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EXHIBIT 1
XXXXXX INDUSTRIES, INC.
Common Stock Issuable upon Conversion of
5% Convertible Subordinated Notes Due May 15, 2006
STANDBY UNDERWRITING AGREEMENT
July 7, 1999
Warburg Dillon Read LLC,
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Ladies and Gentlemen:
Xxxxxx Industries, Inc., a Delaware corporation (the "Company"), has
called for redemption on July 15, 1999 (the "Redemption Date") all of its
outstanding 5% Convertible Subordinated Notes Due May 15, 2006 (the
"Debentures") at a redemption price of $1,035 for each $1,000 principal amount
thereof, plus accrued interest thereon from May 15, 1999 to the Redemption Date
(the "Redemption Price"). The Debentures are convertible into shares of the
Company's Common Stock, par value $.10 per share (the "Common Stock"). The right
to convert the Debentures into Common Stock will terminate at 5:00 p.m., New
York City time, on July 14, 1999 (the "Conversion Expiration Date"). The Company
desires to make arrangements with you (the "Purchaser") pursuant to which the
Purchaser will purchase 50% of the authorized but unissued shares of Common
Stock that would have been delivered upon conversion (the "Shares") of those
Debentures that are either (i) duly surrendered for redemption or (ii) not duly
surrendered for conversion or redemption prior to 5:00 p.m., New York City time,
on the Conversion Expiration Date (collectively, the "Subject Debentures"), at a
purchase price equal to $18.91 per share (the "Purchase Price").
Notwithstanding any provision in this Agreement to the contrary, if (i)
the Subject Debentures represent 10% or less of the principal amount of the
Debentures outstanding at the Execution Time and (ii) the closing price of the
Common Stock on the American Stock Exchange on the Conversion Expiration Date is
at least $19.41, then the Company shall not have the right to sell any Shares to
the Purchaser.
Notwithstanding any provision in this Agreement to the contrary, if (i)
the Subject Debentures represent more than 10% of the principal amount of the
Debentures outstanding at the Execution Time and (ii) the closing price of the
Common Stock on the American Stock Exchange on the Conversion Expiration Date is
at least $19.41, then the Company shall have the right, but not the obligation,
to sell to the Purchaser a number of Shares equal to up to 50% of the Shares in
excess of the Threshold Shares. For purposes of this Agreement, the term
"Threshold Shares" shall mean number of authorized but unissued shares of Common
Stock that would have been delivered upon conversion of 10% of the principal
amount of the Debentures outstanding at the Execution Time.
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1. REPRESENTATIONS AND WARRANTIES. The Company represents and warrants
to, and agrees with, the Purchaser as set forth below in this Section 1. Certain
terms used in this Section 1 are defined in paragraph (c) hereof.
(a) The Company meets the requirements for use of Form S-3 under the
Securities Act of 1933, as amended (the "Act"), and has filed with the
Securities and Exchange Commission (the "Commission") a registration statement
(file number 333-81137) on such Form for the registration under the Act of the
offering and sale of one or more series of debt securities, preferred stock,
warrants, common stock and depositary shares having an aggregate initial
offering price not in excess of $500,000,000, including the Shares. The
registration statement was declared effective by the Commission on June 28,
1999. The Company will file with the Commission a final prospectus with regard
to the transactions contemplated by this Agreement in accordance with Rules 415
and 424(b)(2) or (5). As filed, such final prospectus shall contain all Rule
430A Information, together with all other such required information, with
respect to the Shares and the offering thereof and, except to the extent the
Purchaser shall agree in writing to a modification, shall be in all substantive
respects in the form furnished to you prior to the Execution Time or, to the
extent not completed at the Execution Time, shall contain only such specific
additional information and other changes as the Company has advised you, prior
to the Execution Time, will be included or made therein. The Registration
Statement, at the Execution Time, meets the requirement set forth in Rule
415(a)(1)(x).
(b) The Registration Statement has become effective under the Act; no
stop order suspending the effectiveness of the Registration Statement is in
effect, and no proceedings for such purpose are pending before or, to the
Company's knowledge, threatened by the Commission. On the Effective Date, the
Registration Statement did, and when the Prospectus is first filed in accor
dance with Rule 424(b)(2) or (5), as the case may be, and on the Closing Date
(as hereinafter defined), the Prospectus (and any supplements thereto) will,
comply in all material respects with the applicable requirements of the Act and
the Securities Exchange Act of 1934 (the "Exchange Act") and the rules
thereunder; on the Effective Date, the Registration Statement did not contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or neces sary in order to make the statements
therein not misleading; on the Effective Date, the Prospectus did not, and on
the date of any filing pursuant to Rule 424(b)(2) or (5), as the case may be,
and on the Closing Date, the Prospectus (together with any supplement thereto)
will not, include any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading; provided, however,
that the Company makes no representations or warranties as to the information
contained in or omitted from the Registration Statement or the Prospectus (or
any supplement thereto) in reliance upon and in conformity with information
furnished in writing to the Company by or on behalf of the Purchaser
specifically for inclusion in the Registration Statement or the Prospectus (or
any supplement thereto).
(c) The terms which follow, when used in this Agreement, shall have the
meanings indicated. The term "the Effective Date" shall mean each date that the
Registration Statement and any post-effective amendment or amendments thereto
became or become effective and each date after the date hereof on which a
document incorporated by reference in the Registration Statement is filed.
"Execution Time" shall mean the date and time that this Agreement is executed
and
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delivered by the parties hereto. "Prospectus" shall mean the prospectus relating
to the Shares that is first filed pursuant to Rule 424(b) after the Execution
Time, and, unless the context otherwise requires, shall also include any
supplements or amendments thereto. "Registration Statement" shall mean the
registration statement referred to in paragraph (a) above, including
incorporated documents, exhibits and financial statements, as amended at the
Execution Time and, in the event any post-effective amendment thereto becomes
effective prior to the Closing Date, shall also mean such registration statement
as so amended. "Rule 415," "Rule 424," "Rule 430A" and "Regulation S-K" refer to
such rules or regulation under the Act. "Rule 430A Information" means
information with respect to the Shares and the offering thereof which would have
been permitted to be omitted from the Registration Statement if it had become
effective pursuant to Rule 430A. Any reference herein to the Registration
Statement or the Prospectus shall be deemed to refer to and include the
documents incorporated by reference therein pursuant to Item 12 of Form S-3
which were filed under the Exchange Act on or before the Effective Date or the
issue date of the Prospectus, as the case may be; and any reference herein to
the terms "amend", "amendment" or "supplement" with respect to the Registration
Statement or the Prospectus shall be deemed to refer to and include the filing
of any document under the Exchange Act after the Effective Date of the
Registration Statement, or the issue date of the Prospectus, as the case may be,
that is incorporated therein by reference.
(d) The Company has been duly incorporated, is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation, has the corporate power and authority to own its property and to
conduct its business as described in the Prospectus and is duly qualified to
transact business and is in good standing in each jurisdiction in which the
conduct of its business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so qualified or be in
good standing would not have a material adverse effect on the Company and its
subsidiaries, taken as a whole.
(e) Each Significant Subsidiary (as defined below) has been duly
incorporated, is validly existing as a corporation in good standing under the
laws of the jurisdiction of its incorporation, has the corporate power and
authority to own its property and to conduct its business as described in the
Prospectus and is duly qualified to transact business and is in good standing in
each jurisdiction in which the conduct of its business or its ownership or
leasing of property requires such qualification, except to the extent that the
failure to be so qualified or be in good standing would not have a material
adverse effect on the Company and its Significant Subsidiaries, taken as a
whole; all of the issued shares of capital stock of each Significant Subsidiary
of the Company have been duly and validly authorized and issued, are fully paid
and non-assessable and are owned directly by the Company, free and clear of all
liens, encumbrances, equities or claims. "Significant Subsidiaries" shall mean
Xxxxxx International, Inc., Sundowner Offshore Services, Inc., Xxxxxx Drilling
USA, Inc., Nabors Alaska Drilling, Inc., Xxxxxx Offshore Drilling, Inc., Xxxxxx
Drilling International Limited, a Delaware corporation, and Xxxxxx Drilling
Limited.
(f) This Agreement has been duly authorized, executed and delivered by
the Company.
(g) The Company has an authorized equity capitalization as set forth in
the Prospectus, and all of the issued and outstanding shares of capital stock of
the Company have been duly and validly authorized and issued and are fully paid
and non-assessable and conform to the description thereof contained in the
Prospectus or incorporated by reference therein; all of the shares of Common
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Stock to be issued by the Company pursuant to this Agreement have been duly
authorized and, where applicable, reserved for issuance upon conversion of the
Debentures and, when issued and delivered as contemplated hereby, will be
validly issued, fully paid and non-assessable and will conform to the
description of the Common Stock contained in the Prospectus; and the
stockholders of the Company have no preemptive rights with respect to the
Debentures or the Common Stock.
(h) At the close of business on June 30, 1999, $172,498,000 aggregate
principal amount of the Debentures remained outstanding; the Debentures are
convertible in accordance with the terms of the Indenture between the Company
and HSBC Bank USA (as successor to Marine Midland Bank) (the "Trustee"), dated
as of May 15, 1996, as supplemented by Supplemental Indenture dated as of May
15, 1996 (the "Indenture"), until 5:00 p.m., New York City time, on the
Conversion Expiration Date, into Common Stock at a conversion price of $18.125
of principal amount of Debentures per share of Common Stock; and from and after
the date hereof until the close of business on the Redemption Date, the Company
will take no action which would result in any change in the conversion price.
(i) The execution and delivery by the Company of, and the performance
by the Company of its obligations under this Agreement, including, without
limitation, the call of the Debentures for redemption, the redemption of the
Debentures, and the issue and sale of the shares of Common Stock by the Company
as contemplated by this Agreement, will not contravene any provision of the
certificate of incorporation or by-laws of the Company or any agreement or other
instrument binding upon the Company or any of its Significant Subsidiaries that
is material to the Company and its subsidiaries, taken as a whole, except such
as would not, or could not be reasonably expected to, either singly or in the
aggregate, have a material adverse effect upon the Company and its subsidiaries,
taken as a whole, or, to the knowledge of the Company, any judgment, order or
decree of any governmental body, agency or court having jurisdiction over the
Company or any Significant Subsidiary. The Company has full power and authority
to authorize, issue and sell the shares of Common Stock as contemplated by this
Agreement; and all taxes, if any, required to be paid by the Company with
respect to the redemption of the Debentures and the issuance of shares of Common
Stock upon conversion of the Debentures or otherwise pursuant to this Agreement,
have been or will be paid by the Company.
(j) There are no material legal or governmental proceedings pending or,
to the knowledge of the Company, threatened to which the Company or any of its
Significant Subsidiaries is a party or to which any of the properties of the
Company or any of its subsidiaries is subject that are required to be described
in the Registration Statement or the Prospectus and are not so described or any
material contracts or other documents that are required to be described in the
Registration Statement or the Prospectus or to be filed or incorporated by
reference as exhibits to the Registration Statement that are not described,
filed or incorporated as required.
