Exhibit 10.1
COMVERSE TECHNOLOGY, INC.
4-1/2% Convertible Subordinated Debentures due 2005
PURCHASE AGREEMENT
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June 25, 1998
XXXXXX BROTHERS INC.
0 Xxxxx Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Comverse Technology, Inc., a New York corporation (the "Company"),
proposes to offer and sell to Xxxxxx Brothers Inc. (the "Initial Purchaser")
$250,000,000 principal amount of the Company's 4-1/2% Convertible Subordinated
Debentures due 2005 (the "Firm Offered Securities") to be issued pursuant to the
provisions of an Indenture to be dated as of June 30, 1998 (the "Indenture")
between the Company and The Chase Manhattan Bank, as trustee (the "Trustee").
In addition, the Company proposes to grant to the Initial Purchaser an option to
purchase up to an additional $50,000,000 principal amount of its 4-1/2%
Convertible Subordinated Debentures due 2005 (the "Additional Offered
Securities") on the terms and for the purposes set forth in Section 2(b) hereof.
The Firm Offered Securities and any Additional Offered Securities purchased
pursuant to this Agreement are herein called the "Offered Securities". The
Offered Securities will be convertible into shares (the "Conversion Shares") of
common stock, par value $.10 per share, of the Company (the "Common Stock").
It is understood that the Initial Purchaser will resell the Offered
Securities only inside the United States to qualified institutional buyers
(each, a "Qualified Institutional Buyer") in reliance on Rule 144A under the
U.S. Securities Act of 1933, as amended (the "Securities Act").
1. Representations, Warranties and Agreements of the Company. The
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Company represents and warrants to the Initial Purchaser that:
(a) The Company has prepared an Offering Memorandum dated the date
hereof (the "Offering Memorandum") relating to the Offered Securities.
Copies of the Offering Memorandum have been delivered by the Company to the
Initial Purchaser and the Company authorizes the Initial Purchaser to
distribute copies thereof in connection with the offering and resale of the
Offered Securities as provided herein. Documents filed by the Company
under the U.S. Securities Exchange Act of 1934, as amended (the "Exchange
Act"), on or prior to the date of the Offering Memorandum and any documents
filed by the Company under the Exchange Act after the date of the Offering
Memorandum, in each case that are incorporated or deemed incorporated by
reference in the Offering Memorandum, when they were or are filed with the
U.S. Securities and Exchange Commission (the "Commission"), conformed or
will conform, as the case may
be, as to form in all material respects to the applicable requirements of
the Exchange Act and the applicable rules and regulations of the Commission
thereunder. The Offering Memorandum does not and will not prior to the
completion of the distribution of the Offered Securities 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; provided that the Company makes
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no representation or warranty as to information contained in or
omitted from the Offering Memorandum in reliance upon and in conformity
with written information furnished to the Company by or on behalf of the
Initial Purchaser specifically for inclusion therein.
For purposes of this Agreement, "Rules and Regulations" means the
rules and regulations of the Commission under the Securities Act and the
Exchange Act, as the context requires. Reference made herein to the
Offering Memorandum shall be deemed to refer to and include any documents
incorporated by reference therein as of the date of the Offering Memorandum
and any reference to any amendment or supplement to the Offering Memorandum
shall be deemed to refer to and include any documents filed under the
Exchange Act after the date of the Offering Memorandum, as amended by
subsequently dated documents, and incorporated by reference in the Offering
Memorandum.
(b) The Company and each of its Subsidiaries (as such term is defined
in Rule 405 under the Securities Act) have been duly incorporated and are
validly existing as corporations in good standing under the laws of their
respective jurisdictions of incorporation, are duly qualified to do
business and are in good standing as foreign corporations in each
jurisdiction in which their respective ownership or lease of property or
the conduct of their business requires such qualification (except for where
the failure to be so qualified or in good standing would not, individually
or in the aggregate, have a material adverse effect on the business,
properties, financial condition, results of operations or prospects of the
Company and its Subsidiaries taken as a whole) and have all power and
authority necessary to own or hold their respective properties and to
conduct the business in which they are engaged; and none of the
Subsidiaries of the Company (other than Efrat Future Technology Ltd. and
Comverse Network Systems, Inc.) is a "significant subsidiary" (as such term
is defined in Rule 405 under the Securities Act).
(c) The Company has an authorized capitalization as set forth in the
Offering Memorandum; all the issued shares of capital stock of the Company
have been duly and validly authorized and issued, are fully paid and non-
assessable and conform to the description thereof contained in the Offering
Memorandum; all the shares of capital stock of each Subsidiary of the
Company, owned by the Company, directly or indirectly, have been duly and
validly authorized and issued and are fully paid and non-assessable
and owned directly or indirectly by the Company, free and clear of all
liens, encumbrances, equities or claims except as described in the Offering
Memorandum; the Conversion Shares have been duly authorized and validly
reserved for issuance upon conversion of the Offered Securities and are
free of preemptive rights, and all Conversion Shares, when so issued and
delivered upon such conversion in accordance with the terms of the
Indenture, will be duly and validly authorized and issued, fully paid and
non-assessable
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and free and clear of all liens, encumbrances, equities or claims.
(d) The Offered Securities have been duly authorized by the Company
and, when executed, authenticated and delivered in accordance with this
Agreement and the Indenture, will be valid and legally binding obligations
of the Company enforceable against the Company in accordance with their
terms, except (i) as the enforceability thereof may be limited by
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium
and other similar laws now or hereafter in effect relating to or affecting
rights of creditors and other obligees generally, by general equitable
principles (regardless of whether such enforceability is considered in a
proceeding in equity or at law) or by an implied covenant of good faith and
fair dealing, and will be entitled to the benefits of the Indenture.
(e) The Company has full right, power and authority to execute and
deliver this Agreement and the Registration Rights Agreement between the
Company and the Initial Purchaser (the "Registration Rights Agreement") and
perform its obligations hereunder and thereunder; and each of this
Agreement and the Registration Rights Agreement has been duly authorized,
executed and delivered by the Company and (assuming the due execution and
delivery thereof by the Initial Purchaser) constitutes a valid and legally
binding agreement of the Company enforceable against the Company in
accordance with its terms, except as the enforceability hereof and thereof
may be limited by bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws now or hereafter in
effect relating to or affecting rights of creditors' and other obligees
generally, by general equitable principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law) or by an
implied covenant of good faith and fair dealing, and except, further, as
enforceability of the indemnification and contribution provisions hereof
and thereof may be limited by considerations of public policy.
(f) The Company has full right, power and authority to execute and
deliver the Indenture and perform its obligations thereunder; the Indenture
has been duly authorized and, when duly executed and delivered by the
Company (assuming the due execution and delivery thereof by the Trustee),
will constitute a valid and legally binding agreement of the Company
enforceable against the Company in accordance with its terms, except as the
enforceability thereof may be limited by bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws now or
hereafter in effect relating to or affecting rights of creditors and other
obligees generally, by general equitable principles (regardless of whether
such enforceability is considered in a proceeding in equity or at law) or
by an implied covenant of good faith and fair dealing. The Offered
Securities and the Indenture conform in all material respects to the
respective statements relating thereto contained in the Offering
Memorandum.
(g) The execution, delivery and performance of this Agreement, the
Registration Rights Agreement and the Indenture and the issuance of the
Offered Securities and the Conversion Shares and the consummation of the
transactions contemplated hereby and thereby will not conflict with, or
result in a breach or violation of any of the terms or provisions of, or
(including with the giving of notice or the lapse of time or both)
constitute a default under, any indenture, mortgage, deed of trust, loan
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agreement or other agreement or instrument to which the Company or any of
its Subsidiaries is a party or by which the Company or any of its
Subsidiaries is bound or to which any of the properties or assets of the
Company or any of its Subsidiaries is subject which would, individually or
in the aggregate, have a material adverse effect on the business,
properties, financial condition, results of operations or prospects of the
Company and its Subsidiaries taken as a whole, nor will such actions result
in any violation of the provisions of the charter, by-laws or other
constitutive documents of the Company or any of its Subsidiaries or any
statute or any order, rule 7or regulation of any court or governmental
agency or body having jurisdiction over the Company or any of its
Subsidiaries or any of their properties or assets; and no consent,
approval, authorization or order of, or filing or registration with, any
court or governmental agency or body is required for the execution,
delivery and performance of this Agreement, the Registration Rights
Agreement and the Indenture and the issuance of the Offered Securities and
the Conversion Shares and the consummation of the transactions contemplated
hereby and thereby except as may be required by the securities or "blue
sky" laws of any state of the United States in connection with the sale of
the Offered Securities and except as contemplated by the Registration
Rights Agreement.
