EXHIBIT 10.1
$40,000,000 AGGREGATE PRINCIPAL AMOUNT
MINDSPEED TECHNOLOGIES, INC.
3.75% CONVERTIBLE SENIOR NOTES DUE 2009
PURCHASE AGREEMENT
December 2, 2004
Xxxxxx Brothers Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Mindspeed Technologies, Inc., a Delaware corporation (the "COMPANY"),
proposes, subject to the terms and conditions stated herein, to issue and sell
$40,000,000 aggregate principal amount of its 3.75% Convertible Senior Notes due
2009 (the "FIRM NOTES") to Xxxxxx Brothers Inc. (the "INITIAL PURCHASER"). In
addition, the Company proposes to grant to the Initial Purchaser an option to
purchase up to an additional $6,000,000 aggregate principal amount of its 3.75%
Convertible Senior Notes due 2009 on the terms set forth in Section 2 (the
"OPTION NOTES" and, together with the Firm Notes, the "NOTES"). This is to
confirm the agreement between the Company and the Initial Purchaser concerning
the offer, issue and sale of the Notes.
The Notes will be issued pursuant to an indenture (the "INDENTURE") to
be dated as of the First Delivery Date (as defined in Section 2(a)), between the
Company and Xxxxx Fargo Bank, N.A., as Trustee (the "TRUSTEE"). The Notes will
be convertible into duly and validly issued, fully paid and non-assessable
shares of common stock, $0.01 par value per share (the "COMMON STOCK"), of the
Company, together with the rights (the "RIGHTS") evidenced by such Common Stock
to the extent provided in the Rights Agreement dated June 26, 2003 between the
Company and Mellon Investor Services LLC as rights agent, as amended (the
"RIGHTS AGREEMENT"), (such shares of Common Stock into which the Notes are
convertible, the "CONVERSION SHARES") on the terms, and subject to the
conditions, set forth in the Indenture.
The Notes will be offered and sold to the Initial Purchaser without
being registered under the Securities Act of 1933, as amended, and the rules and
regulations of the Securities and Exchange Commission (the "COMMISSION")
thereunder (collectively, the "SECURITIES ACT"), in reliance upon an exemption
therefrom.
Holders of the Notes (including the Initial Purchaser and its direct
and indirect transferees) will be entitled to the benefits of a Registration
Rights Agreement, dated as of the First Delivery Date, between the Company and
the Initial Purchaser (the "REGISTRATION RIGHTS AGREEMENT"), the form of which
is contained in Annex A hereof, pursuant to which the Company will agree, among
other things, to file with the Commission a shelf registration
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statement pursuant to Rule 415 under the Securities Act (the "REGISTRATION
STATEMENT") covering the resale of the Notes and the Conversion Shares, and to
use its reasonable best efforts to cause the Registration Statement to be
declared effective within the time periods specified therein.
Holders of the Notes will be entitled to the benefits of a Pledge
Agreement (the "PLEDGE AGREEMENT"), pursuant to which the Company will deposit
with and pledge to the Trustee for the benefit of the holders of the Notes a
portfolio of securities (the "PLEDGED SECURITIES") consisting of U.S. government
securities in such amount as the Company expects will be sufficient, upon
receipt of scheduled interest payments thereof, to provide for the payment of
the first four scheduled interest payments on the Notes when due. Pursuant to a
Control Agreement (the "CONTROL AGREEMENT"), the Pledged Securities shall be
held in an account maintained with a securities intermediary and depositary
bank.
This Agreement, the Indenture, the Registration Rights Agreement, the
Pledge Agreement and the Control Agreement are referred to herein collectively
as the "TRANSACTION DOCUMENTS".
1. Representations, Warranties and Agreements of the Company.
The Company represents, warrants to and agrees with, the Initial Purchaser that:
(a) The Company has prepared a preliminary offering
memorandum dated December 2, 2004 (the "PRELIMINARY OFFERING
MEMORANDUM") and will prepare an offering memorandum dated the date
hereof (the "OFFERING MEMORANDUM") setting forth information concerning
the Company, the Notes, the Common Stock, the Indenture, the Pledge
Agreement and the Registration Rights Agreement, in form and substance
satisfactory to you. Copies of the Preliminary Offering Memorandum have
been, and copies of the Offering Memorandum will be, delivered by the
Company to you. As used in this Agreement, "PRELIMINARY OFFERING
MEMORANDUM" or "OFFERING MEMORANDUM" means the Preliminary Memorandum
or Offering Memorandum, as the case may be, including the documents
incorporated by reference therein, as amended or supplemented. Each of
the Preliminary Offering Memorandum and the Offering Memorandum, will
not as of its respective date, and the Offering Memorandum will not as
of the applicable Delivery Date (as defined in Section 2(b)), contain
any untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading; provided
that, the Company makes no representation or warranty as to information
contained in or omitted from the Preliminary Offering Memorandum or the
Offering Memorandum in reliance upon and in conformity with the written
information furnished to the Company by the Initial Purchaser
specifically for inclusion therein.
(b) The documents incorporated by reference in the
Offering Memorandum (the "INCORPORATED DOCUMENTS"), when they became
effective or were filed with the Commission, as the case may be,
conformed in all material respects to the requirements of the
Securities Exchange Act of 1934, as amended, and the rules and
regulations of the Commission thereunder (collectively, the "EXCHANGE
ACT"), as applicable, and none of such documents contained any untrue
statement of a material fact
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or omitted to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading; and any further documents
so filed and incorporated by reference in the Offering Memorandum, when
such documents are filed with the Commission will conform in all
material respects to the requirements of the Exchange Act and will not
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading.
(c) The Company has established and maintains
disclosure controls and procedures (as such term is defined in Rule
13a-14 under the Exchange Act); (ii) such disclosure controls and
procedures are designed to ensure that material information relating to
the Company, including its consolidated subsidiaries, is made known to
the Company's principal executive officer and its principal financial
officer by others within those entities, particularly during the
periods in which the periodic reports required under the Exchange Act
are being prepared; and (iii) such disclosure controls and procedures
are effective in all material respects to perform the functions for
which they were established.
(d) The Company's auditors and the audit committee of
the board of directors have been advised of (i) all significant
deficiencies and material weaknesses in the design or operation of
internal control over financial reporting which are reasonably likely
to adversely affect the Company's ability to record, process, summarize
and report financial information; and (ii) any fraud, whether or not
material, that involves management or other employees who have a
significant role in the Company's internal control over financial
reporting.
(e) Since the date of the most recent evaluation of
such disclosure controls and procedures, there have been no significant
changes in internal controls or in other factors that could
significantly affect internal controls, including any corrective
actions with regard to significant deficiencies and material
weaknesses.
(f) The Company and each of its subsidiaries with
active operations (each, a "Subsidiary" and collectively,
"Subsidiaries") has been duly incorporated or formed, as the case may
be, and is validly existing as a corporation, foreign corporation or
limited liability company, as the case may be, in good standing under
the laws of its jurisdiction of incorporation or formation, as the case
may be, is duly qualified to do business and is in good standing as a
foreign corporation or a limited liability company in each jurisdiction
in which its ownership or lease of property or the conduct of its
businesses requires such qualification, except where the failure to be
so qualified could not reasonably be expected to have a material
adverse effect on the business, financial condition, stockholders'
equity or results of operations of the Company and its subsidiaries
taken as a whole (a "MATERIAL ADVERSE EFFECT"), and has all power and
authority necessary to own, lease or hold its properties and to conduct
the businesses in which it is engaged.
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(g) The Company has an authorized and issued
capitalization as set forth in the Offering Memorandum, and all of the
issued shares of capital stock of the Company have been duly and
validly authorized and issued, are fully paid and non-assessable and
conform to the description thereof contained in the Offering
Memorandum; and all of the issued shares of capital stock of each
subsidiary of the Company have been duly and validly authorized and
issued and are fully paid and non-assessable and (except for directors'
qualifying shares), and except as set forth in the Offering Memorandum,
are owned directly or indirectly by the Company, free and clear of all
liens, encumbrances, equities, claims or adverse interests
(collectively, "LIENS") of any nature. There has been no change in the
authorized or issued capitalization of the Company or any of its
Subsidiaries since the date indicated in the Offering Memorandum except
with respect to (i) changes occurring in the ordinary course of
business and (ii) changes in outstanding Common Stock resulting from
transactions relating to the Company's employee benefit plans.
(h) No relationship, direct or indirect, exists
between or among the Company, on the one hand, and the directors,
officers, stockholders, customers or suppliers of the Company, on the
other hand, which would be required to be set forth in the Offering
Memorandum if the Offering Memorandum were a prospectus included or
incorporated by reference in a registration statement on Form S-3 that
has not been so set forth.
(i) Except as set forth in the Offering Memorandum,
there are no legal or governmental proceedings, actions, suits, claims,
arbitrations, investigations or proceedings pending or, to the
Company's knowledge, threatened to which the Company or any of its
subsidiaries is or could be a party or to which any of their respective
properties is or could be subject that would be required to be
described in the Offering Memorandum if the Offering Memorandum were a
prospectus included in a registration statement on Form S-1 and are not
so described or that could reasonably be expected to have a Material
Adverse Effect or would materially and adversely affect the ability of
the Company to perform its obligations under the Transaction Documents;
nor are there any statutes, regulations, contracts or other documents
that would be required to be described in the Offering Memorandum if
the Offering Memorandum were a prospectus included in a registration
statement on Form S-1, in each case except as are set forth or
incorporated by reference in the Offering Memorandum; and, to the
Company's knowledge, no such proceedings are threatened or contemplated
by governmental authorities or threatened by others.
(j) Except with respect to the rights contained in
the Registration Rights Agreement and except as set forth in the
Offering Memorandum, there are no contracts, agreements or other
documents between the Company and any person granting such person the
right to require the Company to file a registration statement under the
Securities Act with respect to any securities of the Company owned or
to be owned, directly or indirectly, by such person or to require the
Company to include such securities in any registration statement filed
by the Company.
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(k) Neither the Company nor any of its Subsidiaries
(i) is in violation of its charter or by-laws, (ii) is in default, and
no event has occurred which, with notice or lapse of time or both,
would constitute such a default, in the due performance or observance
of any term, covenant or condition contained in any indenture,
mortgage, deed of trust, loan agreement or other agreement or
instrument to which it is a party or by which it is bound or to which
any of its properties or assets is subject or (iii) is in violation of
any law, ordinance, governmental rule, regulation or court decree to
which it or its property or assets may be subject or has failed to
obtain any material license, permit, certificate, franchise or other
governmental authorization or permit necessary to the ownership of its
property or to the conduct of its business, except in the case of
clauses (ii) and (iii) above, for any such default, the occurrence of
any such event, any violation or the failure to obtain any such
license, permit, certificate, franchise or authorization that,
individually or in the aggregate, could not reasonably be expected to
have a Material Adverse Effect.
(l) Neither the Company nor any of its Subsidiaries
has sustained, since the date of the latest audited financial
statements included and incorporated by reference in the Offering
Memorandum, any material loss or interference with its business from
fire, explosion, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental action,
order or decree (a "MATERIAL LOSS"); and, since such date, there has
not been any change in the capital stock, short-term debt or long-term
debt of the Company or any of its Subsidiaries or any change or
development involving a prospective change that could reasonably be
expected to have a Material Adverse Effect.
