EXHIBIT 1.1
1,500,000 SHARES(1)
CNS, INC.
COMMON STOCK, $.01 PAR VALUE
PURCHASE AGREEMENT
March __, 1996
▇▇▇▇▇ ▇▇▇▇▇▇▇ INC.
▇▇▇▇▇▇▇▇▇▇ SECURITIES
As Representatives of the several
Underwriters named in Schedule II hereto
c/o ▇▇▇▇▇ ▇▇▇▇▇▇▇ Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇ Tower
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
CNS, Inc., a Delaware corporation (the "Company"), and the stockholders
of the Company listed in Schedule I hereto (the "Selling Stockholders")
severally propose to sell to the several Underwriters named in Schedule II
hereto (the "Underwriters") an aggregate of 1,500,000 shares (the "Firm Shares")
of Common Stock, $.01 par value (the "Common Stock"), of the Company. The Firm
Shares consist of 1,375,000 authorized but unissued shares of Common Stock to be
issued and sold by the Company and 125,000 outstanding shares of Common Stock to
be sold by the Selling Stockholders. The Company and certain Selling
Stockholders have also granted to the several Underwriters an option to purchase
up to 225,000 additional shares of Common Stock on the terms and for the
purposes set forth in Section 3 hereof (the "Option Shares"). The Firm Shares
and any Option Shares purchased pursuant to this Purchase Agreement are herein
collectively called the "Securities."
The Company and the Selling Stockholders hereby confirm their agreement
with respect to the sale of the Securities to the several Underwriters, for whom
you are acting as Representatives (the "Representatives").
1. Registration Statement. A registration statement on Form S-3 (File
No. 333-_____) with respect to the Securities, including a preliminary form of
prospectus, has been prepared by the Company in conformity with the requirements
of the Securities Act of 1933, as amended (the "Act"), and the rules and
regulations ("Rules and Regulations") of the Securities and Exchange Commission
(the "Commission") thereunder and has been filed with the Commission; one or
more amendments to such registration statement have also been so prepared and
have been, or will be, so filed. Copies of such registration statement and
amendments and each related preliminary prospectus have been delivered to you.
--------
(1) Plus an option to purchase up to 225,000 additional shares to cover
over-allotments.
If the Company has elected not to rely upon Rule 430A of the Rules and
Regulations, the Company has prepared and will promptly file an amendment to the
registration statement and an amended prospectus. If the Company has elected to
rely upon Rule 430A of the Rules and Regulations, it will prepare and file a
prospectus pursuant to Rule 424(b) that discloses the information previously
omitted from the prospectus in reliance upon Rule 430A. Such registration
statement as amended at the time it is or was declared effective by the
Commission, together with (a) any registration statement filed by the Company
pursuant to Rule 462(b) under the Act and (b) the documents incorporated by
reference in the Prospectus contained in the Registration Statement at the time
such Registration Statement became effective, and, in the event of any amendment
thereto after the effective date and prior to the First Closing Date (as
hereinafter defined), such registration statement as so amended (but only from
and after the effectiveness of such amendment), including the information deemed
to be part of the registration statement at the time of effectiveness pursuant
to Rule 430A(b), if applicable, is hereinafter called the "Registration
Statement." The prospectus included in the Registration Statement at the time it
is or was declared effective by the Commission is hereinafter called the
"Prospectus," except that if any prospectus filed by the Company with the
Commission pursuant to Rule 424(b) of the Rules and Regulations or any other
prospectus provided to the Underwriters by the Company for use in connection
with the offering of the Securities (whether or not required to be filed by the
Company with the Commission pursuant to Rule 424(b) of the Rules and
Regulations) differs from the prospectus on file at the time the Registration
Statement is or was declared effective by the Commission, the term "Prospectus"
shall refer to such differing prospectus from and after the time such prospectus
is filed with the Commission or transmitted to the Commission for filing
pursuant to such Rule 424(b) or from and after the time it is first provided to
the Underwriters by the Company for such use. The term "Prospectus" may refer,
if applicable, to the term sheet or abbreviated term sheet filed by the Company
with the Commission pursuant to Rule 424(b)(7) together with the last
preliminary prospectus included in the Registration Statement filed prior to the
time it becomes effective or filed pursuant to Rule 424(a) under the Act from
and after the time it is first provided to the Underwriters by the Company for
delivery to purchasers of the Securities. The term "Preliminary Prospectus" as
used herein means any preliminary prospectus included in the Registration
Statement prior to the time it becomes or became effective under the Act and any
prospectus subject to completion as described in Rule 430A of the Rules and
Regulations. Any reference herein to any Preliminary Prospectus or Prospectus
shall be deemed to refer to and include the documents incorporated by reference
therein pursuant to Item 12 of Form S-3 under the Act, as of the date of the
Preliminary Prospectus or Prospectus, as the case may be; any reference to any
amendment or supplement to any Preliminary Prospectus or Prospectus shall be
deemed to refer to and include any documents filed after the date of such
Preliminary Prospectus or Prospectus, as the case may be, under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and incorporated by
reference in such Preliminary Prospectus or Prospectus, as the case may be; and
any reference to any amendment to the Registration Statement shall be deemed to
refer to and include any annual report of the Company filed pursuant to Section
13(a) or 15(d) of the Exchange Act after the effective date of the Registration
Statement that is incorporated by reference in the Registration Statement.
2. Representations and Warranties of the Company and the Selling
Stockholders.
(a) The Company represents and warrants to, and agrees with, the
several Underwriters as follows:
(i) No order preventing or suspending the use of any
Preliminary Prospectus has been issued by the Commission and each
Preliminary Prospectus, at the time of filing thereof, did not contain
an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made,
not misleading; except that the foregoing shall not apply to statements
in or omissions from any Preliminary Prospectus in reliance upon, and
in conformity with, written information furnished to the Company by
you, or by any Underwriter through you, specifically for use in the
preparation thereof.
(ii) The documents incorporated by reference in the
Prospectus, when they became effective or were filed with the
Commission, as the case may be, conformed in all material respects to
the requirements of the Act or the Exchange Act, as applicable, and the
rules and regulations of the Commission thereunder, and none of such
documents 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; and any further documents
so filed and incorporated by reference in the Prospectus or any further
amendment or supplement thereto, when such documents become effective
or are filed with the Commission, as the case may be, will conform in
all material respects to the requirements of the Act or the Exchange
Act, as applicable, and the rules and regulations of the Commission
thereunder and will not contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; provided,
however, that this representation and warranty shall not apply to any
statements or omissions made in reliance upon and in conformity with
information furnished in writing to the Company by an Underwriter
through you expressly for use therein.
(iii) As of the time the Registration Statement (or any
post-effective amendment thereto) is or was declared effective by the
Commission, upon the filing or first delivery to the Underwriters of
the Prospectus (or any supplement to the Prospectus) and at the First
Closing Date and Second Closing Date (as hereinafter defined), (A) the
Registration Statement and Prospectus (in each case, as so amended
and/or supplemented) will conform or conformed in all material respects
to the requirements of the Act and the Rules and Regulations, (B) the
Registration Statement (as so amended) will not or did not include an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading, and (C) the Prospectus (as so supplemented)
will not or did not include an untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
in which they are or were made, not misleading; except that the
foregoing shall not apply to statements in or omissions from any such
document in reliance upon, and in conformity with, written information
furnished to the Company by you, or by any Underwriter through you,
specifically for use in the preparation thereof. If the Registration
Statement has been declared effective by the Commission, no stop order
suspending the effectiveness of the Registration Statement has been
issued, and no proceeding for that purpose has been initiated or, to
the Company's knowledge, threatened by the Commission.
(iv) The financial statements of the Company, together with
the notes thereto, set forth in the Registration Statement and
Prospectus comply in all material respects with the requirements of the
Act and fairly present the financial condition of the Company as of the
dates indicated and the results of operations and changes in cash flows
for the periods therein specified in conformity with generally accepted
accounting principles consistently applied throughout the periods
involved (except as otherwise stated therein); and the supporting
schedule incorporated by reference in the Registration Statement
presents fairly the information required to be stated therein. No other
financial statements or schedules are required to be included in the
Registration Statement or Prospectus. KPMG Peat Marwick LLP, which has
expressed its opinion with respect to the financial statements and
schedules filed as a part of the Registration Statement and included in
the Registration Statement and Prospectus, are independent public
accountants as required by the Act and the Rules and Regulations.
(v) The Company has been duly organized and is validly
existing as a corporation in good standing under the laws of its
jurisdiction of incorporation. The Company has full corporate power and
authority to own its properties and conduct its business as currently
being carried on and as described in the Registration Statement and
Prospectus, and is duly qualified to do business as a foreign
corporation in good standing in each jurisdiction in which it owns or
leases real property or in which the conduct of its business makes such
qualification necessary and in which the failure to so qualify would
have a material adverse effect upon its business, condition (financial
or otherwise) or properties, taken as a whole.
(vi) Except as contemplated in the Prospectus, subsequent to
the respective dates as of which information is given in the
Registration Statement and the Prospectus, the Company has not incurred
any material liabilities or obligations, direct or contingent, or
entered into any material transactions, or declared or paid any
dividends or made any distribution of any kind with respect to its
capital stock; and there has not been any change in the capital stock
(other than a change in the number of outstanding shares of Common
Stock due to the issuance of shares upon the exercise of outstanding
options or warrants), or any material change in the short-term or
long-term debt, or any issuance of options, warrants, convertible
securities or other rights to purchase the capital stock, of the
Company, or any material adverse change, or any development involving a
prospective material adverse change, in the general affairs, condition
(financial or otherwise), business, key personnel, property, prospects,
net worth or results of operations of the Company, taken as a whole.
