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EXHIBIT 1.1
8,000,000 SHARES
INTUITIVE SURGICAL, INC.
COMMON STOCK (PAR VALUE $0.001 PER SHARE)
UNDERWRITING AGREEMENT
_______________, 2000
▇▇▇▇▇▇ Brothers Inc.,
Bear, ▇▇▇▇▇▇▇ & Co. Inc.,
Fleet Boston ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Inc.,
UBS Warburg LLC and
Fidelity Capital Markets, a division of
National Financial Services Corporation
As Representatives of the several
Underwriters named in SCHEDULE 1
c/▇ ▇▇▇▇▇▇ Brothers Inc.,
Three World Financial Center
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Intuitive Surgical, Inc., a Delaware corporation (the "COMPANY"), proposes
to sell to the Underwriters named in SCHEDULE 1 hereto (the "UNDERWRITERS")
8,000,000 shares (the "FIRM STOCK") of the Company's Common Stock (par value
$0.001 per share) (the "COMMON STOCK"). In addition, the Company proposes to
grant the Underwriters an option to purchase up to an additional 1,200,000
shares of the Common Stock on the terms and for the purposes set forth in
Section 2 (the "OPTION STOCK"). The Firm Stock and the Option Stock, if
purchased, are hereinafter collectively called the "STOCK." This is to confirm
the agreement concerning the purchase of the Stock from the Company by the
Underwriters.
1. Representations, Warranties and Agreements of the Company. The Company
represents, warrants and agrees that:
(a) A registration statement on Form S-1 with respect to the Stock
has (i) been prepared by the Company in conformity with the requirements of the
United States Securities Act of 1933, as amended (the "SECURITIES ACT"), and the
rules and regulations (the "RULES AND REGULATIONS") of the United States
Securities and Exchange Commission (the "COMMISSION") thereunder, (ii) been
filed with the Commission under the Securities Act and (iii) become effective
under the Securities Act. Copies of such registration statement have been
delivered by the Company to you as the representatives (the "REPRESENTATIVES")
of the Underwriters. As used in this Agreement, "EFFECTIVE TIME" means the date
and the time as of which such registration statement, or the most recent
post-effective amendment thereto, if any,
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was declared effective by the Commission; "EFFECTIVE DATE" means the date of the
Effective Time; "PRELIMINARY PROSPECTUS" means each prospectus included in such
registration statement, or amendments thereof, before it became effective under
the Securities Act and any prospectus filed with the Commission by the Company
with the consent of the Representatives pursuant to Rule 424(a) of the Rules and
Regulations; "REGISTRATION STATEMENT" means such registration statement, as
amended at the Effective Time, including all information contained in the final
prospectus filed with the Commission pursuant to Rule 424(b) of the Rules and
Regulations in accordance with Section 5 hereof and deemed to be a part of the
registration statement as of the Effective Time pursuant to paragraph (b) of
Rule 430A of the Rules and Regulations; if the Company has filed an abbreviated
registration statement to register additional shares of Common Stock pursuant to
Rule 462(b) under the Securities Act (a "RULE 462(B) REGISTRATION Statement"),
then any reference to "Registration Statement" shall be deemed to include such
Rule 462(b) Registration Statement; and "PROSPECTUS" means such final
prospectus, as first filed with the Commission pursuant to paragraph (1) or (4)
of Rule 424(b) of the Rules and Regulations. The Commission has not issued any
order preventing or suspending the use of any Preliminary Prospectus.
(b) The Registration Statement conforms, and the Prospectus and any
further amendments or supplements to the Registration Statement or the
Prospectus will, when they become effective or are filed with the Commission, as
the case may be, conform in all material respects to the requirements of the
Securities Act and the Rules and Regulations and do not and will not, as of the
applicable effective date (as to the Registration Statement and any amendment
thereto) and as of the applicable filing date (as to the Prospectus and any
amendment or supplement thereto) contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading; provided that no representation or
warranty is made as to information contained in or omitted from the Registration
Statement or the Prospectus in reliance upon and in conformity with written
information furnished to the Company through the Representatives by or on behalf
of any Underwriter specifically for inclusion therein.
(c) The Company and each of the Subsidiaries (as defined in Section
18) have been duly incorporated and are validly existing as corporations in good
standing under the laws of their respective jurisdictions of incorporation, are
duly qualified to do business and are in good standing as foreign corporations
in each jurisdiction in which their respective ownership or lease of property or
the conduct of their respective businesses requires such qualification, except
where the failure to be so qualified would not have a material adverse effect on
the business, financial condition, results of operations or prospects of the
Company and each of the Subsidiaries, taken as a whole, and have all power and
authority necessary to own or hold their properties and to conduct the
businesses in which they are engaged; none of the Subsidiaries is a "significant
subsidiary", as such term is defined in Rule 405 of the Rules and Regulations.
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(d) The Company has an authorized capitalization as set forth in the
Prospectus, and all of the issued shares of capital stock of the Company have
been duly and validly authorized and issued, are fully paid and non-assessable
and conform to the description thereof contained in the Prospectus; and all of
the issued shares of capital stock of each of the Subsidiaries have been duly
and validly authorized and issued and are fully paid and non-assessable and are
owned directly by the Company, free and clear of all liens, encumbrances,
equities or claims.
(e) The unissued shares of the Stock to be issued and sold by the
Company to the Underwriters hereunder have been duly and validly authorized and,
when issued and delivered against payment therefor as provided herein, will be
duly and validly issued, fully paid and non-assessable; and the Stock will
conform to the description thereof in the Prospectus.
(f) This Agreement has been duly authorized, executed and delivered
by the Company.
(g) The execution, delivery and performance of this Agreement by the
Company and the consummation of the transactions contemplated hereby will not
conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument to which the Company or
any of the Subsidiaries is a party or by which the Company or any of the
Subsidiaries is bound or to which any of their respective properties or assets
are subject, except where such conflict, breach, violation or default will not
result a material adverse effect on the business, financial condition, results
of operations or prospects of the Company and each of the Subsidiaries, taken as
a whole, nor will such actions result in any violation of the provisions of the
charter or by-laws of the Company or any statute or any order, rule or
regulation of any court or governmental agency or body having jurisdiction over
the Company or any of its properties or assets; and except for the registration
of the Stock under the Securities Act and such consents, approvals,
authorizations, registrations or qualifications as may be required under the
Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT") and applicable
state securities laws in connection with the purchase and distribution of the
Stock by the Underwriters, no consent, approval, authorization or order of, or
filing or registration with, any such court or governmental agency or body is
required for the execution, delivery and performance of this Agreement by the
Company and the consummation of the transactions contemplated hereby.
(h) Except as described in the Prospectus, there are no contracts,
agreements or understandings between the Company and any person granting such
person the right (other than rights which have been waived or satisfied) to
require the Company to file a registration statement under the Securities Act
with respect to any securities of the Company owned or to be owned by such
person or to require the Company to include such securities in the securities
registered pursuant to the Registration Statement or in any securities being
registered pursuant to any other registration statement filed by the Company
under the Securities Act, nor does any
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person have any preemptive rights or right of first refusal to purchase any of
the shares of Stock.
(i) Except as described in the Prospectus, the Company has not sold
or issued any shares of Common Stock or granted any options to purchase, or
other rights to subscribe for or to purchase, any shares of Common Stock during
the six-month period preceding the date of the Prospectus, including any sales
pursuant to Rule 144A under, or Regulations D or S of, the Securities Act, other
than shares, options or rights issued pursuant to the Company's employee benefit
plans, qualified stock option plans or other employee compensation plans or
pursuant to outstanding options, rights or warrants.
(j) None of the Company or the Subsidiaries has sustained, since the
date of the latest audited financial statements included in the Prospectus, any
material loss or interference with its business from fire, explosion, flood or
other calamity, whether or not covered by insurance, or from any labor dispute
or court or governmental action, order or decree, otherwise than as set forth or
contemplated in the Prospectus; and, since such date, there has not been any
material change in the capital stock or long-term debt of the Company or any
material adverse change, or any development involving a prospective material
adverse change, in or affecting the general affairs, management, financial
position, stockholders' equity or results of operations of the Company,
otherwise than as set forth or contemplated in the Prospectus.
(k) The financial statements (including the related notes and
supporting schedules) filed as part of the Registration Statement or included in
the Prospectus present fairly the financial condition and results of operations
of the Company at the dates and for the periods indicated, and have been
prepared in conformity with generally accepted accounting principles applied on
a consistent basis throughout the periods involved.
