EXHIBIT 1.1
$100,000,000
CREDENCE SYSTEMS CORPORATION
5 1/4% CONVERTIBLE SUBORDINATED NOTES DUE 2002
PURCHASE AGREEMENT
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September 4, 1997
Xxxxx Xxxxxx Inc.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
Credence Systems Corporation, a Delaware corporation (the "Company"),
proposes, upon the terms and conditions set forth herein, to issue and sell to
you, as the initial purchaser (the "Initial Purchaser"), $100,000,000 aggregate
principal amount of its 5 1/4% Convertible Subordinated Notes due 2002 (the
"Firm Notes"). The Company also proposes, upon the terms and conditions set
forth herein, to issue and sell to the Initial Purchaser up to an additional
$15,000,000 aggregate principal amount of its 5 1/4% Convertible Subordinated
Notes due 2002 (the "Additional Notes"). The Firm Notes and the Additional
Notes are hereinafter collectively referred to as the "Notes". The Notes will
(i) have the terms and provisions which are summarized in the Offering Circular
(ii) be in the forms specified and (iii) be issued pursuant to the provisions of
an Indenture, to be dated as of September 10, 1997 (the "Indenture"), between
the Company and State Street Bank and Trust Company of California N.A., as
trustee (the "Trustee"). As used herein, the term "Common Stock" refers to the
common stock, par value $0.001 per share, of the Company.
The Company wishes to confirm as follows its agreement with the
Initial Purchaser in connection with the purchase and resale of the Notes.
1. Preliminary Offering Memorandum and Offering Memorandum. The
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Notes will be offered and sold to the Initial Purchaser without registration
under the Securities Act of 1933, as amended (the "Act"), in reliance on an
exemption pursuant to Section 4(2) under the Act. The Company has prepared a
preliminary offering memorandum, dated September 2, 1997 (the "Preliminary
Offering Memorandum"), and an offering memorandum, dated September 4, 1997
(the "Offering Memorandum"), setting forth information regarding the Company
and the Notes. Any references herein to the Preliminary Offering Memorandum
and the Offering Memorandum shall be deemed to include all amendments and
supplements thereto and any documents filed under the Securities Exchange Act
of 1934, as amended, and the rules and regulations of the Securities and
Exchange Commission (the "Commission") thereunder (collectively, the "Exchange
Act") which are incorporated by reference therein. As used herein, the term
"Incorporated Documents"
means the documents which at the time they are incorporated by reference in the
Preliminary Offering Memorandum, the Offering Memorandum or any amendment or
supplement thereto. The Company hereby confirms that it has authorized the use
of the Preliminary Offering Memorandum and the Offering Memorandum in connection
with the offering and resale of the Notes by the Initial Purchaser.
The Company understands that the Initial Purchaser proposes to make
offers and sales (the "Exempt Resales") of the Notes purchased by the Initial
Purchaser hereunder only on the terms and in the manner set forth in the
Offering Memorandum and Section 2 hereof, as soon as the Initial Purchaser deems
advisable after this Agreement has been executed and delivered, (i) to persons
in the United States whom the Initial Purchaser reasonably believes to be
qualified institutional buyers ("Qualified Institutional Buyers") as defined in
Rule 144A under the Act, as such rule may be amended from time to time ("Rule
144A"), in transactions under Rule 144A, and (ii) outside the United States to
persons other than U.S. persons in reliance upon Regulation S ("Regulation S")
under the Act (such persons specified in clauses (i) and (ii) being referred to
herein as the "Eligible Purchasers"). As used herein the terms "United States"
and "U.S. persons" have the meaning given them in Regulation S.
It is understood and acknowledged that upon original issuance thereof,
and until such time as the same is no longer required under the applicable
requirements of the Act, the Notes shall bear the following legend:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER
THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES NOT TO
OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE "RESALE
RESTRICTION TERMINATION DATE") WHICH IS TWO YEARS AFTER THE LATER OF THE
ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY
AFFILIATED PERSON OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY
PREDECESSOR OF SUCH SECURITY) UNLESS SUCH OFFER, SALE OR OTHER TRANSFER IS (A)
TO THE COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED
EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE
ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON THE HOLDER REASONABLY
BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A
QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING
MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES THAT XXXXX
XXXXXXX XXX
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XXXXXX XXXXXX WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, (E)
TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH
(A)(1), (A)(2), (A)(3) OR (A)(7) OF RULE 501 UNDER THE SECURITIES ACT THAT IS
ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN
INSTITUTIONAL "ACCREDITED INVESTOR," FOR INVESTMENT PURPOSES AND NOT WITH A
VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN
VIOLATION OF THE SECURITIES ACT, OR (F) PURSUANT TO ANOTHER AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO
THE COMPANY'S AND STATE STREET BANK AND TRUST COMPANY OF CALIFORNIA, N.A.'S
RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSES (D), (E)
OR (F) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR
OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND IN EACH OF THE FOREGOING
CASES, A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THIS SECURITY IS
COMPLETED AND DELIVERED BY THE TRANSFEROR TO STATE STREET BANK AND TRUST
COMPANY OF CALIFORNIA, N.A. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF
THE THEN HOLDER OF THIS SECURITY AFTER THE RESALE RESTRICTION TERMINATION
DATE.
It is also understood and acknowledged that holders (including
subsequent transferees) of the Notes and, if such Notes are subsequently
converted into Common Stock, the Common Stock will have the registration rights
agreement (the "Registration Right Agreement"), to be dated the date hereof, in
substantially the form of Exhibit B hereto, for so long as such Notes and Common
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Stock constitute "Transfer Restricted Securities" (as defined in the
Registration Rights Agreement). Pursuant to the Registration Rights Agreement,
the Company will agree (i) to file with the Commission under the circumstances
set forth therein, a registration statement on the appropriate form under the
Act relating to the resale of the Notes and the Common Stock by certain holders
thereof from time to time in accordance with the methods of distribution set
forth in such registration statement and Rule 415 under the Act (the "Shelf
Registration Statement") and (ii) to use its best efforts to cause such Shelf
Registration Statement to be declared effective. This Agreement, the Indenture
and the Registration Rights Agreement are hereinafter referred to collectively a
the "Operative Documents."
Capitalized terms used herein without definition have the respective
meanings specified therefor in the Indenture or the Offering Memorandum.
2. Agreements to Sell, Purchase and Resell. (a) The Company hereby
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agrees, subject to all the terms and conditions set forth herein, to issue and
sell to the Initial Purchaser and, upon the basis of the representations,
warranties and agreements of the Company herein contained and subject to all
the terms and conditions set forth herein, the Initial Purchaser agrees to
purchase from the Company, at a purchase price of 97.5% of the principal
amount thereof, the principal amount of Firm Notes set forth opposite the name
of the Initial Purchaser in Schedule I hereto.
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(b) The Company also agrees, subject to all the terms and
conditions set forth herein, to sell to the Initial Purchaser, and, upon
the basis of the representations, warranties and agreements of the
Company herein contained and subject to all the terms and conditions set
forth herein, the Initial Purchaser shall have the right to purchase from
the Company pursuant to an option (the "over-allotment option") which may
be exercised at any time and from time to time prior to 9:00 P.M., New
York City time, on the 30th day after the date of the Offering Memorandum
(or, if such 30th day shall be a Saturday or Sunday or a holiday, on the
next business day thereafter when the New York Stock Exchange is open for
trading), up to $15,000,000 principal amount of Additional Notes at the
same purchase price as the Firm Notes, plus accrued interest, if any,
from the date of issuance of the Firm Notes to the date of delivery and
payment.
(c) The Initial Purchaser has advised the Company that it proposes
to offer the Notes for sale upon the terms and conditions set forth in
this Agreement and in the Offering Memorandum. The Initial Purchaser
hereby represents and warrants to the Company that the Initial Purchaser
(i) is purchasing the Notes pursuant to a private sale exempt from
registration under the Act, (ii) will not solicit offers for, or offer or
sell, the Notes by means of any form of general solicitation or general
advertising or in any manner involving a public offering within the
meaning of Section 4(2) of the Act, and (iii) will solicit offers for the
Notes only from, and will offer, sell or deliver the Notes as part of its
initial offering, only to (A) persons in the United States whom the
Initial Purchaser reasonably believes to be Qualified Institutional
Buyers, or if any such person is buying for one or more institutional
accounts for which such person is acting as fiduciary or agent, only when
such person has represented to the Initial Purchaser that each such
account is a Qualified Institutional Buyer, to whom notice has been given
that such sale or delivery is being made in reliance on Rule 144A, in
each case, in transactions under Rule 144A, and (B) outside the United
States to persons other than U.S. persons in reliance on Regulation S.
