<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 10, 1995
REGISTRATION NO. 33-
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
CYBEROPTICS CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
MINNESOTA 41-1472057
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
2505 KENNEDY STREET, N.E.
MINNEAPOLIS, MINNESOTA 55413
(612) 331-5702
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
KENT O. LILLEMOE
VICE PRESIDENT--FINANCE AND ADMINISTRATION
CYBEROPTICS CORPORATION
2505 KENNEDY STREET, N.E.
MINNEAPOLIS, MINNESOTA 55413
(612) 331-5702
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
----------------
COPIES TO:
THOMAS MARTIN, ESQ. HENRY D. KAHN, ESQ.
DORSEY & WHITNEY P.L.L.P. PIPER & MARBURY L.L.P.
PILLSBURY CENTER SOUTH CHARLES CENTER SOUTH
220 SOUTH SIXTH STREET 36 SOUTH CHARLES STREET
MINNEAPOLIS, MINNESOTA 55402-1498 BALTIMORE, MARYLAND 21201-3010
(612) 340-2600 (410) 539-2530
----------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or reinvestment plans, please check the following box. [_]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
registration statement. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier registration statement for the
same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [X]
CALCULATION OF REGISTRATION FEE
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C>
PROPOSED
PROPOSED MAXIMUM
AMOUNT MAXIMUM AGGREGATE AMOUNT OF
TITLE OF EACH CLASS OF TO BE OFFERING PRICE OFFERING REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED(1) PER UNIT(2) PRICE(2) FEE
---------------------------------------------------------------------------------------------
Common Stock, no par value..... 1,437,500 shares $26.75 $38,453,125 $13,260
</TABLE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
(1) Including 187,500 shares which the Underwriters may purchase to cover over-
allotments, if any.
(2) Estimated solely for the purposes of calculating the registration fee,
based on the average of the high and low sale prices of the Common Stock as
reported on The Nasdaq Stock Market on August 7, 1995.
----------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION
AUGUST 10, 1995
1,250,000 Shares
[CYBER LOGO]
Common Stock
--------
Of the 1,250,000 shares offered hereby, 1,200,000 shares are being issued and
sold by CyberOptics Corporation ("CyberOptics" or the "Company") and 50,000
shares are being sold by a stockholder of the Company (the "Selling
Stockholder"). The Company will not receive any of the proceeds from the sale
of shares by the Selling Stockholder. See "Principal and Selling Stockholders."
The Company's Common Stock is traded on the Nasdaq National Market under the
symbol "CYBE." On August 7, 1995, the last reported sale price, as quoted on
the Nasdaq National Market, was $25.94 per share. See "Price Range of Common
Stock" and "Dividend Policy."
--------
SEE "RISK FACTORS" ON PAGE 5 FOR INFORMATION THAT SHOULD BE CONSIDERED BY
PROSPECTIVE INVESTORS.
--------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRICE UNDERWRITING PROCEEDS PROCEEDS
TO DISCOUNTS AND TO TO SELLING
PUBLIC COMMISSIONS COMPANY(1) STOCKHOLDER
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per Share................... $ $ $ $
--------------------------------------------------------------------------------
Total(2).................... $ $ $ $
</TABLE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
(1) Before deducting estimated offering expenses of $ , all of which will
be paid by the Company.
(2) The Company has granted the Underwriters a 30-day option to purchase up to
an additional 187,500 shares of Common Stock solely to cover over-
allotments, if any. To the extent that the option is exercised, the
Underwriters will offer the additional shares at the Price to Public shown
above. If the option is exercised in full, the total Price to Public,
Underwriting Discounts and Commissions and Proceeds to Company will be
$ , $ and $ , respectively. See "Underwriting."
--------
The shares of Common Stock are being offered by the several Underwriters,
subject to prior sale and when, as and if delivered to and accepted by them,
and subject to the right of the Underwriters to reject any order in whole or in
part. It is expected that delivery of the certificates for the shares of Common
Stock will be made at the offices of Alex. Brown & Sons Incorporated,
Baltimore, Maryland on or about , 1995.
Alex. Brown &
Sons
INCORPORATED
Robertson, Stephens & Company
Piper Jaffray Inc.
THE DATE OF THIS PROSPECTUS IS , 1995.
<PAGE>
[INSERT PHOTO OF CYBERSCAN LV]
The CyberScan LV, a multi-purpose inspection
system, records, analyzes and displays
dimensions with sub-micron precision.
[INSERT GRAPHICS
OF 3-D IMAGES]
3-D images of solder paste used to check
quality of Fine Pitch ^ and Ball Grid Array
^^component sites.
[INSERT GRAPHICS
OF 3-D IMAGES]
[INSERT PHOTO OF CYBERSENTRY]
CyberSentry provides automated
inspection to identify solder paste
printing problems before yield is
affected, without slowing down the
manufacturing process.
----------------
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK
AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
IN CONNECTION WITH THIS OFFERING, CERTAIN UNDERWRITERS AND SELLING GROUP
MEMBERS (IF ANY) OR THEIR RESPECTIVE AFFILIATES MAY ENGAGE IN PASSIVE MARKET
MARKING TRANSACTIONS IN THE COMMON STOCK ON THE NASDAQ NATIONAL MARKET IN
ACCORDANCE WITH RULE 10B-6A UNDER THE SECURITIES EXCHANGE ACT OF 1934.
2
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information, including "Risk Factors," and financial statements and notes
thereto appearing elsewhere and incorporated by reference in this Prospectus.
Unless otherwise indicated, all information in this Prospectus assumes that the
Underwriters' over-allotment option is not exercised.
THE COMPANY
CyberOptics Corporation ("CyberOptics" or the "Company") designs,
manufactures and markets intelligent non-contact sensors and integrated systems
that measure the minute characteristics, dimensions and distances required for
process and quality control in the automated assembly of complex manufactured
goods. Utilizing proprietary laser and optics technology combined with advanced
software and electronics, the Company's products enable manufacturers to
increase operating efficiencies, product yields and quality by measuring the
characteristics and placement of components both during and after the
manufacturing process. Currently, the Company's products are used primarily for
process and quality control in the electronics industry.
The electronics industry is experiencing rapid growth which has fueled demand
for capital equipment, including equipment sold by the Company and the
Company's original equipment manufacturer ("OEM") customers. The trend toward
miniaturization in the electronics industry, together with competitive
requirements to improve productivity and quality, have required the development
of process control and inspection technologies that are integrated into the
manufacturing process and rely on sophisticated hardware and software
solutions.
The Company's products are used for process control in the automated assembly
of printed circuit boards ("PCBs") using advanced manufacturing technologies
such as surface mount technology ("SMT"). The Company's in-line process control
products and systems ensure the proper deposition of solder paste on PCBs;
ensure accurate component placement at high production speeds; identify
defective or damaged leads and lead coplanarity before component placement; and
detect broken and worn drill bits used in drilling holes in PCBs. The Company's
off-line inspection systems measure distances to test objects at high speeds;
produce precise two- and three-dimensional analyses of complex surfaces; and
make height and registration measurements of printed solder paste. These
products rely on complex optical technologies combined with sophisticated
software and hardware solutions to provide data in one, two and three
dimensions and with resolution as small as 0.1 microns.
The Company sells its products worldwide to many of the leading manufacturers
of electronics and electronics equipment, including Philips Electronics N.V.,
AT&T Corp., Excellon Industries Inc., Fuji Machine Manufacturing Co., Ltd.,
International Business Machines Corporation, Juki Corporation, Matsushita
Electric Industrial Co., Ltd., Motorola, Inc., Siemens A.G., and Yamaha Motor
Co., Ltd. In 1994 and during the first six months of 1995, sales outside the
United States accounted for 57% and 60%, respectively, of the Company's sales
revenue.
The Company's business strategy is to continue to integrate multiple
technologies and engineering disciplines to develop sophisticated process
control and inspection products for the electronics manufacturing market; to
develop and maintain long-term, strategic relationships that enable the Company
to anticipate developments in the electronics markets; to leverage its core
competence in optics technology and system integration to develop sensors and
systems for the specific applications needed by its customers; to focus on
rapidly expanding worldwide markets that require precision, quality and reduced
product development times; and to adapt non-contact process control and
inspection technologies for use in other automated manufacturing processes.
The Company was incorporated in Minnesota in 1984. Its principal executive
office is locatedat 2505 Kennedy Street Northeast, Minneapolis, Minnesota
55413, and its telephone number is(612) 331-5702.
3
<PAGE>
THE OFFERING
<TABLE>
<C> <S>
Common Stock offered by the Company............. 1,200,000 shares
Common Stock offered by the Selling Stockholder. 50,000 shares
Common Stock to be outstanding after the
offering....................................... 5,598,156 shares(1)
Use of proceeds................................. For working capital
associated with expanded
sales, research and
development and other general
corporate purposes. See "Use
of Proceeds."
Nasdaq National Market symbol................... CYBE
</TABLE>
SUMMARY FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED DECEMBER 31, ENDED JUNE 30,
------------------------------------ --------------
1990 1991 1992 1993 1994 1994 1995
------ ------ ------ ------- ------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Revenues................. $4,608 $7,803 $8,425 $11,621 $15,276 $6,377 $11,796
Gross margin............. 2,627 4,543 5,037 7,090 8,672 3,856 6,361
Income from operations... 269 1,108 447 1,080 2,042 676 2,248
Net income............... 283 829 339 943 1,524 510 1,598
Net income per share..... $ 0.07 $ 0.20 $ 0.08 $ 0.22 $ 0.35 $ 0.12 $ 0.34
Weighted average common
and common equivalent
shares outstanding...... 4,042 4,134 4,271 4,328 4,404 4,308 4,676
</TABLE>
<TABLE>
<CAPTION>
JUNE 30, 1995
----------------------
ACTUAL AS ADJUSTED(2)
------- --------------
<S> <C> <C>
BALANCE SHEET DATA:
Working capital........................................ $ 8,438 $37,486
Total assets........................................... 12,384 41,432
Long-term debt......................................... -0- -0-
Stockholders' equity................................... 9,200 38,248
</TABLE>
--------
(1) Based on the number of shares outstanding as of July 31, 1995. Does not
include 461,151 shares that may be issued upon exercise of options
outstanding as of such date.
(2) Adjusted to reflect the sale of 1,200,000 shares offered by the Company
hereby at an assumed offering price of $25.94 per share and the application
of the estimated net proceeds thereof. See "Use of Proceeds."
4
<PAGE>
RISK FACTORS
In addition to the other information in this Prospectus, the following
factors should be considered carefully in evaluating an investment in the
Common Stock offered in this Prospectus.
Industry Concentration and Cyclicality. Substantially all of the Company's
revenue is directly or indirectly related to capital expenditures in the
electronics industry. This industry is highly cyclical and has historically
experienced periodic downturns which often have had a severe effect on capital
expenditures. For the foreseeable future, the Company's operations will
continue to be dependent on the capital expenditures in this industry which, in
turn, is largely dependent on the market demand for products containing
integrated circuits. Although the Company's products have been, and continue to
be, used in a variety of industries outside the electronics industry, the
Company's current product development and marketing is focused on electronics
and its business and results of operations would be significantly and adversely
affected by a slowdown in this industry.
Dependence Upon Principal Customers. For the year ended December 31, 1994 and
the six-month period ended June 30, 1995, one of the Company's customers,
Philips Electronics N.V. ("Philips"), accounted for approximately 14% and 29%,
respectively, of the Company's revenue. In addition, the Company's five
principal customers (including Philips), in the aggregate, accounted for
approximately 44% and 53%, respectively, of the Company's revenue for such
periods. The loss of, or a significant curtailment of purchases by, any one or
more of these customers would have a material adverse effect on the Company's
results of operations. The Company anticipates that a significant portion of
its sales will continue to be concentrated in a small number of customers.
Dependence on Outside Contractors and Suppliers. The Company currently
contracts with third party assembly houses for a substantial portion of the
purchase and assembly of components of its products. Although the Company
endeavors to inspect and internally test most components prior to final
assembly, reliance on outside contractors reduces its control over quality and
delivery schedules. The failure by one or more of these subcontractors to
deliver quality components in a timely manner could have a material adverse
effect on the Company's results of operations. In addition, a number of the
components used in the Company's products are available from only a single
supplier or from a limited number of suppliers. Some of these components have
relatively long order cycles, in some cases over one year, and the timely
availability of these components to the Company is dependent on the Company's
ability to develop accurate forecasts of customer volume requirements. Any
interruption in or termination of supply of these components, or material
change in the purchase terms, including pricing, of any of these components, or
a reduction in their quality or reliability, could have a material adverse
effect on the Company's business and results of operations. See "Business--
Manufacturing."
Management of Growth. The Company's business has grown rapidly over the past
several years. A continuing period of rapid growth could place a significant
strain on the Company's management, operations and other resources. The
Company's future success will depend on the ability of its officers and key
employees to manage growth successfully through maintenance of appropriate
operational, financial and management information systems and to attract,
retain, motivate and effectively manage its employees. Currently, the Company's
facilities are near capacity and the Company is in the process of identifying a
new facility to provide additional capacity. If the Company is unable to manage
growth effectively, the quality of the Company's products, its ability to
retain key personnel and its results of operations could be materially and
adversely affected. See "Business--Employees" and "--Properties."
Proprietary Technology and Intellectual Property. The Company relies heavily
on its proprietary hardware designs and software technology. Although the
Company uses a variety of methods to protect its technology, it relies most
heavily on patents and trade secrets. There can be no assurance
5
<PAGE>
that the steps taken by the Company will be adequate to deter misappropriation
of its technology, that any patents issued to the Company will not be
challenged, invalidated or circumvented, or that the rights granted thereunder
will provide a competitive advantage to the Company. In addition, there remains
the possibility that others will "reverse engineer" the Company's products in
order to determine their method of operation and introduce competing products
or that others will develop competing technology independently. Any such
adverse circumstances could have a material adverse effect on the Company's
results of operations. Further, some of the markets in which the Company
competes are characterized by the existence of a large number of patents and
frequent litigation for financial gain that is based on patents with broad, and
often questionable, application. As the number of its products increases, the
markets in which its products are sold expands, and the functionality of those
products grows and overlaps with products offered by competitors, the Company
believes that it may become increasingly subject to infringement claims.
Although the Company does not believe any of its products or proprietary rights
infringe the rights of third parties, there can be no assurances that
infringement claims will not be asserted against the Company in the future or
that any such claims will not require the Company to enter into royalty
arrangements or result in costly litigation. See "Business--Proprietary
Protection."
Dependence on Key Personnel. The Company is highly dependent upon the
technical expertise, management and leadership of Dr. Steven K. Case,
President, Chief Executive Officer and a director of the Company, as well as
other members of the Company's senior management team, many of whom would be
difficult to replace. Although the Company has a $5,000,000 key-man insurance
policy on Dr. Case and has retained other experienced and qualified senior
managers, the loss of the services of Dr. Case or other key personnel would
have a material adverse effect on the Company.
Technological Change and New Product Development. The market for the
Company's products is characterized by rapidly changing technology.
Accordingly, the Company believes that its future success will depend upon its
ability to continue to develop and introduce new products with improved price
and performance. In order to develop such new products successfully, the
Company is dependent upon close relationships with its customers and their
willingness to share information about their requirements and participate in
joint development efforts with the Company. There can be no assurance that the
Company's customers will continue to provide it with timely access to such
information or that the Company will be able to develop and market such new
products successfully and respond effectively to technological changes or new
product announcements by others. See "Business--Products" and "--Research and
Development."
Competition. The Company competes with other vendors of optical sensors, with
vendors of machine vision systems, and with the internal engineering efforts of
the Company's current or prospective customers, many of which may have greater
financial and other resources than the Company. There can be no assurance that
the Company will be able to compete successfully in the future or that the
Company will not be required to incur significant costs in connection with its
engineering research, development, marketing and customer service efforts to
remain competitive. Moreover, the Company's principal customers operate within
the electronics industry, which is highly competitive and highly dependent upon
its suppliers' ability to provide high quality, cost efficient products.
Competitive pressures may result in price erosion or other factors which will
adversely affect the Company's financial performance. See "Business--
Competition."
Quarterly Fluctuations. The Company has experienced quarterly fluctuations in
operating results and anticipates that these fluctuations will continue. These
fluctuations have been caused by various factors, including the capital
procurement practices of its customers and the electronics industry generally,
the timing and acceptance of new product introductions and enhancements, and
the timing of product shipments and marketing. Future operating results may
fluctuate as a result of these and other factors, including the Company's
ability to continue to develop innovative products, the
6
<PAGE>
introduction of new products by the Company's competitors, the Company's
product and customer mix, the level of competition and overall trends in the
economy. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations--Quarterly Comparisons."
International Revenue. In the years ended December 31, 1992, 1993, and 1994
and the six months ended June 30, 1995, sales of the Company's products to
customers outside the United States accounted for approximately 35%, 39%, 57%
and 60%, respectively, of the Company's revenue. The Company anticipates that
international revenue will continue to account for a significant portion of its
revenues. The Company's operating results are subject to the risks inherent in
international sales, including various regulatory requirements, political and
economic changes and disruptions, transportation delays, difficulties in
staffing and managing foreign sales operations, and potentially adverse tax
consequences. In addition, fluctuations in exchange rates may render the
Company's products less competitive relative to local product offerings. There
can be no assurance that these factors will not have a material adverse effect
on the Company's future international sales and, consequently, on the Company's
operating results. See "Business--Sales and Marketing."
Possible Volatility of Stock Price. The Company believes that factors such as
the announcement of new products by the Company or its competitors, market
conditions in the electronics and precision measurement industries generally
and quarterly fluctuations in financial results could cause the market price of
the Common Stock to vary substantially. In recent years, the stock market has
experienced price and volume fluctuations that have particularly affected the
market prices for many high technology companies and which often have been
unrelated to the operating performance of such companies. The market volatility
may adversely affect the market price of the Company's Common Stock. See "Price
Range of Common Stock."
Anti-takeover Considerations. The effect of Section 302A.671 of the Minnesota
Business Corporation Act and the ability of the Board of Directors to issue
preferred stock without stockholder approval may have the effect of delaying or
preventing a change in control or merger of the Company, which could operate to
the detriment of other stockholders.
7
<PAGE>
USE OF PROCEEDS
The net proceeds to the Company from the sale of the shares of Common Stock
offered by the Company hereby are estimated to be $29,047,500, assuming an
offering price of $25.94 per share and after deducting the estimated
underwriting discounts and commissions and estimated offering expenses. The
Company intends to use the net proceeds for working capital associated with
expanded sales, research and development and other general corporate purposes.
The Company may use a portion of the net proceeds for the acquisition of
businesses, technologies or products complementary to the Company's business,
although no such acquisition is being negotiated or planned as of the date of
this Prospectus. Pending such uses, the net proceeds are expected to be
invested in short-term, investment grade securities.
The Company will not receive any proceeds from the sale of shares of Common
Stock by the Selling Stockholder. See "Principal and Selling Stockholders."
PRICE RANGE OF COMMON STOCK
The Company's Common Stock is quoted in the Nasdaq National Market under the
symbol CYBE. The following table sets forth, for the periods indicated, the
high and low sale prices of the Company's Common Stock.
<TABLE>
<CAPTION>
HIGH LOW
----- -----
<S> <C> <C>
1993:
First Quarter.............................................. $6.00 $4.25
Second Quarter............................................. 5.75 4.25
Third Quarter.............................................. 6.50 4.75
Fourth Quarter............................................. 7.63 5.63
1994:
First Quarter.............................................. 6.38 5.50
Second Quarter............................................. 5.88 5.00
Third Quarter.............................................. 6.50 4.63
Fourth Quarter............................................. 8.63 5.75
1995:
First Quarter.............................................. 11.38 7.50
Second Quarter............................................. 25.50 11.00
Third Quarter (through August 7, 1995)..................... 31.00 20.88
</TABLE>
As of August 7, 1995, there were 343 holders of record of the Company's
Common Stock and the Company estimates that there were approximately 3,000
beneficial holders. The last reported sales price of the Common Stock on the
Nasdaq National Market on August 7, 1995 was $25.94.
DIVIDEND POLICY
The Company has never declared or paid a cash dividend on its Common Stock.
The Company currently intends to retain earnings for use in the operation and
expansion of its business and therefore does not anticipate paying any cash
dividends in the foreseeable future.
8
<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of the Company as of June
30, 1995, as adjusted to reflect the sale of 1,200,000 shares of Common Stock
offered by the Company hereby at an assumed price of $25.94 per share (after
deduction of the underwriting discounts and commissions and estimated offering
expenses) and the anticipated use of the net proceeds therefrom. See "Use of
Proceeds."
<TABLE>
<CAPTION>
JUNE 30, 1995
------------------
ACTUAL AS ADJUSTED
------ -----------
(IN THOUSANDS)
<S> <C> <C>
Long-term debt.............................................. $ -0- $ -0-
------ -------
Stockholders' equity:
Preferred Stock, no par value, 5,000,000 shares
authorized,
no shares issued or outstanding.......................... -0- -0-
Common Stock, no par value, 10,000,000 shares authorized;
4,315,321 shares issued and outstanding;
5,515,321 shares issued and outstanding, as adjusted (1). 4,354 33,402
Retained earnings......................................... 4,846 4,846
------ -------
Total stockholders' equity.............................. 9,200 38,248
------ -------
Total capitalization................................... $9,200 $38,248
====== =======
</TABLE>
--------
(1) Does not include 486,129 shares that may be issued upon exercise of options
outstanding as of June 30, 1995. See Note 6 of Notes to Financial
Statements.
