Exhibit 1.1
Flowserve Corporation
Debt Securities, Preferred Stock and Common Stock
Underwriting Agreement
Ladies and Gentlemen:
1. Introductory. Flowserve Corporation, a New York corporation (the
"Company") proposes, subject to the terms and conditions stated herein, to
issue and sell to the Underwriters named in a schedule to the Terms Agreement
(as defined in Article 3 below) (the "Underwriters") from time to time certain
of its preferred stock or common stock (the "Offered Equity Securities"). The
Company [if there are Guarantors-- and Flowserve US Inc., Flowserve
International, Inc., Flowserve Holdings, Inc., BW/IP-New Mexico, Inc.,
Ingersoll-Dresser Pump Company, Flowserve International L.L.C., Flowserve
Management Company, CFM-V.R. Tesco Inc., Flowserve International Limited and
Flowserve Finance B.V. (collectively, the "Guarantors")], propose[s], subject
to the terms and conditions stated herein, to issue and sell to the
Underwriters from time to time certain of its debt securities (the "Offered
Debt Securities" and, together with the Offered Equity Securities, the
"Offered Securities"). The representatives of the Underwriters, if any,
specified in a Terms Agreement are hereinafter referred to as the
"Representatives"; provided, however, that if the Terms Agreement does not
specify any representative of the Underwriters, the term "Representatives", as
used in this Agreement, shall mean the Underwriters. If the Offered Securities
are Debt Securities: The Offered Securities will be issued under an indenture,
dated as of ____, ____ (the "Indenture"), between the Company[, the
Guarantors] and a trustee as Trustee, in one or more series, which series may
vary as to interest rates, maturities, redemption provisions, selling prices
and other terms. If the Offered Securities are Preferred Stock: The Offered
Securities may be issued in one or more series, which series may vary as to
dividend rates, redemption provisions, selling prices and other terms.
Particular series or offerings of Offered Securities will be sold pursuant to
a Terms Agreement, for resale in accordance with terms of offering determined
at the time of sale.
2. Representations and Warranties of the Company [and the Guarantors].
The Company [and the Guarantors, jointly and severally,] as of the date of
each Terms Agreement, represent[s] and warrant[s] to, and agree[s] with, each
Underwriter that:
(a) A registration statement (No. 333- ) on Form S-3 relating to the
Offered Securities has been filed with the Securities and Exchange
Commission (the "Commission") and has become effective; and no stop order
suspending the effectiveness of the initial registration statement, any
post-effective amendment thereto or Rule 462(b) registration statement,
if any, has been issued and no
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proceeding for that purpose has been initiated or threatened by the
Commission. Such registration statement, as amended at the time of any
Terms Agreement, is hereinafter referred to as the "Registration
Statement", and the prospectus included in such Registration Statement,
as supplemented and as contemplated by Section 3 to reflect the terms of
the Offered Securities (if they are debt securities or preferred stock)
and the terms of the offering of the Offered Securities, as first filed
with the Commission pursuant to and in accordance with Rule 424(b) ("Rule
424(b)") under the Securities Act of 1993 (the "Act"), including all
material incorporated by reference therein, is hereinafter referred to as
the "Prospectus";
(b) No order preventing or suspending the use of any preliminary
Prospectus has been issued by the Commission, and each preliminary
Prospectus, at the time of filing thereof, conformed in all material
respects to the requirements of the Act and the rules and regulations of
the Commission thereunder ("Rules and Regulations"), and did 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, in the light of the circumstances under which they were made,
not misleading; provided, however, that this representation and warranty
shall not apply to any statements or omissions made in reliance upon and
in conformity with information furnished in writing to the Company by an
Underwriter expressly for use therein;
(c) The Registration Statement conforms and on the date of each
Terms Agreement will conform, and the Prospectus and any further
amendments or supplements to the Registration Statement or the Prospectus
will conform, in all material respects to the requirements of the Act and
the Rules and Regulations and do not and will not, as of the applicable
effective date as to the Registration Statement and any amendment thereto
and as of the applicable date as to the Prospectus and any amendment or
supplement thereto and as of the date of each Terms Agreement, 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; provided, however, that this representation and warranty
shall not apply to any statements or omissions made in reliance upon and
in conformity with information furnished in writing to the Company by an
Underwriter expressly for use therein;
(d) The Company has been duly incorporated and is an existing
corporation in good standing under the laws of the State of New York,
with power and authority (corporate and other) to own 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 its ownership or lease of property or
the conduct of its business requires such qualification, except to the
extent that the failure to be so qualified or be in good standing would
not individually or in the aggregate have a material adverse effect on
the condition (financial or other),
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business, properties or results of operations of the Company and its
subsidiaries taken as a whole after giving effect to the Acquisition
("Material Adverse Effect");
(e) Each subsidiary of the Company [, including each of the
Guarantors] has been duly organized or incorporated and is an existing
partnership, limited liability company or corporation in good standing
under the laws of the jurisdiction of its organization or incorporation
and has the requisite corporate or similar power and authority to own its
assets and to carry on its business as described in the Prospectus,
except to the extent that the failure to be so qualified or be in good
standing would not individually or in the aggregate have a Material
Adverse Effect; and each subsidiary of the Company is duly qualified to
do business as a foreign partnership, limited liability company or
corporation in good standing in all other jurisdictions in which its
ownership or lease of property or the conduct of its business requires
such qualification, except to the extent that the failure to be so
qualified or be in good standing would not individually or in the
aggregate have a Material Adverse Effect; all of the issued and
outstanding capital stock of each subsidiary of the Company has been duly
authorized and validly issued and is fully paid and nonassessable; and,
except as disclosed in the Prospectus, the capital stock of each
subsidiary owned by the Company, directly or through subsidiaries, is
owned free from liens, encumbrances and defects;
(f) The Company has an authorized capitalization as set forth in the
Prospectus, and 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
contained in the Prospectus;
(g) Except as disclosed in the Prospectus, the Company and its
subsidiaries have good and marketable title to all real properties and
all other properties and assets owned by them, in each case free from
liens, encumbrances and defects that would materially affect the value
thereof or materially interfere with the use made or to be made thereof
by them; and except as disclosed in the Prospectus, the Company and its
subsidiaries hold any leased real or personal property under valid and
enforceable leases with no exceptions that would materially interfere
with the use made or to be made thereof by them;
(h) None of the subsidiaries of the Company (other than the
subsidiaries designated as "Significant Subsidiaries" under the Terms
Agreement) (collectively, the "Significant Subsidiaries")) is a
"significant subsidiary," as such term is defined in Rule 405 of the
rules and regulations under the Act;
(i) If the Offered Securities are debt securities: The Indenture has
been duly authorized by the Company [and the Guarantors] and on the date
provided by the Terms Agreement will have been duly executed and
delivered by the Company[, the
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Guarantors] and the Trustee, as applicable, and will constitute a valid
and binding agreement of the Company [and the Guarantors], enforceable
against the Company [and the Guarantors] in accordance with its terms,
except as the enforcement thereof may be limited by bankruptcy,
insolvency (including, without limitation, all laws relating to
fraudulent transfers), reorganization, moratorium or similar laws
affecting enforcement of creditors' rights generally and except as
enforcement thereof is subject to general principles of equity
(regardless of whether enforcement is considered in a proceeding in
equity or at law);
(j) If the Offered Securities are debt securities: The Offered
Securities have been duly and validly authorized and, when issued and
delivered against payment therefor as provided pursuant to the Terms
Agreement, will be duly and validly executed, authenticated, issued and
delivered and will constitute valid and legally binding obligations of
the Company [and the Guarantors] and will be entitled to the benefits
provided by the Indenture under which they are to be issued, which is
substantially in the form filed as an exhibit to the Registration
Statement. The Indenture has been duly qualified under the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act");
(k) If the Offered Securities are common stock: The Offered
Securities to be issued and sold by the Company to the Underwriters
pursuant to the Terms Agreement have been duly and validly authorized
and, when issued and delivered against payment therefor as provided
herein, will be duly and validly issued and fully paid and nonassessable;
and, except as described in the Prospectus, the stockholders of the
Company have no preemptive rights with respect to the Offered Securities;
(l) If the Offered Securities are preferred stock: The Offered
Securities have been duly authorized and, when the Offered Securities
have been delivered and paid for in accordance with the Terms Agreement
on the Closing Date (as defined in Article 3 below), such Offered
Securities will have been validly issued, fully paid and nonassessable;
and, except as described in the Prospectus, the stockholders of the
Company have no preemptive rights with respect to the Offered Securities;
(m) If the Offered Securities are convertible into common stock:
When the Offered Securities are delivered and paid for pursuant to the
Terms Agreement at the Time of Delivery (as defined in Article 3 below),
such Offered Securities will be convertible into common stock of the
Company in accordance with their terms (if the Offered Securities are
preferred stock) or the Indenture (if the Offered Securities are debt
securities); the shares of common stock initially issuable upon
conversion of such Offered Securities have been duly authorized and
reserved for issuance upon such conversion and, when issued upon such
conversion, will be validly issued, fully paid and nonassessable; the
outstanding shares of common stock have been duly authorized and validly
issued, are fully paid and nonassessable; and, except as
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described in the Prospectus, the stockholders of the Company have no
preemptive rights with respect to the common stock;
(n) The execution, delivery and performance of [If the Offered
Securities are debt securities: the Indenture] [If the Offered Securities
are preferred stock: the certificate of designations (the "Certificate of
Designations")] and the Terms Agreement and the issuance and sale of the
Offered Securities and compliance by the Company [and the Guarantors]
with all of the provisions thereof will not conflict with or result in a
breach or violation of any of the terms or provisions of, or (with the
giving of notice or the lapse of time or both) constitute a default
under, any statute, any rule, regulation or order of any governmental
agency or body or any court, domestic or foreign, having jurisdiction
over the Company[, any Guarantor] or any subsidiary of the Company or any
of their properties, or any material agreement or instrument to which the
Company[, any Guarantor] or any such subsidiary is a party or by which
the Company[, any Guarantor] or any such subsidiary is bound or to which
any of the properties of the Company[, any Guarantor] or any such
subsidiary is subject, or the charter or by-laws of the Company[, any
Guarantor] or any such subsidiary, and each of the Company [and the
Guarantors] has full power and authority to consummate the Transactions
and to authorize, issue and sell the Offered Securities as contemplated
by the Terms Agreement (including the provisions of this Agreement);
(o) 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 by the Terms Agreement
(including the provisions of this Agreement) in connection with the
issuance and sale of the Offered Securities by the Company [and the
Guarantors], except (A) the registration under the Act of the Offered
Securities and (B) such consents, approvals, authorizations,
registrations or qualifications (1) as may be required under the
Securities and Exchange Act of 1934, as amended (the "Exchange Act"), the
Trust Indenture Act and applicable state or foreign securities laws in
connection with the purchase and distribution of the Offered Securities
by the Underwriters, (2) as may have already been obtained or made and
(3) which the failure to obtain or make would not, individually or in the
aggregate, have a Material Adverse Effect;
(p) Neither the Company nor any of its subsidiaries (A) is in
violation of its charter, by-laws or other constitutive documents, (B) is
in default in any material respect, and no event has occurred which, with
notice or lapse of time or both, would constitute such a default, in the
due performance or observance of any term, covenant or condition
contained in any material indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which it is a party or by
which it is bound or to which any of its properties or assets is subject
or (C) is in violation in any material respect of any law, ordinance,
governmental rule, regulation or court decree
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to which it or its property or assets may be subject or has failed to
obtain any material license, permit, certificate, franchise or other
governmental authorization or permit necessary to the ownership of its
property or to the conduct of its business, except for, in the cases of
clause (B) or (C), such defaults, violations or failures to obtain that
in the aggregate would not have a Material Adverse Effect;
(q) The statements set forth in the Prospectus under the caption
"Description of the [Debt Securities and Guarantees/Capital Stock]",
insofar as they purport to constitute a summary of the terms of the
Offered Securities, under the caption "Certain United States Federal
Income Tax Considerations" and under the caption "Plan of Distribution",
insofar as they purport to describe the provisions of the laws and
documents referred to therein, are accurate, complete and fair;
(r) Except as disclosed in the Prospectus, there are no pending
actions, suits or proceedings against or affecting the Company, [any
Guarantors] any of [its/their respective] subsidiaries or any of their
respective properties that, if determined adversely to the Company [any
Guarantors] or any of [its/their respective] subsidiaries would
individually or in the aggregate have a Material Adverse Effect, or would
materially and adversely affect the ability of the Company[, any
Guarantor] or any subsidiary of the Company that is a party thereto to
perform its obligations under the [Indenture,] Terms Agreement or this
Agreement or which are otherwise material in the context of the sale of
the Offered Securities; and no such actions, suits or proceedings are
threatened or, to the Company's knowledge, contemplated;
(s) The Company is not an open-end investment company, unit
investment trust or face-amount certificate company that is or is
required to be registered under Section 8 of the United States Investment
Company Act of 1940 (the "Investment Company Act") ; and the Company is
not and, after giving effect to the offering and sale of the Offered
Securities and the application of the proceeds thereof as described in
the Prospectus, will not be an "investment company" as defined in the
Investment Company Act;
(t) Ernst & Young LLP and PricewaterhouseCoopers LLP, who have each
certified certain financial statements of the Company and its
subsidiaries in the Registration Statement are independent public
accountants as required by the Act and the rules and regulations of the
Commission thereunder;
(u) Except as described in the Prospectus, there are no contracts,
agreements or understandings between the Company or any of its
subsidiaries and any person (other than as described in the Terms
Agreement) granting such person the right to require the Company or any
of its subsidiaries to file a registration statement under the Act with
respect to any securities of the Company and its subsidiaries owned or to
be owned by such person or to require the Company or any of its
subsidiaries to
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include such securities in the securities registered pursuant to the
Registration Statement or the Prospectus in any securities being
registered pursuant to any other registration statement filed by the
Company or any of its subsidiaries under the Act;
(v) This Agreement and the Terms Agreement have been duly
authorized, executed and delivered by the Company [and each Guarantor
that is a party thereto] and, assuming due authorization, execution and
delivery by the Underwriters, constitute the valid and binding agreement
of the Company [and each Guarantor that is a party thereto], enforceable
against the Company [and each Guarantor that is a party thereto] in
accordance with their terms except as the enforcement thereof may be
limited by bankruptcy, insolvency (including, without limitation, all
laws relating to fraudulent transfers) reorganization, moratorium or
similar laws affecting enforcement of creditors' rights generally and
except as enforcement thereof is subject to general principles of equity
(regardless of whether enforcement is considered in a proceeding in
equity or at law);
(w) If the Offered Securities are common stock or are convertible
into common stock: Except as described in the Prospectus, the Company has
not sold or issued any shares of common stock during the six-month period
preceding the date of the Terms Agreement, including any sales pursuant
to Rule 144A under, or Regulation D or Regulation S of, the Act other
than shares issued pursuant to employee benefit plans or other employee
compensation plans or pursuant to outstanding options, rights or
warrants;
(x) The financial statements, together with the related notes
thereto filed as part of the Registration Statement or included in the
Prospectus comply as to form in all material respects with the
requirements of Regulation S-X under the Act applicable to registration
statements on Form S-3 under the Act. Such financial statements fairly
present the financial position of the Company and its consolidated
subsidiaries as of the dates shown and their results of operations and
cash flows for the periods shown, in each case in accordance with
generally accepted accounting principles ("GAAP") consistently applied
throughout such periods. The assumptions used in preparing the pro forma
financial statements included in the Registration Statement provide a
reasonable basis for presenting the significant effects directly
attributable to the transactions or events described therein, the related
pro forma adjustments give appropriate effect to those assumptions, and
the pro forma columns therein reflect the proper application of those
adjustments to the corresponding historical financial statement amounts.
The other financial and statistical information and data filed as part of
the Registration Statement or included in the Prospectus, historical and
pro forma, are, in all material respects, fairly presented and prepared
on a basis consistent with such financial statements and the books and
records of the Company;
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(y) The Company and its subsidiaries possess adequate certificates,
authorities or permits issued by appropriate governmental agencies or
bodies necessary to conduct the business now operated by them and have
not received any notice of proceedings relating to the revocation or
modification of any such certificate, authority or permit that, if
determined adversely to the Company or any of their respective
subsidiaries, would individually or in the aggregate have a Material
Adverse Effect;
(z) The Company and its subsidiaries own, possess or can acquire on
reasonable terms, adequate trademarks, trade names and other rights to
inventions, know-how, patents, copyrights, confidential information and
other intellectual property (collectively, "intellectual property
rights") necessary to conduct the business now operated by them, or
presently employed by them, and have not received any notice of
infringement of or conflict with asserted rights of others with respect
to any intellectual property rights that, if determined adversely to the
Company or any of its subsidiaries, would individually or in the
aggregate have a Material Adverse Effect;
(aa) No labor dispute with the employees of the Company or any
subsidiary exists or, to the knowledge of the Company, is imminent that
might have a Material Adverse Effect;
(bb) Except as disclosed in the Prospectus, since the date of the
latest audited financial statements included in the Registration
Statement there has been no material adverse change, nor any development
or event involving a prospective material adverse change, in the
condition (financial or other), business, properties or results of
operations of the Company, and its subsidiaries taken as a whole and,
except as disclosed in or contemplated by the Prospectus, there has been
no dividend or distribution of any kind declared, paid or made by the
Company on any class of its capital stock; and
(cc) Except as disclosed in the Prospectus, none of the Company or
any of its subsidiaries is in violation of any statute, any rule,
regulation, decision or order of any governmental agency or body or any
court, domestic or foreign, relating to the use, disposal or release of
hazardous or toxic substances or relating to the protection or
restoration of the environment or human exposure to hazardous or toxic
substances (collectively, "environmental laws"), owns or operates any
real property contaminated with any substance that is subject to any
environmental laws, is liable for any off-site disposal or contamination
pursuant to any environmental laws, or is subject to any claim relating
to any environmental laws, which violation, contamination, liability or
claim would individually or in the aggregate have a Material Adverse
Effect; and the Company is not aware of any pending investigation which
might lead to such a claim.
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3. Purchase, Sale and Delivery of Offered Securities. The obligation of
the Underwriters to purchase the Offered Securities will be evidenced by an
agreement or exchange of other written communications ("Terms Agreement") at
the time the Company determines to sell the Offered Securities. The Terms
Agreement may also amend, modify or supplement this Agreement as provided
therein. The Terms Agreement will incorporate by reference the provisions of
this Agreement, except as otherwise provided therein, and will specify the
firm or firms which will be Underwriters, the names of any Representatives,
the principal amount or number of shares to be purchased by each Underwriter,
the purchase price to be paid by the Underwriters and (if the Offered
Securities are debt securities or preferred stock) the terms of the Offered
Securities not already specified (in the Indenture, in the case of Offered
Securities that are debt securities), including, but not limited to, interest
rate (if debt securities), dividend rate (if preferred stock), maturity (if
debt securities), any redemption provisions (if debt securities or preferred
stock) and any sinking fund requirements (if debt securities or preferred
stock). The Terms Agreement will also specify the time and date of delivery
and payment (such time and date, or such other time not later than seven full
business days thereafter as the Underwriter first named in the Terms Agreement
(the "Lead Underwriter") and the Company agree as the time for payment and
delivery, being herein and in the Terms Agreement referred to as the "Time of
Delivery"), the place of delivery and payment and any details of the terms of
offering that should be reflected in the prospectus supplement relating to the
offering of the Offered Securities. For purposes of Rule 15c6-1 under the
Exchange Act, the Time of Delivery (if later than the otherwise applicable
settlement date) shall be the date for payment of funds and delivery of
securities for all the Offered Securities sold pursuant to the offering. The
obligations of the Underwriters to purchase the Offered Securities will be
several and not joint. It is understood that the Underwriters propose to offer
the Offered Securities for sale as set forth in the Prospectus.
If the Offered Securities are debt securities and the Terms Agreement
specifies "Book-Entry Only" settlement or otherwise states that the provisions
of this paragraph shall apply, the Company will deliver against payment of the
purchase price the Offered Securities in the form of one or more permanent
global securities in definitive form (the "Global Securities") deposited with
the Trustee as custodian for The Depository Trust Company ("DTC") and
registered in the name of Cede & Co., as nominee for DTC. Interests in any
permanent global securities will be held only in book-entry form through DTC,
except in the limited circumstances described in the Prospectus. Payment for
the Offered Securities shall be made by the Underwriters (if the Terms
Agreement specifies that the Offered Securities will not trade in DTC's Same
Day Funds Settlement System) by certified or official bank check or checks in
New York Clearing House (next day) funds or (if the Terms Agreement specifies
that the Offered Securities will trade in DTC's Same Day Funds Settlement
System) in Federal (same day) funds by official check or checks or wire
transfer to an account in New York previously designated to the Lead
Underwriter by the Company at a bank acceptable to the Lead Underwriter, in
each case
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drawn to the order of the Company at the place of payment specified in the
Terms Agreement on the date specified in the Terms Agreement as the closing
date (the "Closing Date"), against delivery to the Trustee as custodian for
DTC of the Global Securities representing all of the Offered Securities.
4. Certain Agreements of the Company [and the Guarantors]. The Company
[and the Guarantors jointly and severally] agree[s] with each of the
Underwriters:
(a) To prepare the Prospectus in a form approved by the Representatives
and to file such Prospectus pursuant to Rule 424(b) under the Act not later
than the Commission's close of business on the second business day following
the execution and delivery of the Terms Agreement, or, if applicable, such
earlier time as may be required by Rule 430A(a)(3) under the Act; to make no
further amendment or any supplement to the Registration Statement or
Prospectus which shall be disapproved by the Representatives promptly after
reasonable notice thereof; to advise the Representatives promptly after it
receives notice thereof, of the time when any amendment to the Registration
Statement has been filed or becomes effective or any supplement to the
Prospectus or any amended Prospectus has been filed and to furnish the
Representatives with copies thereof; to advise the Representatives promptly
after it receives notice thereof, of the issuance by the Commission of any
stop order or of any order preventing or suspending use of the Prospectus, of
the suspension of the qualification of the Offered Securities for offering or
sale in any jurisdiction, of the initiation or threatening of any proceeding
for any such purpose, or of any request by the Commission for the amending or
supplementing of the Registration Statement or the Prospectus or for
additional information; and, in the event of the issuance of any stop order or
of any order preventing or suspending the use of the Prospectus or suspending
any such qualification, to promptly use its best efforts to obtain the
withdrawal of such order;
(b) Promptly from time to time to take such action as the Representatives
may reasonably request to qualify the Offered Securities for offering and sale
under the securities laws of such jurisdictions as the Representatives may
request and to comply with such laws so as to permit the continuance of sales
and dealings therein in such jurisdictions for as long as may be necessary to
complete the distribution of the Offered Securities, provided that in
connection therewith the Company [and the Guarantors] shall not be required to
qualify as a foreign corporation or to file a general consent to service of
process in any jurisdiction;
(c) Prior to Noon, New York City time, on the New York Business Day next
succeeding the date of the Terms Agreement and from time to time, to furnish
the Underwriters with copies of the Prospectus in New York City in such
quantities as the Representatives may reasonably request, and, if the delivery
of the Prospectus is required at any time prior to the expiration of nine
months after the time of issue of the Prospectus in connection with the
offering or sale of the Offered Securities and if at such time any
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events shall have occurred as a result of which the Prospectus as then amended
or supplemented would include an untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements therein,
in light of the circumstances under which they were made when such Prospectus
is delivered, not misleading, or, if for any other reason it shall be
necessary during such same period to amend or supplement the Prospectus in
order to comply with the Act [For debt securities: or the Trust Indenture Act,
or] to notify the Representatives and upon the request of the Representatives
to prepare and furnish without charge to each Underwriter and to any dealer in
securities as many copies as the Underwriters may from time to time reasonably
request of an amended Prospectus or a supplement to the Prospectus which will
correct such statement or omission or effect such compliance; and in case any
Underwriter is required to deliver the Prospectus in connection with sales of
any of the Offered Securities at any time nine months or more after the time
of issue of the Prospectus, upon request of the Representatives but at the
expense of such Underwriter, to prepare and deliver to such Underwriter as
many copies as the Representatives may request of an amended or supplemented
Prospectus complying with Section 10(a)(3) of the Act;
(d) To make generally available to its securityholders as soon as
practicable, but in any event not later than eighteen months after the date of
the Terms Agreement, an earnings statement of the Company and its subsidiaries
(which need not be audited) complying with Section 11(a) of the Act and the
rules and regulations of the Commission thereunder (including, at the option
of the Company, Rule 158);
(e) During the period beginning at the time of the execution of the Terms
Agreement and ending the number of days after the Time of Delivery specified
under "Blackout" in the Terms Agreement, not to offer, sell, contract to sell
or otherwise dispose of, except as provided hereunder and under the Terms
Agreement any securities of the Company that are substantially similar to the
Offered Securities including but not limited to any securities that are
convertible into or exchangeable for, or that represent the right to receive,
common stock or any such substantially similar securities (other than pursuant
to employee stock option plans existing on, or upon the conversion or exchange
of convertible or exchangeable securities outstanding as of, the date of this
Agreement), without the prior written consent of the Underwriters;
(f) To cause each of the persons listed on a schedule to the Term
Agreement to enter into a lock-up agreement with the Underwriters, in form and
substance satisfactory to the Underwriters, providing that, during the period
beginning at the time of execution of the Terms Agreement and ending the
number of days after the Time of Delivery specified under "Blackout" in the
Terms Agreement, such person will not offer, sell, contract to sell or
otherwise dispose of, except as provided hereunder or under the Terms
Agreement, any securities of the Company that are substantially similar to the
Offered Securities, including but not limited to any securities that are
convertible into or exchangeable for, or that represent the right to receive,
the Offered Securities or any such substantially similar
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securities (other than pursuant to employee stock option plans existing on, or
upon the conversion or exchange of convertible or exchangeable securities
outstanding as of, the date of the Term Agreement), without the prior written
consent of the Underwriters;
(g) During a period of three years from the effective date of the
Registration Statement, to furnish to the Representatives, upon request,
copies of all reports or other communications (financial or other) furnished
to stockholders, and to deliver to the Representatives, as soon as practicable
after they are available, [(A)] copies of any reports and financial statements
furnished to or filed with the Commission or any national securities exchange
on which the Offered Securities or any class of securities of the Company is
listed [For debt securities: and (B) the documents specified in the Indenture
as in effect at the Time of Delivery];
(h) To use the net proceeds received by it from the sale of the Offered
Securities pursuant to this Agreement in the manner specified in the
Prospectus under the caption "Use of Proceeds";
(i) If Offered Securities are common stock: To use its best efforts to
list for quotation the Offered Securities on the New York Stock Exchange
("NYSE");
(j) If the Company [and the Guarantors] elect[s] to rely upon Rule
462(b), the Company [and the Guarantors] shall file a Rule 462(b) Registration
Statement with the Commission in compliance with Rule 462(b) by 10:00 P.M.,
Washington, D.C. time, on the date of this Agreement, and the Company [and the
Guarantors] shall at the time of filing either pay to the Commission the
filing fee for the Rule 462(b) Registration Statement or give irrevocable
instructions for the payment of such fee pursuant to Rule 111(b) under the
Act; and
(k) 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 registration of the Offered Securities under the Act and
all other expenses in connection with the preparation, printing and filing of
the Registration Statement, the Prospectus and amendments and supplements
thereto and the mailing and delivering of copies thereof to the Underwriters
and dealers; (ii) the cost of printing or producing any Agreement among
Underwriters, this Agreement, the Terms Agreement, [If the Offered Securities
are debt securities: the Indenture,] closing documents (including any
compilations thereof) and any other documents in connection with the offering,
purchase, sale and delivery of the Offered Securities; (iii) all expenses in
connection with the qualification of the Offered Securities for offering and
sale under state securities laws as provided in this Section 4, including the
fees and disbursements of counsel for the Underwriters (not in excess, in the
aggregate, an amount specified in the Terms Agreement) in connection with such
qualification; (iv) any fees charged by securities rating services for rating
the Offered Securities; [If the Offered Securities are common
13
stock: (v) all fees and expenses in connection with listing the Offered
Securities on the NYSE]; (vi) the filing fees incident to securing any
required review by the National Association of Securities Dealers, Inc. of the
terms of the sale of the Offered Securities; (vii) the cost of preparing
certificates evidencing the Offered Securities; (viii) the fees and expenses
[If the Offered Securities are debt securities: 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 Offered Securities] [If the Offered
Securities are common stock: any transfer agent or registrar]; and (ix) all
other costs and expenses incident to the performance of its obligations
hereunder and under the Terms Agreement which are not otherwise specifically
provided for above. It is understood, however, except as provided in this
Subsection 4(k), and Sections 6 and 9 hereof, the Underwriters will pay all of
their own costs and expenses, including the fees of their counsel, transfer
taxes on resale of any of the Offered Securities by them, and any advertising
expenses connected with any offers they may make.
5. Conditions of the Obligations of the Underwriters. The respective
obligations of the Underwriters hereunder and under the Terms Agreement as to
the Offered Securities to be delivered at each Time of Delivery, shall be
subject, in the sole discretion of the Representatives, to the condition that
all representations and warranties of the Company [and the Guarantors] herein
are, at and as of the Time of Delivery, true and correct, the condition that
the Company [and the Guarantors] shall have performed all of its and their
obligations hereunder and under the Terms Agreement theretofore to be
performed and the following additional conditions:
(a) The Prospectus shall have been filed with the Commission pursuant to
Rule 424(b) within the applicable time period prescribed for such filing by
the rules and regulations under the Act and in accordance with Section 4(a)
hereof; if the Company has elected to rely upon Rule 462(b), the Rule 462(b)
Registration Statement shall have become effective by 10:00 P.M., Washington,
D.C. time, on the date of this Agreement; no stop order suspending the
effectiveness of the Registration Statement or any part thereof shall have
been issued and no proceeding for that purpose shall have been initiated or
threatened by the Commission; and all requests for additional information on
the part of the Commission shall have been complied with to the reasonable
satisfaction of the Representatives, as the case may be;
(b) _____________, counsel for the Underwriters, shall have furnished to
the Representatives, such written opinion or opinions, dated the Time of
Delivery, as the Representatives may reasonably require, and such counsel
shall have received such papers and information as they may reasonably request
to enable them to pass upon such matters;
14
(c) Cravath, Swaine & Xxxxx, special counsel for the Company, shall have
furnished to the Representatives their written opinion, dated the Time of
Delivery, in form and substance satisfactory to the Representatives, to the
effect that:
(i) The Company is a corporation validly existing and in good
standing under the laws of the state of its incorporation or formation
(which opinion may be based solely on a certificate of the Secretary of
State of such state).
(ii) To the knowledge of such counsel, there are no agreements,
contracts, indentures, leases or other instruments to which the Company
or any of the Significant Subsidiaries is a party or to which any of
their respective properties or assets is subject that are required to be
described in, or filed as exhibits to, the Registration Statement and the
Prospectus that have not been so described or filed;
(iii) The Registration Statement was declared effective under the
Act as of the date and time specified in such opinion, the Prospectus was
filed with the Commission pursuant to the subparagraph of Rule 424(b) of
the Rules and Regulations specified in such opinion on the date specified
therein and to their knowledge no stop order suspending the effectiveness
of the Registration Statement has been issued and no proceedings for that
purpose have been instituted or are pending or contemplated under the
Act;
(iv) If the Offered Securities are debt securities: Assuming that
the Indenture under which the Offered Securities will be issued has been
duly and validly authorized, executed and delivered by the Company [and
the Guarantors] and, assuming due authorization, execution and delivery
by the Trustee, such Indenture will constitute the legal, valid and
binding obligation of the Company, enforceable against the Company in
accordance with its terms (subject to applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and other similar laws
affecting creditors' rights generally from time to time in effect and to
general principles of equity, including, without limitation, concepts of
materiality, reasonableness, good faith and fair dealing, regardless of
whether in a proceeding in equity or at law); and such Indenture has been
duly qualified under the Trust Indenture Act;
(v) If the Offered Securities are debt securities: Assuming that the
Offered Securities have been duly and validly authorized by the Company
[and the Guarantors] and when duly executed by the Company [and the
Guarantors] in accordance with the terms of the Indenture under which the
Offered Securities will be issued and, assuming due authentication of the
Offered Securities by the Trustee, upon delivery to the Underwriters
against payment therefor in accordance with the terms of the Terms
Agreement, will have been validly issued and delivered, and will
constitute valid and binding obligations of the Company [and the
Guarantors] entitled
15
to the benefits of such Indenture, enforceable against the Company in
accordance with their terms (subject to applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer and other
similar laws affecting creditors' rights generally from time to time in
effect and to general principles of equity, including, without
limitation, concepts of materiality, reasonableness, good faith and fair
dealing, regardless of whether in a proceeding in equity or at law);
(vi) No authorization, approval or other action by, and no notice
to, consent of, order of, or filing with, any United States Federal, New
York or, to the extent required under the General Corporation Law of the
State of Delaware, Delaware governmental authority or regulatory body is
required for the consummation of the transactions contemplated by this
Agreement or the Terms Agreement, except such as have been obtained under
the Act or the Trust Indenture Act and such as may be required under the
blue sky laws of any jurisdiction in connection with the purchase and
distribution of the Offered Securities by the Underwriters;
(vii) The statements made in the Prospectus under the caption
"Description of Debt Securities and Guarantees", insofar as they purport
to constitute summaries of the terms of the debt securities [and the
guarantees] and under the caption "Certain United States Federal Income
Tax Considerations," insofar as they purport to describe the material tax
consequences of an investment in the Offered Securities, fairly summarize
the matters therein described;
(viii) If the Offered Securities are debt securities convertible
into common stock: The Offered Securities are convertible into common
stock in accordance with the terms of the Indenture.
