1
Execution Copy
EXHIBIT 1.1
DSC COMMUNICATIONS CORPORATION
7% CONVERTIBLE SUBORDINATED NOTES DUE AUGUST 1, 2004
PURCHASE AGREEMENT
August 7, 1997
Xxxxxxx, Xxxxx & Co.,
00 Xxxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000.
NationsBanc Capital Markets, Inc.
000 Xxxx Xxxxxx
00xx Xxxxx
Xxxxxx, Xxxxx 00000
Ladies and Gentlemen:
DSC Communications Corporation, a Delaware corporation (the
"Company"), proposes, subject to the terms and conditions stated herein, to
issue and sell to the Purchasers named in Schedule I hereto (the "Purchasers")
an aggregate of U.S.$300,000,000 principal amount of the 7% Convertible
Subordinated Notes due August 1, 2004, specified above, convertible into shares
of Common Stock, par value U.S.$.01 per share (the "Stock"), of the Company,
together with the related Preferred Stock Purchase Rights of the Company
issuable with such shares of Stock (the "Firm Securities"), and, at the
election of the Purchasers, up to an aggregate of U.S.$100,000,000 additional
aggregate principal amount of such Notes (the "Optional Securities"). The Firm
Securities and the Optional Securities which the Purchasers elect to purchase
pursuant to Section 2 hereof are herein collectively called the "Securities".
As used herein, the term "Securities" shall be deemed, unless the context
otherwise requires, to include the Securities issued and sold in reliance on
Regulation S under the United States Securities Act of 1933, as amended (the
"Act"), and the term "Purchasers" shall be deemed to include Xxxxxxx Sachs
International ("GSI"), which is acting as Xxxxxxx, Xxxxx & Co.'s selling agent
in making certain resales of the Securities pursuant to Section 3.
The Purchasers and other holders (including subsequent transferees) of
Securities in registered form without coupons will be entitled to the benefits
of the registration rights agreement, to be dated as of the First Time of
Delivery (as defined below) (the "Registration Rights Agreement"), among the
Company and the Purchasers, in the form attached hereto as Exhibit A.
1. The Company represents and warrants to, and agrees with, each of
the Purchasers that:
(1) An offering circular dated August 7, 1997 (the
"Offering Circular," including the international
supplement thereto (the "International Supplement"))
in respect of the Securities has been prepared in
connection with the offering of the Securities and
the shares of Stock issuable upon conversion thereof.
Any reference to the Offering Circular shall be
deemed to refer to and include the Company's Annual
Report on Form 10-K for the fiscal year ended
December 31, 1996 (the "Form 10-K"), the Quarterly
Reports on Form 10-Q for the quarters ended March 31,
1997 and June 30, 1997 (the "Quarterly Reports"),
excerpts from the Proxy Statement for the Annual
2
Meeting of Stockholders on April 30, 1997 (the "Proxy
Statement"), attached to and made a part of the
Offering Circular, and all subsequent documents filed
by the Company with the United States Securities and
Exchange Commission (the "Commission") pursuant to
Section 13(a), 13(c) or 15(d) of the United States
Securities Exchange Act of 1934, as amended (the
"Exchange Act"), on or prior to the date of the
Offering Circular and any reference to the Offering
Circular, as amended or supplemented, as of any
specified date, shall be deemed to include (i) any
documents filed with the Commission by the Company
pursuant to Section 13(a), 13(c) or 15(d) of the
Exchange Act after the date of the Offering Circular
and prior to such specified date and (ii) any
Additional Issuer Information (as defined in Section
5(g)) furnished by the Company prior to the
completion of the distribution of the Securities; and
all documents filed under the Exchange Act by the
Company and so deemed to be included in the Offering
Circular or any amendment or supplement thereto are
hereinafter called the "Exchange Act Reports". The
Exchange Act Reports, when they were or are filed
with the Commission, conformed or will conform in all
material respects to the applicable requirements of
the Exchange Act and the applicable rules and
regulations of the Commission thereunder. The
Offering Circular and any amendments or supplements
thereto did not and will not, and the Exchange Act
Reports did not or will not, as of their respective
dates, contain an untrue statement of a material fact
or omit to state a material fact necessary in order
to make the statements therein, in the light of the
circumstances under which they were made, not
misleading; provided, however, that this
representation and warranty shall not apply to any
statements or omissions made in reliance upon and in
conformity with information furnished in writing to
the Company by a Purchaser through Xxxxxxx, Sachs &
Co. expressly for use therein;
(2) This Purchase Agreement (this "Agreement") has been,
and prior to the First Time of Delivery the
Registration Rights Agreement will be, duly and
validly authorized, executed and delivered by the
Company and this Agreement constitutes, and the
Registration Rights Agreement when delivered as
contemplated herein will constitute, a valid and
binding obligation of the Company;
(3) Each of the Company and the subsidiaries of the
Company listed on Schedule II hereto (collectively,
the "Subsidiaries"), is a corporation or partnership
duly organized, validly existing and in good standing
under the laws of its jurisdiction of incorporation
or organization, and has the power and authority to
conduct its business as it is currently being
conducted and to own or lease its properties. Each of
the Company and the Subsidiaries is duly qualified
and in good standing (other than entities that are
organized as limited partnerships for which no
representation as to good standing need be expressed)
as a foreign corporation or foreign partnership
authorized to do business in each jurisdiction in
which the nature of its business or its ownership or
leasing of property requires such qualification and
where the failure to be so qualified would,
individually or in the aggregate, have a material
adverse effect on the condition (financial or
otherwise), business, prospects or results of
operations of the Company and the Subsidiaries,
considered as a whole. All of the outstanding shares
of capital stock and partnership interests of each
Subsidiary have been duly authorized and validly
issued and are fully paid and nonassessable. All of
the outstanding shares of capital stock and
partnership interests of each Subsidiary are owned of
record by the Company or another Subsidiary, and are
owned beneficially, directly or indirectly, by the
Company free and clear of all restrictions on
transfer, liens, encumbrances, equities and claims;
provided, however, that with respect to DSC Japan
Incorporated, a Japanese corporation, Netman A/S, a
Danish corporation and TMN Udviklling I/S, a joint
venture of a subsidiary of the Company, the Company
owns, directly or indirectly, of
-2-
3
record and beneficially 95%, 60% and 99%,
respectively, of the outstanding voting securities or
partnership interests of each such Subsidiary. Except
for the Subsidiaries, the Company has no subsidiaries
or affiliated companies and does not control,
directly or indirectly, any other business entity.
Complete and correct copies of the certificate of
incorporation and of the by-laws or other
organizational documents of the Company and each
Subsidiary and all amendments thereto have been
delivered to, or have been made available for
inspection by, the Purchasers, and (except as
contemplated by the Offering Circular) no changes
therein will be made subsequent to the date hereof
and prior to the earlier of (i) the expiration of the
Purchasers' over allotment option, or (ii) the Second
Time of Delivery (as defined below);
(4) The Securities have been duly authorized by the
Company and, when issued and delivered pursuant to
this Agreement and the Indenture (hereinafter
defined), will have been duly executed,
authenticated, issued and delivered and will
constitute valid and legally binding obligations of
the Company, enforceable in accordance with their
terms, subject, as to enforcement, to bankruptcy,
insolvency, reorganization and other laws of general
applicability relating to or affecting creditors'
rights and to general equity principles and entitled
to the benefits provided by the Indenture to be dated
as of August 12, 1997 (the "Indenture") between the
Company and The Bank of New York, as trustee (the
"Trustee"), under which they are to be issued and the
Registration Rights Agreement; the Indenture has been
duly authorized and, when executed and delivered by
the parties thereto, will constitute a valid and
legally binding instrument, enforceable in accordance
with its terms, subject, as to enforcement, to
bankruptcy, insolvency, reorganization and other laws
of general applicability relating to or affecting
creditors' rights and to general equity principles;
and the Securities and the Indenture will conform to
the descriptions thereof in the Offering Circular and
will be in substantially the form previously
delivered to you;
(5) The Company has an authorized capitalization as set
forth in by the Offering Circular and all the
outstanding shares of capital stock of the Company
have been duly authorized and validly issued and are
fully paid, nonassessable and free of preemptive
rights; the shares of Stock initially issuable upon
conversion of the Securities have been duly
authorized and reserved for issuance and, when issued
and delivered in accordance with the terms of the
Securities and Indenture, will be duly authorized,
validly issued, fully paid and nonassessable, will be
sold free and clear of any pledge, lien, security
interest, encumbrance, claim or equitable interest
and, at each Time of Delivery, will conform to the
description of the Stock contained in the Offering
Circular. No preemptive right, co-sale right,
registration right, right of first refusal or other
similar right of stockholders (in each case granted
or agreed to by the Company or by which the Company
is or may be bound), exists or will exist at any time
of issuance with respect to the Securities or any of
the shares of Stock initially issuable upon
conversion of the Securities, other than the
Registration Rights Agreement. The Preferred Stock
Purchase Rights related to the shares of Stock
issuable upon conversion of the Securities have been
duly and validly authorized and, when issued and
delivered with the shares of the Stock to be issued
and delivered as provided herein will have been
validly issued and shall become binding obligations
of the Company, entitled to the benefits of the
Rights Agreement, dated as of April 25, 1996 (as
amended, the "Rights Agreement"), between the Company
and KeyCorp Shareholder Services, Inc., as Rights
Agent, and enforceable in accordance with their
terms;
(6) The Securities, the Stock, the Preferred Stock
Purchase Rights and the Company's authorized
Preferred Stock, par value $1.00 per share (the
"Preferred Stock")
-3-
4
conform to the respective descriptions thereof
included in the Offering Circular and the Exchange
Act Reports. The description of the Company's stock
option and restricted stock, stock bonus, stock
purchase and other stock plans or arrangements, and
the options or other rights granted and exercised
thereunder, set forth in the Form 10-K accurately and
fairly presents the information required to be shown
with respect to such plans, arrangements, options and
rights. Except as set forth in the Offering
Circular, except for options and restricted stock
issued in the ordinary course after the date hereof
under the Company's existing stock option and
restricted stock, stock bonus, stock purchase and
other stock plans or arrangements, the Company does
not have outstanding, and at each Time of Delivery
will not have outstanding, any options to purchase,
or any rights or warrants to subscribe for, or any
securities or obligations convertible into, or any
contracts or commitments to issue or sell, any shares
of Stock, any shares of capital stock of any
subsidiary or any such warrants, convertible
securities or obligations;
(7) Neither the Company nor any Subsidiary is in
violation of its respective charter, bylaws or other
organizational documents and neither the Company nor
any Subsidiary is in default in the performance of
