DECS TRUST
3,100,000 DECS SM*
(Representing Beneficial Interests in Contracts Relating to Shares of
Common Stock, no par value, of DIMON Incorporated)
Underwriting Agreement
New York, New York
_______, 1997
Salomon Brothers Inc
Seven Xxxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
DECS Trust, a statutory business trust organized under
the Delaware Business Trust Act, 12 Del.C. section 3801 et seq., (the
"Delaware Act") (such trust and the trustees thereof acting in their
capacities as such being referred to herein as the "Trust"),
proposes to issue and sell to Salomon Brothers Inc ("SBI") an
aggregate of 3,100,000 DECS representing shares of beneficial
interest in the Trust (the "Underwritten DECS"). In addition, SBI
will have an option to purchase up to DECS (the "Option DECS"
and, together with the Underwritten DECS, the "DECS") to cover
over-allotments, if any. The Option DECS and the Underwritten
DECS, together with the DECS of the Trust subscribed for by SBI
pursuant to the Subscription Agreement, dated September 9, 1997,
between SBI and the Trust, are referred to herein as the
"Securities". The Securities are to be issued under an Amended
and Restated Declaration of Trust, dated as of , 1997 (the
"Trust Agreement"), among the trustees of the Trust (the
"Trustees") and SBI, as sponsor.
The Trust has entered into forward purchase contracts
(the "Contracts") with the persons listed on Schedule I hereto
(each a "Seller") pursuant to which each Seller has agreed to
sell, and the Trust has agreed to purchase, the number of shares
of common stock, no par value (the "Shares"), of DIMON
Incorporated (the "Company") specified therein on , 2000 (the
"Exchange Date") (subject to the Seller's right to deliver cash
with a value equivalent thereto as provided in the Contracts).
Each Seller's obligations under his, her or its respective Contract will
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* Plus an option to purchase from DECS Trust up to
additional DECS to cover over-allotments.
be secured by a pledge of collateral under a collateral
agreement (each a "Collateral Agreement") between such
Seller and the Bank of New York ("BoNY"), as collateral agent (in
such capacity, the "Collateral Agent").
Certain terms used in this Agreement are defined in
paragraph (d) of Section 1 and paragraph (c) of Section 2.
1. Representations and Warranties of the Trust. The
Trust represents and warrants to, and agrees with, SBI as set
forth below in this Section 1.
(a) The Trust meets the requirements for use of Form N-2
under the Securities Act of 1933, as amended (the "Act") and has
filed with the Securities and Exchange Commission (the
"Commission") (a) a notification on Form N-8A (the
"Notification") of registration of the Trust as an investment
company under the Investment Company Act of 1940, as amended (the
"Investment Company Act") and (b) a registration statement on
Form N-2 (Nos. 33-99752 and 811-09138), including a related
preliminary prospectus, for the registration of the offering and
sale of the DECS under the Act. The Trust may have filed one or
more amendments thereto, including the related preliminary
prospectus, each of which has previously been furnished to you.
The Trust will next file with the Commission either (i) prior to
effectiveness of such registration statement, a further amendment
to such registration statement (including the form of final
prospectus) or (ii) after effectiveness of such registration
statement, a final prospectus in accordance with Rules 430A and
497(h). In the case of clause (ii), the Trust has included in
such registration statement, as amended at the Trust Effective
Date, all information (other than Rule 430A Information) required
by the Act and the rules thereunder to be included in such
prospectus with respect to the DECS and the offering thereof. As
filed, such amendment and form of final prospectus, or such final
prospectus, shall contain all Rule 430A Information, together
with all other such required information, with respect to the
DECS and the offering thereof and, except to the extent SBI 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 (beyond that contained in the latest Preliminary Trust
Prospectus) as the Trust has advised you, prior to the Execution
Time, will be included or made therein.
(b) On the Trust Effective Date, the Trust Registration
Statement and the Notification did or will, and when the Trust
Prospectus is first filed (if required) in accordance with Rule
497(h) and on the Closing Date, the Trust Prospectus (and any
supplements thereto) will, comply in all material respects with
the applicable requirements of the Act, the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and the Investment
Company Act, and the respective rules thereunder.
(c) On the Trust Effective Date, the Trust Registration
Statement did not or will not contain any untrue statement of a
material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements
therein not misleading; on the Trust Effective Date, the Trust
Prospectus, if not filed pursuant to Rule 497(h), did not or will
not, and on the date of any filing pursuant to Rule 497(h) and on
the Closing Date, the Trust
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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.
(d) The terms which follow, when used in this Agreement,
shall have the meanings indicated. The term "Trust Effective
Date" shall mean each date that the Trust Registration Statement
and any post-effective amendment or amendments thereto became or
become effective. "Execution Time" shall mean the date and time
that this Agreement is executed and delivered by the parties
hereto. "Preliminary Trust Prospectus" shall mean any preliminary
prospectus referred to in paragraph (a) of this Section 1 and any
preliminary prospectus included in the Trust Registration
Statement at the Trust Effective Date that omits Rule 430A
Information. "Trust Prospectus" shall mean the prospectus
relating to the DECS that is first filed pursuant to Rule 497(h)
after the Execution Time or, if no filing pursuant to Rule 497(h)
is required, shall mean the form of final prospectus relating to
the DECS that is included in the Trust Registration Statement at
the Trust Effective Date. "Trust Registration Statement" shall
mean the registration statement referred to in paragraph (a) of
this Section 1, including exhibits and financial statements, as
amended at the Execution Time (or, if not effective at the
Execution Time, in the form in which it shall become effective)
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. Such term shall include any
Rule 430A Information deemed to be included therein at the Trust
Effective Date as provided by Rule 430A. "Rule 430A" and "Rule
497(h)" refer to such rules under the Act. "Rule 430A
Information" means information with respect to the DECS, the
Shares and the offering thereof permitted to be omitted from the
Trust Registration Statement (or, as used in Section 2, the
Company Registration Statement) when it becomes effective
pursuant to Rule 430A. If the Trust has filed an abbreviated
registration statement to register additional DECS pursuant to
Rule 462(b) under the Securities Act (the "Rule 462 Trust
Registration Statement"), then any reference herein to the term
"Trust Registration Statement" shall be deemed to include such
Rule 462 Trust Registration Statement. As used herein, the terms
"Trust Registration Statement", "Preliminary Trust Prospectus"
and "Trust Prospectus" shall not include the Company Prospectus
attached thereto.
(e) No stop order suspending the effectiveness of the
Trust Registration Statement is in effect, no order preventing or
suspending the use of any Preliminary Trust Prospectus has been
issued by the Commission, no notice or order under Section 8(e)
of the Investment Company Act has been issued, and no proceedings
for any such purpose are pending before or threatened by the
Commission.
(f) The Trust has been duly created, is validly
existing as a business trust under the Delaware Act, has the
power and authority to own its properties and conduct its
business as described in the Trust Prospectus and to enter into
and perform its obligations under this Agreement, the Trust
Agreement and each of the Fundamental Documents (as defined
below) and is duly qualified to do business and is in good
standing under the laws of each jurisdiction in which it owns or
leases properties or conducts any business so as to require such
qualification other than where the failure to be so qualified
would not have a material adverse effect on the Trust or its
assets. The Trust has no subsidiaries.
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(g) The Trust is registered with the Commission as a
non-diversified, closed-end management investment company under
the Investment Company Act and no order of suspension or
revocation of such registration has been issued or proceedings
therefor initiated or, to the knowledge of the Trust, threatened
by the Commission. No person is serving or acting as an officer
or trustee of the Trust except in accordance with the provisions
of the Investment Company Act.
(h) This Agreement has been duly authorized, executed and
delivered by the Trust.
(i) Each of the Contracts, the Collateral Agreements, the
Administration Agreement between BoNY and the Trust (the
"Administration Agreement"), the Custodian Agreement between BoNY
and the Trust (the "Custodian Agreement"), the Paying Agent
Agreement between BoNY and the Trust (the "Paying Agent
Agreement") and the Fund Indemnity Agreement between SBI and the
Trust (the "Fund Indemnity Agreement") (the Contracts, the
Collateral Agreements, the Administration Agreement, the
Custodian Agreement, the Paying Agent Agreement and the Fund
Indemnity Agreement are referred to herein, collectively, as the
"Fundamental Agreements") has been duly authorized, executed and
delivered by the Trust and, assuming due authorization, execution
and delivery by the other parties thereto, is a valid and binding
agreement of the Trust, enforceable against the Trust in
accordance with its terms except as such enforceability may be
limited by applicable bankruptcy, insolvency and similar laws
affecting creditors' rights generally and by general equitable
principles.
(j) The execution and delivery by the Trust of, and the
performance by the Trust of its obligations under, this Agreement
and each Fundamental Agreement (including the issue and sale by
the Trust of the DECS as contemplated by this Agreement) do not
and will not, whether with or without the giving of notice or
passage of time or both, conflict with or constitute a breach of,
or default under, or give the holder of any indebtedness of the
Trust the right to require the repurchase, redemption or
repayment of all or a portion of such indebtedness under, or
result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Trust pursuant to,
any contract, indenture, mortgage, deed of trust, loan or credit
agreement, note, lease or other agreement or instrument to which
the Trust is a party or by which it may be bound, or to which any
of the property or assets of the Trust is subject, nor will such
action result in any violation of the provisions of the Trust
Agreement or any applicable law, statute, rule, regulation,
judgment, order, writ or decree of any government, government
instrumentality or court, domestic or foreign, having
jurisdiction over the Trust or any of its assets or properties;
and no consent, approval, authorization, order of, or
qualification or filing with, any governmental body or agency,
self-regulatory organization or court or other tribunal, whether
foreign or domestic, is required for the execution and delivery
by the Trust of this Agreement or the Fundamental Agreements or
the performance by the Trust of its obligations hereunder and
thereunder, except for the filing of a Certificate of Trust with the
office of the Secretary of State of the State of Delaware (which
filing has been duly made) and such as have been obtained and as may be
required by the securities or Blue Sky laws of the various states and
foreign jurisdictions in connection with the offer and sale of the DECS
by SBI.
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(k) The DECS, the Trust Agreement and the Fundamental
Agreements conform in all material respects to the descriptions
thereof contained in the Trust Prospectus.
(l) The Trust Agreement and the Fundamental Agreements
comply with all applicable provisions of the Act, the Exchange
Act and the Investment Company Act, and all approvals of such
documents required under the Investment Company Act by the
holders of the Securities and the Trustees have been obtained and
are in full force and effect.