The Initial Purchaser has advised the Company that it will offer the
Notes to Eligible Purchasers at a price initially equal to 100% of the
principal amount thereof, plus accrued interest, if any, from the date of
issuance of the Firm Notes. Such price may be changed by the Initial
Purchaser at any time thereafter without notice.
(d) The Initial Purchaser represents and warrants to the Company
that it (i) has not offered or sold and prior to the date that is six
months after the Closing Date (as defined in Section 3 hereof) with
respect to the Offering will not offer or sell any Notes 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 will not involve an offer to the public in the United
Kingdom within the meaning of the Public Offers of Securities Regulations
1995 (the "Regulations"); (ii) has complied with and will comply with all
applicable provisions of the Financial Services Act of 1986 and the
Regulations with respect to anything done by it in relation to the Notes
in, from, or otherwise involving the United Kingdom; and (iii) has only
issued or passed on and will only issue or pass on to any person in the
United Kingdom any document received by it in connection with the offer
of the Notes if that person is of a kind described in Article 11(3) of
the Financial Services Act of 1986 (Investment Advertisement)
(Exemptions) Order 1996 or is a person to whom such document may
otherwise lawfully be issued or passed on.
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(e) The Initial Purchaser represents and warrants to the Company
that it has offered and sold the Notes and agrees that it will offer and
sell the Notes (i) as part of its distribution at any time, and (ii)
otherwise until 40 days after the later of the commencement of the
offering of the Notes and the Closing Date, only in accordance with Rule
903 of Regulation S or as otherwise permitted pursuant to paragraph (c)
above. Accordingly, the Initial Purchaser represents and agrees that
neither such Initial Purchaser, its affiliates nor any persons acting on
its or their behalf has engaged or will engage in any directed selling
efforts with respect to the Notes, and it and they have complied and will
comply with the offering restrictions requirement of Regulation S. Such
Initial Purchaser agrees that, at or prior to confirmation of the sale of
Notes other than a sale pursuant to Rule 144A, it will have sent to each
distributor, dealer or person receiving a selling concession, fee or
other remuneration that purchases Notes from such Initial Purchaser
during the restricted period a confirmation or notice to substantially
the following effect:
"The Securities covered hereby have not been registered under the U.S.
Securities Act of 1933, as amended (the "Securities Act"), and may not
be offered and sold within the United States or to, or for the account
or benefit of, U.S. persons (i) as part of their distribution at any
time or (ii) otherwise until 40 days after the later of the
commencement of the offering and the closing date, except in either
case in accordance with Regulation S (or Rule 144A) under the
Securities Act. Terms used above have the meaning given to them by
Regulation S."
The Initial Purchaser understands that the Company and, for purposes
of the opinions to be delivered to the Initial Purchaser pursuant to Sections
7(c) and 7(d) hereof, counsel to the Company and counsel to the Initial
Purchaser, will rely upon the accuracy and truth of the foregoing
representations and agreements and the Initial Purchaser hereby consents to
such reliance.
3. Delivery of the Notes and Payment Therefor. Delivery to the
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Initial Purchaser of and payment for the Firm Notes shall be made at the
office of Xxxxx Xxxxxx Inc., 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, XX 00000, at
10:00 A.M., New York City time, on September 10, 1997 (the "Closing Date").
The place of closing for the Firm Notes and the Closing Date may be varied by
agreement between the Initial Purchaser and the Company.
Delivery to the Initial Purchaser of and payment for any Additional
Notes to be purchased by the Initial Purchaser shall be made at the
aforementioned office of Xxxxx Xxxxxx Inc. at such time on such date (the
"Option Closing Date"), which may be the same as the Closing Date but shall in
no event be earlier than the Closing Date nor earlier than two nor later than
ten business days after the giving of the notice hereinafter referred to, as
shall be specified in a written notice from the Initial Purchaser to the Company
of the Initial Purchaser's determination to purchase the principal amount of
Additional Notes specified in such notice. The place of closing for any
Additional Notes and the Option Closing Date for such Additional Notes may be
varied by agreement between the Initial Purchaser and the Company.
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The Firm Notes and any Additional Notes which the Initial Purchaser
may elect to purchase will be delivered to the Initial Purchaser against payment
of the purchase price therefor in immediately available funds. The Notes will
be evidenced by a single global security in definitive form (the "Global
Debenture") and/or by additional definitive securities, and will be registered,
in the case of the Global Debenture, in the name of Cede & Co. as nominee of The
Depository Trust Company ("DTC"), and in the other cases, in such names and in
such denominations as the Initial Purchaser shall request prior to 9:30 A. M.,
New York City time, on the second business day preceding the Closing Date or any
Option Closing Date, as the case may be. The Notes to be delivered to the
Initial Purchaser shall be made available to the Initial Purchaser in New York
City for inspection and packaging not later than 9:30 A.M., New York City time,
on the business day next preceding the Closing Date or the Option Closing Date,
as the case may be.
4. Agreements of the Company. The Company agrees with the Initial
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Purchaser as follows:
(a) The Company will advise the Initial Purchaser promptly and, if
requested by it, will confirm such advice in writing, within the period
of time referred to in paragraph (e) below, of any material change in
the Company's condition (financial or other), business, properties, net
worth or results of operations, or of the happening of any material
event which makes any statement made in the Offering Memorandum (as then
amended or supplemented) untrue or which requires the making of any
additions to or changes in the Offering Memorandum (as then amended or
supplemented) in order to make the statements therein not misleading, or
of the necessity to amend or supplement the Offering Memorandum (as then
amended or supplemented) to comply in all material respects with any
law.
(b) The Company will furnish to the Initial Purchaser, without
charge, as of the date of the Offering Memorandum, such number of copies
of the Offering Memorandum (as then amended or supplemented) as it may
reasonably request.
(c) The Company will not make any amendment or supplement to the
Preliminary Offering Memorandum or to the Offering Memorandum of which
the Initial Purchaser shall not previously have been advised or to which
it shall reasonably object after being so advised.
(d) Prior to the execution and delivery of this Agreement, the
Company has delivered or will deliver to the Initial Purchaser, without
charge, in such quantities as the Initial Purchaser shall have requested
or may hereafter reasonably request, copies of the Preliminary Offering
Memorandum. The Company consents to the use, in accordance with the
securities or Blue Sky laws of the jurisdictions in which the Notes are
offered by the Initial Purchaser and by dealers, prior to the date of the
Offering Memorandum, of each Preliminary Offering Memorandum so furnished
by the Company. The Company consents to the use of the Offering
Memorandum (and of any amendment or supplement thereto) in accordance
with the securities or Blue Sky laws of the jurisdictions in which the
Notes are offered by the Initial Purchaser and by all dealers to whom
Notes may be sold, in connection with the offering and sale of the Notes.
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(e) If, at any time prior to completion of the distribution of the
Notes by the Initial Purchaser to Eligible Purchasers, any event shall
occur that in the judgment of the Company or in the opinion of counsel
for the Initial Purchaser should be set forth in the Offering Memorandum
(as then amended or supplemented) in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading, or if it is necessary to supplement or amend the Offering
Memorandum in order to comply with any law, the Company will forthwith
prepare an appropriate supplement or amendment thereto or such document,
and will expeditiously furnish to the Initial Purchaser and dealers a
reasonable number of copies thereof. In the event that the Company and
the Initial Purchaser agree that the Offering Memorandum should be
amended or supplemented, the Company, if requested by the Initial
Purchaser, will promptly issue a press release announcing or disclosing
the matters to be covered by the proposed amendment or supplement or such
document.
(f) The Company will cooperate with the Initial Purchaser and with
its counsel in connection with the qualification of the Notes for
offering and sale by the Initial Purchaser and by dealers under the
securities or Blue Sky laws of such jurisdictions as the Initial
Purchaser may designate and will file such consents to service of process
or other documents necessary or appropriate in order to effect such
qualification; provided that in no event shall the Company be obligated
to qualify to do business in any jurisdiction where it is not now so
qualified or to take any action which would subject it to service of
process in suits, other than those arising out of the offering or sale of
the Notes, in any jurisdiction where it is not now so subject.
