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EXHIBIT 1.1
SENSORMATIC ELECTRONICS CORPORATION
6,000,000 Depositary Shares Each Representing a One-Tenth Interest in a
Share of 6 1/2% Convertible Preferred Stock
PURCHASE AGREEMENT
April 6, 1998
BEAR, XXXXXXX & CO. INC.
XXXXXX BROTHERS INC.
NATIONSBANC XXXXXXXXXX SECURITIES LLC
XXXXXXXX & CO. INC.
c/o Bear, Xxxxxxx & Co. Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, X.X. 00000
Ladies and Gentlemen:
Sensormatic Electronics Corporation, a corporation organized and
existing under the laws of the State of Delaware (the "Company"), proposes,
subject to the terms and conditions stated herein, to issue and sell to the
several Initial Purchasers named in Schedule I hereto (the "Initial Purchasers")
an aggregate of 6,000,000 Depositary Shares (the "Depositary Shares"), each
representing a one-tenth interest in a share of its 6 1/2% Convertible Preferred
Stock, par value $0.01 (the "Preferred Stock"). The Preferred Stock and the
related Depositary Shares are to be authorized and issued pursuant to the
provisions of a Certificate of Designations of the Powers, Preferences and
Relative, Participating, Optional or Other Special Rights of Preferred Stock and
Qualifications, Limitations and Restrictions (the "Certificate of Designations")
to be filed with the Secretary of State of the State of Delaware. BankBoston,
N.A. will be the transfer agent and registrar for the Preferred Stock and will
also act as the "Depositary Agent" for the Depositary Shares.
1. ISSUANCE OF SECURITIES. The Company proposes to, upon the terms and
subject to the conditions set forth herein, issue and sell to the Initial
Purchasers 6,000,000 Depositary Shares (the "Firm Shares"). In addition, the
Company proposes to grant to the Initial Purchasers an option, for the sole
purpose of covering over-allotments in connection with the sale of the Firm
Shares, to purchase up to an additional 900,000 Depositary Shares (the
"Additional Shares," and together with the Firm Shares, the "Company Shares").
The Firm Shares, any Additional Shares and the Preferred Stock are collectively
referred to herein as the "Securities."
For purposes of this Purchase Agreement (this "Agreement"), capitalized
terms used but not otherwise defined herein shall have the meanings given to
such terms in the Certificate of Designations. Upon original issuance thereof,
and until such time as the same is no longer required under the applicable
requirements of the Securities Act (as defined herein), the Securities
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(and all securities issued in exchange therefor, in substitution thereof or upon
conversion thereof) shall bear the following legend:
"THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS
ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION
UNDER XXXXXXX 0 XX XXX XXXXXX XXXXXX SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), AND THE SECURITY EVIDENCED
HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN
THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION
THEREFROM. EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY IS
HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE
EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES
ACT PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THE
SECURITY EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE
COMPANY THAT (A) SUCH SECURITY MAY BE RESOLD, PLEDGED OR
OTHERWISE TRANSFERRED, ONLY (1)(a) TO A PERSON WHO THE SELLER
REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (b) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE
SECURITIES ACT, OR (c) IN ACCORDANCE WITH ANOTHER EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND
BASED UPON AN OPINION OF COUNSEL IF THE COMPANY SO REQUESTS),
(2) TO THE COMPANY OR (3) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH
THE APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER
WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY
PURCHASER FROM IT OF THE SECURITY EVIDENCED HEREBY OF THE
RESALE RESTRICTIONS SET FORTH IN (A) ABOVE."
2. OFFERING. The Company Shares will be offered and sold to the Initial
Purchasers pursuant to an exemption from the registration requirements under the
Securities Act of 1933, as amended (the "Securities Act"). The Company has
prepared a preliminary offering memorandum, dated March 26, 1998 (the
"Preliminary Offering Memorandum"), and a final offering memorandum, dated April
6, 1998 (the "Offering Memorandum"), relating to the Company and the Securities.
The Shares have not been registered under the Securities Act, and are
being sold in reliance on exemptions from or in transactions not subject to the
registration requirements of the
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Securities Act, including sales (i) made in the United States to "qualified
institutional buyers" as defined in, and in reliance on, Rule 144A under the
Securities Act ("Rule 144A"), or (ii) made in the United States to a limited
number of persons who have represented to the Company that they are
institutional "accredited investors" referred to in Rule 501(a)(1), (2), (3) or
(7) under the Securities Act.
The Initial Purchasers have advised the Company that the Initial
Purchasers will make offers of sale (the "Exempt Resales") of the Company
Shares, on the terms set forth in the Offering Memorandum, as amended or
supplemented, solely to persons whom any of the Initial Purchasers reasonably
believe to be "qualified institutional buyers," as defined in Rule 144A under
the Securities Act ("QIBs"), and to a limited number of persons who have
represented to the Company that they are institutional "accredited investors"
referred to in Rule 501(a)(1), (2), (3) or (7) under the Securities Act (each,
an "Accredited Investor"). The QIBs and the Accredited Investors are referred to
herein as the "Eligible Purchasers." The Initial Purchasers will offer the
Securities to such Eligible Purchasers initially at the price per share set
forth in the Offering Memorandum. Such price may be changed at any time without
notice.
Holders (including subsequent transferees) of the Securities will have
the registration rights set forth in a Registration Rights Agreement relating
thereto (the "Registration Rights Agreement"), to be dated the Closing Date (as
defined below), for so long as such Securities constitute "Transfer Restricted
Securities" (as defined in the Registration Rights Agreement). Pursuant to the
Registration Rights Agreement, the Company will agree to file with the
Securities and Exchange Commission (the "Commission"), under the circumstances
set forth therein, a shelf registration statement pursuant to Rule 415 under the
Securities Act (the "Shelf Registration Statement") relating to the resale by
certain holders of the Securities, and to the sale by certain holders of Common
Stock of the Company received in connection with conversion of the Preferred
Stock or received in payment of dividends on the Preferred Stock, and to use its
best efforts to cause the Shelf Registration Statement to be declared effective.
This Agreement, the Certificate of Designations, the Securities, the
Registration Rights Agreement and the Deposit Agreement (as defined in the
Registration Rights Agreement) are hereinafter sometimes referred to
collectively as the "Operative Documents."
3. PURCHASE, SALE AND DELIVERY. (a) On the basis of the
representations, warranties, covenants and agreements herein contained, but
subject to the terms and conditions herein set forth, the Company agrees to sell
to the Initial Purchasers, and the Initial Purchasers, severally and not
jointly, agree to purchase from the Company, the number of Firm Shares set forth
opposite their respective names in Schedule I hereto. The purchase price for the
Firm Shares shall be as indicated in the Offering Memorandum.
(b) In addition, on the basis of the representations,
warranties, covenants and agreements herein contained, but subject to the terms
and conditions herein set forth, the Company hereby grants to the Initial
Purchasers the option to purchase, severally and not jointly, up to an aggregate
of 900,000 Additional Shares, for the sole purpose of covering over-allotments
in the sale of Firm Shares by the Initial Purchasers, at the same purchase price
to be paid by the Initial Purchasers to the Company for the Firm Shares as set
forth in Section 3(a).
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This option may be exercised at any time, in whole or in part, on or before the
30th day following the date of the Offering Memorandum, by written notice by
Bear, Xxxxxxx & Co., Inc. ("Bear Xxxxxxx"), on behalf of the Initial Purchasers,
to the Company. Such notice shall set forth the aggregate number of Additional
Shares to be purchased pursuant to the option and the date and time when the
Additional Shares are to be delivered (such date and time being herein sometimes
referred to as the "Additional Closing Date"); provided that the Additional
Closing Date shall not be earlier than (x) the Closing Date or (y) the second
full business day after the date on which the option shall have been exercised,
nor later than the eighth full business day after the date on which the option
shall have been exercised (unless such date and time are postponed in accordance
with Section 10 hereof). Upon any exercise of the option, the Initial
Purchasers, severally and not jointly, agree to purchase from the Company, the
number of Additional Shares that bears the same proportion to the aggregate
number of Firm Shares set forth opposite the name of such Initial Purchaser in
Schedule I hereto (or such number increased as set forth in Section 10 hereof)
bears to the aggregate number of Firm Shares, subject to such adjustments to
eliminate fractional Depositary Shares as Bear Xxxxxxx, on behalf of the Initial
Purchasers, in its sole discretion may make.