(m) The Fundamental Agreements are in full force and
effect and the Trust is not in default thereunder and, to the
knowledge of the Trust, no event has occurred which with the
passage of time or the giving of notice or both would constitute
a default thereunder. The Trust is not currently in breach of, or
in default under, the Trust Agreement or any other written
agreement or instrument to which it or its property is bound or
affected.
(n) All of the outstanding Securities have been duly
authorized and are validly issued, fully paid and non-assessable
undivided beneficial interests in the assets of the Trust, and
the form of certificates used to evidence the Securities is in
due and proper form and complies with all provisions of
applicable law.
(o) The DECS have been duly authorized by the Trust for
issuance to SBI pursuant to this Agreement and, when issued and
delivered by the Trust in accordance with the terms of this
Agreement and the Trust Agreement against payment of the purchase price
therefor as provided herein, will be validly issued, fully paid and
non-assessable undivided beneficial interests in the assets of
the Trust, and the issuance of such DECS will not be subject to
any preemptive or similar rights. No person has rights to the
registration of any securities because of the filing of the Trust
Registration Statement, and no holder of the Securities will be
subject to personal liability by reason of being such a holder.
(p) The DECS have been approved for listing on the New
York Stock Exchange, Inc. (the "NYSE"), subject to official
notice of issuance. The Trust's Registration Statement on Form
8-A under the Exchange Act is effective.
(q) There has not occurred any material adverse change, or
any development involving a prospective material adverse change,
in the condition, financial or otherwise, of the Trust, or in the
investment objectives, investment policies, liabilities,
business, prospects or operations of the Trust from that set
forth in the Trust Prospectus (exclusive of any supplements
thereto subsequent to the date of this Agreement) and there have
been no transactions entered into by the Trust which are material
to the Trust other than those in the ordinary course of its
business or as described in the Trust Prospectus (exclusive of
any supplements thereto subsequent to the date of this
Agreement).
(r) There are no legal or governmental proceedings
pending or, to the knowledge of the Trust, threatened against or
affecting the Trust that are required to be described in the Trust
Registration Statement or the Trust Prospectus and are
not so described or any statutes, regulations, contracts or other
documents that are required to be described in the Trust
5
Registration Statement or the Trust Prospectus or to be filed as
exhibits to the Trust Registration Statement that are not
described or files as required.
(s) The Trust has all necessary consents, authorizations,
approvals, orders (including exemptive orders), certificates and
permits of and from, and has made all declarations and filings
with, all governmental authorities, self-regulatory organizations
and courts and other tribunals, whether foreign or domestic, to
own and use its assets and to conduct its business in the manner
described in the Trust Prospectus, except to the extent that the
failure to obtain or file the foregoing would not have a material
adverse effect on the Trust and except such as may be required by
the securities or Blue Sky laws of the various states in
connection with the offer and sale of the DECS.
(t) There are no material restrictions, limitations or
regulations with respect to the ability of the Trust to invest
its assets as described in the Trust Prospectus, other than as
described therein.
(u) The Trust has good title to all properties owned by
it, in each case, free and clear of all mortgages, pledges,
liens, security interests, claims, restrictions or encumbrances
of any kind except such as (a) are described in the Trust
Prospectus or (b) do not, singly or in the aggregate, materially
affect the value of such property and do not interfere with the
use made and proposed to be made of such property by the Trust.
(v) There are no legal or governmental proceedings pending
to which the Trust is a party or of which any property of the
Trust is the subject which, if determined adversely to the Trust,
would individually or in the aggregate have a material adverse
effect on the current or future financial position or results of
operations of the Trust; and, to the best of the Trust's
knowledge, no such proceedings are threatened or contemplated by
governmental authorities or threatened by others.
(w) The statement of assets, liabilities and capital
included in the Trust Registration Statement and the Trust
Prospectus, together with the notes thereto, present fairly the
financial position of the Trust at the date indicated, and such
financial statement has been prepared in conformity with
generally accepted accounting principles.
(x) The accountants who certified the financial statements
and supporting schedules included in the Trust Registration
Statement are independent public accountants as required by the
Act and the rules and regulations of the Commission thereunder.
(y) The Trust has not taken and will not take, directly or
indirectly, any action designed to or which has constituted or
which might reasonably be expected to cause or result, under the
Exchange Act or otherwise, in stabilization or manipulation of
the price of any security of the Company to facilitate the sale
or resale of the DECS or the Shares, and has not effected any
sales of the Company's common stock which, if effected by the
Company, would be required to be disclosed in response to Item
701 of Regulation S-K.
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2. Representations and Warranties of the Company. The
Company represents and warrants to, and agrees with, SBI as set
forth below in this Section 2.
(a) The Company meets the requirements for use of Form S-3
under the Act and has filed with the Commission a registration
statement (file number 333-33267) on such Form, including a
related preliminary prospectus, for the registration under the
Act of the offering and sale of the Shares in connection with the
offering and sale of the DECS. The Company may have filed one or
more amendments thereto, including the related preliminary
prospectuses, each of which has previously been furnished to you.
The Company will next file with the Commission one of the
following: (i) prior to effectiveness of such registration
statement, a further amendment to such registration statement,
including the form of final prospectus, (ii) a final prospectus
in accordance with Rules 430A and 424(b)(1) or (4), or (iii) a
final prospectus in accordance with Rules 415 and 424(b)(2) or
(5). In the case of clause (ii), the Company has included in such
registration statement, as amended at the Company Effective Date,
all information (other than Rule 430A Information) required by
the Act and the rules thereunder to be included in such
prospectus with respect to the Shares and the offering thereof.
As filed, such amendment and form of final prospectus, or 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
SBI 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 (beyond that contained in the latest Preliminary
Company Prospectus) as the Company has advised you, prior to the
Execution Time, will be included or made therein. If the Company
Registration Statement contains the undertaking specified by
Regulation S-K Item 512(a), the Company Registration Statement,
at the Execution Time, meets the requirements set forth in Rule
415(a)(1)(x).
(b) On the Company Effective Date, the Company Registration
Statement did or will, and when the Company Prospectus is first
filed (if required) in accordance with Rule 424(b) and on the
Closing Date, the Company Prospectus (and any supplement thereto)
will, comply in all material respects with the applicable
requirements of the Act, the Exchange Act and the respective
rules thereunder; on the Company Effective Date, the Company
Registration Statement did not or will not contain any untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading; on the Company Effective Date, the
Company Prospectus, if not filed pursuant to Rule 424(b), did not
or will not, and on the date of any filing pursuant to Rule
424(b) and on the Closing Date, the Company 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 representation or
warranty as to the information contained in or omitted from the
Company Registration Statement or the Company Prospectus (or any
supplement thereto) in reliance upon and in conformity with
information furnished in writing to the Company (i) by SBI
specifically for inclusion in the Company Registration Statement
or the Company Prospectus (or any supplement thereto) or (ii) by
any Seller specifically for inclusion in the Company Registration
Statement or the Company
7
Prospectus (or any supplement thereto)
for use in the preparation of information responsive to Item 7 of
Form S-3.
(c) The terms which follow, when used in this
Agreement, shall have the meanings indicated. The term "Company
Effective Date" shall mean each date that the Company
Registration Statement and any post-effective amendment or
amendments thereto became or become effective. "Preliminary
Company Prospectus" shall mean any preliminary prospectus
referred to in paragraph (a) of this Section 2 and any
preliminary prospectus included in the Company Registration
Statement at the Company Effective Date that omits Rule 430A
Information. "Company Prospectus" shall mean the prospectus
relating to the Shares that is used in connection with the
offering and sale of the DECS and that is first filed pursuant to
Rule 424(b) after the Execution Time or, if no filing pursuant to
Rule 424(b) is required, shall mean the form of final prospectus
relating to the Shares that is used in connection with such
offering and sale and that is included in the Company
Registration Statement at the Company Effective Date. "Company
Registration Statement" shall mean the registration statement
referred to in paragraph (a) of this Section 2 including
incorporated documents, exhibits and financial statements, as
amended at the Execution Time (or, if not effective at the
Execution Time, in the form in which it shall become effective)
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. Such term shall include any
Rule 430A Information deemed to be included therein at the
Company Effective Date as provided by Rule 430A. "Rule 415",
"Rule 424" and "Regulation S-K" refer to such rules or regulation
under the Act. Any reference herein to the Company Registration
Statement, Preliminary Company Prospectus or the Company
Prospectus shall be deemed to refer to and include the documents
incorporated by reference therein pursuant to Item 12 of Form S-3
that were filed under the Exchange Act on or before the Company
Effective Date or the issue date of such Preliminary Company
Prospectus or the Company Prospectus, as the case may be; and any
reference herein to the terms "amend," "amendment" or
"supplement" with respect to the Company Registration Statement,
any Preliminary Company Prospectus or the Company Prospectus
shall be deemed to refer to and include the filing of any
document under the Exchange Act after the Company Effective Date,
or the issue date of any Preliminary Company Prospectus or the
Company Prospectus, as the case may be, deemed to be incorporated
therein by reference.
(d) No stop order suspending the effectiveness of the
Company Registration Statement is in effect, no order preventing
or suspending the use of any Preliminary Company Prospectus has
been issued by the Commission, and no proceedings for any such
purpose are pending before or threatened by the Commission. Each
document incorporated by reference in the Company Registration
Statement or the Company Prospectus, when they were filed or are
filed with the Commission, conformed or will conform in all
material respects to the requirements of the Exchange Act and the
rules and regulations of the Commission thereunder, and none of
such documents contained or will contain an untrue statement of a
material fact or omitted or will omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading.
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(e) Schedule II to this Agreement contains a complete
and correct list of all direct and indirect subsidiaries of the
Company (the "Subsidiaries").
(f) Neither the Company nor any of the Subsidiaries
has sustained since the date of the latest audited financial
statements included in the Company Prospectus any material loss
or interference with its business from fire, explosion, flood or
other calamity, whether or not covered by insurance, or from any
labor dispute or court or governmental action, order or decree,
otherwise than as set forth or contemplated in the Company
Prospectus; and, since the respective dates as of which
information is given in the Company Registration Statement and
the Company Prospectus, there has not been any change in the
outstanding capital stock, long-term debt, or short-term debt
(other than in the ordinary course of business) of the Company or
a material adverse effect on (i) the business, operations,
properties, assets, liabilities, net worth, condition (financial
or otherwise) or prospects of the Company or any of its
subsidiaries or (ii) the ability of the Company to perform any of
its obligations under this Agreement (a "Company Material Adverse
Effect") or any development involving a prospective Company
Material Adverse Effect, otherwise than as set forth or
contemplated in the Company Prospectus.