(g) So long as at least 25% of the aggregate principal amount of
the Notes is outstanding, the Company will furnish to the Initial
Purchaser upon its request (i) as soon as available, a copy of each
report of the Company mailed to stockholders or filed with any stock
exchange or regulatory body and (ii) from time to time such other
information concerning the Company as the Initial Purchaser may
reasonably request.
(h) If this Agreement shall terminate or shall be terminated after
execution and delivery pursuant to any provisions hereof (otherwise than
pursuant to Section 10 hereof or by notice given by the Initial Purchaser
terminating this Agreement pursuant to Section 9 or Section 11 hereof) or
if this Agreement shall be terminated by the Initial Purchaser because of
any failure or refusal on the part of the Company to comply with the
terms or fulfill any of the conditions of this Agreement, the Company
agrees to reimburse the Initial Purchaser for all reasonable out-of-
pocket expenses (including reasonable fees and expenses of its counsel)
incurred by it in connection herewith.
(i) The Company will apply the net proceeds from the sale of the
Notes to be sold by it hereunder substantially in accordance with the
description set forth in the Offering Memorandum.
(j) Except as provided in this Agreement or the Registration Rights
Agreement or as set forth in the Offering Memorandum or pursuant to the
Company's employee stock purchase plan or upon exercise of currently
outstanding options, the Company will not sell, contract to sell or
otherwise dispose of any Common Stock or any securities convertible into
or exercisable
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or exchangeable for Common Stock, or grant any options (except under the
Company's stock option plans) or warrants to purchase Common Stock, for a
period of ninety (90) days after the date of the Offering Memorandum,
without the prior written consent of the Initial Purchaser. The Company
has caused or will cause each of its current directors and executive
officers to furnish a letter or letters, in form and substance
satisfactory to the Initial Purchaser, pursuant to which each such person
shall agree not to offer, sell, contract to sell or otherwise dispose of
any Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock for a period of 90 days after the date of
the Offering Memorandum without the prior written consent of the Initial
Purchaser.
(k) Except as stated in this Agreement and in the Preliminary
Offering Memorandum and Offering Memorandum, the Company has not taken,
nor will it 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 the Notes to facilitate the sale or resale
of the Notes.
(l) The Company will use its best efforts to cause the Notes to be
designated for trading in the PORTAL Market.
(m) From and after the Closing Date, so long as any of the Notes are
outstanding and are "Restricted Securities" within the meaning of the Rule
144(a)(3) under the Act or, if earlier, until two years after the Closing
Date, and during any period in which the Company is not subject to Section
13 or 15(d) of the Exchange Act, the Company will furnish to holders of the
Notes and prospective purchasers of Notes designated by such holders, upon
request of such holders or such prospective purchasers, the information
required to be delivered pursuant to Rule 144A(d)(4) under the Act to
permit compliance with Rule 144A in connection with resale of the Notes.
(n) The Company has complied and will comply with all provisions of
Florida Statutes Section 517.075 relating to issuers doing business with
Cuba.
(o) The Company agrees not to sell, offer for sale or solicit
offers to buy or otherwise negotiate in respect of any security (as
defined in the Act ) that would be integrated with the sale of the Notes
in a manner that would require the registration under the Act of the sale
to the Initial Purchaser or the Eligible Purchasers of the Notes.
(p) The Company agrees to comply with all of the terms of the
Registration Rights Agreement and all agreements set forth in the
representation letters of the Company to DTC relating to the approval of
the Notes by DTC for "book entry" transfer.
(q) The Company agrees that prior to any registration of the Notes
pursuant to the Registration Rights Agreement, or at such earlier time as
may be so required, the Indenture shall be qualified under the Trust
Indenture Act of 1939, as amended (the "1939 Act"), and will cause to be
entered into any necessary supplemental indentures or such other
agreements as may be necessary in connection therewith.
5. Representations and Warranties of the Company. The Company
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represents and warrants to the Initial Purchaser that:
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(a) The Preliminary Offering Memorandum and Offering Memorandum
with respect to the Notes have been prepared by the Company for use by
the Initial Purchaser in connection with the Exempt Resales. No order or
decree preventing the use of the Preliminary Offering Memorandum or the
Offering Memorandum or any amendment or supplement thereto, or any order
asserting that the transactions contemplated by this Agreement are
subject to the registration requirements of the Act has been issued and
no proceeding for that purpose has commenced or is pending or, to the
knowledge of the Company, is contemplated.
(b) The Preliminary Offering Memorandum and the Offering Memorandum
as of their respective dates and the Offering Memorandum as of the
Closing Date, did not or will not at such times contain an 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 not
misleading, except that this representation and warranty does not apply
to statements in or omissions from the Preliminary Offering Memorandum
and Offering Memorandum made in reliance upon and in conformity with
information relating to the Initial Purchaser furnished to the Company in
writing by or on behalf of the Initial Purchaser expressly for use
therein.
(c) The Incorporated Documents heretofore filed were filed in a
timely manner and, when they were filed (or, if any amendment with
respect to any such document was filed, when such document was filed),
conformed in all material respects to the requirements of the Exchange
Act and did not contain an 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 not misleading; and any further Incorporated
Documents will, when so filed, be filed in a timely manner and conform in
all material respects to the requirements of the Exchange Act and will
not contain an 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 not misleading.
(d) The Indenture has been duly and validly authorized by the
Company and, upon its execution, delivery and performance by the Company
and assuming due authorization, execution, delivery and performance by
the Trustee, will be a valid and binding agreement of the Company,
enforceable in accordance with its terms, except as enforcement thereof
may be limited by bankruptcy, fraudulent conveyance, insolvency,
reorganization, moratorium or other similar laws affecting creditors'
rights generally and by general equitable principles and as
enforceability of rights to indemnity and contribution thereunder may be
limited by Federal or State securities laws or principles of public
policy, and the Indenture conforms in all material respects to the
description thereof in the Offering Memorandum; and no qualification of
the Indenture under the 1939 Act is required in connection with the offer
and sale of the Notes contemplated hereby or in connection with the
Exempt Resales.
(e) The Notes have been duly authorized by the Company and, when
executed by the Company and authenticated by the Trustee in accordance
with the Indenture and delivered to the Initial Purchaser against payment
therefor in accordance with the terms hereof, will have been validly
issued and delivered, and will constitute valid and binding obligations
of the Company entitled to the benefits of the Indenture and enforceable
in accordance with their terms, except as enforcement thereof may be
limited by bankruptcy, fraudulent conveyance, insolvency,
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reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and by general equitable
principles, and the Notes will conform in all material respects to the
description thereof in the Offering Memorandum.
(f) All the outstanding shares of capital stock of the Company have
been duly authorized and validly issued, are fully paid and
nonassessable, are free of any preemptive or similar rights and were
issued and sold in compliance with all applicable federal and state
securities laws; the shares of Common Stock issuable upon conversion of
the Notes have been duly authorized and reserved for issuance and, when
delivered upon conversion of the Notes, will be validly issued, fully
paid and nonassessable and free of any preemptive or similar rights; and
the authorized capital stock of the Company conforms to the description
thereof in the Offering Memorandum and the authorized and outstanding
capital stock of the Company is as set forth under the caption
"Capitalization" in the Offering Memorandum.
(g) The Company is a corporation duly organized and validly
existing in good standing under the laws of the State of Delaware with
corporate power and authority to own, lease and operate its properties
and to conduct its business as described in the Offering Memorandum, and
is duly registered and qualified to conduct its business and is in good
standing in each jurisdiction or place where the nature of its properties
or the conduct of its business requires such registration or
qualification, except where the failure so to register or qualify does
not have a material adverse effect on the condition (financial or other),
business, properties, net worth or results of operations of the Company
and the Subsidiaries (as hereinafter defined) taken as a whole (a
"Material Adverse Effect").