(vii) Except as set forth in the Prospectus, there is not
pending or, to the knowledge of the Company, threatened or
contemplated, any action, suit or proceeding to which the Company is a
party before or by any court or governmental agency, authority or body,
or any arbitrator, which might result in any material adverse change in
the condition (financial or otherwise), business, prospects, net worth
or results of operations of the Company, taken as a whole.
(viii) There are no contracts or documents of the Company that
are required to be filed as exhibits to the Registration Statement by
the Act or by the Rules and Regulations that have not been so filed or
incorporated by reference.
(ix) This Agreement has been duly authorized, executed and
delivered by the Company. The execution, delivery and performance of
this Agreement and the consummation of the transactions herein
contemplated will not result in a breach or violation of any of the
terms and provisions of, or constitute a default under, any statute,
any agreement or instrument to which the Company is a party or by which
it is bound or to which any of its property is subject, the Company's
charter or by-laws, or any order, rule, regulation or decree of any
court or governmental agency or body having jurisdiction over the
Company or any of its properties; no consent, approval, authorization
or order of, or filing with, any court or governmental agency or body
is required for the execution, delivery and performance of this
Agreement or for the consummation of the transactions contemplated
hereby, including the issuance or sale of the Securities by the
Company, except such as may be required under the Act or state
securities or blue sky laws; and the Company has full power and
authority to enter into this Agreement and to authorize, issue and sell
the Securities as contemplated by this Agreement.
(x) All of the issued and outstanding shares of capital stock
of the Company, including the outstanding shares of Common Stock, are
duly authorized and validly issued, fully paid and nonassessable, have
been issued in compliance with all federal and state securities laws,
were not issued in violation of or subject to any preemptive rights or
other rights to subscribe for or purchase securities, and the holders
thereof are not subject to personal liability by reason of being such
holders; the Securities which may be sold hereunder by the Company have
been duly authorized and, when issued, delivered and paid for in
accordance with the terms hereof, will have been validly issued and
will be fully paid and nonassessable, and the holders thereof will not
be subject to personal liability by reason of being such holders; and
the capital stock of the Company, including the Common Stock, conforms
to the description thereof in the Registration Statement and
Prospectus. Except as otherwise stated in the Registration Statement
and Prospectus, there are no preemptive rights or other rights to
subscribe for or to purchase, or any restriction upon the voting or
transfer of, any shares of Common Stock pursuant to the Company's
charter, by-laws or any agreement or other instrument to which the
Company is a party or by which the Company is bound. Neither the filing
of the Registration Statement nor the offering or sale of the
Securities as contemplated by this Agreement gives rise to any rights
for or relating to the registration of any shares of Common Stock or
other securities of the Company, except for such rights as have been
waived. Except as described in the Registration Statement and the
Prospectus, there are no options, warrants, agreements, contracts or
other rights in existence to purchase or acquire from the Company any
shares of the capital stock of the Company. The Company has an
authorized and outstanding capitalization as set forth in the
Registration Statement and the Prospectus.
(xi) The Company holds, and is operating in compliance in all
material respects with, all franchises, grants, authorizations,
licenses, permits, easements, consents, certificates and orders of any
governmental or self-regulatory body required for the conduct of its
business and all such franchises, grants, authorizations, licenses,
permits, easements, consents, certifications and orders are valid and
in full force and effect; and the Company is in compliance in all
material respects with all applicable federal, state, local and foreign
laws, regulations, orders and decrees.
(xii) The Company has good and marketable title to all
property described in the Registration Statement and Prospectus as
being owned by it, in each case free and clear of all liens, claims,
security interests or other encumbrances except such as are described
in the Registration Statement and the Prospectus; the property held
under lease by the Company is held by it under valid, subsisting and
enforceable leases with only such exceptions with respect to any
particular lease as do not interfere in any material respect with the
conduct of the business of the Company; except as stated in the
Registration Statement, the Company owns, has an exclusive license
under a license agreement or possesses all patents, patent
applications, trademarks, service marks, tradenames, trademark
registrations, service ▇▇▇▇ registrations, copyrights, licenses,
inventions, trade secrets and rights necessary for the conduct of the
business of the Company as currently carried on and as described in the
Registration Statement and Prospectus; except as stated in the
Registration Statement and Prospectus, no name which the Company uses
and no other aspect of the business of the Company will involve or give
rise to any infringement of, or license or similar fees for, any
patents, patent applications, trademarks, service marks, tradenames,
trademark registrations, service ▇▇▇▇ registrations, copyrights,
licenses, inventions, trade secrets or other similar rights of others
material to the business or prospects of the Company, and the Company
has not received any notice alleging any such infringement or fee.
(xiii) The Company is not in violation of its charter or
by-laws or in breach of or otherwise in default in the performance of
any material obligation, agreement or condition contained in any bond,
debenture, note, indenture, loan agreement or any other material
contract, lease or other instrument to which it is subject or by which
it may be bound, or to which any of the material property or assets of
the Company is subject.
(xiv) The Company has filed all federal, state, local and
foreign income and franchise tax returns required to be filed and is
not in default in the payment of any taxes which were payable pursuant
to said returns or any assessments with respect thereto, other than any
which the Company is contesting in good faith.
(xv) The Company has not distributed and will not distribute
any prospectus or other offering material in connection with the
offering and sale of the Securities other than any Preliminary
Prospectus or the Prospectus or other materials permitted by the Act to
be distributed by the Company.
(xvi) The Securities have been approved for designation upon
notice of issuance on the Nasdaq National Market under the symbol
"CNXS."
(xvii) The Company owns no capital stock or other equity or
ownership or proprietary interest in any corporation, partnership,
association, trust or other entity.
(xviii) The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurances that (i)
transactions are executed in accordance with management's general or
specific authorization; (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain accountability for
assets; (iii) access to assets is permitted only in accordance with
management's general or specific authorization; and (iv) the recorded
accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to
any differences.
(xix) Other than as contemplated by this Agreement, the
Company has not incurred any liability for any finder's or broker's fee
or agent's commission in connection with the execution and delivery of
this Agreement or the consummation of the transactions contemplated
hereby.
(xx) The conditions for use of Form S-3, as set forth in the
General Instructions thereto, have been satisfied.
(xxi) Neither the Company nor any of its affiliates is
presently doing business with the government of Cuba or with any person
or affiliate located in Cuba.
(b) Each Selling Stockholder represents and warrants to, and agrees
with, the several Underwriters as follows:
(i) Such Selling Stockholder is the record and beneficial
owner of, and has, and on the First Closing Date and/or the Second
Closing Date, as the case may be, will have, valid and marketable title
to the Securities to be sold by such Selling Stockholder, free and
clear of all security interests, claims, liens, restrictions on
transferability, legends, proxies, equities or other encumbrances; and
upon delivery of and payment for such Securities hereunder, the several
Underwriters will acquire valid and marketable title thereto, free and
clear of any security interests, claims, liens, restrictions on
transferability, legends, proxies, equities or other encumbrances. Such
Selling Stockholder is selling the Securities to be sold by such
Selling Stockholder for such Selling Stockholder's own account and is
not selling such Securities, directly or indirectly, for the benefit of
the Company, and no part of the proceeds of such sale received by such
Selling Stockholder will inure, either directly or indirectly, to the
benefit of the Company other than as described in the Registration
Statement and Prospectus.
(ii) Such Selling Stockholder has duly authorized, executed
and delivered a Letter of Transmittal and Custody Agreement ("Custody
Agreement"), which Custody Agreement is a valid and binding obligation
of such Selling Stockholder, to Norwest Bank Minnesota, N.A., as
Custodian (the "Custodian"); pursuant to the Custody Agreement the
Selling Stockholder has placed in custody with the Custodian, for
delivery under this Agreement, the certificates representing the
Securities to be sold by such Selling Stockholder; such certificates
represent validly issued, outstanding, fully paid and nonassessable
shares of Common Stock; and such certificates were duly and properly
endorsed in blank for transfer, or were accompanied by all documents
duly and properly executed that are necessary to validate the transfer
of title thereto, to the Underwriters, free of any legend, restriction
on transferability, proxy, lien or claim, whatsoever.
(iii) Such Selling Stockholder has the power and authority to
enter into this Agreement and to sell, transfer and deliver the
Securities to be sold by such Selling Stockholder; and such Selling
Stockholder has duly authorized, executed and delivered to ▇▇▇▇▇▇ ▇.
▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, as attorneys-in-fact (the
"Attorneys-in-Fact"), an irrevocable power of attorney (a "Power of
Attorney") authorizing and directing the Attorneys-in-Fact, or either
of them, to effect the sale and delivery of the Securities being sold
by such Selling Stockholder, to enter into this Agreement and to take
all such other action as may be necessary hereunder.