(ix) None of the issue and sale of the Offered Securities, the
consummation of any other of the transactions contemplated by this
Agreement or the Terms Agreement or the performance of the terms of this
Agreement or the Terms Agreement (i) will conflict with, result in a
breach of, or constitute a default under, the terms of any indenture or
other agreement or instrument to which the Company or any of its
subsidiaries is a party or bound and listed as an exhibit to the
Company's most recent Annual Report on Form 10-K or any subsequent
Commission filings, except as would not have a Material Adverse Effect or
(ii) will contravene in any material respect any law, rule or regulation
of the United States or the State of New York or the General Corporation
Law of the State of Delaware, or, to such counsel's knowledge, any order
or decree of any court or government agency or instrumentality. In
connection with the foregoing, such counsel may point out that certain of
the agreements referred to in clause (i) above are or may be governed by
laws other than the laws of the State of New York. For purposes of the
opinion expressed in this paragraph, however, such counsel may assume
that all such agreements are governed by and would be interpreted in
accordance with the laws of the State of New York;
16
(x) The Registration Statement and the Prospectus and any further
amendments and supplements thereto made by the Company prior to such Time
of Delivery (other than the financial statements and related schedules
therein, as to which such counsel need express no opinion) comply as to
form in all material respects with the requirements of the Act and the
rules and regulations thereunder;
(xi) The Company is not and, upon sale of the Offered Securities to
be issued and sold thereby in accordance herewith and the application of
the net proceeds to the Company of such sale as described in the
Prospectus under the caption "Use of Proceeds," will not be an
"investment company" within the meaning of the Investment Company Act of
1940, as amended.
In addition, such counsel shall also state that such counsel has
participated in conferences with certain officers of, and with the accountants
and counsel, for the Company, and with certain representatives of, and counsel
for, the underwriters, concerning the preparation of the Registration
Statement and the Prospectus and that although such counsel has made certain
inquiries and investigations in connection with the preparation of the
Registration Statement and Prospectus, the limitations inherent in the role of
outside counsel are such that such counsel cannot and does not assume
responsibility for the accuracy or completeness of the statements made in the
Registration Statement and Prospectus, except insofar as such statements
relate to such counsel and except to the extent set forth in clause (vii)
above. Subject to the foregoing, such counsel shall advise you that its work
in connection with this matter did not disclose any information that gave such
counsel reason to believe that the Registration Statement at the time the
Registration Statement was last amended or deemed to be amended or the
Prospectus, as of its date or as of the Time of Delivery (in each case except
for the financial statements and other information of a statistical,
accounting or financial nature included or incorporated by reference therein,
[If the Offered Securities are debt securities: and the Statement of
Eligibility (Form T-1) included as an exhibit to the Registration Statement,]
as to which such counsel need not express any view), was not appropriately
responsive in all material respects to the requirements of the Act [If the
Offered Securities are debt securities: and the Trust Indenture Act] and the
Rules and Regulations or the Registration Statement, at the time it became
effective was last amended or deemed to be amended, contained an untrue
statement of a material fact or omitted to state a material fact required to
be stated therein or necessary to make the statements therein not misleading,
or that the Prospectus, at the Time of Delivery, includes an untrue statement
of a material fact or omits 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 each case except for the financial
statements and other information of a statistical, accounting or financial
nature included therein, as to which such counsel need not express any view).
17
The opinion of such counsel may be limited to the laws of the State of
New York, the General Corporation Law of the State of Delaware and the Federal
laws of the United States;
(d) Xxxx Xxxxx, Associate General Counsel to the Company, shall have
furnished to the Representatives, his written opinion, dated such Time of
Delivery, in form and substance reasonably satisfactory to the
Representatives, to the effect that:
(i) Each of the Company, and [the Guarantors] is (other than [list
non- corporate entities]) a corporation validly existing and in good
standing under the laws of the state of its incorporation or formation
(which opinion may be based solely on a certificate of the Secretary of
State of such state), and has all requisite corporate power and authority
to own its assets and carry on its business as described in the
Prospectus. Each of the Company, and [the Guarantors] is duly qualified
to do business as a foreign corporation in good standing (which opinion
may be based solely on a certificate of the Secretary of State of such
state), in each jurisdiction in which its ownership or lease of property
or the conduct of its business requires such registration or
qualification, except where the failure so to register or qualify or to
be in good standing would not have a Material Adverse Effect;
(ii) All of the issued and outstanding capital stock of the Company
and each subsidiary of the Company (other than as set forth in the Terms
Agreement) have been duly and validly authorized and issued and are fully
paid, non-assessable and (except for directors' qualifying shares) all
such shares of the subsidiaries of the Company are owned directly or
indirectly by the Company, free and clear of all liens, encumbrances and
defects, except as set forth in the Registration Statement and the
Prospectus (including the exhibits thereto);
(iii) The Company has an authorized capitalization as set forth in
the Prospectus; and all of the issued shares of capital stock of the
Company (including the Offered Shares being delivered at such Time of
Delivery) have been duly and validly authorized and issued, are fully
paid and nonassessable; and the shares conform to the description of the
capital stock contained in the Prospectus;
(iv) To the knowledge of such counsel, except as disclosed in the
Prospectus, the Company and its subsidiaries have good and marketable
title to all real properties and all other properties and assets owned by
them, in each case free from liens, encumbrances and defects that would
materially affect the value thereof or materially interfere with the use
made or to be made thereof by them; and except as disclosed in the
Prospectus, the Company and its subsidiaries hold any leased real or
personal property under valid and enforceable leases with no exceptions
that would materially interfere with the use made or to be made thereof
by them;
18
(v) To the knowledge of such counsel, except as disclosed in the
Prospectus, there are no pending actions, suits or proceedings against or
affecting the Company, [any Guarantors] any of [its/their respective]
subsidiaries or any of their respective properties that, if determined
adversely to the Company [any Guarantors] or any of [its/their
respective] subsidiaries would individually or in the aggregate have a
Material Adverse Effect, or would materially and adversely affect the
ability of the Company[, any Guarantor] or any subsidiary of the Company
that is a party thereto to perform its obligations under the [Indenture,]
Terms Agreement or this Agreement or which are otherwise material in the
context of the sale of the Offered Securities; and no such actions, suits
or proceedings are threatened or, to the Company's knowledge,
contemplated;
(vi) To the knowledge of such counsel, except as described in the
Prospectus there are no contracts, agreements or understandings between
the Company or any of its subsidiaries (other than as set forth in the
Terms Agreement) and any person granting such person the right to require
the Company or any of such subsidiaries to file a registration statement
under the Act with respect to any securities of the Company owned or to
be owned by such person or to require the Company or any of such
Subsidiaries to include such securities in the securities registered
pursuant to the Registration Statement or in any securities being
registered pursuant to any other registration statement filed by the
Company or any of such Subsidiaries under the Act;
(vii) The execution, delivery and performance of [If the Offered
Securities are debt securities: the Indenture] [If the Offered Securities
are preferred stock: the certificate of designations] and the Terms
Agreement and the issuance and sale of the Offered Securities and
compliance by the Company [and the Guarantors] with all of the provisions
thereof will not conflict with or result in a breach or violation of any
of the terms or provisions of, or (with the giving of notice or the lapse
of time or both) constitute a default under, any statute, any rule,
regulation or order of any governmental agency or body or any court,
domestic or foreign, having jurisdiction over the Company[, any
Guarantor] or any subsidiary of the Company or any of their properties,
or any material agreement or instrument to which the Company[, any
Guarantor] or any such subsidiary is a party or by which the Company[,
any Guarantor] or any such subsidiary is bound or to which any of the
properties of the Company[, any Guarantor] or any such subsidiary is
subject, or the charter or by-laws of the Company[, any Guarantor] or any
such subsidiary, and each of the Company [and the Guarantors] has full
power and authority to consummate the Transactions and to authorize,
issue and sell the Offered Securities as contemplated by the Terms
Agreement (including the provisions of this Agreement);
(viii) 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 by the Terms Agreement
(including the provisions of this
19
Agreement) in connection with the issuance and sale of the Offered
Securities by the Company [and the Guarantors], except (A) the
registration under the Act of the Offered Securities and (B) such
consents, approvals, authorizations, registrations or qualifications as
(1) may be required under the Securities and Exchange Act of 1934, as
amended, the Trust Indenture Act and applicable state or foreign
securities laws in connection with the purchase and distribution of the
Offered Securities by the Underwriters, (2) as may have already been
obtained or made and (3) the failure to obtain or make would not,
individually or in the aggregate, have a Material Adverse Effect;
(ix) If the Offered Securities are common stock: Except as described
in the Prospectus, there are no preemptive or other rights to subscribe
for or to purchase, nor any restriction upon the voting or transfer of,
any Offered Securities pursuant to the Company's charter or by-laws or
any agreement or other instrument known to such counsel;
(x) If the Offered Securities are debt securities: The Indenture has
been duly and validly authorized, executed and delivered by the Company
[and the Guarantors].
(xi) If the Offered Securities are debt securities: The Offered
Securities have been duly and validly authorized by the Company [and the
Guarantors].
(xii) If the Offered Securities are common stock: The Offered
Securities have been duly and validly authorized and, when issued and
delivered against payment therefor as provided in the Terms Agreement,
will be duly and validly issued and fully paid and nonassessable.
(xiii) If the Offered Securities are preferred stock: The Offered
Securities have been duly authorized and, when the Offered Securities
have been delivered and paid for in accordance with the Terms Agreement
on the Closing Date, such Offered Securities will have been validly
issued, fully paid and nonassessable; and, except as described in the
Prospectus, the stockholders of the Company have no preemptive rights
with respect to the Offered Securities;
(xiv) If the Offered Securities are convertible into common stock:
The Offered Securities will be convertible into common stock of the
Company in accordance with their terms (if the Offered Securities are
preferred stock) or the Indenture (if the Offered Securities are debt
securities); the shares of common stock initially issuable upon
conversion of such Offered Securities have been duly authorized and
reserved for issuance upon such conversion and, when issued upon such
conversion, will be validly issued, fully paid and nonassessable; the
outstanding shares of common stock have been duly authorized and validly
issued, are fully paid
20
and nonassessable; and, except as described in the Prospectus, the
stockholders of the Company have no preemptive rights with respect to the
common stock;
(xv) The Terms Agreement has been duly and validly authorized,
executed and delivered by the Company; and
(xvi) This Agreement has been duly and validly authorized, executed
and delivered by the Company.
(xvii) Such counsel has no reason to believe that the Registration
Statement at the time the Registration Statement was last amended or
deemed to be amended or the Prospectus, as of its date or as of the Time
of Delivery, contained any untrue statement of material fact or omitted
to state any material fact necessary to make the statements therein not
misleading; the descriptions in the Registration Statement and the
Prospectus of statutes, legal and governmental proceedings and contracts
and other documents are accurate and fairly present the information
required to be shown; it being understood that such counsel need express
no opinion as to the financial statements or other financial related
statistical data contained in the Registration Statement or the
Prospectus.
The opinion of such counsel may be limited to the laws of the State of
Texas, the General Corporation Law of the State of Delaware and the Federal
laws of the United States;
(e) On the date of the Prospectus at a time prior to the execution of
this Agreement, at 9:30 a.m., New York City time, on the effective date of any
post-effective amendment to the Registration Statement filed subsequent to the
date of the Terms Agreement and also at the Time of Delivery, Ernst & Young
LLP and PricewaterhouseCoopers LLP shall have furnished to the Representatives
a letter or letters, dated the respective dates of delivery thereof, in form
and substance satisfactory to the Representatives;
(f) Neither the Company nor any of its subsidiaries shall have sustained
since the date of the latest audited financial statements included in the
Prospectus any 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 Prospectus, and (ii) since the respective
dates as of which information is given in the Prospectus there shall not have
been any change in the capital stock or long-term debt of the Company or any
of its subsidiaries or any change, or any development involving a prospective
change, in or affecting the general affairs, management, financial position,
stockholders' equity or results of operations of the Company and its
subsidiaries, otherwise than as set forth or contemplated in the Prospectus,
the effect of which, in any such case described in clause (i) or (ii), is in
the judgment of the Representatives so material and adverse as to
21
make it impracticable or inadvisable to proceed with the public offering or
the delivery of the Offered Securities on the terms and in the manner
contemplated in the Prospectus;
(g) On or after the date of the Terms Agreement (i) no downgrading shall
have occurred in the rating accorded the Company's debt securities or
preferred stock by any nationally recognized statistical rating organization,
as that term is defined by the Commission for purposes of Rule 436(g)(2) under
the Act, and (ii) no such organization shall have publicly announced that it
has under surveillance or review, with possible negative implications, its
rating of any of the Company's debt securities or preferred stock;
(h) On or after the date of the Terms Agreement there shall not have
occurred any of the following: (i) a material suspension or material
limitation in trading in securities generally on the NYSE or on NASDAQ; (ii) a
suspension or material limitation in trading in the Company's securities on
the NYSE; (iii) a general moratorium on commercial banking activities declared
by either Federal or New York State authorities; or (iv) the outbreak or
escalation of hostilities involving the United States or the declaration by
the United States of a national emergency or war, if the effect of any such
event specified in this clause (iv) in the judgment of the Representatives
makes it impracticable or inadvisable to proceed with the public offering or
the delivery of the Offered Securities on the terms and in the manner
contemplated in the Prospectus; [If the Offered Securities are debt
securities: or (v) the occurrence of any material adverse change in the
existing financial, political or economic conditions in the United States or
elsewhere which, in the judgment of the Representatives, would materially and
adversely affect the financial markets or the market for the Offered
Securities and other debt securities;]
(i) If the Offered Securities are common stock: At such Time of Delivery
the NYSE shall have approved the Offered Securities to be sold by the Company
for inclusion, subject only to official notice of issuance and evidence of
satisfactory distribution;
(j) If the Offered Securities are common stock: The Company has obtained
and delivered to the Underwriters executed copies of an agreement from the
persons identified a schedule to the Terms Agreement to the effect set forth
in Subsection 4(e) hereof in form and substance satisfactory to the
Representatives;
(k) The Company shall have complied with the provisions of Section 4(c)
hereof with respect to the furnishing of Prospectuses on the New York Business
Day next succeeding the date of this Agreement; and
(l) The Company shall have furnished or caused to be furnished to the
Representatives at the Time of Delivery certificates of officers of the
Company satisfactory to the Representatives as to (i) the accuracy of the
representations and
22
warranties of the Company herein at and as of such Time of Delivery, (ii) the
performance by the Company of all of its obligations hereunder and under the
Terms Agreement to be performed at or prior to such Time of Delivery, (iii)
the absence of untrue statements of material facts or omissions of material
facts required to be stated or necessary to make statements not misleading in
the Registration Statement and the Prospectus, (iv) absence of events since
the effective date of the Registration Statement which should be set forth in
a supplement or amendment to the Registration Statement and the Prospectus,
and (v) such other matters as the Underwriter may reasonably request and the
Company shall have furnished or caused to be furnished certificates as to the
matters set forth in subsections (a) and (f) of this Section and as to such
other matters as the Representatives may reasonably request.
