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EXHIBIT 10.2
3.25% CONVERTIBLE SUBORDINATED DISCOUNT NOTES DUE 2004
TEKELEC
PURCHASE AGREEMENT
October 27, 1999
Deutsche Bank Securities Inc.
Warburg Dillon Read LLC
c/o Deutsche Bank Securities Inc.
000 Xxxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Ladies and Gentlemen:
Tekelec, a California corporation (the "Company"), confirms its agreement with
Deutsche Bank Securities Inc. and Warburg Dillon Read LLC(the "Initial
Purchasers") with respect to the sale by the Company and the purchase by the
Initial Purchasers, acting severally and not jointly, of the respective
principal amounts at maturity set forth in SCHEDULE A of the $117,500,000
aggregate principal amount at maturity of the Company's 3.25% Convertible
Subordinated Discount Notes due November 2, 2004 (the "Notes") to be issued
pursuant to the provisions of an indenture to be dated as of November 2, 1999
(the "Indenture") between the Company and Bankers Trust Company, as trustee (the
"Trustee"). Such $117,500,000 aggregate principal amount at maturity of Notes
are hereafter referred to as the "Firm Notes." Upon the request of the Initial
Purchasers, as provided in Section 2(b) of this Agreement, the Company shall
also issue and sell to the Initial Purchasers up to an additional $17,500,000
aggregate principal amount at maturity of Notes for the purpose of covering
over-allotments, if any. Such $17,500,000 aggregate principal amount at maturity
of Notes are hereinafter referred to as the "Option Notes." The Firm Notes and
Option Notes collectively constitute all of the Notes, and, as used herein, the
term "Notes" refers to the Firm Notes and the Option Notes, collectively.
The Notes are convertible into shares of the Company's common stock, without par
value (the "Common Stock"), at any time after the 90th day following the latest
date of the original issuance thereof and before the close of business on the
maturity date of the Notes, unless previously redeemed or repurchased. The
Common Stock issuable upon conversion of the Notes is sometimes hereinafter
referred to as the "Underlying Stock." Notes issued in book-entry form will be
issued to Cede& Co. as nominee of The Depository Trust Company ("DTC") pursuant
to a letter agreement, to be dated as of the Closing Date (as defined in Section
3) among the Company, the Trustee and DTC. Notes may also be issued in
certificated form to Institutional Accredited Investors (as hereinafter defined)
in accordance with the terms hereof and of the Indenture.
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The Company understands that the Initial Purchasers propose to make an offering
of the Notes on the terms and in the manner set forth herein and agrees that the
Initial Purchasers may resell, subject to the conditions set forth herein, all
or a portion of the Notes to purchasers ("Subsequent Purchasers") at any time
after the date of this Agreement. The Notes will be offered and sold by the
Initial Purchasers without being registered under the Securities Act of 1933, as
amended (the "Securities Act"), in reliance upon exemption therefrom. Pursuant
to the terms of the Notes and the Indenture, investors that acquire Notes may
only resell or otherwise transfer such Notes if such Notes are hereafter
registered under the Securities Act or if an exemption from the registration
requirements of the Securities Act is available (including, without limitation,
the exemption afforded by Rule 144A ("Rule 144A") of the rules and regulations
promulgated under the Securities Act by the Securities and Exchange Commission
(the "Commission")).
The Company has prepared and will deliver to the Initial Purchasers, on the date
hereof, copies of a final offering memorandum dated October 27, 1999 (the
"Offering Memorandum"), setting forth information regarding the Company, the
Notes and the Underlying Stock. The Offering Memorandum is to be used by the
Initial Purchasers in connection with their solicitation of purchases of, or
offering of, the Notes. "Offering Memorandum," unless otherwise stated, include
exhibits thereto and any documents incorporated therein by reference. The
Company hereby confirms that it has authorized the use of the Offering
Memorandum in connection with the offering and sale of the Notes.
Holders (including subsequent transferees) of the Notes (the "Holders") will
have the registration rights set forth in the Registration Rights Agreement (the
"Registration Rights Agreement"). Pursuant to the Registration Rights Agreement,
the Company has agreed to file with the Commission a shelf registration
statement pursuant to Rule 415 under the Securities Act (the "Shelf Registration
Statement") to cover public resales of the Notes and the Underlying Stock by the
Holders.
Capitalized terms used herein without definition have the respective meanings
specified therefor in the Offering Memorandum. For purposes hereof, "Rules and
Regulations" means the rules and regulations adopted by the Commission under the
Securities Act, the Securities Exchange Act of 1934, as amended (the "Exchange
Act") or the Trust Indenture Act of 1939, as amended (the "Trust Indenture
Act"), as applicable.
All references in this Agreement to financial statements and schedules and other
information which is "contained," "included," "stated," or "described" in the
Offering Memorandum (or other references of like import) shall be deemed to mean
and include all such financial statements and schedules and other information
which is incorporated by reference in the Offering Memorandum.
1. REPRESENTATIONS AND WARRANTIES. The Company represents and warrants
to, and agrees with, each of the Initial Purchasers as of the date hereof, and
as of the Closing Date and the Option Closing Date (as defined in Section 2(b)
hereof), if any, as follows:
(a) The Offering Memorandum, as of its date, together with each
amendment or supplement thereto, as of its date, contains all the information
that, if requested by a
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prospective purchaser, would be required to be provided pursuant to Rule
144A(d)(4) under the Securities Act. The Offering Memorandum does not, and at
the Closing Date and any Option Closing Date will not, and any amendment or
supplement thereto, if any, as of its date, will not, contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. The preceding sentence does not apply to
information contained in or omitted from the Offering Memorandum (or any
supplement or amendment thereto) in reliance upon and in conformity with written
information furnished to the Company by or on behalf of any Initial Purchaser
specifically for use therein (the "Initial Purchasers' Information"). The
parties acknowledge and agree that the Initial Purchasers' Information consists
solely of the last paragraph at the bottom of the front cover page concerning
the terms of the offering by the Initial Purchasers, the legend concerning
overallotment and trading activities of the Initial Purchasers on the inside
front cover page and the paragraphs under the caption "Plan of Distribution" in
the Offering Memorandum. The Company is subject to Sections 13 or 15(d) of the
Exchange Act.
(b) The Company has been duly organized and is validly existing
as a corporation in good standing under the laws of the State of California,
with corporate power and authority to own or lease its properties and conduct
its business as described in the Offering Memorandum. Each of the subsidiaries
of the Company as listed on SCHEDULE B hereto (collectively, the "Subsidiaries")
has been duly organized and is validly existing as a corporation in good
standing under the laws of the jurisdiction of its incorporation, with the
corporate power and authority to own or lease its properties and conduct its
business as described in the Offering Memorandum. The Subsidiaries are the only
material subsidiaries, direct or indirect, of the Company. The Company and each
of the Subsidiaries are duly qualified to transact business in all jurisdictions
in which the conduct of their business requires such qualification except for
jurisdictions where failure to so qualify, together with all other such
failures, would not have a material adverse effect upon the business,
properties, assets, rights, operations, condition (financial or otherwise) or
prospects of the Company and the Subsidiaries (defined below) taken as a whole.
The outstanding shares of capital stock of each of the Subsidiaries have been
duly authorized and validly issued, are fully paid and non-assessable and are
owned by the Company or another Subsidiary free and clear of all liens,
encumbrances and equities and claims, except (i) for encumbrances disclosed in
the Offering Memorandum, (ii) for encumbrances relating to any indebtedness
disclosed in the Offering Memorandum and (iii) the pledge of the shares of IEX
Corporation to secure the payment of the IEX notes described in the Offering
Memorandum; and no options, warrants or other rights to purchase, agreements or
other obligations to issue or other rights to convert any obligations into
shares of capital stock or ownership interests in the Subsidiaries are
outstanding. Other than the Subsidiaries, the Company does not own, control or
hold any equity interest in excess of 5% of any corporation, partnership,
limited liability company, joint venture or other entity.
(c) The outstanding shares of Common Stock of the Company have
been duly authorized and validly issued and are fully paid and non-assessable;
and no preemptive rights of stockholders exist with respect to any of the Common
Stock or the issuance of additional shares of Common Stock upon the conversion
of the Notes. The offering or sale of the Notes and the Underlying Stock as
contemplated by this Agreement do not give rise to any rights, other than
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those which have been waived or satisfied, for or relating to the registration
of any shares of Common Stock.
(d) [Reserved]
(e) The information set forth under the caption "Capitalization"
in the Offering Memorandum is true and correct. Neither the Company nor any
Subsidiaries is a party to or bound by any instrument, agreement or other
arrangement, including, but not limited to, any voting trust agreement,
stockholders' agreement or other agreement or instrument, affecting the
securities or rights or obligations of securityholders of the Company or of the
Subsidiaries or providing for any of them to issue, sell, transfer or acquire
any capital stock, rights, warrants, options or other securities of the Company
or the Subsidiaries, except for this Agreement, the Indenture, and as set forth
in the Offering Memorandum. The Notes and the Company's capital stock conform in
all material respects to all statements with respect thereto contained in the
Offering Memorandum.
(f) The consolidated financial statements of the Company and the
Subsidiaries, together with related notes and schedules as set forth in the
Offering Memorandum, present fairly the financial position and the results of
operations and cash flows of the Company and the consolidated Subsidiaries, at
the indicated dates and for the indicated periods. Such financial statements and
related schedules have been prepared in accordance with generally accepted
principles of accounting, consistently applied throughout the periods involved,
except as disclosed therein, and all adjustments necessary for a fair
presentation of results for such periods have been made. The summary financial
and statistical data included in the Offering Memorandum presents fairly the
information shown therein and such data has been compiled on a basis consistent
with the financial statements presented therein and the books and records of the
Company.