9
<PAGE>
SELECTED FINANCIAL DATA
The balance sheet data at December 31, 1990, 1991, 1992, 1993 and 1994 and
the statement of income data for the years then ended are derived from and
should be read in conjunction with the more detailed financial statements of
the Company and the notes thereto, which have been audited by Price Waterhouse
LLP at December 31, 1990, 1991, 1992 and 1993 and for the years then ended, and
by Coopers & Lybrand L.L.P. at December 31, 1994 and for the year then ended.
The reports on the financial statements at December 31, 1993 and 1994 and for
the three years then ended are included elsewhere and incorporated by reference
in this Prospectus, and should be read in conjunction with the section entitled
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," which follows this section. The balance sheet data at June 30,
1995 and the statement of income data for the six months ended June 30, 1994
and 1995 are derived from the unaudited financial statements of the Company
included elsewhere in this Prospectus. In the opinion of management, the
unaudited financial statements have been prepared on a basis consistent with
the audited financial statements and include all adjustments, consisting only
of normal recurring adjustments, necessary for a fair presentation of the
financial position and results of operations for such periods. Results for the
six-month period ended June 30, 1995 are not necessarily indicative of the
results that may be expected for any subsequent period.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
------------------------------------ ----------------
1990 1991 1992 1993 1994 1994 1995
------ ------ ------ ------- ------- -------- -------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Revenues................ $4,608 $7,803 $8,425 $11,621 $15,276 $ 6,377 $11,796
Cost of revenues........ 1,981 3,260 3,388 4,531 6,604 2,521 5,435
------ ------ ------ ------- ------- ------- -------
Gross margin........... 2,627 4,543 5,037 7,090 8,672 3,856 6,361
Research and development
expenses............... 686 958 1,631 2,410 2,749 1,382 1,770
Selling, general and
administrative
expenses............... 1,673 2,477 2,959 3,600 3,881 1,798 2,343
------ ------ ------ ------- ------- ------- -------
Income from operations. 269 1,108 447 1,080 2,042 676 2,248
Interest income......... 119 111 57 43 72 34 59
------ ------ ------ ------- ------- ------- -------
Income before income
taxes................. 388 1,219 504 1,123 2,114 710 2,307
Provision for income
taxes.................. 105 390 165 180 590 200 709
------ ------ ------ ------- ------- ------- -------
Net income............. $ 283 $ 829 $ 339 $ 943 $ 1,524 $ 510 $ 1,598
====== ====== ====== ======= ======= ======= =======
Net income per share.... $ 0.07 $ 0.20 $ 0.08 $ 0.22 $ 0.35 $ 0.12 $ 0.34
====== ====== ====== ======= ======= ======= =======
Weighted average common
and common equivalent
shares outstanding..... 4,042 4,135 4,271 4,328 4,404 4,308 4,676
====== ====== ====== ======= ======= ======= =======
<CAPTION>
DECEMBER 31,
------------------------------------ JUNE 30,
1990 1991 1992 1993 1994 1995
------ ------ ------ ------- ------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital......... $3,078 $3,763 $4,249 $ 5,548 $ 6,902 $ 8,438
Total assets............ 3,964 5,308 5,717 6,901 8,823 12,384
Long-term debt.......... -0- -0- -0- -0- -0- -0-
Stockholders' equity.... 3,383 4,259 4,840 6,073 7,478 9,200
</TABLE>
10
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONAND RESULTS OF
OPERATIONS
OVERVIEW
The Company was founded in 1984 by Dr. Steven Case, a tenured professor
researching and teaching optical engineering at the University of Minnesota,
to commercialize technology for non-contact three-dimensional sensing systems.
During the first year and one-half of its existence, the Company performed
primarily custom contracting work through Dr. Case. In 1985, the Company
received a $1.5 million development grant from the Defense Advanced Research
Projects Agency to develop sensor systems. The Company introduced its first
commercial product, the Point Range Sensor, in 1986 and began producing full
non-contact profiling systems used in metrology, CAD-CAM and electronics
inspection in 1987. The Company continued to expand its line of products and
sensing systems for general applications through 1991.
Since 1992, the Company has made significant investments in the development
of new technology and products designed specifically for applications in the
electronics industry. Designed primarily for applications in the rapidly
growing surface mount market, these products measure screen printed solder
paste, align electronic components and measure electronic component lead
coplanarity during automated assembly of circuit boards. The Company's revenue
has been significantly affected by the timing of the introduction of these
products and the acceptance and shipment of versions of these products by OEM
and end user customers.
RESULTS OF OPERATIONS
The following table sets forth certain financial data (1) expressed as a
percentage of revenue for the years ended December 31, 1992, 1993 and 1994 and
for the six months ended June 30, 1994 and 1995 and (2) expressed as a
percentage increase from the previous period's results:
<TABLE>
<CAPTION>
PERCENTAGE OF REVENUES PERCENTAGE INCREASE
---------------------------- --------------------------
SIX
MONTHS SIX MONTHS
YEAR ENDED ENDED YEAR ENDED ENDED
DECEMBER 31, JUNE 30, DECEMBER 31, JUNE 30,
---------------- ---------- --------------- ----------
1993 1994 1995
1992 1993 1994 1994 1995 TO 1992 TO 1993 TO 1994
---- ---- ---- ---- ---- ------- ------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues.................... 100% 100% 100% 100% 100% 38% 31% 85%
Gross margin................ 60 61 57 60 54 41 22 65
Research and development
expenses................... 19 21 18 22 15 48 14 28
Selling, general and
administrative expenses.... 35 31 25 28 20 22 8 30
Income from operations...... 5 9 13 11 19 142 89 233
Net income.................. 4 8 10 8 14 178 62 213
</TABLE>
COMPARISON OF SIX MONTHS ENDED JUNE 30, 1995 TO THE SIX MONTHS ENDED JUNE 30,
1994
Revenues. Revenues increased 85% to $11.8 million during the six months
ended June 30, 1995, from $6.4 million during the comparable period in 1994,
as both sensor revenue and system revenue improved. Sensor revenue increased
89% during the first six months of 1995 when compared to the same period last
year. The primary reasons for this increase were increased unit shipments of
LaserAlign (principally to Philips) and an increase in unit shipments of other
OEM sensor products to existing customers. Sensor revenue represented 67% of
total revenue ($7.9 million) for the first six months of 1995 compared to 65%
of revenue ($4.2 million) in the first six months of 1994. System revenue
increased 77% during the first six months of 1995 compared to the same period
in 1994.
11
<PAGE>
This increase is due principally to revenue from the current version of the
CyberSentry product, which began shipping in March 1995. System revenue
accounted for 33% of revenue ($3.9 million) for the first six months of 1995
compared to 35% of revenue ($2.2 million) for the same period last year.
International revenue totaled $7.1 million in the 1995 period, or 60% of total
revenue, compared to $3.4 million or 54% in the 1994 period.
Cost of Revenues. Cost of revenues increased 116% to $5.4 million during the
six months ended June 30, 1995, from $2.5 million during the comparable period
in 1994 and increased as a percentage of revenue to 46% during the 1995 period
from 40% during the 1994 period. This increase in the cost of revenue as a
percentage of revenue is due to expenditures in manufacturing related to
start-up expenses and increasing capacity for the LaserAlign sensor and the
production of the CyberSentry products. In addition the Company increased its
reserves for inventory obsolescence and warranty accrual by $100,000 and
$50,000, respectively in the second quarter of 1995. The Company believes
these increases are appropriate and are roughly proportionate to increases in
inventory and revenue.
Research and Development Expenses. Research and development expenses
increased 28% to $1.8 million during the six months ended June 30, 1995, from
$1.4 million during the comparable period in 1994, but decreased as a
percentage of revenue to 15% during the 1995 period from 22% during the period
in 1994. Research and development efforts in the first six months of 1995
focused primarily on the completion of CyberSentry, CyberGage and CyberScan
LV. The Company intends to continue to increase research and development
expenditures in future periods, but does not anticipate that these expenses
will increase substantially as a percentage of revenue.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased 30% to $2.3 million during the six months
ended June 30, 1995, from $1.8 million during the comparable period in 1994,
but decreased as a percentage of revenue to 20% during the 1995 period from
28% during the 1994 period. The increase in selling, general and
administrative expenses can be attributed to the growth in resources to
support increased revenue. The decrease as a percentage of revenue is due
primarily to the large increase in revenue, but is also attributable to the
high percentage of sensor sales to OEM customers, which are made primarily by
the Company rather than through distributors.
Effective Tax Rate. The Company applied an effective tax rate of 31% for the
first six months of 1995, compared to 28% in 1994. Benefits from the Company's
foreign sales corporation and the use of the research and development tax
credit will be primarily responsible for reducing the effective tax rate below
the statutory federal rate in 1995. Although the Company anticipates that its
effective tax rate will continue to benefit from sales through its foreign
sales corporation, the research and development credit expired as of June 30,
1995.
COMPARISON OF YEAR ENDED DECEMBER 31, 1994 TO YEAR ENDED DECEMBER 31, 1993
Revenues. Revenues increased 31% to $15.3 million in 1994 from $11.6 million
in 1993, primarily as a result of increased sales of new sensor products to
OEMs. Revenue from sensor products increased $3.8 million or 68% during 1994
compared to 1993. The Company's LaserAlign and Laser Lead Locator sensors
contributed $6.4 million in revenue in 1994 compared to $3.4 million in 1993,
reflecting both additional OEM customers and increased sales to previous
customers. System revenue decreased $100,000 or 2% during 1994 as compared to
1993. The slight decrease in systems revenue in 1994 reflected decreased
domestic demand for the Company's scanning station products and a delay in the
introduction of the CyberSentry product. Originally planned for release in the
spring of 1994, CyberSentry was delayed until 1995 in order to improve its
precision and speed. International revenue totaled $8.6 million in 1994 or 57%
of total revenue compared to $4.5 million or 39% of revenue in 1993. Sales of
the Company's products in Western Europe, Japan and the other parts of the Far
East
12
<PAGE>
increased significantly during this period. These international markets account
for the vast majority of the production capability of capital equipment for the
manufacture of electronics--the primary market for the LaserAlign and Laser
Lead Locator products.
Cost of Revenues. Cost of revenues increased 46% to $6.6 million in 1994 from
$4.5 million in 1993, and increased as a percentage of revenue to 43% in 1994
from 39% in 1993. The increase in cost as a percentage of revenue in 1994 is a
result of start-up and rework costs for new product lines, including
CyberSentry which was introduced in final form in 1995, and to a lesser extent
changes in product mix and increases in manufacturing overhead to support
higher production volumes. See "Quarterly Comparisons" for further discussion
of trends in the Company's gross margins.
Research and Development Expenses. Research and development expenses
increased 14% to $2.7 million in 1994 compared to $2.4 million in 1993, but
decreased as a percentage of revenue to 18% in 1994 from 21% in 1993. The
increased expenditures in 1994 reflect primarily the development of additional
models of the Company's LaserAlign and continued development on the CyberSentry
and CyberGage products which were introduced in the first half of 1995.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased 8% to $3.9 million in 1994 from $3.6 million
in 1993, but decreased as a percentage of revenue to 25% in 1994 from 31% in
1993. The decrease in these expenses as a percentage of revenue is due to the
large increase in sensor revenue from OEM customers.
Effective Tax Rate. The Company's effective tax rate was 27.9% and 16.0% for
1994 and 1993, respectively. This tax rate is below the statutory federal rate
primarily due to benefits from the Company's foreign sales corporation and
utilization of research and development credits. In 1993, the Company
benefitted by the reinstatement of the research and development credit by the
Omnibus Budget Reconciliation Act of 1993. This Act, which was passed into law
in August 1993, allowed the Company to claim a tax credit of approximately
$80,000, or $0.02 per share, in the second half of 1993 for research activities
conducted during the second half of 1992. The reinstated credit also permitted
approximately $180,000 to be recorded in 1993 for that year's development
activities.
COMPARISON OF YEAR ENDED DECEMBER 31, 1993 TO YEAR ENDED DECEMBER 31, 1992
Revenues. Revenues increased 38% to $11.6 million in 1993 from $8.4 million
in 1992. Sensor revenue increased $2.5 million or 100% in 1993 compared to 1992
due to the introduction of the LaserAlign and Laser Lead Locator products in
late 1992. System revenue increased $700,000 or 13% as a result of increased
domestic and international demand for scanning station products as electronics
manufacturers invested in equipment to meet increased demand for computer-
related products. International revenue totaled $4.5 million in 1993 or 39% of
total revenue compared to $2.9 million or 35% of revenue in 1992.
Cost of Revenues. Cost of revenues increased 34% to $4.5 million in 1993 from
$3.4 million in 1992, but decreased as a percentage of revenue to 39% in 1993
from 40% in 1992. The decrease in cost as a percentage of revenue was due to
product mix and lower costs on purchased parts resulting from higher purchasing
volume.
Research and Development Expenses. Research and development expenses
increased 48% to $2.4 million during 1993 from $1.6 million during 1992 and
increased as a percentage of revenue to 21% during 1993 from 19% during 1992.
The increase in research and development expenses represents a full year's
development expense on CyberSentry and CyberGage development efforts, which
were commenced in late 1992, as well as continued development on the Laser Lead
Locator and LaserAlign products.
13
<PAGE>
Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased 22% to $3.6 million in 1993 from $3.0
million in 1992, but decreased as a percentage of revenue to 31% in 1993 from
35% in 1992. The decrease as a percentage of revenue was primarily a result of
increased sales of LaserAlign and Laser Lead Locator to original equipment
manufacturers which require less sales support per unit sold. This decrease
was partially offset by the increased costs of operating a sales office in
Munich, Germany. The depressed economic conditions in Germany in 1993 led to
lower than expected revenue and as a result, the Company closed this office in
the fourth quarter of 1993.
Effective Tax Rate. The Company's tax rate declined to 16.0% in 1993 from
32.7% in 1992. The Company was fully taxed in 1992, while in 1993 it received
the benefit of the research and development tax credits described above.
QUARTERLY COMPARISONS
The following table sets forth certain quarterly financial data, for the
first two quarters in 1995 and the four quarters in each of fiscal years 1994
and 1993 as well as certain of such information expressed as a percentage of
revenue for the same period. This quarterly information is unaudited, but has
been prepared on the same basis as the annual financial statements and, in
management's opinion, reflects all adjustments, consisting only of normal
recurring adjustments, required for a fair presentation of the information for
the periods presented. The operating results for any quarter are not
necessarily indicative of results for any future period.
<TABLE>
<CAPTION>
QUARTER ENDED
-------------------------------------------------------------------------------------------
MAR. 31, JUNE 30, SEPT. 30, DEC. 31, MAR. 31, JUNE 30, SEPT. 30, DEC. 31, MAR. 31, JUNE 30,
1993 1993 1993 1993 1994 1994 1994 1994 1995 1995
-------- -------- --------- -------- -------- -------- --------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues.............. $2,597 $2,956 $2,790 $3,278 $3,132 $3,245 $4,346 $4,553 $4,556 $7,240
Gross margin.......... 1,541 1,837 1,695 2,017 1,907 1,949 2,392 2,424 2,507 3,854
Income from
operations........... 190 444 250 196 384 292 673 693 681 1,567
Net income............ 134 295 296 218 272 238 484 530 497 1,101
Net income per share.. 0.03 0.07 0.07 0.05 0.06 0.06 0.11 0.12 0.11 0.24
AS A PERCENTAGE OF REVENUES:
Gross margin.......... 59% 62% 61% 62% 61% 60% 55% 53% 55% 53%
Income from
operations........... 7 15 9 6 12 9 15 15 15 22
Net income............ 5 10 11 7 9 7 11 12 11 15
</TABLE>
The Company has experienced quarterly fluctuations in operating results and
anticipates that these fluctuations will continue. These fluctuations have
been caused by various factors, including the buying patterns of the Company's
target market, the number and timing of new product introductions and
enhancements, the timing of product shipments and marketing. Future operating
results may fluctuate as a result of these and other factors, including the
Company's ability to continue to develop innovative products, the introduction
of new products by the Company's competitors, the Company's product and
customer mix, the level of competition and overall trends in the economy.
Revenues generally increased from quarter to quarter during the 10 quarters
presented. Gross margin remained relatively constant as a percentage of
revenue until the quarter ended September 30, 1994. The decrease in gross
margin during this period was due to the Company redesigning
14
<PAGE>
certain features of its CyberSentry product starting in the third quarter of
1994 in order to increase its precision and speed. It had begun manufacturing
CyberSentry before such time and the redesign caused certain components in the
Company's inventory to become obsolete, all of which were charged against cost
of revenue during the redesign period. In addition, certain costs of reworking
the CyberSentry product and start-up costs associated with the CyberGage and
CyberScan LV increased cost of revenue during these periods. The Company does
not anticipate incurring similar cost of revenue charges in future periods.
Nevertheless, because of the increased percentage of sales represented by
certain OEM products, the Company does not anticipate that gross margins as a
percentage of revenue will fully recover to historical levels.
All of the Company's increases in revenue have resulted from increases in
units shipped and new product introductions. The Company believes that
inflation has had no appreciable effect on operations.
LIQUIDITY AND CAPITAL RESOURCES
The Company used $977,000 of cash during the first six months of 1995. The
Company used $982,000 of cash in operations during the six-month period,
primarily to finance a $2.6 million increase in accounts receivable and a $2.2
million increase in inventory. The increase in accounts receivable is due to
the increase in shipment levels and the timing of end of period shipments.
Inventory increases are primarily due to increased levels of shipments and
orders. These working capital requirements were offset by net income of $1.6
million, non-cash expenses of $364,000, and an increase in current liabilities
of $1.8 million.
The Company used $119,000 in investing activities in the first six months of
1995, as $357,000 was expended for the purchase of capital equipment offset by
$250,000 generated from net maturities of short-term investments. Financing
activities, consisting of sale of common stock upon exercise of employee
options, generated $124,000 of cash during the first six months of 1995.
The Company consumed $350,000 of cash during the year ended December 31,
1994. Operating activities generated $857,000 of cash in 1994, primarily due to
net income for the year of $1.5 million, non-cash expenses of $492,000 and
increases in current liabilities and accrued expenses of $517,000. These
amounts were partially offset by cash required for increases in accounts
receivable and inventory of $885,000 and $703,000, respectively, resulting from
the increased size of the Company's overall operations.
Investing activities required $1.1 million in cash in 1994, $740,000 of which
represented net purchases of short-term investments. The Company also made
additions to furnishings and equipment of $281,000 and capitalized patent costs
of $64,000. The Company also consumed cash in financing activities during 1994
due to the application of $235,000 of cash to repurchase common stock in open
market transactions. This amount was partially offset by proceeds received from
the exercise of stock options and from stock issued under the Employee Stock
Purchase Plan of $113,000.
During the second quarter of 1995, the Company established a $2 million line
of credit. To date, the Company has not drawn any funds on this line and it has
no debt outstanding. Currently, the Company has no material outstanding capital
expenditure commitments, although it may be required to invest in leasehold
improvements in 1996 if it completes negotiations for new facilities.
The Company believes current working capital and anticipated funds from
operations, together with the net proceeds from the offering made hereby, will
be adequate for anticipated operating needs.
15
<PAGE>
BUSINESS
GENERAL
CyberOptics designs, manufactures and markets intelligent, non-contact
sensors and integrated systems that measure the minute characteristics,
dimensions and distances required for process and quality control in the
automated assembly of complex manufactured goods. Utilizing proprietary laser
and optics technology combined with advanced software and electronics, the
Company's products enable manufacturers to increase operating efficiencies,
product yields and quality by measuring the characteristics and placement of
components both during and after the manufacturing process. The Company offers
individual sensors that provide data in one, two or three dimensions, as well
as complete, non-contact three-dimensional profiling systems, that allow
manufacturers to inspect product features as small as 0.1 microns.
Currently, the Company's products are used primarily for process and quality
control in the electronics industry. Customers in this industry use the
Company's products to make critical dimensional measurements of components and
materials during the assembly of circuit boards. The electronics industry is
experiencing rapid growth, which has fueled demand for capital equipment,
including equipment sold by the Company and the Company's OEM customers.
BACKGROUND
In response to worldwide competitive pressures and the rapid pace of
technological innovation, the electronics industry has led other manufacturing
industries in the implementation of automated manufacturing processes and
advanced manufacturing technologies. The demand for electronic systems with
more functionality, higher performance, greater reliability and lower costs has
forced electronics producers to radically redesign the manufacturing process.
In the early 1980s, automated electronic manufacturing was dominated by
through-hole assembly, in which electronic components, such as integrated
circuits, are inserted with pins or leads through pre-drilled holes in a PCB
and then soldered to the circuit board. Because the components used in the
through-hole process are relatively large, process control is accomplished
using mechanical alignment tools and quality is controlled by simple operator
inspection.
Improvements during the 1980s and 1990s in integrated circuit design and
fabrication has allowed dramatic miniaturization of individual components and
has encouraged equally dramatic changes in the methods of making
interconnections between components and circuit boards. The fastest growing
electronic manufacturing processes today utilize SMT, in which a slurry of
solder paste is screened over portions of the circuit board, components are
placed precisely over the solder paste and heat is applied to melt the solder
and form both the mechanical and electrical connection with the board. As
manufacturers strive to further reduce the distance between components, newer
interconnection technologies, such as ball grid array and flip chip, have also
been developed. Because of their fragility and size, mechanical alignment of
the miniature components placed with these technologies is becoming undesirable
and visual inspection, while still possible with magnification, is not
practical or cost-effective for high speed manufacturing processes.
The same competitive pressures that forced miniaturization and mandated
automation have required manufacturers to apply increasingly stringent
standards for quality and consistency of components produced. The International
Standards Organization ("ISO") 9000 series standards are rapidly becoming
requirements for manufacturing worldwide. Effective control of the
manufacturing process is essential to ensure compliance with these consistency
standards.