(l) Ernst & Young LLP, who have certified certain financial
statements of the Company, whose report appears in the Prospectus and who have
delivered the initial letter referred to in Section 7(h) hereof, are independent
public accountants as required by the Securities Act and the Rules and
Regulations.
(m) The Company does not own any real property. The Company has good
and marketable title to all personal property owned by it, in each case free and
clear of all liens, encumbrances and defects except such as are described in the
Prospectus or such as do not materially affect the value of such property and do
not materially interfere with the use made and proposed to be made of such
property by the Company; and all real property and buildings held under lease by
the Company are held by it under valid, subsisting and enforceable leases, with
such exceptions as are not material and do not interfere with the use made and
proposed to be made of such property and buildings by the Company.
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(n) The Company carries, or is covered by, insurance in such amounts
and covering such risks as is adequate for the conduct of its business and the
value of its properties and as is customary for companies engaged in similar
businesses in similar industries.
(o) (i) Except as described in the Prospectus, the Company owns or
possesses adequate licenses or other rights to use all patents, patent
applications, trademarks, trademark applications, service marks, service ▇▇▇▇
applications, trade names, copyrights, manufacturing processes, formulae, trade
secrets, know-how, and other material intangible property and assets
(collectively, "INTELLECTUAL PROPERTY") necessary to conduct its business as
described in the Prospectus, except where the failure to so own or possess such
rights would not, singularly or in the aggregate, have a material adverse effect
on the financial position, stockholders' equity, results of operations, business
or prospects of the Company.
(ii) Except as described in the Prospectus, the Company has no
actual knowledge of any facts which would preclude it from having exclusive
rights to its patents or patent applications and to the licensed patents and
patent applications referenced in the Prospectus and has no actual knowledge of
any facts that would lead it to believe that its issued patents are not valid
and enforceable.
(iii) Except as described in the Prospectus or in the letter
dated March 20, 2000 addressed to Ernst & Young LLP from Fish & ▇▇▇▇▇▇▇▇▇▇ PC,
the Company has not received any notice of infringement or of conflict with
rights or claims of others which are infringed upon by potential products or
processes referred to in the Prospectus in such a manner as to materially and
adversely affect the Company.
(iv) Except as described in the Prospectus, there are no legal
or governmental proceedings, other than patent applications, pending which
relate to the Intellectual Property rights of the Company, to which the Company
is a party, which, whether singly or in the aggregate, would have a material
adverse effect on the Company if decided adversely or unfavorably to the
Company.
(p) Except as described in the Prospectus, there are no legal or
governmental proceedings pending to which the Company is a party or of which any
of its property or assets is the subject which, if determined adversely to the
Company, might have a material adverse effect on the financial position,
stockholders' equity, results of operations, business or prospects of the
Company; and to the best of the Company's knowledge, no such proceedings are
threatened or contemplated by governmental authorities or threatened by others.
(q) There are no contracts or other documents which are required to
be described in the Prospectus or filed as exhibits to the Registration
Statement by the
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Securities Act or by the Rules and Regulations which have not been described in
the Prospectus or filed as exhibits to the Registration Statement.
(r) No relationship, direct or indirect, exists between or among the
Company on the one hand, and the directors, officers, stockholders, customers or
suppliers of the Company on the other hand, which is required to be described in
the Prospectus which is not so described.
(s) No labor disturbance by the employees of the Company exists or,
to the knowledge of the Company, is imminent, which might be expected to have a
material adverse effect on the financial position, stockholders' equity, results
of operations, business or prospects of the Company.
(t) The Company is in compliance in all material respects with all
presently applicable provisions of the Employee Retirement Income Security Act
of 1974, as amended, including the regulations and published interpretations
thereunder ("ERISA"); no "reportable event" (as defined in ERISA) has occurred
with respect to any "pension plan" (as defined in ERISA) for which the Company
would have any liability; the Company has not incurred and does not expect to
incur liability under (i) Title IV of ERISA with respect to termination of, or
withdrawal from, any "pension plan" or (ii) Sections 412 or 4971 of the Internal
Revenue Code of 1986, as amended, including the regulations and published
interpretations thereunder (the "CODE"); and each "pension plan" for which the
Company would have any liability that is intended to be qualified under Section
401(a) of the Code is so qualified in all material respects and nothing has
occurred, whether by action or by failure to act, which would cause the loss of
such qualification.
(u) The Company has filed all federal, state and local income and
franchise tax returns required to be filed through the date hereof and has paid
all taxes due thereon, and no tax deficiency has been determined adversely to
the Company which has had (nor does the Company have any knowledge of any tax
deficiency which, if determined adversely to the Company, might have) a material
adverse effect on the financial position, stockholders' equity, results of
operations, business or prospects of the Company.
(v) Since the date as of which information is given in the Prospectus
through the date hereof, and except as may otherwise be disclosed in the
Prospectus, the Company has not (i) issued or granted any securities (except
options to purchase shares of Common Stock issued to employees or consultants of
the Company pursuant to the Company's employee benefit plans, qualified stock
option plans, stock incentive plans or other employee compensation plans
described in the Prospectus and shares of Common Stock issued upon the exercise
of outstanding options or warrants), (ii) incurred any liability or obligation,
direct or contingent, other than liabilities and obligations which were incurred
in the ordinary course of business, (iii) entered into any transaction not in
the ordinary course of business or (iv) declared or paid any dividend on its
capital stock.
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(w) Each of the Company and the Subsidiaries (i) makes and keeps
accurate books and records and (ii) maintains internal accounting controls which
provide reasonable assurance that (A) transactions are executed in accordance
with management's authorization, (B) transactions are recorded as necessary to
permit preparation of its financial statements and to maintain accountability
for its assets, (C) access to its assets is permitted only in accordance with
management's authorization; and (D) the reported accountability for its assets
is compared with existing assets at reasonable intervals.
(x) Except as disclosed in the Prospectus, neither the Company nor
any of the Subsidiaries is (i) in violation of its charter or by-laws, (ii) in
default in any material respect, and no event has occurred which, with notice or
lapse of time or both, would constitute such a default, in the due performance
or observance of any term, covenant or condition contained in any material
indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument to which it is a party or by which it is bound or to which any of its
properties or assets is subject or (iii) in violation in any material respect of
any law, ordinance, governmental rule, regulation (including, without
limitation, any regulation of the United States Food and Drug Administration
(the "FDA")) or court decree to which it or its property or assets may be
subject and has not failed to obtain any material license, permit, certificate,
franchise or other governmental authorization or permit necessary to the
ownership of its property or to the conduct of its business.
(y) Neither the Company nor any director, officer, agent, employee or
other person associated with or acting on behalf of the Company, has used any
corporate funds for any unlawful contribution, gift, entertainment or other
unlawful expense relating to political activity; made any direct or indirect
unlawful payment to any foreign or domestic government official or employee from
corporate funds; violated or is in violation of any provision of the Foreign
Corrupt Practices Act of 1977; or made any bribe, rebate, payoff, influence
payment, kickback or other unlawful payment.
(z) There has been no storage, disposal, generation, manufacture,
refinement, transportation, handling or treatment of toxic wastes, medical
wastes, hazardous wastes or hazardous substances by the Company (or, to the
knowledge of the Company, any of its predecessors in interest) at, upon or from
any of the property now or previously owned or leased by the Company in
violation of any applicable law, ordinance, rule, regulation, order, judgment,
decree or permit or which would require remedial action under any applicable
law, ordinance, rule, regulation, order, judgment, decree or permit, except for
any violation or remedial action which would not have, or could not be
reasonably likely to have, singularly or in the aggregate with all such
violations and remedial actions, a material adverse effect on the general
affairs, management, financial position, stockholders' equity or results of
operations of the Company; there has been no material spill, discharge, leak,
emission, injection, escape, dumping or release of any kind onto such property
or into the environment surrounding such property of any toxic wastes, medical
wastes, solid wastes, hazardous wastes or hazardous substances due to or caused
by
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the Company or with respect to which the Company has knowledge, except for any
such spill, discharge, leak, emission, injection, escape, dumping or release
which would not have or would not be reasonably likely to have, singularly or in
the aggregate with all such spills, discharges, leaks, emissions, injections,
escapes, dumpings and releases, a material adverse effect on the general
affairs, management, financial position, stockholders' equity or results of
operations of the Company; and the terms "hazardous wastes", "toxic wastes",
"hazardous substances" and "medical wastes" shall have the meanings specified in
any applicable local, state, federal and foreign laws or regulations with
respect to environmental protection.