(g) The Company and each of the Subsidiaries have good
and marketable title in fee simple to all real property and good
and marketable title to all personal property owned by each of
them, free and clear of all liens, encumbrances and defects
except such as are described in the Company Prospectus or such as
do not materially affect the value of such property and do not
interfere with the use made and proposed to be made of such
property by the Company and such Subsidiaries; and any real
property and buildings held under lease by the Company or any of
the Subsidiaries are held by it under valid, subsisting and
enforceable leases with such exceptions as are not material and
do not interfere with the use made and proposed to be made of
such property and buildings by the Company or such Subsidiaries.
(h) The Company and each of the Subsidiaries have been
duly incorporated and are validly existing as corporations in
good standing under the laws of their respective jurisdictions of
incorporation, with power and authority (corporate and other) to
own or lease their respective properties and conduct their
respective businesses as described in the Company Prospectus, and
each has been duly qualified as a foreign corporation for the
transaction of business and is in good standing under the laws of
each other jurisdiction which requires such qualification in
which it owns or leases material properties, or conducts any
material business, except where the failure or failures to so
qualify or be in good standing would not in the aggregate result
in a Company Material Adverse Effect.
(i) The Company has an authorized capitalization as
set forth in the Company Prospectus; all of the issued shares of
capital stock of the Company have been duly and validly
authorized and issued, are fully paid and nonassessable and
conform to the description of the capital stock of the Company
contained in the Company Prospectus; except as described in the
Company Prospectus, there are no preemptive or other rights to
subscribe for or to purchase any securities of the Company;
except as described in the Company Prospectus, there are no
warrants, options or other rights to purchase any securities of
the Company; neither the filing of the Company Registration
Statement nor the offering or sale of the Shares or the DECS as
9
contemplated by this Agreement and the Company Prospectus gives
rise to any rights for or relating to the registration of any
securities of the Company with respect to such filing, offering
or sale, other than rights which have been waived or satisfied.
(j) All outstanding shares of capital stock of each of
the Subsidiaries have been duly and validly authorized and
issued, are fully paid and non-assessable and, except as noted on
Schedule II, are owned by the Company, either directly or through
wholly-owned subsidiaries, free and clear of any perfected
security interest and any other security interest, claim, lien or
encumbrance.
(k) The performance of this Agreement by the Company and the
consummation of the other transactions herein contemplated will
not conflict with or result in a breach or violation of any terms
or provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, loan agreement or other agreement or
instrument to which the Company or any Subsidiary is a party or
by which any of the property or assets of the Company or any
Subsidiary is bound or to which any of the property or assets of
the Company or any Subsidiary is subject, nor will such action
result in any violation of the provisions of the Articles of
Incorporation or By-laws of the Company or the constituent
documents of any Subsidiary or any statute or any order, rule or
regulation of any court or governmental agency or body having
jurisdiction over the Company or any Subsidiary or any of their
respective properties; and no consent, approval, authorization,
order, registration or qualification of or with any such court or
governmental agency or body is required for consummation by the
Company of the transactions contemplated by this Agreement and
the Company Prospectus, except such consents, approvals,
authorizations, registrations or qualifications as may be
required under the Act and under state securities or Blue Sky
laws in connection with the offer and sale of the Shares.
(l) There are no legal or governmental proceedings
pending to which the Company or any of its Subsidiaries is a
party or of which any property of the Company or any of its
Subsidiaries is the subject, other than as set forth or
contemplated in the Company Prospectus, which, if determined
adversely to the Company or any of its Subsidiaries, would
individually or in the aggregate, result in a Company Material
Adverse Effect and, to the best of the Company's knowledge, no
such proceedings are threatened or contemplated by any
governmental authorities or by any other persons.
(m) Price Waterhouse LLP, and Ernst & Young LLP (who
have certified certain financial statements of the Company and
Dibrell Brothers, Incorporated ("Xxxxxxx"), respectively), are
and were, with respect to the Company and Xxxxxxx, respectively,
independent public accountants as required by the Act and the
rules and regulations of the Commission thereunder.
(n) All employee benefit plans (as defined in Section
3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA")) established, maintained or contributed to by
the Company comply in all material respects with the requirements
of ERISA and no employee pension benefit plan (as defined in
Section 3(2) of ERISA) has incurred or assumed an "accumulated
funding deficiency" within the meaning of Section 302 of ERISA or
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has incurred or assumed any material liability (other than for
the payment of premiums) to the Pension Benefit Guaranty
Corporation.
(o) The consolidated financial statements of the
Company, together with the related schedules and notes thereto,
included or incorporated in the Company Registration Statement
and the Company Prospectus (and any amendment or supplement
thereto) present fairly the consolidated financial position,
results of operations and changes in financial position of the
Company at the indicated dates and for the indicated periods;
such financial statements have been prepared in accordance with
generally accepted accounting principles, consistently applied
throughout the periods presented except as noted in the notes
thereon, and all adjustments necessary for a fair presentation of
results for such periods have been made; and the selected
financial information included in the Company Prospectus presents
fairly the information shown therein and has been compiled on a
basis consistent with the financial statements presented therein.
(p) The Company and each Subsidiary have timely filed
all necessary federal, state and foreign income, franchise and
excise tax returns and have paid all taxes shown thereon as due,
and there is no tax deficiency that has been or, to the best
knowledge of the Company, might be asserted against the Company
or any Subsidiary that might result in a Company Material Adverse
Effect, except for any such assessment, fine or penalty that is
currently being contested in good faith and for which the Company
retains adequate reserves; and all tax liabilities are adequately
provided for on the books of the Company.
(q) Neither the Company nor any of the Subsidiaries is
in violation of any international, federal or state law,
regulation, or treaty relating to the storage, handling,
transportation, treatment or disposal of hazardous substances (as
defined in 42 U.S.C. Section 9601) or hazardous materials (as
defined by any international, federal or state law or regulation)
or other waste products, which violation may result in a Company
Material Adverse Effect, and the Company and each of the
Subsidiaries have received all material permits, licenses or
other approvals as may be required of them under applicable
international, federal and state environmental laws and
regulations to conduct their business as described in the Company
Prospectus; and the Company and each of the Subsidiaries are in
compliance in all material respects with the terms and conditions
of any such permit, license or approval; neither the Company nor
any of the Subsidiaries has received any notices or claims that
it is a responsible party or a potentially responsible party in
connection with any claim or notice asserted pursuant to 42
U.S.C. Section 9601 et seq. or any state superfund law; and, to
the best knowledge of the Company, the disposal of all of the
Company's and each Subsidiary's hazardous substances, hazardous
materials and other waste products, if any, has been lawful.
(r) No relationship, direct or indirect, exists
between or among the Company or any of the Subsidiaries, on the
one hand, and the directors, officers, shareholders, customers or
suppliers of the Company or any of the Subsidiaries on the other
hand, that is required by the Act or the Exchange Act, or by the
rules and regulations under either of such Acts to be described
in the Company Registration Statement and the Company Prospectus
or documents incorporated by reference therein that is not so
described.
11
(s) Neither the Company nor any of the Subsidiaries
has taken and none of such entities will take, directly or
indirectly, any action that is designed to or that has
constituted 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
Shares or the DECS.
(t) Each of the Company and the Subsidiaries owns or
possesses, or can acquire on reasonable terms, adequate licenses,
copyrights, trademarks, service marks and trade names
(collectively, "intellectual property") necessary to carry on its
business as presently operated by it, except where the failure to
own or possess or have the ability to acquire any such
intellectual property would not, individually or in the
aggregate, result in a Company Material Adverse Effect, and
neither the Company nor any of the Subsidiaries has received any
notice or is otherwise aware of any infringement of or conflict
with asserted rights of others with respect to any intellectual
property or of any facts which would render any intellectual
property invalid or inadequate to protect the interest of the
Company or any of the Subsidiaries therein and which infringement
or conflict could result in a Company Material Adverse Effect.
(u) The Company holds and is operating in compliance,
in all material respects, with all franchises, grants,
authorizations, licenses, permits, easements, consents,
certificates and orders of any governmental or self-regulatory
body required for the conduct of its business as presently being
conducted ("licenses") and all licenses are valid and in full
force and effect, and the Company is in compliance, in all
material respects, with all laws, regulations, orders and decrees
applicable to it.
(v) The Company and the Subsidiaries maintain, with
financially sound insurers, insurance of the types and in the
amounts that are reasonable, customary or required for the
business operated by them, all of which insurance is in full
force and effect;
(w) This Agreement has been duly authorized, executed
and delivered by the Company.
(x) The Company 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 authorization; (ii) transactions
are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting
principles and to maintain accountability for assets; (iii)
access to assets is permitted only in accordance with
management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with existing
assets at reasonable intervals and appropriate action is taken
with respect to any differences.
(y) There is no document or contract of a character
required to be described in the Company Registration Statement or
the Company Prospectus or to be filed as an exhibit to the
Company Registration Statement which is not described or filed as
required. All such contracts to which the Company or any
Subsidiary is a party constitute valid and binding agreements of
the Company or such Subsidiary and are enforceable against the
Company or such Subsidiary in accordance with the terms thereof,
except as may be limited by bankruptcy,
12
insolvency, fraudulent transfer or other similar laws
affecting the rights and remedies of creditors generally and
subject to general principles of equity.
(z) The outstanding shares of the Company's common
stock are duly listed and admitted for trading on the NYSE.
3. Representations and Warranties of the Sellers. Each
of the Sellers (or, where expressly so limited, each of the X.X.
Xxxx, Xx. Trust, the Xxxxx X. Xxxx Trust and the Xxxxx Xxxx
Xxxxxxxx Trust (the "Trust Sellers")), severally and not jointly,
represents and warrants to, and agrees with, SBI, the Company and
the Trust that:
(a) In the case of the Trust Sellers, such Trust
Seller has been duly created, is validly existing under the laws
of the State of North Carolina, has the power and authority to
own its property, and does not conduct any business in any
jurisdiction, own any property [other than securities held in
trust for its beneficiaries] or have any subsidiaries.
(b) Such Seller has full right, power and authority to
enter into and perform its obligations under this Agreement, such
Seller's Contract and Collateral Agreement and the letter
agreement between the Sellers and SBI relating to expenses of the
Trust (the "Reimbursement Agreement").