(c) Payment of the purchase price for, and delivery of, the
Firm Shares will be made at the offices of Xxxxxxx & Xxxxxx, New York, New York,
at 9:30 a.m. (New York time) on April 13, 1998, unless postponed in accordance
with Section 10 hereof, or such other time and date as may be mutually agreed in
writing between the Initial Purchasers and the Company (the time and date of
such payment and delivery being herein called the "Closing Date").
(d) Payment of the purchase price for, and delivery of, any
Additional Shares to be purchased by the Initial Purchasers will be made at the
offices of Xxxxxxx & Xxxxxx, New York, New York, at such time and on the
Additional Closing Date.
(e) The Firm Shares and any Additional Shares to be purchased
hereunder shall initially be issued in the form of one or more global
certificates (the "Global Securities"), registered in the name of Cede & Co., as
the nominee of The Depository Trust Company ("DTC"), having a liquidation
preference corresponding to the aggregate liquidation preference of the Firm
Shares and the Additional Shares, as the case may be. The Global Securities
shall be delivered by the Company to the Initial Purchasers (or as the Initial
Purchasers direct), in each case with the transfer taxes payable upon initial
issuance thereof, if any, duly paid by the Company, against payment of the
purchase price by wire transfer of immediately available funds to the order of
the Company. The Global Securities shall be made available to the Initial
Purchasers for inspection no later than 9:30 a.m. (New York time) on the
business day immediately preceding the Closing Date.
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to, and agrees with, each of the Initial Purchasers
that:
(a) The Offering Memorandum, as of the date hereof and as of
the Closing Date and as of any Additional Closing Date is and will be accurate
in all material respects, does not and will not contain an untrue statement of a
material fact and does not and will not omit to
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state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading. The Preliminary Offering Memorandum, as of the date
thereof, was accurate in all material respects, did not contain an untrue
statement of a material fact and did not omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein in light of the circumstances under which they were made not misleading.
No representation and warranty is made in this Section 4(a), however, with
respect to any information contained in or omitted from the Preliminary Offering
Memorandum or the Offering Memorandum or any amendment thereof or supplement
thereto in reliance upon and in conformity with information furnished in writing
to the Company by the Initial Purchasers expressly for use in connection with
the preparation thereof.
(b) When the Company Shares are issued and delivered pursuant
to this Agreement, neither the Preferred Stock nor the Company Shares will be of
the same class (within the meaning of Rule 144A under the Securities Act) as
securities of the Company that are listed on a national securities exchange
registered under Section 6 of the Exchange Act, or that are quoted in a United
States automated inter-dealer quotation system.
(c) The Company and each of its subsidiaries (i) has been duly
organized and is validly existing as a corporation in good standing under the
laws of its respective jurisdiction of incorporation, (ii) has all requisite
corporate power and authority to carry on its business as it is currently being
conducted and as described in the Offering Memorandum and to own, lease and
operate its properties, and (iii) is duly qualified and in good standing as a
foreign corporation authorized to do business in each jurisdiction in which the
nature of its business or its ownership or leasing of property requires such
qualification EXCEPT, with respect to this clause (iii), where the failure to be
so qualified or in good standing does not and could not reasonably be expected
to (x) individually or in the aggregate, result in a material adverse effect on
the properties, business, results of operations, condition (financial or
otherwise), affairs or prospects of the Company and its subsidiaries, taken as a
whole, (y) interfere with or adversely affect the issuance or marketability of
the Securities pursuant hereto or (z) in any manner draw into question the
validity of this Agreement or any other Operative Documents (any of the events
set forth in clauses (x), (y) or (z), a "Material Adverse Effect").
(d) All of the outstanding shares of capital stock of the
Company have been duly authorized, validly issued, and are fully paid and
nonassessable and were not issued in violation of any preemptive or similar
rights. At December 31, 1997, after giving effect to the issuance and sale of
the Preferred Stock (and the related Depositary Shares) pursuant hereto, the
Company had an authorized and outstanding consolidated capitalization as set
forth in the Offering Memorandum under the caption "Capitalization."
(e) Except as set forth in the Offering Memorandum, there are
not, as of the date hereof and will not be as a result of the Offering, any
outstanding subscriptions, rights, warrants, calls, commitments of sale or
options to acquire, or instruments convertible into or exchangeable for, any
capital stock or other equity interest of the Company or any of its
subsidiaries.
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(f) The Company has all requisite corporate power and
authority to execute, deliver and perform its obligations under this Agreement
and the other Operative Documents, and to consummate the transactions
contemplated hereby and thereby, including, without limitation, the corporate
power and authority to issue, sell and deliver the Securities as provided herein
and therein.
(g) This Agreement has been duly and validly authorized,
executed and delivered by the Company and is the legal, valid and binding
agreement of the Company, enforceable against it in accordance with its terms,
EXCEPT insofar as certain provisions may be limited by applicable law or
equitable principles and subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization or similar laws affecting the rights of
creditors generally and subject to general principles of equity.
(h) The shares of Preferred Stock (and the related Depositary
Shares) have been duly and validly authorized for issuance and sale to the
Initial Purchasers by the Company pursuant to this Agreement and, when issued,
delivered and paid for in accordance with the terms of this Agreement, will be
validly issued, fully paid and non-assessable and entitled to the rights,
privileges and preferences set forth in the Certificate of Designations, and the
issuance of such shares of Preferred Stock (and the related Depositary Shares)
will not be subject to any preemptive or similar rights. The Preferred Stock
(and the related Depositary Shares) will conform in all material respects with
the description thereof in the Offering Memorandum.
(i) The Certificate of Designations has been duly authorized
by all necessary corporate action (including any stockholder action) and, on the
Closing Date will have been duly executed by the Company and filed with the
Secretary of State of the State of Delaware and will conform in all material
respects to the description thereof in the Offering Memorandum.
(j) Each of the Registration Rights Agreement and the Deposit
Agreement has been duly and validly authorized by the Company and, when duly
executed and delivered by the Company, will be the legal, valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization or similar laws affecting the rights of creditors generally and
subject to general principles of equity and limitations on the validity or
enforceability of certain provisions set forth therein. The Offering Memorandum
contains a fair summary of the material terms of the Registration Rights
Agreement and the Deposit Agreement.
(k) None of the Company or any of its subsidiaries is and,
after giving effect to the Offering, will not be (i) in violation of its charter
or bylaws, (ii) in default in the performance of any bond, debenture, note,
indenture, mortgage, deed of trust or other agreement or instrument to which it
is a party or by which it is bound or to which any of its properties is subject,
or (iii) in violation of any local, state or federal law, statute, ordinance,
rule, regulation, requirement, judgment or court decree (including, without
limitation, the orders of the Federal Trade Commission dated April 18, 1995 and
January 21, 1998, respectively, the Cease and Desist Order of the Commission
dated March 25, 1998, the rules and regulations of the Federal
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Communications Commission (the "FCC"), and environmental laws, statutes,
ordinances, rules, regulations, judgments or court decrees) applicable to the
Company or any of its subsidiaries or any of their assets or properties (whether
owned or leased) OTHER THAN, in the case of clauses (ii) and (iii), any default
or violation (A) that could not reasonably be expected to have a Material
Adverse Effect or (B) which was disclosed in the Offering Memorandum. To the
best knowledge of the Company, there exists no condition that, with notice, the
passage of time or otherwise, would constitute a default under any such document
or instrument that could reasonably be expected to result in a Material Adverse
Effect, except as disclosed in the Offering Memorandum.
(l) None of (i) the execution, delivery or performance by the
Company of this Agreement and the other Operative Documents, (ii) the issuance
and sale of the Securities, (iii) the performance by the Company of its
obligations under this Agreement and the other Operative Documents and (iv) the
consummation of the transactions contemplated by this Agreement and the other
Operative Documents violate, conflict with or constitute a breach of any of the
terms or provisions of, or a default under (or an event that with notice or the
lapse of time, or both, would constitute a default), or require consent under,
or result in any imposition of a lien or encumbrance on any properties of the
Company or any of its subsidiaries, or an acceleration of any indebtedness of
the Company or any of its subsidiaries pursuant to, (A) the charter or bylaws of
the Company or any of its subsidiaries, (B) any bond, debenture, note,
indenture, mortgage, deed of trust or other agreement or instrument to which the
Company or any of its subsidiaries is a party or by which any of them or their
property is or may be bound, (C) any statute, rule or regulation applicable to
the Company or any of its subsidiaries or any of their respective assets or
properties or (D) any judgment, order or decree of any court or governmental
agency or authority having jurisdiction over the Company or its subsidiaries or
any of their assets or properties, EXCEPT in the case of clauses (B), (C) and
(D) for such violations, conflicts, breaches, defaults, consents, impositions of
liens or accelerations that (1) could not singly, or in the aggregate,
reasonably be expected to have a Material Adverse Effect or (2) were disclosed
in the Offering Memorandum. Other than as described in the Offering Memorandum,
no consent, approval, authorization or order of, or filing, registration,
qualification, license or permit of or with, (i) any court or governmental
agency body or administrative agency (including, without limitation, the FCC) or
(ii) any other person is required for (A) the execution, delivery and
performance by the Company of this Agreement and the other Operative Documents,
or (B) the issuance and sale of the Securities and the transactions contemplated
hereby and thereby, EXCEPT (x) such as have been obtained and made (or, in the
case of the Registration Rights Agreement, will be obtained and made) under the
Securities Act and state securities or Blue Sky laws and regulations or such as
may be required by the NASD or (y) where the failure to obtain any such consent,
approval, authorization or order of, or filing, registration, qualification,
license or permit could not reasonably be expected to result in a Material
Adverse Effect.