(h) Each wholly-owned subsidiary of the Company (collectively, the
"Subsidiaries") is a corporation duly organized, validly existing and in
good standing in the jurisdiction of its incorporation, with corporate
power and authority to own, lease and operate its properties and to conduct
its business as described in the Offering Memorandum, and is duly
registered and qualified to conduct its business and is in good standing in
each jurisdiction or place where the nature of its properties or the
conduct of its business requires such registration or qualification, except
where the failure so to register or qualify or be in good standing does not
have a Material Adverse Effect. All the outstanding shares of capital
stock of each of such Subsidiaries have been duly authorized and validly
issued, are fully paid and nonassessable, and are owned by the Company
directly or indirectly through one of the other such Subsidiaries, free and
clear of any lien, adverse claim, security interest, equity or other
encumbrance, except as described in the Offering Memorandum or for
directors' qualifying shares.
(i) There are no legal or governmental proceedings pending or, to
the knowledge of the Company, threatened, against the Company or any of
the Subsidiaries or to which the Company or any of the Subsidiaries, or
to which any of their respective properties, is subject, that are not
disclosed in the Offering Memorandum and which, if adversely decided,
could have a Material Adverse Effect, or materially affect the issuance
of the Notes or the consummation of the transactions contemplated by this
Agreement. There are no agreements, contracts, indentures, leases or
other instruments that would be required to be described in the Offering
Memorandum if it were a prospectus included in a registration statement
on Form S-3 under the Act but are not
10
described as would be required, or that are required to be filed as an
exhibit to any Incorporated Document that are not so filed as required.
Neither the Company nor any Subsidiary is involved in any strike, job
action or labor dispute with any group of employees, and, to the
Company's best knowledge, no such action or dispute is threatened.
(j) Neither the Company nor any of the Subsidiaries is in violation
of its certificate or articles of incorporation or by-laws or other
organizational documents or, in any material respect, of any material
law, ordinance, administrative or governmental rule or regulation
applicable to the Company or any of the Subsidiaries, except where such
violation would not have a Material Adverse Effect, or of any material
decree of any court or governmental agency or body having jurisdiction
over the Company or any of the Subsidiaries, except where such violation
would not have a Material Adverse Effect, or in default in the
performance of any obligation, agreement or condition contained in any
bond, debenture, note or any other evidence of indebtedness or in any
agreement, indenture, lease or other instrument to which the Company or
any of the Subsidiaries is a party or by which any of them or any of
their respective properties may be bound, except where such default would
not have a Material Adverse Effect .
(k) None of the issuance, offer, sale or delivery of the Notes, the
issuance of Common Stock upon conversion of the Notes, the execution,
delivery or performance of this Agreement, the Indenture or the
Registration Rights Agreement by the Company or the consummation by the
Company of the transactions contemplated hereby or thereby (i) requires
any consent, approval, authorization or other order of, or registration
or filing with, any court, regulatory body, administrative agency or
other governmental body, agency or official (except such as may be
required in connection with the registration under the Act of the Notes
or the Common Stock in accordance with the Registration Rights Agreement
or the qualification of the Indenture under the 1939 Act and except for
compliance with the securities or Blue Sky laws of various jurisdictions
or any filing required by the National Association of Securities Dealers,
Inc. (the "NASD") or the Commission), or conflicts or will conflict with
or constitutes or will constitute a breach of, or a default under, the
certificate or articles of incorporation or bylaws, or other
organizational documents, of the Company or any of the Subsidiaries or
(ii) conflicts or will conflict with or constitutes or will constitute a
breach of, or a default under any material agreement, indenture, lease or
other material instrument to which the Company or any of the Subsidiaries
is a party or by which any of them or any of their respective properties
may be bound which is material to the Company and its Subsidiaries taken
as a whole, except for any such conflict, breach or default that has been
waived, or violates or will violate any statute, law, regulation or
filing or judgment, injunction, order or decree applicable to the Company
or any of the Subsidiaries or any of their respective properties, or will
result in the creation or imposition of any lien, charge or encumbrance
upon any property or assets of the Company or any of the Subsidiaries
pursuant to the terms of any agreement or instrument to which any of them
is a party or by which any of them may be bound or to which any of the
property or assets of any of them is subject.
(l) The accountants, Ernst & Young LLP, who have certified or shall
certify the financial statements included as part of the Offering
Memorandum (or any amendment or supplement thereto), each are independent
public accountants under Rule 101 of the AICPA'a Code of Professional
Conduct, and its interpretation and rulings.
11
(m) The financial statements, together with related schedules and
notes forming part of the Offering Memorandum, present fairly the
consolidated financial position, results of operations and changes in the
financial position of the Company and the Subsidiaries on the basis
stated in the Offering Memorandum at the respective dates or for the
respective periods to which they apply; such statements and related
schedules and notes have been prepared in accordance with generally
accepted accounting principles consistently applied throughout the
periods involved, except as disclosed therein; and the other financial
and statistical information and data set forth in the Offering
memorandum, are accurately presented in all material respects and
prepared on a basis consistent with such financial statements and the
books and records of the Company and the Subsidiaries.
(n) The Company has all requisite power and authority to execute,
deliver and perform its obligations under this Agreement and the
Registration Rights Agreement; the execution and delivery of, and the
performance by the Company of its obligations under, this Agreement and
the Registration Rights Agreement have been duly and validly authorized
by the Company, and this Agreement has been duly executed and delivered
by the Company and constitute the valid and legally binding agreement of
the Company, enforceable against the Company in accordance with their
terms, except as the enforcement hereof and thereof may be limited by
bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium
or other similar laws affecting the enforcement of creditors' rights
generally and subject to the applicability of general equitable
principles, and except as rights to indemnity and contribution hereunder
and thereunder may be limited by Federal or state securities laws.
(o) Except as disclosed in the Offering Memorandum (or any
amendment or supplement thereto), subsequent to the date as of which such
information is given in the Offering Memorandum (or any amendment or
supplement thereto), neither the Company nor any of the Subsidiaries has
incurred any liability or obligation, direct or contingent, or entered
into any transaction, not in the ordinary course of business, that is
material to the Company and the Subsidiaries taken as a whole, and there
has not been any change in the capital stock, or material increase in the
short-term or long-term debt, of the Company or any of the Subsidiaries
or any material adverse change, in the condition (financial or other),
business, or results of operations of the Company and the Subsidiaries
taken as a whole.
(p) Each of the Company and the Subsidiaries has good title to all
property (real and personal) described in the Offering Memorandum as
being owned by it, free and clear of all liens, claims, security
interests or other encumbrances except such as are described in the
Offering Memorandum or in a document filed as an exhibit to an
Incorporated Document, subject to such exceptions as are not material to
its respective business or do not materially interfere with the use made
of such property by the Company and the Subsidiaries taken as whole, and
all the property described in the Offering Memorandum as being held under
lease by the Company or any of the Subsidiaries is held by it under
valid, subsisting and enforceable leases, except where the failure to do
so would not have a Material Adverse Effect.
(q) The Company has not distributed and, prior to the later to
occur of the Closing Date and completion of the distribution of the
Notes, will not distribute any offering
12
material in connection with the offering and sale of the Notes other than
the Preliminary Offering Memorandum and Offering Memorandum.
(r) Each of the Company and the Subsidiaries has such permits,
licenses, franchises and authorizations of governmental or regulatory
authorities ("Permits") as are necessary to own its properties and to
conduct its business in the manner described in the Offering Memorandum
or in an Incorporated Document, subject to such qualifications as may be
set forth in the Offering Memorandum, except where the failure to obtain
such permits, licenses, franchises and authorizations would not have a
Material Adverse Effect, each of the Company and the Subsidiaries has
fulfilled and performed all its material obligations with respect to the
Permits, and no event has occurred which allows, or after notice or lapse
of time would allow, revocation or termination thereof or results in any
other material impairment of the rights of the holder of any Permit,
subject in each case to such qualification as may be set forth in the
Offering Memorandum. Except as described in the Offering Memorandum, none
of the Permits contains any restriction that is materially burdensome to
the Company or the Subsidiaries.
(s) The Company and the Subsidiaries have in effect insurance with
respect to their properties and business against loss or damage of the
kind and in the amounts which the Company believes is reasonably adequate
in light of the business conducted by the Company and the Subsidiaries
and the properties covered thereby.
(t) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurances that (i) transactions are
executed in accordance with management's general or specific
authorization; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain accountability for assets; (iii)
access to assets is permitted only in accordance with management's
general or specific authorization; and (iv) the recorded accountability
for assets is compared with existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
(u) Neither the Company nor any of the Subsidiaries nor, to the
Company's knowledge, any employee of the Company or any Subsidiary has
made any payment of funds of the Company or any Subsidiary or received or
retained any funds in violation of any law, rule or regulation, which
payment, receipt or retention of funds is of a character that would be
required to be disclosed in the Offering Memorandum if it were a
prospectus included in a registration statement.
