2,250,000 Shares(1)
ENDOCARDIAL SOLUTIONS, INC.
Common Stock
PURCHASE AGREEMENT
March ___, 1997
XXXXX XXXXXXX INC.
XXXXX, XXXXX & COMPANY LLC
As Representatives of the several
Underwriters named in Schedule I hereto
c/o Xxxxx Xxxxxxx Inc.
Xxxxx Xxxxxxx Tower
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Ladies and Gentlemen:
Endocardial Solutions, Inc., a Delaware corporation (the "Company"),
proposes to sell to the several Underwriters named in Schedule I hereto (the
"Underwriters") an aggregate of 2,250,000 authorized but unissued shares (the
"Firm Shares") of Common Stock, $.01 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 337,500 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."
Concurrently with the offer and sale of Securities offered and sold to
the Underwriters, the Company will sell, pursuant to a stock purchase
agreement (the "Concurrent Placement Purchase Agreement"), an additional
750,000 shares of Common Stock (the "Placement Securities") at the price to
public per share set forth in the Registration Statement referred to below,
in a private placement (the "Concurrent Placement") to Medtronic, Inc. or
designated affiliate thereof. The Securities and the Placement Securities
are herein collectively called the "Offered 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-1 (File No. 333-20677) 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"),
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(1) Plus an option to purchase up to 337,500 additional shares to cover
over-allotments.
and the rules and regulations ("Rules and Regulations") of the Securities and
Exchange Commission (the "Commission") thereunder and has been filed with the
Commission; one or more amendments to such registration statement have also
been so prepared and have been, or will be, so filed; 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 a registration statement with respect to such
increase pursuant to Rule 462(b). 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 reply 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 a registration statement (if any)
filed pursuant to Rule 462(b) of the Rules and Regulations increasing the
size of the offering registered under the Act and 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.
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 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
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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 registration statement (if
any) filed pursuant to Rule 462(b) of the Rules and Regulations
increasing the size of the offering registered under the Act) 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 financial statements of the Company, together
with the notes thereto, set forth in the Registration Statement and
Prospectus comply in all material respects with the requirements of the
Act and fairly present the financial condition of the Company as of the
dates indicated and the results of operations and changes in cash flows
for the periods therein specified in conformity with generally accepted
accounting principles consistently applied throughout the periods
involved (except as otherwise stated therein); and the supporting
schedules included 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 the Registration
Statement or Prospectus. Ernst & Young LLP, which has expressed its
opinion with respect to the financial statements and schedules filed as
a part of the Registration Statement and included in the Registration
Statement and Prospectus, are independent public accountants as required
by the Act and the Rules and Regulations.
(iv) The Company has been duly incorporated and is
validly existing as a corporation in good standing under the laws of the
State of Delaware. The Company has full corporate power and authority
to own its properties and conduct its business as currently being
carried on and as described in the Registration Statement and
Prospectus, and is duly qualified to do business as a foreign
corporation in good standing in the State of Minnesota.
(v) Except as contemplated in the Prospectus,
subsequent to the respective dates as of which information is given in
the Registration Statement and the Prospectus, the Company has not
incurred any material liabilities or obligations, direct or contingent,
or entered into any material transactions, or declared or paid any
dividends or made any distribution of any kind with respect to its
capital stock; and there has not been any change in the capital stock
(other than a change in the number of outstanding shares of Common Stock
due to the issuance of shares upon the
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exercise of outstanding options or warrants), or any material change in
the short-term or long-term debt (including, without limitation, capital
lease obligations), or any issuance of options, warrants, convertible
securities or other rights to purchase the capital stock of the Company,
or any material adverse change, or any development involving a
prospective material adverse change, in the general affairs, condition
(financial or otherwise), business, key personnel, property, prospects,
net worth or results of operations of the Company, taken as a whole.
(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 which the Company is a party before or
by any court or governmental agency, authority or body, or any
arbitrator, which might result in any material adverse change in the
condition (financial or otherwise), business, prospects, net worth or
results of operations of the Company, taken as a whole.
(vii) There are no contracts or documents of the Company
that are required to be filed as exhibits to the Registration Statement
by the Act or by the Rules and Regulations that have not been so filed.
(viii) Each of this Agreement and the Concurrent Placement
Purchase 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 and the Concurrent
Placement Purchase Agreement and the consummation of the transactions
herein and therein contemplated will not result in a breach or violation
of any of the terms and provisions of, or constitute a default under,
any statute, 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 certificate of incorporation or bylaws, 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 and the Concurrent Placement Purchase
Agreement or for the consummation of the transactions contemplated
hereby and thereby, including the issuance or sale of the Offered
Securities by the Company, except such as may be required under the Act
or state securities or blue sky laws and which, in the case of the Act
as to the Offered Securities and in the case of the blue sky laws as to
the Placement Securities, have been obtained; and the Company has full
power and authority to enter into this Agreement and the Concurrent
Placement Purchase Agreement and to authorize, issue and sell the
Offered Securities as contemplated by this Agreement and the Concurrent
Placement Purchase Agreement. The offer and sale of the Placement
Securities are exempt from the registration, qualification and
prospectus delivery requirements of the Act and applicable state
securities laws.
(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, and the
holders thereof are not subject to personal liability by reason of being
such holders; the Offered Securities which may be sold hereunder by the
Company have been duly
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authorized and, when issued, delivered and paid for in accordance with
the terms hereof, will have been validly issued and will be fully paid
and nonassessable, and the holders thereof will not be subject to
personal liability by reason of being such holders; and the capital
stock of the Company, including the Common Stock, conforms to the
description thereof in the Registration Statement and Prospectus. Except
as otherwise stated in the Registration Statement and Prospectus, there
are no preemptive rights or other rights to subscribe for or to
purchase, or any restriction upon the voting or transfer of, any shares
of Common Stock pursuant to the Company's certificate of incorporation,
bylaws 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 Offered
Securities as contemplated by this Agreement and the Concurrent
Placement Purchase Agreement gives rise to any rights for or relating to
the registration of any shares of Common Stock or other securities of
the Company except for those rights that have been validly satisfied or
waived prior to the date of this Agreement. Except as described in the
Registration Statement and the Prospectus, there are no options,
warrants, agreements, contracts or other rights in existence to purchase
or acquire from the Company any shares of the capital stock of the
Company. The Company has an authorized and outstanding capitalization as
set forth in the Registration Statement and the Prospectus under the
caption "Capitalization."
(x) The Company holds, and is operating in compliance
in all material respects with, all franchises, grants, authorizations,
licenses, permits, easements, consents, certificates and orders of any
governmental or self-regulatory body required for the conduct of its
business and all such franchises, grants, authorizations, licenses,
permits, easements, consents, certificates and orders are valid and in
full force and effect; and the Company is in compliance in all material
respects with all applicable federal, state, local and foreign laws,
regulations, orders and decrees.
(xi) The Company has good and marketable title to all
property described in the Registration Statement and Prospectus as being
owned by it, in each case free and clear of all material liens, claims,
security interests or other encumbrances except such as are described in
the Registration Statement and the Prospectus; the property held under
lease by the Company is held by it under valid, subsisting and
enforceable leases with only such exceptions with respect to any
particular lease as do not interfere in any material respect with the
conduct of the business of the Company.
(xii) The Company owns or possesses all works of
authorship, patents, patent applications, trademarks, service marks,
trade names, trademark registrations, service xxxx registrations,
copyrights, licenses, inventions, know-how, trade secrets and rights
necessary for the conduct of the business of the Company as currently
carried on or intended to be carried on and as described in the
Registration Statement and Prospectus. Except as stated in the
Registration Statement and Prospectus, no name which the Company uses
and no other aspect of the business of the Company will involve or give
rise to any infringement of, or license or similar fees for, any patent,
patent application, trademark, service xxxx, trade name, trademark
registration, service xxxx registration, copyright, license, invention,
trade secret or other similar right of others material to the business
or prospects of the Company and the Company has not received any notice
alleging any such infringement or fee.
(xiii) The Company is not in violation of its certificate
of incorporation or bylaws or in breach of or otherwise in default in
the performance of any material obligation, agreement or condition
contained in any bond, debenture, note, indenture, loan agreement or any
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other material contract, lease or other instrument to which it is
subject or to which any of the material property or assets of the
Company is subject.
(xiv) The Company has filed all federal, state, local and
foreign income and franchise tax returns required to be filed and is not
in default in the payment of any taxes which were payable pursuant to
said returns or any assessments with respect thereto, other than any
which the Company is contesting in good faith.
(xv) The Company has not distributed and will not
distribute any prospectus or other offering material in connection with
the offering and sale of the Offered Securities other than any
Preliminary Prospectus or the Prospectus or other materials permitted by
the Act to be distributed by the Company.
(xvi) The Offered Securities have been conditionally
approved for listing on the Nasdaq National Market and, on the date the
Registration Statement became or becomes effective, the Company's
Registration Statement on Form 8-A or other applicable form under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), became
or will become effective.
(xvii) The Company owns no capital stock or other equity
or ownership or proprietary interest in any corporation, partnership,
association, trust or other entity.
(xviii) The Company maintains a system of internal
accounting controls sufficient to provide reasonable assurances that (A)
transactions are executed in accordance with management's general or
specific authorization; (B) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain accountability for
assets; (C) access to assets is permitted only in accordance with
management's general or specific authorization; and (D) 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 and the Concurrent Placement Purchase Agreement or the
consummation of the transactions contemplated hereby and thereby.
(xx) Upon completion of the First Closing (A) the
Amended and Restated Co-Sale Agreement dated as of January 31, 1995,
will terminate (B) all outstanding shares of preferred stock of the
Company (the "Preferred Stock") shall be mandatorily converted, in
accordance with their respective terms, into shares of duly authorized,
validly issued, fully paid and nonassessable shares of Common Stock and
(C) all outstanding warrants for the purchase of any shares of Preferred
Stock shall be exercisable solely for shares of Common Stock.
(xxi) The Company has received from the U.S. Food and
Drug Administration (FDA) an investigational device exemption (IDE) as
described in the Registration Statement; such IDE is in full force and
effect and neither the Company nor the FDA has withdrawn or revoked the
IDE.
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(xxii) 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.
(xxiii) The Company is not, and upon completion of the sale
of the Securities will not be, required to register as an "investment
company" under the Investment Company Act of 1940, as amended.
(b) Any certificate signed by any officer of the Company and
delivered to you or to counsel for the Underwriters shall be deemed a
representation and warranty by the Company to each Underwriter as to the
matters covered thereby.
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 2,250,000 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 certified or official bank check or other next day funds payable
to the order of the Company at the offices of Faegre & Xxxxxx LLP, 2200
Norwest Center, 00 Xxxxx Xxxxxxx Xxxxxx, 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 Closing Date at the offices of Xxxxx Xxxxxxx Inc., Xxxxx Xxxxxxx Tower,
000 Xxxxx Xxxxx Xxxxxx, 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, with respect to 337,500 of the Option Shares, 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 at any time (but not more than once) within 30 days after the
effective date of this Agreement upon notice (confirmed in writing) by the
Representatives to the Company 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
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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 certified or official bank check or other next day funds payable
to the order of the Company at the offices of Faegre & Xxxxxx LLP, 2200
Norwest Center, 00 Xxxxx Xxxxxxx Xxxxxx, 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 Xxxxx Xxxxxxx Inc., Xxxxx Xxxxxxx
Tower, 000 Xxxxx Xxxxx Xxxxxx, 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.
(d) Concurrently with delivery and payment for the Firm Shares on
the First Closing Date, the Company shall pay to the Representatives in cash
by wire transfer of funds or other mutually agreed form of settlement a fee
equal to $_____ per share of Placement Securities offered and sold by the
Company.
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; 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 registration statement with respect to such increase with
the Commission within the time period
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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) 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 obtain knowledge thereof, of the issuance by the Commission of any
stop order suspending the effectiveness of the Registration Statement, of the
suspension of the qualification of the Securities for offering or sale in any
jurisdiction, or of the initiation or threatening of any proceeding for any
such purpose; and the Company will promptly use its best efforts to prevent
the issuance of any stop order or to obtain its withdrawal if such a stop
order should be issued.
(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 material fact or omit
to state a material fact necessary to make the statements therein, in light
of the circumstances then existing, not misleading, or if during such period
it is necessary to amend the Registration Statement or supplement the
Prospectus to comply with the Act, the Company will promptly notify you and
will amend the Registration Statement or supplement the Prospectus (at the
expense of the Company) so as to correct such statement or omission or effect
such compliance.
(d) The Company will use its best efforts to qualify the
Securities for sale under the securities laws of such jurisdictions as you
reasonably designate and to continue such qualifications in effect so long as
required for the distribution of the Securities, except that the Company
shall not be required in connection therewith to qualify as a foreign
corporation or to execute a general consent to service of process in any
state.
(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) 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., the Nasdaq Stock Market or any securities exchange.
(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,
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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 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, (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(d) 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 part to be performed, or because any other condition of the Underwriters'
obligations hereunder required to be fulfilled by the Company is not
fulfilled, the Company will reimburse the 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
Offered Securities to be sold by it hereunder and under the Concurrent
Placement Purchase Agreement for the purposes set forth in the Prospectus
under the caption "Use of Proceeds" and will file such reports with the
Commission with respect to the sale of the Securities and the application of
the proceeds therefrom as may be required in accordance with Rule 463 of the
Rules and Regulations.
(j) The Company will not, without your prior written consent,
directly or indirectly, offer for sale, sell, contract to sell, grant any
option for the sale of or otherwise issue or dispose of any shares of Common
Stock, or any securities convertible into or exchangeable for Common Stock,
or any options, warrants or other rights to purchase or acquire, Common Stock
or securities convertible or exchangeable for Common Stock, for a period of
180 days after the commencement of the public offering of the Securities by
the Underwriters, except (i) to the Underwriters pursuant to this Agreement
(ii) upon the exercise of options granted or warrants issued prior to the
date of this Agreement, or (iii) for grants of options to directors,
officers, employees or consultants of the Company under the Company's Amended
and Restated 1993 Long-Term Incentive and Stock Option Plan, the 1997
Employee Stock Purchase Plan and the Company's Directors' Stock Option Plan.
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(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, officers and
shareholders stating that such person will not, without your prior written
consent, directly or indirectly, offer for sale, sell, contract to sell or
otherwise dispose of any shares of Common Stock or any securities convertible
into or exchangeable for Common Stock, or any options or warrants to acquire,
shares of Common Stock or securities convertible into or exchangeable for
Common Stock for a period of 180 days after the commencement of the public
offering of the Securities by the Underwriters, except (i) as a bona fide
gift or gifts, provided that the donor provides prior written notice of such
gift or gifts to the Underwriters and the donee or donees thereof agree in
writing to be bound by the restrictions set forth herein (ii) as a
distribution to stockholders of the shareholders, provided that the
distributee or distributees thereof agree to be bound by the restrictions set
forth herein, or (iii) for shares acquired in the public market on or after
the date of this 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 Offered Securities, and has not effected any sales of
any securities of the Company which are required to be disclosed in response
to Item 701 of Regulation S-K of the Commission which have not been so
disclosed in the Registration Statement.
(m) 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 and the Concurrent Placement Purchase Agreement or
the consummation of the transactions contemplated hereby and thereby.
(n) The Company will inform the Florida Department of Banking and
Finance at any time prior to the consummation of the distribution of the
Securities by the Underwriters if it commences engaging in business with the
government of Cuba or with any person or affiliate located in Cuba. Such
information will be provided within 90 days after the commencement thereof or
after a change occurs with respect to previously reported information.
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 sheet within the meaning of Rule 434
of the Rules and Regulations), contains an untrue statement of fact which, in
your
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opinion, is material, or omits to state a fact which, in your opinion, is
material and is required to be stated therein or necessary to make the
statements therein not misleading.
(c) Except as contemplated in the Prospectus, subsequent to the
respective dates as of which information is given in the Registration
Statement and the Prospectus, the Company shall not have incurred any
material liabilities or obligations, direct or contingent, or entered into
any material transactions, or declared or paid any dividends or made any
distribution of any kind with respect to its capital stock; and there shall
not have been any change in the capital stock (other than a change in the
number of outstanding shares of Common Stock due to the conversion of
outstanding shares of Preferred Stock and the issuance of shares upon the
exercise of outstanding options or warrants), or any material change in the
short-term or long-term debt (including, without limitation, capital lease
obligations) of the Company, or any issuance of options, warrants,
convertible securities or other rights to purchase the capital stock of the
Company or any material adverse change or any development involving a
prospective material adverse change (whether or not arising in the ordinary
course of business), in the general affairs, condition (financial or
otherwise), business, key personnel, property, prospects, net worth or
results of operations of the Company, taken as a whole, that, in your
judgment, makes it impractical or inadvisable to offer or deliver the
Securities on the terms and in the manner contemplated in the Prospectus.
(d) On each Closing Date, there shall have been furnished to you,
as Representatives of the several Underwriters, the opinion of Xxxxxx &
Xxxxxxx LLP, counsel for the Company, dated such Closing Date and addressed
to you, to the effect that:
(i) The Company has been duly incorporated and is
validly existing as a corporation in good standing under the laws of
the State of Delaware. The Company has full corporate power and
authority to own its properties and conduct its business as currently
being carried on and as described in the Registration Statement and
Prospectus, and is duly qualified to do business as a foreign
corporation and is in good standing in the State of Minnesota.
(ii) The capital stock of the Company conforms as to
legal matters to the description thereof contained in the Prospectus
under the caption "Description of Capital Stock." All of the issued
and outstanding shares of the capital stock of the Company have been
duly authorized and validly issued and are fully paid and
nonassessable, and the holders thereof are not subject to personal
liability by reason of being such holders. The Offered 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 and the Concurrent Placement Purchase 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. Concurrently with the First Closing, all
outstanding shares of Preferred Stock of the Company shall be
mandatorily converted in accordance with their respective terms into
shares of duly authorized, validly issued, fully paid and nonassessable
shares of Common Stock, and all outstanding warrants for the purchase
of any shares of Preferred Stock shall be exercisable solely for shares
of Common Stock. 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
certificate of incorporation, bylaws or any agreement or other
instrument known to such counsel to which the Company is a party or by
which the Company is bound. To the best of such counsel's knowledge,
neither the filing of the Registration Statement nor the offering or
sale of the Offered Securities as contemplated by this Agreement and
the Concurrent Placement Purchase Agreement gives rise to any rights
for or relating to the registration of any shares of Common Stock or
other securities of
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the Company except for those rights which have been validly satisfied or
waived prior to the date of this Agreement.
(iii) The Registration Statement has become effective
under the Act and, to the best of such counsel's knowledge, no stop
order suspending the effectiveness of the Registration Statement has
been issued and no proceeding for that purpose has been instituted or,
to the knowledge of such counsel, threatened by the Commission.
(iv) The descriptions in the Registration Statement and
Prospectus of statutes, 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 or legal or governmental proceedings required to
be described in the Prospectus that are not described as required, or
of any contracts or documents of a character required to be described
in the Registration Statement or Prospectus or included as exhibits to
the Registration Statement that are not described or included as
required.
(v) The Company has corporate power to enter into this
Agreement and the Concurrent Placement Purchase Agreement, and each of
this Agreement and the Concurrent Placement Purchase 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 and the Concurrent Placement Purchase
Agreement and the consummation of the transactions herein and therein
contemplated will not result in a breach or violation of any of the
terms and provisions of, or constitute a default under, any statute,
rule or regulation, any agreement or instrument known to such counsel
to which the Company is a party or by which it is bound or to which any
of its property is subject, the Company's certificate of incorporation
or bylaws, 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 and the Concurrent Placement Purchase Agreement or for the
consummation of the transactions contemplated hereby and thereby,
including the issuance or sale of the Offered Securities by the
Company, except such as may be required under the Act or state
securities laws or blue sky laws and which, in the case of the Act as
to the Offered Securities and in the case of the blue sky laws as to the
Placement Securities, have been obtained. The offer and sale of the
Placement Securities are exempt from the registration, qualification
and prospectus delivery requirements of the Act and applicable state
securities laws.
(vi) To the best of such counsel's knowledge, the
Company is not in violation of its certificate of incorporation or
bylaws and is not in breach of or otherwise in default in the
performance of any material obligation, agreement or condition
contained in any bond, debenture, note, indenture, loan agreement or
any other material contract, lease or other instrument to which it is
subject, or to which any of the material property or assets of the
Company is subject.
(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), comply as
to form in all material respects with the requirements of the Act and
the
-13-
Rules and Regulations; and on the basis of conferences with officers of
the Company, examination of documents referred to in the Registration
Statement and Prospectus and such other procedures as such counsel
deemed appropriate, nothing has come to the attention of such counsel
that causes such counsel to believe that the Registration Statement or
any amendment thereof, at the time the Registration Statement became
effective and as of such Closing Date (including any Registration
Statement filed under Rule 462(b) of the Rules and Regulations),
contained any untrue statement of a material fact or omitted to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading or that the Prospectus (as of its date
and as of such Closing Date), as amended or supplemented, includes any
untrue statement of material fact or omits to state a material fact
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading; it being understood that
such counsel need express no opinion as to the financial statements,
schedules or other financial data included therein.
In rendering such opinion such counsel may rely as to matters of
fact, to the extent such counsel deems reasonable, upon certificates of
officers of the Company provided the extent of such reliance is specified in
such opinion.
(e) On each Closing Date, there shall have been furnished to you,
as Representatives of the several Underwriters, the opinion of Merchant,
Gould, Smith, Edell, Xxxxxx and Xxxxxxx, patent counsel for the Company,
dated such Closing Date and addressed to you, to the effect that:
(i) To the best of such counsel's knowledge, the
Company owns or possesses, works of authorship, patents, patent
applications, inventions, trademarks, service marks, trade names,
copyrights, trade secrets 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.
(ii) To the best of such counsel's knowledge, there are
no legal or governmental proceedings relating to any 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; there are no legal or governmental proceedings relating to
a third party's Intellectual Property Rights pending against the
Company; and, to the best of such counsel's knowledge, no such
proceedings are threatened or contemplated by governmental authorities
or others.
(iii) 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.
(iv) To the best of such counsel's knowledge, 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
-14-
violating any Intellectual Property Rights of others and there are no
infringements by others of any Intellectual Property Rights owned or
used by the Company.
(v) The Company's pending U.S. patent applications have
been prepared and filed in 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.
(vi) As to each of the Company's U.S. patent
applications on file more than one year, and as to each of the Company's
U.S. Patents which have issued from patent applications on file more
than one year, corresponding foreign applications claiming priority
under the Paris Convention from the corresponding U.S. applications have
been filed in the appropriate patent offices and are pending.
(vii) Such counsel has reviewed the Registration
Statement, the Preliminary Prospectus and the Prospectus. Nothing has
come to the attention of such counsel that causes such counsel to
believe that as of the date of the Prospectus, at the time the
Registration Statement becomes effective, or on the First Closing Date,
the Prospectus (i) under the caption "Risk Factors - Dependence on
Patents and Proprietary Technology" and (ii) under the caption "Business
- Patents and Proprietary Rights" contained any untrue statement of a
material fact or omitted to state a material fact necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading.
(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 Underwriters, dated such Closing Date
and addressed to you, with respect to the formation of the Company, the
validity of the Securities, the Registration Statement, the Prospectus and
other related matters as you reasonably may request, and such counsel shall
have received such papers and information as they request to enable them to
pass upon such matters.
(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 and the Concurrent Placement Purchase Agreement are true and
correct, in all material respects, as if
-15-
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 Offered 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 supplemented prospectus which has not been so set forth, (C)
subsequent to the respective dates as of which information is given in
the Registration Statement and the Prospectus, the Company has not
incurred any material liabilities or obligations, direct or contingent,
or entered into any material transactions, not in the ordinary course of
business, or declared or paid any dividends or made any distribution of
any kind with respect to its capital stock, and expect 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 conversion of outstanding shares of Preferred Stock or the
issuance of shares upon the exercise of outstanding options or
warrants), or any material change in the short-term or long-term debt
(including, without limitation, capital lease obligations), or any
issuance of options, warrants, convertible securities or other rights to
purchase the capital stock, of the Company or any material adverse
change or any development involving a prospective material adverse
change (whether or not arising in the ordinary course of business), in
the general affairs, condition (financial or otherwise), business, key
personnel, property, prospects, net worth or results of operations of
the Company, taken as a whole, and (D) except as stated in the
Registration Statement and the Prospectus, there is not pending, or, to
the knowledge of the Company, threatened or contemplated, any action,
suit or proceeding to which the Company is a party before or by any
court or governmental agency, authority or body, or any arbitrator,
which might result in any material adverse change in the condition
(financial or otherwise), business, prospects or results of operations
of the Company, taken as a whole.
(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) The Concurrent Placement shall have been consummated.
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.
-16-
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 term sheet within the meaning of Rule
434 of the Rules and Regulations), 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, or
arise out of or are based upon the Concurrent Placement, 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, 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 its 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, the Underwriter that
received such payment shall promptly return it to the party or parties that
made such payment, together with interest, compounded daily, determined on
the basis of the prime rate (or other commercial lending rate for borrowers
of the highest credit standing) announced from time to time by Norwest Bank
Minnesota, N.A. (the "Prime Rate"). Any such interim reimbursement payments
which are not made to an Underwriter within 30 days of a request for
reimbursement shall bear interest at the Prime Rate from the date of such
request. This indemnity agreement shall be in addition to any liabilities
which the Company 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 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
-17-
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. In case any such action
shall be brought against any indemnified party, and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party shall
be entitled to participate in, and, to the extent that it shall wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party, and after
notice from the indemnifying party to such indemnified party of the
indemnifying party's election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party under such
subsection for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than
reasonable costs of investigation; provided, however, that if, in the sole
judgement of the Representatives, it is advisable for the Underwriters to be
represented as a group by separate counsel, the Representatives shall have
the right to employ a single counsel to represent the Representatives and all
Underwriters who may be subject to liability arising from any claim in
respect of which indemnity may be sought by the Underwriters under subsection
(a) of this Section 6, in which event the reasonable fees and expenses of
such separate counsel shall be borne by the indemnifying party or parties and
reimbursed to the Underwriters as incurred (in accordance with the provisions
of the second paragraph in subsection (a) above). An indemnifying party shall
not be obligated under any settlement agreement relating to any action under
this Section 6 to which it has not agreed in writing.
(d) If the indemnification provided for in this Section 6 is
unavailable or insufficient to hold harmless an indemnified party under
subsection 9(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 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' relative 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
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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,
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.
7. REPRESENTATIONS AND AGREEMENTS TO SURVIVE DELIVERY. All
representations, warranties, and agreements of the Company herein or in
certificates delivered pursuant hereto including, without limitation, the
agreements contained in Section 6 hereof, 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, 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 or Underwriters shall fail to take up and
pay for the amount of Firm Shares agreed by such Underwriter or Underwriters
to be purchased hereunder, upon tender of such Firm Shares in accordance with
the terms hereof, and the amount of Firm Shares not purchased does not
aggregate more than 10% of the total amount of Firm Shares set forth in
Schedule 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 or Underwriters shall fail to take up and
pay for the amount of Firm Shares agreed by such Underwriter or Underwriters
to be purchased hereunder, upon tender of such Firm Shares in accordance with
the terms hereof, and the amount of Firm Shares not purchased aggregates more
than 10% of the total amount of Firm Shares set forth in Schedule 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).
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If Firm Shares to which a default relates are to be purchased by the
non-defaulting Underwriters or by any other party or parties, the
Representatives or the Company shall have the right to postpone the First
Closing Date for not more than seven business days in order that the
necessary changes in the Registration Statement, Prospectus and any other
documents, as well as any other arrangements, may be effected. As used
herein, the term "Underwriter" includes any person substituted for an
Underwriter under this Section 8.
9. EFFECTIVE DATE OF THIS AGREEMENT AND TERMINATION.
(a) This Agreement shall become effective at 10:00 a.m., 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 9, the Securities shall be deemed to have been released for sale to
the public upon release by you of the publication of a newspaper
advertisement relating thereto or upon release by you of telexes offering the
Securities for sale to securities dealers, whichever shall first occur. By
giving notice as hereinafter specified before the time this Agreement becomes
effective, you, as Representatives of the several Underwriters, or the
Company may prevent this Agreement from becoming effective without liability
of any party to any other party, except that the provisions of Section 4(h)
and Section 6 hereof shall at all times be effective.
(b) You, as Representatives of the several Underwriters, shall
have the right to terminate this Agreement by giving notice as hereinafter
specified at any time at or prior to the First Closing Date, and the option
referred to in Section 3(b), if exercised, may be canceled at any time prior
to the Second Closing Date, if (i) the Company shall have failed, refused or
been unable, at or prior to such Closing Date, to perform any agreement on
its part to be performed hereunder, (ii) any other condition of the
Underwriters' obligations hereunder is not fulfilled, (iii) trading on the
New York Stock Exchange or the American Stock Exchange or quotation on the
Nasdaq Stock Market shall have been wholly suspended, (iv) minimum or maximum
prices for trading shall have been fixed, or maximum ranges for prices for
securities shall have been required, on the New York Stock Exchange or the
American Stock Exchange, 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 or New York 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 9, the Company
shall be notified promptly by you by telephone or telegram, confirmed by
letter. If the Company elects to prevent this Agreement from becoming
effective, you shall be notified by the Company by telephone or telegram,
confirmed by letter.
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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 Underwriter.
No action taken pursuant to this Section 10 shall relieve the
Company from liability, if any, in respect of such default.
11. INFORMATION FURNISHED BY UNDERWRITERS. The statements set forth in
the last paragraph of the cover page and under the caption "Underwriting" in
any Preliminary Prospectus and in the Prospectus constitute the written
information furnished by or on behalf of the Underwriters referred to in
Section 2 and Section 6 hereof.
12. NOTICES. Except as otherwise provided herein, all communications
hereunder shall be in writing or by telegraph and, if to the Underwriters or
the Representatives, shall be mailed, telegraphed or delivered to the
Representatives c/o Xxxxx Xxxxxxx Inc., Xxxxx Xxxxxxx Tower, 000 Xxxxx Xxxxx
Xxxxxx, 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
mailed, telegraphed or delivered to Endocardial Solutions, Inc., 0000 Xxxxxx
Xxxx, Xxxxx 000, Xxxxx Xxxx, Xxxxxxxxx 00000 Attention: President and
Chief Executive Officer, 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.
13. PERSONS ENTITLED TO BENEFIT OF AGREEMENT. This Agreement shall
inure to the benefit of and be binding upon the parties hereto and their
respective successors and assigns and the controlling persons, officers and
directors referred to in Section 6. Nothing in this Agreement is intended or
shall be construed to give to any other person, firm or corporation any legal
or equitable remedy or claim under or in respect of this Agreement or any
provision herein contained. The term "successors and assigns" as herein used
shall not include any purchaser, as such purchaser, of any of the Securities
from any of the several Underwriters.
14. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Minnesota.
Signature Page Follows
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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,
ENDOCARDIAL SOLUTIONS, INC.
By
--------------------------------------
Xxxxx X. Xxxxxxx; 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.
XXXXX XXXXXXX INC.
By
-----------------------------------
Managing Director
XXXXX, XXXXX & COMPANY LLC
By
-----------------------------------
Managing Director
SCHEDULE I
Underwriter Number of Firm Shares (1)
----------- -------------------------
Xxxxx Xxxxxxx Inc.
Xxxxx, Xxxxx & Company LLC
---------------
Total. . . . . . . . . . . . . . . . . . . . . . . . . .
---------------
---------------
-----------------
(1) The Underwriters may purchase up to an additional 337,500 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.