(h) Except for the Company's 5-3/4% Convertible Subordinated
Debentures due 2006 and as otherwise described or referred to in the
Offering Memorandum, there are no outstanding warrants or options issued by
the Company to purchase any shares of the capital stock of the Company or
any security convertible into or exchangeable for capital stock of the
Company except for stock options issued to employees of the Company and its
Subsidiaries pursuant to the Company's stock option plans and stock
purchase plans, and there are no preemptive or other rights to subscribe
for or to purchase from the Company, and no restrictions upon the voting or
transfer of, any shares of Common Stock pursuant to the Company's charter,
by-laws or other constitutive documents or any agreement or other
instrument to which the Company is a party or by which it is bound, and no
contracts, agreements or understandings between the Company and any person
granting such person the right to require the Company to file a
registration statement under the Securities Act with respect to any
securities of the Company owned or to be owned by such person or to require
the Company to include such securities in any securities being registered
pursuant to any registration statement filed by the Company under the
Securities Act.
(i) Neither the Company nor any of its Subsidiaries has sustained,
since the date of the latest audited consolidated financial statements
included or incorporated by reference in the Offering Memorandum, any
material loss or interference with its business from fire, explosion, flood
or other calamity, whether or not actually covered by insurance, or any
labor dispute or court or governmental action, order or decree, otherwise
than as set forth or contemplated in the Offering Memorandum; and, since
the respective dates as of which information is given in the Offering
Memorandum, there has not been any change in the capital stock (except
pursuant to the exercise of outstanding options or warrants or the
conversion of the Company's 5-3/4% Subordinated Debentures due 2006) or
long-term debt of the Company (other than scheduled redemptions or
payments) or any material adverse change, or, to the best of
the Company's knowledge, any development involving a prospective material
adverse change, in or affecting the business, properties, financial
condition, results of operations or prospects of the
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Company and its Subsidiaries taken as a whole, otherwise than as set forth
or contemplated in the Offering Memorandum.
(j) The consolidated financial statements included or incorporated by
reference in the Offering Memorandum present fairly, in all material
respects, the financial condition and results of operations of the Company
and its Subsidiaries at the dates and for the periods indicated, and have
been prepared in conformity with U.S. generally accepted accounting
principles ("U.S. GAAP") applied on a consistent basis throughout the
periods involved, except, with respect to interim financial statements, for
omissions permissible under the Rules and Regulations under the Exchange
Act applicable to a Quarterly Report on Form 10-Q.
(k) Deloitte & Touche LLP, whose reports are included or incorporated
by reference in the Offering Memorandum, are independent public accountants
within the meaning of the Securities Act and the Exchange Act and the Rules
and Regulations.
(l) The Company and each of its Subsidiaries own or possess adequate
and enforceable rights to use all material licenses, patents, patent
applications, trademarks, trademark applications, service marks, service
xxxx applications, copyrights, copyright applications, tradenames, know-how
(including trade secrets and other unpatented or unpatentable proprietary
or confidential information, systems or procedures) and other similar
rights and proprietary knowledge (collectively, "Intangibles") necessary
for the conduct of their respective businesses as now being conducted and
as described in the Offering Memorandum. Except as described in the
Offering Memorandum, neither the Company nor any Subsidiary infringes or is
in conflict with, any rights of others with respect to any Intangibles
which, individually or in the aggregate, which is reasonably likely to have
a material adverse effect on the business, properties, financial condition,
results of operations or prospects of the Company and its Subsidiaries
taken as a whole.
(m) Except as described in the Offering Memorandum, there are no legal
or governmental proceedings pending to which the Company or any of its
Subsidiaries is a party or of which any property of the Company or any of
its Subsidiaries is the subject which is reasonably likely to have a
material adverse effect on the business, properties, financial condition,
results of operations or prospects of the Company and its Subsidiaries
taken as a whole; and to the best of the Company's knowledge, no
such proceedings are threatened or contemplated by governmental authorities
or any other party.
(n) No labor disturbance by the employees of the Company or any of its
Subsidiaries exists or, to the best knowledge of the Company, is imminent
which is reasonably likely to have, individually or in the aggregate, a
material adverse effect on the business, properties, financial condition,
results of operations or prospects of the Company and its Subsidiaries
taken as a whole.
(o) 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 ("ERISA"), and the regulations and published
interpretations thereunder, and no "reportable event" (as defined in ERISA
and the regulations and published interpretations thereunder) has occurred
with respect to any "plan" (as defined in ERISA and the
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regulations and published interpretations thereunder) of the Company, and
the Company has not incurred and does not expect to incur liability under
Title IV of ERISA which is reasonably likely to have a material adverse
effect on the business, properties, financial condition, results of
operations or prospects of the Company and its Subsidiaries taken as a
whole. In addition, the execution and delivery of this Agreement, the
Registration Rights Agreement and the Indenture, and the consummation of
the transactions contemplated hereby and thereby, will not involve a
"prohibited transaction" within the meaning of Section 406 of ERISA or
Section 4975 of the Internal Revenue Code of 1986, as amended.
(p) The Company and its Subsidiaries have duly filed with the
appropriate taxing authorities all income and franchise Tax Returns and all
other Tax Returns involving the payment of more than nominal amounts,
required to be filed by any of them, except as the date of the filing
thereof has been duly extended and such extension is in effect; and such
Tax Returns are each true, correct and complete, in all material respects;
and, except as adequate reserves have been made in the Company's financial
statements included or incorporated by reference in the Offering
Memorandum, the Company and its Subsidiaries have paid all taxes due prior
to the date hereof; and there is no tax deficiency that has been asserted
against the Company or any Subsidiary that would materially adversely
affect the business, properties, financial condition, results of operations
or prospects of the Company and its Subsidiaries taken as a whole (other
than items for which adequate reserve has been made in the Company's
financial statements). The term "Tax Returns" means any report, return,
application or other information supplied by the Company or any of its
subsidiaries to a taxing authority in the United States, Israel or
elsewhere.
(q) Since the date as of which information is given in the Offering
Memorandum through the date hereof, and except as may otherwise be
disclosed in the Offering Memorandum, neither the Company nor any of its
Subsidiaries has (i) issued or granted any securities (except for stock
options and stock purchase plans issued to employees pursuant to the
Company's existing stock option plans and issuances of Common Stock
pursuant to outstanding options and warrants), (ii) incurred any material
liability or obligation, direct or contingent, other than liabilities and
obligations that were incurred in the ordinary course of business, (iii)
entered into any material transaction not in the ordinary course of
business or (iv) declared or paid any dividend on its capital stock.
(r) The books, records and accounts of the Company and its
Subsidiaries accurately and fairly reflect, in reasonable detail and in all
material respects, the transactions in and dispositions of the assets of,
and the results of operations of, the Company and its Subsidiaries. The
system of internal accounting controls maintained by the Company and its
Subsidiaries is sufficient to provide reasonable assurances that: (i)
transactions are executed in accordance with management's general or
specific authorizations; (ii) transactions are recorded as necessary (A) to
permit preparation of financial statements in accordance with U.S. GAAP and
generally accepted accounting principles in Israel as applicable, and (B)
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 the
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existing assets at reasonable intervals and appropriate action is taken
with respect to any difference.