(m) The consolidated financial statements of the
Company and its subsidiaries (including the related notes and
supporting schedules) included or incorporated by reference in the
Preliminary Offering Memorandum and Offering Memorandum present fairly
in all material respects the financial condition, results of operations
and changes in financial position of the Company and its subsidiaries
on the basis stated therein at the respective dates or for the
respective periods to which they apply; such statements and related
schedules and notes have been prepared in accordance with generally
accepted accounting principles consistently applied throughout the
periods involved, except as disclosed therein; the supporting
schedules, if any, included or incorporated by reference in the
Preliminary Offering Memorandum or the Offering Memorandum present
fairly in all material respects in accordance with generally accepted
accounting principles the information required to be stated therein;
and the other financial information and data set forth in the
Preliminary Offering Memorandum and Offering Memorandum (and any
amendment or supplement thereto) are, in all material respects,
accurately presented and prepared on a basis consistent with such
financial statements (including the related notes and supporting
schedules) and the books and records of the Company.
(n) Xxxxxxxx & Touche LLP (the "ACCOUNTANTS"), who
have audited the financial statements of the Company, whose report is
incorporated by reference in the Offering Memorandum and who have
delivered the initial letter referred to in Section 5(f)
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hereof, are an independent registered public accounting firm as
required by the Securities Act; and the Accountants, whose report is
incorporated by reference in the Offering Memorandum and who have
delivered one of the initial letters referred to in Section 5(f)
hereof, were an independent registered public accounting firm as
required by the Securities Act during the periods covered by the
financial statements on which they reported.
(o) Except as set forth in the Offering Memorandum,
the Company and each of its subsidiaries have good and marketable title
in fee simple to all real property and good and marketable title to all
personal property owned by them, in each case free and clear of all
liens, encumbrances and defects, except such as do not materially
affect the value of such property and do not materially interfere with
the use made and proposed to be made of such property by the Company
and its subsidiaries; and all assets held under lease by the Company
and its subsidiaries are held by them under valid, subsisting and
enforceable leases, with such exceptions as are not material and do not
interfere with the use made and proposed to be made of such property
and buildings by the Company and its subsidiaries.
(p) The Company and each of its subsidiaries carry,
or are covered by, insurance in such amounts and covering such risks as
is adequate for the conduct of their respective businesses and the
value of their respective properties from insurers of recognized
financial responsibility and as is customary for companies engaged in
similar businesses in similar industries. Neither the Company nor any
of its subsidiaries (i) has received notice from any insurer or agent
of such insurer that substantial capital improvements or other material
expenditures will have to be made in order to continue such insurance
or (ii) has any reason to believe that it will not be able to renew its
existing insurance coverage as and when such coverage expires or to
obtain similar coverage from similar insurers at a cost that could not
reasonably be expected to have a Material Adverse Effect.
(q) The Company and each of its subsidiaries has such
permits, licenses, consents, exemptions, franchises, authorizations and
other approvals (each, an "AUTHORIZATION") of, and has made all filings
with and notices to, all governmental or regulatory authorities and
self-regulatory organizations and all courts and other tribunals,
including, without limitation, under any applicable environmental law,
ordinance, rule, regulation, order, judgment, decree or permit, as are
necessary to own, lease, license and operate its respective properties
and to conduct its business, except where the failure to have any such
Authorization or to make any such filing or notice could not reasonably
be expected to have a Material Adverse Effect; each such Authorization
is valid and in full force and effect and the Company and each of its
subsidiaries is in compliance with all the terms and conditions thereof
and with the rules and regulations of the authorities and governing
bodies having jurisdiction with respect thereto; and no event has
occurred (including, without limitation, the receipt of any notice from
any authority or governing body) which allows or, after notice or lapse
of time or both, would allow, revocation, suspension or termination of
any such Authorization or results or, after notice or lapse of time or
both, would result in any other impairment of the rights of the holder
of any such
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Authorization; and such Authorizations contain no restrictions that are
burdensome to the Company or any of its subsidiaries, except where such
failure to be valid and in full force and effect or to be in
compliance, the occurrence of any such event or the presence of any
such restriction, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect.
(r) The Company and each of its subsidiaries own or
possess adequate rights to use all material patents, patent rights,
patent applications, trademarks, service marks, trade names, trademark
registrations, service mark registrations, copyrights, inventions,
know-how (including trade secrets and other unpatented and/or
unpatentable proprietary of confidential information, systems or
procedures) and licenses necessary for the conduct of their respective
businesses and have no reason to believe that the conduct of their
respective businesses will conflict with, and neither the Company nor
any of its subsidiaries has received any notice of infringement of or
conflict with, asserted rights of others with respect to any of such
intellectual property which, individually or in the aggregate, would
reasonably be expected to have a Material Adverse Effect.
(s) None of the Company and its subsidiaries is
involved in any strike, job action or labor dispute with any group of
employees that could reasonably be expected to have a Material Adverse
Effect, and, to the Company's knowledge, no such action or dispute is
threatened.
(t) The Company and each of its subsidiaries is in
compliance in all material respects with all presently applicable
provisions of the Employee Retirement Income Security Act of 1974, as
amended, and the regulations and published interpretations thereunder
(collectively, "ERISA"); no "reportable event" (as defined in ERISA)
has occurred with respect to any "pension plan" (as defined in ERISA)
for which the Company would have any liability; the Company has not
incurred and does not expect to incur liability under (i) Title IV of
ERISA with respect to termination of, or withdrawal from, any "pension
plan" or (ii) Sections 412 or 4971 of the Internal Revenue Code of
1986, as amended, including the regulations and published
interpretations thereunder (collectively, the "INTERNAL REVENUE CODE");
and each "pension plan" for which the Company would have any liability
that is intended to be qualified under Section 401(a) of the Internal
Revenue Code is so qualified in all material respects and nothing has
occurred, whether by action or by failure to act, which would cause the
loss of such qualification.
(u) The Company and each of its subsidiaries has
filed all federal, state and local income and franchise tax returns
required to be filed through the date hereof and has paid all taxes
(including withholding taxes, penalties and interest, assessments, fees
and other charges) due thereon, except where the failure to file or pay
such taxes could not reasonably be expected to have a Material Adverse
Effect; and no tax deficiency has been determined adversely to the
Company or any of its subsidiaries which has had (nor does the Company
have any knowledge of any tax deficiency which, if determined adversely
to the Company or any of its subsidiaries, could reasonably be expected
to have) a Material Adverse Effect.
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(v) Since the date as of which information is given
in the Offering Memorandum through the date hereof and except as
described in the Offering Memorandum, the Company has not (i) issued or
granted any securities (other than grants of stock options or issuances
of Common Stock pursuant to the Company's stock incentive and stock
purchase plans), (ii) incurred any liability or obligation, direct or
contingent, other than liabilities and obligations which were incurred
in the ordinary course of business, and which are not material, (iii)
entered into any transaction not in the ordinary course of business or
(iv) declared or paid any dividend on any of its capital stock.
(w) The Company (i) makes and keeps accurate books
and records and (ii) maintains internal accounting controls which
provide reasonable assurance that (A) transactions are executed in
accordance with management's authorization, (B) transactions are
recorded and reported to the Company's management as necessary to
permit preparation of its financial statements in conformity with
United States generally accepted accounting principles and to maintain
accountability for its assets, (C) access to its assets is permitted
only in accordance with management's authorization and (D) the reported
accountability for its assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to
any differences.
(x) Since June 6, 2003, the Company has not, directly
or indirectly, including through any subsidiary, extended or maintained
credit, or arranged for the extension of credit, or renewed any
extension of credit, in the form of a personal loan to or for any of
its directors or executive officers in violation of the Sarbanes Oxley
Act of 2002 and the rules and regulations promulgated in connection
therewith (collectively, the "XXXXXXXX-XXXXX ACT").
(y) There are no material off-balance sheet
arrangements (as defined in Regulation S-K Item 303(a)(4)(ii)) that may
have a material current or future effect on the Company's financial
condition, changes in financial condition, results of operations,
liquidity, capital expenditures or capital resources which are not
disclosed or incorporated by reference in the Offering Memorandum.
(z) There is and has been no failure on the part of
the Company and any of the Company's officers or directors, in their
capacities as such, to comply with any applicable provisions of the
Xxxxxxxx-Xxxxx Act.
(aa) Neither the Company nor any of its subsidiaries,
nor any director or officer, nor, to the Company's knowledge, any
agent, employee or other person associated with or acting on behalf of
the Company or any of its subsidiaries, has used any corporate funds
for any unlawful contribution, gift, entertainment or other unlawful
expense relating to political activity; made any direct or indirect
unlawful payment to any foreign or domestic government official or
employee from corporate funds; violated or is in violation of any
provision of the Foreign Corrupt Practices Act of 1977, as amended, or
made any bribe, rebate, payoff, influence payment, kickback or other
unlawful payment.
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(bb) There has been no storage, disposal, generation,
manufacture, refinement, transportation, handling or treatment of toxic
wastes, medical wastes, hazardous wastes or hazardous substances by the
Company or any of its subsidiaries (or, to the Company's knowledge, any
of their predecessors in interest) at, upon or from any of the property
now or previously owned or leased by the Company or its subsidiaries in
violation of any applicable law, ordinance, rule, regulation, order,
judgment, decree or permit or which would require remedial action under
any applicable law, ordinance, rule, regulation, order, judgment,
decree or permit, except for any violation or remedial action which
would not have, or could not reasonably be expected to have a Material
Adverse Effect; there has been no material spill, discharge, leak,
emission, injection, escape, dumping or release of any kind onto such
property or into the land surrounding such property of any toxic
wastes, medical wastes, solid wastes, hazardous wastes or hazardous
substances due to or caused by the Company or any of its subsidiaries
or with respect to which the Company or any of its subsidiaries have
knowledge, except for any such spill, discharge, leak, emission,
injection, escape, dumping or release which would not have or would not
reasonably be expected to have a Material Adverse Effect; and the terms
"hazardous wastes", "toxic wastes", "hazardous substances" and "medical
wastes" shall have the meanings specified in any applicable local,
state, federal and foreign laws or regulations with respect to
environmental protection.
(cc) This Agreement has been duly authorized,
executed and delivered by the Company; assuming due authorization,
execution and delivery by the Initial Purchaser, this Agreement
constitutes a legally valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms, subject
to the effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or
affecting creditors' rights generally, general equitable principles
(whether considered in a proceeding in equity or at law) and an implied
covenant of good faith and fair dealing, and except with respect to the
rights of indemnification and contribution hereunder, where enforcement
hereof may be limited by federal or state securities laws or the
policies underlying such laws; and this Agreement will conform in all
material respects to the description thereof contained in the Offering
Memorandum.
(dd) The Company has all necessary power and
authority to execute and deliver the Indenture and perform its
obligations thereunder; the Indenture has been duly authorized by the
Company and, upon the effectiveness of the Registration Statement, will
be qualified under the Trust Indenture Act of 1939, as amended, and the
rules and regulations of the Commission thereunder (collectively, the
"TRUST INDENTURE ACT"); when the Indenture is duly executed and
delivered by the Company, assuming due authorization, execution and
delivery of the Indenture by the Trustee, it will constitute a legally
valid and binding agreement of the Company, enforceable against the
Company in accordance with its terms, subject to the effects of
bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors'
rights generally, general equitable principles (whether considered in a
proceeding in equity or at law) and an implied covenant of good faith
and fair dealing;
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and the Indenture will conform, when executed, in all material respects
to the description thereof contained in the Offering Memorandum.
