EXHIBIT 1.1
X.X. XXXXXX SECURITIES INC.
CATAPULT COMMUNICATIONS CORPORATION
1,581,250 Shares of Common Stock
Underwriting Agreement
September 15, 2004
X.X.Xxxxxx Securities Inc.
As Representative of the
several Underwriters listed
in Schedule 1 hereto
c/o X.X. Xxxxxx Securities Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Catapult Communications Corporation, a Nevada corporation (the "COMPANY"),
proposes to issue and sell to the several Underwriters listed in Schedule 1
hereto (the "UNDERWRITERS"), for whom you are acting as representative (the
"REPRESENTATIVE"), an aggregate of 200,000 shares of Common Stock, par value
$0.001 per share (the "COMMON STOCK"), of the Company (the "PRIMARY SHARES") and
the stockholders of the Company named in Schedule 2 hereto (the "SELLING
STOCKHOLDERS") propose to sell to the Underwriters an aggregate of 1,381,250
shares of Common Stock (the "SECONDARY SHARES"). The aggregate of the Primary
Shares and the Secondary Shares is herein referred to as the "UNDERWRITTEN
SHARES". Two of the Selling Stockholders, Xx. Xxxxxxx X. Xxxx and Xx. Xxxxx X.
Xxxx (the "PRINCIPAL SELLING STOCKHOLDERS"), also propose to issue and sell, at
the option of the Underwriters, up to an aggregate of an additional 237,187
shares of Common Stock (the "OPTION SHARES"). The Underwritten Shares and the
Option Shares are herein referred to as the "SHARES."
The Company hereby confirms its agreement with the several Underwriters
concerning the purchase and sale of the Primary Shares, and the Selling
Stockholders hereby confirm their agreement with the several Underwriters
concerning the purchase and sale of the Secondary Shares and the Option Shares,
as follows:
1. Registration Statement. The Company has prepared and filed with the
Securities and Exchange Commission (the "COMMISSION") under the Securities Act
of 1933, as amended,
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and the rules and regulations of the Commission thereunder (collectively, the
"SECURITIES ACT"), a registration statement (File No. 333-112610), including a
prospectus relating to the Shares (the "BASIC PROSPECTUS"). Such registration
statement, as amended as of the date of this Agreement and as amended by any
post-effective amendment thereto that becomes effective prior to the Closing
Date (as defined in Section 2(b) hereof), is referred to herein as the
"REGISTRATION STATEMENT." As used herein, the term "PRELIMINARY PROSPECTUS"
means any preliminary prospectus supplement to the Basic Prospectus relating to
the Shares, together with the Basic Prospectus, and the term "FINAL PROSPECTUS"
means the final prospectus supplement to the Basic Prospectus relating to the
Shares in the form first used to confirm sales of the Shares, together with the
Basic Prospectus. If the Company has filed an abbreviated registration statement
pursuant to Rule 462(b) under the Securities Act (the "RULE 462 REGISTRATION
STATEMENT"), then any reference herein to the term "Registration Statement"
shall be deemed to include such Rule 462 Registration Statement. Any reference
in this Agreement to the Registration Statement, any Preliminary Prospectus or
the Final Prospectus shall be deemed to refer to and include the documents
incorporated by reference therein pursuant to Item 12 of Form S-3 under the
Securities Act, as of the effective date of the Registration Statement or the
date of such Preliminary Prospectus or the Final Prospectus, as the case may be,
and any reference to "amend," "amendment" or "supplement" with respect to the
Registration Statement, any Preliminary Prospectus or the Final Prospectus shall
be deemed to refer to and include any documents filed after such date under the
Securities Exchange Act of 1934, as amended, and the rules and regulations of
the Commission thereunder (collectively, the "EXCHANGE ACT") that are deemed to
be incorporated by reference therein. Capitalized terms used but not defined
herein shall have the meanings given to such terms in the Registration Statement
and the Final Prospectus.
2. Purchase of the Shares by the Underwriters. (a) The Company, as to
200,000 of the Underwritten Shares, and each of the Selling Stockholders, as and
to the extent indicated in Schedule 2 hereto, agree, severally and not jointly,
to sell the Underwritten Shares to the several Underwriters as provided in this
Agreement, and each Underwriter, on the basis of the representations, warranties
and agreements set forth herein and subject to the conditions set forth herein,
agrees, severally and not jointly, to purchase from the Company and each of the
Selling Stockholders at a purchase price per share of $ 18.0215 (the "PURCHASE
PRICE") the number of Underwritten Shares (to be adjusted by you so as to
eliminate fractional shares) determined by multiplying the aggregate number of
Underwritten Shares to be sold by the Company and each of the Selling
Stockholders as set forth opposite their respective names in Schedule 2 hereto
by a fraction, the numerator of which is the aggregate number of Underwritten
Shares to be purchased by such Underwriter as set forth opposite the name of
such Underwriter in Schedule 1 hereto and the denominator of which is the
aggregate number of Underwritten Shares to be purchased by all the Underwriters
from the Company and all the Selling Stockholders hereunder.
In addition, each of the Principal Selling Stockholders, as and to
the extent indicated in Schedule 2 hereto, agrees, severally and not jointly to
sell the Option Shares to the several Underwriters and the Underwriters shall
have the option to purchase at their election up to 237,187 Option Shares at the
Purchase Price solely for the purpose of covering over-allotments in connection
with the sale of the Underwritten Shares. The Underwriters, on the
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basis of the representations and warranties herein contained, but subject to the
conditions hereinafter stated, shall have the option to purchase, severally and
not jointly, from each of the Principal Selling Stockholders at the Purchase
Price that portion of the number of Option Shares to be contributed by such
Principal Selling Stockholder in respect of the total number of Option Shares as
to which such election shall have been exercised (to be adjusted by you so as to
eliminate fractional shares) determined by multiplying such number of Option
Shares to be contributed by a fraction, the numerator of which is the maximum
number of Underwritten Shares to be purchased by such Underwriter as set forth
opposite the name of such Underwriter in Schedule 1 hereto and the denominator
of which is the maximum number of Underwritten Shares which all of the
Underwriters are entitled to purchase hereunder. The number of Option Shares
contributed by each Principal Selling Stockholder shall be determined by
multiplying the aggregate number of Option Shares to be purchased by a fraction,
the numerator of which is the number of Option Shares as set forth opposite the
name of such Principal Selling Stockholder in Schedule 2 hereto and the
denominator of which is the total number of Option Shares available as set forth
in Schedule 2 hereto.
The Underwriters may exercise the option to purchase the Option
Shares at any time and from time to time on or before the thirtieth day
following the date of this Agreement, by written notice from the Representative
to the Company and each of the Principal Selling Stockholders. Such notice shall
set forth the aggregate number of Option Shares as to which the option is being
exercised and the date and time when the Option Shares are to be delivered and
paid for which may be the same date and time as the Closing Date but shall not
be earlier than the Closing Date nor later than the tenth full business day
after the date of such notice (unless such time and date are postponed in
accordance with the provisions of Section 10 hereof). Any such notice shall be
given at least two business days prior to the date and time of delivery
specified therein.
(b) The Company and the Selling Stockholders understand that the
Underwriters intend to make a public offering of the Shares as soon after the
effectiveness of this Agreement as in the judgment of the Representative is
advisable, and initially to offer the Shares on the terms set forth in the Final
Prospectus. The Company and the Selling Stockholders acknowledge and agree that
the Underwriters may offer and sell Shares to or through any affiliate of an
Underwriter and that any such affiliate may offer and sell Shares purchased by
it to or through any Underwriter.
Payment for the Underwritten Shares shall be made by wire transfer in
immediately available funds to the respective accounts specified to the
Representative by the Company with respect to the Primary Shares and by the
Selling Stockholders, or any of them, with respect to the Secondary Shares at
the offices of Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, 000 Xxxx Xxxx Xxxx, Xxxx Xxxx,
Xxxxxxxxxx 00000, at 7:00 A.M. San Francisco time on September 21, 2004, or at
such other time or place on the same or such other date, not later than the
fifth business day thereafter, as the Representative and the Company may agree
upon in writing or, in the case of the Option Shares, on the date and at the
time and place specified by the Representative in the written notice of the
Underwriters' election to purchase Option Shares. The time and date of such
payment for the Underwritten Shares are referred to herein as the "CLOSING DATE"
and the time and date for
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such payment for the Option Shares, if other than the Closing Date, are herein
referred to as the "ADDITIONAL CLOSING DATE."