(aa) Except as described in the Prospectus, the Company has all
consents, approvals, orders, certificates, authorizations and permits issued by,
and has made all declarations and filings with all appropriate federal, state
and foreign regulatory authorities necessary to conduct its business as
currently being conducted or as proposed in the Registration Statement to be
conducted, except where the failure to possess such consents, approvals, orders,
certificates, authorizations and permits, or to make all such declarations and
filings, would not have a material adverse effect on the Company or its ability
to own, lease, license or use its properties and assets in the manner necessary
for the conduct of its business, and the Company has not received notice of any
proceedings relating to the revocation or modification of any such consent,
approval, order, certificate, authorization or permit which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or finding, would
have a material adverse effect.
(bb) The Company has not taken and will not take, directly or
indirectly, any action designed to cause or result in, or which constitutes or
which might reasonably be expected to constitute, the stabilization or
manipulation of the price of the shares of Common Stock to facilitate the sale
or resale of the Stock.
(cc) The Company has not offered, or caused the Underwriters to offer,
Shares to any person pursuant to the Directed Share Program (as defined in
SECTION 3 below) with the specific intent to unlawfully influence (i) a customer
or supplier of the Company or its subsidiaries to alter the customer's or
supplier's level or type of business with the Company or its subsidiaries, or
(ii) a trade journalist or publication to write or publish favorable information
about the Company or its business.
2. Purchase of the Stock by the Underwriters. On the basis of the
representations and warranties contained in, and subject to the terms and
conditions of, this Agreement, the Company agrees to sell 8,000,000 shares of
the Firm Stock to the several Underwriters and each of the Underwriters,
severally and not jointly, agrees to purchase the number of shares of the Firm
Stock set opposite that Underwriter's name in SCHEDULE 1 hereto. The respective
purchase obligations of the Underwriters with respect to the Firm Stock shall be
rounded among the Underwriters to avoid fractional shares, as the
Representatives may determine.
In addition, the Company grants to the Underwriters an option to purchase
up to 1,200,000 shares of Option Stock. Such option is granted for the purpose
of covering over-
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allotments in the sale of Firm Stock and is exercisable as provided in Section 4
hereof. Shares of Option Stock shall be purchased severally for the account of
the Underwriters in proportion to the number of shares of Firm Stock set
opposite the name of such Underwriters in Schedule 1 hereto. The respective
purchase obligations of each Underwriter with respect to the Option Stock shall
be adjusted by the Representatives so that no Underwriter shall be obligated to
purchase Option Stock other than in 100 share amounts. The price of both the
Firm Stock and any Option Stock shall be $_____ per share.
The Company shall not be obligated to deliver any of the Stock to be
delivered on any Delivery Date (as hereinafter defined), except upon payment for
all the Stock to be purchased on such Delivery Date as provided herein.
3. Offering of Stock by the Underwriters.
Upon authorization by the Representatives of the release of the Firm Stock,
the several Underwriters propose to offer the Firm Stock for sale upon the terms
and conditions set forth in the Prospectus.
It is understood that approximately shares of Firm Stock ("DIRECTED
SHARES") will initially be reserved by the Underwriters for offer and sale to
employees and persons having business relationships with the Company and its
subsidiaries ("DIRECTED SHARE PARTICIPANTS") at the public offering price upon
the terms and conditions set forth in the Prospectus and in accordance with
applicable rules, regulations and interpretations of the National Association of
Securities Dealers, Inc. (the "NASD"). Under no circumstances will ▇▇▇▇▇▇
Brothers or any Underwriter be liable to the Company or to any Directed Share
Participant for any action taken or omitted to be taken in good faith in
connection with the Directed Share Program. To the extent that any Directed
Shares are not affirmatively reconfirmed for purchase by any Directed Share
Participant on or immediately after the date of this Agreement, such Directed
Shares may be offered to the public as part of the public offering contemplated
hereby.
4. Delivery of and Payment for the Stock. Delivery of and payment for the
Firm Stock shall be made at the office of ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, Palo
Alto, California at 10:00 A.M., New York City time, on the fourth full business
day following the date of this Agreement or at such other date or place as shall
be determined by agreement between the Representatives and the Company. This
date and time are sometimes referred to as the "FIRST DELIVERY DATE." On the
First Delivery Date, the Company shall deliver or cause to be delivered
certificates representing the Firm Stock to the Representatives for the account
of each Underwriter against payment to or upon the order of the Company of the
purchase price by wire transfer in immediately available funds. Time shall be of
the essence, and delivery at the time and place specified pursuant to this
Agreement is a further condition of the obligation of each Underwriter
hereunder. Upon delivery, the Firm Stock shall be registered in such names and
in such denominations as the Representatives shall request in writing not less
than two full business days prior to the First Delivery Date. For the purpose of
expediting the checking and packaging of the certificates for the Firm Stock,
the Company shall make the certificates representing the Firm Stock available
for inspection by the Representatives in New York, New York, not later than 2:00
P.M., New York City time, on the business day prior to the First Delivery Date.
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The option granted in Section 2 will expire 30 days after the date of this
Agreement and may be exercised in whole or in part from time to time by written
notice being given to the Company by the Representatives. Such notice shall set
forth the aggregate number of shares of Option Stock as to which the option is
being exercised, the names in which the shares of Option Stock are to be
registered, the denominations in which the shares of Option Stock are to be
issued and the date and time, as determined by the Representatives, when the
shares of Option Stock are to be delivered; provided, however, that this date
and time shall not be earlier than the First Delivery Date nor earlier than the
second business day after the date on which the option shall have been exercised
nor later than the fifth business day after the date on which the option shall
have been exercised. The date and time the shares of Option Stock are delivered
are sometimes referred to as a "SECOND DELIVERY DATE" and the First Delivery
Date and any Second Delivery Date are sometimes each referred to as a "DELIVERY
DATE".
Delivery of and payment for the Option Stock shall be made at the place
specified in the first sentence of the first paragraph of this Section 4 (or at
such other place as shall be determined by agreement between the Representatives
and the Company) at 10:00 A.M., New York City time, on such Second Delivery
Date. On such Second Delivery Date, the Company shall deliver or cause to be
delivered the certificates representing the Option Stock to the Representatives
for the account of each Underwriter against payment to or upon the order of the
Company of the purchase price by wire transfer in immediately available funds.
Time shall be of the essence, and delivery at the time and place specified
pursuant to this Agreement is a further condition of the obligation of each
Underwriter hereunder. Upon delivery, the Option Stock shall be registered in
such names and in such denominations as the Representatives shall request in the
aforesaid written notice. For the purpose of expediting the checking and
packaging of the certificates for the Option Stock, the Company shall make the
certificates representing the Option Stock available for inspection by the
Representatives in New York, New York, not later than 2:00 P.M., New York City
time, on the business day prior to such Second Delivery Date.
5. Further Agreements of the Company. The Company agrees:
(a) To prepare the Prospectus in a form approved by the
Representatives and to file such Prospectus pursuant to Rule 424(b) under the
Securities Act not later than 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; to make no further amendment or any supplement to the
Registration Statement or to the Prospectus except as permitted herein; to
advise the Representatives, promptly after it receives notice thereof, of the
time when any amendment to the Registration Statement has been filed or becomes
effective or any supplement to the Prospectus or any amended Prospectus has been
filed and to furnish the Representatives with copies thereof; to advise the
Representatives, promptly after it receives notice thereof, of the issuance by
the Commission of any stop order or of any order preventing or suspending the
use of any Preliminary Prospectus or the Prospectus, of the suspension of the
qualification of the Stock for offering or sale in any jurisdiction, of the
initiation or threatening of any proceeding for any such purpose, or of any
request by the Commission for the amending or supplementing of the Registration
Statement or the Prospectus or for additional information; and, in the event of
the issuance of any stop
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order or of any order preventing or suspending the use of any Preliminary
Prospectus or the Prospectus or suspending any such qualification, to use
promptly its best efforts to obtain its withdrawal;
(b) To furnish promptly to the Representatives a conformed copy and
to counsel for the Underwriters a signed copy of the Registration Statement as
originally filed with the Commission, and each amendment thereto filed with the
Commission, including all consents and exhibits filed therewith;
(c) To deliver promptly to the Representatives such number of the
following documents as the Representatives shall reasonably request: (i)
conformed copies of the Registration Statement as originally filed with the
Commission and each amendment thereto (in each case excluding exhibits other
than this Agreement and the computation of per share earnings) and (ii) each
Preliminary Prospectus, the Prospectus and any amended or supplemented
Prospectus; and, if the delivery of a prospectus is required at any time after
the Effective Time in connection with the offering or sale of the Stock or any
other securities relating thereto and if at such time any events shall have
occurred as a result of which the Prospectus as then amended or supplemented
would include an untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made when such Prospectus is delivered,
not misleading, or, if for any other reason it shall be necessary to amend or
supplement the Prospectus in order to comply with the Securities Act, to notify
the Representatives and, upon their request, to prepare and furnish without
charge to each Underwriter and to any dealer in securities as many copies as the
Representatives may from time to time reasonably request of an amended or
supplemented Prospectus which will correct such statement or omission or effect
such compliance.