(m) There is (i) no action, suit or proceeding before or by
any court, arbitrator or governmental agency, body or official, domestic or
foreign, now pending or, to the best knowledge of the Company or any of its
subsidiaries, threatened or contemplated to which the Company or any of its
subsidiaries is or may be a party or to which the business or property of the
Company or any of its subsidiaries is subject, (ii) no statute, rule, regulation
or order that has been enacted, adopted or issued by any governmental agency or
that has been proposed by any
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governmental body or (iii) no injunction, restraining order or order of any
nature by a federal or state court or foreign court of competent jurisdiction to
which the Company or any of its subsidiaries is or may be subject or to which
the business, assets, or property of the Company or any of its subsidiaries are
or may be subject that, either individually or in the aggregate (x) is required
to be disclosed in the Preliminary Offering Memorandum and the Offering
Memorandum and that is not so disclosed, or (y) could reasonably be expected to,
either individually or in the aggregate, result in a Material Adverse Effect.
(n) No action has been taken and no statute, rule, regulation
or order has been enacted, adopted or issued by any governmental agency that
prevents the issuance of the Preferred Stock (and the related Depositary Shares)
or prevents or suspends the use of the Offering Memorandum; no injunction,
restraining order or order of any nature by a federal or state court of
competent jurisdiction has been issued that prevents the issuance of the
Preferred Stock (and the related Depositary Shares) or prevents or suspends the
sale of the Preferred Stock (and the related Depositary Shares) in any
jurisdiction referred to in Section 5(c) hereof; and every request of any
securities authority or agency of any jurisdiction for additional information
has been complied with in all material respects.
(o) Except as set forth in the Offering Memorandum, there is
(i) no significant unfair labor practice complaint pending against the Company
or any of its subsidiaries nor, to the best knowledge of the Company, threatened
against any of them, before the National Labor Relations Board, any state or
local labor relations board or any foreign labor relations board, and no
significant grievance or significant arbitration proceeding arising out of or
under any collective bargaining agreement is so pending against the Company or
any of its subsidiaries or, to the best knowledge of the Company, threatened
against any of them, (ii) no significant strike, labor dispute, slowdown or
stoppage pending against the Company or any of its subsidiaries and (iii) to the
best knowledge of the Company, no union representation question existing with
respect to the employees of the Company or any of its subsidiaries that, either
individually or in the aggregate, could reasonably be expected to result in a
Material Adverse Effect. To the best knowledge of the Company, no collective
bargaining organizing activities are taking place with respect to the Company
and its subsidiaries that could reasonably be expected to result in a Material
Adverse Effect. None of the Company or any of its subsidiaries has violated (A)
any federal, state or local law or foreign law relating to discrimination in
hiring, promotion or pay of employees, (B) any applicable wage or hour laws or
(C) any provision of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), or the rules and regulations thereunder, which, either
individually or in the aggregate, could reasonably be expected to result in a
Material Adverse Effect.
(p) None of the Company or any of its subsidiaries has
violated any environmental, safety or similar law or regulation applicable to it
or its business or property relating to the protection of human health and
safety, the environment or hazardous or toxic substances or wastes, pollutants
or contaminants ("Environmental Laws"), lacks any permit, license or other
approval required of it under applicable Environmental Laws or is violating any
term or condition of such permit, license or approval which could reasonably be
expected to, either individually or in the aggregate, have a Material Adverse
Effect.
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(q) Each of the Company and its subsidiaries has (i) good and
marketable title to all of the properties and assets described in the Offering
Memorandum as owned by it, free and clear of all liens, charges, encumbrances
and restrictions, (ii) peaceful and undisturbed possession under all material
leases to which any of them is a party as lessee, (iii) all licenses,
certificates, permits, authorizations, approvals, franchises and other rights
from, and has made all declarations and filings with, all federal, state and
local authorities (including, without limitation, the FCC), all self-regulatory
authorities and all courts and other tribunals (each an "Authorization")
necessary to engage in the business conducted by any of them in the manner
described in the Offering Memorandum and (iv) no reason to believe that any
governmental body or agency is considering limiting, suspending or revoking any
such Authorization, EXCEPT as described in the Offering Memorandum or as could
not reasonably be expected to result in a Material Adverse Effect. Except where
the failure to be in full force and effect would not have a Material Adverse
Effect, all such Authorizations are valid and in full force and effect and each
of the Company and subsidiaries is in compliance in all material respects with
the terms and conditions of all such Authorizations and with the rules and
regulations of the regulatory authorities having jurisdiction with respect
thereto. Except as could not reasonably be expected to result in a Material
Adverse Effect, all material leases to which the Company and its subsidiaries is
a party are valid and binding and no default by the Company or any of its
subsidiaries has occurred and is continuing thereunder and, to the best
knowledge of the Company and its subsidiaries, no material defaults by the
landlord are existing under such lease.
(r) Each of the Company and its subsidiaries owns, possesses
or has the right to employ all patents, patent rights, licenses (including all
FCC, state, local or other jurisdictional regulatory licenses), inventions,
copyrights, know-how (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, software, systems or
procedures), trademarks, service marks and trade names, inventions, computer
programs, technical data and information (collectively, the "Intellectual
Property") presently used by it in connection with the businesses now operated
by it or which are proposed to be operated by it. The use of the Intellectual
Property in connection with the business and operations of the Company and its
subsidiaries does not infringe on or otherwise contravene the rights of any
person, nor has the Company or any of its subsidiaries received any notice of
any infringement of or conflict with asserted rights of others with respect to
any of the foregoing, EXCEPT as could not reasonably be expected to have a
Material Adverse Effect. Except as could not reasonably be expected to have a
Material Adverse Effect, all of the software included in the Intellectual
Property (the "SOFTWARE") (i) will continue to operate and produce data after
December 31, 1999, accurately and without delay, interruption or error relating
to the fact that the time at which and the date on which the Software is
operating is after December 31, 1999 or that the year 2000 is a leap year; and
(ii) will not cause any interruption in normal business operations of the
Company and its subsidiaries whether before, on or after December 31, 1999.
(s) None of the Company or any of its subsidiaries, or to the
best knowledge of the Company, any of their respective officers, directors,
partners, employees, agents or affiliates or any other person acting on behalf
of the Company or any of its subsidiaries has, directly or indirectly, given or
agreed to give any money, gift or similar benefit (other than legal
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price concessions to customers or agents of a customer or supplier, official or
employee of any governmental agency (domestic or foreign), instrumentality of
any government (domestic or foreign) or any political party or candidate for
office (domestic or foreign) or other person who was, is or may be in a position
to help or hinder the business of the Company or any of its subsidiaries (or
assist the Company or any of its subsidiaries in connection with any action or
proposed transaction) which (i) might subject the Company or any of its
subsidiaries, or any other individual or entity, to any damage or penalty in any
civil, criminal or governmental litigation or proceeding (domestic or foreign),
(ii) if not given in the past, might have had a Material Adverse Effect on the
assets, business or operations of the Company or any of its subsidiaries, or
(iii) if not continued in the future, might have a Material Adverse Effect.
(t) All material tax returns required to be filed by the
Company and each of its subsidiaries in all jurisdictions have been so filed.
All taxes, including withholding taxes, penalties and interest, assessments,
fees and other charges due or claimed to be due from such entities or that are
due and payable have been paid, other than those being contested in good faith
and for which adequate reserves have been provided or those currently payable
without penalty or interest. To the knowledge of the Company, there are no
material proposed additional tax assessments against the Company, the assets or
property of the Company or any of its subsidiaries.