(c) This Agreement has been duly authorized (in the
case of the Trust Sellers), executed and delivered by such
Seller. The Contract and Collateral Agreement to which such
Seller is a party and the Reimbursement Agreement have been duly
authorized (in the case of the Trust Sellers), executed and
delivered by such Seller and, assuming due authorization,
execution and delivery by the other parties thereto, is each a
valid and binding agreement of such Seller, enforceable against
such Seller in accordance with its terms.
(d) The execution and delivery by such Seller of this
Agreement, the Contract and Collateral Agreement to which such
Seller is a party and the Reimbursement Agreement, the
performance by such Seller of its obligations hereunder and
thereunder and the consummation of the transactions herein and
therein contemplated do not and will not, whether with or without
the giving of notice or passage of time or both, conflict with or
constitute a breach of, or default under, or give the holder of
any indebtedness the right to require the repurchase, redemption
or repayment of all or a portion of such indebtedness by such
Seller under, or result in the creation or imposition of any
lien, charge or encumbrance upon any property or assets of such
Seller pursuant to, any contract, indenture, mortgage, deed of
trust, loan or credit agreement, note, lease or any other
agreement or instrument to which such Seller may be bound, or to
which any of the property or assets of such Seller is subject,
nor will such action result in any violation of any applicable
law, statute, rule or regulation of any government or government
instrumentality having jurisdiction over such Seller or any of
his, her or its assets, properties or operations, or any
applicable judgment, order, writ or decree of any government,
government instrumentality or court having jurisdiction over such
Seller or any of such Seller's assets, or operations.
13
(e) In the case of the Trust Sellers, such Seller is
not an "investment company" or an entity "controlled" by an
"investment company" as such terms are defined in the Investment
Company Act.
(f) Such Seller is the sole registered owner of and
has, and on the Closing Date (and, if any Option DECS are
purchased, at the time of delivery thereof pursuant to Section
4(b)) will have, good and valid title to the Shares to be pledged
and assigned by it under its Collateral Agreement, free and clear
of any security interests, claims, liens, equities and other
encumbrances, except for those created pursuant to its Collateral
Agreement, and such Seller has the full right, power and
authority, and all authorization and approval required by law to
pledge and assign the Shares to be pledged and assigned by such
Seller pursuant to its Collateral Agreement.
(g) Assuming payment of the purchase price on the
Closing Date, delivery of the Shares to be sold by such Seller
pursuant to such Seller's Contract on the Exchange Date will pass
to the Trust and the holders of the Securities title to such
Shares free and clear of any security interests, claims, liens,
equities and other encumbrances. The sale, transfer and delivery
of the Shares to be sold by such Seller pursuant to such Seller's
Contract is not, and at the time of delivery of such Shares will
not be, subject to any right of first refusal or similar rights
of any person pursuant to any contract to which such Seller or
(in the case of a Trust Seller) any beneficiary or subsidiary of
such Seller is a party or by which any of them is bound.
(h) Such Seller hereby repeats and confirms as if set
forth in full herein each of the representations, warranties and
agreements made by such Seller in such Seller's Contract and
Collateral Agreement and agrees that such representations,
warranties and agreements are made hereby for the benefit of, and
may be relied upon by, (i) SBI and Cleary, Gottlieb, Xxxxx &
Xxxxxxxx, counsel to SBI, (ii) the Company and Hunton & Xxxxxxxx,
counsel to the Company and (iii) Skadden, Arps, Slate, Xxxxxxx &
Xxxx LLP, counsel to the Sellers.
(i) Such Seller will not offer for sale, sell or
contract to sell, or otherwise dispose of, directly or
indirectly, or announce the offering of, or file or cause the
filing of any registration statement under the Act with respect
to, any shares of common stock of the Company or any securities
convertible into or exchangeable for, or warrants to acquire,
common stock of the Company for a period of 90 days after the
date of the Company Prospectus, except (i) pursuant to this
Agreement and such Seller's Contract, (ii) pursuant to the
separate underwriting agreement for the underwritten sale of
common stock of the Company described in the Company Registration
Statement, (iii) with SBI's prior written consent or (iv) in bona
fide gifts and private transactions.
(j) Such Seller has not taken and will not take,
directly or indirectly, any action which is designed to or which
has constituted or which might reasonably be expected to cause or
result in stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the
Shares or the DECS.
14
(k) Such Seller is familiar with the Company
Registration Statement and the Company Prospectus and verifies
that the information set forth therein respecting him, her or it
is true and complete.
(l) Such Seller has no reason to believe that any of
the representations and warranties of the Company contained in
Section 2 hereof are not true and correct in all material
respects.
4. Purchase and Sale. (a) Subject to the terms and
conditions and in reliance upon the representations and
warranties herein set forth, the Trust agrees to sell to SBI, and
SBI agrees to purchase from the Trust, at a price of $ per DECS,
3,100,000 Underwritten DECS.
(b) Subject to the terms and conditions and in
reliance upon the representations and warranties herein set
forth, the Trust hereby grants an option to SBI to purchase up to
Option DECS at the same purchase price per DECS as SBI shall
pay for the Underwritten DECS. Such option may be exercised only
to cover over-allotments in the sale of the Underwritten DECS by
SBI. Such option may be exercised in whole or in part at any time
(but not more than once) on or before the 30th day after the date
of the Trust Prospectus upon written or telecopied notice by SBI
to the Trust setting forth the number of the Option DECS as to
which SBI is exercising the option and the settlement date.
Delivery of certificates for the Option DECS, and payment
therefor, shall be made as provided in Section 5 hereof.
(c) As compensation to SBI for its commitment
hereunder, and in view of the fact that the proceeds of the sale
of the DECS will be used by the Trust as specified in the
Contracts, the Sellers agree to pay to SBI, at the time of each
delivery of DECS pursuant to Section 5, an amount equal to
$___.__ per DECS being delivered at such time; provided that the
aggregate amount payable to SBI by the Sellers shall be paid by
the Sellers on a pro rata basis according to the number of Shares
pledged by each Seller pursuant to the Collateral Agreement to
which such Seller is a party.
5. Delivery and Payment. Delivery of and payment for
the Underwritten DECS and the Option DECS (if the option provided
for in Section 4(b) hereof shall have been exercised on or before
the first business day prior to the Closing Date) shall be made
at 10:00 AM, New York City time, on , 1997, (or such later date
not later than five business days after such specified date as
SBI shall designate) which date and time may be postponed by
agreement between SBI and the Trust (such date and time of
delivery and payment for the DECS being herein called the
"Closing Date"). Delivery of the DECS shall be made to SBI for
the account of SBI against payment by SBI of the purchase price
thereof to or upon the order of the Trust by wire transfer to an
account designated in writing by the Trust at least two business
days in advance of the Closing Date, payable in same-day funds.
Delivery of the DECS shall be made through the facilities of the
Depository Trust Company.
The Trust agrees to have the DECS available for
inspection and checking by SBI in New York, New York, not later
than 1:00 PM on the business day prior to the Closing Date.
15
If the option provided for in Section 4(b) hereof is
exercised after the first business day prior to the Closing Date,
the Trust will deliver (at the expense of the Trust) to SBI at
Seven World Trade Center, New York, New York, on the date
specified by SBI (which shall be within three business days after
exercise of said option), certificates for the Option DECS in
such names and denominations SBI shall have requested against
payment of the purchase price thereof to or upon the order of the
Trust by wire transfer to an account designated in writing by the
Trust at least two business days in advance of such settlement
date, payable in same-day funds. If settlement for the Option
DECS occurs after the Closing Date, the Trust, the Company and
the Sellers will deliver to SBI on the settlement date for the
Option DECS, and the obligation of SBI to purchase the Option
DECS shall be conditioned upon receipt of, supplemental opinions,
certificates and letters confirming as of such date the opinions,
certificates and letters delivered on the Closing Date pursuant
to Section 9 hereof.
6. Offering by SBI. It is understood that SBI proposes
to offer the DECS for sale to the public as set forth in the
Trust Prospectus.
7. Agreements of the Trust. The Trust agrees with SBI that:
(a) The Trust will use its best efforts to cause the
Trust Registration Statement, if not effective at the Execution
Time, and any amendment thereof, to become effective. Prior to
the termination of the offering of the DECS, the Trust will not
file any amendment of the Trust Registration Statement or
supplement to the Trust Prospectus without SBI's prior consent.
Subject to the foregoing sentence, if the Trust Registration
Statement has become or becomes effective pursuant to Rule 430A,
or filing of the Trust Prospectus is otherwise required under
Rule 424(b), the Trust will cause the Trust 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 prescribed and will provide evidence
satisfactory to SBI of such timely filing. The Trust will
promptly advise SBI (i) when the Trust Registration Statement, if
not effective at the Execution Time, and any amendment thereto,
shall have become effective, (ii) when the Trust Prospectus, and
any supplement thereto, shall have been filed (if required) with
the Commission pursuant to Rule 424(b), (iii) when, prior to
termination of the offering of the DECS, any amendment to the
Trust Registration Statement shall have been filed or become
effective, (iv) of any request by the Commission for any
amendment of the Trust Registration Statement or supplement to
the Trust Prospectus or for any additional information, (v) of the
issuance by the Commission of any stop order suspending the
effectiveness of the Trust Registration Statement or the
institution or threatening of any proceeding for that purpose and
(vi) of the receipt by the Trust of any notification with respect
to the suspension of the qualification of the DECS for sale in
any jurisdiction or the initiation or threatening of any
proceeding for such purpose. The Trust will use its best 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
DECS is required to be delivered under the Act, any event occurs
as a result of which the Trust Prospectus as then supplemented
would include any untrue statement of a material fact or omit to
state any material
16
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 Trust
Registration Statement or supplement the Trust Prospectus to
comply with the Act or the rules thereunder, the Trust promptly
will prepare and file with the Commission, subject to the second
sentence of paragraph (a) of this Section 7, an amendment or
supplement which will correct such statement or omission or
effect such compliance.
(c) The Trust will furnish to SBI and counsel for SBI,
without charge, copies of the Trust Registration Statement
(including exhibits thereto). The Trust will furnish to SBI not
later than (i) 6:00 PM, New York City time, on the date of
determination of the public offering price of the DECS, if such
determination occurred at or prior to 12:00 Noon, New York City
time, on such date or (ii) 6:00 PM, New York City time, on the
business day following the date on which the public offering
price was determined, if such determination occurred after 12:00
Noon, New York City time, on such date, as many copies of each
Preliminary Trust Prospectus, the Trust Prospectus and any
supplement thereto as SBI may reasonably request; further, so
long as delivery of a prospectus by SBI or any dealer may be
required by the Act, as many copies of each Preliminary Trust
Prospectus and the Trust Prospectus and any supplement thereto as
SBI may reasonably request.