16
<PAGE>
The pressures on electronics manufacturers to improve productivity and
quality while working with smaller parts has required integration of process
control technologies directly into the manufacturing process. To be effective,
electronics manufacturing process control increasingly must provide real-time
measurement of all three dimensions of the electronic components being placed
on the PCB. These process control technologies must also strike an appropriate
balance between the need for high speeds and moderate cost. Machine vision
systems, which use cameras and software-based image processing to gather and
analyze two-dimensional data in a horizontal plane, provide generalized
solutions but are inadequate in many applications requiring three-dimensional
measurement. This inability to measure certain critical dimensions such as
material thickness and component lead heights often results in higher levels of
manufacturing defects and scrap.
THE CYBEROPTICS SOLUTION
The Company's intelligent sensors and systems apply proprietary optics
technology and software with integrated microprocessors to provide non-contact
process control and inspection that reduces the waste and increases the speed
of contemporary manufacturing. The Company's products allow manufacturers to
identify manufacturing flaws in minute components during the production process
without touching or deforming the component inspected.
CyberOptics has developed products that are specifically designed to measure
the dimensions, including thickness and lead height, that are critical to
detecting flaws during the surface mount manufacturing of printed circuit
boards. The Company's SMT products are integrated directly into the assembly
line and are capable of detecting manufacturing flaws without slowing the
circuit board assembly process. Because they are designed to perform specific
functions, these products provide high precision without the extraneous
features that result in high component costs to OEMs. The Company's SMT process
control products inspect the placement of solder paste on the circuit board
while it is moving through the production line, precisely align components for
placement while they are being moved from the component bin to the circuit
board, and inspect the lead alignment of components.
The Company also offers a range of other products that are used for off-line
inspection and quality control by manufacturers in electronics and other
industries. These products can be purchased at the sensor level for integration
into existing product lines or as complete systems for use in the quality
control laboratory.
A number of the world's leading producers of microelectronics manufacturing
systems, including Philips, Yamaha, Fuji, Juki, Siemens and Excellon,
incorporate CyberOptics sensors and systems into the products they sell. In
addition, the Company's products are used by many of the leading manufacturers
of electronics goods, including AT&T and IBM, to inspect the components of
their products.
17
<PAGE>
CYBEROPTICS STRATEGY
The Company's objective is to be a leading worldwide supplier of intelligent
non-contact sensors and integrated systems that dramatically improve the
performance, quality, reliability, yield, and cost of automated manufacturing
processes.
Key elements of the Company's strategy include:
. Provide Leading-Edge Technology. The Company focuses on producing
sophisticated systems utilizing its advanced optics technology,
proprietary software and integrated microprocessors. Combining multiple
technologies and engineering disciplines, including optical physics,
electronics design, and operating and applications software design, the
Company produces sophisticated products with proprietary technology that
creates a barrier to entry by competitors. The Company maintains a large
research and development staff dedicated to continued development and
implementation of leading-edge process control technology.
. Enhance Strategic OEM Relationships. The Company maintains long-term
alliances with high-growth OEMs of complex, leading-edge products which
require flexible, value-added process and quality control systems. The
Company's goal is to provide OEM partners with technologically advanced
and innovative solutions that anticipate market developments and that
continue to be integrated by each OEM through the life cycle of its
product family.
. Establish Optimal Solutions for Specific Applications. The Company
leverages its core competence in optics technology and system integration
to develop sensors and systems for specific applications demanded by its
customers. The Company introduces its technology to customers through its
range sensors and scanning stations and then refines its core technology
through interaction with customers to develop specific products that
provide optimal solutions for specific applications.
. Focus on Expanding Markets. The Company offers proprietary products
focused on rapidly expanding markets, such as the microelectronics
market, that require precision, quality and reduced product development
times. The Company seeks to adapt the non-contact inspection and process
control technology it develops for one application to other markets,
including reverse-CAD, metal fabrication, and machining, on an
opportunistic basis.
PRODUCTS
CyberOptics has developed intelligent, non-contact sensors and systems for
in-line process control and inspection as well as sensors and scanning stations
for quality control and inspection. The Company's products enable manufacturers
to increase operating efficiencies, product yields and quality in a variety of
industries. Although a majority of the Company's revenue is generated through
sales of its in-line process control products for SMT, the Company also offers
several specialized products for through-hole process control and more
generalized products for inspection and quality control.
In addition to proprietary hardware designs that combine precision optics,
various light sources, and multiple detectors, the Company's products
incorporate high value-added software that controls the hardware, filters and
converts raw data into application specific information, and automatically
communicates this information to a host processor for ultimate use in process
control. Software represents approximately 50% of the CyberOptics research and
development effort and distinguishes Cyberoptics' intelligent sensors and
systems from simpler data-gathering detectors.
18
<PAGE>
IN-LINE PROCESS CONTROL--SMT. The following diagram illustrates the
integration of the Company's in-line SMT products into the principal stages of
the surface mount PCB assembly process:
[INSERT GRAPHIC]
CyberSentry. The CyberSentry system measures the deposition of solder paste
after the first step of the surface mount assembly process. Because of the
small size of the component that must be placed on each pad of solder paste and
the density of component placement on the circuit board, a significant amount
of SMT assembly problems are related to the quality of solder paste deposition.
Misplaced solder paste, or excess or inadequate amounts of paste can lead to
improper connections or bridges between leads causing an entire circuit board
to malfunction.
Introduced in its current format in the first quarter of 1995, the
CyberSentry system is designed to be installed in existing automated production
lines and to strike a balance between inspection of 100% of each circuit board
and the off-line measurement devices used in quality control laboratories. The
CyberSentry incorporates a sensor extended on a mechanical robot arm over the
production line that measures the height, area and volume of solder paste pads.
The CyberSentry can be retrofitted and integrated into most SMT production
lines, providing real time process control immediately after a PCB leaves the
screen printer and before component placement commences.
LaserAlign. After solder paste has been inspected and measured, extremely
small surface mount components are placed on the solder pads by component
placement machines. CyberOptics' LaserAlign sensors are incorporated into the
heads of component placement machines to ensure accurate component placement at
high production speeds. Various high speed component placement machine types
utilize between one and sixteen LaserAlign sensors per machine.
LaserAlign integrates an intelligent sensor, composed of a laser, optics and
detectors with a microprocessor and software for making specific measurements.
LaserAlign quickly and accurately aligns each component as it is being
transported by the pick-and-place arm for surface mount assembly. Using non-
contact technology, LaserAlign facilitates orientation and placement of
components at much higher speeds than can be achieved using conventional
process control systems.
19
<PAGE>
Laser Lead Locator. Following placement of the smallest leadless components,
more sophisticated components, including microprocessor chips, are applied to
the printed circuit boards by fine pitch component placement machines. These
components have leads on all sides that are soldered to the circuit board.
Since all of these surface mount leads must make contact with the solder
paste, lead coplanarity is a critical quality factor. Misaligned, bent or
damaged leads will result in missed connections, open circuits and ultimately
a defective end product.
The Laser Lead Locator ensures the coplanarity of component leads. The Laser
Lead Locator, which is incorporated directly into fine pitch component
placement machines, inspects components immediately before placement on the
circuit board to identify defective or damaged leads and determines if all
lead tips lie within the same plane. Components meeting these parameters are
placed on the printed circuit board. Parts falling outside the specified
tolerances are rejected before placement, saving both time and money.
PROCESS CONTROL--THROUGH-HOLE. A substantial number of circuit boards are
made with through-hole technology using high speed drills to fabricate printed
circuit boards. These drills are highly automated and contain multiple drill
heads that cannot be constantly monitored by attendants. CyberOptics
manufactures two process control sensors for measuring characteristics of
drill bits used in drilling holes in printed circuit boards. The first of
these, the ADM, was completed in the third quarter of 1989 and is used to
ensure that drill bits are not damaged and that holes are drilled with the
proper size. The second sensor, the LTC, was completed in May 1990 and is used
to detect broken drill bits so that all of the preprogrammed holes in the
circuit board are properly drilled. Both sensors are sold under an exclusive
arrangement to a manufacturer of drilling machines for incorporation into its
products.
OFF-LINE INSPECTION SENSORS AND SYSTEMS. The Company built its commercial
business with laser sensors designed to precisely measure, without contact,
the distance to a point on an object. These sensors have been refined and
combined with software and processing capability and are sold as both single
sensors for incorporation into the equipment of customers and as complete
inspection systems for use in the quality control laboratory and off-line
process control.
The Company's off-line sensors and systems are used in a broad array of
applications in a number of different industries. Included among such
applications is the measurement of the score in a beverage can lid, collection
of three-dimensional digital data for use in a CAD-CAM system, measurement of
the thickness of resistive inks applied in the manufacture of hybrid
electronic circuits and measurement of the bend angles of suspension arms for
disc drives.
PRS and CyberGage. The Company offers two lines of range sensors designed to
measure distance to a point on a test object. The Point Range Sensor ("PRS"),
was the Company's first commercial product and is currently offered in seven
models that provide varying resolutions and are designed for optimal function
at varying standoff distances. The CyberGage sensor is a new series of range
sensors that gather data up to 40 times faster than the PRS product line and
is sold with a video camera view port that allows the user to integrate laser
sensing and video in the same sensor. The Company believes this is the first
product available with both laser sensing and video capabilities.
CyberScan and CyberScan LV. CyberScan stations are complete height profiling
systems capable of producing precise, two- and three-dimensional analysis of
complex surfaces. These stations incorporate the Company's CyberGage sensor or
PRS mounted over a computer-controlled mechanical table with a personal
computer and the Company's proprietary software. The recently introduced
CyberScan LV series of scanning stations, which incorporate the CyberGage
sensors and video cameras, offers a unique quilting feature that allows the
user to view and select test sites over a large area of a test object.
20
<PAGE>
Laser Section Microscope (LSM). The LSM is a low cost instrument for making
height and registration measurement of screen printed solder paste during the
assembly of electronic circuit boards. One of the principal advantages of the
LSM is its ease of use--unskilled operators can make non-contact measurements
with only minimal training.
MARKETS AND CUSTOMERS
A majority of the Company's products are currently sold in the
microelectronics market, particularly the portion servicing manufacturers
using SMT. The value of automation is high in this market because the products
produced, such as semiconductor chips, hybrid circuits and printed circuit
boards, have high unit costs and are manufactured at speeds too high for
effective human intervention. Moreover, the trend in these industries toward
smaller devices with higher circuit densities and smaller circuit paths
requires manufacturing and testing equipment capable of extremely accurate
alignment and multi-dimensional measurement such as achieved using non-contact
optical sensors. Customers in these industries, moreover, also employ
knowledgeable engineers who are competent to work with computer-related
equipment. The Company's Laser Lead Locator and LaserAlign products are sold
to OEMs serving this market and the CyberSentry, LSM, CyberGage, and CyberScan
systems are most often sold to manufacturers in this market. In addition, the
Company's more generalized products, including the PRS, CyberGage and
CyberScan products, are used in the general metrology and gauging, precision
plastic manufacturing and computer aided design and manufacturing markets.
The following is a list of certain of the Company's customers that it
believes are representative of its customer base.
AT&T Corporation Motorola, Inc.
Excellon Industries Inc. Philips Electronics, N.V.
Fuji Machine Manufacturing Co., Ltd. Siemens A.G.
International Business Machines Corporation Universal Instruments Corp.
Juki Corporation Yamaha Motor Co., Ltd.
Matsushita Electric Industrial Co., Ltd. Zevatech, Inc.
SALES AND MARKETING
The Company sells its products worldwide through a combination of direct
sales staff and independent distributors. The Company maintains a direct sales
staff at its headquarters in Minneapolis, Minnesota that call on large house
accounts and that sell to OEM customers. The Company also has agreements with
seven stocking distributors in the United States who focus primarily on
products sold to end-users. Most sales to international end-users of sensors
and systems are made through 13 representatives and distributors covering
Western Europe and the Pacific Rim.
The following table sets forth the percentage of the Company's total product
sales (including sales delivered through distributors) by location during the
past three years:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, SIX MONTHS
---------------- ENDED JUNE 30,
1992 1993 1994 1995
---- ---- ---- --------------
<S> <C> <C> <C> <C>
United States............................... 65% 61% 43% 40%
Asia........................................ 13% 27% 30% 21%
Europe...................................... 18% 8% 26% 37%
Other....................................... 4% 4% 1% 2%
</TABLE>
Substantially all of the Company's export sales are negotiated, invoiced and
paid in United States dollars.
21
<PAGE>
The Company markets its products through appearances at industry trade shows,
advertising in industry journals and articles published in industry and
technical journals. In addition, the Company's strategic relationships with
customers serve as highly visible references.
BACKLOG
CyberOptics products are typically shipped two weeks to four months after the
receipt of an order. Since 1993, however, certain OEM customers have placed
orders for delivery over as many as 12 months. Product backlog was $6,419,000
at June 30, 1995 of which approximately $5.6 million is deliverable in the
third quarter of 1995, as compared with $2,775,000 at June 30, 1994 of which
$2.1 million was deliverable in the third quarter of 1994. Although the
Company's business is generally not of a seasonal nature, its sales may vary
based on the capital procurement practices in the electronics industry.
Historically, the Company's quarterly revenue has been largest in the last
quarter of the year. The Company's scheduled backlog at any time may vary
significantly based on the timing of orders from OEM customers. Accordingly,
backlog may not be an accurate indicator of the Company's performance in the
future.
RESEARCH AND DEVELOPMENT
The Company distinguishes its products primarily on the basis of its unique
technology and on the Company's ability to synthesize several different
technical disciplines to address industry needs. CyberOptics was founded by
research scientists and has retained relationships with academic institutions
to ensure that the most current information on technological developments is
obtained. In addition, the Company actively seeks ongoing strategic customer
relationships with leading product innovators in the markets it serves and
actively investigates the needs of, and seeks input from, these customers to
identify opportunities to improve the manufacturing process. The Company
provides direct interaction between its engineers and scientists and these key
accounts to ensure adoption of current technologies. In many instances, the
Company provides the outsourced research and development for these customers
through funded development contracts that provide the customer with an
exclusive selling period but allow the Company to retain technology and
distribution rights. Payments by these customers for funded research and
development during 1992, 1993, 1994 and the first six months of 1995 were
$291,000, $50,000, $222,000, and $120,000, respectively.
CyberOptics believes that continued and timely development of new products
and enhancements to existing products is essential to maintaining its
competitive position. The Company has committed and expects to continue to
commit substantial resources to its research and development effort, which
plays a critical role in maintaining and advancing its position as a leading
provider of optical sensors and systems. CyberOptics' current research and
development efforts are directed to increasing performance of its LaserAlign
and CyberSentry products for use in process automation in electronics circuit
board assembly and completion of its CyberGage and CyberScan LV products for
general metrology and gauging applications. There can be no assurances that
such efforts, or any other research and development efforts of the Company,
will be successful in producing products that respond effectively to
technological changes or new product announcements by others.
Research and development expenses were $1.6 million, $2.4 million, $2.7
million, and $1.8 million for the years ended December 31, 1992, 1993, 1994 and
the six months ending June 30, 1995, respectively. These amounts represented
19.4%, 20.7%, 18.0% and 15.0% of revenues, respectively. Research and
development expenses consist primarily of salaries, project materials and other
costs associated with CyberOptics' ongoing product development and enhancement
efforts.
22
<PAGE>
MANUFACTURING
Much of the Company's product manufacturing, consisting primarily of circuit
board manufacturing, component placement and soldering, lens manufacturing and
machined parts production, is contracted with outside vendors. Company
personnel inspect incoming parts, assemble sensors, calibrate and perform final
quality control testing of finished products. The Company believes that its
products are not suited for the large production runs that would justify the
capital investment necessary for complete internal manufacturing. The Company
believes that outsourcing much of its manufacturing allows it to focus more of
its resources on research and development, marketing, sales and customer
support.
A variety of components used in the Company's products are available only
from single sources and involve relatively long order cycles, in some cases
over one year. Although the Company has located alternative sources for most of
such components, use of those alternative components could require substantial
rework of the Company's product designs, resulting in periods during which it
could not satisfy customer orders. Further, although the Company believes it
has identified alternative assembly contractors for most of its subassemblies,
an actual change in such contractors would likely require a period of training
and test. Accordingly, an interruption in a supply relationship or the
production capacity of one or more of such contractors could result in the
Company's inability to deliver one or more products for a period of several
months.
COMPETITION
Although the Company believes that its products are unique, competitors offer
technologies and systems that are capable of certain of the visual inspection
and alignment functions performed by the Company's products. The Company faces
competition from a number of companies in the machine vision, image processing
and inspection systems market, some of which have greater manufacturing and
marketing capabilities, and greater financial, technological and personnel
resources. Potential competitors in these markets include Cognex Corporation,
Robotic Visions Systems, Inc., Synthetic Vision Systems, Inc., ICOS Systems,
GmbH, and Keyence Incorporated. In addition, the Company may compete with the
internal development efforts of its current and prospective customers. The
Company believes that its sensors offer several advantages over competitive
optical sensors in terms of speed, flexibility, cost and ease of control. The
Company's OEM products are typically very specialized in their applications.
The Company believes that its OEM products compete favorably with other product
alternatives based on the speed and accuracy of their performance, their price
and certain technological advantages.
Although the Company believes its current products offer several advantages
in terms of price and suitability for specific applications and although the
Company has attempted to protect the proprietary nature of such products, it is
possible that any of the Company's products could be duplicated by other
companies in the same general market. There can be no assurances that the
Company would be able to compete with similar products produced by a
competitor.
EMPLOYEES
As of June 30, 1995, the Company had 145 full-time employees including 23 in
sales and marketing and customer service, 64 in manufacturing, 46 in research,
development and engineering and 12 in finance and administration at its
headquarters in Minneapolis, Minnesota. To date, the Company has been
successful in attracting and retaining qualified technical personnel, although
there can be no assurance that this success will continue. None of the
Company's employees are covered by collective bargaining agreements or are
members of a union. The Company has never experienced a work stoppage and
believes that its relations with its employees are excellent.
23
<PAGE>
PROPRIETARY PROTECTION
The Company relies on the technical expertise and know-how of its personnel
and trade secret protection, as well as on patents, to maintain its competitive
position. The Company attempts to protect its intellectual property by
restricting access to its proprietary methods by a combination of technical and
internal security measures. In addition, the Company makes use of non-
disclosure agreements with customers, consultants, suppliers and employees.
Nevertheless, there can be no assurance that any of the above measures will be
adequate to protect the proprietary technology of the Company.
The Company holds nine patents on a number of its technologies, including
those used in its Laser Lead Locator, LaserAlign and point range sensors. In
addition the Company has filed applications for letters patent on features of a
number of other products. The Company protects the proprietary nature of its
software primarily through copyright and license agreements, but also through
close integration with its hardware offerings. It is the Company's policy to
protect the proprietary nature of its new product developments whenever they
are likely to become significant sources of revenue. No guarantee can be given
that the Company will be able to obtain patent or other protection for other
products.
Although it is not currently subject to any such claims, as the number of its
products increases and the functionality of those products expands, the Company
believes that it will become increasingly vulnerable to infringement claims. In
some geographic markets, it is the practice of companies to engage in "patent
flooding" by seeking patent protection for multiple functional applications
that are incremental rather than technological advances. Such patent flooding
could limit the Company's ability to sell its products in those markets for
some applications without obtaining license rights. Further, certain
individuals have claimed United States patent protection of extremely broad
techniques and have notified customers of the Company that any use of products
that employ such techniques would be infringing and require a license. Although
the Company believes that none of the products purchased by such customers
employ such techniques, and none of the Company's products are the subject of
any such infringement claim, there can be no assurance that third parties will
not assert infringement claims against the Company in the future or that any
such assertion will not require the Company to enter into a royalty arrangement
or result in costly litigation.
GOVERNMENT REGULATION
Many of the Company's products contain lasers which are classified as either
Class I, Class II or Class IIIb Laser Products under applicable rules and
regulations of the Center for Devices and Radiological Health ("CDRH") of the
Food and Drug Administration. Such regulations generally require a self-
certification procedure pursuant to which a manufacturer must file with the
CDRH with respect to each product incorporating a laser device, periodic
reporting of sales and purchases and compliance with product labeling
standards. The Company's products are generally not harmful to human tissue,
but could result in injury if directed into the eyes of an individual or
otherwise misused. The Company is not aware of any incident involving injury or
a claim of injury from its products and believes that its sensors and sensor
systems comply with all applicable laws for the manufacture of laser devices.
PROPERTIES
The Company leases approximately 30,000 square feet of office, warehouse,
laboratory and demonstration space at its corporate offices at 2505 Kennedy
Street NE, Minneapolis, Minnesota. The lease expires in October 1999 and is
cancelable in October 1997. The lease requires the Company to pay rent at rates
from $6.50 to $7.50 per square foot per year plus property taxes and other
operational expenses.
24
<PAGE>
The Company is rapidly outgrowing its current office facilities and is
actively seeking new office facilities having initial availability of
approximately 60,000 square feet. Although the Company believes that such
facilities will be available, it believes the market for commercial office and
manufacturing space has become more restricted and anticipates that the lease
rates on such new facilities will be higher.
LEGAL PROCEEDINGS
From time to time the Company may be involved in litigation relating to
claims arising from its operations in the normal course of business. The
Company is not a party to any pending legal proceedings as of the date of this
Prospectus.
25
<PAGE>
MANAGEMENT
The following table sets forth the executive officers and directors of the
Company:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Dr. Steven K. Case...... 46 President, Chief Executive Officer and Director
Kent O. Lillemoe........ 36 Vice President--Finance and Administration
Dr. Jeffrey A. Jalkio... 34 Vice President--Research
John D. Beagan.......... 53 Vice President--Operations and Development
Carl D. Moe............. 48 Vice President--Sales and Marketing
Alex B. Cimochowski..... 56 Director
Erwin A. Kelen.......... 60 Director
George E. Kline......... 59 Director
Dr. P. June Min......... 59 Director
Steven M. Quist......... 49 Director
</TABLE>
Steven K. Case, PhD., has been President and a director of the Company since
its formation in January 1984. Until 1994, Dr. Case was also a part-time
professor in the Electrical Engineering Department of the University of
Minnesota and has taught optics courses as a professor at the University of
Minnesota on either a full or part-time basis since 1979.
Kent O. Lillemoe started as the Company's controller in September 1985, was
elected Treasurer in January 1987 and was elected Vice President--Finance and
Administration in April 1991. Mr. Lillemoe is a certified public accountant.
Jeffrey A. Jalkio, PhD., started as a Research Engineer for the Company in
May 1987, became Director of Research and Development in July 1988 and was
elected Vice President--Research in February 1992.
John D. Beagan started as Director of Manufacturing for the Company in
September 1993, and became Vice President--Operations and Development in
February 1995. Mr. Beagan held executive officer positions in the
manufacturing, development and customer service areas of Computer Network
Technology Corporation, a manufacturer of mainframe network products, from 1987
to 1993.
Carl D. Moe started as Director of Sales and Marketing for the Company in
October 1992, and became Vice President--Sales and Marketing in February 1995.
Mr. Moe was President of the Danbury Group, a consulting firm specializing in
market development of technology based products from 1988 until joining the
Company.
Alex B. Cimochowski, a director of the Company since May 1984, has been Chief
Executive Officer of Delphax Systems, a manufacturer of high speed laser
printers, since November 1988.
Erwin A. Kelen, a director of the Company since February 1995, has been a
private investor since 1990. From 1984 to 1990, Mr. Kelen was President of
Datamyte Corporation, a subsidiary of Allen Bradley Co. Mr. Kelen is also a
director of Printronix, Inc., Insignia Systems, Inc. and Computer Network
Technology Corporation.
George E. Kline, a director of the Company since June 1986, has been a
private investor and financial consultant for more than five years. Mr. Kline
is also a director of Applied Biometrics, Inc., IVI Publishing, Inc., Pet Food
Warehouse, Inc., Health Fitness Physical Therapy, Inc. and Rimage Corporation.
26
<PAGE>
P. June Min PhD., a director of the Company since February 1995, has been
Vice Chairman of Anam Industrial Co., Ltd. since May 1995 and Chairman and
Chief Executive Officer of Intellect, Inc., a consulting firm, since May 1990.
He was Vice President, and the Chief Executive Officer of the Semiconductor
Division of Daewoo Corporation, a company headquartered in Korea, from November
1993 to April 1995. Dr. Min was also Chairman and Chief Executive Officer of
CyberTech, Inc., a computer simulation company, from September 1992 to August
1993; Chairman and Chief Executive Officer of Liberty Systems, Inc., an
engineering design house, from September 1988 to June 1992; President and Chief
Executive Officer of Western Digital Korea, Ltd. from October 1987 to April
1990. Before that time, Dr. Min was the founder and chief executive officer of
Goldstar Semiconductor.
Steven M. Quist, a director of the Company since June 1991, is President of
the Rosemount Measurement Division of Rosemount Inc., a subsidiary of Emerson
Electric Co., and has been an employee of Rosemount Inc. since 1970.
27
<PAGE>
PRINCIPAL AND SELLING STOCKHOLDERS
The following table sets forth, as of July 31, 1995, and as adjusted to
reflect the sale of the shares of Common Stock in this offering, certain
information with respect to beneficial ownership of the Company's Common Stock
by (i) each person or entity known by the Company to own beneficially more than
5% of the Company's Common Stock, (ii) each director of the Company, (iii) all
executive officers and directors as a group and (iv) the Selling Stockholder.
Except as indicated by footnote, the persons or entities named in the table
below have sole voting and investment power with respect to all shares of
Common Stock shown as beneficially owned by them.
<TABLE>
<CAPTION>
SHARES
BENEFICIALLY SHARES
OWNED BEFORE BENEFICIALLY
THE OFFERING OWNED AFTER THE
(1) SHARES OFFERING
--------------- BEING ---------------
NUMBER PERCENT OFFERED NUMBER PERCENT
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Steven K. Case......................... 341,988 7.7% 50,000 291,988 5.2%
2505 Kennedy Street NE
Minneapolis, MN 55413
Robert Fleming Inc.(2)................. 235,797 5.4% -- 235,797 4.2%
1285 Avenue of the Americas
16th Floor
New York, NY 10019
Alex B. Cimochowski(3)................. 44,671 1.0% -- 44,671 *
George E. Kline(4)..................... 25,800 * -- 25,800 *
Steven M. Quist........................ 14,200 * -- 14,200 *
Erwin A. Kelen......................... 11,375 * -- 11,375 *
P. June Min............................ 8,000 * -- 8,000 *
All executive officers and directors as
a group
(10 persons).......................... 560,592 12.4% 50,000 510,592 8.9%
</TABLE>
--------
*Less than 1%
(1) Includes 22,500 shares for Dr. Case, 19,200 shares for Mr. Cimochowski,
13,200 shares for Mr. Quist, 7,375 shares for Mr. Kelen, 8,000 shares for
Dr. Min and 111,150 shares for all officers and directors as a group,
purchasable upon exercise of options exercisable within 60 days of July 31,
1995.
(2) Based on the Schedule 13G filed by such stockholder on February 14, 1995.
(3) Includes 1,650 shares owned by Mr. Cimochowski's spouse, the beneficial
ownership of which Mr. Cimochowski disclaims.
(4) Includes 22,500 shares held by Venture Management Pension Plan and Trust of
Minneapolis, Minnesota, of which Mr. Kline is trustee and sole beneficiary
and 3,300 shares owned by Mr. Kline's spouse. Mr. Kline disclaims
beneficial ownership of shares held by his spouse.
28
<PAGE>
UNDERWRITING
Subject to the terms and conditions of the Underwriting Agreement (a copy of
which is filed as an exhibit to the Registration Statement of which this
Prospectus is a part), the Underwriters named below, through their
representatives Alex. Brown & Sons Incorporated, Robertson, Stephens & Company,
L.P. and Piper Jaffray Inc. (the "Representatives") have severally agreed to
purchase from the Company and the Selling Stockholder the following number of
shares of Common Stock at the public offering price less the underwriting
discounts and commissions set forth on the cover page of this Prospectus:
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER SHARES
----------- ---------
<S> <C>
Alex. Brown & Sons Incorporated.................................
Robertson, Stephens & Company, L.P..............................
Piper Jaffray Inc...............................................
---------
Total.......................................................
=========
</TABLE>
The Underwriting Agreement provides that the obligations of the Underwriters
are subject to certain conditions precedent and that the Underwriters will
purchase all shares of the Common Stock offered hereby if any of such shares
are purchased.
The Company and the Selling Stockholder have been advised by the
Representatives of the Underwriters that the Underwriters propose to offer the
shares of Common Stock to the public at the public offering price set forth on
the cover page of this Prospectus and to certain dealers at such price less a
concession not in excess of $ per share. The Underwriters may allow, and
such dealers may reallow, a concession not in excess of $ per share to
certain other dealers. After the offering, the offering price and other selling
terms may be changed by the Representatives of the Underwriters.
The Company has granted to the Underwriters an option, exercisable not later
than 30 days from the date of this Prospectus, to purchase up to 187,500
additional shares of Common Stock at the public offering price less the
underwriting discounts and commissions set forth on the cover page of this
Prospectus. To the extent that the Underwriters exercise such option, each of
the Underwriters will have a firm commitment to purchase approximately the same
percentage thereof that the number of shares of Common Stock to be purchased by
it shown in the above table bears to 1,250,000 and the Company will be
obligated, pursuant to the option, to sell such shares to the Underwriters. The
Underwriters may exercise such option only to cover over-allotments made in
connection with the sale of Common Stock offered hereby. If purchased, the
Underwriters will offer such additional shares on the same terms as those on
which the 1,250,000 shares are being offered.
The Underwriting Agreement contains covenants of indemnity and contribution
among the Underwriters, the Company and the Selling Stockholder against certain
civil liabilities, including liabilities under the Securities Act of 1933, as
amended.
29
<PAGE>
The Company and its officers and directors, including the Selling
Stockholder, have agreed not to offer, sell or otherwise dispose of any
additional shares of Common Stock for a period of 90 days after the date of
this Prospectus without the prior written consent of the Representatives of the
Underwriters, except that the Company may issue, and grant options to purchase,
shares of Common Stock under its existing stock plans.
The rules of the Securities and Exchange Commission (the "Commission")
generally prohibit the Underwriters and other members of the selling group, if
any, from making a market in the Company's Common Stock during the "cooling-
off" period immediately preceding the commencement of sales in the offering.
The Commission has, however, adopted an exemption from these rules that permits
passive market making under certain conditions. These rules permit an
Underwriter or other member of the selling group, if any, to continue to make a
market in the Company's Common Stock subject to the conditions, among others,
that its bid not exceed the highest bid by a market maker not connected with
the offering and that its net purchases on any one trading day not exceed
prescribed limits. Pursuant to these exemptions, certain Underwriters and other
members of the selling group, if any, may engage in passive market making in
the Company's Common Stock during the cooling-off period.
VALIDITY OF SHARES
The validity of the Common Stock offered hereby will be passed upon for the
Company by Dorsey & Whitney P.L.L.P., Minneapolis, Minnesota and certain legal
matters will be passed upon for the Underwriters by Piper & Marbury L.L.P.,
Baltimore, Maryland. Thomas Martin, a partner in Dorsey & Whitney P.L.L.P., is
Secretary of the Company and the holder of 2,014 shares of the Company's Common
Stock.
EXPERTS
The financial statements of the Company included and incorporated by
reference in the registration statement as of December 31, 1994 and for the
year then ended have been audited by Coopers & Lybrand L.L.P., independent
public accountants, as indicated in their report with respect thereto, and are
included and incorporated by reference herein in reliance upon the authority of
said firm as experts in accounting and auditing. The financial statements of
the Company as of December 31, 1993 and for the two years then ended included
in this Prospectus have been so included in reliance on the report of Price
Waterhouse LLP, independent accountants, given on the authority of said firm as
experts in auditing and accounting.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements, and other information with the
Commission. Such reports, proxy statements and other information can be
inspected and copied at the public reference facilities of the Commission at
Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549-1004; and at the
Commission's regional offices at Northwestern Atrium Center, Suite 1400, 500
West Madison Street, Chicago, Illinois 60661 and Suite 1300, Seven World Trade
Center, New York, New York 10048. Copies of such material can also be obtained
from the Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549 at prescribed rates.
The Company has filed with the Commission a Registration Statement under the
Securities Act of 1933, as amended (the "Securities Act"), with respect to the
Common Stock. This Prospectus does
30
<PAGE>
not contain all the information set forth in the Registration Statement,
certain portions of which have been omitted as permitted by the rules and
regulations of the Commission. For further information with respect to the
Company and the Common Stock, reference is made to the Registration Statement,
including the exhibits thereto. The Registration Statement may be inspected by
anyone without charge at the principal office of the Commission in Washington,
D.C., and copies of all or any part of it may be obtained from the Commission
upon payment of the prescribed fees.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents filed with the Commission by the Company are
incorporated into this Prospectus by reference:
(a) Annual Report on Form 10-KSB for the year ended December 31, 1994;
(b) Quarterly Reports on Form 10-QSB for the quarters ended March 31,
1995 and June 30, 1995; and
(c) Registration Statement on Form 8-A dated February 12, 1988.
All other documents filed by the Company pursuant to Sections 13(a), 13(c),
14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus and
prior to termination of the offering of the shares of Common Stock shall be
deemed incorporated herein by reference and to be a part hereof from the
respective dates of filing such documents.
Any statement contained herein or in a document incorporated by reference
herein shall be deemed to be modified or superseded for purposes of this
Prospectus to the extent that a statement contained herein, or in any other
document subsequently filed with the Commission which also is or is deemed to
be incorporated by reference herein, modifies or supersedes such statement. Any
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus. The Company will
provide without charge to each person to whom a copy of this Prospectus is
delivered, upon oral or written request of such person, a copy of any or all
documents listed above which are incorporated by reference in this Prospectus,
other than exhibits to such documents (unless such exhibits are specifically
incorporated by reference into such documents). Written requests for such
copies should be directed to Kent O. Lillemoe, Vice President--Finance and
Administration, CyberOptics Corporation, 2505 Kennedy Street NE, Minneapolis,
MN 55413. Telephone requests may be directed to the Company at (612) 331-5702.
31
<PAGE>
CYBEROPTICS CORPORATION
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Accountants as of December 31, 1994 and for the
year then ended......................................................... F-2
Report of Independent Accountants as of December 31, 1993 and for the two
years then ended........................................................ F-3
Balance Sheets as of December 31, 1993 and 1994 and June 30, 1995........ F-4
Statements of Income for the years ended December 31, 1992, 1993 and 1994
and for the six months ended June 30, 1994 and 1995..................... F-5
Statements of Stockholders' Equity for the years ended December 1992,
1993 and 1994 and for the six months ended June 30, 1995................ F-6
Statements of Cash Flows for the years ended December 31, 1992, 1993 and
1994 and for the six months ended June 30, 1994 and 1995................ F-7
Notes to the Financial Statements........................................ F-8
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders of CyberOptics Corporation
We have audited the accompanying balance sheet of CyberOptics Corporation as
of December 31, 1994, and the related statements of income, stockholders'
equity, and cash flows for the year then ended. These financial statements are
the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of CyberOptics Corporation as of
December 31, 1994, and the results of its operations and its cash flows for the
year then ended in conformity with generally accepted accounting principles.
Coopers & Lybrand L.L.P.
Minneapolis, Minnesota
January 25, 1995
F-2
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders of CyberOptics Corporation
In our opinion, the accompanying balance sheet and the related statements of
income, of stockholders' equity and of cash flows present fairly, in all
material respects, the financial position of CyberOptics Corporation at
December 31, 1993, and the results of its operations and its cash flows for
each of the two years in the period ended December 31, 1993, in conformity with
generally accepted accounting principles. These financial statements are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
Price Waterhouse LLP
Minneapolis, Minnesota
February 1, 1994
F-3
<PAGE>
CYBEROPTICS CORPORATION
BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
DECEMBER 31,
------------- JUNE 30,
ASSETS 1993 1994 1995
------ ------ ------ -----------
(UNAUDITED)
<S> <C> <C> <C>
Cash and cash equivalents............................ $1,778 $1,428 $ 451
Short-term investments............................... 440 1,180 930
Accounts receivable, less allowance for doubtful
accounts of $30, $50 and $70, respectively.......... 2,152 2,964 5,497
Inventories.......................................... 1,757 2,335 4,341
Other current assets................................. 249 340 403
------ ------ -------
Total current assets............................. 6,376 8,247 11,622
Equipment and furnishings, net....................... 406 478 685
Capitalized patent costs, less accumulated
amortization of $107, $193 and $226, respectively... 119 98 77
------ ------ -------
Total assets..................................... $6,901 $8,823 $12,384
====== ====== =======
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
<S> <C> <C> <C>
Accounts payable..................................... $ 332 $ 572 $ 1,459
Income taxes payable................................. 39 212 721
Accrued expenses..................................... 457 561 1,004
------ ------ -------
Total current liabilities........................ 828 1,345 3,184
Commitments
Stockholders' equity:
Preferred stock, no par value, 5,000,000 shares
authorized, none outstanding......................
Common stock, no par value, 10,000,000 shares
authorized, 4,249,420, 4,235,141 and 4,315,321
shares issued and outstanding, respectively....... 4,349 4,230 4,354
Retained earnings.................................. 1,724 3,248 4,846
------ ------ -------
Total stockholders' equity....................... 6,073 7,478 9,200
------ ------ -------
Total liabilities and stockholders' equity....... $6,901 $8,823 $12,384
====== ====== =======
</TABLE>
The accompanying notes are an integral part of the financial statements
F-4
<PAGE>
CYBEROPTICS CORPORATION
STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER SIX MONTHS
31, ENDED JUNE 30,
---------------------- --------------
1992 1993 1994 1994 1995
------ ------- ------- ------ -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenues................................. $8,425 $11,621 $15,276 $6,377 $11,796
Cost of revenues..................... 3,388 4,531 6,604 2,521 5,435
------ ------- ------- ------ -------
Gross margin............................. 5,037 7,090 8,672 3,856 6,361
Research and development expenses........ 1,631 2,410 2,749 1,382 1,770
Selling, general and administrative
expenses................................ 2,959 3,600 3,881 1,798 2,343
------ ------- ------- ------ -------
Income from operations............... 447 1,080 2,042 676 2,248
Interest income.......................... 57 43 72 34 59
------ ------- ------- ------ -------
Income before income taxes........... 504 1,123 2,114 710 2,307
Provision for income taxes............... 165 180 590 200 709
------ ------- ------- ------ -------
Net income........................... $ 339 $ 943 $ 1,524 $ 510 $ 1,598
====== ======= ======= ====== =======
Net income per share..................... $ 0.08 $ 0.22 $ 0.35 $ 0.12 $ 0.34
====== ======= ======= ====== =======
Weighted average common and common
equivalent shares outstanding........... 4,271 4,328 4,404 4,308 4,676
====== ======= ======= ====== =======
</TABLE>
The accompanying notes are an integral part of the financial statements
F-5
<PAGE>
CYBEROPTICS CORPORATION
STATEMENTS OF STOCKHOLDERS' EQUITY
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
COMMON STOCK TOTAL
----------------- RETAINED STOCKHOLDERS'
SHARES AMOUNT EARNINGS EQUITY
--------- ------ -------- -------------
<S> <C> <C> <C> <C>
Balance, December 31, 1991........... 4,019,931 $3,817 $ 442 $4,259
Tax benefit from exercise of stock
options............................. 30 30
Exercise of stock options and
warrants net of shares exchanged as
payment and subsequently retired.... 143,478 213 213
Net income........................... 339 339
--------- ------ ------ ------
Balance, December 31, 1992........... 4,163,409 4,060 781 4,841
Tax benefit from exercise of stock
options............................. 4 4
Exercise of stock options and
warrants............................ 71,565 219 219
Issuance of common stock under
Employee Stock Purchase Plan........ 14,446 66 66
Net income........................... 943 943
--------- ------ ------ ------
Balance, December 31, 1993........... 4,249,420 4,349 1,724 6,073
Tax benefit from exercise of stock
options............................. 3 3
Exercise of stock options net of
shares exchanged as payment and
subsequently retired................ 8,606 19 19
Issuance of common stock under
Employee Stock Purchase Plan........ 20,615 94 94
Repurchase of common stock........... (43,500) (235) (235)
Net income........................... 1,524 1,524
--------- ------ ------ ------
Balance, December 31, 1994........... 4,235,141 4,230 3,248 7,478
Exercise of stock options net of
shares exchanged as payment and
subsequently retired (Unaudited).... 80,180 124 124
Net income (Unaudited)............... 1,598 1,598
--------- ------ ------ ------
Balance, June 30, 1995 (Unaudited)... 4,315,321 $4,354 $4,846 $9,200
========= ====== ====== ======
</TABLE>
The accompanying notes are an integral part of the financial statements
F-6
<PAGE>
CYBEROPTICS CORPORATION
STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED JUNE
YEAR ENDED DECEMBER 31, 30,
--------------------------- -------------
1992 1993 1994 1994 1995
------- -------- -------- ----- ------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows from operating
activities
Net income....................... $ 339 $ 943 $ 1,524 $ 510 $1,598
Adjustments to reconcile net
income to net cash provided
(used) by operating activities:
Depreciation and amortization.. 218 247 295 135 183
Provision for losses on
accounts receivable........... 30 15 73 20
Provision for losses on
inventories................... 56 235 124 27 161
Deferred income taxes.......... (30) (27) (67)
Tax benefit from exercise of
stock options................. 30 4 3
Changes in operating assets and
liabilities:
Accounts receivable.......... (240) (334) (885) (77) (2,553)
Inventories.................. (521) (255) (703) (426) (2,167)
Other current assets......... (55) (14) (24) (25) (63)
Accounts payable............. (42) (150) 239 389 887
Income taxes payable......... (235) (39) 174 55 509
Accrued expenses............. 105 140 104 65 443
------- -------- -------- ----- ------
Net cash (used) provided by
operating activities...... (345) 765 857 653 (982)
------- -------- -------- ----- ------
Cash flows from investing
activities:
Maturities of short-term
investments..................... 850 955 993 1,057
Purchase of short-term
investments..................... (608) (440) (1,733) (756) (807)
Additions to equipment and
furnishings..................... (223) (131) (281) (178) (357)
Additions to patents............. (92) (50) (64) (34) (12)
------- -------- -------- ----- ------
Net cash (used) provided by
investing activities...... (73) 334 (1,085) (968) (119)
------- -------- -------- ----- ------
Cash flows from financing
activities:
Repurchase of common stock....... (235) (140)
Proceeds from exercise of stock
options and warrants............ 213 219 19 8 124
Proceeds from issuance of common
stock under Employee Stock
Purchase Plan................... 66 94
------- -------- -------- ----- ------
Net cash provided (used) by
financing activities...... 213 285 (122) (132) 124
------- -------- -------- ----- ------
Increase (decrease) in cash and
cash equivalents.................. (205) 1,384 (350) (447) (977)
Cash and cash equivalents--
beginning of period............... 599 394 1,778 1,778 1,428
------- -------- -------- ----- ------
Cash and cash equivalents--end of
period............................ $ 394 $ 1,778 $ 1,428 $1331 $ 451
======= ======== ======== ===== ======
</TABLE>
The accompanying notes are an integral part of the financial statements
F-7
<PAGE>
CYBEROPTICS CORPORATION
NOTES TO FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
(INFORMATION AS OF JUNE 30, 1995 AND FOR THE SIX MONTHS ENDED
JUNE 30, 1994 AND 1995 IS UNAUDITED.)
NOTE 1--BUSINESS DESCRIPTION AND SIGNIFICANT ACCOUNTING POLICIES
Business
CyberOptics Corporation designs and manufactures intelligent sensors and
systems for high-precision, non-contact dimensional measurement and process
control.
Revenue Recognition
Revenue is recognized upon shipment. The Company provides for estimated
warranty costs concurrent with the recognition of revenue.
Cash and Cash Equivalents, and Short-Term Investments
Cash and cash equivalents are carried at cost which approximates market and
consists of cash and money market accounts. At December 31, 1994, over one
million dollars of cash equivalents were concentrated in one money market
account. Short-term investments generally consist of treasury bills and short-
term mutual bonds with original maturities of 3 to 18 months. Short-term
investments will be held to their maturity and are carried at amortized cost.
Unrealized holding gains and losses were not significant.
Inventories
Inventories are stated at the lower of cost or market, with cost determined
using the first-in, first-out (FIFO) method.
Patents
Patents consist of legal and patent registration costs for protection of the
Company's proprietary sensor technologies. The Company amortizes such
expenditures over a three-year period on a straight-line basis.
Equipment and Furnishings
Equipment and furnishings are stated at cost. Significant additions or
improvements extending asset lives are capitalized, while repairs and
maintenance are charged to expense as incurred. Depreciation is recorded using
the straight-line method over the estimated useful lives of the assets, ranging
from three to five years. Gains or losses on dispositions are included in
current operations.
Income Taxes
Deferred income taxes are recorded to reflect the tax consequences in future
years of differences between the financial reporting and tax bases of assets
and liabilities using currently enacted tax rates in effect for the years in
which the differences are expected to reverse. Income tax expense is the sum of
the tax currently payable and the change in the deferred tax assets and
liabilities during the period.
Net Income per Share
Net income per common and common equivalent shares has been computed using
the weighted average shares outstanding plus common stock equivalents for each
period. Common equivalent shares include dilutive options and warrants using
the treasury stock method.
F-8
<PAGE>
CYBEROPTICS CORPORATION
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
(INFORMATION AS OF JUNE 30, 1995 AND FOR THE SIX MONTHS ENDED
JUNE 30, 1994 AND 1995 IS UNAUDITED.)
Use of Estimates
The preparation of the Company's financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities, and the reported amounts of
revenues and expenses during the reported period. Actual results could differ
from those estimates.
Interim Periods
The balance sheet at June 30, 1995 and the statements of income and cash
flows for the six-month periods ended June 30, 1994 and 1995, and the statement
of stockholders' equity for the six-month period ended June 30, 1995, together
with the related notes, are unaudited, but, in the opinion of management of the
Company, include all adjustments (which consist only of accruals of a normal
recurring nature) necessary to present fairly, in all material respects, the
financial condition at June 30, 1995 and the results of operations and cash
flows for the Company for the six-month periods ended June 30, 1994 and 1995.
NOTE 2--OTHER FINANCIAL STATEMENT DATA
Inventories consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
------------- JUNE 30,
1993 1994 1995
------ ------ --------
<S> <C> <C> <C>
Raw materials and purchased parts.................. $1,362 $1,902 $2,876
Work in process.................................... 269 406 1,417
Finished goods..................................... 126 27 48
------ ------ ------
$1,757 $2,335 $4,341
====== ====== ======
</TABLE>
Equipment and furnishings consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------- JUNE 30,
1993 1994 1995
------ ------- --------
<S> <C> <C> <C>
Equipment and furnishings...................... $1,323 $ 1,604 $ 1,961
Less accumulated depreciation.................. (917) (1,126) (1,276)
------ ------- -------
$ 406 $ 478 $ 685
====== ======= =======
</TABLE>
Other accrued expenses consist of the following:
<TABLE>
<CAPTION>
DECEMBER
31,
--------- JUNE 30,
1993 1994 1995
---- ---- --------
<S> <C> <C> <C>
Accrued wages and benefits............................. $221 $313 $ 666
Accrued lease expense.................................. 114 84 70
Other accrued expenses................................. 122 164 268
---- ---- ------
$457 $561 $1,004
==== ==== ======
</TABLE>
F-9
<PAGE>
CYBEROPTICS CORPORATION
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
(INFORMATION AS OF JUNE 30, 1995 AND FOR THE SIX MONTHS ENDED
JUNE 30, 1994 AND 1995 IS UNAUDITED.)
NOTE 3--INCOME TAXES
The provision for income taxes consists of the following:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
----------------
1992 1993 1994
---- ---- ----
<S> <C> <C> <C>
Current:
Federal............................................... $188 $206 $643
State................................................. 7 1 14
Deferred................................................ (30) (27) (67)
---- ---- ----
$165 $180 $590
==== ==== ====
</TABLE>
Deferred tax assets (liabilities) consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------
1992 1993 1994
---- ---- ----
<S> <C> <C> <C>
Inventories.............................................. $22 $ 49 $ 41
Vacation accrual......................................... 20 27 36
Accounts receivable allowances........................... 10 11 52
Warranty accrual......................................... 10 15 22
R&D credit carryforward.................................. 17
Other, net............................................... (2) (15) (14)
--- ---- ----
Deferred tax asset included in other current assets...... $60 $ 87 $154
=== ==== ====
</TABLE>
A reconciliation of the statutory rate to the effective income tax rate is as
follows:
<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED ENDED JUNE
DECEMBER 31, 30,
-------------------- ------------
1992 1993 1994 1994 1995
----- ------ ----- ----- -----
<S> <C> <C> <C> <C> <C>
Federal statutory rate..................... 34.0% 34.0% 34.0% 34.0% 34.0%
Increase (decrease) resulting from:
State income taxes, net of federal
benefit................................. 0.9% 0.1% 0.7% 0.9% 1.0%
Benefits of current period tax credits... (7.9%) (18.4%) (7.9%) (7.8%) (5.3%)
Other, net............................... 5.7% 0.3% 1.1% 1.1% 1.0%
----- ------ ----- ----- -----
Effective rate............................. 32.7% 16.0% 27.9% 28.2% 30.7%
===== ====== ===== ===== =====
</TABLE>
The benefit of current period tax credits in 1993 of 18.4% includes the
impact of the reinstatement of the tax law which allows the Company to claim
tax credits for its research and development activities retroactive to July
1992. As a result, the 1993 tax provision includes 18 months of research and
development tax credit compared to six months in 1992. The research and
development tax credit expired as of June 30, 1995. Cash payments of income
taxes for the years ended December 31, 1992, 1993, and 1994, were approximately
$399, $294 and $480, respectively.
F-10
<PAGE>
CYBEROPTICS CORPORATION
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
(INFORMATION AS OF JUNE 30, 1995 AND FOR THE SIX MONTHS ENDED
JUNE 30, 1994 AND 1995 IS UNAUDITED.)
NOTE 4--OPERATING LEASES
The Company leases office, warehouse and manufacturing facilities under an
operating lease that is cancelable October 31, 1997. This lease generally
requires the Company to pay insurance, property taxes and other expenses
related to the leased property. Total rental expenses for the years ended
December 31, 1992, 1993 and 1994, were approximately $149, $241 and $255,
respectively. Total rent expense for the six months ended June 30, 1994 and
1995, were approximately $127 and $145, respectively.
Future minimum rental payments required under this lease are as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------
<S> <C>
1995................................................................ $179
1996................................................................ 179
1997................................................................ 235
----
$593
====
</TABLE>
NOTE 5--STOCKHOLDERS' EQUITY
On February 14, 1992, the Company's Board of Directors approved a 3-for-2
stock split payable on March 13, 1992. All share and per share amounts in these
financial statements and notes have been adjusted to reflect this split. In
connection with the public offering of common stock in December 1987, the
Company issued common stock warrants for the purchase of 66,000 shares of
unissued common stock. The warrants were exercised in 1992 at $2.00 per share.
During the second quarter of 1994, the Company's Board of Directors
authorized the repurchase of up to 100,000 shares of CyberOptics' common stock.
As of June 30, 1995, the Company has repurchased 43,500 shares in open market
transactions. These shares were repurchased under a share repurchase program to
provide for issuance of shares under the Company's stock option plans and
Employee Stock Purchase Plan.
NOTE 6--BENEFIT PLANS
Stock Option Plans
The Company has two stock option plans that reserve 610,129 shares of common
stock in the aggregate for issuance to employees, directors, officers and
others. Canceled options are available for future grant under both plans.
Options are granted at an option price per share equal to or greater than fair
value at the date of grant. Generally, options vest over a four-year period and
expire five years after the date of grant. The plans allow for option holders
to redeem shares of the Company's common stock as consideration for the option
price. Options exercised by tendering shares are shown at the net amount in the
Statements of Stockholders' Equity.
F-11
<PAGE>
CYBEROPTICS CORPORATION
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
(INFORMATION AS OF JUNE 30, 1995 AND FOR THE SIX MONTHS ENDED
JUNE 30, 1994 AND 1995 IS UNAUDITED.)
The following is a summary of stock option plan activity:
<TABLE>
<CAPTION>
OPTION PRICE
RANGE PER SHARE OPTIONS
---------------- -------
<S> <C> <C> <C>
Outstanding at December 31, 1991...................... $1.21 $ 5.50 323,257
Granted............................................. $4.38 $ 9.67 149,800
Exercised........................................... $1.21 $ 2.65 (77,478)
Canceled............................................ $2.65 $ 5.75 (9,771)
------- -------- -------
Outstanding at December 31, 1992...................... $2.12 $ 9.67 385,808
Granted............................................. $5.00 $ 6.00 190,000
Exercised........................................... $2.21 $ 4.57 (71,565)
Canceled............................................ $2.35 $ 9.67 (39,742)
------- -------- -------
Outstanding at December 31, 1993...................... $2.12 $ 9.67 464,501
Granted............................................. $5.00 $ 7.13 68,400
Exercised........................................... $2.21 $ 5.00 (12,536)
Canceled............................................ $2.35 $ 6.00 (26,538)
------- -------- -------
Outstanding at December 31, 1994...................... $2.12 $ 9.67 493,827
Granted............................................. $9.25 $ 15.00 90,850
Exercised........................................... $2.65 $ 6.00 (91,973)
Canceled............................................ $5.50 $ 6.00 (6,575)
------- -------- -------
Outstanding at June 30, 1995.......................... 486,129
=======
Exercisable at June 30, 1995.......................... 178,700
=======
</TABLE>
Employee Stock Purchase Plan
The Company has an Employee Stock Purchase Plan available to eligible
employees. Under terms of the plan, eligible employees may designate from 1 to
10% of their compensation to be withheld through payroll deductions for the
purchase of common stock at 85% of the lower of the market price on the first
or last day of the offering period. Under the plan, 200,000 shares of common
stock have been reserved for issuance. As of December 31, 1994, 35,061 shares
have been issued under this plan.
401(k) Plan
The Company has a savings plan pursuant to Section 401(k) of the Internal
Revenue Code ("the Code") whereby eligible employees may contribute up to 15%
of their earnings, not to exceed amounts allowed under the Code. In addition,
the Company may also make contributions at the discretion of the Board of
Directors. During 1992, 1993 and 1994, the Company provided for matching
contributions totaling $34, $37, and $43, respectively. During the six months
ended June 30, 1994 and 1995, the Company provided $20 and $28 for matching
contributions.
F-12
<PAGE>
CYBEROPTICS CORPORATION
NOTES TO FINANCIAL STATEMENTS--(CONCLUDED)
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
(INFORMATION AS OF JUNE 30, 1995 AND FOR THE SIX MONTHS ENDED
JUNE 30, 1994 AND 1995 IS UNAUDITED.)
NOTE 7--MAJOR CUSTOMER AND EXPORT SALES
The following summarizes significant customers:
<TABLE>
<CAPTION>
SIGNIFICANT PERCENTAGE
CUSTOMER REVENUES OF REVENUES
----------- -------- -----------
<S> <C> <C> <C>
Year ended December 31, 1993............. A $1,682 14%
Year ended December 31, 1994............. B 2,115 14%
A 1,894 12%
Six months ended June 30, 1994........... A 1,208 19%
C 754 12%
Six months ended June 30, 1995........... B 3,405 29%
</TABLE>
Export sales amounted to 35 percent, 39 percent and 57 percent for 1992, 1993
and 1994, respectively, and 54 percent and 60 percent for the six months ended
June 30, 1994 and 1995. Substantially all of the Company's export sales are
negotiated, invoiced and paid in U.S. dollars. Foreign sales by geographic area
are summarized as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER SIX MONTHS ENDED
31, JUNE 30,
-------------------- -----------------
1992 1993 1994 1994 1995
------ ------ ------ -------- --------
<S> <C> <C> <C> <C> <C>
North America............................ $ 345 $ 406 $ 141 $ 65 $ 87
Europe................................... 1,514 951 3,895 1,164 4,372
Asia..................................... 1,066 3,155 4,555 2,070 2,488
Other.................................... 45 144 118
------ ------ ------ -------- --------
$2,925 $4,512 $8,636 $ 3,443 $ 7,065
====== ====== ====== ======== ========
</TABLE>
NOTE 8--BANK LINE OF CREDIT
On May 26, 1995, the Company entered into an unsecured revolving line of
credit which provides for borrowings up to $2,000. Amounts outstanding under
this agreement would bear interest, payable monthly, at prime or LIBOR plus
2.25%. As of June 30, 1995, the Company has not borrowed against this line of
credit. The line of credit expires May 31, 1996 and contains covenants
including not incurring other forms of debt or liens other than for this line
or other credit facilities of the lender.
F-13
<PAGE>
^CyberOptics LaserAlign sensor
mounts on the moving head of a
SMT placement machine. Non-
contact component alignment is
accomplished while the component
is moving between the supply and
placement site to increase
manufacturing speed.
[INSERT PHOTO OF LASERALIGN SENSOR]
Operational diagram shows how component
is lifted into LaserAlign sensor for
measurement and subsequent placement on
the circuit board.^^
[INSERT DIAGRAM OF LASERALIGN
SENSOR]
[INSERT PHOTO OF LASER LEAD LOCATORS]
^A multi-leaded component is
shown moving through the Laser
Lead Locator. The sensor is
mounted within a high precision
component placement machine to
ensure production quality and
increase placement accuracy.
Diagram shows how lasers locate leads and
determine coplanarity of integrated
circuits.^^
[INSERT DIAGRAM OF LASER LEAD
LOCATORS]
<PAGE>
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
NO PERSON HAS BEEN AUTHORIZED IN CONNECTION WITH THE OFFERING MADE HEREBY TO
GIVE ANY INFORMATION OR MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPEC-
TUS IN CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY THE COMPANY, THE SELLING STOCKHOLDER OR THE UNDERWRITERS.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF ANY
OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY TO ANY PERSON OR BY ANYONE
IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITA-
TION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER
SHALL UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION
HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.
-----------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary........................................................ 3
Risk Factors.............................................................. 5
Use of Proceeds........................................................... 8
Price Range of Common Stock............................................... 8
Dividend Policy........................................................... 8
Capitalization............................................................ 9
Selected Financial Data................................................... 10
Management's Discussion and Analysis of Financial Condition and Results of
Operations............................................................... 11
Business.................................................................. 16
Management................................................................ 26
Principal and Selling Stockholders........................................ 28
Underwriting.............................................................. 29
Validity of Shares........................................................ 30
Experts................................................................... 30
Available Information..................................................... 30
Incorporation of Certain Information by Reference......................... 31
Financial Statements...................................................... F-1
</TABLE>
-------------------------------------------------------------------------------
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1,250,000 Shares
[LOGO]
Common Stock
-----------
PROSPECTUS
-----------
Alex. Brown & Sons
INCORPORATED
Robertson, Stephens & Company
Piper Jaffray Inc.
, 1995
-------------------------------------------------------------------------------
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<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following are the estimated expenses in connection with the distribution
of the securities being registered, other than underwriting expenses and
commissions. All such expenses are estimated, except for the SEC registration
fee and the NASD filing fee:
<TABLE>
<S> <C>
SEC registration fee............................................ $ 13,260
NASD filing fee................................................. 4,345
Nasdaq listing fee.............................................. 17,500
Accounting fees and expenses.................................... 60,000
Legal fees and expenses......................................... 70,000
Printing........................................................ 35,000
Transfer agent fees............................................. 3,000
Blue Sky fees and expenses (including legal fees)............... 5,000
Miscellaneous................................................... 1,895
--------
Total....................................................... $210,000
========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 302A.521, subd. 2, of the Minnesota Statutes requires the Company to
indemnify a person made or threatened to be made a party to a proceeding by
reason of the former or present official capacity of the person with respect to
the Company, against judgments, penalties, fines, including, without
limitation, excise taxes assessed against the person with respect to an
employee benefit plan, settlements, and reasonable expenses, including
attorneys' fees and disbursements, incurred by the person in connection with
the proceeding with respect to the same acts or omissions if such person (1)
has not been indemnified by another organization or employee benefit plan for
the same judgments, penalties or fines; (2) acted in good faith; (3) received
no improper personal benefit, and statutory procedure has been followed in the
case of any conflict of interest by a director; (4) in the case of a criminal
proceeding, had no reasonable cause to believe the conduct was unlawful; and
(5) in the case of acts or omissions occurring in the person's performance in
the official capacity of director or, for a person not a director, in the
official capacity of officer, board committee member or employee, reasonably
believed that the conduct was in the best interests of the Company, or, in the
case of performance by a director, officer or employee of the Company involving
service as a director, officer, partner, trustee, employee or agent of another
organization or employee benefit plan, reasonably believed that the conduct was
not opposed to the best interests of the Company. In addition, Section
302A.521, subd. 3, requires payment by the Company, upon written request, of
reasonable expenses in advance of final disposition of the proceeding in
certain instances. A decision as to required indemnification is made by a
disinterested majority of the Board of Directors present at a meeting at which
a disinterested quorum is present, or by a designated committee of the Board,
by special legal counsel, by the shareholders, or by a court.
Provisions regarding indemnification of officers and directors of the Company
are contained in Article 9.01 of the Company's Bylaws, each of which are
incorporated herein by reference.
Under Section 8 of the Underwriting Agreement, filed as Exhibit 1 hereto, the
Underwriters agree to indemnify, under certain conditions, the Company, its
directors, certain of its officers and persons who control the Company within
the meaning of the Securities Act of 1933, as amended, against certain
liabilities.
II-1
<PAGE>
ITEM 16. EXHIBITS.
(a) Exhibits to Registration Statement.
<TABLE>
<CAPTION>
EXHIBIT
NO.
-------
<S> <C>
1 Form of Underwriting Agreement and Agreement Among Underwriters.
5 Opinion of Dorsey & Whitney P.L.L.P. as to the legality of the securities
being registered.
23.1 Consent of Dorsey & Whitney P.L.L.P. (included in their opinion filed as
Exhibit 5).
23.2 Consent of Coopers & Lybrand L.L.P.
23.3 Consent of Price Waterhouse LLP
25 Powers of Attorney (contained on page II-4 to the Registration Statement).
</TABLE>
ITEM 17. UNDERTAKINGS.
The Registrant undertakes:
(1) To file, during the period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(a) To include any prospectuses required by Section 10(a)(3) of the
Securities Act of 1933;
(b) To reflect in the prospectus any facts or events after the
effective date of this Registration Statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in this
Registration Statement;
(c) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or
any material change to such information in the Registration Statement;
provided, however, that paragraphs (1)(a) and (1)(b) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Registrant
pursuant to section 13 or section 15(d) of the Securities Exchange Act of
1934 that are incorporated by reference in this Registration Statement.
(2) That for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain at the termination of
the offering.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Act of 1934) that is incorporated by reference in this Registration
Statement shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the bona fide offering thereof.
II-2
<PAGE>
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers, and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that, in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against liabilities (other than the payment by the registrant
of expenses incurred or paid by a director, officer or controlling person of
the registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
The undersigned registrant hereby undertakes that:
(1) for purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus filed
as part of this registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the registrant pursuant to
Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be
deemed to be part of this registration statement as of the time it was
declared effective.
(2) for the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof.
II-3
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL OF THE
REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, IN THE CITY OF MINNEAPOLIS, STATE OF MINNESOTA, ON AUGUST 8, 1995.
CyberOptics Corporation
/s/ Steven K. Case
By: _________________________________
Steven K. Case,
President and Chief Executive
Officer
POWER OF ATTORNEY
EACH PERSON WHOSE SIGNATURE TO THIS REGISTRATION STATEMENT APPEARS BELOW
HEREBY CONSTITUTES AND APPOINTS STEVEN K. CASE AND KENT O. LILLEMOE, AND EACH
OF THEM, AS HIS TRUE AND LAWFUL ATTORNEY-IN-FACT AND AGENT, WITH FULL POWER OF
SUBSTITUTION, TO SIGN ON HIS BEHALF INDIVIDUALLY AND IN THE CAPACITY STATED
BELOW AND TO PERFORM ANY ACTS NECESSARY TO BE DONE IN ORDER TO FILE ALL
AMENDMENTS AND POST-EFFECTIVE AMENDMENTS TO THIS REGISTRATION STATEMENT, AND
ANY AND ALL INSTRUMENTS OR DOCUMENTS FILED AS PART OF OR IN CONNECTION WITH
THIS REGISTRATION STATEMENT OR THE AMENDMENTS THERETO AND EACH OF THE
UNDERSIGNED DOES HEREBY RATIFY AND CONFIRM ALL THAT SAID ATTORNEY-IN-FACT AND
AGENT, OR HIS SUBSTITUTES, SHALL DO OR CAUSE TO BE DONE BY VIRTUE HEREOF.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT, THIS REGISTRATION
STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES INDICATED
ON AUGUST 8, 1995.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
/s/ Steven K. Case Chairman, Chief Executive Officer,
___________________________________________ President (Principal executive officer)
Steven K. Case and Director
/s/ Kent O. Lillemoe Vice President--Finance (Principal
___________________________________________ financial and accounting officer)
Kent O. Lillemoe
/s/ George E. Kline Director
___________________________________________
George E. Kline
/s/ Alex B. Cimochowski Director
___________________________________________
Alex B. Cimochowski
/s/ Erwin A. Kelen Director
___________________________________________
Erwin A. Kelen
Director
___________________________________________
P. June Min
/s/ Steven M. Quist Director
___________________________________________
Steven M. Quist
</TABLE>
II-4
<PAGE>
EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NO.
-------
<S> <C>
1 Form of Underwriting Agreement and Agreement Among Underwriters.
5 Opinion of Dorsey & Whitney P.L.L.P. as to the legality of the securities being
registered.
23.1 Consent of Dorsey & Whitney P.L.L.P. (included in their opinion filed as Exhibit
5).
23.2 Consent of Coopers & Lybrand L.L.P.
23.3 Consent of Price Waterhouse LLP
25 Powers of Attorney (contained on page II-4 to the Registration Statement).
</TABLE>
<PAGE>
Exhibit 1
DRAFT -- JULY 30, 1995
__________ Shares
CYBEROPTICS CORPORATION
Common Stock
(no par value)
UNDERWRITING AGREEMENT
----------------------
September __, 1995
ALEX. BROWN & SONS INCORPORATED
PIPER JAFFRAY INC.
ROBERTSON, STEPHENS & COMPANY
As Representatives of the Several Underwriters
c/o Alex. Brown & Sons Incorporated
135 East Baltimore Street
Baltimore, Maryland 21202
Gentlemen:
CyberOptics Corporation, a Minnesota corporation (the "Company"), and
certain shareholders of the Company named in Schedule II hereto (the "Selling
Shareholders") propose to sell to the several underwriters (the "Underwriters")
named in Schedule I hereto for whom you are acting as representatives (the
"Representatives") an aggregate of ________ shares of the Company's Common
Stock, no par value (the "Firm Shares") of which ________ shares will be sold by
the Company and _______ shares will be sold by the Selling Shareholders. The
respective amounts of the Firm Shares to be so purchased by the several
Underwriters are set forth opposite their names in Schedule I hereto, and the
respective amounts to be sold by the Selling Shareholders are set forth opposite
their names in Schedule II hereto. The Company and the Selling Shareholders are
sometimes referred to herein collectively as the "Sellers". The
-1-
<PAGE>
Company and certain [other] Selling Shareholders also propose to sell at the
Underwriters' option an aggregate of up to ______ additional shares of the
Company's Common Stock (the "Option Shares") as set forth below.
The shares of Common Stock, no par value per share, of the Company are
hereinafter referred to as the "Common Stock".
As the Representatives, you have advised the Company and the Selling
Shareholders (a) that you are authorized to enter into this Agreement on behalf
of the several Underwriters, and (b) that the several Underwriters are willing,
acting severally and not jointly, to purchase the numbers of Firm Shares set
forth opposite their respective names in Schedule I, plus their pro rata portion
of the Option Shares if you elect to exercise the over-allotment option in whole
or in part for the accounts of the several Underwriters. The Firm Shares and
the Option Shares (to the extent the aforementioned option is exercised) are
herein collectively called the "Shares".
In consideration of the mutual agreements contained herein and of the
interests of the parties in the transactions contemplated hereby, the parties
hereto agree as follows:
1. Representations and Warranties of the Company and the Selling
Shareholders.
(a) The Company represents and warrants as follows:
(i) A registration statement on Form S-3 (File No. 33- ) with respect
to the Shares has been carefully prepared by the Company in conformity with the
requirements of the Securities Act of 1933, as amended (the "Act"), and the
rules and regulations (the "Rules and Regulations") of the Securities and
Exchange Commission (the "Commission") promulgated thereunder and has been filed
with the Commission under the Act. The Company has complied with the conditions
for the use of Form S-3. Copies of such registration statement, including any
amendments thereto, the preliminary prospectuses (meeting the requirements of
Rule 430A of the Rules and Regulations) contained therein and the exhibits,
financial statements and schedules, as finally amended and revised, have
heretofore been delivered by the Company to you. Such registration statement,
herein referred to as the "Registration Statement", which shall be deemed to
include all information omitted therefrom in reliance upon Rule 430A and
contained in the Prospectus referred to below, has been declared effective by
the Commission under the Act and no post-effective amendment to the Registration
Statement has been filed as of the date of this Agreement. The form of
prospectus first filed by the Company with the Commission pursuant to its Rule
424(b) and Rule 430A is herein referred to as the "Prospectus". Each
preliminary prospectus included in the Registration Statement prior to the time
it becomes effective is herein referred to as a "Preliminary Prospectus". Any
reference herein to any Preliminary Prospectus or the Prospectus shall be deemed
to refer to and include the documents incorporated by reference therein, as of
the date of such Preliminary Prospectus or Prospectus, as the case may be, and,
in the case of any reference herein to any Prospectus, also shall be deemed
-2-
<PAGE>
to include any documents incorporated by reference therein, and any supplements
or amendments thereto, filed with the Commission after the date of filing of the
Prospectus under Rules 424(b) and 430A, and prior to the termination of the
offering of the Shares by the Underwriters.
(ii) The Company has been duly organized and is validly existing as a
corporation in good standing under the laws of the State of Minnesota, with
corporate power and authority to own its properties and conduct its business as
described in the Registration Statement; the Company is duly qualified to
transact business in all jurisdictions in which the conduct of its business
requires such qualification and in which the failure so to qualify would have a
materially adverse effect upon the business of the Company. The Company has no
subsidiaries, direct or indirect. [modify of CO has subsidiaries]
(iii) The outstanding shares of Common Stock of the Company, including all
shares to be sold by the Selling Shareholders, have been duly authorized and
are, or in the case of the shares to be sold by the Selling Shareholders, when
issued and paid for as contemplated by the applicable option agreement and plan
will be, validly issued, fully paid and non-assessable; the portion of the
Shares to be issued and sold by the Company have been duly authorized and when
issued and paid for as contemplated herein will be validly issued, fully-paid
and non-assessable; and no preemptive rights of stockholders exist with respect
to any of the Shares or the issue and sale thereof. Neither the filing of the
Registration Statement nor the offering or sale of the Shares as contemplated by
this Agreement gives rise to any rights, other than those which have been waived
or satisfied, for or relating to the registration of any shares of Common Stock.
(iv) The Shares conform with the statements concerning them in the
Registration Statement. The certificates, if any, representing the Shares are
genuine, and the Company has no knowledge of any fact that would impair the
validity thereof.
(v) The Commission has not issued an order preventing or suspending the use
of any Preliminary Prospectus relating to the proposed offering of the Shares
nor instituted proceedings for that purpose and each Preliminary Prospectus, at
the time of filing thereof, did not contain any untrue statement of material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances in which
they were made, not misleading. The Registration Statement contains and the
Prospectus and any amendments or supplements thereto will contain all statements
which are required to be stated therein by, and in all respects conform or will
conform, as the case may be, to the requirements of, the Act and the Rules and
Regulations. The documents incorporated by reference in the Prospectus, at the
time filed with the Commission, conform in all respects to the requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or the
Act, as applicable, and the Rules and Regulations of the Commission thereunder.
Neither the Registration Statement nor any amendment thereto, and neither the
Prospectus nor any supplement thereto, including any documents incorporated by
reference therein, contains or will
-3-
<PAGE>
contain, as the case may be, any untrue statement of a material fact or omits or
will omit to state any 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; provided, however, that the Company makes no
representations or warranties as to information contained in or omitted from the
Registration Statement or the Prospectus, or any such amendment or supplement,
or any documents incorporated by reference therein, in reliance upon, and in
conformity with, written information furnished to the Company by or on behalf of
any Underwriter through the Representatives, specifically for use in the
preparation thereof.
(vi) The financial statements of the Company, together with related notes
and schedules as set forth or incorporated by reference in the Registration
Statement, present fairly the financial position and the results of operations
of the Company, at the indicated dates and for the indicated periods. Such
financial statements have been prepared in accordance with generally accepted
principles of accounting, consistently applied throughout the periods involved,
and all adjustments necessary for a fair presentation of results for such
periods have been made. The selected and summary financial and statistical data
included in the Registration Statement presents fairly the information shown
therein and have been compiled on a basis consistent with the financial
statements presented therein.
(vii) There is no action, suit, claim or proceeding pending or, to the
knowledge of the Company, threatened against the Company before any court or
administrative agency or otherwise which might result in any material adverse
change in the business, properties, assets, rights, operations or condition
(financial or otherwise) of the Company or to prevent the consummation by the
Company of the transactions contemplated hereby, except as set forth in the
Registration Statement.
(viii) The Company has good and marketable title to all of the properties
and assets reflected in the financial statements hereinabove described (or as
described in the Registration Statement), subject to no lien, mortgage, pledge,
charge or encumbrance of any kind except those reflected in such financial
statements (or as described in the Registration Statement) or which are not
material in amount. The Company occupies its leased properties under valid and
binding leases conforming in all material respects to the description thereof
set forth in the Registration Statement.
(ix) The Company has filed, or has obtained appropriate extensions for, all
Federal, State and foreign income tax returns which have been required to be
filed and has paid all taxes indicated by said returns and all assessments
received by them or any of them to the extent that such taxes have become due.
All federal and state tax liabilities are adequately provided for on the books
of the Company.
-4-
<PAGE>
(x) Since the respective dates as of which information is given in the
Registration Statement, as it may be amended or supplemented, there has not been
any material adverse change or any development involving a prospective material
adverse change in or affecting the condition, financial or otherwise, of the
Company or the earnings, business, management, properties, assets, rights,
operations, condition (financial or otherwise), or prospects of the Company,
whether or not occurring in the ordinary course of business, and there has not
been any material transaction entered into by the Company, other than
transactions in the ordinary course of business and changes and transactions
contemplated by the Registration Statement, as it may be amended or
supplemented. The Company has no material contingent obligations which are not
disclosed in the Registration Statement, as it may be amended or supplemented.
(xi) The Company is not, and with the giving of notice or lapse of time or
both will not be, in violation of or in default under its Articles of
Incorporation or By-Laws, each as amended, or under any agreement, lease,
contract, indenture or other instrument or obligation to which it is a party or
by which it or any of its properties is bound and which default is of material
significance in respect of the business or financial condition of the Company.
The consummation by the Company of the transactions herein contemplated and the
fulfillment of the terms hereof will not conflict with or result in a breach of
any of the terms or provisions of, or constitute a default under, any indenture,
mortgage, deed of trust or other agreement or instrument to which the Company is
a party, or of the Articles of Incorporation or the By-Laws of the Company, each
as amended, or any order, rule or regulation applicable to the Company of any
court or of any regulatory body or administrative agency or other governmental
body having jurisdiction, other than state securities or "blue sky" laws.
(xii) Each approval, consent, order, authorization, designation,
declaration or filing by or with any regulatory, administrative or other
governmental body necessary in connection with the execution and delivery by the
Company of this Agreement and the consummation of the transactions herein
contemplated (except such additional steps as may be required by the National
Association of Securities Dealers, Inc. (the "NASD") or may be necessary to
qualify the Shares for public offering by the Underwriters under State
securities or Blue Sky laws) has been obtained or made and is in full force and
effect.
(xiii) The Company holds all material licenses, certificates and permits
from governmental authorities which are necessary to the conduct of their
businesses; and the Company has not received notice of infringement of, or to
its knowledge infringed, any patents, patent rights, trade names, trademarks or
copyrights, which infringement is material to the business of the Company.
(xiv) Coopers & Lybrand, L.L.P. and Price Waterhouse L.L.P., who have
certified certain of the financial statements filed with the Commission as part
of, or incorporated by reference in, the Registration Statement, are independent
public accountants as required by the Act and the Rules and Regulations.
-5-
<PAGE>
(xv) The Common Stock of the Company is designated on the National
Association of Securities Dealers Automated Quotations National Market System.
(xvi) To the Company's knowledge, there are no affiliations or associations
between any member of the NASD and any of the Company's officers, directors or
5% or greater security holders, except as set forth in the Registration
Statement or as otherwise disclosed in writing to the Representatives.
(xvii) Neither the Company, nor to the Company's knowledge, any of its
affiliates, has taken, directly or indirectly, any action designed to cause or
result in, or which has constituted or which might reasonably be expected to
constitute, the stabilization or manipulation of the price of the shares of
Common Stock to facilitate the sale or resale of the Shares
(b) Each of the Selling Shareholders severally and not jointly represents
and warrants as follows:
(i) Such Selling Shareholder now has and at the Closing Date and
the Option Closing Date, as the case may be (as such dates are hereinafter
defined) will have good and marketable title to the Firm Shares and the
Option Shares to be sold by such Selling Shareholder, free of any liens,
encumbrances, equities and claims, and full right, power and authority to
effect the sale and delivery of such Firm Shares and Option Shares; and
upon the delivery of and payment for such Firm Shares and Option Shares
pursuant to this Agreement, the Underwriters will acquire good and
marketable title thereto, free of any liens, encumbrances, equities and
claims.
(ii) Such Selling Shareholder has full right, power and authority
to execute and deliver this Agreement and the Custodian Agreement and Power
of Attorney referred to below, and to perform its obligations under such
agreements. The consummation by such Selling Shareholder of the
transactions herein contemplated and the fulfillment by such Selling
Shareholder of the terms hereof will not result in a breach of any of the
terms and provisions of, or constitute a default under, any indenture,
mortgage, deed of trust or other agreement or instrument to which such
Selling Shareholder is a party, or of any order, rule or regulation
applicable to such Selling Shareholder of any court or of any regulatory
body or administrative agency or other governmental body having
jurisdiction.
(iii) Such Selling Shareholder has not taken and will not take,
directly or indirectly, any action designed to, or which has constituted,
or which might reasonably be expected to cause or result in stabilization
or manipulation of the price of the Common Stock of the Company.
-6-
<PAGE>
(iv) No offering, sale or other disposition of any Common Stock of
the Company will be made for a period of [180] [120] {CONFIRM WITH ABS}
days after the date of this Agreement, directly or indirectly, by such
Selling Shareholder otherwise than hereunder or with the prior written
consent of the Representatives.
(v) The Power of Attorney appointing certain individuals as such
Selling Shareholders' attorney-in-fact to the extent set forth therein and
the Custodian Agreement (as defined in Section 2) have been duly executed
and delivered by such Selling Shareholder and are the valid and binding
agreements of such Selling Shareholder.
(vi) Without having undertaken to determine independently the
accuracy or completeness of either the representations and warranties of
the Company contained herein or the information contained in the
Registration Statement and documents incorporated by reference therein,
such Selling Shareholder has no reason to believe that the representations
and warranties of the Company contained in this Section 1 are not true and
correct, is familiar with the Registration Statement and has no knowledge
of any material fact, condition or information not disclosed in the
Registration Statement or the documents incorporated by reference therein
which has adversely affected or may adversely affect the business of the
Company or the Subsidiary; and the sale of the Firm Shares and the Option
Shares by such Selling Shareholder pursuant hereto is not prompted by any
information concerning the Company or the Subsidiary which is not set forth
in the Registration Statement or the documents incorporated by reference
therein. The information pertaining to such Selling Shareholder under the
caption "Selling Shareholders" in the Prospectus is complete and accurate
in all material respects.
In order to document the Underwriters' compliance with the reporting and
withholding provisions of the Tax Equity and Fiscal Responsibility Act of 1982
and the Interest and Dividend Tax Compliance Act of 1983 with respect to the
transactions herein contemplated, each of the Selling Shareholders agrees to
deliver to you prior to or at the Closing Date a properly completed and executed
United States Treasury Department Form W-9 (or other applicable from or
statement specified by Treasury Department regulations in lieu thereof).
2. Purchase, Sale and Delivery of the Firm Shares. On the basis of the
representations, warranties and covenants herein contained, and subject to the
conditions herein set forth, the Sellers agree to sell to the Underwriters and
each Underwriter agrees, severally and not jointly, to purchase, at a price of
$_____ per share, the number of Firm Shares set forth opposite the name of each
Underwriter in Schedule I hereof, subject to adjustments in accordance with
Section 9 hereof. The number of Firm Shares to be purchased by each Underwriter
from each Seller shall be as nearly as practicable in the same proportion to the
total number of Firm Shares being sold by each Seller as the number of Firm
Shares being purchased by each Underwriter bears to the total number of Firm
Shares to be sold hereunder. The
-7-
<PAGE>
obligations of the Company and of each of the Selling Shareholders shall be
several and not joint.
Certificates in negotiable form for the total number of the Shares to be
sold hereunder by the Selling Shareholders have been placed in custody with
___________ as custodian (the "Custodian") pursuant to the Custodian Agreement
executed by each Selling Shareholder for delivery of all Firm Shares and any
Option Shares to be sold hereunder by the Selling Shareholders. Each of the
Selling Shareholders specifically agrees that the Firm Shares and any Option
Shares represented by the certificates held in custody for the Selling
Shareholders under the Custodian Agreement are subject to the interests of the
Underwriters hereunder, that the arrangements made by the Selling Shareholders
for such custody are to that extent irrevocable, and that the obligations of the
Selling Shareholders hereunder shall not be terminable by any act or deed of the
Selling Shareholders (or by any other person, firm or corporation including the
Company, the Custodian or the Underwriters) or by operation of law (including
the death of an individual Selling Shareholder or the dissolution of a corporate
Selling Shareholder) or by the occurrence of any other event or events, except
as set forth in the Custodian Agreement. If any such event should occur prior
to the delivery to the Underwriters of the Firm Shares or the Option Shares
hereunder, certificates for the Firm Shares or the Option Shares, as the case
may be, shall be delivered by the Custodian in accordance with the terms and
conditions of this Agreement as if such event has not occurred. The Custodian
is authorized to receive and acknowledge receipt of the proceeds of sale of the
Shares held by it against delivery of such Shares.
Payment for the Firm Shares to be sold hereunder is to be made in New York
Clearing House funds by certified or bank cashier's checks drawn to the order of
the Company for the shares to be sold by it and to the order of "______________,
Custodian for CyberOptics Selling Shareholders" for the shares to be sold by the
Selling Shareholders, in each case against delivery of certificates therefor to
the Representatives for the several accounts of the Underwriters. Such payment
and delivery are to be made at the offices of Alex. Brown & Sons Incorporated,
135 East Baltimore Street, Baltimore, Maryland, at 10:00 A.M., Baltimore time,
on the [third] business day after the date of this Agreement or at such other
time and date not later than five business days thereafter as you and the
Company shall agree upon, such time and date being herein referred to as the
"Closing Date." (As used herein, "business day" means a day on which the New
York Stock Exchange is open for trading and on which banks in New York are open
for business and not permitted by law or executive order to be closed.) The
certificates for the Firm Shares will be delivered in such denominations and in
such registrations as the Representatives request in writing not later than the
third full business day prior to the Closing Date, and will be made available
for inspection by the Representatives at least one business day prior to the
Closing Date.
In addition, on the basis of the representations and warranties herein
contained and subject to the terms and conditions herein set forth, the Company
and certain Selling
-8-
<PAGE>
Shareholders listed on Schedule III hereto hereby grant an option to the several
Underwriters to purchase the Option Shares at the price per share as set forth
in the first paragraph of this Section 2. The maximum number of Option Shares to
be sold by the Company and the Selling Shareholders is set forth opposite their
respective names on Schedule III hereto. The option granted hereby may be
exercised in whole or in part but only once and at any time upon written notice
given within 30 days after the date of this Agreement, by you, as
Representatives of the several Underwriters, to the Company and the Custodian
setting forth the number of Option Shares as to which the several Underwriters
are exercising the option, the names and denominations in which the Option
Shares are to be registered and the time and date at which such certificates are
to be delivered. If the option granted hereby is exercised in part, the
respective number of Option Shares to be sold by the Company and each of the
Selling Shareholders listed in Schedule III hereto shall be determined on a pro
rata basis in accordance with the percentages set forth opposite their names on
Schedule II hereto, adjusted by you in such manner as to avoid fractional
shares. The time and date at which certificates for Option Shares are to be
delivered shall be determined by the Representatives but shall not be earlier
than three nor later than 10 full business days after the exercise of such
option, nor in any event prior to the Closing Date (such time and date being
herein referred to as the "Option Closing Date"). [ If the date of exercise of
the option is three or more days before the Closing Date, the notice of exercise
shall set the Closing Date as the Option Closing Date.] {CONSIDER FOR T+3} The
number of Option Shares to be purchased by each Underwriter shall be in the same
proportion to the total number of Option Shares being purchased as the number of
Firm Shares being purchased by such Underwriter bears to the total number of
Firm Shares, adjusted by you in such manner as to avoid fractional shares. The
option with respect to the Option Shares granted hereunder may be exercised only
to cover over-allotments in the sale of the Firm Shares by the Underwriters.
You, as Representatives of the several Underwriters, may cancel such option at
any time prior to its expiration by giving written notice of such cancellation
to the Company. To the extent, if any, that the option is exercised, payment for
the Option Shares shall be made on the Option Closing Date in New York Clearing
House funds by certified or bank cashier's check drawn to the order of the
Company for the Option Shares to be sold by it and to the order of
"________________, Custodian for CyberOptics Selling Shareholders" for the
Option Shares to be sold by the Selling Shareholders against delivery of
certificates therefor at the offices of Alex. Brown & Sons Incorporated, 135
East Baltimore Street, Baltimore, Maryland.
3. Offering by the Underwriters. It is understood that the several
Underwriters are to make a public offering of the Firm Shares as soon as the
Representatives deem it advisable to do so. The Firm Shares are to be initially
offered to the public at the initial public offering price set forth in the
Prospectus. The Representatives may from time to time thereafter change the
public offering price and other selling terms. To the extent, if at all, that
any Option Shares are purchased pursuant to Section 2 hereof, the Underwriters
will offer them to the public on the foregoing terms.
-9-
<PAGE>
It is further understood that you will act as the Representatives for the
Underwriters in the offering and sale of the Shares in accordance with a Master
Agreement Among Underwriters entered into by you and the several other
Underwriters.
4. Covenants of the Company and the Selling Shareholders.
(a) The Company covenants and agrees with the several Underwriters and the
Selling Shareholders that:
(i) The Company will (A) use its best efforts to cause the Registration
Statement to become effective or, if the procedure in Rule 430A of the Rules and
Regulations is followed, to prepare and timely file with the Commission under
Rule 424(b) of the Rules and Regulations a Prospectus in the form approved by
the Representatives containing information previously omitted at the time of
effectiveness of the Registration Statement in reliance on Rule 430A of the
Rules and Regulations, (B) not file any amendment to the Registration Statement
or supplement to the Prospectus or document incorporated by reference therein of
which the Representatives shall not previously have been advised and furnished
with a copy or to which the Representatives shall have reasonably objected in
writing or which is not in compliance with the Rules and Regulations, and (C)
file on a timely basis all reports and any definitive proxy or information
statements required to be filed by the Company with the Commission subsequent to
the date of the Prospectus and prior to the termination of the offering of the
Shares by the Underwriters.
(ii) The Company will advise the Representatives promptly when the
Registration Statement or any post-effective amendment thereto shall have become
effective, of receipt after the date hereof of any comments from the Commission,
of any request after the date hereof of the Commission for amendment of the
Registration Statement or for supplement to the Prospectus or for any additional
information, or of the issuance by the Commission of any stop order suspending
the effectiveness of the Registration Statement or the use of the Prospectus or
of the institution of any proceedings for that purpose, and the Company will use
its best efforts to prevent the issuance of any such stop order preventing or
suspending the use of the Prospectus and to obtain as soon as possible the
lifting thereof, if issued.
(iii) The Company will cooperate with the Representatives in
endeavoring to qualify the Shares for sale under the securities laws of such
jurisdictions as the Representatives may reasonably have designated in writing
and will make such applications, file such documents, and furnish such
information as may be reasonably required for that purpose, provided the Company
shall not be required to qualify as a foreign corporation or to file a general
consent to service of process in any jurisdiction where it is not now so
qualified or required to file such a consent. The Company will, from time to
time, prepare and file such statements, reports, and other documents, as are or
may be required to continue such
-10-
<PAGE>
qualifications in effect for so long a period as the Representatives may
reasonably request for distribution of the Shares.
(iv) The Company will deliver to, or upon the order of, the
Representatives, from time to time, as many copies of any Preliminary Prospectus
as the Representatives may reasonably request. The Company will deliver to, or
upon the order of, the Representatives during the period when delivery of a
Prospectus is required under the Act, as many copies of the Prospectus in final
form, or as thereafter amended or supplemented, as the Representatives may
reasonably request. The Company will deliver to the Representatives at or
before the Closing Date, two signed copies of the Registration Statement and all
amendments thereto including all exhibits filed therewith, and will deliver to
the Representatives such number of copies of the Registration Statement, but
without exhibits, and of all amendments thereto, as the Representatives may
reasonably request.
(v) The Company will comply, to the best of its ability, with the Act
and the Rules and Regulations and the Exchange Act, and the rules and
regulations of the Commission promulgated thereunder, so as to permit the
completion of the distribution of the shares as contemplated in this Agreement
and the Prospectus. If during the period in which a prospectus is required by
law to be delivered by an Underwriter or dealer any event shall occur as a
result of which, in the reasonable judgment of the Company or of the
Representatives, it becomes necessary to amend or supplement the Prospectus in
order to make the statements therein, in the light of the circumstances existing
at the time the Prospectus is delivered to a purchaser, not misleading, or, if
it is necessary at any time to amend or supplement the Prospectus to comply with
any law, the Company promptly will either (A) prepare and file with the
Commission an appropriate amendment to the Registration Statement or supplement
to the Prospectus, or (B) prepare and file with the Commission an appropriate
filing under the Exchange Act which shall be incorporated by reference in the
Prospectus so that the Prospectus as so amended or supplemented will not, in the
light of the circumstances when it is so delivered, be misleading, or so that
the Prospectus will comply with law.
(vi) The Company will make generally available to its security holders,
as soon as it is practicable to do so, but in any event not later than 15 months
after the effective date of the Registration Statement, an earnings statement
(which need not be audited) in reasonable detail, covering a period of at least
12 consecutive months beginning after the effective date of the Registration
Statement, which earning statement shall satisfy the requirements of Section
11(a) of the Act and Rule 158 of the Rules and Regulations and will advise you
in writing when such statement has been so made available.
(vii) The Company will, for a period of five years from the Closing
Date, deliver to the Representatives copies of annual reports and copies of all
other documents, reports and information furnished by the Company to its
stockholders or filed with any securities exchange
-11-
<PAGE>
pursuant to the requirements of such exchange or with the Commission pursuant to
the Act or the Securities Exchange Act of 1934, as amended. The Company will
deliver to the Representatives similar reports with respect to any significant
subsidiary, as that term is defined in the Rules and Regulations, which are not
consolidated in the Company's financial statements.
(viii) No offering, sale, short sale or other disposition of any
Common Stock of the Company or other securities convertible into or exchangeable
or exercisable for Common Stock or derivative of Common Stock will be made for a
period of [120][180] {confirm with ABS} days after the date of this Agreement,
directly or indirectly, by the Company otherwise than hereunder or with the
prior written consent of the Representatives except that the Company may,
without such consent, issue options and shares pursuant to the Company's stock
option plans described in the Registration Statement; provided that each
recipient of such shares agrees in writing to be subject to the transfer
restrictions imposed pursuant to this Section 4(a)(viii) to the extent the 180-
day period following the date of this Agreement has not expired.
(ix) The Company shall cause each executive officer and director of the
Company to furnish to you, on or prior to the date of this Agreement, a letter
or letters, in form and substance satisfactory to the Underwriters, pursuant to
which each such person shall agree not to offer, sell, sell short or otherwise
dispose of any shares of Common Stock of the Company or other capital stock of
the Company, or any securities convertible, exchangeable or exercisable for
Common Shares or derivative of Common Shares beneficially owned by such person
(or as to which such person has the right to direct the disposition of) for a
period of [120] [180 ]days {CONFIRM WITH ABS} after the date of this Agreement,
except with the prior written consent of Alex. Brown & Sons Incorporated.
(x) The Company shall apply the net proceeds of the sale of the Shares
as set forth in the Prospectus and shall file such reports with the Commission
with respect to the sale of the Shares and the application of the proceeds
therefrom as may be required in accordance with Rule 463 under the Act.
(xi) The Company shall not invest, or otherwise use the proceeds
received by the Company from the sale of the shares to the Underwriters in such
manner as would require the Company to register as an investment company under
the Investment Company Act of 1940, as amended (the "1940 Act").
(xii) The Company will maintain a transfer agent and, if necessary
under the jurisdiction of incorporation of the Company or if required for NMS
designation, a registrar for its Common Shares.
(xiii) The Company will not take, directly or indirectly, any action
designed to cause or result in, or that has constituted or might reasonably be
expected to constitute, the
-12-
<PAGE>
stabilization or manipulation of the price of any securities of the Company to
facilitate the sale or resale of the Shares.
(b) Each of the Selling Shareholders covenants and agrees with the several
Underwriters and the Company that:
(i) In order to document the Underwriters' compliance with the
reporting and withholding provisions of the Tax Equity and Fiscal Responsibility
Act of 1982 and the Interest and Dividend Tax Compliance Act of 1983 with
respect to the transaction herein contemplated, each of the Selling Shareholders
agrees to deliver to you prior to or at the Option Closing Date a properly
completed and executed United States Treasury Department Form W-9 (or other
applicable form or statement specified by Treasury Department regulations in
lieu thereof).
(ii) Such Selling Shareholder will not take, directly or indirectly,
any action designed to cause or result in, or that has constituted or might
reasonably be expected to constitute, the stabilization or manipulation of the
price of any securities of the Company to facilitate the sale or resale of the
Shares.
5. Costs and Expenses. The Company will pay all costs, expenses and fees
incident to the performance of the obligations of the Company and the Selling
Shareholders under this Agreement, including, without limiting the generality of
the foregoing, the following: accounting fees of the Company; the fees and
disbursements of counsel for the Company and the Selling Shareholders; the cost
of printing and delivering to, or as requested by, the Underwriters copies of
the Registration Statement, Preliminary Prospectuses, the Prospectus, this
Agreement, the Invitation Letter, the Blue Sky Survey and any supplements or
amendments thereto; the filing fees of the Commission; the filing fees of the
NASD; and the expenses, including the fees and disbursements of counsel for the
Underwriters, incurred in connection with the qualification of the Shares under
State securities or Blue Sky laws. To the extent, if at all, that any of the
Selling Shareholders engage special legal counsel to represent them in
connection with this offering, the fees and expenses of such counsel shall be
borne by such Selling Shareholder. Any transfer taxes imposed on the sale of
the Shares to the several Underwriters will be paid by the Company and the
Selling Shareholders pro rata. The Company and the Selling Shareholders shall
not, however, be required to pay for any of the Underwriters' expenses (other
than those related to qualification under State securities or Blue Sky laws)
except that, if the purchase and sale of the Firm Shares shall not be
consummated because the conditions in Section 7 hereof are not satisfied due to
no fault or omission of any Underwriter, or because this Agreement is properly
terminated by the Representatives pursuant to Section 6 hereof, or by reason of
any failure, refusal or inability on the part of the Company or the Selling
Shareholders to perform in any material respects any undertaking or satisfy in
any material respect any condition of this Agreement or to comply in any
material respect with any of the terms hereof on their part to be performed,
unless such termination by the Underwriters or such failure to perform such
undertaking or to satisfy said condition or to comply with said terms be due to
the default or
-13-
<PAGE>
omission of any Underwriter, then the Company shall reimburse the several
Underwriters for reasonable out-of-pocket expenses, including fees and
disbursements of counsel, reasonably incurred in connection with investigating,
marketing and proposing to market the Shares or in contemplation of performing
their obligations hereunder; but the Company and the Selling Shareholders shall
not in any event be liable to any of the several Underwriters for damages on
account of loss of anticipated profits from the sale by them of the Shares.
6. Conditions of Obligations of the Underwriters. The several obligations
of the Underwriters to purchase the Firm Shares on the Closing Date and the
Option Shares, if any, on the Option Closing Date are subject to the accuracy,
as of the Closing Date or the Option Closing Date, as the case may be, of the
representations and warranties of the Company and the Selling Shareholders
contained herein, and to the performance by the Company and the Selling
Shareholders of their covenants and obligations hereunder and to the following
additional conditions:
(a) The Registration Statement and all post-effective amendments thereto
shall have become effective and any and all filings required by Rule 424 and
Rule 430A of the Rules and Regulations shall have been made, and any written
request of the Commission for additional information (to be included in the
Registration Statement or otherwise) shall have been disclosed to the
Representatives and complied with to their reasonable request. No stop order
suspending the effectiveness of the Registration Statement, as amended from time
to time, shall have been issued and no proceedings for that purpose shall have
been taken or, to the knowledge of the Company or the Selling Shareholders,
shall be contemplated by the Commission.
(b) The Representatives shall have received on the Closing Date or the
Option Closing Date, as the case may be, the opinion of Dorsey & Whitney,
P.L.L.P., counsel for the Company and the Selling Shareholders, dated the
Closing Date or the Option Closing Date, as the case may be, addressed to the
Underwriters to the effect that:
(i) The Company has been duly organized and is validly existing as a
corporation in corporate good standing under the laws of the State of
Minnesota, with corporate power and authority to own its properties and
conduct its business as described in the Prospectus.
(ii) The Company has authorized the outstanding capital stock as set
forth under the caption "Capitalization" in the Prospectus as of the date
thereof; the authorized shares of its Common Stock have been duly
authorized; the outstanding shares of its Common Stock have been duly
authorized and validly issued and are fully paid and non-assessable; all of
the Shares conform to the description thereof contained in the Prospectus;
the certificates, if any, for the Shares are in due and proper form; the
shares of Common Stock, including the Option Shares, if any, to be sold by
the Company and the Selling Shareholders pursuant to this Agreement have
been duly authorized and will be validly
-14-
<PAGE>
issued, fully paid and non-assessable when issued and paid for as
contemplated by this Agreement; and no preemptive rights of stockholders
exist with respect to any of the Shares or the issue and sale thereof under
Minnesota law or the amended Articles of Organization of the Company or, to
such counsel's acknowledge, otherwise.
(iii) Except as described in or contemplated by the Prospectus
(including for purposes of this exception options granted under stock plans
to the extent such plans are described in the Prospectus), to the knowledge
of such counsel, there are no outstanding securities of the Company
convertible or exchangeable into or evidencing the right to purchase or
subscribe for any shares of capital stock of the Company and there are no
outstanding or authorized options, warrants or rights of any character
obligating the Company to issue any shares of its capital stock or any
securities convertible or exchangeable into or evidencing the right to
purchase or subscribe for any shares of such stock; and except as described
in the Prospectus, to the knowledge of such counsel, there is no holder of
any securities of the Company or any other person who has the right,
contractual or otherwise, to cause the Company to sell or otherwise issue to
them, or to permit them to underwrite the sale of, any of the Shares or the
right to have any common stock or other securities of the Company included
in the Registration Statement or the right, as a result of the filing of the
Registration Statement, to require registration under the Act of any common
shares or other securities of the Company.
(iv) The Registration Statement has become effective under the Act and,
to the best of the knowledge of such counsel, no stop order proceedings with
respect thereto have been instituted or are pending or threatened under the
Act.
(v) The Registration Statement, all Preliminary Prospectuses, the
Prospectus and each amendment or supplement thereto and document
incorporated by reference therein comply as to form in all material
respects with the requirements of the Act or the Exchange Act, as
applicable, and the applicable rules and regulations thereunder (except
that such counsel need express no opinion as to the financial statements,
schedules and other financial information included or incorporated by
reference therein).
(vi) The statements under the captions "____________" in the
Prospectus, and the description of the Company's Common Stock contained in
its Registration Statement on Form 8-A filed with the Commission on
_________, 198_ and incorporated by reference in the Prospectus, insofar as
such statements constitute a summary of documents referred to therein or
matters of law, are accurate summaries and fairly and correctly present the
information called for with respect to such documents and matters.
(vii) Such counsel does not know of any contracts or documents
required to be filed as exhibits to or incorporated by reference in the
Registration Statement or
-15-
<PAGE>
described in the Registration Statement or the Prospectus which are not so
filed, incorporated by reference or described as required, and such
contracts and documents as are summarized in the Registration Statement or
the Prospectus are fairly summarized in all material respects.
(viii) Such counsel knows of no material legal or governmental
proceedings pending or threatened against the Company, except as set forth
in the Prospectus.
(ix) The execution and delivery of this Agreement and the consummation
by the Company of the transactions herein contemplated do not and will not
conflict with or result in a breach of any of the terms or provisions of, or
constitute a default under, the [Articles of Incorporation or By-Laws of the
Company, each as amended, or any agreement or instrument known to such
counsel to which the Company is a party or by which the Company may be bound
and which is material to the Company.
(x) This Agreement has been duly authorized, executed and delivered by
the Company.
(xi) No approval, consent, order, authorization, designation,
declaration or filing by or with any regulatory, administrative or other
governmental body is necessary in connection with the execution and delivery
of this Agreement and the consummation by the Company of the transactions
herein contemplated (other than as may be required by the National
Association of Securities Dealers, Inc. or as required by State securities
and Blue Sky laws as to which such counsel need express no opinion) except
such as have been obtained or made, specifying the same.
(xii) The Company is not, and will not become as a result of the
consummation of the transactions contemplated by this Agreement, required to
register as an investment company under the 1940 Act.
(xiii) This Agreement has been duly authorized, executed and delivered
by or on behalf of the Selling Shareholders.
(xiv) To such counsel's knowledge, each Selling Shareholder has full
legal right, power and authority, and any approval required by law (other
than as required by State securities and Blue Sky laws as to which such
counsel need express no opinion), to sell, assign, transfer and deliver the
portion of the Shares to be sold by such Selling Shareholder.
(xv) The Power of Attorney and Custodian Agreement executed and
delivered by each Selling Shareholder is an irrevocable instrument that is
valid and binding.
-16-
<PAGE>
(xvi) The Underwriters (assuming that they are bona fide purchasers
within the meaning of the Uniform Commercial Code) have acquired good and
marketable title to the Option Shares being sold by each Selling Shareholder
on the Option Closing Date, free and clear of all claims, liens,
encumbrances and security interests whatsoever.
In rendering such opinion Dorsey & Whitney P.L.L.P. may rely as to matters
governed by the laws of states other than Minnesota or Federal laws on local
counsel in such jurisdictions and as to the matters set forth in subparagraphs
(xiii), (xiv) and (xv) on opinions of other counsel representing the respective
Selling Shareholders, provided that in each case Dorsey & Whitney P.L.L.P. shall
state that they believe that they and the Underwriters are justified in relying
on such other counsel. In addition to the matters set forth above, such opinion
shall also include a statement to the effect that nothing has come to the
attention of such counsel which leads them to believe that the Registration
Statement, as of the time it became effective under the Act, the Prospectus or
any amendment or supplement thereto, on the date it was filed pursuant to Rule
424(b) or any of the documents incorporated by reference therein, as of the date
of effectiveness of the Registration Statement or, in the case of documents
incorporated by reference in the Prospectus after the date of effectiveness of
the Registration Statement, as of the respective dates when such documents were
filed with the Commission and the Registration Statement and the Prospectus, or
any amendment or supplement thereto, as of the Closing Date or the Option
Closing Date, as the case may be, contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading (except that such counsel need
express no view as to financial statements, schedules and other financial
information included or incorporated by reference therein). With respect to
such statement, Dorsey & Whitney P.L.L.P. may state that their belief is based
upon the procedures set forth therein, but is without independent check and
verification.
(c) The Representatives shall have received from Piper & Marbury L.L.P.,
counsel for the Underwriters, an opinion dated the Closing Date or the Option
Closing Date, as the case may be, substantially to the effect specified in
subparagraphs [(ii),](iii), (iv), (ix) and (xii)] [hdk -- check these] of
Paragraph (b) of this Section 6, and that the Company is a validly organized and
existing corporation under the laws of the State of Minnesota. In rendering
such opinion Piper & Marbury L.L.P. may rely as to all matters governed other
than by the laws of the State of Maryland or Federal laws on the opinion of
counsel referred to in paragraph (b) of this Section 6. In addition to the
matters set forth above, such opinion shall also include a statement to the
effect that nothing has come to the attention of such counsel which leads them
to believe that the Registration Statement, as of the time it became effective
under the Act, and the Prospectus or any amendment or supplement thereto, on the
date it was filed pursuant to Rule 424(b) or any of the documents incorporated
by reference therein, as of the date of effectiveness of the Registration
Statement or, in the case of documents incorporated by reference in the
Prospectus after the date of effectiveness of the Registration Statement, as of
the
-17-
<PAGE>
respective dates when such documents were filed with the Commission and the
Registration Statement and the Prospectus, or any amendment or supplement
thereto, as of the Closing Date or the Option Closing Date, as the case may be,
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading (except that such counsel need express no view as to financial
statements, schedules and other financial information included or incorporated
by reference therein). With respect to such statement, Piper & Marbury L.L.P.
may state that their belief is based upon the procedures set forth therein, but
is without independent check and verification.
(d) The Representatives shall have received at or prior to the Closing Date
from Piper & Marbury L.L.P. a memorandum or summary, in form and substance
satisfactory to the Representatives, with respect to the qualification for
offering and sale by the Underwriters of the Shares under the State securities
or Blue Sky laws of such jurisdictions as the Representatives may reasonably
have designated to the Company.
(e) The Representatives shall have received, on each of the dates hereof,
the Closing Date and the Option Closing Date, a letter dated the date of
delivery hereof, the Closing Date, and the Option Closing Date, as the case may
be, in form and substance satisfactory to you, of Coopers & Lybrand L.L.P. and
Price Waterhouse L.L.P., confirming that they are independent public accountants
within the meaning of the Act and the applicable published Rules and Regulations
thereunder and stating that in their opinion the financial statements and
schedules examined by them and included in the Registration Statement comply in
form in all material respects with the applicable accounting requirements of the
Act and the related published Rules and Regulations; and containing such other
statements and information as is ordinarily included in accountants' "comfort
letters" to Underwriters with respect to the financial statements and certain
financial information contained in the Registration Statement and Prospectus.
(f) The Representatives shall have received on the Closing Date or the
Option Closing Date, as the case may be, a certificate or certificates of the
Chief Executive Officer and the Chief Financial Officer of the Company, on
behalf of the Company, to the effect that, as of the Closing Date or the Option
Closing Date, as the case may be, each of them severally represents, on behalf
of the Company, as follows:
(i) The Registration Statement has become effective under the Act and
no stop order suspending the effectiveness of the Registration Statement has
been issued, and no proceedings for such purpose have been taken or are, to
his or her knowledge, contemplated by the Commission.
(ii) The representations and warranties of the Company contained in
Section 1(a) hereof are true and correct as of the Closing Date or the
Option Closing Date, as the case may be.
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<PAGE>
(iii) All filings required to have been made pursuant to Rules 424 or
430A under the Act have been made.
(iv) Such officer has carefully examined the Registration Statement
and the Prospectus and, in such officer's opinion, as of the effective date
of the Registration Statement, the statements contained in the Registration
Statement, including any document incorporated by reference therein, were
true and correct, and such Registration Statement and Prospectus or any
document incorporated by reference therein did not omit to state a material
fact required to be stated therein or necessary in order to make the
statements therein not misleading and, in such officer's opinion, since the
effective date of the Registration Statement, no event has occurred which
should have been set forth in a supplement to or an amendment of the
Prospectus which has not been so set forth in such supplement or amendment.
(g) The Company and the Selling Shareholders shall have furnished to the
Representatives such further certificates and documents confirming the
representations and warranties contained herein and related matters as the
Representatives may reasonably have requested.
[(h) The Firm Shares, and Option Shares, if any, have been approved for
designation upon official notice of issuance on the Nasdaq National Market.]
[(i) The Company shall have delivered to you written agreements (the "Lockup
Agreements") described in Section 4 (a)(x).] [HDK -- CHECK TO SEE IF THIS IS
REDUNDANT]
The opinions and certificates mentioned in this Agreement shall be deemed to
be in compliance with the provisions hereof only if they are in all material
respects satisfactory to the Representatives and to Piper & Marbury L.L.P.,
counsel for the Underwriters.
If any of the conditions hereinabove provided for in this Section 6 shall
not have been fulfilled when and as required by this Agreement to be fulfilled,
the obligations of the Underwriters hereunder may be terminated by the
Representatives by notifying the Company and the Selling Shareholders of such
termination in writing or by telegram at or prior to the Closing Date or the
Option Closing Date, as the case may be.
In such event, the Selling Shareholders, the Company and the Underwriters
shall not be under any obligation to each other (except to the extent provided
in Sections 5 and 8 hereof).
7. Conditions of the Obligations of the Company and the Selling
Shareholders. The obligations of the Company and the Selling Shareholders to
sell and deliver the portion of the
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Shares required to be delivered as and when specified in this Agreement are
subject to the conditions that at the Closing Date or the Option Closing Date,
as the case may be, no stop order suspending the effectiveness of the
Registration Statement shall have been issued and in effect or proceedings
therefor initiated or threatened.
8. Indemnification.
(a) The Company and the Selling Shareholders, jointly and severally, agree
to indemnify and hold harmless each Underwriter and each person, if any, who
controls any Underwriter within the meaning of the Act against any losses,
claims, damages or liabilities to which such Underwriter or such controlling
person may become subject under the Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions or proceedings in respect thereof)
arise out of or are based upon (i) any untrue statement or alleged untrue
statement of any material fact contained or incorporated by reference in the
Registration Statement, any Preliminary Prospectus, the Prospectus or any
amendment or supplement thereto, or (ii) 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 and
each such controlling person for any legal or other expenses reasonably incurred
by such Underwriter or such controlling person in connection with investigating
or defending any such loss, claim, damage or liability, action or proceeding and
expenses reasonably incurred in responding to a subpoena or governmental inquiry
whether or not such underwriter or controlling person is a party to any action
or proceeding; provided, however, that the Company and the Selling Shareholders
will not be liable in any such case to the extent that any such loss, claim,
damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement, or omission or alleged omission made or incorporated
by reference in the Registration Statement, any Preliminary Prospectus, the
Prospectus, or such amendment or supplement, in reliance upon and in conformity
with written information furnished to the Company by or through the
Representatives specifically for use in the preparation thereof; provided
further, that the indemnity agreement contained in this Section with respect to
any Preliminary Prospectus will not inure to the benefit of any Underwriter (or
of any person controlling such Underwriter) on account of any loss, claim,
damage, liability, action or proceeding arising out of or based upon an untrue
statement or alleged untrue statement of a material fact, or omission or alleged
omission of a material fact, made therein, with respect to the sale of the
Shares by such Underwriter to any person if a copy of a Preliminary Prospectus
or Prospectus or any amendment or supplement thereto (if any amendment or
supplement thereto shall have been furnished to such Underwriter) correcting
such untrue statement or alleged untrue statement or omission or alleged
omission shall not have been given or sent to such person by or on behalf of
such Underwriter with or prior to the written confirmation of the sale involved.
In no event, however, shall the liability of any Selling Shareholder for
indemnification under this Section 8(a) exceed the lesser of (i) that proportion
of the total of such losses, claims, damages or liabilities indemnified against
equal to the proportion of the total Shares sold hereunder which is being sold
by such Selling Shareholder or (ii) the proceeds
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received by such Selling Shareholder from the Underwriters in the offering. This
indemnity agreement will be in addition to any liability which the Company or
the Selling Shareholders may otherwise have.
(b) Each Underwriter will indemnify and hold harmless the Company, each of
its directors, each of its officers who have signed the Registration Statement,
the Selling Shareholders, and each person, if any, who controls the Company or
the Selling Shareholders within the meaning of the Act, against any losses,
claims, damages or liabilities to which the Company or any such director,
officer, Selling Shareholder or controlling person may become subject under the
Act or otherwise, insofar as such losses, claims, damages or liabilities (or
actions or proceedings in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained or
incorporated by reference in the Registration Statement, any Preliminary
Prospectus, the Prospectus or any amendment or supplement thereto, or arise out
of or are based upon the omission or the alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances under which they were
made; and will reimburse any legal or other expenses reasonably incurred by the
Company or any such director, officer, Selling Shareholder or controlling person
in connection with investigating or defending any such loss, claim, damage,
liability, action or proceeding; provided, however, that each Underwriter will
be liable in each case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission has been
made or incorporated by reference in the Registration Statement, any Preliminary
Prospectus, the Prospectus or such amendment or supplement, in reliance upon and
in conformity with written information furnished to the Company by or through
the Representatives specifically for use in the preparation thereof. This
indemnity agreement will be in addition to any liability which such Underwriter
may otherwise have.
(c) In case any proceeding (including any governmental investigation) shall
be instituted involving any person in respect of which indemnity may be sought
pursuant to this Section 8, such person (the "indemnified party") shall promptly
notify the person against whom such indemnity may be sought (the "indemnifying
party") in writing. No indemnification provided for in Section 8(a) or (b)
shall be available to any party who shall fail to give notice as provided in
this Section 8(c) if the party to whom notice was not given was unaware of the
proceeding to which such notice would have related and was materially prejudiced
by the failure to give such notice, but the failure to give such notice shall
not relieve the indemnifying party or parties from any liability which it or
they may have to the indemnified party for contribution or otherwise than on
account of the provisions of Section 8(a) or (b). In case any such proceeding
shall be brought against any indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate therein 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 shall pay as
incurred the fees and disbursements of such counsel related to such proceeding.
In any such proceeding,
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<PAGE>
any indemnified party shall have the right to retain its own counsel at its own
expense. Notwithstanding the foregoing, the indemnifying party shall pay as
incurred the fees and expenses of the counsel retained by the indemnified party
in the event (i) the indemnifying party and the indemnified party shall have
mutually agreed to the retention of such counsel or (ii) the named parties to
any such proceeding (including any impleaded parties) include both the
indemnifying party and the indemnified party and representation of both parties
by the same counsel would be inappropriate due to actual or potential differing
interests between them. It is understood that the indemnifying party shall not,
in connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the reasonable fees and expenses of more than one
separate firm for all such indemnified parties. Such firm shall be designated in
writing by you in the case of parties indemnified pursuant to Section 8(a) and
by the Company and the Selling Shareholders in the case of parties indemnified
pursuant to Section 8(b). The indemnifying party shall not be liable for any
settlement of any proceeding effected without its written consent but if settled
with such consent or if there be a final judgment for the plaintiff, the
indemnifying party agrees to indemnify the indemnified party from and against
any loss or liability by reason of such settlement or judgment. In addition, the
indemnifying party will not, without the prior written consent of the
indemnified party, settle or compromise or consent to the entry of any judgment
in any pending or threatened claim, action or proceeding of which
indemnification may be sought hereunder (whether or not any indemnified party is
an actual or potential party to such claim, action or proceeding) unless such
settlement, compromise or consent includes an unconditional release of each
indemnified party from all liability arising out of such claim, action or
proceeding.
(d) If the indemnification provided for in this Section 8 is unavailable to
or insufficient to hold harmless an indemnified party under Section 8(a) or (b)
above in respect of any losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) referred to therein, then each indemnifying
party shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) in such proportion as is appropriate to reflect
the relative benefits received by the Company and the Selling Shareholders on
the one hand and the Underwriters on the other from the offering of the Shares.
If, however, the allocation provided by the immediately preceding sentence is
not permitted by applicable law or if the indemnified party failed to give the
notice required under Section 8(c) above, then each indemnifying party shall
contribute to such amount paid or payable by such indemnified party in such
proportion as is appropriate to reflect not only such relative benefits but also
the relative fault of the Company and the Selling Shareholders on the one hand
and the Underwriters on the other in connection with the statements or omissions
which resulted in such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof), as well as any other relevant equitable
considerations. The relative benefits received by the Company and the Selling
Shareholders on the one hand and the Underwriters on the other shall be deemed
to be in the same proportion as the total net proceeds from the offering (before
deducting expenses) received by the Company and the Selling Shareholders bear to
the total underwriting discounts and commissions received by the
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<PAGE>
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 Selling Shareholders on the one hand or the
Underwriters on the other and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company, the Selling Shareholders and the Underwriters agree that it
would not be just and equitable if contributions pursuant to this Section 8(d)
were determined by pro rata allocation (even if the Underwriters were treated as
one entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to above in this Section
8(d). The amount paid or payable by an indemnified party as a result of the
losses, claims, damages or liabilities (or actions or proceedings in respect
thereof) referred to above in this Section 8(d) shall be deemed to include any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this subsection (d), (i) no Underwriter shall
be required to contribute any amount in excess of the underwriting discounts and
commissions applicable to the Shares purchased by such Underwriter, (ii) 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, and (iii) no Selling Shareholder
shall be required to contribute any amount in excess of the lesser of (A) that
proportion of the total of such losses, claims, damages or liabilities
indemnified or contributed against equal to the proportion of the total Shares
sold hereunder which is being sold by such Selling Shareholder, or (B) the
proceeds received by such Selling Shareholder from the Underwriters in the
offering. The Underwriters' obligations in this Section 8(d) to contribute are
several in proportion to their respective underwriting obligations and not
joint.
(e) In any proceeding relating to the Registration Statement, any
Preliminary Prospectus, the Prospectus or any supplement or amendment thereto,
each party against whom contribution may be sought under this Section 8 hereby
consents to the jurisdiction of any court having jurisdiction over any other
contributing party, agrees that process issuing from such court may be served
upon him or it by any other contributing party and consents to the service of
such process and agrees that any other contributing party may join him or it as
an additional defendant in any such proceeding in which such other contributing
party is a party.
9. Default by Underwriters. If on the Closing Date or the Option
Closing Date, as the case may be, any Underwriter shall fail to purchase and pay
for the portion of the Shares which such Underwriter has agreed to purchase and
pay for on such date (otherwise than by reason of any default on the part of the
Company or a Selling Shareholder), you, as Representatives of the Underwriters,
shall use your best efforts to procure within 36 hours thereafter one or more of
the other Underwriters, or any others, to purchase from the Company and the
Selling Shareholders such amounts as may be agreed upon and upon the terms set
forth
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<PAGE>
herein, the Firm Shares or Option Shares, as the case may be, which the
defaulting Underwriter or Underwriters failed to purchase. If during such 36
hours you, as such Representatives, shall not have procured such other
Underwriters, or any others, to purchase the Firm Shares or Option Shares, as
the case may be, agreed to be purchased by the defaulting Underwriter or
Underwriters, then (a) if the aggregate number of shares with respect to which
such default shall occur does not exceed 10% of the Firm Shares or Option
Shares, as the case may be, covered hereby, the other Underwriters shall be
obligated, severally, in proportion to the respective numbers of Firm Shares or
Option Shares, as the case may be, which they are obligated to purchase
hereunder, to purchase the Firm Shares or Option Shares, as the case may be,
which such defaulting Underwriter or Underwriters failed to purchase, or (b) if
the aggregate number of shares of Firm Shares or Option Shares, as the case may
be, with respect to which such default shall occur exceeds 10% of the Firm
Shares or Option Shares, as the case may be, covered hereby, the Company and the
Selling Shareholders or you as the Representatives of the Underwriters will have
the right, by written notice given within the next 24-hour period to the parties
to this Agreement, to terminate this Agreement without liability on the part of
the non-defaulting Underwriters or of the Company or of the Selling Shareholders
except to the extent provided in Section 8 hereof. In the event of a default by
any Underwriter or Underwriters, as set forth in this Section 9, the Closing
Date or Option Closing Date, as the case may be, may be postponed for such
period, not exceeding seven days, as you, as Representatives, may determine in
order that the required changes in the Registration Statement or in the
Prospectus or in any other documents or arrangements may be effected. The term
"Underwriter" includes any person substituted for a defaulting Underwriter. Any
action taken under this Section 9 shall not relieve any defaulting Underwriter
from liability in respect of any default of such Underwriter under this
Agreement.
10. Notices. All communications hereunder shall be in writing and, except
as otherwise provided herein, will be mailed, delivered or telegraphed and
confirmed as follows: if to the Underwriters, to Alex. Brown & Sons
Incorporated, 135 East Baltimore Street, Baltimore, Maryland 21202, Attention:
Peter M. McGowan, Managing Director; if to the Company or the Selling
Shareholder, to CyberOptics Corporation, 2505 Kennedy Street, N.W., Minneapolis,
Minnesota 55413, Attention: Dr. Stephen K. Case, President.
11. Termination. This Agreement may be terminated by you by notice to the
Company or the Selling Shareholders as follows:
(a) at any time prior to the earlier of (i) the time the Shares are released
by you for sale by notice to the Underwriters, or (ii) 11:30 A.M. on the first
business day following the date of this Agreement;
(b) at any time after the date hereof if any of the following has occurred:
(i) since the respective dates as of which information is given in the
Registration Statement and the Prospectus, any material adverse change or any
development involving a prospective material
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<PAGE>
adverse change in or affecting the condition, financial or otherwise, of the
Company or the earnings, business affairs, management or business prospects of
the Company, whether or not arising in the ordinary course of business, (ii) any
outbreak of hostilities or declaration of war or national emergency or other
national or international calamity or crisis or change in economic or political
conditions if the effect of such outbreak, escalation, declaration, emergency,
calamity, crisis or change on the financial markets of the United States would,
in your reasonable judgment, make the offering or delivery of the Shares
impracticable, (iii) suspension of trading in securities on the New York Stock
Exchange or the American Stock Exchange or limitation on prices (other than
limitations on hours or numbers of days of trading) for securities on either
such Exchange, (iv) the enactment, publication, decree or other promulgation of
any federal or state statute, regulation, rule or order of any court or other
governmental authority which in your reasonable opinion materially and adversely
affects or will materially or adversely affect the business or operations of the
Company, (v) declaration of a banking moratorium by either United States or New
York State authorities, (vi) the suspension of trading of the Company's Common
Stock by the NASD, or (vii) the taking of any action by any federal, state or
local government or agency in respect of its monetary or fiscal affairs which in
your reasonable opinion has a material adverse effect on the securities markets
in the United States; or
(c) as provided in Sections 6 and 9 of this Agreement.
This Agreement also may be terminated by you, by notice to the Company and
the Selling Shareholders, as to any obligation of the Underwriters to purchase
the Option Shares, upon the occurrence at any time prior to the Option Closing
Date of any of the events described in subparagraph (b) above or as provided in
Sections 6 and 9 of this Agreement.
12. Successors. This Agreement has been and is made solely for the benefit
of the Underwriters, the Company and the Selling Shareholders and their
respective successors, executors, administrators, heirs and assigns, and the
officers, directors and controlling persons referred to herein, and no other
person will have any right or obligation hereunder. The term "successors" shall
not include any purchaser of the Shares merely because of such purchase.
13. Miscellaneous. The reimbursement, indemnification and contribution
agreements contained in this Agreement and the representations, warranties and
covenants in this Agreement shall remain in full force and effect regardless of
(a) any termination of this Agreement, (b) any investigation made by or on
behalf of any Underwriter or controlling person thereof, or by or on behalf of
the Company or its directors or officers or any of the Selling Shareholders; and
(c) delivery of and payment for the Shares under this Agreement; the other
covenants of the Company and the Selling Shareholders in this Agreement shall
remain in full force and effect regardless of (a) any investigation made by or
on behalf of any underwriter or controlling person and (b) delivery of and
payment for the Shares under this Agreement.
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<PAGE>
This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
This Agreement shall be governed by, and construed in accordance with, the
laws of the State of Maryland.
If the foregoing letter is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicates hereof,
whereupon it will become a binding agreement among the Selling Shareholders, the
Company and the several Underwriters in accordance with its terms. It is
understood that your acceptance of this letter on behalf of each of the
Underwriters is pursuant to the authority set forth in a form of Agreement among
Underwriters, the form of which shall be submitted to the Company and the
Selling Shareholders for examination, upon request, but without warranty on your
part as to the authority of the signers thereof.
Any person executing and delivering this Agreement as Attorney-in-Fact for a
Selling Shareholder represents by so doing that he has been duly appointed as
Attorney-in-Fact by such Selling Shareholder pursuant to a validly existing and
binding Power of Attorney which authorized such Attorney-in-Fact to take such
action.
Very truly yours,
CYBEROPTICS CORPORATION
By: __________________________________
Stephen K. Case, Ph. D., President
Selling Shareholders listed on
Schedule II
By:___________________________________
, Attorney-in-Fact
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<PAGE>
The foregoing Underwriting Agreement
is hereby confirmed and accepted as
of the date first above written.
ALEX. BROWN & SONS INCORPORATED
PIPER JAFFRAY INC.
ROBERTSON, STEPHENS & COMPANY
As Representatives of the
several Underwriters listed
on Schedule I
By: Alex. Brown & Sons Incorporated
By:___________________________
Authorized Officer
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SCHEDULE I
Schedule of Underwriters
Number of Firm Shares
Underwriter to be Purchased
----------- ---------------------
Alex. Brown & Sons Incorporated
Piper Jaffray Inc.
Robertson, Stephens & Company
Total __________
==========
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SCHEDULE II
Schedule of Selling Shareholders
Number of [Firm] Shares
Selling Shareholder to be Sold
------------------- ----------
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[Letterhead of Dorsey & Whitney P.L.L.P]
Exhibit 5.1
CyberOptics Corporation
2505 Kennedy Street, N.E.
Minneapolis, MN 55413
Re: Registration Statement on Form S-3
----------------------------------
Gentlemen:
In connection with the Registration Statement (the "Registration
Statement") on Form S-3 filed by CyberOptics Corporation (the "Company") with
the Securities and Exchange Commission on or about the date hereof relating to
an offering of up to 1,250,000 shares of its Common Stock, no par value,
1,200,000 shares of which are to be offered by the Company and 50,000 shares
of which are to be offered by a selling stockholder, and up to an additional
187,500 shares to be offered by the Company to cover over-allotments, if any
(collectively, the "Shares"), we have examined such corporate documents and
records, and reviewed such matters of law as we have deemed necessary or
advisable for the purposes of this opinion, and based thereon, we advise you
that it is our opinion that:
(1) The Company is a validly existing corporation in good standing
under the laws of the State of Minnesota.
(2) The 50,000 Shares to be sold by the selling stockholder are and
the Shares to be sold by the Company will, when issued and paid for as
contemplated in the Registration Statement, be validly issued, fully paid, and
nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to our firm under the heading
"Legal Matters" in the Prospectus comprising a part of the Registration
Statement.
Very truly yours,
/s/ Dorsey & Whitney P.L.L.P.
Dated: August 10, 1995
/brg
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion and incorporation by reference in this
registration statement on Form S-3 of our report dated January 25, 1995, on our
audit of the financial statements of CyberOptics Corporation as of December 31,
1994 and for the year then ended. We also consent to the references to our Firm
under the captions "Selected Financial Data" and "Experts."
COOPERS & LYBRAND L.L.P.
Minneapolis, Minnesota
August 9, 1995
<PAGE>
EXHIBIT 23.3
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-3 of our report dated
February 1, 1994, which appears in Exhibit 99.0 of CyberOptics Corporation's
Annual Report on Form 10-KSB for the year ended December 31, 1994. We also
consent to the use in the Prospectus constituting part of this registration
statement on Form S-3 of CyberOptics Corporation of our report dated February 1,
1994 relating to the financial statements of CyberOptics Corporation, which
appears in such Prospectus. We also consent to the references to us under the
headings "Experts" and "Selected Financial Data" in such Prospectus. However, it
should be noted that Price Waterhouse LLP has not prepared or certified such
"Selected Financial Data."
Price Waterhouse LLP
Minneapolis, Minnesota
August 9, 1995
