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EXHIBIT 4.1
$100,000,000(1)
MRV COMMUNICATIONS, INC.
5% Convertible Subordinated Notes Due 2003
PURCHASE AGREEMENT
June 23, 1998
PRUDENTIAL SECURITIES INCORPORATED
BEAR, XXXXXXX & CO. INC.
c/o Prudential Securities Incorporated
Xxx Xxx Xxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
MRV Communications, Inc., a Delaware corporation (the "Company"),
confirms its agreement with the several initial purchasers named in Schedule I
hereto (collectively, the "Initial Purchasers"), with respect to the issue and
sale by the Company and the purchase by the Initial Purchasers, subject to the
terms and conditions contained in this Agreement, of an aggregate of
$100,000,000 principal amount of 5% Convertible Subordinated Notes Due 2003 (the
"Notes"), convertible into common stock, par value $.0034 per share ("Common
Stock"), of the Company (the "Firm Securities") and, if requested by the Initial
Purchasers, up to an aggregate of $15,000,000 additional principal amount of
Notes (the "Option Securities"). The Firm Securities and the Option Securities
are herein collectively referred to as the "Securities."
1. Securities.
The Securities will be offered and sold without being registered under
the Securities Act of 1933, as amended (the "Securities Act"), in reliance on
exemptions therefrom. The Company understands that the Initial Purchasers will
resell a portion of the Securities (the "Rule 144A Securities") inside the
United States to qualified institutional buyers ("QIBs") in reliance on Rule
144A ("Rule 144A") under the Securities Act and the remaining Securities, if any
(the "Regulation S Securities"), outside the United States to persons other than
U.S. persons in reliance on Regulation S under the Securities Act ("Regulation
S"). The Rule 144A Securities will initially be issued in the form of a single,
permanent global certificate (the "Rule 144A Global Security"). The Regulation
S
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(1) Plus an option to purchase from the Company up to an aggregate of
$15,000,000 additional aggregate principal amount to cover over-allotments.
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Securities, if any, will initially be issued in the form of a single,
permanent global certificate (the "Regulation S Global Security," and together
with the Rule 144A Global Securities, the "Global Securities"). It is also
understood and acknowledged that holders (including subsequent transferees) of
the Securities and, if such Securities are subsequently converted into shares of
Common Stock that are restricted for purposes of Rule 144 under the Securities
Act ("Restricted Securities"), the holders of Restricted Securities will have
the registration rights set forth in the Registration Agreement to be dated the
date hereof, reflecting the terms set forth in the Offering Memorandum (as
hereinafter defined) and other customary matters (the "Registration Agreement"),
for so long as the Securities or any Restricted Securities constitute "Transfer
Restricted Securities" (as defined in the Registration Agreement). Pursuant to
the Registration Agreement, the Company will agree, subject to the terms and
conditions set forth therein, (i) to file with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-1 or Form S-3
under the Securities Act relating to the resale of the Securities and the
Transfer Restricted Securities by certain holders thereof from time to time in
accordance with the methods of distribution set forth in such registration
statement and Rule 415 under the Securities Act (the "Shelf Registration
Statement") and (ii) to use its best efforts to cause such Shelf Registration
Statement to be declared and to remain effective.
2. Representations and Warranties of the Company.
The Company represents and warrants to, and agrees with, the Initial
Purchasers that:
(a) A preliminary offering memorandum dated June 4, 1998 and an
offering memorandum dated June 23, 1998 have been prepared by the Company in
connection with the offering of the Securities (the preliminary offering
memorandum being hereinafter referred to as the "Preliminary Offering
Memorandum" and the offering memorandum being hereinafter referred to as the
"Offering Memorandum"; any reference to the Preliminary Offering Memorandum or
the Offering Memorandum shall be deemed to refer to and include the Additional
Company Information (as defined in Section 5(c)), if any). The Preliminary
Offering Memorandum and the Offering Memorandum and any amendments or
supplements thereto did not and will not, as of their respective dates, contain
any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. The foregoing provisions of this
paragraph (a) do not apply to statements or omissions made in the Preliminary
Offering Memorandum or the Offering Memorandum in reliance upon and in
conformity with written information furnished to the Company by any Initial
Purchaser specifically for use therein or, in the case of the Preliminary
Offering Memorandum, information omitted therefrom with respect to the offering
price, the amount of proceeds, conversion and interest rates of the Securities
and other items dependent on the offering price, and with respect to the
delivery date and terms of the Securities dependent upon the offering date.
(b) When the Securities are issued and delivered pursuant to this
Agreement, (i) such Securities will not be of the same class (within the meaning
of Rule 144A) as securities of the Company which are listed on a national
securities exchange registered under Section 6 of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), or quoted in a U.S. automated
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inter-dealer quotation system; (ii) the Company will be subject to Section 13 or
15(d) of the Exchange Act; (iii) the Company is not an investment company or a
company "controlled" by an investment company within the meaning of the
Investment Company Act of 1940, as amended (the "Investment Company Act"); (iv)
neither the Company nor any affiliate (as defined in Rule 501(b) under the
Securities Act) of the Company 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 with
the sale of the Securities in a manner that would require the registration of
the Securities or the Common Stock issuable upon conversion of the Securities
(the "Conversion Securities") under the Securities Act; and (v) neither the
Company nor any person acting on its behalf (other than the Initial Purchasers)
has engaged or will engage, in connection with the offering of the Securities,
in any form of general solicitation or general advertising within the meaning of
Rule 502(c) under the Securities Act or in any manner involving a public
offering within the meaning of Section 4(2) of the Securities Act, or, with
respect to Securities sold in reliance on Rule 903 ("Rule 903") under the
Securities Act, in any directed selling efforts within the meaning of Rule 903
with respect to the Securities and each of them has complied and will comply
with the offering restrictions requirement of Regulation S.
(c) Based on the Initial Purchasers' representations and
warranties in Section 4 and compliance by the Initial Purchasers with their
covenants in Section 4, it is not necessary in connection with (i) the offer,
sale and delivery of the Securities in the manner contemplated by the Offering
Memorandum and this Agreement or (ii) the issuance and delivery of the Common
Stock, to register the Securities or any Conversion Securities under the
Securities Act. The Indenture, dated as of June 26, 1998 (the "Indenture"),
between the Company and America Stock Transfer & Trust Company (the "Trustee")
meets the requirements for an indenture to be qualified under the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act").
(d) The Company is a corporation duly organized and validly
existing as a corporation in good standing under the laws of the State of
Delaware. Each of the Company's subsidiaries has been duly organized and is
validly existing as a corporation in good standing under the laws of their
respective jurisdictions. The Company and each of its subsidiaries are duly
qualified to transact business as foreign corporations and are in good standing
under the laws of all other jurisdictions where the ownership or leasing of
their respective properties or the conduct of their respective businesses
requires such qualification, except where the failure to be so qualified does
not amount to a material liability or disability to the Company and its
subsidiaries, taken as a whole. The Company's only significant subsidiaries,
within the meaning of Rule 405 under the Securities Act, are NBase
Communications, Ltd., an Israeli corporation ("NBase Israel"), and Xyplex Inc.,
a Massachusetts corporation ("Xyplex").
(e) The Company and each of its subsidiaries have full power
(corporate and other) to own or lease their respective properties and conduct
their respective businesses as described in the Offering Memorandum; and the
Company has full power (corporate and other) to execute and deliver this
Agreement and the Registration Agreement and the Indenture (the "Other Company
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Agreements") and to carry out all the terms and provisions hereof and thereof to
be carried out by it.
(f) The issued shares of capital stock of each of the Company's
subsidiaries have been duly authorized and validly issued, are fully paid and
nonassessable and (except for minority positions in the shares of capital stock
of EDSLAN SRL (EDS), RDS, Technonet) are owned of record and beneficially by the
Company, directly or indirectly through one or more of the subsidiaries, free
and clear of any security interests, liens, encumbrances, equities or claims;
except as described in the Offering Memorandum there are not any outstanding
rights, warrants or options to acquire any shares of capital stock of the
Company or any subsidiary, other than employee stock options granted since March
31, 1998 in accordance with ordinary Company practice; and none of the shares of
the Company or any subsidiary was issued in violation of the rights or other
rights to subscribe for or purchase securities, including preemptive rights or
other rights to subscribe for or purchase securities, of any stockholders of the
Company or any subsidiary.
(g) The Company has an authorized, issued and outstanding
capitalization as set forth in the Offering Memorandum under the caption
"Capitalization." The outstanding shares of Common Stock have been duly
authorized and validly issued and are fully paid and nonassessable; the issuance
of all outstanding shares of Common Stock is not and may not be void or
voidable, including being voidable by virtue of any statutory right of
preemption or other rights to subscribe for or purchase securities; the holders
of the outstanding shares of Common Stock are not entitled to preemptive or
other rights to acquire any Securities or Conversion Securities or other
securities as a result of the transactions contemplated hereunder (which shall
include the issuance and sale of the Securities and the Conversion Securities);
the Conversion Securities are freely issuable by the Company upon conversion of
the Securities and, other than as described in the Offering Memorandum, there
are no restrictions on the ownership or subsequent transfers of the Conversion
Securities. Conversion Securities have been duly authorized and reserved for
issuance upon such conversion of the Securities and, when they are issued and
delivered upon conversion of the Securities in accordance with the terms thereof
and the Indenture, will be validly issued, fully paid and not subject to calls
for additional payments of any kind; and the Common Stock conforms to the
description thereof contained in the Offering Memorandum.
(h) The Indenture has been duly authorized by the Company and,
when executed and delivered by the Company, the Indenture will constitute the
valid and binding obligation of the Company, enforceable against the Company in
accordance with its terms, except as enforcement thereof may be limited by the
effect of any applicable bankruptcy, insolvency, reorganization, receivership,
moratorium or other similar laws affecting the rights and remedies of creditors
generally and to general principles of equity (regardless of whether enforcement
is considered in a proceeding in equity or at law).
(i) The execution and delivery of this Agreement and the
Registration Agreement have been duly authorized by the Company; this Agreement
has been duly executed and delivered by the Company, and this Agreement is, and
upon execution and delivery of the Registration Agreement
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such agreement will be, the valid and binding agreements of the Company,
enforceable against the Company in accordance with their terms, except as
enforcement thereof may be limited by the effect of any applicable bankruptcy,
insolvency, reorganization, receivership, moratorium or other similar laws
affecting the rights and remedies of creditors generally and to general
principles of equity (regardless of whether enforcement is considered in a
proceeding in equity or at law) and except that rights to indemnity and
contribution may be limited by federal and state securities laws and public
policy considerations.
