EXHIBIT 1.1
2,500,000 SHARES(1)
ADVANCED NEUROMODULATION SYSTEMS, INC.
COMMON STOCK
PURCHASE AGREEMENT
May ____, 2002
U.S. BANCORP XXXXX XXXXXXX INC.
CIBC WORLD MARKETS CORP.
XXXXXX XXXXXX XXXXXXXX & CO., INC.
As Representatives of the several
Underwriters named in Schedule I hereto
c/o U.S. Bancorp Xxxxx Xxxxxxx Inc.
U.S. Bancorp Center
000 Xxxxxxxx Xxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Ladies and Gentlemen:
Advanced Neuromodulation Systems, Inc., a Texas corporation (the
"Company"), proposes to sell to the several underwriters named in Schedule I
hereto (the "Underwriters") an aggregate of 2,500,000 shares (the "Firm Shares")
of Common Stock, $0.05 par value per share (the "Common Stock"), of the Company.
The Company has also granted to the several Underwriters an option to purchase
up to 375,000 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 hereby confirms its 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 AND PROSPECTUS. 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
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(1) Plus an option to purchase up to 375,000 additional shares to cover
over-allotments.
also been so prepared and have been, or will be, so filed; and, if the Company
has elected to rely upon Rule 462(b) of the Rules and Regulations to increase
the size of the offering registered under the Act, the Company will prepare and
file with the Commission an abbreviated registration statement with respect to
such increase pursuant to Rule 462(b) (the "Rule 462 Registration Statement").
Copies of such registration statement(s) and amendments and each related
preliminary prospectus have been delivered to you.
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 (including a term sheet meeting
the requirements of Rule 434 of the Rules and Regulations). If the Company has
elected to rely upon Rule 430A of the Rules and Regulations, it will prepare and
file a prospectus (or a term sheet meeting the requirements of Rule 434)
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, 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
(i) all documents incorporated or deemed to be incorporated by reference in the
prospectus contained in such registration statement, (ii) a Rule 462
Registration Statement (if any), and (iii) information (if any) deemed to be
part of the registration statement at the time of effectiveness pursuant to
Rules 430A(b) and 434(d) of the Rules and Regulations, 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 (including any term sheet
meeting the requirements of Rule 434 of the Rules and Regulations provided by
the Company for use with a prospectus subject to completion within the meaning
of Rule 434 in order to meet the requirements of Section 10(a) of the Rules and
Regulations) filed by the Company with the Commission pursuant to Rule 424(b)
(and Rule 434, if applicable) of the Rules and Regulations or any other such
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 (including any term sheet within the
meaning of Rule 434 of the Rules and Regulations) 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) (and Rule 434, if applicable) or from and
after the time it is first provided to the Underwriters by the Company for such
use. 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 or 434 of the Rules and Regulations. Any reference in
this Agreement to a Preliminary Prospectus or Prospectus shall be deemed to
refer to and include the documents incorporated by reference or deemed to be
incorporated by reference therein pursuant to Item 12 of Form S-3 under the Act,
as of the date of such Preliminary Prospectus or Prospectus, as the case may be.
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2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
(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) As of the time the Registration Statement (or any
post-effective amendment thereto, including a Rule 462 Registration
Statement, if any), 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 (including any term sheet meeting
the requirements of Rule 434 of the Rules and Regulations)) 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) conformed or will conform in all material
respects to the requirements of the Act and the Rules and Regulations,
(B) the Registration Statement (as so amended) did not or will 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) did not or will 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.
(iii) The consolidated financial statements of the Company and
its subsidiaries, together with the notes thereto, set forth in or
incorporated by reference in the Registration Statement, Preliminary
Prospectus and Prospectus comply in all material respects with the
requirements of the Act, the Rules and Regulations and the Securities
Exchange Act of 1934, as amended, and the rules and regulations
thereunder (collectively, the "Exchange Act") and fairly present the
consolidated financial condition of the
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Company and its subsidiaries 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 (subject, in the
case of unaudited interim financial statements, to normal year-end
adjustments and except as otherwise stated therein); and the supporting
schedules included in or incorporated by reference in the Registration
Statement present fairly the information required to be stated therein.
No other financial statements or schedules are required to be included
in or incorporated by reference in the Registration Statement or
Prospectus. Ernst & Young LLP, which has expressed its opinion with
respect to the consolidated financial statements included in or
incorporated by reference in the Registration Statement and Prospectus,
are independent public accountants as required by the Act and the Rules
and Regulations.
(iv) Each of the Company and its subsidiaries has been duly
organized and is validly existing as a corporation in good standing
under the laws of its jurisdiction of incorporation. Each of the
Company and its subsidiaries 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 the business, prospects, properties, operations,
condition (financial or otherwise) or results of operations of the
Company and its subsidiaries, taken as a whole (a "Material Adverse
Effect").
