$60,000,000
ACTIVISION, INC.
6 3/4% CONVERTIBLE SUBORDINATED NOTES DUE 2005
PURCHASE AGREEMENT
December 16, 1997
CREDIT SUISSE FIRST BOSTON CORPORATION
XXXXX XXXXXXX, INC.
UBS SECURITIES LLC
c/o Credit Suisse First Boston Corporation,
Eleven Madison Avenue,
New York, N.Y. 10010-3629
Ladies and Gentlemen:
1. INTRODUCTORY. Activision, Inc., a Delaware corporation (the
"Company"), proposes, subject to the terms and conditions stated herein, to
issue and sell to the several initial purchasers named in Schedule A hereto
(the "Purchasers") U.S.$60,000,000 principal amount of its 6 3/4% Convertible
Subordinated Notes Due 2005 (the "Offered Securities"), which are
convertible into shares of the Company's common stock, $0.000001 par value
("Common Stock"), to be issued under an indenture, dated as of December 22,
1997 (the "Indenture"), between the Company and State Street Bank and Trust
Company of California, N.A., as Trustee (the "Trustee").
The duly authorized shares of Common Stock reserved for issuance upon
conversion of the Offered Securities are herein referred to as the
"Underlying Shares." The United States Securities Act of 1933 is herein
referred to as the "Securities Act." This Agreement, the Indenture, and the
Registration Rights Agreement signed concurrently among the parties to this
Agreement (the "Registration Rights Agreement") are herein collectively
referred to as the "Transaction Documents."
The Company hereby agrees with the several Purchasers as follows:
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents
and warrants to, and agrees with, the several Purchasers as follows:
(a) A preliminary offering circular and an offering circular
relating to the Offered Securities to be offered by the Purchasers have
been prepared by the Company. Such preliminary offering circular and
offering circular, as supplemented as of the date of this Agreement,
together with the documents listed in Schedule B hereto and any other
document approved by the Company for use in connection with the
contemplated resale of the Offered Securities are hereinafter collectively
referred to as the "Offering Document." Any reference to the Offering
Document shall be deemed to refer to and include (i) the Company's most
recent Annual Report
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on Form 10-K and all subsequent documents filed by the Company with the
Securities and Exchange Commission (the "Commission") pursuant to
Section 13(a), 13(c) or 15(d) of the United States Securities Exchange
Act of 1934, as amended (the "Exchange Act") on or prior to the date of
the Offering Document and any reference to the Offering Document, as
amended or supplemented, as of any specified date, shall be deemed to
include any documents filed with the Commission pursuant to Section
13(a), 13(c) or 15(d) of the Exchange Act after the date of the Offering
Document and prior to such specified date and any Rule 144A Information
(as defined in Section 5(b) hereof) furnished by the Company prior to
the completion of the distribution of the Offered Securities; and all
documents filed under the Exchange Act and so deemed to be included in
the Offering Document or any amendment or supplement thereto are
hereinafter called the "Exchange Act Reports"; and (ii) any other
document listed in Schedule B hereto and any other document approved by
the Company for use in connection with the contemplated resale of the
offered securities. The Exchange Act Reports, when they were or are
filed with the Commission, conformed or will conform in all material
respects to the applicable requirements of the Exchange Act and the
applicable rules and regulations of the Commission thereunder. The
Offering Document and any amendments or supplements thereto and the
Exchange Act Reports did not and will not, as of their respective dates,
contain an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
PROVIDED, HOWEVER, that this representation and warranty shall not apply
to any statements or omissions made in reliance upon and in conformity
with information furnished in writing to the Company by any Purchaser
through CSFBC specifically for use therein, it being understood and
agreed that the only such information is that described as such in
Section 7(b) hereof.
(b) The Company has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the State of Delaware,
with power and authority (corporate and other) to own its properties and
conduct its business as described in the Offering Document; and the
Company is duly qualified to do business as a foreign corporation in good
standing in all other jurisdictions in which its ownership or lease of
property or the conduct of its business requires such qualification, or is
subject to no material liability or disability by reason of the failure to
be so qualified in any such jurisdiction. The Company has an authorized
capitalization as set forth in the Offering Document, and all of the
issued shares of capital stock of the Company have been duly and validly
authorized and issued and are fully paid and non-assessable.
(c) Each subsidiary of the Company listed in Schedule D hereto and
identified therein as a material subsidiary (each a "Material Subsidiary"
and collectively the "Material Subsidiaries") has been duly incorporated
and is validly existing as a corporation in good standing under the laws
of the jurisdiction of its incorporation, with power and authority
(corporate and other) to own its properties and conduct its business as
described in the Offering Document; and each Material Subsidiary of the
Company is duly qualified to do business as a foreign corporation in good
standing in all other jurisdictions in which its ownership or lease of
property or the conduct of its business requires such qualification, or is
subject to no material liability or disability by reason of the failure to
be so qualified in any such jurisdiction. All of the issued and
outstanding capital stock of each Material Subsidiary of the Company has
been duly authorized and validly issued and is fully paid and
nonassessable; and the capital stock of each subsidiary owned by the
Company, directly or through subsidiaries, is owned free from liens,
encumbrances and defects, other than liens securing the lines of credit
described in the Offering Document.
(d) The Indenture and the Registration Rights Agreement have been
duly authorized by the Company; the Offered Securities and the Underlying
Shares have been duly authorized by the Company; and when the Offered
Securities are delivered and paid for pursuant to this Agreement on the
Closing Date (as defined below), the Indenture and the Registration Rights
Agreement will have
2
been duly executed and delivered by the Company, such Offered Securities
will have been duly executed, authenticated, issued and delivered by the
Company and will conform to the description thereof contained in the
Offering Document and the Indenture and such Offered Securities will
constitute valid and legally binding obligations of the Company,
enforceable against the Company in accordance with their respective
terms, subject, as to enforcement, to bankruptcy, insolvency,
reorganization and similar laws of general applicability relating to or
affecting creditors' rights and to general equity principles.
(e) When the Offered Securities are delivered and paid for pursuant
to this Agreement on the Closing Date, such Offered Securities will be
convertible into the Underlying Shares in accordance with the terms of the
Indenture; the Underlying Shares issuable upon conversion of the Offered
Securities delivered on the Closing Date have been duly authorized and
reserved for issuance upon such conversion and, when issued upon such
conversion, will be validly issued, fully paid and nonassessable; and the
shareholders of the Company have no preemptive rights with respect to the
Offered Securities or the Underlying Shares.
(f) Except as disclosed in the Offering Document, and except for
registration rights or similar rights that have been satisfied prior to
the date of this Agreement by the filing by the Company of a registration
statement under the Securities Act, there are no persons with
registration rights or other similar rights to have any securities of the
Company (other than the Offered Securities) registered under any
Securities Act registration statement; and, except as disclosed in the
Offering Document, no holder of any security of the Company (other than
Holders of the Offered Securities) has any right to request or demand
registration of any security of the Company because of the consummation of
the transactions contemplated by the Transaction Documents.
(g) No statute, rule, regulation or order that has been enacted,
adopted or issued by any governmental agency, and no injunction,
restraining order or order of any nature by a Federal or state court of
competent jurisdiction to which either the Company or any of its
subsidiaries is subject that has been issued or is pending, (i) could
interfere with or adversely affect the issuance of the Offered Securities
or the Underlying Shares, or (ii) could in any manner draw into question
the validity of this Agreement or any other Transaction Document.
(h) No consent, approval, authorization, or order of, or filing
with, any governmental agency or body or any court is required for the
consummation of the transactions contemplated by this Agreement or in
connection with the issuance or sale of the Offered Securities by the
Company or the issuance of the Underlying Shares upon conversion of the
Offered Securities, and no consents or waivers from any other person are
required for the execution, delivery or performance of this Agreement and
the other Transaction Documents by the Company and the consummation of the
transactions contemplated hereby and thereby, other than such as have been
obtained and are in full force and effect and other than such filings as
may be required under the Securities Act or the rules and regulations
thereunder, as may be required under the securities or "blue sky" laws of
the various states, or as may be required in any other jurisdiction in
connection with the offer and sale of the Offered Securities or the
Underlying Shares in such jurisdiction. No order or decree preventing the
use of the Offering Document and no order asserting that the transactions
contemplated by this Agreement are subject to the registration
requirements of the Securities Act has been issued, and no proceeding for
that purpose has commenced or is pending or, to the knowledge of the
Company, is contemplated.
