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EQUITY CORPORATION INTERNATIONAL
(A DELAWARE CORPORATION)
4 1/2% CONVERTIBLE SUBORDINATED DEBENTURES DUE 2004
PURCHASE AGREEMENT
Dated: February 19, 1998
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TABLE OF CONTENTS
SECTION 1. Representations and Warranties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -3-
(a) Representations and Warranties by the Company . . . . . . . . . . . . . . . . . . . . . . . . -3-
(b) Officer's Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -12-
SECTION 2. Sale and Delivery to Initial Purchasers; Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . -12-
(a) Initial Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -12-
(b) Option Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -12-
(c) Payment; Registration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -12-
(d) Information with Respect to Initial Purchasers . . . . . . . . . . . . . . . . . . . . . . . -13-
SECTION 3. Covenants of the Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -13-
(a) Delivery of Offering Memorandum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -13-
(b) Amendments to Offering Memorandum and Supplements . . . . . . . . . . . . . . . . . . . . . -13-
(c) Notice and Effect of Material Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . -14-
(d) Blue Sky Qualifications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -14-
(e) Rule 144A Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -14-
(f) No Resale of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -15-
(g) Rating of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -15-
(h) DTC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -15-
(i) Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -15-
(j) Restriction on Sale of Equity Securities . . . . . . . . . . . . . . . . . . . . . . . . . . -15-
(k) Reservation of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -16-
(l) Investment Company Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -16-
(m) Listing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -16-
SECTION 4. Payment of Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -16-
(a) Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -16-
(b) Termination of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -17-
SECTION 5. Conditions of Initial Purchasers' Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -17-
(a) Opinions of Counsel for Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -17-
(b) Opinion of Counsel for Initial Purchasers . . . . . . . . . . . . . . . . . . . . . . . . . -17-
(c) Officers' Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -17-
(d) Accountant's Comfort Letter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -18-
(e) Bring-down Comfort Letter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -18-
(f) Maintenance of Rating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -18-
(g) Lock-up Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -18-
(h) PORTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -18-
(i) Approval of Listing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -18-
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(j) Conditions to Purchase of Option Securities . . . . . . . . . . . . . . . . . . . . . . . . -18-
(k) Registration Rights Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -19-
(l) Additional Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -19-
(m) Termination of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -20-
SECTION 6. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -20-
(a) Indemnification of Initial Purchasers . . . . . . . . . . . . . . . . . . . . . . . . . . . -20-
(b) Indemnification of Company, Directors and Officers . . . . . . . . . . . . . . . . . . . . . -21-
(c) Actions against Parties; Notification . . . . . . . . . . . . . . . . . . . . . . . . . . . -21-
(d) Settlement without Consent if Failure to Reimburse . . . . . . . . . . . . . . . . . . . . . -22-
SECTION 7. Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -22-
SECTION 8. Representations, Warranties and Agreements to Survive Delivery . . . . . . . . . . . . . . . . . . . . . -23-
SECTION 9. Subsequent Offers and Resales of the Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . -23-
(a) Offer and Sale Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -23-
(b) Selling Restrictions for Offers and Sales Outside the United States . . . . . . . . . . . . -25-
SECTION 10. Termination of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -26-
(a) Termination; General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -26-
(b) Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -26-
SECTION 11. Default by One or More of the Initial Purchasers . . . . . . . . . . . . . . . . . . . . . . . . . . . -26-
SECTION 12. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -27-
SECTION 13. Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -27-
SECTION 14. GOVERNING LAW AND TIME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -27-
SECTION 15. Effect of Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -28-
Schedule A - Initial Purchasers
Schedule B - Securities
Schedule C - List of Persons Subject to Lock-up
Exhibit A - Form of Opinions of Company's Counsel
Exhibit B - Form of Lock-up
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EQUITY CORPORATION INTERNATIONAL
(a Delaware corporation)
$125,000,000
4 1/2% Convertible Subordinated Debentures due 2004
PURCHASE AGREEMENT
February 19, 1998
XXXXXXX XXXXX & CO.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
ABN AMRO Incorporated
Xxxxxx Xxxxxxx & Co. Incorporated
x/x Xxxxxxx Xxxxx & Xx.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
Xxxxx Xxxxx
Xxxxx Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Ladies and Gentlemen:
Equity Corporation International, a Delaware corporation (the
"Company"), confirms its agreement with Xxxxxxx Xxxxx & Co., Xxxxxxx Lynch,
Pierce, Xxxxxx & Xxxxx Incorporated ("Xxxxxxx Xxxxx"), ABN AMRO Incorporated
and Xxxxxx Xxxxxxx & Co. Incorporated (collectively, the "Initial Purchasers,"
which term shall also include any purchaser substituted as hereinafter provided
in Section 11 hereof), with respect to the issue and sale by the Company and
the purchase by the Initial Purchasers, acting severally and not jointly, of
the respective principal amounts set forth in Schedule A hereto of the
$125,000,000 aggregate principal amount of the Company's 4 1/2% Convertible
Subordinated Debentures due 2004 (the "Debentures"), and with respect to the
grant by the Company to the Initial Purchasers, acting severally and not
jointly, of the option described in Section 2(b) hereof to purchase all or any
part of an additional $18,750,000 principal amount of Debentures to cover
over-allotments, if any. The aforesaid $125,000,000 principal amount of
Debentures (the "Initial Securities") to be purchased by the Initial Purchasers
and all or any part of the $18,750,000 principal amount of Debentures subject
to the option described in Section 2(b) hereof (the "Option Securities") are
hereinafter called, collectively, the "Securities." The Securities are to be
issued pursuant to an Indenture dated as of February 25, 1998 (the "Indenture")
between the Company and Bankers Trust Company, as trustee (the "Trustee").
Securities issued in book-entry form will be issued to Cede & Co., as nominee
of The Depository Trust Company ("DTC"),
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pursuant to a letter agreement, to be dated on or before the Closing Time (as
defined in Section 2(c)) (the "DTC Agreement"), among the Company, the Trustee
and DTC.
The Securities are convertible into shares of common stock, par value
$.01 per share, of the Company (the "Common Stock") in accordance with the
terms of the Securities and the Indenture, at the initial conversion price
specified in Schedule B hereto.
The Company understands that the Initial Purchasers propose to make an
offering of the Securities on the terms and in the manner set forth herein and
agrees that the Initial Purchasers may resell, subject to the conditions set
forth herein, all or a portion of the Securities to purchasers (the "Subsequent
Purchasers") at any time after the date of this Agreement. The Securities are
to be offered and resold by the Initial Purchasers without being registered
under the Securities Act of 1933, as amended (the "1933 Act"), in reliance upon
exemptions therefrom. Pursuant to the terms of the Securities and the
Indenture, Securities may be resold or otherwise transferred only if such
resale or transfer is hereafter registered under the 1933 Act or if an
exemption from the registration requirements of the 1933 Act is available
(including the exemption afforded by Rule 144A ("Rule 144A") or Regulation S
("Regulation S") of the rules and regulations promulgated under the 1933 Act
(the "1933 Act Regulations") by the Securities and Exchange Commission (the
"Commission")). Prior to or concurrently with the purchase of the Initial
Securities by the Initial Purchasers, the Company will enter into with the
Initial Purchasers an agreement (the "Registration Rights Agreement") pursuant
to which the Company is required to file and use its reasonable efforts to have
declared effective a registration statement under the 1933 Act to register
resales of the Registrable Securities (as defined in the Registration Rights
Agreement) and the shares of Common Stock issuable upon conversion thereof.
The Company has prepared and delivered to the Initial Purchasers
copies of a preliminary offering memorandum dated February 11, 1998 (the
"Preliminary Offering Memorandum") and has prepared and will deliver to the
Initial Purchasers, on the date hereof or on the next succeeding business day,
copies of a final offering memorandum dated February 19, 1998 (the "Final
Offering Memorandum"), each to be used by the Initial Purchasers in connection
with the offering of the Securities and the shares of Common Stock issuable
upon conversion thereof. "Offering Memorandum" means, with respect to any date
or time referred to in this Agreement, the most recent offering memorandum
(whether the Preliminary Offering Memorandum or the Final Offering Memorandum,
or any amendment or supplement to either such document), including exhibits
thereto and any documents incorporated therein by reference, which has been
prepared and delivered by the Company to the Initial Purchasers in connection
with the offering of the Securities and the shares of Common Stock issuable
upon conversion thereof.
All references in this Agreement to financial statements and schedules
and other information which are "contained," "included" or "stated" in the
Offering Memorandum (or other references of like import) shall be deemed to
mean and include all such financial statements and schedules and other
information which are incorporated by reference in the Offering Memorandum; and
all references in this Agreement to amendments or supplements to the Offering
Memorandum shall be
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deemed to mean and include the filing of any document under the Securities
Exchange Act of 1934, as amended (the "1934 Act"), which is incorporated by
reference in the Offering Memorandum.
SECTION 1. Representations and Warranties.
(a) Representations and Warranties by the Company. The Company
represents and warrants to each Initial Purchaser as of the date hereof, as of
the Closing Time referred to in Section 2(c) hereof, and as of each Date of
Delivery (if any) referred to in Section 2(b) hereof, and agrees with each
Initial Purchaser, as follows:
(i) Similar Offerings. The Company and its affiliates,
as such term is defined in Rule 501(b) under the 1993 Act
("Affiliates"), have not, directly or indirectly, solicited any offer
to buy or offered to sell, sold or otherwise negotiated in respect of
and will not, directly or indirectly, solicit any offer to buy or
offer to sell, sell or otherwise negotiate in respect of, in the
United States or to any United States citizen or resident, any
security which is or would be integrated with the sale of the
Securities in a manner that would require the Securities to be
registered under the 1933 Act.
(ii) Offering Memorandum. Neither the Offering
Memorandum nor any amendments or supplements thereto, at the time the
Offering Memorandum or any such amendment or supplement was issued,
included an untrue statement of a material fact or omitted 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, and the Offering Memorandum, as amended or supplemented,
at the Closing Time (and, if any Option Securities are purchased, at
each Date of Delivery) will not include an untrue statement of a
material fact or omit to state a material fact necessary in order to
make the statements therein, in light of the circumstances under which
they were made, not misleading; provided that this representation,
warranty and agreement shall not apply to statements in or omissions
from the Offering Memorandum made in reliance upon and in conformity
with information furnished to the Company in writing by any Initial
Purchaser through Xxxxxxx Xxxxx expressly for use in the Offering
Memorandum.