(j) The Securities have been duly authorized by the Company and
when duly executed by the Company and authenticated by the Trustee and issued
and delivered by the Company in accordance with the Indenture, will have been
duly and validly executed, authenticated, issued and delivered and will
constitute valid and binding obligations of the Company, enforceable against the
Company in accordance with their terms except as enforcement thereof may be
limited by the effect of any applicable bankruptcy, insolvency, reorganization,
receivership, moratorium or other similar laws affecting the rights and remedies
of creditors generally and to general principles of equity (regardless of
whether enforcement is considered in a proceeding in equity or at law); and the
Securities are entitled to the benefits provided by the Indenture.
(k) The consolidated financial statements of the Company and its
consolidated subsidiaries included in the Offering Memorandum fairly present the
financial position of the Company and its consolidated subsidiaries and the
results of operations and changes in financial condition as of the dates and for
the periods therein specified. Such financial statements have been prepared in
accordance with United States generally accepted accounting principles
consistently applied throughout the periods involved (except as otherwise noted
therein). The selected financial data set forth under the caption "Selected
Consolidated Financial and Operating Data" in the Offering Memorandum fairly
present, on the basis stated in the Offering Memorandum, the information
included therein.
(l) Each of Xxxxxx Xxxxxxxx LLP, Xxxxx & Xxxxx LLP and Coopers &
Xxxxxxx L.L.P., who have certified certain financial statements and delivered
their respective reports with respect to the audited financial statements
included in the Offering Memorandum, are independent public accountants within
the meaning of the Securities Act, the Exchange Act and the applicable rules and
regulations thereunder.
(m) No legal or governmental proceedings are pending to which the
Company or any of its subsidiaries is a party or to which the property of the
Company or any of its subsidiaries is subject that (i) would affect the
offering, issuance sale or marketability of the Securities or the Conversion
Securities or in any manner draw into question the validity of this Agreement or
any of the Other Company Agreements or any of the transactions contemplated
herein or therein, or (ii) is of a character that would be required to be
disclosed in a registration statement on Form S-1 or the related prospectus
relating to the offer and sale of the Securities and which is not described in
the Offering Memorandum, and no such proceedings have been threatened against
the Company or any of its subsidiaries or with respect to any of their
respective properties.
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(n) There are no contracts or other documents of a character that
would be required to be described in a registration statement on Form S-1 or the
related prospectus relating to the offer and sale of the Securities which are
not described in the Offering Memorandum; except as otherwise described in the
Offering Memorandum, all contracts and other documents described in the Offering
Memorandum are in full force and effect; there are no statutes that would be
required to be described in a registration statement on Form S-1 or the related
prospectus relating to the offer and sale of the Securities that are not
described as would be so required; and no relationship, direct or indirect,
exists between the Company or any affiliate of the Company, on the one hand, and
any director, officer, stockholder, customer or supplier of any of them, on the
other hand, which would be required by the Securities Act, the Trust Indenture
Act or the rules and regulations of the Commission under the Securities Act or
the Trust Indenture Act to be described in a registration statement on Form S-1
or the related prospectus relating to the offer and sale of the Securities which
is not adequately described in the Offering Memorandum.
(o) The offering, sale, issuance and delivery of the Securities
to the Initial Purchasers by the Company pursuant to this Agreement, compliance
by the Company with the provisions of this Agreement and the Other Company
Agreements, and the consummation of the transactions herein and therein
contemplated (including the issuance and delivery of the Conversion Securities)
do not (i) require any authorization, approval, consent, order of, license of,
registration, filing or qualification of or with any governmental authority of
the United States, except (w) such as have been obtained, (x) such as may be
required under state securities or blue sky laws (y) such as may be required in
connection with the Shelf Registration Statement and (z) such as may be required
to list the Conversion Securities, or (ii) conflict with or result in a breach
or violation of any of the terms and provisions of, or constitute a default
under, (w) any indenture, mortgage, deed of trust, 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 or any of their respective
properties are bound, or (y) the charter documents or bylaws of the Company or
any of its subsidiaries, or (z) any statute or other provision of law or any
judgment, decree, order, rule or regulation of any court or other governmental
authority or any arbitrator applicable to the Company or any of its
subsidiaries.
(p) The Company has not, directly or indirectly, (i) taken any
action designed to cause or to result in, or that has constituted or which might
reasonably be expected to constitute, the stabilization or manipulation of the
price of any security of the Company or to facilitate the sale or resale of the
Securities or the Common Stock or (ii) since the date of the Preliminary
Offering Memorandum (A) sold, bid for, purchased, or paid anyone any
compensation for soliciting purchases of, the Securities or the Common Stock, or
(B) paid or agreed to pay to any person any compensation for soliciting another
to purchase any other securities of the Company.
(q) Subsequent to the date as of which information is given in
the Offering Memorandum, (i) neither the Company nor any of its subsidiaries has
incurred any material liability or obligation, direct or contingent, or entered
into any material transaction not in the ordinary course of business; (ii) the
Company has not purchased any of its outstanding capital stock, nor declared,
paid or otherwise made any dividend or distribution of any kind on its capital
stock; and (iii) there has
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not been any material change in the capital stock, short-term debt or long-term
debt of the Company and its consolidated subsidiaries, except in each case as
described in or contemplated by the Offering Memorandum.
(r) Each of the Company and each of its subsidiaries has good and
marketable title in fee simple to all items of real property and title to all
personal property described in the Offering Memorandum as being owned by each of
them, in each case free and clear of any security interests, liens,
encumbrances, equities, claims and other defects, except such as do not
materially and adversely affect the value of any such property and do not
interfere with the use made or proposed to be made of such property by the
Company or such subsidiary and any real property and buildings held under lease
by the Company or such subsidiary are held under valid, subsisting and
enforceable leases, with such exceptions as are not material and do not
interfere with the use made or proposed to be made of such property and
buildings by the Company or such subsidiary in each case, other than those
arising pursuant to loan agreements and other obligations described in the
Offering Memorandum.
(s) No labor dispute with the employees of the Company or any of
its subsidiaries exists or, to the knowledge of the Company, is threatened
against any of them that could result in a material adverse change in the
condition (financial or otherwise), business prospects, net worth or results of
operations of the Company and its subsidiaries.
(t) Each of the Company and each of its subsidiaries owns or
possesses adequate patent rights, licenses, inventions, copyrights, know-how
(including trade secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures), trademarks, service marks,
trade names and other intellectual property (collectively, "Intellectual
Property") necessary to carry on the business it now operates, and, except as
disclosed in the Offering Memorandum, neither the Company nor any of its
subsidiaries has received any notice or is otherwise aware of (i) any claim,
action or demand of any person in the United States or elsewhere or any
proceeding in the United States or elsewhere, pending or threatened, that (A)
challenges the ownership interests of the Company or any of its subsidiaries in
any of the Intellectual Property or (B) alleges that any product or service of
the Company or any of its subsidiaries infringes or misappropriates the
Intellectual Property rights of others, which claim, action, demand or
proceeding (including without limitation infringement, misappropriation and
unfair competition), if the subject of any unfavorable decision, ruling or
finding, or invalidity or inadequacy could reasonably be expected to have, in
the aggregate with all other such claims, actions, demands and proceedings, a
material adverse change in the condition (financial or otherwise), business
prospects, net worth or results of operations of the Company and its
subsidiaries or (ii) any facts or circumstances that would render any
Intellectual Property invalid or inadequate to protect the interest of the
Company or any of its subsidiaries therein.
(u) The Company and each of its subsidiaries are insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as are prudent and customary in the businesses in which they
are engaged; neither the Company nor any such subsidiary has been refused any
insurance coverage sought or applied for; and neither the Company nor any such
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subsidiary 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 as may be necessary to continue its
business at a cost that would not materially and adversely affect the condition
(financial or otherwise), business prospects, net worth, or results of
operations of the Company and its subsidiaries.
(v) No "significant subsidiary," as defined in the regulations
promulgated pursuant to the Securities Act, of the Company is currently
prohibited, directly or indirectly, from paying any dividends to the Company,
from making any other distribution on such subsidiary's capital stock, from
repaying to the Company any loans or advances to such subsidiary from the
Company or from transferring any of such subsidiary's property or assets to the
Company or any other subsidiary of the Company, except for customary lease
assignment provisions and as generally referred to in or contemplated by the
Offering Memorandum.
(w) The Company and its subsidiaries possess all certificates,
authorizations and permits issued by the appropriate federal, state or foreign
regulatory authorities necessary to conduct their respective businesses, and
neither the Company nor any such subsidiary has received any notice of
proceedings relating to the revocation or modification of any such certificate,
authorization or permit which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would result in a material adverse
change in the condition (financial or otherwise), business prospects, net worth
or results of operations of the Company and its subsidiaries, except as
described in or contemplated by the Offering Memorandum.
(x) The Company has filed all foreign, federal, state and local
tax returns that are required to be filed or has requested extensions thereof
(except in any case in which the failure so to file would not have a material
adverse effect on the Company and its subsidiaries, taken as a whole) and has
paid all taxes required to be paid by it and any other assessment, fine or
penalty levied against it, to the extent that any of the foregoing is due and
payable, except for any such assessment, fine or penalty that is currently being
contested in good faith.
(y) Neither the Company nor any of its subsidiaries is in
violation of any federal, state or foreign law or regulation relating to
occupational safety and health or to the storage, handling or transportation of
hazardous or toxic material and the Company and its subsidiaries have received
all permits, licenses or other approvals required of them under applicable
federal, state and foreign occupational safety and health and environmental laws
and regulations to conduct their respective businesses, and the Company and each
such subsidiary is in compliance with all terms and conditions of any such
permit, license or approval, except any such violation of law or regulation,
failure to receive required permits, licenses or other approvals or failure to
comply with the terms and conditions of such permits, licenses or approvals
which would not, singly or in the aggregate, result in a material adverse change
in the condition (financial or otherwise), business prospects, net worth or
results of operations of the Company and its subsidiaries, taken as a whole.