(v) Except as contemplated by or referred to in the
Prospectus, subsequent to the respective dates as of which information
is given in the Registration Statement and the Prospectus, neither the
Company nor any of its subsidiaries has 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 of its subsidiaries (other
than in the ordinary course of business in accordance with past
practice pursuant to the Company's existing equity incentive plans), or
any material adverse change in the condition (financial or otherwise),
business, prospects, property, operations or results of operations of
the Company and its subsidiaries, taken as a whole ("Material Adverse
Change") or any development involving a prospective Material Adverse
Change.
(vi) 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
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which the Company or any of its subsidiaries is a party or of which any
property or assets of the Company is the subject before or by any court
or governmental agency, authority or body, or any arbitrator, which,
individually or in the aggregate, would be reasonably expected to
result in a Material Adverse Change.
(vii) There are no statutes, regulations, contracts or
documents that are required to be described in the Registration
Statement and Prospectus or be filed, or incorporated by reference, as
exhibits to the Registration Statement by the Act or by the Rules and
Regulations that have not been so described, filed or incorporated by
reference therein.
(viii) This Agreement has been duly authorized, executed and
delivered by the Company, and constitutes a valid, legal and binding
obligation of the Company, enforceable in accordance with its terms,
except as rights to indemnity hereunder 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 the
rights of creditors generally and subject to general principles of
equity. The execution, delivery and performance of this Agreement by
the Company and the consummation by the Company 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 by the Company or for the consummation by the Company
of the transactions contemplated hereby, including the issuance or sale
of the Securities by the Company, except such as have been obtained or
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.
(ix) 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 that have not been
waived in writing (a copy of which has been delivered to counsel to the
Representative), 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 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; and the
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authorized capital stock of the Company, including the Common Stock,
conforms to the description thereof incorporated by reference 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 which have
not been fully satisfied or waived. All of the issued and outstanding
shares of capital stock of each of the Company's subsidiaries have been
duly and validly authorized and issued and are fully paid and
nonassessable, and the Company owns of record and beneficially, free
and clear of any security interests, claims, liens, proxies, equities
or other encumbrances, all of the issued and outstanding shares of
capital stock of each subsidiary. Except as otherwise stated 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 or any subsidiary of the Company
any shares of the capital stock of the Company or any subsidiary of the
Company. The Company has an authorized and outstanding capitalization
as set forth in the Registration Statement and the Prospectus.
(x) The Company and each of its subsidiaries holds, and is
operating in compliance 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 as currently conducted and as proposed to be conducted as
described in the Prospectus, except where the failure to so hold or
comply would not reasonably be expected to have a Material Adverse
Effect. All such franchises, grants, authorizations, licenses, permits,
easements, consents, certifications and orders are valid and in full
force and effect; and the Company and each of its subsidiaries is in
compliance with all applicable federal, state, local and foreign laws,
regulations, orders and decrees, except where the failure to so comply
would not, either individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
(xi) The Company and its subsidiaries have good and marketable
title to all property described in the Registration Statement and
Prospectus as being owned by them, in each case free and clear of all
liens, claims, security interests, encumbrances or title defects except
such as are described in the Registration Statement and the Prospectus
or such as do not, either individually or in the aggregate, materially
affect the value of such property and do not, either individually or in
the aggregate, interfere with the use made and proposed to be made by
the Company and its subsidiaries. The property held under lease by the
Company and its subsidiaries is held by them under valid, subsisting
and enforceable leases with only such exceptions with respect to any
particular lease as do not interfere in
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any material respect with the conduct of the business of the Company or
its subsidiaries taken as a whole.
(xii) Except as otherwise stated in the Prospectus, the
Company and each of its subsidiaries owns, possesses or has adequate
licenses to use all patents, patent applications, trademarks, service
marks, tradenames, trademark registrations, service xxxx registrations,
copyrights, licenses, inventions, trade secrets and rights necessary
for the conduct of the business of the Company and its subsidiaries as
currently carried on and as described in the Registration Statement and
Prospectus, except where the failure to own, possess or license such
property would not, either individually or in the aggregate, have a
Material Adverse Effect; except as stated in the Registration Statement
and Prospectus, no name which the Company or any of its subsidiaries
uses and no other aspect of the business of the Company or any of its
subsidiaries 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
xxxx registrations, copyrights, licenses, inventions, trade secrets or
other similar rights of others material to the business or prospects of
the Company and neither the Company nor any of its subsidiaries has
received any notice alleging any such infringement or fee.
(xiii) Neither the Company nor any of its subsidiaries is in
violation of its respective charter or by-laws or in breach of or
otherwise in default, and no event has occurred which, with notice or
lapse of time or both, would constitute such a default in the
performance of any obligation, agreement or condition contained in any
bond, debenture, note, indenture, loan agreement or any other contract,
lease or other instrument to which it is subject or by which any of
them may be bound, or to which any of the property or assets of the
Company or any of its subsidiaries is subject, except where such breach
or default would not, either individually or in the aggregate, have a
Material Adverse Effect.
(xiv) The Company and its subsidiaries have filed all federal,
state, local and foreign income and franchise tax returns required to
be filed and are not in default in the payment of any taxes which were
payable pursuant to said returns or any assessments or penalties with
respect thereto, other than any which the Company or any of its
subsidiaries 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 Common Stock (including the Securities) is
registered pursuant to Section 12(g) of the Exchange Act and is listed
on the Nasdaq National Market and the Company has taken no action
designed to, or likely to have the effect of, terminating the
registration of the Common Stock under the Exchange Act or delisting
the Common Stock
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from the Nasdaq National Market nor has the Company received any
notification that the Commission or the National Association of
Securities Dealers, Inc. is contemplating terminating such registration
or listing. The Company has filed an application to list the Securities
on the Nasdaq National Market System and the Securities have been
approved for listing thereon, subject to official notice of issuance.
(xvii) Other than _______________ and _______________, which
are shell corporations that have no operations and no material assets
or liabilities, and the subsidiaries of the Company listed in Exhibit
21 to the Company's Annual Report on Form 10-K for the year-ended
December 31, 2001, 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) 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.
(xxi) The Company carries, or is covered by, insurance in such
amounts and covering such risks as is adequate for the conduct of its
business as currently carried on and the value of its properties and as
is customary for companies engaged in similar businesses in similar
industries.
(xxii) The Company is not and, after giving effect to the
offering and sale of the Securities, will not be an "investment
company," as such term is defined in the Investment Company Act of
1940, as amended.
(xxiii) The Company has complied with the conditions for use
of Form S-3, set forth in the General Instructions thereto.
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(xxiv) 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
none of such documents contained an untrue statement of a material fact
or omitted to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made,
not misleading; any further documents so filed and incorporated by
reference in the Prospectus, when such documents are filed with the
Commission, will conform in all material respects to the requirements
of the Exchange Act, and will not contain an untrue statement of a
material fact or omit to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they
were made, not misleading.
(b) Any certificate signed by any officer of the Company and
delivered to you or to counsel for the Underwriters pursuant to the terms of
this Agreement shall be deemed a representation and warranty by the Company 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 the Firm Shares to the several Underwriters,
and each Underwriter agrees, severally and not jointly, to purchase from the
Company the number of Firm Shares set forth opposite the name of such
Underwriter in Schedule I hereto. The purchase price for each Firm Share shall
be $ per share. 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 I.
The Firm Shares will be delivered by the Company to you for the
accounts of the several Underwriters against payment of the purchase price
therefor by wire transfer of same day funds payable to the order of the Company
at the offices of U.S. Bancorp Xxxxx Xxxxxxx Inc., U.S. Bancorp Center, 000
Xxxxxxxx Xxxx, Xxxxxxxxxxx, Xxxxxxxxx, or such other location as may be mutually
acceptable, at 9:00 a.m. Central time on the third (or if the Securities are
priced, as contemplated by Rule 15c6-1(c) under the Exchange Act, after 4:30
p.m. Eastern time, the fourth) full business day following the date hereof, or
at such other time and date as you and the Company determine pursuant to Rule
15c6-1(a) under the Exchange Act, such time and date of delivery being herein
referred to as the "First Closing Date." If the Representatives so elect,
delivery of the Firm Shares may be made by credit through full fast transfer to
the accounts at The Depository Trust Company designated by the Representatives.
Certificates representing 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, will be made available for checking
and packaging not later than 10:30 a.m., Central time, on the business day next
preceding the First
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Closing Date at the offices of U.S. Bancorp Xxxxx Xxxxxxx Inc., U.S. Bancorp
Center, 000 Xxxxxxxx Xxxx, Xxxxxxxxxxx, Xxxxxxxxx, or such other location as may
be mutually acceptable.
(b) On the basis of the representations, warranties and agreements
herein contained, but subject to the terms and conditions herein set forth, the
Company hereby grants 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 (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 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. 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 Company to you for the
accounts of the several Underwriters against payment of the purchase price
therefor by wire transfer of same day funds payable to the order of the Company
at the offices of U.S. Bancorp Xxxxx Xxxxxxx Inc., U.S. Bancorp Center, 000
Xxxxxxxx Xxxx, Xxxxxxxxxxx, Xxxxxxxxx, or such other location as may be mutually
acceptable at 9:00 a.m., Central time, on the Second Closing Date. If the
Representatives so elect, delivery of the Option Shares may be made by credit
through full fast transfer to the accounts at The Depository Trust Company
designated by the Representatives. Certificates representing 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 not later than 10:30 a.m., Central time, on the business
day next preceding the Second Closing Date at the office of U.S. Bancorp Xxxxx
Xxxxxxx Inc., U.S. Bancorp Center, 000 Xxxxxxxx Xxxx, Xxxxxxxxxxx, Xxxxxxxxx, or
such other location as may be mutually acceptable.
(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 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.
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4. COVENANTS. The Company covenants and agrees with the several
Underwriters as follows:
(a) 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
(including any term sheet within the meaning of Rule 434 of the Rules and
Regulations) has been filed and of any request by the Commission for any
amendment or supplement to the Registration Statement or Prospectus or
additional information relating thereto; if the Company has elected to rely on
Rule 430A of the Rules and Regulations, the Company will prepare and file a
Prospectus (or term sheet within the meaning of Rule 434 of the Rules and
Regulations) containing the information omitted therefrom pursuant to Rule 430A
of the Rules and Regulations with the Commission within the time period required
by, and otherwise in accordance with the provisions of, Rules 424(b), 430A and
434, if applicable, of the Rules and Regulations; if the Company has elected to
rely upon Rule 462(b) of the Rules and Regulations to increase the size of the
offering registered under the Act, the Company will prepare and file a Rule 462
Registration Statement with the Commission within the time period required by,
and otherwise in accordance with the provisions of, Rule 462(b) 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 (including any term sheet within the meaning of Rule 434 of the
Rules and Regulations) 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 (including any term sheet within the meaning of Rule 434 of the
Rules and Regulations or any document that is, or would be deemed to be,
incorporated by reference into 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.
(b) The Company will advise you, promptly after it shall receive
notice or obtains 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.
(c) Within the time during which a prospectus (including any term
sheet within the meaning of Rule 434 of the Rules and Regulations) 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
-11-
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 or to file under the Exchange
Act any document which would be deemed to be incorporated by reference in the
Prospectus in order to comply with the Act or the Exchange Act, the Company will
promptly notify you and will amend the Registration Statement or supplement the
Prospectus or file such document (at the expense of the Company) so as to
correct such statement or omission or effect such compliance.
(d) The Company shall take or cause to be taken all necessary
action 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.
(e) The Company will furnish to the Underwriters copies of the
Registration Statement (three of which will be signed and will include all
exhibits), each Preliminary Prospectus, the Prospectus, and all amendments and
supplements (including any term sheet within the meaning of Rule 434 of the
Rules and Regulations, and any document filed under the Exchange Act and deemed
to be incorporated by reference into the Prospectus) to such documents, in each
case as soon as available and in such quantities as you may from time to time
reasonably request.
(f) 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., Nasdaq or any securities exchange (other than any such
information, documents and reports that are filed with the Commission
electronically via XXXXX or any successor system).
(g) 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.
(h) 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 (i) all expenses (including transfer taxes allocated to the
respective transferees) incurred in connection with the delivery to the
Underwriters of the Securities, (ii) all expenses and fees (including, without
limitation, fees and expenses of the Company's accountants and counsel but,
except as otherwise
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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 (covering the states and other
applicable jurisdictions), (iii) all filing fees and fees and disbursements of
the Underwriters' counsel incurred in connection with the qualification 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(a) hereof, (iv) the fees and
expenses of any transfer agent or registrar, (v) the filing fees incident to any
required review by the National Association of Securities Dealers, Inc. of the
terms of the sale of the Securities, (vi) listing fees, if any, and (vii) 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 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 is not fulfilled upon receipt
of a reasonably detailed accounting, 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.
(i) The Company will apply the net proceeds from the sale of the
Securities to be sold by it hereunder in the manner specified in the Prospectus
under the heading "Use of Proceeds".
(j) The Company will not, without the prior written consent of
U.S. Bancorp Xxxxx Xxxxxxx Inc., from the date of execution of this Agreement
and continuing to and including the date 90 days after the date of the
Prospectus (the "Lock-Up Period") offer for sale; sell; contract to sell;
pledge; grant any option for the sale of; enter into any transaction which is
designed to, or might reasonably be expected to, result in the disposition
(whether by actual disposition or effective economic disposition due to cash
settlement or otherwise) by the Company or any affiliate; or otherwise issue or
dispose of, directly or indirectly (or publicly disclose the intention to make
any such offer, sale, pledge, grant, issuance or other disposition), any Common
Stock or any securities convertible into or exchangeable for, or any options or
rights to purchase or acquire, Common Stock, except for (i) the sale of the
Securities to the Underwriters pursuant to this Agreement, and (ii) the issuance
by the Company of shares of Common Stock upon the exercise of existing options,
and the grant by the Company of options under the Company's existing stock
incentive plans in the ordinary course of business consistent with past
practice.
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The Company agrees not to accelerate the vesting of any option or warrant prior
to the expiration of the Lock-Up Period.
(k) 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 executive officers
and Xxxxxxx Xxxxxxxx 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, as set forth in such letter, any shares of Common Stock or
rights to purchase Common Stock for the Lock-Up Period (the "Lock-Up
Agreement").
(l) 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
(m) Except as contemplated 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.
(n) The Company will file with the Commission subsequent to the
date of the Prospectus and prior to the termination of the offering of the
Securities by the Underwriters, such periodic and special reports as required to
be filed by the Company by the Rules and Regulations or the Exchange Act.
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 contained herein, to the performance by
the Company of its obligations hereunder and to the following additional
conditions:
(a) The Registration Statement shall have become effective not
later than 5:00 p.m., Central 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 Rules 424, 430A and 434 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 (including any term
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sheet within the meaning of Rule 434 of the Rules and Regulations), 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, neither the Company nor any of its subsidiaries shall 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, except
as contemplated in the Prospectus, 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 of its subsidiaries,
or any Material Adverse Change or any development which would constitute a
prospective Material Adverse Change (whether or not arising in the ordinary
course of business), 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, separate opinions of Xxxxxx
& Xxxx LLP, counsel for the Company, and Xxxxxxx X. Xxxxxx, the Company's
General Counsel, Executive Vice President-Corporate Development, dated such
Closing Date and addressed to you, each to the effect that:
(i) Each of the Company and its subsidiaries with operations
or material assets or liabilities has been duly incorporated and is
validly existing as a corporation in good standing under the laws of
its jurisdiction of incorporation. Each of the Company and its
subsidiaries 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.
(ii) The capital stock of the Company conforms as to legal
matters to the description thereof incorporated by referenced into the
Prospectus. 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
-15-
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 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, which have
not been fully satisfied or validly waived.
(iii) All of the issued and outstanding shares of capital
stock of each of the Company's subsidiaries with operations or material
assets or liabilities have been duly and validly authorized and issued
and are fully paid and nonassessable, and, to such counsel's knowledge,
the Company owns of record, free and clear of any security interests,
claims, liens, proxies, equities or other encumbrances, all of the
issued and outstanding shares of such capital stock of each subsidiary
of the Company with operations or material assets or liabilities. To
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 or any subsidiary any shares of the capital stock of the
Company or any subsidiary of the Company.
(iv) The Registration Statement has become effective under the
Act and, to 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 threatened by the
Commission.
(v) The descriptions in the Registration Statement and
Prospectus of statutes, regulations, legal and governmental
proceedings, contracts and other documents are accurate in all material
respects and fairly present the information required to be shown; and
such counsel does not know of any statutes, regulations, legal or
governmental proceedings or contracts or other documents required to be
described in the Registration Statement and Prospectus (or required to
be filed under the Exchange Act if upon such filing they would be
incorporated in whole or in part, by reference therein) 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 and constitutes a valid, legal
and binding obligation of the Company enforceable in accordance with
its terms (except as rights to indemnity hereunder may be limited by
federal or state securities laws and rights to indemnify for a party's
own negligence may be limited by the express negligence doctrine
enunciated by Texas courts and except as such enforceability may be
limited by bankruptcy, insolvency, reorganization
-16-
or similar laws affecting the rights of creditors generally and subject
to general principles of equity); 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 material agreement or instrument set
forth in a mutually-agreed upon schedule to such counsel's opinion, 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.
(vii) The Registration Statement and the Prospectus, and any
amendment thereof or supplement thereto (including any term sheet
within the meaning of Rule 434 of the Rules and Regulations, but
excepting the financial statements and schedules and other financial
and statistical data included therein, as to which such counsel
expresses no opinion), comply as to form in all material respects with
the requirements of the Act and the Rules and Regulations. In addition,
such counsel shall state that in the course of the preparation of the
Registration Statement and the Prospectus, such counsel has
participated in conferences with officers and other representatives of
the Company, representatives of the independent accountants of the
Company, representatives of the Underwriters and representatives of
counsel for the Underwriters, at which the contents of the Registration
Statement and the Prospectus and related matters were discussed and
such counsel has examined the documents referred to in the Registration
Statement and Prospectus and, although, with the exception of paragraph
(v) above, such counsel does not pass upon, and does not assume any
responsibility for, the accuracy, completeness or fairness of any
statement contained in the Registration Statement or the Prospectus and
such counsel has made no independent check or verification thereof,
based in part upon the foregoing, nothing has come to such counsel's
attention that have led such counsel to believe that the Registration
Statement (except as to the financial statements and notes thereto and
other financial and statistical data derived therefrom as to which such
counsel need not express any opinion or belief), as of the date of
effectiveness or as of the date of such opinion contained an untrue
statement of material fact or omitted to state any material fact
required to be stated therein or necessary in order to make the
statements therein not misleading or that the Prospectus (except as to
the financial statements and the notes thereto and other financial and
statistical data included therein or derived therefrom as to which such
counsel need not express any opinion or belief), as of its date or as
of the date of such opinion, contained or contains an untrue statement
of material fact or omitted or omits to state a material fact necessary
in order to make the statements therein, in light of the circumstances
under which they were
-17-
made, not misleading; it being understood that the foregoing statement
may be contained in a separate letter addressed to the Underwriters.
(viii) Each document filed pursuant to the Exchange Act (other
than the financial statements and supporting schedules included
therein, as to which no opinion need to be rendered) and incorporated
or deemed to be incorporated by reference in the Prospectus complied
when so filed as to form in all material respects with the Exchange
Act.
(ix) To such counsel's knowledge, the Company owns or
possesses, works of authorship, patents, patent applications,
inventions, trademarks, service marks, trade names, copyrights, trade
secrets mask works, product designs and other intellectual property
rights (collectively, the "Intellectual Property Rights") necessary to
conduct the business now being or proposed to be conducted by the
Company as described in the Registration Statement and Prospectus.
Title to all patents, patent applications, trademark applications and
registrations that are part of the Intellectual Property Rights, are
recorded in the name of the Company, or documents to reflect such
recordation have been filed and are unencumbered by any security
interests, liens or other encumbrances.
(x) Except as otherwise stated in the Registration Statement
and Prospectus, and except for ongoing prosecution matters relating to
its patent applications and for an application for an extension to the
term of a single patent under 35 U.S.C. Section 156, to the best of
such counsel's knowledge, there are no legal or governmental
proceedings relating to the Intellectual Property Rights owned or used
by the Company pending against the Company or any third party and no
such proceedings are threatened or contemplated by governmental
authorities or others.
(xi) Such counsel does not know of any contracts or other
documents relating to the Intellectual Property Rights of the Company
of a character required to be filed as an exhibit to the Registration
Statement or required to be described in the Registration Statement or
the Prospectus that are not filed or described as required.
(xii) To counsel's knowledge, the Company's products, the
manufacture of the Company's products, the use of the Company's
products or the conduct of the business now being proposed to be
conducted by the Company as described in the Registration Statement
will not infringe or otherwise violate, and the conduct of the Company,
including but not limited to past conduct, does not infringe or
otherwise violate, nor has it been alleged that the Company or its
conduct is infringing or otherwise violating any Intellectual Property
Rights of others, the Company is not engaged in any legal or
governmental proceedings involving the Intellectual Property Rights of
third parties and there are no infringements by others of any
Intellectual Property Rights owned or possessed by the Company.
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(xiii) To such counsel's knowledge, the Company's pending U.S.
patent applications have been prepared and filed in the United States
Patent and Trademark Office (the "USPTO") in a form and with
accompanying papers that are acceptable to the USPTO for the purposes
of according each such application a filing date and serial number, and
of placing each such application in condition for eventual examination
on the merits as to patentability. For each such U.S. application, an
Official Filing Receipt has been received from the USPTO. As to each of
such applications, counsel is not aware of any material defect in
preparation or filing.
In rendering any such opinion, such counsel may state that such
counsel (y) expresses no opinion as to the laws of any jurisdiction other than
the laws of the State of Texas and the federal laws of the United States and (z)
has assumed, without independent verification, that the laws of the State of
Minnesota are identical in all respects to the laws of the State of Texas,
noting that the laws of the State of Minnesota are likely to differ from the
laws of the State of Texas with respect to the matters covered by such counsel's
opinion, that even if such laws were the same as the laws of the State of Texas,
judicial interpretations thereto in Minnesota may differ from judicial
interpretations by Texas courts and that such differences may be material. In
rendering such opinion such counsel may rely (i) as to matters of law other than
Texas 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 although such counsel is not admitted to practice law
in such jurisdiction, it has no reason to believe that they and you are not
entitled to rely on such opinion and (ii) as to matters of fact, to the extent
such counsel deems reasonable upon certificates of public officials, transfer
agents and officers of the Company and its subsidiaries, provided that the
extent of such reliance is specified in such opinion.
(e) On each Closing Date, there shall have been furnished to you the
opinion of XxXxxxx & Xxxxx, L.L.P., special regulatory counsel for the Company,
dated such Closing Date and addressed to you to the effect that:
(i) The statements in the Registration Statement under the
captions "Risk Factors - Failure to obtain necessary government
approvals for new products or for new applications for existing
products would mean we could not sell those new products, or sell our
existing products for those new applications -- Modification of any
marketed device could require a new 510(k) clearance or PMA or require
us to cease marketing or recall the modified device until we obtain
this clearance or approval -- We will be unable to sell our products if
we fail to comply with manufacturing regulations -- Our products are
subject to product recalls even after receiving FDA clearance or
approval, which would negatively affect our financial performance and
could harm our reputation" and "Business -- Government Regulation", in
each case insofar as they purport to describe the provision of law and
proceedings referred therein, fairly summarize the matters therein
described (collectively, the "Covered Sections").
-19-
(ii) To the best of such counsel's knowledge, the Company has
such permits, licenses, franchises, authorizations and clearances of
the FDA and/or any committee thereof, that are necessary to own its
properties and are material to conduct its business in the manner
described in the Prospectus ("FDA Permits"), subject to such exceptions
and qualifications as may be set forth in the Prospectus, the Company
has fulfilled and performed all of its material obligations with
respect to the FDA Permits, and no event has occurred which allows, or
after notice or lapse of time would allow, revocation or termination
thereof or results in any other material impairment of the rights of
the holder of any FDA Permit, subject to each case to such exceptions
and qualifications as may be set forth in the Prospectus and except
where such revocation, termination or impairment would not have a
Material Adverse Effect.
(iii) On the basis of conferences with officers of the
Company, examination of documents referred to in the Covered Sections
of the Registration Statement 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 Covered Sections of the
Registration Statement or any amendment thereof, at the time the
Registration Statement became effective and as of such Closing Date
(including any Registration Statement filed under Rule 462(b) of the
Rules and Regulations), contained or contains any untrue statement of a
material fact or omitted or omits 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, with respect to the Covered
Sections 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 are 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 sentence.
In rendering such opinion such counsel may rely (i) as to matters of
law other than 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 and its subsidiaries
provided that the extent of such reliance is specified in such opinion.
(f) On each Closing Date, there shall have been furnished to you, as
Representatives of the several Underwriters, such opinion or opinions from
Faegre & Xxxxxx 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
-20-
counsel shall have received such papers and information as they request to
enable them to pass upon such matters.
(g) On each Closing Date you, as Representatives of the several
Underwriters, shall have received a letter of Ernst & Young 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.
(h) 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 (including any term sheet within the
meaning of Rule 434 of the Rules and Regulations), 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, (B) since the effective date of the Registration
Statement, there has occurred no event required to be set forth in an
amended or
-21-
supplemented prospectus which has not been so set forth, and there has
been no document required to be filed under the Exchange Act that upon
such filing would be deemed to be incorporated by reference into the
Prospectus that has not been so filed, (C) subsequent to the respective
dates as of which information is given in the Registration Statement
and the Prospectus, neither the Company nor any of its subsidiaries has
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 of its subsidiaries, or any Material Adverse Change or
any development involving a prospective Material Adverse Change
(whether or not arising in the ordinary course of business), 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 or
any of its subsidiaries is a party before or by any court or
governmental agency, authority or body, or any arbitrator, which could
reasonably be expected to result in a Material Adverse Effect.
(i) 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.
(j) All necessary filings have been made as required and all filing
fees shall have been paid to effect the listing of the Securities on 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 agrees 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) 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 Rules 430A and 434(d) of the Rules and Regulations, if applicable, any
Preliminary Prospectus, the Prospectus, or any amendment or supplement thereto
(including any
-22-
term sheet within the meaning of Rule 434 of the Rules and Regulations, and any
documents filed under the Exchange Act and deemed to be incorporated by
reference into the Prospectus), or in any materials or information provided to
investors by, or with the approval of, the Company in connection with the
marketing of the offering of the Common Stock ("Marketing Materials"), including
any roadshow or investor presentations made to investors by the Company (whether
in person or electronically) 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 the Company shall not be liable in
any such case to the extent that any such loss, claim, damage, liability or
action arises out of or is based upon 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,
or in any Marketing Materials, 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.
In addition to their other obligations under this Section 6(a), the
Company agrees 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), it 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 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, any Underwriter that received such payment shall promptly return it to
the Company, 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 U.S. Bank, National Association
(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 may
otherwise have.
(b) Each Underwriter will indemnify and hold harmless the Company
against any losses, claims, damages or liabilities to which the Company 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 (including any term sheet within the meaning of Rule 434 of
the Rules and Regulations), or arise out of or are based upon the omission
-23-
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
for any legal or other expenses reasonably incurred by the Company 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 to the extent such indemnifying party
is not materially prejudiced by such failure and in any event shall not relieve
such indemnifying party from any liability that it may otherwise have under this
Agreement. 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 the defendants in
any such action include both the indemnified party or parties and the
indemnifying party, and the indemnified party or parties shall have concluded
that there may be legal defenses or claims available to it or them which are
different from or additional to those available to the indemnifying party, or if
there is a conflict of interest which would prevent counsel for the indemnifying
party or parties from also representing the indemnified party or parties, and
that it is advisable for the indemnified party or parties to be represented by
separate counsel, then the indemnified party or parties shall have the right to
employ a single counsel (in addition to any local counsel) to represent the
indemnified party or the indemnified parties as a group, in which event the
reasonable fees and expenses of the separate counsel shall be borne by the
indemnifying party or parties. 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, which consent shall not be unreasonably
withheld or delayed.