(iii) Incorporated Documents. The Offering Memorandum as
delivered from time to time shall incorporate by reference the most
recent Annual Report of the Company on Form 10-K filed with the
Commission, each Quarterly Report of the Company on Form 10-Q, each
Current Report of the Company on Form 8-K and the registration
statement of the Company on Form 8-A (File No. 0-24728), and each
amendment to each of the foregoing, filed with the Commission since
the filing of the end of the fiscal year to which such Annual Report
relates. The documents incorporated or deemed to be incorporated by
reference in the Offering Memorandum, when they became effective or at
the time they were or hereafter are filed with the Commission, as the
case may be, complied and will comply in all material respects with
the requirements of the 1934 Act and the rules and regulations of the
Commission thereunder (the "1934 Act Regulations"), and, when read
together with
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the other information in the Offering Memorandum, at the date of the
Offering Memorandum and at the Closing Time (and, if any Option
Securities are purchased, at each Date of Delivery), do not and will
not include 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.
(iv) Independent Accountants. The accountants who
certified the financial statements and supporting schedules included
or incorporated by reference in the Offering Memorandum are
independent certified public accountants within the meaning of
Regulation S-X under the 1933 Act.
(v) Financial Statements. The financial statements
included or incorporated by reference in the Offering Memorandum,
together with the related schedules and notes, present fairly (A) the
financial position of the Company and its consolidated subsidiaries at
the dates indicated and (B) the statement of operations, stockholders'
equity and cash flows of the Company and its consolidated subsidiaries
for the periods specified; said financial statements have been
prepared in conformity with generally accepted accounting principles
("GAAP") applied on a consistent basis throughout the periods
involved. The supporting schedules, if any, included or incorporated
by reference in the Offering Memorandum present fairly in accordance
with GAAP the information required to be stated therein. The selected
financial data and the summary financial information included in the
Offering Memorandum present fairly the information shown therein and
have been compiled on a basis consistent with that of the audited
financial statements included in the Offering Memorandum.
(vi) No Material Adverse Change in Business. Since the
respective dates as of which information is given in the Offering
Memorandum, except as otherwise stated therein, (A) there has been no
material adverse change in the condition, financial or otherwise, or
in the earnings, business affairs or business prospects of the Company
and its subsidiaries considered as one enterprise, whether or not
arising in the ordinary course of business (a "Material Adverse
Effect"), (B) there have been no transactions entered into by the
Company or any of its subsidiaries, other than those in the ordinary
course of business, which are material with respect to the Company and
its subsidiaries considered as one enterprise, and (C) there has been
no dividend or distribution of any kind declared, paid or made by the
Company on any class of its capital stock.
(vii) Good Standing of the Company. The Company has been
duly organized and is validly existing as a corporation in good
standing under the laws of the State of Delaware and has corporate
power and authority to own, lease and operate its properties and to
conduct its business as described in the Offering Memorandum and to
enter into and perform its obligations under this Agreement; and the
Company is duly qualified as a foreign corporation to transact
business and is in good standing in each other jurisdiction in which
such qualification is required, whether by reason of the ownership or
leasing of property or
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the conduct of business, except where the failure so to qualify or to
be in good standing would not result in a Material Adverse Effect.
(viii) Good Standing of Subsidiaries. Each of ECI Capital
Corporation, ECI Services, Inc., JPH Properties, Inc. and ECI Cemetery
Services, Inc. (each a "Subsidiary" and, collectively, the
"Subsidiaries") has been duly organized and is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation, has corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the
Offering Memorandum and is duly qualified as a foreign corporation to
transact business and is in good standing in each jurisdiction in
which such qualification is required, whether by reason of the
ownership or leasing of property or the conduct of business, except
where the failure so to qualify or to be in good standing would not
result in a Material Adverse Effect; except as otherwise disclosed in
the Offering Memorandum, all of the issued and outstanding capital
stock of each such Subsidiary has been duly authorized and validly
issued, is fully paid and non-assessable and is owned by the Company,
directly or through subsidiaries, free and clear of any security
interest, mortgage, pledge, lien, encumbrance, claim or equity; none
of the outstanding shares of capital stock of any Subsidiary was
issued in violation of any preemptive or similar rights of any
securityholder of such Subsidiary.
(ix) Capitalization. The authorized, issued and
outstanding capital stock of the Company is as set forth in the
Offering Memorandum under the caption "Capitalization" (except for
subsequent issuances, if any, pursuant to this Agreement, pursuant to
employee benefit plans referred to in the Offering Memorandum,
pursuant to the exercise of convertible securities or options
described in the Offering Memorandum or otherwise permitted under the
terms of this Agreement). The shares of issued and outstanding capital
stock of the Company have been duly authorized and validly issued and
are fully paid and non-assessable; none of the outstanding shares of
capital stock of the Company was issued in violation of the preemptive
or other similar rights of any securityholder of the Company arising
by operation of law, under the charter or by-laws of the Company or
under any agreement to which the Company or any of its subsidiaries is
a party or by which it is bound. Except as described in or
incorporated by reference in the Offering Memorandum, the Company does
not have outstanding any options to purchase, or any warrants to
subscribe for, or any securities or obligations convertible into, or
any contracts or commitments to issue or sell, any Common Stock or
other securities of the Company or any such warrants, convertible
securities or obligations.
(x) Authorization of Agreement. This Agreement has
been, and at the Closing Time, the Registration Rights Agreement will
have been, duly authorized, executed and delivered by the Company.
(xi) Authorization of the Indenture. The Indenture has
been duly authorized by the Company and when duly executed and
delivered by the Company and the Trustee,
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will constitute a valid and binding agreement of the Company,
enforceable against the Company 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 other similar laws relating
to or 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).
(xii) Authorization of the Securities. The Securities
have been duly authorized and, at the Closing Time, 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 therefor as provided in this
Agreement, will constitute valid and binding obligations of the
Company, enforceable against the Company 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 other 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), and will be in the form contemplated by, and
entitled to the benefits of, the Indenture.
(xiii) Description of the Securities and the Indenture.
The Securities and the Indenture will conform in all material respects
to the respective statements relating thereto contained in the
Offering Memorandum, and the Indenture will be in substantially the
form previously delivered to the Initial Purchasers.
(xiv) Authorization and Description of Common Stock. The
Common Stock conforms to all statements relating thereto contained or
incorporated by reference in the Offering Memorandum and such
description conforms to the rights set forth in the instruments
defining the same. 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 initially issuable upon
conversion of the Securities have been duly authorized and reserved
for issuance upon such conversion by all necessary corporate action
and such shares, when issued upon such conversion, will be validly
issued and will be fully paid and non-assessable; no holder of such
shares will be subject to personal liability by reason of being such a
holder; and the issuance of such shares upon such conversion will not
be subject to the preemptive or other similar rights of any
securityholder of the Company.
(xv) Absence of Defaults and Conflicts. Neither the
Company nor any of its subsidiaries is in violation of its charter or
by-laws or in default in the performance or observance of any
obligation, agreement, covenant or condition contained in any
contract, indenture, mortgage, deed of trust, loan or credit
agreement, note, lease or other agreement
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or instrument to which the Company or any of its subsidiaries is a
party or by which it or any of them may be bound, or to which any of
the property or assets of the Company or any subsidiary is subject
(collectively, "Agreements and Instruments") except for such defaults
that would not result in a Material Adverse Effect; and the execution,
delivery and performance of this Agreement, the Indenture, the
Securities and the Registration Rights Agreement and any other
agreement or instrument entered into or issued or to be entered into
or issued by the Company in connection with the transactions
contemplated hereby or thereby or in the Offering Memorandum and the
consummation of the transactions contemplated herein, therein and in
the Offering Memorandum (including the issuance and sale of the
Securities and the use of the proceeds from the sale of the Securities
as described in the Offering Memorandum under the caption "Use of
Proceeds" and the issuance of the shares of Common Stock issuable upon
conversion of the Securities) and compliance by the Company with its
obligations hereunder and thereunder have been duly authorized by all
necessary corporate action and do not and will not, whether with or
without the giving of notice or passage of time or both, conflict with
or constitute a breach of, or default or Repayment Event (as defined
below) under, or result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Company or
any of its subsidiaries pursuant to, the Agreements and Instruments
(except for such conflicts, breaches, defaults, Repayment Events or
liens, charges or encumbrances that, singly or in the aggregate, would
not result in a Material Adverse Effect), nor will such action result
in any violation of the provisions of the charter or by-laws of the
Company or any of its subsidiaries or any applicable law, statute,
rule, regulation, judgment, order, writ or decree of any government,
government instrumentality or court, domestic or foreign, having
jurisdiction over the Company or any of its subsidiaries or any of
their assets, properties or operations. As used herein, a "Repayment
Event" means any event or condition which gives the holder of any
note, debenture or other evidence of indebtedness (or any person
acting on such holder's behalf) the right to require the repurchase,
redemption or repayment of all or a portion of such indebtedness by
the Company or any of its subsidiaries.
(xvi) Absence of Labor Dispute. No labor dispute with
the employees of the Company or any of its subsidiaries exists or, to
the knowledge of the Company, is imminent, and the Company is not
aware of any existing or imminent labor disturbance by the employees
of any of its or any of its subsidiaries' principal suppliers,
manufacturers, customers or contractors, which, in either case, may
reasonably be expected to result in a Material Adverse Effect.
(xvii) Absence of Proceedings. There is no action, suit,
proceeding, inquiry or investigation before or brought by any court or
governmental agency or body, domestic or foreign, now pending, or, to
the knowledge of the Company, threatened, against or affecting the
Company or any subsidiary, which is required to be disclosed in the
Offering Memorandum (other than as disclosed therein), which might
reasonably be expected to result in a Material Adverse Effect, or
which might reasonably be expected to materially and adversely affect
the properties or assets of the Company or any of its subsidiaries or
the
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consummation of the transactions contemplated in this Agreement, the
Indenture or the Registration Rights Agreement or the performance by
the Company of its obligations hereunder or thereunder; the aggregate
of all pending legal or governmental proceedings to which the Company
or any subsidiary is a party or of which any of their respective
property or assets is the subject which are not described in the
Offering Memorandum, including ordinary routine litigation incidental
to the business, could not reasonably be expected to result in a
Material Adverse Effect.
(xviii) Possession of Intellectual Property. The Company
and its subsidiaries own or possess, or can acquire on reasonable
terms, adequate patents, patent rights, licenses, inventions,
copyrights, know-how (including trade secrets and other unpatented
and/or unpatentable proprietary or confidential information, systems
or procedures), trademarks, service marks, trade names or other
intellectual property (collectively, "Intellectual Property")
necessary to carry on the business now operated by them, and neither
the Company nor any of its subsidiaries has received any notice or is
otherwise aware of any infringement of or conflict with asserted
rights of others with respect to any Intellectual Property or of any
facts or circumstances which would render any Intellectual Property
invalid or inadequate to protect the interest of the Company or any of
its subsidiaries therein, and which infringement or conflict (if the
subject of any unfavorable decision, ruling or finding) or invalidity
or inadequacy, singly or in the aggregate, would result in a Material
Adverse Effect.
(xix) Absence of Further Requirements. No filing with,
or authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or
agency is necessary or required for the performance by the Company of
its obligations under this Agreement or the Indenture, in connection
with the offering, issuance or sale of the Securities hereunder or the
consummation of the transactions contemplated by this Agreement,
except such as may be required under state securities laws.
(xx) Possession of Licenses and Permits. The Company
and its subsidiaries possess such certificates, permits, licenses,
approvals, consents and other authorizations (collectively,
"Governmental Licenses") issued by the appropriate federal, state,
local or foreign regulatory agencies or bodies necessary to conduct
the business now operated by them; the Company and its subsidiaries
are in compliance with the terms and conditions of all such
Governmental Licenses, except where the failure so to comply would
not, singly or in the aggregate, have a Material Adverse Effect; all
of the Governmental Licenses are valid and in full force and effect,
except when the invalidity of such Governmental Licenses or the
failure of such Governmental Licenses to be in full force and effect
would not have a Material Adverse Effect; and neither the Company nor
any of its subsidiaries has received any notice of proceedings
relating to the revocation or modification of any such Governmental
Licenses which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would result in a Material
Adverse Effect.
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12
(xxi) Title to Property. The Company and its
subsidiaries have good and indefeasible title to all real property
owned by the Company and its subsidiaries and good title to all other
properties owned by them, in each case, free and clear of all
mortgages, pledges, liens, security interests, claims, restrictions or
encumbrances of any kind, except such as (a) are described in the
Offering Memorandum or (b) do not, singly or in the aggregate,
materially affect the value of such property and do not materially
interfere with the use made and proposed to be made of such property
by the Company or any of the subsidiaries; and all of the leases and
subleases material to the business of the Company and its
subsidiaries, considered as one enterprise, and under which the
Company or any of its subsidiaries holds properties described in the
Offering Memorandum, are in full force and effect, and neither the
Company nor any of its subsidiaries has any notice of any material
claim of any sort that has been asserted by anyone adverse to the
rights of the Company or any of its subsidiaries under any of the
leases or subleases mentioned above, or affecting or questioning the
rights of the Company or such subsidiary to the continued possession
of the leased or subleased premises under any such lease or sublease
which might reasonably be expected to materially interfere with the
use of such leased or subleased property.
(xxii) Investment Company Act. The Company is not, and
upon the issuance and sale of the Securities as herein contemplated
and the application of the net proceeds therefrom as described in the
Offering Memorandum will not be, an "investment company" or an entity
"controlled" by an "investment company" as such terms are defined in
the Investment Company Act of 1940, as amended (the "Investment
Company Act").
(xxiii) Taxes. Each of the Company and the Subsidiaries
has filed all federal, state and local income, franchise and other tax
returns which have been required to be filed and has paid all taxes
shown as due thereon. All such returns, as amended if applicable, are
complete, accurate and correct in all material respects. Neither the
Company nor any of the Subsidiaries has any knowledge of any tax
deficiency which might be asserted against it which would have a
Material Adverse Effect. The provisions and reserves on the books of
the Company in respect of federal, state, local and other taxes for
any taxable period as to which the Company's liability for taxes has
not been finally determined are, in the opinion of the Company,
adequate.
(xxiv) Insurance Coverage. The Company and each
Subsidiary maintain insurance, which is in full force and effect, of
the types and in the amounts customary in the funeral home and
cemetery business. Neither the Company nor any Subsidiary has any
reason to believe that it will not be able to renew its existing
insurance coverage as and when such coverage expires or to obtain
similar coverage from insurers at a cost that would not have a
Material Adverse Effect.
(xxv) Environmental Laws. Except as described in the
Offering Memorandum and except for such violations as would not,
singly or in the aggregate, result in a Material Adverse Effect, (A)
neither the Company nor any of its subsidiaries is in violation of any
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federal, state, local or foreign statute, law, rule, regulation,
ordinance, code, policy or rule of common law or any judicial or
administrative interpretation thereof, or any judicial or
administrative order, consent, decree or judgment which names the
Company or any of its subsidiaries as a party or as being subject
thereto, relating to pollution or protection of human health, the
environment (including, without limitation, ambient air, surface
water, groundwater, land surface or subsurface strata) or wildlife,
including, without limitation, laws and regulations relating to the
release or threatened release of chemicals, pollutants, contaminants,
wastes, toxic substances, hazardous substances, petroleum or petroleum
products (collectively, "Hazardous Materials") or to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport
or handling of Hazardous Materials (collectively, "Environmental
Laws"), (B) the Company and its subsidiaries have all permits,
authorizations and approvals required under any applicable
Environmental Laws and are each in compliance with their requirements,
except where the failure to have such permits, authorizations and
approvals or to comply with their requirements would not, singly or in
the aggregate, have a Material Adverse Effect, (C) there are no
pending or, to the Company's knowledge, threatened administrative,
regulatory or judicial actions, suits, demands, demand letters,
claims, liens, notices of noncompliance or violation, investigation or
proceedings relating to any Environmental Law against the Company or
any of its subsidiaries which, singly or in the aggregate, might
reasonably be expected to result in a Material Adverse Effect and (D)
to the Company's knowledge, there are no events or circumstances that
might reasonably be expected to form the basis of an order for
clean-up or remediation, or an action, suit or proceeding by any
private party or governmental body or agency, against or affecting the
Company or any of its subsidiaries relating to any Hazardous Materials
or the violation of any Environmental Laws which, singly or in the
aggregate, might reasonably be expected to result in a Material
Adverse Effect. Based on its prior experience with respect to
compliance with Environmental Laws as they apply to the business
conducted by the Company and its subsidiaries and the properties owned
or leased by them, the Company has reasonably concluded that the costs
and liabilities associated with compliance with Environmental Laws are
not likely to have a Material Adverse Effect.
(xxvi) Rule 144A Eligibility. The Securities are
eligible for resale pursuant to Rule 144A and will not be, at the
Closing Time, of the same class as securities listed on a national
securities exchange registered under Section 6 of the 1934 Act, or
quoted in a U.S. automated interdealer quotation system.
(xxvii) No General Solicitation. None of the Company, its
Affiliates, or any person acting on its or any of their behalf (other
than the Initial Purchasers, as to whom the Company makes no
representation) has engaged or will engage, in connection with the
offering of the Securities, in any form of general solicitation or
general advertising within the meaning of Rule 502(c) under the 1933
Act.
(xxviii) No Registration Required. Subject to compliance
by the Initial Purchasers with the representations and warranties set
forth in Section 2(d) and the procedures set forth
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in Section 9 hereof, it is not necessary in connection with the offer,
sale and delivery of the Securities to the Initial Purchasers and to
each Subsequent Purchaser in the manner contemplated by this Agreement
and the Offering Memorandum to register the Securities under the 1933
Act or to qualify the Indenture under the Trust Indenture Act of 1939,
as amended (the "1939 Act").
(xxix) No Directed Selling Efforts. With respect to
those Securities sold in reliance on Regulation S, (A) none of the
Company, its Affiliates or any person acting on its or their behalf
(other than the Initial Purchasers, as to whom the Company makes no
representation) has engaged or will engage in any directed selling
efforts within the meaning of Regulation S and (B) each of the Company
and its Affiliates and any person acting on its or their behalf (other
than the Initial Purchasers, as to whom the Company makes no
representation) has complied and will comply with the offering
restriction requirement of Regulation S.
(xxx) PORTAL. The Company has been advised by the
National Association of Securities Dealers, Inc. (the "NASD") that the
Securities have been designated PORTAL eligible securities in
accordance with the rules and regulations of the NASD.
(xxxi) Registration Rights. There are no persons with
registration rights or other similar rights to have any securities
registered by the Company under the 1933 Act pursuant to the Shelf
Registration Statement (as defined in the Registration Rights
Agreement), except as described in the Registration Rights Agreement.
(xxxii) Solvency. The Company is, and immediately after
the Closing Time will be, Solvent. As used herein, the term "Solvent"
means, with respect to the Company on a particular date, that on such
date (A) the fair market value of the assets of the Company is greater
than the total amount of liabilities (including contingent
liabilities) of the Company, (B) present fair salable value of the
assets of the Company is greater than the amount that will be required
to pay the probable liabilities of the Company on its debts as they
become absolute and matured, (C) the Company is able to realize upon
its assets and pay its debts and other liabilities, including
contingent obligations, as they mature, and (D) the Company does not
have unreasonably small capital.
(xxxiii) No Stabilization or Manipulation. Neither the
Company nor any of its officers, directors or controlling persons has
taken, directly or indirectly, any action designed to cause or to
result in, or that has constituted or which might reasonably be
expected to constitute, the stabilization or manipulation of the price
of any security of the Company to facilitate the sale or resale of the
Securities.
(xxxiv) Distribution of Offering Material. The Company
has not distributed and, prior to the later to occur of (i) the
Closing Time and (ii) completion of the distribution of the
Securities, will not distribute any offering material in connection
with the offering and
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sale of the Securities other than the Preliminary Offering Memorandum,
the Final Offering Memorandum, any amendments or supplements to either
of the foregoing or documents incorporated by reference therein, the
Indenture, the Registration Rights Agreement or other materials, if
any, approved by the Initial Purchasers.
(b) Officer's Certificates. Any certificate signed by any officer
of the Company or any of its subsidiaries delivered to the Initial Purchasers
or to counsel for the Initial Purchasers shall be deemed a representation and
warranty by the Company to each Initial Purchaser as to the matters covered
thereby.
SECTION 2. Sale and Delivery to Initial Purchasers; Closing.
(a) Initial Securities. On the basis of the representations and
warranties herein contained and subject to the terms and conditions herein set
forth, the Company agrees to sell to each Initial Purchaser, severally and not
jointly, and each Initial Purchaser, severally and not jointly, agrees to
purchase from the Company, at the price set forth in Schedule B, the aggregate
principal amount of Initial Securities set forth in Schedule A opposite the
name of such Initial Purchaser, plus any additional principal amount of Initial
Securities which such Initial Purchaser may become obligated to purchase
pursuant to the provisions of Section 11 hereof.