(ee) The Company has all necessary power and
authority to execute, issue and deliver the Notes and perform its
obligations thereunder; the Notes have been duly authorized by the
Company and when the Notes are executed, authenticated and issued in
accordance with the terms of the Indenture and delivered to and paid
for by the Initial Purchaser pursuant to this Agreement on the
applicable Delivery Date, assuming due authentication of the Notes by
the Trustee, such Notes will constitute legally valid and binding
obligations of the Company entitled to the benefits of the Indenture,
enforceable against the Company in accordance with their terms, subject
to the effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or
affecting creditors' rights generally, general equitable principles
(whether considered in a proceeding in equity or at law) and an implied
covenant of good faith and fair dealing; and the Notes will conform,
when issued, in all material respects to the description thereof
contained in the Offering Memorandum.
(ff) The Company has all necessary power and
authority to execute, issue and deliver the Conversion Shares; the
Conversion Shares have been duly and validly authorized and reserved
for issuance upon conversion of the Notes and are free of preemptive
rights; all Conversion Shares, when issued and delivered upon such
conversion in accordance with the terms of the Indenture, will be duly
and validly authorized and issued, fully paid and non-assessable and
will be free and clear of any Liens; and the Conversion Shares will
conform, if issued, in all material respects to the description thereof
in the Offering Memorandum.
(gg) The Company has all necessary power and
authority to execute and deliver the Registration Rights Agreement and
perform its obligations thereunder; the Registration Rights Agreement
and the transactions contemplated thereby have been duly authorized by
the Company and, when the Registration Rights Agreement is duly
executed and delivered by the Company, assuming due authorization,
execution and delivery by the Initial Purchaser, it will be a legally
valid and binding agreement of the Company, enforceable against the
Company in accordance with its terms, except as the enforceability
thereof may be limited by bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws relating
to or affecting creditors' rights generally, subject to general
principles of equity and to limitations on availability of equitable
relief, including specific performance (whether considered in a
proceeding in equity or at law) and an implied covenant of good faith
and fair dealing, and except with respect to the rights of
indemnification and contribution thereunder, where enforcement thereof
may be limited by federal or state securities laws or the policies
underlying such laws; and the Registration Rights Agreement will
conform, when executed and delivered, in all material respects to the
description thereof contained in the Offering Memorandum.
(hh) The Company has all necessary power and
authority to execute and deliver the Pledge Agreement and the Control
Agreement and perform its obligations thereunder; the Pledge Agreement,
the Control Agreement and the transactions contemplated thereby have
been duly authorized by the Company and, when the Pledge
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Agreement and the Control Agreement are duly executed and delivered by
the Company, assuming due authorization, execution and delivery by the
Trustee and, in the case of the Control Agreement, the securities
intermediary party thereto, each of such agreement will be a legally
valid and binding agreement of the Company, enforceable against the
Company in accordance with its terms, except as the enforceability
thereof may be limited by bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws relating
to or affecting creditors' rights generally, subject to general
principles of equity and to limitations on availability of equitable
relief, including specific performance (whether considered in a
proceeding in equity or at law) and an implied covenant of good faith
and fair dealing; and the Pledge Agreement and the Control Agreement
will conform, when executed and delivered, in all material respects to
the description thereof contained in the Offering Memorandum.
(ii) The execution, delivery and performance by the
Company of the Transaction Documents, the issuance of the Notes and the
Conversion Shares, if at all, the compliance by the Company with all
the provisions hereof and thereof and the consummation of the
transactions contemplated hereby and thereby will not (i) conflict with
or result in a breach or violation of any of the terms or provisions
of, or constitute a default under, any indenture, mortgage, deed of
trust, loan agreement, lease or other agreement or instrument to which
the Company or any of its subsidiaries is a party or by which the
Company or any of its subsidiaries is bound or to which any of the
property or assets of the Company or any of its subsidiaries is
subject, (ii) result in any violation of the provisions of the charter
or by-laws of the Company or the organizational documents of any of its
subsidiaries, (iii) result in any violation of any statute or any
order, rule or regulation of any court or governmental agency or body
having jurisdiction over the Company or any of its subsidiaries or any
of their properties or assets, (iv) other than pursuant to the terms of
the Pledge Agreement and the other documents contemplated thereby,
result in the imposition or creation of (or the obligation to create or
impose) a Lien under any agreement or instrument to which the Company
or any of its subsidiaries is a party or by which the Company or any of
its subsidiaries or their respective properties or assets is bound or
(v) result in the suspension, termination or revocation of any
Authorization of the Company or any of its subsidiaries or any other
impairment of the rights of the holder of any such Authorization,
except, in the case of clauses (i), (iii), (iv) and (v), for any such
conflict, breach, violation, default, imposition or creation of a Lien,
or suspension, termination, revocation or impairment of any
Authorization that could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
(jj) Except (i) with respect to the transactions
contemplated by the Registration Rights Agreement as may be required
under the Securities Act and the Exchange Act and the qualification of
the Indenture under the Trust Indenture Act, (ii) with respect to the
filing of any financing statements as contemplated by the Pledge
Agreement, (iii) as required by applicable state securities or "blue
sky" laws and (iv) for such consents, approvals, authorizations,
orders, filings or registrations which have been obtained or made, no
consent, approval, authorization or order of, or filing or registration
with, any court or governmental agency or body having jurisdiction over
the Company
12
or any of its subsidiaries or any of their respective properties or
assets is required for the execution, delivery and performance of the
Transaction Documents by the Company, the issuance of the Notes, and
the Conversion Shares, if at all, and the consummation of the
transactions contemplated hereby and thereby.
(kk) Neither the Company nor any subsidiary is or, as
of the applicable Delivery Date, after giving effect to the issuance of
the Notes and the application of the net proceeds therefrom as set
forth in the Offering Memorandum, will be an "investment company" as
defined, and subject to regulation, under the Investment Company Act of
1940, as amended, and the rules and regulations of the Commission
thereunder (collectively, the "INVESTMENT COMPANY ACT").
(ll) Except as disclosed in the Offering Memorandum,
there are no outstanding securities convertible into or exchangeable
for, or warrants, options or rights issued by the Company to purchase,
any shares of the capital stock of the Company; there are no statutory,
contractual, preemptive or other rights to subscribe for or to purchase
any Common Stock; and there are no restrictions upon transfer of the
Common Stock pursuant to the Company's charter or bylaws.
(mm) Assuming the accuracy of the representations and
warranties of the Initial Purchaser contained in Section 6 and its
compliance with the agreements set forth therein, it is not necessary,
in connection with the issuance and sale of the Notes to the Initial
Purchaser, the offer, resale and delivery of the Notes by the Initial
Purchaser and the conversion of the Notes into Conversion Shares, in
the manner contemplated by this Agreement, the Indenture, the
Registration Rights Agreement and the Offering Memorandum, to register
the Notes or the Conversion Shares under the Securities Act or to
qualify the Indenture under the Trust Indenture Act.
(nn) No securities of the same class (within the
meaning of Rule 144A(d)(3) under the Securities Act) as the Notes are
listed on any national securities exchange registered under Section 6
of the Exchange Act or quoted on an automated inter-dealer quotation
system.
(oo) None of the Company or any of its Affiliates (as
defined in Rule 501(b) of Regulation D, an "Affiliate"), has, directly
or through an agent, engaged in any form of general solicitation or
general advertising in connection with the offering of the Notes or the
Conversion Shares (as those terms are used in Regulation D) under the
Securities Act or in any manner involving a public offering within the
meaning of Section 4(2) of the Securities Act; and the Company has not
entered into any contractual arrangement with respect to the
distribution of the Notes or the Conversion Shares, except for this
Agreement and the Registration Rights Agreement, and the Company will
not enter into any such arrangement.
(pp) None of the Company or any of its Affiliates
has, directly or through any agent, sold, offered for sale, solicited
offers to buy or otherwise negotiated in respect of, any "security" (as
defined in the Securities Act) which is or will be integrated
13
with the sale of the Notes or the Conversion Shares in a manner that
would require the registration under the Securities Act of the Notes or
the Conversion Shares.
(qq) Except as disclosed in the Offering Memorandum,
the Company has not sold or issued any shares of Common Stock, any
security convertible into shares of Common Stock, or any security of
the same class as the Notes during the six-month period preceding the
date of the Offering Memorandum, including any sales pursuant to Rule
144A ("RULE 144A"), Regulation D ("REGULATION D") or Regulation S
("REGULATION S") under the Securities Act, other than shares issued
pursuant to employee benefit plans, qualified stock option plans or
other employee compensation plans or pursuant to outstanding options,
rights or warrants.
(rr) Neither the Company, nor to its knowledge, any
of its Affiliates, has taken, directly or indirectly, any action (A)
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 Notes or Common Stock to facilitate the sale or
resale of such securities or (B) prohibited by Regulation M under the
Exchange Act.
(ss) The indebtedness represented by the Notes is
being incurred for proper purposes and in good faith and the Company is
and will be on any Delivery Date (after giving effect to the
application of the proceeds from the issuance of the Notes) solvent,
and has and will have on any Delivery Date (after giving effect to the
application of the proceeds from the issuance of the Notes) sufficient
capital for carrying on its business and is and will be on the Delivery
Date (after giving effect to the application of the proceeds from the
issuance of the Notes) able to pay its existing and current debts as
they mature.
(tt) No event has occurred nor has any circumstance
arisen which, had the Notes been issued on such Delivery Date, would
constitute a default or an Event of Default under the Indenture as
summarized in the Offering Memorandum.
(uu) Each certificate signed by any officer of the
Company and delivered to the Initial Purchaser or counsel to the
Initial Purchaser shall be deemed to be a representation and warranty
by the Company to the Initial Purchaser as to the matters covered
thereby.
2. Purchase, Sale and Delivery of Notes.
(a) Subject to the terms and conditions and in
reliance upon the representations and warranties herein set forth, the
Company agrees to sell to the Initial Purchaser, and the Initial
Purchaser agrees to purchase from the Company, at a purchase price of
95.50% of the principal amount thereof (the "PURCHASE PRICE"), the Firm
Notes.
Delivery of and payment for the Firm Notes shall be
made at the offices of Xxxxxxx Xxxxxxx & Xxxxxxxx LLP, 1999 Avenue of
the Stars, Los Angeles, California 90067, at 8:00 a.m., Pacific
Standard Time, on December 8, 2004, or such later date as the Initial
Purchaser shall designate, which date and time may be postponed by
14
agreement between the Initial Purchaser and the Company (such date and
time of delivery and payment for the Firm Notes being referred to
herein as the "FIRST DELIVERY DATE"). Delivery of the Firm Notes by the
Company shall be made to the Initial Purchaser against payment of the
purchase price by the Initial Purchaser; and payment for the Firm Notes
by the Initial Purchaser shall be made against delivery to the Initial
Purchaser of the Firm Notes as set forth below and effected either by
wire transfer of immediately available funds to an account with a bank
in The City of New York, the account number and the ABA number for such
bank to be provided by the Company to the Initial Purchaser at least
two business days in advance of the First Delivery Date, or by such
other manner of payment as may be agreed by the Company and the Initial
Purchaser.
Subject to the terms and conditions and in reliance
upon the representations and warranties herein set forth, the Company
hereby grants the option to the Initial Purchaser to purchase the
Option Notes at the same purchase price as the Initial Purchaser will
pay for the Firm Notes. The option may be exercised in whole or in
part at any time and from time to time upon notice in writing or by
facsimile by Xxxxxx Brothers Inc. to the Company setting forth the
amount (which shall be an integral multiple of $1,000 principal
amount) of Option Notes as to which such option is being exercised;
provided that the Option Delivery Date (as defined below) must not be
more than 30 days subsequent to the date of this Agreement; and
provided further that Option Notes may not be issued in whole or in
part after the period which ends 13 days after the date hereof
(counting the date hereof as the first day) unless the Initial
Purchaser determines that such Option Notes would not be treated as
having been issued with "original issue discount" for purposes of
Sections 1271-1275 of the Internal Revenue Code and the applicable
Treasury regulations promulgated thereunder.
The date for the delivery of and payment for the
Option Notes, being herein referred to as an "OPTION DELIVERY DATE",
which may be the First Delivery Date (the First Delivery Date and the
Option Delivery Date, if any, being referred to as a "DELIVERY DATE"),
shall be determined by the Initial Purchaser but shall not be later
than five full business days after written notice of election to
purchase Option Notes is given. Delivery of the Option Notes by the
Company shall be made to the Initial Purchaser against payment of the
purchase price therefor by the Initial Purchaser; and payment for the
Option Notes by the Initial Purchaser shall be made against delivery
to the Initial Purchaser of the Option Security as set forth below and
effected either by wire transfer of immediately available funds to an
account with a bank in The City of New York, the account number and
the ABA number for such bank to be provided by the Company to the
Initial Purchaser at least two business days in advance of the Option
Delivery Date, or by such other manner of payment as may be agreed by
the Company and the Initial Purchaser.
(b) The Company will deliver against payment of the
purchase price the Notes initially sold to qualified institutional
buyers ("QIBS"), as defined in Rule 144A, in the form of one or more
permanent global certificates (the "GLOBAL NOTES"), registered in the
name of Cede & Co., as nominee for The Depository Trust Company
15
("DTC"). Beneficial interests in the Notes initially sold to QIBs will
be shown on, and transfers thereof will be effected only through,
records maintained in book-entry form by DTC and its participants. The
Global Notes will be made available, at the request of the Initial
Purchaser, for checking at least 24 hours prior to such Delivery Date.
(c) Notwithstanding the foregoing, at each Delivery
Date, the Company shall irrevocably instruct the Initial Purchaser to
(i) purchase Pledged Securities on behalf of the Company using a
portion of the net proceeds from the issuance of the Notes in such
amount as the Company expects will be sufficient, upon receipt of
scheduled interest and principal payments thereof, to provide for the
payment of the first four scheduled interest payments on the Notes when
due and (ii) deliver such Pledged Securities on behalf of the Company
to the Trustee, for its benefit and the ratable benefit of the holders
of the Notes, pursuant to the Pledge Agreement.
(d) Time shall be of the essence, and delivery at the
time and place specified pursuant to this Agreement is a further
condition of the obligations of the Initial Purchaser hereunder.
3. Further Agreements of the Company. The Company agrees:
(a) To prepare the Offering Memorandum in a form
approved by Xxxxxx Brothers Inc.;
(b) To advise the Initial Purchaser promptly of any
proposal to amend or supplement the Offering Memorandum and not to
effect any such amendment or supplement without the consent of the
Initial Purchaser. If, at any time prior to completion of the resale of
the Notes by the Initial Purchaser, any event shall occur or condition
exist as a result of which it is necessary to amend or supplement the
Offering Memorandum in order that the Offering Memorandum will not
include an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in the
light of the circumstances existing at the time it is delivered to a
purchaser, not misleading, to promptly notify the Initial Purchaser and
prepare, subject to the first sentence of this Section 3(b), such
amendment or supplement as may be necessary to correct such untrue
statement or omission;
(c) To furnish promptly to the Initial Purchaser and
to Xxxxxxx Xxxxxxx & Xxxxxxxx LLP, counsel to the Initial Purchaser,
copies of the Preliminary Offering Memorandum and the Offering
Memorandum (and all amendments and supplements thereto), as soon as
available and in such quantities as the Initial Purchaser reasonably
requests for internal use and for distribution to prospective
purchasers; and to furnish to the Initial Purchaser on the date hereof
four copies of the Offering Memorandum signed by duly authorized
officers of the Company, one of which will include the independent
auditors' report therein manually signed by such independent auditors.
The Company will pay the expenses of printing and distributing to the
Initial Purchaser all such documents;
16
(d) Promptly from time to time, to take such action
as the Initial Purchaser may reasonably request, to qualify the Notes
for offering and sale under the securities laws of such jurisdictions
as the Initial Purchaser may request and to comply with such laws so as
to permit the continuance of sales and dealings therein in such
jurisdictions for as long as may be necessary to complete the resale of
the Notes; provided that, in connection therewith, the Company shall
not be required to qualify as a foreign corporation or to file a
general consent to service of process in any jurisdiction in which the
Company is not already so qualified or has not so consented;
(e) For a period of two years following the First
Delivery Date, to furnish to the Initial Purchaser upon request copies
of all materials furnished by the Company to its stockholders and all
public reports and all reports and financial statements furnished by
the Company to the principal national securities exchange upon which
the Notes or Common Stock may be listed pursuant to requirements of or
agreements with such exchange or to the Commission pursuant to the
Exchange Act; provided, however, that the Company shall not be required
to provide the Initial Purchaser with any such reports or similar forms
that have been filed with the Commission by electronic transmission
pursuant to XXXXX;
(f) For a period of 90 days from the date hereof, not
to, directly or indirectly, (1) announce an offering of, or file any
registration statement with the Commission relating to, debt or equity
securities of the Company (other than the offering contemplated by the
Registration Rights Agreement or the filing of a Form S-8 with respect
to the Company's employee benefit plans) or offer for sale, sell,
pledge or otherwise dispose of (or enter into any transaction or device
which is designed to, or could be expected to, result in the
disposition or purchase by any person at any time in the future of) any
debt or equity securities of the Company (other than the Notes), any
securities convertible into or exchangeable for Common Stock or
substantially similar securities (other than the Notes, the Conversion
Shares and Common Stock to be issued in the ordinary course under the
Company's employee benefit plans, qualified stock option plans or other
employee compensation plans existing on the date hereof or pursuant to
currently outstanding options, warrants or rights) or sell or grant
options, warrants or rights with respect to any shares of Common Stock
or securities convertible into or exchangeable for Common Stock (other
than the grant of options, warrants or rights pursuant to option or
other employee compensation plans existing on the date hereof) or (2)
enter into any swap or other derivatives transaction that transfers to
another, in whole or in part, any of the economic benefits or risks of
ownership of such shares of Common Stock, whether any such transaction
described in clause (1) or (2) above is to be settled by delivery of
Common Stock or other securities, in cash or otherwise, without the
prior written consent of the Initial Purchaser; and to cause each
executive officer and director of the Company to furnish to the Initial
Purchaser, on or prior to the date hereof, a letter substantially in
the form of Annex B hereto; provided however, that notwithstanding the
foregoing, the Company may take any action required to be taken by it
under those registration rights agreements described in the Offering
Memorandum;
17
(g) To use its best efforts to assist the Initial
Purchaser in arranging to cause the Notes to be accepted to trade in
The PORTAL Market ("PORTAL") of the National Association of Securities
Dealers, Inc. ("NASD");
(h) To use its best efforts to cause the Conversion
Shares to be approved for trading on The NASDAQ Stock Market (the
"NASDAQ") prior to the effectiveness of the Registration Statement;
(i) Not to take, directly or indirectly, any action
which is designed to stabilize or manipulate, or which constitutes or
which might reasonably be expected to cause or result in stabilization
or manipulation, of the price of any security of the Company in
connection with the offering of the Notes;
(j) To use its best efforts to cause the Notes to be
accepted for clearance and settlement through the facilities of DTC;
(k) To execute and deliver the Indenture, the
Registration Rights Agreement, the Pledge Agreement and the Control
Agreement in form and substance reasonably satisfactory to Initial
Purchaser;
(l) To apply the proceeds from the sale of the Notes
as set forth under "Use of Proceeds" in the Offering Memorandum;
(m) To take such steps as shall be necessary to
ensure that neither the Company nor any of its subsidiaries shall
become an "investment company" as defined, and subject to regulation,
under Investment Company Act;
(n) For so long as any of the Notes are "restricted
securities" within the meaning of Rule 144(a)(3) under the Securities
Act, to provide to any holder of the Notes or to any prospective
purchaser of the Notes designated by any holder, upon request of such
holder or prospective purchaser, information required to be provided by
Rule 144A(d)(4) of the Securities Act if, at the time of such request,
the Company is not subject to the reporting requirements under Section
13 or 15(d) of the Exchange Act;
(o) During the period of two years after the First
Delivery Date or, if later, the Option Delivery Date, the Company will
not, and will not permit any of its Affiliates to, resell any of the
Notes which constitute "restricted securities" under Rule 144 that have
been reacquired by any of them.
(p) To ensure that each of the Notes and the
Conversion Shares will bear, to the extent applicable, the legend
contained in the Offering Memorandum under the caption "Notice to
Investors" for the time period and upon the other terms stated therein,
except after the Notes are resold pursuant to a registration statement
effective under the Securities Act;
(q) Except following the effectiveness of the
Registration Statement, not to, and will cause its respective
Affiliates not to, solicit any offer to buy or offer to
18
sell the Notes by means of any form of general solicitation or general
advertising (as those terms are used in Regulation D under the
Securities Act) or in any manner involving a public offering within the
meaning of Section 4(2) of the Securities Act;
(r) Not to, and will cause its respective affiliates
not to, sell, offer for sale or solicit offers to buy or otherwise
negotiate in respect of any "security" (as defined in the Securities
Act) in a transaction that could be integrated with the sale of the
Notes in a manner that would require the registration under the
Securities Act of the Notes; and
(s) To comply, in all material respects, with the
provisions of the Xxxxxxxx-Xxxxx Act.
4. Expenses. The Company agrees to pay the following expenses,
whether or not the transactions contemplated by this Agreement are consummated
or this Agreement is terminated:
(a) the costs incident to the authorization,
issuance, sale and delivery of the Notes and the Conversion Shares, if
applicable, and any taxes payable in that connection;
(b) the costs incident to the preparation, printing
and distribution of the Preliminary Offering Memorandum, the Offering
Memorandum and any amendment or supplement to the Offering Memorandum,
all as provided in this Agreement;
(c) the costs of producing and distributing the
Transaction Documents;
(d) the filing fees incident to securing any required
review by the NASD of the terms of sale of the Notes and any applicable
listing or other fees, including all expenses and fees in connection
with the application for inclusion of the Conversion Shares on NASDAQ;
(e) the fees and expenses of qualifying the Notes and
the Conversion Shares under the securities laws of the several
jurisdictions as provided in Section 3(d) and of preparing, printing
and distributing a U.S. Blue Sky memorandum, if any (including related
fees and expenses of counsel to the Initial Purchaser);
(f) all costs and expenses incident to the
preparation of a "road show" presentation or comparable marketing
materials used in connection with the offering of the Notes;
(g) all fees and expenses incurred in connection with
any rating of the Notes;
(h) the costs of preparing the Notes;
(i) the fees and expenses (including fees and
disbursements of counsel, if applicable) of Company, the Accountants,
the Trustee (in relation to the
19
Indenture, the Pledge Agreement and the Control Agreement) and the
costs and charges of any registrar, transfer agent, paying agent or
conversion agent under the Indenture;
(j) all expenses and fees in connection with the
application for inclusion of the Notes in The PORTAL Market; and
(k) the fees and expenses (including fees and
disbursements of counsel) of the Company in connection with approval of
the Notes by DTC for "book-entry" transfer; and
(l) all other costs and expenses incident to the
performance of the obligations of the Company under this Agreement;
provided that, except as provided in this Section 4 and in Section 9, the
Initial Purchaser shall pay its own costs and expenses, including the costs and
expenses of its counsel.