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(z) Each certificate signed by any officer of the Company and
delivered to the Initial Purchasers or counsel for the Initial Purchasers shall
be deemed to be a representation and warranty by the Company to the Initial
Purchasers as to the matters covered thereby.
(aa) Except for the shares of capital stock of each of the
subsidiaries owned by the Company and such subsidiaries or as otherwise
described in the Offering Memorandum, the shares and warrants of New Access
Communications, Inc., a Delaware corporation, if any, the shares of SEICOM, and
except for an immaterial amount of shares, if any, of publicly held companies,
neither the Company nor any such subsidiary owns any shares of stock or any
other equity securities of any corporation or has any equity interest in any
firm, partnership, association or other entity.
(bb) There are no holders of securities of the Company, who, by
reason of the filing of the Shelf Registration Statement contemplated under the
Registration Agreement, will have the right to request the Company to register
under the Securities Act, or to include in the Shelf Registration Statement, any
securities held by them, other than Intel Corporation.
(cc) The Common Stock currently outstanding is included for
quotation in The Nasdaq National Market.
(dd) The Company and each of its subsidiaries maintain a system
of internal accounting controls sufficient to provide reasonable assurance that
(i) transactions are executed in accordance with management's general or
specific authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability; (iii) access to
assets is permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(ee) Neither the Company nor any of its subsidiaries is in
default, or has any knowledge of any event that has occurred which, with notice
or lapse or time or both, would constitute a default in the due performance and
observance of any term, covenant or condition of any indenture, mortgage, deed
of trust, 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
or any of their respective properties is bound or may be affected in any
material adverse effect on the property, business or operations of the Company
and its subsidiaries, taken as a whole.
3. Purchase Sale and Delivery of the Securities.
(a) On the basis of the representations, warranties, agreements
and covenants herein contained and subject to the terms and conditions herein
set forth, the Company agrees to issue and sell to each of the Initial
Purchasers, and each of the Initial Purchasers, severally and not jointly,
agrees to purchase from the Company, at a purchase price of 97% of the principal
amount thereof, plus accrued interest from June 26, 1998, if any, to the Firm
Closing Date (as defined), the number
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of Firm Securities set forth opposite the name of such Initial Purchaser in
Schedule 1 hereto. The Firm Securities to be delivered shall be delivered by the
Company in the form of one or more Global Securities delivered on behalf of the
Company to the Depositary Trust Company ("DTC"), and registered in the name of
Cede & Co., as DTC's nominee, for the account of the Initial Purchasers, against
payment by wire transfer on the Firm Closing Date to the Company by or on behalf
of the Initial Purchasers of the purchase price therefor in immediately
available funds. Such payment for the Firm Securities shall be made at the
offices of Freshman, Marantz, Orlanski, Xxxxxx & Xxxxx, Eighth Floor, East
Tower, 0000 Xxxxxxxx Xxxxxxxxx, Xxxxxxx Xxxxx, Xxxxxxxxxx 00000, at 9:30 A.M.,
Los Angeles time, on June 26, 1998, or at such other place, time or date as the
Initial Purchasers and the Company may agree upon or as the Initial Purchasers
may determine pursuant to Section 9 hereof, such time and date of delivery
against payment being herein referred to as the "Firm Closing Date." The Company
will make such certificate or certificates for the Firm Securities available for
checking and packaging by the Initial Purchasers at the offices in New York, New
York of the Trustee at least 24 hours prior to the Firm Closing Date.
(b) For the purpose of covering any over-allotments in connection
with the distribution and sale of the Firm Securities as contemplated by the
Offering Memorandum, the Company hereby grants to the several Initial Purchasers
an option to purchase, up to $15,000,000 aggregate principal amount of Option
Securities. The purchase price to be paid for any Option Securities shall be 97%
of the principal amount thereof, plus accrued interest from June 26, 1998, if
any, to the Option Closing Date (as defined). The option granted hereby may be
exercised as to all or any part of the Option Securities from time to time
within 30 days after the date of the Offering Memorandum (or, if such 30th day
shall be a Saturday or Sunday or a holiday, on the next business day thereafter
when the New York Stock Exchange is open for trading). The Initial Purchasers
shall not be under any obligation to purchase any of the Option Securities prior
to the exercise of such option. The Initial Purchasers may from time to time
exercise the option granted hereby by giving notice in writing or by telephone
(confirmed in writing) to the Company setting forth the aggregate principal
amount of Option Securities as to which the Initial Purchasers is then
exercising the option and the date and time for delivery of and payment for such
Option Securities. Any such date of delivery shall be determined by the Initial
Purchasers, but shall not be earlier than two business days or later than seven
business days after such exercise of the option and, in any event, shall not be
earlier than the Firm Closing Date. The time and date set forth in such notice,
or such other time on such other date as the Initial Purchasers and the Company
may agree upon or as the Initial Purchasers may determine pursuant to Section 9
hereof, is herein called the "Option Closing Date" with respect to such Option
Securities. Upon exercise of the option as provided herein, the Company shall
become obligated to sell to each of the several Initial Purchasers, and, subject
to the terms and conditions herein set forth, the Initial Purchasers shall
become obligated, severally and not jointly, to purchase from the Company, the
same percentage of the total principal amount of the Option Securities as to
which the several Initial Purchasers are then exercising the option as such
Initial Purchaser is obligated to purchase of the aggregate principal amount of
Firm Securities. If the option is exercised as to all or any portion of the
Option Securities, one or more Global Securities representing such Option
Securities shall be delivered by the Company on behalf of the Initial Purchasers
to DTC and registered in the name of Cede & Co., as DTC's nominee, against
payment
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for such Option Securities, on the related Option Closing Date in the manner,
and upon the terms and conditions set forth in paragraph (a) of this Section 3,
except that reference therein to the Firm Securities and the Firm Closing Date
shall be deemed, for purposes of this paragraph (b), to refer to such Option
Securities and Option Closing Date, respectively.
(c) It is understood and acknowledged that upon original issuance
thereof, and until such time as the same is no longer required under the
applicable requirements of the Securities Act, the Securities (and all
securities in exchange therefor, in substitution thereof or upon conversion
thereof), shall bear a legend to the following effect:
THE SECURITIES EVIDENCED HEREBY AND THE SHARES OF COMMON STOCK ISSUABLE
UPON THEIR CONVERSION HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE
OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED, EXCEPT (A)(1) TO A PERSON WHOM
THE TRANSFEROR REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE
MEANING OF RULE 144A UNDER THE SECURITIES ACT ("RULE 144A") ACQUIRING FOR ITS
OWN ACCOUNT OF FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (2) IN AN OFFSHORE
TRANSACTION MEETING THE REQUIREMENTS OF RULE 903 OR RULE 904 OF REGULATION S
UNDER THE SECURITIES ACT, (3) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER
THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE), (4) TO AN
INSTITUTION THAT IS AN ACCREDITED INVESTOR WITHIN THE MEANING OF RULE 501 (A)
(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT IN A TRANSACTION
EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (IF AVAILABLE)
OR (5) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT
AND (B) IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE
UNITED STATES.
CONVERSION OF THIS SECURITY IS SUBJECT TO CERTIFICATION AND OTHER
REQUIREMENTS, AND ANY COMMON STOCK ISSUED ON SUCH CONVERSION WILL BE SUBJECT TO
THE TRANSFER RESTRICTIONS REFERRED TO ABOVE.
4. Offering by the Initial Purchasers.
(a) Each Initial Purchaser, severally and not jointly, represents
and warrants that it is a "qualified institutional buyer" within the meaning of
Rule 144A.
(b) Each Initial Purchaser, severally and not jointly,
acknowledges that the Securities have not been registered under the Securities
Act and may not be offered or sold within the United States or to, or for the
benefit of, United States persons except pursuant to an exemption from, or a
transaction not subject to, the registration requirements of the Securities Act
or pursuant to an effective registration statement under the Securities Act.
Each Initial Purchaser, severally and
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not jointly, represents, warrants and agrees that it has offered the Securities,
and will offer and sell the Securities, only: (i) inside the United States to
persons whom it reasonably believes are "qualified institutional buyers" in
accordance with Rule 144A or (ii) to non-U.S. persons pursuant to offers and
sales that occur outside the United States in accordance with Regulation S under
the Securities Act. Each Initial Purchaser, severally and not jointly,
represents, warrants and agrees that, with respect to Securities offered or sold
in reliance on Regulation S, (i) neither it nor its affiliates nor any person
acting on its behalf has engaged or will engage in any directed selling efforts
in the United States within the meaning of Regulation S with respect to the
Securities, (ii) such Initial Purchasers, its affiliates and all persons acting
on its or their behalf have complied and will comply with the offering
restrictions requirements of Regulation S in connection with the offering of the
Securities outside of the United States and (iii) with respect to resales by
such Initial Purchaser made in reliance on Regulation S, to deliver either with
the confirmation of such resale by such Initial Purchaser or otherwise prior to
settlement of such resale a notice substantially to the following effect: "The
Securities covered hereby have not been registered under the U.S. Securities Act
of 1933, as amended (the "Securities Act") and may not be offered and sold
within the United States or to, or for the account or benefit of, U.S. persons
(i) as part of the distribution thereof at any time or (ii) otherwise until one
year after the later of the date of the commencement of the offering and the
latest closing date, except in either case in accordance with Regulation S under
the Securities Act. Terms used above have the meaning given them by Regulation
S."
(c) Each Initial Purchaser, severally and not jointly, represents
and agrees that (i) it has not offered or sold and, prior to the date six months
after the latest Closing Date, will not offer or sell, directly or indirectly,
any Securities in the United Kingdom by means of any document other than to
persons whose ordinary business it is to buy or sell shares or notes, whether as
principal or agent, for the purposes of their business or otherwise in
circumstances which have not resulted in or will not result in an offer to the
public in the United Kingdom within the meaning of the Public Offers of
Securities Regulations 1995; (ii) it has complied and will comply with all
applicable provisions of the Financial Services Xxx 0000 with respect to
anything done by it in relation to the Securities in, from or otherwise
involving the United Kingdom, including any stabilization activities as referred
to in the Offering Memorandum, and (iii) it has only issued or passed on and
will only issue or pass on in the United Kingdom any document received by it in
connection with the issue of the Securities to a person who is of a kind
described in Article 11(3) of the Financial Services Xxx 0000 (Investment
Advertisements) (Exemptions) Order 1996 or to a person to whom the document may
otherwise lawfully be issued or passed on.
