EXHIBIT 10.1
$100,000,000
INTEGRATED CIRCUIT SYSTEMS, INC.
11 1/2% Senior Subordinated Notes Due 2009
PURCHASE AGREEMENT
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May 5, 1999
Bear, Xxxxxxx & Co. Inc.
Credit Suisse First Boston Corporation
c/o Bear, Xxxxxxx & Co. Inc.
000 Xxxx Xxxxxx,
Xxx Xxxx, X.X. 00000
Ladies and Gentlemen:
1. Introductory. Integrated Circuit Systems, Inc., a Pennsylvania
corporation (the "Company"), proposes, subject to the terms and conditions
stated herein, to issue and sell to the several initial purchasers named in
Schedule A hereto (the "Initial Purchasers") the respective principal amounts
set forth in Schedule A hereto of U.S. $100,000,000 aggregate principal amount
of its 11 1/2% Senior Subordinated Notes Due 2009 (the "Notes"). The Notes are
to be issued pursuant to an indenture to be dated as of May 11, 1999 (the
"Indenture"), between the Company, the guarantors named therein and Chase
Manhattan Trust Company, National Association, as Trustee, which Notes will be
unconditionally guaranteed by ICS Technologies, Inc., ICST Inc. and Microclock,
Inc. (the "Guarantors," and together with the Company, the "Issuers"). For
purposes of this agreement, (i) the term "Offered Securities" means the Notes,
together with the guarantees (the "Guarantees") thereof by the Guarantors and
(ii) references to "Subsidiaries" or "subsidiaries" of the Company shall include
the direct and indirect subsidiaries of the Company. The United States
Securities Act of 1933 is herein referred to as the "Securities Act."
Pursuant to and in furtherance of the Agreement and Plan of Merger dated as
of January 20, 1999, as amended by Amendment No. 1 to the Agreement and Plan of
Merger dated as of February 16, 1999 (the "Recapitalization Agreement"), by and
between ICS Merger Corp. ("Merger Corp.") and the Company, among other things,
(i) Merger Corp. will be established and merged into the Company (the "Merger"),
with the Company as the surviving corporation, (ii) an equity investment of
$40.0 million (the "Equity Investment") will be made by Xxxx Capital, Inc. and
Bear, Xxxxxxx & Co. Inc. or one or more of their respective affiliates and
certain other investors (the "Investors") and certain management investors and
existing shareholders will convert certain outstanding shares of common stock
and options of the Company before the Merger (the "Rollover Equity") into common
stock and options of the Company following the consummation of the Merger
(collectively with the Investors, the "Equity Investors"), (iii) the Issuers
will issue and sell the Offered Securities, (iv) the Company will enter into a
new secured global credit facility consisting of an aggregate of $70 million
of term loan facilities and an aggregate $25 million revolving credit facility
(the "New Credit Facility") with the agents and lenders named therein, and the
Company will make initial borrowings of approximately $77.4 million thereunder,
(v) the existing issued and outstanding capital stock of the Company (other than
the Rollover Equity) (the "Shares") will be redeemed and/or repurchased, for
aggregate cash consideration of $265.9 million, (vi) the Company will repay in
full all of the Existing Indebtedness, as defined in the New Credit Facility,
and (vii) the Company will pay reasonable fees and expenses (including, without
limitation, reasonable fees of outside counsel) in connection with the foregoing
in an amount not to exceed $17.5 million (all such transactions, including the
Merger, shall be referred to in this Agreement as the "Recapitalization"). The
net proceeds of the offering of the Notes will be used, together with a portion
of the borrowings under the New Credit Facility, the existing cash on hand of
the Company and the Equity Investment to finance the Recapitalization. As a
result of the Recapitalization, (i) the Equity Investors will own all of the
outstanding capital stock of the Company, (ii) the Company's common stock will
no longer be traded on the Nasdaq National Market and (iii) the registration of
the Company's common stock under the Securities Exchange Act of 1934, as amended
(the "Exchange Act") will be terminated.
The Offered Securities will be offered and sold to the Initial Purchasers
without being registered under the Securities Act, in reliance upon an exemption
therefrom. Pursuant to the terms of the Offered Securities and the Indenture,
the Initial Purchasers and investors that acquire Offered Securities may only
resell or otherwise transfer such Offered Securities if such Offered Securities
are hereafter registered under the Securities Act or if an exemption from the
registration requirements of the Securities Act is available (including, without
limitation, the exemption afforded by Rule 144A, Rule 144 or Regulation S of the
rules and regulations under the Securities Act).
Holders of the Offered Securities (including the Initial Purchasers and
their direct and indirect transferees) will be entitled to the benefits of a
Registration Rights Agreement dated the Closing Date, among the Issuers and the
Initial Purchasers (the "Registration Rights Agreement"), pursuant to which the
Company and the Guarantors will agree to file with the Securities and Exchange
Commission (the "Commission") (i) a registration statement under the Securities
Act (the "Exchange Offer Registration Statement") registering an issue of senior
subordinated notes of the Company (together with the applicable subsidiary
guarantees, the "Exchange Notes"), which are identical in all material respects
to the Offered Securities (except that the Exchange Notes will not contain terms
with respect to transfer restrictions and interest rate increase) and (ii) under
certain circumstances, a shelf registration statement pursuant to Rule 415 under
the Securities Act.
This Agreement, the Indenture, the Offered Securities, the Exchange Notes,
the Registration Rights Agreement, all material agreements and instruments
relating to the Merger (including, but not limited to, the Recapitalization
Agreement and the Articles of Merger to be filed with the Department of State of
the Commonwealth of Pennsylvania on the Closing Date (the "Articles of
Merger")), and the New Credit Facility and the agreements creating security
interests in the assets of the Company for the benefit of the holders of
indebtedness arising under the New Credit Facility (together with the New Credit
Facility, the "Bank Agreement") are sometimes referred to in this Agreement,
individually, as a "Transaction Document" and, collectively, as the
"Transaction Documents." The transactions that comprise the Recapitalization
(including the Merger and the issuance and sale of the Offered Securities) are
sometimes referred to in this Agreement, individually, as a "Transaction" and
collectively, as the "Transactions."
Capitalized terms used but not defined herein shall have the meanings given
to such terms in the Offering Document (as defined below).
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Each of the Issuers, jointly and severally, hereby agrees with the several
Initial Purchasers as follows:
2. Representations and Warranties of the Company. Each of the several
Issuers, jointly and severally, represents and warrants to, and agrees with, the
Initial Purchasers that:
(a) A preliminary offering circular dated April 20, 1999 and an
offering circular dated the date of this Agreement relating to the Offered
Securities to be offered by the Initial Purchasers have been prepared by
the Company. Such preliminary offering circular (the "Preliminary Offering
Circular") and offering circular (the "Offering Circular"), as supplemented
as of the date of this Agreement, together with any other document approved
by the Company for use in connection with the contemplated resale of the
Offered Securities, are hereinafter collectively referred to as the
"Offering Document." Any references herein to the Offering Document shall
be deemed to include all amendments and supplements thereto, unless
otherwise noted. The Preliminary Offering Circular as of its date does not,
and the Offering Circular as of its date and as of the Closing Date does
not and will not, and any supplement or amendment to them will not, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. The preceding sentence does not apply to statements in or
omissions from the Offering Document based upon written information
furnished to the Company by any Initial Purchaser through Bear, Xxxxxxx &
Co. Inc. ("Bear Xxxxxxx") specifically for use therein, it being understood
and agreed that the only such information is that described as such in
Section 7(b) hereof. Except as disclosed in the Offering Document, each of
the Company's Annual Report on Form 10-K most recently filed with the
Commission and all subsequent reports, proxy statements and other
documents (collectively, the "Exchange Act Documents") which have been
filed by the Company with the Commission or sent to stockholders pursuant
to the Exchange Act (including, but not limited to the proxy statement on
Schedule 14A and the transaction statement on Schedule 13E-3 filed with the
Commission relating to the Recapitalization) does not include any untrue
statement of a material fact or omit to state any material fact necessary
to make the statements therein, in the light of the circumstances under
which they were made, not misleading. Such documents, when they were filed
with the Commission, conformed in all material respects to the requirements
of the Exchange Act and the rules and regulations of the Commission
thereunder. No stop order preventing the use of the Offering Document, or
any order asserting that any of the Transactions are subject to the
registration requirements of the Securities Act, has been issued.
(b) Each of the Issuers and Merger Corp. has been duly incorporated
and is an existing corporation in good standing under the laws of the
jurisdiction of its incorporation, with power and authority (corporate and
other) to own its properties and conduct its business as described in the
Offering Document; and each of the Issuers and Merger Corp. is duly
qualified to do business as a foreign corporation in good standing in all
other jurisdictions in which its ownership or lease of property or the
conduct of its business requires such qualification, except where the
failure to be so qualified and in good standing would not reasonably be
expected to individually or in the aggregate (x) result in a material
adverse effect on the properties, business, result of operations, condition
(financial or other), affairs or prospects of the Company and its
subsidiaries taken as a whole, (y) interfere with or adversely affect the
issuance or marketability of the Offered Securities or (z) in any manner
draw into question the validity of this Agreement, any other Transaction
Document or any
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Transaction (any of the events set forth in clauses (x), (y) or (z), a
"Material Adverse Effect").
(c) Each subsidiary of the Company other than the Guarantors that (i)
generates 5% or more of the revenues, (ii) generates 5% or more of the
operating income, or (iii) holds 5% or more of the assets, in each case, of
the Company and its subsidiaries on a consolidated basis as reflected in
the financial statements included in the Offering Document under the
heading "Unaudited Pro Forma Consolidated Financial Data" (each, a
"Significant Non-Guarantor Subsidiary," and, together with the Guarantors,
each a "Significant Subsidiary"), has been duly incorporated and is an
existing corporation in good standing under the laws of the jurisdiction of
its incorporation, with power and authority (corporate and other) to own
its properties and conduct its business as described in the Offering
Document; and each Significant Non-Guarantor Subsidiary of the Company is
duly qualified to do business as a foreign corporation in good standing in
all other jurisdictions in which its ownership or lease of property or the
conduct of its business requires such qualification, except where the
failure to be so qualified and in good standing could not reasonably be
expected, individually or in the aggregate, to have a Material Adverse
Effect; all of the issued and outstanding capital stock of Merger Corp.,
the Company and of each Significant Subsidiary has been duly authorized and
validly issued and is fully paid and nonassessable; and except for pledges
in favor of Credit Suisse First Boston, as collateral agent, under the New
Credit Facility, the capital stock of each Significant Subsidiary owned by
the Company, directly or through subsidiaries, is owned free from liens,
encumbrances and defects.