any obligation, agreement or condition contained in
any bond, debenture, note or any other evidence of
indebtedness or in any indenture or other instrument
or agreement material to the condition (financial or
otherwise), business, prospects or results of
operations of the Company and the Subsidiaries,
considered as a whole, to which the Company or any
Subsidiary is a party or by which the Company or any
Subsidiary or any of their respective properties is
bound. The execution, delivery and performance of
this Agreement and the Registration Rights Agreement,
the issue and sale of the Securities in the manner
contemplated in this Agreement and the Offering
Circular, and the compliance by the Company with all
of the provisions of the Securities, the Indenture,
the Registration Rights Agreement and this Agreement
and the consummation of the transactions contemplated
hereby and thereby will not conflict with or
constitute a breach of any of the terms or provisions
of, or a default under, the charter, bylaws or other
organizational documents of the Company or any
Subsidiary, or any bond, debenture, note or other
evidence of indebtedness, indenture or instrument or
agreement to which the Company or any Subsidiary is a
party or by which the Company or any Subsidiary, or
any of their properties, is bound, or (assuming
compliance with applicable state securities and blue
sky laws) violate or conflict with any law,
administrative regulation or ruling or court order
applicable to the Company or any Subsidiary or to any
of their respective properties;
(8) Except for the registration of the Securities and the
Stock initially issuable upon the conversion thereof
under the Act as contemplated by the Registration
Rights Agreement, the qualification of the Indenture
under the Trust Indenture Act of 1939 as contemplated
by the Registration Rights Agreement, the
qualification of the Stock issuable upon conversion
of the Securities for quotation on the NASDAQ
National Market and such consents, approvals,
authorizations, registrations or qualifications as
may be required under state or foreign securities or
blue sky laws in connection with the purchase and
distribution of the Securities by the Purchasers or
in connection with the Company's performance of its
obligations under the Registration Rights Agreement,
no consent, approval, authorization, order,
registration or qualification of or with any such
court or governmental agency or body is required for
the issue and sale of the Securities, the shares of
Stock issuable upon conversion of the Securities or
the consummation by the Company of the transactions
contemplated by this Agreement, the Registration
Rights Agreement or the Indenture;
-4-
5
(9) Except as disclosed in the Offering Circular, there
is no material litigation or governmental proceeding
pending to which the Company or any Subsidiary is a
party or of which any of their respective properties
is the subject, and no such litigation or proceeding
is or has been threatened or, to the best of the
Company's knowledge, is contemplated;
(10) The consolidated financial statements and related
schedules (including the related notes) of the
Company included or incorporated by reference in the
Offering Circular present fairly the consolidated
financial condition, the consolidated results of
operations and consolidated cash flows of the Company
and its consolidated results of operations and
consolidated cash flows of the Company and its
consolidated subsidiaries at the dates and for the
periods indicated and have been prepared in
accordance with generally accepted accounting
principles applied on a consistent basis throughout
the periods indicated, except as disclosed therein.
All historical financial statements and schedules of
the Company required to be included in the Form 10-K
under the Exchange Act or the rules and regulations
thereunder are included therein. Ernst & Young (the
"Accountants"), who have certified certain financial
statements of the Company and the Subsidiaries, are
independent accountants with respect to the Company
as required by the Act and the rules and regulations
of the Commission thereunder. No financial statements
or schedules of any of the Company's subsidiaries
that are required to be included or incorporated by
reference in the Form 10-K are not so included or
incorporated by reference;
(11) The Company and its Subsidiaries have good and
indefeasible title in fee simple to all real property
and good and indefeasible title to all personal
property owned by them, in each case free and clear
of all liens, encumbrances and defects except such as
are described in the Offering Circular or such as do
not materially affect the value of such property and
do not interfere with the use made and proposed to be
made of such property by the Company and its
Subsidiaries; and any real property and buildings
held under lease by the Company and its Subsidiaries
are held by them under valid, subsisting and
enforceable leases with such exceptions as are not
material and do not interfere with the use made and
proposed to be made of such property and buildings by
the Company and its Subsidiaries;
(12) Each of the Company and the Subsidiaries is in
possession of and operating in compliance with all
licenses, permits, franchises certificates and
approvals necessary to conduct its business and to
own or lease its properties, all of which are valid
and in full force and effect, except where the
failure to so operate would not, individually or in
the aggregate, have a material adverse effect on the
condition (financial or otherwise), business,
prospects or results of operations of the Company and
the Subsidiaries, considered as a whole. Each of the
Company and the Subsidiaries is operating in
compliance with all laws, regulations, administrative
orders or rulings or court decrees applicable to it
or to any of its property, except where the failure
to so operate would not, individually or in the
aggregate, have a material adverse effect on the
condition (financial or otherwise), business,
prospects or results of operations of the Company and
the Subsidiaries, considered as whole;
(13) Neither the Company nor any of its subsidiaries has
sustained since the date of the latest audited
financial statements included in the Offering
Circular any material loss or interference with its
business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or
from any labor dispute or court or governmental
action, order or decree, other than as set forth or
contemplated in the Offering Circular; and subsequent
to the respective dates as of which information is
given in the Offering Circular, and except as set
forth in the Offering Circular, neither the
-5-
6
Company nor any of the Subsidiaries has incurred any
material liabilities or obligations, direct or
contingent, or entered into any material transactions
not in the ordinary course of business, and there has
not been any material adverse change, or any
development involving a prospective material adverse
change, in the condition (financial or otherwise),
business, prospects or results of operations of the
Company and the Subsidiaries, considered as a whole,
or any change in the capital stock or long-term debt
of the Company and the Subsidiaries, considered as a
whole, other than as a result of the issuance of
shares of Stock upon (i) the exercise of employee
stock options granted at least 60 days prior to the
date hereof and outstanding on the date hereof and
(ii) the exercise of rights by employees pursuant to
other stock bonus, restricted stock, stock purchase
and other stock plans or arrangements and other
employee benefit plans of the Company in effect on
the date hereof. Neither the Company nor any
Subsidiary has any contingent obligations which are
required to be disclosed and are not disclosed in the
Offering Circular which would be reasonably likely to
have a material adverse effect on the condition
(financial or otherwise), business, prospects or
results of operations of the Company and the
Subsidiary, considered as a whole;
(14) The Company keeps books, records and accounts, which,
in reasonable detail, accurately and fairly reflect
the transactions and dispositions of the Company's
assets. The Company maintains a system of internal
accounting controls sufficient to provide reasonable
assurances that (i) transactions are executed in
accordance with management's general or specific
authorizations; (ii) transactions are recorded as
necessary to permit preparation of financial
statements in conformity with generally accepted
accounting principles and to maintain accountability
for assets; (iii) access to assets is permitted only
in accordance with management's general or specific
authorization; and (iv) the recorded accountability
for assets is compared with existing assets at
reasonable intervals and appropriate action is taken
with respect to any differences;
(15) Each contract to which the Company or any Subsidiary
is a party and which is material to the condition
(financial or otherwise), business, prospects or
results of operations of the Company and the
Subsidiaries, considered as a whole, has been duly
authorized, executed and delivered and is in full
force and effect in accordance with its terms. None
of such contracts has been assigned by the Company or
any Subsidiary, and the Company knows of no present
condition or fact that would prevent compliance in
all material respects by the Company, any Subsidiary
or any other party thereto with the terms of any such
contract. The Company has no present intention of
exercising any right that it or any Subsidiary may
have to cancel any of its or any Subsidiary's rights
or obligations under any such contract and has not
knowledge that any other party to any such contract
has any intention not to render full performance in
all material respects under such contract. No
contract or document or a charter required to be
described in the Exchange Act Reports or to be filed
as an exhibit thereto is not so described or filed as
required;
(16) Except as disclosed in the Offering Circular, no
customer or supplier that was significant to the
Company during the year ended December 31, 1996, or
that has been significant to the Company thereafter,
has given notice to the Company that it has
terminated, materially reduced or threatened to
terminate or materially reduce its purchases from or
provision of products or services to the Company, as
the case may be, and to the best of the Company's
knowledge, no such action is contemplated, except in
any such case for terminations, reductions or
threatened terminations or reductions that would not,
individually or in the aggregate, have a material
adverse effect on the condition (financial or
otherwise), business, prospects
-6-
7
or results or operations of the Company and the
Subsidiaries, considered as a whole;
(17) The Company and the Subsidiaries own or have licenses
with respect to all inventions, patents, copyrights,
know-how (including trade secrets and other
unpatented or unpatentable proprietary or
confidential information, systems or procedures),
trademarks, service marks and trade names presently
used by the Company or any Subsidiary in connection
with the business now operated by the Company and the
Subsidiaries, with such exceptions as would not,
individually or in the aggregate, have a material
adverse effect on the condition (financial or
otherwise), business, prospects or results of
operations of the Company and the Subsidiaries,
considered as a whole. Neither the Company nor any
Subsidiary has received any notice of any claim that
the Company or any Subsidiary has infringed or is
infringing any patent, copyright, trademark, trade
secret, or other intellectual property right of
another, which, individually or in the aggregate, if
the subject of an unfavorable decision, ruling or
finding, would have a material adverse effect on the
condition (financial or otherwise), business,
prospects or results of operations of the Company and
the Subsidiaries, considered as a whole. The Company
is not aware of any basis for any assertion by
another that any of its intellectual property rights
are or have been infringed by the Company or any
Subsidiary which, individually or in the aggregate,
if the subject of an unfavorable decision, ruling or
finding, would have a material adverse effect on the