(k) No holder of outstanding shares of Common Stock has any rights to
the registration of shares of Common Stock or other securities of the Company
which would or could require such securities to be included in the Registration
Statement, except for such registration rights as have been waived in a manner
reasonably satisfactory to the Purchaser and its counsel.
(l) The Company has neither paid nor given, nor will pay or give,
directly or indirectly, any commission or other remuneration for soliciting the
conversion of any Debentures into Common Stock, except as may be contemplated by
this Agreement.
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(m) The Company has instructed, or will promptly instruct, the Trustee
to cooperate with you in order to facilitate the conversion of Debentures
acquired by you until 5:00 p.m., New York City time, on the Conversion
Expiration Date.
(n) The Shares have been listed (or will be listed prior to the Closing
Date), subject to notice of issuance, on the American Stock Exchange.
(o) Except for this Agreement, the Company has not entered into, and
will not enter into, any standby, underwriting or similar agreement with any
person relating to the Redemption.
2. PURCHASE AND SALE. 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 issue and sell to you, and you agree to
purchase from the Company, all of the Purchased Shares at the Purchase Price.
3. DELIVERY AND PAYMENT. Promptly after the close of business on the
Redemption Date, the Company shall notify the Purchaser in writing after
conferring with the Trustee of the principal amount of Debentures that have been
converted.
The closing (the "Closing") of the purchase and sale of the Purchased
Shares shall occur at 10:00 A.M. (New York City time) on July 15, 1999, or at
such other time not later than seven full business days thereafter as the
Purchaser and the Company determine (the "Closing Date"), at the offices of
Xxxxxx & Xxxxxx L.L.P., Houston, Texas. Payment for the Purchased Shares shall
be by wire transfer in immediately available funds. The Company will deliver to
you certificates evidencing the Purchased Shares (in definitive form and
registered in such names and in such denominations as you shall request by
written notice to the Company). A "business day" shall be a day on which the
Commission's office in Washington, D.C., and banks and securities exchanges in
New York, New York, are open for business. Delivery of the certificates
evidencing the Purchased Shares is to be made at your office at 000 Xxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000, or as you may otherwise designate in writing.
For purposes of expediting the checking and packaging of any
certificates to be delivered at the Closing, the Company shall make certificates
available for inspection at the office of the Purchaser, 000 Xxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000, at least 24 hours prior to the Closing.
As compensation to you for your commitment hereunder the Company will
pay to you, by wire transfer in immediately available funds, (a) $895,000 as a
standby fee, subject to adjustment in the manner set forth below in this
paragraph (the "Standby Fee") and (b) at the Closing an additional amount per
Share purchased (the "Take-up Amount") equal to 3% of the Purchase Price;
provided, that you may deduct the Take-up Amount from the above payment for the
Purchased Shares. The Standby Fee shall be paid as follows to the Purchaser: (i)
66-2/3% of the Standby Fee shall be paid upon the execution hereof and (ii)
33-1/3% of the Standby Fee shall be payable no later than the 12-month
anniversary of the execution hereof; provided, however, that any unpaid portion
of the Standby Fee shall be reduced by an amount equal to 50% of the Net
Underwriting Revenues actually paid to the Purchaser by the Company during such
12-month period. The term "Net Underwriting Revenues" shall mean the amount of
any underwriting discounts or
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commissions and/or placement agent or purchaser fees actually paid to the
Purchaser by the Company in connection with the Purchaser's acting as a lead
manager or co-manager (or lead purchaser or co-purchaser in connection with a
144A Offering) relating to an underwritten public offering or a 144A Offering of
the Company's securities, in each case net of any costs or expenses of the
Purchaser (including without limitation reasonable attorneys' fees and expenses)
which are incurred in connection with any such offering and for which the
Purchaser does not actually receive reimbursement during such 12-month period.
The term "144A Offering" shall mean an offering with respect to which resales
are intended to be exempt under Rule 144A of the Act.
4. AGREEMENTS. The Company agrees with the Purchaser that:
(a) Prior to the payment for the Purchased Shares, the Company will not
file any amendment of the Registration Statement or supplement to the Prospectus
unless the Company has furnished you a copy for your review prior to filing and,
except as set forth in subparagraph (b) hereof, will not file any such proposed
amendment or supplement to which you reasonably object. Subject to the foregoing
sentence, if the Registration Statement has become or becomes effective pursuant
to Rule 430A, or filing of the Prospectus is otherwise required under Rule
424(b), the Company will cause the Prospectus, properly completed, and any
supplement thereto to be filed with the Commission pursuant to the applicable
paragraph of Rule 424(b) within the time period pre scribed and will provide
evidence satisfactory to the Purchaser of such timely filing. The Company will
promptly advise the Purchaser (i) when the Prospectus, and any supplement
thereto, shall have been filed (if required) with the Commission pursuant to
Rule 424(b), (ii) when, prior to payment for the Shares, any amendment to the
Registration Statement shall have been filed or become effective, (iii) of any
request by the Commission for any amendment of the Registration Statement or
supplement to the Prospectus or for any additional information, (iv) of the
issuance by the Commission of any stop order suspending the effectiveness of the
Registration Statement or the institution or threatening of any proceeding for
that purpose and (v) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the Shares for sale in any
jurisdiction or the initiation or threatening of any proceeding for such
purpose. The Company will use all commercially reasonable efforts to prevent the
issuance of any such stop order and, if issued, to obtain as soon as possible
the withdrawal thereof.
(b) If, at any time when a prospectus relating to the Shares is
required to be delivered under the Act, any event occurs as a result of which
the Prospectus as then supplemented would include any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein in the light of the circumstances under which they were made
not misleading, or if it shall be necessary to amend the Registration Statement
or supplement the Prospectus to comply with the Act or the Exchange Act or the
respective rules thereunder, the Company promptly will (i) prepare and file with
the Commission, subject to the second sentence of subparagraph (a) of this
Section 4, an amendment or supplement which will correct such statement or
omission or an amendment which will effect such compliance and (ii) supply any
supplemented Prospectus to you in such quantities as you may reasonably request.
(c) As soon as practicable, the Company will make generally available
to its security holders and to the Purchaser an earnings statement or statements
of the Company and its subsidiaries which will satisfy the provisions of Section
11(a) of the Act and Rule 158 under the Act.
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(d) The Company will furnish to the Purchaser and counsel for the
Purchaser, without charge, signed copies of the Registration Statement
(including exhibits thereto), as well as such number of conformed copies of the
Registration Statement, excluding exhibits thereto, as the Purchaser may
reasonably request and, so long as delivery of a prospectus by the Purchaser or
a dealer may be required by the Act, as many copies of the Prospectus and any
supplement thereto as the Purchaser may reasonably request. The Company will pay
the expenses of printing or other production of all documents relating to
transactions contemplated by this Agreement.
(e) The Company, at its expense, will arrange for the qualification of
the Common Stock for sale under the laws of such jurisdictions as the Purchaser
may designate and will maintain such qualifications in effect so long as
required for the distribution of the Common Stock, provided, that in connection
therewith the Company shall not be required to qualify as a foreign corporation,
file a general consent to service of process in any state other than in Florida,
or subject itself to taxation in any jurisdiction. The Company will pay the fees
and expenses of counsel to the Purchaser in connection with such qualifications.
The Company will pay the fee of the National Association of Securities Dealers,
Inc., in connection with its review of the transactions contemplated by this
Agreement, if applicable.
(f) If the Purchaser actually purchases any Shares under the terms of
this Agreement, the Company will not, for a period of 90 days following the
Execution Time, without the prior written consent of the Purchaser (which
consent shall not be unreasonably withheld), directly or indirectly, offer to
sell, sell, grant any option (exercisable before 90 days after the Execution
Time) for the sale of or otherwise dispose of any shares of Common Stock or any
securities convertible into or exchangeable for any shares of Common Stock, or
any right or option to acquire any such shares or securities, provided, however,
that the Company may issue and sell Common Stock and other securities
convertible into or exchangeable for Common Stock (i) pursuant to any director
or employee benefit plan, stock option plan or dividend reinvestment plan, (ii)
pursuant to any outstanding options or warrants or other convertible securities,
and (iii) as a consideration in an acquisition of the stock or assets of another
entity (provided that in connection with any such acquisition or acquisitions,
the number of shares of Common Stock issued or issuable shall not exceed
10% of the currently outstanding shares of Common Stock, provided further
than any shares of Common Stock that the Company is contractually obligated on
the date hereof to issue pursuant to the applicable definitive acquisition
agreement shall not be subject to such 10% limitation). Sales by the
Company to the Purchaser are exempt from the foregoing restriction.
(g) To promptly mail or cause to be mailed or otherwise delivered to
holders of Debentures a Prospectus and an amended notice of redemption (as
amended, the "Notice of Redemption") of all the Debentures on the Redemption
Date in accordance with the terms of the Indenture, the time of the first such
mailing being called herein the "Time of Mailing"; and the Company will cause
notice of redemption to be given by press release at such times as you and the
Company may mutually agree.
(h) To advise you daily or direct the Trustee to advise you daily of
the respective principal amount of Debentures surrendered for conversion into
Common Stock and surrendered for redemption on the preceding day.
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(i) To supplement the Prospectus, or file a post-effective amendment to
the Registration Statement, after the Redemption Date to set forth the results
of the call for redemption and other information that may be required to comply
with the rules of the Commission, if applicable.
(j) If the Purchaser actually purchases any Shares under the terms of
this Agreement, then for a period of 90 days after the Closing Date, to not
directly or indirectly purchase, redeem or otherwise acquire any shares of
Common Stock or otherwise reduce the number of issued and outstanding shares of
Common Stock from the number of shares of Common Stock issued and outstanding on
the Closing Date, after giving effect to the purchase of Shares by the Purchaser
pursuant hereto.
5. CONDITIONS TO THE OBLIGATIONS OF THE PURCHASER. The obligations of
the Purchaser to purchase the Purchased Shares shall be subject to the accuracy
in all material respects of the representations and warranties on the part of
the Company contained herein as of the Execution Time and the Closing Date, to
the accuracy in all material respects of the statements of the Company made in
any certificates pursuant to the provisions hereof, to the performance by the
Company in all material respects of its obligations hereunder and to the
following additional conditions:
(a) The supplement to the Prospectus required pursuant to the
applicable paragraph of Rule 424(b) shall have been filed in the manner and
within the time period required by Rule 424(b); and no stop order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceedings for that purpose shall have been instituted or threatened.