Payment for the Shares to be purchased on the Closing Date or the
Additional Closing Date, as the case may be, shall be made against delivery to
the Representative for the respective accounts of the several Underwriters of
the Shares to be purchased on such date in definitive form (or, if requested by
the Underwriters, by book entry delivery through the Depository Trust Company
("DTC")) registered in such names and in such denominations as the
Representative shall request in writing not later than two full business days
prior to the Closing Date or the Additional Closing Date, as the case may be,
with any transfer taxes payable in connection with the sale of the Shares duly
paid by the Company or the Selling Stockholders, as the case may be. The
certificates for the Shares, unless delivered by book-entry through the
facilities of DTC, will be made available for inspection by the Representative
at the office of X.X. Xxxxxx Securities Inc. set forth above not later than 1:00
P.M., New York City time, on the business day prior to the Closing Date or the
Additional Closing Date, as the case may be.
3. Representations and Warranties of the Company. The Company represents
and warrants to each Underwriter and the Selling Stockholders that:
(a) Preliminary Prospectus. No order preventing or suspending the use of
any Preliminary Prospectus has been issued by the Commission, and, other than
the omission of pricing related information, each Preliminary Prospectus, at the
time of filing thereof, complied in all material respects with the Securities
Act and did not contain any untrue statement of a material fact or omit to state
a 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; provided that the Company makes no representation and
warranty with respect to any statements or omissions made in reliance upon and
in conformity with information relating to any Underwriter furnished to the
Company in writing by such Underwriter through the Representative expressly for
use in any Preliminary Prospectus.
(b) Registration Statement and Final Prospectus. No order suspending the
effectiveness of the Registration Statement has been issued by the Commission
and no proceeding for that purpose has been initiated or threatened by the
Commission; as of the applicable effective date of the Registration Statement
and any amendment thereto, the Registration Statement complied and will comply
in all material respects with the Securities Act, and did not and will not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein not misleading; and as of the applicable filing date of the Final
Prospectus and any amendment or supplement thereto and as of the Closing Date
and as of the Additional Closing Date, as the case may be, the Final Prospectus
will not contain any untrue statement of a material fact or omit to state a
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; provided that the Company makes no representation and
warranty with respect to any statements or omissions made in reliance upon and
in conformity with information relating to any Underwriter furnished to the
Company in writing by such Underwriter through the Representative expressly
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for use in the Registration Statement and the Final Prospectus and any amendment
or supplement thereto.
(c) Incorporated Documents. The documents incorporated by reference in the
Final Prospectus, when they became effective or were filed with the Commission,
as the case may be, conformed in all material respects to the requirements of
the Exchange Act, and none of such documents contained any 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 the light of the circumstances
under which they were made, not misleading; and any further documents so filed
and incorporated by reference in the Final Prospectus, when such documents
become effective or are filed with the Commission, as the case may be, will
conform in all material respects to the requirements of the Exchange Act and
will not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
(d) Financial Statements. The financial statements and the related notes
thereto included or incorporated by reference in the Registration Statement and
the Final Prospectus comply in all material respects with the applicable
requirements of the Securities Act and the Exchange Act, as applicable, and
present fairly the financial position of the Company and its subsidiaries on a
consolidated basis as of the dates indicated and the results of their operations
and the changes in their cash flows on a consolidated basis for the periods
specified; such financial statements have been prepared in conformity with
generally accepted accounting principles applied on a consistent basis
throughout the periods covered thereby, and the supporting schedules included or
incorporated by reference in the Registration Statement present fairly the
information required to be stated therein; and the other financial information
included or incorporated by reference in the Registration Statement and the
Final Prospectus has been derived from the accounting records of the Company and
its subsidiaries and presents fairly the information shown thereby.
(e) No Material Adverse Change. Since the date of the most recent
financial statements of the Company included or incorporated by reference in the
Registration Statement and the Final Prospectus, (i) there has not been any
change in the capital stock or long-term debt of the Company or any of its
subsidiaries, or any dividend or distribution of any kind declared, set aside
for payment, paid or made by the Company on any class of capital stock, or any
material adverse change, or any development involving a prospective material
adverse change, in or affecting the business, properties, management, financial
position, stockholders' equity, results of operations or prospects of the
Company and its subsidiaries, taken as a whole; (ii) neither the Company nor any
of its subsidiaries has entered into any transaction or agreement that is
material to the Company and its subsidiaries taken as a whole or incurred any
liability or obligation, direct or contingent, that is material to the Company
and its subsidiaries taken as a whole; and (iii) neither the Company nor any of
its subsidiaries has sustained any material loss or interference with its
business from fire, explosion, flood or other calamity, whether or not covered
by insurance, or from any labor disturbance or dispute or any action, order or
decree of any court or arbitrator or governmental or regulatory authority,
except in each of (i), (ii) or (iii) as otherwise disclosed or contemplated in
the Registration Statement and the Final Prospectus.
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(f) Organization and Good Standing. The Company and each of its
subsidiaries have been duly organized and are validly existing and in good
standing under the laws of their respective jurisdictions of organization, are
duly qualified to do business and are in good standing in each jurisdiction in
which their respective ownership or lease of property or the conduct of their
respective businesses requires such qualification, and have all power and
authority necessary to own or hold their respective properties and to conduct
the businesses in which they are engaged, except where the failure to be so
qualified or have such power or authority would not, individually or in the
aggregate, have a material adverse effect on the business, properties,
management, financial position, stockholders' equity, results of operations or
prospects of the Company and its subsidiaries, taken as a whole ("MATERIAL
ADVERSE EFFECT"). The Company has no "significant subsidiary" other than the
subsidiaries listed in Schedule 3 to this Agreement.
(g) Capitalization. The Company has an authorized capitalization as set
forth in the Final Prospectus under the heading "Capitalization"; all the
outstanding shares of capital stock of the Company have been duly and validly
authorized and issued and are fully paid and non-assessable and are not subject
to any pre-emptive or similar rights; except as described in or expressly
contemplated by the Final Prospectus, there are no outstanding rights
(including, without limitation, pre-emptive rights), warrants or options to
acquire, or instruments convertible into or exchangeable for, any shares of
capital stock or other equity interest in the Company or any of its
subsidiaries, or any contract, commitment, agreement, understanding or
arrangement of any kind relating to the issuance of any capital stock of the
Company or any such subsidiary, any such convertible or exchangeable securities
or any such rights, warrants or options; the capital stock of the Company
conforms in all material respects to the description thereof contained in the
Registration Statement and the Final Prospectus; and all the outstanding shares
of capital stock or other equity interests of each subsidiary of the Company
have been duly and validly authorized and issued, are fully paid and
non-assessable and are owned directly or indirectly by the Company, free and
clear of any lien, charge, encumbrance, security interest, restriction on voting
or transfer or any other claim of any third party.
(h) Due Authorization. The Company has full right, power and authority to
execute and deliver this Agreement and to perform its obligations hereunder; and
all corporate action required to be taken for the due and proper authorization,
execution and delivery by it of this Agreement and the consummation by it of the
transactions contemplated hereby has been duly and validly taken.
(i) Underwriting Agreement. This Agreement has been duly authorized,
executed and delivered by the Company.
(j) The Shares. The Shares to be issued and sold by the Company hereunder
have been duly authorized by the Company and, when issued and delivered and paid
for as provided herein, will be duly and validly issued and will be fully paid
and nonassessable and will conform to the descriptions thereof in the Final
Prospectus; and the issuance of the Shares is not subject to any preemptive or
similar rights.
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(k) No Violation or Default. Neither the Company nor any of its
subsidiaries is (i) in violation of its charter or by-laws or similar
organizational documents in any material respect; (ii) in default, and no event
has occurred that, with notice or lapse of time or both, would constitute such a
default, in the due performance or observance of any term, covenant or condition
contained in any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which the Company or any of its subsidiaries is a
party or by which the Company or any of its subsidiaries is bound or to which
any of the property or assets of the Company or any of its subsidiaries is
subject; or (iii) in violation of any law or statute or any judgment, order,
rule or regulation of any court or arbitrator or governmental or regulatory
authority, except, in the case of clauses (ii) and (iii) above, for any such
default or violation that would not, individually or in the aggregate, have a
Material Adverse Effect.
(l) No Conflicts. The execution, delivery and performance by the Company
of this Agreement, the issuance and sale of the Shares to be sold by the Company
hereunder, the issuance by the Company of the Shares to be issued upon the
conversion of the convertible promissory notes issued by Catapult Communications
International Limited, an Irish registered limited liability company (the
"SUBSIDIARY"), to Tekelec (the "NOTES") and the consummation by the Company of
the transactions contemplated by this Agreement will not (i) result in a breach
or violation of any of the terms or provisions of, or constitute a default
under, or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company or any of its
subsidiaries pursuant to, any indenture, mortgage, deed of trust, loan agreement
or other agreement or instrument to which the Company or any of its subsidiaries
is a party or by which the Company or any of its subsidiaries is bound or to
which any of the property or assets of the Company or any of its subsidiaries is
subject, (ii) result in any violation of the provisions of the charter or
by-laws or similar organizational documents of the Company or any of its
subsidiaries or (iii) result in the violation of any law or statute or any
judgment, order, rule or regulation of any court or arbitrator or governmental
or regulatory authority having jurisdiction over the Company, except, in the
case of clauses (i) and (iii), for such breaches, violations or defaults that
would not have a Material Adverse Effect.