(v) The property, assets and operations of the Company and the
Subsidiaries comply in all material respects with all applicable Federal,
state and local laws, rules, orders, decrees, judgments, injunctions,
licenses, permits and regulations relating to environmental maters (the
"Environmental Laws"), except to the extent that the lack of compliance
with such Environmental Laws would not, singularly or in the aggregate,
have a Material Adverse Effect. To the Company's best knowledge, none of
the Company's or any Subsidiary's property, assets or operations is the
subject of any federal, state or local investigation evaluating whether
any remedial action is needed to respond to a release of any substance
into the environment regulated by or
13
forming the basis of liability under any Environmental Laws (a "Hazardous
Material"). Neither the Company nor any Subsidiary has received any
notice or claim, nor are there any pending or, to the Company's best
knowledge, threatened or reasonably anticipated lawsuits against it with
respect to violations of an Environmental Law or in connection with the
release of any Hazardous Material into the environment. Neither the
Company nor any Subsidiary has any material contingent liability in
connection with any release of Hazardous Material into the environment.
(w) No holder of any security of the Company (other than holders of
the Notes and holders of shares of Common Stock received upon conversion
thereof) has any right which has not been waived to have any Common stock
or other securities of the Company included in the Shelf Registration
Statement or to request or demand registration of shares of Common Stock
or any other security of the Company because of the consummation of the
transactions contemplated by this Agreement or the Registration Rights
Agreement. Except as described in the Offering Memorandum, no person has
the right, contractual or otherwise, to cause the Company to sell or
otherwise issue to them, or to permit them to underwrite the sale of, any
of the Notes. Except as described in or contemplated by the Offering
Memorandum, there are no outstanding options, warrants or other rights
calling for the issuance of, and, there are no commitments, plans or
arrangements to issue, any shares of capital stock of the Company or any
security convertible into or exchangeable or exercisable for capital
stock of the Company, except (i) pursuant to offers of employment made in
the ordinary course of business or (ii) options granted, or which the
Company has committed to grant, since April 30, 1997.
(x) Except as disclosed in the Offering Memorandum, the Company and
the Subsidiaries own or possess all patents, trademarks, trademark
registrations, service marks, service xxxx registrations, trade names,
copyrights, licenses, inventions, trade secrets and rights described in
the Offering Memorandum as being owned by any of them or necessary for
the conduct of their respective businesses, and the Company is not aware
of any material claim to the contrary or any material challenge by any
other person to the material rights of the Company and the Subsidiaries
with respect to the foregoing.
(y) The Company is not now, and after sale of the Notes to be sold
by it hereunder and application of the net proceeds from such sale as
described in the Offering Memorandum under the caption "Use of Proceeds"
will not be, an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
(z) Based upon the assumptions and subject to the qualifications
set forth therein, the statements made in the Offering Memorandum under
the caption "Certain United States Federal Income Tax Consequences"
accurately summarize the material United States federal income tax
consequences of the ownership, conversion and disposition of the Notes
for United States holders who acquire Notes on original issue and who
hold Notes as "capital assets" within the meaning of Section 1221 of the
Internal Revenue Code of 1986, as amended.
(aa) The Company and the Subsidiaries have filed all federal, state,
local and foreign tax returns and tax forms required to be filed; such
returns and forms are complete and correct in all material respects; and
all taxes shown by such returns or otherwise assessed that are
14
due or payable have been paid, except such taxes as are being contested
in good faith and as to which adequate reserves have been provided.
(bb) When the Notes are issued and delivered pursuant to this
Agreement, such Notes will not be of the same class (within the meaning
of Rule 144A(d)(3) under the Act) as any security of the Company that is
listed on a national securities exchange registered under Section 6 of
the Exchange Act or that is quoted in a United States automated
interdealer quotation system.
(cc) After giving effect to the intended use of proceeds from the
offering of the Notes as described in the Offering Memorandum under the
caption "Use of Proceeds" the Notes do not constitute "corporate
acquisition indebtedness" within the meaning of Section 279 of the
Internal Revenue Code.
(dd) Neither the Company nor any affiliate (as defined in Rule
501(b) of Regulation D ("Regulation D") under the Act) of the Company has
directly, or through any agent (provided that no representation is made
as to the Initial Purchaser or any person acting on its behalf), (i)
sold, offered for sale, solicited offers to buy or otherwise negotiated
in respect of, any security (as defined in the Act) which is or will be
integrated with the offering and sale of the Notes in a manner that would
require the registration of the Notes under the Act or (ii) engaged in
any form of general solicitation or general advertising (within the
meaning of Regulation D) in connection with the offering of the Notes.
(ee) The Company is not required to deliver the information
specified in Rule 144A(d)(4) in connection with the offering and resale
of the Notes by the Initial Purchaser.
(ff) Assuming (i) that the representations and warranties in Section
2 hereof are true, (ii) the Initial Purchaser complies with the covenants
set forth in Section 2 hereof and (iii) that each person to whom the
Initial Purchaser offers, sells or delivers the Notes is a Qualified
Institutional Buyer or a person other than a U.S. person outside the
United States in reliance on Regulation S under the Act, the purchase and
sale of the Notes pursuant hereto (including the Initial Purchaser's
proposed offering of the Notes on the terms and in the manner set forth
in the Offering Memorandum and Section 2 hereof) is exempt from the
registration requirements of the Act. None of the Company, its
Subsidiaries or affiliates or any person acting on its or their behalf
(provided that no representation is made as to the Initial Purchaser or
any person acting on its behalf) has engaged in any directed selling
efforts (as that term is defined in Regulation S) with respect to the
Notes and the Company, its Subsidiaries and each person acting on their
behalf (provided that no representation is made as to the Initial
Purchaser or any person acting on its behalf) have complied with the
offering restrictions requirement of Regulation S.
(gg) The execution and delivery of this Agreement, the other
Operative Documents and the sale of the Notes to the Initial Purchaser or
by the Initial Purchaser to Eligible Purchasers will not involve any
prohibited transaction within the meaning of Section 406 of ERISA or
Section 4975 of the Code. The representation made by the Company in the
preceding sentence is made in reliance upon and subject to the accuracy
of, and compliance with, the representations and covenants made or deemed
made by the Eligible Purchasers as set forth in the Offering Memorandum
under the section entitled "Notice to Investors."
15
(hh) The Company is not required to obtain stockholder consent or
approval pursuant to the rules of the Nasdaq National Market or any
securities exchange or trading facility in connection with the offering
and sale of the Notes.
6. Indemnification and Contribution. (a) The Company agrees to
--------------------------------
indemnify and hold harmless the Initial Purchaser and each person, if any, who
controls the Initial Purchaser within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act, from and against any and all losses, claims,
damages, liabilities and expenses (including reasonable costs of
investigation) arising out of or based upon any untrue statement or alleged
untrue statement of a material fact contained in the Preliminary Offering
Memorandum or Offering Memorandum or in any amendment or supplement thereto,
or arising out of or based upon any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as such losses, claims,
damages, liabilities or expenses arise out of or are based upon any untrue
statement or omission or alleged untrue statement or omission which has been
made therein or omitted therefrom in reliance upon and in conformity with the
information relating to the Initial Purchaser furnished in writing to the
Company by or on behalf of the Initial Purchaser expressly for use in
connection therewith ; provided, however, that the indemnification contained
-------- -------
in this paragraph (a) with respect to the Preliminary Offering Memorandum
shall not inure to the benefit of the Initial Purchaser (or to the benefit of
any person controlling the Initial Purchaser) on account of any such loss,
claim, damage, liability or expense arising from the sale of the Notes by the
Initial Purchaser to any person if the untrue statement or alleged untrue
statement or omission or alleged omission of a material fact contained in the
Preliminary Offering Memorandum was corrected in the Offering Memorandum and
the Initial Purchaser sold Notes to that person without sending or giving at
or prior to the written confirmation of such sale, a copy of the Offering
Memorandum (as then amended or supplemented) if the Company has previously
furnished sufficient copies thereof to the Initial Purchaser on a timely basis
to permit such sending or giving. The foregoing indemnity agreement shall be
in addition to any liability which the Company may otherwise have.