condition (financial or otherwise), business,
prospects or results of operations of the Company and
the Subsidiaries, considered as a whole. The Company
has taken reasonable steps to maintain as
confidential the design information and software
which have been developed by the Company;
(18) Prior to the First Time of Delivery, you will receive
executed agreements, in the form of Exhibit B hereto,
of each of the persons specified on Schedule III
hereto, which agreements shall provide that each such
person shall not, directly or indirectly, sell,
contract to sell or otherwise dispose of any
Securities, shares of Stock, rights to acquire such
shares or securities convertible into or exchangeable
for Stock during the lock-up period specified therein
without obtaining your prior written consent;
(19) The statements set forth in the Offering Circular
under the captions "Description of Notes" and
"Description of Capital Stock," insofar as they
purport to constitute a summary of the terms of the
Securities, the capital stock of the Company and the
documents and laws therein described, and under the
captions "Notice to Investors", "United States
Taxation," and "Offer and Resale," insofar as they
purport to describe the provisions of the laws and
documents referred to therein, fairly present the
information with respect to such legal matters and
documents and fairly summarize relevant provisions of
the Company's Restated Certificate of Incorporation
and Amended and Restated Bylaws, each as amended to
date, the Indenture, the Registration Rights
Agreement, this Agreement, the laws of the State of
Delaware and other matters referred to therein;
(20) The Company is subject to Section 13 or 15(d) of the
Exchange Act and is a reporting issuer as such term
is defined by Regulation S under the Act;
(21) When the Securities are issued and delivered pursuant
to this Agreement, such Securities will not be of the
same class (within the meaning of Rule 144A under the
Act) as securities which are listed on a national
securities exchange registered under Section 6 of the
Exchange Act, or quoted on a U.S. automated
interdealer quotation system;
-7-
8
(22) The Company is not, and after giving effect to the
offering and sale of the Securities or the issuance
of Stock upon conversion of the Securities, will not
be an "investment company" or an entity "controlled"
by an "investment company" as such terms are defined
in the United States Investment Company Act of 1940,
as amended (the "Investment Company Act");
(23) Neither the Company nor any person acting on its
behalf has, with respect to any Securities sold in
the United States, offered or sold the Securities by
means of any general solicitation or general
advertising within the meaning of Rule 502(c) under
the Act or, with respect to Securities sold outside
the United States to non-U.S. persons (as defined in
Rule 902 under the Act), by means of any directed
selling efforts within the meaning of Rule 902 under
the Act and the Company, any affiliate of the Company
and any person acting on its or their behalf, has
complied with and will implement the offering
restriction requirements of such Rule 902;
(24) Within the six months preceding the date hereof,
neither the Company nor any person acting on behalf
of the Company has offered or sold to any person any
Securities, any Stock or any security substantially
similar to the Securities or the Stock (other than,
in the case of Stock, sales of the Stock registered
on Form S-8) other than the Securities offered and
sold to the Purchasers hereunder. The Company will
observe reasonable precautions designed to ensure
that any offer or sale, direct or indirect, in the
United States or to any U.S. person of any
Securities, any Stock or any security substantially
similar to the Securities or the Stock issued by the
Company, within six months subsequent to the date on
which the distribution of the Securities has been
completed (as notified to the Company by Xxxxxxx,
Sachs & Co.), is made under restrictions and other
circumstances reasonably designed not to affect the
status of the offer and sale of the Securities and
the Stock issuable upon the conversion thereof in the
United States and to U.S. persons contemplated by
this Agreement as transactions exempt from the
registration requirements of the Act;
(25) None of the holders of outstanding shares of capital
stock of the Company and no other person has or will
have any preemptive or other rights to purchase,
subscribe for or otherwise acquire (i) the shares of
Stock issuable upon conversion of the Securities or
any rights to such shares or (ii) as a result of or
in connection with the transactions contemplated by
the Indenture, the Registration Rights Agreement or
this Agreement, any other capital stock of the
Company or rights thereto; and no holder of
securities of the Company has rights, pursuant to any
agreement with the Company or otherwise, to register
such securities under any registration statement
filed with the Commission except as otherwise
disclosed in the Offering Circular;
(26) None of the transactions contemplated by this
Agreement (including, without limitation, the use of
the proceeds from the sale of the Securities) will
violate or result in a violation of Section 7 of the
Exchange Act, or any regulation promulgated
thereunder, including, without limitation,
Regulations G, T, U, and X of the Board of Governors
of the Federal Reserve System;
(27) The Company has not taken nor will it take, directly
or indirectly, any action designed to cause or result
in, or that has constituted or that might reasonably
be expected to cause or result in, stabilization or
manipulation of the price of any security of the
Company to facilitate the sale or resale of the
Securities or the Stock issued upon conversion of the
Securities or the sale by the Purchasers of any
-8-
9
Securities or shares of Stock acquired by the
Purchasers in the course of the transactions
contemplated hereby;
(28) The Company does no business with the government of
Cuba or with any person or affiliate located in Cuba
within the meaning of Section 517.075, Florida
Statutes; and
(29) Neither the Company nor any Subsidiary is involved in
any material labor dispute nor, to the knowledge of
the Company, is any such dispute threatened;
2. Subject to the terms and conditions herein set forth, (a) the
Company agrees to issue and sell to each of the Purchasers, and each of the
Purchasers agrees, severally and not jointly, to purchase from the Company, at
a purchase price of 97.5% of the principal amount thereof, plus accrued
interest, if any, from August 12, 1997 to the Time of Delivery hereunder, the
principal amount of Securities set forth opposite the name of such Purchaser in
Schedule I hereto, and (b) in the event and to the extent that Xxxxxxx, Xxxxx &
Co. on behalf of the Purchasers shall exercise the election to purchase
Optional Securities as provided below, the Company agrees to issue and sell to
each of the Purchasers, and each of the Purchasers agrees, severally and not
jointly, to purchase from the Company, at the same purchase price set forth in
clause (a) of this Section 2, that portion of the aggregate principal amount of
the Optional Securities as to which such election shall have been exercised (to
be adjusted by you so as to eliminate denominations of less than $5,000)
determined by multiplying such aggregate principal amount of Optional
Securities by a fraction, the numerator of which is the maximum aggregate
principal amount of Optional Securities which such Purchaser is entitled to
purchase as set forth opposite the name of such Purchaser in Schedule I hereto
and the denominator of which is the maximum aggregate principal amount of
Optional Securities which all of the Purchasers are entitled to purchase
hereunder.
The Company hereby grants to the Purchasers the right to purchase at
their election up to U.S.$100,000,000 aggregate principal amount of Optional
Securities, at the purchase price set forth in clause (a) of the first
paragraph of this Section 2, for the sole purpose of covering over allotments
in the sale of Firm Securities. Any such election to purchase Optional
Securities may be exercised by written notice from you to the Company, given
within a period of 30 calendar days after the date of this Agreement, setting
forth the aggregate principal amount of Optional Securities to be purchased and
the date on which such Optional Securities are to be delivered, as determined
by you but in no event earlier than the First Time of Delivery (as hereinafter
defined) or, unless you and the Company otherwise agree in writing earlier than
two or later than ten business days after the date of such notice.
3. Upon the authorization by you of the release of the Securities,
the several Purchasers propose to offer the Securities for sale upon the terms
and conditions set forth in this Agreement and the Offering Circular and each
Purchaser hereby represents and warrants to, and agrees with, the Company that:
(a) It will offer and sell the Securities only: (i) to
persons who it reasonably believes are "qualified institutional
buyers" ("QIBs") within the meaning of Rule 144A under the Act in
transactions meeting the requirements of Rule 144A, or (ii) upon the
terms and conditions set forth in Annex I to this Agreement;
(b) It will not offer or sell the Securities by any form of
general solicitation or general advertising, including but not limited
to the methods described in Rule 502(c) under the Act; and
(c) Xxxxxxx, Sachs & Co., through Xxxxxxx Xxxxx
International, as its selling agent, only may offer or sell Notes in
Japan pursuant to an exemption from the registration requirements of
the securities and exchange laws of Japan and in compliance with any
other applicable requirements of Japanese law.
-9-
10
4. (a) The Securities to be purchased will initially be
represented by one or more definitive global Securities in book-entry
form which will be deposited by or on behalf of the Company with The
Depository Trust Company ("DTC") or its designated custodian. The
Company will deliver the global Securities in book-entry form to the
Purchasers, against payment by or on behalf of the Purchasers of the
purchase price therefor by certified or official bank check or checks,
or by wire transfer, payable to the order of the Company in Federal
(same day) funds, by causing DTC to credit the Securities to the
respective accounts of the Purchasers, at DTC. The portion of the
Securities to be evidenced by the temporary global Security shall be
in the aggregate principal amount deposited with such depositary and
will be delivered by credit to the account of GSI, unless otherwise
directed by GSI, and the portion of the Securities to be resold in
registered form shall be delivered at the office of Xxxxxxx, Sachs &
Co., at 00 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, in such
denominations and registered in such names as Xxxxxxx, Xxxxx & Co.,
may request, in each case against payment by the Purchasers or on
their behalf of the purchase price therefor in United States dollars
in immediately available funds. The Company will cause the
certificates representing the Securities in book-entry form to be
deposited with DTC to be made available to Xxxxxxx, Sachs & Co. for
checking at least twenty-four hours prior to the Time of Delivery at
the office of DTC or its designated custodian (the "Designated
Office"). The time and date of such delivery and payment shall be,
with respect to the Firm Securities, 9:00 a.m., New York City time, on
August 12, 1997 or such other time and date as Xxxxxxx, Xxxxx & Co.
and the Company may agree upon in writing and, with respect to the
Optional Securities, 9:00 a.m., New York City time, on the date
specified by Xxxxxxx, Sachs & Co. in the written notice given by
Xxxxxxx, Xxxxx & Co. of the Purchasers' election to purchase such
Optional Securities, or such other time and date as Xxxxxxx, Sachs &
Co. and the Company may agree upon in writing. Such time and date for
delivery of the Firm Securities is herein called the "First Time of
Delivery", such time and date for delivery of the Optional Securities,
if not the First Time of Delivery, is herein called the "Second Time
of Delivery", and each such time and date for delivery is herein
called a "Time of Delivery".