(i) None of the transactions contemplated by this Agreement
(including, without limitation, the use of the proceeds from the sale of
the Offered Securities) will violate or result in a violation of Section 7
of the Exchange act, or any regulation promulgated thereunder, including,
without limitation, Regulations G, T, U, and X of the Board of Governors
of the Federal Reserve System.
3
(j) Prior to the date of this Agreement, neither the Company nor any
of its affiliates has taken any action which is designed to or which has
constituted or which might reasonably be expected to cause or result in
stabilization or manipulation of the price of any security of the Company
in connection with the offering of the Offered Securities.
(k) The execution, delivery and performance of the Transaction
Documents, compliance with the terms and provisions thereof, the issuance
and sale of the Offered Securities and the issuance of the Underlying
Shares upon conversion of the Offered Securities will not result in a
breach or violation (including any event which, with notice or lapse of
time or both would constitute a breach or violation) of any of the terms
or provisions of, or constitute a default (including any event which, with
notice or lapse of time or both would constitute a default) under, any
statute, rule, regulation or order of any governmental agency or body or
any court, domestic or foreign, having jurisdiction over the Company or
any Material Subsidiary of the Company or any of their properties, or any
agreement or instrument to which the Company or any such Material
Subsidiary is a party or by which the Company or any such Material
Subsidiary is bound or to which any of the properties of the Company or
any such Material Subsidiary is subject, or the charter or by-laws of the
Company or any such Material Subsidiary, and the Company has full power
and authority to authorize, issue and sell the Offered Securities and to
issue the Underlying Shares upon conversion of the Offered Securities,
each as contemplated by this Agreement.
(l) This Agreement has been duly authorized, executed and delivered
by the Company.
(m) Except as disclosed in the Offering Document, the Company and
its Material Subsidiaries have good and marketable title to all property
owned by them, in each case free from liens, encumbrances and defects that
would materially affect the value thereof or materially interfere with the
use made or to be made thereof by them; and except as disclosed in the
Offering Document, the Company and its Material Subsidiaries hold any
leased real or personal property under valid and enforceable leases with
no exceptions that would materially interfere with the use made or to be
made thereof by them.
(n) The Company and its Material Subsidiaries possess adequate
certificates, authorities or permits issued by appropriate governmental
agencies or bodies necessary to conduct the business now operated by them
and have not received any notice of proceedings relating to the revocation
or modification of any such certificate, authority or permit that, if
determined adversely to the Company or any of its Material Subsidiaries,
would individually or in the aggregate have a material adverse effect on
the Company and its Material Subsidiaries taken as a whole.
(o) No labor dispute with the employees of the Company or any
subsidiary exists or, to the knowledge of the Company, is imminent that
might have a material adverse effect on the Company and its subsidiaries
taken as a whole, and, to the knowledge of the Company, neither the
Company nor any of its subsidiaries has violated any Federal, state or
local law relating to discrimination in hiring, promotion or pay of
employees. Neither the Company nor any of its subsidiaries will cause or
permit any goods to be manufactured, sold or distributed by any of its
employees in violation of the minimum wage or overtime laws of Sections 6
and 7 of the Federal Fair Labor Standards Act.
(p) The Company and its subsidiaries own, possess or have licenses
to use trademarks, trade names and other rights to inventions, know-how,
patents, copyrights, confidential information and other intellectual
property (collectively, "intellectual property rights") necessary to
conduct the business now operated by them, or presently employed by them,
and, except as described in the Offering Document, have not received any
notice of infringement of or conflict with asserted rights
4
of others with respect to any intellectual property rights that, if
determined adversely to the Company or any of its subsidiaries, could
individually or in the aggregate have a material adverse effect on the
Company and its subsidiaries taken as a whole.
(q) Except as disclosed in the Offering Document, neither the
Company nor any of its subsidiaries is in violation of any statute, rule,
regulation, decision or order of any governmental agency or body or any
court, domestic or foreign, relating to the use, disposal or release of
hazardous or toxic substances or relating to the protection or restoration
of the environment or human exposure to hazardous or toxic substances
(collectively, "environmental laws"), owns or operates any real property
contaminated with any substance that is subject to any environmental laws,
is liable for any off-site disposal or contamination pursuant to any
environmental laws, or is subject to any claim relating to any
environmental laws, which violation, contamination, liability or claim
could individually or in the aggregate have a material adverse effect on
the Company and its subsidiaries taken as a whole; and the Company is not
aware of any pending investigation which might lead to such a claim.
(r) Except as disclosed in the Offering Document, neither the
Company nor any of its Material Subsidiaries is in violation of its
charter or by-laws or in default (including any event which, with notice
or lapse of time, or both, would constitute a default) in the performance
or observance of any material obligation, covenant or condition, contained
in any material contract, indenture, mortgage, deed of trust, loan
agreement, lease or other agreement or instrument to which it is a party
or by which it or any of its properties may be bound.
(s) The statements set forth in the Offering Circular under the
captions "Description of Notes," insofar as they purport to constitute a
summary of the terms of the Offered Securities and of the documents and
laws therein described, and under the captions "Certain United States
Federal Tax Considerations," "Transfer Restrictions" and "Plan of
Distribution," insofar as they purport to describe the provisions of the
documents and laws therein described, are accurate and complete in all
material respects.
(t) Except as disclosed in the Offering Document, there are no
pending legal or governmental actions, suits or proceedings against or
affecting the Company, any of its subsidiaries or any of their respective
properties that, if determined adversely to the Company or any of its
subsidiaries, could individually or in the aggregate have a material
adverse effect on the condition (financial or other), business, properties
or results of operations of the Company and its subsidiaries taken as a
whole, or could materially and adversely affect the ability of the Company
to perform its obligations under the Transaction Documents, or which are
otherwise material in the context of the sale of the Offered Securities;
and no such actions, suits or proceedings are threatened or, to the
Company's knowledge, contemplated.
(u) The financial statements included in the Offering Document,
including financial statements relating to any company which the Company
has recently acquired (an "Acquired Company") present fairly the financial
position of the Company, its consolidated subsidiaries and any Acquired
Company, as the case may be, as of the dates shown and their results of
operations and cash flows for the periods shown and such financial
statements have been prepared in conformity with the generally accepted
accounting principles in the United States applied on a consistent basis;
and the assumptions used in preparing the pro forma financial statements
included in the Offering Document provide a reasonable basis for
presenting the significant effects directly attributable to the
transactions or events described therein, the related pro forma
adjustments give appropriate effect to those assumptions, and the pro
forma columns therein reflect the proper application of those adjustments
to the corresponding historical financial statement amounts.
5
(v) Except as disclosed in the Offering Document, the Company and
its subsidiaries have filed all tax returns required to be filed, and such
returns are true and correct in all material respects, and the Company and
its subsidiaries are not in default in the payment of any taxes which
were payable pursuant to said returns or any assessments with respect
thereto, except insofar as the failure to file any such return or make any
such payment could not, singly or in the aggregate with all other such
failures, reasonably be expected to have a material adverse effect on the
Company and its subsidiaries, taken as a whole. The Company does not
know of any material proposed additional tax assessments against it or any
of its Material Subsidiaries.
(w) The Company is not, nor will it be, as a result of or after
giving effect to the issuance of the Offered Securities and the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated thereby, (i) insolvent, (ii) left with an
unreasonably small capital with which to engage in its existing and
anticipated businesses or (iii) incurring debts beyond its ability to pay
such debts as they mature. The Company is not issuing the Offered
Securities in anticipation of insolvency.
(x) Except as disclosed in the Offering Document, since the date of
the latest audited financial statements of the Company included in the
Offering Document there has been no material adverse change, nor any
development or event involving a prospective material adverse change, in
the condition (financial or other), business, properties or results of
operations of the Company and its subsidiaries taken as a whole and,
except as disclosed in or contemplated by the Offering Document, there has
been no dividend or distribution of any kind declared, paid or made by the
Company on any class of its capital stock.
(y) KPMG Peat Marwick LLP ("KPMG") and Coopers & Xxxxxxx LLP, who
have certified certain financial statements of the Company and its
subsidiaries, and Xxxxx Xxxxxxxx, who has certified certain financial
statements of certain subsidiaries of the Company, are independent public
accountants with respect to the Company and its subsidiaries as required
by the Securities Act and the rules and regulations of the Commission
thereunder.
(z) The Company is not an open-end investment company, unit
investment trust or face-amount certificate company that is or is required
to be registered under Section 8 of the United States Investment Company
Act of 1940, as amended (the "Investment Company Act") ; and the Company
is not and, after giving effect to the offering and sale of the Offered
Securities and the application of the proceeds thereof as described in the
Offering Document, will not be an "investment company" as defined in the
Investment Company Act.
