as described in the
Registration Statement and the Prospectus. In the event that during this period,
(A) any shares are issued pursuant to the
29
<PAGE> 30
Company's existing stock option plan or bonus plan that are exercisable during
such 180 day period or (B) any registration is effected on Form S-8 or on any
successor form relating to shares that are exercisable during such 180 period,
the Company shall obtain the written agreement of such grantee or purchaser or
holder of such registered securities that, for a period of 180 days after the
date of the Prospectus, such person will not, without the prior written consent
of CIBC World Markets Corp., offer for sale, sell, distribute, grant any option
for the sale of or otherwise dispose of, directly or indirectly, or exercise any
registration rights with respect to, any shares of Common Stock (or any
securities convertible into, exercisable for or exchangeable for any shares of
Common Stock) owned by such person.
(10) On or before completion of the offering of the Shares, the
Company shall make all filings required under applicable securities laws and by
the Nasdaq National Market (including any required registration under the
Exchange Act).
(11) The Company shall supply the Underwriters with copies of all
correspondence to and from, and all documents issued to and by, the Commission
in connection with the registration of the Shares under the Securities Act.
(12) Prior to the Closing Date, the Company shall furnish to the
Underwriters, as soon as they have been prepared, copies of any unaudited
interim consolidated financial statements of the Company and its Subsidiaries
for any periods subsequent to the periods covered by the financial statements
appearing in the Registration Statement and the Prospectus.
(13) Prior to the Closing Date, the Company shall issue no press
release or other communications, directly or indirectly, and hold no press
conference with respect to the Company or any of its Subsidiaries, the
condition, financial or otherwise, or the earnings, business affairs or business
prospects of any of them, or the offering of the Shares without the prior
written consent of the Representatives unless in the judgment of the Company and
its counsel, and after notification to the Representatives, such press release
or communication is required by law.
30
<PAGE> 31
(14) The Company shall file timely and accurate reports in
accordance with the provisions of Section 517.075 of the Florida Statutes, or
any successor provision, and any regulation promulgated thereunder, if at any
time after the Effective Date, the Company or any of its affiliates commences to
engage in business with the government of Cuba or any person or affiliate
located in Cuba.
(15) The Company shall apply the net proceeds from the offering of
the Shares in the manner set forth under "Use of Proceeds" in the Prospectus.
(16) The Company shall not take, directly or indirectly, any action
designed to, or that might reasonably be expected to, cause or result in the
stabilization or manipulation of the price of the Common Stock to facilitate the
sale or resale of any of the Shares.
(17) The Company shall use its best efforts to maintain the
quotation of the Common Stock (including the Shares) on the Nasdaq National
Market and shall file with the Nasdaq National Market all documents and notices
required by the Nasdaq National Market of companies that have shares that are
traded in the over-the-counter market and quotations for which are reported by
the Nasdaq National Market.
(2) The Company agrees to pay, or reimburse if paid by the
Representatives, whether or not the transactions contemplated hereby are
consummated or this Agreement is terminated, all costs and expenses incident to
the offering of the Shares and the performance of the obligations of the Company
under this Agreement including, without limitation, those relating to: (i) the
preparation, printing, filing and distribution of the Registration Statement,
including all exhibits thereto, each Preliminary Prospectus, the Prospectus, all
amendments of and supplements to the Registration Statement and the Prospectus,
and the printing, filing and distribution of this Agreement; (ii) the
preparation and delivery of certificates for the Shares to the Underwriters;
(iii) the registration or qualification of the Shares for offer and sale under
the securities or Blue Sky laws of the various jurisdictions referred to in
Section 6(a)(vi) hereof, if any, including the reasonable fees and disbursements
of counsel for the Underwriters in connection with such registration and
qualification and the preparation, printing, distribution and shipment of
preliminary and supplementary Blue Sky memoranda; (iv) the furnishing (including
costs of shipping and mailing) to the Representatives and to the Underwriters of
copies of each Preliminary Prospectus, the
31
<PAGE> 32
Prospectus and all amendments of or supplements to the Prospectus, and of the
several documents required by this Section 6(b) to be so furnished, as may be
reasonably requested for use in connection with the offering and sale of the
Shares by the Underwriters or by dealers to whom Shares may be sold; (v) the
filing fees of the NASD in connection with its review of the terms of the public
offering and the reasonable fees and disbursements of counsel for the
Underwriters in connection with such review; (vi) the inclusion of the Shares
for quotation on the Nasdaq National Market; and (vii) all transfer taxes, if
any, with respect to the sale and delivery of the Shares by the Company to the
Underwriters. Subject to the provisions of Section 9 hereof, the Underwriters
agree to pay, whether or not the transactions contemplated hereby are
consummated or this Agreement is terminated, all costs and expenses incident to
the performance of the obligations of the Underwriters under this Agreement not
payable by the Company pursuant to the preceding sentence, including, without
limitation, the fees and disbursements of counsel for the Underwriters.
7. Indemnification.
(1) The Company agrees to indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act
against any and all losses, claims, damages and liabilities, joint or several
(including any reasonable investigation, legal and other expenses incurred in
connection with, and any amount paid in settlement of, any action, suit or
proceeding or any claim asserted), to which they, or any of them, may become
subject under the Securities Act, the Exchange Act or other Federal or state law
or regulation, at common law or otherwise, insofar as such losses, claims,
damages or liabilities arise out of or are based upon (i) any untrue statement
or alleged untrue statement of a material fact contained in the Registration
Statement or any amendment thereof or supplement thereto, or any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading; (ii) any untrue
statement or alleged untrue statement of a material fact contained in any
Preliminary Prospectus or the Prospectus or any amendment thereof or supplement
thereto, or any omission or alleged omission to state therein or 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; (iii) any
untrue statement or alleged untrue statement of a material fact contained in any
Blue Sky application or other information or other documents executed by the
Company filed in any state or other jurisdiction to qualify any or all of the
Shares under the securities laws thereof (any such application, document or
information being hereinafter referred to as a "Blue Sky Application"); (iv) in
whole or in part, any breach of the representations and warranties set forth in
Section 4 hereof; or (v) in whole or in part upon any failure of the Company to
perform any of its obligations hereunder or
32
<PAGE> 33
under law; provided, however, that such indemnity shall not inure to the benefit
of any Underwriter (or any person controlling such Underwriter) on account of
any losses, claims, damages or liabilities arising from the sale of the Shares
to any person by such Underwriter if such untrue statement or omission or
alleged untrue statement or omission was made in the Registration Statement or
the Prospectus in reliance upon and in conformity with information furnished in
writing to the Company by the Representatives on behalf of any Underwriter
expressly for use therein. This indemnity agreement will be in addition to any
liability which the Company may otherwise have.
(2) Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless the Company and each person, if any, who controls the Company
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act, each director of the Company, and each officer of the Company who
signs the Registration Statement, to the same extent as the foregoing indemnity
from the Company to each Underwriter, but only insofar as such losses, claims,
damages or liabilities arise out of or are based upon any untrue statement or
omission or alleged untrue statement or omission which was made in the
Registration Statement or the Prospectus in the (i) concession and reallowance
figures appearing under the caption "Underwriting" and (ii) the stabilization
information contained under the caption "Underwriting"; provided, however, that
the obligation of each Underwriter to indemnify the Company (including any
controlling person, director or officer thereof) shall be limited to the net
proceeds received by the Company from such Underwriter.
(3) Any party that proposes to assert the right to be indemnified
under this Section 7(c) will, promptly after receipt of notice of commencement
of any action, suit or proceeding against such party in respect of which a claim
is to be made against an indemnifying party or parties under this Section 7(c),
notify each such indemnifying party of the commencement of such action, suit or
proceeding, enclosing a copy of all papers served. No indemnification provided
for in Section 7(a) or 7(b) hereof shall be available to any party who shall
fail to give notice as provided in this Section 7(c) if the party to whom notice
was not given was unaware of the proceeding to which such notice would have
related and was prejudiced by the failure to give such notice, but the omission
so to notify such indemnifying party of any such action, suit or proceeding
shall not relieve it from any liability that it may have to any indemnified
party for contribution or otherwise than under this Section 7(c). In case any
such action, suit or proceeding shall be brought against any indemnified party
and it shall notify the indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to participate in, and, to the extent that
it shall wish, jointly with any other indemnifying party similarly notified, to
assume the defense thereof, with counsel reasonably satisfactory to such
indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense
33
<PAGE> 34
thereof and the approval by the indemnified party of such counsel, the
indemnifying party shall not be liable to such indemnified party for any legal
or other expenses, except as provided below and except for the reasonable costs
of investigation subsequently incurred by such indemnified party in connection
with the defense thereof. The indemnified party shall have the right to employ
its counsel in any such action, but the fees and expenses of such counsel shall
be at the expense of such indemnified party unless (i) the employment of counsel
by such indemnified party has been authorized in writing by the indemnifying
parties, (ii) the indemnified party shall have been advised by counsel that
there may be one or more legal defenses available to it which are different from
or in addition to those available to the indemnifying party (in which case the
indemnifying parties shall not have the right to direct the defense of such
action on behalf of the indemnified party) or (iii) the indemnifying parties
shall not have employed counsel to assume the defense of such action within a
reasonable time after notice of the commencement thereof, in each of which cases
the fees and expenses of counsel shall be at the expense of the indemnifying
parties. An indemnifying party shall not be liable for any settlement of any
action, suit, proceeding or claim effected without its written consent, which
consent shall not be unreasonably withheld or delayed.
8. Contribution. In order to provide for just and equitable
contribution in circumstances in which the indemnification provided for in
Section 7(a) or Section 7(b) hereof is due in accordance with its terms but for
any reason is held to be unavailable to or insufficient to hold harmless an
indemnified party under Section 7(a) or 7(b) hereof, then each indemnifying
party shall contribute to the aggregate losses, claims, damages and liabilities
(including any investigation, legal and other expenses reasonably incurred in
connection with, and any amount paid in settlement of, any action, suit or
proceeding or any claims asserted, but after deducting any contribution received
by any person entitled hereunder to contribution from any person who may be
liable for contribution) to which the indemnified party may be subject in such
proportion as is appropriate to reflect the relative benefits received by the
Company on the one hand and the Underwriters on the other from the offering of
the Shares or, if such allocation is not permitted by applicable law or
indemnification is not available as a result of the indemnifying party not
having received notice as provided in Section 7 hereof, in such proportion as is
appropriate to reflect not only the relative benefits referred to above but also
the relative fault of the Company on the one hand and the Underwriters on the
other in connection with the statements or omissions which resulted in such
losses, claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative benefits received by the Company and the
Underwriters shall be deemed to be in the same proportion as (x) the total
proceeds from the offering (net of underwriting discounts but before deducting
expenses) received by the Company, as set forth in the table on the cover page
of the Prospectus, bear to (y) the underwriting discounts received by the
Underwriters, as set forth in the table on the
34
<PAGE> 35
cover page of the Prospectus. The relative fault of the Company or the
Underwriters shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact related to information
supplied by the Company or the Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company and the Underwriters agree that it would not
be just and equitable if contribution pursuant to this Section 8 were determined
by pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation which does not take account
of the equitable considerations referred to above. Notwithstanding the
provisions of this Section 8, (i) in no case shall any Underwriter (except as
may be provided in the Master Agreement Among Underwriters) be liable or
responsible for any amount in excess of the underwriting discount applicable to
the Shares purchased by such Underwriter hereunder; and (ii) the Company shall
be liable and responsible for any amount in excess of such underwriting
discount; provided, however, that no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 8, each person, if
any, who controls an Underwriter within the meaning of Section 15 of the
Securities Act or Section 20(a) of the Exchange Act shall have the same rights
to contribution as such Underwriter, and each person, if any, who controls the
Company within the meaning of Section 15 of the Securities Act or Section 20(a)
of the Exchange Act, each officer of the Company who shall have signed the
Registration Statement and each director of the Company shall have the same
rights to contribution as the Company, subject in each case to clauses (i) and
(ii) in the immediately preceding sentence of this Section 8. Any party entitled
to contribution will, promptly after receipt of notice of commencement of any
action, suit or proceeding against such party in respect of which a claim for
contribution may be made against another party or parties under this Section 8,
notify such party or parties from whom contribution may be sought, but the
omission so to notify such party or parties from whom contribution may be sought
shall not relieve the party or parties from whom contribution may be sought from
any other obligation it or they may have hereunder or otherwise than under this
Section 8. No party shall be liable for contribution with respect to any action,
suit, proceeding or claim settled without its written consent. The Underwriter's
obligations to contribute pursuant to this Section 8 are several in proportion
to their respective underwriting commitments and not joint.
9. Termination. This Agreement may be terminated with respect to the
Shares to be purchased on a Closing Date by the Representatives by notifying the
Company at any time in the absolute discretion of the Representatives at or
before any Closing Date:
35
<PAGE> 36
(1) (i) if on or prior to such date, any domestic or international
event or act or occurrence has materially disrupted, or in the opinion of the
Representatives will in the future materially disrupt, the securities markets;
(ii) if there has occurred any new outbreak or material escalation of
hostilities or other calamity or crisis the effect of which on the financial
markets of the United States is such as to make it, in the judgment of the
Representatives, inadvisable to proceed with the offering; (iii) if there shall
be such a material adverse change in general financial, political or economic
conditions or the effect of international conditions on the financial markets in
the United States is such as to make it, in the judgment of the Representatives,
inadvisable or impracticable to market the Shares; (iv) if trading in the Shares
has been suspended by the Commission or trading generally on the New York Stock
Exchange, Inc., on the American Stock Exchange, Inc. or the Nasdaq National
Market has been suspended or limited, or minimum or maximum ranges for prices
for securities shall have been fixed, or maximum ranges for prices for
securities have been required, by said exchanges or by order of the Commission,
the NASD, or any other governmental or regulatory authority; or (v) if a banking
moratorium has been declared by any state or Federal authority; or (vi) if, in
the judgment of the Representatives, there has occurred a Material Adverse
Effect, or
(2) if any of the conditions specified in Section 5 hereof shall not
have been fulfilled when and as required by this Agreement.
If this Agreement is terminated pursuant to any of its provisions, the
Company shall not be under any liability to any Underwriter, and no Underwriter
shall be under any liability to the Company, except that (x) if this Agreement
is terminated by the Representatives or the Underwriters because of any failure,
refusal or inability on the part of the Company to comply with the terms or to
fulfill any of the conditions of this Agreement, the Company will reimburse the
Underwriters for all out-of-pocket expenses (including the reasonable fees and
disbursements of their counsel) incurred by them in connection with the proposed
purchase and sale of the Shares or in contemplation of performing their
obligations hereunder and (y) no Underwriter who shall have failed or refused to
purchase the Shares agreed to be purchased by it under this Agreement, without
some reason sufficient hereunder to justify cancellation or termination of its
obligations under this Agreement, shall be relieved of liability to the Company
or to the other Underwriters for damages occasioned by its failure or refusal.
10. Substitution of Underwriters. If one or more of the Underwriters
shall fail (other than for a reason sufficient to justify the cancellation or
termination of this Agreement under Section 9 hereof) to purchase on any Closing
Date the Shares agreed to be purchased on such Closing Date by such Underwriter
or Underwriters, the Representatives may find one or more substitute
underwriters to purchase such Shares
36
<PAGE> 37
or make such other arrangements as the Representatives may deem advisable or one
or more of the remaining Underwriters may agree to purchase such Shares in such
proportions as may be approved by the Representatives, in each case upon the
terms set forth in this Agreement. If no such arrangements have been made by the
close of business on the business day following such Closing Date and
(1) if the number of Shares to be purchased by the defaulting
Underwriters on such Closing Date does not exceed 10% of the Shares that all the
Underwriters are obligated to purchase on such Closing Date, then each of the
nondefaulting Underwriters shall be obligated to purchase such Shares on the
terms herein set forth in proportion to their respective obligations hereunder;
provided, however, that in no event shall the maximum number of Shares that any
Underwriter has agreed to purchase pursuant to Section 1 hereof be increased
pursuant to this Section 10 by more than one-ninth of such number of Shares
without the written consent of such Underwriter, or
(2) if the number of Shares to be purchased by the defaulting
Underwriters on such Closing Date exceeds 10% of the Shares that all the
Underwriters are obligated to purchase on such Closing Date, then the Company
shall be entitled to one additional business day within which it may, but is not
obligated to, find one or more substitute underwriters reasonably satisfactory
to the Representatives to purchase such Shares upon the terms set forth in this
Agreement.
In any such case, either the Representatives or the Company shall have
the right to postpone the applicable Closing Date for a period of not more than
five business days in order that necessary changes and arrangements (including
any necessary amendments or supplements to the Registration Statement or
Prospectus) may be effected by the Representatives and the Company. If the
number of Shares to be purchased on such Closing Date by such defaulting
Underwriter or Underwriters exceeds 10% of the Shares that all the Underwriters
are obligated to purchase on such Closing Date, and none of the nondefaulting
Underwriters or the Company shall make arrangements pursuant to this Section 10
within the period stated for the purchase of the Shares that the defaulting
Underwriters agreed to purchase, this Agreement shall terminate with respect to
the Shares to be purchased on such Closing Date without liability on the part of
any nondefaulting Underwriter to the Company and without liability on the part
of the Company, except in both cases as provided in Sections 6(b), 7, 8 and 9
hereof. The provisions of this Section 10 shall not in any way affect the
liability of any defaulting Underwriter to the Company or the nondefaulting
Underwriters arising out of such default. A substitute underwriter hereunder
shall become an Underwriter for all purposes of this Agreement.
37
<PAGE> 38
11. Miscellaneous. The respective agreements, representations,
warranties, indemnities and other statements of the Company or its officers and
of the Underwriters set forth in or made pursuant to this Agreement shall remain
in full force and effect, regardless of any investigation made by or on behalf
of any Underwriter or the Company or any of the officers, directors or
controlling persons referred to in Sections 7 and 8 hereof, and shall survive
delivery of and payment for the Shares. The provisions of Sections 6(b), 7, 8
and 9 hereof shall survive the termination or cancellation of this Agreement.
This Agreement has been and is made for the benefit of the
Underwriters and the Company and their respective successors and assigns, and,
to the extent expressed herein, for the benefit of persons controlling any of
the Underwriters, or the Company, and directors and officers of the Company, and
their respective successors and assigns, and no other person shall acquire or
have any right under or by virtue of this Agreement. The term "successors and
assigns" shall not include any purchaser of Shares from any Underwriter merely
because of such purchase.
All notices and communications hereunder shall be in writing and
mailed or delivered by telephone or telegraph if subsequently confirmed in
writing, (a) if to the Representatives, c/o CIBC World Markets Corp., One World
Financial Center, New York, New York 10281, Attention: Joseph Missett, with a
copy to Skadden, Arps, Slate, Meagher & Flom LLP, 525 University Avenue, Suite
220, Palo Alto, California 94301, Attention: Jerome L. Coben and (b) if to the
Company, to its agent for service as such agent's address appears on the cover
page of the Registration Statement, with a copy to Wilson Sonsini Goodrich &
Rosati, Professional Corporation, Attention: Issac J. Vaughn.
This Agreement shall be governed by and construed in accordance with
the laws of the State of New York without regard to principles of conflict of
laws.
This Agreement may be signed in any number of counterparts, each of
which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument.
38
<PAGE> 39
Please confirm that the foregoing correctly sets forth the agreement
among us.
Very truly yours,
ISTA PHARMACEUTICALS, INC.
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
Confirmed:
CIBC WORLD MARKETS CORP.
By:
------------------------------------
Name:
Title:
Acting severally on behalf of itself
and as representative of the several
Underwriters named in Schedule I annexed
hereto.
<PAGE> 40
SCHEDULE I
<TABLE>
<CAPTION>
Number of
Firm Shares to
Name Be Purchased
---- ------------
<S> <C>
CIBC World Markets Corp.
Prudential Securities Incorporated
Thomas Weisel Partners LLC
</TABLE>
I-1
<PAGE> 41
EXHIBIT A
FORM OF LOCK-UP AGREEMENT
______________, 2000
CIBC WORLD MARKETS CORP.
PRUDENTIAL SECURITIES INCORPORATED
ING BARINGS LLC
As Representatives of the Several Underwriters
c/o CIBC World Markets Corp.
One World Financial Center
200 Liberty Street
New York, New York 10281
Re: Public Offering of Common Stock of Advanced Corneal Systems, Inc.
Ladies and Gentlemen:
The undersigned, a holder of common stock, par value $.01 per share
("Common Stock"), or rights to acquire Common Stock, of Advanced Corneal
Systems, Inc. (the "Company") understands that the Company intends to file a
Registration Statement on Form S-1 (the "Registration Statement") with the
Securities and Exchange Commission (the "Commission") for the registration of
shares of its Common Stock (the "Offering"). The undersigned further understands
that you are contemplating entering into an Underwriting Agreement with the
Company in connection with the Offering.
In order to induce the Company, you and the other Underwriters to enter
into the Underwriting Agreement and to proceed with the Offering and for other
good and valuable consideration, the undersigned agrees, for the benefit of the
Company, you and the other Underwriters, that should the Offering be effected,
the undersigned will not, without the prior written consent of CIBC World
Markets Corp., directly or indirectly, make any offer, sale, assignment,
transfer, encumbrance, contract to sell, grant of an option to purchase or other
disposition of any Common Stock beneficially owned (within the meaning of Rule
13d-3 under the Securities Exchange Act of 1934, as amended) by the undersigned
on the date hereof or hereafter acquired for a period of 180
A-1
<PAGE> 42
days subsequent to the date of the Underwriting Agreement, other than Common
Stock transferred as a gift or gifts to his or her immediate family or to a
trust the beneficiary of which is exclusively the undersigned and/or a member or
members of his or her immediate family (provided that any donee thereof agrees
in writing to be bound by the terms hereof). For the purposes of this paragraph,
"immediate family" shall mean spouse, lineal descendant, father, mother, brother
or sister of the transferor.
The undersigned confirms that he, she or it understands that the
Underwriters and the Company will rely upon the representations and covenants
set forth in this agreement in proceeding with the Offering. This agreement
shall be binding on the undersigned and his, her or its respective successors,
heirs, personal representatives and assigns. The undersigned agrees and consents
to the entry of stop transfer instructions with the Company's transfer agent
against the transfer of Common Stock or securities convertible into or
exchangeable or exercisable for Common Stock held by the undersigned except in
compliance with this agreement.
Very truly yours,
Dated: , 2000 --------------------------------------------
------- Signature
--------------------------------------------
Printed Name and Title (if applicable)
Number of shares of Common
Stock, options and/or warrants
owned by the undersigned:
Shares
-----------------
Options
-----------------
Warrants
-----------------
A-2