(b) The Company shall have furnished to the Purchaser the opinion of
Xxxxxxxxx X. Xxxxx, Senior Counsel of Xxxxxx Corporate Services, Inc., dated the
Closing Date, to the effect that:
(i) each of the Company and Xxxxxx International, Inc., Xxxxxx
Drilling USA, Inc., Xxxxxx Offshore Drilling, Inc. and Xxxxxx Drilling
International Limited, a Delaware corporation (collectively, the
"Material Subsidiaries"), has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the
jurisdiction in which it is chartered or organized, with full corporate
power and authority to own its properties and conduct its business as
described in the Prospectus, and is duly qualified to do business as a
foreign corporation and is in good standing under the laws of each
jurisdiction which requires such qualification wherein it owns or
leases properties or conducts business, except to the extent that the
failure to be so qualified or be in good standing would not have a
material adverse effect on the Company and its subsidiaries, taken as a
whole;
(ii) all the outstanding shares of capital stock of the
Company and each Material Subsidiary have been duly and validly
authorized and issued and are fully paid and nonassessable and all
outstanding shares of capital stock of each of the Material
Subsidiaries are owned by the Company either directly or through wholly
owned subsidiaries free and clear of any perfected security interest
and, to the knowledge of such counsel, any other security interests,
claims, liens or encumbrances;
(iii) to the knowledge of such counsel, there is no pending or
threatened material action, suit or proceeding before any court or
governmental agency, authority or body or any
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arbitrator involving the Company or any of its subsidiaries of a
character required to be disclosed in the Registration Statement which
is not adequately disclosed in the Prospectus, and there is no
franchise, contract or other document of a character required to be
described in the Registration Statement or the Prospectus, or to be
filed as an exhibit, which is not described or filed as required;
(iv) such counsel has no reason to believe that at the
Effective Date the Registration Statement (other than the financial
statements and the other financial and statistical information
contained or incorporated by reference therein, as to which information
such counsel need express no comment) included any untrue statement of
a material fact or omitted to state any material fact required to be
stated therein or necessary to make the statements therein not
misleading or that the Prospectus (other than the financial statements
and the other financial and statistical information contained or
incorporated by reference therein, as to which information such counsel
need express no comment), as of its date and as of the Closing Date,
included or includes any untrue statement of a material fact or omitted
or omits to state a material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading;
(v) no consent, approval, authorization or order of any court
or governmental agency or body is required of the consummation of the
transactions contemplated herein, except such as have been obtained
under the Act and such as may be required under the blue sky laws of
any jurisdiction in connection with the purchase and distribution of
the Purchased Shares by the Purchaser (as to which such counsel need
express no opinion) and such other approvals as have been obtained;
(vi) neither the issue and sale of the Shares, nor the
consummation of any other of the transactions herein contemplated nor
the fulfillment of the terms hereof, including, without limitation, the
call of the Debentures for redemption, the redemption of the
Debentures, and the issue and sale of the Purchased Shares by the
Company as contemplated by this Agreement, will conflict with, result
in a breach or violation of, or constitute a default under the terms of
(A) any indenture or other agreement or instrument known to such
counsel and to which the Company or any of its Significant Subsidiaries
is a party or bound, or any judgment, order or decree known to such
counsel to be applicable to the Company or any of its Significant
Subsidiaries of any court, regulatory body, administrative agency,
governmental body or arbitrator having jurisdiction over the Company or
any of its Significant Subsidiaries, except such as would not, either
singly or in the aggregate, have a material adverse effect upon the
Company and its subsidiaries, taken as a whole, or prevent the Company
from performing its obligations under this Agreement, or (B) the
respective charters or bylaws of the Material Subsidiaries; and
(vii) no holders of securities of the Company have rights to
the registration of such securities under the Registration Statement.
In giving such opinion, such counsel may rely as to matters of fact, to
the extent such counsel deems proper, on certificates of responsible officers of
the Company and the Material Subsidiaries and of public officials. Such opinion
may be relied upon only by the Purchaser in connection with
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the transactions contemplated by this Agreement, and may not be used or relied
upon by the Purchaser for any other purpose, or by any other person, firm,
corporation or entity for any purpose whatsoever, without the prior written
consent of such counsel. Such opinion may be limited to the laws of the State of
Texas and the General Corporation Law of the State of Delaware.
References in this Section 5(b) to the Prospectus include any
supplements thereto at the Closing Date.
(c) The Company shall have furnished to the Purchaser the opinion of
Winston & Xxxxxx, special counsel for the Company, dated the Closing Date, 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 Delaware, with full corporate power and authority to own its
properties and conduct its business as described in the Prospectus;
(ii) the Debentures are convertible into Common Stock of the
Company in accordance with the terms of the Indenture; and the shares
of such Common Stock initially issuable upon conversion of the
Debentures have been duly authorized and reserved for issuance upon
such conversion, and, when so issued and delivered against payment
therefor in accordance with the Indenture, will be validly issued,
fully paid and non-assessable; all of the outstanding Shares have been
duly authorized and, upon payment and delivery therefor in accordance
with this Agreement, will be validly issued, fully paid, non-assessable
and not subject to any preemptive or similar right; the description of
the Common Stock contained in the Prospectus under the heading
"Description of Capital Stock and Depositary Shares" conforms to the
terms thereof contained in the Company's certificate of incorporation;
and the stockholders of the Company have no preemptive rights with
respect to the Common Stock or the Debentures under the Company's
certificate of incorporation or bylaws or applicable state law;
(iii) the statements in the Prospectus under the captions
"Description of Capital Stock and Depositary Shares" and "Standby
Arrangements", insofar as such statements constitute summaries of the
documents and legal matters referred to therein, fairly present the
information called for with respect to such documents and matters;
(iv) the redemption of all of the outstanding Debentures on
the Redemption Date has been duly authorized and all action required by
the terms of the Debentures or the Indenture to call the Debentures for
redemption on the Redemption Date has been duly taken in accordance
with the terms of the Indenture;
(v) any required filing of the Prospectus, and any supplements
thereto, pursuant to Rule 424(b) has been filed in the manner and
within the time period required by Rule 424(b); to the knowledge of
such counsel, no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that
purpose have been instituted or threatened and the Registration
Statement, as of its Effective Date, and the Prospectus as of its date
(other than the financial statements, financial schedules and other
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financial and statistical information contained therein or excluded
therefrom, as to which such counsel need express no opinion) comply as
to form in all material respects with the applicable requirements of
the Act and the respective rules thereunder;
(vi) this Agreement has been duly authorized, executed and
delivered by the Company; and
(vi) neither the issue and sale of the Shares, nor the
consummation of any other of the transactions herein contemplated nor
the fulfillment of the terms hereof, including, without limitation, the
call of the Debentures for redemption, the redemption of the
Debentures, and the issue and sale of the Purchased Shares as
contemplated by this Agreement, will conflict with, result in a breach
or violation of, or constitute a default under any provision of (A)
applicable law, except such as would not, either singly or in the
aggregate, have a material adverse effect upon the Company and its
subsidiaries, taken as a whole, or prevent the Company from performing
its obligations under this Agreement, or (B) the Restated Certificate
of Incorporation or By-Laws of the Company.
In rendering their opinions set forth in Section 5(c) above, such
counsel may rely, to the extent deemed advisable by such counsel, (i) as to
factual matters on certificates of officers of the Company and (ii) upon
certificates of public officials. Such counsel shall also state that such
counsel has participated in conferences with officers and representatives of the
Company, the independent public accountants of the Company and the Purchaser and
its counsel, at which conferences such counsel made inquiries of such officers,
the Purchaser and accountants, discussed in detail the contents of the
Registration Statement and Prospectus and (without taking any further action to
verify independently the statements made in the Registration Statement and the
Prospectus and, except as stated in Section 5(c)(ii) above, without assuming any
responsibility for the accuracy, completeness or fairness of such statements)
that nothing has come to such counsel's attention that would lead such counsel
to believe that the Registration Statement (other than the financial statements
and other financial and statistical information contained or incorporated by
reference therein, as to which such counsel need express no comment), at the
Execution Time, contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading (other than the information omitted therefrom
in reliance upon Section 430A), or that the Prospectus (other than the financial
statements, financial schedules and other financial and statistical information
contained or incorporated by reference therein, as to which such counsel need
express no comment), at the time it was filed pursuant to Rule 424(b) after the
Execution Time or at the Closing Date, contained or contains an untrue statement
of a material fact or omitted or omits to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
Such opinion shall be limited to the laws of the State of New York, the
Federal laws of the United States and the General Corporation Law of the State
of Delaware. Such opinion shall be rendered as of the Closing Date only in
connection with the Agreement and will be solely for the benefit of the
Purchaser and may not be relied upon, nor shown to or quoted from, for any other
purpose, or to any other person, firm or corporation. References to the
Prospectus in this Section 5(c) include any supplements thereto at the Closing
Date.
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(d) The Purchased Shares shall have been duly listed, subject to notice
of issuance, on the American Stock Exchange.
(e) The Purchaser shall have received from Xxxxxx & Xxxxxx L.L.P.,
counsel for the Purchaser, such opinion or opinions, dated the Closing Date,
with respect to (i) the due incorporation of the Company, (ii) the due
authorization, valid issuance and fully paid and nonassessable status of the
Shares, (iii) the Registration Statement, (iv) the Prospectus (together with any
supplement thereto) and (v) such other related matters as the Purchaser may
reasonably require, and the Company shall have furnished to such counsel such
documents as they request for the purpose of enabling them to pass upon such
matters.
(f) The Company shall have furnished to the Purchaser a certificate of
the Company, signed by the Chairman of the Board or the President and the
principal financial or accounting officer of the Company, dated the Closing
Date, to the effect that the signers of such certificate have carefully examined
the Registration Statement, the Prospectus, any supplement to the Prospectus and
this Agreement and that:
(i) the representations and warranties of the Company in this
Agreement are true and correct in all material respects on and as of
the Closing Date with the same effect as if made on the Closing Date
and the Company has complied in all material respects with all the
agreements and satisfied all the conditions on its part to be performed
or satisfied at or prior to the Closing Date;
(ii) no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that
purpose have been instituted or, to the Company's knowledge, are
threatened;
(iii) since the date of the most recent financial statements
included or incorporated by reference in the Prospectus, there has been
no material adverse change in the condition (financial or other),
earnings, business or properties of the Company and its subsidiaries,
whether or not arising from transactions in the ordinary course of
business, except as set forth in or contemplated in the Prospectus; and
(iv) the Company is not aware of any business acquisition
which is probable of being consummated by the Company as of the date
hereof which would be required under the Act to be disclosed in the
Prospectus and is not so disclosed.
(g) At the Closing Date, PricewaterhouseCoopers LLP shall have
furnished to the Purchaser a letter or letters, dated as of the Closing Date, in
form and substance satisfactory to the Purchaser, containing statements and
information of the type ordinarily included in accountants' "comfort letters" to
underwriters with respect to the financial statements and certain financial
information contained in or incorporated by reference into the Prospectus.
(h) Subsequent to the Execution Time or, if earlier, the dates as of
which information is given in the Registration Statement (exclusive of any
amendment thereof) and the Prospectus
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(exclusive of any supplement thereto), there shall not have been (i) any change
or decrease specified in the letter or letters referred to in paragraph (g) of
this Section 5 or (ii) any change, or any development involving a prospective
change, in or affecting the business or properties of the Company and its
subsidiaries the effect of which, in any case referred to in clause (i) or (ii)
above, is, in the judgment of the Purchaser, so material and adverse as to make
it impractical or inadvisable to proceed with the offering or delivery of the
Shares as contemplated by the Registration Statement (exclusive of any amendment
thereof) and the Prospectus.
(i) Prior to the Closing Date, the Company shall have furnished to the
Purchaser such further information, certificates and documents as the Purchaser
may reasonably request.
If any of the conditions specified in this Section 5 shall not have
been fulfilled in all material respects when and as provided in this Agreement,
or if any of the opinions and certificates mentioned above or elsewhere in this
Agreement shall not be in all material respects reasonably satisfactory in form
and substance to the Purchaser and counsel for the Purchaser, this Agreement and
all obligations of the Purchaser hereunder may be canceled at, or at any time
prior to, the Closing Date by the Purchaser. Notice of such cancellation shall
be given to the Company in writing or by telephone or telegraph confirmed in
writing.
The documents required to be delivered by this Section 5 shall be
delivered at the office of counsel for the Company on the Closing Date.
6. ADDITIONAL PURCHASES. Until 5:00 p.m., New York City time, on the
Conversion Expiration Date, you may (but shall be under no obligation to)
purchase Debentures in such amounts and at such prices as you may deem
advisable. The Common Stock acquired by you on conversion of the Debentures
purchased by you pursuant to this Section may be sold at any time or from time
to time by you. It is also understood that, for the purpose of stabilizing the
price of the Common Stock or otherwise, you may make purchases and sales of
Common Stock, Debentures or options therefor, in the open market or otherwise,
for long or short account, on such terms as you deem advisable, and may
over-allot in arranging sales, all subject to applicable provisions of the
Exchange Act and the rules and regulations of the Commission thereunder.
7. REIMBURSEMENT OF EXPENSES. If the sale of the Shares provided for
herein is not consummated because any condition to the obligations of the
Purchaser set forth in Section 5 hereof is not satisfied, because of any
termination pursuant to Section 10 hereof or because of any refusal, inability
or failure on the part of the Company to perform any agreement herein or comply
with any provision hereof other than by reason of a default by the Purchaser,
the Company will reimburse the Purchaser severally upon demand for all
out-of-pocket expenses (including reasonable fees and disbursements of counsel)
that shall have been incurred by it in connection with the proposed purchase and
sale of the Purchased Shares, up to a maximum of $50,000. The Purchaser shall
provide the Company with invoices or other reasonable evidence of such expenses
at or prior to the time of reimbursement.
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8. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company agrees to indemnify and hold harmless the Purchaser,
the directors, officers, employees and agents of the Purchaser and each person
who controls the Purchaser within the meaning of either the Act or the Exchange
Act against any and all losses, claims, damages or liabilities, joint or
several, to which they or any of them may become subject under the Act, the
Exchange Act or other Federal or state statutory law or regulation, at common
law 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 a material fact contained in the registration
statement for the registration of the Shares as originally filed or in any
amendment thereof, or in the Prospectus, or in any amendment thereof or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and agrees to reimburse
each such indemnified party, as incurred, for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability or action; 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 any such untrue
statement or alleged untrue statement or omission or alleged omission made
therein in reliance upon and in conformity with written information furnished to
the Company by or on behalf of the Purchaser through the Purchaser specifically
for inclusion therein. This indemnity agreement will be in addition to any
liability which the Company may otherwise have.
(b) The Purchaser severally agrees to indemnify and hold harmless the
Company, each of its directors, each of its officers who signs the Registration
Statement, and each person who controls the Company within the meaning of either
the Act or the Exchange Act, to the same extent as the foregoing indemnity from
the Company to the Purchaser, but only with reference to written information
relating to the Purchaser furnished to the Company by or on behalf of the
Purchaser through the Purchaser specifically for inclusion in the documents
referred to in the foregoing indemnity. This indemnity agreement will be in
addition to any liability which the Purchaser may otherwise have. The Company
acknowledges that the statements set forth in the last paragraph of the cover
page and under the heading "Standby Arrangements" in the Prospectus constitute
the only information furnished in writing by or on behalf of the Purchaser for
inclusion in the Prospectus, and you, as the Purchaser, confirm that such
statements are correct.
(c) Promptly after receipt by an indemnified party under this Section 8
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 this
Section 8, notify the indemnifying party in writing of the commencement thereof;
but the failure so to notify the indemnifying party (i) will not relieve it from
liability under paragraph (a) or (b) above unless and to the extent it did not
otherwise learn of such action and such failure results in the forfeiture by the
indemnifying party of substantial rights and defenses and (ii) will not, in any
event, relieve the indemnifying party from any obligations to any indemnified
party other than the indemnification obligation provided in paragraph (a) or (b)
above. The indemnifying party shall be entitled to appoint counsel of the
indemnifying party's choice at the indemnifying party's expense to represent the
indemnified party in any action for which indemnification is sought (in which
case the indemnifying party shall not thereafter be responsible for the fees and
expenses of any separate counsel retained by the indemnified party or parties
except
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as set forth below); provided, however, that such counsel shall be reasonably
satisfactory to the indemnified party. Notwithstanding the indemnifying party's
election to appoint counsel to represent the indemnified party in an action, the
indemnified party shall have the right to employ not more than one separate
counsel (including local counsel), and the indemnifying party shall bear the
reasonable fees, costs and expenses of such separate counsel if (i) the use of
counsel chosen by the indemnifying party to represent the indemnified party
would present such counsel with a conflict of interest, (ii) the actual or
potential defendants in, or targets of, any such action include both the
indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that there may be legal defenses available to it
and/or other indemnified parties which are different from or additional to those
available to the indemnifying party, (iii) the indemnifying party shall not have
employed counsel reasonably satisfactory to the indemnified party to represent
the indemnified party within a reasonable time after notice of the institution
of such action or (iv) the indemnifying party shall authorize the indemnified
party to employ separate counsel at the expense of the indemnifying party. An
indemnifying party will not, 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.
(d) In the event that the indemnity provided in paragraph (a) or (b) of
this Section 8 is unavailable to or insufficient to hold harmless an indemnified
party for any reason, the Company and the Purchaser agree to contribute to the
aggregate losses, claims, damages and liabilities (including legal or other
expenses reasonably incurred in connection with investigating or defending same)
(collectively "Losses") to which the Company and one or more of the Purchaser
may be subject in such proportion as is appropriate to reflect the relative
benefits received by the Company and by the Purchaser from the offering of the
Shares); provided, however, that in no case shall the Purchaser be responsible
for any amount in excess of the aggregate Take-up Amount applicable to the
Purchased Shares purchased by the Purchaser hereunder. If the allocation
provided by the immediately preceding sentence is unavailable for any reason,
the Company and the Purchaser shall contribute in such proportion as is
appropriate to reflect not only such relative benefits but also the relative
fault of the Company and of the Purchaser in connection with the statements or
omissions which resulted in such Losses as well as any other relevant equitable
considerations. Benefits received by the Company shall be deemed to be equal to
the total net proceeds from the offering (before deducting expenses), and
benefits received by the Purchaser shall be deemed to be equal to the total
Take-up Amount relating to the Purchased Shares purchased by the Purchaser
hereunder, in each case as set forth on the cover page of the Prospectus.
Relative fault shall be determined by reference to whether any alleged untrue
statement or omission relates to information provided by the Company or the
Purchaser. The Company and the Purchaser agree that it would not be just and
equitable if contribution were determined by pro rata allocation or any other
method of allocation which does not take account of the equitable considerations
referred to above. Notwithstanding the provisions of this paragraph (d), no
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. For purposes of this Section 8,
each person who controls the Purchaser within the meaning of either the Act or
the Exchange Act and each director,
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officer, employee and agent of the Purchaser shall have the same rights to
contribution as the Purchaser, and each person who controls the Company within
the meaning of either the Act or the Exchange Act, each officer of the Company
who shall have signed the Registration Statement and each director of the
Company shall have the same rights to contribution as the Company, subject in
each case to the applicable terms and provisions of this paragraph (d).
10. TERMINATION. This Agreement shall be subject to termination in the
absolute discretion of the Purchaser, by notice given to the Company prior to
delivery of and payment for the Purchased Shares, if prior to such time (i)
trading in the Company's Common Stock shall have been suspended by the
Commission or the American Stock Exchange or trading in securities generally on
the New York Stock Exchange or the American Stock Exchange shall have been
suspended or limited or minimum prices shall have been established on either of
such Exchanges, (ii) a banking moratorium shall have been declared either by
Federal or New York State authorities or (iii) there shall have occurred any
outbreak or escalation of hostilities, declaration by the United States of a
national emergency or war or any other calamity or crisis the effect of which on
financial markets is such as to make it, in the judgment of the Purchaser,
impracticable or inadvisable to proceed with the offering or delivery of the
Shares as contemplated by the Prospectus.
11. REPRESENTATIONS AND INDEMNITIES TO SURVIVE. The respective
agreements, representations, warranties, indemnities and other statements of the
Company or its officers and of the Purchaser set forth in or made pursuant to
this Agreement will remain in full force and effect, regardless of any
investigation made by or on behalf of the Purchaser or the Company or any of the
officers, directors or controlling persons referred to in Section 8 hereof, and
will survive delivery of and payment for the Shares. The provisions of Sections
7 and 8 hereof shall survive the termination or cancellation of this Agreement.
12. NOTICES. All communications hereunder will be in writing and
effective only on receipt, and, if sent to the Purchaser, will be mailed,
delivered or telecopied and confirmed to the Purchaser at Warburg Dillon Read
LLC, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: General Counsel; or,
if sent to the Company, will be mailed, delivered or telecopied and confirmed to
it at 000 Xxxx Xxxxxx Xxxx, Xxxxx 0000, Xxxxxxx, Xxxxx 00000, Attention of
Xxxxxx X. Xxxxxxxx, Chairman and Chief Executive Officer.
13. SUCCESSORS. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and the officers
and directors and controlling persons referred to in Section 8 hereof, and no
other person will have any right or obligation hereunder. No purchaser of any of
the Purchased Shares from the Purchaser shall be deemed a successor or assign by
reason merely of such purchase.
14. APPLICABLE LAW. THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES
OF CONFLICTS OF LAWS.
15. COUNTERPARTS. This Agreement may be executed by one or more of the
parties hereto 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 instrument.
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16. CONSENT. The Company and the Purchaser acknowledge that Winston &
Xxxxxx, which is acting as special counsel to the Company in connection with the
transactions contemplated by this Agreement, may act as counsel from time to
time to the Purchaser in connection with unrelated matters. The Company and the
Purchaser consent to Winston & Xxxxxx so acting as special counsel to the
Company. The Company and the Purchaser also acknowledge that Xxxxxx & Xxxxxx
L.L.P., which is acting as counsel to the Purchaser in connection with the
transactions contemplated by this Agreement, also acts as counsel from time to
time to the Company and certain of its affiliates in connection with unrelated
matters. The Company and the Purchaser consent to Xxxxxx & Xxxxxx L.L.P. so
acting as counsel to the Purchaser.
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If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicate hereof, whereupon
this letter and your acceptance shall represent a binding agreement among the
Company and the Purchaser.
Very truly yours,
XXXXXX INDUSTRIES, INC.
By: /s/ XXXXXXX X. XXXXXXXX
-------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: President and Chief Operating
Officer
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
WARBURG DILLON READ LLC
By: /s/ WILL X. XXXXX
---------------------------------
Will X. Xxxxx
Managing Director
By: /s/ XXXXX XXXXXXX
---------------------------------
Xxxxx Xxxxxxx
Managing Director