(iv) This Agreement, the Custody Agreement and the Power of
Attorney have each been duly authorized, executed and delivered by or
on behalf of such Selling Stockholder and each constitutes a valid and
binding agreement of such Selling Stockholder, enforceable in
accordance with its terms, except as rights to indemnity hereunder or
thereunder may be limited by federal or state securities laws and
except as such enforceability may be limited by bankruptcy, insolvency,
reorganization or laws affecting the rights of creditors generally and
subject to general principles of equity. The execution and delivery of
this Agreement, the Custody Agreement and the Power of Attorney and the
performance of the terms hereof and thereof and the consummation of the
transactions herein and therein contemplated will not result in a
breach or violation of any of the terms and provisions of, or
constitute a default under, any agreement or instrument to which such
Selling Stockholder is a party or by which such Selling Stockholder is
bound, or any law, regulation, order or decree applicable to such
Selling Stockholder; no consent, approval, authorization or order of,
or filing with, any court or governmental agency or body is required
for the execution, delivery and performance of this Agreement, the
Custody Agreement and the Power of Attorney or for the consummation of
the transactions contemplated hereby and thereby, including the sale of
the Securities being sold by such Selling Stockholder, except such as
may be required under the Act or state securities laws or blue sky
laws.
(v) Such Selling Stockholder has not distributed and will not
distribute any prospectus or other offering material in connection with
the offering and sale of the Securities other than any Preliminary
Prospectus or the Prospectus or other materials permitted by the Act to
be distributed by such Selling Stockholder.
(vi) Such Selling Stockholder has not taken and will not take,
directly or indirectly, any action designed to or which might
reasonably be expected to cause or result in stabilization or
manipulation of the price of any security of the Company to facilitate
the sale or resale of the Securities.
(vii) Such Selling Stockholder has reviewed the Registration
Statement and the Prospectus and to the best knowledge of such Selling
Stockholder neither the Registration Statement nor the Prospectus
contains any untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading regarding such Selling Stockholder,
the other Selling Stockholders, the Company or otherwise.
(viii) To the best knowledge of such Selling Stockholder, the
representations and warranties of the Company contained in paragraph
(a) of this Section 2 are true and correct.
(c) Any certificate signed by any officer of the Company and delivered
to you or to counsel for the Underwriters shall be deemed a representation and
warranty by the Company to each Underwriter as to the matters covered thereby;
any certificate signed by or on behalf of any Selling Stockholder as such and
delivered to you or to counsel for the Underwriters shall be deemed a
representation and warranty by such Selling Stockholder to each Underwriter as
to the matters covered thereby.
3. Purchase, Sale and Delivery of Securities.
(a) On the basis of the representations, warranties and agreements
herein contained, but subject to the terms and conditions herein set forth, the
Company agrees to issue and sell 1,375,000 Firm Shares, and each Selling
Stockholder agrees, severally and not jointly, to sell the number of Firm Shares
set forth opposite the name of such Selling Stockholder in Schedule I hereto, to
the several Underwriters, and each Underwriter agrees, severally and not
jointly, to purchase from the Company and the Selling Stockholders the number of
Firm Shares set forth opposite the name of such Underwriter in Schedule II
hereto. The purchase price for each Firm Share shall be $________ per share. The
obligation of each Underwriter to each of the Company and the Selling
Stockholders shall be to purchase from each of the Company and the Selling
Stockholders that number of Firm Shares (to be adjusted by the Representatives
to avoid fractional shares) which represents the same proportion of the number
of Firm Shares to be sold by each of the Company and the Selling Stockholders
pursuant to this Agreement as the number of Firm Shares set forth opposite the
name of such Underwriter in Schedule II hereto represents to the total number of
Firm Shares to be purchased by all Underwriters pursuant to this Agreement. In
making this Agreement, each Underwriter is contracting severally and not
jointly; except as provided in paragraph (c) of this Section 3 and in Section 8
hereof, the agreement of each Underwriter is to purchase only the respective
number of Firm Shares specified in Schedule II.
The Firm Shares will be delivered by the Company and the Custodian to
you for the accounts of the several Underwriters against payment of the purchase
price therefor by certified or official bank check or other next day funds
payable to the order of the Company and the Custodian, as appropriate, at the
offices of ▇▇▇▇▇ ▇▇▇▇▇▇▇ Inc., ▇▇▇▇▇ ▇▇▇▇▇▇▇ Tower, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, or such other location as may be mutually acceptable, at
9:00 a.m., Minneapolis time, on the fourth full business day following the date
hereof, or at such other time as you and the Company determine, such time and
date of delivery being herein referred to as the "First Closing Date." The Firm
Shares, in definitive form and in such denominations and registered in such
names as you may request upon at least two business days' prior notice to the
Company and the Custodian, will be made available for checking and packaging at
the offices of ▇▇▇▇▇ ▇▇▇▇▇▇▇ Inc., ▇▇▇▇▇ ▇▇▇▇▇▇▇ Tower, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, or such other location as may be mutually acceptable, at
least one business day prior to the First Closing Date.
(b) On the basis of the representations, warranties and agreements
herein contained, but subject to the terms and conditions herein set forth, the
Company, with respect to 130,000 of the Option Shares, and certain of the
Selling Stockholders, with respect to the number of Option Shares set forth
opposite the name of such Selling Stockholder in Schedule I hereto, hereby grant
to the several Underwriters an option to purchase all or any portion of the
Option Shares at the same purchase price as the Firm Shares, for use solely in
covering any over-allotments made by the Underwriters in the sale and
distribution of the Firm Shares. The option granted hereunder may be exercised
at any time (but not more than once) within 30 days after the effective date of
this Agreement upon notice (confirmed in writing) by the Representatives to the
Company and to the Attorneys-in-Fact setting forth the aggregate number of
Option Shares as to which the several Underwriters are exercising the option,
the names and denominations in which the certificates for the Option Shares are
to be registered and the date and time, as determined by you, when the Option
Shares are to be delivered, such time and date being herein referred to as the
"Second Closing" and "Second Closing Date," respectively; provided, however,
that the Second Closing Date shall not be earlier than the First Closing Date
nor earlier than the second business day after the date on which the option
shall have been exercised. If the option is exercised, the obligation of each
Underwriter shall be to purchase from the Company and each Selling Stockholder
granting an option to purchase the Option Shares, on a pro rata basis, that
number of Option Shares (to be adjusted by the Representatives to avoid
fractional shares) which represents the same proportion that the number of
Option Shares granted by the Company and each such Selling Stockholder bears to
the total number of Option Shares. The number of Option Shares to be purchased
by each Underwriter shall be the same percentage of the total number of Option
Shares to be purchased by the several Underwriters as the number of Firm Shares
to be purchased by such Underwriter is of the total number of Firm Shares to be
purchased by the several Underwriters, as adjusted by the Representatives in
such manner as the Representatives deem advisable to avoid fractional shares. No
Option Shares shall be sold and delivered unless the Firm Shares previously have
been, or simultaneously are, sold and delivered.
The Option Shares will be delivered by the Custodian and the Company,
as appropriate, to you for the accounts of the several Underwriters against
payment of the purchase price therefor by certified or official bank check or
other next day funds payable to the order of the Custodian or the Company, as
appropriate, at the offices of ▇▇▇▇▇ ▇▇▇▇▇▇▇ Inc., ▇▇▇▇▇ ▇▇▇▇▇▇▇ Tower, ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, or such other location as may be
mutually acceptable at 9:00 a.m., Minneapolis time, on the Second Closing Date.
The Option Shares in definitive form and in such denominations and registered in
such names as you have set forth in your notice of option exercise, will be made
available for checking and packaging at the office of ▇▇▇▇▇ ▇▇▇▇▇▇▇ Inc., ▇▇▇▇▇
▇▇▇▇▇▇▇ Tower, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, or such other
location as may be mutually acceptable, at least one business day prior to the
Second Closing Date.
(c) It is understood that you, individually and not as Representatives
of the several Underwriters, may (but shall not be obligated to) make payment to
the Company or the Selling Stockholders, on behalf of any Underwriter for the
Securities to be purchased by such Underwriter. Any such payment by you shall
not relieve any such Underwriter of any of its obligations hereunder. Nothing
herein contained shall constitute any of the Underwriters an unincorporated
association or partner with the Company or any Selling Stockholder.
4. Covenants.
(a) The Company covenants and agrees with the several Underwriters as
follows:
(i) If the Registration Statement has not already been
declared effective by the Commission, the Company will use its best
efforts to cause the Registration Statement and any post-effective
amendments thereto to become effective as promptly as possible; the
Company will notify you promptly of the time when the Registration
Statement or any post-effective amendment to the Registration Statement
has become effective or any supplement to the Prospectus has been filed
and of any request by the Commission for any amendment or supplement to
the Registration Statement or Prospectus or additional information; if
the Company has elected to rely on Rule 430A of the Rules and
Regulations, the Company will file a Prospectus containing the
information omitted therefrom pursuant to such Rule 430A with the
Commission within the time period required by, and otherwise in
accordance with the provisions of, Rules 424(b) and 430A of the Rules
and Regulations; the Company will prepare and file with the Commission,
promptly upon your request, any amendments or supplements to the
Registration Statement or Prospectus that, in your opinion, may be
necessary or advisable in connection with the distribution of the
Securities by the Underwriters; and the Company will not file any
amendment or supplement to the Registration Statement or Prospectus or
any document incorporated by reference in the Prospectus to which you
shall reasonably object by notice to the Company after having been
furnished a copy a reasonable time prior to the filing. The Company
will file promptly all reports and any definitive proxy or information
statements required to be filed by the Company with the Commission
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act
subsequent to the date of the Prospectus and for so long as the
delivery of a prospectus is required in connection with the offering or
sale of the Securities.