(d) To file promptly with the Commission any amendment to the
Registration Statement or the Prospectus or any supplement to the Prospectus
that may, in the judgment of the Company or the Representatives, be required by
the Securities Act or requested by the Commission;
(e) Prior to filing with the Commission any amendment to the
Registration Statement or supplement to the Prospectus or any Prospectus
pursuant to Rule 424 of the Rules and Regulations, to furnish a copy thereof to
the Representatives and counsel for the Underwriters and obtain the consent of
the Representatives to the filing;
(f) As soon as practicable, but not later than the Availability Date
(as defined below), the Company will make generally available to its
securityholders an earnings statement covering a period of at least 12 months
beginning after the Effective Date of the Registration Statement (or, if later,
the Effective Date of the Prospectus) which will satisfy the provisions of
Section 11(a) of the Securities Act and the Rules and Regulations (including, at
the option of the Company, Rule 158). For the purpose of the preceding sentence,
"Availability Date" means the 45th day
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after the end of the fourth fiscal quarter following the fiscal quarter that
includes such Effective Date, except that, if such fourth fiscal quarter is the
last quarter of the Company's fiscal year, "Availability Date" means the 90th
day after the end of such fiscal quarter;
(g) For a period of five years following the Effective Date, to
furnish to the Representatives copies of all materials furnished by the Company
to its shareholders and all public reports and all reports and financial
statements furnished by the Company to the principal national securities
exchange upon which the Common Stock may be listed pursuant to requirements of
or agreements with such exchange or to the Commission pursuant to the Exchange
Act or any rule or regulation of the Commission thereunder;
(h) Promptly from time to time to take such action as the
Representatives may reasonably request to qualify the Stock for offering and
sale under the securities laws of such jurisdictions as the Representatives may
request and to comply with such laws so as to permit the continuance of sales
and dealings therein in such jurisdictions for as long as may be necessary to
complete the distribution of the Stock; provided, however, that in connection
therewith the Company shall not be required to qualify as a foreign corporation
or to file a general consent to service of process in any jurisdiction;
(i) For a period of 180 days from the date of the Prospectus, not to,
directly or indirectly, (1) offer for sale, sell, pledge or otherwise dispose of
(or enter into any transaction or device which is designed to, or could be
expected to, result in the disposition by any person at any time in the future
of) any shares of Common Stock or securities convertible into or exchangeable
for Common Stock (other than the Stock and shares issued pursuant to the
Company's employee benefit plans, qualified stock option plans or other employee
compensation plans existing on the date hereof or pursuant to currently
outstanding options, warrants or rights), or sell or grant options, rights or
warrants with respect to any shares of Common Stock or securities convertible
into or exchangeable for Common Stock (other than the grant of options pursuant
to the option plans existing on the date hereof), or (2) enter into any swap or
other derivatives transaction that transfers to another, in whole or in part,
any of the economic benefits or risks of ownership of such shares of Common
Stock, whether any such transaction described in clause (1) or (2) above is to
be settled by delivery of Common Stock or other securities, in cash or
otherwise, in each case without the prior written consent of ▇▇▇▇▇▇ Brothers
Inc.; and to cause each officer and director of the Company to furnish to the
Representatives, prior to the First Delivery Date, a letter or letters, in form
and substance satisfactory to counsel for the Underwriters, pursuant to which
each such person shall, subject to the exceptions set forth in such letter or
letters, agree not to, directly or indirectly, (1) offer for sale, sell, pledge
or otherwise dispose of (or enter into any transaction or device which is
designed to, or could be expected to, result in the disposition by any person at
any time in the future of) any shares of Common Stock or securities convertible
into or exchangeable for Common Stock or (2) enter into any swap or other
derivatives transaction that transfers to another, in whole or in part, any of
the
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economic benefits or risks of ownership of such shares of Common Stock, whether
any such transaction described in clause (1) or (2) above is to be settled by
delivery of Common Stock or other securities, in cash or otherwise, in each case
for a period of 180 days from the date of the Prospectus, without the prior
written consent of ▇▇▇▇▇▇ Brothers Inc.;
(j) Prior to the Effective Date, to apply for the inclusion of the
Stock on The Nasdaq National Market and to use its best efforts to complete the
listing, subject only to official notice of issuance and evidence of
satisfactory distribution, prior to the First Delivery Date;
(k) To apply the net proceeds from the sale of the Stock being sold
by the Company as set forth in the Prospectus.
(l) ▇▇▇▇▇▇ Brothers Inc. will notify the Company as to which Directed
Shares will be restricted as required by the NASD or the NASD rules from sale,
transfer, assignment, pledge or hypothecation for a period of three months
following the date of this Agreement. At the request of the Underwriters, the
Company will direct the transfer agent to place a stop transfer restriction upon
such securities for such period of time. Should the Company release, or seek to
release, from such restrictions any of the Directed Shares, the Company agrees
to reimburse the Underwriters for any reasonable expenses (including, without
limitation, legal expenses) they incur in connection with such release.
(m) To use reasonable efforts to assist ▇▇▇▇▇▇ Brothers Inc. in
complying with all applicable securities and other applicable laws, rules and
regulations in each foreign jurisdiction in which the Directed Shares are
offered in connection with the Directed Share Program.
(n) The Company agrees that, until the date that is 180 days
following the date of the Prospectus, it shall enforce all, and shall not,
without the prior consent of ▇▇▇▇▇▇ Brothers Inc., amend or waive, any, lock-up
or market standoff provisions contained in any option agreement, warrant, stock
purchase agreement, investor rights agreement or similar agreement between the
Company and any holder of any outstanding securities of the Company (including
any such agreement entered into during such 180 day period). The Company
acknowledges that the intent of the foregoing sentence is to restrict, pursuant
to the terms of such option agreements, warrants, stock purchase agreements,
investor rights agreements or similar agreements, the ability of holders of the
Company's securities to dispose of such securities (or securities acquired upon
exercise or exchange of such securities) to the same extent as if each such
holder had executed a written undertaking to ▇▇▇▇▇▇ Brothers Inc. not to issue,
sell, offer or otherwise dispose of any of the securities of the Company held by
such holder.
6. Expenses. The Company agrees to pay (a) the costs incident to the
authorization, issuance, sale and delivery of the Stock and any taxes payable in
that connection; (b) the costs incident to the preparation, printing and filing
under the Securities Act of the
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Registration Statement and any amendments and exhibits thereto; (c) the costs of
distributing the Registration Statement as originally filed and each amendment
thereto and any post-effective amendments thereof (including, in each case,
exhibits), any Preliminary Prospectus, the Prospectus and any amendment or
supplement to the Prospectus, all as provided in this Agreement; (d) the costs
of producing and distributing this Agreement and any other related documents in
connection with the offering, purchase, sale and delivery of the stock; (e) the
filing fees incident to securing any required review by the National Association
of Securities Dealers, Inc. of the terms of sale of the Stock; (f) any
applicable listing or other fees; (g) the fees and expenses of qualifying the
Stock under the securities laws of the several jurisdictions as provided in
Section 5 (h) and of preparing, printing and distributing a Blue Sky Memorandum
(including related fees and expenses of counsel to the Underwriters); (h) all
costs and expenses of the Underwriters, including the fees and disbursements of
counsel for the Underwriters with respect to the Directed Share Program,
incurred by the Underwriters in connection with the Directed Share Program, and
stamp duties, similar taxes or duties or other taxes, if any, incurred by the
Underwriters in connection with the Directed Share Program and (i) all other
costs and expenses incident to the performance of the obligations of the Company
under this Agreement; provided that, except as provided in this Section 6 and in
Section 11 the Underwriters shall pay their own costs and expenses, including
the costs and expenses of their counsel, any transfer taxes on the Stock which
they may sell and the expenses of advertising any offering of the Stock made by
the Underwriters.