(b) If any action, suit or proceeding shall be brought against the
Initial Purchaser or any person controlling the Initial Purchaser in
respect of which indemnity may be sought against the Company, the Initial
Purchaser or such controlling person shall promptly notify the parties
against whom indemnification is being sought (the "indemnifying
parties"), and such indemnifying parties shall assume the defense
thereof, including the employment of counsel and payment of all fees and
expenses. The Initial Purchaser or any such controlling person shall have
the right to employ separate counsel in any such action, suit or
proceeding and to participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of the Initial Purchaser
or such controlling person unless (i) the indemnifying parties have
agreed in writing to pay such fees and expenses, (ii) the indemnifying
parties have failed to assume the defense and employ counsel, or (iii)
the named parties to any such action, suit or proceeding (including any
impleaded parties) include both the Initial Purchaser or such controlling
person and the indemnifying parties and the Initial Purchaser or such
controlling person shall have been advised by its counsel that
representation of such indemnified party and any indemnifying party by
the same counsel would be inappropriate under applicable standards of
professional conduct (whether or not such representation by the same
counsel has been proposed) due to actual or potential differing interests
between them (in which case the indemnifying party shall not have the
right to assume the defense of such action, suit or proceeding on behalf
of the Initial Purchaser or such controlling person). It is understood,
however, that the indemnifying parties shall, in connection with any one
such action, suit or proceeding or separate but substantially similar or
related actions, suits or proceedings in the same jurisdiction arising
out of the same general allegations or circumstances, be liable for the
reasonable fees and expenses of only one separate firm of attorneys (in
addition to any local counsel) at any time for the Initial Purchaser and
controlling persons not having actual or potential differing
16
interests with the Initial Purchaser or among themselves, which firm
shall be designated in writing by Xxxxx Xxxxxx Inc., and that all such
fees and expenses shall be reimbursed on a monthly basis as provided in
paragraph (a) hereof. The indemnifying parties shall not be liable for
any settlement of any such action, suit or proceeding effected without
their written consent, but if settled with such written consent, or if
there be a final judgment for the plaintiff in any such action, suit or
proceeding, the indemnifying parties agree to indemnify and hold harmless
the Initial Purchaser, to the extent provided in paragraph (a), and any
such controlling person from and against any loss, claim, damage,
liability or expense by reason of such settlement or judgment.
(c) The Initial Purchaser agrees to indemnify and hold harmless the
Company, and its directors and officers, and any person who controls the
Company within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act to the same extent as the indemnity from the Company to the
Initial Purchaser set forth in paragraph (a) hereof, but only with
respect to information relating to the Initial Purchaser furnished in
writing by or on behalf of the Initial Purchaser expressly for use in the
Preliminary Offering Memorandum or Offering Memorandum or any amendment
or supplement thereto. If any action, suit or proceeding shall be brought
against the Company, any of its directors or officers, or any such
controlling person based on the Preliminary Offering Memorandum or
Offering Memorandum, or any amendment or supplement thereto, and in
respect of which indemnity may be sought against the Initial Purchaser
pursuant to this paragraph (c), the Initial Purchaser shall have the
rights and duties given to the Company by paragraph (b) above (except
that if the Company shall have assumed the defense thereof the Initial
Purchaser shall not be required to do so, but may employ separate counsel
therein and participate in the defense thereof, but the fees and expenses
of such counsel shall be at the Initial Purchaser's expense), and the
Company, its directors and officers, and any such controlling person
shall have the rights and duties given to the Initial Purchaser by
paragraph (b) above. The foregoing indemnity agreement shall be in
addition to any liability which the Initial Purchaser may otherwise have.
(d) If the indemnification provided for in this Section 6 is
unavailable to an indemnified party under paragraphs (a) or (c) hereof in
respect of any losses, claims, damages, liabilities or expenses referred
to therein, then an indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages,
liabilities or expenses (i) in such proportion as is appropriate to
reflect the relative benefits received by the Company on the one hand and
the Initial Purchaser on the other hand from the offering of the Notes,
or (ii) if the allocation provided by clause (i) above is not permitted
by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the
relative fault of the Company on the one hand and the Initial Purchaser
on the other in connection with the statements or omissions that resulted
in
17
such losses, claims, damages, liabilities or expenses, as well as any
other relevant equitable considerations. The relative benefits received
by the Company on the one hand and the Initial Purchaser on the other
shall be deemed to be in the same proportion as the total net proceeds
from the offering (before deducting expenses) received by the Company
bear to the total underwriting discounts and commissions received by the
Initial Purchaser, in each case as set forth in the table on the cover
page of the Offering Memorandum; provided that, in the event that the
Initial Purchaser shall have purchased any Additional Notes hereunder,
any determination of the relative benefits received by the Company or the
Initial Purchaser from the offering of the Notes shall include the net
proceeds (before deducting expenses) received by the Company, and the
underwriting discounts and commissions received by the Initial Purchaser,
from the sale of such Additional Notes, in each case computed on the
basis of the respective amounts set forth in the notes to the table on
the cover page of the Offering Memorandum. The relative fault of the
Company on the one hand and the Initial Purchaser on the other hand shall
be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the
Company on the one hand or by the Initial Purchaser on the other hand and
the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
(e) The Company and the Initial Purchaser agree that it would not
be just and equitable if contribution pursuant to this Section 6 were
determined by a pro rata allocation or by any other method of allocation
that does not take account of the equitable considerations referred to in
paragraph (d) above. The amount paid or payable by an indemnified party
as a result of the losses, claims, damages, liabilities and expenses
referred to in paragraph (d) above shall be deemed to include, subject to
the limitations set forth above, any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating any
claim or defending any such action, suit or proceeding. Notwithstanding
the provisions of this Section 6, the Initial Purchaser shall not be
required to contribute any amount in excess of the amount by which the
total price of the Notes underwritten by it and distributed to the public
exceeds the amount of any damages which the Initial Purchaser 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 Act) shall
be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
(f) Any losses, claims, damages, liabilities or expenses for which an
indemnified party is entitled to indemnification or contribution under this
Section 6 shall be paid by the indemnifying party to the indemnified party
as such losses, claims, damages, liabilities or expenses are incurred. The
indemnity and contribution agreements contained in this Section 6 and the
representations and warranties of the Company set forth in this Agreement
shall remain operative and in full force and effect, regardless of (i) any
investigation made by or on behalf of the Initial Purchaser or any person
controlling the Initial Purchaser, the Company, its directors or officers
or any person controlling the Company, (ii) acceptance of any Notes and
payment therefor hereunder, and (iii) any termination of this Agreement. A
successor to the Initial Purchaser or any person controlling the Initial
Purchaser, or to the Company, its directors or officers or any person
controlling the Company, shall be entitled to the benefits of the
indemnity, contribution and reimbursement agreements contained in this
Section 6.
18
(g) No indemnifying party shall, without the prior written consent
of the indemnified party, effect any settlement of any pending or
threatened action, suit or proceeding 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
claims that are the subject matter of such action, suit or proceeding.
7. Conditions of the Initial Purchaser's Obligations. The
-------------------------------------------------
obligations of the Initial Purchaser to purchase the Firm Notes hereunder are
subject to the following conditions:
(a) At the time of execution of this Agreement and on the Closing
Date, no order or decree preventing the use of the Offering Memorandum or
any amendment or supplement thereto, or any order asserting that the
transactions contemplated by this Agreement are subject to the
registration requirements of the Act shall have been issued and no
proceedings for that purpose shall have been commenced or shall be
pending or, to the knowledge of the Company, be contemplated. No stop
order suspending the sale of the Notes in any jurisdiction designated by
the Initial Purchaser shall have been issued and no proceedings for that
purpose shall have been commenced or shall be pending or, to the
knowledge of the Company, shall be contemplated.
(b) Subsequent to the effective date of this Agreement, there shall
not have occurred (i) any change in or affecting the condition (financial
or other), business, properties, net worth, or results of operations of
the Company and the Subsidiaries (taken as a whole) not contemplated by
the Offering Memorandum, which in the opinion of the Initial Purchaser,
would materially adversely affect the market for the Notes, or (ii) any
event or development relating to or involving the Company or any officer
or a key employee named in the Offering Memorandum, or any director of
the Company which makes any statement made in the Offering Memorandum
untrue or which, in the opinion of the Company and its counsel or the
Initial Purchaser and its counsel, requires the making of any addition to
or change in the Offering Memorandum in order to state a material fact
required by any law to be stated therein or necessary in order to make
the statements therein not misleading, if amending or supplementing the
Offering Memorandum to reflect such event or development would, in the
opinion of the Initial Purchaser, materially adversely affect the market
for the Notes.