(ii) The Company will advise you, promptly after it shall
receive notice or obtain knowledge thereof, of the issuance by the
Commission of any stop order suspending the effectiveness of the
Registration Statement, of the suspension of the qualification of the
Securities for offering or sale in any jurisdiction, or of the
initiation or threatening of any proceeding for any such purpose; and
the Company will promptly use its best efforts to prevent the issuance
of any stop order or to obtain its withdrawal if such a stop order
should be issued.
(iii) Within the time during which a prospectus relating to
the Securities is required to be delivered under the Act, the Company
will comply as far as it is able with all requirements imposed upon it
by the Act, as now and hereafter amended, and by the Rules and
Regulations, as from time to time in force, so far as necessary to
permit the continuance of sales of or dealings in the Securities as
contemplated by the provisions hereof and the Prospectus. If during
such period any event occurs as a result of which the Prospectus would
include an untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in the light of
the circumstances then existing, not misleading, or if during such
period it is necessary to amend the Registration Statement or
supplement the Prospectus to comply with the Act, the Company will
promptly notify you and will amend the Registration Statement or
supplement the Prospectus (at the expense of the Company) so as to
correct such statement or omission or effect such compliance.
(iv) The Company will use its best efforts to qualify the
Securities for sale under the securities laws of such jurisdictions as
you reasonably designate and to continue such qualifications in effect
so long as required for the distribution of the Securities, except that
the Company shall not be required in connection therewith to qualify as
a foreign corporation or to execute a general consent to service of
process in any state.
(v) The Company will furnish to the Underwriters copies of the
Registration Statement (two of which will be signed and will include
all exhibits), each Preliminary Prospectus, the Prospectus, and all
amendments and supplements to such documents, in each case as soon as
available and in such quantities as you may from time to time
reasonably request.
(vi) During a period of five years commencing with the date
hereof, the Company will furnish to the Representatives, and to each
Underwriter who may so request in writing, copies of all periodic and
special reports furnished to the stockholders of the Company and all
information, documents and reports filed with the Commission, the
National Association of Securities Dealers, Inc. (the "NASD"), Nasdaq
or any securities exchange.
(vii) The Company will make generally available to its
security holders as soon as practicable, but in any event not later
than 15 months after the end of the Company's current fiscal quarter,
an earnings statement (which need not be audited) covering a 12-month
period beginning after the effective date of the Registration Statement
that shall satisfy the provisions of Section 11(a) of the Act and Rule
158 of the Rules and Regulations.
(viii) The Company, whether or not the transactions
contemplated hereunder are consummated or this Agreement is prevented
from becoming effective under the provisions of Section 9(a) hereof or
is terminated, will pay or cause to be paid (A) all expenses (including
transfer taxes allocated to the respective transferees) incurred in
connection with the delivery to the Underwriters of the Securities, (B)
all expenses and fees (including, without limitation, fees and expenses
of the Company's accountants and counsel but, except as otherwise
provided below, not including fees of the Underwriters' counsel) in
connection with the preparation, printing, filing, delivery, and
shipping of the Registration Statement (including the financial
statements therein and all amendments, schedules, and exhibits
thereto), the Securities, each Preliminary Prospectus, the Prospectus,
and any amendment thereof or supplement thereto, and the printing,
delivery, and shipping of this Agreement and other underwriting
documents, including Blue Sky Memoranda, (C) any filing fees and fees
and disbursements of the Underwriters' counsel incurred in connection
with the qualifications of the Securities for offering and sale by the
Underwriters or by dealers under the securities or blue sky laws of the
states and other jurisdictions which you shall designate in accordance
with Section 4(d) hereof, (D) the fees and expenses of any transfer
agent or registrar, (E) the filing fees incident to any required review
by the NASD of the terms of the sale of the Securities, (F) listing
fees, if any, and (G) all other costs and expenses incident to the
performance of its obligations hereunder that are not otherwise
specifically provided for herein. If the sale of the Securities
provided for herein is not consummated by reason of action by the
Company pursuant to Section 9(a) hereof which prevents this Agreement
from becoming effective, or by reason of any failure, refusal or
inability on the part of the Company or the Selling Stockholders to
perform any agreement on its or their part to be performed, or because
any other condition of the Underwriters' obligations hereunder required
to be fulfilled by the Company or the Selling Stockholders is not
fulfilled, the Company will reimburse the several Underwriters for all
out-of-pocket disbursements (including fees and disbursements of
counsel) incurred by the Underwriters in connection with their
investigation, preparing to market and marketing the Securities or in
contemplation of performing their obligations hereunder. The Company
shall not in any event be liable to any of the Underwriters for loss of
anticipated profits from the transactions covered by this Agreement.
(ix) The Company will apply the net proceeds from the sale of
the Securities to be sold by it hereunder for the purposes set forth in
the Prospectus.
(x) The Company will not, without the prior written consent of
▇▇▇▇▇ ▇▇▇▇▇▇▇ Inc., offer for sale, sell, contract to sell, grant any
option for the sale of or otherwise issue or dispose of any Common
Stock or any securities convertible into or exchangeable for, or any
options or rights to purchase or acquire, Common Stock, except to the
Underwriters pursuant to this Agreement and pursuant to employee stock
option plans and options outstanding on the date of this Agreement for
a period of 90 days after the commencement of the public offering of
the Securities by the Underwriters.
(xi) The Company either has caused to be delivered to you or
will cause to be delivered to you prior to the effective date of the
Registration Statement a letter from each of the Company's directors
and officers, Selling Stockholders and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ stating that
such person agrees that he or she will not, without your prior written
consent, offer for sale, sell, contract to sell or otherwise dispose of
any shares of Common Stock or rights to purchase Common Stock, except
to the Underwriters pursuant to this Agreement, for a period of 90 days
after commencement of the public offering of the Securities by the
Underwriters.
(xii) The Company has not taken and will not take, directly or
indirectly, any action designed to or which might reasonably be
expected to cause or result in, or which has constituted, the
stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Securities.
(xiii) Except as provided herein, the Company will not incur
any liability for any finder's or broker's fee or agent's commission in
connection with the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby.
(xiv) The Company will inform the Florida Department of
Banking and Finance at any time prior to the consummation of the
distribution of the Securities by the Underwriters if it commences
engaging in business with the government of Cuba or with any person or
affiliate located in Cuba. Such information will be provided within 90
days after the commencement thereof or after a change occurs with
respect to previously reported information.
(xv) The Company will use its best efforts to maintain the
designation of the Common Stock on the Nasdaq National Market.
(b) Each Selling Stockholder covenants and agrees with the several
Underwriters as follows:
(i) Except as otherwise agreed to by the Company and the
Selling Stockholder, such Selling Stockholder will pay all taxes, if
any, on the transfer and sale, respectively, of the Securities being
sold by such Selling Stockholder, the fees of such Selling
Stockholder's counsel and such Selling Stockholder's proportionate
share (based upon the number of Securities being offered by such
Selling Stockholder pursuant to the Registration Statement) of all
costs and expenses (except for legal and accounting expenses and fees
of the registrar and transfer agent) incurred by the Company pursuant
to the provisions of Section 4(a)(viii) of this Agreement; provided,
however, that each Selling Stockholder severally agrees to reimburse
the Company for any reimbursement made by the Company to the
Underwriters pursuant to Section 4(a)(viii) hereof to the extent such
reimbursement resulted from the failure or refusal on the part of such
Selling Stockholder to comply under the terms or fulfill any of the
conditions of this Agreement.
(ii) If this Agreement shall be terminated by the Underwriters
because of any failure, refusal or inability on the part of such
Selling Stockholder to perform any agreement on such Selling
Stockholder's part to be performed, or because any other condition of
the Underwriters' obligations hereunder required to be fulfilled by
such Selling Stockholder is not fulfilled, such Selling Stockholder
agrees to reimburse the several Underwriters for all out-of-pocket
disbursements (including fees and disbursements of counsel for the
Underwriters) incurred by the Underwriters in connection with their
investigation, preparing to market and marketing the Securities or in
contemplation of performing their obligations hereunder. The Selling
Stockholder shall not in any event be liable to any of the Underwriters
for loss of anticipated profits from the transactions covered by this
Agreement.
(iii) The Securities to be sold by such Selling Stockholder,
represented by the certificates on deposit with the Custodian pursuant
to the Custody Agreement of such Selling Stockholder, are subject to
the interest of the several Underwriters and the other Selling
Stockholders; the arrangements made for such custody are, except as
specifically provided in the Custody Agreement, irrevocable; and the
obligations of such Selling Stockholder hereunder shall not be
terminated, except as provided in this Agreement or in the Custody
Agreement, by any act of such Selling Stockholder, by operation of law,
whether by the liquidation, dissolution or merger of such Selling
Stockholder, by the death of such Selling Stockholder, or by the
occurrence of any other event. If any Selling Stockholder should
liquidate, dissolve or be a party to a merger or if any other such
event should occur before the delivery of the Securities hereunder,
certificates for the Securities deposited with the Custodian shall be
delivered by the Custodian in accordance with the terms and conditions
of this Agreement as if such liquidation, dissolution, merger or other
event had not occurred, whether or not the Custodian shall have
received notice thereof.
(iv) Such Selling Stockholder will not, without the prior
written consent of ▇▇▇▇▇ ▇▇▇▇▇▇▇ Inc., offer for sale, sell, contract
to sell, grant any option for the sale of or otherwise dispose of any
Common Stock or any securities convertible into or exchangeable for, or
any options or rights to purchase or acquire, Common Stock, except to
the Underwriters pursuant to this Agreement, for a period of 90 days
after the commencement of the public offering of the Securities by the
Underwriters.