5. Conditions of the Initial Purchaser's Obligations. The
obligations of the Initial Purchaser hereunder are subject to the accuracy, when
made and on the applicable Delivery Date, of the representations and warranties
of the Company contained herein, to the performance by the Company of its
obligations hereunder, and to each of the following additional terms and
conditions:
(a) The Initial Purchaser shall not have discovered
and disclosed to the Company prior to or on such Delivery Date that the
Offering Memorandum or any amendment or supplement thereto, in the
opinion of Xxxxxxx Xxxxxxx & Xxxxxxxx LLP, counsel to the Initial
Purchaser, contains an untrue statement of a material fact or omits to
state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading.
(b) All corporate proceedings and other legal matters
incident to the authorization, form and validity of the Offering
Memorandum, the Transaction Documents, the Notes and the Conversion
Shares and all other legal matters relating to the offering, issuance
and sale, as applicable, of the Notes and the Conversion Shares and the
transactions contemplated hereby and thereby shall be satisfactory in
all material respects to counsel to the Initial Purchaser; and the
Company shall have furnished to such counsel all documents and
information that they may reasonably request to enable them to pass
upon such matters.
(c) Xxxxxxxx & Xxxxxxxx LLP, counsel to the Company,
shall have furnished to the Initial Purchaser its written opinion
addressed to the Initial Purchaser and dated such Delivery Date, in
form and substance reasonably satisfactory to the Initial Purchaser, to
the effect that:
(i) The Company has been duly incorporated
and is validly existing as a corporation in good standing
under the laws of the State of Delaware and is duly qualified
to do business and is in good standing as a foreign
corporation in each jurisdiction in which its ownership or
lease of property or the
20
conduct of its business requires such qualification, and has
all corporate power and authority necessary to own or hold its
properties and conduct the businesses in which they are
engaged;
(ii) Each domestic Subsidiary of the Company
has been duly incorporated or formed, as the case may be, and
is validly existing as a corporation or limited liability
company, as the case may be, in good standing under the laws
of the jurisdiction of its incorporation or formation, as the
case may be, and is duly qualified to do business and is in
good standing as a foreign corporation or limited liability
company, as the case may be, in each jurisdiction in which its
ownership or lease of property or the conduct of its business
requires such qualification, and has all power and authority
(corporate and otherwise) necessary to own or hold its
properties and conduct the business in which it is engaged;
(iii) The Company has all necessary
corporate right, power and authority to execute and deliver
each of the Transaction Documents, to perform its obligations
thereunder, to issue, sell and deliver to the Notes to the
Initial Purchaser and to issue and deliver the Conversion
Shares upon the conversion of any of the Notes.
(iv) This Agreement has been duly
authorized, executed and delivered by the Company.
(v) The Indenture has been duly authorized,
executed and delivered by the Company and, assuming due
authorization, execution and delivery thereof by the Trustee,
constitutes a legally valid and binding agreement of the
Company enforceable against the Company in accordance with its
terms, except as the enforceability thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium and other
similar laws relating to or affecting creditors' rights
generally, subject to general principles of equity and to
limitations on availability of equitable relief, including
specific performance (regardless of whether such
enforceability is considered in a proceeding in equity or at
law) or by an implied covenant of good faith and fair dealing.
(vi) The Notes have been duly authorized by
the Company and when executed, issued and authenticated in
accordance with terms of the Indenture and delivered to and
paid for by the Initial Purchaser, will constitute legally
valid and binding obligations of the Company entitled to the
benefits of the Indenture, enforceable against the Company in
accordance with their terms, except as the enforceability
thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws relating to
or affecting creditors' rights generally, subject to general
principles of equity and to limitations on availability of
equitable relief, including specific performance (regardless
of whether such enforceability is considered in a proceeding
in equity or at law) or by an implied covenant of good faith
and fair dealing.
21
(vii) The Registration Rights Agreement has
been duly authorized, executed and delivered by the Company
and, assuming due authorization, execution and delivery
thereof by the Initial Purchaser, constitutes a valid and
legally binding agreement of the Company enforceable against
the Company in accordance with its terms, except as the
enforceability thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium and other similar laws
relating to or affecting creditors' rights generally, subject
to general principles of equity and to limitations on
availability of equitable relief, including specific
performance (regardless of whether such enforceability is
considered in a proceeding in equity or at law), by an implied
covenant of good faith and fair dealing, and except with
respect to the rights of indemnification and contribution
thereunder, where enforcement thereof may be limited by
federal and state securities laws or the policies underlying
such laws.
(viii) Each of the Pledge Agreement and the
Control Agreement has been duly authorized, executed and
delivered by the Company and, assuming due authorization,
execution and delivery thereof by the Trustee and, in the case
of the Control Agreement, the securities intermediary party
thereto, constitutes a valid and legally binding agreement of
the Company enforceable against the Company in accordance with
its terms, except as the enforceability thereof may be limited
by bankruptcy, insolvency, reorganization, moratorium and
other similar laws relating to or affecting creditors' rights
generally, subject to general principles of equity and to
limitations on availability of equitable relief, including
specific performance (regardless of whether such
enforceability is considered in a proceeding in equity or at
law), by an implied covenant of good faith and fair dealing,
(ix) The Conversion Shares have been duly
authorized and validly reserved for issuance upon conversion
of the Notes and are free of preemptive rights arising under
statute, regulation, the Company's charter or by-laws, and to
such counsel's knowledge, except as identified in the opinion,
any agreement or instrument to which the Company is a party or
other rights to subscribe for or to purchase any shares of
Common Stock; and the Conversion Shares, when so issued and
delivered upon such conversion in accordance with the terms of
the Indenture, will be duly and validly authorized and issued,
fully paid and non-assessable.
(x) The statements made in the Offering
Memorandum under the caption "Description of the Notes",
insofar as they purport to constitute summaries of the
Indenture, the Registration Rights Agreement and the Notes,
constitute accurate summaries in all material respects.
(xi) The statements made in the Offering
Memorandum under the caption "Description of Capital Stock",
insofar as they purport to constitute summaries of the
provisions of the Company's capital stock, including the
Common Stock (including the Conversion Shares) or Delaware
General Corporation Law are accurate and complete in all
material respects.
22
(xii) The Company has an authorized and
issued capitalization as set forth in the Offering Memorandum,
and all of the issued shares of capital stock of the Company
have been duly and validly authorized and issued, are fully
paid and non-assessable and conform to the description thereof
contained in the Offering Memorandum.
(xiii) Except as set forth in the Offering
Memorandum with respect to the rights contained in the
Registration Rights Agreement, there are no preemptive or
other rights to subscribe for or to purchase from the Company,
or any restriction upon the voting or transfer of, any shares
of Common Stock pursuant to any agreement or other instrument,
known to such counsel, to which the Company is a party.
(xiv) To the knowledge of such counsel and
other than as set forth in the Offering Memorandum, there are
no legal or governmental proceedings pending or threatened to
which the Company or any of its subsidiaries is a party or of
which any property or assets of the Company or any of its
subsidiaries is the subject which, if determined adversely to
the Company or any of its subsidiaries, would reasonably be
expected to have a Material Adverse Effect.
(xv) The statements made in the Offering
Memorandum under the caption "Material United States Federal
Income Tax Considerations", insofar as they purport to
constitute summaries of matters of United States federal
income tax law and regulations or legal conclusions with
respect thereto, constitute accurate summaries of the matters
set forth therein in all material respects.
(xvi) The execution, delivery and
performance by the Company of the Transaction Documents, the
issuance of the Notes and the Conversion Shares, if at all,
the compliance by the Company with all the provisions hereof
and thereof and the consummation of the transactions
contemplated hereby and thereby will not (A) conflict with or
result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any material
indenture, mortgage, deed of trust, loan agreement, lease or
other agreement or instrument to which the Company or any of
its subsidiaries is a party or by which the Company or any of
its subsidiaries is bound or to which any of the property or
assets of the Company or any of its subsidiaries is subject or
(B) result in any violation of the provisions of the charter
or by-laws of the Company or any of its subsidiaries or any
statute or any order, rule or regulation known to such counsel
of any court or governmental agency or body having
jurisdiction over the Company or any of its subsidiaries or
any of their properties or assets.
(xvii) No consent, approval, authorization
or order of, or filing or registration with, any such U.S. or
foreign court or governmental agency or body having
jurisdiction over the Company or any of its domestic
subsidiaries or any of their respective properties or assets
is required for the execution, delivery and performance of
this Agreement or any of the other documents to be entered
into in
23
connection with the issuance of the Notes and the Conversion
Shares by the Company and the consummation of the transactions
contemplated hereby and thereby, except (A) with respect to
the transactions contemplated by the Registration Rights
Agreement as may be required under the Securities Act and the
qualification of the Indenture under the Trust Indenture Act,
(B) such consents, approvals, authorizations, registrations or
qualifications as may be required under the Exchange Act and
applicable state securities laws in connection with the
purchase and distribution of the Notes by the Initial
Purchaser (as to which such counsel need express no opinion
beyond that set forth in paragraph (xviii) below), (C) filings
contemplated to be made pursuant to the Pledge Agreement and
(D) for such consents, approvals, authorizations, orders,
filings or registrations as have been obtained or made.
(xviii) The Company is not in violation of
its charter or by-laws.
(xix) Assuming (A) the accuracy of the
representations and warranties of the Company and the Initial
Purchaser contained herein, (B) the Company and the Initial
Purchaser comply with the agreements and covenants contained
herein, (C) the accuracy of the representations and warranties
of purchasers to whom the Initial Purchaser initially resell
the Notes as contemplated herein and (D) compliance by the
Initial Purchaser of the offering and transfer procedures and
restrictions described in the Offering Memorandum, no
registration of the Notes or the Conversion Shares under the
Securities Act, and no qualification of the Indenture under
the Trust Indenture Act, is required in connection with the
offer, sale and delivery of the Notes by the Company to the
Initial Purchaser or by the Initial Purchaser of the Notes to
the initial purchasers therefrom or in connection with the
conversion of the Notes into Conversion Shares, in each case
in the manner contemplated by the Offering Memorandum, this
Agreement and the Indenture (it being understood that no
opinion is given as to any subsequent resale of the Notes or
the Conversion Shares).
(xx) The Company is not, and upon
application of the net proceeds from the sale of the Notes as
set forth in the Offering Memorandum, will not be, an
"investment company" as defined, and subject to regulation,
under the Investment Company Act.