7. Conditions of Underwriters' Obligations. The respective obligations of
the Underwriters hereunder are subject to the accuracy, when made and on each
Delivery Date, of the representations and warranties of the Company contained
herein, to the performance by the Company of its obligations hereunder, and to
each of the following additional terms and conditions:
(a) The Prospectus shall have been timely filed with the Commission
in accordance with Section 5(a); no stop order suspending the effectiveness of
the Registration Statement or any part thereof shall have been issued and no
proceeding for that purpose shall have been initiated or threatened by the
Commission; and any request of the Commission for inclusion of additional
information in the Registration Statement or the Prospectus or otherwise shall
have been complied with.
(b) No Underwriter shall have discovered and disclosed to the Company
on or prior to such Delivery Date that the Registration Statement or the
Prospectus or any amendment or supplement thereto contains an untrue statement
of a fact which, in the opinion of ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, counsel for the
Underwriters, is material or omits to state a fact which, in the opinion of such
counsel, is material and is required to be stated therein or is necessary to
make the statements therein not misleading.
(c) All corporate proceedings and other legal matters incident to the
authorization, form and validity of this Agreement, the Stock, the Registration
Statement and the Prospectus, and all other legal matters relating to this
Agreement and the transactions contemplated hereby shall be reasonably
satisfactory in all material respects to counsel for the Underwriters, and the
Company shall have furnished to such counsel all documents and information that
they may reasonably request to enable them to pass upon such matters.
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(d) ▇▇▇▇▇▇ Godward LLP shall have furnished to the Representatives
its written opinion, as counsel to the Company, addressed to the Underwriters
and dated such Delivery Date, in form and substance reasonably satisfactory to
the Representatives, to the effect that:
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State of
Delaware, to the best of such counsel's knowledge, is duly qualified to do
business and is in good standing as a foreign corporation in each United States
jurisdiction in which its ownership or lease of property or the conduct of its
business requires such qualification, except where the failure to be so
qualified would not have a material adverse effect on the business, financial
conditions or results of operations of the Company, and has all power and
authority necessary to own or hold its properties and to conduct the business in
which it is engaged;
(ii) The Company has an authorized capitalization as set forth
in the Prospectus and all of the issued shares of capital stock of the Company
(including the shares of Stock being delivered on the Delivery Date) have been
duly and validly authorized and issued, are fully paid and non-assessable and
conform in all material respects to the description thereof contained in the
Prospectus;
(iii) To such counsel's knowledge, there are no preemptive or
other rights to subscribe for or to purchase, nor any restriction upon the
voting or transfer of, any shares of the Stock pursuant to the Company's charter
or by-laws or any agreement or document filed as an exhibit to the Registration
Statement or, to such counsel's knowledge, any other instrument to which the
Company or any Subsidiary is a party;
(iv) To such counsel's knowledge and other than as set forth in
the Prospectus, there are no legal or governmental proceedings pending or
threatened in writing to which the Company is a party or of which any of its
property or assets is the subject which, if determined adversely to the Company,
might have a material adverse effect on the financial position, stockholders'
equity, results of operations, business or prospects of the Company;
(v) The Registration Statement was declared effective under the
Securities Act as of the date and time specified in such opinion, the Prospectus
was filed with the Commission pursuant to the subparagraph of Rule 424(b) of the
Rules and Regulations specified in such opinion on the date specified therein
and, to the knowledge of such counsel, no stop order suspending the
effectiveness of the Registration Statement has been issued
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and, to the knowledge of such counsel, no proceeding for that purpose is pending
or threatened by the Commission;
(vi) The Registration Statement and the Prospectus and any
further amendments or supplements thereto made by the Company prior to such
Delivery Date (other than the financial statements and related schedules
therein, and other financial and statistical data derived therefrom, 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 and Regulations;
(vii) To such counsel's knowledge, there are no contracts or
other documents which are required to be described in the Prospectus or filed as
exhibits to the Registration Statement by the Securities Act or by the Rules and
Regulations which have not been described or filed as exhibits to the
Registration Statement;
(viii) This Agreement has been duly authorized, executed and
delivered by the Company;
(ix) The issue and sale of the shares of Stock being delivered
on such Delivery Date by the Company and the compliance by the Company with all
of the provisions of this Agreement and the consummation of the transactions
contemplated hereby will not conflict with or result in a breach or violation of
any of the terms or provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, loan agreement or other agreement or instrument to
which the Company is a party or by which the Company is bound or to which any of
the property or assets of the Company is subject that is filed as an exhibit to
the Registration Statement, nor will such actions result in any violation of the
provisions of the charter or by-laws of the Company or any statute or any order,
rule or regulation known to such counsel of any court or governmental agency or
body having jurisdiction over the Company or any of its properties or assets
(except the securities or Blue Sky laws of the various states and the rules of
the NASD governing underwriting compensation, as to which such counsel need
express no opinion); and, except for the registration of the Stock under the
Securities Act and such consents, approvals, authorizations, registrations or
qualifications as may be required under the Exchange Act and applicable state
securities laws in connection with the purchase and distribution of the Stock by
the Underwriters and the rules of the NASD governing underwriter compensation,
no consent, approval, authorization or order of, or filing or registration with,
any such court or governmental agency or body is required for the execution,
delivery and performance of this Agreement by the Company and the consummation
of the transactions contemplated hereby; and
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(x) Except as disclosed in the Prospectus and to such counsel's
knowledge, there are no contracts, agreements or understandings between the
Company and any person granting such person the right to require the Company to
file a registration statement under the Securities Act with respect to any
securities of the Company owned or to be owned by such person or to require the
Company to include such securities in the securities registered pursuant to the
Registration Statement.
(xi) The Company is not an "investment company" under the
Investment Company Act of 1940, as amended.
In rendering such opinion, such counsel may state that its opinion is
limited to matters governed by the Federal laws of the United States of America,
the laws of the State of California and the General Corporation Law of the State
of Delaware and that such counsel is not admitted in the State of Delaware. Such
counsel shall also have furnished to the Representatives a written statement,
addressed to the Underwriters and dated the Delivery Date, in form and substance
satisfactory to the Representatives, to the effect that:
"In connection with the preparation of the Registration Statement we have
participated in conferences with officers and other representatives of the
Company, representatives of the independent public or certified public
accountants for the Company and with representatives of the Underwriters. We
have not independently verified and accordingly are not passing upon and do not
assume any responsibility for the accuracy, completeness or fairness of the
statements contained in the Registration Statement or the Prospectus (other than
the statements made in the Prospectus under the captions "Description of Capital
Stock" and "Shares Eligible for Future Sale," insofar as such statements relate
to the Stock and concern legal matters), and any supplements or amendments
thereto. On the basis of the foregoing and in our capacity as counsel to the
Company, nothing has come to our attention which has caused us to believe that
either the Registration Statement or any amendments thereto (except as to the
financial statements and schedules, and other financial data and statistical
data derived therefrom), at the time the Registration Statement or such
amendments became effective, contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein not misleading or that the Prospectus (except as to
the financial statements and schedules, other financial data and statistical
data derived therefrom), as of its date or as of the date hereof contained an
untrue statement of material fact or omitted to state a material fact necessary
in order to make the statements therein, in light of the circumstances in which
they were made, not misleading."
(e) The Underwriters shall have received on the Closing Date an
opinion of ▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, outside regulatory counsel for the Company,
dated the Closing Date, to the effect that the statements under the captions
"Risk Factors--Our products are subject to a lengthy and uncertain domestic
regulatory process. If we do not obtain and maintain the necessary domestic
regulatory approvals, we will not be able to market and sell our products in the
United States" and "Business - Government Regulation - FDA's Premarket Clearance
and Approval Requirements" (together the "Regulatory Portion"), insofar as such
statements (i) purport to summarize applicable provisions of the Federal Food,
Drug, and Cosmetic Act and the regulations promulgated thereunder, such
statements are accurate summaries in all material respects of the provisions
purported to be summarized under such captions in the Prospectus and
Registration Statement, and (ii) relate to FDA regulatory matters, such counsel
has no reason to believe that the information contained in the Regulatory
Portion of the Registration Statement and Prospectus at the time they became
effective, contains an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they are made, not
misleading.