(s) To the best knowledge of the Company, the Company and its
Subsidiaries are in compliance with all applicable existing federal, state,
local and foreign laws and regulations (collectively, "Environmental Laws")
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relating to protection of human health or the environment or imposing
liability or standards of conduct concerning any Hazardous Material (as
defined below), except for such instances of noncompliance that, either
individually or in the aggregate, would not have a material adverse effect
on the business, properties, financial condition, results of operations or
prospects of the Company or its Subsidiaries taken as a whole. The term
"Hazardous Material" means (i) any "hazardous substance" as defined by the
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Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended, (ii) any "hazardous waste" as defined by the Resource
Conservation and Recovery Act, as amended, (iii) any petroleum or petroleum
product, (iv) any polychlorinated biphenyl and (v) any pollutant or
contaminant or hazardous, dangerous or toxic chemical, material, waste or
substance regulated under or within the meaning of any other Environmental
Law. To the best knowledge of the Company, there is no alleged or potential
liability (including, without limitation, alleged or potential liability
for investigatory costs, cleanup costs, governmental response costs,
natural resources damages, property damages, personal injuries, or
penalties) of the Company or any of its subsidiaries arising out of, based
on, or resulting from (A) the presence or release into the environment of
any Hazardous Material at any location currently owned by the Company or
any of its subsidiaries or at any location currently used or leased by the
Company or any of its subsidiaries, or (B) any violation or alleged
violation of any Environmental Law, except, in each case, alleged or
potential liabilities that, singly or in the aggregate, would not have a
material adverse effect on the business, properties, financial condition,
results of operations or prospects of the Company or its Subsidiaries taken
as a whole.
(t) Except as, individually or in the aggregate, would not have a
material adverse effect on the business, properties, financial condition,
results of operations or prospects of the Company or its Subsidiaries taken
as a whole, (i) the Company and its Subsidiaries, have (A) such permits,
licenses, franchises and authorizations of governmental or regulatory
authorities (federal, foreign, state or local) ("Permits") as are necessary
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to own, lease and operate their properties and to conduct their businesses
as presently conducted, and (B) fulfilled and performed all of their
material obligations with respect to the Permits, and (ii) no event has
occurred that would allow, or after notice or lapse of time would allow,
revocation or termination of any Permit or that would result in any other
material impairment of the rights granted to the Company or any of its
subsidiaries under any Permit, and the Company has no reason to believe
that any governmental body or agency is considering limiting, suspending or
revoking any Permit.
(u) The Company and its subsidiaries maintain adequate insurance for
their business and the value of their properties as is customary for the
industry, and all such insurance is outstanding and in force as of the date
hereof.
(v) None of the Company or any of its Subsidiaries (i) is in violation
of its charter, by-laws or other constitutive documents, (ii) is in default
in any material respect,
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and no event has occurred that, with notice or lapse of time or both, would
constitute such a default, in the due performance or observance of any
term, covenant or condition contained in any agreement, indenture or
instrument, or (iii) is in violation in any respect of any law, ordinance,
governmental rule, regulation or court decree to which it or its property
may be subject or has failed to obtain any Permit necessary to the
ownership of its property or to the conduct of its business, except for
any violation, default or failure that would not reasonably be expected to
have, singularly or in the aggregate with all such violations or failures,
a material adverse effect on the business, properties, financial condition,
results of operations or prospects of the Company and its Subsidiaries
taken as a whole.
(w) None of the Company or any of its Subsidiaries, or any director,
officer, agent, employee or other person associated with or acting on
behalf of the Company or any of its Subsidiaries, has used any corporate
funds of the Company or any of its Subsidiaries for any unlawful
contribution, gift, entertainment or other unlawful expense relating to
political activity; made any direct or indirect unlawful payment to any
foreign or domestic government official or employee from corporate funds;
violated or is in violation of any provision of the Foreign Corrupt
Practices Act of 1977, as amended; or made any unlawful bribe, rebate,
payoff, influence payment, kickback or other unlawful payment.
(x) No securities of the same class (within the meaning of Rule
144A(d)(3) under the Securities Act) as the Offered Securities are, or, as
of the date of issuance of the Offered Securities, will be, listed on any
national securities exchange registered under Section 6 of the Exchange Act
or quoted in an automated inter-dealer quotation system.
(y) No registration of the Offered Securities or the Conversion Shares
under the Securities Act and no qualification of an indenture under the
U.S. Trust Indenture Act of 1939, as amended, is required in connection
with the offer, sale and delivery of the Offered Securities or in
connection with the conversion of the Offered Securities into Conversion
Shares, in each case, in the manner contemplated by the Offering
Memorandum, this Agreement and the Indenture.
(z) The Company is not an "investment company," or an entity
"controlled" by an "investment company," within the meaning of the
Investment Company Act of 1940, as amended (the "Investment Company Act").
(aa) The Company and each of its Subsidiaries which owns any facility
which was granted an "approved enterprise" status under Israeli law is in
material compliance with all conditions and requirements stipulated by the
documents of approval granted to it and by Israeli laws and regulations
relating to such approved enterprise status. All information supplied by
the Company or any such Subsidiary with respect to such applications is
true, correct and complete in all material respects.
(ab) The Company understands that the Initial Purchaser and, for
purposes of the opinions to be delivered to the Initial Purchaser pursuant
hereto, counsel to the Company and counsel to the Initial Purchaser will
rely upon the accuracy and truth as to factual matters of the foregoing
representations and the Company hereby consents to such
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reliance.
2. Purchase, Sale and Delivery of the Offered Securities. (a) On
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the basis of the representations, warranties and agreements herein contained,
but subject to the terms and conditions herein set forth, the Company agrees to
sell to the Initial Purchaser, and the Initial Purchaser agrees to purchase from
the Company, at a purchase price of 97.75% of the principal amount thereof plus
accrued interest, if any, from June 30, 1998 to the Firm Closing Date (as
hereinafter defined), $250,000,000 principal amount of Firm Offered Securities.
(b) The Company hereby grants to the Initial Purchaser an option to
purchase from the Company, solely for the purpose of covering over-allotments in
the sale of Firm Offered Securities, all or any portion of the Additional
Offered Securities. The option granted hereunder may be exercised at any time
within thirty (30) days from the date hereof at a purchase price of 97.75% of
the principal amount thereof plus accrued interest, if any, from June 30, 1998
to the Option Closing Date (as hereinafter defined).
(c) Payment for the Firm Offered Securities shall be made against
delivery of the Firm Offered Securities at a closing to be held at the offices
of Weil, Gotshal & Xxxxxx LLP at 10:00 A.M., local time, on June 30, 1998, or at
such other time on the same or such other date, as shall be determined by the
Initial Purchaser and the Company. The time and date of such payment are herein
referred to as the Firm Closing Date.
(d) Payment for any Additional Offered Securities shall be made
against delivery of the Additional Offered securities at a closing to be held at
the offices of Weil, Gotshal & Xxxxxx LLP at 10:00 A.M., local time, on such
date (which may be the same as the Closing Date but shall in no event be earlier
than either the Closing Date or the second business day after the date on which
the option shall have been exercised nor later than five business days after the
giving of the notice hereinafter referred to) as shall be designated in a
written notice from the Initial Purchaser to the Company of its determination to
purchase an aggregate principal amount, specified in said notice, of Additional
Offered Securities. The time and date of such payment are hereinafter referred
to as the Option Closing Date. The Firm Closing Date and the Option Closing
Date are herein individually referred to as the "Closing Date" and collectively
referred to as the "Closing Dates".
(e) On each Closing Date, payment for the Firm Offered Securities and
Additional Offered Securities shall be made by certified or official bank check
or checks, or by wire transfer, payable to the order of the Company, in Federal
(same day) funds. On each Closing Date, payment will be made against delivery
of one or more global debentures in registered form to be deposited with, on
behalf of, The Depository Trust Company ("DTC") and registered in the name of
Cede & Co., as nominee for DTC, in such denominations and registered in such
names as the Initial Purchaser shall request. Time shall be of the essence, and
delivery at the time and place specified pursuant to this Agreement is a further
condition to the obligation of the Initial Purchaser hereunder. With respect to
each Closing Date, the Company shall make available the certificates
representing the Offered Securities to be resold for inspection by the Initial
Purchaser in New York, New York not later than 2:00 p.m., New York City time, on
the business day prior to such Closing Date.