(d) Each Initial Purchaser, severally and not jointly, agrees
that it will not offer or sell the Securities purchased from the Company
hereunder by means of any form of general solicitation or general advertising.
(It is understood, however, that such limitation shall not preclude the Initial
Purchasers from placing any tombstone announcement with respect to the resale by
the Initial Purchasers of the Securities outside the United States, provided
that such announcement does not constitute directed selling efforts within the
meaning of Regulation S, or, following one year after the later of the
commencement of the offering and the latest Closing Date, inside the United
States.) Each Initial Purchaser, severally and not jointly, agrees, with respect
to resales made in reliance on
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Rule 144A, other than through the National Association of Securities Dealers,
Inc. Private Offerings, Resales and Trading through Automated Linkages
("PORTAL") Market, of any of the Securities purchased from the Company
hereunder, to deliver either with the confirmation of such resale or otherwise
prior to settlement of such resale a notice to the effect that the resale of
such Securities has been made in reliance upon the exemption from the
registration requirements of the Securities Act provided by Rule 144A.
(e) Each Initial Purchaser, severally and not jointly, agrees
that, during the one year "distribution compliance period" (within the meaning
of Regulation S), it will hold the Regulation S Global Security as provided in
the Offering Memorandum and, in connection therewith, it will not (i) effect
transfers of interests in the Regulation S Global Security unless such transfers
are made to QIBs or (ii) effect transfers of interests in the Regulation S
Global Security (x) by any "dealer" or person "receiving a selling concession,
fee or other remuneration" (within the meaning of Regulation S) (y) within the
United States (within the meaning of Regulation S) or (z) to a U.S. person or
for the account or benefit of a U.S. person (within the meaning of Rule 902(o)
under the Securities Act).
(f) Each Initial Purchaser, severally and not jointly,
understands that the Securities have not been and will not be registered under
the Securities and Exchange Law of Japan, and represents that it has not offered
or sold, and agrees not to offer or sell, directly or indirectly, any Securities
in Japan or for the account of any resident thereof except pursuant to any
exemption from the registration requirements of the Securities and Exchange Law
of Japan and otherwise in compliance with applicable provisions of Japanese law.
5. Covenants of the Company.
The Company covenants and agrees with the Initial Purchasers that:
(a) If, at any time prior to the completion of the sale of the
Securities by the Initial Purchasers to purchasers, any event occurs as a result
of which the Offering Memorandum as then amended or supplemented would include
an untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or if it is necessary
at such time to amend or supplement the Offering Memorandum to comply with any
applicable law, the Company will promptly prepare an amendment or supplement
which will correct such statement or omission or effect such compliance (except
that in case the Initial Purchasers is required to deliver an offering
memorandum under applicable law in connection with the offer or sale of
Securities at any time more than nine months after the Firm Closing Date, the
cost of such preparation and furnishing of such amended or supplemented offering
memorandum shall be borne by the Initial Purchasers), and the Company will not
effect any amendment or supplement to the Offering Memorandum of which the
Initial Purchaser shall not have previously been advised or to which it shall
have previously objected without the consent of the Initial Purchasers, which
consent will not be unreasonably withheld. Neither your
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consent to, nor the delivery by the Initial Purchasers of, any such amendment or
supplement shall constitute a waiver of any of the conditions set forth in
Section 7.
(b) The Company will arrange for the qualification of the
Securities and the Conversion Securities for offering and sale under the
securities or blue sky laws of such jurisdictions as the Initial Purchasers may
designate and will continue such qualifications in effect for as long as may be
necessary to complete the distribution of the Securities, provided, however,
that in connection therewith the Company shall not be required to qualify to
conduct business as a foreign corporation or to execute a general consent to
service of process in any jurisdiction. The Company will promptly advise the
Initial Purchasers of the receipt by the Company of any notification with
respect to the suspension of the qualification of the Securities for sale in any
jurisdiction or the initiation or threatening of any proceeding for such
purpose.
(c) The Company will, without charge, provide to the Initial
Purchasers as many copies of each Preliminary Offering Memorandum or the
Offering Memorandum or any amendment or supplement thereto as the Initial
Purchasers and its counsel may reasonably request; without limiting the
application of this sentence, the Company, not later than (1) 6:00 PM, New York
City time, on the date of determination of the offering price, if such
determination occurred at or prior to 10:00 AM, New York City time, on such date
or (2) 2:00 PM, New York City time, on the business day following the date of
determination of the offering price, if such determination occurred after 10:00
AM, New York City time, on such date, will deliver to the Initial Purchasers,
without charge, as many copies of the Offering Memorandum and any amendment or
supplement thereto as the Initial Purchasers may reasonably request for purposes
of confirming orders that are expected to settle on the Firm Closing Date. In
addition, the Company will furnish to the Initial Purchasers, on the date
hereof, five copies of the independent auditors' reports included in the
Offering Memorandum signed by the auditors rendering such report. If, at any
time prior to three years after the later of the Firm Closing Date and the
Option Closing Date and at a time when any of the Securities, the Global
Securities or the Conversion Securities are "restricted securities" within the
meaning of Rule 144(a)(3) under the Securities Act, the Company is not subject
to Section 13 or 15(d) of the Exchange Act and is not exempt from reporting
pursuant to Rule 12g3-2(b) thereunder, the Company will furnish, as soon as
available, to the Initial Purchasers or to any holder of the Securities, or the
Conversion Securities, copies of the information required to be delivered to
holders and prospective purchasers of the Securities, the Global Securities or
the Conversion Securities pursuant to Rule 144A(d)(4) to permit compliance with
Rule 144A in connection with resales of the Securities, the Global Securities or
the Conversion Securities (the "Additional Company Information").
(d) During the period of three years after the later of the Firm
Closing Date and the Option Closing Date or until the effectiveness of the Shelf
Registration Statement to be filed by the Company with the Commission pursuant
to the Registration Agreement, the Company will, upon request, furnish to the
Initial Purchasers and any holder of Securities or Conversion Securities a copy
of the restrictions on transfer applicable to such Securities or Conversion
Securities.
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(e) The Company will not, and will not permit any of its
subsidiaries to, resell any Securities or Conversion Securities which have been
acquired by any of them during the period of three years after the later of the
Firm Closing Date and the Option Closing Date and which constitute "restricted
securities" under Rule 144, otherwise than pursuant to an effective registration
statement under the Securities Act.
(f) The Company will apply the net proceeds from the sale of the
Securities substantially as set forth under "Use of Proceeds" in the Offering
Memorandum.
(g) The Company will not, directly or indirectly, without the
prior written consent of Prudential Securities Incorporated, on behalf of the
Initial Purchasers, offer, sell, offer to sell, contract to sell, pledge, grant
any option to purchase or otherwise sell or dispose (or announce any offer,
sale, offer of sale, contract of sale, pledge, grant of any option to purchase
or other sale or disposition) of any shares of Common Stock or any securities
convertible into, or exchangeable or exercisable for, shares of Common Stock,
for a period until 90 days after the date hereof (the "Lock-Up Period"), except
(i) pursuant to this Agreement, (ii) upon the conversion of the Securities,
(iii) grants of employee stock options in accordance with ordinary Company
practice and issuances pursuant to the exercise of employee stock options
outstanding on the date hereof, (iv) upon the proper exercise of any options or
warrants outstanding as of March 31, 1998 or (v) warrants to purchase up to
300,000 shares of Common Stock at a price of $35.00 per share, which warrants
may be issued in connection with an acquisition of another company, or its
assets. The Company will obtain the agreements described in Section 7(i) hereof
prior to the Firm Closing Date.
(h) Except following the effectiveness of the Shelf Registration
Statement, neither the Company nor any subsidiary of the Company will solicit
any offer to buy or offer or sell the Securities by means of any form of general
solicitation or general advertising (within the meaning of Rule 502(c) under the
Securities Act) in a manner which would result in the proposed sale of the
Securities in accordance with this Agreement and the Offering Memorandum failing
to be exempt from the registration requirements of the Securities Act or take
any other action that would have required the registration of the resale by the
Initial Purchasers of the Securities under the Securities Act.
(i) The Company will not, and will not permit any of its
affiliates (as defined in Rule 501(b) under the Securities Act) to, sell, offer
for sale or solicit offers to buy or otherwise negotiate in respect of any
security (as defined in the Securities Act) the offering of which security could
be integrated with sale of the Securities or Conversion Securities in a manner
which would require the registration of the Securities or Conversion Securities
under the Securities Act.
(j) The Company shall use its best efforts in cooperation with
the Initial Purchasers to permit the Securities to be eligible for clearance and
settlement through DTC, Cedel and Euroclear.
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(k) So long as any of the Securities are outstanding, the Company
will furnish to the Initial Purchasers, as soon as practicable after the end of
the fiscal year, a copy of its annual report to stockholders for such year; and
the Company will furnish to the Initial Purchasers (i) as soon as available, a
copy of each report or definitive proxy statement of the Company filed with the
Commission under the Exchange Act or mailed to stockholders and (ii) from time
to time, such other information concerning the Company as the Initial Purchasers
may reasonably request.
(l) The Company will at all times reserve and keep available,
free of preemptive rights, shares of Common Stock for the purpose of enabling
the Company to satisfy any obligations to issue shares of its Common Stock upon
conversion of the Securities.
(m) The Company will use its best efforts to include for
quotation, subject to notice of issuance, Conversion Securities on The Nasdaq
National Market on or prior to the effective date of the Shelf Registration
Statement.
6. Expenses.
The Company will pay all costs and expenses incident to the performance
of its obligations under this Agreement, whether or not the transactions
contemplated herein are consummated or this Agreement is terminated pursuant to
Section 10 hereof, including all costs and expenses (i) incident to the
preparation and delivery of the Securities in global and definitive forms, the
preparation and printing of the Preliminary Offering Memorandum and the Offering
Memorandum and all other amendments and supplements thereto and the mailing and
delivering of copies thereof to the Initial Purchasers, but not including the
fees and disbursements of counsel to the Initial Purchasers except with respect
to any Preliminary and Supplemental Blue Sky Memoranda, as provided in (iv)
below; (ii) of the Company's counsel and accountants and listing agents in
connection with the issuing and listing of the Securities, (iii) incurred in
connection with the approval of the Securities for trading in the PORTAL market
and the registration or qualification and determination of eligibility for
investment of the Securities under the laws of such jurisdictions as the Initial
Purchasers may designate (including all counsel fees), (iv) in connection with
the preparation, printing (including word processing and duplication costs) and
delivery of this Agreement, the Other Company Agreements and any Preliminary and
Supplemental Blue Sky Memoranda, including mailing and shipping, (v) the fees
and expenses of the Trustee, any successor Trustee and any agent of any Trustee;
and (vi) any "road show" meetings with prospective investors in the Securities
(other than as shall have been specifically approved by the Initial Purchasers
to be paid for by the Initial Purchasers). If the sale of the Securities
provided for herein is not consummated because this Agreement is terminated
pursuant to Section 11(a)(i) or 11(a)(ii) hereof or because of any failure,
refusal or inability on the part of the Company to perform and satisfy any of
the conditions set forth in Sections 7(a), 7(b), 7(c), 7(d), 7(f), 7(g), 7(h),
7(i), 7(l) or 7(m), other than by reason of a default by the Initial Purchasers,
the Company will reimburse the Initial Purchasers upon demand for all reasonable
out-of-pocket expenses (including reasonable counsel fees and disbursements)
that shall have been incurred by it in connection with the proposed purchase and
sale of the Securities. The Company shall not in any event be liable
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to the Initial Purchasers for the loss of anticipated profits from the
transactions covered by this Agreement.
7. Conditions of the Obligations of the Initial Purchasers.
The obligations of the several Initial Purchasers to purchase and pay
for the Firm Securities shall be subject, in the sole discretion of the Initial
Purchasers, to the accuracy of the representations and warranties of the Company
contained herein as of the date hereof and as of the Firm Closing Date, as if
made on and as of the Firm Closing Date, to the accuracy of the certifications,
representations and warranties of the Company's officers made pursuant to the
provisions hereof, to the performance by the Company of its respective covenants
and agreements hereunder and to the following additional conditions:
(a) Subsequent to the execution and delivery of this Agreement,
(i) no order or decree preventing the use of the Offering Memorandum or any
amendment or supplement thereto, or any order asserting that the transactions
contemplated by this Agreement are subject to the registration requirements of
the Securities Act, shall have been issued and no proceedings for that purpose
shall have been commenced or shall be pending or, to the knowledge of the
Company, be contemplated and no stop order suspending the sale of the Securities
in any jurisdiction designated by the Initial Purchasers shall have been issued
and no proceedings for that purpose shall have been commenced or shall be
pending or, to the knowledge of the Company, shall be contemplated; (ii) the
Initial Purchasers shall not have discovered or disclosed to the Company that
the Offering Memorandum or any amendment or supplement thereto contains an
untrue statement of fact which, in the Initial Purchasers' opinion, is material
or fails to state a fact which is material or is necessary to make the
statements therein, in light of the circumstances under which they are made, not
misleading; or (iii) there shall not have occurred any invalidation of Rule 144A
or Regulation S under the Securities Act by any court or any withdrawal or
proposed withdrawal of any rule or regulation under the Securities Act or the
Exchange Act by the Commission or any amendment or proposed amendment thereof by
the Commission which in the judgment of the Initial Purchasers would materially
impair its ability to purchase, hold or effect resales of the Securities as
contemplated hereby.
(b) The Initial Purchasers shall have received an opinion, dated
the Firm Closing Date, of Freshman, Marantz, Orlanski, Xxxxxx & Xxxxx, counsel
for the Company, to the effect that:
(i) The Company and NBase Xyplex, Inc., a Delaware corporation
("NBase Xyplex"), each is a corporation duly organized and validly
existing as a corporation in good standing under the laws of the State
of Delaware. The Company and NBase Xyplex each is duly qualified to
transact business as a foreign corporation and is in good standing under
the laws of all United States jurisdictions where the ownership or
leasing of its properties or the conduct of its businesses requires such
qualification, except where the failure to be so qualified does not
amount to a material liability or disability to the Company and its
subsidiaries, taken as a whole;
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(ii) The Company and NBase Xyplex each has all requisite
corporate power, to own or lease its properties and conduct its business
as described in the Offering Memorandum, and the Company has all
requisite corporate power to enter into this Agreement and the other
Company Agreements and to carry out all the terms and provisions hereof
and thereof;
(iii) The authorized, issued and outstanding capital stock of
the Company as of March 31, 1998 is as set forth in the Offering
Memorandum under the caption "Capitalization," the Common Stock conforms
in all material respects to the description thereof contained in the
Offering Memorandum;
(iv) To the knowledge of such counsel, except for the Securities
and as described in the Offering Memorandum, there are no outstanding
rights, warrants or options to acquire any capital stock of the Company
or any subsidiary;
(v) To the knowledge of such counsel, other than rights pursuant
to the Registration Agreement, no holders of securities other than Intel
Corporation of the Company are entitled to have such securities
registered under the Securities Act as a result of the issuance and sale
of the Securities hereunder or as a result of the Company filing the
Shelf Registration Statement pursuant to the terms of the Registration
Agreement;
(vi) The Indenture has been duly authorized, executed and
delivered by the Company; assuming the due authorization, execution and
delivery of the Indenture by the Trustee, the Indenture constitutes a
valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms; the Indenture complies as to form
in all material respects with the requirements of the Trust Indenture
Act of 1939, as amended (the "TIA"), and the rules and regulations of
the Commission applicable to an indenture which is qualified thereunder;
and it is not legally required in connection with the offer, sale and
delivery of the Securities to the Initial Purchasers or in connection
with the initial resales of the Securities delivered on the Closing Date
by the Company to the Initial Purchasers, in each case in the manner
contemplated by this Agreement and the Offering Memorandum, to qualify
the Indenture under the TIA;
(vii) The Securities have been duly authorized, executed and
delivered by the Company and, assuming they have been duly authenticated
by the Trustee in accordance with the terms of the Indenture, upon
delivery of the Securities in accordance with the Indenture, the
Securities will constitute legal, valid and binding obligations of the
Company, enforceable against the Company in accordance with their terms;
and the Securities conform in all material respects to the descriptions
thereof contained in the Offering Memorandum and are entitled to the
benefits provided by the Indenture;
(viii)The shares of Common Stock to be issued upon conversion of
the Securities have been duly authorized and reserved for issuance upon
such conversion of the
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Securities and, when they are issued and delivered upon conversion of
the Securities in accordance with the terms of the Indenture, will be
validly issued, fully paid and nonassessable and not subject to any
preemptive rights;
(ix) The statements under the captions "Description of Notes,"
"Description of Capital Stock," "Management," "Certain Federal Income
Tax Considerations" and "Notice to Investors" in the Offering Memorandum
insofar as such statements constitute a general summary of matters of
United States law or of documents referred to therein have been reviewed
by such counsel and are correct in all material respects;
(x) This Agreement and the Registration Agreement have been duly
authorized, executed and delivered by the Company and each such
agreement constitutes a valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms;
(xi) To the knowledge of such counsel, no legal or governmental
proceedings are pending to which the Company or any of its subsidiaries
is a party or to which the property of the Company or any of its
subsidiaries is subject, that (i) would affect the subject matter of
this Agreement or any Other Company Agreement or any of the transactions
contemplated herein or therein, or (ii) is of a character that would be
required to be disclosed in a registration statement on Form S-1 or the
related prospectus relating to the offer and sale of the Securities,
and, to the knowledge of such counsel, no such proceedings have been
threatened against the Company or any of its subsidiaries or with
respect to any of their respective properties;
(xii) To the knowledge of such counsel, there are no contracts
or other documents of a character that would be required to be described
in Part I of a registration statement on Form S-1 or the related
prospectus relating to the offer and sale of the Securities which are
not described in the Offering Memorandum;
(xiii) The offering, sale, issuance and delivery of the
Securities to the Initial Purchasers by the Company pursuant to this
Agreement, compliance by the Company with the provisions of this
Agreement and of the Other Company Agreements, and the consummation of
the transactions herein and therein contemplated (including the issuance
and delivery of the Conversion Securities) do not (A) require any
authorization, approval, consent, order of, license of, registration,
filing or qualification of or with any governmental authority of the
United States, except such as may be required under state securities or
blue sky laws (and, in the case of compliance with the Registration
Agreement, the filing of the Shelf Registration Statement (as defined
therein) and the registration thereunder of the Securities and the
Common Stock to be issued upon conversion of the Securities under the
Securities Act), or (B) conflict with or result in a breach or violation
of any of the terms and provisions of, or constitute a default under,
(i) any indenture, mortgage, deed of trust, lease or other agreement or
instrument, known to such counsel, to which the Company or NBase
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Xyplex is a party or by which the Company or NBase Xyplex or any of
their respective properties are bound, or (ii) the charter documents or
bylaws of any of the Company or NBase Xyplex, or (iii) any statute or
regulation of United States, the State of California or the State of New
York or the General Corporation Law of the State of Delaware or any
judgment, decree or order of any court or other governmental authority
or any arbitrator known to such counsel and applicable to the Company or
any of its subsidiaries, except, with respect to clauses (i) and (iii),
for such conflicts, breaches, violations or defaults that would not,
individually or in the aggregate, have a material adverse effect on the
condition (financial or other), business, properties, net worth or
results of operations of the Company and its subsidiaries, taken as a
whole, and would not adversely affect the ability of the Company to
perform its obligations under this Agreement and the Other Company
Agreements;
(xiv) The Company is not and, after giving effect to the
offering and sale of the securities and the application of the proceeds
thereof as described in the Offering Memorandum, will not be, an
"investment company", within the meaning of the Investment Company Act;
and
(xv) Assuming the accuracy of the representations and warranties
and compliance with the agreements of the Company and the Initial
Purchasers herein and referred to under the captions "Plan of
Distribution" and "Notice to Investors" in the Offering Memorandum, in
connection with (A) the offer, sale and delivery of the Securities on
the Closing Date by the Company to the Initial Purchasers pursuant to
this Agreement, (B) the initial resale of the Securities delivered on
the Closing Date by the Initial Purchasers as contemplated by this
Agreement and the Offering Memorandum, or (C) the issuance and delivery
of the Conversion Securities in the manner contemplated by the
Indenture, it is not legally required to register the Securities or any
Conversion Securities under the Securities Act, it being understood that
no opinion is expressed as to any subsequent resale of any Securities or
Conversion Securities.