(u) None of the Company or any of its subsidiaries is (i) an
"investment company" or a company "controlled" by an "investment company" within
the meaning of the Investment Company Act of 1940, as amended, or (ii) a
"holding company" or an "affiliate" of a "holding company" within the meaning of
the Public Utility Holding Company Act of 1935, as amended.
(v) Except as disclosed in the Offering Memorandum, there are
no holders of securities of the Company or its subsidiaries who, by reason of
the execution by the Company of this Agreement or any other Operative Documents
to which it is a party or the consummation by the Company of the transactions
contemplated hereby and thereby, have the right to request or demand that the
Company or any of its subsidiaries register under the Securities Act or
analogous foreign laws and regulations securities held by them.
(w) Each of the Company and its subsidiaries maintains a
system of internal accounting controls sufficient to provide reasonable
assurance that: (i) transactions are executed in accordance with management's
general or specific authorizations; (ii) transactions are recorded as necessary
to permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain accountability for assets; (iii)
access to assets is permitted only in accordance with management's general or
specific authorization and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect thereto.
(x) Each of the Company and its subsidiaries maintains
insurance covering its properties, operations, personnel and businesses. Such
insurance insures against such losses and risks as are adequate in accordance
with customary industry practice to protect the Company and
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its subsidiaries and their respective businesses. None of the Company or any of
its subsidiaries has received notice from any insurer or agent of such insurer
that substantial capital improvements or other expenditures will have to be made
in order to continue such insurance. All such insurance is outstanding and duly
in force on the date hereof, subject only to changes made in the ordinary course
of business, consistent with past practice, which do not, singly or in the
aggregate, materially alter the coverage thereunder or the risks covered
thereby.
(y) None of the Company or any of its subsidiaries has (i)
taken, directly or indirectly, any action designed to, or that might reasonably
be expected to, cause or result in stabilization or manipulation of the price of
any security of the Company to facilitate the sale or resale of the Securities
or (ii) since the date of the Preliminary Offering Memorandum (A) sold, bid for,
purchased or paid any person (other than the Initial Purchasers) any
compensation for soliciting purchases of the Preferred Stock (and the related
Depositary Shares) or (B) paid or agreed to pay to any person any compensation
for soliciting another to purchase any other securities of the Company.
(z) No registration under the Securities Act of the Preferred
Stock (and the related Depositary Shares) is required for the sale of the
Preferred Stock (and the related Depositary Shares) to the Initial Purchasers as
contemplated hereby or for the Exempt Resales assuming (i) that the purchasers
who buy the Preferred Stock (and the related Depositary Shares) in the Exempt
Resales are either QIBs or Accredited Investors and (ii) the accuracy of the
Initial Purchasers' representations regarding the absence of general
solicitation in connection with the sale of Preferred Stock (and the related
Depositary Shares) to the Initial Purchasers and the Exempt Resales contained
herein. No form of general solicitation or general advertising was used by the
Company or any of its representatives (other than the Initial Purchasers, as to
which the Company makes no representation or warranty) in connection with the
offer and sale of any of the Preferred Stock (and the related Depositary Shares)
or in connection with Exempt Resales, including, but not limited to, articles,
notices or other communications published in any newspaper, magazine, or similar
medium or broadcast over television or radio, or any seminar or meeting whose
attendees have been invited by any general solicitation or general advertising.
No securities of the same class as the Preferred Stock (and the related
Depositary Shares) have been issued and sold by the Company within the six-month
period immediately prior to the date hereof.
(aa) Each of the Preliminary Offering Memorandum and the
Offering Memorandum, as of its date, and each amendment or supplement thereto,
as of its date, contains the information specified in, and meets the
requirements of, Rule 144A(d)(4) under the Securities Act.
(bb) Subsequent to the respective dates as of which
information is given in the Offering Memorandum and up to the Closing Date,
except as set forth in the Offering Memorandum, (i) none of the Company or any
of its subsidiaries has incurred any liabilities or obligations, direct or
contingent, which are material, individually or in the aggregate, to the Company
and its subsidiaries taken as a whole, nor entered into any material transaction
not in the ordinary course of business, (ii)
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there has not been, singly or in the aggregate, any change or development, which
could reasonably be expected to result in a Material Adverse Effect and (ii)
there has been no dividend or distribution of any kind declared, paid or made by
the Company on any class of its capital stock.
(cc) None of the Company or any of its subsidiaries or any
agent thereof acting on behalf of them has taken, and none of them will take,
any action that might cause this Agreement or the issuance or sale of the
Securities to violate Regulation G (12 C.F.R. Part 207), Regulation T (12 C.F.R.
Part 220), Regulation U (12 C.F.R. Part 221) or Regulation X (12 C.F.R. Part
224) of the Board of Governors of the Federal Reserve System or analogous
foreign laws and regulations.
(dd) To the best knowledge of the Company, Ernst & Young,
L.L.P., the accountants who have audited and have reported on the consolidated
financial statements for each of the three fiscal years in the period ended June
30, 1997 (the "Audited Financial Statements"), included as part of the Offering
Memorandum, are independent public accountants. The Audited Financial Statements
and the unaudited financial statements for the six-month periods ended December
31, 1997 and 1996 included in the Offering Memorandum comply as to form in all
material respects with the applicable accounting requirements for registration
statements under the Securities Act and the related rules and regulations
thereunder, and present fairly in all material respects the financial position
and results of operations of the Company and its subsidiaries at the respective
dates and for the respective periods indicated. Such financial statements have
been prepared in accordance with generally accepted accounting principles on a
consistent basis throughout the periods presented. The other financial
information and data included in the Offering Memorandum are accurately
presented in all material respects and prepared on a basis consistent with the
financial statements included in the Offering Memorandum and the books and
records of the Company and its subsidiaries, as applicable.
(ee) Except pursuant to this Agreement, there are no
contracts, agreements or understandings between the Company and any other person
that would give rise to a valid claim against the Company or any of the Initial
Purchasers for a brokerage commission, finder's fee or like payment in
connection with the issuance, purchase and sale of the Securities.
(ff) The inventories of raw materials, work-in-process and
finished goods (collectively the "Inventory") shown on the Financial Statements
consist of items of a quality and quantity useable and saleable in the ordinary
course of business by the Company, except for obsolete and slow-moving items and
items below standard quality, all of which have been written down on the books
of the Company to net realizable value, or have been provided for by adequate
reserves. All items included in the Inventory are the property of the Company
and in the Company's possession, except for Inventory sold in the ordinary
course of business since December 31, 1997, and inventory in the possession of
suppliers or customers in the ordinary course of business.
(gg) All of the accounts receivable of the Company as set
forth in the Financial Statements (collectively, the "Accounts"), and all papers
and documents relating thereto, are genuine and in all respects what they
purport to be, and each such Account is valid and subsisting and arises out of a
bona fide sale or lease of goods sold or leased and delivered to, or out of and
for services
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theretofore actually rendered by the Company to, the account debtor named in
such Account EXCEPT as could not reasonably be expected to result in a Material
Adverse Effect.
(hh) None of the Company, any of its affiliates (as defined in
Rule 501(b) under the Securities Act) nor any person acting on behalf of any
such person (excluding the Initial Purchasers and their respective affiliates,
as to which no representation is made) has engaged, or will engage, in any
direct selling efforts (as such term is defined in Regulation S) in the United
States with respect to the Securities.
(ii) Each certificate signed by any officer of the Company and
delivered to the Initial Purchasers or Counsel for the Initial Purchasers (as
defined below) shall be deemed to be a representation and warranty by the
Company to the Initial Purchasers as to the matters covered thereby.
The Company acknowledges that each of the Initial Purchasers and, for
purposes of the opinions to be delivered to the Initial Purchasers pursuant to
Section 7 hereof, counsel to the Company and Counsel for the Initial Purchasers,
will rely upon the accuracy and truth of the foregoing representations and
hereby consents to such reliance.
5. COVENANTS OF THE COMPANY. The Company covenants and agrees with each
of the Initial Purchasers that:
(a) If at any time prior to the Closing Date or any Additional
Closing Date any event shall have occurred as a result of which the Preliminary
Offering Memorandum or the Offering Memorandum, as then amended or supplemented,
would in the judgment of the Initial Purchasers or the Company include an untrue
statement of a material fact or omit to state any material fact required to be
stated there-in or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, the Company will
notify the Initial Purchasers promptly and prepare and deliver to the
Representative on behalf of the Initial Purchasers an amendment or supplement
(in form and substance satisfactory to the Initial Purchasers) which will
correct such statement or omission.