(v) Such Selling Stockholder has not taken and will not take,
directly or indirectly, any action designed to or which might
reasonably be expected to cause or result in stabilization or
manipulation of the price of any security of the Company to facilitate
the sale or resale of the Securities.
(vi) Such Selling Stockholder shall immediately notify you if
any event occurs, or of any change in information relating to such
Selling Stockholder or the Company or any new information relating to
the Company or relating to any matter stated in the Prospectus or any
supplement thereto, which results in the Prospectus (as supplemented)
including an untrue statement of a material fact or omitting to state
any material fact necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading.
5. Conditions of Underwriters' Obligations. The obligations of the
several Underwriters hereunder are subject to the accuracy, as of the date
hereof and at each of the First Closing Date and the Second Closing Date (as if
made at such Closing Date), of and compliance with all representations,
warranties and agreements of the Company and the Selling Stockholders contained
herein, to the performance by the Company and the Selling Stockholders of their
respective obligations hereunder and to the following additional conditions:
(a) The Registration Statement shall have become effective not later
than 5:00 p.m., Minneapolis time, on the date of this Agreement, or such later
time and date as you, as Representatives of the several Underwriters, shall
approve and all filings required by Rule 424 and Rule 430A of the Rules and
Regulations shall have been timely made; no stop order suspending the
effectiveness of the Registration Statement or any amendment thereof shall have
been issued; no proceedings for the issuance of such an order shall have been
initiated or threatened; and any request of the Commission for additional
information (to be included in the Registration Statement or the Prospectus or
otherwise) shall have been complied with to your satisfaction.
(b) No Underwriter shall have advised the Company that the Registration
Statement or the Prospectus, or any amendment thereof or supplement thereto,
contains an untrue statement of fact which, in your opinion, is material, or
omits to state a fact which, in your opinion, is material and is required to be
stated therein or necessary to make the statements therein not misleading.
(c) Except as contemplated in the Prospectus, subsequent to the
respective dates as of which information is given in the Registration Statement
and the Prospectus, the Company shall not have incurred any material liabilities
or obligations, direct or contingent, or entered into any material transactions,
or declared or paid any dividends or made any distribution of any kind with
respect to its capital stock; and there shall not have been any change in the
capital stock (other than a change in the number of outstanding shares of Common
Stock due to the issuance of shares upon the exercise of outstanding options or
warrants), or any material change in the short-term or long-term debt of the
Company, or any issuance of options, warrants, convertible securities or other
rights to purchase the capital stock of the Company, or any material adverse
change or any development involving a prospective material adverse change
(whether or not arising in the ordinary course of business), in the general
affairs, condition (financial or otherwise), business, key personnel, property,
prospects, net worth or results of operations of the Company, taken as a whole,
that, in your judgment, makes it impractical or inadvisable to offer or deliver
the Securities on the terms and in the manner contemplated in the Prospectus.
(d) On each Closing Date, there shall have been furnished to you, as
Representatives of the several Underwriters, the opinion of ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
P.L.L.P., counsel for the Company, dated such Closing Date and addressed to you,
to the effect that:
(i) The Company has been duly organized and is validly
existing as a corporation in good standing under the laws of its
jurisdiction of incorporation. The Company has full corporate power and
authority to own its properties and conduct its business as currently
being carried on and as described in the Registration Statement and
Prospectus, and is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction in which it
owns or leases real property or in which the conduct of its business
makes such qualification necessary and in which the failure to so
qualify would have a material adverse effect upon the business,
condition (financial or otherwise) or properties of the Company, taken
as a whole.
(ii) The capital stock of the Company conforms as to legal
matters to the description thereof contained in the Prospectus under
the caption "Description of Capital Stock." All of the issued and
outstanding shares of the capital stock of the Company have been duly
authorized and validly issued and are fully paid and nonassessable, and
the holders thereof are not subject to personal liability by reason of
being such holders. The Securities to be issued and sold by the Company
hereunder have been duly authorized and, when issued, delivered and
paid for in accordance with the terms of this Agreement, will have been
validly issued and will be fully paid and nonassessable, and the
holders thereof will not be subject to personal liability by reason of
being such holders. Except as otherwise stated in the Registration
Statement and Prospectus, there are no preemptive rights or other
rights to subscribe for or to purchase, or any restriction upon the
voting or transfer of, any shares of Common Stock pursuant to the
Company's charter, by-laws or any agreement or other instrument known
to such counsel to which the Company is a party or by which the Company
is bound. To the best of such counsel's knowledge, neither the filing
of the Registration Statement nor the offering or sale of the
Securities as contemplated by this Agreement gives rise to any rights
for or relating to the registration of any shares of Common Stock or
other securities of the Company, except for such rights as have been
waived.
(iii) To the best of such counsel's knowledge, except as
described in the Registration Statement and Prospectus, there are no
options, warrants, agreements, contracts or other rights in existence
to purchase or acquire from the Company any shares of the capital stock
of the Company.
(iv) The Registration Statement has become effective under the
Act and, to the best of such counsel's knowledge, no stop order
suspending the effectiveness of the Registration Statement has been
issued and no proceeding for that purpose has been instituted or, to
the knowledge of such counsel, threatened by the Commission.
(v) The descriptions in the Registration Statement and
Prospectus of statutes, legal and governmental proceedings, contracts
and other documents are accurate and fairly present the information
required to be shown; and such counsel does not know of any statutes or
legal or governmental proceedings required to be described in the
Prospectus that are not described as required, or of any contracts or
documents of a character required to be described in the Registration
Statement or Prospectus or included as exhibits to the Registration
Statement that are not described or included as required.
(vi) The Company has full corporate power and authority to
enter into this Agreement, and this Agreement has been duly authorized,
executed and delivered by the Company; the execution, delivery and
performance of this Agreement and the consummation of the transactions
herein contemplated will not result in a breach or violation of any of
the terms and provisions of, or constitute a default under, any
statute, rule or regulation, any agreement or instrument known to such
counsel to which the Company is a party or by which it is bound or to
which any of its property is subject, the Company's charter or by-laws,
or any order or decree known to such counsel of any court or
governmental agency or body having jurisdiction over the Company or any
of its respective properties; and no consent, approval, authorization
or order of, or filing with, any court or governmental agency or body
is required for the execution, delivery and performance of this
Agreement or for the consummation of the transactions contemplated
hereby, including the issuance or sale of the Securities by the
Company, except such as may be required under the Act or state
securities laws or blue sky laws.
(vii) To the best of such counsel's knowledge, the Company
holds, and is operating in compliance in all material respects with,
all franchises, grants, authorizations, licenses, permits, easements,
consents, certificates and orders of any governmental or
self-regulatory body required for the conduct of its business and all
such franchises, grants, authorizations, licenses, permits, easements,
consents, certifications and orders are valid and in full force and
effect.
(viii) To the best of such counsel's knowledge, the Company is
not in violation of its charter or by-laws. To the best of such
counsel's knowledge, the Company is not in breach of or otherwise in
default in the performance of any material obligation, agreement or
condition contained in any bond, debenture, note, indenture, loan
agreement or any other material contract, lease or other instrument to
which it is subject or by which it may be bound, or to which any of the
material property or assets of the Company is subject.
(ix) The Registration Statement and the Prospectus, and any
amendment thereof or supplement thereto, comply as to form in all
material respects with the requirements of the Act and the Rules and
Regulations; and on the basis of conferences with officers of the
Company, examination of documents referred to in the Registration
Statement and Prospectus and such other procedures as such counsel
deemed appropriate, nothing has come to the attention of such counsel
that causes such counsel to believe that the Registration Statement or
any amendment thereof, at the time the Registration Statement became
effective and as of such Closing Date, contained any untrue statement
of a material fact or omitted to state any material fact required to be
stated therein or necessary to make the statements therein not
misleading or that the Prospectus (as of its date and as of such
Closing Date), as amended or supplemented, includes any untrue
statement of material fact or omits to state a material fact necessary
to make the statements therein, in light of the circumstances under
which they were made, not misleading; it being understood that such
counsel need express no opinion as to the financial statements or other
financial data included in any of the documents mentioned in this
clause.
(x) The documents incorporated by reference in the Prospectus
or any further amendment or supplement thereto made by the Company
prior to the First Closing Date or the Second Closing Date, as the case
may be, (other than the financial statements and related schedules
therein, as to which such counsel need express no opinion), when they
became effective or were filed with the Commission, as the case may be,
complied as to form in all material respects with the requirements of
the Act or the Exchange Act, as applicable, and the rules and
regulations of the Commission thereunder; such counsel has no reason to
believe that any of such documents, when such documents became
effective or were so filed, as the case may be, contained, in the case
of a registration statement which became effective under the Act, 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, in the case of other documents which were
filed under the Exchange Act with the Commission, an 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 when such documents were so filed, not
misleading.
(xi) The License Agreement, dated January 30, 1992, between
the Company and Creative Integration and Design, Inc. ("Creative"), has
been duly authorized by all requisite corporate action, executed and
delivered by the Company. The License Agreement constitutes the valid,
binding and enforceable obligation of the Company.
In rendering such opinion such counsel may rely (i) as to matters of
law other than Delaware and federal law, upon the opinion or opinions of local
counsel provided that the extent of such reliance is specified in such opinion
and that such counsel shall state that such opinion or opinions of local counsel
are satisfactory to them and that they believe they and you are justified in
relying thereon and (ii) as to matters of fact, to the extent such counsel deems
reasonable upon certificates of officers of the Company provided that the extent
of such reliance is specified in such opinion.