(m) No Consents Required. No consent, approval, authorization, order,
registration or qualification of or with any court or arbitrator or governmental
or regulatory authority is required for the execution, delivery and performance
by the Company of this Agreement, the issuance and sale of the Shares to be sold
by the Company hereunder, the issuance by the Company of the Shares to be issued
upon the conversion of the Notes and the consummation by the Company of the
transactions contemplated hereby, except for the registration of the Shares
under the Securities Act, the filing of a Notice of Listing of Additional Shares
with the NASDAQ Stock Market and such consents, approvals, authorizations,
orders and registrations or qualifications as may be required under applicable
state securities laws in connection with the purchase and distribution of the
Shares by the Underwriters.
(n) Legal Proceedings. Except as described in the Final Prospectus, there
are no legal, governmental or regulatory investigations, actions, suits or
proceedings pending to which the Company or any of its subsidiaries is or may be
a party or to which any property of the Company or any of its subsidiaries is or
may be the subject that, individually or in the aggregate,
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could reasonably be expected to have a Material Adverse Effect or materially and
adversely affect the ability of the Company to perform its obligations
hereunder; no such investigations, actions, suits or proceedings are threatened
or, to the best knowledge of the Company, contemplated by any governmental or
regulatory authority or threatened by others and (x) there are no current or
pending legal, governmental or regulatory actions, suits or proceedings that are
required under the Securities Act to be described in the Final Prospectus that
are not so described and (y) there are no material statutes, regulations or
contracts or other documents that are required under the Securities Act to be
filed as exhibits to the Registration Statement or described in the Registration
Statement or the Final Prospectus that are not so filed or described in all
material respects.
(o) Independent Accountants. PricewaterhouseCoopers LLP, who have
certified certain financial statements of the Company and its subsidiaries, are
independent public accountants with respect to the Company and its subsidiaries
as required by the Securities Act.
(p) Title to Intellectual Property. The Company and its subsidiaries own,
possess or can acquire on reasonable terms adequate rights to use all material
patents, patent applications, trademarks, service marks, trade names, trademark
registrations, service xxxx registrations, copyrights, licenses and know-how
(including trade secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures) necessary for the conduct of
their respective businesses except where the failure to own, possess or acquire
such rights would not reasonably be expected to have a Material Adverse Effect;
and, to the knowledge of the Company, the conduct of their respective businesses
will not conflict in any material respect with any such rights of others, and
the Company and its subsidiaries have not received any written notice of any
claim of infringement or conflict with any such rights of others.
(q) No Undisclosed Relationships. 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, that is required by the Securities Act
to be described in the Registration Statement and the Final Prospectus and that
is not so described.
(r) Investment Company Act. The Company is not and, after giving effect to
the offering and sale of the Shares and the application of the proceeds thereof
as described in the Final Prospectus, will not be required to register as an
"investment company" or an entity "controlled" by an "investment company" within
the meaning of the Investment Company Act of 1940, as amended, and the rules and
regulations of the Commission thereunder (collectively, "INVESTMENT COMPANY
ACT").
(s) Taxes. The Company and its subsidiaries have paid all federal, state,
local and foreign taxes and filed all tax returns required to be paid or filed
through the date hereof, or requested an extension thereof and paid all taxes
due thereon, except for taxes being contested in good faith or taxes or returns
the failure of which to pay or file, as the case may be, would not reasonably be
expected to have a Material Adverse Effect; and except as otherwise disclosed in
the Final Prospectus, there is no material tax deficiency that has been, or
could reasonably be
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expected to be, asserted against the Company or any of its subsidiaries or any
of their respective properties or assets.
(t) Compliance With Environmental Laws. The Company and its subsidiaries
(i) are in compliance with any and all applicable federal, state, local and
foreign laws, rules, regulations, decisions and orders relating to the
protection of human health and safety, the environment or hazardous or toxic
substances or wastes, pollutants or contaminants (collectively, ENVIRONMENTAL
LAWS); (ii) have received and are in compliance with all permits, licenses or
other approvals required of them under applicable Environmental Laws to conduct
their respective businesses; and (iii) have not received notice of any actual or
potential liability for the investigation or remediation of any disposal or
release of hazardous or toxic substances or wastes, pollutants or contaminants,
except in any such case for any such failure to comply, or failure to receive
required permits, licenses or approvals, or liability as would not, individually
or in the aggregate, have a Material Adverse Effect.
(u) Accounting Controls. The Company and its subsidiaries maintain systems
of internal accounting controls sufficient to provide reasonable assurance that
(i) transactions are executed in accordance with management's general or
specific authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability; (iii) access to
assets is permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(v) No Unlawful Payments. Neither the Company nor any of its subsidiaries
nor, to the best knowledge of the Company, any director, officer, agent,
employee or other person associated with or acting on behalf of the Company or
any of its subsidiaries has violated or is in violation of any provision of the
Foreign Corrupt Practices Act of 1977 in any material respect.
(w) No Restrictions on Subsidiaries. No subsidiary of the Company is
currently prohibited, directly or indirectly, in any material respect under any
agreement or other instrument to which it is a party or is subject, from paying
any dividends to the Company, from making any other distribution on such
subsidiary's capital stock, from repaying to the Company any loans or advances
to such subsidiary from the Company or from transferring any of such
subsidiary's properties or assets to the Company or any other subsidiary of the
Company.
(x) No Broker's Fees. Neither the Company nor any of its subsidiaries is a
party to any contract, agreement or understanding with any person (other than
this Agreement) that would give rise to a valid claim against the Company or any
of its subsidiaries or any Underwriter for a brokerage commission, finder's fee
or like payment in connection with the offering and sale of the Shares.
(y) No Registration Rights. Other than the Selling Stockholders, no person
has the right to require the Company or any of its subsidiaries to register any
securities for sale under the Securities Act by reason of the filing of the
Registration Statement, any Preliminary Prospectus
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or the Final Prospectus with the Commission or the issuance and sale of the
Shares to be sold by the Company or the Selling Stockholders hereunder.
(z) No Stabilization. Except as disclosed in the Final Prospectus under
the caption "Underwriting", the Company has not taken, directly or indirectly,
any action designed to or that could reasonably be expected to cause or result
in any stabilization or manipulation of the price of the Shares.
(aa) Forward-Looking Statements. No forward-looking statement (within the
meaning of Section 27A of the Securities Act and Section 21E of the Exchange
Act) contained in the Registration Statement or the Final Prospectus has been
made or reaffirmed without a reasonable basis or has been disclosed other than
in good faith.
(bb) Shares Issued upon Conversion of the Notes. The unissued Shares
issuable upon the conversion of the Notes have been duly authorized by the
Company and validly reserved for issuance, and, at the time of delivery of such
Shares to the Underwriters, such Shares will be issued and delivered in
accordance with the provisions of the Notes and will be validly issued, fully
paid and non-assessable and will conform to the description thereof in the
Registration Statement and the Final Prospectus.
(cc) The Notes. The Notes were duly authorized and validly issued and
constitute valid and binding obligations of the Subsidiary, and Tekelec is
entitled to the benefits provided by the Notes; and the Notes conform in all
material respects to the descriptions thereof in the Registration Statement and
the Final Prospectus.
(dd) No Rated Securities. There are no ratings accorded any securities or
preferred stock of or guaranteed by the Company or any of its subsidiaries by
any "nationally recognized statistical rating organization," as such term is
defined by the Commission for purposes of Rule 436(g)(2) under the Securities
Act.
(ee) Xxxxxxxx-Xxxxx Act. The Company is in compliance in all material
respects with the currently effective and applicable provisions of the
Xxxxxxxx-Xxxxx Act of 2002 and the rules and regulations of the Commission
promulgated in connection therewith, including Section 402 related to loans and
Sections 302 and 906 related to certifications.
4. Representations and Warranties of the Selling Stockholders. (a) Each of
the Selling Stockholders severally and not jointly represents and warrants to
each Underwriter and the Company that:
(i) Required Consents; Authority. All consents, approvals,
authorizations and orders necessary for the execution and delivery by such
Selling Stockholder of this Agreement and for the sale and delivery of the
Shares to be sold by such Selling Stockholder hereunder, have been obtained; and
such Selling Stockholder has full right, power and authority to enter into this
Agreement and to sell, assign, transfer and deliver the Shares to be sold by
such Selling Stockholder hereunder; this Agreement has been duly authorized,
executed and delivered by such Selling Stockholder.
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(ii) No Conflicts. The execution, delivery and performance by such
Selling Stockholder of this Agreement, the sale of the Shares to be sold by such
Selling Stockholder and the consummation by such Selling Stockholder of the
transactions herein contemplated will not (A) result in a breach or violation of
any of the terms or provisions of, or constitute a default under, or result in
the creation or imposition of any lien, charge or encumbrance upon any property
or assets of such Selling Stockholder pursuant to, any indenture, mortgage, deed
of trust, loan agreement or other agreement or instrument to which such Selling
Stockholder is a party or by which such Selling Stockholder is bound or to which
any of the property or assets of such Selling Stockholder is subject, (B) result
in any violation of the provisions of the charter or by-laws or similar
organizational documents of such Selling Stockholder or (C) result in the
violation of any law or statute or any judgment, order, rule or regulation of
any court or arbitrator or governmental or regulatory agency having jurisdiction
over the Selling Stockholder except, in the case of clauses (A) and (C), for
such breaches, violations or defaults that would not adversely affect the
ability of the Selling Stockholder to comply with its obligations under this
Agreement.
(iii) Title to Shares. Such Selling Stockholder has good and valid
title to the Shares to be sold at the Closing Date or the Additional Closing
Date, as the case may be, by such Selling Stockholder hereunder (other than any
Shares to be issued upon conversion of the Notes), free and clear of all liens,
encumbrances or adverse claims; with respect to any Shares to be issued upon
conversion of the Notes, such Selling Stockholder will have, immediately prior
to the Closing Date or the Additional Closing Date, as the case may be, assuming
due issuance of the Shares to be issued upon conversion of the Notes, good and
valid title to such Shares, free and clear of all liens, encumbrances or adverse
claims; and, upon delivery of the certificates representing Shares to be sold by
such Selling Stockholder hereunder (including any Shares to be issued upon
conversion of the Notes) and payment therefor pursuant hereto, good and valid
title to such Shares, free and clear of all liens, encumbrances or adverse
claims, will pass to the several Underwriters.
(iv) No Stabilization. Such Selling Stockholder has not taken and
will not take, directly or indirectly, any action designed to or that could
reasonably be expected to cause or result in any stabilization or manipulation
of the price of the Shares.
(v) Material Information. The sale of the Shares by such Selling
Stockholder is not prompted by any material information concerning the Company
which is not set forth in the Registration Statement or the Final Prospectus.
(vi) No Termination. Each of the Selling Stockholders specifically
agrees that the Shares represented by the certificates (or, in the case of
Tekelec, issuable upon conversion of the Notes) are subject to the interests of
the Underwriters hereunder. Each of the Selling Stockholders specifically agrees
that the obligations of such Selling Stockholder hereunder shall not be
terminated by operation of law, whether by the death or incapacity of any
individual Selling Stockholder, or, in the case of an estate or trust, by the
death or incapacity of any executor or trustee or the termination of such estate
or trust, or in the case of a partnership, corporation or similar organization,
by the dissolution of such partnership, corporation or organization, or by the
occurrence of any other event. If any individual Selling Stockholder or
12
any such executor or trustee should die or become incapacitated, or if any such
estate or trust should be terminated, or if any such partnership, corporation or
similar organization should be dissolved, or if any other such event should
occur, before the delivery of the Shares hereunder, certificates representing
such Shares shall be delivered by or on behalf of such Selling Stockholder in
accordance with the terms and conditions of this Agreement.
(b) Each of the Principal Selling Stockholders severally and not jointly
represents and warrants to each Underwriter and the Company that:
(i) Registration Statement and Final Prospectus. As of the
applicable effective date of the Registration Statement and any amendment
thereto, the Registration Statement complied and will comply in all material
respects with the Securities Act, and did not and will not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein not
misleading; and as of the applicable filing date of the Final Prospectus and any
amendment or supplement thereto and as of the Closing Date and as of the
Additional Closing Date, as the case may be, the Final Prospectus will not
contain any untrue statement of a material fact or omit to state a 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; provided that such Selling Stockholder makes no representation and
warranty with respect to any statements or omissions made in reliance upon and
in conformity with information relating to any Underwriter furnished to the
Company in writing by such Underwriter through the Representative expressly for
use in the Registration Statement and the Final Prospectus and any amendment or
supplement thereto. Each Selling Stockholder has no reason to believe that the
representations and warranties of the Company contained in Section 3 are not
true and correct.
5. Further Agreements of the Company. The Company covenants and agrees
with each Underwriter that:
(a) Effectiveness of the Registration Statement. The Company will file the
Final Prospectus with the Commission within the time periods specified by Rule
424(b) and will file promptly all reports and any definitive proxy or
information statements required to be filed by the Company with the Commission
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to
the date of the Final Prospectus and for so long as the delivery of a prospectus
is required in connection with the offering or sale of the Shares; and the
Company will furnish copies of the Final Prospectus to the Underwriters in New
York City prior to 10:00 A.M., New York City time, to the extent possible on the
business day next succeeding the date of this Agreement, and in any event on the
second business day next succeeding the date of this Agreement, in such
quantities as the Representative may reasonably request.
(b) Filing of the Rule 462 Registration Statement. The Company will
prepare and file with the Commission the Rule 462 Registration Statement, if
necessary, in a form approved by the Representative (which approval shall not be
unreasonably withheld or delayed).
13
(c) Delivery of Copies. The Company will deliver, without charge, (i) to
the Representative, a signed copy of the Registration Statement as originally
filed and each amendment thereto, in each case including all exhibits and
consents filed therewith and documents incorporated by reference therein, and
(ii) to each Underwriter (A) a conformed copy of the Registration Statement as
originally filed and each amendment thereto (without exhibits) and (B) during
the Prospectus Delivery Period, as many copies of the Final Prospectus
(including all amendments and supplements thereto and documents incorporated by
reference therein) as the Representative may reasonably request. As used herein,
the term "PROSPECTUS DELIVERY PERIOD" means such period of time after the first
date of the public offering of the Shares as in the opinion of counsel for the
Underwriters a prospectus relating to the Shares is required by law to be
delivered in connection with sales of the Shares by any Underwriter or dealer.
(d) Amendments or Supplements. Before filing any amendment or supplement
to the Registration Statement or the Final Prospectus, the Company will furnish
to the Representative and counsel for the Underwriters a copy of the proposed
amendment or supplement for review and will not file any such proposed amendment
or supplement to which the Representative reasonably objects.
(e) Notice to the Representative. The Company will advise the
Representative promptly, and confirm such advice in writing, (i) when any
amendment to the Registration Statement has been filed or becomes effective;
(ii) when any amendment or supplement to the Final Prospectus has been filed;
(iii) of any request by the Commission for any amendment to the Registration
Statement or any amendment or supplement to the Final Prospectus or the receipt
of any comments from the Commission relating to the Registration Statement or
any other request by the Commission for any additional information; (iv) of the
issuance by the Commission of any order suspending the effectiveness of the
Registration Statement or preventing or suspending the use of any Preliminary
Prospectus or the Final Prospectus or the initiation or threatening of any
proceeding for that purpose; (v) of the occurrence of any event within the
Prospectus Delivery Period as a result of which the Final Prospectus as then
amended or supplemented would include any untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements therein,
in the light of the circumstances existing when the Final Prospectus is
delivered to a purchaser, not misleading; and (vi) of the receipt by the Company
of any notice with respect to any suspension of the qualification of the Shares
for offer and sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose; and the Company will use its reasonable best
efforts to prevent the issuance of any such order suspending the effectiveness
of the Registration Statement, preventing or suspending the use of any
Preliminary Prospectus or the Final Prospectus or suspending any such
qualification of the Shares and, if any such order is issued, will use
reasonable best efforts to obtain as soon as possible the withdrawal thereof.
(f) Ongoing Compliance. If during the Prospectus Delivery Period (i) any
event shall occur or condition shall exist as a result of which the Final
Prospectus as then amended or supplemented would include an untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the
circumstances existing when the Final Prospectus is delivered to a purchaser,
not misleading
14
or (ii) it is necessary to amend or supplement the Final Prospectus to comply
with law, the Company will immediately notify the Underwriters thereof and
forthwith prepare and, subject to paragraph (d) above, file with the Commission
and furnish to the Underwriters and to such dealers as the Representative may
designate, such amendments or supplements to the Final Prospectus as may be
necessary so that the statements in the Final Prospectus as so amended or
supplemented will not, in the light of the circumstances existing when the Final
Prospectus is delivered to a purchaser, be misleading or so that the Final
Prospectus will comply with law.
(g) Blue Sky Compliance. The Company will qualify the Shares for offer and
sale under the securities or Blue Sky laws of such jurisdictions as the
Representative shall reasonably request and will continue such qualifications in
effect so long as required for distribution of the Shares; provided that the
Company shall not be required to (i) qualify as a foreign corporation or other
entity or as a dealer in securities in any such jurisdiction where it would not
otherwise be required to so qualify, (ii) file any general consent to service of
process in any such jurisdiction or (iii) subject itself to taxation in any such
jurisdiction if it is not otherwise so subject.
(h) Earning Statement. The Company will make generally available to its
security holders and the Representative as soon as practicable an earning
statement that satisfies the provisions of Section 11(a) of the Securities Act
and Rule 158 of the Commission promulgated thereunder covering a period of at
least twelve months beginning on the first day of the first full fiscal quarter
after the date of this Agreement.
(i) Clear Market. For a period of 90 days after the date of this
Agreement, the Company will not (i) offer, pledge, announce the intention to
sell, sell, contract to sell, sell any option or contract to purchase, purchase
any option or contract to sell, grant any option, right or warrant to purchase
or otherwise transfer or dispose of, directly or indirectly, any shares of
Common Stock or any securities convertible into or exercisable or exchangeable
for Common Stock or (ii) enter into any swap or other agreement that transfers,
in whole or in part, any of the economic consequences of ownership of the Common
Stock, whether any such transaction described in clause (i) or (ii) above is to
be settled by delivery of Common Stock or such other securities, in cash or
otherwise, without the prior written consent of the Representative, other than
the issuance of (i) the Shares to be sold hereunder (including the Shares to be
sold by Tekelec), (ii) options to purchase shares of Common Stock granted
pursuant to stock option plans as in effect on the date of this Agreement, (iii)
shares of Common Stock upon the exercise of options granted under, or shares of
Common Stock issued pursuant to, stock option and stock purchase plans, as in
effect on the date of this Agreement and (iv) shares of Common Stock issued in
connection with acquisitions by the Company provided that each recipient of such
shares executes a lock-up agreement with the Representative in form and
substance substantially similar to the lock-up agreement attached as Exhibit C
hereto.
(j) Use of Proceeds. The Company will apply the net proceeds from the sale
of the Shares as described in the Final Prospectus under the heading "Use of
Proceeds" and in a manner that would not cause the Company to be required to
register as an "investment company" or an entity "controlled" by an "investment
company" within the meaning of the Investment Company Act.
15
(k) No Stabilization. The Company will not take, directly or indirectly,
any action designed to or that could reasonably be expected to cause or result
in any stabilization or manipulation of the price of the Shares.
(l) Listing of Shares. The Company will use its reasonable best efforts to
file a Notice of Listing of Additional Shares with respect to the Shares on the
Nasdaq National Market ("NASDAQ").
(m) Reports. For a period of one year after the date of this Agreement,
the Company will make generally available to the Representative, as soon as they
are available, copies of all reports or other communications (financial or
other) furnished to holders of the Shares and copies of any reports and
financial statements furnished to or filed with the Commission or any national
securities exchange or automatic quotation system.
6. Further Agreements of the Selling Stockholders. Each of the Selling
Stockholders covenants and agrees with each Underwriter that:
(a) Tax Form. It will deliver to the Representative prior to or at the
Closing Date a properly completed and executed United States Treasury Department
Form W-9 (or other applicable form or statement specified by the Treasury
Department regulations in lieu thereof) in order to facilitate the Underwriters'
documentation of their compliance with the reporting and withholding provisions
of the Tax Equity and Fiscal Responsibility Act of 1982 with respect to the
transactions herein contemplated.
7. Conditions of Underwriters' Obligations. The obligation of each
Underwriter to purchase the Underwritten Shares on the Closing Date or the
Option Shares on the Additional Closing Date, as the case may be, as provided
herein, is subject to the performance by the Company and each of the Selling
Stockholders of their covenants and other obligations hereunder and to the
following additional conditions:
(a) Registration Compliance; No Stop Order. No order suspending the
effectiveness of the Registration Statement shall be in effect, and no
proceeding for such purpose shall be pending before or threatened by the
Commission; the Final Prospectus shall have been timely filed with the
Commission under the Securities Act and in accordance with Section 5(a) hereof;
and all requests by the Commission for additional information shall have been
complied with to the reasonable satisfaction of the Representative.
(b) Representations and Warranties. The representations and warranties of
the Company and the Selling Stockholders contained herein shall be true and
correct on the date hereof and on and as of the Closing Date or the Additional
Closing Date, as the case may be; and the statements of the Company and its
officers and of each of the Selling Stockholders made in any certificates
delivered pursuant to this Agreement shall be true and correct on and as of the
Closing Date or the Additional Closing Date, as the case may be.
(c) No Material Adverse Change. Subsequent to the execution and delivery
of this Agreement, no event or condition of a type described in Section 3(e)
hereof shall have occurred
16
or shall exist, which event or condition is not described in the Final
Prospectus (excluding any amendment or supplement thereto) and the effect of
which in the judgment of the Representative makes it impracticable or
inadvisable to proceed with the offering, sale or delivery of the Shares on the
Closing Date or the Additional Closing Date, as the case may be, on the terms
and in the manner contemplated by this Agreement and the Final Prospectus.
(d) Officer's Certificate. The Representative shall have received on and
as of the Closing Date or the Additional Closing Date, as the case may be, a
certificate of (i) the chief executive officer and chief financial officer of
the Company (A) confirming that such officers have carefully reviewed the
Registration Statement and the Final Prospectus and, to the knowledge of such
officers after due inquiry, the representation of the Company set forth in
Section 3(b) hereof is true and correct, (B) confirming that the other
representations and warranties of the Company in this Agreement are, to the
knowledge of such officers after due inquiry, true and correct and that the
Company has complied with all agreements and satisfied all conditions on its
part to be performed or satisfied hereunder at or prior to such Closing Date and
(C) to the effect set forth in paragraphs (a) and (c) of this Section 7 and (ii)
of each Selling Stockholder, in form and substance reasonably satisfactory to
the Representative, (A) confirming that the representations of such Selling
Stockholder set forth in Sections 4(a)(v) and 4(a)(vi) and, if applicable,
Section 4(b)(i) hereof are true and correct and (B) confirming that the other
representations and warranties of such Selling Stockholder in this agreement are
true and correct and that the such Selling Stockholder has complied with all
agreements and satisfied all conditions on its part to be performed or satisfied
hereunder at or prior to such Closing Date.
(e) Comfort Letters. On the date of this Agreement and on the Closing Date
or the Additional Closing Date, as the case may be, PricewaterhouseCoopers LLP
shall have furnished to the Representative, at the request of the Company,
letters, dated the respective dates of delivery thereof and addressed to the
Underwriters, in form and substance reasonably satisfactory to the
Representative, containing statements and information of the type customarily
included in accountants' "comfort letters" to underwriters with respect to the
financial statements and certain financial information of the Company and its
subsidiaries consolidated and of the Networks Diagnostics Division of Tekelec
("NDD") contained or incorporated by reference in the Registration Statement and
the Final Prospectus; provided that each letter delivered on the Closing Date or
the Additional Closing Date, as the case may be, shall use a "cut-off" date no
more than three business days prior to such Closing Date or such Additional
Closing Date, as the case may be.
(f) Opinion of Counsel for the Company. Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx,
Professional Corporation, U.S. counsel for the Company, shall have furnished to
the Representative, at the request of the Company, their written opinion, dated
the Closing Date or the Additional Closing Date, as the case may be, and
addressed to the Underwriters, in form and substance reasonably satisfactory to
the Representative, to the effect set forth in Exhibit A-1 hereto. Xxxxxx X.
Xxxxxxx, Solicitors, Irish counsel for the Subsidiary, shall have furnished to
the Representative, at the request of the Company, their written opinion, dated
the Closing Date or the Additional Closing Date, as the case may be, and
addressed to the Underwriters in form and
17
substance reasonably satisfactory to the Representative, to the effect set forth
in Exhibit A-2 hereto.
(g) Opinion of Counsel for the Selling Stockholders. Xxxxxx Xxxxxxx
Xxxxxxxx & Xxxxxx, Professional Corporation, on behalf of the Principal Selling
Stockholders, shall have furnished to the Representative, at the request of the
Principal Selling Stockholders, their written opinion, dated the Closing Date or
the Additional Closing Date, as the case may be, and addressed to the
Underwriters, in form and substance reasonably satisfactory to the
Representative, to the effect set forth in Exhibit B-1 hereto, and Xxxxx Xxxx
LLP, on behalf of Tekelec, shall have furnished to the Representative, at the
request of Tekelec, their written opinion, dated the Closing Date and addressed
to the Underwriters, in form and substance reasonably satisfactory to the
Representative, to the effect set forth in Exhibit B-2 hereto.
(h) Opinion of Counsel for the Underwriters. The Representative shall have
received on and as of the Closing Date or the Additional Closing Date, as the
case may be, an opinion of Xxxxx Xxxx & Xxxxxxxx, counsel for the Underwriters,
with respect to such matters as the Representative may reasonably request, and
such counsel shall have received such documents and information as they may
reasonably request to enable them to pass upon such matters.
(i) No Legal Impediment to Issuance. No action shall have been taken and
no statute, rule, regulation or order shall have been enacted, adopted or issued
by any federal, state or foreign governmental or regulatory authority that
would, as of the Closing Date or the Additional Closing Date, as the case may
be, prevent the issuance or sale of the Shares; and no injunction or order of
any federal, state or foreign court shall have been issued that would, as of the
Closing Date or the Additional Closing Date, as the case may be, prevent the
issuance or sale of the Shares.
(j) Good Standing. The Representative shall have received on and as of the
Closing Date or the Additional Closing Date, as the case may be, satisfactory
evidence of the good standing of the Company in the State of Nevada and as a
foreign entity in California and the Subsidiary in Ireland, in each case in
writing or any standard form of telecommunication from the appropriate
governmental authorities of such jurisdictions.
(k) Lock-Up Agreements. The "lock-up" agreements, each substantially in
the form of Exhibit C hereto, between you and the Selling Stockholders, officers
and directors of the Company relating to sales and certain other dispositions of
shares of Common Stock or certain other securities, delivered to you on or
before the date hereof, shall be full force and effect on the Closing Date or
the Additional Closing Date, as the case may be.
(l) Additional Documents. On or prior to the Closing Date or the
Additional Closing Date, as the case may be, the Company and the Selling
Stockholders shall have furnished to the Representative such further
certificates and documents as the Representative may reasonably request.
(m) Satisfactory Form. All opinions, letters, certificates and evidence
mentioned above or elsewhere in this Agreement shall be deemed to be in
compliance with the provisions
18
hereof only if they are in form and substance reasonably satisfactory to counsel
for the Underwriters.
8. Indemnification and Contribution.
(a) Indemnification of the Underwriters by the Company. The Company agrees
to indemnify and hold harmless each Underwriter, its affiliates, directors and
officers and each person, if any, who controls such Underwriter within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act,
from and against any and all losses, claims, damages and liabilities (including,
without limitation, reasonable legal fees and other expenses incurred in
connection with any suit, action or proceeding or any claim asserted, as such
fees and expenses are incurred), joint or several, that arise out of, or are
based upon, any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement, any Preliminary Prospectus or the Final
Prospectus (or any amendment or supplement thereto), or caused by any omission
or alleged omission to state therein a 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, except insofar as
such losses, claims, damages or liabilities arise out of, or are based upon, any
untrue statement or omission or alleged untrue statement or omission made in
reliance upon and in conformity with any information relating to any Underwriter
furnished to the Company in writing by such Underwriter through the
Representative expressly for use therein, it being understood and agreed that
the only such information furnished by any Underwriter consists of the
information described as such in subsection (c) below; provided, that with
respect to any such untrue statement or alleged untrue statement in or omission
or alleged omission from any Preliminary Prospectus, the indemnity agreement
contained in this paragraph (a) shall not inure to the benefit of any
Underwriter (or any of its affiliates, directors and officers and controlling
persons) to the extent that any such loss, claim, damage or liability of or with
respect to such Underwriter results from the fact that both (i) to the extent
required by applicable law, a copy of the Final Prospectus was not sent or given
to such person at or prior to the written confirmation of the sale of such
Shares to such person and (ii) the untrue statement in or omission from such
Preliminary Prospectus was cured in the Final Prospectus unless, in either case,
such failure to deliver the Final Prospectus was a result of non-compliance by
the Company with the provisions of paragraphs (a), (c), (e) or (f) of Section 5
hereof.
(b) Indemnification of the Underwriters by the Selling Stockholders. Each
of the Selling Stockholders severally in proportion to the number of Shares to
be sold by such Selling Stockholder hereunder and not jointly, agrees to
indemnify and hold harmless each Underwriter, its affiliates, directors and
officers and each person, if any, who controls such Underwriter within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act,
from and against any and all losses, claims, damages and liabilities (including,
without limitation, reasonable legal fees and other expenses incurred in
connection with any suit, action or proceeding or any claim asserted, as such
fees and expenses are incurred), joint or several, that arise out of, or are
based upon, any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement, any Preliminary Prospectus or the Final
Prospectus (or any amendment or supplement thereto), or caused by any omission
or alleged omission to
19
state therein a material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under which they were
made, not misleading, except insofar as such losses, claims, damages or
liabilities arise out of, or are based upon, any untrue statement or omission or
alleged untrue statement or omission made in reliance upon and in conformity
with information relating to any Underwriter furnished to the Company in writing
by such Underwriter through the Representative expressly for use therein, it
being understood and agreed that the only such information furnished by any
Underwriter consists of the information described as such in subsection (c)
below; provided that (i) the liability of each Selling Stockholder under this
paragraph (b) shall be limited to an amount equal to the net proceeds (after
deducting all underwriting discounts and commissions paid by such Selling
Stockholder but before deducting expenses) received by such Selling Stockholder
from the sale of the Shares and (ii) in the case of Tekelec, a California
corporation ("TEKELEC"), the indemnity provided for in this paragraph (b) shall
apply only to the extent that any such losses, claims, damages or liabilities
arise out of, or are based upon, any such untrue statement or alleged untrue
statement or any such omission or alleged omission made in reliance upon and in
conformity with information relating to Tekelec furnished to the Company in
writing by Tekelec expressly for use therein; provided, that with respect to any
such untrue statement or alleged untrue statement in or omission or alleged
omission from any Preliminary Prospectus, the indemnity agreement contained in
this paragraph (a) shall not inure to the benefit of any Underwriter (or any of
its affiliates, directors and officers and controlling persons) to the extent
that any such loss, claim, damage or liability of or with respect to such
Underwriter results from the fact that both (i) to the extent required by
applicable law, a copy of the Final Prospectus was not sent or given to such
person at or prior to the written confirmation of the sale of such Shares to
such person and (ii) the untrue statement in or omission from such Preliminary
Prospectus was cured in the Final Prospectus unless, in either case, such
failure to deliver the Final Prospectus was a result of non-compliance by the
Company with the provisions of paragraphs (a), (c), (e) or (f) of Section 5
hereof.
(c) Indemnification of the Company and the Selling Stockholders. Each
Underwriter agrees, severally and not jointly, to indemnify and hold harmless
the Company, its directors, its officers who signed the Registration Statement
and each person, if any, who controls the Company within the meaning of Section
15 of the Securities Act or Section 20 of the Exchange Act and each of the
Selling Stockholders, its affiliates, directors and officers, if any, and each
person, if any, who controls such Selling Stockholder within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act to the same
extent as the indemnity set forth in paragraph (a) above, but only with respect
to any losses, claims, damages or liabilities that arise out of, or are based
upon, any untrue statement or omission or alleged untrue statement or omission
made in reliance upon and in conformity with any information relating to such
Underwriter furnished to the Company in writing by such Underwriter through the
Representative expressly for use in the Registration Statement, any Preliminary
Prospectus and the Final Prospectus (or any amendment or supplement thereto), it
being understood and agreed upon that the only such information furnished by any
Underwriter consists of the following information in the Final Prospectus
furnished on behalf of each Underwriter: the information contained in the fifth,
ninth, tenth and eleventh paragraphs under the caption "Underwriting".
20
(d) Notice and Procedures. If any suit, action, proceeding (including any
governmental or regulatory investigation), claim or demand shall be brought or
asserted against any person in respect of which indemnification may be sought
pursuant to the preceding paragraphs of this Section 8, such person (the
"INDEMNIFIED PERSON") shall promptly notify the person against whom such
indemnification may be sought (the "INDEMNIFYING PERSON") in writing; provided
that the failure to notify the Indemnifying Person shall not relieve it from any
liability that it may have under this Section 8 except to the extent that it has
been materially prejudiced (through the forfeiture of substantive rights or
defenses) by such failure; and provided further, that the failure to notify the
Indemnifying Person shall not relieve it from any liability that it may have to
an Indemnified Person otherwise than under this Section 8. If any such
proceeding shall be brought or asserted against an Indemnified Person and it
shall have notified the Indemnifying Person thereof, the Indemnifying Person
shall retain counsel reasonably satisfactory to the Indemnified Person to
represent the Indemnified Person and any others entitled to indemnification
pursuant to this Section 8 that the Indemnifying Person may designate in such
proceeding and shall pay the fees and expenses of such counsel related to such
proceeding, as incurred. In any such proceeding, any Indemnified Person shall
have the right to retain its own counsel, but the fees and expenses of such
counsel shall be at the expense of such Indemnified Person unless (i) the
Indemnifying Person and the Indemnified Person shall have mutually agreed to the
contrary; (ii) the Indemnifying Person has failed within a reasonable time to
retain counsel reasonably satisfactory to the Indemnified Person; (iii) the
Indemnified Person shall have reasonably concluded that there may be legal
defenses available to it that are different from or in addition to those
available to the Indemnifying Person; or (iv) the named parties in any such
proceeding (including any impleaded parties) include both the Indemnifying
Person and the Indemnified Person and representation of both parties by the same
counsel would be inappropriate due to actual or potential differing interests
between them. It is understood and agreed that the Indemnifying Person shall
not, in connection with any proceeding or related proceeding in the same
jurisdiction, be liable for the fees and expenses of more than one separate firm
(in addition to any local counsel) for all Indemnified Persons, and that all
such fees and expenses shall be paid or reimbursed as they are incurred. Any
such separate firm for any Underwriter, its affiliates, directors and officers
and any control persons of such Underwriter shall be designated in writing by
X.X. Xxxxxx Securities Inc., any such separate firm for the Company, its
directors, its officers who signed the Registration Statement and any control
persons of the Company shall be designated in writing by the Company and any
such separate firm for the Selling Stockholders shall be designated in writing
by the Selling Stockholders. The Indemnifying Person shall not be liable for any
settlement of any proceeding effected without its written consent, but if
settled with such consent or if there be a final judgment for the plaintiff, the
Indemnifying Person agrees to indemnify each Indemnified Person from and against
any loss or liability by reason of such settlement or judgment. No Indemnifying
Person shall, without the written consent of the Indemnified Person, effect any
settlement of any pending or threatened proceeding in respect of which any
Indemnified Person is or could have been a party and indemnification could have
been sought hereunder by such Indemnified Person, unless such settlement (x)
includes an unconditional release of such Indemnified Person, in form and
substance reasonably satisfactory to such Indemnified Person, from all liability
on claims that are the subject matter of such proceeding and (y) does not
include any statement as to or any admission of fault, culpability or a failure
to act by or on behalf of any Indemnified Person.
21
(e) Contribution. If the indemnification provided for in paragraphs (a),
(b) and (c) above is unavailable to an Indemnified Person or insufficient in
respect of any losses, claims, damages or liabilities referred to therein, then
each Indemnifying Person under such paragraph, in lieu of indemnifying such
Indemnified Person thereunder, shall contribute to the amount paid or payable by
such Indemnified Person as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company and the Selling Stockholders on the one hand
and the Underwriters on the other from the offering of the Shares or (ii) if the
allocation provided by clause (i) is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) but also the relative fault of the Company and the Selling
Stockholders on the one hand and the Underwriters on the other in connection
with the statements or omissions that resulted in such losses, claims, damages
or liabilities, as well as any other relevant equitable considerations. The
relative benefits received by the Company and the Selling Stockholders on the
one hand and the Underwriters on the other shall be deemed to be in the same
respective proportions as the net proceeds (after deducting all underwriting
discounts or commissions but before deducting expenses) received by the Company
and the Selling Stockholders from the sale of the Shares and the total
underwriting discounts and commissions received by the Underwriters in
connection therewith, in each case as set forth in the table on the cover of the
Final Prospectus, bear to the aggregate offering price of the Shares. The
relative fault of the Company and the Selling Stockholders on the one hand and
the Underwriters on the other shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company and the Selling Stockholders or by the Underwriters and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission.
(f) Limitation on Liability. The Company, the Selling Stockholders and the
Underwriters agree that it would not be just and equitable if contribution
pursuant to paragraph (e) above were determined by pro rata allocation (even if
the Selling Stockholders or the Underwriters were treated as one entity for such
purpose) or by any other method of allocation that does not take account of the
equitable considerations referred to in paragraph (e) above. The amount paid or
payable by an Indemnified Person as a result of the losses, claims, damages and
liabilities referred to in paragraph (e) above shall be deemed to include,
subject to the limitations set forth above, any reasonable legal or other
expenses incurred by such Indemnified Person in connection with any such action
or claim. Notwithstanding the provisions of this Section 8, in no event shall an
Underwriter be required to contribute any amount in excess of the amount by
which the total underwriting discounts and commissions received by such
Underwriter with respect to the offering of the Shares exceeds the amount of any
damages that such Underwriter has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. The Underwriters'
obligations to contribute pursuant to this Section 8 are several in proportion
to their respective purchase obligations hereunder and not joint. The Selling
Stockholders' obligations to contribute pursuant to this Section 8 are several
and not joint.
22
(g) Non-Exclusive Remedies. The remedies provided for in this Section 8
are not exclusive and shall not limit any rights or remedies which may otherwise
be available to any Indemnified Person at law or in equity or by agreement.
Without limiting the generality of the foregoing and in connection with the
Registration Statement, any Preliminary Prospectus, the Final Prospectus (or any
amendment or supplement thereto) and the transactions contemplated by this
Agreement, nothing in this Agreement shall terminate, modify or otherwise affect
the indemnification and hold harmless obligations of the Company and Tekelec
pursuant to the Registration Rights Agreement dated as of July 15, 2002, between
the Company and Tekelec, including without limitation pursuant to Section 3.5
thereof, as supplemented by that certain letter agreement dated March 18, 2004
between the Company and Tekelec (as so supplemented, the "REGISTRATION RIGHTS
AGREEMENT").
9. Termination. This Agreement may be terminated in the absolute
discretion of the Representative, by notice to the Company and the Selling
Stockholders, if after the execution and delivery of this Agreement and prior to
the Closing Date or, in the case of the Option Shares, prior to the Additional
Closing Date, (i) trading generally shall have been suspended or materially
limited on or by any of the New York Stock Exchange, the American Stock
Exchange, the National Association of Securities Dealers, Inc., the Chicago
Board Options Exchange, the Chicago Mercantile Exchange or the Chicago Board of
Trade; (ii) trading of any securities issued or guaranteed by the Company shall
have been suspended on any exchange or in any over-the-counter market; (iii) a
general moratorium on commercial banking activities shall have been declared by
federal or New York State authorities; or (iv) there shall have occurred any
outbreak or escalation of hostilities or any change in financial markets or any
calamity or crisis, either within or outside the United States, that, in the
judgment of the Representative, is material and adverse and makes it
impracticable or inadvisable to proceed with the offering, sale or delivery of
the Shares on the Closing Date or the Additional Closing Date, as the case may
be, on the terms and in the manner contemplated by this Agreement and the Final
Prospectus.
10. Defaulting Underwriter. (a) If, on the Closing Date or the Additional
Closing Date, as the case may be, any Underwriter defaults on its obligation to
purchase the Shares that it has agreed to purchase hereunder on such date, the
non-defaulting Underwriters may in their discretion arrange for the purchase of
such Shares by other persons satisfactory to the Company and the Selling
Stockholders on the terms contained in this Agreement. If, within 36 hours after
any such default by any Underwriter, the non-defaulting Underwriters do not
arrange for the purchase of such Shares, then the Company and the Selling
Stockholders shall be entitled to a further period of 36 hours within which to
procure other persons satisfactory to the non-defaulting Underwriters to
purchase such Shares on such terms. If other persons become obligated or agree
to purchase the Shares of a defaulting Underwriter, either the non-defaulting
Underwriters or the Company and the Selling Stockholders may postpone the
Closing Date or the Additional Closing Date, as the case may be, for up to five
full business days in order to effect any changes that in the opinion of counsel
for the Company, counsel for the Selling Stockholders or counsel for the
Underwriters may be necessary in the Registration Statement or the Final
Prospectus or in any other document or arrangement, and the Company agrees to
promptly prepare any amendment or supplement to the Registration Statement or
the Final Prospectus that effects any such changes. As used in this Agreement,
the term "UNDERWRITER"
23
includes, for all purposes of this Agreement unless the context otherwise
requires, any person not listed in Schedule 1 hereto that, pursuant to this
Section 10, purchases Shares that a defaulting Underwriter agreed but failed to
purchase.
(b) If, after giving effect to any arrangements for the purchase of the
Shares of a defaulting Underwriter or Underwriters by the non-defaulting
Underwriters (or the Company and the Selling Stockholders as provided in (a)
above), the aggregate number of Shares that remain unpurchased on the Closing
Date or the Additional Closing Date, as the case may be, does not exceed
one-eleventh of the aggregate number of Shares to be purchased on such date,
then the Company and the Selling Stockholders shall have the right to require
each non-defaulting Underwriter to purchase the number of Shares that such
Underwriter agreed to purchase hereunder on such date plus such Underwriter's
pro rata share (based on the number of Shares that such Underwriter agreed to
purchase on such date) of the Shares of such defaulting Underwriter or
Underwriters for which such arrangements have not been made.
(c) If, after giving effect to any arrangements for the purchase of the
Shares of a defaulting Underwriter or Underwriters by the non-defaulting
Underwriters (or the Company and the Selling Stockholders as provided in (a)
above), the aggregate number of Underwritten Shares that remain unpurchased on
the Closing Date or the Additional Closing Date, as the case may be, exceeds
one-eleventh of the aggregate amount of Shares to be purchased on such date, or
if the Company and the Selling Stockholders shall not exercise the right
described in paragraph (b) above, then this Agreement or, with respect to any
Additional Closing Date, the obligation of the Underwriters to purchase Option
Shares on the Additional Closing Date, as the case may be, shall terminate
without liability on the part of the non-defaulting Underwriters. Any
termination of this Agreement pursuant to this Section 10 shall be without
liability on the part of the Company and the Selling Stockholders, except that
the Company will continue to be liable for the payment of expenses as set forth
in Section 11 hereof and except that the provisions of Section 8 hereof shall
not terminate and shall remain in effect.
(d) Nothing contained herein shall relieve a defaulting Underwriter of any
liability it may have to the Company, the Selling Stockholders or any
non-defaulting Underwriter for damages caused by its default.
11. Payment of Expenses. (a) Whether or not the transactions contemplated
by this Agreement are consummated or this Agreement is terminated, (A) the
Company will pay or cause to be paid all costs and expenses incident to the
performance of its obligations hereunder, including without limitation, (i) the
costs incident to the authorization, issuance, sale, preparation and delivery of
the Shares and any taxes payable in that connection; (ii) the costs incident to
the preparation, printing and filing under the Securities Act of the
Registration Statement, any Preliminary Prospectus and the Final Prospectus
(including all exhibits, amendments and supplements thereto) and the
distribution thereof; (iii) the costs of reproducing and distributing this
Agreement; (iv) the fees and expenses of the Company's counsel and independent
accountants (including the accountants with respect to NDD); (v) the fees and
expenses incurred in connection with the registration or qualification and
determination of eligibility for investment of the Shares under the laws of such
jurisdictions as the Representative may designate, subject to Section 5(g)
24
hereof, and the preparation, printing and distribution of a Blue Sky Memorandum
(including the related reasonable fees and expenses of counsel for the
Underwriters); (vi) the cost of preparing stock certificates; (vii) the costs
and charges of any transfer agent and any registrar; (viii) all expenses and
application fees incurred in connection with any filing with, and clearance of
the offering by, the National Association of Securities Dealers, Inc.; (ix) all
expenses incurred by the Company in connection with any "road show" presentation
to potential investors; and (x) all expenses and application fees related to the
listing of the Shares on Nasdaq and (B) each Selling Stockholder will pay or
cause to be paid all costs and expenses of counsel for such Selling Stockholder
incident to the performance of such Selling Stockholder's obligations hereunder;
provided, however, that in accordance with the terms of the Registration Rights
Agreement, the Company shall pay the reasonable fees and expenses of one counsel
for Tekelec.
(b) If (i) this Agreement is terminated pursuant to Section 9, (ii) the
Company or the Selling Stockholders for any reason fails to tender the Shares
for delivery to the Underwriters or (iii) the Underwriters decline to purchase
the Shares for any reason permitted under this Agreement, the Company agrees to
reimburse the Underwriters upon demand for all out-of-pocket costs and expenses
(including the fees and expenses of their counsel) reasonably incurred by the
Underwriters in connection with this Agreement and the offering contemplated
hereby.
12. Persons Entitled to Benefit of Agreement. This Agreement shall inure
to the benefit of and be binding upon the parties hereto and their respective
successors and the officers and directors and any controlling persons referred
to in Section 8 hereof. Nothing in this Agreement is intended or shall be
construed to give any other person any legal or equitable right, remedy or claim
under or in respect of this Agreement or any provision contained herein. No
purchaser of Shares from any Underwriter shall be deemed to be a successor
merely by reason of such purchase.
13. Survival. The respective indemnities, rights of contribution,
representations, warranties and agreements of the Company, the Selling
Stockholders and the Underwriters contained in this Agreement or made by or on
behalf of the Company, the Selling Stockholders or the Underwriters pursuant to
this Agreement or any certificate delivered pursuant hereto shall survive the
delivery of and payment for the Shares and shall remain in full force and
effect, regardless of any termination of this Agreement or any investigation
made by or on behalf of the Company, the Selling Stockholders or the
Underwriters.
14. Certain Defined Terms. For purposes of this Agreement, (a) except
where otherwise expressly provided, the term "AFFILIATE" has the meaning set
forth in Rule 405 under the Securities Act; (b) the term "BUSINESS DAY" means
any day other than a day on which banks are permitted or required to be closed
in New York City; (c) the term "SUBSIDIARY" has the meaning set forth in Rule
405 under the Securities Act; and (d) the term "SIGNIFICANT SUBSIDIARY" has the
meaning set forth in Rule 1-02 of Regulation S-X under the Exchange Act.
15. Miscellaneous. (a) Authority of the Representative. Any action by the
Underwriters hereunder may be taken by X.X. Xxxxxx Securities Inc. on behalf of
the
25
Underwriters, and any such action taken by X.X. Xxxxxx Securities Inc. shall be
binding upon the Underwriters.
(b) Notices. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given if mailed or transmitted and
confirmed by any standard form of telecommunication. Notices to the Underwriters
shall be given to the Representative c/o X.X. Xxxxxx Securities Inc., 000 Xxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (fax: (000) 000-0000), Attention: Syndicate
Desk, with a copy to Xxxxx Xxxx & Xxxxxxxx, 0000 Xx Xxxxxx Xxxx, Xxxxx Xxxx,
Xxxxxxxxxx 00000 (fax: (000) 000-0000), Attention: Xxxx X. Xxxxxxxxx. Notices to
the Company shall be given to it at Catapult Communications Corporation, 000 X.
Xxxxxxx Xxxx, Xxxxxxxx Xxxx, Xxxxxxxxxx 00000 (fax: (000) 000-0000) Attention:
Chief Financial Officer, with a copy to Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx,
Professional Corporation, 000 Xxxx Xxxx Xxxx, Xxxx Xxxx, XX 00000 (fax: (650)
000-0000) Attention: Xxxxx X. Xxxxxx, Xx. and Xxxxxxx X. Xxxxxx. Notices to the
Principal Selling Stockholders shall be given to Xxxxxx Godward LLP at 0000
Xxxxxxx Xxxxxx, Xxxx Xxxx, Xxxxxxxxxx 00000 (Fax: (000) 000-0000); Attention:
Xxxxx Xxxxxxxxx. Notices to Tekelec shall be given to it at 00000 X. Xxxxxx
Xxxx, Xxxxxxxxx, Xxxxxxxxxx 00000 (Fax: (000) 000-0000); Attention: Xxxxxx X.
Xxxxxx, with a copy to Xxxxx Xxxx LLP, 000 Xxxxxxxx, Xxxxx 000, Xxxxx Xxxxxx,
Xxxxxxxxxx 00000 (Fax: (000) 000-0000); Attention: Xxxxxxxxx X. Xxxxxx.
(c) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
(d) Counterparts. This Agreement may be signed in counterparts (which may
include counterparts delivered by any standard form of telecommunication), each
of which shall be an original and all of which together shall constitute one and
the same instrument.
(e) Amendments or Waivers. No amendment or waiver of any provision of this
Agreement, nor any consent or approval to any departure therefrom, shall in any
event be effective unless the same shall be in writing and signed by each party
hereto that is adversely affected by such amendment, waiver, consent or
approval.
(f) Headings. The headings herein are included for convenience of
reference only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.
26
If the foregoing is in accordance with your understanding, please indicate
your acceptance of this Agreement by signing in the space provided below.
Very truly yours,
CATAPULT COMMUNICATIONS CORPORATION
By: /s/ Xxxxxxx X. Xxxx
Name: Xxxxxxx X. Xxxx
Title: Chief Executive Officer
SELLING STOCKHOLDERS
Xx. Xxxxxxx X. Xxxx
By: /s/ Xxxxxxx X. Xxxx
Name:
Title:
Xx. Xxxxx X. Xxxx
By: /s/ Xxxxx X. Xxxx
Name:
Title:
TEKELEC
By: /s/ Xxxx X. Xxxxxx
Name: Xxxx X. Xxxxxx
Title: Senior Vice President and Chief
Financial Officer
27
Accepted: September 15, 2004
X.X. XXXXXX SECURITIES INC.
Acting severally on behalf of themselves
and the several Underwriters named in
Schedule 1 to the Underwriting Agreement
By: X.X. XXXXXX SECURITIES INC.
By: /s/ Xxxxxxx Xxxxxxx
Name: Xxxxxxx Xxxxxxx
Title: Managing Director
SCHEDULE 1
Underwriter Number of Shares
----------- ----------------
X.X. Xxxxxx Securities Inc. 948,750
X.X. Xxxxxxxxx, Towbin LLC 276,718
Xxxxx Xxxxxxxx, Inc. 276,718
XX Xxxxxxxxx + Co, LLC 79,064
Total 1,581,250
SCHEDULE 2
Selling Stockholder Number of Underwritten Shares Number of Option Shares
------------------- ----------------------------- -----------------------
Xxxxxxx X. Xxxx 150,000 118,594
Xxxxx X. Xxxx 150,000 118,593
Tekelec 1,081,250 0
--------- -------
Total 1,381,250 237,187
SCHEDULE 3
Significant Subsidiaries
Subsidiary
Catapult Communications Limited, a U.K. corporation
Catapult Communications K.K., a Japanese corporation
Tekelec Limited, a Japanese corporation
Catapult Communications International Limited, an Irish corporation