Such counsel shall state that they have participated in conferences with
representatives of the Company, representatives of the independent public
accountants for the Company and the Initial Purchasers and their counsel, at
which conferences the contents of the Offering Memorandum, each amendment
thereof (if any) and supplement thereto (if any) and related matters were
discussed, and, although such counsel is not passing upon and assumes no
responsibility for the accuracy, fairness or completeness of the Offering
Memorandum, any amendment thereof or supplement thereto (except as expressly
provided above), nothing has come to the attention of such counsel to cause such
counsel to believe that the Offering Memorandum or any amendment thereof, if
any, or supplement thereto, if any (other than the financial statements and
related notes and schedules and other financial data included therein, as to
which such counsel need express no belief) contains, as of the date thereof and
as of the Firm Closing Date or the Option Closing Date, as the case may be, any
untrue statement of a material fact or omits to state a material fact necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading.
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In rendering any such opinion, such counsel may (i) rely, as to matters
of fact, to the extent such counsel deems proper, on certificates of responsible
officers of the Company and public officials and (ii) assume that the laws of
the State of New York will have the same effect as the laws of the State of
California.
(c) The Initial Purchasers shall have received the opinion, dated
the Firm Closing Date, of Eckhouse, Talmor, Shilo & Dichno, counsel for NBase
Israel, to the effect that:
(i) NBase Israel is a corporation duly organized and validly
existing as a corporation in good standing under the laws of the State
of Israel. NBase Israel is duly qualified to transact business as a
foreign corporation and is in good standing under the laws of all
jurisdictions where the ownership or leasing of its properties or the
conduct of its businesses requires such qualification, except where the
failure to be so qualified does not amount to a material liability or
disability to the Company and its subsidiaries, taken as a whole;
(ii) NBase Israel has full corporate power, to own or lease its
properties and conduct its business as described in the Offering
Memorandum;
(iii) The issued shares of capital stock of NBase Israel have
been duly authorized and validly issued, are fully paid and
nonassessable and are owned of record by the Company. The issued shares
of capital stock of NBase Israel are, to the knowledge of such counsel,
free and clear of any perfected security interests or any other security
interests, liens, encumbrances, equities or claims; and, to the
knowledge of such counsel, there are no outstanding rights, warrants or
options to acquire any capital stock of NBase Israel;
(iv) To the knowledge of such counsel, no legal or governmental
proceedings are pending to which NBase Israel is a party or to which the
property of NBase is subject, that (i) would affect the subject matter
of this Agreement or any Other Company Agreement or any of the
transactions contemplated herein or therein, or (ii) is of a character
that would be required to be disclosed in a registration statement on
Form S-1 or the related prospectus relating to the offer and sale of the
Securities, and no such proceedings have been threatened against NBase
Israel or with respect to any of its properties;
(v) To the knowledge of such counsel, there are no contracts or
other documents of a character of NBase Israel that would be required to
be described in Part I of a registration statement on Form S-1 or the
related prospectus relating to the offer and sale of the Securities
which are not described in the Offering Memorandum;
(vi) The offering, sale, issuance and delivery of the Securities
to the Initial Purchasers by the Company pursuant to this Agreement,
compliance by the Company with the provisions of this Agreement and of
the Other Company Agreements, and the consummation of the transactions
herein and therein contemplated (including the issuance and
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delivery of the Conversion Securities) do not (A) require any
authorization, approval, consent, order of, license of, registration,
filing or qualification of or with any governmental authority of the
State of Israel, or (B) conflict with or result in a breach or violation
of any of the terms and provisions of, or constitute a default under,
(i) any indenture, mortgage, deed of trust, lease or other agreement or
instrument to which NBase Israel is a party or by which NBase Israel or
any of its properties are bound, or (ii) the charter documents or bylaws
of NBase Israel, or (iii) any statute or regulation of the State of
Israel or any judgment, decree or order of any court or other
governmental authority or any arbitrator known to such counsel and
applicable to NBase Israel, with respect to clauses (i) and (iii), for
such conflicts, breaches, violations or defaults that would not,
individually or in the aggregate, have a material adverse effect on the
condition (financial or other), business, properties, net worth or
results of operations of the Company and its subsidiaries, taken as a
whole, and would not adversely affect the ability of the Company to
perform its obligations under this Agreement and the Other Company
Agreements.
(d) The Initial Purchasers shall have received the opinion, dated
the Firm Closing Date, of Warner & Xxxxxxxxx LLP, counsel to Xyplex, to the
effect that:
(i) Xyplex is a corporation duly organized and validly existing
as a corporation in good standing under the laws of the Commonwealth of
Massachusetts. Xyplex is duly qualified to transact business as a
foreign corporation and is in good standing under the laws of all
jurisdictions where the ownership or leasing of its properties or the
conduct of its businesses requires such qualification, except where the
failure to be so qualified does not amount to a material liability or
disability to the Company and its subsidiaries, taken as a whole;
(ii) Xyplex has full corporate power, to own or lease its
properties and conduct its business as described in the Offering
Memorandum;
(iii) The issued shares of capital stock of Xyplex have been
duly authorized and validly issued, are fully paid and nonassessable and
are owned of record by the Company. The issued shares of capital stock
of Xyplex are, to the knowledge of such counsel, free and clear of any
perfected security interests or any other security interests, liens,
encumbrances, equities or claims; and, to the knowledge of such counsel,
there are no outstanding rights, warrants or options to acquire any
capital stock of vXyplex.
(e) The Initial Purchasers shall have received an opinion, dated
the Firm Closing Date, of Xxxxxxx & Xxxxx L.L.P., counsel for the Initial
Purchasers, with respect to the issuance and sale of the Firm Securities, the
Offering Memorandum, and such other related matters as the Initial Purchasers
may reasonably require, and the Company shall have furnished to such counsel
such documents as they may reasonably request for the purpose of enabling them
to pass upon such matters.
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(f) The Initial Purchasers shall have received from Xxxxxx
Xxxxxxxx, LLP a letter or letters dated, respectively, the date hereof and the
Firm Closing Date, in form and substance satisfactory to the Initial Purchasers,
that:
(i) they are independent accountants with respect to the Company
within the meaning of the Securities Act and the applicable rules and
regulations thereunder;
(ii) in their opinion, the audited financial statements and
schedules and pro forma financial statements of the Company included in
the Offering Memorandum comply in form in all material respects with the
applicable accounting requirements of the Securities Act and the related
published rules and regulations;
(iii) on the basis of their limited review in accordance with
standards established by the American Institute of Certified Public
Accountants of any interim unaudited financial statements of the Company
included or incorporated by reference in the Offering Memorandum,
carrying out certain specified procedures (which do not constitute an
examination made in accordance with generally accepted auditing
standards) that would not necessarily reveal matters of significance
with respect to the comments set forth in this paragraph (iii), a
reading of the minute books of the stockholders, the board of directors
and any committees thereof of the Company, officials of the Company, and
inquiries of certain officials of the Company who have responsibility
for financial and accounting matters, nothing came to their attention
that caused them to believe that:
(A) the unaudited financial statements of the Company
included or incorporated by reference in the Offering Memorandum
do not comply in form in all material respects with the
applicable accounting requirements of the Securities Act and the
related published rules and regulations thereunder or are not in
conformity with generally accepted accounting principles applied
on a basis substantially consistent with that of the audited
financial statements included or incorporated by reference in
the Offering Memorandum; or
(B) at a specific date not more than five business days
prior to the date of such letter, there was any change in long-
term debt of the Company or any decreases in net current assets
or stockholders' equity of the Company, in each case compared
with amounts shown on the March 31, 1998 consolidated balance
sheet included in the Offering Memorandum, or for the period
from March 31, 1998 to such specified date there were any
decreases, as compared with the prior comparable period, in the
net sales, income before income taxes or net income of the
Company, except in all instances for changes, decreases or
increases set forth in such letter;
(iv) they have carried out certain specified procedures (as
requested by the Initial Purchasers), not constituting an audit, with
respect to certain amounts, percentages and financial information that
are derived from the general accounting records of the Company
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and are included in the Offering Memorandum, and have compared such
amounts, percentages and financial information with such records of the
Company or with information derived from such records and have found
them to be in agreement, excluding any questions of legal
interpretation; and
(v) on the basis of a reading of the unaudited pro forma
consolidated condensed financial statements included in the Registration
Statement and the Prospectus, carrying out certain specified procedures
that would not necessarily reveal matters of significance with respect
to the comments set forth in this paragraph (v), inquiries of certain
officials of the Company and its consolidated subsidiaries who have
responsibility for financial and accounting matters and proving the
arithmetic accuracy of the application of the pro forma adjustments to
the historical amounts in the unaudited pro forma consolidated condensed
financial statements, nothing came to their attention that caused them
to believe that the unaudited pro forma consolidated condensed financial
statements do not comply in form in all material respects with the
applicable accounting requirements of Rule 11-02 of Regulation S-X or
that the pro forma adjustments have not been properly applied to the
historical amounts in the compilation of such statements.
In the event that the letter referred to above set forth any such
changes, decreases or increases, it shall be a further condition to the
obligation of the Initial Purchasers that (A) such letters shall be accompanied
by a written explanation of the Company as to the significance thereof, unless
the Initial Purchasers deems such explanation unnecessary, and (B) such changes,
decreases or increases do not, in the sole judgment of the Initial Purchasers,
make it impractical or inadvisable to proceed with the purchase and delivery of
the Securities as contemplated by the Offering Memorandum, as amended as of the
date hereof.
Reference to the Offering Memorandum in this paragraph (f) with respect
to the letter referred to above shall include any amendment or supplement
thereto at the date of such letter.
(g) The Initial Purchasers shall have received from each of Ernst
& Young LLP and Coopers & Xxxxxxx L.L.P. a letter or letters dated,
respectively, the date hereof and the Firm Closing Date, in form and substance
satisfactory to the Initial Purchasers.
(h) The Initial Purchasers shall have received a certificate,
dated the Firm Closing Date, of the Chief Executive Officer and the Chief
Financial Officer of the Company, on behalf of the Company, to the effect that:
(i) the representations and warranties of the Company in this
Agreement are true and correct as if made on and as of the Firm Closing
Date; the Offering Memorandum, as amended as of the Firm Closing Date,
does not include any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not
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misleading; and the Company has performed all covenants and agreements
and satisfied all conditions on its part to be performed or satisfied at
or prior to the Firm Closing Date; and
(ii) subsequent to the respective dates as of which information
is given in the Offering Memorandum, neither the Company nor any of its
subsidiaries has sustained any material loss or interference with their
respective businesses or properties from fire, flood, hurricane,
accident or other calamity, whether or not covered by insurance, or from
any labor dispute or any legal or governmental proceeding, and there has
not been any material adverse change, or any development involving a
prospective material adverse change, in the condition (financial or
otherwise), management, business prospects, net worth or results of
operations of the Company and its subsidiaries, taken as a whole, except
in each case as described in or contemplated by the Offering Memorandum
(exclusive of any amendment or supplement thereto).
(i) The Initial Purchasers shall have received from each person
who is a director or executive officer of the Company an agreement to the effect
that such person will not, directly or indirectly, without the prior written
consent of Prudential Securities Incorporated, offer, sell, offer to sell,
contract to sell, pledge, grant any option to purchase or otherwise sell or
dispose (or announce any offer, sale, offer of sale, contract of sale, pledge,
grant of any option to purchase or other sale or disposition) of any Common
Stock or any securities convertible into, or exchangeable or exercisable for,
Common Stock for a period of 90 days after the date of this Agreement.
(j) On or before the Firm Closing Date, the Initial Purchasers
and counsel for the Initial Purchasers shall have received such further
certificates, documents or other information as they may have reasonably
requested from the Company.
(k) The Securities shall have been approved by the National
Association of Securities Dealers, Inc. for trading in the PORTAL market,
subject to the issuance of the Securities.
(l) The Indenture shall have been duly executed and delivered by
the Company and the Trustee, and the Securities shall have been executed and
delivered by the Company and duly authenticated by the Trustee.
(m) The Registration Agreement shall have been executed and
delivered by the Company.
All opinions, certificates, letters and documents delivered pursuant to
this Agreement will comply with the provisions hereof only if they are
reasonably satisfactory in all material respects to the Initial Purchasers and
counsel for the Initial Purchasers. The Company shall furnish to the Initial
Purchasers such conformed copies of such opinions, certificates, letters and
documents in such quantities as the Initial Purchasers and counsel for the
Initial Purchasers shall reasonably request.
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The obligation of the Initial Purchasers to purchase and pay for any
Option Securities shall be subject, in its discretion, to each of the foregoing
conditions to purchase the Firm Securities, except that all references to the
Firm Securities and the Firm Closing Date shall be deemed to refer to such
Option Securities and the related Option Closing Date, respectively.
8. Indemnification and Contribution.
(a) The Company agrees to indemnify and hold harmless each
Initial Purchaser and each person, if any, who controls any Initial Purchaser
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act, against any losses, claims, damages or liabilities, joint or
several, to which they or any of them may become subject under the Securities
Act or the Exchange Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon:
(i) any untrue statement or alleged untrue statement made by the
Company in Section 2 of this Agreement,
(ii) any untrue statement or alleged untrue statement of any
material fact contained in (A) the Offering Memorandum or the
Preliminary Offering Memorandum or any amendment or supplement thereto,
(B) any application or other document, or any amendment or supplement
thereto, executed by the Company or based upon written information
furnished by or on behalf of the Company filed in any jurisdiction in
order to qualify the Securities under the securities or blue sky laws
thereof or filed with or any securities association or securities
exchange (each an "Application"), or (C) any Additional Company
Information provided by the Company to any holder or prospective
purchaser of Securities pursuant to Section 5(c),
(iii) the omission or alleged omission to state in the Offering
Memorandum or the Preliminary Offering Memorandum or any amendment or
supplement thereto, any Application or any Additional Company
Information provided by the Company to any holder or prospective
purchaser of Securities pursuant to Section 5(c), a material fact
required to be stated therein or necessary to make the statements
therein not misleading or
(iv) any untrue statement or alleged untrue statement of any
material fact contained in any audio or visual materials used in
connection with the marketing of the Securities, including, without
limitation, slides, videos, films and tape recordings,
and will reimburse, as incurred, each Initial Purchaser and each such
controlling person for any legal or other expenses reasonably incurred by such
Initial Purchaser or such controlling person in connection with investigating,
defending against or appearing as a third-party witness in connection with any
such loss, claim, damage, liability or action; provided, however that the
Company will not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon any untrue statement
or alleged untrue statement or omission or alleged omission made
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in such Offering Memorandum or Preliminary Offering Memorandum or any
Application in reliance upon and in conformity with written information
furnished to the Company by such Initial Purchaser specifically for use therein;
and provided, further, that the Company will not be liable to any Initial
Purchaser or any person controlling such Initial Purchaser with respect to any
such untrue statement or omission made in any Preliminary Offering Memorandum
that is corrected in the Offering Memorandum (or any amendment or supplement
thereto) if the person asserting any such loss, claim, damage or liability
purchased Securities from such Initial Purchaser but was not sent or given a
copy of the Offering Memorandum (as amended or supplemented) at or prior to the
written confirmation such Securities to such person in any case where such
delivery of the Offering Memorandum (as amended or supplemented) is required by
the Securities Act, unless such failure to deliver the Offering Memorandum (as
amended or supplemented) was a result of noncompliance by the Company with
Section 5(c) of this Agreement. This indemnity agreement will be in addition to
any liability which the Company may otherwise have. The Company will not,
without the prior written consent of the Initial Purchasers, settle or
compromise or consent to the entry of any judgment in any pending or threatened
claim, action, suit or proceeding in respect of which indemnification may be
sought hereunder (whether or not any Initial Purchaser or any person who
controls such Initial Purchaser within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act is a party to such claim,
action, suit or proceeding), unless such settlement, compromise or consent
includes an unconditional release of all the Initial Purchasers and such
directors, officers, employees, agents or controlling persons from all liability
arising out of such claim, action, suit or proceeding.
(b) Each Initial Purchaser, severally and not jointly, will
indemnify and hold harmless the Company, each of its directors, officers,
employees and agents and each person, if any, who controls the Company within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act against any losses, claims, damages or liabilities to which the Company or
any such director, officer, employee or agent or controlling person may become
subject under the Securities Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon (i) any untrue statement or alleged untrue statement of any material fact
contained in the Offering Memorandum or the Preliminary Offering Memorandum or
any amendment or supplement thereto, or any Application or (ii) the omission or
the alleged omission to state therein a material fact required to be stated in
the Offering Memorandum or the Preliminary Offering Memorandum or any amendment
or supplement thereto, or any Application or necessary to make the statements
therein not misleading, in each case to the extent, but only to the extent, that
such untrue statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with written information
furnished to the Company by such Initial Purchaser specifically for use therein;
and, subject to the limitation set forth immediately preceding this clause, will
reimburse, as incurred, any legal or other expenses reasonably incurred by the
Company or any such director, officer, employee or agent or controlling person
in connection with investigating or defending any such loss, claim, damage,
liability or any action in respect thereof. This indemnity agreement will be in
addition to any liability which such Initial Purchaser may otherwise have.
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(c) Promptly after receipt by an indemnified party under this
Section 8 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section 8, notify the indemnifying party of the commencement thereof;
but the omission so to notify the indemnifying party will not relieve it from
any liability which it may have to any indemnified party otherwise than under
this Section 8. In case any such action is brought against any indemnified
party, and it notifies the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein and, to the extent
that it may wish, jointly with any other indemnifying party similarly notified,
to assume the defense thereof, with counsel satisfactory to such indemnified
party; provided, however, that if the defendants in any such action include both
the indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that there may be one or more legal defenses available
to it and/or other indemnified parties which are different from or additional to
those available to the indemnifying party, the indemnifying party shall not have
the right to direct the defense of such action on behalf of such indemnified
party or parties and such indemnified party or parties shall have the right to
select separate counsel to defend such action on behalf of such indemnified
party or parties. After notice from the indemnifying party to such indemnified
party of its election so to assume the defense thereof and approval by such
indemnified party of counsel appointed to defend such action, the indemnifying
party will not be liable to such indemnified party under this Section 8 for any
legal or other expenses, other than reasonable costs of investigation,
subsequently incurred by such indemnified party in connection with the defense
thereof, unless (i) the indemnified party shall have employed separate counsel
in accordance with the proviso to the next preceding sentence (it being
understood, however, that in connection with such action the indemnifying party
shall not be liable for the expenses of more than one separate counsel (in
addition to local counsel) in any one action or separate but substantially
similar actions in the same jurisdiction arising out of the same general
allegations or circumstances, designated by the Initial Purchaser in the case of
paragraph (a) of this Section 8, representing the indemnified parties under such
paragraph (a) who are parties to such action or actions) or (ii) the
indemnifying party does not promptly retain counsel satisfactory to the
indemnified party or (iii) the indemnifying party has authorized the employment
of counsel for the indemnified party at the expense of the indemnifying party.
After such notice from the indemnifying party to such indemnified party, the
indemnifying party will not be liable for the costs and expenses of any
settlement of such action effected by such indemnified party without the consent
of the indemnifying party.
(d) In circumstances in which the indemnity agreement provided
for in the preceding paragraphs of this Section 8 is unavailable or
insufficient, for any reason, to hold harmless an indemnified party in respect
of any losses, claims, damages or liabilities (or actions in respect thereof)
that by the terms of the preceding paragraphs of this Section 8 could otherwise
be the subject of an indemnity claim, each indemnifying party, in order to
provide for just and equitable contribution, shall contribute to the amount paid
or payable by such indemnified party as a result of such losses, claims, damages
or liabilities (or actions in respect thereof) in such proportion as is
appropriate to reflect (i) the relative benefits received by the indemnifying
party or parties on the one hand and the indemnified party on the other from the
offering of the Securities or (ii) if the allocation provided by the foregoing
clause (i) is not permitted by applicable law, not only such relative benefits
but also the
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relative fault of the indemnifying party or parties on the one hand and the
indemnified party on the other in connection with the statements or omissions or
alleged statements or omissions that resulted in such losses, claims, damages or
liabilities (or actions in respect thereof) that by the terms of the preceding
paragraphs of this Section 8 could otherwise be the subject of an indemnity
claim, as well as any other relevant equitable considerations. The relative
benefits received by the Company on the one hand and the Initial Purchasers on
the other shall be deemed to be in the same proportion as the total proceeds
from the offering (before deducting expenses) received by the Company bear to
the total discounts and commissions received by the Initial Purchasers. The
relative fault of the parties shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company or the Initial Purchasers, the parties' relative
intents, knowledge, access to information and opportunity to correct or prevent
such statement or omission, and any other equitable considerations appropriate
in the circumstances. The Company and the Initial Purchasers agree that it would
not be equitable if the amount of such contribution were determined by pro rata
or per capita allocation or by any other method of allocation that does not take
into account the equitable considerations referred to above in this paragraph
(d). Notwithstanding any other provision of this paragraph (d), no Initial
Purchaser shall be obligated to make contributions hereunder that in the
aggregate exceed the total offering price of the Securities purchased by such
Initial Purchaser under this Agreement, less the aggregate amount of any damages
that such Initial Purchaser has otherwise been required to pay in respect of the
same or any substantially similar claim, and 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. The Initial Purchasers' obligations to contribute
hereunder are several in proportion to their respective purchase obligations and
not joint. For purposes of this paragraph (d), each person, if any, who controls
an Initial Purchaser within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act shall have the same rights to contribution as
such Initial Purchaser, and each director of the Company and each person, if
any, who controls the Company within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act, shall have the same rights to
contribution as the Company.
9. Default of Initial Purchasers.
If one or more Initial Purchasers default in their obligations to
purchase Firm Securities or Option Securities hereunder and the aggregate number
of such Securities that such defaulting Initial Purchaser or Initial Purchasers
agreed but failed to purchase is ten percent or less of the aggregate number of
Firm Securities or Option Securities to be purchased by all of the Initial
Purchasers at such time hereunder, the other Initial Purchasers may make
arrangements satisfactory to the Representatives for the purchase of such
Securities by other persons (who may include one or more of the non-defaulting
Initial Purchasers), but if no such arrangements are made by the Firm Closing
Date or the related Option Closing Date, as the case may be, the other Initial
Purchasers shall be obligated severally in proportion to their respective
commitments hereunder to purchase the Firm Securities or Option Securities that
such defaulting Initial Purchaser or Initial Purchasers agreed but failed to
purchase. If one or more Initial Purchasers so default with respect to an
aggregate number
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of Securities that is more than ten percent of the aggregate number of Firm
Securities or Option Securities, as the case may be, to be purchased by all of
the Initial Purchasers at such time hereunder, and if arrangements satisfactory
to the Initial Purchasers are not made within 36 hours after such default for
the purchase by other persons (who may include one or more of the non-defaulting
Initial Purchasers) of the Securities with respect to which such default occurs,
this Agreement will terminate without liability on the part of any
non-defaulting Initial Purchaser or the Company other than as provided in
Section 10 hereof. In the event of any default by one or more Initial Purchasers
as described in this Section 9, the Representatives shall have the right to
postpone the Firm Closing Date or the Option Closing Date, as the case may be,
established as provided in Section 3 hereof for not more than seven business
days in order that any necessary changes may be made in the arrangements or
documents for the purchase and delivery of the Firm Securities or Option
Securities, as the case may be. As used in this Agreement, the term "Initial
Purchaser" includes any person substituted for an Initial Purchaser under this
Section 9. Nothing herein shall relieve any defaulting Initial Purchaser from
liability for its default.
10. Survival.
The respective representations, warranties, agreements, covenants,
indemnities and other statements of the Company, its officers and the several
Initial Purchasers set forth in this Agreement or made by or on behalf of them,
respectively, pursuant to this Agreement shall remain in full force and effect,
regardless of (i) any investigation made by or on behalf of the Company, any of
its officers or directors, any Initial Purchaser or any controlling person
referred to in Section 8 hereof and (ii) delivery of and payment for the
Securities. The respective agreements, covenants, indemnities and other
statements set forth in Sections 6 and 8 hereof shall remain in full force and
effect, regardless of any termination or cancellation of this Agreement.
11. Termination.
(a) This Agreement may be terminated with respect to the Firm
Securities or any Option Securities in the sole discretion of the Initial
Purchasers by notice to the Company given prior to the Firm Closing Date or the
related Option Closing Date, respectively, in the event that the Company shall
have failed, refused or been unable to perform all obligations and satisfy all
conditions on its part to be performed or satisfied hereunder at or prior
thereto or, if at or prior to the Firm Closing Date or such Option Closing Date,
respectively,
(i) the Company or any of its subsidiaries shall have, in the
sole judgment of the Initial Purchasers, sustained any material loss or
interference with their respective businesses or properties from fire,
flood, hurricane, accident or other calamity, whether or not covered by
insurance, or from any labor dispute or any legal or governmental
proceeding or there shall have been any material adverse change, or any
development involving a prospective material adverse change (including
without limitation a change in management or control of the Company), in
the condition (financial or otherwise), business prospects, net worth or
results of operations of the Company and its subsidiaries, taken as a
whole, except
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in each case as described in or contemplated by the Offering Memorandum
(exclusive of any amendment or supplement thereto);
(ii) trading in the Common Stock shall have been suspended by
the Nasdaq National Market;
(iii) securities trading generally on the New York Stock
Exchange or the Nasdaq National Market shall have been suspended or
minimum or maximum prices shall have been established on any such
exchange or market system;
(iv) a banking moratorium shall have been declared by New York
authorities; or
(v) there shall have been (A) an outbreak or escalation of
hostilities between the United States and any foreign power, (B) an
outbreak or escalation of any other insurrection or armed conflict
involving the United States or (C) any other calamity or crisis or
material adverse change in general economic, political or financial
conditions having an effect on the United States financial markets that,
in the sole judgment of the Initial Purchasers, makes it impractical or
inadvisable to proceed with the offering or the delivery of the
Securities as contemplated by the Offering Memorandum, as amended as of
the date hereof.
(b) Termination of this Agreement pursuant to this Section 11
shall be without liability of any party to any other party except as provided in
Section 10 hereof.
12. Information Supplied by Initial Purchasers.
The statements set forth in the last paragraph on the front cover page
and under the heading "Plan of Distribution" in any Preliminary Offering
Memorandum or the Offering Memorandum (to the extent such statements relate to
the Initial Purchasers) constitute the only information furnished by the Initial
Purchasers to the Company for the purposes of Sections 1(a) and 8 hereof. The
Initial Purchasers confirm that such statements (to such extent) are correct.
13. Notices.
All communications hereunder shall be in writing and, if sent to any of
the Initial Purchasers, shall be delivered or sent by mail, telex or facsimile
transmission and confirmed in writing to Prudential Securities Incorporated, Xxx
Xxx Xxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Equity Transactions Group;
and if sent to the Company, shall be delivered or sent by mail, telex or
facsimile transmission and confirmed in writing to the Company at MRV
Communications, Inc., 0000 Xxxxxxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxxxx 00000,
Attention: Xxxx Xxxxx, President (or, in each case, to such other address as may
be hereafter notified by the respective parties hereto in accordance herewith).
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14. Successors.
This Agreement shall inure to the benefit of and shall be binding upon
the Initial Purchasers, the Company and their respective successors and legal
representatives, and nothing expressed or mentioned in this Agreement is
intended or shall be construed to give any other person any legal or equitable
right, remedy or claim under or in respect of this Agreement, or any provisions
herein contained, this Agreement and all conditions and provisions hereof being
intended to be and being for the sole and exclusive benefit of such persons and
for the benefit of no other person except that (i) the indemnities of the
Company contained in Section 8 of this Agreement shall also be for the benefit
of any person or persons who control the Initial Purchasers within the meaning
of Section 15 of the Securities Act or Section 20 of the Exchange Act and (ii)
the indemnities of the Initial Purchasers contained in Section 8 of this
Agreement shall also be for the benefit of the directors of the Company and any
person or persons who control the Company within the meaning of Section 15 of
the Securities Act or Section 20 of the Exchange Act. No purchaser of Securities
from the Initial Purchasers shall be deemed a successor because of such
purchase.
15. Applicable Law.
The validity and interpretation of this Agreement, and the terms and
conditions set forth herein, shall be governed by and construed in accordance
with the laws of the State of New York, without giving effect to any provisions
relating to conflicts of laws.
16. Consent to Jurisdiction and Service of Process.
All judicial proceedings arising out of or relating to this Agreement
may be brought in any state or federal court of competent jurisdiction in the
State of New York, and by execution and delivery of this Agreement, the Company
accepts for itself and in connection with its properties, generally and
unconditionally, the nonexclusive jurisdiction of the aforesaid courts and
waives any defense of forum non convenience and irrevocably agrees to be bound
by any judgment rendered thereby in connection with this Agreement. Nothing
herein shall limit the right of the Initial Purchasers to bring proceedings
against the Company in the courts of any other jurisdiction.
17. Counterparts.
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
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If the foregoing correctly sets forth our understanding, please indicate
your acceptance thereof in the space provided below for that purpose, whereupon
this letter shall constitute an agreement binding the Company and the Initial
Purchasers.
Very truly yours,
MRV COMMUNICATIONS, INC.
By: /s/ Xxxx Xxxxx
-------------------------------
Name: Xxxx Xxxxx
Title: President
The foregoing Agreement is hereby confirmed and accepted as of the date first
above written.
PRUDENTIAL SECURITIES INCORPORATED
BEAR, XXXXXXX & CO. INC.
By: PRUDENTIAL SECURITIES INCORPORATED
By: /s/ Xxxx-Xxxxxx Canfin
-------------------------------
Name: Xxxx-Xxxxxx Canfin
Title: Managing Director
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SCHEDULE 1
INITIAL PURCHASERS
PRINCIPAL AMOUNT
OF FIRM SECURITIES TO
INITIAL PURCHASERS BE PURCHASED
---------------------
Prudential Securities Incorporated................................ $ 70,000,000
Bear, Xxxxxxx & Co. Inc........................................... 30,000,000
----------------
Total........................................................... $ 100,000,000
================
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