(aa) No securities of the same class (within the meaning of
Rule 144A(d)(3) under the Securities Act) as the Offered Securities are
listed on any national securities exchange registered under Section 6 of
the Exchange Act or quoted in a U.S. automated inter-dealer quotation
system.
(bb) The offer and sale of the Offered Securities to the Purchasers,
and initial resale of the Offered Securities by the Purchasers, each in
the manner contemplated by this Agreement, will be exempt from the
registration requirements of the Securities Act by reason of Section 4(2)
thereof, Regulation D thereunder, or Regulation S thereunder ("Regulation
S"), or, in the case of resales by the Purchasers, Rule 144A under the
Securities Act, provided in each case the representations and warranties
of the Purchasers are true and correct and that the Purchasers comply with
all such applicable laws and regulations in the resale of the Offered
Securities; and it is not necessary to qualify an indenture in respect of
the Offered Securities under the United States Trust Indenture Act of
1939, as amended (the "Trust Indenture Act").
(cc) Neither the Company, nor any of its affiliates, nor any person
acting on its or their
6
behalf (i) has, within the six-month period prior to the date hereof,
offered or sold in the United States or to any U.S. person (as such
terms are defined in Regulation S) the Offered Securities, or any
security of the same class or series as the Offered Securities or (ii)
has offered or will offer or sell the Offered Securities (A) in the
United States by means of any form of general solicitation or general
advertising within the meaning of Rule 502(c) under the Securities Act
or (B) with respect to any such securities sold in reliance on Rule 903
of Regulation S ("Rule 903"), by means of any directed selling efforts
within the meaning of Rule 902(b) of Regulation S. The Company, its
affiliates and any person acting on its or their behalf have complied
and will comply with the offering restrictions requirement of Regulation
S. The Company has not entered and will not enter into any contractual
arrangement with respect to the distribution of the Offered Securities
except for this Agreement.
(dd) Except as permitted by the Securities Act, neither the Company
nor any of its subsidiaries has distributed and, prior to the completion
of the initial distribution of the Offered Securities (which includes the
sale by the Purchasers), neither will distribute, any offering materials
in connection with the offering and sale of the Offered Securities other
than the Offering Document.
(ee) The Offering Document, as of the date of this Agreement,
contains all the information specified in, and meets the requirements of,
Rule 144A(d)(4) under the Securities Act.
(ff) The Company is subject to Section 13 or 15(d) the Exchange
Act.
(gg) Except as disclosed in the Offering Document, there are no
contracts, agreements or understandings between the Company and any person
that would give rise to a valid claim against the Company or any Purchaser
for a brokerage commission, finder's fee or other like payment in
connection with the sale of the Offered Securities.
3. PURCHASE, SALE AND DELIVERY OF OFFERED SECURITIES. On the basis of
the representations, warranties and agreements herein contained, but subject to
the terms and conditions herein set forth, the Company agrees to sell to the
Purchasers, and the Purchasers agree, severally and not jointly, to purchase
from the Company, at a purchase price of 97% of the principal amount thereof,
the respective principal amounts of Offered Securities set forth opposite the
names of the several Purchasers in Schedule A hereto.
The Company will deliver against payment of the purchase price the Offered
Securities in the form of one or more permanent global securities in definitive
form (the "Global Securities") deposited with the Trustee as custodian for The
Depository Trust Company ("DTC") and registered in the name of Cede & Co., as
nominee for DTC. Interests in any permanent global securities will be held
only in book-entry form through DTC, except in the limited circumstances
described in the Offering Document. The Global Securities shall include the
legend regarding restrictions on transfer set forth under "Transfer
Restrictions" in the Offering Document. Payment for the Offered Securities
shall be made by the Purchasers in Federal (same day) funds by official check
or checks or wire transfer to an account at Chase Manhattan Bank, New York, New
York drawn to the order of Activision, Inc. at the offices of Irell & Xxxxxxx
LLP, 0000 Xxxxxx xx xxx Xxxxx, Xxx Xxxxxxx, Xxxxxxxxxx at 10 A.M. (New York
time), on December 22, 1997, or at such other time not later than seven full
business days thereafter as CSFBC and the Company determine, such time being
herein referred to as the "Closing Date," against delivery to the Trustee as
custodian for DTC of the Global Securities representing all of the Offered
Securities. The Global Securities will be made available for checking at the
Corporate Trust Office of the Trustee, as defined in the Indenture at least one
business day prior to the Closing Date.
Notwithstanding the foregoing, any Offered Securities sold to
Institutional Accredited Investors (as hereinafter defined) pursuant to Section
4(c) hereof shall be issued in definitive, fully registered form and shall bear
the legend relating thereto set forth under "Transfer Restrictions" in the
Offering Document, but shall be
7
paid for in the same manner as any Offered Securities to be purchased by the
Purchasers hereunder and to be offered and sold by them in reliance on Rule 144A
or Regulation S under the Securities Act.
4. REPRESENTATIONS BY PURCHASERS; RESALE BY PURCHASERS.
(a) Each Purchaser severally represents and warrants to the Company
that it is an "accredited investor" within the meaning of Regulation D
under the Securities Act;
(b) Each Purchaser severally acknowledges that the Offered
Securities have not been registered under the Securities Act and may not
be offered or sold within the United States or to, or for the account or
benefit of, U.S. persons except pursuant to an exemption from the
registration requirements of the Securities Act. Each Purchaser severally
represents and agrees that it has offered and sold the Offered Securities,
and will offer and sell the Offered Securities as part of its distribution
at any time, only in accordance with Rule 903 or Rule 144A under the
Securities Act ("Rule 144A") or in the case of CSFBC or any other
Purchaser authorized by CSFBC to a limited number of Institutional
Accredited Investors in accordance with subsection (c) below.
Accordingly, neither such Purchaser nor its affiliates, nor any persons
acting on its or their behalf, have engaged or will engage in any directed
selling efforts with respect to the Offered Securities, and such
Purchaser, its affiliates and all persons acting on its or their behalf
have complied and will comply with the offering restrictions requirement
of Regulation S. Each Purchaser severally agrees that, at or prior to
confirmation of sale of the Offered Securities, other than a sale pursuant
to Rule 144A or a sale to an Institutional Accredited Investor in
accordance with subsection (c) below, such Purchaser will have sent to
each distributor, dealer or person receiving a selling concession, fee or
other remuneration that purchases the Offered Securities from it a
confirmation or notice to substantially the following effect:
"The Securities covered hereby have not been registered
under the U.S. Securities Act of 1933 (The "Securities
Act") and may not be offered or sold within the United
States or to, or for the account or benefit of, U.S.
persons as part of their distribution at any time, except
in accordance with Regulation S (or Rule 144A if available)
under the Securities Act. Terms used above have the
meanings given to them by Regulation S."
Terms used in this subsection (b) have the meanings given to them by
Regulation S under the Securities Act;
(c) CSFBC and any other Purchaser authorized by CSFBC may offer and
sell Offered Securities in definitive, fully registered form to a limited
number of institutions, each of which is reasonably believed by the
applicable Purchaser to be an "accredited investor" within the meaning of
Rule 501(a)(1), (2) or (3) 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) or (3) under the Securities Act (each, an
"Institutional Accredited Investor"); provided that each such
Institutional Accredited Investor executes and delivers to such Purchaser
and the Company, prior to the consummation of any sale of Offered
Securities to such Institutional Accredited Investor, a Purchaser's Letter
in substantially the form attached hereto as Schedule C (a "Purchaser's
Letter");
(d) Each Purchaser severally agrees that it and each of its
affiliates has not entered and will not enter into any contractual
arrangement with respect to the distribution of the Offered Securities,
except for any such arrangements with the other Purchasers or affiliates
of the other Purchasers or with the prior written consent of the Company;
(e) Each Purchaser severally agrees that it and each of its
affiliates will not offer or sell the Offered Securities in the United
States by means of any form of general solicitation or general
8
advertising within the meaning of Rule 502(c) under the Securities Act,
including, but not limited to (i) any advertisement, article, notice or
other communication published in any newspaper, magazine or similar
media or broadcast over television or radio, or (ii) any seminar or
meeting whose attendees have been invited by any general solicitation or
general advertising. Each Purchaser severally agrees, with respect to
resales made in reliance on Rule 144A of any of the Offered Securities,
to deliver either with the confirmation of such resale or otherwise
prior to settlement of such resale a notice to the effect that the
resale of such Offered Securities has been made in reliance upon the
exemption from the registration requirements of the Securities Act
provided by Rule 144A;
(f) Each Purchaser severally represents and agrees that (i) it has
not offered or sold and prior to the date six months after the date of
issue of the Offered Securities will not offer or sell any Offered
Securities to persons in the United Kingdom except to persons whose
ordinary activities involve them in acquiring, holding, managing or
disposing of investments (as principal or agent) for the purposes of their
businesses or otherwise in circumstances which have not resulted and will
not result in an offer to the public in the United Kingdom within the
meaning of the Public Offers of Securities Regulations 1995; (ii) it has
complied and will comply with all applicable provisions of the Financial
Services Xxx 0000 with respect to anything done by it in relation to the
Offered Securities in, from or otherwise involving the United Kingdom; and
(iii) it has only issued or passed on and will only issue or pass on in
the United Kingdom any document received by it in connection with the
issue of the Offered Securities to a person who is of a kind described in
Article 11(3) of the Financial Services Xxx 0000 (Investment
Advertisements) (Exemptions) Order 1996 or is a person to whom such
document may otherwise lawfully be issued or passed on.
5. CERTAIN AGREEMENTS OF THE COMPANY. The Company agrees with the
several Purchasers that:
(a) The Company will advise CSFBC promptly of any proposal to amend
or supplement the Offering Document and will not effect such amendment or
supplementation without CSFBC's consent (except that such consent shall
not be required with respect to any filing by the Company under sections
13(a), 13(c) or 15(d) of the Exchange Act that becomes a part of the
Offering Document by reason of such filing). If, at any time prior to the
completion of the resale of the Offered Securities by the Purchasers, any
event occurs as a result of which the Offering Document as then amended or
supplemented would include an untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, the Company will promptly notify CSFBC of such event and
promptly will prepare, at its own expense, an amendment or supplement
which will correct such statement or omission. Neither CSFBC's consent
to, nor the Purchasers' delivery to offerees or investors of, any such
amendment or supplement shall constitute a waiver of any of the conditions
set forth in Section 6 hereof.
(b) The Company has furnished to CSFBC copies of any preliminary
offering circular, and will furnish to CSFBC the Offering Document and all
amendments and supplements to such documents, in each case as soon as
available and in such quantities as CSFBC requests, and the Company will
furnish to CSFBC on the date hereof four copies of the Offering Document
signed by a duly authorized officer of the Company, one of which will
include the independent accountants' reports therein manually signed by
such independent accountants. At any time when the Company is not subject
to Section 13 or 15(d) of the Exchange Act, the Company will promptly
furnish or cause to be furnished to CSFBC (and, upon request, to each of
the other Purchasers) and, upon request of holders and prospective
purchasers of the Offered Securities or Underlying Shares, to such holders
and purchasers, copies of the information required to be delivered to
holders and prospective purchasers of the Offered Securities or Underlying
Shares pursuant to Rule 144A(d)(4) under the Securities Act (or any
successor provision thereto) ("Rule 144A Information") in order to permit
compliance with Rule 144A in connection with resales by such holders of
the Offered Securities or
9
Underlying Shares. The Company will pay the expenses of printing all such
documents and distributing them to the Purchasers.
(c) The Company will arrange for the qualification of the Offered
Securities and the Underlying Shares, and the determination of their
eligibility, for investment under the laws of such jurisdictions in the
United States and Canada as CSFBC designates and will continue such
qualifications in effect so long as required for the resale of the Offered
Securities or the Underlying Shares by the Purchasers, provided that the
Company will not be required to qualify as a foreign corporation or to
file a general consent to service of process in any such state.
(d) The Company will reserve and keep available at all times, free
of preemptive rights, the Underlying Shares for the purpose of enabling
the Company to satisfy its obligations to issue the Underlying Shares upon
conversion of the Offered Securities.
(e) During the period of two years hereafter, the Company will
furnish to CSFBC and, upon request, to each of the other Purchasers, as
soon as practicable after the end of each fiscal year, a copy of its
annual report to shareholders for such year (including a balance sheet and
statements of income, shareholders' equity and cash flows of the Company
and its consolidated subsidiaries certified by independent public
accountants); as soon as practicable after the end of each of the first
three quarters of each fiscal year (beginning with the fiscal quarter
ending after the Closing Date), consolidated summary financial
information of the Company and its subsidiaries for such quarter in
reasonable detail; as soon as available, copies of all reports or other
communications (financial or other) furnished to shareholders of the
Company; as soon as available, a copy of each report and any definitive
proxy statement of the Company filed with the Commission under the
Exchange Act or mailed to shareholders; and, from time to time, such other
information concerning the Company as CSFBC may reasonably request.
(f) During the period of two years after the Closing Date, the
Company will, upon request, furnish to CSFBC, each of the other
Purchasers, and any holder of Offered Securities or of the Underlying
Shares a copy of the restrictions on transfer applicable to the Offered
Securities and the Underlying Shares.
(g) During the period of two years after the Closing Date, the
Company will not, and will not permit any of its affiliates (as defined in
Rule 144 under the Securities Act) to, resell any of the Offered
Securities that have been reacquired by any of them.
(h) During the period of two years after the Closing Date, the
Company will not be or become an open-end investment company, unit
investment trust, or face-amount certificate company that is or is
required to be registered under Section 8 of the Investment Company Act.
(i) The Company will pay all expenses incidental to the performance
of its obligations under this Agreement and the Indenture, including (i)
the fees and expenses of the Trustee, its agents and its professional
advisers in connection with the Indenture, the Offered Securities and the
Underlying Shares; (ii) all expenses (including fees and disbursements of
the Company's counsel and accountants) in connection with the execution,
issue, authentication, packaging and initial delivery of the Offered
Securities and the Underlying Shares, the preparation and printing of the
Transaction Documents, the Offered Securities, the Underlying Shares, the
Offering Document and amendments and supplements thereto, and any other
document relating to the issuance, offer, sale and delivery of the Offered
Securities; (iii) the cost of listing the Offered Securities and
qualifying the Offered Securities for trading in PORTAL and listing the
Underlying Shares on the Nasdaq National Market and any incidental
expenses of such qualification and listing; (iv) the cost of any
advertising approved by the Company in connection with the issue of the
Offered Securities; (v) any expenses
10
(including fees and disbursements of counsel up to $15,000) incurred
in connection with qualification of the Offered Securities and
Underlying Shares for sale under the laws of such jurisdictions in the
United States and Canada as CSFBC designates and the printing of
memoranda relating thereto; (vi) expenses incurred in distributing the
preliminary offering circulars and the Offering Document (including any
amendments and supplements thereto) to the Purchasers; (vii) the fees
and expenses of DTC and any other depository used in connection with the
Offered Securities and of any transfer or conversion agent or registrar
for the Offered Securities or the Underlying Shares; (viii) for any fees
charged by investment rating agencies for rating the Offered Securities;
and (ix) all other costs and expenses incident to the performance of the
Company's obligations hereunder which are not otherwise specifically
provided for in this Section including any expenses incurred in
connection with complying with Section 5(b) hereof; and will indemnify
and hold harmless the Initial Purchasers from any documentary stamp or
similar issue tax and any related interest or penalties on the issue, sale
or delivery of the Offered Securities to the Initial Purchasers which are
or may be due. The Company will also pay or reimburse the Purchasers (to
the extent incurred by them) for all travel expenses of the Company's
officers and employees and any other expenses of the Company in connection
with attending or hosting meetings with prospective purchasers of the
Offered Securities from the Purchasers. The Company shall not be
responsible for any costs or expenses incurred by the Purchasers in
connection with the offer and sale of the Offered Securities other than as
specifically set forth herein.
(j) In connection with the offering, until CSFBC shall have notified
the Company and the other Purchasers of the completion of the resale of
the Offered Securities, neither the Company nor any of its affiliates has
or will, either alone or with one or more other persons, bid for or
purchase for any account in which it or any of its affiliates has a
beneficial interest any Offered Securities or attempt to induce any person
to purchase any Offered Securities; and neither it nor any of its
affiliates will make bids or purchases for the purpose of creating actual,
or apparent, active trading in, or of raising the price of, the Offered
Securities.
(k) For a period of 180 days after the date of the initial offering
of the Offered Securities by the Purchasers, the Company will not offer,
sell, contract to sell, announce its intention to sell, pledge or
otherwise dispose of, directly or indirectly, or file with the Commission
a registration statement under the Securities Act (other than amendments
to registration statements of the Company which are effective on the date
of the Offering Document) relating to, any debt securities issued or
guaranteed by the Company or any of its subsidiaries and having a maturity
of more than one year from the date of issue, any shares of Common Stock
of the Company or securities convertible into, or exchangeable or
exercisable for, any shares of Common Stock of the Company, without the
prior written consent of CSFBC; provided, however, that, notwithstanding
the foregoing, the Company may, without the prior written consent of
CSFBC: (i) issue and sell Common Stock pursuant to any employee stock
option plan, stock ownership plan, stock purchase plan or dividend
reinvestment plan in effect on the date of the Offering Document,
(ii) issue Common Stock upon the conversion of securities or the exercise
of warrants outstanding on the date of the Offering Document, (iii) issue
debt or equity securities or options or warrants to acquire debt or equity
securities as consideration to any seller or licensor of assets,
intellectual property or other rights, or stock that the Company or any of
its subsidiaries is acquiring and file one or more registration statements
with the Commission with respect to such securities and any securities
heretofore issued by the Company. The Company will not at any time offer,
sell, contract to sell, pledge or otherwise dispose of, directly or
indirectly, any securities under circumstances where such offer, sale,
pledge, contract or disposition would cause the exemption afforded by
Section 4(2) of the Securities Act or the safe harbor of Regulation S to
cease to be applicable to the offer and sale of the Offered Securities.
(l) The Company will use its best efforts to have the Underlying
Shares accepted for
11
quotation on the Nasdaq National Market prior to the time the definitive
Offered Securities become available for delivery.
(m) The Company will use its best efforts to cause the Offered
Securities to be eligible for PORTAL;
(n) The Company will use the net proceeds received by it from the
sale of the Offered Securities pursuant to this Agreement in the manner
specified in the Offering Document under the caption "Use of Proceeds."
(o) The Company will do and perform in all material respects all
things required to be done and performed under this Agreement and the
other Transaction Documents by it on, prior to, and after the Closing
Date.
6. CONDITIONS OF THE OBLIGATIONS OF THE PURCHASERS. The obligations of
the several Purchasers to purchase and pay for the Offered Securities on
the Closing Date will be subject to the accuracy of the representations
and warranties on the part of the Company herein, to the accuracy of the
statements of officers of the Company made pursuant to the provisions
hereof, to the performance by the Company of its obligations hereunder and
to the following additional conditions precedent:
(a) The Purchasers shall have received a letter, dated the date of
this Agreement, of KPMG confirming that they are independent public
accountants within the meaning of the Securities Act and the applicable
published rules and regulations thereunder ("Rules and Regulations") and
to the effect that:
(i) in their opinion the financial statements examined by
them and included in the Offering Document and in the Exchange Act
Reports comply as to form in all material respects with the
applicable accounting requirements of the Securities Act and the
related published Rules and Regulations;
(ii) they have performed the procedures specified by the
American Institute of Certified Public Accountants for a review of
interim financial information as described in Statement of Auditing
Standards No. 71, Interim Financial Information, on the unaudited
financial statements of the Company included in the Offering Document
and in the Exchange Act Reports;
(iii) on the basis of the review referred to in clause
(ii) above, a reading of the latest available interim financial
statements of the Company, inquiries of officials of the Company who
have responsibility for financial and accounting matters and other
specified procedures, nothing came to their attention that caused
them to believe that:
(A) the unaudited financial statements of the
Company included in the Offering Document or in the Exchange Act
Reports do not comply as to form in all material respects with
the applicable accounting requirements of the Securities Act and
the related published Rules and Regulations or any material
modifications should be made to such unaudited financial
statements for them to be in conformity with United States
generally accepted accounting principles;
(B) the unaudited consolidated net revenues, net
income and net income per share amounts for the six month
periods ended September 30, 1997 included in the Offering
Document do not agree with the amounts set forth in the
unaudited consolidated financial statements for those same
periods or were not determined
12
on a basis substantially consistent with that of the
corresponding amounts in the audited statements of income;
(C) at the date of the latest available balance
sheet read by such accountants, or at a subsequent specified
date not more than three business days prior to the date of this
Agreement, there was any change in the capital stock or any
increase in short-term indebtedness or long-term debt of the
Company and its consolidated subsidiaries or, at the date of the
latest available balance sheet read by such accountants, there
was any decrease in consolidated net current assets or net
assets, as compared with amounts shown on the latest balance
sheet included in the Offering Document; or
(D) for the period from the closing date of the
latest income statement included in the Offering Document to the
closing date of the latest available income statement read by
such accountants there were any decreases, as compared with the
corresponding period of the previous year and with the period of
corresponding length ended the date of the latest income
statement included in the Offering Document, in consolidated net
sales, net operating income or in the total or per share amounts
of consolidated net income or in the ratio of earnings to fixed
charges;
(E) In addition to the examination referred to
in their reports(s) included in the Offering Document and the
limited procedures, inspection of minute books, inquiries and
other procedures referred to in clause (ii) above, they have
carried out certain specified procedures, not constituting an
audit in accordance with generally accepted auditing standards,
with respect to certain amounts, percentages and financial
information specified by the Purchaser, which are derived from
the general accounting records of the Company and its
subsidiaries, which appear in the Offering Document, and have
computed certain of such amounts, percentages and financial
information and compared them with the accounting records of the
Company and its subsidiaries and have found them to be in
agreement.
except in all cases set forth in clauses (C) and (D) above for
changes, increases or decreases which the Offering Document discloses
have occurred or may occur or which are described in such letter;
(iv) (A) they have read the pro forma financial statements
and other pro forma financial information included in the Offering
Document (collectively, the "Pro Forma Information");
(B) they have made inquiries of certain officials of
the Company who have responsibility for financial and accounting
matters about the basis for the pro forma adjustments;
(C) they have proved the arithmetic accuracy of the
application of the pro forma adjustments to the historical amounts in
the Pro Forma Information and that the Pro Forma Information complies
as to form in all material respects with the accounting requirements
of the Securities Act and the related published Rules and
Regulations; and
(D) on the basis of such procedures, and such other
inquiries and procedures as may be specified in such letter, nothing
came to their attention that caused
13
them to believe that the Pro Forma Information included in the
Offering Document does not comply as to form in all material
respects with the accounting requirements of the Securities Act and
the related published Rules and Regulations or has not been
properly compiled and that the pro forma adjustments have not been
properly applied to the historical amounts in the compilation of
those statements; and
(v) they have compared specified dollar amounts (or
percentages derived from such dollar amounts) and other financial
information contained in the Offering Document and the Exchange Act
Reports (in each case to the extent that such dollar amounts,
percentages and other financial information are derived from the
general accounting records of the Company and its subsidiaries
subject to the internal controls of the Company's accounting system
or are derived directly from such records by analysis or computation)
with the results obtained from inquiries, a reading of such general
accounting records and other procedures specified in such letter and
have found such dollar amounts, percentages and other financial
information to be in agreement with such results, except as otherwise
specified in such letter.
(b) The Purchasers shall have received a letter of KPMG, dated the
date of this Agreement and satisfactory to them in form and substance,
concerning the report on Combined Distribution (Holdings) Limited and its
subsidiaries, supplied by KPMG to the Company in connection with the
Company's acquisition of such companies.
(c) The Purchasers shall have received a letter, dated the date
of this Agreement, of Coopers & Xxxxxxx L.L.P. confirming that they are
independent public accountants within the meaning of the Securities Act
and the related published Rules and Regulations and to the effect that in
their opinion the financial statements examined by them and included in
the Offering Document and the Exchange Act Reports comply as to form in
all material respects with the applicable accounting requirements of the
Securities Act and the related published Rules and Regulations.
(d) Subsequent to the execution and delivery of this Agreement,
there shall not have occurred (i) a change in U.S. or international
financial, political or economic conditions or currency exchange rates or
exchange controls as would, in the judgment of CSFBC, be likely to
prejudice materially the success of the proposed issue, sale or
distribution of the Offered Securities, whether in the primary market or
in respect of dealings in the secondary market, or (ii) (A) any change, or
any development or event involving a prospective change, in the condition
(financial or other), business, properties or results of operations of the
Company and its subsidiaries, taken as a whole, which, in the judgment of
a majority in interest of the Purchasers including CSFBC, is material and
adverse and makes it impractical or inadvisable to proceed with completion
of the offering or the sale of and payment for the Offered Securities;
(B) any downgrading in the rating of any debt securities of the Company by
any "nationally recognized statistical rating organization" (as defined
for purposes of Rule 436(g) under the Securities Act or any public
announcement that any such organization has under surveillance or review
its rating of any debt securities of the Company (other than an
announcement with positive implications of a possible upgrading and no
implication of a possible downgrading of such rating); (C) any suspension
or limitation of trading in securities generally on the New York Stock
Exchange or the Nasdaq National Market, or any setting of minimum prices
for trading on such exchange, or any suspension of trading of any
securities of the Company on any exchange or in the over-the-counter
market; (D) any banking moratorium declared by U.S. Federal or New York
authorities; or (E) any outbreak or escalation of major hostilities in
which the United States is involved, any declaration of war by Congress or
any other substantial national or international calamity or emergency if,
in the judgment of a majority in interest of the Purchasers including
CSFBC, the effect of any such outbreak, escalation, declaration, calamity
or emergency
14
makes it impractical or inadvisable to proceed with completion of the
offering or sale of and payment for the Offered Securities.
(e) The Purchasers shall have received an opinion, dated the Closing
Date, of Xxxxxxxx Xxxxxxxxx Xxxxxx Xxxxxxxx & Xxxxxx LLP, counsel for the
Company, that:
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the
State of Delaware, with corporate power and authority to own its
properties and conduct its business as described in the Offering
Document; and the Company is duly qualified to transact business as a
foreign corporation in good standing in all other jurisdictions in
which its ownership or lease of property or the conduct of its
business requires such qualification, or is subject to no material
liability or disability by reason of the failure to be so qualified
in any such jurisdiction;
(ii) Each Material Subsidiary of the Company has been duly
incorporated and is validly existing as a corporation in good
standing under the laws of the jurisdiction of its incorporation,
with corporate power and authority to own its properties and conduct
its business as described in the Offering Document; and to such
counsel's knowledge each Material Subsidiary of the Company is duly
qualified to do business as a foreign corporation in good standing in
all other jurisdictions in which its ownership or lease of property
or the conduct of its business requires such qualification, or is
subject to no material liability or disability by reason of the
failure to be so qualified in any such jurisdiction; and all of the
issued shares of capital stock of such Material Subsidiary have been
duly and validly authorized and issued, to such counsel's knowledge,
are fully paid and non-assessable, and are owned directly or
indirectly by the Company, free and clear of any perfected security
interest other than security interests granted to secure the lines of
credit described in the Offering Document (such counsel being
entitled to rely in respect of the opinion in this clause upon
opinions of local counsel and in respect of matters of fact upon
certificates of officers of the Company or its subsidiaries, provided
that such counsel shall state that they believe that both the
Purchasers and they are justified in relying upon such opinions and
certificates);
(iii) The Transaction Documents have each been duly
authorized, executed and delivered by the Company; the Offered
Securities delivered on the Closing Date have been duly authorized,
executed, authenticated, issued and delivered by the Company and
conform to the description thereof contained in the Offering
Document; and the Indenture and the Offered Securities delivered on
the Closing Date constitute valid and legally binding obligations of
the Company enforceable against the Company in accordance with their
respective terms, subject, as to enforcement, to bankruptcy,
insolvency, reorganization, and similar laws of general applicability
relating to or affecting creditors' rights and to general equity
principles;
(iv) The Offered Securities delivered on the Closing Date
are convertible into the Underlying Shares in accordance with the
terms of the Indenture; the Underlying Shares initially issuable upon
conversion of the Offered Securities delivered on the Closing Date
have been duly authorized and reserved for issuance upon such
conversion and, when issued upon such conversion, will be validly
issued, fully paid and nonassessable; and the shareholders of the
Company have no preemptive rights with respect to the Offered
Securities or the Underlying Shares;
(v) To such counsel's knowledge, no consent, approval,
authorization, or order of, or filing with, any governmental agency
or body or any court is required for the
15
consummation of the transactions contemplated by this Agreement or
in connection with the issuance or sale of the Offered Securities
by the Company or the issuance of the Underlying Shares upon
conversion of the Offered Securities, and no consents or waivers
from any other person are required for the execution, delivery or
performance of this Agreement and the other Transaction Documents
by the Company and the consummation of the transactions
contemplated hereby and thereby, other than such as have been
obtained and are in full force and effect and other than such
filings as may be required under the Securities Act or the rules
and regulations thereunder, as may be required under the securities
or "blue sky" laws of the various states, or as may be required in
any other jurisdiction in connection with the offer and sale of the
Offered Securities or the Underlying Shares in such jurisdiction;
(vi) To such counsel's knowledge, no statute, rule,
regulation or order that has been enacted, adopted or issued by any
governmental agency, and no injunction, restraining order or order of
any nature by a Federal or state court of competent jurisdiction to
which either the Company or any of its subsidiaries is subject that
has been issued or is pending, (i) could reasonably be expected to
interfere with or adversely affect the issuance of the Offered
Securities or the Underlying Shares, or (ii) could reasonably be
expected to in any manner draw into question the validity of this
Agreement or any other Transaction Document;
(vii) To such counsel's knowledge and other than as set
forth in the Offering Document, there are no pending legal or
governmental actions, suits or proceedings against or affecting the
Company, any of its subsidiaries or any of their respective
properties that, if determined adversely to the Company or any of its
subsidiaries, could individually or in the aggregate have a material
adverse effect on the condition (financial or other), business,
properties or results of operations of the Company and its
subsidiaries taken as a whole, or could materially and adversely
affect the ability of the Company to perform its obligations under
the Transaction Documents, or which are otherwise material in the
context of the sale of the Offered Securities; and, to such counsel's
knowledge, no such actions, suits or proceedings are threatened or
contemplated;
(viii) While general in nature, the statements set forth in
the Offering Document under the caption "Certain United States
Federal Tax Consequences," insofar as they purport to describe the
provisions of the laws and documents referred to therein, accurately
describe the material tax consequences to holders of the Offered
Securities and the Underlying Shares;
(ix) The execution, delivery and performance of the
Transaction Documents, compliance with the terms and provisions
thereof, the issuance and sale of the Offered Securities and the
issuance of the Underlying Shares upon conversion of the Offered
Securities will not result in a breach or violation (including any
event which, with notice or lapse of time or both, would constitute a
breach or violation) of any of the terms or provisions of, or
constitute a default (including any event which, with notice or lapse
of time or both, would constitute a default) under, any statute,
rule, regulation or order of any governmental agency or body or any
court, domestic or foreign, having jurisdiction over the Company or
any Material Subsidiary of the Company or any of their properties, or
any agreement or instrument to which the Company or any such Material
Subsidiary is a party or by which the Company or any such Material
Subsidiary is bound or to which any of the properties of the Company
or any such Material Subsidiary is subject, any of which are known to
such counsel, or the charter or by-laws of the Company or any such
Material Subsidiary, and the Company has full corporate power and
authority to authorize, issue and
16
sell the Offered Securities and to issue the Underlying Shares
upon conversion of the Offered Securities, each as contemplated by
this Agreement;
(x) Except as disclosed in the Offering Document, neither
the Company nor any of its Material Subsidiaries is in violation of
its charter or by-laws or to such counsel's knowledge in default
(including any event which, with notice or lapse of time or both,
would constitute a default) in the performance or observance of any
material obligation, covenant or condition, contained in any material
contract, indenture, mortgage, deed of trust, loan agreement, lease
or other agreement or instrument to which it is a party or by which
it or any of its properties may be bound;
(xi) Such counsel has no reason to believe that the
Offering Document, or any amendment or supplement thereto, or any
Exchange Act Report as of the date hereof and as of the Closing Date,
contained any untrue statement of a material fact or omitted to state
any material fact necessary to make the statements therein not
misleading; it being understood that such counsel need express no
opinion as to the financial statements or other financial data
contained in the Offering Document and in the Exchange Act Reports;
(xii) The Offering Document, as of the date of this
Agreement, contains all the information specified in, and meets the
requirements of, Rule 144A(d)(4) under the Securities Act;
(xiii) It is not necessary in connection with (i) the offer,
sale and delivery of the Offered Securities by the Company to the
several Purchasers pursuant to this Agreement, or (ii) the resales of
the Offered Securities by the several Purchasers in the manner
contemplated by this Agreement, to register the Offered Securities
under the Securities Act or to qualify an indenture in respect
thereof under the Trust Indenture Act.
(f) The Purchasers shall have received from Irell & Xxxxxxx LLP,
counsel for the Purchasers, such opinion or opinions, dated the Closing
Date, with respect to the incorporation of the Company, the validity of
the Offered Securities, the Offering Document, the exemption from
registration for the offer and sale of the Offered Securities by the
Company to the several Purchasers and the resales by the several
Purchasers as contemplated hereby and other related matters as CSFBC may
require, and the Company shall have furnished to such counsel such
documents as they reasonably request for the purpose of enabling them to
pass upon such matters.