(d) The Indenture has been duly authorized by each of the Issuers by
all necessary corporate action; the Offered Securities have been duly
authorized by each of the Issuers by all necessary corporate action; and
when the Offered Securities are delivered and paid for pursuant to this
Agreement and the Indenture on the Closing Date (as defined below), the
Indenture will have been duly executed and delivered by each of the
Issuers, such Offered Securities will have been duly executed,
authenticated, issued and delivered by each of the Issuers and will conform
in all material respects to the description thereof contained in the
Offering Document and the Indenture and such Offered Securities will
constitute valid and legally binding obligations of each of the Issuers,
enforceable in accordance with their terms and entitled to the benefits of
the Indenture, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general principles of
equity (regardless of whether enforceability is considered in a proceeding
at law or in equity). The Exchange Notes have been duly and validly
authorized for issuance by the Issuers and, when duly executed,
authenticated, issued and delivered by each of the Issuers in accordance
with the terms of the Exchange Offer and the Indenture, will constitute
valid and legally binding obligations of each of the Issuers, enforceable
in accordance with their terms and entitled to the benefits of the
Indenture, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws for general applicability
relating to or affecting creditors' rights and to general principles of
equity (regardless of whether enforceability is considered in a proceeding
at law or in equity).
(e) Except as disclosed or reflected in the fees and expenses set
forth in the Offering Document, there are no contracts, agreements or
understandings between Merger Corp. or the Company and any person that
would give rise to a valid claim against Merger Corp. or the Company or any
Initial Purchaser for a brokerage commission, finder's fee or other like
payment in connection with the Transactions.
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(f) Subject to the express assumptions set forth in Section 2(s)
below, no consent, approval, authorization, or order of, or filing with,
any governmental agency or body or any court is required for the
consummation of the Transactions as contemplated by (i) this Agreement and
the Registration Rights Agreement, or (ii) any other Transaction Document,
in each case, in connection with the consummation of the transactions
contemplated therein, except as may be required (i) in connection with the
registration of the Exchange Notes under the Securities Act, (ii) in
connection with the qualification of the Indenture under the Trust
Indenture Act (as defined in paragraph (s) below) pursuant to the
Registration Rights Agreement, or (iii) pursuant to state securities or
"Blue Sky" laws.
(g) The execution, delivery and performance by each of Merger Corp.,
the Company and its subsidiaries (to the extent each is a party thereto) of
each of the Transaction Documents and compliance with the terms and
provisions thereof and consummation of the Transactions will not result in
a breach or violation of any of the terms and provisions of, or constitute
a default under, (i) any statute, any rule, regulation or order of any
governmental agency or body or any court, domestic or foreign, having
jurisdiction over Merger Corp., the Company or any of its subsidiaries or
any of their properties, or (ii) the Transaction Documents or any other
agreement or instrument to which Merger Corp., the Company or any of its
subsidiaries is a party or by which Merger Corp., the Company or any of its
subsidiaries is bound or to which any of the properties of Merger Corp.,
the Company or its subsidiaries is subject, or (iii) the charter or by-laws
of Merger Corp., the Company or any of its subsidiaries, except (A) in each
case, that any rights to indemnity and contribution may be limited by
federal and state securities laws and public policy considerations and (B)
in the case of clauses (i) and (ii) for such breaches, violations or
defaults as would not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect; and each of the Issuers has
full corporate power and authority to authorize, issue and sell the Offered
Securities as contemplated by this Agreement, and each of Merger Corp., the
Company and its subsidiaries have full corporate power and authority to
execute, deliver and perform the Transaction Documents to which it is a
party and to consummate the Transactions.
(h) This Agreement has been duly authorized, executed and delivered by
each of the Issuers. Each of the other Transaction Documents has been, or
as of the Closing Date will have been, duly authorized, executed and
delivered by each of Merger Corp., the Company and its subsidiaries (to the
extent each is a party thereto) and each Transaction Document conforms or
will conform in all material respects to the descriptions thereof contained
in the Offering Document and each Transaction Document (other than this
Agreement) is or will constitute valid and legally binding obligations of
Merger Corp., the Company and its subsidiaries (to the extent each is a
party thereto), enforceable in accordance with its respective terms,
except that any rights to indemnity and contribution may be limited by
federal and state securities laws and public policy considerations and
subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or
affecting creditors' rights and to general principles of equity (regardless
of whether enforceability is considered in a proceeding at law or in
equity).
(i) Except as disclosed in the Offering Document, the Company and its
subsidiaries have good and marketable title to all real properties and all
other properties and assets owned by them that are material to the Company
and its subsidiaries taken as a whole, in each case free from liens,
encumbrances and defects that would materially affect the value thereof or
materially interfere with the use made or proposed to be made thereof by
them;
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and except as disclosed in the Offering Document, the Company and its
subsidiaries hold any leased real or personal property that is material to
the Company and its subsidiaries taken as whole under valid and enforceable
leases with no exceptions that would materially interfere with the use made
or proposed to be made thereof by them.
(j) The Company and its subsidiaries possess all certificates,
authorities or permits issued by appropriate governmental agencies or
bodies necessary to conduct the business now operated by them and have not
received any notice of proceedings relating to the revocation or
modification of any such certificate, authority or permit that, if
determined adversely to the Company or any of its subsidiaries, would
reasonably be expected, individually or in the aggregate, to have a
Material Adverse Effect.
(k) No labor strike, slowdown, stoppage or dispute with the employees
of the Company or any of its subsidiaries exists or, to the knowledge of
the Company, is imminent, that would reasonably be expected, individually
or in the aggregate, to have a Material Adverse Effect. None of the Company
or any of its subsidiaries has violated (A) any federal, state or local law
or foreign law relating to discrimination in hiring, promotion or pay of
employees, (B) any applicable wage or hour laws of, or (C) any provision of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
or the rules and regulations thereunder, except those violations that could
not reasonably be expected, individually or in the aggregate, to have a
Material Adverse Effect.
(l) The Company and its subsidiaries own, possess, have the right to
use or can acquire on reasonable terms, adequate trademarks, trade names
and other rights to inventions, know-how, patents, copyrights, confidential
information and other intellectual property (collectively, "intellectual
property rights") used in the conduct the business now operated by them, or
presently employed by them, and have not received any notice of
infringement of or conflict with asserted rights of others with respect to
any intellectual property rights that, if determined adversely to the
Company or any of its subsidiaries, would reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect. To the
knowledge of the Company after due inquiry, the use of the intellectual
property rights in connection with the business and operations of the
Company or any of its subsidiaries does not infringe on the rights of any
person, except such infringements as would not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect.
(m) Neither the Company nor any of its subsidiaries (i) is in
violation of any statute, any rule, regulation, decision or order of any
governmental agency or body or any court, domestic or foreign, relating to
the use, disposal or release of hazardous or toxic substances or relating
to the protection or restoration of the environment or human exposure to
hazardous or toxic substances (collectively, "environmental laws"), (ii)
owns or operates any real property contaminated with any substance that is
subject to any environmental laws, (iii) is liable for any off-site
disposal or contamination pursuant to any environmental laws, or (iv) is
subject to any claim relating to any environmental laws, in each case,
which violation, contamination, liability or claim would reasonably be
expected, individually or in the aggregate, to have a Material Adverse
Effect; and the Company is not aware of any pending investigation which
might lead to such a claim.
(n) Except as disclosed in the Offering Document, there are no pending
actions, suits or proceedings against or affecting Merger Corp., the
Company, any of its subsidiaries or any of their respective properties
that, if determined adversely to Merger
6
Corp., the Company or any of its subsidiaries, would reasonably be
expected, individually or in the aggregate, to have a Material Adverse
Effect, or would materially and adversely affect the ability of Merger
Corp., the Company or any of its subsidiaries to perform their respective
obligations under the Transaction Documents, or which are otherwise
material in the context of the sale of the Offered Securities and the
consummation of the other Transactions; and no such actions, suits or
proceedings are, to the Company's knowledge, threatened or contemplated.
(o) The financial statements included in the Offering Document present
fairly the financial position of the Company and its consolidated
subsidiaries as of the dates shown (subject in the case of interim
financial statements to normal year-end adjustments) and their results of
operations and cash flows for the periods shown, and such financial
statements have been prepared in conformity with the generally accepted
accounting principles in the United States applied on a consistent basis
and the schedules included in the Offering Document present fairly the
information required to be stated therein. The assumptions used in
preparing the pro forma financial data included in the Offering Document
provide a reasonable basis for presenting the significant effects directly
attributable to the transactions or events described therein, the related
pro forma adjustments give appropriate effect to those assumptions, and the
pro forma columns therein reflect the proper application of those
adjustments to the corresponding historical financial statement amounts.
Except as otherwise disclosed in the Offering Document, such pro forma
financial data comply as to form in all material respects with the
requirements that would have been applicable to pro forma financial
statements had this Offering Document been a prospectus included in a
registration statement on Form S-1 filed with the Commission under the
Securities Act.
(p) Except as disclosed in the Offering Document, since the date of
the latest audited financial statements included in the Offering Document
there has been (i) no material adverse change, nor any development or event
involving a prospective material adverse change, in the condition
(financial or other), business, properties or results of operations of the
Company and its subsidiaries taken as a whole, (ii) except as disclosed in
or contemplated by the Offering Document, there has been no dividend or
distribution of any kind declared, paid or made by the Company on any class
of its capital stock, (iii) none of the Company or any of its subsidiaries
has incurred any liabilities or obligations, direct or contingent, which
are material, individually or in the aggregate, to the Company and its
subsidiaries, taken as a whole, nor entered into any transaction not in the
ordinary course of business, and (iv) none of the Company or any of its
subsidiaries has incurred any liabilities or obligations, direct or
contingent, that are material, individually or in the aggregate, to the
Company and its subsidiaries, taken as a whole, and that are required to be
disclosed on a balance sheet or notes thereto in accordance with generally
accepted accounting principles and are not disclosed on the latest balance
sheet or notes thereto included in the Offering Document.
(q) None of the Issuers is an open-end investment company, unit
investment trust or face-amount certificate company that is or is required
to be registered under Section 8 of the United States Investment Company
Act of 1940 (the "Investment Company Act"); and each of the Issuers is not
and, after giving effect to the offering and sale of the Offered Securities
and the application of the proceeds thereof as described in the Offering
Document and the consummation of the other Transactions, will not be an
"investment company" as defined in the Investment Company Act.
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(r) The Offered Securities are eligible for resale to "qualified
institutional buyers" pursuant to Rule 144A under the Securities Act and no
securities of the Company or any of its subsidiaries of the same class
(within the meaning of Rule 144A(d)(3) under the Securities Act) as the
Offered Securities are listed on any national securities exchange
registered under Section 6 of the Exchange Act or quoted in a U.S.
automated inter-dealer quotation system.