(b) The documents to be delivered at each Time of Delivery by
or on behalf of the parties hereto pursuant to Section 7 hereof,
including the cross-receipt for the Securities and any additional
documents requested by the Purchasers pursuant to Section 7(h) hereof,
will be delivered at the offices of Xxxxxxxx & Xxxxxxxx, 000 Xxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (the "Closing Location"), and the
Securities will be delivered (subject to Section 4(a) hereof) at the
offices of Xxxxxxx, Sachs & Co., all at such Time of Delivery. A
meeting will be held at the Closing Location at 3:00 p.m., New York
City time, on the New York Business Day next preceding the Time of
Delivery, at which meeting the final drafts of the documents to be
delivered pursuant to the preceding sentence will be available for
review by the parties hereto. For the purposes of this Section 4, "New
York Business Day" shall mean each Monday, Tuesday, Wednesday,
Thursday and Friday which is not a day on which banking institutions
in New York City are generally authorized or obligated by law or
executive order to close.
5. The Company agrees with each of the Purchasers:
(a) To prepare the Offering Circular in a form approved by
you; to make no amendment or supplement to the Offering Circular which
shall be disapproved by you promptly after reasonable notice thereof;
and to furnish you with copies thereof;
(b) Promptly from time to time to take such action as you may
reasonably request to qualify such Securities and the shares of Stock
issuable upon conversion thereof for offering and sale under the
securities laws of such jurisdictions in the United States as you may
request and to comply with such laws so as to permit the continuance
of sales and dealings therein in such jurisdictions for as long as may
be necessary to complete the distribution of such Securities and the
shares of Stock issuable upon conversion thereof, provided that in
connection therewith the Company shall not be required to qualify as a
foreign corporation or to file a general consent to service of process
in any jurisdiction;
-10-
11
(c) To furnish the Purchasers with three copies of the
Offering Circular and each amendment or supplement thereto signed by
an authorized officer of the Company with the independent accountants'
report(s) in the Offering Circular, and any amendment or supplement
containing amendments to the financial statements covered by such
report(s), signed by the accountants, and additional copies thereof in
such quantities as you may from time to time reasonably request, and,
if, at any time prior to the expiration of nine months after the date
of the Offering Circular, any event shall have occurred as a result of
which the Offering Circular 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 when such
Offering Circular is delivered, not misleading, or, if for any other
reason it shall be necessary during such same period to amend or
supplement the Offering Circular, to notify you, and upon your request
to prepare and furnish without charge to each Purchaser and to any
dealer in securities as many copies as you may from time to time
reasonably request of an amended Offering Circular or a supplement to
the Offering Circular which will correct such statement or omission or
effect such compliance;
(d) During the period beginning from the date hereof and
continuing to and including the 90th day after the date of the
Offering Circular, not to, directly or indirectly, offer, sell,
contract to sell or otherwise dispose of any securities of the Company
(other than a registration statement relating to Common Stock that the
Company may sell pursuant to clauses (a) and (b) below) that are
substantially similar to the Securities or the Stock, including but
not limited to any securities of the Company convertible into or
exchangeable or exercisable for shares of Stock or substantially
similar securities, without your prior written consent, other than (a)
pursuant to stock option and restricted stock, stock bonus, stock
purchase or other stock plans or arrangements existing as of the date
hereof or in connection with other employee incentive compensation
arrangements consistent with past practice, or upon the exercise of
options heretofore or hereafter granted pursuant to such plans or
arrangements, or (b) shares of Common Stock issued as consideration
for acquisitions of businesses, properties or assets, provided that
each recipient of any such shares of Common Stock so issued in
connection with any such acquisition shall agree in writing for the
benefit of the Purchasers, in form and substance satisfactory to
Xxxxxxx, Xxxxx & Co., that all such shares of Common Stock shall
remain subject to restrictions identical to those contained in this
sentence (excluding the restriction on the filing of a registration
statement, which shall not apply to a registration statement filed
with respect to such shares of Common Stock if filed after 10 days'
notice to Xxxxxxx, Sachs & Co.);
(e) To use the net proceeds received by it from the sale of
the Securities pursuant to this Agreement in the manner specified in
the Offering Circular under the caption "Use of Proceeds";
(f) Not to be or become, at any time prior to the expiration
of two years after the latest Time of Delivery for the Securities, an
open-end investment company, unit investment trust, closed-end
investment company or face-amount certificate company that is or is
required to be registered under Section 8 of the Investment Company
Act;
(g) At any time when the Company is not subject to Section 13
or 15(d) of the Exchange Act, for the benefit of holders from time to
time of Securities and the Stock issuable upon conversion thereof, to
furnish at its expense, upon request, to holders of Securities and the
Stock issuable upon conversion thereof and prospective purchasers of
Securities and the Stock issuable upon conversion thereof information
(the "Additional Information") satisfying the requirements of
subsection (d)(4)(i) of Rule 144A under the Act;
(h) To use its best efforts to cause the Securities sold in
reliance on Rule 144A and the Stock issuable upon conversion thereof
to be eligible for the PORTAL trading system of the National
Association of Securities Dealers, Inc.;
-11-
12
(i) To file with the Commission not later than 15 days after
the Time of Delivery, five copies of a notice on Form D under the Act
(one of which will be manually signed by a person duly authorized by
the Company); to otherwise comply with the requirements of Rule 503
under the Act; and to furnish promptly to you evidence of each such
required timely filing (including a copy thereof);
(j) During the period of two years (or, if shorter, the
holding period provided by Rule 144(k) under the Act) after the latest
Time of Delivery, the Company will not, and will not permit any of its
"affiliates" (as defined by Rule 144 under the Act) to, resell any
Securities or Stock issued upon conversion thereof (so long as such
Stock constitutes a "restricted security" as defined in Rule 144 under
the Act) that have been reacquired by any of them;
(k) To reserve and keep available at all times, free of
preemptive rights, out of its authorized but unissued shares of stock,
shares of Stock for the purpose of enabling the Company to satisfy any
obligations to issue shares of Stock upon conversion of the
Securities;
(l) Except as otherwise contemplated by the Indenture, to
include a legend on the Securities offered and sold otherwise than in
reliance on Regulation S and the Stock issuable upon the conversion
thereof to the effect set forth under "Notice to Investors" in the
Offering Circular;
(m) To furnish to the holders of the Securities as soon as
practicable after the end of each fiscal year an annual report
(including a balance sheet and statements of operations, stockholders'
equity and cash flows of the Company and its consolidated subsidiaries
certified by independent public accountants) and, as soon as
practicable after the end of each of the first three quarters of each
fiscal year (beginning with the fiscal quarter ending after the date
of the Offering Circular), the financial information of the Company
and its subsidiaries for such quarter contained in the Company's Form
10-Q for such quarter as filed with the Commission or, if no such Form
10-Q is filed, such financial information in reasonable detail;
(n) During a period of five years from the date of the
Offering Circular, to furnish to you copies of all reports or other
communications (financial or other) furnished to stockholders, and
deliver to you (i) as soon as they are available, copies of any
reports and financial statements furnished to or filed with the
Commission or any securities exchange on which the Securities or any
class of securities of the Company is listed; and (ii) such additional
information concerning the business and financial condition of the
Company as you may from time to time reasonably request (such
financial statements to be on a consolidated basis to the extent the
accounts of the Company and its Subsidiaries are consolidated in
reports furnished to its stockholders generally or to the Commission);
and
(o) To use its best efforts to have approved for quotation,
subject to notice of issuance, the shares of Stock issuable upon
conversion of the Securities on the Nasdaq National Market.
6. The Company covenants and agrees with the several Purchasers that
the Company will pay or cause to be paid the following: (i) the fees,
disbursements and expenses of the Company's counsel and accountants and all
other expenses of the Company in connection with the issue of the Securities
and the issue and listing of the Stock issuable upon conversion thereof, the
preparation and delivery of the Securities in temporary and definitive forms,
the preparation and printing of [the Preliminary Offering Circular and] the
Offering Circular and any amendments and supplements thereto and the mailing
and delivering of copies thereof to the Purchasers and dealers; (ii) the cost
of printing or producing any Agreement among Purchasers, this Agreement, the
Indenture, the Registration Rights Agreement, any Blue Sky and Legal Investment
Memoranda, closing documents (including any compilations thereof) and any other
documents in connection with the offering, purchase, sale and delivery of the
Securities and the Stock issuable upon conversion thereof; (iii) the fees and
expenses of the Trustee and any agent of the Trustee and the fees and
disbursements of counsel for the Trustee and any such agent in connection with
the Indenture and the Securities; (iv) the fees and expenses of Euroclear,
CEDEL and any other depositary used in connection with the Securities and of
-12-
13
any transfer or conversion agent or registrar for the Securities or the Stock
issuable upon conversion of the Securities; (v) all expenses in connection with
the qualification of the Securities for trading in the PORTAL System of the
National Association of Securities Dealers, Inc. and the qualification of the
Stock issuable upon conversion of the Securities for inclusion on the NASDAQ
National Market; (vi) fees, if any, charged by securities rating services for
rating the Securities; (vii) all expenses in connection with the qualification
of the Securities and the shares of Stock issuable upon the conversion of the
Securities for offering and sale under state securities or Blue Sky laws as
provided in Section 5(b) hereof, including the fees and disbursements of
counsel for the Purchasers in connection with the Blue Sky surveys; and (viii)
all other costs and expenses incident to the performance of the Company's
obligations hereunder which are not otherwise specifically provided for in this
Section; and to indemnify and hold harmless the Purchasers from any documentary
stamp or similar issue tax and any related interest or penalties on the issue,
sale or delivery of the Securities to the Purchasers which are or may be due in
the United Kingdom or the United States of America. It is understood, however,
that, except as provided in this Section and Sections 8 and 11 hereof, the
Purchasers will pay all of their own costs and expenses, including the fees of
their counsel, transfer taxes on resale of any of the Securities by them, and
any advertising expenses connected with any offers they may make.
7. The obligations of the Purchasers hereunder at each Time of
Delivery shall be subject, in their discretion, to the condition that all
representations and warranties and other statements of the Company herein are,
at and as of such Time of Delivery, true and correct, the condition that the
Company shall have performed all of its obligations hereunder theretofore to be
performed, and the following additional conditions:
(a) Xxxxxxxx & Xxxxxxxx, counsel for the Purchasers, shall
have furnished to you such opinion or opinions, dated such Time of
Delivery, with respect to the incorporation of the Company, the
validity of the Indenture, the Securities, the shares of Stock
issuable upon conversion of the Securities, the Offering Circular and
other related matters as you may reasonably request, and such counsel
shall have received such papers and information as they may reasonably
request to enable them to pass upon such matters;
(b) Xxxxx & XxXxxxxx, counsel for the Company, shall have
furnished to you their written opinion or opinions, dated such Time of
Delivery, in form and substance satisfactory to you, to the effect
that:
(i) The Company is organized and is validly
existing as a corporation in good standing under the laws of
the state of Delaware, with corporate power and authority to
own and lease its properties and conduct its business as now
conducted and as described in the Offering Circular;
(ii) The Company has an authorized and issued
capital stock as set forth in the Offering Circular. The
shares of Stock initially issuable upon conversion of the
Securities have been duly and validly authorized and reserved
for issuance and, when issued and delivered in accordance with
the provisions of the Securities and the Indenture, will be
duly and validly issued and fully paid and non-assessable, and
stockholders of the Company will have no preemptive rights
with respect to the issuance thereof. The Preferred Stock
Purchase Rights related to the shares of Stock to be initially
issuable upon conversion of the Securities have been duly and
validly authorized and, when issued and delivered with the
shares of Stock to be issued upon conversion of the
Securities, will have been validly issued and shall become
binding obligations of the Company, entitled to the benefits
of the Rights Agreement and enforceable in accordance with
their terms, subject, as to enforcement, to bankruptcy,
insolvency, reorganization, moratorium and other similar laws
relating to or affecting creditors' rights generally, to
general equity principles (regardless of whether such
enforceability is considered in a proceeding in equity or at
law);
(iii) The Company has full legal right, power and
authority to enter into this Agreement, the Registration
Rights Agreement and the Indenture and to issue and sell the
-13-
14
Securities to be sold to the Purchasers as provided in Section
2 hereof. This Agreement and the Registration Rights Agreement
have been duly authorized, executed and delivered by the
Company. The Indenture has been duly authorized, executed and
delivered by the Company and constitutes a valid and legally
binding instrument, enforceable in accordance with its terms,
subject, as to enforcement, to bankruptcy, insolvency,
reorganization and other laws of general applicability
relating to or affecting creditors' rights and to general
equity principles (regardless of whether such enforceability
is considered in a proceeding in equity or at law). No
consent, approval, authorization, order, registration or
qualification of or with any such court or governmental agency
or body is required for the issue and sale of the Securities
or the consummation by the Company of the transactions
contemplated by this Agreement, the Registration Rights
Agreement or the Indenture, except, such as may be required
under the Act in connection with the shares of Stock issuable
upon conversion of the Securities and such consents,
approvals, authorizations, registrations or qualifications as
may be required under state securities or Blue Sky laws in
connection with the purchase and distribution of the
Securities by the Purchasers;
(iv) The Securities have been duly authorized by
the Company; the Securities have been duly executed,
authenticated, issued and delivered and constitute valid and
legally binding obligations of the Company entitled to the
benefits provided by the Indenture; and the Securities and the
Indenture conform to the descriptions thereof in the Offering
Circular;
(v) The issue and sale of the Securities and the
performance by the Company of its obligations with respect to
the Securities, the Indenture, the Registration Rights
Agreement and this Agreement and the consummation of the
transactions herein and therein contemplated will not conflict
with or result in a breach or violation of any of the terms or
provisions of, or constitute a default by the Company under,
the Restated Certificate of Incorporation or Amended and
Restated Bylaws of the Company, each as amended to date or, to
the knowledge of such counsel, any statute, rule or regulation
or any judgement, decree or order of any court or governmental
agency or body applicable to the Company or any of its
properties;
(vi) The performance of this Agreement, the
Registration Rights Agreement and the Indenture by the Company
and the consummation by the Company of the transactions herein
and therein contemplated will not result in a breach or
violation by any of the Significant Subsidiaries (other than
DSC Communications A/S, as to which no opinion need be
expressed) of any of the terms or provisions of, or constitute
a default by any of the Significant Subsidiaries (other than
DSC Communications A/S, as to which no opinion need be
expressed) under the charter, bylaws or other organizational
documents, of any of the Significant Subsidiaries (other than
DSC Communications A/S, as to which no opinion need be
expressed). For purposes of this Agreement, the term
"Significant Subsidiaries" means DSC Finance Corporation, DSC
International Corporation, DSC Telecommunications Corporation,
DSC Marketing Services, Inc., each a Delaware corporation; DSC
Telecom, Inc., a Nevada corporation; DSC Telecom L.P., a Texas
limited partnership; and DSC Communications A/S, a Danish
corporation;
(vii) To the best of our knowledge the Company is
not in violation of its Restated Certificate of Incorporation
and Amended and Restated Bylaws, each as amended to date;
(viii) The statements set forth in the Offering
Circular under the captions "Description of Notes" and
"Description of Capital Stock", insofar as they purport to
constitute a summary of the terms of the Securities and the
Stock, under the caption "Taxation", and under the caption
"Offer and Resale", insofar as they purport to describe the
provisions of the laws and documents referred to therein,
fairly present the information with respect to such legal
matters and documents and fairly summarize relevant provisions
of the Company's
-14-
15
Restated Certificate of Incorporation and Amended and Restated
Bylaws, each as amended to date, the Indenture, the
Registration Rights Agreement, this Agreement, the laws of the
State of Delaware and other matters referred to therein;
(ix) No registration of the Securities under the
Act, and no qualification of the Indenture under the United
States Trust Indenture Act of 1939 with respect thereto, is
required for the offer, sale and initial resale of the
Securities by the Purchasers in the manner contemplated by
this Agreement;
(x) The Company is not an "investment company" or
an entity "controlled" by an "investment company", as such
terms are defined in the Investment Company Act; and
(xi) The Exchange Act Reports (other than the
financial statements and related scheduled therein, as to
which such counsel need express no opinion), when they were
filed with the Commission, complied as to form in all material
respects with the requirements of the Exchange Act, and the
rules and regulations of the Commission thereunder.
In addition, such counsel shall state that it has
participated in conferences with officers and other
representatives of the Company, independent public accountants
for the Company, and the Purchasers in connection with the
preparation of the Offering Circular and has considered the
matters stated therein and the statements contained therein,
although such counsel has not independently verified the
accuracy, completeness or fairness of such statements (except
to the extent stated in paragraph (viii)); and such counsel
shall advise you, on the basis of the foregoing (relying as to
materiality to a certain extent upon facts provided to such
counsel by officers and other representatives of the Company
and, except to the extent indicated above, without independent
check or verification) that no facts have come to such
counsel's attention that have caused it to believe that the
Offering Circular (including the documents and information
incorporated by reference therein) or any amendment or
supplement thereto (other than the financial statements, notes
and schedules and other financial data included therein, as to
which such counsel need express no belief or comment), as of
its date contained, or as of the Time of Delivery contains,
any untrue statement of a material fact or as of its date
omitted, or as of the Time of Delivery omits, to state a
material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not
misleading.
In giving such opinion, such counsel may state that
insofar as such opinion involves factual matters, it has
relied, to the extent it has deemed proper, upon certificates
of officers of the Company and certificates of public
officials.
(c) Xxxxxx X. Xxxxx, Vice President, General counsel and
Secretary of the Company, shall have furnished to you his written
opinion, dated such Time of Delivery, in form and substance
satisfactory to you, to the effect that:
(i) The Company is organized and is validly
existing as a corporation in good standing under the laws of
the state of Delaware, with corporate power and authority to
own and lease its properties and conduct its business as now
conducted and as described in the Offering Circular;
(ii) No authorization, consent or approval of any
governmental authority or agency of or within the United
States is required in connection with the transactions
contemplated by this Agreement or the Indenture, except such
as may be required under the Act in connection with the shares
of Stock issuable upon conversion of the Securities and such
consents, approvals, authorizations, registrations or
qualifications as may be required
-15-
16
under state securities or Blue Sky laws in connection with the
purchase and distribution of the Securities by the Purchasers;
(iii) The Company has an authorized and issued
capital stock as set forth in the Offering Circular. All of
the outstanding shares of Stock have been duly authorized and
validly issued and are fully paid and nonassessable, and such
shares were not issued in violation of any preemptive rights
provided for by law or by the Company's Restated Certificate
of Incorporation or Amended and Restated Bylaws. The Stock,
the Preferred Stock Purchase Rights and the Preferred Stock
conform to the respective descriptions thereof included in the
Offering Circular;
(iv) Each of the Significant Subsidiaries is
organized and validly existing and in good standing (other
than entities that are organized as limited partnerships for
which no opinion as to good standing need be expressed) under
the laws of its jurisdiction of organization, with the power
and authority to own or lease its properties and to conduct
its business as now conducted and as described in the Offering
Circular. All of the outstanding shares of capital stock of
each Significant Subsidiary have been duly authorized and
validly issued and are fully paid and nonassessable. All of
the outstanding shares of capital stock of each Significant
Subsidiary, or partnership interests, as applicable, are owned
of record by the Company, and, to the knowledge of such
counsel, are owned beneficially, directly or indirectly, by
the Company free and clear of all restrictions on transfer,
liens, encumbrances, equities and claims;
(v) Each of the Company and the Significant
Subsidiaries is duly qualified and in good standing as a
foreign corporation or partnership, as the case may be,
authorized to do business in each jurisdiction in which the
nature of its business or its ownership or leasing of property
requires such qualification and where failure to be qualified
in such manner would, individually or in the aggregate, have a
material adverse effect on the condition (financial or
otherwise), business, prospects or results of operations of
the Company and the Significant Subsidiaries, considered as a
whole;
(vi) The issuance and sale of the Securities and
the performance by the Company of all of its obligations with
respect to the Securities, the Indenture, the Registration
Rights Agreement and this Agreement and the consummation of
the transactions herein and therein contemplated will not
result in a breach or violation of any of the terms or
provisions of, or constitute a default by the Company under,
any indenture, mortgage, deed of trust, loan agreement or
other agreement or instrument known to such counsel to which
the Company is a party or to which it or its properties is
subject, the Restated Certificate of Incorporation or Amended
and Restated Bylaws of the Company, each as amended to date,
any statute, rule or regulation or any judgment decree or
order of any court or governmental agency or body applicable
to the Company or any of its properties;
(vii) The performance of this Agreement, the
Indenture and the Registration Rights Agreement and the
consummation by the Company of the transactions herein and
therein contemplated will not result in a breach or violation
by any of the Significant Subsidiaries of any of the terms or
provisions of, or constitute a default by any of the
Significant Subsidiaries under, any indenture, mortgage, deed
of trust, loan agreement or other agreement or instrument
known to such counsel to which any of the Significant
Subsidiaries is a party or to which any of them or their
respective properties is subject, the charter, bylaws or other
organizational document, of any of the Significant
Subsidiaries, any statute, rule or regulation or any judgment
decree or order of any court or governmental agency or body
applicable to any of the Significant Subsidiaries or any of
their respective properties;
-16-
17
(viii) To the knowledge of such counsel, neither the
Company nor any of the Subsidiaries is in default in the
performance or observance of any obligation, covenant or
condition contained in any contract, indenture, mortgage, loan
agreement, note, lease or other agreement or instrument to
which it is a party or by which it or any of its properties
may be bound, the effect of which, individually or in the
aggregate, would have a material adverse effect on the
condition (financial or otherwise), business, prospects or
results of operations of the Company and the Subsidiaries,
considered as a whole;
(ix) To the knowledge of such counsel, except as
described in the Offering Circular, there is not pending or
threatened any action, suit, proceeding, inquiry or
investigation, to which the Company or any of the Subsidiaries
is a party, or to which the property of the Company or any of
the Subsidiaries is the subject, before or brought by any
court or governmental agency or body, which, individually or
in the aggregate is material to the condition (financial or
otherwise), business, prospects or results of operations of
the Company and the Subsidiaries, considered as a whole. The
descriptions in the Offering Circular of statutes, legal and
governmental proceeding and contracts and other documents are
accurate and fairly present such documents. To the knowledge
of such counsel, there are no legal or governmental
proceedings required to be described in the Exchange Act
Reports that are not described as required, or any contracts
or documents of a character required to be described in the
Exchange Act Reports or filed as exhibits to and Exchange Act
Report that are not described or filed as required; and
(x) The Company and its Significant Subsidiaries
have good and marketable title in fee simple to all real
property owned by them, in each case free and clear of all
liens, encumbrances and defects except such as are described
in the Offering Circular or such as do not materially affect
the value of such property and do not interfere with the use
made and proposed to be made of such property by the Company
and its Significant Subsidiaries; and any real property and
buildings held under lease by the Company and its Significant
Subsidiaries are held by them under valid, subsisting and
enforceable leases with such exceptions as are not material
and do not interfere with the use made and proposed to be made
of such property and buildings by the Company and its
Significant Subsidiaries (in giving the opinion in this
clause, such counsel may state that no examination of record
titles for the purpose of such opinion has been made, and that
they are relying upon a general review of the titles of the
Company and its Significant Subsidiaries, upon opinions of
local counsel and abstracts, reports and policies of title
companies rendered or issued at or subsequent to the time of
acquisition of such property by the Company or its Significant
Subsidiaries, upon opinions of counsel to the lessors of such
property and, in respect of matters of fact, upon certificates
of officers of the Company or its Significant Subsidiaries,
provided that such counsel shall state that they believe that
both you and they are justified in relying upon such opinions,
abstracts, reports, policies and certificates); and
(xi) The Exchange Act Reports (other than the
financial statements and related scheduled therein, as to
which such counsel need express no opinion), when they were
filed with the Commission, complied as to form in all material
respects with the requirements of the Exchange Act, and the
rules and regulations of the Commission thereunder.
In addition, such counsel shall state that he has
participated in conferences with officers and other
representatives of the Company, independent public accountants
for the Company, and the Purchasers in connection with the
preparation of the Offering Circular and has considered the
matters required to be stated therein and the statements
contained therein, although such counsel has not independently
verified the accuracy, completeness or fairness of such
statements (except to the extent stated in paragraph (ix)
above); and such counsel shall advise you, on the basis of the
foregoing (relying as to materiality to a certain extent upon
facts provided to such counsel by officers and other
representatives of the
-17-
18
Company) that no facts have come to such counsel's attention
that have caused such counsel to believe that the Offering
Circular (including the documents and information incorporated
by reference therein) or any amendment or supplement thereto
(other than the financial statements, notes and schedules and
other financial data included therein, as to which such
counsel need express no belief or comment), as of its date
contained, or as of the Time of Delivery contains, any untrue
statement of a material fact or as of its date omitted, or as
of the Time of Delivery omits, to state a material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; or
the documents and information incorporated by reference in the
Offering Circular (other than financial statements, notes and
schedules and other financial data included therein, as to
which such counsel need express no belief or comment), when
they were filed with the Commission contained any untrue
statement of a material fact or when they were so filed,
omitted to state a material fact required to be stated therein
or necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading.
In giving such opinion, such counsel may state that
insofar as such opinion involves factual matters, he has
relied, to the extent he has deemed proper, upon certificates
of officers of the Company and certificate of public
officials; as to matters involving laws other than the laws of
the States of Texas, laws of the United States of American and
the General Corporation Law of the state of Delaware, such
counsel shall rely upon opinions of counsel, satisfactory to
you, licensed to practice in such other jurisdictions. A copy
of any opinion upon which such counsel relies shall be
attached to the opinion of such counsel and shall be addressed
to such counsel or expressly state that such counsel may rely
upon it.
The opinions of Xxxxx & XxXxxxxx and Xxxxxx X. Xxxxx
described in paragraphs (b) and (c) above shall be rendered to
you at the request of the Company and shall so state therein.
(d) Immediately prior to the execution of this Agreement and
also at such Time of Delivery, the Accountants shall have furnished to
you a letter or letters, dated the respective date of delivery
thereof, in form and substance satisfactory to you, to the effect set
forth in Annex II hereto and as to such other matters as you may
reasonably request;
(e) (i) Neither the Company nor any of its Subsidiaries shall
have sustained since the date of the latest audited financial
statements included in the Offering Circular any loss or interference
with its business from fire, explosion, flood or other calamity,
whether or not covered by insurance, or from any labor dispute or
court or governmental action, order or decree, otherwise than as set
forth or contemplated in the Offering Circular, and (ii) since the
respective dates as of which information is given in the Offering
Circular there shall not have been any change in the capital stock or
long-term debt of the Company or any of its Subsidiaries or any
change, or any development involving a prospective change, in or
affecting the general affairs, management, financial position,
stockholders' equity or results of operations of the Company and its
Subsidiaries, otherwise than as set forth or contemplated in the
Offering Circular, the effect of which, in any such case described in
Clause (i) or (ii), is in your judgment so material and adverse as to
make it impracticable or inadvisable to proceed with the public
offering or the delivery of the Securities on the terms and in manner
contemplated in this Agreement and in the Offering Circular;
(f) On or after the date hereof (i) no downgrading shall have
occurred in the rating accorded the Company's debt securities by any
"nationally recognized statistical rating organization," as that term
is defined by the Commission for purposes of Rule 436(g)(2) under the
Act and (ii) no such organization shall have publicly announced that
it has under surveillance or review, with possible negative
implications, its rating of any of the Company's debt securities;
-18-
19
(g) On or after the date hereof there shall not have occurred
any of the following: (i) a suspension or material limitation in
trading in securities generally on the New York Stock Exchange or on
the NASDAQ National Market; (ii) a suspension or material limitation
in trading in the Company's securities on the NASDAQ National Market;
(iii) a general moratorium on commercial banking activities in New
York declared by either Federal or New York State authorities; (iv)
the outbreak or the escalation of hostilities involving the United
States or the declaration by the United States, of a national
emergency or war; or (v) the occurrence of any change in national or
international financial, political or economic conditions or currency
exchange rates or controls, if the effect of any event specified in
clause (iv) or (v) above, in the judgment of Xxxxxxx, Xxxxx & Co.,
makes it impracticable or inadvisable to proceed with the offering or
the delivery of the Securities being issued at such Time of Delivery
on the terms and in the manner contemplated in the Offering Circular;
and
(h) The Company shall have furnished or caused to be
furnished to you at such Time of Delivery certificates of officers of
the Company satisfactory to you as to the accuracy of the
representations and warranties of the Company herein at and as of such
Time of Delivery, as to the performance by the Company of all of its
obligations hereunder to be performed at or prior to such Time of
Delivery, as to the matters set forth in subsection (e) of this
Section and as to such other matters as you may reasonably request.
8. (a) The Company will indemnify and hold harmless each
Purchaser against any losses, claims, damages or liabilities, joint or
several, to which such Purchaser may become subject, under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon an untrue
statement or alleged untrue statement of a material fact contained in
the Offering Circular, or any amendment or supplement thereto, or
arise out of or are based upon the omission or alleged omission to
state therein a material fact necessary to make the statements therein
not misleading, and will reimburse each Purchaser for any legal or
other expenses reasonably incurred by such Purchaser in connection
with investigating or defending any such action or claim as such
expenses are incurred; provided, however, that the Company shall not
be liable in any such case to the extent that any such loss, claim,
damage or liability (or actions in respect thereof) arises out of or
is based upon an untrue statement or alleged untrue statement or
omission or alleged omission made in the Offering Circular or any such
amendment or supplement in reliance upon and in conformity with
written information furnished to the Company by any Purchaser through
Xxxxxxx, Sachs & Co. expressly for use therein.
(b) Each Purchaser will indemnify and hold harmless the
Company against any losses, claims, damages or liabilities to which
the Company may become subject insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or are
based upon an untrue statement or alleged untrue statement of a
material fact contained in the Offering Circular, or any amendment or
supplement thereto, or arise out of or are based upon the omission or
alleged omission to state therein a material fact necessary to make
the statements therein not misleading, in each case to the extent, but
only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in the Offering
Circular or any such amendment or supplement in reliance upon and in
conformity with written information furnished to the Company by such
Purchaser through you expressly for use therein; and will reimburse
the Company for any legal or other expenses reasonably incurred by the
Company in connection with investigating or defending any such action
or claim as such expenses are incurred.
(c) Promptly after receipt by an indemnified party under
subsection (a) or (b) above of notice of the commencement of any
action, such indemnified party shall, if a claim in respect thereof is
to be made against the indemnifying party under such subsection,
notify the indemnifying party in writing of the commencement thereof;
but the omission so to notify the indemnifying party shall not relieve
it from any liability which it may have to any indemnified party
otherwise than under such subsection. In case any such action shall be
brought against any indemnified party and it shall notify the
-19-
20
indemnifying party of the commencement thereof, the indemnifying party
shall be entitled to participate therein and, to the extent that it
shall wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel satisfactory to
such indemnified party (who shall not, except with the consent of the
indemnified party, be counsel to the indemnifying party), and, after
notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party
shall not be liable to such indemnified party under such subsection
for any legal expenses of other counsel or any other expenses, in each
case subsequently incurred by such indemnified party, in connection
with the defense thereof other than reasonable costs of investigation.
No indemnifying party shall, without the written consent of the
indemnified party, effect the settlement or compromise of, or consent
to the entry of any judgment with respect to, any pending or
threatened action or claim in respect of which indemnification or
contribution may be sought hereunder (whether or not the indemnified
party is an actual or potential party to such action or claim) unless
such settlement, compromise or judgment (i) includes an unconditional
release of the indemnified party from all liability arising out of
such action or claim and (ii) does not include a statement as to, or
an admission of, fault, culpability or a failure to act, by or on
behalf of any indemnified party.
(d) If the indemnification provided for in this Section 8 is
unavailable to or insufficient to hold harmless an indemnified party
under subsection (a) or (b) above in respect of any losses, claims,
damages or liabilities (or actions in respect thereof) referred to
therein, then each indemnifying party shall contribute to the amount
paid or payable by such indemnified party as a result of such losses,
claims, damages or liabilities (or actions in respect thereof) in such
proportion as is appropriate to reflect the relative benefits received
by the Company on the one hand and the Purchasers on the other from
the offering of the Securities. If, however, the allocation provided
by the immediately preceding sentence is not permitted by applicable
law or if the indemnified party failed to give the notice required
under subsection (c) above, then each indemnifying party shall
contribute to such amount paid or payable by such indemnified party in
such proportion as is appropriate to reflect not only such relative
benefits but also the relative fault of the Company on the one hand
and the Purchasers on the other in connection with the statements or
omissions which resulted in such losses, claims, damages or
liabilities (or actions in respect thereof), as well as any other
relevant equitable considerations. The relative benefits received by
the Company on the one hand and the Purchasers on the other shall be
deemed to be in the same proportion as the total net proceeds from the
offering (before deducting expenses) received by the Company bear to
the total underwriting discounts and commissions received by the
Purchasers, in each case as set forth in the Offering Circular. The
relative fault shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company on the one hand or the
Purchasers on the other and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such
statement or omission. The Company and the Purchasers agree that it
would not be just and equitable if contribution pursuant to this
subsection (d) were determined by pro rata allocation (even if the
Purchasers were treated as one entity for such purpose) or by any
other method of allocation which does not take account of the
equitable considerations referred to above in this subsection (d). The
amount paid or payable by an indemnified party as a result of the
losses, claims, damages or liabilities (or actions in respect thereof)
referred to above in this subsection (d) shall be deemed to include
any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action or
claim. Notwithstanding the provisions of this subsection (d), no
Purchaser shall be required to contribute any amount in excess of the
amount by which the total price at which the Securities underwritten
by it and distributed to investors were offered to investors exceeds
the amount of any damages which such Purchaser has otherwise been
required to pay by reason of such untrue or alleged untrue statement
or omission or alleged omission. The Purchasers' obligations in this
subsection (d) to contribute are several in proportion to their
respective underwriting obligations and not joint.
-20-
21
(e) The obligations of the Company under this Section 8 shall
be in addition to any liability which the Company may otherwise have
and shall extend, upon the same terms and conditions, to each person,
if any, who controls any Purchaser within the meaning of the Act; and
the obligations of the Purchasers under this Section 8 shall be in
addition to any liability which the respective Purchasers may
otherwise have and shall extend, upon the same terms and conditions,
to each officer and director of the Company and to each person, if
any, who controls the Company within the meaning of the Act.
9. (a) If any Purchaser shall default in its obligation to
purchase the Securities which it has agreed to purchase hereunder, you
may in your discretion arrange for you or another party or other
parties to purchase such Securities on the terms contained herein. If
within thirty-six hours after such default by any Purchaser you do not
arrange for the purchase of such Securities, then the Company shall be
entitled to a further period of thirty-six hours within which to
procure another party or other parties satisfactory to you to purchase
such Securities on such terms. In the event that, within the
respective prescribed periods, you notify the Company that you have so
arranged for the purchase of such Securities, or the Company notifies
you that it has so arranged for the purchase of such Securities, you
or the Company shall have the right to postpone the Time of Delivery
for a period of not more than seven days, in order to effect whatever
changes may thereby be made necessary in the Offering Circular, or in
any other documents or arrangements, and the Company agrees to prepare
promptly any amendments to the Offering Circular which in your opinion
may thereby be made necessary. The term "Purchaser" as used in this
Agreement shall include any person substituted under this Section with
like effect as if such person had originally been a party to this
Agreement with respect to such Securities.
(b) If, after giving effect to any arrangements for the
purchase of the Securities of a defaulting Purchaser or Purchasers by
you and the Company as provided in subsection (a) above, the aggregate
principal amount of such Securities which remains unpurchased does not
exceed one-eleventh of the aggregate principal amount of all the
Securities, then the Company shall have the right to require each
non-defaulting Purchaser to purchase the principal amount of
Securities which such Purchaser agreed to purchase hereunder and, in
addition, to require each non-defaulting Purchaser to purchase its pro
rata share (based on the principal amount of Securities which such
Purchaser agreed to purchase hereunder) of the Securities of such
defaulting Purchaser or Purchasers for which such arrangements have
not been made; but nothing herein shall relieve a defaulting Purchaser
from liability for its default.
(c) If, after giving effect to any arrangements for the
purchase of the Securities of a defaulting Purchaser or Purchasers by
you and the Company as provided in subsection (a) above, the aggregate
principal amount of Securities which remains unpurchased exceeds
one-eleventh of the aggregate principal amount of all the Securities,
or if the Company shall not exercise the right described in subsection
(b) above to require non-defaulting Purchasers to purchase the
Securities of a defaulting Purchaser or Purchasers, then this
Agreement (or with respect to the Second Time of Delivery, the
obligation of the Purchasers to purchase and the Company to sell the
Optional Securities) shall thereupon terminate, without liability on
the part of any non-defaulting Purchaser or the Company, except for
the expenses to be borne by the Company and the Purchasers as provided
in Section 6 hereof and the indemnity and contribution agreements in
Section 8 hereof; but nothing herein shall relieve a defaulting
Purchaser from liability for its default.
10. The respective indemnities, agreements, representations,
warranties and other statements of the Company and the several Purchasers, as
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 any investigation (or any statement as to the results thereof) made by or on
behalf of any Purchaser or any controlling person of any Purchaser, or the
Company, or any officer or director or controlling person of the Company, and
shall survive delivery of and payment for the Securities.
-21-
22
11. If this Agreement shall be terminated pursuant to Section 9
hereof, the Company shall not then be under any liability to any Purchaser,
except as provided in Sections 6 and 8 hereof; but, if for any other reason,
the Securities are not delivered by or on behalf of the Company as provided
herein, the Company will reimburse the Purchasers through you for all
out-of-pocket expenses approved in writing by you, including fees,
disbursements and expenses of counsel, reasonably incurred by the Purchasers in
making preparations for the purchase, sale and delivery of the Securities, but
the Company shall then be under no further liability to any Purchaser except as
provided in Sections 6 and 8 hereof.
12. In all dealings hereunder, you shall act on behalf of each of the
Purchasers, and the parties hereto shall be entitled to act and rely upon any
statement, request, notice or agreement on behalf of any Purchaser made or
given by you jointly or by Xxxxxxx, Xxxxx & Co. on your behalf.
All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Purchasers shall be delivered or sent by mail, telex or
facsimile transmission to you in care of Xxxxxxx, Sachs & Co., 00 Xxxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000, Attention: Registration Department; and if to the
Company shall be delivered or sent by mail, telex or facsimile transmission to
the address of the Company set forth in the Offering Circular, Attention:
Secretary. Any such statements, requests, notices or agreements shall take
effect upon receipt thereof.
13. This Agreement shall be binding upon, and inure solely to the
benefit of, the Purchasers, the Company and, to the extent provided in Sections
8 and 10 hereof, the officers and directors of the Company and each person who
controls the Company or any Purchaser, and their respective heirs, executors,
administrators, successors and assigns, and no other person shall acquire or
have any right under or by virtue of this Agreement. No purchaser of any of the
Securities from any Purchaser shall be deemed a successor or assign by reason
merely of such purchase.
14. Time shall be of the essence of this Agreement.
15. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK.
16. This Agreement may be executed by any one or more of the parties
hereto in any number of counterparts, each of which shall be deemed to be an
original, but all such counterparts shall together constitute one and the same
instrument.
-22-
23
If the foregoing is in accordance with your understanding, please sign
and return to us five counterparts hereof, and upon the acceptance hereof by
you, this letter and such acceptance hereof shall constitute a binding
agreement between each of the Purchasers and the Company. It is understood
that your acceptance of this letter on behalf of each of the Purchasers is
pursuant to the authority set forth in a form of Agreement among Purchasers,
the form of which shall be submitted to the Company for examination upon
request, but without warranty on your part as to the authority of the signers
thereof.
Very truly yours,
DSC Communications Corporation
By: /s/ Xxxxxx X. Xxxxxx
------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Senior Vice President and
Chief Financial Officer
Accepted as of the date hereof:
Xxxxxxx, Xxxxx & Co.
NationsBanc Capital Markets, Inc.
By: Xxxxxxx, Sachs & Co.
/s/ Xxxxxxx, Xxxxx & Co.
----------------------------------
(Xxxxxxx, Sachs & Co.)
-23-
24
SCHEDULE I
Aggregate Principal Amount
Principal Amount of of Optional Securities to be
Firm Securities to Purchased if Maximum Option
Purchaser be Purchased Exercised
--------- ------------ ---------
Xxxxxxx, Xxxxx & Co. . . . . . . . . . . . . . . . . $270,000,000 $ 90,000,000
NationsBanc Capital Markets, Inc. . . . . . . . . . . 30,000,000 10,000,000
-------------- -------------
TOTAL . . . . . . . . . . . . . . . . . . . . . $300,000,000 $100,000,000
============ ============
-24-
25
SCHEDULE II
SUBSIDIARIES
Name
----
DSC Finance Corporation (Delaware)
DSC Finance (Pty) Ltd. (Australia)
DSC Communications Ltd. (United Kingdom)
DSC Local Network (Europe) Ltd. (United Kingdom) (Inactive)
DSC Communications Technics Ltd. (U.K.) (Inactive)
DSC Communications Canada, Inc. (Ontario)
DSC of Virginia Island (US Virgin Island) (Inactive)
DSC Communications Ireland Holdings, Ltd. (Barbados)
DSC Communications Ireland (Ireland)
DSC Communications (Nederland) B.V. (formerly Sildor Investments B.V.)
DSC Communications A/S (Denmark)
Netman A/S Denmark
DSC Communications TMN A/S (Denmark)
TMN Udviklling I/S
Fibcom India Ltd. Joint Venture (India)
DSC Communications Polska SP Z.O.O. (Poland)
DSC Communications France S.A.
DSC Communications (India) Private, Ltd.
DSC Marketing Services, Inc. (Delaware)
DSC Japan Inc. (Japan)
DSC Telecom, Inc. (Nevada)
DSC Telecommunications Corporation (Delaware)
DSC Telecom L.P. (Texas)
DSC of Puerto Rico, Inc. (Delaware)
DSC Global Export Ltd. (Barbados)
DSC Communications (Pty) Ltd. (Australia)
DSC International Corporation (Delaware)
DSC Communications (Far East) Ltd. (Hong Kong)
DSC Kommunikationsdienste GmbH (Germany)
DSC Communications (Cayman Islands) Ltd.
DSC Comunicacoes Ltda. (Brazil)
DSC Comunicaciones de S.A. de C.V. (Mexico)
DSC Comunicaciones de Costa Rica S.A.
DSC Communications (Asia-Pacific) Pte Ltd. (Singapore)
DSC Taiwan Inc. (Delaware)
DSC Korea, Inc. (Delaware) (Inactive)
DSC Communications Italia S.r.l.
-25-
26
SCHEDULE III
Xxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxxx
Xxx Xxxx Xxxxxxxxxx
Xxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx
Xxxxxxx X. Xxxx
Xxxxxx X. Xxxxxx
-26-
27
ANNEX I
(1) The Securities and the Stock issuable upon the conversion
thereof have not been and will not be registered under the Act and may not be
offered or sold within the United States or to, or for the account or benefit
of, U.S. persons except in accordance with Regulation S under the Act or
pursuant to an exemption from the registration requirements of the Act. Each
Purchaser represents that it has offered and sold, and will offer and sell, the
Securities and the Stock issuable upon the conversion thereof (i) as part of
its distribution at any time and (ii) otherwise until 40 days after the later
of the commencement of the offering and the closing date, only in accordance
with Rule 903 of Regulation S, Rule 144A or another exemption from registration
under the Act. Accordingly, each Purchaser agrees that neither it, its
affiliates nor any persons acting on its or their behalf have engaged or will
engage in any directed selling efforts with respect to the Securities or the
Stock issuable upon conversion thereof, and, in the case of sales pursuant to
Rule 903, it and they have complied and will comply with the offering
restrictions requirement of Regulation S. Each Purchaser agrees that, at or
prior to confirmation of sale of Securities being made pursuant to Rule 903, it
will have sent to each distributor, dealer or person receiving a selling
concession, fee or other remuneration that purchases Securities or the Stock
issuable upon conversion thereof from it during the restricted period a
confirmation or notice to substantially the following effect:
"The Securities covered hereby and the Stock issuable upon
conversion thereof have not been registered under the U.S. Act of 1933
(the "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
their distribution at any time or (ii) otherwise until 40 days after
the later of the commencement of the offering and the closing date,
except in either case in accordance with Regulation S (or Rule 144A if
available) under the Act. Terms used above have the meaning given to
them by Regulation S."
Terms used in this paragraph have the meanings given to them by Regulation S.
Each Purchaser further agrees that it has not entered and will not
enter into any contractual arrangement with respect to the distribution or
delivery of the Securities, except with its affiliates or with the prior
written consent of the Company and Xxxxxxx, Sachs & Co.
(2) Notwithstanding the foregoing, Securities in registered form may
be offered, sold and delivered by the Purchasers in the United States and to
U.S. persons without delivery of the written statement required by paragraph
(1) above.
(3) Each Purchaser further represents and agrees that (i) it has not
offered or sold and prior to the date six months after the date of issue of the
Securities will not offer or sell any Securities to persons in the United
Kingdom except to persons whose ordinary activities involve them in acquiring,
holding, managing or disposing of investments (as principal or agent) for the
purposes of their businesses or otherwise in circumstances which have not
resulted and will not result in an offer to the public in the United Kingdom
within the meaning of the Public Offers of Securities Regulations 1995, (b) it
has complied, and will comply, with all applicable provisions of the Financial
Services Act of 1986 of Great Britain with respect to anything done by it in
relation to the Securities in, from or otherwise involving the United Kingdom,
and (c) 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 issuance 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
of Great Britain or is a person to whom the document may otherwise lawfully be
issued or passed on.
(4) Each Purchaser agrees that it will not offer, sell or deliver any
of the Securities or the Stock issuable upon the conversion thereof in any
jurisdiction outside of the United States except under circumstances that will
result in compliance with the applicable laws thereof, and that it will take at
its own expense whatever action is required to permit its purchase and resale
of the Securities or the Stock issuable upon the conversion thereof in such
jurisdictions. Each Purchaser understands that no action has been taken to
permit a public offering in any jurisdiction outside of the United States where
action would be required for such purpose. Each Purchaser agrees not to cause
any advertisement of the Securities to be published in any newspaper or
periodical or posted in any public place and not to issue any circular relating
to the Securities, except in any such case with Xxxxxxx, Xxxxx & Co.'s express
written consent and then only at its own risk and expense.
-1-
28
ANNEX II
Pursuant to Section 7(d) of the Agreement, the Accountants shall
furnish letters to the Purchasers to the effect that:
(i) They are independent certified public accountants with
respect to the Company and its subsidiaries under Rule 101 of the
AICPA's Code of Professional Conduct, and its interpretations and
rulings;
(ii) In their opinion, the consolidated financial statements
and related financial statement schedules audited by them and included
in the Offering Circular comply as to form in all material respects
with the applicable requirements of the Securities Exchange Act of
1934 (the "Exchange Act") and the related published rules and
regulations;
(iii) The Unaudited Selected Consolidated Financial
Information with respect to the consolidated results of operations and
financial position of the Company for the three most recent fiscal
years included in the Offering Circular agrees with the corresponding
amounts (after restatements where applicable) in the audited
consolidated financial statements for such three fiscal years;
(iv) On the basis of limited procedures not constituting an
audit in accordance with generally accepted auditing standards,
consisting of a reading of the unaudited financial statements and
other information referred to below, a reading of the latest available
interim financial statements of the Company and its subsidiaries,
inspection of the minute books of the Company and its subsidiaries
since the date of the latest audited financial statements included in
the Offering Circular, inquiries of officials of the Company and its
subsidiaries responsible for financial and accounting matters and such
other inquiries and procedures as may be specified in such letter,
nothing came to their attention that caused them to believe that:
(A) the unaudited condensed consolidated statements
of income, consolidated balance sheets and consolidated
statements of cash flows included in the Offering Circular are
not in conformity with generally accepted accounting
principles applied on the basis substantially consistent with
the basis for the audited condensed consolidated statements of
income, consolidated balance sheets and consolidated
statements of cash flows included in the Offering Circular;
(B) any other unaudited income statement data and
balance sheet items included in the Offering Circular do not
agree with the corresponding items in the unaudited
consolidated financial statements from which such data and
items were derived, and any such unaudited data and items were
not determined on a basis substantially consistent with the
basis for the corresponding amounts in the audited
consolidated financial statements included in the Offering
Circular;
(C) the unaudited financial statements which were
not included in the Offering Circular but from which were
derived any unaudited condensed financial statements referred
to in Clause (A) and any unaudited income statement data and
balance sheet items included in the Offering Circular and
referred to in Clause (B) were not determined on a basis
substantially consistent with the basis for the audited
consolidated financial statements included in the Offering
Circular;
(D) as of a specified date not more than five days
prior to the date of such letter, there have been any changes
in the consolidated capital stock (other than exercise of
options, issuance of common stock under employee stock
purchase plans and vesting of restricted stock, in each case
which were outstanding on the date of the latest financial
statements included in the Offering Circular) or any increase
in the consolidated long-term debt of the Company and its
subsidiaries, in each case as compared with amounts shown in
the latest balance sheet included in the Offering Circular
except in each case for changes
-1-
29
or increases which the Offering Circular discloses have
occurred or may occur or which are described in such letter;
and
(v) In addition to the examination referred to in their
report(s) included in the Offering Circular and the limited
procedures, inspection of minute books, inquiries and other procedures
referred to in paragraphs (iii) and (iv) above, they have carried out
certain specified procedures, not constituting an audit in accordance
with generally accepted auditing standards, with respect to certain
amounts, percentages and financial information specified by the
Purchasers, which are derived from the general accounting records of
the Company and its subsidiaries, which appear in the Offering
Circular, and have compared certain of such amounts, percentages and
financial information with the accounting records of the Company and
its subsidiaries and have found them to be in agreement.
-2-
30
EXHIBIT A
FORM OF REGISTRATION RIGHTS AGREEMENT
-1-
31
EXHIBIT B
FORM OF LOCK-UP AGREEMENT
-1-