(c) The Initial Purchaser shall have received on the Closing Date
an opinion of Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP, counsel for the Company,
dated the Closing Date and addressed to the Initial Purchaser, to the
effect that:
(i) The Company is a corporation duly incorporated and validly
existing in good standing under the laws of the State of Delaware with
full corporate power and authority to own, lease and operate its
properties and to conduct its business as described in the Offering
Memorandum and, to such counsel's knowledge, is duly registered and
qualified to conduct its business and is in good standing in each
jurisdiction where the nature of its properties or the conduct of its
business requires such registration or qualification, except where the
failure so to register or qualify would not have a Material Adverse
Effect;
19
(ii) EPRO is a corporation duly organized and validly
existing in good standing under the laws of the jurisdiction of its
organization, with corporate power and authority to own, lease, and
operate its properties and to conduct its business as described in the
Offering Memorandum; and all the outstanding shares of capital stock of
EPRO have been duly authorized and validly issued, are fully paid and
nonassessable, and, except as set forth in the Offering Memorandum, are
owned by the Company free and clear of any perfected security interest,
or, to the knowledge of such counsel after reasonable inquiry, any other
security interest, lien, adverse claim, equity or other encumbrances;
(iii) The authorized capital stock of the Company conforms in
all material respects as to legal matters to the description thereof
contained in the Offering Memorandum under the caption "Description of
Capital Stock";
(iv) All the shares of capital stock of the Company
outstanding prior to the issuance of the Notes have been duly authorized
and validly issued, are fully paid and nonassessable;
(v) The Company has corporate power and authority to enter
into this Agreement and the Registration Rights Agreement and to issue,
sell and deliver the Notes to be sold by it to the Initial Purchaser as
provided herein, and this Agreement and the Registration Rights Agreement
has been duly authorized, executed and delivered by the Company and is
the valid, legal and binding agreement of the Company, except as
enforcement of rights to indemnity and contribution hereunder and
thereunder may be limited by Federal or state securities laws or
principles of public policy and subject to the qualification that the
enforceability of the Company's obligations hereunder and thereunder may
be limited by bankruptcy, fraudulent conveyance, insolvency,
reorganization, moratorium, and other laws relating to or affecting
creditors' rights generally and by general equitable principles;
(vi) The Indenture has been duly and validly authorized,
executed and delivered by the Company and, assuming due authorization,
execution and delivery by the Trustee, is a valid and binding agreement
of the Company, enforceable in accordance with its terms, subject to the
qualification that the enforceability of the Company's obligations
thereunder may be limited by bankruptcy, fraudulent conveyance,
insolvency, reorganization, moratorium, and other laws relating to or
affecting creditors' rights generally and by general equitable principles
and as enforceability of rights to indemnity and contribution thereunder
may be limited by Federal or State securities laws or principles of
public policy; no qualification of the Indenture under the 1939 Act is
required in connection with the offer and sale of the Notes contemplated
hereby or in connection with the Exempt Resales;
(vii) The Notes have been duly and validly authorized by the
Company and when executed by the Company in accordance with the Indenture
and, assuming due authentication of the Notes by the Trustee, upon
delivery to the Initial Purchaser against payment therefor in accordance
with the terms hereof, will have been validly issued and delivered, and
will constitute valid and binding obligations of the Company entitled to
the benefits of the Indenture, subject to the qualification that the
enforceability of the Company's obligations thereunder may be
20
limited by bankruptcy, fraudulent conveyance, insolvency, reorganization,
moratorium, and other laws relating to or affecting creditors' rights
generally and by general equitable principles;
(viii) The shares of Common Stock issuable upon conversion of
the Notes have been duly authorized and reserved for issuance and, when
issued and delivered upon conversion of the Notes, in accordance with the
terms thereof, will be validly issued, fully paid and nonassessable and
to the best knowledge of such counsel, will be free of preemptive or
similar rights;
(ix) Neither the offer, sale or delivery of the Notes, the
execution, delivery or performance by the Company of this Agreement and
the Indenture, compliance by the Company with the provisions hereof or
thereof nor consummation by the Company of the transactions contemplated
hereby or thereby conflicts with or constitutes a breach of, or a default
under, in any material respect, the certificate of incorporation or
bylaws of the Company or any material agreement, indenture, lease or
other instrument to which the Company is a party or by which its
properties is bound and which have been filed as exhibits to any
Incorporated Document, or will result in the creation or imposition of
any lien, charge or encumbrance upon any property or assets of the
Company pursuant to the terms of any material agreement or instrument to
which the Company is a party or by which it may be bound or to which any
of the property or assets of the Company is subject, nor to such
counsel's knowledge will any such action result in any violation in any
material respect of any existing law, or any regulation, ruling (assuming
compliance with all applicable state securities and Blue Sky laws),
judgment, injunction, order or decree, applicable to the Company;
(x) No consent, approval, authorization or other order of,
or registration or filing with, any court, regulatory body,
administrative agency or other governmental body, agency, or official is
required on the part of the Company for the valid issuance and sale of
the Notes to the Initial Purchaser as contemplated by this Agreement
except as may be required under state securities or blue sky laws or
applicable rules and regulations of the NASD or in connection with
qualifying the Indenture under the 1939 Act;
(xi) To the knowledge of such counsel, (A) other than as
described or contemplated in the Offering Memorandum, there are no legal
or governmental proceedings pending or threatened against the Company or
any of the Subsidiaries or to which the Company or any of its properties
is subject, which are not disclosed in the Offering Memorandum and which,
if adversely decided, are reasonably likely to cause a Material Adverse
Effect or materially affects the issuance of the Notes or the
consummation of the transactions contemplated by this Agreement and (B)
there are no material agreements, contracts, indentures, leases or other
instruments, that are not described in the Offering Memorandum or filed
as exhibits to any of the Incorporated Documents;
(xii) The statements in the Offering Memorandum, insofar as
they are descriptions of contracts, agreements or other legal documents, or
refer to statements of law or legal conclusions, are accurate in all material
respects and present fairly the information required to be shown;
21
(xiii) Except as described in the Offering Memorandum, such
counsel does not know of any person who has the right, contractual or
otherwise, as a result of the consummation of the transactions contemplated by
this Agreement, to require registration under the Act of any shares of Common
Stock or other securities of the Company;
(xiv) No registration of the Notes under the Act is required
for the sale of the Notes to the Initial Purchaser as contemplated in this
Agreement or for the Exempt Resales (assuming (A) that any Eligible Purchaser
who buys the Notes in the Exempt Resales is a Qualified Institutional Buyer or
a person other than a U.S. person outside the United States in reliance on
Regulation S and (B) the accuracy of the Initial Purchaser's representations
and those of the Company in this Agreement; and
(xv) Although such counsel have not undertaken to determine
independently, and do not assume any responsibility for, the accuracy,
completeness or fairness of the statements in the Offering Memorandum,
such counsel have participated in the preparation of the Offering
Memorandum, including review and discussion of the contents thereof, and
nothing has come to the attention of such counsel that has caused them to
believe that the Offering Memorandum, as of its date and as of the
Closing Date or the Option Closing Date, as the case may be, 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 or that any amendment or supplement to the Offering
Memorandum, as of its respective date, and as of the Closing Date or the
Option Closing Date, as the case may be, contained any untrue statement
of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading (it
being understood that such counsel need express no opinion with respect
to the financial statements and the notes thereto and the schedules and
other financial and statistical data included or incorporated by
reference in the Offering Memorandum and information furnished by or on
behalf of the Initial Purchaser).
(d) The Initial Purchaser shall have received on the Closing Date
an opinion of Xxxxxxxx & Xxxxxxxx LLP, counsel for the Initial Purchaser,
dated the Closing Date, and addressed to the Initial Purchaser, with
respect to matters as the Initial Purchaser may request.
(e) The Initial Purchaser shall have received letters addressed to
the Initial Purchaser, and dated the date hereof and the Closing Date
from Ernst & Young LLP, independent certified public accountants,
substantially in the forms heretofore approved by the Initial Purchaser.
(f) (i) There shall not have been any change in the capital stock
of the Company nor any material increase in the short-term or long-term
debt of the Company (other than in the ordinary course of business or
pursuant to the Indenture) from that set forth or contemplated in the
Offering Memorandum (or any amendment or supplement thereto); (ii) there
shall not have been, since the respective dates as of which information
is given in the Offering Memorandum (or any amendment or supplement
thereto), except as may otherwise be stated in the Offering Memorandum
(or any amendment or supplement thereto), any material adverse change in
the condition (financial or other), business, properties, net worth or
results of operations of the
22
Company and the Subsidiaries taken as a whole; (iii) the Company and the
Subsidiaries shall not have any liabilities or obligations, direct or
contingent (whether or not in the ordinary course of business), that are
material to the Company and the Subsidiaries, taken as a whole, other
than those reflected in the Offering Memorandum (or any amendment or
supplement thereto); and (iv) all the representations and warranties of
the Company contained in this Agreement shall be true and correct in all
material respects on and as of the date hereof and on and as of the
Closing Date as if made on and as of the Closing Date, and the Initial
Purchaser shall have received a certificate, dated the Closing Date and
signed by the chief executive officer and the chief accounting officer of
the Company (or such other officers as are acceptable to the Initial
Purchaser), to the effect set forth in this Section 7(f) and in Section
7(g) hereof.
(g) The Company shall not have failed at or prior to the Closing
Date to have performed or complied with any of its agreements herein
contained and required to be performed or complied with by it hereunder
at or prior to the Closing Date.
(h) There shall not have been any announcement by any "nationally
recognized statistical rating organization," as defined for purposes of
Rule 436(g) under the Act, that (i) it is downgrading its rating assigned
to any class of securities of the Company, or (ii) it is reviewing its
ratings assigned to any class of securities of the Company with a view to
possible downgrading, or with negative implications, or direction not
determined.
(i) The Notes have been designated for trading in the PORTAL Market.
(j) The Company shall have furnished or caused to be furnished to
the Initial Purchaser such further certificates and documents as the
Initial Purchaser shall have requested.
All such opinions, certificates, letters and other documents will be
in compliance with the provisions hereof only if they are reasonably
satisfactory in form and substance to the Initial Purchaser and counsel for the
Initial Purchaser.
Any certificate or document signed by any officer of the Company and
delivered to the Initial Purchaser, or to counsel for the Initial Purchaser,
shall be deemed a representation and warranty by the Company to the Initial
Purchaser as to the statements made therein.
The obligations of the Initial Purchaser to purchase any Additional
Notes hereunder are subject to the satisfaction on and as of any Option Closing
Date of the conditions set forth in this Section 7, except that, if any Option
Closing Date is other than the Closing Date, the certificates, opinions and
letters referred to in paragraphs (c) through (g) and paragraphs (i) and (l)
shall be dated the Option Closing Date in question and the opinions called for
by paragraphs (c), (d) and (e) shall be revised to reflect the sale of
Additional Notes.
8. Expenses. The Company agrees to pay the following costs and
--------
expenses and all other costs and expenses incident to the performance by it of
its obligations hereunder: (i) the preparation, printing or reproduction of
the Offering Memorandum (including financial statements thereto), and each
amendment or supplement to any of them, this Agreement and the Indenture; (ii)
the printing (or reproduction) and delivery (including postage, air freight
charges and
23
charges for counting and packaging) of such copies of the Offering Memorandum,
the Preliminary Offering Memorandum, and all amendments or supplements to any
of them as may be reasonably requested for use in connection with the offering
and sale of the Notes; (iii) the preparation, printing, authentication,
issuance and delivery of certificates for the Notes, including any stamp taxes
in connection with the original issuance and sale of the Notes; (iv) the
printing (or reproduction) and delivery of this Agreement, the Blue Sky
Memorandum and all other agreements or documents printed (or reproduced) and
delivered in connection with the offering of the Notes; (v) the application to
designate the Notes for trading in the PORTAL Market; (vi) the qualification
of the Notes for offer and sale under the securities or Blue Sky laws of the
several states as provided in Section 4(f) hereof (including the reasonable
fees, expenses and disbursements of counsel for the Initial Purchaser relating
to the preparation, printing or reproduction, and delivery of the Blue Sky
Memorandum and such qualification); (vii) the fees and expenses of the
Company's accountants and the fees and expenses of counsel (including local
and special counsel) for the Company. The Company hereby agrees that it will
pay in full as soon as practicable after the Closing Date the fees and
expenses referred to in clause (vi) of this Section 8 by delivering to counsel
for the Initial Purchaser on such date a check payable to such counsel in the
requisite amount.
9. Effective Date of Agreement. This Agreement shall become
---------------------------
effective upon the execution and delivery hereof by all the parties hereto.
10. Termination of Agreement. This Agreement shall be subject to
------------------------
termination in the absolute discretion of the Initial Purchaser, without
liability on the part of the Initial Purchaser to the Company, by notice to
the Company, if prior to the Closing Date or any Option Closing Date (if
different from the Closing Date and then only as to the Additional Notes), as
the case may be, (i) trading in securities generally on the New York Stock
Exchange or The Nasdaq Stock Market shall have been suspended or materially
limited, (ii) a general moratorium on commercial banking activities in New
York shall have been declared, or (iii) there shall have occurred any outbreak
or escalation of hostilities or other international or domestic calamity,
crisis or change in political, financial or economic conditions, the effect of
which on the financial markets of the United States is such as to make it, in
the judgment of the Initial Purchaser, impracticable or inadvisable to
commence or continue the offering of the Notes on the terms set forth on the
cover page of the Offering Memorandum or to enforce contracts for the resale
of the Notes by the Initial Purchaser. Notice of such termination may be given
to the Company by telegram, telecopy or telephone and shall be subsequently
confirmed by letter.
11. Information Furnished by the Initial Purchaser. The statements
----------------------------------------------
set forth in the stabilization legend on the inside front cover, the last
paragraph on the cover page and the statements in the fourth and ninth
paragraphs under the caption "Plan of Distribution" in the Preliminary
Offering Memorandum and Offering Memorandum, constitute the only information
furnished by or on behalf of the Initial Purchaser as such information is
referred to in Sections 5(b) and 6 hereof.
12. Miscellaneous. Except as otherwise provided in Sections 4, 9
-------------
and 10 hereof, notice given pursuant to any provision of this Agreement shall
be in writing and shall be delivered (i) if to the Company, at the office of
the Company at 000 Xxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxxx
24
94539, Attention: Chief Financial Officer with a copy to Xxxxxx X. Xxxxxxx at
Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP, 0000 Xxxx Xxxx, Xxxx Xxxx, Xxxxxxxxxx 00000,
or (ii) if to the Initial Purchaser, to Xxxxx Xxxxxx Inc., 000 Xxxxxxxxx
Xxxxxx, Xxx Xxxx, XX 00000, Attention: Manager, Investment Banking Division.
This Agreement has been and is made solely for the benefit of the
Initial Purchaser, the Company, its directors, its officers and the controlling
persons referred to in Section 6 hereof and their respective successors and
assigns, to the extent provided herein, and no other person shall acquire or
have any right under or by virtue of this Agreement. Neither the term
"successor" nor the term "successors and assigns" as used in this Agreement
shall include a purchaser from the Initial Purchaser of any of the Notes in his
status as such purchaser.
13. Applicable Law; Counterparts. This Agreement shall be governed
-----------------------------
by and construed in accordance with the laws of the State of California
applicable to contracts made and to be performed within the State of
California and without regard to the conflicts of law principles thereof.
This Agreement may be signed in various counterparts which together
constitute one and the same instrument. If signed in counterparts, this
Agreement shall not become effective unless at least one counterpart hereof
shall have been executed and delivered on behalf of each party hereto.
25
Please confirm that the foregoing correctly sets forth the agreement
between the Company and the Initial Purchaser.
Very truly yours,
CREDENCE SYSTEMS CORPORATION
By:
_____________________________________
Title:
Confirmed as of the date first
above mentioned.
XXXXX XXXXXX INC.
By:
__________________________________
Managing Director
26
SCHEDULE I
NAME OF COMPANY
Principal Amount
Initial Purchaser of Firm Notes
----------------- ----------------
Xxxxx Xxxxxx Inc........................................ $ 100,000,000
Total................................................. $ 100,000,000
================