(xxi) The Pledge Agreement is effective to
create in favor of the Trustee for the benefit of the holders
of Notes a security interest under the New York UCC in the
rights of the Company in (A) the Pledged Account (as defined
therein) and the financial assets (as defined in the New York
UCC Section 8-102) from time to time credited to such Pledged
Account and (B) the deposit account identified in the Control
Agreement and the collateral from time to time credited to
such account.
(xxii) The execution and delivery of the
Control Agreement by the parties thereto operate to perfect
such security interest.
24
In rendering such opinion, such counsel may state that their
opinion is limited to matters governed by the federal laws of the
United States of America and the laws of the States of California, New
York and Delaware. In rendering such opinion, such counsel may rely (A)
as to matters involving the application of laws of any jurisdiction
other than the States of California, New York, Delaware or the United
States, to the extent they deem proper and specified in such opinion,
upon the opinion of other counsel of good standing whom they believe to
be reliable and who are reasonably satisfactory to counsel for the
Initial Purchaser and (B) as to matters of fact, to the extent they
deem proper, on certificates of responsible officers of the Company and
public officials. References to the Offering Memorandum in this
paragraph (c) include any supplements thereto at the Closing Date. Such
opinion shall also include a statement to the effect that (x) such
counsel has acted as counsel to the Company in connection with the
preparation of the Offering Memorandum and participated in conferences
with officers and other representatives of the Company, the Company's
independent accountants and the Initial Purchaser and their counsel, at
which the contents of the Offering Memorandum were discussed (although
such counsel may state that it has not independently verified the
accuracy, completeness or fairness of such statements except as set
forth in clauses (x), (xi) and (xv) above), and (y) based on the
foregoing, no facts have come to the attention of such counsel which
lead such counsel to believe that the Offering Memorandum (except for
the financial statements, supporting schedules, footnotes and other
financial and statistical information included or incorporated by
reference therein, as to which such counsel need express no belief), as
of its date or as of the applicable Delivery Date, contained or
contains any untrue statement of a material fact or omitted or omits to
state a material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
(d) Xxxxxxxx & Xxxxxxxx LLP, counsel to the Company,
shall have furnished to the Trustee a reliance letter addressed to the
Trustee and dated such Delivery Date permitting the Trustee to rely on
such counsel's opinions set forth in clauses (xxi) and (xxii) of
Section 5(c) above.
(e) Xxxxxxxx & Xxxxxxxx MNP, counsel to Microcosm
Communications Ltd. ("MICROCOSM"), a subsidiary of the Company
domiciled in the United Kingdom, shall have furnished to the Initial
Purchaser its written opinion addressed to the Initial Purchaser and
dated such Delivery Date, in form and substance reasonably satisfactory
to the Initial Purchaser, to the effect that:
(i) Microcosm is a private limited company,
duly incorporated and subsisting under the laws of England. So
far as is discoverable from certain searches specified in such
counsel's opinion, Microcosm is not in liquidation and no
order or resolution for the winding-up of Microcosm has been
made and no receiver, administrative receiver, administrator
or liquidator in respect of Microcosm (or any of its assets or
properties) has been appointed.
(ii) Microcosm has requisite corporate power
and authority to carry on the business disclosed in its
Memorandum of Association.
25
(iii) The issued share capital of Microcosm
is 4,856,636 ordinary shares of 0.0333p each, all of which are
held by Mindspeed Technologies, Inc.
(f) Xxxxxxxxx & Partners, counsel to Mindspeed
Technologies K.K. ("MTKK"), a subsidiary of the Company domiciled in
Japan, shall have furnished to the Initial Purchaser its written
opinion addressed to the Initial Purchaser and dated such Delivery
Date, in form and substance reasonably satisfactory to the Initial
Purchaser, to the effect that:
(i) MTKK has been duly formed and is validly
existing as a foreign corporation, in good standing under the
laws of Japan (to the extent such concepts exist in such
jurisdiction), and is duly qualified to do business and is in
good standing as a foreign corporation (to the extent such
concepts exist in such jurisdiction), in each jurisdiction in
which its ownership or lease of property or the conduct of its
business requires such qualification, and has all power and
authority (corporate and otherwise) necessary to own or hold
its properties and conduct the business in which it is
engaged.
(ii) All of the issued shares of capital
stock of MTKK have been duly and validly authorized and issued
and are fully paid, non-assessable and (except for directors'
qualifying shares) are owned directly or indirectly by the
Company, free and clear of all Liens.
(g) Xxxxxxx Xxxxxxx & Xxxxxxxx LLP shall have
furnished to the Initial Purchaser its written opinion, as counsel to
the Initial Purchaser, addressed to the Initial Purchaser and dated
such Delivery Date, in form and substance reasonably satisfactory to
the Initial Purchaser.
(h) At the time of execution of this Agreement, the
Initial Purchaser shall have received from the Accountants a letter or
letters, in form and substance reasonably satisfactory to the Initial
Purchaser, addressed to the Initial Purchaser and dated the date hereof
(i) confirming that they are an independent registered public
accounting firm within the meaning of the Securities Act and are in
compliance with the applicable requirements relating to the
qualification of accountants under Rule 2-01 of Regulation S-X of the
Commission and (ii) stating, as of the date hereof (or, with respect to
matters involving changes or developments since the respective dates as
of which specified financial information is given in the Offering
Memorandum, as of a date not more than five days prior to the date
hereof), the conclusions and findings of such firm with respect to the
financial information and other matters ordinarily covered by
accountants' "comfort letters" to Initial Purchaser in connection with
registered public offerings.
(i) With respect to the letter of the Accountants
referred to in the preceding paragraph and delivered to the Initial
Purchaser concurrently with the execution of this Agreement (the
"INITIAL COMFORT LETTER"), the Company shall have furnished to the
Initial Purchaser a letter (the "BRING-DOWN COMFORT LETTER") of such
26
accountants, addressed to the Initial Purchaser and dated such Delivery
Date (i) confirming that they are an independent registered public
accounting firm within the meaning of the Securities Act and are in
compliance with the applicable requirements relating to the
qualification of accountants under Rule 2-01 of Regulation S-X of the
Commission, (ii) stating, as of the date of the bring-down letter (or,
with respect to matters involving changes or developments since the
respective dates as of which specified financial information is given
in the Offering Memorandum, as of a date not more than five days prior
to the date of the bring-down letter), the conclusions and findings of
such firm with respect to the financial information and other matters
covered by the initial letters and (iii) confirming in all material
respects the conclusions and findings set forth in the initial comfort
letter.
(j) The Company shall have furnished to the Initial
Purchaser on the applicable Delivery Date a certificate, dated such
Delivery Date and delivered on behalf of the Company by its chief
executive officer and its chief financial officer, in form and
substance reasonably satisfactory to the Initial Purchaser, to the
effect that:
(i) the representations, warranties and agreements of
the Company in Section 1 of this Agreement are true and
correct as of such Delivery Date; and the Company has complied
in all material respects with all its agreements contained
herein to be performed prior to or on such Delivery Date and
the conditions set forth in Sections 5(m) and 5(n) have been
fulfilled;
(ii) since the respective dates as of which
information is given in the Offering Memorandum, other than as
set forth in the Offering Memorandum (exclusive of any
amendments or supplements thereto subsequent to the date of
this Agreement), (A) there has not occurred any change or any
development that could reasonably be expected to have a
Material Adverse Effect, (B) there has not been any change in
the capital stock, the short-term debt, or the long-term debt
of the Company or any of its subsidiaries that could
reasonably be expected to have a Material Adverse Effect, (C)
neither the Company nor any of its subsidiaries has incurred
any material liability or obligation, direct or contingent,
(D) a Material Loss has not occurred, (E) the Company has not
declared or paid any dividend on its capital stock, except for
dividends declared in the ordinary course of business and
consistent with past practice, and, (F) except as set forth in
the Offering Memorandum, neither the Company nor any of its
subsidiaries has entered into any transaction or agreement
(whether or not in the ordinary course of business) material
to the Company and its subsidiaries taken as a whole; and
(iii) such officer has carefully examined the
Offering Memorandum and, in such officer's opinion (A) the
Offering Memorandum, as of its date and the applicable
Delivery Date, did not and does not include any untrue
statement of a material fact and did not and does not omit to
state any material fact necessary to make the statements
therein, in the light of the circumstances under which they
were made, not misleading, and (B) since the date of the
Offering Memorandum, no event has occurred which should have
been set forth in a supplement or amendment to the Offering
Memorandum.
27
(k) The Indenture (in form and substance reasonably
satisfactory to the Initial Purchaser) shall have been duly executed
and delivered by the Company and the Trustee, and the Notes shall have
been duly executed and delivered by the Company and duly authenticated
by the Trustee.
(l) The Pledge Agreement and the Control Agreement
(each in form and substance reasonably satisfactory to the Initial
Purchaser) shall have been duly executed and delivered by the Company
and the Trustee, and the Company shall have given irrevocable
instructions to the Initial Purchaser to purchase Pledged Securities
(as defined in the Pledge Agreement) on behalf of the Company with a
portion of the proceeds of the offering. In addition, the Company shall
have:
(i) made all filings and taken such other actions
(including, without limitation, (A) actions necessary to
obtain control of the Pledged Securities as provided in
Sections 9-104, 9-105, 9-106 and 9-107 of the UCC and (B)
actions necessary to perfect the Trustee's security interest
with respect to the Pledged Securities evidenced by a
certificate of ownership) necessary to perfect the security
interest in the Pledged Securities created under the Pledge
Agreement and so that such security interest is in full force
and effect, and created in favor of the Trustee for its
benefit and the ratable benefit of the Holders of the Notes a
valid and, together with such filings and other actions, a
perfected first priority security interest in the Pledged
Securities;
(ii) delivered to the Initial Purchaser evidence
satisfactory to the Initial Purchaser that upon such purchase
and delivery, the Trustee for its benefit and the ratable
benefit of the Holders of the Notes will have a valid and,
together with such filings and other actions, a perfected
first priority security interest in the Pledged Securities.
All filing fees and taxes in connection with such recordings
or filings shall have been paid and the Initial Purchaser
shall have received evidence satisfactory to it of such
recordation, filings and payments, including in the case of
any financing statements, the secured party's copy of all such
financing statements bearing evidence of filing; and
(m) The Company and the Initial Purchaser shall have
executed and delivered the Registration Rights Agreement (in form and
substance satisfactory to the Initial Purchaser), and the Registration
Rights Agreement shall be in full force and effect.
(n) The Initial Purchaser shall have received from
each executive officer and director of the Company an executed lock-up
letter agreement contemplated by Section 3(f) hereof.
(o) The NASD shall have accepted the Notes for
trading on PORTAL.
(p) Neither the Company nor any of its subsidiaries
shall have sustained since the date of the latest audited financial
statements included or incorporated by reference in the Offering
Memorandum (A) any Material Loss, otherwise than as set forth or
contemplated in the Offering Memorandum (exclusive of any amendments or
28
supplements thereto subsequent to the date of this Agreement), or (B)
since such date there shall not have been any change in the capital
stock, short-term debt or long-term debt of the Company or any of its
subsidiaries or any change, or any development involving a prospective
change, in or affecting the general affairs, management, financial
position, prospects, stockholders' equity or results of operations of
the Company and its subsidiaries, otherwise than as set forth or
contemplated in the Offering Memorandum (exclusive of any amendments or
supplements thereto subsequent to the date of this Agreement), the
effect of which, in any such case set forth in clause (A) or (B), is,
in the judgment of the Initial Purchaser, so material and adverse as to
make it impracticable or inadvisable to proceed with the offering or
the delivery of the Notes being delivered on the applicable Delivery
Date on the terms and in the manner contemplated in the Offering
Memorandum and this Agreement.