(d) The Trust will arrange for the qualification of the
DECS and the Shares for sale under the laws of such jurisdictions
as SBI may designate and will maintain such qualifications in
effect so long as required for the distribution of the DECS and
will pay the fee of NASD Regulation, Inc. (the "NASD") in
connection with its review, if any, of the Trust Registration
Statement and the offering of the DECS.
8. Agreements of the Company. The Company agrees with SBI
that:
(a) The Company will use its best efforts to cause the
Company Registration Statement, if not effective at the Execution
Time, and any amendment thereof, to become effective. Prior to
the termination of the offering of the DECS, the Company will not
file any amendment of the Company Registration Statement or
supplement to the Company Prospectus without SBI's prior consent
(which shall not be unreasonably withheld). Subject to the
foregoing sentence, if the Company Registration Statement has
become or becomes effective pursuant to Rule 430A, or filing of
the Company Prospectus is otherwise required under Rule 424(b),
the Company will cause the Company 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 prescribed and will provide evidence
satisfactory to SBI of such timely filing. The Company will
promptly advise SBI (i) when the Company Registration Statement,
if not effective at the Execution Time, and any amendment
thereto, shall have become effective, (ii) when the Company
Prospectus, and any supplement thereto, shall have been filed (if
required) with the Commission pursuant to Rule 424(b), (iii)
when, prior to termination of the offering of the DECS, any
amendment to the Company Registration Statement shall have been
filed or become effective, (iv) of any request by the Commission
for any amendment of the Company Registration Statement or
supplement to the Company Prospectus or for any additional
information, (v) of the issuance by the Commission of any stop
order suspending the
17
effectiveness of the Company Registration Statement or
the institution or threatening of any proceeding for that purpose
and (vi) 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 its best
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 (including in
respect of the offering and sale of the DECS), any event occurs
as a result of which the Company 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 Company
Registration Statement or supplement the Company Prospectus to
comply with the Act or the Exchange Act or the respective rules
thereunder, the Company (i) as soon as practicable will notify
SBI of such event or necessity and (ii) promptly will prepare and
file with the Commission, subject to the second sentence of
paragraph (a) of this Section 8, an amendment or supplement which
will correct such statement or omission or effect such
compliance.
(c) As soon as practicable, the Company will make
generally available to its security holders and to SBI 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.
(d) The Company will furnish to SBI and counsel for
SBI, without charge, signed copies of the Company Registration
Statement (including exhibits thereto). The Company will furnish
to SBI not later than (A) 6:00 PM, New York City time, on the
date of determination of the public offering price of the DECS,
if such determination occurred at or prior to 12:00 Noon, New
York City time, on such date or (B) 6:00 PM, New York City time,
on the business day following the date on which the public
offering price of the DECS was determined, if such determination
occurred after 12:00 Noon, New York City time, on such date, as
many copies of each Preliminary Company Prospectus, the Company
Prospectus and any supplement thereto as SBI may reasonably
request; further, so long as delivery of a prospectus by SBI or
any dealer may be required by the Act (including in respect of
the offering and sale of the DECS), as many copies of each
Preliminary Company Prospectus and the Company Prospectus and any
supplement thereto as SBI may reasonably request. The Company
will pay the expenses of printing or other production of the
Company Registration Statement, each Preliminary Company
Prospectus and the Company Prospectus.
(e) The Company will cooperate with the Trust for
purposes of the qualification of the DECS and the Shares for sale
under the laws of such jurisdictions as SBI may designate and
will maintain such qualifications in effect so long as required
for the distribution of the DECS and the Shares and will pay the
fee of the NASD in connection with its review, if any, of the
Company Registration Statement and the offering of the Shares in
connection with the offering of the DECS; provided, however, that
in connection therewith, the Company shall not be
18
required to qualify as a foreign corporation or to file a
general consent to service of process in any jurisdiction.
(f) The Company will not offer for sale, sell or
contract to sell, or otherwise dispose of, directly or
indirectly, or announce the offering of, or file or cause the
filing of any registration statement under the Act with respect
to, any shares of common stock of the Company or any securities
convertible into or exchangeable for, or warrants to acquire,
shares of common stock of the Company for a period of 90 days
after the date of the Company Prospectus without SBI's prior
written consent; provided, however, that the foregoing shall not
restrict the ability of the Company to take any of the foregoing
actions in connection with (i) the offering by the Trust of the
DECS or any delivery of Shares pursuant to the terms of the DECS,
(ii) the offering by certain of the Sellers and others of up to
2,040,000 Shares as described in the Company Registration
Statement or (iii) in connection with any employee stock option
plan, stock ownership plan or dividend reinvestment plan of the
Company in effect at the date of the Company Prospectus.
(g) The Company will furnish the Trust in sufficient
quantities for transmission to holders of the DECS the Company's
annual report to shareholders and reports on Forms 10-K and 10-Q
as soon as practicable after such reports are required to be
filed with the Commission.
(h) The Company will take such actions as may be
reasonably necessary to comply with the rules and regulations of
the NYSE in respect of the offering of the Shares contemplated
hereby.
9. Conditions to the Obligations of SBI. The
obligations of SBI to purchase the DECS shall be subject to the
accuracy of the representations and warranties on the part of the
Trust, the Company and the Sellers contained herein as of the
Execution Time, the Closing Date and any settlement date pursuant
to Section 4(b) hereof, to the accuracy of the statements of the
Trust, the Company and the Sellers made in any certificates
pursuant to the provisions hereof, to the performance by the
Trust, the Company and the Sellers of their respective
obligations hereunder and to the following additional conditions:
(a) If the Trust Registration Statement or the Company
Registration Statement has not become effective prior to the
Execution Time, unless SBI agrees in writing to a later time,
such Trust Registration Statement or Company Registration
Statement will become effective not later than (i) 6:00 PM, New
York City time, on the date of determination of the public
offering price of the DECS, if such determination occurred at or
prior to 3:00 PM, New York City time, on such date or (ii) 12:00
Noon, New York City time, on the business day following the day
on which the public offering price of the DECS was determined, if
such determination occurred after 3:00 PM, New York City time, on
such date; if filing of the Trust Prospectus or the Company
Prospectus, or any supplements thereto, is required pursuant to
Rule 497(h) or Rule 424(b), such Trust Prospectus or Company
Prospectus, and any such supplements, will be filed in the manner
and within the time period required by such Rule; and no stop
order suspending the effectiveness of the Trust Registration
Statement or the Company
19
Registration Statement shall have been issued and no proceedings
for that purpose shall have been instituted or threatened.
(b) SBI shall have received the opinion of Xxxxxxxx,
Xxxxxx & Finger, special Delaware counsel for the Trust, dated
the Closing Date, with respect to such matters as SBI may
reasonably request. Such opinion shall also be addressed to the
Sellers.
(c) SBI shall have received the opinion of Hunton &
Xxxxxxxx, counsel for the Company, dated the Closing Date, in
form and substance satisfactory to SBI, to the effect that:
(i) each of the Company, [DIMON International, Inc.,
Florimex Worldwide, Inc., DIMON do Brasil Tabacos
Ltds, DIMON Zimbabwe (PVY) LTD, DIMON GMBH,
Florimex Worldwide B.V., Florimex U.S.A. and
Baardse B.V.] (individually an "Opinion
Subsidiary" and collectively the "Opinion
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 Company Prospectus;
(ii) all the outstanding shares of capital stock of each
Opinion Subsidiary have been duly and validly
authorized and issued and are fully paid and
nonassessable, and, except as otherwise set forth
in the Company Prospectus, all outstanding shares
of capital stock of each of the Opinion
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, after due
inquiry, any other security interests, claims,
liens or encumbrances;
(iii) the Company's authorized equity capitalization is as
set forth in the Company Prospectus; all of the
Shares have been duly and validly authorized and
issued, are fully paid and nonassessable and
conform to the description thereof contained in
the Company Prospectus; there are no preemptive
or other similar rights to subscribe for or to
purchase any of the Shares; and the form of the
certificates evidencing the Shares complies with
all formal requirements of Virginia law;
(iv) to the best knowledge of such counsel, there is no
pending or threatened action, suit or proceeding
before any court or governmental agency,
authority or body or any arbitrator involving the
Company or any of its subsidiaries or any of
their respective properties of a character
required to be disclosed in the Company
Registration Statement which is not adequately
disclosed in the Company Prospectus, and there is
no franchise, contract or other document of a
character required to be described in the Company
Registration Statement or Company Prospectus, or
to be filed as an exhibit, which is not described
or filed as required;
20
(v) the Company Registration Statement has become
effective under the Act; any required filing of
any Preliminary Company Prospectus and the
Company Prospectus, and any supplements thereto,
pursuant to Rule 424(b) has been made in the
manner and within the time period required by
Rule 424(b); to the best knowledge of such
counsel, no stop order suspending the
effectiveness of the Company Registration
Statement has been issued, and no proceedings for
that purpose have been instituted or threatened;
(vi) the Company Registration Statement and the Company
Prospectus (except for financial statements and
schedules included therein, as to which such
counsel need express no opinion) comply as to
form in all material respects with the Act and
the rules and regulations of the Commission
thereunder; and the documents incorporated by
reference in the Company Registration Statement
and the Company Prospectus (other than the
financial statements and schedules included
therein, as to which such counsel need express no
opinion), when they were filed with the
Commission, complied on their face as to form in
all material respects with the requirements of
the Exchange Act and the rules and regulations of
the Commission thereunder;
(vii) this Agreement has been duly authorized, executed and
delivered by the Company;
(viii) neither the performance of this Agreement by the
Company, nor the distribution of the Shares and
the consummation of the other of the transactions
herein contemplated nor the fulfillment of the
terms hereof will conflict with, result in a
breach or violation of, or constitute a default
under any law or the Articles of Incorporation or
By-laws of the Company or the terms of any
indenture or other agreement or instrument known to
such counsel and to which the Company or any of its
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 subsidiaries of any court, regulatory
body, administrative agency, governmental body or
arbitrator having jurisdiction over the Company
or any of its subsidiaries;
(ix) no holders of securities of the Company other
than the Sellers have rights to the registration
of such securities under the Company Registration
Statement; and
(x) no consent, approval, authorization, order,
registration or qualification of or with any such
court or governmental agency or body is required
for the consummation by the Company of the
transactions contemplated by this Agreement,
except such as have been obtained under the Act
and such as may be required under state
securities or Blue Sky laws (as to which such
21
counsel need express no opinion) in connection
with the purchase and distribution of the DECS by
SBI and the distribution of the Shares pursuant
to the terms of the DECS.