(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 on the
-24-
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 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 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
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 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 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
by which the total price at which the Securities underwritten by it and
distributed to the public were offered to the public exceeds the amount of any
damages that such Underwriter has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the 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 under this Section 6 shall be in
addition to any liability which the Company 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
within the meaning of the Act.
-25-
(f) The Underwriters severally confirm and the Company acknowledges
that the statements with respect to the public offering of the Securities by the
Underwriters set forth on the cover page of, and the concession and reallowance
figures appearing under the caption "Underwriting" in, the Prospectus are
correct and constitute the only information concerning such Underwriters
furnished in writing to the Company by or on behalf of the Underwriters
specifically for inclusion in the Registration Statement and the Prospectus.
7. REPRESENTATIONS AND AGREEMENTS TO SURVIVE DELIVERY. All
representations, warranties, and agreements of the Company herein or in
certificates delivered pursuant hereto, and the agreements of the several
Underwriters and the Company 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, and shall
survive delivery of, and payment for, the Securities to and by the Underwriters
hereunder.
8. SUBSTITUTION OF UNDERWRITERS.
(a) If any Underwriter shall fail to take up and pay for the amount
of Firm Shares agreed by such Underwriter 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 aggregate
amount of Firm Shares set forth in Schedule I 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 I 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 shall fail to take up and pay for the amount
of Firm Shares agreed by such Underwriter 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 aggregate amount of
Firm Shares set forth in Schedule I 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 the Company shall not be under any liability to any Underwriter
(except to the extent provided in Section 4(h) 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 (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
-26-
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., Central
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 an electronic communication authorizing commencement of the
offering the Securities for sale by the Underwriters or other securities
dealers. 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(h) and Section 6 hereof shall at all times be effective.
(b) You 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 cancelled
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
Nasdaq National Market, New York Stock Exchange or the American Stock Exchange
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 Nasdaq National Market, New York Stock Exchange or the
American Stock Exchange, 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 Texas 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(h) 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 shall be
notified promptly by you by telephone, confirmed by letter. If the Company
elects to prevent this Agreement from becoming effective, you shall be notified
by the Company by telephone, confirmed by letter.
-27-
10. DEFAULT BY THE COMPANY. 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 from liability, if any, in respect of such default.
11. NOTICES. Except as otherwise provided herein, all communications
hereunder shall be in writing and, if to the Underwriters, shall be delivered by
mail, hand-delivery or facsimile transmission to the Representatives c/o U.S.
Bancorp Xxxxx Xxxxxxx Inc., U.S. Bancorp Center, 000 Xxxxxxxx Xxxx, Xxxxxxxxxxx,
Xxxxxxxxx 00000, 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; if to the Company, shall be delivered by mail, hand-delivery or
facsimile transmission to it at 0000 Xxxxxxxxx Xxxxx, Xxxxx, Xxxxx 00000,
Attention: Xxxxxxx X. Xxxxxx; or in each case to such other address as the
person to be notified may have requested in writing. 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.
12. 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.
13. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Minnesota.
14. COUNTERPARTS. This Agreement may be executed in one or more
counterparts and, if executed in more than one counterpart, the executed
counterparts shall each be deemed to be an original and all such counterparts
shall together constitute one and the same instrument.
[Signature Page Follows]
-28-
Please sign and return to the Company the enclosed duplicates
of this letter whereupon this letter will become a binding agreement between the
Company and the several Underwriters in accordance with its terms.
Very truly yours,
ADVANCED NEUROMODULATION SYSTEMS, INC.
By
-------------------------------------
President and Chief Executive Officer
Confirmed as of the date first above mentioned, on behalf of themselves and the
other several Underwriters named in Schedule I hereto.
U.S. BANCORP XXXXX XXXXXXX INC.
By
-----------------------------------------
Managing Director
CIBC WORLD MARKETS CORP.
By
-----------------------------------------
Managing Director
XXXXXX XXXXXX XXXXXXXX & CO., INC.
By
-----------------------------------------
Managing Director
SCHEDULE I
Underwriter Number of Firm Shares(1)
----------- -------------------------
U.S. Bancorp Xxxxx Xxxxxxx Inc.
CIBC World Markets Corp.
Xxxxxx Xxxxxx Xxxxxxxx & Co.
---------
Total. . . . . . . . . . . . . . . . . . . 2,500,000
=========
-----------------
(1) The Underwriters may purchase up to an additional 375,000 Option
Shares, to the extent the option described in Section 3(b) of the
Agreement is exercised, in the proportions and in the manner described
in the Agreement.