(b) The Company will promptly deliver to the Initial
Purchasers and those persons identified by the Initial Purchasers to the
Company, without charge, as many copies of the Preliminary Offering Memorandum,
the Offering Memorandum and all amendments of and supplements thereto as the
Initial Purchasers may reasonably request. The Company consents to the use of
the Preliminary Offering Memorandum and the Offering Memorandum and all
amendments of and supplements thereto by the Initial Purchasers in connection
with Exempt Resales.
(c) The Company will endeavor in good faith, in cooperation
with the Initial Purchasers, to qualify the Company Shares for offering and sale
under the securities and legal investment laws relating to the offering or sale
of the Company Shares of such jurisdictions as the Initial Purchasers may
designate and to maintain such qualification in effect for so long as required
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for the Exempt Resales; except that in no event shall the Company be obligated
in connection therewith to qualify as a foreign corporation or to execute a
general consent to service of process.
(d) The Company will apply the proceeds from the sale of the
Company Shares as set forth under "Use of Proceeds" in the Offering Memorandum.
(e) The Company will use its best efforts to cause the Company
Shares to be designated Private Offerings, Resales and Trading through Automated
Linkage ("PORTAL") market securities in accordance with the rules and
regulations of the National Association of Securities Dealers, Inc. relating to
trading on the PORTAL market.
(f) The Company shall (whether or not it shall then be
required to do so) timely file with the Commission such information, documents
and reports that a corporation subject to Section 13 or 15(d) of the Exchange
Act is required to file. In addition, the Company shall take such other measures
and file such other information, documents and reports, as shall hereafter be
required by the Commission as a condition to the availability of Rule 144 under
the Securities Act (or any similar exemptive provision hereafter in effect) and
the use of registration statements on Forms S-2 and S-3. The Company also
covenants to use its best efforts, to the extent that it is reasonably within
its power to do so, to continue to qualify for the use of Forms S-2 and S-3. The
Company acknowledges and agrees that the purposes of the requirements contained
in this paragraph (f) are (i) to enable any holder of the Securities to comply
with the current public information requirement contained in paragraph (c) of
Rule 144 under the Securities Act should such holder ever wish to dispose of any
of the Securities without registration under the Securities Act in reliance upon
Rule 144 (or any other similar exemptive provision) and (ii) to qualify the
Company for the use of registration statements on Forms S-2 and S-3.
(g) During the period of 90 days from the date of the Offering
Memorandum, the Company will not, without prior written consent of Bear Xxxxxxx,
issue, sell, offer or agree to sell, grant any option for the sale of, or
otherwise dispose of, directly or indirectly, any Common Stock (or any
securities convertible into, exercisable for or exchangeable for Common Stock),
other than the Company's sale of the Company Shares hereunder and the Company's
issuance of Common Stock upon the exercise of presently outstanding stock
options and conversion of the Preferred Stock.
(h) None of the Company, its subsidiaries or affiliates or any
person acting on their behalf (other than the Initial Purchasers and their
respective affiliates, as to which no representation is made) will solicit any
offer to buy or offer or sell the Company Shares by means of any form of general
solicitation or general advertising (as those terms are used in Regulation D
under the Securities Act) or in any manner involving a public offering within
the meaning of Section 4(2) of the Securities Act.
(j) During the period from the Closing Date until three years
after the Closing Date, the Company and its subsidiaries will not, and will not
permit any of their "affiliates" (as defined in Rule 144 under the Securities
Act) to, resell any of the Company Shares that have been
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reacquired by them, except for Company Shares purchased by the Company and its
subsidiaries or any of their affiliates and resold in a transaction registered
under the Securities Act.
(k) None of the Company, any of its affiliates (as defined in
Rule 501(b) under the Securities Act) nor any person acting on behalf of any
such person (excluding the Initial Purchasers and their respective affiliates,
as to which no representation is made) has engaged in any direct selling efforts
(as such term is defined in Regulation S) or will offer, sell or solicit offers
to buy or otherwise negotiate in respect of any security (as defined in the
Securities Act) which will be integrated with the sale of the Company Shares in
a manner that would require the registration of the sale of the Company Shares
under the Securities Act, or take any other action that would result in the
Exempt Resales not being exempt from registration under the Securities Act.
6. PAYMENT OF EXPENSES. Whether or not the transactions contemplated in
this Agreement are consummated or this Agreement is terminated, the Company
hereby agrees to pay all costs and expenses incident to the performance of the
obligations of the Company hereunder, including those in connection with (i)
preparing, printing, duplicating, filing and distributing the Preliminary
Offering Memorandum and the Offering Memorandum and any amendments or
supplements thereto (including, without limitation, fees and expenses of the
Company's accountants and counsel), the underwriting documents (including this
Agreement and the other Operative Documents and any related agreement among
underwriters, intersyndicate agreement or selling agreement) and all other
documents related to the offering of the Securities (including those supplied to
the Initial Purchasers in quantities provided for herein), (ii) the issuance,
transfer and delivery of the Securities to the Initial Purchasers, including any
transfer or other taxes payable thereon, (iii) the qualification of the
Securities under state or foreign legal investment, securities or Blue Sky laws,
including the costs of printing and mailing a preliminary and final "Blue Sky
Survey" and the fees of Counsel for the Initial Purchasers and such counsel's
disbursements in relation thereto, (iv) the cost and charges of the Depositary
Agent and any transfer agent or registrar, (v) the preparation of certificates
for the Securities (including, without limitation, printing and engraving
thereof), (vi) all expenses and listing fees in connection with the application
for quotation of the Company Shares in PORTAL, (vii) the costs and charges in
connection with the approval of the Securities by DTC for "book entry" transfer,
(viii) rating the Securities by rating agencies (ix) the performance of the
Company under this Agreement and the Operative Documents, and (x) "roadshow"
travel and other expenses incurred in connection with the marketing and sale of
the Securities (other than out-of-pocket expenses incurred by the Initial
Purchasers for travel, meals and lodgings).
7. CONDITIONS OF INITIAL PURCHASERS' OBLIGATIONS. The obligations of
the Initial Purchasers to purchase and pay for the Firm Shares and the
Additional Shares, as provided herein, shall be subject to the accuracy of the
representations and warranties of the Company herein contained, as of the date
hereof and as of the Closing Date (for purposes of this Section 7 "Closing Date"
shall refer to the Closing Date and any Additional Closing Date, if different),
to the absence from any certificates, opinions, written statements or letters
furnished to the Initial Purchasers or to Xxxxxx & Xxxx, L.L.P., Dallas, Texas
("Counsel for the Initial Purchasers")
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pursuant to this Section 6 of any misstatement or omission, to the performance
by the Company of its obligations hereunder, and to the following additional
conditions:
(a) At the Closing Date the Initial Purchasers shall have
received the opinion of Xxxxxxx & Xxxxxx, New York, New York, counsel for the
Company, dated the Closing Date, addressed to the Initial Purchasers and in form
and substance satisfactory to Counsel for the Initial Purchasers, to the effect
that:
(i) Each of the Company and each of its United States
subsidiaries that would constitute a significant subsidiary
within the meaning of Rule 1-02 of Regulation S-X promulgated
by the Commission, or any successor rule ("Significant
Subsidiaries") (A) has been duly organized and is validly
existing as a corporation in good standing under the laws of
its jurisdiction of incorporation; (B) is duly qualified and
in good standing as a foreign corporation in each jurisdiction
in which the character or location of its properties (owned,
leased or licensed) or the nature or conduct of its business
makes such qualification necessary, except for those failures
to be so qualified or in good standing which will not in the
aggregate have a Material Adverse Effect; and (C) to the
knowledge of such counsel, has all requisite corporate power
and authority, and all material consents, approvals,
authorizations, orders, registrations, qualifications,
licenses and permits of and from all public, regulatory or
governmental agencies and bodies, necessary to own, lease,
license and operate its properties and conduct its business as
now being conducted and as described in the Offering
Memorandum, EXCEPT as could not be reasonably expected to have
a Material Adverse Effect.
(ii) The Company has all requisite corporate power
and authority to execute, deliver and perform its obligations
under this Agreement and the Operative Documents, and to
consummate the transactions contemplated hereby and thereby,
including (without limitation) (A) the issuance, sale and
delivery of the Securities hereunder and (B) the filing of the
Shelf Registration Statement under and as defined in the
Registration Rights Agreement.