(q) Subsequent to the execution and delivery of this
Agreement, there shall not have occurred any of the following: (i)
trading in securities generally on the New York Stock Exchange or the
American Stock Exchange or the NASDAQ or in the over-the-counter
market, or trading in any securities of the Company on any exchange or
in the over-the-counter market, shall have been suspended or the
settlement of such trading generally shall have been materially
disrupted or minimum prices shall have been established on any such
exchange or such market by the Commission, by such exchange or by any
other regulatory body or governmental authority having jurisdiction,
(ii) a banking moratorium shall have been declared by Federal or state
authorities of the United States, (iii) the United States shall have
become engaged in hostilities, there shall have been an escalation in
hostilities involving the United States, there shall have been a
declaration of a national emergency or war by the United States or
there shall have occurred any other substantial, national or
international calamity or crisis, (iv) there shall have occurred such a
material adverse change in general domestic or international economic,
political or financial conditions, including without limitation as a
result of terrorist activities, or the effect of international
conditions on the financial markets in the United States shall be such,
as to make it, in the judgment of the Initial Purchaser impracticable
or inadvisable to proceed with the public offering or delivery of the
Notes being delivered on such Delivery Date on the terms and in the
manner contemplated in the Offering Memorandum.
The Company shall have furnished to the Initial Purchaser such further
information, certificates and documents as the Initial Purchaser may reasonably
request to evidence compliance with the conditions set forth in this Section 5.
All opinions, letters, evidence and certificates mentioned above or elsewhere in
this Agreement shall be deemed to be in compliance with the provisions hereof
only if they are in form and substance reasonably satisfactory to counsel to the
Initial Purchaser.
6. Representations, Warranties and Agreements of Initial
Purchaser. The Initial Purchaser represents and warrants to and agrees with the
Company that it (i) is an institutional "accredited investor" within the meaning
of Rule 501(a) under the Securities Act, (ii) is purchasing the Notes pursuant
to a private sale exempt from registration under the Securities Act without the
intent to distribute the Notes in violation of the Securities Act, (iii)
29
will not solicit offers for, or offer or sell, the Notes by means of any form of
general solicitation or general advertising or in any manner involving a public
offering within the meaning of Section 4(2) of the Securities Act and (iv) will
solicit offers for the Notes only from, and will offer, sell or deliver the
Notes, as part of its initial offering, only to persons whom it reasonably
believes to be QIBs, or, if any such person is buying for one or more
institutional accounts for which such person is acting as fiduciary or agent,
only when such person has represented to it that each such account is a QIB, to
whom notice has been given that such sale or delivery is being made in reliance
on Rule 144A in transactions under Rule 144A.
7. Indemnification and Contribution.
(a) The Company shall indemnify and hold harmless the
Initial Purchaser, its directors, officers and employees and each
person, if any, who controls the Initial Purchaser within the meaning
of the Securities Act, from and against any loss, claim, damage or
liability, joint or several, or any action in respect thereof
(including, but not limited to, any loss, claim, damage, liability or
action relating to purchases and sales of the Notes), to which the
Initial Purchaser, director, officer, employee or controlling person
may become subject, insofar as such loss, claim, damage, liability or
action arises out of, or is based upon, (i) any untrue statement or
alleged untrue statement of a material fact contained in any (A)
Preliminary Offering Memorandum, the Offering Memorandum or in any
amendment or supplement thereto or (B) materials or information
provided to investors by, or with the approval of, the Company in
connection with the marketing of the offering of the Notes ("MARKETING
MATERIALS"), including any roadshow or investor presentations made to
investors by the Company (whether in person or electronically), (ii)
the omission or alleged omission to state in the Preliminary Offering
Memorandum, the Offering Memorandum or in any amendment or supplement
thereto or in any Marketing Materials any material fact necessary to
make the statements therein not misleading or (iii) any act or failure
to act or any alleged act or failure to act by the Initial Purchaser in
connection with, or relating in any manner to, the Notes or the
offering contemplated hereby, and which is included as part of or
referred to in any loss, claim, damage, liability or action arising out
of or based upon matters covered by clause (i) or (ii) above (provided
that, the Company shall not be liable under this clause (iii) to the
extent that it is determined in a final judgment by a court of
competent jurisdiction that such loss, claim, damage, liability or
action resulted directly from any such acts or failures to act
undertaken or omitted to be taken by the Initial Purchaser through its
gross negligence or willful misconduct), and shall reimburse the
Initial Purchaser and each such director, officer, employee or
controlling person promptly upon demand for any legal or other expenses
reasonably incurred by that Initial Purchaser, director, officer,
employee or controlling person in connection with investigating or
defending or preparing to defend against any such loss, claim, damage,
liability or action as such expenses are incurred; provided, however,
that the Company shall not be liable in any such case to the extent
that any such loss, claim, damage, liability or action arises out of,
or is based upon, any untrue statement or alleged untrue statement or
omission or alleged omission made in any Preliminary Offering
Memorandum, the Offering Memorandum, or in any such amendment or
supplement, in reliance upon and in conformity with the written
information concerning the Initial Purchaser furnished to the Company
by the
30
Initial Purchaser specifically for inclusion therein, which information
consists solely of the information specified in Section 7(e). The
foregoing indemnity agreement is in addition to any liability which the
Company may otherwise have to the Initial Purchaser or to any director,
officer, employee or controlling person of the Initial Purchaser.
(b) The Initial Purchaser shall indemnify and hold
harmless the Company, its directors, officers and employees and each
person, if any, who controls the Company within the meaning of the
Securities Act from and against any loss, claim, damage or liability,
joint or several, or any action in respect thereof, to which the
Company or any such director, officer, employee or controlling person
may become subject, under the Securities Act or otherwise, insofar as
such loss, claim, damage, liability or action arises out of, or is
based upon, (i) any untrue statement or alleged untrue statement of a
material fact contained in any Preliminary Offering Memorandum or the
Offering Memorandum or in any amendment or supplement thereto or (ii)
the omission or alleged omission to state in any Preliminary Offering
Memorandum or the Offering Memorandum or in any amendment or supplement
thereto, any material fact necessary to make the statements therein not
misleading, but in each case only to the extent that the untrue
statement or alleged untrue statement or omission or alleged omission
was made in reliance upon and in conformity with the written
information concerning the Initial Purchaser furnished to the Company
by the Initial Purchaser specifically for inclusion therein and set
forth in Section 7(e), and shall reimburse the Company and any such
director, officer, employee or controlling person promptly upon demand
for any legal or other expenses reasonably incurred by the Company or
any such director, officer, employee or controlling person in
connection with investigating or defending or preparing to defend
against any such loss, claim, damage, liability or action as such
expenses are incurred. The foregoing indemnity agreement is in addition
to any liability which the Initial Purchaser may otherwise have to the
Company or any such director, officer, employee or controlling person.
(c) Promptly after receipt by an indemnified party
under this Section 7 of notice of any claim or the commencement of any
action, the indemnified party shall, if a claim in respect thereof is
to be made against the indemnifying party under this Section 7, notify
the indemnifying party in writing of the claim or the commencement of
that action; provided, however, that the failure to notify the
indemnifying party shall not relieve it from any liability which it may
have under this Section 7 except to the extent it has been materially
prejudiced by such failure and, provided, further, that the failure to
notify the indemnifying party shall not relieve it from any liability
which it may have to an indemnified party otherwise than under this
Section 7. If any such claim or action shall be brought against an
indemnified party, and it shall notify the indemnifying party thereof,
the indemnifying party shall be entitled to participate therein and, to
the extent that it wishes, jointly with any other similarly notified
indemnifying party, to assume the defense thereof with counsel
satisfactory to the indemnified party. After notice from the
indemnifying party to the indemnified party of its election to assume
the defense of such claim or action, the indemnifying party shall not
be liable to the indemnified party under this Section 7 for any legal
or other expenses subsequently incurred by the indemnified party in
connection with the defense thereof other than reasonable costs of
investigation;
31
provided, however, that the Initial Purchaser shall have the right to
employ separate counsel to represent jointly the Initial Purchaser and
their respective directors, officers, employees and controlling persons
who may be subject to liability arising out of any claim in respect of
which indemnity may be sought by the Initial Purchaser against the
Company under this Section 7 if, in the reasonable judgment of the
Initial Purchaser it is advisable for the Initial Purchaser and such
directors, officers, employees and controlling persons to be jointly
represented by separate counsel, and in that event the fees and
expenses of such separate counsel shall be paid by the Company. No
indemnifying party shall, (i) without the prior written consent of the
indemnified parties (which consent shall not be unreasonably withheld),
settle or compromise or consent to the entry of any judgment with
respect to any pending or threatened claim, action, suit or proceeding
in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified parties are actual or
potential parties to such claim or action) unless such settlement,
compromise or consent includes an unconditional release of each
indemnified party from all liability arising out of such claim, action,
suit or proceeding, or (ii) be liable for any settlement of any such
action effected without its written consent (which consent shall not be
unreasonably withheld), but if settled with its written consent or if
there be a final judgment of the plaintiff in any such action, the
indemnifying party agrees to indemnify and hold harmless any
indemnified party from and against any loss or liability by reason of
such settlement or judgment.
(d) If the indemnification provided for in this
Section 7 shall for any reason be unavailable or insufficient to hold
harmless an indemnified party under Section 7(a) or 7(b) in respect of
any loss, claim, damage or liability, or any action in respect thereof,
referred to therein, then each indemnifying party shall, in lieu of
indemnifying such indemnified party, contribute to the amount paid or
payable by such indemnified party as a result of such loss, claim,
damage or liability, or action in respect thereof, (i) in such
proportion as shall be appropriate to reflect the relative benefits
received by the Company on the one hand and the Initial Purchaser on
the other from the offering of the Notes, or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative fault of
the Company on the one hand and the Initial Purchaser on the other with
respect to the statements or omissions or alleged statements or
omissions which resulted in such loss, claim, damage or liability, or
action in respect thereof, as well as any other relevant equitable
considerations. The relative benefits received by the Company on the
one hand and the Initial Purchaser on the other with respect to such
offering shall be deemed to be in the same proportion as the total net
proceeds from the offering of the Notes purchased under this Agreement
(net of discounts and commissions but before deducting expenses)
received by the Company on the one hand, and the total discounts and
commissions received by the Initial Purchaser with respect to the Notes
purchased under this Agreement, on the other hand, bear to the total
gross proceeds from the offering of the Notes under this Agreement. The
relative fault shall be determined by reference to whether the untrue
or alleged untrue statement of a material fact or omission or alleged
omission to state a material fact relates to information supplied by
the Company or the Initial Purchaser, the intent of the parties and
their relative knowledge, access to information and opportunity to
correct or prevent such
32
statement or omission. The Company and the Initial Purchaser agree that
it would not be just and equitable if contributions pursuant to this
Section 7(d) were to be determined by pro rata allocation or by any
other method of allocation which does not take into account the
equitable considerations referred to herein. The amount paid or payable
by an indemnified party as a result of the loss, claim, damage or
liability, or action in respect thereof, referred to above in this
Section shall be deemed to include, for purposes of this Section 7(d),
any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action or
claim. Notwithstanding the provisions of this Section, no Initial
Purchaser shall be required to contribute any amount in excess of the
amount by which the total price at which the Notes resold by it in the
initial placement of such Notes were offered to investors exceeds the
amount of any damages which the Initial Purchaser has otherwise paid or
become liable by reason of any untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who
was not guilty of such fraudulent misrepresentation.