3. Representations, Warranties and Agreements of the Initial
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Purchaser.
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(a) The Initial Purchaser represents and warrants that it is a
Qualified Institutional Buyer and that it will offer the Offered Securities for
resale only upon the terms and conditions set forth in this Agreement and in the
Offering Memorandum.
(b) The Initial Purchaser 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 benefit of, U.S. persons except
pursuant to an exemption from the registration requirements of the Securities
Act. The Initial Purchaser represents, warrants and agrees that it has only
offered the Offered Securities, and will only offer and sell the Offered
Securities inside the United States to persons whom the Initial Purchaser
reasonably believes to be Qualified Institutional Buyers.
(c) The Initial Purchaser represents, warrants and agrees that it has
not and will not solicit offers for, or offer or sell the Offered Securities
purchased from the Company hereunder by means of any form of general
solicitation or general advertising (as those terms are used in Regulation D
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. The Initial Purchaser agrees, with respect to resales made in
reliance on Rule 144A, other than through the Private Offerings Resales and
Trading through Automated Linkages ("PORTAL") market, of any of the Offered
Securities 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 Offered Securities has been made in
reliance upon the exemption from the registration requirements of the Securities
Act provided by Rule 144A.
(d) The Initial Purchaser understands that the Company and, for
purposes of the opinions to be delivered to the Initial Purchaser pursuant
hereto, counsel to the Company and counsel to the Initial Purchaser will rely
upon the accuracy of the foregoing representations and the Initial Purchaser
hereby consent to such reliance.
4. Certain Agreements of the Company.
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(a) The Company agrees with the Initial Purchaser that:
(i) The Company will advise the Initial Purchaser promptly of
any proposed amendment or supplement to the Offering Memorandum and will
not effect such amendment or supplement without the Initial Purchaser's
consent, which consent shall not be unreasonably withheld. If at any time
prior to the completion of the resale of the Offered Securities by the
Initial Purchaser, any event occurs 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 the light of the circumstances
under which they were made, not misleading, or if it is necessary at such
time to amend or supplement the Offering Memorandum to comply with any
applicable law, the Company promptly will notify the Initial Purchaser of
such event and promptly prepare an amendment or supplement which will
correct such statement or omission or effect such compliance. Neither the
Initial
10
Purchaser's consent to, nor the Initial Purchaser's delivery of, any such
amendment or supplement shall constitute a waiver of any of the conditions
set forth in Section 5 hereof.
(ii) The Company will furnish to the Initial Purchaser copies
of the Offering Memorandum and all amendments and supplements thereto, in
each case as soon as available and in such quantities as it may reasonably
request.
(iii) During the period of two years after the Closing Date,
the Company will, upon request, furnish to the Initial Purchaser and any
holder of Offered Securities a copy of the restrictions on transfer
applicable to such Offered Securities.
(iv) The Company will not resell any Offered Securities which
have been acquired by it during the period of two years after the Closing
Date and which constitute "restricted securities" under Rule 144, otherwise
than pursuant to an effective registration statement under the Securities
Act.
(v) During the period of two years after the Closing Date, the
Company will not be or become an "investment company" within the meaning
of, nor be or become subject to regulation under, the Investment Company
Act.
(vi) During the period beginning on the date hereof and
continuing through the date which is 90 days after the date hereof, without
the prior written consent of the Initial Purchaser, the Company will not
offer, sell, contract to sell or otherwise dispose of, any shares of
capital stock or securities convertible into or exchangeable for shares of
capital stock or warrants or other rights to purchase capital stock, except
(i) Common Stock pursuant to options or warrants outstanding on the date
hereof or upon conversion of the Company's 5-3/4% Convertible Subordinated
Debentures due 2006, (ii) stock options pursuant to employee benefit plans,
stock purchase plans, stock option plans or other employee compensation
plans existing on the date hereof maintained for the officers, directors or
employees of the Company, (iii) Common Stock or other securities
constituting all or part of the consideration for the acquisition of any
property or business by the Company or any of its Subsidiaries, (iv) the
Offered Securities and (v) the Conversion Shares.
(vii) The Company will reserve and keep available at all
times, free of preemptive rights, the full number of Conversion Shares
issuable upon conversion of the Offered Securities.
(viii) The Company will use all reasonable efforts to effect,
prior to the time the Offered Securities may be converted, the designation
or listing subject to notice of issuance, of the Conversion Shares issuable
upon such conversion on the Nasdaq National Market or on such market or
exchange on which the Common Stock is then quoted or listed.
(ix) The Company will use all reasonable efforts to arrange for
qualification of the Offered Securities for sale under the laws of such
jurisdictions as the Initial Purchaser may reasonably designate and to
maintain such qualifications in effect so long as reasonably required for
the distribution of the Offered Securities; provided,
--------
11
however, that the Company will not be obligated to qualify to do business
-------
as a foreign corporation in any state in which it is not so qualified or to
file a general consent to service of process in any jurisdiction.
(x) The Company agrees to pay (A) the fees and expenses of its
counsel and accountants and the Trustee and any transfer agents, conversion
agents and paying agents; (B) costs associated with the packaging and
initial delivery of the certificates evidencing the Offered Securities and
the preparation and printing of the certificates evidencing the Offered
Securities, this Agreement, the Indenture, the Registration Rights
Agreement, the Offering Memorandum and any information provided by the
Company pursuant to Section 4(a)(ii) and (xi) hereof and any other document
relating to the issuance of the Offered Securities; (C) the cost of
obtaining approval for the trading of the Offered Securities through the
PORTAL market and the designation or listing of the Common Stock issuable
upon the conversion of the Offered Securities on the Nasdaq National Market
or on such market or exchange on which the Common Stock is then quoted or
listed; (D) all fees and expenses of DTC; (E) the costs of qualifying the
Offered Securities for offering and sale under any state securities or blue
sky laws, including reasonable legal fees and expenses of counsel for the
Initial Purchaser in connection therewith; (F) the cost of having the
Offered Securities rated by any rating agency; and (G) all other costs,
fees and expenses incident to the performance of its obligations hereunder
which are not specifically provided for above.
(xi) So long as any of the Offered Securities 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 Section 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) upon 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 the prospective purchasers designated by such holders, from
time to time of such restricted securities.
(xii) The Company will use all reasonable efforts to cause the
Offered Securities to be eligible for the PORTAL trading system of the
National Association of Securities Dealers, Inc. and to cause the Offered
Securities to be eligible for clearance and settlement through the
facilities of DTC.
(xiii) For a period of five years following the Closing date,
the Company shall furnish to the Initial Purchaser copies of any annual
reports, quarterly reports and current reports filed with the Commission on
Forms 10-K, 10-Q and 8-K, or such other similar forms as may be designated
by the Commission, and such other documents, reports and information as
shall be furnished by the Company to the Trustee or to the holders of the
Offered Securities pursuant to the Indenture.
(xiv) If the sale of Offered Securities is not consummated
hereunder for any reason other than the occurrence of an event referred to
in Section 5(h) hereof or a default by the Initial Purchaser in the
performance of its obligations under this Agreement, the Company will
reimburse the Initial Purchaser upon demand for all
12
reasonable out-of-pocket expenses (including the reasonable fees and
disbursements of counsel to the Initial Purchaser) that shall have been
incurred by it in connection with the proposed purchase and issue of the
Offered Securities.
5. Conditions of the Obligations of the Initial Purchaser. The
------------------------------------------------------
obligations of the Initial Purchaser to purchase and pay for the Firm Offered
Securities on the Firm Closing Date and the Additional Offered Securities on the
Option Closing Date will be subject to the accuracy of the representations and
warranties on the part of the Company when made and as of such respective dates,
to the accuracy of the statements of officers of the Company made in
certificates delivered pursuant to the provisions hereof, to the performance by
the Company of its respective obligations hereunder and to the following
additional conditions precedent:
(a) No Initial Purchaser shall have been advised by the Company or
shall have discovered and disclosed to the Company that the Offering Memorandum
or any amendment or supplement thereto, contains an untrue statement of fact
which, in the opinion of counsel for the Initial Purchaser, is material, or
omits to state a fact which, in the opinion of counsel for the Initial
Purchaser, is material and is required to be stated therein or is necessary to
make the statements therein not misleading.
(b) All corporate proceedings and other legal matters incident to the
authorization, form and validity of this Agreement, the Indenture, the
Registration Rights Agreement, the Offered Securities and the Offering
Memorandum, and all other legal matters relating to this Agreement and the
transactions contemplated hereby shall be reasonably satisfactory in all
respects to counsel for the Initial Purchaser.
(c) On each Closing Date there shall have been furnished to you the
opinion (addressed to the Initial Purchaser) of Kramer, Levin, Naftalis &
Xxxxxxx, special counsel for the Company, dated such Closing Date and in form
and substance reasonably satisfactory to counsel for the Initial Purchaser, to
the effect 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
New York and has all corporate power and authority necessary to own or hold
its properties and to conduct the business in which it is engaged;
(ii) The Company has an authorized capitalization as set forth
in the Offering Memorandum; all the issued shares of capital stock of the
Company conform in all material respects to the description thereof
contained in the Offering Memorandum;
(iii) The Conversion Shares have been duly authorized and
validly reserved for issuance upon conversion of the Offered Securities and
are free of preemptive rights; and all Conversion Shares, when so issued
and delivered upon such conversion in accordance with the terms of the
Indenture, will be duly and validly authorized and issued, fully paid and
non-assessable;
(iv) The statements in the Offering Memorandum under the
captions "Description of Debentures", "Description of Capital Stock" and
"Transfer
13
Restrictions" insofar as they purport to summarize the provisions of the
Indenture, the Offered Securities and the Common Stock (including the
Conversion Shares) are accurate and complete in all material respects;
(v) There are no preemptive or other rights to subscribe for or
to purchase from the Company, or any restriction upon the voting or
transfer of, any shares of Common Stock pursuant to the Company's charter
or by-laws;
(vi) This Agreement has been duly authorized, executed and
delivered by the Company;
(vii) Each of the Indenture and the Registration Rights
Agreement has been duly authorized, executed and delivered by the Company
and, assuming due authorization, execution and delivery by the other
parties thereto, constitutes the valid and legally binding agreement of the
Company. The Indenture is enforceable against the Company in accordance
with its terms, except as the enforceability thereof may be limited by
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium
and other similar laws now or hereafter in effect relating to or affecting
rights of creditors and other obligees generally, by general equitable
principles (regardless of whether such enforceability is considered in a
proceeding in equity or at law) or by an implied covenant of good faith and
fair dealing;
(viii) The Offered Securities have been duly authorized by the
Company and, when executed, authenticated and delivered in accordance with
this Agreement and the Indenture, will be valid and legally binding
obligations of the Company enforceable against the Company in accordance
with their terms, except in all cases as the enforceability thereof may be
limited by bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws now or hereafter in effect relating to or
affecting rights of creditors and other obligees generally, by general
equitable principles (regardless of whether such enforceability is
considered in a proceeding in equity or at law) or by an implied covenant
of good faith and fair dealing, and will be entitled to the benefits of the
Indenture;
(ix) The execution, delivery and performance of this Agreement,
the Registration Rights Agreement and the Indenture and the issuance of the
Offered Securities and the Conversion Shares and the consummation of the
transactions contemplated hereby and thereby do not result in any violation
of the provisions of the charter or by-laws of the Company; and no consent,
approval, authorization or order of, or filing or registration with, any
U.S. court or governmental agency or body is required for the execution,
delivery and performance of this Agreement, the Registration Rights
Agreement and the Indenture and the issuance of the Offered Securities and
the Conversion Shares and the consummation of the transactions contemplated
hereby and thereby except as may be required by the securities or "blue
sky" laws of any state of the United States in connection with the sale of
the Offered Securities and except as contemplated by the Registration
Rights Agreement.
(x) The statements in the Offering Memorandum under the caption
"Certain Federal Income Tax Considerations" as to matters of U.S. tax law
and
14
regulation are confirmed in all material respects;
(xi) No registration of the Offered Securities or the
Conversion Shares under the Securities Act and no qualification of the
Indenture or an indenture under the U.S. Trust Indenture Act of 1939, as
amended, is required in connection with the offer, sale and delivery of the
Offered Securities or in connection with the conversion of the Offered
Securities into Conversion Shares, in each case, in the manner contemplated
by the Offering Memorandum, this Agreement and the Indenture;
(xii) The Company is not an "investment company," or an entity
"controlled" by "investment company," within the meaning of the Investment
Company Act; and
(xiii) The Offered Securities satisfy the eligibility
requirements of Rule 144A(d)(3) under the Securities Act.
Such counsel shall also deliver a statement (addressed to the Initial
Purchaser) to the effect that no facts have come to the attention of such
counsel that have led it to believe that the Offering Memorandum (other than the
financial statements and the financial data included therein, as to which such
counsel need express no opinion or belief), as of its date, and at the
applicable Closing Date, contained or contains an untrue statement of a material
fact or omitted or omits to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. The foregoing opinion and statement may each be qualified
by a statement to the effect that such counsel does not assume any
responsibility for the accuracy, completeness or fairness of the statements
contained in the Offering Memorandum except for statements of United States law
or legal conclusions with respect thereto made in the Offering Memorandum under
the captions "Description of Debentures," "Description of Capital Stock" and
"Certain Federal Income Tax Consequences" insofar as such statements relate to
the Offered Securities or the Common Stock.
In rendering such opinion, such counsel may rely as to matters
involving the application of laws other than the laws of New York and federal
laws of the United States, to the extent such counsel deems proper and to the
extent specified in such opinion, if at all, upon an opinion or opinions (in
form and substance reasonably satisfactory to the counsel for the Initial
Purchaser) of other counsel reasonably acceptable to the counsel for the Initial
Purchaser familiar with the applicable laws and admitted to practice in the
applicable jurisdiction. In rendering such opinion, such counsel for the
Company shall have no reason to believe that it is not justified in relying on
the opinion of any such other counsel. Such counsel may also rely as to matters
of fact upon certificates of officers and other representatives of the Company
and public officials.
(d) On each Closing Date, there shall have been furnished to you the
opinion (addressed to the Initial Purchaser) of Xxxxxxx X. Xxxxx, Esq., General
Counsel of the Company, dated such Closing Date, in form and substance
reasonably satisfactory to counsel for the Initial Purchaser to the effect that:
(i) Each of the Company and its Subsidiaries that are organized
under the laws of the United States or any state thereof (the "U.S.
Subsidiaries") has been duly incorporated and is validly existing as a
corporation in good
15
standing under the laws of their respective jurisdictions of incorporation,
are duly qualified to do business and are in good standing as foreign
corporations in each jurisdiction in which their respective ownership or
lease of property or the conduct of their business requires such
qualification (except for where the failure to be so qualified or in good
standing would not, individually or in the aggregate, have a material
adverse effect on the business, properties, financial condition, results of
operations or prospects of the Company and its Subsidiaries taken as a
whole) and have all corporate power and authority necessary to own or hold
their respective properties and to conduct the business in which they are
engaged;
(ii) Except as set forth in the Offering Memorandum, to the
best knowledge of such counsel, there are no outstanding warrants or
options issued by the Company or any of its Subsidiaries to purchase any
shares of the capital stock of the Company or its Subsidiaries or any
security convertible into or exchangeable for capital stock of the Company
or its Subsidiaries and there are no preemptive or other rights to
subscribe for or to purchase from the Company, or any restriction upon the
voting or transfer of, any shares of Common Stock pursuant to the Company's
charter or by-laws or other constitutive documents or any agreement or
other instrument known to such counsel to which the Company is a party or
by which it is bound;
(iii) All the issued shares of capital stock of the Company
have been duly and validly authorized and issued, are fully paid and non-
assessable and conform to the description thereof contained in the Offering
Memorandum; except as described in the Offering Memorandum, all the issued
shares of capital stock of each U.S. Subsidiary of the Company have been
duly and validly authorized and issued and are fully paid and non-
assessable and owned of record by the Company, to the best of such
counsel's knowledge, free and clear of all liens, encumbrances, equities or
claims;
(iv) Except as described in the Offering Memorandum, to the best
knowledge of such counsel, there are no legal or governmental proceedings
pending to which the Company or any of its Subsidiaries is a party or of
which any property of the Company or any of its Subsidiaries is the subject
which, if determined adversely to the Company or any of its Subsidiaries,
would, individually or in the aggregate, have a material adverse effect on
the business, properties, financial condition, results of operations or
prospects of the Company and its Subsidiaries taken as a whole; and to the
best knowledge of such counsel, no such proceedings are threatened or
contemplated by governmental authorities or any other party;
(v) The execution, delivery and performance of this Agreement,
the Registration Rights Agreement and the Indenture and the issuance of the
Offered Securities and the Conversion Shares and the consummation of the
transactions contemplated hereby and thereby will not conflict with or
result in a breach or violation of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument known to such counsel to which
the Company or any of its U.S. Subsidiaries is a party or by which the
Company or any of its U.S. Subsidiaries is bound or to which any of the
properties or assets of the Company or any of its U.S. Subsidiaries is
subject, nor will such actions result in any violation of the provisions of
the charter, by-laws or other constitutive
16
documents of the Company or any of its U.S. Subsidiaries or any U.S.
statute or any order, rule or regulation of any U.S. court or governmental
agency or body having jurisdiction over the Company or any of its U.S.
Subsidiaries or any of their properties or assets; and no U.S. consent,
approval, authorization or order of, or filing or registration with, any
court or governmental agency or body is required for the execution,
delivery and performance of this Agreement, the Registration Rights
Agreement and the Indenture and the issuance of the Offered Securities and
the Conversion Shares and the consummation of the transactions contemplated
hereby and thereby except as may be required by the securities or "blue
sky" laws of any state of the United States in connection with the sale of
the Offered Securities or as contemplated by the Registration Rights
Agreement;
(vi) To the best knowledge of such counsel, none of the Company
or the Subsidiaries (i) is in violation of its charter or by-laws (ii) is
in default, and no event has occurred which, with notice or lapse of time
or both, would constitute such a default, in the due performance or
observance of any time period, covenant or condition contained in this
Agreement, the Registration Rights Agreement or the Indenture, or (iii) is
in violation of any law, ordinance, governmental rule, regulation or court
decree to which it or its properties or assets may be subject or has failed
to obtain any material license, permit, certificate, franchise or other
governmental authorization or permit necessary to the ownership of its
properties or assets or to the conduct of its business;
(vii) To the best of such counsel's knowledge, there are no
contracts, agreements or understandings between the Company and any person
granting such person the right to require the Company to file a
registration statement under the Securities Act with respect to any
securities of the Company owned or to be owned by such person or to require
the Company to include such securities in any registration statement filed
by the Company under the Securities Act; and
(viii) Each document incorporated by reference in the Offering
Memorandum (except for financial statements and schedules included therein
as to which such counsel need not express any opinion), when filed with the
Commission complied as to form in all material respects with the Exchange
Act and the Rules and Regulations.
The written opinion of such counsel shall also contain a statement to the
effect that no facts have come to the attention of such counsel that have led
him to believe that the Offering Memorandum (other than the financial statements
and the financial data included therein, as to which such counsel need express
no opinion or belief), as of its date, and at the applicable Closing Date,
contained or contains an untrue statement of a material fact, omitted or omits
to state a material fact or necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
In rendering such opinion, such counsel may rely as to matters involving
the application of laws other than the laws of New York and federal laws of the
United States, to the extent such counsel deems proper and to the extent
specified in such opinion, if at all, upon an opinion or opinions (in form and
substance reasonably satisfactory to the counsel for the Initial Purchaser) of
other counsel reasonably acceptable to the counsel for the Initial Purchaser
familiar with the
17
applicable laws and admitted to practice in the applicable jurisdiction. The
opinion of such counsel for the Company shall state that the opinion of any such
other counsel is in form satisfactory to such counsel and that in their opinion
the Initial Purchaser and they are justified in relying thereon. Such counsel
may also rely as to matters of fact upon certificates of officers and other
representatives of the Company and public officials.
(e) On each Closing Date, there shall have been furnished to you the
opinion (addressed to the Initial Purchaser) of Kleinhendler & Halevy, Israeli
counsel for the Company, dated such Closing Date, in form and substance
reasonably satisfactory to counsel for the Initial Purchaser to the effect that:
(i) Each of the Company's Subsidiaries which is organized under the
laws of Israel (the "Israeli Subsidiaries") has been duly incorporated and
is validly existing as a corporation in good standing under the laws of
Israel, is duly qualified to do business and is in good standing in each
jurisdiction in which its ownership or lease of property or the conduct of
its business requires such qualification (except for where the failure to
be so qualified or in good standing would not, individually or in the
aggregate, have a material adverse effect on the business, properties,
financial condition, results of operations or prospects of the Company and
its Subsidiaries taken as a whole) and has all corporate power and
authority necessary to own or hold its properties and to conduct the
business in which it is engaged;
(ii) No proceeding has been instituted by the Registrar of Companies in
Israel for the dissolution of any of the Israeli Subsidiaries;
(iii) Except as described in the Offering Memorandum, all the shares
of capital stock of each Israeli Subsidiary owned, directly or indirectly,
by the Company have been duly and validly authorized and issued, are fully
paid and non-assessable and owned of record and, to the best knowledge of
such counsel, beneficially by the Company and, to the best of such
counsel's knowledge, free and clear of all liens, encumbrances, equities or
claims;
(iv) The issuance and delivery to the Initial Purchaser of the
Offered Securities and the Conversion Shares and the consummation of the
transactions contemplated by this Agreement, the Registration Rights
Agreement and the Indenture are not subject to any tax imposed by Israel or
any political subdivision thereof;
(v) The statements in the Offering Memorandum under the captions
"Risk Factors-Subsidiary Operations" and "Risk Factors-Operations in
Israel," insofar as they purport to summarize statutes, laws and
regulations of the State of Israel and programs of the government of Israel
relating to or affecting the Company or its Israeli Subsidiaries, are
accurate and complete in all material respects;
(vi) Efrat Future Technology, Ltd. is an "approved enterprise" under
Israeli law;
(vii) No governmental authorizations, consents or exemptions in
Israel are necessary for the execution, delivery and performance of this
Agreement, the Registration Rights Agreement and the Indenture and the
consummation of the transactions
18
contemplated hereby and thereby (including, but not limited to, the
issuance and sale of the Offered Securities and the issuance upon
conversion of the Offered Securities as contemplated by this Agreement and
the Indenture); and
(viii) The execution, delivery and performance of this Agreement, the
Registration Rights Agreement and the Indenture and the issuance of the
Offered Securities and the Conversion Shares and the consummation of the
transactions contemplated hereby and thereby will not conflict with or
result in a breach or violation of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument known to such counsel to which
the Company or any of its Israeli Subsidiaries is a party or by which the
Company or any of its Israeli Subsidiaries is bound or to which any of the
properties or assets of the Company or its Israeli Subsidiaries is subject,
nor will such actions result in any violation of the provisions of the
Memorandum or Articles of Association of the Israeli Subsidiaries or any
statute or any order, rule or regulation of any Israeli court, governmental
agency or body having jurisdiction over the Israeli Subsidiaries or any of
their properties or assets.
(f) The Company shall have furnished to the Initial Purchaser a
certificate, dated such Closing Date, signed on behalf of the Company by the
Chief Executive Officer and by the Vice President-Finance and Treasurer of the
Company to the effect that: (i) the representations and warranties of the
Company contained in this Agreement are true and correct, as if made at and as
of such Closing Date, and the Company has complied with all the agreements and
satisfied all the conditions on its part to be complied with or satisfied at or
prior to such Closing Date; (ii) the signers of said certificate have carefully
examined the Offering Memorandum, and any amendments or supplements thereto
(including any documents filed under the Exchange Act and deemed to be
incorporated by reference in the Offering Memorandum), and to their knowledge do
not include any untrue statement of material fact or omit to state any material
fact required to be included therein in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading; and
(iii) since the date of the most recent financial statements incorporated by
reference in the Offering Memorandum there has occurred no event required to be
set forth in an amendment or supplement to the Offering Memorandum which has not
been so set forth.
(g) On each Closing Date you shall have received a letter of Deloitte
& Touche LLP, dated such Closing Date and addressed to the Initial Purchaser,
confirming that they are independent certified public accountants with respect
to the Company within the meaning of the Securities Act and the Rules and
Regulations, and stating, as of the date of such letter (or, with respect to
matters involving changes or developments since the respective dates as of which
specified financial information is given or incorporated in the Offering
Memorandum, as of a date not more than five days prior to the date of such
letter), the conclusions and findings of such firm with respect to the financial
information and other matters covered by its letter delivered to you
concurrently with the execution of this Agreement, and confirming the
conclusions and findings set forth in such prior letter.
(h) Subsequent to the execution and delivery of this Agreement, there
shall not have occurred any of the following: (i) trading in securities
generally on the New York Stock Exchange, the American Stock Exchange or the
over-the-counter market shall have been
19
suspended or minimum prices shall have been established on either of such
exchanges or such market by the Commission or such exchange or other regulatory
body or governmental authority having jurisdiction, (ii) a banking moratorium is
declared by either Federal or New York State authorities, (iii) the United
States or Israel becomes engaged in hostilities or there is an escalation of
hostilities involving the United States or Israel or there is a declaration of a
national emergency or war by the United States or Israel, (iv) a material
adverse change in general economic, political or financial conditions, or the
effect of international or national conditions on the financial markets in the
United States which change shall be such as to, in the judgment of the Initial
Purchaser, make it inadvisable or impracticable to proceed with the payment for
and delivery of the Offered Securities, or (v) a material adverse change in the
operations, business, prospects, capitalization or financial condition of the
Company, whether or not arising in the ordinary course of business, which
change, in the reasonable judgment of the Initial Purchaser, shall render it
impracticable or inadvisable to proceed with the payment for and delivery of the
Offered Securities.
(i) The Initial Purchaser shall have received from Weil, Gotshal &
Xxxxxx LLP, counsel for the Initial Purchaser, such opinion or opinions, dated
such Closing Date, with respect to the validity of the Indenture, the Offered
Securities, the Conversion Shares, the Offering Memorandum, and other related
matters as they may reasonably 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.
(j) The Offered Securities shall have been (i) approved by the
National Association of Securities Dealers, Inc., as being eligible for trading
in the PORTAL market and (ii) accepted for settlement through the facilities of
DTC.
(k) The Registration Rights Agreement shall have been executed and
delivered and be substantially in the form of Exhibit A hereto.
20
All such opinions, certificates, letters and documents shall be in
compliance with the provisions hereof only if they are reasonably satisfactory
in form and substance to counsel for the Initial Purchaser. The Company shall
furnish to the Initial Purchaser conformed copies of such opinions,
certificates, letters and other documents in such number as the Initial
Purchaser shall reasonably request. If any of the conditions specified in this
Section 5 shall not have been fulfilled when and as required by this Agreement,
this Agreement and all obligations of the Initial Purchaser hereunder may be
canceled at, or at any time prior to, each Closing Date, by the Initial
Purchaser. Any such cancellation shall be without liability of the Initial
Purchaser to the Company. Notice of such cancellation shall be given to the
Company in writing, or by telegraph or telephone and confirmed in writing.
6. Indemnification and Contribution.
---------------------------------
21
(a) The Company shall indemnify and hold harmless the Initial
Purchaser, its directors, officers and employees and each person, if any, who
controls the Initial Purchaser within the meaning of the Securities Act, from
and against any loss, claim, damage or liability, joint or several, or any
action in respect thereof (including, but not limited to, any loss, claim,
damage, liability or action relating to purchases and sales of Offered
Securities), to which the Initial Purchaser or any such director, officer,
employee or controlling person may become subject, under the Securities Act or
otherwise, insofar as such loss, claim, damage, liability or action arises out
of, or is based upon, (i) any untrue statement or alleged untrue statement of a
material fact contained (A) in the Offering Memorandum, or any amendment or
supplement thereto or the reports filed pursuant to the Exchange Act
incorporated by reference in the Offering Memorandum or (B) in any blue sky
application or other document prepared or executed by the Company (or based upon
any written information furnished by the Company) specifically for the purpose
of qualifying any or all of the Offered Securities under the securities laws of
any state or other jurisdiction (any such application, document or information
being hereinafter called a "Blue Sky Application"), or (ii) the omission or
alleged omission to state in the Offering Memorandum, or any amendment or
supplement thereto or the reports filed pursuant to the Exchange Act
incorporated by reference in the Offering Memorandum, or in any Blue Sky
Application any material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading; and shall reimburse the Initial Purchaser and each such
director, officer, employee or controlling persons promptly upon demand for any
reasonable legal or other expenses reasonably incurred by the Initial Purchaser,
director, officer, employee or controlling person in connection with
investigating or defending or preparing to defend against any such loss, claim,
damage, liability or action as such expenses are incurred; provided, however,
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that the Company shall not be liable in any such case to the extent that any
such loss, claim, damage, liability or action (i) arises out of, or is based
upon, any untrue statement or alleged untrue statement or omission or alleged
omission made in reliance upon and in conformity with written information
concerning the Initial Purchaser furnished to the Company by or on behalf of the
Initial Purchaser specifically for inclusion therein or (ii) results from the
fact the Initial Purchaser sold Offered Securities to a person as to whom it is
established that there was not sent or given, at or prior to the written
confirmation of such sale, a copy of the Offering Memorandum, as then amended or
supplemented, in any case where the Company has previously furnished copies
thereof in sufficient quantity to the Initial Purchaser and the loss, claim,
damage or liability of the Initial Purchaser results from an untrue statement or
omission of a material fact contained in the Offering Memorandum which was
corrected in the Offering Memorandum as then amended or supplemented. The
foregoing indemnity agreement is in addition to any liability which the Company
may otherwise have to the Initial Purchaser or to any officer, employee or
controlling person of the Initial Purchaser.
(b) The Initial Purchaser shall indemnify and hold harmless the
Company, its directors, officers and employees and each person, if any, who
controls the Company within the meaning of the Securities Act, from and against
any loss, claim, damage or liability, joint or several, or any action in respect
thereof, to which the Company or any such director, officer, employee or
controlling person may become subject, under the Securities Act or otherwise,
insofar as such loss, claim, damage, liability or action arises out of, or is
based upon, (i) any untrue statement or alleged untrue statement of a material
fact contained (A) in the Offering Memorandum, or any amendment or supplement
thereto, or (B) in any Blue Sky Application or (ii) the omission or alleged
omission to state in the Offering Memorandum or any amendment or
22
supplement thereto or any Blue Sky Application any material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, but in each case only
to the extent that the untrue statement or alleged untrue statement or omission
or alleged omission was made in reliance upon and in conformity with written
information concerning the Initial Purchaser furnished to the Company by or on
behalf of the Initial Purchaser specifically for inclusion therein; and shall
reimburse the Company and any such director, officer, employee or controlling
persons for any reasonable legal or other expenses reasonably incurred by the
Company or any such director, officer, employee or controlling person in
connection with investigating or defending or preparing to defend against any
such loss, claim, damage, liability or action as such expenses are incurred. The
foregoing indemnity agreement is in addition to any liability which the Initial
Purchaser may otherwise have to the Company or any such director, officer,
employee or controlling person.
(c) Promptly after receipt by an indemnified party under this Section
6 of notice of any claim or the commencement of any action, the indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party under this Section 6, notify the indemnifying party in
writing of the claim or the commencement of that action; provided, however, that
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the failure to notify the indemnifying party shall not relieve it from any
liability which it may have under this Section 6, except to the extent it has
been materially prejudiced by such failure, or from any liability which it may
have to an indemnified party otherwise than under this Section 6. If any such
claim or action shall be brought against an indemnified party, and it shall
notify the indemnifying party thereof, the indemnifying party shall be entitled
to participate therein and, to the extent that it wishes, jointly with any other
similarly notified indemnifying party, to assume the defense thereof with
counsel reasonably satisfactory to the indemnified party. After notice from the
indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, the indemnifying party shall not be liable to
the indemnified party under this Section 6 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided, however, that
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the indemnified party shall have the right to employ counsel to represent such
indemnified party and its respective directors, officers, employees and
controlling persons who may be subject to liability arising out of any claim in
respect of which indemnity may be sought by such indemnified party against the
indemnifying party under this Section 6 if an indemnified party shall have been
advised by counsel in writing that representation of such indemnified party and
those directors, officers, employees and controlling persons by the same counsel
would be inappropriate under applicable standards of professional conduct due to
actual or potential conflicting interests and the indemnified party so notifies
the indemnifying party, and in that event the fees and expenses of not more than
one such separate counsel (in addition to local counsel) shall be paid by the
indemnifying party. No indemnifying party shall (i) without the prior written
consent of the indemnified parties (which consent shall not be unreasonably
withheld), settle or compromise or consent to the entry of any judgment with
respect to any pending or threatened claim, action, suit or proceeding in
respect of which indemnification or contribution may be sought hereunder
(whether or not the indemnified parties are actual or potential parties to such
claim or action) unless such settlement, compromise or consent includes an
unconditional release of each indemnified party from all liability arising out
of such claim, action, suit or proceeding, or (ii) be liable for any settlement
of any such claim, action, suit or proceeding effected without its written
consent (which consent shall not be unreasonably withheld), but if settled with
the written consent of the indemnifying party or if there be a final judgment in
favor of the plaintiff in any such action, the indemnifying party
23
agrees to indemnify and hold harmless any indemnified party from and against any
loss or liability by reason of such settlement or judgment.
(d) If the indemnification provided for in this Section 6 shall for
any reason be unavailable to or insufficient to hold harmless an indemnified
party under Section 6(a) or 6(b) in respect of any loss, claim, damage or
liability, or any action in respect thereof, referred to therein, then each
indemnifying party shall, in lieu of indemnifying such indemnified party,
contribute to the amount paid or payable by such indemnified party as a result
of such loss, claim, damage or liability, or action in respect thereof, (i) in
such proportion as shall be appropriate to reflect the relative benefits
received by the Company on the one hand and the Initial Purchaser on the other
hand from the offering of the 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 Initial Purchaser on the other with respect to the statements or
omissions which resulted in such loss, claim, damage or liability, or action 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
Purchaser on the other with respect to such offering shall be deemed to be in
the same proportion as the total net proceeds from the offering of the Offered
Securities purchased under this Agreement (before deducting expenses) received
by the Company, on the one hand, and the total underwriting discounts and
commissions received by the Initial Purchaser with respect to the Offered
Securities purchased under this Agreement, on the other hand, bear to the total
gross proceeds from the offering of the Offered Securities under this Agreement.
The relative fault shall be determined by reference to whether the untrue or
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact relates to information supplied by the Company, on the one
hand, or the Initial Purchaser, on the other hand, the intent of the parties and
their relative knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Company and the Initial Purchaser agree
that it would not be just and equitable if contributions pursuant to this
Section 6(d) were to be determined by pro rata allocation (even if either the
Initial Purchaser or the Company, as the case may be, were treated as one entity
for such purposes) or by any other method of allocation which does not take into
account the equitable considerations referred to herein. The amount paid or
payable by an indemnified party as a result of the loss, claim, damage or
liability, or action in respect thereof, referred to above in this Section 6(d)
shall be deemed to include, subject to the limitations set forth above, for
purposes of this Section 6(d), any reasonable 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 6(d),
the Initial Purchaser shall not be required to contribute any amount in excess
of the amount by which the total price at which the Offered Securities purchased
and resold by it exceeds the amount of any damages which the Initial Purchaser
has otherwise paid or become liable to pay by reason of any untrue or alleged
untrue statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. Each party entitled to contribution agrees that
upon the service of a summons or other initial legal process upon it in any
action instituted against it in respect to which contribution may be sought, it
shall promptly give written notice of such service to the party or parties from
which contribution may be sought, but the omission so to notify such party or
parties of any such service shall not relieve the party from whom contribution
may be sought for any obligation it may have hereunder or otherwise (except as
specifically provided in subsection (c) hereof). The
24
remedies provided for in this Section 6 are not exclusive and shall not limit
any rights or remedies which may otherwise be available to any indemnified party
in equity or at law.
(e) The Initial Purchaser confirms and the Company acknowledges that
(i) the last paragraph on the cover page, (ii) the stabilization legend on page
3 and (iii) the fifth, seventh and tenth paragraphs under the caption "Plan of
Distribution" constitute the only information concerning the Initial Purchaser
furnished in writing to the Company by or on behalf of the Initial Purchaser
specifically for inclusion in the Offering Memorandum.
7. Survival of Certain Representations and Obligations. The
----------------------------------------------------
respective indemnities, agreements, representations, warranties and other
statements of the Company or its officers and of the Initial Purchaser set forth
in or made in certificates delivered pursuant to this Agreement will remain in
full force and effect, regardless of any investigation made by or on behalf of
any Initial Purchaser, the Company or any of their respective representatives,
officers or directors or any controlling person, and will survive delivery of
any payment for the Offered Securities.
8. Notices. All communications hereunder will be in writing and
-------
will be deemed to have been duly given if mailed or transmitted by any standard
form of telecommunication. Notices to the Initial Purchaser shall be directed
to Xxxxxx Brothers Inc. at 0 Xxxxx Xxxxxxxxx Xxxxxx, Xxx Xxxx, XX 00000,
Attention: Investment Banking Group (facsimile: (000) 000-0000), with a copy, in
case of any notice pursuant to Section 6(c), to the Director of Litigation,
Office of the General Counsel, Xxxxxx Brothers Inc., 0 Xxxxx Xxxxxxxxx Xxxxxx,
00xx Xxxxx, Xxx Xxxx, XX 00000; notices to the Company shall be directed to it
at Comverse Technology, Inc., 000 Xxxxxxxxx Xxxx Xxxxx, Xxxxxxxx, Xxx Xxxx
00000, Attention: Xxxxxxx X. Xxxxx, Esq. (facsimile: (000) 000-0000).
9. Persons Entitled to Benefit of Agreement. This Agreement shall
----------------------------------------
inure to the benefit of and be binding upon the Initial Purchaser, the Company
and their respective successors and the controlling persons referred to in
Section 6. This Agreement and the terms and provisions hereof are for the sole
benefit of only those persons, except that (x) the representations, warranties,
indemnities and agreements of the Company contained in this Agreement shall also
be deemed to be for the benefit of the directors, officers and employees of the
Initial Purchaser and the person or persons, if any, who control the Initial
Purchaser within the meaning of Section 15 of the Securities Act and (y) the
representations, warranties, indemnities and agreements of the Initial Purchaser
contained in this Agreement shall be deemed to be for the benefit of directors,
officers and employees of the Company and any person controlling the Company
within the meaning of Section 15 of the Securities Act. Nothing in this
Agreement is intended or shall be construed to give any person, other than the
persons referred to in this Section 9, any legal or equitable right, remedy or
claim under or in respect of this Agreement or any provision contained herein.
10. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
-------------
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO THE
PRINCIPLES OF CONFLICTS OF LAWS OF THE STATE OF NEW YORK.
11. Counterparts. This Agreement may be executed in any number of
------------
25
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same instrument.
12. Headings. The headings herein are inserted for convenience of
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reference only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.
[Remainder of page intentionally left blank]
26
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to us one of the counterparts hereof,
whereupon it will become a binding agreement among the Company and the Initial
Purchaser in accordance with its terms.
COMVERSE TECHNOLOGY, INC.
By: ____________________________________
Name:
Title:
The foregoing Purchase Agreement is hereby
confirmed and accepted as of the date first
above written.
XXXXXX BROTHERS INC.
By: _____________________________________
Name:
Title:
