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CSX CORPORATION
$490,000,000
Zero Coupon Convertible Debentures due 2021
UNDERWRITING AGREEMENT
Dated: October 24, 2001
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Exhibit 1.1
EXECUTION COPY
CSX CORPORATION
$490,000,000
Zero Coupon Convertible Debentures due 2021
UNDERWRITING AGREEMENT
October 24, 2001
Credit Suisse First Boston Corporation
As Representative of the Several Underwriters
Eleven ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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Ladies and Gentlemen:
CSX CORPORATION, a Virginia corporation (the "Company"), proposes to
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issue and sell to the parties named in Schedule II hereto (the "Underwriters"),
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for whom you are acting as representative (the "Representative") $490,000,000
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aggregate principal amount at maturity of its Zero Coupon Convertible Debentures
due 2021 (the "Initial Securities") and to grant to the Underwriters the option
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described in Section 2(b) to purchase all or any part of an additional
$73,500,000 aggregate principal amount at maturity of the Company's Zero Coupon
Convertible Debentures due 2021 to cover over-allotments, if any (the "Option
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Securities"). The Initial Securities, together with the Option Securities, are
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collectively referred to herein as the "Securities". The Securities are to be
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issued under an indenture (the "Indenture") dated as of August 1, 1990 between
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the Company and The Chase Manhattan Bank, as trustee (the "Trustee"), as
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supplemented and amended by the First Supplemental Indenture dated as of June
15, 1991, the Second Supplemental Indenture dated as of May 6, 1997, the Third
Supplemental Indenture dated as of April 22, 1998 and the Fourth Supplemental
Indenture to be dated as of October 30, 2001. The Securities will initially be
issued in book-entry form to Cede & Co., as nominee of The Depositary Trust
Company ("DTC"), pursuant to a letter of representations, to be dated as of the
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Closing Date (as defined in Section 3(a)) (the "DTC Letter of Representations"),
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among the Company, the Trustee and DTC.
The Securities will be convertible into shares of common stock, par
value $1.00 per share, of the Company (the "Common Stock") in accordance with
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the terms of the Securities and the Indenture, as described in the Prospectus
(as defined below). Upon the second, fifth, seventh, tenth and fifteenth
anniversaries of the initial issuance date of the Securities, each holder of
Securities may require the Company to purchase such Securities at a purchase
price equal to the accreted value of such Securities, together with accrued and
unpaid cash interest, if any, up to but not including the purchase date. On the
first three purchase dates (October 30, 2003, October 30, 2006 and October 30,
2008), the Company may elect to pay the purchase price in cash or (subject to
certain limitations) shares of Common Stock, or any combination thereof. On the
last two purchase dates (October 30, 2011 and October 30, 2016), the Company may
pay the purchase price in cash only. If prior to such purchase date the
principal amount at maturity of
the Securities has been restated following the occurrence of a Tax Event (as
defined in the Indenture), such purchase price will be equal to the Restated
Principal Amount (as defined in the Indenture) plus accrued and unpaid cash
interest, if any, up to but not including the purchase date. Upon each Change in
Control (as defined in the Indenture), each holder of Securities may require the
Company to purchase for cash such holder's Securities (subject to certain
restrictions) at a purchase price equal to the accreted value for such
Securities plus accrued and unpaid cash interest, if any, up to but not
including the Change of Control Purchase Date (as defined in the Indenture). If
prior to such Change of Control Purchase Date the principal amount at maturity
of the Securities has been restated following the occurrence of a Tax Event,
upon a Change in Control the Company will be required to purchase such
Securities at a cash price equal to the Restated Principal Amount plus accrued
and unpaid cash interest, if any, up to but not including the Change of Control
Purchase Date.
In connection with the sale of the Securities, the Company has
prepared and filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (Registration No. 333-60134)
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for the registration of debt securities, including the Securities, trust
preferred securities (and related guarantee and agreement as to expenses and
liabilities), common stock, preferred stock, securities warrants and depositary
shares, under the Securities Act of 1933, as amended (the "Securities Act") and
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the offering thereof from time to time in accordance with Rule 415 of the rules
and regulations of the Commission under the Securities Act (the "Securities Act
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Regulations"). The registration statement as amended as of the date hereof is
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hereinafter referred to as the "Registration Statement"; the prospectus included
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in the Registration Statement, as supplemented to reflect the terms of the
Securities and the terms of the offering thereof, as first filed with the
Commission pursuant to and in accordance with Rule 424(b) under the Securities
Act, including all material incorporated by reference therein, is hereinafter
referred to as the "Prospectus". The Prospectus and the Registration Statement
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incorporate certain reports of the Company filed pursuant to Section 13 or 14 or
15 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Any
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reference herein to the terms "amend," "amendment" or "supplement" with respect
to the Registration Statement or the Prospectus shall be deemed to include only
amendments or supplements to the Registration Statement or Prospectus, as the
case may be, and documents incorporated by reference therein after the date of
this Agreement and prior to the termination of the offering of the Securities by
the Underwriters. The Company hereby confirms that it has authorized the use of
the Prospectus, and any amendment or supplement thereto, in connection with the
offer and sale of the Securities by the Underwriters.
1. Representations and Warranties. The Company represents and
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warrants to, and agrees with, each Underwriter as set forth below in this
Section 1. Any reference to persons acting on behalf of the Company does not
include any of the Underwriters, with respect to whom the Company makes no
representation.
(a) The Registration Statement has become effective under the
Securities Act; no stop order suspending the effectiveness of the
Registration Statement is in effect, and no proceedings for such purposes
are pending before or, to the knowledge of the Company, threatened by the
Commission.
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(b) At the time the Registration Statement became effective, the
Registration Statement complied in all material respects with the
requirements of the Securities Act and the Securities Act Regulations and
the Trust Indenture Act of 1939, as amended (the "TIA"), and the rules and
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regulations of the Commission promulgated thereunder. The Registration
Statement, at the time it became effective, did not, and as of the date
hereof does not, contain an 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. The Prospectus, as of the date
hereof does not contain, and as of the Closing Date, will not contain an
untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided,
however, that the Company makes no representation or warranty as to
statements in or omissions from the Registration Statement or Prospectus
made in reliance upon and in conformity with information furnished to the
Company in writing by or on behalf of an Underwriter expressly for use in
the Registration Statement or Prospectus or to that part of the
Registration Statement which constitutes the Trustee's Statement of
Eligibility and Qualification under the TIA ("Form T-1").
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(c) The documents incorporated by reference in the Prospectus, at the
time they were filed with the Commission, complied in all material respects
with the requirements of the Exchange Act and the rules and regulations of
the Commission promulgated thereunder, and, when read together and with the
other information in the Prospectus, did not contain an untrue statement of
a material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in the light
of the circumstances under which they were or are made, not misleading.
(d) Since the respective dates as of which information is given in
the Registration Statement and Prospectus, except as may otherwise be
stated therein or contemplated thereby, there has been no material adverse
change in the condition, financial or otherwise, or in the earnings,
business or properties of the Company and its subsidiaries considered as
one enterprise, whether or not arising in the ordinary course of business.
(e) All of the issued and outstanding capital stock of each
significant subsidiary, as defined in Rule 405 of Regulation C of the
Securities Act, of the Company (each a "Significant Subsidiary") has been
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duly authorized and validly issued, is fully paid and nonassessable, and,
except for directors' qualifying shares, if any, is owned by the Company
free and clear of any mortgage, pledge, lien, encumbrance, claim or equity,
except as would not reasonably be expected to have a material adverse
effect on the Company and its subsidiaries, considered as one enterprise.
(f) Upon issuance and delivery of the Securities in accordance with
this Agreement and the Indenture, the Securities will be convertible at the
option of the holder thereof into shares of Common Stock in accordance with
the terms of the Securities and the Indenture; the shares of Common Stock
issuable upon such conversion of the Securities have been duly authorized
and reserved for issuance upon such conversion by
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all necessary corporate action and such shares, when issued upon such
conversion in accordance with the terms of the Securities and the
Indenture, will be validly issued and will be fully paid and non-
assessable; the shares of Common Stock issuable at the Company's option
upon purchase of the Securities at the option of the holder thereof will
have been, prior to the issuance thereof, duly authorized by all necessary
corporate action, and such shares, if and when issued in accordance with
the terms of the Securities and the Indenture, will be validly issued,
fully paid and non-assessable; no holder of such shares of Common Stock
will be subject to personal liability by reason of being such a holder and
the issuance of such shares upon such conversion or purchases will not be
subject to the preemptive or other similar rights of any securityholder of
the Company.
(g) This Agreement has been duly authorized, executed and delivered
by the Company.
(h) The Securities have been duly authorized by the Company and, at
the Closing Date, will have been duly executed by the Company and, when
authenticated, issued and delivered in the manner provided for in the
Indenture and delivered against payment of the purchase price therefore as
provided in this Agreement, will be the valid and binding obligations of
the Company enforceable against the Company in accordance with their terms,
subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or
affecting creditors' rights and to general equity principles (regardless of
whether considered in a proceeding in equity or at law), and will be in the
form contemplated by, and entitled to the benefits of, the Indenture.
(i) The Indenture has been duly authorized by the Company, and when
duly executed and delivered by the Company and the Trustee, will be a valid
and binding agreement of the Company enforceable against the Company in
accordance with its terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and to general
equity principles (regardless of whether considered in a proceeding in
equity or at law).
(j) The Company 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 in stabilization or manipulation
of the price of the Securities (other than any stabilization done by the
Underwriters, as to which the Company makes no representation).
(k) The Company is not an "investment company" within the meaning of
the Investment Company Act of 1940, as amended (the "Investment Company
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Act"), without taking account of any exemption arising out of the number of
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holders of the Company's securities.
(l) The information, if any, provided by the Company pursuant to
Section 5(d) hereof will not, at the date thereof, contain any untrue
statement of a material fact or
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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.
2. Purchase and Sale. (a) Subject to the terms and conditions and in
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reliance upon the representations and warranties herein set forth, the Company
agrees to sell to each Underwriter, and each Underwriter agrees, severally and
not jointly, to purchase from the Company, at the price set forth in Schedule I
hereto, the principal amount at maturity of Initial Securities set forth
opposite such Underwriter's name in Schedule II hereto.
(b) In addition, subject to the terms and conditions and in reliance
upon the representations and warranties herein set forth, the Company hereby
grants an option to the Underwriters to purchase, severally and not jointly, any
or all of the Option Securities (in multiples of $1,000 principal amount at
maturity) at the price set forth in Schedule I hereto plus accreted value and
accrued interest, if any, from the Closing Date to the Date of Delivery. The
option hereby granted will expire 13 days after the date hereof and may be
exercised at one time in whole or in part only for the purpose of covering over-
allotments that may be made in connection with the offering and distribution of
the Initial Securities upon notice by the Representative to the Company setting
forth the number of Option Securities as to which the Underwriters are
exercising the option and the time and date of payment and delivery for such
Option Securities. Such Option Securities shall be purchased for the account of
each Underwriter in the same proportion as the principal amount of Initial
Securities set forth opposite such Underwriter's name bears to the total
principal amount of Initial Securities (subject to adjustment by the
Representative to eliminate fractions). Such time and date of delivery (the
"Date of Delivery") shall be determined by the Representative, but shall not be
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later than seven full business days after the exercise of said option, nor in
any event prior to the Closing Date.
3. Delivery and Payment. (a) Delivery of and payment for the Initial
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Securities shall be made at the offices of Shearman & Sterling, counsel for the
Underwriters, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ or such other place
as the parties hereto shall agree, at 10:00 AM, New York City time, on October
30, 2001, or such later date not later than seven full business days thereafter
as the Representative shall designate, which date and time may be postponed by
agreement between the Representative and the Company or as provided in Section 9
hereof (such date and time of delivery and payment being herein called the
"Closing Date"). Delivery of the Securities shall be made to the Representative
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for the respective accounts of the Underwriters against payment by the
Underwriters through the Representative of the purchase price thereof to or upon
the order of the Company by wire transfer of Federal funds or other immediately
available funds or in such other manner of payment as may be agreed by the
Company and the Representative.
(b) In addition, in the event that any or all of the Option
Securities are purchased by the Underwriters, payment of the purchase price
for, and delivery of certificates for, such Option Securities shall be made
at the above-mentioned offices, or at such other place as shall be agreed
upon by the Representative and the Company, on the Date of Delivery as
specified in the notice from the Representative to the Company.
(c) Certificates for the Securities shall be in such denominations
($1,000 or integral multiples thereof), registered in the name of Cede &
Co. pursuant to the DTC
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Letter of Representations and made available for examination by the
Representative in the City of New York not later than 1:00 PM on the last
business day prior to the Closing Date or the Date of Delivery, as the case
may be.
4. Offering of Securities. Each Underwriter, severally and not
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jointly, represents and warrants to and agrees with the Company that it shall
deliver to each purchaser of Securities therefrom, in connection with its
original distribution of the Securities, a copy of the Prospectus, as amended
and supplemented at the date of such purchase (in accordance with the Securities
Act and Securities Act Regulations).
5. Agreements. The Company agrees with each Underwriter that:
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(a) The Company will furnish to each Underwriter and to counsel for
the Underwriters, without charge, during the period referred to in
paragraph (c) below, as many copies of the Prospectus and any amendments
and supplements thereto as it may reasonably request. The Company will pay
the expenses of printing or other production of all documents relating to
the offering.
(b) The Company will not amend or supplement the Prospectus (other
than by filing documents under the Exchange Act which are incorporated by
reference therein), without having previously advised and furnished to the
Representative a copy of such amendment or supplement to which the
Representative, on advice from counsel, has not reasonably objected;
provided, however, that, prior to the completion of the distribution of the
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Initial Securities by the Underwriters (as determined by the
Representative), the Company will not file any document under the Exchange
Act which is incorporated by reference in the Prospectus unless, prior to
such proposed filing, the Company has furnished the Representative with a
copy of such document. The Company will promptly advise the Representative
when any document filed under the Exchange Act which is incorporated by
reference in the Prospectus shall have been filed with the Commission.
(c) If at any time prior to the earlier of (i) completion of the sale
of the Securities by the Underwriters (as determined by the Representative)
or (ii) six months from the date hereof, any event occurs as a result of
which the Prospectus, as then amended or 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 should be necessary to
amend or supplement the Prospectus (including any document incorporated by
reference therein which was filed under the Exchange Act) to comply with
the Exchange Act or the rules thereunder or other applicable law, the
Company will promptly notify the Representative of the same and, subject to
the requirements of paragraph (b) of this Section 5, will prepare and
provide to the Representative pursuant to paragraph (a) of this Section 5
an amendment or supplement which will correct such statement or omission or
effect such compliance and, if such an amendment or supplement is required
to be filed under the Exchange Act and is to be incorporated by reference
in the Prospectus, will file such amendment or supplement with the
Commission. The Representative will promptly advise the Company, in
writing, of the completion of the initial distribution of the Securities.
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(d) The Company will, during the period when the Prospectus is
required to be delivered under the Securities Act and during which the
Company is subject to the reporting requirements of Section 13 or Section
15(d) of the Exchange Act, timely file all Annual Reports on Form 10-K,
Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and any other
reports, statements, documents, registrations, filings or submissions
required to be filed by the Company with the Commission pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act.
(e) The Company will use its best efforts, in cooperation with the
Representative, to qualify the Securities for offering and sale under the
applicable securities laws of such states and other jurisdictions as the
Representative may reasonably designate and will maintain such
qualifications in effect as long as required for the sale of the
Securities; provided, however, that the Company shall not be obligated to
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file any general consent to service of process or to qualify as a foreign
corporation or as a dealer in securities in any jurisdiction in which it is
not so qualified or to subject itself to taxation in respect of doing
business in any jurisdiction in which it is not otherwise so subject.
(f) For a period of 90 days after the date of this Agreement, the
Company will not offer, sell, contract to sell, pledge or otherwise dispose
of, directly or indirectly, or file with the Commission a registration
statement under the Act relating to, any additional shares of its Common
Stock or securities convertible into or exchangeable or exercisable for any
shares of its Common Stock, or publicly disclose the intention to make any
such offer, sale, pledge, disposition or filing, without the prior written
consent of the Representative, except
. issuances of Securities pursuant to this offering,
. issuances of shares of Common Stock pursuant to the conversion or
exchange of convertible or exchangeable securities or the
exercise of warrants or options, in each case outstanding on the
date hereof,
. grants of employee stock options pursuant to the terms of a plan
in effect on the date hereof or the filing of a registration
statement on Form S-8 relating to any such plan,
. issuances of shares of Common Stock pursuant to the exercise of
such options or the exercise of any other employee stock options
outstanding on the date hereof,
. issuances of shares of Common Stock pursuant to any employee or
director compensation, incentive or benefit plan or arrangement
in effect on the date hereof or the filing of a registration
statement on Form S-8 relating to any such plan or arrangement,
. the filing of a shelf registration statement on Form S-3 relating
to the sale of any securities of the Company on a delayed or
continuous basis pursuant to Rule 415 under the Securities Act,
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. issuances of Common Stock pursuant to the CSXDirectInvest(SM)
plan and
. issuances of securities as consideration pursuant to
acquisitions.
(g) The Company will reserve and keep available at all times, free of
preemptive rights, a sufficient number of shares of Common Stock for the
purpose of enabling the Company to satisfy any obligations to issue Common
Stock upon conversion of the Securities.
(h) The Company will use its reasonable best efforts to cause all
shares of Common Stock issuable upon conversion of the Securities to be
listed on the New York Stock Exchange.
(i) The Company will make generally available to its security holders
as soon as practicable, but not later than 90 days after the close of the
period covered thereby, an earnings statement (in form complying with the
provisions of Rule 158 under the Securities Act) covering a twelve-month
period beginning not later than the first day of the Company's fiscal
quarter next following the "effective date" (as defined in such Rule 158)
of the Registration Statement.
(j) The Company will cooperate with the Representative and use its
reasonable best efforts to permit the Securities to be eligible for
clearance and settlement through The Depository Trust Company.
6. Conditions to the Obligations of the Underwriters. The
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obligations of the Underwriters to purchase the Initial Securities shall be
subject to the accuracy of the representations and warranties on the part of the
Company contained herein at the date and time that this Agreement is executed
and delivered by the parties hereto (the "Execution Time") and the Closing Date
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and to the accuracy of the statements of the Company made in any certificates
pursuant to the provisions hereof, to the performance by the Company of its
obligations hereunder and to the following additional conditions:
(a) The Company shall have furnished to the Underwriters the opinion
of the Senior Vice President - Law, a General Counsel or an Assistant
General Counsel of the Company, dated the Closing Date, to the effect that:
(i) The Company has been duly incorporated and is an existing
corporation in good standing under the laws of the Commonwealth of
Virginia, with corporate power and authority to own, lease and operate
its properties and conduct its business as described in the
Prospectus; and the Company is duly qualified to do business as a
foreign corporation in good standing in all other jurisdictions in
which it owns or leases substantial properties or in which the conduct
of its business requires such qualification except where the failure
to so qualify or be in good standing would not have a material adverse
effect on the Company and its subsidiaries, considered as one
enterprise;
(ii) Each Significant Subsidiary of the Company has been duly
incorporated and is validly existing as a corporation in good standing
under the
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laws of the jurisdiction of its incorporation, has corporate power and
authority to own, lease and operate its properties and conduct its
business as described in the Prospectus; and, to the best of such
counsel's knowledge, is duly qualified as a foreign corporation to
transact business and is in good standing in each jurisdiction in
which such qualification is required, except where the failure to so
qualify or be in good standing would not have a material adverse
effect on the Company and its subsidiaries, considered as one
enterprise; all of the issued and outstanding capital stock of each
Significant Subsidiary has been duly authorized and validly issued, is
fully paid and nonassessable, and, except for directors' qualifying
shares, if any, is owned by the Company free and clear of any
mortgage, pledge, lien, encumbrance, claim or equity, except as would
not reasonably be expected to have a material adverse effect on the
Company and its subsidiaries, considered as one enterprise;
(iii) No consent, approval, authorization or order of, or filing
with, any governmental agency or body or any court is required for the
consummation of the transactions contemplated herein, except for a
filing of a prospectus under Rule 424(b) of the Securities Act and
such as may be required under state securities laws;
(iv) The execution, delivery and performance of this Agreement
and the issuance and sale of the Securities and compliance with the
terms and provisions thereof will not result in a material breach or
violation of any of the terms and provisions of, or constitute a
default under, any statute, rule, regulation or order of any
governmental agency or body or any court having jurisdiction over the
Company or any Significant Subsidiary or any of their properties or,
to the best of such counsel's knowledge, any agreement or instrument
to which the Company or any of its Significant Subsidiaries is a party
or by which the Company or any Significant Subsidiary is bound or to
which any of the properties of the Company or any Significant
Subsidiary is subject, or the charter or by-laws of the Company or any
Significant Subsidiary, and the Company has full power and authority
to authorize, issue and sell the Securities as contemplated by this
Agreement; and
(v) Each document filed pursuant to the Exchange Act and
incorporated by reference in the Prospectus complied when filed as to
form in all material respects with the Exchange Act and the rules and
regulations promulgated thereunder.
In addition, such counsel shall state that he or she has participated
in conferences with officers and other representatives of the Company,
representatives of Ernst & Young LLP, independent auditors for the Company,
the Representative and counsel for the Underwriters, at which the contents
of the Registration Statement and the Prospectus and any amendment thereof
or supplement thereto and related matters were discussed and although such
counsel has not undertaken to investigate or verify independently, and does
not assume any responsibility for, the accuracy, completeness or fairness
of the statements contained in the Registration Statement or the Prospectus
or any amendment
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thereof or supplement thereto, no facts have come to the attention of such
counsel which would lead such counsel to believe (A) that the Registration
Statement (other than the historical, proforma, projected or other
financial statements, information and data and statistical information and
data included or incorporated by reference therein or omitted therefrom,
and Form T-1, in each case as to which no opinion need be given), at the
time the Registration Statement became effective, contained any untrue
statement of a material fact, or omitted to state a material fact necessary
in order to make the statements therein not misleading or (B) that the
Prospectus, as amended or supplemented as of the date hereof or as of the
Closing Date (other than the historical, proforma, projected or other
financial statements, information and data and statistical information and
data included or incorporated by reference therein or omitted therefrom, in
each case as to which no opinion need be given), includes or will include
any untrue statement of a material fact or omits or will 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.
Except as otherwise set forth herein, all references in this Section 6(a)
to the Prospectus shall be deemed to include any amendment or supplement
thereto at the Closing Date.
(b) The Company shall have furnished to the Underwriters the opinion
of McGuireWoods LLP, counsel for the Company, dated the Closing Date, to
the effect that:
(i) The Indenture has been duly authorized, executed and
delivered by the Company; the Indenture constitutes a valid and
legally binding obligation of the Company enforceable against the
Company in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles (regardless of
whether considered in a proceeding in equity or at law); the
Securities have been duly authorized, executed, issued and delivered
by the Company; the Securities, when authenticated in the manner
provided in the Indenture, will constitute valid and legally binding
obligations of the Company enforceable against the Company in
accordance with their terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors' rights and
to general equity principles (regardless of whether considered in a
proceeding in equity or at law) (in rendering such opinions, such
counsel may assume that the Indenture has been duly authorized,
executed and delivered, and the Securities have been duly
authenticated, by the Trustee); and the Securities conform to the
description thereof contained in the Prospectus;
(ii) This Agreement has been duly authorized, executed and
delivered by the Company;
(iii) The Indenture is qualified under the TIA;
(iv) The Registration Statement is effective under the
Securities Act, the Prospectus was filed with the Commission pursuant
to the subparagraph of Rule 424(b) specified in such opinion on the
date specified therein and, to the best of such counsel's knowledge,
no stop order suspending the effectiveness of the
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Registration Statement has been issued under the Securities Act nor
proceedings therefor initiated or threatened by the Commission;
(v) At the time the Registration Statement became effective,
the Registration Statement (other than the historical, pro forma,
projected or other financial statements, information and data and
statistical information and data included or incorporated by reference
therein or omitted therefrom and Form T-1, in each case as to which no
opinion need be rendered) complied as to form in all material respects
with the requirements of the Securities Act and the Securities Act
Regulations;
(vi) Upon issuance and delivery of the Securities in accordance
with this Agreement and the Indenture, the Securities will be
convertible at the option of the holder thereof for shares of Common
Stock in accordance with the terms of the Securities and the
Indenture; the shares of Common Stock issuable upon conversion of the
Securities have been duly authorized and reserved for issuance upon
such conversion by all necessary corporate action; assuming that such
corporate action remains in full force and effect at the time of such
conversion, such shares, when issued upon such conversion in
accordance with the terms of the Securities and the Indenture, will be
validly issued, fully paid and non-assessable and conform to the
description thereof contained in the Prospectus; no holder of such
shares of Common Stock will be subject to personal liability by reason
of being such a holder;
(vii) The issuance of the shares of Common Stock upon conversion
of the Securities would not be subject to any preemptive rights under
the articles of incorporation or by-laws of the Company as in effect
on the Closing Date;
(viii) The Company is not an "investment company" within the
meaning of the Investment Company Act without taking account of any
exemption arising out of the number of holders of the Company's
securities; and
(ix) The statements in the Prospectus under the captions
"Description of Debentures" and "Description of Common Stock", insofar
as they purport to summarize certain provisions of the Securities, the
Indenture and the Common Stock, are accurate summaries of such
provisions.
In addition, subject to such counsel's customary qualifications about
the scope of its obligations in connection with its participation in the
preparation of documents, such counsel shall state that they have
participated in conferences with officers and other representatives of the
Company, representatives of Ernst & Young LLP, independent auditors for the
Company, the Representative and counsel for the Underwriters at which the
contents of the Registration Statement or the Prospectus and any amendment
thereof or supplement thereto and related matters were discussed and,
although such counsel have not undertaken to investigate or verify
independently, and do not assume any responsibility for, the accuracy,
completeness or fairness of the statements contained in the Registration
Statement or the Prospectus or any amendment thereof or supplement
11
thereto (other than to the extent addressed in the last clause of paragraph
(b)(i) and paragraph b(ix), and did not participate in the preparation of
the documents incorporated by reference in the Registration Statement or
the Prospectus, no facts have come to the attention of such counsel which
would lead such counsel to believe (A) that the Registration Statement
(other than the historical, proforma, projected or other financial
statements, information and data and statistical information and data
included or incorporated by reference therein or omitted therefrom, and
Form T-1, in each case as to which no opinion need be given), at the time
the Registration Statement became effective, contained any untrue statement
of a material fact, or omitted to state a material fact necessary in order
to make the statements therein not misleading or (B) that the Prospectus as
amended or supplemented as of the date hereof or as of the Closing Date
(other than the historical, proforma, projected or other financial
statements, information and data and statistical information and data
included or incorporated by reference therein or omitted therefrom, in each
case as to which no opinion need be given) includes or will include any
untrue statement of a material fact or omits or will 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.
In rendering such opinion, McGuireWoods LLP may rely (A) as to matters
governed by New York law upon the opinion of counsel for the Underwriters,
referred to below and (B) as to matters of fact, to the extent they deem
proper, on certificates of responsible officers of the Company and public
officials. Except as otherwise set forth herein, all references in this
Section 6(b) to the Prospectus shall be deemed to include any amendment or
supplement thereto at the Closing Date.
(c) The Representative shall have received from counsel for the
Underwriters such opinion or opinions, dated the Closing Date, with respect
to the issuance and sale of the Securities, the Prospectus (as amended or
supplemented at the Closing Date) and other related matters as they may
require, and the Company shall have furnished to such counsel such
documents as they may reasonably request for the purpose of enabling them
to pass upon such matters. In rendering such opinion, counsel for the
Underwriters may rely as to the incorporation of the Company on the opinion
of the Senior Vice President - Law, General Counsel or Assistant General
Counsel of the Company and as to all other matters governed by Virginia law
upon the opinion of McGuireWoods LLP, referred to above.
(d) The Company shall have furnished to the Representative a
certificate of the Company, signed by the Chairman of the Board, the
President, any Vice President or the Assistant Vice President - Corporate
Treasury and another person who is the principal financial or accounting
officer of the Company, or, in their absence, other proper officers of the
Company satisfactory to the Representative, dated the Closing Date, to the
effect that the signers of such certificate have examined the Prospectus,
any amendment or supplement to the Prospectus and this Agreement and that,
to the best of their knowledge after reasonable investigation:
(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
12
Date with the same effect as if made on and as of such date, and the
Company has complied with all the agreements and satisfied all the
conditions on its part to be performed or satisfied hereunder at or
prior to the Closing Date; and
(ii) since the date of the most recent financial statements
incorporated by reference in the Prospectus, there has been no
material adverse change in the condition (financial or other),
earnings, business or properties of the Company and its subsidiaries
considered as one enterprise, whether or not arising from transactions
in the ordinary course of business, except as set forth in or
contemplated by the Prospectus (exclusive of any amendment or
supplement thereto after the date hereof) or as described in such
certificate.
(e) The Representative shall have received a letter, dated on or
prior to the date of this Agreement, of Ernst & Young LLP confirming that
they are independent public accountants within the meaning of the
Securities Act and the Securities Act Regulations and stating to the effect
that:
(i) In their opinion the financial statements of the Company
examined by them and included or incorporated by reference in the
Registration Statement comply as to form in all material respects with
the applicable accounting requirements of the Securities Act and the
Securities Act Regulations;
(ii) They have performed the procedures specified by the American
Institute of Certified Public Accountants for a review of interim
financial information as described in Statement of Auditing Standards
No. 71, Interim Financial Information, on the unaudited interim
financial statements of the Company, if any, included or incorporated
by reference in the Registration Statement;
(iii) On the basis of the review referred to in clause (ii) above, a
reading of the latest available interim financial statements of the
Company, inquiries of officials of the Company who have responsibility
for financial and accounting matters and other specified procedures,
nothing came to their attention that caused them to believe that:
(A) The unaudited financial statements of the Company
included or incorporated by reference in the Registration
Statement do not comply as to form in all material respects with
the applicable accounting requirements of the Securities Act and
Securities Act Regulations or any material modifications should
be made to such unaudited financial statements of the Company for
them to be in conformity with generally accepted accounting
principles;
(B) At the date of the latest available balance sheet of the
Company read by such accountants, or at a subsequent specified
date not more than three business days prior to the date of this
Agreement, there was any change in shareholders' equity or any
increase in short-term indebtedness
13
or long-term debt of the Company and its consolidated
subsidiaries or, at the date of the latest available balance
sheet read by such accountants, there was any decrease in
consolidated net current assets, as compared with amounts shown
on the latest balance sheet included or incorporated by reference
in the Prospectus; or
(C) For the period from the closing date of the latest
income statement of the Company included or incorporated by
reference in the Prospectus to the closing date of the latest
available income statement of the Company read by such
accountants there were any decreases, as compared with the
corresponding period of the previous year, in consolidated net
sales or consolidated net income,
except in all cases set forth in clauses (B) and (C) above for
changes, increases or decreases which the Prospectus discloses have
occurred or may occur or which are described in such letter; and
(iv) They have compared specified dollar amounts (or percentages
derived from such dollar amounts) and other financial information
contained or incorporated by reference in the Registration Statement
(in each case to the extent that such dollar amounts, percentages and
other financial information are derived from the general accounting
records of the Company and its subsidiaries subject to the internal
controls of the Company's accounting system or are derived directly
from such records by analysis or computation) with the results
obtained from inquiries, a reading of such general accounting records
and other procedures specified in such letter and have found such
dollar amounts, percentages and other financial information to be in
agreement with such results, except as otherwise specified in such
letter.
(f) With respect to the letter of Ernst & Young LLP referred to in
paragraph (e) of this Section 6 and delivered to the Representative on or
prior to the date hereof (the "Initial Letter"), the Representative shall
--------------
have received on the Closing Date a letter (the "Bring Down Letter") from
-----------------
Ernst & Young LLP, dated the Closing Date, which meets the requirements of
paragraph (e) of Section 6, except that the "specified date" referred to in
such paragraph will be a date no more than three business days prior to the
Closing Date for the purpose of this paragraph.
(g) Subsequent to the Execution Time or, if earlier, the dates as of
which information is given in the Prospectus, there shall not have been (i)
any change or decrease specified in the letter referred to in paragraph (f)
of this Section 6 or (ii) any change in or affecting the business or
properties of the Company and its subsidiaries the effect of which, in any
case referred to in clause (i) or (ii) above, is, in the reasonable
judgment of the Representative, so material and adverse as to make it
impractical or inadvisable to market the Securities as contemplated by the
Prospectus (exclusive of any amendment or supplement thereof or thereto
after the date hereof).
14
(h) Subsequent to the Execution Time, there shall not have been any
decrease in the rating 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 Securities 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.
(i) In the event that the Underwriters exercise their option
provided in Section 2(b) to purchase all or any portion of the Option
Securities, the representations and warranties of the Company contained in
Sections 1(e), (f), (g), (h), (i), (j) and (k) of this Agreement and the
statements in the certificates furnished by the Company and any subsidiary
of the Company hereunder at the Date of Delivery, shall be true and correct
as of the Date of Delivery and, at the Date of Delivery, the Underwriters
shall have received:
(i) A certificate of the Company, dated the Date of Delivery, of
the Chairman of the Board, the President, any Vice President or the
Assistant Vice President - Corporate Treasury and another person who
is the principal financial or accounting officer of the Company, or,
in their absence, other proper officers of the Company satisfactory to
the Representative, to the effect that the signers of such certificate
have examined this Agreement and that, to the best of their knowledge
after reasonable investigation, the representations and warranties of
the Company in Sections 1(e), (f), (g), (h), (i), (j) and (k) of this
Agreement are true and correct in all material respects on and as of
the Date of Delivery with the same effect as if made on and as of such
date, and the Company has complied with all the agreements and
satisfied all the conditions on its part to be performed or satisfied
hereunder at or prior to the Date of Delivery;
(ii) Bring down opinions of McGuireWoods LLP, counsel for the
Company and the Senior Vice President - Law, a General Counsel or an
Assistant General Counsel of the Company, each dated the Date of
Delivery, confirming that the statements made in the respective
opinions provided in accordance with Section 6(b)(i), (ii), (iii),
(vi), (vii) and (viii) and 6(a)(i), (ii), (iii) and (iv),
respectively, of this Agreement remain true and correct as of the Date
of Delivery; and
(iii) The opinion of Shearman & Sterling, counsel for the
Underwriters, dated the Date of Delivery, confirming that the
statements made in the opinion rendered in accordance with Section
6(c) of this Agreement remain true and correct as of the Date of
Delivery, provided, however, that it is understood that no such
-------- -------
confirmation shall be made with respect to any statement in such
opinion that relates to the contents of the Prospectus or the
Registration Statement.
Prior to the Closing Date and the Date of Delivery, as the case may
be, the Company shall furnish to the Representative such conformed copies of
such opinions, certificates, letters and documents as the Representative may
reasonably request.
15
If any of the conditions specified in this Section 6 shall not have
been fulfilled in all material respects when and as provided in this Agreement,
or if any of the opinions and certificates mentioned above or elsewhere in this
Agreement shall not be in all material respects reasonably satisfactory in form
and substance to the Representative and counsel for the Underwriters, this
Agreement and all obligations of the Underwriters hereunder with respect to the
Securities may be canceled at, or at any time prior to, the Closing Date by the
Representative, or, in case of any condition to the purchase of Option
Securities, all obligations of the Underwriters hereunder with respect to the
purchase of the Option Securities may be canceled at, or at any time prior to,
the Date of Delivery. Notice of any such cancellation shall be given to the
Company in writing or by telephone or telefax confirmed in writing.
The documents required to be delivered by this Section 6 will be
delivered at the offices of Shearman & Sterling, counsel for the Underwriters,
at ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇ on the Closing Date or the
Date of Delivery, as applicable.
7. Reimbursement of Expenses. If the sale of the Securities provided
-------------------------
for herein is not consummated because of cancellation by the Representative
pursuant to Section 6 hereof, because of any termination pursuant to Section 10
hereof or because of any refusal, inability or failure on the part of the
Company to perform any material agreement herein or comply with any material
provision hereof other than by reason of a default by any of the Underwriters in
payment for the Securities on the Closing Date, the Company will reimburse the
Underwriters severally upon demand for all reasonable out-of-pocket expenses
(including reasonable fees and disbursements of counsel for the Underwriters)
that shall have been incurred by them in connection with the proposed purchase
and sale of the Securities.
8. Indemnification and Contribution. (a) The Company agrees to
--------------------------------
indemnify and hold harmless each Underwriter, the directors, officers, employees
and agents of each Underwriter and each person who controls any Underwriter
within the meaning of either Section 15 of the Securities Act or Section 20 of
the Exchange Act against any and all losses, claims, damages or liabilities,
joint or several, to which they or any of them may become subject under the
Securities Act, the Exchange Act or other federal or state statutory law or
regulation, at common law or otherwise, insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of a material fact contained in
the Registration Statement, the Prospectus, or in any amendment thereof or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, and agrees to reimburse each such
indemnified party for any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability or action as such expenses are incurred; provided, however, that the
--------- -------
Company will not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon any such untrue
statement or alleged untrue statement or omission or alleged omission made in
the Registration Statement, the Prospectus, or in any amendment thereof or
supplement thereto, in reliance upon and in conformity with written information
furnished to the Company by or on behalf of any Underwriters through the
Representative specifically for inclusion therein, it being understood and
agreed that the only such information furnished by any Underwriter consists of
the information described in paragraph (b) of this Section 8; and
16
provided further, however, that the foregoing agreement, insofar as it relates
---------------- -------
to any preliminary Prospectus, shall not inure to the benefit of any Underwriter
(or to the benefit of any person who controls such Underwriter) on account of
any losses, claims, damages or liabilities arising out of the sale of any of the
Securities by such Underwriter to any person if it shall be established that a
copy of the Prospectus, excluding any documents incorporated by reference (as
supplemented or amended, if the Company shall have made any supplements or
amendments which have been furnished to the Representative), shall not have been
sent or given by or on behalf of such Underwriter to such person at or prior to
the written confirmation of the sale to such person in any case where such
delivery is required by the Securities Act and the Company satisfied its
obligations pursuant to Section 5(a) hereof, if the untrue statement or alleged
untrue statement or omission or alleged omission leading to such loss, claim,
damage or liability was corrected in the Prospectus (excluding any documents
incorporated by reference) as amended or supplemented, and such correction would
have cured the defect giving rise to such loss, claim, damage, or liability.
(b) Each Underwriter severally agrees to indemnify and hold harmless
the Company, its directors, its officers, and each person who controls the
Company within the meaning of either Section 15 of the Securities Act or Section
20 of the Exchange Act, to the same extent as the foregoing indemnity from the
Company to each Underwriter, but only with respect to claims and actions based
upon written information relating to such Underwriter furnished to the Company
by or on behalf of such Underwriter through the Representative specifically for
inclusion in the Prospectus (or in any amendment or supplement thereto). This
indemnity agreement will be in addition to any liability which any Underwriter
may otherwise have. The Company and each Underwriter acknowledge that the
statements set forth in the fifth paragraph (covering the selling concession and
the discount to broker/dealers), the second and third sentence of the seventh
paragraph (covering market-making), the twelfth paragraph (covering stabilizing
transactions, over-allotment transactions and syndicate covering transactions)
and the thirteenth paragraph (regarding the availability of electronic copies of
the Prospectus) of text under the heading "Underwriting" in the Prospectus
constitute the only information furnished in writing by or on behalf of the
Underwriters for inclusion in the Prospectus (or in any amendment or supplement
thereto).