(g) PricewaterhouseCoopers LLP, who have certified certain of the
financial statements included as part of the Offering Memorandum, are
independent public accountants as required by the Securities Act and the Rules
and Regulations.
(h) There is no action or proceeding pending or, to the knowledge
of the Company, threatened against the Company, or any of the Subsidiaries
before any court or administrative agency which the Company believes is likely
to result in any material adverse change in the earnings, business, management,
properties, assets, rights, operations, condition (financial or otherwise) or
prospects of the Company and of the Subsidiaries taken as a whole, except as set
forth in the Offering Memorandum.
(i) The Company and the Subsidiaries have good and marketable
title to all of the properties and assets reflected in the financial statements
(or as described in the Offering Memorandum) hereinabove described, subject to
no lien, mortgage, pledge, charge or encumbrance of any kind except those
reflected in such financial statements (or as described in the Offering
Memorandum) and the pledge of shares of IEX Corporation to secure the Company's
obligations to the former IEX Corporation shareholders described in the Offering
Memorandum or which are not material in amount. The Company and the Subsidiaries
occupy
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their leased properties under valid and binding leases conforming in all
material respects to the description thereof set forth in the Offering
Memorandum.
(j) The Company and the Subsidiaries have filed all Federal,
State, local and foreign income tax returns (or appropriate requests for
extension) which have been required to be filed and have paid all taxes
indicated by said returns and all assessments received by them or any of them to
the extent that such taxes have become due and are not being contested in good
faith. All tax liabilities have been adequately provided for in the financial
statements of the Company.
(k) Since the respective dates as of which information is given
in the Offering Memorandum, as it may be amended or supplemented, there has not
been any material adverse change in the earnings, business, management,
properties, assets, rights, operations, condition (financial or otherwise) or
prospects of the Company and of the Subsidiaries taken as a whole, except as set
forth in the Offering Memorandum, as it may be amended or supplemented. The
Company and the Subsidiaries have no material contingent obligations which are
not disclosed in the Company's financial statements which are included in the
Offering Memorandum.
(l) Neither the Company nor any of the Subsidiaries is or with
the giving of notice or lapse of time or both, will be, in violation of or in
default under its Charter or By-Laws, or under any agreement, lease, contract,
indenture or other instrument or obligation to which it is a party or by which
it, or any of its properties, is bound and which violation or default would
reasonably be expected to have a material adverse change in the earnings,
business, management, properties, assets, rights, operations, condition
(financial or otherwise) or prospects of the Company and of the Subsidiaries
taken as a whole. The execution and delivery of this Agreement, the Indenture,
and the Registration Rights Agreement and the consummation of the transactions
herein and therein contemplated and the fulfillment of the terms hereof and
thereof will not conflict with or result in a breach of any of the terms or
provisions of, or constitute a default under, any indenture, mortgage, deed of
trust or other agreement or instrument to which the Company or any Subsidiary is
a party, or of the Charter or By-Laws of the Company or any order, rule or
regulation applicable to the Company or any Subsidiary of any court or of any
regulatory body or administrative agency or other governmental body having
jurisdiction, which conflict or default could reasonably be expected to have a
material adverse effect on the ability of the parties hereto to consummate the
transactions contemplated by this Agreement or on the earnings, business,
management, properties, assets, rights, operations, condition (financial or
otherwise) or prospects of the Company and of the Subsidiaries taken as a whole.
(m) Each approval, consent, order, authorization, designation,
declaration or filing by or with any regulatory, administrative or other
governmental body necessary in connection with the execution and delivery by the
Company of this Agreement and the consummation of the transactions herein
contemplated (except such additional steps as may be required by the Commission,
the National Association of Securities Dealers, Inc. (the "NASD") or such
additional steps as may be necessary under state securities or Blue Sky laws)
has been obtained or made and is in full force and effect.
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(n) The Company and each of the Subsidiaries holds all licenses,
certificates, permits and other approvals from governmental authorities
(collectively, "Permits") which are necessary to own their properties and to
conduct their businesses, including, without limitation, such Permits as are
required under such federal and state telecommunication laws and regulations as
are applicable to the Company and the Subsidiaries, except where such failure to
have or hold such Permits, together with all other such failures, would not have
a material adverse effect upon the business, properties, assets, rights,
operations, condition (financial or otherwise) or prospects of the Company and
the Subsidiaries taken as a whole; the Company and each of the Subsidiaries has
fulfilled and performed all of its material obligations with respect to such
Permits, and no event or change in condition has occurred which (i) allows, or
after notice or lapse of time would allow, revocation or termination thereof or
(ii) results in any other material impairment of the rights of the holder of any
such Permit, subject in each case to such qualifications as may be set forth in
the Offering Memorandum.
(o) Neither the Company nor any of the Subsidiaries has infringed
any patents, patent rights, trade names, trademarks or copyrights, which
infringement is material to the business of the Company and the Subsidiaries
taken as a whole. The Company knows of no material infringement by others of
patents, patent rights, trade names, trademarks or copyrights owned by or
licensed to the Company or any of the Subsidiaries.
(p) Neither the Company, nor any of its affiliates, has taken or
may take, directly or indirectly, any action designed to cause or result in, or
which has constituted or which might reasonably be expected to constitute, the
stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Notes or otherwise.
(q) Neither the Company nor any Subsidiary is, or as a result of
the consummation of the transactions contemplated by this Agreement and
application of the net proceeds therefrom as described in the Offering
Memorandum will become, an "investment company" within the meaning of such term
under the Investment Company Act of 1940 and the rules and regulations of the
Commission thereunder.
(r) 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.
(s) The Company and each of its Subsidiaries carries, or is
covered by, insurance in such amounts and covering such risks as is adequate for
the conduct of its respective businesses and the value of its respective
properties and as is customary for companies engaged in similar industries.
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(t) The Company is in compliance in all material respects with
all presently applicable provisions of the Employee Retirement Income Security
Act of 1974, as amended, including the regulations and published interpretations
thereunder ("ERISA"); no "reportable event" (as defined in ERISA) (including,
but not limited to, the filing of Form 5500s for prior periods, if required) has
occurred with respect to any "pension plan" (as defined in ERISA) for which the
Company would have any liability; the Company has not incurred and does not
expect to incur liability under (i) Title IV of ERISA with respect to
termination of, or withdrawal from, any "pension plan" or (ii) Sections 412 or
4971 of the Internal Revenue Code of 1986, as amended, including the regulations
and published interpretations thereunder (the "Code"); and each "pension plan"
for which the Company would have any liability that is intended to be qualified
under Section 401(a) of the Code is so qualified in all material respects and
nothing has occurred, whether by action or by failure to act, which would cause
the loss of such qualification.
(u) The property, assets and operations of the Company and the
Subsidiaries comply in all respects with all applicable federal, state or local
law, common law, doctrine, rule, order, decree, judgment, injunction, license,
permit or regulation relating to environmental matters (the "Environmental
Laws"), except to the extent that failure to comply with such Environmental Laws
would not have a material adverse effect on the condition (financial or other),
business, prospects, properties, net worth or results of operations of the
Company and the Subsidiaries taken as a whole. None of the property, assets or
operations of the Company and the Subsidiaries is the subject of any federal,
state or local investigation evaluating whether any remedial action is needed to
respond to a release into the environment of any substance regulated by, or form
the basis of liability under, any Environmental Laws (a "Hazardous Material"),
or is in contravention of any Environmental Law that would have a material
adverse effect on the condition (financial or other), business, prospects,
properties, net worth or results of operations of the Company and Subsidiaries
taken as a whole. Neither the Company nor any Subsidiary has received any notice
or claim, nor are there pending, reasonably anticipated or, or to the Company's
knowledge, threatened lawsuits against them with respect to violations of an
Environmental Law or in connection with the release of any Hazardous Material
into the environment, in each case which, individually or in the aggregate,
would have a material adverse effect on the condition (financial or other),
business, properties, prospects, net worth or results of operations of the
Company and the Subsidiaries taken as a whole. Neither the Company nor any
Subsidiary has any material contingent liability in connection with any release
of Hazardous Material into the environment.
(v) [Reserved]
(w) The Company's Common Stock, without par value, is registered
pursuant to Section 12(g) of the Exchange Act and is listed on The Nasdaq Stock
Market, Inc.'s Nasdaq National Market (the "Nasdaq National Market"), and the
Company has taken no action designed to, or likely to have the effect of,
terminating the registration of the Common Stock under the Exchange Act or
delisting the Common Stock from the Nasdaq National Market, nor has the Company
received any notification that the Commission or the NASD is contemplating
terminating such registration or listing. The Company has filed in a timely
manner all reports and other information required to be filed with the
Commission pursuant to the Exchange Act
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during the twelve calendar months and any portion of a month immediately
preceding the date of the Offering Memorandum (or during such shorter period of
time that the Company has been subject to the reporting requirements of the
Exchange Act). At or prior to 90 days following the Closing Date, the Company
will file an application to list the Underlying Stock on the Nasdaq National
Market.