In addition, such counsel shall state that they have
participated in conferences with directors, officers and other
representatives of the Company, representatives of the
independent public accountants for the Company, the Sellers and
counsel for the Sellers, SBI and counsel for SBI, at which
conferences the contents of the Company Registration Statement
and the Company Prospectus and related matters were discussed,
and, although such counsel have not independently verified and
are not passing upon and assume no responsibility for the
accuracy, completeness or fairness of the statements contained in
the Company Registration Statement and the Company Prospectus
(except to the extent specified elsewhere in such opinion or with
reference to such counsel), no facts have come to the attention
of such counsel that lead such counsel to believe that, at the
Company Effective Date, the Company Registration Statement
included any 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 or that the Company Prospectus includes any untrue
statement of a material fact or omits to state any material fact
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading (it
being understood that such counsel express no view with respect
to the financial statements and related notes, the financial
statement schedules or other financial, statistical and
accounting information or data contained or incorporated by
reference in the Company Registration Statement or Company
Prospectus).
In rendering such opinion, such counsel may rely (A)
as to matters involving the application of laws of any
jurisdiction other than the Commonwealth of Virginia, the State
of North Carolina, the State of New York or the United States, to
the extent they deem proper and specified in such opinion, upon
the opinion of other counsel of good standing whom they believe
to be reliable and who are reasonably satisfactory to counsel for
SBI and (B) as to matters of fact, to the extent they deem proper, on
certificates of responsible officers of the Company and public
officials. References to the Company Prospectus in this paragraph
(c) include any supplements thereto at the Closing Date. Such
opinion shall also be addressed to the Sellers.
(d) SBI shall have received the opinion of Skadden,
Arps, Slate, Xxxxxxx & Xxxx LLP, counsel for the Sellers, dated
the Closing Date, in the form attached hereto as Exhibit B, and
the opinions of Hunton & Xxxxxxxx, North Carolina counsel for the
individual Sellers, and of Xxxxxx Xxxxxxx Xxxxxxxxx & Xxxx PLLC,
North Carolina counsel for the Trust Sellers, each dated the
Closing Date, in form and substance satisfactory to SBI, to the
effect that:
(i) each of the Trust Sellers has been duly created and is
validly existing and in good standing under the
law of the State of North Carolina;
(ii) this Agreement has been duly authorized by each of the
Trust Sellers and duly executed and delivered by
each of the Sellers under the law of the State of
North Carolina; each of the Contracts and
Collateral Agreements and the Reimbursement
Agreement have been duly authorized by each of
22
the Trust Sellers and duly executed and delivered
by each Seller under the law of the State of
North Carolina and, assuming due authorization,
execution and delivery by the other parties
thereto, constitutes a valid and legally binding
agreement of such Seller, enforceable against
such Seller in accordance with its terms, subject
to bankruptcy, insolvency and other similar laws
affecting creditors' rights generally, and to
general equitable principles; and the compliance
by each Seller with all of the provisions of this
Agreement, the Contract and Collateral Agreement
to which such Seller is a party and the
Reimbursement Agreement, and the consummation of
the transactions herein and therein contemplated,
will not violate any North Carolina law, rule or
regulation or any order or decree known to such
counsel of any court or governmental agency or
body having jurisdiction over any Seller or any
of its properties;
(iii) no consent, approval, license, authorization, order
or validation of, and no filing, recording, or
registration with, any North Carolina
governmental authority, agency or body or, to
such counsel's knowledge, any court is required
for the compliance by each Seller with all of the
provisions of this Agreement, the Contract and
Collateral Agreement to which such Seller is a
party and the Reimbursement Agreement, except for
such consents, approvals, authorizations,
registrations or qualifications as may be
required under state securities or Blue Sky laws
in connection with the purchase and distribution
of the DECS and the Shares;
(iv) the Certificate of Spouse attached as Exhibit C to each
Collateral Agreement will, when executed and
delivered by the spouse of any individual Seller,
be effective and sufficient to foreclose any
claims such spouse may have with respect to the
Collateral (as defined therein) pledged
thereunder that may be superior to the rights of
the Trust in such Collateral in the event of a
change in the marital status of such Seller; and
(v) the enforceability of each Contract and Collateral
Agreement against the related Seller will not be
adversely affected by the death or legal
incapacity of such Seller (in the case of
individual Sellers) or any settlor or beneficiary
of such Seller (in the case of Trust Sellers).
(e) SBI shall have received from Cleary, Gottlieb,
Xxxxx & Xxxxxxxx, counsel for SBI and the Trust, such opinion or
opinions, dated the Closing Date, with respect to the issuance
and sale of the DECS, the Trust Registration Statement, the Trust
Prospectus (together with any supplement thereto), the
Fundamental Documents, the Company Registration Statement, the
Company Prospectus (together with any supplement thereto) and
other related matters as SBI may reasonably require, and the
Trust and the Company shall have furnished to such counsel such
documents as they reasonably request for the purpose of enabling
them to pass upon such matters.
23
(f) The Trust shall have furnished to SBI a certificate
of the Trust, signed by the Managing Trustee and dated the
Closing Date, to the effect that:
(i) the representations and warranties of the Trust 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 Trust 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; and
(ii) no stop order suspending the effectiveness of the
Trust Registration Statement or the use of the Trust
Prospectus has been issued and no proceedings for that
purpose have been instituted or, to the Trust's knowledge,
threatened.
(g) The Company shall have furnished to SBI a
certificate of the Company, signed by the Chairman of the Board
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 Company Registration
Statement, the Company Prospectus, any supplements to the Company
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
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
Company Registration Statement or the use of the Company
Prospectus has been issued and no proceedings for that
purpose have been instituted or, to the Company's
knowledge, threatened; and
(iii) since the date of the most recent financial
statements included in, or incorporated by reference in,
the Company Prospectus (exclusive of any supplement
thereto), there has been no Company Material Adverse
Effect, except as set forth in or contemplated in the
Company Prospectus (exclusive of any supplement thereto).
(h) Each of the Sellers shall have furnished to SBI a
certificate, dated the Closing Date, reasonably satisfactory to
SBI as to the accuracy of the respective representations and
warranties of such Seller herein at and as of the Closing Date,
as to the performance by such Seller of all of such Seller's
obligations hereunder to be performed at or prior to the Closing
Date and as to such other matters as SBI may reasonably request.
(i) At the Execution Time and at the Closing Date,
Price Waterhouse LLP shall have furnished to SBI a letter or
letters, dated as of such dates, in form and substance
satisfactory to SBI, confirming that they are independent
accountants within the meaning of the Act and the applicable
published rules and regulations thereunder [and that they have
performed a review of the Company's unaudited condensed financial
information for the nine-month
24
periods ended March 31, 1997 and March 31, 1996 in accordance
with Statement of Auditing Standards No. 71] and stating in
effect that:
(i) in their opinion the audited financial
statements included in the Company Registration Statement
and the Company Prospectus and reported on by them comply
in form in all material respects with the applicable
accounting requirements of the Act and the related
published rules and regulations with respect to
registration statements on Form S-3;
(ii) on the basis of a reading of the latest
unaudited condensed consolidated financial statements made
available by the Company and its subsidiaries; [their
limited review in accordance with the standards established
by the American Institute of Certified Public Accountants
of the unaudited condensed consolidated interim financial
information for the nine-month period ended March 31, 1997,
and as at March 31, 1997;] carrying out certain specified
procedures (but not an examination in accordance with
generally accepted audited standards) which would not
necessarily reveal matters of significance with respect to
the comments set forth in such letter; a reading of the
minutes of the meetings of the stockholders, the Board of
Directors and the audit committee of the Company and the
Subsidiaries; the inquiries of certain officials of the
Company who have responsibility for financial and
accounting matters of the Company as to whether the
unaudited condensed consolidated financial statements
included in the registration statement comply as to form in
all material respects with the applicable accounting
requirements of the Exchange Act [as it applies to Form
10-Q] and the published rules and regulations thereunder,
nothing came to their attention which caused them to
believe that:
(1) the unaudited condensed consolidated
financial statements included in the Company
Registration Statement do not comply as to form in all
material respects with the applicable accounting
requirements of the Exchange Act [as it applies to
Form 10-Q] and the applicable rules and regulations
thereunder or that any material modifications should
be made to the unaudited condensed consolidated
financial statements in order for them to be in
conformity with generally accepted accounting
principles; or
(2) with respect to the period subsequent to the
date of the most recent financial statements (other
than capsule information), audited or unaudited,
included in the Company Registration Statement and the
Company Prospectus, there were, at a specified date
not more than five business days prior to the date of
the letter, any material increases in the long-term
debt of the Company and its subsidiaries, any material
change in the number of issued shares of capital stock
of the Company, any material decreases in the total
assets or stockholders' equity of the Company or any
material decreases in the excess of current assets
over current liabilities of the Company and its
subsidiaries as compared with the amounts shown on the
most recent consolidated balance sheet included in the
Company Registration Statement and the Company
Prospectus, or for the period from the date of the
most recent financial statements included in the Company
25
Registration Statement and the Company Prospectus to
such specified date there were any decreases, as
compared with the corresponding period in the
preceding year in revenues, operating income, net
income before income taxes, total or per share amounts
of net income or net interest income of the Company
and its subsidiaries; except in all instances for
changes or decreases set forth in such letter, in
which case the letter shall be accompanied by an
explanation by the Company as to the significance
thereof unless said explanation is not deemed
necessary by SBI;
(iii) they have performed certain other specified
procedures as a result of which they determined that
certain information of an accounting, financial or
statistical nature (which is limited to accounting,
financial or statistical information derived from the
general accounting records of the Company and its
subsidiaries) set forth in the Company Registration
Statement and the Company Prospectus agrees with the
accounting records of the Company and its subsidiaries,
excluding any questions of legal interpretation; and
(iv) on the basis of a reading of any unaudited
pro forma condensed financial statements included in the
Company Registration Statement and the Company Prospectus
(the "pro forma financial statements"); carrying out
certain specified procedures; inquiries of certain
officials of the Company and relevant other entities who
have responsibility for financial and accounting matters;
and proving the arithmetic accuracy of the application of
the pro forma adjustments to the historical amounts in the
pro forma financial statements, nothing came to their attention
which caused them to believe that the pro forma financial
statements do not comply in form in all material respects
with the applicable accounting requirements of Rule 11-02
of Regulation S-X or that the pro forma adjustments have
not been properly applied to the historical amounts in the
compilation of such statements.