(iii) The execution, delivery, and performance of
this Agreement and the other Operative Documents and the
consummation of the transactions contemplated hereby and
thereby do not and will not (A) conflict with or result in a
breach of any of the terms and provisions of, or constitute a
default (or an event which with notice or lapse of time, or
both, would constitute a default) under, or result in the
creation or imposition of any lien, charge or encumbrance upon
any property or assets of the Company or any of its
subsidiaries pursuant to, any agreement, instrument,
franchise, license or permit known to such counsel to which
the Company or any of its subsidiaries is a party or by which
any of such corporations or their respective properties or
assets may be bound, (B) violate or conflict with any
provision of the certificate of incorporation or by-laws of
the Company or, to the knowledge of such counsel, any of its
subsidiaries or any judgment, decree, order, statute, rule or
regulation of any court or any public,
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governmental or regulatory agency or body having jurisdiction
over the Company or any of its subsidiaries or any of their
respective properties or assets or (C) to the knowledge of
such counsel, require any consent, approval, authorization,
order, registration, filing, qualification, license or permit
of or with any court or any public, governmental or regulatory
agency or body having jurisdiction over the Company or any of
its subsidiaries or any of their respective properties or
assets, except (in the case of clause (C) above) for any such
consents, approvals, authorizations, orders, registrations,
filings, qualifications, licenses and permits as have been
made or obtained, as may be required under state securities or
Blue Sky laws and regulations, or such as may be required by
the NASD, in connection with the purchase and distribution of
the Securities by the Initial Purchasers (as to which such
counsel need express no opinion) or such as have been obtained
and made (or, in the case of the Registration Rights
Agreement, will be obtained and made) under the Securities
Act, and EXCEPT (in the case of clauses (A), (B) and (C)) as
could not singly, or in the aggregate, reasonably be expected
to result in a Material Adverse Effect.
(iv) This Agreement and each of the other Operative
Documents, and the transactions contemplated herein and
therein, have been duly and validly authorized by the Company.
This Agreement and each of the other Operative Documents has
been duly and validly executed and delivered by the Company
and constitutes the legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with
its terms, EXCEPT insofar as indemnification and contribution
provisions may be limited by applicable law, or equitable
principles or public policy, and subject to (x) the effect of
any applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors' rights
generally and (y) the effect of general principles of equity
(regardless of whether considered in a proceeding in equity or
at law).
(v) To such counsel's knowledge, there is no
litigation or governmental or other action, suit, proceeding
or investigation before any court or before or by any public,
regulatory or governmental agency or body pending or
threatened against, or involving the properties or business
of, the Company or any of its subsidiaries, which is of a
character required to be disclosed in the Offering Memorandum
which has not been fairly and accurately disclosed therein.
(vi) The Company has an authorized capital stock as
set forth in the Offering Memorandum. All of the outstanding
shares of capital stock of the Company have been duly and
validly authorized and issued, are fully paid and
nonassessable and were not issued and are not now in violation
of or subject to any preemptive rights. All of the issued and
outstanding shares of capital stock of each Significant
Subsidiary of the Company have been duly and validly issued,
are fully paid and nonassessable, were not issued and are not
now in violation of any preemptive rights, and, to the
knowledge of such counsel, are owned directly or indirectly by
the Company, free and clear of any lien, claim, encumbrance,
security
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interest, restriction on transfer, shareholders' agreement,
voting trust or other preferential arrangement or defect of
title whatsoever.
(vii) The Securities have been duly and validly
authorized and, when delivered by the Company in accordance
with this Agreement, will be duly and validly issued, fully
paid and nonassessable and will not have been issued in
violation of or subject to any preemptive rights.
(viii) The information in the Offering Memorandum
under the headings "Description of Preferred Stock" and
"Description of Depositary Shares," to the extent that it
constitutes a matter of law, summaries of legal matters,
documents or proceedings, or legal conclusions, has been
reviewed by such counsel and is correct in all material
respects.
(ix) The information in the Offering Memorandum under
the heading "Certain Federal Income Tax Considerations," to
the extent that it constitutes a matter of law, summaries of
legal matters, documents or proceedings, or legal conclusions,
has been reviewed by such counsel and is correct in all
material respects.
(x) The statements in the Offering Memorandum under
the heading "Notices to Investors," insofar as they purport to
summarize matters of United States federal law, is correct in
all material respects.
(xi) It is not necessary in connection with (a) the
offer, sale and delivery of the Securities to the Initial
Purchasers in the manner contemplated by this Agreement and
the Offering Memorandum or (b) the initial resale of the
Securities by the Initial Purchasers in the manner
contemplated in this Agreement and the Offering Memorandum to
register the issuance of the Securities under the Securities
Act, it being understood that no opinion need be expressed as
to any subsequent resale of any Security.
(xii) The shares of Common Stock issuable upon
conversion of the Preferred Stock have been duly authorized by
the Company and, when issued and delivered upon such
conversion in accordance with the terms and provisions of the
Preferred Stock and the Certificate of Designations (assuming
payment for and delivery of the Company Shares in accordance
with this Agreement), will be validly issued, fully paid and
nonassessable. The shares of Common Stock issuable on
conversion of the Preferred Stock at the initial conversion
price set forth in the Certificate of Designations have been
reserved for issuance and no further approval or authority of
the stockholders or the Board of Directors of the Company will
be required for such issuance of Common Stock.
(xiii) To such counsel's knowledge, no holders of
securities of the Company have rights which have not been
satisfied or waived to the registration of
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shares of capital stock or other securities of the Company
because of the filing of the Shelf Registration Statement (as
such terms are defined in the Offering Memorandum) by the
Company or the respective offerings contemplated thereby.
(xiv) Except as disclosed in the Offering Memorandum
and this Agreement, to such counsel's knowledge, except for
stock options outstanding pursuant to the Company's existing
stock incentive plans, and stock options and other awards that
may be granted under such plans, there are no outstanding
options, warrants or other rights calling for the issuance of,
and no commitments, plans or arrangements to issue, any shares
of capital stock of the Company or any security convertible
into or exchangeable for capital stock of the Company.
(xv) In addition, such opinion shall also contain a
statement that such counsel has participated in conferences
with officers and representatives of the Company,
representatives of the independent public accountants for the
Company and the Initial Purchasers at which the contents and
the Offering Memorandum and related matters were discussed
and, on the basis of the foregoing, nothing has come to the
attention of such counsel which would lead such counsel to
believe that the Offering Memorandum on the date hereof or at
any time through the Closing Date contained an untrue
statement of a material fact or omitted to state any material
fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading
(it being understood that such counsel has not independently
verified the accuracy, completeness or fairness of such
statements and that such counsel need express no belief or
opinion with respect to the Financial Statements and schedules
and other financial data included therein).
In rendering such opinion, such counsel may rely (x) as to
matters involving the application of laws other than the laws of the
United States and jurisdictions in which they are admitted, 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 Counsel for the Initial Purchasers) of other
counsel reasonably acceptable to Counsel for the Initial Purchasers
familiar with the applicable laws, (y) to the extent they deem proper,
as to factual matters upon, and as to materiality of any matter to a
large extent upon, facts and information provided to such counsel by
officers and other representatives of the Company and (z) certificates
or other written statements of officers of departments of various
jurisdictions having custody of documents respecting the corporate
existence or good standing of the Company and its subsidiaries,
provided that copies of any such statements or certificates shall be
delivered to Counsel for the Initial Purchasers. 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, in their opinion,
the Initial Purchasers and they are justified in relying thereon.
(b) All proceedings taken in connection with the sale of the
Securities as herein contemplated shall be satisfactory in form and substance to
the Initial Purchasers and to Counsel
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for the Initial Purchasers, and the Initial Purchasers shall have received from
said Counsel for the Initial Purchasers a favorable opinion, dated as of the
Closing Date, with respect to the issuance and sale of the Securities, the
Offering Memorandum and such other related matters as the Initial Purchasers may
reasonably require, and the Company shall have furnished to Counsel for the
Initial Purchasers such documents as they may request for the purpose of
enabling them to pass upon such matters.
(c) At the Closing Date the Initial Purchasers shall have
received a certificate of the Chief Executive Officer and the Chief Financial
Officer of the Company, dated the Closing Date, to the effect that (i) as of the
date hereof and as of the Closing Date, the representations and warranties of
the Company set forth in Section 4 hereof are accurate, (ii) as of the Closing
Date, the obligations of the Company to be performed hereunder on or prior
thereto have been duly performed and (iii) subsequent to the respective dates as
of which information is given in the Offering Memorandum, the Company and its
subsidiaries have not sustained any material loss or interference with their
respective businesses or properties from fire, flood, hurricane, accident or
other calamity, whether or not covered by insurance, or from any labor dispute
or any legal or governmental proceeding, and there has not been any material
adverse change, or any development that could reasonably be expected to result
in a material adverse change, in the business, prospects, properties,
operations, condition (financial or otherwise), or results of operations of the
Company and its subsidiaries taken as a whole, except in each case as disclosed
in the Offering Memorandum.
(d) At the time this Agreement is executed and at the Closing
Date, the Initial Purchasers shall have received a customary comfort letter,
from Ernst & Young LLP, independent accountants for the Company, dated,
respectively, as of the date of this Agreement and as of the Closing Date
addressed to the Initial Purchasers in form and substance satisfactory to the
Initial Purchasers and Counsel for the Initial Purchasers with respect to the
Financial Statements and certain financial information of the Company contained
in the Offering Memorandum.
(e) Prior to the Closing Date, the Company shall have
furnished to the Initial Purchasers such further information, certificates and
documents as the Initial Purchasers may reasonably request.
(f) At the Closing Date, the Securities shall have been
approved for quotation in the PORTAL.
(g) The Company shall have authorized, executed and filed the
Certificate of Designations in accordance with Delaware law and each of the
Initial Purchasers shall have received a certified copy thereof.
(h) The Company shall have entered into each of the
Registration Rights Agreement and the Deposit Agreement and the Initial
Purchasers shall have received counterparts, conformed as executed, thereof.
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(i) The Company shall have deposited the Preferred Stock with
the Depositary Agent pursuant to the terms of the Deposit Agreement.
If any of the conditions specified in this Section 7 shall not have
been fulfilled when and as required by this Agreement, or if any of the
certificates, opinions, written statements or letters furnished to the Initial
Purchasers or to Counsel for the Initial Purchasers pursuant to this Section 7
shall not be in all material respects reasonably satisfactory in form and
substance to Bear Xxxxxxx and to Counsel for the Initial Purchasers, all
obligations of the Initial Purchasers hereunder may be canceled by the Initial
Purchasers at, or at any time prior to, the Closing Date and the obligations of
the Initial Purchasers to purchase the Additional Shares may be canceled by the
Initial Purchasers at, or at any time prior to, the Additional Closing Date.
Notice of such cancellation shall be given to the Company in writing, or by
telephone, telex or telegraph, confirmed in writing.
8. INDEMNIFICATION.
(a) The Company agrees to indemnify and hold harmless each
Initial Purchaser and each person, if any, who controls any Initial Purchaser
within the meaning of Section 15 of the Securities Act or Section 20(a) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), against any
and all losses, liabilities, claims, damages and expenses whatsoever as incurred
(including but not limited to attorneys' fees and any and all expenses
whatsoever incurred in investigating, preparing or defending against any
litigation, commenced or threatened, or any claim whatsoever, and any and all
amounts paid in settlement of any claim or litigation), joint or several, to
which they or any of them may become subject under the Securities Act, the
Exchange Act or otherwise, insofar as such losses, liabilities, claims, damages
or expenses (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
Offering Memorandum or the Preliminary Offering Memorandum or any amendment 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; provided, however, that
the Company will not be liable in any such case to the extent but only to the
extent that any such loss, liability, claim, damage or expense 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 any Initial Purchaser expressly for use
therein. This indemnity agreement will be in addition to any liability which the
Company may otherwise have including under this Agreement.
(b) Each Initial Purchaser severally, and not jointly, agrees
to indemnify and hold harmless the Company, each of the directors of the
Company, each of the officers of the Company, and each other person, if any, who
controls the Company within the meaning of Section 15 of the Securities Act or
Section 20(a) of the Exchange Act, against any losses, liabilities, claims,
damages and expenses whatsoever as incurred (including but not limited to
attorneys' fees and any and all expenses whatsoever incurred in investigating,
preparing or defending against any litigation, commenced or threatened, or any
claim whatsoever, and any and all amounts paid in settlement of any claim or
litigation), jointly or severally, to which they or any
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of them may become subject under the Securities Act, the Exchange Act or
otherwise, insofar as such losses, liabilities, claims, damages or expenses (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 Offering
Memorandum, or any related preliminary Offering Memorandum, 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, in each case to the
extent, but only to the extent, that any such loss, liability, claim, damage or
expense 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 any
Initial Purchaser expressly for use therein; provided, however, that in no case
shall any Initial Purchaser be liable or responsible for any amount in excess of
the underwriting discount applicable to the Company Shares purchased by such
Initial Purchaser hereunder. This indemnity will be in addition to any liability
which any Initial Purchaser may otherwise have including under this Agreement.
The Company acknowledges that the statements set forth in the last paragraph of
the cover page and in paragraphs one, three and six and the sixth and seventh
sentences of paragraph seven under the caption "Plan of Distribution" in the
Offering Memorandum constitute the only information furnished in writing by any
Initial Purchaser expressly for use in the Offering Memorandum or in any
amendment thereof or supplement thereto, as the case may be.
(c) Promptly after receipt by an indemnified party under
subsection (a) or (b) above of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify each party against whom
indemnification is to be sought in writing of the commencement thereof (but the
failure so to notify an indemnifying party shall not relieve it from any
liability which it may have under this Section 8). In case any such action is
brought against any indemnified party, and it notifies an indemnifying party of
the commencement thereof, the indemnifying party will be entitled to participate
therein, and to the extent it may elect by written notice delivered to the
indemnified party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof with counsel satisfactory to
such indemnified party. Notwithstanding the foregoing, the indemnified party or
parties shall have the right to employ its or their own counsel in any such
case, but the fees and expenses of such counsel shall be at the expense of such
indemnified party or parties unless (i) the employment of such counsel shall
have been authorized in writing by one of the indemnifying parties in connection
with the defense of such action, (ii) the indemnifying parties shall not have
employed counsel to have charge of the defense of such action within a
reasonable time after notice of commencement of the Securities Action, or (iii)
such indemnified party or parties shall have reasonably concluded that there may
be defenses available to it or them which are different from or additional to
those available to one or all of the indemnifying parties (in which case the
indemnifying parties shall not have the right to direct the defense of such
action on behalf of the indemnified party or parties), in any of which events
such fees and expenses shall be borne by the indemnifying parties. Anything in
this subsection to the contrary notwithstanding, an indemnifying party shall not
be liable for any settlement of any claim or action effected without its written
consent; provided, however, that such consent was not unreasonably withheld.
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9. CONTRIBUTION. In order to provide for contribution in circumstances
in which the indemnification provided for in Section 8 hereof is for any reason
held to be unavailable from any indemnifying party or is insufficient to hold
harmless a party indemnified thereunder, the Company and the Initial Purchasers
shall contribute to the aggregate losses, claims, damages, liabilities and
expenses of the nature contemplated by such indemnification provision (including
any investigation, legal and other expenses incurred in connection with, and any
amount paid in settlement of, any action, suit or proceeding or any claims
asserted, but after deducting in the case of losses, claims, damages,
liabilities and expenses suffered by the Company any contribution received by
the Company from persons, other than the Initial Purchasers, who may also be
liable for contribution, including persons who control the Company within the
meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange
Act, officers and directors of the Company) as incurred to which the Company and
one or more of the Initial Purchasers may be subject, in such proportions as is
appropriate to reflect the relative benefits received by the Company and the
Initial Purchasers from the offering of the Securities or, if such allocation is
not permitted by applicable law or indemnification is not available as a result
of the indemnifying party not having received notice as provided in Section 8
hereof, in such proportion as is appropriate to reflect not only the relative
benefits referred to above but also the relative fault of the Company and the
Initial Purchasers in connection with the statements or omissions which resulted
in such losses, claims, damages, liabilities or expenses, as well as any other
relevant equitable considerations. The relative benefits received by the Company
and the Initial Purchasers shall be deemed to be in the same proportion as (x)
the total proceeds from the Offering (net of underwriting discounts and
commissions but before deducting expenses) received by the Company and (y) the
underwriting discounts and commissions received by the Initial Purchasers
respectively. The relative fault of the Company and of the Initial Purchasers
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the Company or the
Initial Purchasers and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company and the Initial Purchasers agree that it would not be just and
equitable if contribution pursuant to this Section 9 were determined by pro rata
allocation (even if the Initial Purchasers were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to above. Notwithstanding the provisions of
this Section 9, (i) in no case shall any Initial Purchaser be liable or
responsible for any amount in excess of the underwriting discount applicable to
the Company Shares purchased by such Initial Purchaser hereunder, (ii) no person
guilty of fraudulent misrepresentation (within the meaning of Section 1l(f) of
the Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation and (iii) no Initial Purchaser
shall be required to contribute any amount in excess of the amount by which the
total price at which the Company Shares purchased by it and sold in the Offering
were offered to subsequent purchasers exceeds the amount of any damages that
such Initial Purchaser has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. For purposes
of this Section 9, each person, if any, who controls an Initial Purchaser within
the meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange
Act shall have the same rights to contribution as such Initial Purchaser, and
each person, if any, who controls the Company within the meaning of Section 15
of the Securities Act or Section 20(a) of the Exchange Act, each of officer and
each director of
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the Company shall have the same rights to contribution as the Company, subject
in each case to clauses (i) and (ii) of this Section 9. Any party entitled to
contribution will, promptly after receipt of notice of commencement of any
action, suit or proceeding against such party in respect of which a claim for
contribution may be made against another party or parties, notify each party or
parties from whom contribution may be sought, but the omission to so notify such
party or parties shall not relieve the party or parties from whom contribution
may be sought from any obligation it or they may have under this Section 9 or
otherwise. No party shall be liable for contribution with respect to any action
or claim settled without its consent; provided, however, that such consent was
not unreasonably withheld.