(x) The Notes will be issued pursuant to the terms and conditions
of the Indenture, and each of the Indenture and the Registration Rights
Agreement conforms, or will conform, to the description thereof contained in the
Offering Memorandum. The Notes have been duly authorized and, when validly
authenticated, issued, delivered and paid for in the manner contemplated by the
Indenture, will be duly authorized, validly issued and outstanding obligations
of the Company entitled to the benefits of the Indenture. The shares of Common
Stock issuable upon conversion of the Notes will, upon such issuance, be duly
authorized, validly issued, fully paid and non-assessable, and the Company has
duly authorized and reserved for issuance upon conversion of the Notes the
shares of Common Stock issuable upon such conversion. The Notes and the
Underlying Stock are not and will not be subject to any preemptive or other
similar rights of any securityholder of the Company or the Subsidiaries; all
corporate action required to be taken for the authorization, issue and sale of
the Notes and the Underlying Stock has been duly and validly taken; and the
certificates representing the Notes and the Underlying Stock will be in due and
proper form. Upon the issuance and delivery pursuant to the terms of this
Agreement and the Indenture of the Notes to be sold by the Company hereunder and
thereunder, the Initial Purchasers will acquire good and marketable title
thereto free and clear of any lien, charge, claim, encumbrance, pledge, security
interest, defect or other restriction or equity of any kind whatsoever, except
as such restrictions which may arise under the Securities Act, the Exchange Act
and the Registration Rights Agreement.
(y) (i) The Company has full legal right, power and authority to
authorize, issue, deliver and sell the Notes and the Underlying Stock upon
conversion of the Notes, to enter into this Agreement, the Indenture and the
Registration Rights Agreement and to consummate the transactions provided for in
such agreements; (ii) this Agreement has been duly and properly authorized,
executed and delivered by the Company and, as of the Closing Date, each of the
Indenture and the Registration Rights Agreement will have been duly and properly
authorized, executed and delivered by the Company; and (iii) this Agreement
constitutes, and when the Company has duly executed and delivered the
Registration Rights Agreement and the Indenture such documents will constitute
(assuming the due execution and delivery hereof and thereof by the Trustee and
the Initial Purchasers, as applicable), legal, valid and binding agreements of
the Company enforceable against the Company in accordance with their respective
terms, except to the extent that enforcement hereof or thereof may be limited by
(a) bankruptcy, insolvency, reorganization, moratorium or similar laws now or
hereafter in effect relating to creditors' rights generally and (b) general
principles of equity (regardless of whether enforceability is considered in a
proceeding at law or in equity) and except to the extent that rights to
indemnification and contribution contained in this Agreement may be limited by
federal or state securities laws on public policy relating thereto.
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(z) The Notes satisfy the eligibility requirements of Rule
144A(d)(3) under the Securities Act, and the Notes are eligible for trading in
the Private Offerings, Resale and Trading through Automated Linkages ("PORTAL")
market.
(aa) Neither the Company nor any affiliate (as such term is
defined in Rule 501(b) under the Securities Act) of the Company has, directly or
through any agent, sold, offered for sale, solicited offers to buy or otherwise
negotiated in respect of, any "security" (as defined in the Securities Act),
which is or could reasonably be expected to be integrated with the sale of the
Notes in a manner that would require the registration of the Notes under the
Securities Act. Other than pursuant to this Agreement, the Company has no
contract, arrangement or understanding with any broker, finder, investment
banking firm, financial advisor or similar firm or agent which would give rise
to any right of such person to receive any commission, fee or other payment as a
result of the transactions contemplated by this Agreement.
(bb) None of the Company, any affiliate (as such term is defined
in Rule 501(b) under the Securities Act) of the Company and any other person
acting on its or their behalf has engaged, in connection with the offering of
the Notes, in any form of general solicitation or general advertising within the
meaning of Rule 502(c) under the Securities Act.
(cc) Neither the Company nor, to the Company's knowledge, any of
its affiliates has engaged in any "directed selling efforts" with respect to the
Notes in the United States which would result in a failure to comply with the
provisions of Regulation S under the Securities Act. The Company has implemented
"offering restrictions," as that term is defined in Regulation S under the
Securities Act, with respect to the offer and sale of the Notes contemplated by
this Agreement and the Offering Memorandum.
2. SALE TO THE INITIAL PURCHASERS.
(a) On the basis of the representations, warranties and
agreements contained herein, and subject to the terms and conditions set forth
herein, the Company agrees to issue and sell to each Initial Purchaser,
severally and not jointly, and each Initial Purchaser, severally and not
jointly, agrees to purchase from the Company, the Firm Notes at a purchase price
and the aggregate principal amount as set forth in SCHEDULE A opposite the name
of such Initial Purchaser.
(b) In addition, on the basis of the representations, warranties
and agreements contained herein, and subject to the terms and conditions set
forth herein, the Company hereby grants an option to the Initial Purchasers to
purchase any or all of the Option Notes at a price equal to $827.93 per $1,000
principal amount at maturity of the Notes. Such option will expire thirty days
after the date hereof, and may be exercised in whole or in part only for the
purpose of covering overallotments which may be made in connection with the
offering and distribution of the Firm Notes upon notice by the Initial
Purchasers to the Company setting forth the aggregate principal amount of Option
Notes as to which the Initial Purchasers are then exercising the option and the
time and date of delivery and payment therefor. The time and date of delivery
and payment (the "Option Closing Date") shall be determined by the Initial
Purchasers, but shall not be later than five full business days after the
exercise of such option unless otherwise agreed
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by the Company and the Initial Purchasers. If the option is exercised as to all
or a portion of the Option Notes, the principal amount of Option Notes to be
purchased by each Initial Purchaser shall be in the same proportion to the total
principal amount of Option Notes being purchased as the total principal amount
of Firm Notes set forth in SCHEDULE A opposite the name of such Initial
Purchaser bears to the total principal amount of Firm Notes.
(c) The Initial Purchasers have advised the Company that it is
their intention, as promptly as they deem appropriate after the Company shall
have furnished the Initial Purchasers with copies of the Offering Memorandum, to
resell the Notes pursuant to the procedures and upon the terms set forth in the
Offering Memorandum, including not to solicit any offer to buy or offer to sell
the Notes by means of any form of general solicitation or general advertising
(within the meaning of Regulation D under the Securities Act) or in any manner
involving a public offering within the meaning of Section 4(2) of the Securities
Act. Each of the Initial Purchasers warrants and agrees with the Company that it
has solicited and will solicit offers for Notes within the United States only
from, and will offer Notes within the United States only to persons that it
reasonably believes to be either (i) "Qualified Institutional Buyers" or "QIBs"
in transactions that meet the requirements for an exemption from the
registration requirements of the Securities Act under Rule 144A or (ii)
"accredited investors" as that term is defined under Rule 501(a)(1), (2), (3) or
(7) of Regulation D under the Securities Act or an entity in which all of the
equity owners are accredited investors within the meaning of Rule 501(a) (1),
(2), (3) or (7) of Regulation D under the Securities Act (hereinafter
"Institutional Accredited Investors"). Each of the Initial Purchasers warrants
and agrees with the Company that it has solicited and will solicit offers for
Notes outside the United States only from, and will offer Notes outside the
United States only to (i) persons that it reasonably believes to be QIBs in
transactions that meet the requirements for an exemption from the registration
requirements of the Securities Act under Rule 144A or (ii) persons that it
reasonably believes are not "U.S. persons" as that term is defined in Regulation
S under the Securities Act. Sales to persons described in the two immediately
preceding sentences are hereinafter referred to as the "Exempt Resales." Each of
the Initial Purchasers represents and warrants, severally and not jointly, that
it is an Institutional Accredited Investor with such knowledge and experience in
financial and business matters as are necessary to evaluate the merits and risks
of an investment in the Notes, and is acquiring its interest in the Notes not
with a view to the distribution or resale thereof, except resales in compliance
with the registration requirements or exemption provisions of the Securities Act
and that neither it, nor anyone acting on its behalf, will offer the Notes so as
to bring the issuance and sale of the Notes within the provisions of Section 5
of the Securities Act. Each of the Initial Purchasers further represents and
warrants, severally and not jointly, that it is not a pension or welfare plan
(as defined in Section 3 of ERISA) and is not acquiring the Notes on behalf of a
pension or welfare plan. The Company acknowledges and agrees that the Initial
Purchasers may sell Notes to any affiliate of the Initial Purchasers and any
such affiliate may sell Notes purchased by it to the Initial Purchasers,
provided that any such affiliate, and the Initial Purchasers following a
purchase from any such affiliate, will remain bound by the provisions of this
Agreement; each of the Initial Purchasers also agrees that it will provide
written notice to any such affiliate who acquires Notes from the Initial
Purchaser of the restrictions on resale of the Notes set forth in this
Agreement. The Initial Purchasers agree that, prior to or simultaneously with
the confirmation of sale by any of them to any Subsequent Purchaser of any
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of the Notes purchased from the Company pursuant hereto, the Initial Purchasers
shall furnish to that Subsequent Purchaser a copy of the Offering Memorandum
(and any amendment thereof or supplement thereto that the Company shall have
furnished to the Initial Purchasers prior to the date of such confirmation of
sale). In addition to the foregoing, the Initial Purchasers agree and understand
that the Company and, for purposes of the opinions to be delivered to the
Initial Purchasers pursuant to Sections 6(b) and 6(c) hereof, counsel to the
Company and counsel to the Initial Purchasers, respectively, may rely upon the
accuracy and truth of the foregoing representations, warranties and covenants in
this Section 2 and the Initial Purchasers hereby consent to such reliance.
(d) Each Initial Purchaser, severally and not jointly, hereby
represents and warrants to, and agrees with, the Company that (i) no form of
general solicitation or general advertising (within the meaning of Regulation D
under the Securities Act) has been or will be used by the Initial Purchasers or
any of their Initial Purchasers in connection with the offer and sale of any of
the Notes including, but not limited to, articles, notices or other
communications published in any newspaper, magazine, or similar medium or
broadcast over television or radio, or any seminar or meeting whose attendees
have been invited by any general solicitation or general advertising except
pursuant to a registered public offering as provided in the Registration Rights
Agreement; (ii) it will otherwise act in accordance with the terms and
conditions set forth in this Agreement in connection with the placement of the
Notes contemplated hereby; (iii) it has not engaged in any "directed selling
efforts" with respect to the Notes in the United States which would result in a
failure to comply with the provisions of Regulation S under the Securities Act;
and (iv) not to engage in hedging transactions with respect to the Notes or the
Common Stock prior to the date one year following the Closing Date except in
compliance with the Securities Act.
3. DELIVERY OF AND PAYMENT FOR THE NOTES. Delivery of, and payment for,
the Firm Notes shall be made at 9:00 a.m., San Francisco, California time, on
November 2, 1999, or at such other date or time, not later than ten full
business days thereafter, as shall be agreed by the Initial Purchasers and the
Company (such date and time being referred to herein as the "Closing Date").
Delivery of, and payment for, the Firm Notes and the Option Notes shall be made
at the offices of Deutsche Bank Securities Inc., San Francisco, California, or
any such other place as shall be agreed by the Initial Purchasers and the
Company. In addition, in the event that any or all of the Option Notes are
purchased by the Initial Purchasers, delivery of such Option Notes and payment
of the purchase price for such Option Notes shall be made at the above-mentioned
offices of Deutsche Bank Securities Inc., or any such other place as shall be
agreed by the Initial Purchasers and the Company, on each date of delivery as
specified in the notice from the Initial Purchasers to the Company. Payment
shall be made to the Company by wire transfer of same day funds payable to the
order of the Company, against delivery to the Initial Purchasers of certificates
for the Notes to be purchased by them. On the Closing Date, payment will be made
against delivery of one or more global Notes in registered form in such
denominations and registered in such names, or otherwise, as the Initial
Purchasers shall have requested, including one or more global Note to be
deposited with, or on behalf of, DTC and registered in the name of Cede & Co.,
as nominee of DTC. The Company shall make the certificates for the Notes
available for examination and packaging by the Initial Purchasers not later than
10:00 a.m. (San
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Xxxxxxxxx, California time) on the last business day prior to the Closing Date,
or Option Closing Date, as the case may be, at the offices of the Trustee or its
agent in New York, New York.
4. COVENANTS AND AGREEMENTS OF THE COMPANY. The Company covenants and
agrees with the Initial Purchasers as follows:
(a) The Company will furnish promptly to the Initial Purchasers
and counsel for the Initial Purchasers, without charge, as many copies of the
Offering Memorandum (and of any amendments or supplements thereto) as may be
reasonably requested; to furnish to the Initial Purchasers on the date hereof a
copy of the independent accountants' report included in the Offering Memorandum
signed by the accountants rendering such report; and the Company hereby consents
to the use of the Offering Memorandum, and any amendments and supplements
thereto, in connection with Exempt Resales of the Notes.
(b) The Company will notify Deutsche Bank Securities Inc.
promptly, and confirm such advice in writing, of any of the following events
which (A) make any statement of a material fact made in the Offering Memorandum
false or misleading in any material respect or (B) if not disclosed in the
Offering Memorandum, would constitute a material omission therefrom:
(i) any filing made by the Company of information relating to
the offering of the Notes with any securities exchange or any other regulatory
body in the United States or any other jurisdiction, and
(ii) prior to the completion of the placement of the Notes by
the Initial Purchasers as evidenced by a notice in writing from the Initial
Purchasers to the Company, any material adverse change in the earnings,
business, management, properties, assets, rights, operations, condition
(financial or otherwise) or prospects of the Company and of the Subsidiaries
taken as a whole, except as set forth in the Offering Memorandum.
In such event, or if prior to the completion of the placement of the Notes by
the Initial Purchasers as evidenced by a notice in writing from the Initial
Purchasers to the Company, any event shall occur as a result of which it is
necessary, in the reasonable opinion of the Company, its counsel, the Initial
Purchasers or counsel for the Initial Purchasers, to amend or supplement the
Offering Memorandum in order that the Offering Memorandum not include any untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements therein not misleading in light of the circumstances then
existing, the Company will forthwith amend or supplement the Offering Memorandum
by preparing and furnishing to each Initial Purchaser an amendment or amendments
of, or a supplement or supplements to, the Offering Memorandum (in form and
substance satisfactory in the reasonable opinion of counsel for the Initial
Purchasers) so that, as so amended or supplemented, the Offering Memorandum will
not include an untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in light of the
circumstances existing at the time it is delivered to a Subsequent Purchaser,
not misleading.
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(c) The Company agrees that if the delivery of the Offering
Memorandum is required at any time in connection with the sale of the Notes and
if at such time any events shall have occurred as a result of which the Offering
Memorandum as then amended or supplemented would include an untrue statement of
a material fact or omit to state any material fact necessary in order to make
the statements therein, in light of the circumstances under which they were made
when the Offering Memorandum is delivered, not misleading, or if for any other
reason it shall be necessary at such time to amend or supplement the Offering
Memorandum in order to comply with any law, the Company will notify Deutsche
Bank Securities Inc. immediately thereof, and promptly prepare and furnish to
the Initial Purchasers an amended Offering Memorandum or a supplement to the
Offering Memorandum so that statements in the Offering Memorandum, as so amended
or supplemented, will not, in light of the circumstances under which they were
made when it is so delivered, be misleading, or so that the Offering Memorandum
will comply with applicable law. The Initial Purchasers' delivery of any such
amendment or supplement shall not constitute a waiver of any of the conditions
set forth in Section 6 hereof.
(d) The Company agrees to not amend or supplement the Offering
Memorandum without the consent of the Initial Purchasers, which consent shall
not be unreasonably withheld, and to promptly advise the Initial Purchasers when
any document filed under the Exchange Act which is incorporated into the
Offering Memorandum shall have been filed with the Commission.
(e) The Company agrees, during the one-year period following the
Closing Date, to furnish to the Initial Purchasers, upon request, all reports
and other communications furnished to shareholders and copies of all reports,
documents, information and financial statements filed with the Commission or any
national securities exchange on which any class of securities of the Company
shall be listed; provided, however, that the Company shall not be required to
furnish any such reports, documents, information or financial statements which
is available through the Commission's XXXXX service or any such reports,
documents, information or financial statements which are filed confidentially.
(f) The Company will use the proceeds from the sale of the Notes
in the manner described in the Offering Memorandum.
(g) The Company will, in connection with the offering of the
Notes and consistent with its course of conduct in preparing the Offering
Memorandum, make its officers, employees, independent accountants and legal
counsel reasonably available upon request by the Initial Purchasers.
(h) The Company will use its reasonable best efforts to do and
perform all things required to be done and performed under this Agreement by it
that are within its control prior to or after the Closing Date and to use
reasonable efforts to satisfy all conditions precedent on its part to the
delivery of the Notes.
(i) None of the Company, its affiliates (as defined in Rule
501(b) under the Securities Act) or any person (other than the Initial
Purchasers and their respective affiliates, as
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to whom the Company makes no representation) acting on its behalf will engage,
in connection with the offering of the Notes, in any form of general
solicitation or general advertising within the meaning of Rule 502(c) under the
Securities Act, nor will any person acting on its or their behalf, directly or
indirectly, make offers or sales of any security, or solicit offers to buy any
security, under circumstances that would require the registration of the Notes
under the Securities Act.
(j) Until such time as the Shelf Registration Statement is
initially declared effective by the Securities and Exchange Commission, or all
of the restrictive legends required to be placed on the Notes and Underlying
Stock pursuant to the Indenture have been otherwise removed or are otherwise
removable, the Company will not purchase any of the Notes other than Notes which
upon such purchase are canceled and not reissued. For purposes of this Section
4(j), the term "affiliate" shall mean the definition of such term in Rule
144(a)(1) under the Securities Act.
(k) The Company will not, so long as the Notes are outstanding,
be or become, or be or become owned by, an open-end investment company, unit
investment trust or face-amount certificate company that is or is required to be
registered under Section 8 of the Investment Company Act, and will not be or
become, or be or become owned by, a closed-end investment company required to be
registered, but not registered thereunder.
(l) The Company will cooperate with the Initial Purchasers and
counsel for the Initial Purchasers to qualify the Notes and the shares of Common
Stock issuable upon conversion of the Notes for offering and sale under the
applicable securities laws of such states and other jurisdictions (domestic or
foreign) as the Initial Purchasers may reasonably designate in writing, and to
maintain such qualifications in effect for as long as is required to complete
the sale of the Notes and the sale of the shares of Common Stock issuable upon
conversion of the Notes; provided, however, that in connection therewith the
Company shall not be required to qualify as a foreign corporation or to file a
general consent to service of process or to subject it to taxation in any
jurisdiction where it is not so qualified or so subject. In each jurisdiction in
which the Notes or such shares of Common Stock issuable upon conversion of the
Notes have been so qualified, the Company will file such statements and reports
as may be required in connection with the distribution of the Notes.
(m) The Company agrees that no future offer and sale of debt
securities of the Company of any class will be made if, as a result of the
doctrine of "integration" referred to in Rule 502 under the Securities Act, such
offer and sale would render invalid the exemption from the registration
requirements of the Securities Act provided by Section 4(2) thereof or by Rule
144A (for the purpose of (i) the sale of the Notes by the Company to the Initial
Purchasers, (ii) the resale of the Notes by the Initial Purchasers to Subsequent
Purchasers or (iii) the resale of the Notes by such Subsequent Purchasers to
others).
(n) So long as any of the Notes or Common Stock issued upon the
conversion of the Notes are "restricted securities" within the meaning of Rule
144(a)(3) under the Securities Act, the Company will, during any period in which
it is not subject to and in compliance with
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Sections 13 or 15(d) of the Exchange Act, provide to each holder of such
restricted securities and to each prospective purchaser (as designated by such
holder) of such restricted securities, upon the request of such holder or
prospective purchaser, any information required to be provided by Rule
144A(d)(4) under the Securities Act. This covenant is intended to be for the
benefit of the holders, and prospective purchasers designated by such holders,
from time to time of such restricted securities.
(o) The Company will use its reasonable best efforts to comply
with the Registration Rights Agreement and all agreements set forth in any
representation letters of the Company to DTC relating to the approval of the
Notes for "book-entry" transfers;
(p) The Company will not take any action prior to the execution
and delivery of the Indenture which, if taken after such execution and delivery,
would have violated any of the covenants contained in the Indenture.
(q) The Company will not knowingly take any action prior to the
Closing Date which in the Company's reasonable judgment would require the
Offering Memorandum to be amended or supplemented pursuant to Section 4(c)
hereof.
(r) The Company will maintain a transfer agent and, if necessary
under the laws of the jurisdiction of incorporation of the Company, a registrar
(which may be the same entity as the transfer agent) for the Common Stock.
(s) From and after the Closing, the Company will use its
reasonable efforts to permit the Notes to continue to be designated as PORTAL
securities in accordance with the rules and regulations adopted by the National
Association of Securities Dealers, Inc. relating to the PORTAL market. Upon
request of the Initial Purchasers, the Company will use its reasonable efforts
to permit the Notes to be listed for trading on the Luxembourg Stock Exchange.
(t) The Company will cooperate with the Initial Purchasers and
use its reasonable efforts to permit the Notes and the Underlying Stock to be
eligible for clearance and settlement through DTC.
(u) Without the prior written consent of Deutsche Bank Securities
Inc., the Company will not, during the period beginning on the date of this
Agreement and ending 90 days after such date, directly or indirectly, offer to
sell, sell, grant any option for the sale or otherwise dispose of, any Common
Stock or securities convertible into Common Stock, other than (i) the Notes to
be sold hereunder to the Initial Purchasers or Common Stock issued upon
conversion of the Notes, (ii) any shares of Common Stock issued by the Company
upon the exercise or the conversion of an option , warrant or right to acquire a
security outstanding on the date hereof and (iii) any shares of Common Stock
issued or options to purchase Common Stock granted pursuant to existing employee
benefit plans of the Company.
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5. PAYMENT OF EXPENSES.
(a) The Company hereby agrees to pay all of the expenses and fees
incident to the performance of its obligations under this Agreement, the
Indenture and the Registration Rights Agreement, including, regardless of
whether any sale of the Notes to the Initial Purchasers is consummated:
(i) the fees and expenses of accountants and counsel for the
Company,
(ii) all costs and expenses incurred by the Company in
connection with the preparation, duplication, printing (including mailing and
handling charges), and delivery to the Initial Purchasers of the Offering
Memorandum and any amendments and supplements thereto,
(iii) all costs and expenses incurred by the Company in
connection with the reproduction of this Agreement, the Registration Rights
Agreement, the Indenture and such other documents as may be required in
connection with the offering, purchase, sale and delivery of the Notes,
(iv) the printing, issuance and delivery of the Notes,
(v) costs and expenses of travel, food and lodging of Company
personnel in connection with the "road show," information meetings and
presentations, and fees and expenses of the transfer agent and registrar,
(vi) fees and expenses of the Trustee, including the
Trustee's counsel, in connection with the Indenture and the Notes,
(vii) the qualification of the Notes and the shares of Common
Stock issuable upon conversion of the Notes under state securities laws in
accordance with the provisions of Section 4(l), including filing fees and
disbursements of counsel for the Initial Purchasers,
(viii) any fees incurred in connection with the designation
of the Notes as PORTAL securities in connection with the PORTAL market and
designation of the Underlying Stock for quotation on the Nasdaq National Market,
and
(ix) all other costs and expenses incident to the performance
of its obligations hereunder which are not specifically otherwise provided for
in this Section.
(b) The Initial Purchasers shall pay their own costs and
expenses, including costs and expenses of their counsel, any transfer taxes on
Notes which they may sell and expenses incident to their sale of Notes.
6. CONDITIONS OF THE INITIAL PURCHASERS' OBLIGATIONS. The obligations of
the Initial Purchasers hereunder are subject to the continuing accuracy of the
representations and warranties of the Company herein as of the date hereof and
as of the Closing
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Date and each Option Closing Date, if any, as if they had been made on and as of
the Closing Date or each Option Closing Date, as the case may be; and the
performance by the Company on and as of the Closing Date and each Option Closing
Date, if any, of its covenants and obligations hereunder and to the following
further conditions:
(a) The Company shall not have advised the Initial Purchasers
that, and the Initial Purchasers shall not have otherwise become aware of the
fact that, the Offering Memorandum, or any supplement or amendment thereto,
contains an untrue statement of fact which is material, or omits to state a fact
which is material and is required to be stated therein or is necessary to make
the statements, in light of the circumstances under which they were made, not
misleading. No order suspending the sale of the Notes in any jurisdiction shall
have been issued on either the Closing Date or the relevant Option Closing Date,
if any, and no proceedings for that purpose shall have been instituted or shall
be threatened.
(b) At Closing Date, and the Option Closing Date, if any, the
Initial Purchasers shall have received the favorable opinion of Xxxxx Xxxx, LLP,
counsel to the Company, dated the Closing Date, addressed to the Initial
Purchasers and in form and substance reasonably satisfactory to the Initial
Purchasers, and attached hereto as Exhibit A. In rendering such opinion Xxxxx
Xxxx, LLP may rely as to matters governed by the laws of states other than
California or Federal laws on local counsel licensed to practice in such
jurisdictions, provided that in each case Xxxxx Xxxx, LLP shall state that they
believe that they and the Initial Purchasers are justified in relying on such
other counsel. In rendering such opinion, such counsel may also rely, as to
matters of fact, on certificates of officers of the Company and of governmental
officials, in which case their opinion shall state that they are so doing. In
addition to the matters set forth above, such opinion shall also include a
statement to the effect that nothing has come to the attention of such counsel
which leads them to believe that the Offering Memorandum 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 not misleading (except that
such counsel need express no view as to financial statements, schedules and
statistical information therein). With respect to such statement, Xxxxx Xxxx,
LLP may state that their belief is based upon the procedures set forth therein,
but is without independent check and verification.
(c) The Initial Purchasers shall have received at or prior to the
Closing Date a memorandum or summary, in form and substance satisfactory to the
Initial Purchasers, with respect to the qualification for offering and sale by
the Initial Purchasers of the Notes under the State securities or Blue Sky laws
of such jurisdictions as the Initial Purchasers may reasonably have designated
to the Company ("Blue Sky Memorandum").
(d) The Initial Purchasers and its counsel shall have received,
on each of the dates hereof, the Closing Date and the Option Closing Date, as
the case may be, a letter dated the date hereof, the Closing Date or the Option
Closing Date, as the case may be, in form and substance satisfactory to you, of
PricewaterhouseCoopers LLP confirming that they are independent public
accountants within the meaning of the Act and the applicable published Rules and
Regulations thereunder and stating that in their opinion the financial
statements and
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schedules examined by them and included in the Offering Memorandum comply in
form in all material respects with the applicable accounting requirements of the
Act and the related published Rules and Regulations; and containing such other
statements and information as is ordinarily included in accountants' "comfort
letters" to Initial Purchasers with respect to the financial statements and
certain financial and statistical information contained in the Offering
Memorandum.
(e) The Initial Purchasers shall have received on the Closing
Date or the Option Closing Date, as the case may be, a certificate or
certificates of the Chief Executive Officer and the Corporate Controller of the
Company to the effect that, as of the Closing Date or the Option Closing Date,
as the case may be, each of them severally represents in their respective
capacities as officers of the Company and on behalf of the Company as follows:
(i) The representations and warranties of the Company
contained in Section 1 hereof are true and correct as of the Closing Date or the
Option Closing Date, as the case may be, and the Company has complied with all
agreements and covenants and satisfied all conditions contained in this
Agreement, the Indenture and the Registration Rights Agreement on its parts to
be performed or satisfied at or prior to the Closing Date or the Option Closing
Date, as the case may be;
(ii) The final Offering Memorandum has been printed and
copies thereof have been distributed to the Initial Purchasers and no stop order
suspending the sale of the Notes in any jurisdiction has been issued and no
proceedings for that purpose has been commenced or, to the knowledge of the
Company, is threatened;
(iii) He has carefully examined the Offering Memorandum and,
in his opinion, as of the date of the Offering Memorandum, the statements
contained in the Offering Memorandum were true and correct, and such Offering
Memorandum did not omit to state a material fact required to be stated therein
or necessary in order to make the statements therein not misleading, and since
the date of the Offering Memorandum, no event has occurred which should have
been set forth in a supplement to or an amendment of the Offering Memorandum
which has not been so set forth in such supplement or amendment; and
(iv) Since the respective dates as of which information is
given in the Offering Memorandum, there has not been any material adverse change
or any development involving a prospective material adverse change in or
affecting the condition, financial or otherwise, of the Company and its
Subsidiaries taken as a whole or the earnings, business, management, properties,
assets, rights, operations, condition (financial or otherwise) or prospects of
the Company and the Subsidiaries taken as a whole, whether or not arising in the
ordinary course of business.
(f) The Company shall have furnished to the Initial Purchasers
such further certificates and documents confirming the representations and
warranties, covenants and conditions contained herein and related matters as the
Initial Purchasers may reasonably have requested.
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(g) The Notes shall have been approved by the National
Association of Securities Dealers, Inc. for trading in the PORTAL market.
(h) Trading in the Common Stock shall not have been suspended by
the Nasdaq National Market at any time on or after the date of this Agreement,
other than any trading halts imposed generally on shares quoted on the Nasdaq
National Market.
(i) The Company shall have executed and delivered the
Registration Rights Agreement on the Closing Date.
(j) The Indenture shall have been duly executed and delivered by
the Company and the Trustee and the Notes shall have been duly executed and
delivered by the Company and duly authenticated by the Trustee.
(k) If any event shall have occurred that requires the Company
under Section 4(b) or 4(c) hereof to prepare an amendment or supplement to the
Offering Memorandum, such amendment or supplement shall have been prepared, the
Initial Purchasers shall have been given a reasonable opportunity to comment
thereon, and copies thereof delivered to the Initial Purchasers.
(l) There shall not have occurred any invalidation of Rule 144A
under the Securities Act by any court or any withdrawal or proposed withdrawal
of any rule or regulation under the Securities Act or the Exchange Act by the
Commission or any amendment or proposed amendment thereof by the Commission
which in the judgment of the Initial Purchasers would materially impair the
ability of the Initial Purchasers to purchase, hold or effect resales of the
Notes as contemplated hereby.
The opinions and certificates mentioned in this Agreement shall
be deemed to be in compliance with the provisions hereof only if they are in all
material respects reasonably satisfactory to the Initial Purchasers and to Gray
Xxxx Xxxx & Freidenrich LLP, counsel for the Initial Purchasers.
If any of the conditions hereinabove provided for in this Section
6 shall not have been fulfilled when and as required by this Agreement to be
fulfilled, the obligations of the initial Purchasers hereunder may be terminated
by the Initial Purchasers by notifying the Company of such termination in
writing or by telegram at or prior to the Closing Date or the Option Closing
Date, as the case may be.
In such event, the Company and the Initial Purchasers shall not
be under any obligation to each other (except to the extent provided in Sections
5 and 9 hereof).
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7. SUBSEQUENT OFFERS AND RESALES OF THE NOTES. Each of the Initial
Purchasers and the Company hereby establishes and agrees to observe the
following procedures in connection with the offer and sale by the Initial
Purchasers of the Notes.
(a) Offers have been and will be, and sales of the Notes will be,
made by the Initial Purchasers only in transactions that are Exempt Resales.
Without limiting the foregoing, each of the Initial Purchasers agrees that,
prior to the date one year following the Closing Date, it will not make any
offers or sales of the Notes except in compliance with (a) the provisions of
Rules 903 or 904 or Regulation S under the Securities Act, (b) pursuant to a
registration statement filed pursuant to the Securities Act with respect to the
Notes or (c) pursuant to an available exemption from the registration
requirements of the Securities Act . With respect to Institutional Accredited
Investors, the Initial Purchasers shall not confirm any resale of the Notes
until they have received an executed "Letter to be Delivered by Institutional
Accredited Investors" (a form of which is attached hereto as Schedule D), signed
on behalf of such Institutional Accredited Investor.
(b) The Notes have been and will be offered by the Initial
Purchasers only by approaching prospective Subsequent Purchasers on an
individual basis. No general solicitation or general advertising within the
meaning of Rule 502(c) under the Securities Act will be used in connection with
the offering of the Notes. Each of the Initial Purchasers agrees that it will
not engage in any "directed selling efforts" in the United States which would
result in a failure to comply with the restrictions of Regulation S under the
Securities Act. Each of the Initial Purchasers agrees, with respect to resales
made in reliance upon Rule 144A (other than through the PORTAL Market) of any of
the Notes purchased from the Company hereunder, to deliver either with the
confirmation of such resale or otherwise prior to settlement of such resale a
notice to the effect that the resale of such Notes has been made in reliance
upon the exemption from the registration requirements of the Securities Act
provided by Rule 144A. Each of the Initial Purchasers agrees, with respect to
resales made in reliance upon Regulation S under the Securities Act of any of
the Notes purchased from the Company hereunder, to deliver either with the
confirmation of such resale or otherwise prior to settlement of such resale a
notice to the effect that the resale of such Notes has been made in reliance
upon the exemption from the registration requirements of the Securities Act
provided by Regulation S. Each of the Initial Purchasers agrees, with respect to
resales to a distributor, a dealer (as defined in Section 2(a)(12) of the
Exchange Act), or a person receiving a selling concession, fee or other
remuneration, prior to the expiration of one year following the Closing Date,
made in reliance upon Regulation S under the Securities Act of any of the Notes
purchased from the Company hereunder, to deliver either with the confirmation of
such resale or otherwise prior to settlement of such resale a notice to the
effect that the purchaser is subject to the same restrictions on offers and
sales that apply to a distributor.
(c) In connection with the original distribution of the Notes,
the Company agrees that, prior to any offer or resale of the Notes by the
Initial Purchasers, the Initial Purchasers and their counsel shall have the
right to make reasonable inquiries into the business of the Company and its
Subsidiaries. The Company agrees to provide answers to each prospective
Subsequent Purchaser of Notes who so requests information concerning the Company
and its
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Subsidiaries (to the extent such information is available or can be acquired and
made available to prospective Subsequent Purchasers without unreasonable effort
or expense and to the extent the provision thereof is not prohibited by
applicable law) and the terms and conditions of the offering of the Notes, as
provided in the Offering Memorandum.
(d) Counsel for the Initial Purchasers shall deliver to the
Company the Blue Sky Memorandum in form and substance satisfactory to the
Company on or prior to the Closing Date.
8. INDEMNIFICATION.
(a) The Company agrees to indemnify and hold harmless each
Initial Purchaser (for purposes of this Section 8, "Initial Purchasers" shall
include the officers, directors, partners, employees and agents of such Initial
Purchaser, and each person, if any, who controls such Initial Purchaser
("controlling person") within the meaning of Section 15 of the Securities Act or
Section 20(a) of the Exchange Act) from and against any and all losses, claims,
damages, expenses or liabilities, joint or several (and actions, proceedings,
suits and litigation in respect thereof), whatsoever, as the same are incurred,
to which the Initial Purchaser or any such officer, director, partner, employee,
agent or controlling person may become subject, under the Securities Act, the
Exchange Act or any other statute or at common law or otherwise, insofar as such
losses, claims, damages, expenses, liabilities, actions, proceedings, suits or
litigation arise out of or are based upon (i) any untrue statement or alleged
untrue statement of a material fact contained in the Offering Memorandum or any
amendment or supplement thereto or (ii) the omission or alleged omission
therefrom of 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 will reimburse any reasonable legal or other expenses
incurred by the Initial Purchaser or any such officer, director, partner,
employee, agent or controlling person in connection with investigating or
defending any such loss, claim, damage, liability, action, proceeding, suit or
litigation; provided, however, that the Company shall not be liable in any such
case to the extent that any such loss, claim, damage, expense, liability,
action, proceeding, suit or litigation arises out of or is based upon any untrue
statement or alleged untrue statement or omission or alleged omission made in
the Offering Memorandum or any such amendment or supplement in reliance upon and
in conformity with the Initial Purchasers' Information. The indemnity agreement
shall be in addition to any liability which the Initial Purchasers may have at
common law or otherwise.
(b) Each Initial Purchaser severally and not jointly will
indemnify and hold harmless the Company, each of its officers, directors,
partners, employees and agents and each person, if any, who controls the Company
within the meaning of the Securities Act, against any losses, claims, damages or
liabilities, joint or several (and actions, proceedings, suits and litigation in
respect thereof), whatsoever, as the same are incurred, to which the Company or
any such officer, director, partner, employee, agent or controlling person may
become subject, under the Securities Act, the Exchange Act or any other statute
or at common law or otherwise, insofar as such losses, claims, damages,
liabilities, actions, proceedings, suits or litigation arise out of or are based
upon (i) any untrue statement or alleged untrue statement of any material fact
contained
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in the Offering Memorandum or any amendment or supplement thereto, or (ii) the
omission or the alleged omission to 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; and will reimburse any
reasonable legal or other expenses incurred by the Company or any such officer,
director, partner, employee, agent or controlling person in connection with
investigating or defending any such loss, claim, damage, liability, action,
proceeding, suit or litigation; PROVIDED, HOWEVER, that each Initial Purchaser
will be liable in each case to the extent, but only to the extent, that such
untrue statement or alleged untrue statement or omission or alleged omission has
been made in the Offering Memorandum or such amendment or supplement, in
reliance upon and in conformity with Initial Purchasers' Information.
Notwithstanding the provisions of this Section 8(b), (i) no Initial Purchaser
shall be required to make any payment pursuant to this Section 8(b) in excess of
the amount of the commissions applicable to the Notes purchased by such Initial
Purchaser, and (ii) no person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
indemnification from any person who was not guilty of such fraudulent
misrepresentation. This indemnity agreement will be in addition to any liability
which such Initial Purchaser may otherwise have.
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of which
indemnity may be sought pursuant to this Section 8, such person (the
"indemnified party") shall promptly notify the person against whom such
indemnity may be sought (the "indemnifying party") in writing. No
indemnification provided for in Section 8(a) or (b) shall be available to any
party who shall fail to give notice as provided in this Section 8(c) if the
party to whom notice was not given was unaware of the proceeding to which such
notice would have related and was materially prejudiced by the failure. In case
any such proceeding shall be brought against any indemnified party and it shall
notify the indemnifying party of the commencement thereof, the indemnifying
party shall be entitled to participate therein and, to the extent that it shall
wish, jointly with any other indemnifying party similarly notified, to assume
the defense thereof, with counsel satisfactory to such indemnified party and
shall pay as incurred the fees and disbursements of such counsel related to such
proceeding. In any such proceeding, any indemnified party shall have the right
to retain its own counsel at its own expense. Notwithstanding the foregoing, the
indemnifying party shall pay as incurred (or within 45 days of presentation) the
reasonable fees and expenses of the counsel retained by the indemnified party in
the event (i) the indemnifying party and the indemnified party shall have
mutually agreed to the retention of such counsel or (ii) the named parties to
any such proceeding (including any impleaded parties) include both the
indemnifying party and the indemnified party and representation of both parties
by the same counsel would be inappropriate due to actual or potential differing
interests between them or (iii) the indemnifying party shall have failed to
assume the defense and employ counsel acceptable to the indemnified party within
a reasonable period of time after notice of commencement of the action. It is
understood that the indemnifying party shall not, in connection with any
proceeding or related proceedings in the same jurisdiction, be liable for the
reasonable fees and expenses of more than one separate firm for all such
indemnified parties. Such firm shall be designated in writing by you in the case
of parties indemnified pursuant to Section 8(a) and by the Company in the case
of parties indemnified pursuant to Section 8(b). The indemnifying party shall
not be liable for any
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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 party agrees to indemnify the indemnified party from and against
any loss or liability by reason of such settlement or judgment. In addition, the
indemnifying party will not, without the prior written consent of the
indemnified party, settle or compromise or consent to the entry of any judgment
in any pending or threatened claim, action or proceeding of which
indemnification may be sought hereunder (whether or not any indemnified party is
an actual or potential party to such claim, action or proceeding) unless such
settlement, compromise or consent includes an unconditional release of each
indemnified party from all liability arising out of such claim, action or
proceeding.
(d) If the indemnification provided for in this Section 8 is
unavailable to or insufficient to hold harmless an indemnified party under
Section 8(a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) referred to therein,
then each indemnifying party shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) in such proportion as
is appropriate to reflect the relative benefits received by the Company on the
one hand and the Initial Purchasers on the other from the offering of the Notes.
If, however, the allocation provided by the immediately preceding sentence is
not permitted by applicable law then each indemnifying party shall contribute to
such amount paid or payable by such indemnified party in such proportion as is
appropriate to reflect not only such relative benefits but also the relative
fault of the Company on the one hand and the Initial Purchasers on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities, (or actions or proceedings in respect thereof),
as well as any other relevant equitable considerations. The relative benefits
received by the Company on the one hand and the Initial Purchasers on the other
shall be deemed to be in the same proportion as the total net proceeds from the
offering (before deducting expenses) received by the Company bear to the total
commissions received by the Initial Purchasers, in each case as set forth in the
Plan of Distribution Section of the Offering Memorandum. The relative fault
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the Company on the
one hand or the Initial Purchasers on the other and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
The Company and the Initial Purchasers agree that it would not be
just and equitable if contributions pursuant to this Section 8(d) were
determined by pro rata allocation (even if the Initial Purchasers were treated
as one entity for such purpose) or by any other method of allocation which does
not take account of the equitable considerations referred to above in this
Section 8(d). The amount paid or payable by an indemnified party as a result of
the losses, claims, damages or liabilities (or actions or proceedings in respect
thereof) referred to above in this Section 8(d) shall be deemed to include any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 8(d), (i) no Initial Purchaser
shall be required to contribute any amount in excess of the commissions
applicable to the Notes purchased by such Initial Purchaser, and (ii) no person
guilty of fraudulent misrepresentation (within the meaning of
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Section 11(f) of the Securities Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. The Initial
Purchasers' obligations in this Section 8(d) to contribute are several in
proportion to their respective obligations as Initial Purchasers and not joint.
(e) In any proceeding relating to the Offering Memorandum or any
supplement or amendment thereto, each party against whom contribution may be
sought under this Section 8 hereby consents to the jurisdiction of any court
already having jurisdiction over the Company.
(f) Any losses, claims, damages, liabilities or expenses for
which an indemnified party is entitled to indemnification or contribution under
this Section 8 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 8 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 any Initial Purchaser or any person
controlling any Initial Purchaser, the Company, its directors or executive
officers or any persons controlling the Company, (ii) acceptance of any Notes
and payment therefor hereunder, and (iii) any termination of this Agreement. A
successor to any Initial Purchaser, to the Company, its directors or executive
officers, or any person controlling the Company, shall be entitled to the
benefits of the indemnity, contribution and reimbursement agreements contained
in this Section 8.
9. REPRESENTATIONS AND AGREEMENTS TO SURVIVE DELIVERY. All
representations, warranties and agreements contained in this Agreement or
contained in certificates of officers of the Company submitted pursuant hereto
shall be deemed to be representations, warranties and agreements at the Closing
Date and each Option Closing Date, as the case may be, and the agreements of the
Company and the provisions with respect to the payment of expenses contained in
Section 5 and the respective indemnity agreements contained in Section 8 hereof
shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of the Initial Purchasers, the Company, its
Subsidiaries or any controlling person, and shall survive termination of this
Agreement or the issuance and delivery of the Notes to the Initial Purchasers.
10. TERMINATION.
(a) Subject to Section 11(b), the Initial Purchasers shall have
the right to terminate this Agreement, by notice to the Company, at any time at
or prior to the Closing Date (i) if any domestic or international event or act
or occurrence has disrupted, or in the Initial Purchasers' opinion will in the
immediate future disrupt, the financial markets; (ii) if the United States shall
have become involved in a war or major hostilities, or there shall have been an
escalation in an existing war or major hostilities, or a national emergency
shall have been declared in the United States; (iii) if the Company or its
Subsidiaries shall have sustained a loss material to the Company or its
Subsidiaries by fire, flood, accident, hurricane, earthquake, theft, sabotage or
other calamity or malicious act which, whether or not such loss shall have been
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insured, will, in the Initial Purchasers' opinion, make it inadvisable to
proceed with the delivery of the Notes; or (iv) if there shall have been such a
material adverse change in the general market, political or economic conditions
in the United States or elsewhere, as in the Initial Purchasers' reasonable
judgment would make it inadvisable to proceed with the offering, sale and/or
delivery of the Notes.
(b) If this Agreement is terminated by the Initial Purchasers in
accordance with the provisions of Section 11(a), such termination shall be
without liability of any party to any other party provided that Sections 5 and 9
hereof shall survive such termination and remain in full force and effect.
11. DEFAULT BY THE COMPANY. If the Company shall fail at the Closing
Date or any Option Closing Date, as applicable, to sell and deliver the number
of Notes which it is obligated to sell hereunder on such date, then this
Agreement shall terminate (or, if such default shall occur with respect to any
Option Notes to be purchased on an Option Closing Date, the Initial Purchasers
may, at their option, by notice from the Initial Purchasers to the Company,
terminate the Initial Purchasers' obligation to purchase Option Notes from the
Company on such date) without any liability on the part of any nondefaulting
party other than pursuant to Sections 5 and 9. No action taken pursuant to this
Section 12 shall relieve the Company from liability, if any, in respect of such
default.
12. DEFAULT BY INITIAL PURCHASERS. If on the Closing Date or any Option
Closing Date, as the case may be, any Initial Purchaser shall fail to purchase
and pay for the portion of the Notes which such Initial Purchaser has agreed to
purchase and pay for on such date (otherwise than by reason of any default on
the part of the Company), Deutsche Bank Securities Inc. shall use its reasonable
efforts to procure within 36 hours thereafter one or more of the other Initial
Purchasers, or any others, to purchase from the Company such principal amounts
as may be agreed upon, and upon the terms set forth herein, of the Firm Notes or
Option Notes, as the case may be, which the defaulting Initial Purchaser or
Initial Purchasers failed to purchase. If during such 36 hours Deutsche Bank
Securities Inc. shall not have procured such other Initial Purchasers, or any
others, to purchase the principal amount of Firm Notes or Option Notes, as the
case may be, agreed to be purchased by the defaulting Initial Purchaser or
Initial Purchasers, then (i) if the aggregate principal amount of Firm Notes or
Option Notes, as the case may be, with respect to which such default shall occur
does not exceed 10% of the total principal amount of Firm Notes or Option Notes,
as the case may be, covered hereby, the other Initial Purchasers shall be
obligated, severally, in proportion to the respective principal amounts of Firm
Notes or Option Notes, as the case may be, which they are obligated to purchase
hereunder, to purchase the principal amount of Firm Notes or Option Notes, as
the case may be, which such defaulting Initial Purchaser or Initial Purchasers
failed to purchase, or (ii) if the aggregate principal amount of Firm Notes or
Option Notes, as the case may be, with respect to which such default shall occur
exceeds 10% of the total principal amount of Firm Notes or Option Notes, as the
case may be, covered hereby, the Company or Deutsche Bank Securities Inc. will
have the right, by written notice given within the next 36-hour period to the
parties to this Agreement, to terminate this Agreement without liability on the
part of the non-defaulting Initial Purchasers or of the Company except to the
extent provided in Sections 5 and 8 hereof. In the event of a default by
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any Initial Purchaser or Initial Purchasers, as set forth in this Section 12,
the Closing Date or Option Closing Date, as the case may be, may be postponed
for such period, not exceeding seven days, as Deutsche Bank Securities Inc. may
determine in order that the required changes in the Offering Memorandum or in
any other documents or arrangements may be effected. The term "Initial
Purchaser" includes any person substituted for a defaulting Initial Purchaser.
Any action taken under this Section 12 shall not relieve any defaulting Initial
Purchaser from liability in respect of any default of such Initial Purchaser
under this Agreement.
13. NOTICES. All notices and communications hereunder, except as herein
otherwise specifically provided, shall be given in writing and shall be deemed
to have been duly given if mailed or transmitted by any standard form of
telecommunication to the following:
Deutsche Bank Securities Inc.
Warburg Dillon Read LLC
c/o Deutsche Bank Securities Inc.
000 Xxxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: General Counsel
with a copy to:
Gray Xxxx Xxxx & Freidenrich LLP
Attention: Xxxxx Xxxxxxx, Esq.
0000 Xxxxxxxxx Xxxxx, Xxxxx 0000
Xxx Xxxxx, Xxxxxxxxxx 00000-0000.
Tekelec
Attention: Chief Executive Officer
Corporate Secretary
00000 Xxxx Xxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxx 00000,
with a copy to:
Xxxxx Xxxx, LLP
Attention: X. Xxxx Xxxxxx, Esq.
One Metropolitan Square
000 Xxxxx Xxxxxxxx, Xxxxx 0000
Xx. Xxxxx, Xxxxxxxx 00000-2750.
14. PARTIES. This Agreement shall inure to the benefit of and shall be
binding upon the Initial Purchasers and the Company and their respective
successors. Except as otherwise provided herein, this Agreement is not intended
(nor shall it be construed) to give any person, firm or corporation, other than
the parties hereto and their respective successors, heirs and legal
representatives, and the officers, directors, partners, employees, agents and
controlling persons
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referred to in Sections 8(a) and 8(b) and their heirs and legal representatives,
any legal or equitable right, remedy or claim under or in respect of this
Agreement or any provision herein contained. Except as otherwise provided
herein, this Agreement and all conditions and provisions hereof is intended to
be for the sole and exclusive benefit of the Initial Purchasers and the Company
and their respective successors, and said officers, directors, partners,
employees, agents and controlling persons and their heirs and legal
representatives, and for the benefit of no other person, firm or corporation. No
purchaser of Notes from the Initial Purchasers shall be deemed to be a successor
by reason merely of such purchase.
15. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA.
SPECIFIED TIMES OF DAY REFER TO SAN FRANCISCO, CALIFORNIA TIME UNLESS OTHERWISE
SPECIFIED.
16. ENTIRE AGREEMENT, AMENDMENTS. This Agreement constitutes the entire
agreement of the parties hereto and supersedes all prior written or oral
agreements, understandings and negotiations with respect to the subject matter
hereof. This Agreement may not be amended except in a writing signed by the
Initial Purchasers and the Company.
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If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof, whereupon
this instrument, along with all counterparts, will become a binding agreement
among the Initial Purchasers and the Company in accordance with its terms.
Very truly yours,
TEKELEC
By: /s/ Xxxxxxx X. Xxxxxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
-----------------------------
Title: Chief Executive Officer
----------------------------
Confirmed and accepted as of the date first stated above.
DEUTSCHE BANK SECURITIES INC.
WARBURG DILLON READ LLC
By: DEUTSCHE BANK SECURITIES INC.
By: /s/ Xxxxx XxXxxxxx
------------------------------------
Authorized Signatory
Name: Xxxxx XxXxxxxx
Title: Managing Director
29
SCHEDULE A
Principal Amount at
Initial Purchasers Purchase Price Maturity
Deutsche Bank Securities Inc. $ 63,233,154 $ 76,375,000
Warburg Dillon Read LLC 34,048,621 41,125,000
------------ ------------
Total $ 97,281,775 $117,500,000
30
SCHEDULE B
Subsidiary Jurisdiction of Incorporation
IEX Corporation Nevada
Tekex Ltd. U.S. Virgin Islands
Tekelec Limited United Kingdom
Tekelec, Ltd. Japan
31
SCHEDULE C
Xxxxxxx X. Xxxxxxxx
Xxxx Xxxxxxxx
Xxxxx X. Xxxx
Xxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx
Xxxxxx Xxxxxxx
Xxxxxx Xxxxxx
Xxx Xxxxx
Xxxx-Xxxxxx Xxxxxxx
Xxxxxx X. Xxxxx
Xxxxxx X. Xxxxxxx
Xxxxxx Xxxxxxx
Xxx X. Xxxxx
32
SCHEDULE D
Form of Letter to be Delivered by Institutional Accredited Investors
Tekelec
00000 Xxxx Xxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Deutsche Bank Securities Inc.
Warburg Dillon Read LLC
c/o Deutsche Bank Securities Inc.
000 Xxxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Ladies and Gentlemen:
We are delivering this letter in connection with an offering of
Convertible Subordinated Notes due 2002 (the "Notes"), which are convertible
into shares of the Company's Common Stock, without par value (the "Common
Stock"), all as described in the Offering Memorandum (the "Offering Memorandum")
relating to the offering.
We hereby confirm that:
(i) we are an "accredited investor" within the meaning of Rule
501(a) (1), (2), (3) or (7) under the Securities Act of 1933 (the
"Securities Act") or an entity in which all of the equity owners are
accredited investors within the meaning of Rule 501(a) (1), (2), (3) or
(7) under the Securities Act (an "Institutional Accredited Investor");
(ii) (A) any purchase of the Notes by us will be for our own
account or for the account of one or more other Institutional Accredited
Investors or as fiduciary for the account of one or more trusts, each of
which is an "accredited investor" within the meaning of Rule 501(a) (7)
under the Securities Act and for each of which we exercise sole
investment discretion or (B) we are a "bank," within the meaning of
Section 3(a) (2) of the Securities Act, or a "savings and loan
association" or other institution described in Section 3(a) (5) (A) of
the Securities Act that is acquiring Notes as fiduciary for the account
of one or more institutions for which we exercise sole investment
discretion;
(iii) In the event that we purchase any Notes, we will acquire
Notes having a minimum principal amount of not less than $250,000 for
our own account or for any separate account for which we are acting;
(iv) we have such knowledge and experience in financial and
business matters that we are capable of evaluating the merits and risks
of purchasing Notes;
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(v) we are not acquiring Notes with a view to distribute or with
any present intention of offering or selling Notes or the Common Stock
issuable upon conversion thereof, except as permitted below; provided
that the disposition of our property and property of any accounts for
which we are acting as fiduciary shall remain at all times within our
control; and
(vi) we have received a copy of the Offering Memorandum and
acknowledge that we have had access to such financial and other
information, and have been afforded the opportunity to access such
financial and other information, and have been afforded the opportunity
to ask such questions of representatives of the Company and receive
answers thereto, as we deem necessary in connection with our decision to
purchase Notes.
We understand that the Notes are being offered in a transaction not
involving any public offering within the United States within the meaning of the
Securities Act and that the Notes and the shares of Common Stock issuable upon
conversion thereof have not been registered under the Securities Act, and we
agree, on our own behalf and on behalf of each account for which we acquire any
Notes, that if in the future we decide to resell or otherwise transfer such
Notes or the Common Stock issuable upon conversion thereof, such Notes or Common
Stock may be resold or otherwise transferred only (i) to Tekelec or any
subsidiary thereof, or (ii) inside the United States to a person who is a
"qualified institutional buyer" (as defined in Rule 144A under the Securities
Act) in a transaction meeting the requirements of Rule 144A, or (iii) inside the
United States to an Institutional Accredited Investor that, prior to such
transfer, furnishes to the transfer agent or registrar for such securities a
signed letter containing certain representations and agreements relating to the
restrictions on transfer or such securities (the form of which letter can be
obtained from such transfer agent or registrar), or (iv) outside the United
States in a transaction meeting the requirements of Rule 904 under the
Securities Act, or (v) pursuant to the exemption for registration provided by
Rule 144 under the Securities Act (if applicable), or (vi) pursuant to a
registration statement which has been declared effective under the Securities
Act (and which continues to be effective at the time of such transfer) and (vii)
in each case, in accordance with any applicable securities laws of any State of
the United States or any other applicable jurisdiction and in accordance with
the legends set forth on the Notes. We further agree to provide any person
purchasing any of the Notes or the Common Stock issuable upon conversion thereof
other than pursuant to clause (vi) above from us a notice advising such
purchaser that resales of such securities are restricted as stated herein. We
understand that the registrar and transfer agent for the Notes and the Common
Stock will not be required to accept for registration of transfer any Notes or
any shares of Common Stock issued upon conversion of the Notes except upon
presentation of evidence satisfactory to the Company that we have complied with
the foregoing restrictions on transfer. We further understand that any Notes and
any shares of Common Stock issued upon conversion of the Notes will be in the
form of definitive physical certificates and that such certificates will bear a
legend reflecting the substance of this paragraph other than certificates
representing any Notes or any shares of Common Stock issuable upon conversion of
the Notes transferred pursuant to clause (vi) above.
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We acknowledge that the Company, others and you will rely upon our
confirmations, acknowledgments and agreements set forth herein, and we agree to
notify you promptly in writing if any of our representations or warranties
herein ceases to be accurate and complete.
THIS LETTER AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF CALIFORNIA WITHOUT REGARD TO PRINCIPLES OF
CONFLICT OF LAWS.
(Name of Purchaser)
By:
Name:
Title:
Address:
3