(e) On each Closing Date, there shall have been furnished to you, as
Representatives of the several Underwriters, the opinion of ▇▇▇▇▇▇ & ▇▇▇▇▇,
patent counsel for the Company, dated such Closing Date and addressed to you, to
the effect that:
(i) Creative is listed in the records of the U.S. Patent and
Trademark Office as the holder of record of each patent and patent
application listed on Schedule I thereto (the "U.S. Patents and
Applications"). To the best of such counsel's knowledge there are no
claims of third parties to any ownership interest or lien with respect
to any of the U.S. Patents and Applications. Such counsel has no reason
to believe that the Company does not possess sufficient licenses or
other rights to use all U.S. Patents and Applications, trade secrets,
trademarks, service marks or other proprietary information or materials
necessary to conduct the business now being or proposed to be conducted
by the Company as described in the Prospectus.
(ii) Creative is listed in the records of the appropriate
foreign offices as the sole holder of record of each of the foreign
patents and patent applications listed on Schedule II thereto (the
"Foreign Patents and Applications"). To the best of such counsel's
knowledge, there are no claims of third parties to any ownership
interest in or lien with respect to any of the Foreign Patents and
Applications. Such counsel has no reason to believe that the Company
does not possess sufficient licenses or other rights to use all Foreign
Patents and Applications necessary to conduct the business now being or
proposed to be conducted by the Company as described in the Prospectus.
(iii) Such counsel has no knowledge of any reason why any
patent to be issued in respect of any U.S. patent application would not
be valid or would not afford the Company reasonable patent protection
with respect to the claims included in such U.S. patent applications.
Except as disclosed therein, to the best of such counsel's knowledge
there is no pending or threatened action, suit, proceeding or claim by
others challenging the validity or scope of the Company's U.S. Patents
and Applications.
(iv) To the best of such counsel's knowledge, no valid and
unexpired patent held by others (other than patents as to which the
Company possesses a valid license) is infringed by the activities of
the Company described in the Registration Statement or the Prospectus
and except as disclosed therein, such counsel does not know of any
pending or threatened action, suit, proceeding or claim by others that
the Company is infringing or otherwise violating any patents, trade
secrets, trademarks, service marks or other proprietary information or
materials.
(v) The statements in the Registration Statement and the
Prospectus under the captions "Risk Factors -- Dependence on Patents,
Trademarks and Proprietary Rights" and "Business -Patents, Trademarks
and Proprietary Rights" (collectively, the Intellectual Property
Portion), at the time the Registration Statement became effective,
insofar as such statements constitute a summary of the Company's U.S.
Patents and Applications, Foreign Patents and Applications trade
secrets, trademarks, service marks or other proprietary information or
materials of the Company, are accurate summaries and fairly summarize
the legal matters, documents and proceedings relating thereto.
(vi) No facts have come to the attention of such counsel to
lead such counsel to believe that the information in the Intellectual
Property Portion insofar as it concerns matters relating to the U.S.
Patents and Applications, Foreign Patents and Applications, trade
secrets, trademarks, service marks or other proprietary information or
materials, at the time the Registration Statement became effective,
contained any untrue statement of a material fact or omitted to state
any material fact required to be stated therein or necessary to make
the statements therein not misleading or that, as of the date of such
opinion, the information contained in such sections of the Prospectus
contains any untrue statement of a material fact or omits to state any
material fact necessary in order to make the statements therein, in
light of the circumstances in which they were made, not misleading.
(f) On each Closing Date, there shall have been furnished to you, as
Representatives of the several Underwriters, the opinion of ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
P.L.L.P., counsel for the Selling Stockholders, dated such Closing Date and
addressed to you, to the effect that:
(i) Each of the Selling Stockholders is the sole record and
beneficial owner of the Securities to be sold by such Selling
Stockholder and delivery of the certificates for the Securities to be
sold by each Selling Stockholder pursuant to this Agreement, upon
payment therefor by the Underwriters, will pass marketable title to
such Securities to the Underwriters and the Underwriters will acquire
all the rights of such Selling Stockholder in the Securities (assuming
the Underwriters have no knowledge of an adverse claim), free and clear
of any security interests, claims, liens or other encumbrances.
(ii) Each of the Selling Stockholders has the power and
authority to enter into the Custody Agreement, the Power of Attorney
and this Agreement and to perform and discharge such Selling
Stockholder's obligations thereunder and hereunder; and this Agreement,
the Custody Agreements and the Powers of Attorney have been duly and
validly authorized, executed and delivered by (or by the
Attorneys-in-Fact, or either of them, on behalf of) the Selling
Stockholders and are valid and binding agreements of the Selling
Stockholders, enforceable in accordance with their respective terms
(except as rights to indemnity hereunder or thereunder may be limited
by federal or state securities laws and except as such enforceability
may be limited by bankruptcy, insolvency, reorganization or similar
laws affecting creditors' rights generally and subject to general
principles of equity).
(iii) The execution and delivery of this Agreement, the
Custody Agreement and the Power of Attorney and the performance of the
terms hereof and thereof and the consummation of the transactions
herein and therein contemplated will not result in a breach or
violation of any of the terms and provisions of, or constitute a
default under, any statute, rule or regulation, or any agreement or
instrument known to such counsel to which such Selling Stockholder is a
party or by which such Selling Stockholder is bound or to which any of
its property is subject, any such Selling Stockholder's charter or
by-laws, or any order or decree known to such counsel of any court or
government agency or body having jurisdiction over such Selling
Stockholder or any of its respective properties; and no consent,
approval, authorization or order of, or filing with, any court or
governmental agency or body is required for the execution, delivery and
performance of this Agreement, the Custody Agreement and the Power of
Attorney or for the consummation of the transactions contemplated
hereby and thereby, including the sale of the Securities being sold by
such Selling Stockholder, except such as may be required under the Act
or state securities laws or blue sky laws.
In rendering such opinion such counsel may rely (i) as to matters of
law other than Delaware and federal law, upon the opinion or opinions of local
counsel provided that the extent of such reliance is specified in such opinion
and that such counsel shall state that such opinion or opinions of local counsel
are satisfactory to them and that they believe they and you are justified in
relying thereon and (ii) as to matters of fact, to the extent such counsel deems
reasonable upon certificates of officers of the Selling Stockholders provided
that the extent of such reliance is specified in such opinion.
(g) On each Closing Date, there shall have been furnished to you, as
Representatives of the several Underwriters, such opinion or opinions from
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, counsel for the several Underwriters, dated such Closing
Date and addressed to you, with respect to the formation of the Company, the
validity of the Securities, the Registration Statement, the Prospectus and other
related matters as you reasonably may request, and such counsel shall have
received such papers and information as they request to enable them to pass upon
such matters.
(h) On each Closing Date you, as Representatives of the several
Underwriters, shall have received a letter of KPMG Peat Marwick LLP, dated such
Closing Date and addressed to you, confirming that they are independent public
accountants within the meaning of the Act and are in compliance with the
applicable requirements relating to the qualifications of accountants under Rule
2-01 of Regulation S-X of the Commission, and stating, as of the date of such
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 such
letter), the conclusions and findings of said firm with respect to the financial
information and other matters covered by its letter delivered to you
concurrently with the execution of this Agreement, and the effect of the letter
so to be delivered on such Closing Date shall be to confirm the conclusions and
findings set forth in such prior letter.
(i) On each Closing Date, there shall have been furnished to you, as
Representatives of the Underwriters, a certificate, dated such Closing Date and
addressed to you, signed by the chief executive officer and by the chief
financial officer of the Company, to the effect that:
(i) The representations and warranties of the Company in this
Agreement are true and correct, in all material respects, as if made at
and as of such Closing Date, and the Company has complied with all the
agreements and satisfied all the conditions on its part to be performed
or satisfied at or prior to such Closing Date;
(ii) No stop order or other order suspending the effectiveness
of the Registration Statement or any amendment thereof or the
qualification of the Securities for offering or sale has been issued,
and no proceeding for that purpose has been instituted or, to the best
of their knowledge, is contemplated by the Commission or any state or
regulatory body; and
(iii) The signers of said certificate have carefully examined
the Registration Statement and the Prospectus, and any amendments
thereof or supplements thereto, and any documents incorporated by
reference therein, and (A) such documents contain all statements and
information required to be included therein, the Registration
Statement, or any amendment thereof, does not contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading, and the Prospectus, as amended or supplemented,
does not include any untrue statement of material fact or omit to state
a material fact necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading, and any
documents incorporated by reference do not contain an untrue statement
of a material fact or omit to state a material fact necessary in order
to make the statements therein, in light of the circumstances under
which they were made when such documents were so filed, not misleading,
(B) since the effective date of the Registration Statement there has
occurred no event required to be set forth in an amended or
supplemented prospectus which has not been so set forth, (C) subsequent
to the respective dates as of which information is given in the
Registration Statement and the Prospectus, the Company has not incurred
any material liabilities or obligations, direct or contingent, or
entered into any material transactions, not in the ordinary course of
business, or declared or paid any dividends or made any distribution of
any kind with respect to its capital stock, and except as disclosed in
the Prospectus, there has not been any change in the capital stock
(other than a change in the number of outstanding shares of Common
Stock due to the issuance of shares upon the exercise of outstanding
options or warrants), or any material change in the short-term or
long-term debt, or any issuance of options, warrants, convertible
securities or other rights to purchase the capital stock, of the
Company or any material adverse change or any development involving a
prospective material adverse change (whether or not arising in the
ordinary course of business), in the general affairs, condition
(financial or otherwise), business, key personnel, property, prospects,
net worth or results of operations of the Company, taken as a whole,
and (D) except as stated in the Registration Statement and the
Prospectus, there is not pending, or, to the knowledge of the Company,
threatened or contemplated, any action, suit or proceeding to which the
Company is a party before or by any court or governmental agency,
authority or body, or any arbitrator, which might result in any
material adverse change in the condition (financial or otherwise),
business, prospects or results of operations of the Company, taken as a
whole.