References to the Company Prospectus in this paragraph
(i) include any supplement thereto at the date of the letter.
(j) At the Execution Time and on the Closing Date,
Ernst & Young LLP shall have delivered to SBI a letter or
letters, dated as of the date of delivery, in form and substance
satisfactory to SBI, confirming that they were independent public
accountants with respect to Xxxxxxx within the meaning of the Act
and the Exchange Act and the respective applicable published
rules and regulations thereunder.
[(k) At the Execution Time and at the Closing Date, o
shall have furnished to SBI a letter or letters (which may refer
to letters previously delivered to SBI), dated as of the
Execution Time and as of the Closing Date, in form and substance
satisfactory to SBI, including statements and information of the
type ordinarily included in accountants "comfort letters" to
underwriters with respect to the financial statements, financial
statement schedules, and certain other financial information
contained in the Trust Registration Statement or Trust
Prospectus.]
26
(l) Subsequent to the Execution Time or, if earlier,
the dates as of which information is given in each of the Trust
Registration Statement and the Company Registration Statement
(exclusive of any amendment thereof) and each of the Trust
Prospectus and the Company Prospectus (exclusive of any
supplement thereto), there shall not have been (i) any change or
decrease specified in the letter or letters referred to in
paragraphs (i) and (j) of this Section 9 or (ii) any change, or
any development involving a prospective change, in or affecting
the business or properties of the Company and its direct and
indirect subsidiaries the effect of which, in any case referred
to in clause (i) or (ii) above, is, in the judgment of SBI, so
material and adverse as to make it impractical or inadvisable to
proceed with the offering or delivery of the DECS as contemplated
by the Trust Registration Statement and the Company Registration
Statement (in either case, exclusive of any amendment thereof)
and the Trust Prospectus and the Company Prospectus (in either
case, exclusive of any supplement thereto).
(m) Subsequent to the Execution Time, there shall not
have been any decrease in the ratings of any of the Company's
debt securities by any "nationally recognized statistical rating
organization" (as defined for purposes of Rule 436(g) under the
Act) or any notice given of any intended or potential decrease in
any such rating or of a possible change in any such rating that
does not indicate the direction of the possible change.
(n) At the Execution Time, the Company shall have
furnished to SBI letters substantially in the form of Exhibit A
hereto from the directors and officers of the Company [and
certain other shareholders specified by SBI].
(o) The DECS shall have been approved for listing on
the NYSE, subject only to official notice of issuance.
(p) The NASD shall not have raised any objection with
respect to the fairness and reasonableness of the underwriting
terms and arrangements.
(q) Each Fundamental Agreement shall have been executed
and delivered by all parties thereto, and each Seller shall have
delivered to the Collateral Agent the number of Shares required
by the Collateral Agreement to which such Seller is a party to be
initially pledged and assigned by such Seller thereunder in
accordance with the requirements of such Collateral Agreement.
(r) Prior to the Closing Date, the Trust, the Company
and each of the Sellers shall have furnished to SBI such further
information, certificates and documents as SBI may reasonably
request.
If any of the conditions specified in this Section 9
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 SBI and counsel for SBI, this Agreement and all
obligations of SBI hereunder may be canceled at, or at any time
prior to, the Closing Date by SBI. Notice of such cancellation
shall be given to the Trust and the Company in writing or by
telephone or facsimile confirmed in writing.
27
10. Expenses. (a) The Sellers, severally in proportion
to the number of "Total Shares" set forth opposite their names on
Schedule I hereto, will pay all expenses incident to the
performance by the Trust and each Seller of their respective
obligations under this Agreement and their Contracts and
Collateral Agreements, including (i) the preparation, printing
and filing of the Notification and the Trust Registration
Statement (including financial statements and exhibits) as
originally filed and of each amendment thereto, (ii) the
preparation, printing and delivery of this Agreement, the Trust
Agreement, each of the Fundamental Agreements and such other
documents as may be required in connection with the offering,
purchase, sale, issuance or delivery of the DECS, (iii) the
preparation, issuance and delivery of the certificates for the
DECS to SBI, (iv) the fees and disbursements of the Trust's
counsel, accountants and other advisors, (v) the fees and
disbursements of the Sellers' counsel and other advisors, (vi)
the qualification of the DECS under securities laws in accordance
with the provisions of Section 7(d) hereof, including filing fees
and the reasonable fees and disbursements of the counsel for SBI
in connection therewith and in connection with the preparation of
the related blue sky survey and any supplement thereto, (vii) the
printing and delivery to SBI of copies of each Preliminary Trust
Prospectus, the Trust Prospectus and any amendments or
supplements thereto, (viii) the fees and expenses of any transfer
agent or registrar for the DECS, (ix) the filing fees incident
to, and the reasonable fees and disbursements of counsel to SBI
in connection with, securing any required review by the NASD of
the Trust Registration Statement and the offering of the DECS in
accordance with the provisions of Section 7(d) hereof, (x) the
fees and expenses incurred in connection with the listing of the
DECS on the New York Stock Exchange and (xi) the fees and
expenses incurred in connection with the preparation and filing
of a registration statement under the Exchange Act relating to
the DECS. The Sellers severally (in proportion to the number of
"Total Shares" set forth opposite their names on Schedule I
hereto) will reimburse SBI on the Closing Date in immediately
available funds for the Up-Front Fee Amount and the Up-Front
Expense Amount (each as defined in the Fund Expense Agreement
dated as of , 1997 between SBI and BoNY) and for the up-front
fees of the trustees of the Trust paid by SBI.
(b) The Company will pay all expenses incident to the
performance by the Company of its obligations under this
Agreement, including (i) the preparation, printing and filing of
the Company Registration Statement (including financial
statements and exhibits) as originally filed and of each
amendment thereto, (ii) the preparation, issuance and delivery of
the certificates for the Shares to the Trust, (iii) the fees and
disbursements of the Company's counsel, accountants and other
advisors, (iv) the qualification of the Shares under state
securities laws in accordance with the provisions of Section 8(e)
hereof, including filing fees and the reasonable fees and
disbursements of the counsel for SBI in connection therewith and
in connection with the preparation of any related blue sky survey
and any supplement thereto, (v) the printing and delivery to SBI
of copies of each Preliminary Company Prospectus, the Company
Prospectus and any amendments or supplements thereto, (vi) the
fees and expenses of any transfer agent or registrar for the
Shares, (vii) the filing fees incident to, and the reasonable
fees and disbursements of counsel to SBI in connection with,
securing any required review by the NASD of the Company
Registration Statement and the offering of the Shares in
accordance with the provisions of Section 8(e) hereof and (viii)
the fees and expenses incurred in connection with the listing of
the Shares on the New York Stock Exchange.
28
(c) If the sale of the DECS provided for herein is not
consummated because any condition to the obligations of SBI set
forth in Section 9 hereof is not satisfied, because of any
termination pursuant to Section 12 hereof or because of any
refusal, inability or failure on the part of the Company or any
Seller to perform any agreement herein or comply with any
provision hereof other than by reason of a default by SBI, each
of the Sellers jointly and severally will reimburse SBI upon
demand for all reasonable out-of-pocket expenses (including
reasonable fees and disbursements of counsel) that shall have
been incurred by SBI in connection with the proposed purchase and
sale of the DECS.
11. Indemnification and Contribution. (a) The Company
agrees to indemnify and hold harmless each Seller (and in the
case of the Trust Sellers, each of its trustees), the Trust, each
of the Trustees, SBI, the directors, officers, employees and
agents of SBI, and each person who controls a Seller, the Trust
or SBI within the meaning of the Act, the Exchange Act or other
Federal or state statutory law or regulation, at common law or
otherwise, 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 Company Registration Statement as
originally filed or in any amendment thereof, or in any
Preliminary Company Prospectus or the Company Prospectus, or in
any amendment thereof or supplement thereto (each such document,
a "Company Registration Document"), 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 under the indemnity agreement in this paragraph (a) 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 in any
Company Registration Document in reliance upon and in conformity
with (i) written information furnished to the Company by SBI
specifically for inclusion therein or (ii) written information
relating to a Seller furnished to the Company by such Seller
specifically for inclusion therein. This indemnity agreement will
be in addition to any liability which the Company may otherwise
have.
(b) Subject to paragraph (g) of this Section 11, each
Seller agrees to indemnify and hold harmless the Trust, each of
the Trustees, SBI, the directors, officers, employees and agents
of SBI, and each person who controls the Trust or SBI within the
meaning of the Act, the Exchange Act or other Federal or state
statutory law or regulation, at common law or otherwise, 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 (i) any untrue statement
or alleged untrue statement of a material fact contained in any
Company Registration Document or the omission or alleged omission
to state in any Company Registration Document a material fact
required to be stated therein or necessary to make the statements
therein not
29
misleading, but only with reference to written information
relating to such Seller furnished to the Company by
such Seller specifically for inclusion in the Company
Registration Documents, or upon (ii) any untrue statement or
alleged untrue statement of a material fact contained in the
Trust Registration Statement as originally filed or in any
amendment thereof, or in any Preliminary Trust Prospectus or the
Trust Prospectus, or in any amendment thereto or supplement
thereto (each such document, a "Trust Registration Document") or
the omission or alleged omission to state in any Trust
Registration Document a material fact required to be stated
therein or necessary to make the statements therein not
misleading; and in each such case 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 Sellers will not be liable under the
indemnity agreement in this paragraph (b) 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 in any Company Registration
Document or Trust Registration Document in reliance upon and in
conformity with written information furnished to the Company or
the Trust by SBI specifically for inclusion therein. The Trust,
the Company and SBI acknowledge that the names and addresses of such Seller,
the number of Shares beneficially owned by such Seller and the
statements with respect to such Seller set forth in the footnotes
to the table, in each case under the heading "Selling
Stockholders" in any Preliminary Company Prospectus or the
Company Prospectus, constitute the only information furnished in
writing by or on behalf of such Seller for inclusion in the
Company Registration Documents, and each Seller confirms that
such information is correct. This indemnity agreement will be in
addition to any liability which any Seller may otherwise have.
(c) SBI agrees to indemnify and hold harmless the
Company, each of its directors, each of its officers who signs
the Company Registration Statement, and each person who controls
the Company within the meaning of the Act, the Exchange Act or
other Federal or state statutory law or regulation, at common law
or otherwise, to the same extent as the foregoing indemnity in
paragraph (a) from the Company to SBI, but only with reference to
written information furnished to the Company by SBI specifically
for inclusion in the Company Registration Documents. This
indemnity agreement will be in addition to any liability which
SBI may otherwise have. The Company acknowledges that the
statements set forth in the first paragraph of the inside cover
page and under the heading "Plan of Distribution" in any
Preliminary Company Prospectus or the Company Prospectus
constitute the only information furnished in writing by or on
behalf of SBI for inclusion in the Company Registration
Documents, and SBI confirms that such statements are correct.
(d) SBI agrees to indemnify and hold harmless each
Seller to the same extent as the foregoing indemnity in paragraph
(b) from such Seller to SBI, but only with reference to written
information furnished to the Company or the Trust by SBI
specifically for inclusion in the Company Registration Documents
or the Trust Registration Documents. This indemnity agreement
will be in addition to any liability which SBI may otherwise
have. Each Seller acknowledges that the statements set forth in
the first paragraph of the inside cover page and under the
heading "Plan of Distribution" in any Preliminary Company
Prospectus or the Company Prospectus and in the last paragraph of
the cover page, the first paragraph of the inside
30
cover page and under the heading "Plan of Distribution in any
Preliminary Trust Prospectus or the Trust Prospectus constitute
the only information furnished in writing by or on behalf of SBI
for inclusion in the Company Registration Documents or the Trust
Registration Documents, and SBI confirms that such statements are
correct.
(e) Promptly after receipt by an indemnified party
under this Section 11 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 11, 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 any liability
under paragraphs (a), (b), (c) or (d) 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 paragraphs (a), (b), (c) or (d) above. The
indemnifying party shall be entitled to appoint counsel of
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 as set forth
below); provided, however, that such counsel shall be
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 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 upon the advice of its counsel 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 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, 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.
(f) Subject to paragraph (h) of this Section 11, in the
event that the indemnity provided in paragraph (a), (b), (c) or
(d) of this Section 11 is unavailable to or insufficient to hold
harmless an indemnified party for any reason, the Company, each
Seller and SBI agree as among themselves 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, each Seller and SBI may be subject in such
proportion as is appropriate to reflect the
31
relative benefits received by the Company, by such Seller and by
SBI from the offering of the DECS; provided, however, that in no
case shall SBI be responsible for any amount in excess of the
underwriting discount applicable to the DECS purchased by SBI
hereunder. If the allocation provided by the immediately
preceding sentence is unavailable for any reason, the Company,
each Seller and SBI shall contribute in such proportion as is
appropriate to reflect not only such relative benefits but also
the relative fault of the Company, such Seller and SBI in
connection with the statements or omissions which resulted in
such Losses as well as any other relevant equitable
considerations. The benefits received by the Company and the
Sellers shall be deemed to be equal to the total net proceeds
from the offering (before deducting expenses) received by the
Trust, and the benefits received by SBI shall be deemed to be
equal to the total underwriting discounts and commissions, in
each case as set forth on the cover page of the Trust Prospectus
and, as between the Company and SBI, the Company shall be deemed
for this purpose to have received such total net proceeds as are
received by the Trust. Relative fault shall be determined by
reference to whether any alleged untrue statement or omission
relates to information provided by the Company, a Seller or SBI.
The Company, each Seller and SBI 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 (f), 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 11, each person
who controls SBI within the meaning of either the Act or the
Exchange Act and each director, officer, employee and agent of
SBI shall have the same rights to contribution as SBI, and each
person who controls the Company or any Seller within the meaning
of either the Act or the Exchange Act, each officer of the
Company who shall have signed the Company Registration Statement
and each director of the Company shall have the same rights to
contribution as the Company or such Seller, as the case may be,
subject in each case to the applicable terms and conditions of
this paragraph (f).
(g) The liability of each of the Sellers under
paragraph (b)(i) of this Section 11 with respect to any Company
Registration Document shall be limited to an amount equal to the
initial public offering price of a portion of the DECS equal to
such Seller's proportionate share of the total Shares listed on
Schedule I hereto, less the underwriting discount with respect to
such DECS.
(h) Solely as between each Seller on one hand and the
Company on the other (but without affecting the liability of any
Seller or the Company to SBI under paragraph (f) above), the
contribution obligations of any Seller and of the Company under
such paragraph (f) shall be in proportion to the relative fault
of such Seller and the Company in connection with the statements
or omissions which resulted in the applicable Losses as well as
any other relevant equitable considerations, and each Seller and
the Company agree to make additional contribution payments among
themselves to effect the agreement set forth in this paragraph
(h) if any Seller or the Company is required to make contribution
payments to SBI under paragraph (f) above.
12. Termination. This Agreement shall be subject to
termination in the absolute discretion of SBI, by notice given to
the Trust and the Company prior to delivery of and payment
32
for the DECS, if prior to such time (i) trading in the Company's
common stock shall have been suspended by the Commission or the
NYSE or trading in securities generally on the NYSE shall have
been suspended or limited or minimum prices shall have been
established on the NYSE, (ii) a banking moratorium shall have
been declared by either 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 other calamity or crisis, the effect of which
on financial markets of the United States is such as to make it,
in the judgment of SBI, impracticable or inadvisable to proceed
with the offering or delivery of the DECS as contemplated by the
Trust Prospectus (exclusive of any supplement thereto).
13. Representations and Indemnities to Survive. The
respective agreements, representations, warranties, indemnities
and other statements of the Trust, the Company, the Sellers or
their respective officers, if applicable, and of SBI 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
SBI, the Trust, the Company, the Sellers or any of the officers,
directors or controlling persons referred to in Section 11
hereof, and will survive delivery of and payment for the DECS.
The provisions of Sections 10 and 11 hereof shall survive the
termination or cancellation of this Agreement.
14. Notices. All communications hereunder will be in
writing and effective only on receipt, and, if sent to SBI, will
be mailed, delivered or telegraphed and confirmed to it at Seven
Xxxxx Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, attention of the
Legal Department [(except that notices required by paragraphs o
of Section o will be sent by telecopy and confirmed by overnight
courier and other documents required by paragraphs o of Section o
shall be sent by overnight courier, in either case, to Salomon
Brothers Inc, Seven Xxxxx Xxxxx Xxxxxx, Xxx Xxxx, XX 00000, Attn:
Xxxxxxx Xxxxxxx, Esq., Telecopy: 000-000-0000, telephone:
000-000-0000)]; if sent to the Trust, will be mailed, delivered
or telegraphed and confirmed to it at o, Attention: o; if sent to
the Company, will be mailed, delivered, telegraphed and confirmed
to it o, Attention: o and if sent to the Sellers, will be mailed,
delivered or telegraphed and confirmed to them at o.
15. 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 11 hereof, and no
other person will have any right or obligation hereunder.
16. Counterparts. This Agreement may be executed by
any one or more of the parties 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.
17. Applicable Law. THIS AGREEMENT WILL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
33
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 Trust,
the Company, the Sellers and Salomon Brothers Inc.
Very truly yours,
DECS Trust
By:____________________________
DIMON Incorporated
By:_____________________________
Sellers
________________________________
X.X. Xxxx, Xx.
________________________________
X.X. Xxxx, III
________________________________
Xxxxx Xxxx Page
________________________________
Xxxxxxx X. Page
________________________________
X.X. Xxxx
34
___________________, as Trustee of
X.X. Xxxx, Xx. Trust
________________________________
___________________, as Trustee of
Xxxxx X. Xxxx Trust
________________________________
________________________________
Xxxxxx X. Xxxx
________________________________
Xxxxxxx X. Xxxx
________________________________
Xxxxxx X. Xxxx, Xx.
________________________________
Xxxxx Xxxx Xxxxxxxx
35
___________________, as Trustee of
Xxxxx Xxxx Davidson Trust
_____________________________
The foregoing Agreement is hereby
confirmed and accepted as of
the date first above written.
Salomon Brothers Inc
By:___________________________
36
SCHEDULE I
Firm Additional Total
Seller Shares Shares Shares
------------------ ------- ------- -------
X.X. Xxxx, Xx. 102,322 12,678 115,000
X.X. Xxxx, III 533,853 66,147 600,000
Xxxxx Xxxx Page 343,328 42,540 385,868
Xxxxxxx X. Page 53,830 6,670 60,500
X.X. Xxxx 700,565 86,803 787,368
X.X. Xxxx, Xx. Trust 166,384 20,616 187,000
Xxxxx X. Xxxx Trust 166,384 20,616 187,000
Xxxxxx X. Xxxx 324,761 40,239 365,000
Xxxxxxx X. Xxxx 13,346 1,654 15,000
Xxxxxx X. Xxxx, Xx. 392,710 48,658 441,368
Xxxxx Xxxx Xxxxxxxx 116,113 14,387 130,500
Xxxxx Xxxx Davidson Trust 186,404 23,096 209,500
------- ------- -------
3,100,000 384,104 3,484,104
SCHEDULE II
List of Subsidiaries
II-1
EXHIBIT A
______, 1997
Salomon Brothers Inc
Seven Xxxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
This letter is being delivered to you in connection
with the proposed Underwriting Agreement (the "Underwriting
Agreement") among DECS Trust, a Delaware statutory business trust
(the "Trust"), DIMON Incorporated, a Virginia corporation (the
"Company"), the Sellers named therein and Salomon Brothers Inc
relating to an underwritten public offering of DECS of the Trust,
representing beneficial interests in contracts relating to shares
of common stock, no par value, of the Company ("Common Stock").
In order to induce you to enter into the Underwriting
Agreement, the undersigned agrees not to offer for sale, sell or
contract to sell, or otherwise dispose of, directly or
indirectly, or announce the offering of, or cause the filing of
any registration statement under the Securities Act of 1933 with
respect to, any shares of Common Stock beneficially owned by the
undersigned or any securities convertible into, or exchangeable
for, or warrants to acquire, shares of Common Stock for a period
of 90 days following the day on which the Underwriting Agreement
is executed without the prior written consent of Salomon Brothers
Inc, other than shares of Common Stock disposed of as bona fide
gifts.
If for any reason the Underwriting Agreement shall be
terminated prior to the Closing Date (as defined in the
Underwriting Agreement), the agreement set forth above shall
likewise be terminated.
Yours very truly,
---------------------------------
II-1
EXHIBIT B
[Form of Opinion of Skadden, Arps]
A-1