(s) Assuming that the representations and warranties of the Initial
Purchasers contained in Section 4(a) below are true in all material
respects, and assuming compliance in all material respects by the Initial
Purchasers with their covenants in Section 4 below, the offer and sale of
the Offered Securities in the manner contemplated by this Agreement will be
exempt from the registration requirements of the Securities Act by reason
of Section 4(2) thereof and Regulation S thereunder and it is not necessary
to qualify an indenture in respect of the Offered Securities under the
United States Trust Indenture Act of 1939, as amended (the "Trust Indenture
Act").
(t) Neither the Company, nor any of its affiliates, nor any person
acting on its or their behalf (i) has, within the six-month period prior to
the date hereof, offered or sold in the United States or to any U.S. person
(as such terms are defined in Regulation S under the Securities Act) the
Offered Securities or any security of the same class or series as the
Offered Securities or (ii) has offered or will offer or sell the Offered
Securities (A) in the United States by means of any form of general
solicitation or general advertising within the meaning of Rule 502(c) under
the Securities Act or (B) with respect to any such securities sold in
reliance on Rule 903 of Regulation S ("Regulation S") under the Securities
Act, by means of any directed selling efforts within the meaning of Rule
902(c) of Regulation S. The Company, its affiliates and each person acting
on its or their behalf have complied and will comply with the offering
restrictions requirement of Regulation S. The Company has not entered and
will not enter into any contractual arrangement with respect to the
distribution of the Offered Securities except for this Agreement.
(u) Each of the Company and its subsidiaries maintains a system of
internal accounting controls sufficient to provide reasonable assurance
that: (A) transactions are executed in accordance with management's general
or specific authorizations; (B) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain accountability for assets;
(C) access to assets is permitted only in accordance with management's
general or specific authorization; and (D) the recorded accountability for
assets is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect thereto.
(v) Each of the Company and its subsidiaries maintains insurance
covering its properties, operations, personnel and businesses, insuring
against such losses and risks as are consistent with industry practice to
protect the Company and its subsidiaries and their respective businesses.
None of the Company or any of its subsidiaries has received notice from any
insurer or agent of such insurer that substantial capital improvements or
other expenditures will have to be made in order to continue such
insurance.
(w) Except as disclosed in the Offering Document, no relationship,
direct or indirect, exists between or among the Company or any of its
subsidiaries on the one hand, and the directors, officers, stockholders,
customers or suppliers of the Company or any of its subsidiaries on the
other hand, which would be required by the Securities Act to be
8
described in the Offering Document if the Offering Document were a
prospectus included in a registration statement on Form S-1 filed with the
Commission under the Securities Act.
(x) The Company has (A) initiated a review and assessment of all areas
within its and each of its subsidiaries' business and operations (including
those affected by suppliers, vendors and customers) that could be adversely
affected by the "Year 2000 Problem" (that is, the risk that computer
applications used by the Company or any of its subsidiaries (or suppliers,
vendors and customers) may be unable to recognize and perform properly
date-sensitive functions involving certain dates prior to and any date
after December 31, 1999), (B) developed a plan and timeline for addressing
the Year 2000 Problem on a timely basis and (C) to date, has implemented
that plan in accordance with that timetable. Based on the foregoing, the
Issuers believe that all computer applications used by the Company and its
subsidiaries that are material to the business and operations of the
Company and its subsidiaries taken as a whole are, and the Company has no
reason to believe, after due inquiry, that the computer applications used
by the Company's and its subsidiaries' key suppliers, vendors and customers
that are material to the business of the Company and its subsidiaries,
taken as a whole, are not, reasonably expected on a timely basis to be able
to perform properly date-sensitive functions for all dates before and after
January 1, 2000 (that is, be "Year 2000 Compliant"), except to the extent
that a failure to do so would not reasonably be expected, individually or
in the aggregate, to have Material Adverse Effect.
(z) The statistical and market-related data included in the Offering
Document are based on or derived from sources which the Issuers believe to
be reliable and accurate in all material respects.
(aa) The Offering Document, as of its date, and each amendment or
supplement thereto, as of its date, contains the information specified in,
and meets the requirements of, Rule 144A(d)(4) under the Act.
(bb) None of the Issuers intends to, nor believes that it will, incur
debts beyond its ability to pay such debts as they mature. The present fair
saleable value of the assets of each Issuer exceeds the amount that will be
required to be paid on or in respect of its existing debts and other
liabilities (including contingent liabilities) as they become absolute and
matured. The assets of each Issuer do not constitute unreasonably small
capital to carry out its business as conducted or as proposed to be
conducted. Upon the issuance of the Offered Securities, the present fair
saleable value of the assets of each Issuer will exceed the amount that
will be required to be paid on or in respect of its existing debts and
other liabilities (including contingent liabilities) as they become
absolute and matured. Upon the issuance of the Offered Securities, the
assets of each Issuer will not constitute unreasonably small capital to
carry out its business as now conducted, including the capital needs of
each such Issuer, taking into account the projected capital requirements
and capital availability.
(cc) None of the Issuers has (A) taken, directly or indirectly, any
action designed to, or that might reasonably be expected to, cause or
result in stabilization or manipulation of the price of any security of the
Company or any of its subsidiaries to facilitate the sale or resale of the
Offered Securities or (B) since the date of the Preliminary Offering
Circular (1) sold, bid for, purchased or paid any person any compensation
for soliciting purchases of the Offered Securities or (2) paid or agreed to
pay to any person any compensation for soliciting another to purchase any
other securities of the Company or any of its subsidiaries.
9
(dd) None of the Issuers has used or will use any form of general
solicitation in connection with the offer and sale of any of the Offered
Securities, including, but not limited to, articles, notices or other
communications published in any newspaper, magazine, or similar medium or
broadcast over television or radio, or any seminar or meeting whose
attendees have been invited by any general solicitation.
(ee) Each certificate signed by any officer of any Issuer and
delivered to the Initial Purchasers or counsel for the Initial Purchasers
shall be deemed to be a representation and warranty by such Issuer to the
Initial Purchasers as to the matters covered thereby.
3. Purchase, Sale and Delivery of Offered Securities. On the basis of the
representations, warranties and agreements herein contained, but subject to the
terms and conditions herein set forth, the Company agrees to sell to the Initial
Purchasers, and the Initial Purchasers agree, severally and not jointly, to
purchase from the Company, at a purchase price of 97.0% of the principal amount
thereof plus accrued interest from May 11, 1999 to the Closing Date (as
hereinafter defined), the respective principal amounts of the Offered Securities
set forth opposite the names of the several Initial Purchasers in Schedule A
hereto.
The Company will deliver against payment of the purchase price the Offered
Securities in the form of one or more permanent global securities in definitive
form (the "Global Securities") deposited with the Trustee as custodian for The
Depository Trust Company ("DTC") and registered in the name of Cede & Co., as
nominee for DTC. Interests in any permanent Global Securities will be held only
in book-entry form through DTC, except in the limited circumstances described in
the Offering Document. Payment of the purchase price for the Offered Securities
shall be made by the Initial Purchasers in Federal (same day) funds by wire
transfer to an account of the Company at a bank designated by the Company and
acceptable to Bear Xxxxxxx at the office of Skadden, Arps, Slate, Xxxxxxx & Xxxx
LLP at 9 A.M. (New York time), on May 11, 1999 or at such other time not later
than seven full business days thereafter as Bear Xxxxxxx and the Company
determine, such time being herein referred to as the "Closing Date", against
delivery to the Trustee as custodian for DTC of the Global Securities
representing all of the Securities. The Global Securities will be made available
for checking at the office of Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP at least
24 hours prior to the Closing Date.
4. Representations by Initial Purchasers; Resale by Initial Purchasers.
(a) Each Initial Purchaser severally represents and warrants to the
Company that it is a "qualified institutional buyer" within the meaning of
Rule 144A under the Securities Act.
(b) Each Initial Purchaser severally acknowledges that the Offered
Securities have not been registered under the Securities Act and may not be
offered or sold within the United States or to, or for the account or
benefit of, U.S. persons except in accordance with Regulation S or pursuant
to an exemption from the registration requirements of the Securities Act,
or to non-U.S. persons outside the United States except in accordance with
Regulation S or pursuant to an exemption from the registration requirements
of the Securities Act. Each Initial Purchaser severally represents and
agrees that it has offered and sold the Offered Securities, and will offer
and sell the Offered Securities only in accordance with Rule 903 of
Regulation S or Rule 144A under the Securities Act ("Rule 144A").
Accordingly, neither such Initial Purchaser nor 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
10
Offered Securities, and such Initial Purchaser, its affiliates and all
persons acting on its or their behalf have complied in all material
respects and will comply in all material respects with the offering
restrictions requirements of Regulation S and Rule 144A.
(c) Each Initial Purchaser severally agrees that it and each of its
affiliates has not entered and will not enter into any contractual
arrangement with respect to the distribution of the Offered Securities
except for any such arrangements with the other Initial Purchaser or
affiliates of the other Initial Purchaser or with the prior written consent
of the Company.
(d) Each Initial Purchaser severally agrees that it and each of its
affiliates will not offer or sell the Offered Securities in the United
States by means of any form of general solicitation or general advertising
within the meaning of Rule 502(c) under the Securities Act, including, but
not limited to (i) any advertisement, article, notice or other
communication published in any newspaper, magazine or similar media or
broadcast over television or radio, or (ii) any seminar or meeting whose
attendees have been invited by any general solicitation or general
advertising. Each Initial Purchaser severally agrees, with respect to
resales made in reliance on Rule 144A of any of the Offered Securities, to
deliver either with the confirmation of such resale or otherwise prior to
settlement of such resale a notice to the effect that the resale of such
Offered Securities has been made in reliance upon the exemption from the
registration requirements of the Securities Act provided by Rule 144A.
(e) Each of the Initial Purchasers severally 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 Offered Securities will not offer or sell any
Offered 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; (ii) it has
complied and will comply with all applicable provisions of the Financial
Services Xxx 0000 with respect to anything done by it in relation to the
Offered Securities in, from or otherwise involving the United Kingdom; and
(iii) it has only issued or passed on and will only issue or pass on in the
United Kingdom any document received by it in connection with the issue of
the Offered Securities to a person who is of a kind described in Article
11(3) of the Financial Services Xxx 0000 (Investment Advertisements)
(Exemptions) Order 1996 or is a person to whom such document may otherwise
lawfully be issued or passed on.
5. Certain Agreements of the Company. Each of the Issuers, jointly and
severally, agrees with the several Initial Purchasers that:
(a) The Company will advise Bear Xxxxxxx promptly of any proposal to
amend or supplement the Offering Document and will not effect such
amendment or supplementation without Bear Xxxxxxx' consent. If, at any time
prior to the completion of the resale of the Offered Securities by the
Initial Purchasers, any event occurs as a result of which the Offering
Document as then amended or supplemented would include an untrue statement
of a material fact or omit to state any material fact necessary in order to
make the statements therein, in the light of the circumstances under which
they were made, not misleading, the Company promptly will notify Bear
Xxxxxxx of such event and promptly will prepare, at its own expense, an
amendment or supplement which will correct such statement or omission or
11
effect such compliance. Upon receipt of such notice in written form, each
Initial Purchaser agrees to suspend use of the Offering Document until the
Company has amended or supplemented the Offering Document to correct such
misstatement or omission or to effect compliance with this paragraph (a).
Neither Bear Xxxxxxx' consent to, nor the Initial Purchasers' delivery to
offerees or investors of, any such amendment or supplement shall constitute
a waiver of any of the conditions set forth in Section 6. The Company's and
the Initial Purchasers' obligations under this paragraph (a) shall
terminate on the earliest to occur of (i) expiration of the Exchange Offer
(as defined in the Registration Rights Agreement) pursuant to the
Registration Rights Agreement, (ii) the effective date of a shelf
registration statement with respect to the Offered Securities filed
pursuant to the Registration Rights Agreement, (iii) the date upon which no
Initial Purchaser nor any of their respective affiliates continues to hold
Offered Securities acquired as part of their initial distribution, and (iv)
the date upon which no Initial Purchaser nor any of their respective
affiliates continues to hold Exchange Notes, if any.
(b) The Company will furnish to the Initial Purchasers copies of any
preliminary offering circular, the Offering Document and all amendments and
supplements to such documents, in each case as soon as available and in
such quantities as the Initial Purchasers request, and the Company will
furnish to Bear Xxxxxxx on the date hereof three copies of the Offering
Document signed by a duly authorized officer of the Company, one of which
will include the independent accountants' reports therein manually signed
by such independent accountants. At any time when the Company is not
subject to Section 13 or 15(d) of the Exchange Act, the Company will
promptly furnish or cause to be furnished to each Initial Purchaser and,
upon request of holders and prospective purchasers of the Offered
Securities, to such holders and purchasers, copies of the information
required to be delivered to holders and prospective purchasers of the
Offered Securities pursuant to Rule 144A(d)(4) under the Securities Act (or
any successor provision thereto) in order to permit compliance with Rule
144A in connection with resales by such holders of the Offered Securities.
The Company will pay the expenses of printing and distributing to the
Initial Purchasers all such documents.
(c) The Company will advise the Initial Purchasers promptly and, if
requested by the Initial Purchasers, confirm such advice in writing, of the
issuance by any state securities commission of any stop order suspending
the qualification or exemption from qualification of any of the Offered
Securities for offering or sale in any jurisdiction, or the initiation of
any proceeding for such purpose by any state securities commission or other
regulatory authority. The Issuers shall use their best efforts to prevent
the issuance of any stop order suspending the qualification or exemption of
any of the Offered Securities under any state securities or Blue Sky laws
and, if at any time any state securities commission or other regulatory
authority shall issue an order suspending the qualification or exemption of
any of the Offered Securities under any state securities or Blue Sky laws,
the Issuers shall use their best efforts to obtain the withdrawal or
lifting of such order at the earliest possible time.
(d) The Company will cooperate with the Initial Purchasers and their
counsel in connection with the registration and qualification of the
Offered Securities for sale and the determination of their eligibility for
investment under the laws of such jurisdictions as Bear Xxxxxxx designates
and do all things necessary to continue such qualifications in effect so
long as required for the resale of the Offered Securities by the Initial
Purchasers, provided that the Company will not be required to qualify as a
foreign corporation or to file a general consent to service of process in
any such jurisdiction.
12
(e) During the period of five years hereafter, the Company will
furnish to each Initial Purchaser, as soon as practicable after the end of
each fiscal year, a copy of its annual report to stockholders for such
year; and the Company will furnish to each Initial Purchaser (i) as soon as
available, a copy of each report and any definitive proxy statement of the
Company filed with the Commission under the Exchange Act or mailed to
holders of Offered Securities or any securities of the Company which have
been registered under Section 12 of the Exchange Act, and (ii) from time to
time, such other information concerning the Company as such Initial
Purchaser may reasonably request.
(f) During the period of two years after the Closing Date, the
Company will, upon request, furnish to the Initial Purchasers and any
holder of Offered Securities a copy of the restrictions on transfer
applicable to the Offered Securities.
(g) During the period of two years after the Closing Date, the
Company will not, and will not permit any of its affiliates (as defined in
Rule 144 under the Securities Act) to, resell any of the Offered Securities
that have been reacquired by any of them.
(h) During the period of two years after the Closing Date, each of
the Issuers will not be or become, an open-end investment company, unit
investment trust or face-amount certificate company that is or is required
to be registered under Section 8 of the Investment Company Act.
(i) The Company will pay all expenses incidental to the performance
of the Issuers' obligations under this Agreement, the Indenture, the
Registration Rights Agreement and the other Transaction Documents,
including (i) the fees and expenses of counsel and accountant for the
Issuers and of the Trustee and its professional advisers; (ii) all expenses
in connection with the execution, issue, authentication, packaging and
initial delivery of the Offered Securities and, as applicable, the Exchange
Notes, the preparation and printing of this Agreement, the Registration
Rights Agreement, the Offered Securities, the Exchange Notes, the
Indenture, the Offering Document and amendments and supplements thereto,
and any other document relating to the issuance, offer, sale and delivery
of the Offered Securities and as applicable, the Exchange Notes; (iii) the
cost of listing the Offered Securities and qualifying the Offered
Securities for trading in The Portal/SM/ Market ("PORTAL") and any expenses
incidental thereto; (iv) the cost of any advertising approved by the
Company in connection with the issue of the Offered Securities; (v) for any
expenses (including fees and disbursements of counsel to the Initial
Purchasers) incurred in connection with qualification of the Offered
Securities or the Exchange Notes for sale under the laws of such
jurisdictions as Bear Xxxxxxx designates and the printing of memoranda
relating thereto; (vi) for any fees charged by investment rating agencies
for the rating of the Offered Securities or the Exchange Notes, and (vii)
for expenses incurred in printing and distributing preliminary offering
circulars and the Offering Document (including any amendments and
supplements thereto) to or at the direction of the Initial Purchasers. The
Company will also pay or reimburse the Initial Purchasers (to the extent
incurred by them) for all reasonable travel expenses of the Initial
Purchasers and the Company's officers and employees and any other expenses
of the Initial Purchasers and the Company in connection with attending or
hosting meetings with prospective purchasers of the Offered Securities from
the Initial Purchasers.
(j) In connection with the offering, until Bear Xxxxxxx shall have
notified the Company and the other Initial Purchaser of the completion of
the resale of the Offered Securities, neither the Company nor any of its
affiliates has or will, either alone or with one or more other persons, bid
for or purchase for any account in which it or any of its affiliates
13
has a beneficial interest any Offered Securities or attempt to induce any
person to purchase any Offered Securities; and neither it nor any of its
affiliates will make bids or purchases for the purpose of creating actual,
or apparent, active trading in, or of raising the price of, the Offered
Securities.
(k) For a period of 180 days after the date of the initial offering of
the Offered Securities by the Initial Purchasers, none of the Issuers will
offer, sell, contract to sell, pledge or otherwise dispose of, directly or
indirectly, any United States dollar denominated debt securities issued or
guaranteed by any of the Issuers and having a maturity of more than one
year from the date of issue. None of the Issuers will at any time offer,
sell, contract to sell, pledge or otherwise dispose of, directly or
indirectly, any securities under circumstances where such offer, sale,
pledge, contract or disposition would cause the exemption afforded by
Section 4(2) of the Securities Act, the safe harbor of Regulation S
thereunder or the resale exemption under Rule 144A thereunder to cease to
be applicable to the offer and sale of the Offered Securities.
(l) The Company will use the proceeds from the sale of the Offered
Securities in the manner described in the Offering Document under the
caption "Use of Proceeds."
(m) None of the Issuers will sell, offer for sale or solicit offers to
buy or otherwise negotiate in respect of any security (as defined in the
Securities Act) that would be integrated with the sale of the Offered
Securities in a manner that would require the registration under the
Securities Act of the sale to the Initial Purchasers of the Offered
Securities or to take any other action that would result in the resale of
the Offered Securities not being exempt from registration under the
Securities Act.
(n) None of the Issuers will take, directly or indirectly, any action
designed to, or that might reasonably be expected to, cause or result in
stabilization or manipulation of the price of any security of any of the
Issuers to facilitate the resale of the Offered Securities. Except as
permitted by the Securities Act, none of the Issuers will distribute any
(i) preliminary offering memorandum or offering memorandum, including
without limitation, the Offering Document or (ii) other offering material
in connection with the offering and sale of the Offered Securities.
6. Conditions of the Obligations of the Initial Purchasers. The
obligations of the several Initial Purchasers to purchase and pay for the
Offered Securities will be subject to the accuracy of the representations and
warranties on the part of the Issuers herein, to the accuracy of the statements
of officers of the Issuers made pursuant to the provisions hereof, to the
performance by the Issuers of their respective obligations hereunder and to the
following additional conditions precedent:
(a) The Initial Purchasers shall have received a letter, dated the
date of this Agreement, of KPMG LLP in agreed form confirming that they are
independent public accountants within the meaning of the Securities Act and
the applicable published rules and regulations thereunder ("Rules and
Regulations") and to the effect that:
(i) in their opinion the financial statements and schedules
examined by them and included in the Offering Document comply as to
form in all material respects with the applicable accounting
requirements of the Securities Act and the related published Rules and
Regulations;
14
(ii) they have performed the procedures specified by the American
Institute of Certified Public Accountants for a review of interim
financial information as described in Statement of Auditing Standards
No. 71, Interim Financial Information, on the unaudited financial
statements and certain specified financial information included in
the Offering Document;
(iii) on the basis of the review referred to in clause (ii)
above, a reading of the latest available interim financial statements
of the Company, and of all subsidiaries of the Company for which such
interim financial statements are provided, inquiries of officials of
the Company and of such subsidiaries who have responsibility for
financial and accounting matters and other specified procedures,
nothing came to their attention that caused them to believe that:
(A) with respect to the unaudited financial statements
included in the Offering Document, that any material
modifications should be made to such unaudited financial
statements for them to be in conformity with generally accepted
accounting principles;
(B) the unaudited consolidated net sales, net operating
income, net income and net income per share amounts for the
three-month periods ended March 28, 1998 and March 27, 1999
included in the Offering Document do not agree with the amounts
set forth in the unaudited consolidated financial statements for
those same periods or were not determined on a basis
substantially consistent with that of the corresponding amounts
in the audited statements of income;
(C) at the date of the latest available balance sheet read
by such accountants, or at a subsequent specified date not more
than three business days prior to the date of this Agreement,
there was any change in the capital stock or any increase in
short-term indebtedness or long-term debt of the Company and its
consolidated subsidiaries or, at the date of the latest available
balance sheet read by such accountants, there was any decrease in
consolidated net current assets or net assets, as compared with
amounts shown on the latest balance sheet included in Offering
Document; or
(D) for the period from the closing date of the latest
income statement included in the Offering Document to the closing
date of the latest available income statement read by such
accountants there were any decreases, as compared with the
corresponding period of the previous year and with the period of
corresponding length ended the date of the latest income
statement included in the Offering Document, in consolidated net
sales, net operating income or net income or in the ratio of
earnings to fixed charges;
except in all cases set forth in clauses (C) and (D) above for
changes, increases or decreases which the Offering Document disclose have
occurred or may occur or which are described in such letter; and
(iv) they have performed the procedures specified therein on the
pro forma financial statements included in the Offering Document;
15
(v) on the basis of the review referred to in clause (iv) above,
nothing came to their attention that caused them to believe that the
pro forma financial statements included in the Offering Document (not
including specified supplemental adjustments thereto) do not comply
as to form in all material respects with the applicable accounting
requirements of the Securities Act and the related published Rules and
Regulations or that the pro forma adjustments have not been properly
applied to the historical amounts in the compilation of those
statements; and
(vi) they have compared specified dollar amounts (or percentages
derived from such dollar amounts) and other financial information
contained in the Offering Document (in each case to the extent that
such dollar amounts, percentages and other financial information are
derived from the general accounting records of the Company and its
subsidiaries subject to the internal controls of the Company's
accounting system or are derived directly from such records by
analysis or computation) with the results obtained from inquiries, a
reading of such general accounting records and other procedures
specified in such letter and have found such dollar amounts,
percentages and other financial information to be in agreement with
such results, except as otherwise specified in such letter; and
(vii) they have performed the procedures specified by the
American Institute of Certified Public Accountants for a review of
management's discussion and analysis of financial condition and
results of operations as described in Statement of Auditing Standards
No. 86, Management's Discussion and Analysis, on certain specified
portions of the Management's Discussion and Analysis of Financial
Condition and Results of Operations section of the Offering Document.
(b) Subsequent to the execution and delivery of this Agreement, there
shall not have occurred (i) any material adverse change in general
economic, political or financial conditions or if the effect of
international conditions on the financial markets in the United States
shall be such as, in the Initial Purchasers' reasonable judgment, makes it
inadvisable or impracticable to proceed with the delivery of the Offered
Securities as contemplated hereby, or (ii) (A) in the reasonable judgment
of the Initial Purchasers, any material adverse change in the condition
(financial or other), business, properties, assets, liabilities, prospects,
net worth, results of operations or cash flows of the Company or its
subsidiaries, taken as a whole, other than set forth in the Offering
Document; (B) (i) any downgrading, suspension or withdrawal of, nor shall
any notice have been given of any potential or intended down grading,
suspension or withdrawal of, or of any review for a possible change that
does not indicate the direction of possible change in, any rating of any of
the Issuers or any security of any of the Issuers (including, without
limitation, the placing of any of the foregoing ratings on credit watch
with negative or developing implications or under review with an uncertain
direction) by any "nationally recognized statistical rating organization"
as such term is defined for purposes of Rule 436(g)(2) under the Securities
Act, (ii) any change, nor shall any notice have been given of any potential
or intended change, in the outlook for any rating of any of the Issuers or
any securities of any of the Issuers by any such rating organization, and
(iii) any notice by any such rating organization that it has assigned (or
is considering assigning) a lower rating to the Offered Securities than
that on which the Offered Securities were marketed; (C) any suspension or
material limitation of trading in securities generally on the New York
Stock Exchange, the American Stock Exchange, the Chicago Board of Options
Exchange, the Chicago Mercantile Exchange, the Chicago Board of Trade or
the Nasdaq National Market, or any establishment of minimum or maximum
prices for trading, or any requirement of maximum ranges for prices for
securities, on such exchange or the Nasdaq National Market, or by such
16
exchange or other regulatory body or governmental authority having
jurisdiction (other than limitations on price fluctuations or minimums or
maximums in effect as of the date of this Agreement); (D) any banking
moratorium declared by federal or state authorities, or any moratorium
declared in foreign exchange trading by major international banks or
persons; or (E) any outbreak or escalation of armed hostilities involving
the United States on or after the date hereof, or if there has been a
declaration by the United States of a national emergency or war, the effect
of which shall be, in the Initial Purchasers' judgment, to make it
inadvisable or impracticable to proceed with this offering or delivery of
the Offered Securities on the terms and in the manner contemplated in the
Offering Document.
(c) The Initial Purchasers shall have received an opinion, dated the
Closing Date, of Xxxxxxxx & Xxxxx, counsel for the Company, that:
(i) Assuming due authorization, execution and delivery by the
Initial Purchasers and each of the other parties thereto, the
Registration Rights Agreement constitutes a valid and legally binding
obligation of the Company and each of the Guarantors, enforceable in
accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer and
similar laws affecting creditors' rights and remedies generally and to
general principles of equity (regardless of whether enforcement is
sought in a proceeding at law or in equity).
(ii) Assuming due authorization, execution and delivery by the
Company, each Guarantor and, in the case of the Indenture and the
Notes, by the Trustee, the Indenture constitutes and the Notes and
Guarantees, when authenticated in accordance with the terms of the
Indenture and delivered to and paid for by the Initial Purchasers in
accordance with the terms of this Agreement, will constitute valid
and legally binding obligations of the Company and the Guarantors, as
the case may be, enforceable in accordance with their terms, subject
to applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer and similar laws affecting creditors' rights and
remedies generally and to general principles of equity (regardless of
whether enforcement is sought in a proceeding at law or in equity).
(iii) To the knowledge of such counsel, the Company was not
required to obtain any consent, approval, authorization or order of
governmental agency under the Xxxx-Xxxxx-Xxxxxx Anti-Trust
Improvements Act of 1976 for the consummation of the
Recapitalization.
(iv) To the knowledge of such counsel, the Company was not
required under any New York or federal law to obtain any consent,
approval, authorization or order of governmental agency for the
issuance, delivery and sale of the Notes being issued and sold by it
under this Agreement and the Indenture except for any such consent,
approval, authorization or order which may be required under the so-
called "Blue Sky" or securities laws of any states (as to which such
counsel need express no opinion or advice).
(v) The execution and delivery by the Company and each Guarantor
of this Agreement, the Registration Rights Agreement and the Indenture
and the performance of their agreements therein and the consummation
of the sale of the
17
Notes to the Initial Purchasers in accordance with this Agreement do
not constitute a violation by the Company or any Guarantor of any
applicable provision of any New York or federal law, statute or
regulation (except that such counsel need express no opinion in this
paragraph as to compliance with any disclosure requirement or any
prohibition against fraud or misrepresentation or as to whether
performance of the indemnification or contribution provisions in this
Agreement would be permitted).
(vi) It is not necessary in connection with (i) the offer, sale
and delivery of the Notes to the several Initial Purchasers pursuant
to this Agreement or (ii) the resales of the Notes by the several
Initial Purchasers in the manner contemplated in the Offering
Document to register the Notes under the Securities Act or to qualify
an indenture in respect thereof under the Trust Indenture Act.
(vii) The Notes, the Guarantees and the Indenture conform in all
material respects to the descriptions thereof contained in the
Offering Document; the description in the Offering Document under the
heading "Description of Senior Credit Facility" is accurate in all
material respects; and the description in the Offering Document of
United States federal income tax matters under the heading "Federal
Income Tax Considerations" is accurate in all material respects and
fairly presents the information required to be shown.
(viii) Assuming due authorization of the Exchange Notes, when,
as and if (i) the Exchange Offer Registration Statement shall have
become effective pursuant to the provisions of the Securities Act,
(ii) the Indenture shall have been qualified pursuant to the
provisions of the Trust Indenture Act, (iii) the Notes shall have been
validly tendered to the Company, (iv) the Exchange Notes shall have
been duly executed, authenticated and issued in accordance with the
provisions of the Indenture and duly delivered to the purchasers
thereof in exchange for the Notes, (v) the board of directors and the
appropriate officers of the Company have taken all necessary action to
fix and approve the terms of the Exchange Notes and (iv) any legally
required consents, approvals, authorizations or other order of the
Commission or any other regulatory authorities have been obtained, the
Exchange Notes when issued pursuant to the Exchange Offer Registration
Statement will constitute valid and binding obligations of the Company
and the Guarantors, subject to applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and similar laws
affecting creditors' rights and remedies generally and to general
principles of equity (regardless of whether enforcement is sought in a
proceeding at law or in equity).
(ix) Such counsel shall also state that the purpose of such
counsel's professional engagement was not to establish factual
matters, and preparation of the Offering Document involved many
determinations of a wholly or partially nonlegal character. Such
counsel need make no representation that it has independently verified
the accuracy, completeness or fairness of the Offering Document or
that the actions taken in connection with the preparation of the
Offering Document (including the actions described below) were
sufficient to cause the Offering Document to be accurate, complete or
fair. Such counsel need not pass upon and need not assume any
responsibility for the accuracy, completeness or fairness of the
Offering Document except to the extent otherwise explicitly indicated
in numbered paragraph (vii) above. Such counsel shall however confirm
that it has participated
18
in conferences with representatives of the Company, representatives of
the Initial Purchasers, counsel for the Initial Purchasers and
representatives of the independent accountants for the Company during
which disclosures in the Offering Document and related matters were
discussed. Based upon such counsel's participation in the conferences
identified above, such counsel's understanding of applicable law and
the experience such counsel has gained in such counsel's practice
thereunder and relying as to materiality to a large extent upon the
opinions and statements of officers of the Company, such counsel can,
however, advise the Initial Purchasers that nothing has come to such
counsel's attention that has caused such counsel to conclude that the
Offering Document at the date it bears or on the date of this letter
contained an untrue statement of a material fact or omitted to state a
material fact necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading.
(d) The Initial Purchasers shall have received an opinion, dated the
Closing Date, of Xxxxxx Xxxxxxxx LLP, counsel for the Company, that:
(i) Each of the Company and the Guarantors (a) is duly
incorporated and is validly existing as a corporation in good standing
under the laws of its jurisdiction of incorporation, (b) has all
requisite corporate power and authority to carry on its business as it
is currently being conducted and as described in the Offering Document
and to own, lease and operate its properties, and (c) is duly
qualified and in good standing as a foreign corporation, authorized to
do business in each jurisdiction set forth beside such entity's name
on a schedule to such opinion.
(ii) Each of the Company and the Guarantors has all requisite
corporate power and authority to execute, deliver and perform its
obligations under this Agreement and each of the other Transaction
Documents to which it is a party and to consummate the transactions
contemplated hereby and thereby, including, without limitation, to the
extent applicable, the corporate power and authority to issue, sell
and deliver the Offered Securities as provided herein.
(iii) All of the outstanding capital stock of each Guarantor is
owned by the Company of record and, to the best of such counsel's
knowledge, beneficially and, to the best of such counsel's knowledge,
such ownership is free and clear of any security interest, claim,
lien, limitation on voting rights or encumbrance; and all such
securities have been duly authorized, validly issued, and are fully
paid and nonassessable and were not issued in violation of any
preemptive or similar rights.
(iv) This Agreement has been duly and validly authorized,
executed and delivered by each of the Issuers.
(v) Each of the Transaction Documents (other than this Agreement)
has been duly and validly authorized, executed and delivered by the
Company and each of the Guarantors (to the extent each is a party
thereto).
(vi) The Recapitalization Agreement is the valid and binding
agreement of the Company and each of the Guarantors (to the extent
each is a party thereto) and enforceable against each of them (to the
extent each is a party thereto) in accordance with its terms, except
to the extent that enforcement thereof may be limited by (i)
bankruptcy, insolvency, fraudulent conveyance, reorganization,
19
moratorium or other similar laws now or hereafter in effect relating
to creditors' rights generally and (ii) general principles of equity
(regardless of whether enforceability is considered in a proceeding at
law or in equity).
(vii) The Offered Securities have been duly and validly
authorized and executed by each of the Issuers for issuance and sale
to the Initial Purchasers pursuant to this Agreement.
(viii) The Exchange Notes have been duly and validly authorized
for issuance by each of the Issuers.
(ix) To the best of such counsel's knowledge, none of the Company
or any of its Subsidiaries is in violation of its charter or bylaws.
(x) None of (a) the execution, delivery or performance by the
Company or any of the Guarantors of this Agreement or any of the other
Transaction Documents (to the extent each is a party thereto), (b)
the issuance and sale of the Offered Securities and (c) consummation
by the Company and any of the Guarantors of the Transactions violates,
conflicts with or constitutes a breach of any of the terms or
provisions of, or a default under (or an event that with notice or the
lapse of time, or both, would constitute a default under), or requires
consent under, or results in the imposition of a lien or encumbrance
on any properties of the Company or any of the Guarantors, or an
acceleration of any indebtedness of the Company or any of the
Guarantors pursuant to, (i) the charter or bylaws of the Company or
any of the Guarantors, (ii) any Transaction Document or any other
bond, debenture, note, indenture, mortgage, deed of trust or other
agreement or instrument to which the Company or any of the Guarantors
is a party or by which any of them or their property is bound filed as
an exhibit to the Company's annual report on Form 10-K for the year
ended June 27, 1998 or to the Company's quarterly reports on Form 10-
Q for the quarters ended September 26, 1998 and December 26,1998,
(iii) any statute, rule or regulation of the United States, the Common
wealth of Pennsylvania or the State of Delaware applicable to the
Company or any of the Guarantors or any of their assets or properties
or (iv) to the best of such counsel's knowledge, any judgment, order
or decree known to such counsel of any court or governmental agency or
authority of the United States, the Commonwealth of Pennsylvania or
the State of Delaware having jurisdiction over the Company or any of
the Guarantors or any of their assets or properties. Assuming
compliance with applicable state securities and Blue Sky laws, as to
which no opinion is rendered hereby, and except for the filing of a
registration statement under the Securities Act and qualification of
the Indenture under the Trust Indenture Act, or otherwise in
connection with the Registration Rights Agreement, no consent,
approval, authorization or order of, or filing, registration,
qualification, license or permit of or with, (a) any court or
governmental agency, body or administrative agency or (b) any other
person is required for (i) the execution, delivery and performance by
the Company or any of the Guarantors of this Agreement or any of the
other Transaction Documents (to the extent each is a party thereto) or
(ii) the issuance and sale of the Offered Securities or any of the
other Transactions, except such as have been obtained and made or have
been disclosed in the Offering Document.
20
(xi) To the best of such counsel's knowledge and except as
disclosed in the Offering Document, there is (a) no action, suit,
investigation or proceeding before or by any court, arbitrator or
governmental agency, body or official, domestic or foreign, now
pending to which the Company or any of the Guarantors is a party or to
which the business or property of the Company or any of the Guarantors
is subject in any court in the jurisdictions set forth on a schedule
to such opinion next to the name of the Company and each of the
Guarantors, respectively, (b) no statute, rule, regulation or order
that has been enacted, adopted or issued by any governmental agency or
that has been proposed by any governmental body, (c) no injunction,
restraining order or order of any nature by a federal or state court
or foreign court of competent jurisdiction to which the Company or any
of the Guarantors is or may be subject or to which the business,
assets, or property of the Company or any of the Guarantors is or may
be subject, and (d) no bond, debenture, note, indenture, mortgage,
deed of trust or other agreement or instrument to which the Company or
any of the Guarantors is a party or by which any of them or their
property is bound that, in the case of clauses (a), (b), (c) and (d)
above, would be required to be disclosed in the Offering Document had
it been a prospectus included in a registration statement on Form S-1
filed with the Commission under the Securities Act, and that is not so
disclosed.
(xii) The Offering Circular, as of its date, and each amendment
or supplement thereto, as of its date (except for the financial
statements and related notes, the financial statement schedules and
other financial data included therein or omitted therefrom, as to
which no opinion need be expressed), contains the type of information
specified in and required by Rule 144A(d)(4) under the Securities Act.
(xiii) When the Offered Securities are issued and delivered
pursuant to this Agreement, no Offered Security thereof will be of the
same class (within the meaning of Rule 144A under the Securities Act)
as securities of any Issuer that are listed on a national securities
exchange registered under Section 6 of the Exchange Act or that are
quoted in a United States automated inter-dealer quotation system.
(xiv) None of the Issuers is an "investment company" or a
company "controlled" by an "investment company" within the meaning of
the Investment Company Act.
(xv) To the best of such counsel's knowledge, no stop order
preventing the use of the Offering Document, or any amendment or
supplement thereto, or any order asserting that any of the
transactions contemplated by this Agreement are subject to the
registration requirements of the Securities Act, has been issued.
(xvi) The Department of State of the Commonwealth of
Pennsylvania has examined the Articles of Merger and determined that
the documents submitted for preclearance "appear to be correct," and
the Merger will be effective upon the filing of the Articles of Merger
with the Department of State of the Commonwealth of Pennsylvania.
(xvii) Such counsel shall also state that because the primary
purpose of such counsel's engagement was not to establish or confirm
factual matters or financial or accounting matters and because of the
wholly or partially non-legal character of many of the statements
contained in the Offering Document, such
21
counsel is not passing upon and does not assume any responsibility for
the accuracy, completeness or fairness of the statements contained in
the Offering Document and such counsel has not independently verified
the accuracy or completeness of such statements. Without limiting the
foregoing, such counsel assumes no responsibility for and such counsel
has not independently verified the accuracy, completeness or fairness
of the financial statements and any schedules and other financial data
included in the Offering Document and has not examined the accounting
or financial records from which such financial statements, schedules
(if any) and relevant financial data are derived. However, such
counsel participated in conferences with officers and other
representatives and legal counsel of the Company, representatives of
the independent public accountants of the Company and representatives
of the Initial Purchasers at which the contents of the Offering
Document were discussed. Based on such participation and review, and
relying as to materiality in part upon the statements of officers and
other representatives of the Company, no facts have come to such
counsel's attention that have caused such counsel to believe that the
Offering Document as of its date and at the Closing Date, contained an
untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, except that such counsel need not express any comment or
belief with respect to the financial statements or schedules, if any,
or any other financial information included in the Offering Document.
(e) The Initial Purchasers shall have received an opinion dated the
Closing Date, of Xxxxxxx Schwarze Xxxxxx & Xxxxx, P.C., trademark counsel
for the Company, that:
To the knowledge of such counsel and within the parameters of the
limited investigation such counsel has conducted, the Company and/or
its subsidiaries is the exclusive owner of, and has sole, full and
clear title to, the registrations for the Trademarks (as defined in
such opinion) currently registered in the United States Patent and
Trademark Office, as set forth on a schedule to such opinion, free and
clear of any encumbrances, liens or adverse claims of any kind, and
all of the registrations of said Trademarks are subsisting in the
records of the United States Patent and Trademark Office, and the
Company and/or its subsidiaries possess the right to employ such
Trademarks in their respective businesses as presently conducted.
(f) The Initial Purchasers shall have received an opinion dated the
Closing Date, of Xxxxxxxx & Xxxxxxxx & Crew, intellectual property counsel
for the Company, that:
(i) Attached as Exhibit A to such opinion is a list of patents
and patent applications such counsel has handled for the Company or
its subsidiaries. Attached as Exhibit B to such opinion is a
certificate of an officer of the Company that these are the patents
and patent applications which are material to the operations of the
Company and its subsidiaries. All of such patents are in full force
and effect, and all of such patent applications are currently pending.
Assignments to the Company have been prepared for each listed
application and patent, and have been recorded with the appropriate
patent office.
22
(ii) Such counsel is not aware, after due inquiry, of any notice
of infringement if any patent received by the Company or any of its
subsidiaries, except as set forth in such opinion.
(g) The Initial Purchasers shall have received an opinion dated the
Closing Date, of Dechert Price & Xxxxxx, special Pennsylvania counsel for
the Company, that:
(i) Merger Corp. is a corporation duly incorporated, validly
existing and in good standing under the laws of the Commonwealth of
Pennsylvania, and has all requisite corporate power and authority to
execute and deliver the Recapitalization Agreement and to perform its
obligations thereunder.
(ii) The execution, delivery and performance by Merger Corp. of
each of the Transaction Documents to which Merger Corp. is a party
(collectively, the "MergeCorp Transaction Documents"), and the
consummation of the transactions contemplated thereby, have been duly
authorized by all necessary corporate action on the part of Merger
Corp.
(iii) The MergeCorp Transaction Documents constitute the valid
and binding obligations of Merger Corp., enforceable against Merger
Corp. in accordance with their respective terms, except to the extent
limited by bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance and other similar laws, decisions or equitable
principles now or hereafter in effect relating to or affecting the
enforcement of creditors' rights or debtors' obligations generally,
and except that the remedy of specific performance or similar
equitable relief is available only at the discretion of the court
before which enforcement is sought.
(iv) To the knowledge of such counsel, Merger Corp. is not in
violation of any provision of its articles of incorporation or bylaws.
(v) Neither the execution, delivery or performance by Merger
Corp. of any of the MergeCorp Transaction Documents nor the
consummation by Merger Corp. of the transactions contemplated by the
MergeCorp Transaction Documents violates, conflicts with or
constitutes a breach of any of the terms or provisions of, or a
default under (or an event that with notice or the lapse of time, or
both, would constitute a default under), or requires consent under, or
results in the imposition of a lien or encumbrance on any properties
of Merger Corp., or an acceleration of any indebtedness of Merger
Corp. pursuant to (a) the articles of incorporation or bylaws of
Merger Corp., (b) any MergeCorp Transaction Documents or, to the
knowledge of such counsel, any bond, debenture, note, mortgage, deed
of trust or other agreement or instrument to which Merger Corp. is a
party or by which it or its property is bound, (c) any statute, rule
or regulation of the Commonwealth of Pennsylvania applicable to Merger
Corp. or any of its assets or properties or (d) to the knowledge of
such counsel, any judgment, order or decree of any court or
governmental agency or authority of the Commonwealth of Pennsylvania
having jurisdiction over Merger Corp. or any of its assets or
properties. Assuming compliance with applicable federal securities
laws and state securities and Blue Sky laws, as to which such counsel
is expressing no opinion, no consent, approval, authorization or order
of, or filing, registration, qualification, license of or with, (a)
any court or governmental agency, body or administrative agency or (b)
any other person is required for the execution, delivery and
performance by Merger Corp. of any of the MergeCorp Transaction
Documents, except for the filing
23
in the Department of State of the Commonwealth of Pennsylvania of duly
completed and executed articles of merger in accordance with Section
1927 of the Pennsylvania Business Corporation Law of 1988, as amended.
(vi) To the knowledge of such counsel, and in the cases of
clauses (a) and (b), based upon a docket search of the courts of the
Commonwealth of Pennsylvania, there is (a) no action, suit,
investigation or proceeding before or by any court, arbitrator or
governmental agency, body or official now pending in the Commonwealth
of Pennsylvania to which Merger Corp. is a party or to which the
business or property of Merger Corp. is subject, (b) no injunction,
restraining order or order of any nature by a state court to which
Merger Corp. is or may be subject or to which the business, assets, or
property of Merger Corp. is or may be subject, or (c) no bond,
debenture, note, mortgage, deed of trust or other agreement or
instrument to which Merger Corp. is a party or by which it or its
property is or may be bound, that, in the case of clauses (a), (b),
and (c) above, would be required to be disclosed in the Offering
Document had it been a prospectus included in a registration statement
on Form S-1 filed with the Commission under the Securities Act, and
that is not so disclosed.
(h) The Initial Purchasers shall have received an opinion dated the
Closing Date, of Xxxx & Leow, special Singapore counsel for the Company,
that:
Integrated Circuit Systems Pte Ltd ("PTE") is a private company
with limited liability duly incorporated in Singapore on 18 March 1997
and is validly existing in accordance with the laws of Singapore; and
all of the shares in the issued capital of PTE are owned by the
Company, and all such shares are validly issued and fully paid.
(i) The Initial Purchasers shall have received from Skadden, Arps,
Slate, Xxxxxxx & Xxxx LLP, counsel for the Initial Purchasers, such opinion
or opinions, dated the Closing Date, with respect to the validity of the
Offered Securities, the Offering Document, the exemption from registration
for the offer and sale of the Offered Securities by the Company to the
several Initial Purchasers and the resales by the several Initial
Purchasers as contemplated hereby and other related matters as Bear Xxxxxxx
may require, and the Company shall have furnished to such counsel such
documents as they request for the purpose of enabling them to pass upon
such matters with reference to same in the Offering Circular.
(j) The Initial Purchasers shall have received a certificate, dated
the Closing Date, of the President or any Vice President and a principal
financial or accounting officer of each of the Issuers in which such
officers shall state that the representations and warranties of such Issuer
in this Agreement are true and correct, that such Issuer has complied with
all agreements and satisfied all conditions on its part to be performed or
satisfied hereunder at or prior to the Closing Date, and that, subsequent
to the respective dates of the most recent financial statements in the
Offering Document, there has been no material adverse change, nor any
development or event involving a prospective material adverse change, in
the condition (financial or other), business, properties or results of
operations of the Company and its subsidiaries taken as a whole except as
set forth in or contemplated by the Offering Document or as described in
such certificate.
(k) The Initial Purchasers shall have received a letter, dated the
Closing Date, of KPMG LLP which meets the requirements of subsection (a) of
this Section, except that the specified date referred to in such subsection
will be a date not more than three days prior to the Closing Date for the
purposes of this subsection.
24
(l) The Company, the Guarantors and the Trustee shall have entered
into the Indenture and you shall have received counterparts, conformed as
executed, thereof.
(m) The Company and the Guarantors shall have entered into the
Registration Rights Agreement and you shall have received counterparts,
conformed as executed, thereof.
(n) The Offered Securities shall have been designated PORTAL
securities in accordance with the rules and regulations adopted by the
NASD relating to trading in the PORTAL market.
(o) On or prior to the Closing Date, (i)(a) the Issuers shall have
entered into the Bank Agreements and all conditions precedent to the
effectiveness thereof shall have been satisfied or waived and (b) each of
the Transactions shall have been consummated; (ii) such transactions
described in the foregoing clause (i) shall continue to be in full force
and effect in accordance with the terms thereof; and (iii) the Company
shall have provided to each of the Initial Purchasers and counsel to the
Initial Purchasers copies of all Transaction Documents delivered to the
parties relating to the Transactions (including but not limited to legal
opinions relating thereto).
(p) The Initial Purchasers shall have been furnished with a copy of
the opinions delivered on behalf of Issuers in connection with the
Transactions, which opinions shall expressly state that the Initial
Purchasers are justified in relying upon the opinions therein.
(q) The Initial Purchasers shall have received a letter from Xxxxxx,
Xxxxxx & Co., Inc. permitting the Initial Purchasers to rely on the opinion
letter rendered by Xxxxxx, Xxxxxx & Co., Inc. to the Company's Board of
Directors in form and substance reasonably satisfactory to the Initial
Purchasers to the effect that the Transactions will not render any of the
Issuers insolvent, leave any of the Issuers with inadequate or unreasonably
small capital, or result in any of the Issuers incurring indebtedness
beyond their ability to repay as such indebtedness matures.
The Company will furnish the Initial Purchasers with such conformed copies
of such opinions, certificates, letters and documents as the Initial Purchasers
reasonably request. Bear Xxxxxxx may in its sole discretion waive on behalf of
the Initial Purchasers compliance with any conditions to the obligations of the
Initial Purchasers hereunder.
7. Indemnification and Contribution. (a) Each of the Issuers, jointly and
severally, will indemnify and hold harmless each Initial Purchaser, its
partners, directors and officers and each person, if any, who controls such
Initial Purchaser within the meaning of Section 15 of the Securities Act,
against any losses, claims, damages or liabilities, joint or several, to which
such Initial Purchaser may become subject, under the Securities Act or the
Exchange Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
the Offering Document, or any amendment or supplement thereto, or any related
preliminary offering circular or the Exchange Act Reports, or arise out of or
are based upon the omission or alleged omission to state therein a material fact
required to be stated therein necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not misleading,
including any losses, claims, damages or liabilities arising out of or based
upon the Company's failure to perform its obligations under Section 5(a) of this
Agreement, and will reimburse each Initial Purchaser for any legal or other
expenses reasonably incurred by such Initial Purchaser in connection with
investigating or defending any such loss, claim, damage, liability or action as
such expenses are incurred; provided, however, (i) that the Company will not be
liable in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue
25
statement or alleged untrue statement in or omission or alleged omission from
any of such documents in reliance upon and in conformity with written
information furnished to the Company by any Initial Purchaser through Bear
Xxxxxxx specifically for use therein, it being understood and agreed that the
only such information consists of the information described as such in
subsection (b) below and (ii) that the Issuers shall not be liable to any such
Initial Purchaser with respect to any untrue statement or alleged untrue
statement or omission or alleged omission in the Preliminary Offering Circular
to the extent that any such loss, liability, claim, damage or expense of such
Initial Purchaser results from the fact that such Initial Purchaser sold Notes
to a person to whom there was not sent or given, at or prior to the written
confirmation of such sale, a copy of the Offering Circular as then amended or
supplemented if the Company had previously furnished copies thereof to such
Initial Purchaser and the loss, liability, claim, damage or expense of such
Initial Purchaser results from an untrue statement or omission of a material
fact contained in the Preliminary Offering Circular which was corrected in the
Offering Circular.
(b) Each Initial Purchaser will severally and not jointly indemnify
and hold harmless each of the Issuers, their respective directors and officers
and each person, if any, who controls any of the Issuers within the meaning of
Section 15 of the Securities Act, against any losses, claims, damages or
liabilities to which such Issuers may become subject, under the Securities Act
or the Exchange Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
the Offering Document, or any amendment or supplement thereto, or any related
preliminary offering circular, or arise out of or are based upon the omission or
the alleged omission to state therein a material fact required to be stated
therein necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon and in
conformity with written information furnished to the Company by such Initial
Purchaser through Bear Xxxxxxx specifically for use therein, and will reimburse
each Issuer for any legal or other expenses reasonably incurred by the Issuers
in connection with investigating or defending any such loss, claim, damage,
liability or action as such expenses are incurred, it being understood and
agreed that the only such information furnished by any Initial Purchaser
consists of (i) the following information in the Offering Document furnished on
behalf of each Initial Purchaser: under the caption "Plan of Distribution", the
first, third, fifth, and eight paragraphs and (ii) the following information in
the Offering Document furnished on behalf of Bear Xxxxxxx and Credit Suisse
First Boston Corporation:
"The initial purchasers and their respective affiliates have performed and
expect to continue to perform financial advisory and investment and
commercial banking services for the Equity Investors and ICS for which they
have received and will receive customary compensation. Credit Suisse First
Boston, an affiliate of Credit Suisse First Boston Corporation, is a lender
and the administrative agent under the senior credit facility. An affiliate
of Bear, Xxxxxxx and Co. Inc. is one of the Equity Investors.";
provided, however, that the Initial Purchasers shall not be liable for any
losses, claims, damages or liabilities arising out of or based upon the
Company's failure to perform its obligations under Section 5(a) of this
Agreement.
(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 each party against whom
indemnification is to be sought in writing of the commencement thereof (but the
failure so to notify an indemnifying party shall not relieve it from any
liability which it may have under this Section except to the extent that it has
been prejudiced in any material respect by such failure or from any liability
which it may otherwise have). In case any such action is brought against any
indemnified party, and it notifies
26
an indemnifying party of the commencement thereof, the indemnifying party will
be entitled to participate therein, and to the extent it may elect by written
notice delivered to the indemnified party promptly after receiving the aforesaid
notice from such indemnified party, to assume the defense thereof with counsel
reasonably satisfactory to such indemnified party. Notwithstanding the
foregoing, the indemnified party or parties shall have the right to employ its
or their own counsel in any such case, but the fees and expenses of such counsel
shall be at the expense of such indemnified party or parties unless (i) the
employment of such counsel shall have been authorized in writing by the
indemnifying parties in connection with the defense of such action, (ii) the
indemnifying parties shall not have employed counsel to take charge of the
defense of such action within a reasonable time after notice of commencement of
the action, or (iii) such indemnified party or parties shall have reasonably
concluded that there may be defenses available to it or them which are different
from or additional to those available to one or all of the indemnifying parties
(in which case the indemnifying party or parties shall not have the right to
direct the defense of such action on behalf of the indemnified party or
parties), in any of which events such fees and expenses of counsel shall be
borne by the indemnifying parties; provided, however, that the indemnifying
party under subsection (a) or (b) above shall only be liable for the legal
expenses of one counsel (in addition to any local counsel) for all indemnified
parties in each jurisdiction in which any claim or action is brought. No
indemnifying party shall, without prior written consent of the indemnified
party, effect any settlement of any pending or threatened action in respect of
which any indemnified party is or could have been a party and indemnity could
have been sought hereunder by such indemnified party unless such settlement
includes an unconditional release of such indemnified party from all liability
on any claims that are the subject matter of such action and does not include a
statement as to and an admission of fault, culpability or failure to act by or
on behalf of any indemnified party. Anything in this subsection to the contrary
notwithstanding, an indemnifying party shall not be liable for any settlement of
any claim or action effected without its prior written consent, provided that
such consent was not unreasonably withheld, and that if at any time an
indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, such indemnifying party
agrees it shall be liable for any settlement effected without its written
consent if (i) such settlement is entered into more than 45 days after receipt
by such indemnifying party of the aforesaid request, (ii) such indemnifying
party shall have received notice of the terms of such settlement at least 30
days prior to such settlement being entered into and (iii) such indemnifying
party shall not have reimbursed such indemnified party in accordance with such
request prior to the date of such settlement.
(d) If the indemnification provided for in this Section is
unavailable or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of the losses,
claims, damages or liabilities referred to in subsection (a) or (b) above (i) in
such proportion as is appropriate to reflect the relative benefits received by
the Issuers on the one hand and the Initial Purchasers on the other from the
offering of the Offered Securities or (ii) if the allocation provided by clause
(i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Issuers on the one hand and the Initial
Purchasers on the other in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities as well as any other
relevant equitable considerations. The relative benefits received by the Issuers
on the one hand and the Initial 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 Issuers bear to the total discounts and
commissions received by the Initial Purchasers from the Issuers under this
Agreement. 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 Issuers or the Initial Purchasers and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such untrue statement or omission. The amount paid by an indemnified party as a
result of the losses, claims, damages or liabilities referred to in the first
sentence of this subsection (d) shall be deemed to include any legal
27
or other expenses reasonably incurred by such indemnified party in connection
with investigating or defending any action or claim which is the subject of this
subsection (d). Notwithstanding the provisions of this subsection (d), no
Initial Purchaser shall be required to contribute any amount in excess of the
amount by which the total price at which the Offered Securities purchased by it
where resold exceeds the amount of any damages which such Initial Purchaser has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. The Initial Purchasers' obligations
in this subsection (d) to contribute are several in proportion to their
respective purchase obligations and not joint.
(e) The obligations of the Issuers under this Section shall be in
addition to any liability which the Issuers may otherwise have and shall extend,
upon the same terms and conditions, to each person, if any, who controls any
Initial Purchaser within the meaning of the Securities Act or the Exchange Act;
and the obligations of the Initial Purchasers under this Section shall be in
addition to any liability which the respective Initial Purchasers may otherwise
have and shall extend, upon the same terms and conditions, to each person, if
any, who controls the Issuers within the meaning of the Securities Act or the
Exchange Act.
8. Default of Initial Purchasers. If either of the Initial Purchasers
defaults in its obligation to purchase Offered Securities hereunder and the
aggregate principal amount of Offered Securities that such defaulting Initial
Purchaser agreed but failed to purchase does not exceed 10% of the total
principal amount of Offered Securities, Bear Xxxxxxx may make arrangements
satisfactory to the Company for the purchase of such Offered Securities by other
persons, including the other Initial Purchaser, but if no such arrangements are
made by the Closing Date, the non-defaulting Initial Purchaser shall be
obligated to purchase the Offered Securities that such defaulting Initial
Purchaser agreed but failed to purchase. If one Initial Purchaser so defaults
and the aggregate principal amount of Offered Securities with respect to which
such default occurs exceeds 10% of the total principal amount of Offered
Securities and arrangements satisfactory to Bear Xxxxxxx and the Company for the
purchase of such Offered Securities by other persons are not made within 36
hours after such default, this Agreement will terminate without liability on the
part of the non-defaulting Initial Purchaser or the Company, except as provided
in Section 9. As used in this Agreement, the term "Initial Purchaser" includes
any person substituted for an Initial Purchaser under this Section. Nothing
herein will relieve the defaulting Initial Purchaser from liability for its
default.
9. Survival of Certain Representations and Obligations. The respective
indemnities, agreements, representations, warranties and other statements of
each of the Issuers or its officers and of the several Initial Purchasers set
forth in or made pursuant to this Agreement will remain in full force and
effect, regardless of any investigation, or statement as to the results thereof,
made by or on behalf of any Initial Purchaser, the Issuers or any of their
respective representatives, officers or directors or any controlling person, and
will survive delivery of and payment for the Offered Securities. If this
Agreement is terminated pursuant to Sections 8 or 10, or if for any reason the
purchase of the Offered Securities by the Initial Purchasers is not consummated,
the Issuers shall remain responsible for the expenses to be paid or reimbursed
by them pursuant to Section 5 and the respective obligations of the Issuers and
the Initial Purchasers pursuant to Section 7 shall remain in effect; if any
Offered Securities have been purchased hereunder, the Issuers shall remain
responsible for the expenses to be paid or reimbursed by them pursuant to
Section 5 and the respective obligations of the Issuers and the Purchasers
pursuant to Section 7 shall remain in effect, and the representations and
warranties in Section 2 and all other obligations under Section 5 shall also
remain in effect. If the purchase of the Offered Securities by the Initial
Purchasers is not consummated for any reason other than solely because of the
termination of this Agreement pursuant to Section 8 or the occurrence of any
event specified in Section 6(b)(ii) (whether pursuant to Section 10 or
otherwise), the Company will reimburse the Initial Purchasers for all out-of-
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pocket expenses (including fees and disbursements of counsel) reasonably
incurred by them in connection with the offering of the Offered Securities.
10. Termination. The Initial Purchasers shall have the right to terminate
this Agreement at any time prior to the Closing Date by notice to the Company
from the Initial Purchasers, without liability (other than with respect to
Section 7) on the Initial Purchasers' part to the Issuers if, on or prior to
such date, upon the occurrence of any of the events set forth in Section 6(b).
11. Notices. All communications hereunder will be in writing and, if sent
to the Initial Purchasers will be mailed, delivered or telegraphed and confirmed
to the Initial Purchasers, c/o Bear Xxxxxxx & Co. Inc., 000 Xxxx Xxxxxx, Xxx
Xxxx, X.X. 00000, Attention: Corporate Finance Department, or, if sent to the
Company, will be mailed, delivered or telegraphed and confirmed to it at
Integrated Circuit Systems, Inc., 0000 Xxxxxxxxx xx xxx Xxxxxxxx, Xxxxxx Xxxxx,
XX 00000: Attention: Chief Financial Officer, with a copy to Xxxxxx Xxxxxxxx
LLP, 0000 Xxx Xxxxx Xxxxxx, Xxxxxxxxxxxx, XX 00000: Attention: Xxxxxx Xxxxxxx,
Esq.; provided, however, that any notice to an Initial Purchaser pursuant to
Section 7 will be mailed, delivered or telegraphed and confirmed to such Initial
Purchaser.
12. Successors. This Agreement will inure to the benefit of and be binding
upon the parties hereto and their respective successors and the controlling
persons referred to in Section 7, and no other person will have any right or
obligation hereunder, except that holders of Offered Securities shall be
entitled to enforce the agreements for their benefit contained in the second and
third sentences of Section 5(b) hereof against the Company as if such holders
were parties thereto.
13. Representation of Initial Purchasers. You will act for the several
Initial Purchasers in connection with the transactions contemplated by this
Agreement, and any action under this Agreement taken by you jointly or by Bear
Xxxxxxx on behalf of the Initial Purchasers will be binding upon all the Initial
Purchasers.
14. Counterparts. This Agreement may be executed 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 Agreement. Delivery by
telecopy or facsimile transmission of an executed counterpart of this Agreement
shall be considered due and sufficient delivery.
15. Applicable Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York.
EACH OF THE ISSUERS HEREBY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF THE
FEDERAL AND STATE COURTS IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK IN
ANY SUIT OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
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If the foregoing is in accordance with the Initial Purchasers'
understanding of our agreement, kindly sign and return to us one of the
counterparts hereof, whereupon it will become a binding agreement between the
Issuers and the Initial Purchasers in accordance with its terms.
Very truly yours,
INTEGRATED CIRCUIT SYSTEMS, INC.
by: /s/ Xxxxxx X. Xxxxxxx
--------------------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Chairman of the Board
ICS TECHNOLOGIES, INC.
by: /s/ Xxxx X. Xxx
---------------------------------------------------
Name: Xxxx X. Xxx
Title: President
ICST INC.
by: /s/ Xxxxx X. Xxxxxx
--------------------------------------------------
Name: Xxxxx X. Xxxxxx
Title: President
MICROCLOCK, INC.
by: /s/ Xxxxx X. Xxxxxx
--------------------------------------------------
Name: Xxxxx X. Xxxxxx
Title: President
30
The foregoing Purchase Agreement
is hereby confirmed and accepted
as of the date first above written.
Bear, Xxxxxxx & Co. Inc.
Credit Suisse First Boston Corporation
By: Bear, Xxxxxxx & Co. Inc.
/s/ illegible signature
---------------------------
Name:
Title:
By: Credit Suisse First Boston Corporation
/s/ illegible signature
---------------------------
Name:
Title:
31
SCHEDULE A
Principal Amount of
Initial Purchasers Offered Securities
------------------ -------------------
Bear, Xxxxxxx & Co. Inc.................. $ 50,000,000
Credit Suisse First Boston Corporation... $ 50,000,000
------------
Total..................... $100,000,000
============
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