(j) On each Closing Date, there shall have been furnished to you, as
Representatives of the several Underwriters, a certificate or certificates,
dated such Closing Date and addressed to you, signed by each of the Selling
Stockholders or either of such Selling Stockholder's Attorneys-in-Fact to the
effect that the representations and warranties of such Selling Stockholder
contained in this Agreement are true and correct as if made at and as of such
Closing Date, and that such Selling Stockholder has complied with all the
agreements and satisfied all the conditions on such Selling Stockholder's part
to be performed or satisfied at or prior to such Closing Date.
(k) The Company shall have furnished to you and counsel for the
Underwriters such additional documents, certificates and evidence as you or they
may have reasonably requested.
(l) The Securities to be sold by the Company and the Selling
Stockholders shall have been duly accepted for listing, subject to notice of
issuance, through the Nasdaq National Market.
All such opinions, certificates, letters and other documents will be in
compliance with the provisions hereof only if they are satisfactory in form and
substance to you and counsel for the Underwriters. The Company will furnish you
with such conformed copies of such opinions, certificates, letters and other
documents as you shall reasonably request.
6. Indemnification and Contribution.
(a) The Company and each Selling Stockholder, jointly and severally,
agree to indemnify and hold harmless each Underwriter against any losses,
claims, damages or liabilities, joint or several, to which such Underwriter may
become subject, under the Act or otherwise (including in settlement of any
litigation if such settlement is effected with the written consent of the
Company and/or such Selling Stockholders, as the case may be), insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon an untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement, including the information
deemed to be a part of the Registration Statement at the time of effectiveness
pursuant to Rule 430A, if applicable, any Preliminary Prospectus, the
Prospectus, or any amendment or supplement thereto, or any document incorporated
by reference in any of the foregoing, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
will reimburse each Underwriter for any legal or other expenses reasonably
incurred by it in connection with investigating or defending against such loss,
claim, damage, liability or action; provided, however, that neither the Company
nor any Selling Stockholder shall 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
an untrue statement or alleged untrue statement or omission or alleged omission
made in the Registration Statement, any Preliminary Prospectus, the Prospectus,
or any such amendment or supplement, in reliance upon and in conformity with
written information furnished to the Company by you, or by any Underwriter
through you, specifically for use in the preparation thereof; and further
provided, however, that in no event shall any Selling Stockholder be liable
under the provisions of this Section 6 for any amount in excess of the aggregate
amount of proceeds such Selling Stockholder received from the sale of the
Securities pursuant to this Agreement.
In addition to their other obligations under this Section 6(a), the
Company and each Selling Stockholder, jointly and severally, agree that, as an
interim measure during the pendency of any claim, action, investigation, inquiry
or other proceeding arising out of or based upon any statement or omission, or
any alleged statement or omission, described in this Section 6(a), they will
reimburse each Underwriter on a monthly basis for all reasonable legal fees or
other expenses incurred in connection with investigating or defending any such
claim, action, investigation, inquiry or other proceeding, notwithstanding the
absence of a judicial determination as to the propriety and enforceability of
the Company's and/or the Selling Stockholder's obligation to reimburse the
Underwriters for such expenses and the possibility that such payments might
later be held to have been improper by a court of competent jurisdiction. To the
extent that any such interim reimbursement payment is so held to have been
improper, the Underwriter that received such payment shall promptly return it to
the party or parties that made such payment, together with interest, compounded
daily, determined on the basis of the prime rate (or other commercial lending
rate for borrowers of the highest credit standing) announced from time to time
by Norwest Bank Minnesota, N.A. (the "Prime Rate"). Any such interim
reimbursement payments which are not made to an Underwriter within 30 days of a
request for reimbursement shall bear interest at the Prime Rate from the date of
such request. This indemnity agreement shall be in addition to any liabilities
which the Company or the Selling Stockholders may otherwise have.
(b) Each Underwriter will indemnify and hold harmless the Company and
each Selling Stockholder against any losses, claims, damages or liabilities to
which the Company and the Selling Stockholders may become subject, under the Act
or otherwise (including in settlement of any litigation, if such settlement is
effected with the written consent of such Underwriter), insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon an untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement, any Preliminary Prospectus, the
Prospectus, or any amendment or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
in each case to the extent, but only to the extent, that such untrue statement
or alleged untrue statement or omission or alleged omission was made in the
Registration Statement, any Preliminary Prospectus, the Prospectus, or any such
amendment or supplement, in reliance upon and in conformity with written
information furnished to the Company by you, or by such Underwriter through you,
specifically for use in the preparation thereof, and will reimburse the Company
and the Selling Stockholders for any legal or other expenses reasonably incurred
by the Company or any such Selling Stockholder in connection with investigating
or defending against any such loss, claim, damage, liability or action.
(c) Promptly after receipt by an indemnified party under subsection (a)
or (b) above of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party under such subsection, notify the indemnifying party in writing of the
commencement thereof; but the omission so to notify the indemnifying party shall
not relieve the indemnifying party from any liability that it may have to any
indemnified party. In case any such action 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
satisfactory to such indemnified party, and after notice from the indemnifying
party to such indemnified party of the indemnifying party's election so to
assume the defense thereof, the indemnifying party shall not be liable to such
indemnified party under such subsection for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided, however, that
if, in the sole judgment of the Representatives, it is advisable for the
Underwriters to be represented as a group by separate counsel, the
Representatives shall have the right to employ a single counsel to represent the
Representatives and all Underwriters who may be subject to liability arising
from any claim in respect of which indemnity may be sought by the Underwriters
under subsection (a) of this Section 6, in which event the reasonable fees and
expenses of such separate counsel shall be borne by the indemnifying party or
parties and reimbursed to the Underwriters as incurred (in accordance with the
provisions of the second paragraph in subsection (a) above). An indemnifying
party shall not be obligated under any settlement agreement relating to any
action under this Section 6 to which it has not agreed in writing.
(d) If the indemnification provided for in this Section 6 is
unavailable or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of the losses,
claims, damages or liabilities referred to in subsection (a) or (b) above, (i)
in such proportion as is appropriate to reflect the relative benefits received
by the Company and the Selling Stockholders on the one hand and the Underwriters
on the other from the offering of the Securities 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 and the
Selling Stockholders on the one hand and the Underwriters on the other in
connection with the statements or omissions that resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative benefits received by the Company and the Selling
Stockholders on the one hand and the Underwriters on the other shall be deemed
to be in the same proportion as the total net proceeds from the offering (before
deducting expenses) received by the Company and Selling Stockholders bear to the
total underwriting discounts and commissions received by the Underwriters, in
each case as set forth in the table on the cover page of the Prospectus. The
relative fault shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by the
Company, the Selling Stockholders or the Underwriters and the parties' relevant
intent, knowledge, access to information and opportunity to correct or prevent
such untrue statement or omission. The Company, the Selling Stockholders and the
Underwriters agree that it would not be just and equitable if contributions
pursuant to this subsection (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 account of the equitable
considerations referred to in the first sentence of this subsection (d). The
amount paid by an indemnified party as a result of the losses, claims, damages
or liabilities referred to in the first sentence of this subsection (d) shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending against any
action or claim which is the subject of this subsection (d). Notwithstanding the
provisions of this subsection (d), no Underwriter shall be required to
contribute any amount in excess of the amount of the total underwriting
discounts and commissions received by such Underwriter in connection with the
Securities underwritten by it and distributed to the public. No person guilty of
fraudulent misrepresentation (within the meaning of Section 1 l(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters obligations in this subsection
(d) to contribute are several in proportion to their respective underwriting
obligations and not joint.
(e) The obligations of the Company and the Selling Stockholders under
this Section 6 shall be in addition to any liability which the Company and the
Selling Stockholders may otherwise have and shall extend, upon the same terms
and conditions, to each person, if any, who controls any Underwriter within the
meaning of the Act; and the obligations of the Underwriters under this Section 6
shall be in addition to any liability that the respective Underwriters may
otherwise have and shall extend, upon the same terms and conditions, to each
director of the Company (including any person who, with his consent, is named in
the Registration Statement as about to become a director of the Company), to
each officer of the Company who has signed the Registration Statement and to
each person, if any, who controls the Company or any Selling Stockholder within
the meaning of the Act.
7. Representations and Agreements to Survive Delivery. All
representations, warranties, and agreements of the Company and Selling
Stockholders herein or in certificates delivered pursuant hereto, and the
agreements of the several Underwriters, the Company and the Selling Stockholders
contained in Section 6 hereof, shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of any Underwriter
or any controlling person thereof, or the Company or any of its officers,
directors, or controlling persons, or any Selling Stockholders or any
controlling person thereof, and shall survive delivery of, and payment for, the
Securities to and by the Underwriters hereunder.
8. Substitution of Underwriters.
(a) If any Underwriter or Underwriters shall fail to take up and pay
for the amount of Firm Shares agreed by such Underwriter or Underwriters to be
purchased hereunder, upon tender of such Firm Shares in accordance with the
terms hereof, and the amount of Firm Shares not purchased does not aggregate
more than 10% of the total amount of Firm Shares set forth in Schedule II
hereto, the remaining Underwriters shall be obligated to take up and pay for (in
proportion to their respective underwriting obligations hereunder as set forth
in Schedule II hereto except as may otherwise be determined by you) the Firm
Shares that the withdrawing or defaulting Underwriters agreed but failed to
purchase.
(b) If any Underwriter or Underwriters shall fail to take up and pay
for the amount of Firm Shares agreed by such Underwriter or Underwriters to be
purchased hereunder, upon tender of such Firm Shares in accordance with the
terms hereof, and the amount of Firm Shares not purchased aggregates more than
10% of the total amount of Firm Shares set forth in Schedule II hereto, and
arrangements satisfactory to you for the purchase of such Firm Shares by other
persons are not made within 36 hours thereafter, this Agreement shall terminate.
In the event of any such termination neither the Company nor any Selling
Stockholder shall be under any liability to any Underwriter (except to the
extent provided in Section 4(a)(viii), Section 4(b)(ii) and Section 6 hereof)
nor shall any Underwriter (other than an Underwriter who shall have failed,
otherwise than for some reason permitted under this Agreement, to purchase the
amount of Firm Shares agreed by such Underwriter to be purchased hereunder) be
under any liability to the Company or the Selling Stockholders (except to the
extent provided in Section 6 hereof).
If Firm Shares to which a default relates are to be purchased by the
non-defaulting Underwriters or by any other party or parties, the
Representatives or the Company shall have the right to postpone the First
Closing Date for not more than seven business days in order that the necessary
changes in the Registration Statement, Prospectus and any other documents, as
well as any other arrangements, may be effected. As used herein, the term
"Underwriter" includes any person substituted for an Underwriter under this
Section 8.
9. Effective Date of this Agreement and Termination.
(a) This Agreement shall become effective at 10:00 a.m., Minneapolis
time, on the first full business day following the effective date of the
Registration Statement, or at such earlier time after the effective time of the
Registration Statement as you in your discretion shall first release the
Securities for sale to the public; provided, that if the Registration Statement
is effective at the time this Agreement is executed, this Agreement shall become
effective at such time as you in your discretion shall first release the
Securities for sale to the public. For the purpose of this Section, the
Securities shall be deemed to have been released for sale to the public upon
release by you of the publication of a newspaper advertisement relating thereto
or upon release by you of telexes offering the Securities for sale to securities
dealers, whichever shall first occur. By giving notice as hereinafter specified
before the time this Agreement becomes effective, you, as Representatives of the
several Underwriters, or the Company may prevent this Agreement from becoming
effective without liability of any party to any other party, except that the
provisions of Section 4(a)(viii), Section 4(b)(ii) and Section 6 hereof shall at
an times be effective.
(b) You, as Representatives of the several Underwriters, shall have the
right to terminate this Agreement by giving notice as hereinafter specified at
any time at or prior to the First Closing Date, and the option referred to in
Section 3(b), if exercised, may be canceled at any time prior to the Second
Closing Date, if (i) the Company shall have failed, refused or been unable, at
or prior to such Closing Date, to perform any agreement on its part to be
performed hereunder, (ii) any other condition of the Underwriters' obligations
hereunder is not fulfilled, (iii) trading on the New York Stock Exchange or the
American Stock Exchange or in the national market system or over-the-counter
market by the NASD shall have been wholly suspended, (iv) minimum or maximum
prices for trading shall have been fixed, or maximum ranges for prices for
securities shall have been required, on the New York Stock Exchange or the
American Stock Exchange or in the national market system or over-the-counter
market by the NASD, by such exchange or by order of the Commission or any other
governmental authority having jurisdiction, (v) a banking moratorium shall have
been declared by Federal, New York or Minnesota authorities, or (vi) there has
occurred any material adverse change in the financial markets in the United
States or an outbreak of major hostilities (or an escalation thereof) in which
the United States is involved, a declaration of war by Congress, any other
substantial national or international calamity or any other event or occurrence
of a similar character shall have occurred since the execution of this Agreement
that, in your judgment, makes it impractical or inadvisable to proceed with the
completion of the sale of and payment for the Securities. Any such termination
shall be without liability of any party to any other party except that the
provisions of Section 4(a)(viii), Section 4(b)(ii) and Section 6 hereof shall at
all times be effective.
(c) If you elect to prevent this Agreement from becoming effective or
to terminate this Agreement as provided in this Section, the Company and an
Attorney-in-Fact, on behalf of the Selling Stockholders, shall be notified
promptly by you by telephone or telegram, confirmed by letter. If the Company
elects to prevent this Agreement from becoming effective, you and an
Attorney-in-Fact, on behalf of the Selling Stockholders, shall be notified by
the Company by telephone or telegram, confirmed by letter.
10. Default by One or More of the Selling Stockholders or the Company.
If one or more of the Selling Stockholders shall fail at the First Closing Date
to sell and deliver the number of Securities which such Selling Stockholder or
Selling Stockholders are obligated to sell hereunder, and the remaining Selling
Stockholders do not exercise the right hereby granted to increase, pro rata or
otherwise, the number of Securities to be sold by them hereunder to the total
number of Securities to be sold by all Selling Stockholders as set forth in
Schedule I, then the Underwriters may at your option, by notice from you to the
Company and the non-defaulting Selling Stockholders, either (a) terminate this
Agreement without any liability on the part of any non-defaulting party or
(b) elect to purchase the Securities which the Company and the non-defaulting
Selling Stockholders have agreed to sell hereunder.
In the event of a default by any Selling Stockholder as referred to in
this Section, either you or the Company or, by joint action only, the
non-defaulting Selling Stockholders shall have the right to postpone the First
Closing Date for a period not exceeding seven days in order to effect any
required changes in the Registration Statement or Prospectus or in any other
documents or arrangements.
If the Company shall fail at the First Closing Date to sell and deliver
the number of Securities which it is obligated to sell hereunder, then this
Agreement shall terminate without any liability on the part of any
non-defaulting party.
No action taken pursuant to this Section shall relieve the Company or
any Selling Stockholders so defaulting from liability, if any, in respect of
such default.
11. Information Furnished by Underwriters. The statements set forth in
the last paragraph of the cover page and under the caption "Underwriting" in any
Preliminary Prospectus and in the Prospectus constitute the written information
furnished by or on behalf of the Underwriters referred to in Section 2 and
Section 6 hereof.
12. Notices. Except as otherwise provided herein, all communications
hereunder shall be in writing or by telegraph and, if to the Underwriters, shall
be mailed, telegraphed or delivered to the Representatives c/o ▇▇▇▇▇ ▇▇▇▇▇▇▇
Inc., ▇▇▇▇▇ ▇▇▇▇▇▇▇ Tower, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(except that notices given to an Underwriter pursuant to Section 6 hereof shall
be sent to such Underwriter at the address stated in the Underwriters'
Questionnaire furnished by such Underwriter in connection with this offering),
with a copy to ▇▇▇▇▇▇ & Whitney LLP, Pillsbury Center South, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇; if to the
Company, shall be mailed, telegraphed or delivered to it at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, M.D., with a
copy to ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ P.L.L.P., 4200 IDS Center, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇; if to any of the
Selling Stockholders, at the address of the Attorneys-in-Fact as set forth in
the Powers of Attorney, or in each case to such other address as the person to
be notified may have requested in waiting. All notices given by telegram shall
be promptly confirmed by letter. Any party to this Agreement may change such
address for notices by sending to the parties to this Agreement written notice
of a new address for such purpose.
13. Persons Entitled to Benefit of Agreement. This Agreement shall
inure to the benefit of and be binding upon the parties hereto and their
respective successors and assigns and the controlling persons, officers and
directors referred to in Section 6. Nothing in this Agreement is intended or
shall be construed to give to any other person, firm or corporation any legal or
equitable remedy or claim under or in respect of this Agreement or any provision
herein contained. The term "successors and assigns" as herein used shall not
include any purchaser, as such purchaser, of any of the Securities from any of
the several Underwriters.
14. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Minnesota.
Please sign and return to the Company the enclosed duplicates of this
letter, whereupon this letter will become a binding agreement between the
Company, the Selling Stockholders and the several Underwriters in accordance
with its terms.
Very truly yours,
CNS, INC.
By: _______________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, M.D.
Chairman of the Board, Chief
Executive Officer and
Treasurer
SELLING STOCKHOLDERS
Named in Schedule I hereto
By ________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, M.D.
Attorney-in-Fact
Confirmed as of the date first above
mentioned, on behalf of themselves and
the other several Underwriters named in
Schedule II hereto.
▇▇▇▇▇ ▇▇▇▇▇▇▇ INC.
▇▇▇▇▇▇▇▇▇▇ SECURITIES
By ▇▇▇▇▇ ▇▇▇▇▇▇▇ INC.
By ________________________
Managing Director
SCHEDULE I
Selling Stockholders
Number of Maximum Number of
Firm Shares Option Shares
Name to be Sold Subject to Option
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Total .................
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SCHEDULE II
Number of
Underwriter Firm Shares (1)
-------------
Total ................................
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(1) The Underwriters may purchase up to an additional 225,000 Option
Shares, to the extent the option described in Section 3 of the
Agreement is exercised, in the proportions and in the manner described
in the Agreement.