6. Indemnification and Contribution. (a) The Company [and the Guarantors,
jointly and severally] will indemnify and hold harmless each Underwriter,
their respective officers and employees and each person, if any, who controls
any Underwriter within the meaning of the Act, from and against any loss,
claim, damage or liability, joint or several, or any action in respect thereof
(including, but not limited to, any loss, claim, damage, liability or action
relating to purchases and sales of Offered Securities), to which that
Underwriter, officer, employee or controlling person may become subject, under
the Act or otherwise, insofar as such loss, claim, damage, liability or action
arises out of, or is based upon any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement or the
Prospectus or in any amendment or supplement thereto, or arise out of or are
based upon the omission or alleged omission to state therein any material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading, and
shall reimburse each Underwriter, and each such officer, employee or
controlling person promptly upon demand for any legal or other expenses
reasonably incurred by that Underwriter, officer, employee or controlling
person in connection with investigating or defending or preparing to defend
against any such loss, claim damage, liability or action as such expenses are
incurred; provided, however, that the Company [and the Guarantors] shall not
be liable in any such case to the extent that any such loss, claim, damage,
liability, or action arises out of or is based upon any untrue statement or
alleged untrue statement or omission or alleged omission made in the
Registration Statement or the Prospectus or any such amendment or supplement
in reliance upon and in conformity with written information concerning such
Underwriter furnished to the Company by any Representatives by or on behalf of
any underwriter specifically for inclusion therein; provided further that
[neither] the Company [nor any Guarantor] shall be liable to any Underwriter
under the indemnity agreement in this paragraph 6(a) with respect to the
Prospectus to the extent that any such loss, claim, damage or liability of
such Underwriters results from the fact that such Underwriter sold Offered
Securities to a person as to whom there was not sent or given, at or prior to
written confirmation of such sale, a copy of the Prospectus as then amended or
supplemented if the Company had previously furnished copies thereof in the
quantity requested and in a timely manner in
23
accordance with Section 4(c) hereof to such Underwriter and the loss, claim,
damage or liability of such Underwriter results from an untrue statement or
omission of a material fact contained in the Registration Statement and
corrected in the Prospectus as amended or supplemented.
(b) Each Underwriter, severally and not jointly, shall indemnify and hold
harmless the Company, [the Guarantors] [their respective /its] officers who
sign the Registration Statement, each of [their respective/its] directors
(including any person who, with his or her consent, is named in the
Registration Statement or the Prospectus as about to become a director of the
Company), and each person, if any, who controls the Company or a Guarantor
within the meaning of the Act, from and against any loss, claim, damage or
liability, joint or several, or any action in respect thereof, to which the
Company [the Guarantors] or any such director, officer or controlling person
may become subject, under the Act or otherwise, insofar as such loss, claim,
damage, liability or action arises out of, or is based upon, (i) any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement or the Prospectus or in any amendment or supplement
thereto or (ii) the omission or alleged omission to state in the Registration
Statement or the Prospectus, or in any amendment or supplement thereto, any
material fact required to be stated therein or necessary to make the
statements therein not misleading, but in each case only to the extent that
the untrue statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with written information
concerning such Underwriter furnished to the Company through the
Representatives by or on behalf of that Underwriter specifically for inclusion
therein, and shall reimburse the Company and any such director, officer or
controlling person for any legal or other expenses reasonably incurred by the
Company or any such director, officer or controlling person in connection with
investigating or defending or preparing to defend against any such loss,
claim, damage, liability or action as such expenses are incurred. The
foregoing indemnity agreement is in addition to any liability which any
Underwriter may otherwise have to the Company [the Guarantors], or any such
director, officer, employee or controlling person.
(c) Promptly after receipt by an indemnified party under subsection (a)
or (b) above of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made against
the indemnifying party under such subsection, notify the indemnifying party in
writing of the claim or the commencement thereof; provided, however, that the
failure to notify the indemnifying party shall not relieve it from any
liability which it may have under this section except to the extent it has
been materially prejudiced by such failure, and provided further, that the
failure to notify the indemnifying party shall not relieve it from any
liability which it may have to an indemnified party otherwise than under such
subsection. In case any such claim or action shall be brought against an
indemnified party, and it shall notify the indemnifying party thereof, the
indemnifying party shall be entitled to participate therein and, to the extent
that it wishes, jointly with any other similarly notified indemnifying party,
to
24
assume the defense thereof, with counsel reasonably satisfactory to the
indemnified party. After notice from the indemnifying party to the indemnified
party of its election to assume the defense of such claim or action, the
indemnifying party shall not be liable to the indemnified party under such
subsection for any legal or other expenses, subsequently incurred by the
indemnified party, in connection with the defense thereof; provided, however,
that if the defendants in any such action include both the indemnified party
and the indemnifying party and the indemnified party shall have in good faith
reasonably concluded that there may be defenses available to it which are
different from or additional to those available to the indemnifying party or
if the interests of the indemnified party may be deemed to conflict with the
interests of the indemnifying party, the indemnified party shall have the
right to select a separate counsel in the defense of such action, with the
expenses and fees of such separate counsel and other expenses related to such
participation to be reimbursed by the indemnifying party as incurred, provided
further that in no event shall the foregoing proviso require the indemnifying
party to bear the fees and expenses of more than one separate counsel, in
addition to local counsel, for each of the following classes of parties
hereto: (i) the Representatives and those other Underwriters and their
respective officers, employees and controlling persons who may be subject to
liability arising out of any claim in respect of which indemnity may be sought
under this Section 6, (ii) the Company and its Subsidiaries [and (iii) the
Guarantors]. No indemnifying party shall (i) without the prior written consent
of the indemnified parties (which consent shall not be unreasonably withheld),
settle or compromise or consent to the entry of any judgment with respect to
any pending or threatened claim, action, suit or proceeding in respect of
which indemnification or contribution may be sought hereunder (whether or not
the indemnified parties are actual or potential parties to such claim or
action) unless such settlement, compromise or consent includes an
unconditional release of each indemnified party from all liability arising out
of such claim, action, suit or proceeding, or (ii) be liable for any
settlement of any such action effected without its written consent (which
consent shall not be unreasonably withheld), but if settled with the consent
of the indemnifying party or if there be a final judgment of the plaintiff in
any such action, the indemnifying party agrees to indemnify and hold harmless
any indemnified party from and against any loss or liability by reason of such
settlement or judgment to the extent provided in this Section 6.
(d) If the indemnification provided for in this Section 6 shall for any
reason be unavailable to or insufficient (other than by reason of the
exceptions provided therein) to hold harmless an indemnified party under
subsection (a) or (b) above in respect of any loss, claim, damage or
liability, or any action in respect thereof, referred to therein, then each
indemnifying party shall, in lieu of indemnifying such indemnified party,
contribute to the amount paid or payable by such indemnified party as a result
of such loss, claim, damage or liability or action in respect thereof, (i) in
such proportion as shall be appropriate to reflect the relative benefits
received by each party to the Terms Agreement from the offering of the Offered
Securities or (ii) if the allocation provided by the clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to
25
reflect not only such relative benefits but also the relative fault of each
party to the Terms Agreement with respect to the statements or omissions which
resulted in such loss, claim, damage or liability, or action in respect
thereof, as well as any other relevant equitable considerations. The relative
benefits received by the Company, the Underwriters, [and the Guarantors] with
respect to such offering shall be deemed to be in the same proportion as the
total net proceeds from the offering of the Offered Securities purchased under
this Agreement (before deducting expenses) received by the Company, [the
Guarantors], and the total underwriting discounts and commissions received by
the Underwriters with respect to the Offered Securities purchased under the
Terms Agreement as set forth in the table on the cover page of the Prospectus,
bear to the sum of the total proceeds from the sale of the Offered Securities
(before deducting expenses) in the offering. The relative fault shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to
state a material fact relates to information supplied by the Company, or the
Underwriters and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company, [the Guarantors], and the Underwriters agree that it would not be
just and equitable if contributions pursuant to this subsection (e) were
determined by pro rata allocation or by any other method of allocation which
does not take into account of the equitable considerations referred to herein.
The amount paid or payable by an indemnified party as a result of the loss,
claim, damage or liability or action in respect thereof, referred to above in
this subsection (e) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
subsection (e), no Underwriter shall be required to contribute any amount in
excess of the amount by which the total price at which the Offered Securities
underwritten by it and distributed to the public was offered to the public,
exceeds the amount of any damages which such Underwriter, as the case may be,
has otherwise been required paid or become liable to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Act) shall be entitled to contribution from any person who was not guilty
of such fraudulent misrepresentation. The Underwriters' obligations in this
subsection (e) to contribute are several in proportion to their respective
underwriting obligations and not joint.