(b) Option Securities. In addition, on the basis of the
representations and warranties herein contained and subject to the terms and
conditions herein set forth, the Company hereby grants an option to the Initial
Purchasers, severally and not jointly, to purchase up to an additional
$18,750,000 principal amount of Securities at the same price set forth in
Schedule B for the Initial Securities, plus accrued interest, if any, from the
Closing Time to each Date of Delivery (as defined below). The option hereby
granted will expire 30 days after the date hereof and may be exercised in whole
or in part from time to time only for the purpose of covering over-allotments
which may be made in connection with the subsequent resale of the Initial
Securities upon notice by the Initial Purchasers to the Company setting forth
the number of Option Securities as to which the several Initial Purchasers are
then exercising the option and the time and date of payment and delivery for
such Option Securities. Any such time and date of delivery (a "Date of
Delivery") shall be determined by the Initial Purchasers, but shall not be
later than seven full business days after the exercise of said option, nor in
any event prior to the Closing Time, as hereinafter defined. If the option is
exercised as to all or any portion of the Option Securities, each of the
Initial Purchasers, acting severally and not jointly, will purchase that
proportion of the total principal amount of Option Securities then being
purchased which the principal amount of Initial Securities set forth in
Schedule A opposite the name of such Initial Purchaser bears to the total
principal amount of Initial Securities, subject in each case to such
adjustments as the Initial Purchasers in their discretion shall make to
eliminate any sales or purchases of Securities having a principal amount less
than $1,000.
(c) Payment; Registration. Except as set forth in the next
paragraph, the Securities to be purchased by each Initial Purchaser hereunder
will be represented by one or more definitive global Securities in book-entry
form which will be deposited by or on behalf of the Company with
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DTC or its designated custodian. The Company will deliver each of the global
Securities to Xxxxxxx Xxxxx for the account of each Initial Purchaser, against
payment by or on behalf of such Initial Purchaser of the purchase price
therefor to the order of the Company in same day funds, by causing DTC to
credit the Securities to the account of Xxxxxxx Xxxxx at DTC. The time and date
of such delivery and payment shall be, with respect to the Initial Securities,
9:00 a.m., New York City time, on the third (fourth, if the pricing occurs
after 4:30 p.m., New York City time, on any given day) business day after the
date hereof (unless postponed in accordance with the provisions of Section 11),
or such other time and date not later than ten business days after such date as
the Initial Purchasers and the Company may agree upon in writing (such time and
date of payment and delivery of the Initial Securities being herein called the
"Closing Time") and, with respect to the Option Securities, on each Date of
Delivery as specified in the notice from the Initial Purchasers to the Company.
Such Securities, if any, as Xxxxxxx Xxxxx may request upon at least
two full business days' prior notice to the Company (such request to include
the authorized denominations and the names in which they are to be registered),
shall be delivered in definitive certificated form, by or on behalf of the
Company to Xxxxxxx Xxxxx, for the account of the Initial Purchasers, against
payment by or on behalf of such Initial Purchaser of the purchase price
therefor to the order of the Company in same day funds. The Company will cause
the certificates representing such Securities to be made available for checking
and packaging at least 24 hours prior to the Closing Time or the relevant Date
of Delivery at the office of Xxxxxxx Xxxxx, Xxxxxxx Xxxxx World Headquarters,
North Tower, World Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000-0000.
(d) Information with Respect to Initial Purchasers. Each Initial
Purchaser, severally and not jointly, hereby represents and warrants to, and
agrees with, the Company that it (i) is a "qualified institutional buyer"
within the meaning of Rule 144A under the 1933 Act (a "Qualified Institutional
Buyer") and an institutional "accredited investor" within the meaning of
Regulation D under the 1933 Act (an "Accredited Investor"); (ii) has not and
will not solicit offers for, or offer or sell, Securities by means of any
general solicitation or general advertising within the meaning of Rule 502(c)
under Regulation D under the 1933 Act; and (iii) will otherwise act in
accordance with the terms and conditions set forth in this Agreement, including
Section 9 hereof, and in the Offering Memorandum in connection with the
placement of the Securities contemplated hereby.
SECTION 3. Covenants of the Company. The Company covenants with each
Initial Purchaser as follows:
(a) Delivery of Offering Memorandum. The Company agrees to furnish
to each Initial Purchaser, as promptly as possible, without charge, such number
of copies of the Preliminary Offering Memorandum, the Final Offering Memorandum
and any supplements and amendments thereto and documents incorporated by
reference therein as such Initial Purchaser may reasonably request.
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(b) Amendments to Offering Memorandum and Supplements. The Company
will advise each Initial Purchaser promptly of any proposal to amend or
supplement the Offering Memorandum and will not effect such amendment or
supplement without the consent of the Initial Purchasers. Neither the consent
of the Initial Purchasers, nor the Initial Purchasers' delivery of any such
amendment or supplement, shall constitute a waiver of any of the conditions set
forth in Section 5 hereof.
(c) Notice and Effect of Material Changes. The Company will
immediately notify each Initial Purchaser, and confirm such notice in writing,
of (x) any filing made by the Company of information relating to the placement
of the Securities with any securities exchange or any other regulatory body in
the United States or any other jurisdiction, and (y) prior to the completion of
the placement of the Securities by the Initial Purchasers as evidenced by a
notice in writing from the Initial Purchasers to the Company, any material
changes in or affecting the condition, financial or otherwise, or the earnings,
business affairs or business prospects of the Company and its subsidiaries that
(i) make any statement in the Offering Memorandum false or misleading or (ii)
are not disclosed in the Offering Memorandum. In such event or if during such
time any event shall occur as a result of which it is necessary, in the
reasonable opinion of any of the Company, its counsel, the Initial Purchasers
or counsel for the Initial Purchasers, to amend or supplement the Final
Offering Memorandum in order that the Final Offering Memorandum not include any
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements therein not misleading in the light of the
circumstances then existing, the Company will forthwith amend or supplement the
Final Offering Memorandum by preparing and furnishing to each Initial Purchaser
an amendment or amendments of, or a supplement or supplements to, the Final
Offering Memorandum (in form and substance satisfactory in the reasonable
opinion of counsel for the Initial Purchasers) so that, as so amended or
supplemented, the Final Offering Memorandum will not include 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
existing at the time it is delivered to a Subsequent Purchaser, not misleading.
(d) Blue Sky Qualifications. The Company will use its best
efforts, in cooperation with the Initial Purchasers, to qualify the Securities
and the shares of Common Stock issuable upon conversion of the Securities for
offering and sale under the applicable securities laws of such states and other
jurisdictions as the Initial Purchasers may designate and to maintain such
qualifications in effect for so long as may be required to complete the
distribution of the Securities or as otherwise required by law; provided,
however, that the Company shall not be obligated to 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. In each jurisdiction in which the Securities have
been so qualified, the Company will file such statements and reports as may be
required by the laws of such jurisdiction to continue such qualification in
effect for so long as may be required to complete the distribution of the
Securities or as otherwise required by law.
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(e) Rule 144A Information. The Company agrees that, in order to
render the Securities and the shares of Common Stock issuable upon conversion
thereof eligible for resale pursuant to Rule 144A under the 1933 Act, while any
of the Securities or such shares remain outstanding, to make available, upon
request, to any holder of Securities or such shares or prospective purchasers
of Securities or such shares the information specified in Rule 144A(d)(4),
unless the Company furnishes information to the Commission pursuant to Section
13 or 15(d) of the 1934 Act.
(f) No Resale of Securities. During the period of two years after
the latest Date of Delivery, the Company will not, and will not permit any of
its "affiliates" (as defined in Rule 144 under the Securities Act) to, resell
any of the Securities which constitute "restricted securities" under Rule 144
that have been reacquired by any of them, except pursuant to an effective
registration statement under the 1933 Act.
(g) Rating of Securities. The Company shall take all reasonable
action necessary to enable Standard & Poor's Ratings Services, a division of
the XxXxxx-Xxxx Companies, Inc. ("S&P"), and Xxxxx'x Investors Service, Inc.
("Moody's") to provide their respective credit ratings of the Securities.
(h) DTC. The Company will cooperate with the Initial Purchasers
and use its best efforts to permit the Securities to be eligible for clearance
and settlement through the facilities of DTC.
(i) Use of Proceeds. The Company will use the net proceeds
received by it from the sale of the Securities in the manner specified in the
Offering Memorandum under "Use of Proceeds."
(j) Restriction on Sale of Equity Securities. During a period of
90 days from the date of the Offering Memorandum (the "Lock-Up Period"), the
Company will not, without the prior written consent of Xxxxxxx Xxxxx, (i)
directly or indirectly, offer, pledge, sell, contract to sell, sell any option
or contract to purchase, purchase any option or contract to sell, grant any
option, right or warrant to purchase or otherwise transfer or dispose of any
share of Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock or file any registration statement under the 1933
Act with respect to any of the foregoing or (ii) enter into any swap or any
other agreement or any transaction that transfers, in whole or in part,
directly or indirectly, the economic consequence of ownership of the Common
Stock, whether any such swap or transaction described in clause (i) or (ii)
above is to be settled by delivery of Common Stock or such other securities, in
cash or otherwise. The foregoing sentence shall not apply to (A) the Securities
to be sold hereunder, (B) any shares of Common Stock issued by the Company upon
the exercise of an option or warrant or the conversion of a security
outstanding on the date hereof and referred to in the Offering Memorandum, (C)
any shares of Common Stock issued as payment of any part of the purchase price
for funeral homes or cemeteries (or businesses or capital stock of businesses
that operate funeral homes or cemeteries) which are acquired by the Company
(provided, however, that such shares shall be subject to restrictions that will
prohibit the transfer thereof until after expiration of the Lock-Up Period),
(D) options to purchase shares of Common Stock granted pursuant to the
Company's 1994 Long-Term Incentive Plan (the "Incentive Plan") (provided,
however, that such options shall not be
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exercisable until after the expiration of the Lock-Up Period except upon the
termination of the option holder's employment by reason of a disability, death,
or qualified retirement of the option holder as provided in the option holder's
stock option agreement relating to such options) and (E) restricted shares,
restricted stock units, stock unit awards payable in the form of Common Stock
or performance shares issued or granted pursuant to the Incentive Plan;
provided, however, that (1) in the case of restricted shares, such shares shall
be subject to restrictions on transfer or sale which do not lapse until after
the expiration of the Lock-Up Period, (2) in the case of restricted stock units
or stock unit awards payable in the form of Common Stock, the issuance of
shares of Common Stock in respect of such units shall be subject to
restrictions which do not lapse until after the expiration of the Lock-Up
Period, and (3) in the case of performance shares, such shares shall be subject
to provisions to the effect that they may not be earned by or vested in the
participant prior to the end of the Lock-Up Period. The Company shall not
waive, release or modify any of the restrictions referred to in the immediately
preceding sentence without the prior written consent of Xxxxxxx Xxxxx.
(k) Reservation of Shares. The Company will reserve and keep
available at all times, free of preemptive rights, shares of Common Stock for
the purpose of enabling the Company to satisfy any obligations to issue Common
Stock upon conversion of Securities.
(l) Investment Company Act. The Company agrees that it is not and
will not become, at any time prior to the expiration of two years after the
latest Date of Delivery, an open-end investment company, unit investment trust,
closed-end investment company or face-amount certificate company that is or is
required to be registered under Section 8 of the Investment Company Act.
(m) Listing. The Company will use its best efforts to effect the
listing of the shares of Common Stock initially issuable upon conversion of the
Securities on the New York Stock Exchange.
SECTION 4. Payment of Expenses.
(a) Expenses. The Company will pay all expenses incident to the
performance of its obligations under this Agreement, including (i) the
preparation, printing and delivery of the Offering Memorandum (including
financial statements and any schedules or exhibits and any document
incorporated therein by reference) and of each amendment or supplement thereto,
(ii) the preparation, printing and delivery to the Initial Purchasers of this
Agreement, the Indenture and the Registration Rights Agreement, and such other
documents as may be required in connection with the offering, purchase, sale,
issuance or delivery of the Securities or the issuance or delivery of the
Common Stock issuable upon conversion thereof, (iii) the preparation, issuance
and delivery of the certificates for the Securities to the Initial Purchasers
and the certificates for the Common Stock issuable upon conversion thereof,
including any charges of DTC in connection therewith, (iv) the fees and
disbursements of the Company's counsel, accountants and other advisors, (v) the
qualification of the Securities and the Common Stock under securities laws in
accordance with the provisions of Section 3(d) hereof, including filing fees
and the reasonable fees and disbursements of counsel for the Initial
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Purchasers in connection therewith and in connection with the preparation and
delivery to the Initial Purchasers of copies of the Blue Sky Survey and any
supplement thereto, (vi) the fees and expenses of the Trustee, including the
fees and disbursements of counsel for the Trustee in connection with the
Indenture and the Securities, (vii) any fees payable in connection with the
rating of the Securities, (viii) the fees and expenses of any transfer agent or
registrar for the Common Stock and (ix) any fees payable for the review by the
NASD in connection with the initial and continued designation of the Securities
as PORTAL securities under the PORTAL Market Rules pursuant to NASD Rule 5322.
(b) Termination of Agreement. If this Agreement is terminated by
the Initial Purchasers in accordance with the provisions of Section 5 or
Section 10(a)(i) hereof, the Company shall reimburse the Initial Purchasers for
all of their out-of-pocket expenses, including the reasonable fees and
disbursements of counsel for the Initial Purchasers.
SECTION 5. Conditions of Initial Purchasers' Obligations. The
obligations of the several Initial Purchasers hereunder are subject to the
accuracy of the representations and warranties of the Company contained in
Section 1 hereof or in certificates of any officer of the Company or any of its
subsidiaries delivered pursuant to the provisions hereof, to the performance by
the Company of its covenants and other obligations hereunder, and to the
following further conditions:
(a) Opinions of Counsel for Company. At the Closing Time the
Initial Purchasers shall have received the favorable opinions, dated as of the
Closing Time, of Xxxxxxx & Xxxxx L.L.P. and Xxxxxxx, Xxxxx & Craft, L.L.P.,
each counsel for the Company, in form and substance reasonably satisfactory to
the Initial Purchasers, to the combined effect set forth in Exhibit A hereto
and to such further effect as the Initial Purchasers may reasonably request.
(b) Opinion of Counsel for Initial Purchasers. At the Closing Time
the Initial Purchasers shall have received the favorable opinion, dated as of
the Closing Time, of Xxxxxx & Xxxxxx L.L.P., counsel for the Initial
Purchasers, with respect to the matters set forth in (i), (ii), (iv) (solely as
to preemptive or other similar rights arising by operation of law or under the
charter or by-laws of the Company), (v) to (viii), inclusive, (xii) (solely as
to the information in the Offering Memorandum under "Description of Debentures"
and "Description of Capital Stock"), (xviii) and the penultimate paragraph of
Exhibit A hereto. In giving such opinion such counsel may rely, as to all
matters governed by the laws of jurisdictions other than the law of the State
of New York, the federal law of the United States and the General Corporation
Law of the State of Delaware, upon the opinions of counsel satisfactory to the
Initial Purchasers. Such counsel may also state that, insofar as such opinion
involves factual matters, they have relied, to the extent they deem proper,
upon certificates of officers of the Company and its subsidiaries and
certificates of public officials.
(c) Officers' Certificate. At the Closing Time, there shall not
have been, since the date hereof or since the respective dates as of which
information is given in the Offering Memorandum, any material adverse change in
the condition, financial or otherwise, or in the earnings, business affairs or
business prospects of the Company and its subsidiaries considered as one
enterprise, whether or not arising in the ordinary course of business, and the
Initial Purchasers shall have
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received a certificate of the President or a Vice President of the Company and
of the chief financial or chief accounting officer of the Company, dated as of
the Closing Time, to the effect that, (i) there has been no such material
adverse change, (ii) the representations and warranties in Section 1(a) hereof
are true and correct (in the case of representations and warranties that are
qualified as to materiality) or are true and correct in all material respects
(in the case of representations and warranties that are not so qualified) with
the same force and effect as though expressly made at and as of the Closing
Time, and (iii) the Company has complied in all material respects with all
agreements and satisfied all conditions on its part to be performed or
satisfied at or prior to the Closing Time.
(d) Accountant's Comfort Letter. At the time of the execution of
this Agreement, the Initial Purchasers shall have received from Coopers &
Xxxxxxx L.L.P. a letter dated such date, in form and substance satisfactory to
the Initial Purchasers containing statements and information of the type
ordinarily included in accountants' "comfort letters" to initial purchasers
with respect to the financial statements and certain financial information
contained in the Offering Memorandum.
(e) Bring-down Comfort Letter. At the Closing Time, the Initial
Purchasers shall have received from Coopers & Xxxxxxx L.L.P., a letter dated as
of the Closing Time, to the effect that they reaffirm the statements made in
the letter furnished pursuant to subsection (d) of this Section, except that
the specified date referred to shall be a date not more than three business
days prior to the Closing Time.
(f) Maintenance of Rating. At the Closing Time, the Securities
shall be rated at least B1 by Moody's and B by S&P, and the Company shall have
delivered to the Initial Purchasers a letter dated the Closing Time, from each
such rating agency, or other evidence satisfactory to the Initial Purchasers,
confirming that the Securities have such ratings; and since the date of this
Agreement, there shall not have occurred a downgrading in the rating assigned
to the Securities or any of the Company's other securities by any "nationally
recognized statistical rating agency," as that term is defined by the
Commission for purposes of Rule 436(g)(2) under the 1933 Act, and no such
organization shall have publicly announced that it has under surveillance or
review its rating of the Securities or any of the Company's other securities.
(g) Lock-up Agreements. At the date of this Agreement, the Initial
Purchasers shall have received an agreement substantially in the form of
Exhibit B hereto signed by the persons listed on Schedule C hereto.
(h) PORTAL. At the Closing Time, the Securities shall have been
designated for trading on PORTAL.
(i) Approval of Listing. The shares of Common Stock initially
issuable upon conversion of the Securities shall have been duly listed, subject
to notice of issuance, on the New York Stock Exchange.
- 18 -
22
(j) Conditions to Purchase of Option Securities. In the event that
the Initial Purchasers exercise their option provided in Section 2(b) hereof to
purchase all or any portion of the Option Securities, the representations and
warranties of the Company contained herein and the statements in any
certificates furnished by the Company or any subsidiary of the Company
hereunder shall be true and correct (in the case of representations and
warranties that are qualified as to materiality) or are true and correct in all
material respects (in the case of representations and warranties that are not
so qualified) as of each Date of Delivery and, at the relevant Date of
Delivery, the Initial Purchasers shall have received:
(i) Officers' Certificate. A certificate, dated such Date of
Delivery, of the President or a Vice President of the Company and of
the chief financial or chief accounting officer of the Company
confirming that the certificate delivered at the Closing Time pursuant
to Section 5(c) hereof remains true and correct as of such Date of
Delivery.
(ii) Opinions of Counsel for Company. The favorable opinions
of Xxxxxxx & Xxxxx L.L.P. and Xxxxxxx, Xxxxx & Craft, L.L.P., each
counsel for the Company, in form and substance satisfactory to the
Initial Purchasers, dated such Date of Delivery, relating to the
Option Securities to be purchased on such Date of Delivery and
otherwise to the same effect as the opinions required by Section 5(a)
hereof.
(iii) Opinion of Counsel for Initial Purchasers. The favorable
opinion of Xxxxxx & Xxxxxx L.L.P., counsel for the Initial Purchasers,
dated such Date of Delivery, relating to the Option Securities to be
purchased on such Date of Delivery and otherwise to the same effect as
the opinion required by Section 5(b) hereof.
(iv) Bring-down Comfort Letter. A letter from Coopers &
Xxxxxxx L.L.P., in form and substance satisfactory to the Initial
Purchasers and dated such Date of Delivery, substantially in the same
form and substance as the letter furnished to the Initial Purchasers
pursuant to Section 5(d) hereof, except that the "specified date" in
the letter furnished pursuant to this paragraph shall be a date not
more than three days prior to such Date of Delivery.
(v) No Downgrading. Subsequent to the date of this Agreement,
no downgrading shall have occurred in the rating accorded the
Securities or of any of the Company's other securities by any
"nationally recognized statistical rating organization", as that term
is defined by the Commission for purposes of Rule 436(g)(2) under the
1933 Act, and no such organization shall have publicly announced that
it has under surveillance or review its ratings of any of the
Company's securities.
(k) Registration Rights Agreement. At the Closing Time, the
Company shall have executed and delivered the Registration Rights Agreement.
- 19 -
23
(l) Additional Documents. At the Closing Time and at each Date of
Delivery, counsel for the Initial Purchasers shall have been furnished with
such documents and opinions as they may require for the purpose of enabling
them to pass upon the issuance and sale of the Securities as herein
contemplated, or in order to evidence the accuracy of any of the
representations or warranties, or the fulfillment of any of the conditions,
herein contained; and all proceedings taken by the Company in connection with
the issuance and sale of the Securities as herein contemplated and with respect
to the shares of Common Stock issuable upon conversion of the Securities shall
be satisfactory in form and substance to the Initial Purchasers.
(m) Termination of Agreement. If any condition specified in this
Section shall not have been fulfilled when and as required to be fulfilled,
this Agreement, or, in the case of any condition to the purchase of Option
Securities, on a Date of Delivery which is after the Closing Time, the
obligations of the several Initial Purchasers to purchase the relevant Option
Securities, may be terminated by the Initial Purchasers by notice to the
Company at any time at or prior to the Closing Time or such Date of Delivery,
as the case may be, and such termination shall be without liability of any
party to any other party except as provided in Section 4 and except that
Sections 1, 6, 7 and 8 shall survive such termination and remain in full force
and effect.
SECTION 6. Indemnification.
(a) Indemnification of Initial Purchasers. The Company agrees to
indemnify and hold harmless each Initial Purchaser and each person, if any, who
controls any Initial Purchaser within the meaning of Section 15 of the 1933 Act
or Section 20 of the 1934 Act as follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue statement
or alleged untrue statement of a material fact contained in any
Preliminary Offering Memorandum or the Final Offering Memorandum (or
any amendment or supplement thereto), or the omission or alleged
omission therefrom of a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount
paid in settlement of any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or
threatened, or of any claim whatsoever based upon any such untrue
statement or omission, or any such alleged untrue statement or
omission; provided that (subject to Section 6(d) below) any such
settlement is effected with the written consent of the Company; and
(iii) against any and all expenses whatsoever, as incurred
(including the fees and disbursements of counsel chosen by Xxxxxxx
Xxxxx), reasonably incurred in investigating, preparing or defending
against any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim
whatsoever based
- 20 -
24
upon any such untrue statement or omission, or any such alleged untrue
statement or omission, to the extent that any such expense is not paid
under (i) or (ii) above;
provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by any
Initial Purchaser through Xxxxxxx Xxxxx expressly for use in any Preliminary
Offering Memorandum or the Final Offering Memorandum (or any amendment or
supplement thereto); and provided further, that, insofar as this indemnity
agreement relates to any untrue statement or omission, or any alleged untrue
statement or omission, made in the Preliminary Offering Memorandum, but
eliminated or remedied in the Final Offering Memorandum, it shall not inure to
the benefit of an Initial Purchaser (or to the benefit of any person who
controls such Initial Purchaser) if a copy of the Final Offering Memorandum was
not delivered by such Initial Purchaser to the person asserting the claim
arising from such untrue statement or omission, or such alleged untrue
statement or omission at or prior to the confirmation of the sale of the
Securities to such person, if the delivery thereof would have constituted a
defense to the claim asserted by such person.
(b) Indemnification of Company, Directors and Officers. Each
Initial Purchaser severally agrees to indemnify and hold harmless the Company,
its directors, its officers, and each person, if any, who controls the Company
within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act
against any and all loss, liability, claim, damage and expense described in the
indemnity contained in subsection (a) of this Section, as incurred, but only
with respect to untrue statements or omissions, or alleged untrue statements or
omissions, made in the Preliminary Offering Memorandum or the Final Offering
Memorandum (or any amendment or supplement thereto) in reliance upon and in
conformity with written information furnished to the Company by such Initial
Purchaser through Xxxxxxx Xxxxx expressly for use in the Preliminary Offering
Memorandum or the Final Offering Memorandum (or any amendment or supplement
thereto).
(c) Actions against Parties; Notification. Each indemnified party
shall give notice as promptly as reasonably practicable to each indemnifying
party of any action commenced against it in respect of which indemnity may be
sought hereunder, but failure to so notify an indemnifying party shall not
relieve such indemnifying party from any liability hereunder to the extent it
is not materially prejudiced as a result thereof and in any event shall not
relieve it from any liability which it may have otherwise than on account of
this indemnity agreement. In the case of parties indemnified pursuant to
Section 6(a) above, counsel to the indemnified parties shall be selected by
Xxxxxxx Xxxxx, and, in the case of parties indemnified pursuant to Section 6(b)
above, counsel to the indemnified parties shall be selected by the Company. An
indemnifying party may participate at its own expense in the defense of any
such action; provided, however, that counsel to the indemnifying party shall
not (except with the consent of the indemnified party) also be counsel to the
indemnified party. In no event shall the indemnifying parties be liable for
fees and expenses of more than one counsel (in addition to any local counsel)
separate from their own counsel for all indemnified parties in connection with
any one action or separate but similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances. No
indemnifying party shall, without
- 21 -
25
the prior written consent of the indemnified parties, settle or compromise or
consent to the entry of any judgment with respect to any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever in respect of which indemnification or
contribution could be sought under this Section 6 or Section 7 hereof (whether
or not the indemnified parties are actual or potential parties thereto), unless
such settlement, compromise or consent (i) includes an unconditional release of
each indemnified party from all liability arising out of such litigation,
investigation, proceeding or claim 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.
(d) Settlement without Consent if Failure to Reimburse. If at any
time an indemnified party shall have requested an indemnifying party to
reimburse the indemnified party for fees and expenses of counsel, such
indemnifying party agrees that it shall be liable for any settlement of the
nature contemplated by Section 6(a)(ii) effected without its written consent if
(i) such settlement is entered into more than 45 days after receipt by such
indemnifying party of the aforesaid request, (ii) such indemnifying party shall
have received notice of the terms of such settlement at least 30 days prior to
such settlement being entered into and (iii) such indemnifying party shall not
have reimbursed such indemnified party in accordance with such request prior to
the date of such settlement.
SECTION 7. Contribution. If the indemnification provided for in
Section 6 hereof is for any reason unavailable to or insufficient to hold
harmless an indemnified party in respect of any losses, liabilities, claims,
damages or expenses referred to therein, then each indemnifying party shall
contribute to the aggregate amount of such losses, liabilities, claims, damages
and expenses incurred by such indemnified party, as incurred, (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company on the one hand and the Initial Purchasers on the other hand from the
offering of the Securities pursuant to this Agreement or (ii) if the allocation
provided by clause (i) is not permitted by applicable law, in such proportion
as is appropriate to reflect not only the relative benefits referred to in
clause (i) above but also the relative fault of the Company on the one hand and
of the Initial Purchasers on the other hand in connection with the statements
or omissions which resulted in such losses, liabilities, claims, damages or
expenses, as well as any other relevant equitable considerations.
The relative benefits received by the Company on the one hand and the
Initial Purchasers on the other hand in connection with the offering of the
Securities pursuant to this Agreement shall be deemed to be in the same
proportion as the total net proceeds from the offering of the Securities
pursuant to this Agreement (before deducting expenses) received by the Company
bear to the total discount received by the Initial Purchasers.
The relative fault of the Company on the one hand and the Underwriters
on the other hand shall be determined by reference to, among other things,
whether any such untrue or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact relates to
- 22 -
26
information supplied by the Company or by the Initial Purchasers and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.
The Company and the Initial Purchasers agree that it would not be just
and equitable if contribution pursuant to this Section 7 were determined by pro
rata allocation (even if the Initial Purchasers were treated as one entity for
such purpose) or by any other method of allocation which does not take account
of the equitable considerations referred to above in this Section 7. The
aggregate amount of losses, liabilities, claims, damages and expenses incurred
by an indemnified party and referred to above in this Section 7 shall be deemed
to include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged
untrue statement or omission or alleged omission.
Notwithstanding the provisions of this Section 7, no Initial Purchaser
shall be required to contribute any amount in excess of the amount by which the
total price at which the Securities underwritten by it and distributed to the
public were offered to the public exceeds the amount of any damages which such
Initial Purchaser has otherwise been required to pay by reason of any 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 0000 Xxx) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who controls an
Initial Purchaser within the meaning of Section 15 of the 1933 Act or Section
20 of the 1934 Act shall have the same rights to contribution as such Initial
Purchaser, and each director of the Company, each officer, and each person, if
any, who controls the Company within the meaning of Section 15 of the 1933 Act
or Section 20 of the 1934 Act shall have the same rights to contribution as the
Company. The Initial Purchasers' respective obligations to contribute pursuant
to this Section 7 are several in proportion to the principal amount of
Securities set forth opposite their respective names in Schedule A hereto and
not joint.
SECTION 8. Representations, Warranties and Agreements to Survive
Delivery. All representations, warranties and agreements contained in this
Agreement or in certificates of officers of the Company submitted pursuant
hereto, shall remain operative and in full force and effect, regardless of any
investigation made by or on behalf of any Initial Purchaser or controlling
person, or by or on behalf of the Company, and shall survive delivery of the
Securities to the Initial Purchasers.
- 23 -
27
SECTION 9. Subsequent Offers and Resales of the Securities.
(a) Offer and Sale Procedures. Each of the Initial Purchasers and
the Company hereby establish and agree to observe the following procedures in
connection with the offer and sale of the Securities:
(i) Offers and Sales only to Institutional Accredited
Investors or Qualified Institutional Buyers. Offers and sales of the
Securities will be made only by the Initial Purchasers or affiliates
thereof qualified to do so in the jurisdictions in which such offers
or sales are made. Each such offer or sale shall be made only (A) to
persons whom the offeror or seller reasonably believes to be Qualified
Institutional Buyers (as defined in Rule 144A under the Securities
Act), or (B) to other institutional accredited investors (as such term
is defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D) that
the offeror or seller reasonably believes to be and, with respect to
sales and deliveries, that are Accredited Investors ("Institutional
Accredited Investors"), or (C) non-U.S. persons outside the United
States to whom the offeror or seller reasonably believes offers and
sales of the Securities may be made in reliance upon Regulation S
under the 1933 Act.
(ii) No General Solicitation. The Securities will be offered
by the Initial Purchasers only by approaching prospective Subsequent
Purchasers on an individual basis. No general solicitation or general
advertising (within the meaning of Rule 502(c) under the 0000 Xxx)
will be used in connection with the offering of the Securities.
(iii) Purchase by Non-Bank Fiduciaries. In the case of a
non-bank Subsequent Purchaser of a Security acting as a fiduciary for
one or more third parties, in connection with an offer and sale to
such purchaser pursuant to clause (B) of paragraph (i) above, each
third party shall, in the judgment of the Initial Purchasers, be an
Institutional Accredited Investor.
(iv) Restrictions on Transfer. The transfer restrictions and
the other provisions set forth in Sections 2.6 and 2.12 of the
Indenture, including the legend required thereby, shall apply to the
Securities except as otherwise agreed by the Company and the Initial
Purchasers. Following the sale of the Securities by the Initial
Purchasers to Subsequent Purchasers pursuant to the terms hereof,
except as otherwise provided in Section 6 hereof, the Initial
Purchasers shall not be liable or responsible to the Company for any
losses, damages or liabilities suffered or incurred by the Company,
including any losses, damages or liabilities under the 1933 Act,
arising from or relating to any resale or transfer of any Security.
(v) Delivery of the Offering Memorandum. Each Initial
Purchaser will deliver to each Subsequent Purchaser, in connection
with its original distribution of the Securities, a copy of the
Offering Memorandum, as amended and supplemented at the date of such
delivery.
(vi) Subsequent Purchaser Notification. Each Initial Purchaser
will take reasonable steps to inform, and cause each of its U.S.
affiliates to take reasonable steps to inform, persons acquiring
Securities from such Initial Purchaser or U.S. affiliate, as the case
may be,
- 24 -
28
in the United States that the Securities (A) have not been and will
not be registered under the 1933 Act, (B) are being sold to them
without registration under the 1933 Act in reliance on Rule 144A or in
accordance with another exemption from registration under the 1933
Act, as the case may be, and (C) may not be offered, sold or otherwise
transferred except (1) to the Company, (2) outside the United States
in accordance with Rule 904 of Regulation S, or (3) inside the United
States in accordance with (x) Rule 144A to a person whom the seller
reasonably believes is a Qualified Institutional Buyer that is
purchasing such Securities for its own account or for the account of a
Qualified Institutional Buyer to whom notice is given that the offer,
sale or transfer is being made in reliance on Rule 144A or (y) the
exemption from registration under the 1933 Act provided by Rule 144,
if available.
(b) Selling Restrictions for Offers and Sales Outside the United
States. Each Initial Purchaser understands that the Securities have not been
and will not be registered under the 1933 Act and may not be offered or sold
within the United States or to, or for the account or benefit of, U.S. persons
except in accordance with Regulation S under the 1933 Act or pursuant to an
exemption from the registration requirements of the 1933 Act. Each Initial
Purchaser represents and agrees that, except as permitted by Section 9
(a)(i)(B) above, it has offered and sold Securities and will offer and sell
Securities (i) as part of its distribution at any time and (ii) otherwise until
forty days after the later of the date upon which the offering of the
Securities commences and the latest Date of Delivery, only in accordance with
Rule 903 of Regulation S or Rule 144A under the 1933 Act. Accordingly, neither
the Initial Purchasers, their affiliates nor any persons acting on their behalf
have engaged or will engage in any directed selling efforts with respect to
Securities, and the Initial Purchasers, their affiliates and any person acting
on their behalf have complied and will comply with the offering restriction
requirements of Regulation S. Each Initial Purchaser agrees that, at or prior
to confirmation of a sale of Securities pursuant to Rule 903 of Regulation S,
it will have sent to each distributor, dealer or person receiving a selling
concession, fee or other remuneration that purchases Securities from it or
through it during the restricted period a confirmation or notice to
substantially the following effect:
"The Securities covered hereby have not been registered under the
United States Securities Act of 1933 (the "Securities Act") and may
not be offered or sold within the United States or to or for the
account or benefit of U.S. persons (i) as part of their distribution
at any time and (ii) otherwise until forty days after the later of the
date upon which the offering of the Securities commenced and the date
of closing, except in either case in accordance with Regulation S or
Rule 144A under the Securities Act. Terms used above have the meaning
given to them by Regulation S."
Terms used in the above paragraph have the meanings given to them by Regulation
S.
Each Initial Purchaser severally represents and agrees that it has not
entered and will not enter into any contractual arrangements with respect to
the distribution of the Securities, except with its affiliates or with the
prior written consent of the Company.
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29
SECTION 10. Termination of Agreement.
(a) Termination; General. The Initial Purchasers may terminate
this Agreement, by notice to the Company, at any time at or prior to the
Closing Time (i) if there has been, since the time of execution of this
Agreement or since the respective dates as of which information is given in the
Offering Memorandum, any material adverse change in the condition, financial or
otherwise, or in the earnings, business affairs or business prospects of the
Company and its subsidiaries considered as one enterprise, whether or not
arising in the ordinary course of business, or (ii) if there has occurred any
material adverse change in the financial markets in the United States or the
international financial markets, any outbreak of hostilities or escalation
thereof or other calamity or crisis or any change or development involving a
prospective change in national or international political, financial or
economic conditions, in each case the effect of which is such as to make it, in
the judgment of the Initial Purchasers, impracticable to market the Securities
or to enforce contracts for the sale of the Securities, or (iii) if trading in
any securities of the Company has been suspended or limited by the Commission
or the New York Stock Exchange, or (iv) if trading generally on the American
Stock Exchange or the New York Stock Exchange or in the Nasdaq National Market
System has been suspended or limited, or minimum or maximum prices for trading
have been fixed, or maximum ranges for prices have been required, by any of
said exchanges or by such system or by order of the Commission, the NASD or any
other governmental authority, or if a banking moratorium has been declared by
either federal or New York or Texas authorities, in each case (with respect to
the items referred to in this clause (iv)) the effect of which is such as to
make it, in the judgment of the Initial Purchasers, impracticable to market the
Securities or to enforce contracts for the sale of the Securities.
(b) Liabilities. If this Agreement is terminated pursuant to this
Section, such termination shall be without liability of any party to any other
party except as provided in Section 4 hereof and provided further that Sections
6 and 7 shall survive such termination and remain in full force and effect.
SECTION 11. Default by One or More of the Initial Purchasers. If one
or more of the Initial Purchasers shall fail at the Closing Time or a Date of
Delivery to purchase the Securities which it or they are obligated to purchase
under this Agreement (the "Defaulted Securities"), the non-defaulting Initial
Purchasers shall have the right, within 24 hours thereafter, to make
arrangements for one or more of the non-defaulting Initial Purchasers, or any
other purchasers, to purchase all, but not less than all, of the Defaulted
Securities in such amounts as may be agreed upon and upon the terms herein set
forth; if, however, the non-defaulting Initial Purchasers shall not have
completed such arrangements within such 24-hour period, then:
(a) if the principal amount of Defaulted Securities does not
exceed 10% of the aggregate principal amount of Securities to be purchased on
such date, each of the non-defaulting Initial Purchasers shall be obligated,
severally and not jointly, to purchase the full amount thereof in the
proportions that their respective underwriting obligations hereunder bear to
the underwriting obligations of all non-defaulting Initial Purchasers, or
- 26 -
30
(b) if the principal amount of Defaulted Securities exceeds 10% of
the aggregate principal amount of Securities to be purchased on such date, this
Agreement or, with respect to any Date of Delivery which occurs after the
Closing Time, the obligation of the Initial Purchasers to purchase and of the
Company to sell the Option Securities to be purchased and sold on such Date of
Delivery, shall terminate without liability on the part of any non-defaulting
Initial Purchaser.
No action taken pursuant to this Section shall relieve any defaulting
Initial Purchaser from liability in respect of its default.
In the event of any such default which does not result in a
termination of this Agreement or, in the case of a Date of Delivery, which is
after the Closing Time, which does not result in a termination of the
obligation of the Initial Purchasers to purchase and the Company to sell the
relevant Option Securities, as the case may be, either the non-defaulting
Initial Purchasers or the Company shall have the right to postpone the Closing
Time or the relevant Date of Delivery, as the case may be, for a period not
exceeding seven days in order to effect any required changes in the Offering
Memorandum or in any other documents or arrangements. As used herein, the term
"Initial Purchaser" includes any person substituted for an Initial Purchaser
under this Section 11.
SECTION 12. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the Initial
Purchasers shall be directed to the Initial Purchasers c/o Merrill Xxxxx at
0000 XxXxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxx 00000, Attention: Xxxxxxxxxxx X.
Xxxx; and notices to the Company shall be directed to it at 000 Xxxxx Xxxxx
Xxxxxx, Xxxxx 000, Xxxxxx, Xxxxx 00000, Attention: X. Xxxxxx Xxxxxx.
SECTION 13. Parties. This Agreement shall inure to the benefit of and
be binding upon the Initial Purchasers and the Company and their respective
successors. Nothing expressed or mentioned in this Agreement is intended or
shall be construed to give any person, firm or corporation, other than the
Initial Purchasers and the Company and their respective successors and the
controlling persons and officers and directors referred to in Sections 6 and 7
and their heirs and legal representatives, any legal or equitable right, remedy
or claim under or in respect of this Agreement or any provision herein
contained. This Agreement and all conditions and provisions hereof are intended
to be for the sole and exclusive benefit of the Initial Purchasers and the
Company and their respective successors, and said controlling persons and
officers and directors and their heirs and legal representatives, and for the
benefit of no other person, firm or corporation. No purchaser of Securities
from any Initial Purchaser shall be deemed to be a successor by reason merely
of such purchase.
SECTION 14. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME.
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31
SECTION 15. Effect of Headings. The Article and Section headings
herein are for convenience only and shall not affect the construction hereof.
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof,
whereupon this instrument, along with all counterparts, will become a binding
agreement between the Initial Purchasers and the Company in accordance with its
terms.
Very truly yours,
EQUITY CORPORATION INTERNATIONAL
By:
----------------------------------
X. Xxxxxx Xxxxxx
Senior Vice President - Chief
Financial Officer
CONFIRMED AND ACCEPTED,
as of the date first above written:
XXXXXXX XXXXX & CO.
XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX
INCORPORATED
ABN AMRO INCORPORATED
XXXXXX XXXXXXX & CO. INCORPORATED
By: XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX
INCORPORATED
By
------------------------------------------
Authorized Signatory
- 28 -
32
SCHEDULE A
Principal Amount of
Name of Initial Purchaser Initial Securities
------------------------- ------------------
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 72,500,000
ABN AMRO Incorporated . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26,250,000
Xxxxxx Xxxxxxx & Co. Incorporated . . . . . . . . . . . . . . . . . . . . . . 26,250,000
------------
TOTAL $125,000,000
============
Sch A - 1
33
SCHEDULE B
EQUITY CORPORATION INTERNATIONAL
$125,000,000
4 1/2% Convertible Subordinated Debentures due 2004
1. The initial price to investors of the Securities shall be 100%
of principal amount thereof, plus accrued interest, if any, from the date of
initial issuance.
2. The purchase price to be paid by the several Initial
Purchasers for the Initial Securities shall be 97.25% of the principal amount
thereof.
3. The interest rate on the Securities shall be 4 1/2% per annum.
4. The Securities shall be convertible into shares of Common
Stock, par value $.01 per share, of the Company at an initial conversion price
of $27.09 per share.
Sch B - 1
34
SCHEDULE C
List of Persons
Subject to Lock-up
1. Xxxxxxx X. XxXxxxxx
2. Xxxx X. Xxxxxxx
3. X. Xxxxxx Xxxxxx
4. Xxxxx X. Xxxxx
5. Xxxx X. Xxxxxx
6. Xxxxxx X. XxXxxx
7. Xxxxxxx X. Xxxxx
8. Xxxxx X. Xxxxxx, III
9. Xxx Xxxxxxx
10. J. Xxxxxxx Xxxxxxx
Sch C - 1
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Exhibit A
FORM OF OPINIONS OF COMPANY'S COUNSEL
TO BE DELIVERED PURSUANT TO
SECTION 5(a)
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State of
Delaware.
(ii) The Company has the requisite corporate power and
authority to own, lease and operate its properties and to conduct its business
as described in the Offering Memorandum and to enter into and perform its
obligations under the Purchase Agreement, the Registration Rights Agreement and
the Indenture.
(iii) The authorized, issued and outstanding capital stock of
the Company is as set forth in the Offering Memorandum in the column entitled
"Actual" under the caption "Capitalization" (except for subsequent issuances,
if any, pursuant to the Purchase Agreement or pursuant to reservations,
agreements, employee benefit plans or the exercise of convertible securities or
options referred to in the Offering Memorandum); the shares of issued and
outstanding capital stock of the Company have been duly authorized and validly
issued and are fully paid and non- assessable, and none of the outstanding
shares of capital stock of the Company were issued in violation of the
preemptive or other similar rights of any securityholder of the Company.
(iv) The issuance and sale of the Securities or the shares of
Common Stock issuable upon conversion of the Securities is not subject to
preemptive or other similar rights of any securityholder of the Company arising
by operation of law, under the charter or by-laws of the Company or, to our
knowledge, under any agreement to which the Company or any of its subsidiaries
is a party or by which it is bound.
(v) The Purchase Agreement and the Registration Rights
Agreement have been duly authorized, executed and delivered by the Company.
(vi) The Initial Securities or Option Securities, as the case
may be, to be issued and sold by the Company pursuant to the Purchase Agreement
have been duly authorized by the requisite corporate action on the part of the
Company, and the Securities, when executed and authenticated in accordance with
the terms of the Indenture and delivered to and paid for by you, will be valid
and binding obligations of the Company entitled to the benefits of the
Indenture and enforceable against the Company in accordance with their terms,
except as the enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium (including, without limitation, all laws relating to
fraudulent transfers), or other similar laws now or hereafter in effect
relating to or affecting creditors' rights generally, or by general principles
of equity (regardless of whether enforcement is considered in a proceeding at
law or in equity); and the Securities and the Indenture conform as to legal
matters in all material respects to the descriptions thereof in the Offering
Memorandum.
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(vii) The Indenture has been duly authorized, executed and
delivered by the Company and (assuming the due authorization, execution and
delivery thereof by the Trustee) constitutes a valid and binding agreement of
the Company, enforceable against the Company in accordance with its terms,
except as the enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium (including, without limitation, all laws relating to
fraudulent transfers), or other similar laws now or hereafter in effect
relating to or affecting the enforcement of creditors' rights generally, or by
general principles of equity (regardless of whether enforcement is considered
in a proceeding at law or in equity).
(viii) The Securities have been duly authorized by the Company,
and the global certificate representing the Securities has been duly executed
by the Company and, when it has been authenticated by the Trustee in the manner
provided in the Indenture (assuming the due authorization, execution and
delivery of the Indenture by the Trustee) and delivered against payment of the
purchase price therefor, the Securities will constitute valid and binding
obligations of the Company, enforceable against the Company in accordance with
their terms, except as the enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium (including, without limitation, all laws
relating to fraudulent transfers), or other similar laws relating to or
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), and will be
entitled to the benefits of the Indenture.
(ix) The Securities and the Indenture conform in all material
respects to the descriptions thereof contained in the Offering Memorandum.
(x) Upon issuance and delivery of the Securities in
accordance with the Purchase Agreement and the Indenture, the Securities shall
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 initially issuable upon conversion of Securities have been duly
authorized for issuance upon such conversion by all necessary action; and such
shares, when issued upon such conversion, will be validly issued and will be
fully paid and non-assessable, and no holder of such Common Stock is or will be
subject to personal liability by reason of being such a holder.
(xi) The shares of Common Stock (including the shares issuable
upon conversion of the Securities) conform as to legal matters in all material
respects to the description thereof in the Company's registration statement on
Form 8-A (File No. 0-24728), as amended, which is incorporated by reference in
the Offering Memorandum.
(xii) The form of certificate used to evidence the Common Stock
complies in all material respects with Section 158 of the Delaware General
Corporation Law and with any applicable requirements of the charter and by-laws
of the Company.
(xiii) To our knowledge, there is not any action, suit,
proceeding, inquiry or investigation to which the Company or any subsidiary is
or is threatened to be made a party, or to
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which the property of the Company or any subsidiary is subject, before or
brought by any court or governmental agency or body, domestic or foreign, which
(a) is required to be disclosed in the Offering Memorandum (other than as
disclosed therein) or (b) seeks to enjoin or prevent the issuance and sale of
the Securities.
(xiv) The information in the Offering Memorandum under
"Description of Debentures" and "Description of Existing Securities and Credit
Facility," to the extent that it constitutes matters of law, summaries of legal
matters, the Company's charter and by-laws or legal proceedings, or legal
conclusions, has been reviewed by us and is correct in all material respects.
(xv) All descriptions in the Offering Memorandum of contracts
and other documents to which the Company or any of its subsidiaries are a party
are accurate in all material respects; to our knowledge, there are no
franchises, contracts, indentures, mortgages, loan agreements, notes, leases or
other instruments required to be described in the Offering Memorandum that are
not described or referred to therein or incorporated by reference thereto, and
the descriptions thereof or references thereto are correct in all material
respects.
(xvi) No filing with, or authorization, approval, consent,
license, order, registration, qualification or decree of, any court or
governmental authority or agency (other than as may be required under the
securities or blue sky laws of the various states, as to which we need express
no opinion) is necessary or required in connection with the due authorization,
execution and delivery of the Purchase Agreement, the Indenture or the
Registration Rights Agreement or for the offering, issuance or sale of the
Securities to the Initial Purchasers or the initial resale by the Initial
Purchasers in accordance with the Purchase Agreement.
(xvii) The execution, delivery and performance of the Purchase
Agreement, the Indenture and the Registration Rights Agreement and the
consummation of the transactions contemplated thereby (including the issuance
and sale of the Securities and the use of the proceeds from the sale of the
Securities as described under the caption "Use of Proceeds" and the issuance of
the shares of Common Stock issuable upon conversion of the Securities) and
compliance by the Company with its obligations thereunder do not and will not,
whether with or without the giving of notice or lapse of time or both,
constitute a breach of, or default or Repayment Event (as defined in Section
1(a)(xv) of the Purchase Agreement) under or result in the creation or
imposition of any lien, charge or encumbrance upon any property or assets of
the Company or any subsidiary pursuant to any contract, indenture, mortgage,
deed of trust, loan or credit agreement, note, lease or any other agreement or
instrument incorporated by reference in the Offering Memorandum or filed as an
exhibit to the Company's Annual Report on Form 10-K for the year ended December
31, 1996 (other than with respect to covenants or agreements of a financial or
numerical nature or requiring computation, to which we express no opinion) nor
will such action result in any violation of (i) the provisions of the charter
or by-laws of the Company or any subsidiary, (ii) any applicable law, statute,
rule or regulation or (iii) any judgment, order, writ or decree, known to us,
of any government, government instrumentality or court which names the Company
or any subsidiary or any of their respective properties or assets as a party or
being subject thereto.
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(xiii) The Company is not an "investment company" or an entity
"controlled" by an "investment company" as such terms are defined in the
Investment Company Act.
(xix) The documents filed pursuant to the 1934 Act and
incorporated by reference in the Offering Memorandum (other than the financial
statements and notes thereto and related schedules and other financial data
included therein, as to which no opinion need be rendered) when they became
effective or were filed with the Commission, as the case may be, complied as to
form in all material respects with the requirements of the 1934 Act, as
applicable, and the 1934 Act Regulations, as applicable.
(xx) Assuming the accuracy of the representations and
warranties of the Company and the Initial Purchasers contained in the Purchase
Agreement and compliance with the agreements of the Company and the Initial
Purchasers contained therein, no registration of the Securities under the 1933
Act is required, and no qualification of the Indenture under the Trust
Indenture Act of 1939 is necessary, for the offer and sale of the Securities to
the Initial Purchasers as contemplated by the Purchase Agreement or in
connection with the initial resale of the Securities by the Initial Purchasers
in accordance with the Purchase Agreement.
(xxi) The Securities are not of the same class (within the
meaning of Rule 144A) as securities of the Company that are listed on a
national securities exchange registered under Section 6 of the 1934 Act or that
are quoted in a United States automated inter-dealer quotation system.
(xxii) To our knowledge, there are no persons with registration
rights or other similar rights to have any securities registered by the Company
under the 1933 Act pursuant to the Shelf Registration Statement (as defined in
the Registration Rights Agreement), except as described in the Registration
Rights Agreement.
Nothing has come to our attention that would lead us to believe that
the Offering Memorandum or any amendment or supplement thereto (except for
financial statements and notes thereto and related schedules and other
financial data included therein or omitted therefrom, as to which we need make
no statement), at the time the Offering Memorandum was issued, at the time any
such amendment or supplement to the Offering Memorandum was issued or at the
Closing Time, included or includes an untrue statement of a material fact or
omitted 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.
Such opinion may state that it is limited to federal law and the laws
of the State of Delaware and the State of Texas and the General Corporation Law
of the State of Delaware. In rendering such opinion, such counsel may rely, as
to matters of fact (but not as to legal conclusions), to the extent they deem
proper, on certificates of responsible officers of the Company and public
officials. Such opinion shall not state that it is to be governed or qualified
by, or that it is otherwise subject to, any treatise, written policy or other
document relating to legal opinions, including, without limitation, the Legal
Opinion Accord of the ABA Section of Business Law (1991).
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[FORM OF LOCK-UP
PURSUANT TO SECTION 5(G)]
Exhibit B
______________, 1998
XXXXXXX XXXXX & CO.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated,
ABN AMRO Incorporated
Xxxxxx Xxxxxxx & Co. Incorporated
x/x Xxxxxxx Xxxxx & Xx.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
Xxxxx Xxxxx
Xxxxx Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Re: Proposed Private Offering by Equity Corporation International
Dear Sirs:
The undersigned, [a stockholder] [an officer] [a director] of Equity
Corporation International, a Delaware corporation (the "Company"), understands
that Xxxxxxx Xxxxx & Co., Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated
("Xxxxxxx Xxxxx"), ABN AMRO Incorporated and Xxxxxx Xxxxxxx & Co. Incorporated
propose to enter into a Purchase Agreement (the "Purchase Agreement") with the
Company providing for the private offering of ______% Convertible Subordinated
Debentures due 2004. In recognition of the benefit that such an offering will
confer upon the undersigned as [a stockholder] [an officer] [a director] of the
Company, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the undersigned agrees with each
purchaser to be named in the Purchase Agreement that, during a period of 90
days from the date of the Purchase Agreement, the undersigned will not, without
the prior written consent of Xxxxxxx Xxxxx, directly or indirectly, (i) offer,
pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant for
the sale of, or otherwise dispose of or transfer any shares of the Company's
common stock, par value $.01 per share (the "Common Stock"), or any securities
convertible into or exchangeable or exercisable for Common Stock, whether now
owned or hereafter acquired by the undersigned or with respect to which the
undersigned has or hereafter acquires the power of disposition or (ii) enter
into any swap or any other agreement or any transaction that transfers, in
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whole or in part, directly or indirectly, the economic consequence of ownership
of the Common Stock, whether any such swap or transaction described in clause
(i) or (ii) above is to be settled by delivery of Common Stock or other
securities, in cash or otherwise.
Very truly yours,
Signature:
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Print Name:
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