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(f) The Underwriters shall have received on the Closing Date an
opinion of ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & Crew LLP, outside intellectual property counsel
for the Company, dated the Closing Date, to the effect that
(i) such counsel is familiar with the technology used by the
Company in its business and the manner of its use,
(ii) such counsel has read the statements contained in the
Registration Statement and Prospectus under the captions "Risk Factors--If we
are unable to protect the intellectual property contained in our products from
use by third parties, our ability to compete in the market will be harmed,"
"Risk Factors--Others may assert that our products infringe their intellectual
property rights, which may cause us to engage in costly disputes and, if we are
not successful in defending ourselves, could also cause us to pay substantial
damages and prohibit us from selling our products," "Risk Factors--The rights
and measures we rely on to protect the intellectual property underlying our
products may not be adequate to prevent third parties from using our technology,
which could harm our ability to compete in the market," and
"Business--Intellectual Property" (together, the "INTELLECTUAL PROPERTY
PORTION"),
(iii) the Intellectual Property Portion contains accurate
descriptions of the Company's patent applications, issued and allowed patents,
and, to the best of counsel's knowledge, patents licensed to the Company, and
fairly summarizes the legal matters, documents and proceedings relating thereto,
(iv) except as disclosed in the Prospectus, such counsel is not
aware of any valid patent that is or would be infringed by the activities of the
Company in the manufacture, use or sale of any presently proposed product, as
described in the Prospectus,
(v) such counsel has reviewed the Company's patent applications
filed in the U.S. and outside the U.S. (the "APPLICATIONS"), and the
Applications have been properly prepared and filed on behalf of the Company, and
are being diligently pursued by the Company; the inventions described in the
Applications are assigned or licensed to the Company to our knowledge, except
for patents where the
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Company has obtained a field of use license, and/or where certain rights have
been retained by the licensor or the U.S. government, no other entity or
individual has any right or claim in any of the inventions, Applications, or any
patent to be issued therefrom, and in such counsel's opinion based on presently
available information each of the Applications discloses patentable subject
matter,
(vi) except as disclosed in the Prospectus, such counsel is not
aware of any pending or threatened judicial or governmental proceedings relating
to patents or proprietary information to which the Company is a party or of
which any property of the Company is subject and such counsel is not aware of
any pending or threatened action, suit or claim by others that the Company is
infringing or otherwise violating any patent rights of others, nor is such
counsel aware of any rights of third parties to any of the Company's inventions
described in the Applications, issued, approved or licensed patents which could
reasonably be expected to materially affect the ability of the Company to
conduct its business as described in the Prospectus, and
(vii) such counsel has no reason to believe that the information
contained in the Intellectual Property Portion of the Registration Statement and
the Prospectus at the time each became effective, contained any untrue statement
of a material fact or omitted to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
(g) The Representatives shall have received from ▇▇▇▇▇▇, ▇▇▇▇ &
▇▇▇▇▇▇▇▇ LLP, counsel for the Underwriters, such opinion or opinions, dated such
Delivery Date, with respect to the issuance and sale of the Stock, the
Registration Statement, the Prospectus and other related matters as the
Representatives may reasonably require, and the Company shall have furnished to
such counsel such documents as they reasonably request for the purpose of
enabling them to pass upon such matters.
(h) At the time of execution of this Agreement, the Representatives
shall have received from Ernst & Young LLP a letter, in form and substance
reasonably satisfactory to the Representatives, addressed to the Underwriters
and dated the date hereof (i) confirming that they are independent public
accountants within the meaning of the Securities Act and are in compliance with
the applicable requirements relating to the qualification of accountants under
Rule 2-01 of Regulation S-X of the Commission, (ii) stating, as of the date
hereof (or, with respect to matters involving changes or developments since the
respective dates as of which specified financial information is given in the
Prospectus, as of a date not more than five days prior to the date hereof), the
conclusions and findings of such firm with respect to the financial information
and other matters ordinarily covered by accountants' "comfort letters" to
underwriters in connection with registered public offerings.
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(i) With respect to the letter of Ernst & Young LLP referred to in
the preceding paragraph and delivered to the Representatives concurrently with
the execution of this Agreement (the "initial letter"), the Company shall have
furnished to the Representatives a letter (the "bring-down letter") of such
accountants, addressed to the Underwriters and dated such Delivery Date (i)
confirming that they are independent public accountants within the meaning of
the Securities Act and are in compliance with the applicable requirements
relating to the qualification of accountants under Rule 2-01 of Regulation S-X
of the Commission, (ii) stating, as of the date of the bring-down letter (or,
with respect to matters involving changes or developments since the respective
dates as of which specified financial information is given in the Prospectus, as
of a date not more than five days prior to the date of the bring-down letter),
the conclusions and findings of such firm with respect to the financial
information and other matters covered by the initial letter and (iii) confirming
in all material respects the conclusions and findings set forth in the initial
letter.
(j) The Company shall have furnished to the Representatives a
certificate, dated such Delivery Date, of its Chairman of the Board, its
President or a Vice President and its chief financial officer stating that:
(i) The representations, warranties and agreements of the
Company in Section 1 hereof are true and correct as of such Delivery Date; the
Company has complied with all its agreements contained herein; and the
conditions set forth in Sections 7(a) and 7(i) have been fulfilled; and
(ii) They have carefully examined the Registration Statement and
the Prospectus and, in their opinion (A) as of the Effective Date, the
Registration Statement and Prospectus did not include any untrue statement of a
material fact and did not omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, and (B)
since the Effective Date no event has occurred which should have been set forth
in a supplement or amendment to the Registration Statement or the Prospectus.
(k) (i) The Company shall not, since the date of the latest audited
financial statements included in the Prospectus, have sustained any loss or
interference with its business from fire, explosion, flood or other calamity,
whether or not covered by insurance, or from any labor dispute or court or
governmental action, order or decree, otherwise than as set forth or
contemplated in the Prospectus or (ii) since such date there shall not have been
any change in the capital stock or long-term debt of the Company or any change,
or any development involving a prospective change, in or affecting the general
affairs, management, financial position, stockholders' equity or results of
operations of the Company, other than as set forth or contemplated in the
Prospectus, the effect of which, in any such case described in clause (i) or
(ii), is, in the judgment of the Representatives, so material and adverse as to
make it impracticable or inadvisable to proceed with the public
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offering or the delivery of the Stock being delivered on such Delivery Date on
the terms and in the manner contemplated in the Prospectus.
(l) Subsequent to the execution and delivery of this Agreement there
shall not have occurred any of the following: (i) trading in securities
generally on the New York Stock Exchange or the American Stock Exchange or in
the over-the-counter market shall have been suspended or minimum prices shall
have been established on any such exchange or such market by the Commission, by
such exchange or by any other regulatory body or governmental authority having
jurisdiction, (ii) a banking moratorium shall have been declared by Federal or
New York or California state authorities, (iii) the United States shall have
become engaged in hostilities, there shall have been an escalation in
hostilities involving the United States or there shall have been a declaration
of a national emergency or war by the United States or (iv) there shall have
occurred such a material adverse change in general economic, political or
financial conditions (or the effect of international conditions on the financial
markets in the United States shall be such) as to make it, in the judgment of a
majority in interest of the several Underwriters, impracticable or inadvisable
to proceed with the public offering or delivery of the Stock being delivered on
such Delivery Date on the terms and in the manner contemplated in the
Prospectus.
(m) The Nasdaq National Market shall have approved the Stock for
inclusion, subject only to official notice of issuance.
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably satisfactory
to counsel for the Underwriters.
8. Indemnification and Contribution.
(a) The Company shall indemnify and hold harmless each Underwriter,
its officers and employees and each person, if any, who controls any Underwriter
within the meaning of the Securities Act, from and against any loss, claim,
damage or liability, joint or several, or any action in respect thereof
(including, but not limited to, any loss, claim, damage, liability or action
relating to purchases and sales of Stock), to which that Underwriter, officer,
employee or controlling person may become subject, under the Securities Act or
otherwise, insofar as such loss, claim, damage, liability or action arises out
of, or is based upon, (i) any untrue statement or alleged untrue statement of a
material fact contained in (A) any Preliminary Prospectus, the Registration
Statement or the Prospectus or in any amendment or supplement thereto or (B) in
any written or electronically produced materials or information provided
electronically to investors by, or with the approval of, the Company in
connection with the marketing of the offering of the Stock ("MARKETING
MATERIALS"), including any roadshow or investor presentations made to investors
by the Company (whether in person or electronically), (ii) the omission or
alleged omission to state in any Preliminary Prospectus, the Registration
Statement or the Prospectus, or in any amendment or supplement thereto, or in
any Marketing Materials, any material fact required to be stated therein or
necessary to make the statements therein not misleading or (iii) any act or
failure to act or any alleged act or failure to act by any Underwriter in
connection with, or relating in any manner to, the Stock or the offering
contemplated hereby, and which is
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included as part of or referred to in any loss, claim, damage, liability or
action arising out of or based upon matters covered by clause (i) or (ii) above
(provided that the Company shall not be liable under this clause (iii) to the
extent that it is determined in a final judgment by a court of competent
jurisdiction that such loss, claim, damage, liability or action resulted
directly from any such acts or failures to act undertaken or omitted to be taken
by such Underwriter through its gross negligence or willful misconduct), and
shall reimburse each Underwriter and each such officer, employee or controlling
person promptly upon demand for any legal or other expenses reasonably incurred
by that Underwriter, officer, employee or controlling person in connection with
investigating or defending or preparing to defend against any such loss, claim,
damage, liability or action as such expenses are incurred; provided, however,
that the Company shall not be liable in any such case to the extent that any
such loss, claim, damage, liability or action arises out of, or is based upon,
any untrue statement or alleged untrue statement or omission or alleged omission
made in any Preliminary Prospectus, the Registration Statement or the
Prospectus, or in any such amendment or supplement, in reliance upon and in
conformity with written information concerning such Underwriter furnished to the
Company through the Representatives by or on behalf of any Underwriter
specifically for inclusion therein which information consists solely of the
information specified in Section 8(e). In connection with the offer and sale of
the Directed Shares, the Company agrees, promptly upon a request in writing, to
indemnify and hold harmless ▇▇▇▇▇▇ Brothers and the other Underwriters from and
against any loss, claim, damage, expense, liability or action which (i) arises
out of, or is based upon, any untrue statement or alleged untrue statement of a
material fact contained in any material prepared by or with the approval of the
Company, other than any material prepared solely by ▇▇▇▇▇▇ Brothers Inc. for
distribution to Directed Share Participants in connection with the Directed
Share Program 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) arises out of the failure of any Directed Share Program
participant to pay for and accept delivery of Directed Shares that the
Participant agreed to purchase or (iii) is otherwise related to the Directed
Share Program, other than losses, claims, damages or liabilities (or expenses
relating thereto) that are finally judicially determined to have resulted
directly from the bad faith or gross negligence of ▇▇▇▇▇▇ Brothers. The
foregoing indemnity agreement is in addition to any liability which the Company
may otherwise have to any Underwriter or to any officer, employee or controlling
person of that Underwriter.
(b) Each Underwriter, severally and not jointly, shall indemnify and
hold harmless the Company, its officers and employees, each of its directors,
and each person, if any, who controls the Company within the meaning of the
Securities Act, from and against any loss, claim, damage or liability, joint or
several, or any action in respect thereof, to which the Company or any such
director, officer, employee or controlling person may become subject, under the
Securities Act or otherwise, insofar as such loss, claim, damage, liability or
action arises out of, or is based upon, (i) any untrue statement or alleged
untrue statement of a material fact contained (A) in any Preliminary Prospectus,
the Registration Statement or the Prospectus or in any amendment or supplement
thereto, or (B) in any Blue Sky Application or (ii) the omission or alleged
omission to state in any Preliminary Prospectus, the Registration Statement or
the Prospectus, or in any amendment or supplement thereto, or in any Blue Sky
Application any material fact required to be stated therein or necessary to make
the statements therein not misleading, but in each case only to the extent that
the untrue statement or alleged untrue statement or omission or alleged omission
was made in reliance upon and in conformity with written information concerning
such Underwriter furnished to the Company through the Representatives by or on
behalf of that Underwriter specifically for inclusion therein, and shall
reimburse the Company and any such director, officer, employee or controlling
person for any legal or other expenses reasonably incurred by the Company or any
such director, officer,
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employee or controlling person in connection with investigating or defending or
preparing to defend against any such loss, claim, damage, liability or action as
such expenses are incurred. The foregoing indemnity agreement is in addition to
any liability which any Underwriter may otherwise have to the Company or any
such director, officer, employee or controlling person.
(c) Promptly after receipt by an indemnified party under this Section
8 of notice of any claim or the commencement of any action, the indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party under this Section 8, notify the indemnifying party in
writing of the claim or the commencement of that action; provided, however, that
the failure to notify the indemnifying party shall not relieve it from any
liability which it may have under this Section 8 except to the extent it has
been materially prejudiced by such failure and, provided further, that the
failure to notify the indemnifying party shall not relieve it from any liability
which it may have to an indemnified party otherwise than under this Section 8.
If any such claim or action shall be brought against an indemnified party, and
it shall notify the indemnifying party thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it wishes, jointly with
any other similarly notified indemnifying party, to assume the defense thereof
with counsel reasonably satisfactory to the indemnified party. After notice from
the indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, the indemnifying party shall not be liable to
the indemnified party under this Section 8 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided, however, that
the Representatives shall have the right to employ counsel to represent jointly
the Representatives and those other Underwriters and their respective officers,
employees and controlling persons who may be subject to liability arising out of
any claim in respect of which indemnity may be sought by the Underwriters
against the Company under this Section 8 if, in the reasonable judgment of the
Representatives, it is advisable for the Representatives and those Underwriters,
officers, employees and controlling persons to be jointly represented by
separate counsel, and in that event the fees and expenses of such separate
counsel shall be paid by the Company. No indemnifying party shall (i) without
the prior written consent of the indemnified parties (which consent shall not be
unreasonably withheld or delayed), settle or compromise or consent to the entry
of any judgment with respect to any pending or threatened claim, action, suit or
proceeding in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified parties are actual or potential
parties to such claim or action) unless such settlement, compromise or consent
includes an unconditional release of each indemnified party from all liability
arising out of such claim, action, suit or proceeding, or (ii) be liable for any
settlement of any such action effected without its written consent (which
consent shall not be unreasonably withheld or delayed), but if settled with the
consent of the indemnifying party or if there be a final judgment of the
plaintiff in any such action, the indemnifying party agrees to indemnify and
hold harmless any indemnified party from and against any loss or liability by
reason of such settlement or judgment.
(d) If the indemnification provided for in this Section 8 shall for
any reason be unavailable to or insufficient to hold harmless an indemnified
party under Section 8(a) or 8(b) in respect of any loss, claim, damage or
liability, or any action in respect thereof, referred to therein, then each
indemnifying party shall, in lieu of indemnifying such indemnified party,
contribute to the amount paid or payable by such indemnified party as a result
of such loss, claim, damage or
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liability, or action in respect thereof, (i) in such proportion as shall be
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 Stock or (ii)
if the allocation provided by clause (i) above is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative fault of the
Company, on the one hand, and the Underwriters, on the other, with respect to
the statements or omissions which resulted in such loss, claim, damage or
liability, or action in respect thereof, as well as any other relevant equitable
considerations. The relative benefits received by the Company, on the one hand,
and the Underwriters, on the other, with respect to such offering shall be
deemed to be in the same proportion as the total net proceeds from the offering
of the Stock purchased under this Agreement (before deducting expenses) received
by the Company, on the one hand, and the total underwriting discounts and
commissions received by the Underwriters with respect to the shares of the Stock
purchased under this Agreement, on the other hand, bear to the total gross
proceeds from the offering of the shares of the Stock under this Agreement, in
each case as set forth in the table on the cover page of the Prospectus. The
relative fault shall be determined by reference to whether the untrue or alleged
untrue statement of a material fact or omission or alleged omission to state a
material fact relates to information supplied by the Company or the
Underwriters, the intent of the parties and their relative knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company and the Underwriters agree that it would not be just and equitable
if contributions pursuant to this Section 8(d) were to be 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 into account
the equitable considerations referred to herein. The amount paid or payable by
an indemnified party as a result of the loss, claim, damage or liability, or
action in respect thereof, referred to above in this Section shall be deemed to
include, for purposes of this Section 8(d), any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
Section 8(d), no Underwriter shall be required to contribute any amount in
excess of the amount by which the total price at which the Stock underwritten by
it and distributed to the public was offered to the public exceeds the amount of
any damages which such Underwriter has otherwise paid or become liable to pay by
reason of any untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. The
Underwriters' obligations to contribute as provided in this Section 8(d) are
several in proportion to their respective underwriting obligations and not
joint.
(e) The Underwriters severally confirm and the Company acknowledges
that the statements with respect to the public offering of the Stock by the
Underwriters set forth on the cover page of, the legend concerning
over-allotments on the inside front cover page of and the concession and
reallowance figures appearing under the caption "Underwriting" in, the
Prospectus are correct and constitute the only information concerning such
Underwriters furnished in writing to the Company by or on behalf of the
Underwriters specifically for inclusion in the Registration Statement and the
Prospectus.
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9. Defaulting Underwriters.
If, on either Delivery Date, any Underwriter defaults in the performance of
its obligations under this Agreement, the remaining non-defaulting Underwriters
shall be obligated to purchase the Stock which the defaulting Underwriter agreed
but failed to purchase on such Delivery Date in the respective proportions which
the number of shares of the Firm Stock set opposite the name of each remaining
non-defaulting Underwriter in Schedule 1 hereto bears to the total number of
shares of the Firm Stock set opposite the names of all the remaining
non-defaulting Underwriters in Schedule 1 hereto; provided, however, that the
remaining non-defaulting Underwriters shall not be obligated to purchase any of
the Stock on such Delivery Date if the total number of shares of the Stock which
the defaulting Underwriter or Underwriters agreed but failed to purchase on such
date exceeds 9.09% of the total number of shares of the Stock to be purchased on
such Delivery Date, and any remaining non-defaulting Underwriter shall not be
obligated to purchase more than 110% of the number of shares of the Stock which
it agreed to purchase on such Delivery Date pursuant to the terms of Section 2.
If the foregoing maximums are exceeded, the remaining non-defaulting
Underwriters, or those other underwriters satisfactory to the Representatives
who so agree, shall have the right, but shall not be obligated, to purchase, in
such proportion as may be agreed upon among them, all the Stock to be purchased
on such Delivery Date. If the remaining Underwriters or other underwriters
satisfactory to the Representatives do not elect to purchase the shares which
the defaulting Underwriter or Underwriters agreed but failed to purchase on such
Delivery Date, this Agreement (or, with respect to the Second Delivery Date, the
obligation of the Underwriters to purchase, and of the Company to sell, the
Option Stock) shall terminate without liability on the part of any
non-defaulting Underwriter or the Company, except that the Company will continue
to be liable for the payment of expenses to the extent set forth in Sections 6
and 11. As used in this Agreement, the term "Underwriter" includes, for all
purposes of this Agreement unless the context requires otherwise, any party not
listed in SCHEDULE 1 hereto who, pursuant to this Section 9, purchases Firm
Stock which a defaulting Underwriter agreed but failed to purchase.
Nothing contained herein shall relieve a defaulting Underwriter of any
liability it may have to the Company for damages caused by its default. If other
underwriters are obligated or agree to purchase the Stock of a defaulting or
withdrawing Underwriter, either the Representatives or the Company may postpone
the Delivery Date for up to seven full business days in order to effect any
changes that in the opinion of counsel for the Company or counsel for the
Underwriters may be necessary in the Registration Statement, the Prospectus or
in any other document or arrangement.
10. Termination. The obligations of the Underwriters hereunder may be
terminated by the Representatives by notice given to and received by the Company
prior to delivery of and payment for the Firm Stock if, prior to that time, any
of the events described in Sections 7(k) or 7(l), shall have occurred or if the
Underwriters shall decline to purchase the Stock for any reason permitted under
this Agreement.
11. Reimbursement of Underwriters' Expenses. If (a) the Company shall fail
to tender the Stock for delivery to the Underwriters by reason of any failure,
refusal or inability on the part of the Company to perform any agreement on its
part to be performed, or because any other condition of the Underwriters'
obligations hereunder required to be fulfilled by the Company is not fulfilled,
the Company will reimburse the Underwriters for all reasonable out-of-pocket
expenses (including fees and disbursements of counsel) incurred by the
Underwriters in connection with this
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Agreement and the proposed purchase of the Stock, and upon demand the Company
shall pay the full amount thereof to the Representatives. If this Agreement is
terminated pursuant to Section 9 by reason of the default of one or more
Underwriters, the Company shall not be obligated to reimburse any defaulting
Underwriter on account of those expenses.
12. Notices, etc. All statements, requests, notices and agreements
hereunder shall be in writing, and:
(a) if to the Underwriters, shall be delivered or sent by mail, telex
or facsimile transmission to ▇▇▇▇▇▇ Brothers Inc., Three World Financial Center,
New York, New York 10285, Attention: Syndicate Department (Fax: ▇▇▇-▇▇▇-▇▇▇▇),
with a copy, in the case of any notice pursuant to Section 8(c), to the Director
of Litigation, Office of the General Counsel, ▇▇▇▇▇▇ Brothers Inc., ▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇;
(b) if to the Company, shall be delivered or sent by mail, telex or
facsimile transmission to the address of the Company set forth in the
Registration Statement, Attention: __________ (Fax: __________);
provided, however, that any notice to an Underwriter pursuant to Section 8(c)
shall be delivered or sent by mail, telex or facsimile transmission to such
Underwriter at its address set forth in its acceptance telex to the
Representatives, which address will be supplied to any other party hereto by the
Representatives upon request. Any such statements, requests, notices or
agreements shall take effect at the time of receipt thereof. The Company shall
be entitled to act and rely upon any request, consent, notice or agreement given
or made on behalf of the Underwriters by ▇▇▇▇▇▇ Brothers Inc. on behalf of the
Representatives.
13. Persons Entitled to Benefit of Agreement. This Agreement shall inure
to the benefit of and be binding upon the Underwriters, the Company, and their
respective successors. This Agreement and the terms and provisions hereof are
for the sole benefit of only those persons, except that (A) the representations,
warranties, indemnities and agreements of the Company contained in this
Agreement shall also be deemed to be for the benefit of the person or persons,
if any, who control any Underwriter within the meaning of Section 15 of the
Securities Act and (B) the indemnity agreement of the Underwriters contained in
Section 8(b) of this Agreement shall be deemed to be for the benefit of
directors of the Company, officers of the Company who have signed the
Registration Statement, employees of the Company and any person controlling the
Company within the meaning of Section 15 of the Securities Act. Nothing in this
Agreement is intended or shall be construed to give any person, other than the
persons referred to in this Section 13, any legal or equitable right, remedy or
claim under or in respect of this Agreement or any provision contained herein.
14. Survival. The respective indemnities, representations, warranties and
agreements of the Company and the Underwriters contained in this Agreement or
made by or on behalf on them, respectively, pursuant to this Agreement, shall
survive the delivery of and payment for the Stock and shall remain in full force
and effect, regardless of any investigation made by or on behalf of any of them
or any person controlling any of them.
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15. Definition of the Terms "Business Day" and "Subsidiary". For purposes
of this Agreement, (a) "BUSINESS DAY" means any day on which the New York Stock
Exchange, Inc. is open for trading each Monday, Tuesday, Wednesday, Thursday or
Friday which is not a day on which banking institutions in New York are
generally authorized or obligated by law or executive order to close and (b)
"SUBSIDIARY OR SUBSIDIARIES" shall mean either of, or both of, Intuitive
Surgical, SARL and Intuitive Surgical Deutschland GmbH.
16. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF NEW YORK.
17. Counterparts. This Agreement may be executed in one or more
counterparts and, if executed in more than one counterpart, the executed
counterparts shall each be deemed to be an original but all such counterparts
shall together constitute one and the same instrument.
18. Headings. The headings herein are inserted for convenience of
reference only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.
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If the foregoing correctly sets forth the agreement between the Company and
the Underwriters, please indicate your acceptance in the space provided for that
purpose below.
Very truly yours,
INTUITIVE SURGICAL, INC.
----------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
Accepted:
▇▇▇▇▇▇ Brothers Inc.,
Bear, ▇▇▇▇▇▇▇ & Co. Inc.,
Fleet Boston ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Inc.,
UBS Warburg LLC and
Fidelity Capital Markets, a division of
National Financial Services Corporation
For themselves and as Representatives
of the several Underwriters named
in SCHEDULE 1 hereto
By ▇▇▇▇▇▇ Brothers Inc.
--------------------------------------
Name:
---------------------------------
Title:
--------------------------------
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SCHEDULE 1
Number of
Underwriters Shares
------------ ---------
▇▇▇▇▇▇ Brothers Inc. ..............................................
Bear ▇▇▇▇▇▇▇ & Co., Inc. ..........................................
Fleet Boston ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Inc. ..............................
UBS Warburg LLC....................................................
Fideltiy Capital Markets, a division of National Financial
Services Corporation...............................................
[Others]
Total......................................................... 8,000,000
29