10. DEFAULT BY AN INITIAL PURCHASER.
If one or more of the Initial Purchasers shall fail at the
Closing Date or the Additional Closing Date to purchase the Company Shares which
it is obligated to purchase under this Agreement (the "Defaulted Shares"), the
non-defaulting Initial Purchaser(s) shall have the right, within 24 hours
thereafter, to make arrangements for it or any other Initial Purchaser(s) to
purchase all, but not less than all, of the Defaulted Shares in such amounts as
may be agreed upon and upon the terms herein set forth; if, however, the
non-defaulting Initial Purchaser(s) shall not have completed such arrangements
within such 24-hour period, then this Agreement shall terminate without
liability on the part of the non-defaulting Initial Purchaser(s).
No action taken pursuant to this Section shall relieve any
defaulting Initial Purchaser from liability in respect of its default.
In the event of any such default which does not result in a
termination of this Agreement, either the non-defaulting Initial Purchaser(s) or
the Company shall have the right to postpone the Closing Date for a period not
exceeding seven days in order to effect any required changes in the Offering
Memorandum or in any other documents or arrangements.
11. SURVIVAL OF REPRESENTATIONS AND AGREEMENTS. All representations and
warranties, covenants and agreements of the Initial Purchasers and the Company
contained in this Agreement, including the agreements contained in Section 5,
the indemnity agreements contained in Section 8 and the contribution agreements
contained in Section 9, shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of any Initial Purchasers
or any agent, representative or controlling person thereof or by or on behalf of
the Company, any of its of officers and directors or any controlling person
thereof, and shall survive delivery of and payment for the Company Shares to and
by the Initial Purchasers. The representations contained in Section 1 and the
agreements contained in Sections 5, 8, 9 and 12(d) hereof shall survive the
termination of this Agreement, including termination pursuant to Section 10 or
12 hereof.
12. TERMINATION.
(a) Bear Xxxxxxx, on behalf of the Initial Purchasers, shall
have the right to terminate this Agreement at any time prior to the Closing Date
or the obligations of the Initial Purchasers to purchase the Additional Shares
at any time prior to the Additional Closing Date, as
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the case may be, if (A) any domestic or international event or act or occurrence
has materially disrupted, or in Bear Xxxxxxx' opinion will in the immediate
future materially disrupt the market for the Company's securities, or the United
States or international securities markets, generally; or (B) if trading on the
New York Stock Exchange shall have been suspended, or materially limited; or (C)
if a banking moratorium has been declared by any United States federal or New
York State authority or if any new restriction materially adversely affecting
the distribution of the Firm Shares or the Additional Shares, as the case may
be, shall have become effective; or (D) if any downgrading in the rating of the
Company's debt securities by any "nationally recognized statistical rating
organization" (as defined for purposes of Rule 436(g) under the Securities Act);
or (E)(i) if the United States becomes engaged in hostilities or there is an
escalation of hostilities involving the United States, or there is a declaration
of a national emergency or war by the United States or (ii) if there shall have
been such change in political, financial or economic conditions if the effect of
any such event in (i) or (ii) in Bear Xxxxxxx' judgment makes it impracticable
or inadvisable to proceed with the offering, sale and delivery of the Firm
Shares or the Additional Shares, as the case may be, on the terms contemplated
by the Offering Memorandum.
(b) Any notice of termination pursuant to this Section 12
shall be by telephone, telex, or telegraph, confirmed in writing by letter.
(c) If this Agreement shall be terminated pursuant to any of
the provisions hereof (otherwise than pursuant to Section 10 or 12(a) hereof),
or if the sale of the Company Shares provided for herein is not consummated
because any condition to the obligations of the Initial Purchasers set forth
herein is not satisfied 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, the Company will, subject to demand by the Initial Purchasers, reimburse
the Initial Purchasers for all out-of-pocket expenses (including the fees and
expenses of their counsel), incurred by the Initial Purchasers in connection
herewith.
13. NOTICE. All communications hereunder, except as may be otherwise
specifically provided herein, shall be in writing and, if sent to any Initial
Purchaser, shall be mailed, delivered, or telexed or telegraphed and confirmed
in writing, to it c/o Bear, Xxxxxxx & Co. Inc., 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000, Attention: Xxxxxx Xxxxxx, Senior Managing Director; if sent to the
Company, shall be mailed, delivered, or telegraphed and confirmed in writing to
the Company, 000 Xxxxxx Xxxx, Xxxx Xxxxx, Xxxxxxx 00000-0000, Attention: Xxxxxxx
X. Xxxxxx, Senior Vice President and Chief Financial Officer.
14. PARTIES. This Agreement shall inure solely to the benefit of, and
shall be binding upon, the Initial Purchasers and the Company and the
controlling persons, directors, officers, employees and agents referred to in
Section 8 and 9, and their respective successors and assigns, and no other
person shall have or be construed to have any legal or equitable right, remedy
or claim under or in respect of or by virtue of this Agreement or any provision
herein contained. The term "successors and assigns" shall not include a
purchaser, in its capacity as such, of Company Shares from any of the Initial
Purchasers.
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15. GOVERNING LAW.
(a) This Agreement shall be governed by the laws of the State
of New York.
(b) The Company hereby irrevocably submits to the
non-exclusive jurisdiction of the courts of the State of New York and the
federal courts of the United States of America sitting in the City of New York
in any action or proceeding arising out of or relating to this Agreement and
irrevocably agrees that all claims in respect of such action or proceeding may
be heard in any such New York State or Federal court. The Company irrevocably
waives, to the fullest extent it may do so, the defense of an inconvenient forum
to the maintenance of such action or proceeding and appoints CT Corporation
Trust System with an office at 0000 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000 as its
authorized agent upon whom process may be served in any action arising out of or
based upon this Agreement which may be instituted in any such court. The Company
represents and warrants that such agent has agreed to act as its agent for
service of process and agrees to take any and all actions including the filing
of any and all documents or instruments (including the appointment of any
successor agent, as necessary) that may be necessary to continue such
appointment in effect. Nothing herein shall be construed to prevent or impair
the right of any Initial Purchaser to serve process in any other manner
permitted by law or to bring any action, suit or proceeding in any other
jurisdiction.
[remainder of page intentionally left blank]
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If the foregoing correctly sets forth the understanding between the
Initial Purchasers and the Company, please so indicate in the space provided
below for that purpose, whereupon this letter shall constitute a binding
agreement among us.
Very truly yours,
SENSORMATIC ELECTRONICS
CORPORATION
By: /s/ Xxxxxxx X. Xxxxxx
---------------------------------
Xxxxxxx X. Xxxxxx,
Senior Vice President and
Chief Financial Officer
Accepted as of the date first above written
BEAR, XXXXXXX & CO., INC.
By: /s/ Xxxx X. Xxxxxx
---------------------------------------
Xxxx X. Xxxxxx, Managing Director
XXXXXX BROTHERS INC.
By: /s/ Xxxxx Xxx
---------------------------------------
Xxxxx Xxx, Vice President
NATIONSBANC XXXXXXXXXX SECURITIES LLC
By: /s/ Xxxx Xxxxxxx
---------------------------------------
Xxxx Xxxxxxx, Managing Director
XXXXXXXX & CO. INC.
By: /s/ Xxxx X. Xxxxxx
---------------------------------------
Xxxx X. Xxxxxx, Managing Director
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SCHEDULE I
NUMBER OF FIRM
NAME OF INITIAL PURCHASER SHARES TO BE PURCHASED
------------------------- ----------------------
Bear, Xxxxxxx & Co. Inc. 3,000,000
Xxxxxx Brothers Inc. 1,500,000
NationsBanc Xxxxxxxxxx Securities LLC 900,000
Xxxxxxxx & Co. Inc. 600,000
--------------
Total 6,000,000
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