(g) The Purchasers shall have received a certificate, dated the
Closing Date, of the President or any Vice President and a principal
financial or accounting officer of the Company in which such officers, to
the best of their knowledge after reasonable investigation, shall state
that the representations and warranties of the Company in this Agreement
are true and correct in all material respects, that the Company has
complied with all agreements and satisfied all conditions on its part to
be performed or satisfied hereunder at or prior to the Closing Date, and
that, subsequent to the date of the most recent financial statements in
the Offering Document there has been no material adverse change, nor any
development or event involving a prospective material adverse change, in
the condition (financial or other), business, properties or results of
operations of the Company and its subsidiaries taken as a whole, except as
set forth in or contemplated by the Offering Document or as described in
such certificate.
(h) The Purchasers shall have received a letter, dated the Closing
Date, of KPMG which meets the requirements of subsection (a) above, except
that the specified date referred to in such subsection will be a date not
more than three business days prior to the Closing Date for the purposes
of this subsection.
17
The Company will furnish the Purchasers with such conformed copies of
such opinions, certificates, letters and documents as the Purchasers reasonably
request. CSFBC may in its sole discretion waive on behalf of the Purchasers
compliance with any conditions to the obligations of the Purchasers hereunder.
7. INDEMNIFICATION AND CONTRIBUTION. (a) The Company will indemnify and
hold harmless each Purchaser against any losses, claims, damages or
liabilities, joint or several, to which such Purchaser may become subject,
under the Securities Act or the Exchange Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise
out of or are based upon any untrue statement or alleged untrue statement of
any material fact contained in the Offering Document, or any amendment or
supplement thereto, or the Exchange Act Reports, or arise out of or are based
upon the omission or alleged omission to state therein a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, and will reimburse
each Purchaser for any legal or other expenses reasonably incurred by such
Purchaser in connection with investigating or defending any such loss, claim,
damage, liability or action as such expenses are incurred; provided, however,
that the Company will not be liable in any such case to the extent that any
such loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement in or omission or alleged omission from
any of such documents in reliance upon and in conformity with written
information furnished to the Company by any Purchaser through CSFBC
specifically for use therein, it being understood and agreed that the only such
information consists of the information described as such in subsection (b)
below.
(b) Each Purchaser will severally and not jointly indemnify and hold
harmless the Company against any losses, claims, damages or liabilities to
which the Company may become subject, under the Securities Act or the Exchange
Act or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact contained in the Offering
Document, or any amendment or supplement thereto, or any related preliminary
offering circular, or arise out of or are based upon the omission or the
alleged omission to state therein a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they were
made, not misleading, in each case to the extent, but only to the extent, that
such untrue statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with written information
furnished to the Company by such Purchaser through CSFBC specifically for use
therein, and will reimburse any legal or other expenses reasonably incurred by
the Company in connection with investigating or defending any such loss, claim,
damage, liability or action as such expenses are incurred, it being understood
and agreed that the only such information furnished by any Purchaser consists
of the following information in the Offering Document furnished on behalf of
each Purchaser: the last paragraph at the bottom of the cover page concerning
the terms of the offering by the Purchasers, the legend concerning stabilizing
on page (ii), the statements as to the Purchasers' intention to make a market
in the Offered Securities in the third sentence of the ninth paragraph, and the
statements as to stabilizing in the tenth paragraph under the caption "Plan of
Distribution."
(c) Promptly after receipt by an indemnified party under this
Section of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying
party under subsection (a) or (b) above, notify the indemnifying party of the
commencement thereof; but the omission so to notify the indemnifying party will
not relieve it from any liability which it may have to any indemnified party
otherwise than under subsection (a) or (b) above. In case any such action is
brought against any indemnified party and it notifies the indemnifying party of
the commencement thereof, the indemnifying party will be entitled to
participate therein and, to the extent that it may wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel reasonably satisfactory to such indemnified party (who shall not,
except with the consent of the indemnified party, be counsel to the
indemnifying party), and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified
18
party under this Section for any legal or other expenses subsequently
incurred by such indemnified party in connection with the defense thereof
other than reasonable costs of investigation. No indemnifying party shall,
without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened action in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party unless such settlement includes an
unconditional release of such indemnified party from all liability on any
claims that are the subject matter of such action.
(d) If the indemnification provided for in this Section is
unavailable or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of the losses,
claims, damages or liabilities referred to in subsection (a) or (b) above
(i) in such proportion as is appropriate to reflect the relative benefits
received by the Company on the one hand and the Purchasers on the other from
the offering of the Offered Securities or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company on the one hand and the
Purchasers on the other in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities as well as any other
relevant equitable considerations. The relative benefits received by the
Company on the one hand and the Purchasers on the other shall be deemed to be
in the same proportion as the total net proceeds from the offering (before
deducting expenses) received by the Company bear to the total discounts and
commissions received by the Purchasers from the Company under this Agreement.
The relative fault shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company or the Purchasers and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
untrue statement or omission. The amount paid by an indemnified party as a
result of the losses, claims, damages or liabilities referred to in the first
sentence of this subsection (d) shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any action or claim which is the subject of this
subsection (d). Notwithstanding the provisions of this subsection (d), no
Purchaser shall be required to contribute any amount in excess of the amount by
which the total price at which the Offered Securities purchased by it were
resold exceeds the amount of any damages which such Purchaser has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. The Purchasers' obligations in this subsection
(d) to contribute are several in proportion to their respective purchase
obligations and not joint.
(e) The obligations of the Company under this Section shall be in
addition to any liability which the Company may otherwise have and shall
extend, upon the same terms and conditions, to each person, if any, who
controls any Purchaser within the meaning of the Securities Act or the Exchange
Act; and the obligations of the Purchasers under this Section shall be in
addition to any liability which the respective Purchasers may otherwise have
and shall extend, upon the same terms and conditions, to each person, if any,
who controls the Company within the meaning of the Securities Act or the
Exchange Act.
8. DEFAULT OF PURCHASERS. If any Purchaser or Purchasers default in
their obligations to purchase Offered Securities hereunder and the aggregate
principal amount of Offered Securities that such defaulting Purchaser or
Purchasers agreed but failed to purchase does not exceed 10% of the total
principal amount of Offered Securities that the Purchasers are obligated to
purchase, CSFBC may make arrangements satisfactory to the Company for the
purchase of such Offered Securities by other persons, including any of the
Purchasers, but if no such arrangements are made by the Closing Date, the non-
defaulting Purchasers shall be obligated severally, in proportion to their
respective commitments hereunder, to purchase the Offered Securities that such
defaulting Purchasers agreed but failed to purchase. If any Purchaser or
Purchasers so default and the aggregate principal amount of Offered Securities
with respect to which such default or defaults occur exceeds 10% of the total
principal amount of Offered Securities that the Purchasers are obligated to
purchase and arrangements satisfactory to CSFBC and the Company for the
purchase of such Offered Securities by other persons are not
19
made within 36 hours after such default, this Agreement will terminate
without liability on the part of any non-defaulting Purchaser or the Company,
except as provided in Section 9 hereof. As used in this Agreement, the term
"Purchaser" includes any person substituted for a Purchaser under this
Section. Nothing herein will relieve a defaulting Purchaser from liability
for its default.
9. SURVIVAL OF CERTAIN REPRESENTATIONS AND OBLIGATIONS. The respective
indemnities, agreements, representations, warranties and other statements of
the Company or its officers and of the several Purchasers set forth in or made
pursuant to this Agreement will remain in full force and effect, regardless of
any investigation, or statement as to the results thereof, made by or on behalf
of any Purchaser, the Company or any of their respective representatives,
officers or directors or any controlling person, and will survive delivery of
and payment for the Offered Securities. If this Agreement is terminated
pursuant to Section 8 hereof or if for any reason the purchase of the Offered
Securities by the Purchasers is not consummated, the Company shall remain
responsible for the expenses to be paid or reimbursed by it pursuant to
Section 5 hereof and the respective obligations of the Company and the
Purchasers pursuant to Section 7 hereof shall remain in effect, and if any
Offered Securities have been purchased hereunder the representations and
warranties in Section 2 hereof and all obligations under Section 5 hereof shall
also remain in effect. If the purchase of the Offered Securities by the
Purchasers is not consummated for any reason other than solely because of the
termination of this Agreement pursuant to Section 8 hereof or the occurrence of
any event specified in clauses (C), (D) or (E) of Section 6(d)(ii) hereof, the
Company will reimburse the Purchasers for all out-of-pocket expenses (including
fees and disbursements of counsel) reasonably incurred by them in connection
with the offering of the Offered Securities.
10. NOTICES. All communications hereunder will be in writing and, if
sent to the Purchasers will be mailed, delivered, telecopied, telegraphed, or
sent by nationally recognized overnight courier service and confirmed to the
Purchasers, c/o Credit Suisse First Boston Corporation, Eleven Xxxxxxx Xxxxxx,
Xxx Xxxx, X.X. 00000-0000, fax number (000) 000-0000 Attention: Investment
Banking Department - Transactions Advisory Group, or, if sent to the Company,
will be mailed, delivered, telecopied, telegraphed or sent by nationally
recognized overnight courier service and confirmed to it at 0000 Xxxxx Xxxx
Xxxx., Xxxxx Xxxxxx, XX 00000, fax number (000) 000-0000, Attention: Chief
Financial Officer; with a copy to Xxxxxxxx Xxxxxxxxx Xxxxxx Xxxxxxxx & Xxxxxx
LLP, 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, XX 00000, fax number (212) 541-
1357, Attention Xxxxxxx X. Xxxxxxxxx, Esq., provided, however, that any notice
to a Purchaser pursuant to Section 7 hereof will be mailed, delivered or
telegraphed and confirmed to such Purchaser.
11. SUCCESSORS. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and the
controlling persons referred to in Section 7 hereof, and no other person will
have any right or obligation hereunder, except that holders of Offered
Securities and the Underlying Shares shall be entitled to enforce the
agreements for their benefit contained in the second and third sentences of
Section 5(b) hereof against the Company as if such holders were parties
thereto.
12. REPRESENTATION OF PURCHASERS. CSFBC will act for the several
Purchasers in connection with this purchase, and any action under this
Agreement taken by CSFBC will be binding upon all the Purchasers.
13. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement.
14. APPLICABLE LAW. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of New York without regard to
principles of conflicts of laws.
The Company hereby submits to the non-exclusive jurisdiction of the
Federal and state courts in the Borough of Manhattan in The City of New York in
any suit or proceeding arising out of or relating to this
20
Agreement or the transactions contemplated hereby.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
21
If the foregoing is in accordance with the Purchasers' understanding of
our agreement, kindly sign and return to us one of the counterparts hereof,
whereupon it will become a binding agreement between the Company and the
several Purchasers in accordance with its terms.
Very truly yours,
ACTIVISION, INC.
By........................................
Xxxxx X. Xxxxx
President and Chief Operating Officer
The foregoing Purchase Agreement
is hereby confirmed and accepted
as of the date first above written.
CREDIT SUISSE FIRST BOSTON CORPORATION
XXXXX XXXXXXX, INC.
UBS SECURITIES LLC
Acting on behalf of themselves
and as the Representatives of
the several Purchasers
By CREDIT SUISSE FIRST BOSTON CORPORATION
By.............................................
Xxxx X. Xxxxx
Managing Director
22
SCHEDULE A
PRINCIPAL AMOUNT OF
PURCHASER OFFERED SECURITIES
--------- -------------------
Credit Suisse First Boston Corporation.............. $30,000,000
Xxxxx Xxxxxxx, Inc.................................. $15,000,000
UBS Securities LLC.................................. $15,000,000
-----------
Total............................................ $60,000,000
-----------
-----------
23
SCHEDULE B
LIST OF DOCUMENTS DELIVERED WITH
OFFERING CIRCULAR
None
24
SCHEDULE C
FORM OF LETTER TO BE DELIVERED BY
INSTITUTIONAL ACCREDITED INVESTORS
Activision, Inc.
0000 Xxxxx Xxxx Xxxxxxxxx
Xxxxx Xxxxxx, XX 00000
and
Credit Suisse First Boston Corporation
Xxxxx Xxxxxxx, Inc.
UBS Securities LLC
As Initial Purchasers
c/o Credit Suisse First Boston Corporation
Eleven Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attn: Transactions Advisory Group
Ladies and Gentlemen:
We are delivering this letter in connection with an offering (the
"Offering") of $60,000,000 principal amount of 6 3/4% Convertible
Subordinated Notes Due 2005 (the "Securities") of Activision, Inc., a
Delaware corporation (the "Company"), which are convertible into shares of
the Company's common stock, $0.000001 par value (the "Common Stock"), all as
described in the Confidential Offering Circular (the "Offering Circular")
relating to the Offering.
We hereby confirm that:
(i) we are an "accredited investor" within the meaning of Rule
501(a)(1), (2) or (3) under the Securities Act of 1933, as amended (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) or (3) under
the Securities Act (an "Institutional Accredited Investor");
(ii) (A) any purchase of the Securities 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 the
Securities 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 of the Securities, we will
acquire Securities having a minimum purchase price of not less than $100,000
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
the Securities;
(v) we are not acquiring the Securities with a view to distribution
thereof or with any present intention of offering or selling any of the
Securities or the shares of Common Stock issuable upon conversion thereof,
except inside the United States in accordance with Rule 144A under the
Securities Act or outside the United States in accordance with Regulation S
under the Securities Act, as provided below;
25
provided, however, that the disposition of our property and the property of
any accounts for which we are acting as fiduciary shall remain at all times
within our control;
(vi) we have received a copy of the Offering Circular and acknowledge
that we have had access to 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 the Securities; and
(vii) we are not an "affiliate" (as defined in Rule 144 under the
Securities Act) of the Company or acting on behalf of an affiliate of the
Company.
We understand that the Securities 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 Securities 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 Securities, that if in the future we decide to
resell, pledge or otherwise transfer such Securities or the shares of Common
Stock issuable upon conversion thereof, such Securities and Common Stock may
be offered, resold, pledged or otherwise transferred only (i) inside the
United States to a person who we reasonably believe is a "qualified
institutional buyer" (as defined in Rule 144A under the Securities Act) in a
transaction meeting the requirements of Rule 144A, (ii) outside the United
States in a transaction meeting the requirements of Rule 904 under the
Securities Act, (iii) pursuant to an exemption from registration under the
Securities Act provided by Rule 144 thereunder (if available), or (iv)
pursuant to an effective registration statement under the Securities Act and,
in each of clauses (i) through (iv) above, in accordance with any applicable
securities laws of any state of the United States or any other applicable
jurisdiction. We agree to notify any purchaser, pledgee or transferee of
such Securities of the restrictions referred to in clauses (i) through (iv)
above. We understand that the registrar and transfer agent for the
Securities and the shares of Common Stock will not be required to accept for
registration or transfer any Securities acquired by us or any shares of
Common Stock issued upon conversion thereof, except upon presentation of
evidence satisfactory to the Company and the transfer agent that the
foregoing restrictions on transfer have been complied with. We further
understand that any Securities acquired by us, and any shares of Common Stock
issued upon conversion thereof, will be in the form of definitive physical
certificates and that such certificates will bear a legend reflecting the
substance of this paragraph.
We acknowledge that you, the Company and others 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 SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF
LAWS.
Date:
(Name of Purchaser)
By
Name:
Title:
Address:
26
SCHEDULE D
Activision, Inc.
LIST OF SUBSIDIARIES
JURISDICTION
MATERIAL SUBSIDIARIES OF ORGANIZATION
--------------------- ---------------
Activision Productions, Inc. Delaware
Raven Software Corporation Wisconsin
Activision UK Ltd. UK
Combined Distribution (Holdings) Ltd. UK
CentreSoft Limited UK
PDQ Distribution Limited UK
Activision GmbH Germany
Take Us! Marketing & Consulting GmbH Germany
kappaphoenicis Beteiligungs GmbH Germany
NBG EDV Handels-und Verlags GmbH Germany
jotaphoenicis Beteiligungs GmbH Germany
Activision Japan Co. Ltd Japan
Activision Australia Pty. Ltd. Australia
JURISDICTION
OTHER SUBSIDIARIES (NOT MATERIAL SUBSIDIARIES) OF ORGANIZATION
---------------------------------------------- ---------------
Activision Latin America, Inc. Florida
Activisiion Texas, Inc. Texas
Activision Illinois, Inc. Illinois
Activision New York, Inc. New York
TDC Group, Inc. Delaware
International Consumer Technologies Corporation Delaware
Activision Europe Sarl France
Activision Kft. Hungary
Target Software Vertriebs GmbH Germany
27