(c) Promptly after receipt by an indemnified party under this Section
8 of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 8, notify the indemnifying party in writing of the commencement thereof;
but the failure so to notify the indemnifying party (i) will not relieve it from
liability under paragraph (a) or (b) above unless and to the extent it did not
otherwise learn of such action and such failure results in the forfeiture by the
indemnifying party of substantial rights and defenses and (ii) will not, in any
event, relieve the indemnifying party from any obligations to any indemnified
party other than the indemnification obligation provided in paragraph (a) or (b)
above. The indemnifying party shall be entitled to appoint counsel of the
indemnifying party's choice at the indemnifying party's expense to represent the
indemnified party in any action for which indemnification is sought (in which
case the indemnifying party shall not thereafter be responsible for the fees and
expenses of any separate counsel retained by the indemnified party or parties
except as set forth below); provided, however, that such counsel shall be
-------- -------
reasonably satisfactory to the indemnified party. Notwithstanding the
indemnifying party's election to appoint counsel to represent the
17
indemnified party in an action, the indemnified party shall have the right to
employ separate counsel (including local counsel), however, the indemnifying
party shall bear the reasonable fees, costs and expenses of such separate
counsel only 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 advice of 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 reasonably
satisfactory to the indemnified party to represent the indemnified party within
a reasonable time after notice of the institution of such action or (iv) the
indemnifying party shall authorize the indemnified party to employ separate
counsel at the expense of the indemnifying party. An indemnifying party will
not, without the prior written consent of the indemnified parties, 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 (i) includes an unconditional
release of each indemnified party from all liability arising out of such claim,
action, suit or proceeding and (ii) does not include a statement as to, or an
admission of, fault, culpability or a failure to act, by or on behalf of any
indemnified party. An indemnifying party shall not be liable under this Section
8 to any indemnified party regarding any settlement 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 is consented to by such indemnifying party, which consent shall not
be unreasonably withheld.
(d) If the indemnity provided in paragraph (a) or (b) of this Section
8 is unavailable to or insufficient to hold harmless an indemnified party for
any reason, the Company and the Underwriters agree to contribute to the
aggregate losses, claims, damages and liabilities (including legal or other
expenses reasonably incurred in connection with investigating or defending same)
(collectively "Losses") to which the Company and one or more of the Underwriters
------
may be subject in such proportion as is appropriate to reflect the relative
benefits received by the Company and by the Underwriters from the offering of
the Securities. If the allocation provided by the immediately preceding
sentence is unavailable for any reason, the Company and the Underwriters shall
contribute in such proportion as is appropriate to reflect not only such
relative benefits but also the relative fault of the Company and of the
Underwriters in connection with the statements or omissions which resulted in
such Losses as well as any other relevant equitable considerations. Benefits
received by the Company shall be deemed to be equal to the total net proceeds
from the offering (before deducting expenses), and benefits received by the
Underwriters shall be deemed to be equal to the total purchase discounts and
commissions received by the Underwriters from the Company in connection with the
purchase of the Securities hereunder, in each case as set forth on the cover
page of the Prospectus. Relative fault shall be determined by reference to
whether any alleged untrue statement or omission relates to information provided
by the Company or the Underwriters, the intent of the parties and their relative
knowledge, access to information and opportunity to correct or prevent such
untrue statement or omission. The Company and the Underwriters agree that it
would not be just and
18
equitable if contribution were determined by pro rata allocation or any other
method of allocation which does not take account of the equitable considerations
referred to above. Notwithstanding the provisions of this paragraph (d), no
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. The Underwriters'
obligations to contribute as provided in this Section 8(d) are several in
proportion to their respective purchase obligations and not joint. For purposes
of this Section 8, each person who controls an Underwriter within the meaning of
either Section 15 of the Securities Act or Section 20 of the Exchange Act and
each director, officer, employee and agent of an Underwriter shall have the same
rights to contribution as such Underwriter, and each person who controls the
Company within the meaning of either Section 15 of the Securities Act or Section
20 of the Exchange Act and each officer and director of the Company shall have
the same rights to contribution as the Company, subject in each case to the
applicable terms and conditions of this paragraph (d). Notwithstanding the
provisions of this paragraph (d), in no case shall any Underwriter (except as
may be provided in any agreement among the Underwriters relating to the offering
of the Securities) be responsible for any amount in excess of the purchase
discount or commission applicable to the Securities purchased by such
Underwriter hereunder, in each case as set forth on the cover page of the
Prospectus.
9. Default by an Underwriter. If any one or more Underwriters shall
-------------------------
fail to purchase and pay for any of the Initial Securities agreed to be
purchased by such Underwriter hereunder and such failure to purchase shall
constitute a default in the performance of its or their obligations under this
Agreement, the remaining Underwriters shall be obligated severally to take up
and pay for (in the respective proportions which the principal amount at
maturity of Initial Securities set forth opposite their names in Schedule II
hereto bears to the aggregate principal amount at maturity of Initial Securities
set forth opposite the names of all the remaining Underwriters) the Initial
Securities which the defaulting Underwriter or Underwriters agreed but failed to
purchase; provided, however, that if the aggregate principal amount at maturity
-------- -------
of Initial Securities which the defaulting Underwriter or Underwriters agreed
but failed to purchase shall exceed 10% of the aggregate principal amount at
maturity of Initial Securities set forth in Schedule II hereto, the remaining
Underwriters shall have the right to purchase all, but shall not be under any
obligation to purchase any, of the Initial Securities, and if such non-
defaulting Underwriters do not purchase all the Initial Securities within 36
hours of such default, this Agreement will terminate without liability to any
non-defaulting Underwriter or the Company except as otherwise provided in
Section 11. In the event of a default by any Underwriter as set forth in this
Section 9, the Closing Date shall be postponed for such period, not exceeding
seven days, as the Representative shall determine in order that the required
changes in the Prospectus or in any other documents or arrangements may be
effected. Nothing contained in this Agreement shall relieve any defaulting
Underwriter of its liability, if any, to the Company or to any non-defaulting
Underwriter for damages occasioned by its default hereunder.
10. Termination. This Agreement shall be subject to termination in
-----------
the absolute discretion of the Representative, by notice given to the Company
prior to delivery of and payment for the Initial Securities, if prior to such
time (i) there shall have occurred any change, or any development involving a
prospective change, in or affecting particularly the business or properties of
the Company or its subsidiaries which, in the judgment of the Representative,
materially impairs the investment quality of the Securities, (ii) any
downgrading
19
in the rating of any debt securities of the Company by any "nationally
recognized statistical rating organization" (as defined for purposes of Rule
436(g) under the Securities Act), or any public announcement that any such
organization has under surveillance or review its rating of any debt securities
of the Company (other than an announcement with positive implications of a
possible upgrading, and no implication of a possible downgrading, of such
rating), (iii) trading in any of the Company's securities shall have been
suspended by the Commission or the New York Stock Exchange or trading in
securities generally on the New York Stock Exchange shall have been suspended or
materially limited or minimum prices shall have been established on such
exchange, (iv) a banking moratorium shall have been declared either by federal
or New York State authorities or (v) 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 is such as to make it, in the reasonable judgment of the Representative,
impracticable or inadvisable to proceed with the offering or delivery of the
Securities as contemplated by the Prospectus (exclusive of any amendment or
supplement thereof or thereto after the date hereof).
11. Representations and Indemnities to Survive. The respective
------------------------------------------
agreements, representations, warranties, indemnities and other statements of the
Company or its officers and of the Underwriters set forth in or made pursuant to
this Agreement will remain in full force and effect, regardless of any
investigation made by or on behalf of the Underwriters or the Company or any of
the officers, directors or controlling persons referred to in Section 8 hereof,
and will survive delivery of and payment for the Securities. The provisions of
Sections 7 and 8 hereof shall survive the termination or cancellation of this
Agreement.
12. Fees, Expenses. The Company covenants and agrees with the
--------------
Representative that the Company will pay or cause to be paid the following: (i)
the fees, disbursements and expenses of the Company's counsel and accountants in
connection with the issue of the Securities and all other expenses in connection
with the preparation and printing of the Prospectus and any amendments and
supplements thereto and the mailing and delivering of copies thereof to the
Underwriters; (ii) the cost of printing or other production of all documents
relating to the offering, purchase, sale and delivery of the Securities as
provided in Section 4; (iii) any fees charged by securities rating services for
rating the Securities; (iv) the cost of preparing the Securities; (v) the fees
and expenses of the Trustee and any agent of the Trustee and the fees and
disbursements of counsel for the Trustee in connection with the Indenture and
the Securities; (vi) any fees charged by DTC; (vii) all expenses in connection
with the qualification of the Securities for offering and sale under state
securities laws, including the fees and disbursements of counsel for the
Underwriters in connection with such qualification and in connection with Blue
Sky and Legal Investment Survey; and (viii) all other costs and expenses
incident to the performance of its obligations hereunder which are not otherwise
specifically provided for in this Section 12. It is understood, however, that
except as provided in Sections 7 and 12 hereof, the Underwriters will pay all of
their own costs and expenses, including the fees, disbursements and expenses of
their counsel and any marketing expenses connected with any offers they may
make.
13. Notices. All communications hereunder will be in writing and
-------
effective only on receipt, and, if sent to the Representative, will be mailed,
delivered or telefaxed and confirmed to them, care of Credit Suisse First Boston
Corporation, Eleven ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, attention: Transaction Advisory Group, telefax number
(▇▇▇) ▇▇▇-▇▇▇▇; or, if sent to the Company, will be mailed, delivered or
telefaxed and confirmed to it at One ▇▇▇▇▇ Center, ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Assistant Vice President -
Corporate Treasury, telefax number (▇▇▇) ▇▇▇-▇▇▇▇.
14. Successors. This Agreement will inure to the benefit of and be
----------
binding upon the parties hereto and their respective successors and the officers
and directors and controlling persons referred to in Section 8 hereof, and no
other person will have any right or obligation hereunder.
15. Applicable Law. This Agreement will be governed by and construed
--------------
in accordance with the laws of the State of New York.
16. Business Day. For purposes of this Agreement, "business day"
------------
means each Monday, Tuesday, Wednesday, Thursday and Friday that is not a day on
which banking institutions in The City of New York, New York are authorized or
obligated by law, executive order or regulation to close.
17. Counterparts. This Agreement may be executed in one or more
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counterparts, each of which will be deemed to be an original, but all such
counterparts will together constitute one and the same instrument.
18. Headings. The section headings are for convenience only and
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shall not affect the construction hereof.
21
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicate hereof, whereupon
this Agreement and your acceptance shall represent a binding agreement between
the Company and the Underwriters.
Very truly yours,
CSX CORPORATION
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: Vice President and Treasurer
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
/s/ ▇▇▇ ▇▇▇▇▇▇
--------------------
Credit Suisse First Boston Corporation
For themselves and the other Underwriters named in
Schedule II to the foregoing Agreement
SCHEDULE I
CSX CORPORATION
$490,000,000 Zero Coupon Convertible Debentures due 2021
1. The initial offering price per $1,000 principal amount at maturity of
the Securities shall be $819.14 which represents a yield to maturity of 1.00%
per annum (computed on a semiannual bond equivalent basis).
2. The Securities shall be convertible into shares of Common Stock at an
initial rate of 17.7461 shares of Common Stock per $1,000 principal amount at
maturity of Securities.
3. The purchase price to be paid by the Underwriters for the Securities
shall be $802.76, being an amount equal to the initial offering price per $1,000
principal amount at maturity of Securities set forth above, less $16.38 per
$1,000 principal amount at maturity of Securities.
4. Prior to October 30, 2008, the Securities will not be redeemable.
5. The redemption prices to be supplied on page S-22 of the Prospectus
(and correspondingly in the Indenture) shall be:
(1) (2) (3)
Issue Price Accretion in Value Redemption
from the Date of Price
Redemption Date Issuance (1) + (2)
---------------- ------------- -------------------- ------------
October 30
2008 $819.14 $ 59.24 $ 878.38
2009 819.14 68.05 887.19
2010 819.14 76.94 896.08
2011 819.14 85.92 905.06
2012 819.14 95.00 914.14
2013 819.14 104.16 923.30
2014 819.14 113.42 932.56
2015 819.14 122.77 941.91
2016 819.14 132.21 951.35
2017 819.14 141.75 960.89
2018 819.14 151.38 970.52
2019 819.14 161.11 980.25
2020 819.14 170.94 990.08
2021 819.14 180.86 1000.00
1
6. The purchase dates and purchase prices to be supplied on page S-23 of
the Prospectus and correspondingly in the Indenture shall be:
Purchase Date Purchase Price
------------- --------------
October 30, 2003 $835.65
October 30, 2006 $861.03
October 30, 2008 $878.38
October 30, 2011 $905.06
October 30, 2016 $951.35
7. The prices referred to in paragraph 5 and 6 above are subject to
adjustment upon the occurrence of a Tax Event and the subsequent conversion of
the Securities to semiannual coupon debentures, and in the event of a reset in
the yield to maturity, each in the manner specified in the Prospectus.
2
SCHEDULE II
Principal Amount at
Maturity of Securities
Underwriters to be Purchased
----------------------------------------------------------------------
Credit Suisse First Boston Corporation $275,625,000
▇.▇. ▇▇▇▇▇▇ Securities Inc. $ 61,250,000
▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney Inc. $ 61,250,000
▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. $ 7,350,000
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated $ 7,350,000
BNY Capital Markets, Inc. $ 11,025,000
Mizuho International plc $ 14,700,000
PNC Capital Markets, Inc. $ 11,025,000
Scotia Capital (USA) Inc. $ 14,700,000
Tokyo-Mitsubishi International plc $ 14,700,000
First Union Securities, Inc. $ 11,025,000
Total $490,000,000
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