(e) The Initial Purchaser confirms, and the Company
acknowledges, that the statements in paragraph numbers 3, 7, 8, 9, the
last sentence of paragraph 5 and the first two sentences of paragraph
15 under the caption "Plan of Distribution" in the Offering Memorandum
are correct and constitute the only information concerning the Initial
Purchaser furnished in writing to the Company by or on behalf of the
Initial Purchaser specifically for inclusion in the Offering
Memorandum.
8. Termination. The obligations of the Initial Purchaser
hereunder may be terminated by the Initial Purchaser by notice given to and
received by the Company prior to delivery of and payment for the Notes if, prior
to that time, any of the events described in Sections 5(m) or 5(n) shall have
occurred or if the Initial Purchaser shall decline to purchase the Firm Notes
for any reason permitted under this Agreement.
9. Reimbursement of Initial Purchaser's Expenses.
(a) If (i) the Company fails to tender the Notes for
delivery to the Initial Purchaser by reason of any failure, refusal or
inability on the part of the Company to perform any agreement on its
part to be performed, or because any other condition of the Initial
Purchaser's obligations hereunder required to be fulfilled by the
Company is not fulfilled or (ii) the Initial Purchaser declines to
purchase the Notes for any reason permitted under this Agreement
(including the termination of this Agreement pursuant to Section 8),
the Company shall reimburse the Initial Purchaser for all reasonable
out-of-pocket expenses (including fees and disbursements of counsel)
incurred by the Initial Purchaser in connection with this Agreement and
the proposed purchase of the Notes, and upon demand the Company shall
pay the full amount thereof to the Initial Purchaser.
(b) The Company shall reimburse the Initial Purchaser
for all out-of-pocket expenses incurred by the Initial Purchaser in
connection with the purchase and delivery of Pledged Securities on
behalf of the Company pursuant to Section 2(c) hereof, and upon demand
the Company shall pay the full amount thereof to the Initial Purchaser.
33
10. Notices, Etc. All statements, requests, notices and
agreements hereunder shall be in writing, and:
(a) if to the Initial Purchaser, shall be delivered
or sent by mail, telex or facsimile transmission to Xxxxxx Brothers
Inc., 000 Xxxxxxx Xxxxxx, Xxx Xxxx 00000, Attention: Syndicate
Registration Department (Fax: 000-000-0000), with a copy, in the case
of any notice pursuant to Section 7(c), to the Director of Litigation,
Office of the General Counsel, Xxxxxx Brothers Inc., 000 Xxxx Xxxxxx,
00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 10022 and
with a copy to Xxxxxxx Xxxxxxx & Xxxxxxxx LLP, 000 Xxxxxxxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxx X. Xxxxxxx, Esq. (Fax:
000-000-0000; Telephone: (000) 000-0000);
(b) if to the Company, shall be delivered or sent by
mail, telex or facsimile transmission to it at Mindspeed Technologies,
Inc., 0000 XxxXxxxxx Xxxxxxxxx, Xxxx Xxxxx, Xxxxxxx Xxxxx, XX 00000,
Attention: Xxxxx Xxxxxxxxxxx (Fax: 000-000-0000, Telephone:
000-000-0000);
with a copy to Xxxxxxxx & Xxxxxxxx LLP, 00000 XxxXxxxxx Xxxxxxxxx, 00xx
Xxxxx, Xxxxxx, XX 00000, Attention: Xxxxxx X. Xxxxxxx, Xx., Esq. (Fax:
000-000-0000, Telephone: 000-000-0000).
11. Persons Entitled to Benefit of Agreement. This Agreement
will inure to the benefit of and be binding upon the Initial Purchaser, the
Company and their respective successors. This Agreement and the terms and
provisions hereof are for the sole benefit of only those persons, except that
(A) the representations, warranties, indemnities and agreements of the Company
contained in this Agreement will also be deemed to be for the benefit of the
directors, officers and employees of the Initial Purchaser and the person or
persons, if any, who control the Initial Purchaser within the meaning of Section
15 of the Securities Act and (B) any indemnity agreement of the Initial
Purchaser contained in Section 7(b) of this Agreement will be deemed to be for
the benefit of directors, officers and employees of the Company and any person
controlling the Company within the meaning of Section 15 of the Securities Act.
Nothing in this Agreement is intended or shall be construed to give any person,
other than the persons referred to in this Section 11, any legal or equitable
right, remedy or claim under or in respect of this Agreement or any provision
contained herein.
12. Survival. The respective indemnities, representations,
warranties and agreements of the Company and the Initial Purchaser contained in
this Agreement or made by or on behalf of them, respectively, pursuant to this
Agreement, will survive the delivery of and payment for the Notes and will
remain in full force and effect, regardless of any termination or cancellation
of this Agreement or any investigation made by or on behalf of any of them or
any person controlling any of them.
13. Definition of the Term "Business Day". For purposes of
this Agreement, "BUSINESS DAY" means any day on which the New York Stock
Exchange, Inc. is open for trading.
34
14. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York.
15. Counterparts. This Agreement may be executed in one or
more counterparts and, if executed in more than one counterpart, the executed
counterparts shall each be deemed to be an original but all such counterparts
shall together constitute one and the same instrument.
16. Headings. The headings herein are inserted for convenience
of reference only and are not intended to be part of, or to affect the meaning
or interpretation of, this Agreement.
35
If the foregoing correctly sets forth the agreement between
the Company and the Initial Purchaser, please indicate your acceptance in the
space provided for that purpose below.
Very truly yours,
Mindspeed Technologies, Inc.
By: /s/ Xxxxx Xxxxxxxxxxx
----------------------------------------
Name: Xxxxx Xxxxxxxxxxx
Title: Senior Vice President, Chief
Financial Officer, Secretary and
Treasurer
Accepted and agreed by:
Xxxxxx Brothers Inc.
By: /s/ Xxxxx Xxxxxxxx
-------------------------------
Authorized Representative
ANNEX A
FORM OF REGISTRATION RIGHTS AGREEMENT
[SEPARATELY FILED]
A-1
ANNEX B
LOCK-UP LETTER AGREEMENT
Xxxxxx Brothers Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Ladies and Gentlemen:
The undersigned understands that you propose to enter into a purchase
agreement (the "PURCHASE Agreement") providing for the purchase by you (the
"INITIAL PURCHASER") of Convertible Senior Notes due 2009 (the "NOTES") of
Mindspeed Technologies, Inc., a Delaware corporation (the "COMPANY"), which are
convertible into fully paid, non-assessable shares of common stock, par value
$0.01 per share, of the Company (the "COMMON STOCK"), and that the Initial
Purchaser proposes to reoffer the Notes to certain qualified institutional
buyers under Rule 144A of the Securities Act of 1933, as amended (the
"OFFERING").
In consideration of the execution of the Purchase Agreement by the
Initial Purchaser, and for other good and valuable consideration, the
undersigned hereby irrevocably agrees that, without the prior written consent of
the Initial Purchaser, the undersigned will not, directly or indirectly, (1)
offer for sale, sell, pledge or otherwise dispose of (or enter into any
transaction or device which is designed to, or could be expected to, result in
the disposition by any person at any time in the future of) any shares of Common
Stock or any securities convertible into or exchangeable for Common Stock or
substantially similar securities (or exercise any right to require the Company
to register any such securities under the Securities Act of 1933, as amended) or
sell or grant options, warrants or rights with respect to any shares of Common
Stock or securities convertible into or exchangeable for Common Stock or
substantially similar securities (the "LOCK-UP SHARES") or (2) enter into any
swap or other derivatives transaction that transfers to another, in whole or in
part, any of the economic benefits or risks of ownership of such shares of
Common Stock, whether any such transaction described in clause (1) or (2) above
is to be settled by delivery of Common Stock or other securities, in cash or
otherwise, for a period of 90 days after the date of the final Offering
Memorandum relating to the Offering.
Notwithstanding the foregoing, if (1) during the last 17 days of the
90-day restricted period the Company issues an earnings release or material news
or a material event relating to the Company occurs or (2) prior to the
expiration of the 90-day restricted period, the Company announces that it will
release earnings results during the 16-day period beginning on the last day of
the 90-day period, then the restrictions imposed by this letter shall continue
to apply until the expiration of the 18-day period beginning on the issuance of
the earnings release or the occurrence of the material news or material event.
Notwithstanding the foregoing, the undersigned may transfer any or all
Lock-Up Shares (i) as a bona fide gift or gifts, provided that the donee or
donees thereof have executed and delivered to the Initial Purchaser a written
agreement providing their agreement to be bound by the restrictions set forth
herein, (ii) to any trust, partnership, limited liability company or other legal
entity commonly used for estate planning purposes which is established for the
direct or
A-2
indirect benefit of the undersigned or the immediate family of the undersigned,
provided that the trustee, general partner, manager or other administrator, as
the case may be, has executed and delivered to the Initial Purchaser a written
agreement providing their agreement to be bound by the restrictions set forth
herein, and provided further that any such transfer shall not involve a
disposition for value, (iii) any 10b5-1 trading plan in existence on the date
hereof, or (iv) with the prior written consent of the Initial Purchaser. For
purposes of this Lock-Up Letter Agreement, "immediate family" shall mean any
relationship by blood, marriage or adoption, not more remote than first cousin.
Notwithstanding the foregoing, if options for Common Stock held by the
undersigned that are exercisable shall expire during the lock-up period
described herein unless exercised, the undersigned may exercise such options and
sell such number of shares received upon exercise to the extent necessary to
satisfy obligations under a cashless exercise arrangement, without the consent
of the Initial Purchaser, provided the shares issued upon the exercise of such
options shall be subject the terms of this Lock-Up Letter Agreement and deemed
Lock-Up Shares except to the extent sold pursuant to such cashless exercise.
In furtherance of the foregoing, the Company and its transfer agent are
hereby authorized to decline to make any transfer of securities if such transfer
would constitute a violation or breach of this Lock-Up Letter Agreement.
The undersigned understands that the Company and the Initial Purchaser
will proceed with the Offering in reliance on this Lock-Up Letter Agreement.
Whether or not the Offering actually occurs depends on a number of factors,
including market conditions. Any Offering will only be made pursuant to the
Purchase Agreement, the terms of which are subject to negotiation between the
Company and the Initial Purchaser. In addition, it is understood that, if the
Company notifies you that it does not intend to proceed with the Offering, if
the Purchase Agreement is not executed, or if the Purchase Agreement (other than
the provisions thereof which survive termination) shall terminate or be
terminated prior to payment for and delivery of the Notes, the undersigned will
be released from its obligations under this Lock-Up Letter Agreement.
This Lock-Up Letter Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to enter into this Lock-Up Letter Agreement and that,
upon request, the undersigned will execute any additional documents necessary in
connection with the enforcement hereof. Any obligations of the undersigned shall
be binding upon the heirs, personal representatives, successors and assigns of
the undersigned.
Very truly yours,
[NAME]
By: ______________________________
Name:
Title:
Dated: ________, 2004
A-3