(e) As used herein, the phrase "actual knowledge" means, with respect to
any natural person, the actual knowledge of such person and, with respect to
any other person, the actual knowledge of any natural person exercising
control (whether by ownership or management) over such person, and shall not
imply any duty to investigate or be deemed to include any knowledge that might
have become actually known following investigation. The phrase "actually
known" shall have a correlative meaning.
26
(f) The obligations of the Company [and the Guarantors] under this
Section 6 shall be in addition to any liability which the Company [and the
Guarantors] may otherwise have and shall extend, upon the same terms and
conditions, to each person, if any, who controls any Underwriter within the
meaning of the Act; the obligations of the Underwriters under this Section 6
shall be in addition to any liability which the respective Underwriters may
otherwise have and shall extend, upon the same terms and conditions, to each
officer and director of the Company [or any Guarantor] (including any person
who, with his or her consent, is named in the Registration Statement or the
Prospectus as about to become a director of the Company [or any Guarantor])
and to each person, if any, who controls the Company [or any Guarantor] within
the meaning of the Act.
7. Default of Underwriters. (a) If any Underwriter shall default in its
obligation to purchase the Offered Securities which it has agreed to purchase
under the Terms Agreement, at a Time of Delivery, the Representatives may in
their discretion arrange for the Representatives or another party or other
parties to purchase such Offered Securities on the terms contained herein. If
within thirty-six hours after such default by any Underwriter, the
Representatives do not arrange for the purchase of such Offered Securities,
then the Company shall be entitled to a further period of thirty-six hours
within which to procure another party or other parties satisfactory to the
Representatives to purchase such Offered Securities on such terms. In the
event that, within the respective prescribed periods, the Representatives
notify the Company that they have so arranged for the purchase of such Offered
Securities, or the Company notifies the Representatives that it has so
arranged for the purchase of such Offered Securities, the Representatives or
the Company shall have the right to postpone the Time of Delivery for a period
of not more than seven days, in order to effect whatever changes may thereby
be made necessary in the Registration Statement or the Prospectus, or in any
other documents or arrangements, and the Company agrees to file promptly any
amendments to the Registration Statement or the Prospectus which in the
opinion of the Representatives may thereby be made necessary. The term
"Underwriter" as used in this Agreement shall include any person substituted
under this Section with like effect as if such person had originally been a
party to this Agreement with respect to such Offered Securities.
(b) If, after giving effect to any arrangements for the purchase of the
Offered Securities of a defaulting Underwriter or Underwriters by the
Representatives and the Company as provided in subsection (a) above, the
aggregate number of such Offered Securities which remains unpurchased does not
exceed one-eleventh of the aggregate principal number of all the Offered
Securities to be purchased at such Time of Delivery, then the Company shall
have the right to require each non-defaulting Underwriter to purchase the
number of Offered Securities which such Underwriter agreed to purchase under
the Terms Agreement at such Time of Delivery and, in addition, to require each
non-defaulting Underwriter to purchase its pro rata share (based on the number
of Offered Securities which such Underwriter agreed to purchase under the
Terms Agreement) of the Offered Securities of such defaulting Underwriter or
Underwriters for which such
27
arrangements have not been made; but nothing herein shall relieve a defaulting
Underwriter from liability for its default.
(c) If, after giving effect to any arrangements for the purchase of the
Offered Securities of a defaulting Underwriter or Underwriters by the
Representatives and the Company as provided in subsection (a) above, the
aggregate number of Offered Securities which remains unpurchased exceeds
one-eleventh of the aggregate principal amount of all the Offered Securities,
or if the Company shall not exercise the right described in subsection (b)
above to require non-defaulting Underwriters to purchase Offered Securities of
a defaulting Underwriter or Underwriters, then this Agreement shall thereupon
terminate, without liability on the part of any non-defaulting Underwriter or
the Company, except for the expenses to be borne by the Company [and the
Guarantors] and the Underwriters as provided in Subsection 4(k) hereof and the
indemnity and contribution agreements in Section 6 hereof; but nothing herein
shall relieve a defaulting Underwriter from liability for its default.
8. Survival of Certain Representations and Obligations. The respective
indemnities, agreements, representations, warranties and other statements of
the Company, [the Guarantors] and the several Underwriters, as set forth in
this Agreement or made by or on behalf of them, respectively, pursuant to this
Agreement and the Terms Agreement, shall remain in full force and effect,
regardless of any investigation (or any statement as to the results thereof)
made by or on behalf of any Underwriter or any controlling person of any
Underwriter, the Company [, or any Guarantor], or any officer or director or
controlling person of the Company [or any Guarantor,] and shall survive
delivery of and payment for the Offered Securities.
9. Reimbursement for Underwriting Expenses. If this Agreement shall be
terminated pursuant to Section 7 hereof, neither the Company [nor the
Guarantors] shall then be under any liability to any Underwriter except as
provided in Sections 4(k) and 6 hereof; but, if for any other reason, the
Offered Securities are not delivered by or on behalf of the Company [and the
Guarantors] as provided herein, the Company will reimburse the Underwriters
through the Representatives for all out-of-pocket expenses approved in writing
by the Representatives, including fees and disbursements of counsel,
reasonably incurred by the Underwriters in making preparations for the
purchase, sale and delivery of the Offered Securities not so delivered, but
the Company [and the Guarantors] shall then be under no further liability to
any Underwriter except as provided in and Sections 4(k) and 6 hereof.
10. Notices, etc. In all dealings hereunder and under the Terms
Agreement, the Representatives shall act on behalf of each of the
Underwriters, and the parties hereto shall be entitled to act and rely upon
any statement, request, notice or agreement on behalf of any Underwriter made
or given by the Representatives jointly or by the Lead Underwriter on behalf
of the Representatives.
28
All statements, requests, notices, and agreements hereunder and under the
Terms Agreement shall be in writing, and if to the Underwriters shall be
delivered or sent by mail, telex or facsimile transmission to the
Representatives at the address specified in the Terms Agreement; and if to the
Company [or any Guarantor] shall be delivered or sent by mail, telex or
facsimile transmission to the address of the Company set forth in the
Registration Statement, Attention: Xxxxx Xxxxxxxxx; provided, however, that
any notice to an Underwriter pursuant to Section 6(c) hereof shall be
delivered or sent by mail, telex or facsimile transmission to such Underwriter
at its address set forth in its Underwriters' Questionnaire, or telex
constituting such Questionnaire, which address will be supplied to the Company
by the Representatives upon request. Any such statements, requests, notices or
agreements shall take effect upon receipt thereof. The Company shall be
entitled to act and rely upon any request, consent, notice or agreement given
or made on behalf of the Underwriters by any of the Representatives.
11. Persons Entitled to Benefit of Agreement. This Agreement and the
Terms Agreement shall be binding upon, and inure solely to the benefit of, the
Underwriters, the Company and [the Guarantors and,] to the extent provided in
Sections 6 and 8 hereof, the officers and directors of the Company and each
person who controls the Company, [any Guarantor,] any Underwriter, and their
respective heirs, executors, administrators, successors and assigns, and no
other person shall acquire or have any right under or by virtue of this
Agreement. No purchaser of any of the Offered Securities from any Underwriter
shall be deemed a successor or assign by reason merely of such purchase.
12. Time of the Essence. Time shall be of the essence of this Agreement
and the Terms Agreement. As used herein, the term "Business Day" shall mean
any day on which the New York Stock Exchange, Inc. is open for trading.
13. Governing Law. This Agreement and the Terms Agreement shall be
governed by and construed in accordance with the laws of the State of New York
without giving effect to any provisions relating to conflicts of law.
14. Counterparts. This Agreement and the Terms Agreement may be executed
by any one or more of the parties hereto in any number of counterparts, each
of which shall be deemed to be an original, but all such counterparts shall
together constitute one and the same instrument.
15. Headings. The headings herein are inserted for convenience of
reference only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.
29
Very truly yours,
Flowserve Corporation
By:
---------------------------------
Name:
Title:
Flowserve US Inc.
Flowserve International, Inc.
Flowserve Holdings, Inc.
BW/IP-New Mexico, Inc.
Ingersoll-Dresser Pump Company
Flowserve International L.L.C.
Flowserve Management Company
CFM-V.R. Tesco Inc.
Flowserve International Limited
Flowserve Finance B.V.
By:
---------------------------------
Name:
Title:
