EXHIBIT 10
DST SYSTEMS, INC.
4.125% Series A Convertible Senior Debentures due 2023
3.625% Series B Convertible Senior Debentures due 2023
Purchase Agreement
August 6, 2003
Citigroup Global Markets Inc.
Banc of America Securities LLC
As Representatives of the Initial Purchasers
c/o Citigroup Global Markets Inc.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
DST Systems, Inc., a corporation organized under the laws of Delaware (the
"Company"), proposes to issue and sell to the several parties named in Schedule
I hereto (the "Initial Purchasers"), for whom you (the "Representatives") are
acting as representatives, $450,000,000 aggregate original principal amount of
its 4.125% Series A Convertible Senior Debentures due 2023 (the "Series A
Securities") and $250,000,000 aggregate original principal amount of its 3.625%
Series B Convertible Senior Debentures due 2023 (the "Series B Securities" and,
together with the Series A Securities, the "Firm Securities"). The Company also
proposes to grant to the Representatives an option to purchase up to $90,000,000
additional original principal amount of the Series A Securities (the "Series A
Option Securities") and/or up to $50,000,000 additional original principal
amount of the Series B Securities (the "Series B Option Securities" and,
together with the Series A Option Securities, the "Option Securities" and,
together with the Firm Securities, the "Securities"). The Securities are
convertible into shares of Common Stock, par value $0.01 per share (the "Common
Stock"), of the Company. The Series A Securities and the Series B Securities are
to be issued under the indenture (the "Indenture") to be dated as of the Closing
Date between the Company and JPMorgan Chase Bank, as trustee (the "Trustee").
The Securities will have the benefit of a registration rights agreement (the
"Registration Rights Agreement") to be dated as of the Closing Date between the
Company and the Initial Purchasers, pursuant to which the Company will agree to
use its reasonable best efforts to register the resale of the Securities under
the Act subject to the terms and conditions therein specified. To the extent
there are no additional parties listed on Schedule I other than you, the term
Representatives as used herein shall mean you as the Initial Purchasers, and the
terms Representatives and Initial Purchasers shall mean either the singular or
plural as the context requires. The use of the neuter in this Agreement shall
include the feminine and masculine wherever appropriate. Certain terms used
herein are defined in Section 18 hereof.
The sale of the Securities to the Initial Purchasers will be made without
registration of the Securities, or the Common Stock issuable upon conversion
thereof, under the Act in reliance upon exemptions from the registration
requirements of the Act.
In connection with the sale of the Securities, the Company has prepared a
preliminary offering memorandum dated August 5, 2003 (as amended or supplemented
at the date thereof, including any and all exhibits thereto and any information
incorporated by reference therein, the "Preliminary Memorandum"), and a final
offering memorandum dated August 6, 2003 (as amended or supplemented at the
Execution Time, including any and all exhibits thereto and any information
incorporated by reference therein, the "Final Memorandum"). Each of the
Preliminary Memorandum and the Final Memorandum sets forth certain information
concerning the Company, the Securities and the Common Stock issuable upon
conversion thereof. The Company hereby confirms that it has authorized the use
of the Preliminary Memorandum and the Final Memorandum, and any amendment or
supplement thereto, in connection with the offer and sale of the Securities by
the Initial Purchasers. Unless stated to the contrary, any references herein to
the terms "amend", "amendment" or "supplement" with respect to the Final
Memorandum shall be deemed to refer to and include any information filed under
the Exchange Act subsequent to the Execution Time that is incorporated by
reference therein.
1. Representations and Warranties. The Company represents and warrants to
each Initial Purchaser as set forth below in this Section 1.
(a) The Preliminary Memorandum, at the date thereof, did not contain any
untrue statement of a material fact or omit to state any material fact necessary
to make the statements therein, in the light of the circumstances under which
they were made, not misleading. At the Execution Time, on the Closing Date and
on any settlement date, the Final Memorandum did not and will not (and any
amendment or supplement thereto, at the date thereof, at the Closing Date and on
any settlement date, will not) contain any untrue statement of a material fact
or omit to state any material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading;
provided, however, that the Company makes no representation or warranty as to
the information contained in or omitted from the Preliminary Memorandum or the
Final Memorandum, or any amendment or supplement thereto, in reliance upon and
in conformity with information furnished in writing to the Company by or on
behalf of the Initial Purchasers through the Representatives specifically for
inclusion therein.
(b) None of the Company, its Affiliates, or any person acting on its or
their behalf has, directly or indirectly, made offers or sales of any security,
or solicited offers to buy, any security under circumstances that would require
the registration of the Securities or the Common Stock issuable upon conversion
thereof under the Act.
(c) None of the Company, its Affiliates, or any person acting on its or
their behalf has engaged in any form of general solicitation or general
advertising (within the meaning of Regulation D) in connection with any offer or
sale of the Securities.
(d) The Securities satisfy the eligibility requirements of Rule 144A(d)(3)
under the Act.
(e) The Company has been advised by the NASD's PORTAL Market that the
Securities have been designated PORTAL-eligible securities in accordance with
the rules and regulations of the NASD.
(f) No registration under the Act of the Securities is required for the
offer and sale of the Securities to or by the Initial Purchasers in the manner
contemplated herein and in the Final Memorandum.
(g) The Company is not, and after giving effect to the offering and sale of
the Securities and the application of the proceeds thereof as described in the
Final Memorandum will not be, an "investment company" as defined in the
Investment Company Act, without taking account of any exemption arising out of
the number of holders of the Company's securities.
(h) The Company is subject to and in full compliance with the reporting
requirements of Section 13 or Section 15(d) of the Exchange Act.
(i) The Company has not paid or agreed to pay to any person any
compensation for soliciting another to purchase any securities of the Company
(except as contemplated in this Agreement).
(j) The Company has not taken, directly or indirectly, any action designed
to or that has constituted or that might reasonably be expected to cause or
result, under the Exchange Act or otherwise, in stabilization or manipulation of
the price of any security of the Company to facilitate the sale or resale of the
Securities.
(k) Each of the Company and its significant subsidiaries listed on Annex A
hereto (individually, a "Subsidiary" and collectively, the "Subsidiaries") has
been duly incorporated and is validly existing as a corporation in good standing
under the laws of the jurisdiction in which it is chartered or organized with
full corporate power and authority to own or lease, as the case may be, and to
operate its properties and conduct its business as described in the Final
Memorandum, and is duly qualified to do business as a foreign corporation and is
in good standing under the laws of each jurisdiction that requires such
qualification.
(l) All the outstanding shares of capital stock of each Subsidiary have
been duly authorized and validly issued and are fully paid and nonassessable,
and, except as otherwise set forth in the Final Memorandum, all outstanding
shares of capital stock of the Subsidiaries are owned by the Company either
directly or through wholly owned subsidiaries free and clear of any security
interest, claim, lien or encumbrance.
(m) The Company's authorized equity capitalization is as set forth in the
Final Memorandum; the capital stock of the Company conforms to the description
thereof contained in the Final Memorandum; the outstanding shares of Common
Stock have been duly authorized and validly issued and are fully paid and
nonassessable; the shares of Common Stock issuable upon conversion of the
Securities have been duly authorized and, when issued upon conversion of the
Securities, will be validly issued, fully paid and nonassessable; the Board of
Directors of the Company has duly and validly adopted resolutions reserving such
shares of Common Stock for issuance upon conversion of the Securities; the
holders of outstanding shares of capital stock of the Company are not entitled
to preemptive or other rights to subscribe for the Securities or the shares of
Common Stock issuable upon conversion thereof; and, except as set forth in the
Final Memorandum, no options, warrants or other rights to purchase, agreements
or other obligations to issue, or rights to convert any obligations into or
exchange any securities for, shares of capital stock of or ownership interests
in the Company are outstanding.
(n) The statements in the Final Memorandum set forth (i) under the headings
"Material U.S. Federal Income Tax Considerations", "Description of the Series A
Debentures", "Description of the Series B Debentures", "Description of Capital
Stock" and "Registration Rights" and (ii) in the thirteenth risk factor relating
to certain regulatory matters under the heading "Risk Factors-Risks Related to
DST" fairly summarize the matters therein described.
(o) This Agreement has been duly authorized, executed and delivered by the
Company; the Indenture has been duly authorized and, assuming due authorization,
execution and delivery thereof by the Trustee, when executed and delivered by
the Company, will constitute a legal, valid, binding instrument enforceable
against the Company in accordance with its terms (subject, as to the enforcement
of remedies, to applicable bankruptcy, reorganization, insolvency, moratorium or
other laws affecting creditors' rights generally from time to time in effect and
to general principles of equity); the Securities have been duly authorized, and,
when executed and authenticated in accordance with the provisions of the
Indenture and delivered to and paid for by the Initial Purchasers, will have
been duly executed and delivered by the Company and will constitute the legal,
valid and binding obligations of the Company entitled to the benefits of the
Indenture (subject, as to the enforcement of remedies, to applicable bankruptcy,
reorganization, insolvency, moratorium or other laws affecting creditors' rights
generally from time to time in effect and to general principles of equity) and
will be convertible into Common Stock in accordance with their terms; and the
Registration Rights Agreement has been duly authorized by the Company and, when
executed and delivered by the Company, will constitute the legal, valid, binding
and enforceable instrument of the Company (subject, as to the enforcement of
remedies, to applicable bankruptcy, reorganization, insolvency, moratorium or
other laws affecting creditors' rights generally from time to time in effect and
to general principles of equity), provided that no representation is made with
respect to the indemnification provisions thereof.
(p) No consent, approval, authorization, filing with or order of any court
or governmental agency or body is required in connection with the transactions
contemplated herein, in the Indenture or in the Registration Rights Agreement,
except such as may be required under the blue sky laws of any jurisdiction in
which the Securities are offered and sold and, in the case of the Registration
Rights Agreement, such as will be obtained under the Act and the Trust Indenture
Act.
(q) None of the execution and delivery of the Indenture, this Agreement or
the Registration Rights Agreement, the issuance and sale of the Securities or
the issuance of the Common Stock upon conversion thereof, or the consummation of
any other of the transactions herein or therein contemplated, or the fulfillment
of the terms hereof or thereof will conflict with, result in a breach or
violation or imposition of any lien, charge or encumbrance upon any property or
assets of the Company or any of its Subsidiaries pursuant to, (i) the charter or
by-laws of the Company or any of its Subsidiaries; (ii) the terms of any
indenture, contract, lease, mortgage, deed of trust, note agreement, loan
agreement or other agreement, obligation, condition, covenant or instrument to
which the Company or any of its Subsidiaries is a party or bound or to which its
or their property is subject; or (iii) any statute, law, rule, regulation,
judgment, order or decree of any court, regulatory body, administrative agency,
governmental body, arbitrator or other authority having jurisdiction over the
Company or any of its subsidiaries or any of its or their properties; except for
such violation or default, in the case of clauses (ii) and (iii) above, as would
not, either individually or in the aggregate with all other violations and
defaults referred to in this paragraph (if any), have (x) a Material Adverse
Effect (as defined below) or (y) a material adverse effect upon the transactions
contemplated herein or by any Initial Purchaser.
(r) The consolidated historical financial statements and schedules of the
Company and its consolidated subsidiaries included or incorporated by reference
in the Final Memorandum present fairly the financial condition, results of
operations and cash flows of the Company as of the dates and for the periods
indicated, comply as to form with the applicable accounting requirements of
Regulation S-X and have been prepared in conformity with generally accepted
accounting principles applied on a consistent basis throughout the periods
involved (except as otherwise noted therein); the summary financial data set
forth under the caption "Summary-Summary Consolidated Financial Information" in
the Final Memorandum fairly present, on the basis stated in the Final
Memorandum, the information included therein.
(s) No action, suit or proceeding by or before any court or governmental
agency, authority or body or any arbitrator involving the Company or any of its
Subsidiaries or its or their property is pending or, to the best knowledge of
the Company, threatened that (i) could reasonably be expected to have a material
adverse effect on the performance of this Agreement, the Indenture or the
Registration Rights Agreement, or the consummation of any of the transactions
contemplated hereby or (ii) could reasonably be expected to have a material
adverse effect on the condition (financial or otherwise), prospects, earnings,
business or properties of the Company and its subsidiaries, taken as a whole,
whether or not arising from transactions in the ordinary course of business (a
"Material Adverse Effect"), except as set forth in or contemplated in the Final
Memorandum (exclusive of any amendment or supplement thereto).
(t) Each of the Company and its Subsidiaries owns or leases all such
properties as are necessary to the conduct of its operations as presently
conducted.
(u) Neither the Company nor any of its Subsidiaries is in violation or
default of (i) any provision of its charter or bylaws; (ii) the terms of any
indenture, contract, lease, mortgage, deed of trust, note agreement, loan
agreement or other agreement, obligation, condition, covenant or instrument to
which it is a party or bound or to which its property is subject; or (iii) any
statute, law, rule, regulation, judgment, order or decree applicable to the
Company or any of its Subsidiaries of any court, regulatory body, administrative
agency, governmental body, arbitrator or other authority having jurisdiction
over the Company or such Subsidiary or any of its properties, as applicable;
except for such violation or default, in the case of clauses (ii) and (iii)
above, as would not, either individually or in the aggregate with all other
violations and defaults referred to in this paragraph (if any), have (x) a
Material Adverse Effect or (y) a material adverse effect upon the transactions
contemplated herein or by any Initial Purchaser.
(v) PricewaterhouseCoopers LLP, who have certified certain financial
statements of the Company and its consolidated subsidiaries and delivered their
report with respect to the audited consolidated financial statements and
schedules included or incorporated by reference in the Final Memorandum, are
independent public accountants with respect to the Company within the meaning of
the Act.
(w) There are no stamp or other issuance or transfer taxes or duties or
other similar fees or charges required to be paid in connection with the
execution and delivery of this Agreement or the issuance or sale by the Company
of the Securities or upon the issuance of Common Stock upon the conversion
thereof.
(x) The Company has filed all non-U.S., U.S. federal, state and local tax
returns that are required to be filed or has requested extensions thereof
(except in any case in which the failure so to file would not have a Material
Adverse Effect and except as set forth in or contemplated in the Final
Memorandum (exclusive of any amendment or supplement thereto)) and has paid all
taxes required to be paid by it and any other assessment, fine or penalty levied
against it, to the extent that any of the foregoing is due and payable, except
for any such assessment, fine or penalty that is currently being contested in
good faith or as would not have a Material Adverse Effect and except as set
forth in or contemplated in the Final Memorandum (exclusive of any amendment or
supplement thereto).
(y) No labor problem or dispute with the employees of the Company or any of
its Subsidiaries exists or, to the knowledge of the Company, is threatened or
imminent, and the Company is not aware of any existing or imminent labor
disturbance by the employees of any of its or its Subsidiaries' principal
suppliers, contractors or customers, except as would not have a Material Adverse
Effect, and except as set forth in or contemplated in the Final Memorandum
(exclusive of any amendment or supplement thereto).
(z) The Company and each of its Subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks and in such
amounts as are prudent and customary in the businesses in which they are
engaged; all policies of insurance and fidelity or surety bonds insuring the
Company or any of its Subsidiaries or their respective businesses, assets,
employees, officers and directors are in full force and effect; the Company and
its Subsidiaries are in compliance with the terms of such policies and
instruments; there are no claims by the Company or any of its Subsidiaries under
any such policy or instrument as to which any insurance company is denying
liability or defending under a reservation of rights clause; and neither the
Company nor any of its Subsidiaries 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 similar insurers as may be necessary
to continue its business at a cost that would not have a Material Adverse Effect
except as set forth in or contemplated in the Final Memorandum (exclusive of any
amendment or supplement thereto).
(aa) No Subsidiary of the Company is currently prohibited, directly or
indirectly, from paying any dividends to the Company, from making any other
distribution on such Subsidiary's capital stock, from repaying to the Company
any loans or advances to such Subsidiary from the Company or from transferring
any of such Subsidiary's property or assets to the Company or any other
Subsidiary of the Company, except as described in or contemplated in the Final
Memorandum (exclusive of any amendment or supplement thereto).
(bb) The Company and its Subsidiaries possess all licenses, certificates,
permits and other authorizations issued by the appropriate U.S. federal, state
or non-U.S. regulatory authorities necessary to conduct their respective
businesses, and neither the Company nor any of its Subsidiaries has received any
notice of proceedings relating to the revocation or modification of any such
certificate, authorization or permit which, singly or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would have a Material
Adverse Effect, except as set forth in or contemplated in the Final Memorandum
(exclusive of any amendment or supplement thereto).
(cc) The Company and its Subsidiaries own, possess, license or have other
rights to use on reasonable terms, all patents, trade and service marks, trade
names, copyrights, domain names (in each case including all registrations and
applications to register same), inventions, trade secrets, technology, know-how
and other intellectual property, (collectively, the "Intellectual Property")
necessary for the conduct of the Company's business as now conducted or as
proposed in the Final Memorandum to be conducted; except for those instances
where the failure to own, possess, license or have other rights to use such
Intellectual Property could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect. Except as set forth in the Final
Memorandum, (i) the Company owns, or has rights to use under license, all such
Intellectual Property free and clear in all material respects of all adverse
claims, liens or other encumbrances; (ii) to the knowledge of the Company, there
is no material infringement by third parties of any such Intellectual Property;
(iii) there is no pending or, to the Company's knowledge, threatened action,
suit, proceeding or claim by any third party challenging the Company's or its
Subsidiaries' rights in or to any such Intellectual Property, and the Company is
unaware of any facts which would form a reasonable basis for any such claim;
(iv) there is no pending or, to the Company's knowledge, threatened action,
suit, proceeding or claim by any third party challenging the validity, scope or
enforceability of any such Intellectual Property, and the Company is unaware of
any facts that would form a reasonable basis for any such claim; (v) there is no
pending or, to the Company's knowledge, threatened action, suit, proceeding or
claim by any third party that the Company or any Subsidiary infringes or
otherwise violates any patent, trademark, copyright, trade secret or other
proprietary rights of any third party, and the Company is unaware of any other
fact which would form a reasonable basis for any such claim; and (vi) to the
knowledge of the Company, there is no valid and subsisting patent or published
patent application that would preclude the Company, in any material respect,
from practicing any such Intellectual Property.
(dd) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions are executed in
accordance with management's general or specific authorizations; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain asset accountability; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(ee) The Company and its Subsidiaries are (i) in compliance with any and
all applicable non-U.S., U.S. federal, state and local laws and regulations
relating to the protection of human health and safety, the environment or
hazardous or toxic substances or wastes, pollutants or contaminants
("Environmental Laws"); (ii) have received and are in compliance with all
permits, licenses or other approvals required of them under applicable
Environmental Laws to conduct their respective businesses; and (iii) have not
received notice of any actual or potential liability under any Environmental
Law, except where such non-compliance with Environmental Laws, failure to
receive required permits, licenses or other approvals, or liability would not,
individually or in the aggregate, have a Material Adverse Effect, except as set
forth in or contemplated in the Final Memorandum (exclusive of any amendment or
supplement thereto). Except as set forth in the Final Memorandum, neither the
Company nor any of its Subsidiaries has been named as a "potentially responsible
party" under the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended.
(ff) The minimum funding standard under Section 302 of the Employee
Retirement Income Security Act of 1974, as amended, and the regulations and
published interpretations thereunder ("ERISA"), has been satisfied by each
"pension plan" (as defined in Section 3(2) of ERISA) which has been established
or maintained by the Company and/or one or more of its Subsidiaries, and the
trust forming part of each such plan which is intended to be qualified under
Section 401 of the Code is so qualified; each of the Company and its
Subsidiaries has fulfilled its obligations, if any, under Section 515 of ERISA;
neither the Company nor any of its Subsidiaries maintains or is required to
contribute to a "welfare plan" (as defined in Section 3(1) of ERISA) which
provides retiree or other post-employment welfare benefits or insurance coverage
(other than "continuation coverage" (as defined in Section 602 of ERISA)), other
than life insurance provided to certain retirees of EquiServe, Inc.; each
pension plan and welfare plan established or maintained by the Company and/or
one or more of its Subsidiaries is in compliance in all material respects with
the currently applicable provisions of ERISA; and neither the Company nor any of
its Subsidiaries has incurred or could reasonably be expected to incur any
withdrawal liability under Section 4201 of ERISA, any liability under Section
4062, 4063, or 4064 of ERISA, or any other liability under Title IV of ERISA.
(gg) The subsidiaries listed on Annex A attached hereto are the only
"significant subsidiaries" of the Company (as defined in Rule l-02 of Regulation
S-X under the Act).
(hh) None of the Company, its Subsidiaries or, to the knowledge of the
Company, any director, officer, agent, employee or Affiliate of the Company or
any of its Subsidiaries is aware of or has taken any action, directly or
indirectly, that would result in a violation by such Persons of Foreign Corrupt
Practices Act of 1977, as amended, and the rules and regulations thereunder (the
"FCPA"), including, without limitation, making use of the mails or any means or
instrumentality of interstate commerce corruptly in furtherance of an offer,
payment, promise to pay or authorization of the payment of any money, or other
property, gift, promise to give, or authorization of the giving of anything of
value to any "foreign official" (as such term is defined in the FCPA) or any
foreign political party or official thereof or any candidate for foreign
political office, in contravention of the FCPA; and the Company, its
Subsidiaries and, to the knowledge of the Company, its Affiliates have conducted
their businesses in compliance with the FCPA and have instituted and maintain
policies and procedures designed to ensure, and which are reasonably expected to
continue to ensure, continued compliance therewith.
(ii) The operations of the Company and its Subsidiaries are and have been
conducted at all times in compliance with applicable financial recordkeeping and
reporting requirements of the Currency and Foreign Transactions Reporting Act of
1970, as amended, the money laundering statutes of all jurisdictions, the rules
and regulations thereunder and any related or similar rules, regulations or
guidelines, issued, administered or enforced by any governmental agency
(collectively, the "Money Laundering Laws") and no action, suit or proceeding by
or before any court or governmental agency, authority or body or any arbitrator
involving the Company or any of its Subsidiaries with respect to the Money
Laundering Laws is pending or, to the best knowledge of the Company, threatened.
(jj) None of the Company, any of its Subsidiaries or, to the knowledge of
the Company, any director, officer, agent, employee or Affiliate of the Company
or any of its Subsidiaries is currently subject to any U.S. sanctions
administered by the Office of Foreign Assets Control of the U.S. Department of
the Treasury ("OFAC"); and the Company will not directly or indirectly use the
proceeds of the offering of the Securities hereunder, or lend, contribute or
otherwise make available such proceeds to any subsidiary, joint venture partner
or other person or entity, for the purpose of financing the activities of any
person currently subject to any U.S. sanctions administered by OFAC.
(kk) There is and has been no failure on the part of the Company and any of
the Company's directors or officers, in their capacities as such, to comply with
any provision of the Sarbanes Oxley Act of 2002 and the rules and regulations
promulgated in connection therewith (the "Sarbanes Oxley Act"), including
Section 402 related to loans and Sections 302 and 906 related to certifications.
(ll) Prior to the date hereof, the Company has furnished to the
Representatives letters, each substantially in the form of Exhibit A hereto,
duly executed by each executive officer and director of the Company listed in
Schedule II hereto and addressed to the Representatives.
Any certificate signed by any executive officer of the Company and
delivered to the Representatives or counsel for the Initial Purchasers in
connection with the offering of the Securities shall be deemed a representation
and warranty by the Company, as to matters covered thereby, to each Initial
Purchaser.
2. Purchase and Sale. (a) Subject to the terms and conditions and in
reliance upon the representations and warranties herein set forth, the Company
agrees to sell to each Initial Purchaser, and each Initial Purchaser agrees,
severally and not jointly, to purchase from the Company, at a purchase price of
97.5% of the original principal amount thereof, plus accrued interest, if any,
to the Closing Date, the original principal amount of Series A Securities and
the original principal amount of Series B Securities set forth opposite such
Initial Purchaser's name in Schedule I hereto.
(b) Subject to the terms and conditions and in reliance upon the
representations and warranties herein set forth, the Company hereby grants an
option to the several Representatives to purchase, severally and not jointly,
the Series A Option Securities and/or the Series B Option Securities at the same
purchase price as the Representatives shall pay for the Firm Securities, plus
accrued interest, if any, to the settlement date for the Series A Option
Securities and/or the Series B Option Securities. The option may be exercised in
whole or in part at any time (but not more than once) prior to the 13th day from
and including the Closing Date, upon written or telegraphic notice by the
Representatives to the Company setting forth the original principal amount of
the Series A Option Securities and/or the original principal amount of the
Series B Option Securities as to which the several Representatives are
exercising the option and the settlement date; provided that the settlement date
for such Option Securities is no later than the 13th day from and including the
Closing Date. Delivery of the Series A Option Securities and/or the Series B
Option Securities, and payment therefor, shall be made as provided in Section 3
hereof. Each Representative shall purchase 50% of the original principal amount
of the Series A Option Securities and/or 50% of the original principal amount of
the Series B Option Securities to be purchased, subject to such adjustments as
you in your absolute discretion shall make to eliminate any fractional
Securities.
3. Delivery and Payment. (a) Delivery of and payment for the Firm
Securities and the Series A Option Securities and/or the Series B Option
Securities (if the option provided for in Section 2(b) hereof shall have been
exercised on or before the Business Day prior to the Closing Date) shall be made
at 10:00 A.M., New York City time, on August 12, 2003, or at such time on such
later date not more than three Business Days after the foregoing date as the
Representatives shall designate, which date and time may be postponed by
agreement between the Representatives and the Company or as provided in Section
9 hereof (such date and time of delivery and payment for the Securities being
herein called the "Closing Date"). Delivery of the Securities shall be made to
the Representatives for the respective accounts of the several Initial
Purchasers against payment by the several Initial Purchasers through the
Representatives of the purchase price thereof to or upon the order of the
Company by wire transfer payable in same-day funds to the account specified by
the Company. Delivery of the Securities shall be made through the facilities of
The Depository Trust Company unless the Representatives shall otherwise
instruct.
(b) If the option provided for in Section 2(b) hereof is exercised after
the third Business Day prior to the Closing Date, the Company will deliver the
Series A Option Securities and/or the Series B Option Securities (at the expense
of the Company) to the Representatives on the date specified by the
Representatives (which shall be within three Business Days after exercise of
said option) for the respective accounts of the several Representatives, against
payment by the several Representatives of the purchase price thereof to or upon
the order of the Company by wire transfer payable in same-day funds to the
account specified by the Company. If settlement for the Series A Option
Securities and/or the Series B Option Securities occurs after the Closing Date,
the Company will deliver to the Representatives on the settlement date for the
Series A Option Securities and/or the Series B Option Securities, and the
obligation of the Representatives to purchase such Option Securities shall be
conditioned upon receipt of, supplemental opinions, certificates and letters
confirming as of such date the opinions, certificates and letters delivered on
the Closing Date pursuant to Section 6 hereof.
4. Offering by Initial Purchasers. (a) Each Initial Purchaser acknowledges
that the Securities and the Common Stock issuable upon conversion thereof have
not been and will not be registered under the Act and may not be offered or
sold, except pursuant to an exemption from, or in a transaction not subject to,
the registration requirements of the Act.
(b) Each Initial Purchaser, severally and not jointly, represents and
warrants to and agrees with the Company that:
(i) it has not offered or sold, and will not offer or sell, any Securities
except to those it reasonably believes to be "qualified institutional buyers"
(as defined in Rule 144A);
(ii) neither it nor any person acting on its behalf has made or will make
offers or sales of the Securities by means of any form of general solicitation
or general advertising (within the meaning of Regulation D);
(iii) in connection with each sale of Securities, it has taken or will take
reasonable steps to ensure that the purchaser of such Securities is aware that
such sale is being made in reliance on Rule 144A;
(iv) any information provided by the Initial Purchasers to publishers of
publicly available databases about the terms of the Securities shall include a
statement that the Securities have not been registered under the Act and are
subject to restrictions under Rule 144A;
(v) it acknowledges that additional restrictions on the offer and sale of
the Securities and the Common Stock issuable upon conversion thereof are
described in the Final Memorandum; and
(vi) it is an "accredited investor" (as defined in Rule 501(a) of
Regulation D).
5. Agreements. The Company agrees with each Initial Purchaser that:
(a) The Company will furnish to each Initial Purchaser and to counsel for
the Initial Purchasers, without charge, during the period referred to in
paragraph (c) below, as many copies of the Final Memorandum and any amendments
and supplements thereto as they may reasonably request.
(b) The Company will not amend or supplement the Final Memorandum, other
than by filing documents under the Exchange Act that are incorporated by
reference therein, without the prior written consent of the Representatives;
provided, however, that, prior to the completion of the distribution of the
Securities by the Initial Purchasers (as determined by the Initial Purchasers),
the Company will not file any document under the Exchange Act that is
incorporated by reference in the Final Memorandum unless, prior to such proposed
filing, the Company has furnished the Representatives with a copy of such
document for their review and the Representatives have not reasonably objected
to the filing of such document. The Company will promptly advise the
Representatives when any document filed under the Exchange Act that is
incorporated by reference in the Final Memorandum shall have been filed with the
Commission.
(c) If at any time prior to the completion of the sale of the Securities by
the Initial Purchasers (as determined by the Representatives), any event occurs
as a result of which the Final Memorandum, as then amended or supplemented,
would include any untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or if it should be
necessary to amend or supplement the Final Memorandum to comply with applicable
law, the Company will promptly (i) notify the Representatives of any such event;
(ii) subject to the requirements of Section 5(b) hereof, prepare an amendment or
supplement that will correct such statement or omission or effect such
compliance; and (iii) supply any supplemented or amended Final Memorandum to the
several Initial Purchasers and counsel for the Initial Purchasers without charge
in such quantities as they may reasonably request.
(d) The Company will arrange, if necessary, for the qualification of the
Securities for sale by the Initial Purchasers under the laws of such
jurisdictions as the Representatives may designate and will maintain such
qualifications in effect so long as required for the sale of the Securities;
provided that in no event shall the Company be obligated to qualify to do
business in any jurisdiction where it is not now so qualified or to take any
action that would subject it to service of process in suits, other than those
arising out of the offering or sale of the Securities, in any jurisdiction where
it is not now so subject. The Company will promptly advise the Representatives
of the receipt by the Company of any notification with respect to the suspension
of the qualification of the Securities for sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose.
(e) The Company will not, and will not permit any of its Affiliates to,
resell any Securities or shares of Common Stock issued upon conversion thereof
that have been acquired by any of them.
(f) None of the Company, its Affiliates, or any person acting on its or
their behalf will, directly or indirectly, make offers or sales of any security,
or solicit offers to buy any security, under circumstances that would require
the registration of the Securities or Common Stock issuable upon conversion
thereof under the Act.
(g) None of the Company, its Affiliates, or any person acting on its or
their behalf will engage in any form of general solicitation or general
advertising (within the meaning of Regulation D).
(h) So long as any of the Securities or the Common Stock issuable upon the
conversion thereof are "restricted securities" within the meaning of Rule
144(a)(3) under the Act, the Company will, during any period in which it is not
subject to and in compliance with Section 13 or 15(d) of the Exchange Act,
provide to each holder of such restricted securities and to each prospective
purchaser (as designated by such holder) of such restricted securities, upon the
request of such holder or prospective purchaser, any information required to be
provided by Rule 144A(d)(4) under the Act. This covenant is intended to be for
the benefit of the holders, and the prospective purchasers designated by such
holders, from time to time of such restricted securities.
(i) Any information provided by the Company to publishers of publicly
available databases about the terms of the Securities shall include a statement
that the Securities have not been registered under the Act and are subject to
restrictions under Rule 144A.
(j) The Company will cooperate with the Representatives and use its
reasonable best efforts to permit the Securities to be eligible for clearance
and settlement through The Depository Trust Company.
(k) The Company will reserve and keep available at all times, free of
pre-emptive rights, the full number of shares of Common Stock issuable upon
conversion of the Securities.
(l) The Company will not for a period of 90 days following the Execution
Time, without the prior written consent of the Representatives, directly or
indirectly, offer, sell, contract to sell, pledge, otherwise dispose of, enter
into any transaction which is designed to, or might reasonably be expected to,
result in the disposition (whether by actual disposition or effective economic
disposition due to cash settlement or otherwise) by the Company or any Affiliate
of the Company or any person in privity with the Company or any Affiliate of the
Company, file (or participate in the filing of) a registration statement with
the Commission in respect of, or establish or increase a put equivalent position
or liquidate or decrease a call equivalent position within the meaning of
Section 16 of the Exchange Act in respect of, any shares of capital stock of the
Company or any securities convertible into, or exercisable or exchangeable for,
shares of capital stock of the Company (other than the Securities), or publicly
announce an intention to effect any such transaction; provided, however, that
the Company may issue and sell Common Stock or securities convertible into or
exchangeable for Common Stock pursuant to any employee stock option plan, stock
ownership plan, dividend reinvestment plan, qualified retirement plan, employee
stock purchase plan or any other employee benefit plan of the Company described
in the Final Memorandum and in effect at the Execution Time, and the Company may
issue Common Stock issuable upon the conversion of securities or the exercise of
warrants outstanding at the Execution Time and described in the Final
Memorandum.
(m) The Company will not take, directly or indirectly, any action designed
to or which has constituted or which might reasonably be expected to cause or
result, under the Exchange Act or otherwise, in stabilization or manipulation of
the price of any security of the Company to facilitate the sale or resale of the
Securities.
(n) Between the date hereof and the Closing Date, the Company will not do
or authorize any act or thing that would result in an adjustment of the
conversion price.
(o) The Company agrees to pay the costs and expenses relating to the
following matters: (i) the preparation of the Indenture and the Registration
Rights Agreement, the issuance of the Securities, the fees of the Trustee and
the issuance of the Common Stock upon conversion of the Securities; (ii) the
preparation, printing or reproduction of the Preliminary Memorandum and the
Final Memorandum and each amendment or supplement to either of them; (iii) the
printing (or reproduction) and delivery (including postage, air freight charges
and charges for counting and packaging) of such copies of the Preliminary
Memorandum and the Final Memorandum, and all amendments or supplements to either
of them, as may, in each case, be reasonably requested for use in connection
with the offering and sale of the Securities; (iv) the preparation, printing,
authentication, issuance and delivery of certificates for the Securities; (v)
any stamp or transfer taxes in connection with the original issuance and sale of
the Securities; (vi) the printing (or reproduction) and delivery of this
Agreement, any blue sky memorandum and all other agreements or documents printed
(or reproduced) and delivered in connection with the offering of the Securities;
(vii) any registration or qualification of the Securities for offer and sale
under the securities or blue sky laws of the several states and any other
jurisdictions specified pursuant to Section 5(d) hereof (including filing fees
and the reasonable fees and expenses of counsel for the Initial Purchasers
relating to such registration and qualification); (viii) admitting the
Securities for trading in the PORTAL market; (ix) the transportation and other
expenses incurred by or on behalf of Company representatives in connection with
presentations to prospective purchasers of the Securities; (x) the fees and
expenses of the Company's accountants and the fees and expenses of counsel
(including local and special counsel) for the Company; and (xi) all other costs
and expenses incident to the performance by the Company of its obligations
hereunder.
(p) The Company will, for a period of twelve months following the Execution
Time, furnish to the Representatives (i) all reports or other communications
(financial or other) generally made available to stockholders, and deliver such
reports and communications to the Representatives as soon as they are available,
unless such documents are furnished to or filed with the Commission or any
securities exchange on which any class of securities of the Company is listed
and generally made available to the public and (ii) such additional information
concerning the business and financial condition of the Company as the
Representatives may from time to time reasonably request (such statements to be
on a consolidated basis to the extent the accounts of the Company and its
subsidiaries are consolidated in reports furnished to stockholders).
(q) The Company will comply with all applicable securities and other laws,
rules and regulations, including, without limitation, the Sarbanes Oxley Act,
and use its reasonable best efforts to cause the Company's directors and
officers, in their capacities as such, to comply with such laws, rules and
regulations, including, without limitation, the provisions of the Sarbanes Oxley
Act.
6. Conditions to the Obligations of the Initial Purchasers. The obligations
of the Initial Purchasers or the Representatives to purchase the Firm Securities
or the Series A Option Securities and/or the Series B Option Securities, as the
case may be, shall be subject to the accuracy of the representations and
warranties of the Company contained herein at the Execution Time, the Closing
Date and any settlement date pursuant to Section 2(b) hereof, to the accuracy of
the statements of the Company made in any certificates pursuant to the
provisions hereof, to the performance by the Company of its obligations
hereunder and to the following additional conditions:
(a) The Company shall have requested and caused Xxxxxxxxxxxx Xxxx &
Xxxxxxxxx, counsel for the Company, to furnish to the Representatives its
opinion, dated the Closing Date and addressed to the Representatives, to the
effect set forth in Exhibit B hereto.
(b) The Representatives shall have received from Xxxxx Xxxx & Xxxxxxxx,
counsel for the Initial Purchasers, such opinion, dated the Closing Date and
addressed to the Representatives, with respect to the issuance and sale of the
Securities, the Indenture, the Registration Rights Agreement, the Final
Memorandum (as amended or supplemented at the Closing Date) and other related
matters as the Representatives may reasonably require, and the Company shall
have furnished to such counsel such documents as they request for the purpose of
enabling them to pass upon such matters.
(c) The Company shall have furnished to the Representatives a certificate
of the Company, signed by (x) the Chief Executive Officer and President and (y)
the principal financial or accounting officer of the Company, dated the Closing
Date, to the effect that the signers of such certificate have carefully examined
the Final Memorandum, any amendment or supplement to the Final Memorandum and
this Agreement and that:
(i) the representations and warranties of the Company in this
Agreement are true and correct on and as of the Closing Date with the same
effect as if made on the Closing Date, and the Company has complied with
all the agreements and satisfied all the conditions on its part to be
performed or satisfied hereunder at or prior to the Closing Date; and
(ii) since the date of the most recent financial statements included
or incorporated by reference in the Final Memorandum (exclusive of any
amendment or supplement thereto), there has been no material adverse change
in the condition (financial or otherwise), prospects, earnings, business or
properties of the Company and its subsidiaries, taken as a whole, whether
or not arising from transactions in the ordinary course of business, except
as set forth in or contemplated in the Final Memorandum (exclusive of any
amendment or supplement thereto).
(d) At the Execution Time and at the Closing Date, the Company shall have
requested and caused PricewaterhouseCoopers LLP to furnish to the
Representatives letters, dated respectively as of the Execution Time and as of
the Closing Date, in form and substance satisfactory to the Representatives,
confirming that they are independent accountants within the meaning of the
Exchange Act and the applicable published rules and regulations thereunder and
stating in effect that:
(i) in their opinion the audited financial statements and financial
statement schedules included or incorporated by reference in the Final
Memorandum and reported on by them comply as to form with the applicable
accounting requirements of Regulation S-X;
(ii) on the basis of a reading of the latest unaudited financial
statements made available by the Company and its subsidiaries; their
limited review in accordance with the standards established under Statement
on Auditing Standards No. 100 of the unaudited interim financial
information for the six-month period ended June 30, 2003, and as at June
30, 2003; carrying out certain specified procedures (but not an examination
in accordance with generally accepted auditing standards) which would not
necessarily reveal matters of significance with respect to the comments set
forth in such letter; a reading of the minutes of the meetings of the
stockholders, directors and any executive, finance, compensation and audit
committees of the Company and its subsidiaries; and inquiries of certain
officials of the Company who have responsibility for financial and
accounting matters of the Company and its subsidiaries as to transactions
and events subsequent to December 31, 2002, nothing came to their attention
which caused them to believe that:
(A) any unaudited financial statements included or incorporated
by reference in the Final Memorandum do not comply as to form with
applicable accounting requirements of Regulation S-X and with the
published rules and regulations of the Commission with respect to
financial statements included or incorporated by reference in
quarterly reports on Form 10-Q under the Exchange Act; and said
unaudited financial statements are not in conformity with generally
accepted accounting principles applied on a basis substantially
consistent with that of the audited financial statements included or
incorporated by reference in the Final Memorandum; or
(B) with respect to the period subsequent to June 30, 2003, there
was any change, at a specified date not more than five days prior to
the date of the letter, in the common stock of the Company, as
compared with the amounts shown on the June 30, 2003 consolidated
balance sheet included or incorporated by reference in the Final
Memorandum, except in all instances for changes set forth in such
letter, in which case the letter shall be accompanied by an
explanation by the Company as to the significance thereof unless said
explanation is not deemed necessary by the Representatives; and
(iii) they have performed certain other specified procedures as a
result of which they determined that certain information of an accounting,
financial or statistical nature (which is limited to accounting, financial
or statistical information derived from the general accounting records of
the Company and its subsidiaries) set forth in the Final Memorandum, the
information included or incorporated by reference in the Company's Annual
Report on Form 10-K, incorporated by reference in the Final Memorandum, and
the information included in the "Management's Discussion and Analysis of
Financial Condition and Results of Operations" included or incorporated by
reference in the Company's Quarterly Reports on Form 10-Q, incorporated by
reference in the Final Memorandum, agrees with the accounting records of
the Company and its subsidiaries, excluding any questions of legal
interpretation.
All references in this Section 6(d) to the Final Memorandum include any
amendment or supplement thereto at the date of the applicable letter.
(e) Subsequent to the Execution Time or, if earlier, the dates as of which
information is given in the Final Memorandum (exclusive of any amendment or
supplement thereto), there shall not have been (i) any change specified in the
letter or letters referred to in paragraph (d) of this Section 6; or (ii) any
change, or any development involving a prospective change, in or affecting the
condition (financial or otherwise), prospects, earnings, business or properties
of the Company and its subsidiaries taken as a whole, whether or not arising
from transactions in the ordinary course of business, except as set forth in or
contemplated in the Final Memorandum (exclusive of any amendment or supplement
thereto), the effect of which, in any case referred to in clause (i) or (ii)
above, is, in the sole judgment of the Representatives, so material and adverse
as to make it impractical or inadvisable to proceed with the offering or
delivery of the Securities as contemplated in the Final Memorandum (exclusive of
any amendment or supplement thereto).
(f) The Securities shall have been designated as PORTAL-eligible securities
in accordance with the rules and regulations of the NASD and the Securities
shall be eligible for clearance and settlement through The Depository Trust
Company.
(g) Prior to the Execution Time, the Company shall have furnished to the
Representatives a letter substantially in the form of Exhibit A hereto from each
executive officer and director of the Company listed in Schedule II hereto
addressed to the Representatives.
(h) The Company shall have caused the shares of Common Stock initially
issuable upon conversion of the Securities to be approved for listing, subject
to issuance, on the New York Stock Exchange.
(i) The conditions precedent set forth in Sections 3(a) and (b) of the
Second Amendment dated as of August 4, 2003 to the Credit Agreement dated as of
December 19, 2001 among the Company, the lenders identified therein and Bank of
America, N.A., as administrative agent, shall have been satisfied. The Letter
Agreement dated as of August 4, 2003 relating to the Loan Agreement dated as of
June 30, 2003 between the Company and Citibank N.A. shall have been executed by
the parties thereto.
(j) Prior to the Closing Date, the Company shall have furnished to the
Representatives such further information, certificates and documents as the
Representatives may reasonably request.
If any of the conditions specified in this Section 6 shall not have been
fulfilled when and as provided in this Agreement, or if any of the opinions and
certificates mentioned above or elsewhere in this Agreement shall not be
reasonably satisfactory in form and substance to the Representatives and counsel
for the Initial Purchasers, this Agreement and all obligations of the Initial
Purchasers hereunder may be cancelled at, or at any time prior to, the Closing
Date by the Representatives. Notice of such cancellation shall be given to the
Company in writing or by telephone or facsimile confirmed in writing.
The documents required to be delivered by this Section 6 will be delivered
at the office of Xxxxx Xxxx & Xxxxxxxx at 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx, xx the Closing Date.
7. Reimbursement of Expenses. If the sale of the Securities provided for
herein is not consummated because any condition to the obligations of the
Initial Purchasers set forth in Section 6 hereof is not satisfied, because of
any termination pursuant to Section 10 hereof or because of any refusal,
inability or failure on the part of the Company to perform any agreement herein
or comply with any provision hereof other than by reason of a default by any of
the Initial Purchasers, the Company will reimburse the Initial Purchasers
severally through Citigroup on demand for all reasonable expenses (including
fees and disbursements of counsel) that shall have been incurred by them in
connection with the proposed purchase and sale of the Securities.
8. Indemnification and Contribution. (a) The Company agrees to indemnify
and hold harmless each Initial Purchaser, the directors, officers, employees,
Affiliates and agents of each Initial Purchaser and each person who controls any
Initial Purchaser within the meaning of either the Act or the Exchange Act
against any and all losses, claims, damages or liabilities, joint or several, to
which they or any of them may become subject under the Act, the Exchange Act or
other U.S. federal or state statutory law or regulation, at common law or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact contained in the Preliminary Memorandum, the
Final Memorandum or in any amendment or supplement thereto, or arise out of or
are based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading, and
agrees to reimburse each such indemnified party, as incurred, for any legal or
other expenses reasonably incurred by it in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that the Company will not be liable in any such case to the extent that any such
loss, claim, damage or liability arises out of or is based upon any such untrue
statement or alleged untrue statement or omission or alleged omission made in
the Preliminary Memorandum, the Final Memorandum, or in any amendment thereof or
supplement thereto, in reliance upon and in conformity with written information
furnished to the Company by or on behalf of any Initial Purchaser through the
Representatives specifically for inclusion therein. This indemnity agreement
will be in addition to any liability that the Company may otherwise have.
(b) Each Initial Purchaser severally, and not jointly, agrees to indemnify
and hold harmless the Company, each of its directors, each of its officers, and
each person who controls the Company within the meaning of either the Act or the
Exchange Act, to the same extent as the foregoing indemnity from the Company to
each Initial Purchaser, but only with reference to written information relating
to such Initial Purchaser furnished to the Company by or on behalf of such
Initial Purchaser through the Representatives specifically for inclusion in the
Preliminary Memorandum, the Final Memorandum or in any amendment or supplement
thereto. This indemnity agreement will be in addition to any liability that any
Initial Purchaser may otherwise have. The Company acknowledges that the
statements set forth in (i) the last paragraph of the cover page and (ii) the
sixth, seventh, eighth and ninth paragraphs under the heading "Plan of
Distribution" in the Preliminary Memorandum and the Final Memorandum constitute
the only information furnished in writing by or on behalf of the Initial
Purchasers for inclusion in the Preliminary Memorandum, the Final Memorandum or
in any amendment or supplement thereto.
(c) Promptly after receipt by an indemnified party under this Section 8 of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 8, notify the indemnifying party in writing of the commencement thereof;
but the failure so to notify the indemnifying party (i) will not relieve it from
liability under paragraph (a) or (b) above unless and to the extent it did not
otherwise learn of such action and such failure results in the forfeiture by the
indemnifying party of substantial rights and defenses and (ii) will not, in any
event, relieve the indemnifying party from any obligations to any indemnified
party other than the indemnification obligation provided in paragraph (a) or (b)
above. The indemnifying party shall be entitled to appoint counsel (including
local counsel) of the indemnifying party's choice at the indemnifying party's
expense to represent the indemnified party in any action for which
indemnification is sought (in which case the indemnifying party shall not
thereafter be responsible for the fees and expenses of any separate counsel,
other than local counsel if not appointed by the indemnifying party, retained by
the indemnified party or parties except as set forth below); provided, however,
that such counsel shall be satisfactory to the indemnified party.
Notwithstanding the indemnifying party's election to appoint counsel (including
local counsel) to represent the indemnified party in an action, the indemnified
party shall have the right to employ separate counsel (including local counsel),
and the indemnifying party shall bear the reasonable fees, costs and expenses of
such separate counsel if (i) the use of counsel chosen by the indemnifying party
to represent the indemnified party would present such counsel with a conflict of
interest; (ii) the actual or potential defendants in, or targets of, any such
action include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be legal
defenses available to it and/or other indemnified parties that are different
from or additional to those available to the indemnifying party; (iii) the
indemnifying party shall not have employed counsel satisfactory to the
indemnified party to represent the indemnified party within a reasonable time
after notice of the institution of such action; or (iv) the indemnifying party
shall authorize the indemnified party to employ separate counsel at the expense
of the indemnifying party. An indemnifying party will not, without the prior
written consent of the indemnified parties, settle or compromise or consent to
the entry of any judgment with respect to any pending or threatened claim,
action, suit or proceeding in respect of which indemnification or contribution
may be sought hereunder (whether or not the indemnified parties are actual or
potential parties to such claim or action) unless such settlement, compromise or
consent includes an unconditional release of each indemnified party from all
liability arising out of such claim, action, suit or proceeding.
(d) In the event that the indemnity provided in paragraph (a) or (b) of
this Section 8 is unavailable to or insufficient to hold harmless an indemnified
party for any reason, the Company and the Initial Purchasers severally agree to
contribute to the aggregate losses, claims, damages and liabilities (including
legal or other expenses reasonably incurred in connection with investigating or
defending any loss, claim, damage, liability or action) (collectively, "Losses")
to which the Company and one or more of the Initial Purchasers may be subject in
such proportion as is appropriate to reflect the relative benefits received by
the Company on the one hand and by the Initial Purchasers on the other from the
offering of the Securities; provided, however, that in no case shall any Initial
Purchaser be responsible for any amount in excess of the purchase discount or
commission applicable to the Securities purchased by such Initial Purchaser
hereunder. If the allocation provided by the immediately preceding sentence is
unavailable for any reason, the Company and the Initial Purchasers severally
shall contribute in such proportion as is appropriate to reflect not only such
relative benefits but also the relative fault of the Company on the one hand and
the Initial Purchasers on the other in connection with the statements or
omissions that resulted in such Losses, as well as any other relevant equitable
considerations. Benefits received by the Company shall be deemed to be equal to
the total net proceeds from the offering (before deducting expenses) received by
it, and benefits received by the Initial Purchasers shall be deemed to be equal
to the total purchase discounts and commissions. Relative fault shall be
determined by reference to, among other things, whether any untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information provided by the Company on the one hand
or the Initial Purchasers on the other, the intent of the parties and their
relative knowledge, access to information and opportunity to correct or prevent
such untrue statement or omission. The Company and the Initial Purchasers agree
that it would not be just and equitable if contribution were determined by pro
rata allocation or any other method of allocation that does not take account of
the equitable considerations referred to above. Notwithstanding the provisions
of this paragraph (d), no person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. For purposes
of this Section 8, each person who controls an Initial Purchaser within the
meaning of either the Act or the Exchange Act and each director, officer,
employee, Affiliate and agent of an Initial Purchaser shall have the same rights
to contribution as such Initial Purchaser, and each person who controls the
Company within the meaning of either the Act or the Exchange Act and each
officer and director of the Company shall have the same rights to contribution
as the Company, subject in each case to the applicable terms and conditions of
this paragraph (d).
9. Default by an Initial Purchaser. If any one or more Initial Purchasers
shall fail to purchase and pay for any of the Securities agreed to be purchased
by such Initial Purchaser hereunder and such failure to purchase shall
constitute a default in the performance of its or their obligations under this
Agreement, the remaining Initial Purchasers shall be obligated severally to take
up and pay for (in the respective proportions which the original principal
amount of Series A Securities and the original principal amount of Series B
Securities set forth opposite their names in Schedule I hereto bears to the
aggregate original principal amount of Series A Securities and the aggregate
original principal amount of Series B Securities set forth opposite the names of
all the remaining Initial Purchasers) the Securities which the defaulting
Initial Purchaser or Initial Purchasers agreed but failed to purchase; provided,
however, that in the event that the aggregate original principal amount of
Securities which the defaulting Initial Purchaser or Initial Purchasers agreed
but failed to purchase shall exceed 10% of the aggregate original principal
amount of Series A Securities and the aggregate original principal amount of
Series B Securities set forth in Schedule I hereto, the remaining Initial
Purchasers shall have the right to purchase all, but shall not be under any
obligation to purchase any, of the Securities, and if such nondefaulting Initial
Purchasers do not purchase all the Securities, this Agreement will terminate
without liability to any nondefaulting Initial Purchaser or the Company. In the
event of a default by any Initial Purchaser as set forth in this Section 9, the
Closing Date shall be postponed for such period, not exceeding five Business
Days, as the Representatives shall determine in order that the required changes
in the Final Memorandum or in any other documents or arrangements may be
effected. Nothing contained in this Agreement shall relieve any defaulting
Initial Purchaser of its liability, if any, to the Company or any nondefaulting
Initial Purchaser for damages occasioned by its default hereunder.
10. Termination. This Agreement shall be subject to termination in the
absolute discretion of the Representatives, by notice given to the Company prior
to delivery of and payment for the Securities, if at any time prior to such time
(i) trading in the Company's Common Stock shall have been suspended by the
Commission or the New York Stock Exchange or trading in securities generally on
the New York Stock Exchange shall have been suspended or limited or minimum
prices shall have been established on such exchange; (ii) a banking moratorium
shall have been declared either by U.S. federal or New York State authorities;
or (iii) there shall have occurred any outbreak or escalation of hostilities,
declaration by the United States of a national emergency or war or other
calamity or crisis the effect of which on financial markets is such as to make
it, in the sole judgment of the Representatives, impractical or inadvisable to
proceed with the offering or delivery of the Securities as contemplated in the
Final Memorandum (exclusive of any amendment or supplement thereto).
11. Representations and Indemnities to Survive. The respective agreements,
representations, warranties, indemnities and other statements of the Company or
its officers and of the Initial Purchasers set forth in or made pursuant to this
Agreement will remain in full force and effect, regardless of any investigation
made by or on behalf of the Initial Purchasers or the Company or any of the
indemnified persons referred to in Section 8 hereof, and will survive delivery
of and payment for the Securities. The provisions of Sections 7 and 8 hereof
shall survive the termination or cancellation of this Agreement.
12. Notices. All communications hereunder will be in writing and effective
only on receipt, and, if sent to the Representatives, will be mailed, delivered
or telefaxed to the Citigroup General Counsel (fax no.: (000) 000-0000) and
confirmed to Citigroup at 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Attention: General Counsel; or, if sent to the Company, will be mailed,
delivered or telefaxed to (000) 000-0000 and confirmed to it at DST Systems,
Inc., 000 Xxxx 00xx Xxxxxx, Xxxxxx Xxxx, Xxxxxxxx, attention of the Legal
Department.
13. Successors. This Agreement will inure to the benefit of and be binding
upon the parties hereto and their respective successors and the indemnified
persons referred to in Section 8 hereof and their respective successors, and,
except as expressly set forth in Section 5(h) hereof, no other person will have
any right or obligation hereunder.
14. Applicable Law. This Agreement will be governed by and construed in
accordance with the laws of the State of New York applicable to contracts made
and to be performed within the State of New York. The parties hereto each hereby
waive any right to trial by jury in any action, proceeding or counterclaim
arising out of or relating to this Agreement.
15. Waiver of Tax Confidentiality. Notwithstanding anything to the contrary
contained herein or in any document related to the offering of the Securities,
purchasers of the Securities (and each employee, representative or other agent
of the Company) may disclose to any and all persons, without limitation of any
kind, the U.S. tax treatment and U.S. tax structure of any transaction
contemplated herein and all materials of any kind (including opinions or other
tax analyses) that are provided to the purchasers of the Securities relating to
such U.S. tax treatment and U.S tax structure, other than any information for
which nondisclosure is reasonably necessary in order to comply with applicable
securities laws.
16. Counterparts. This Agreement may be signed in one or more counterparts,
each of which shall constitute an original and all of which together shall
constitute one and the same agreement.
17. Headings. The section headings used herein are for convenience only and
shall not affect the construction hereof.
18. Definitions. The terms that follow, when used in this Agreement, shall
have the meanings indicated.
"Act" shall mean the Securities Act of 1933, as amended, and the rules and
regulations of the Commission promulgated thereunder.
"Affiliate" shall have the meaning specified in Rule 501(b) of Regulation
D.
"Business Day" shall mean any day other than a Saturday, a Sunday or a
legal holiday or a day on which banking institutions or trust companies are
authorized or obligated by law to close in The City of New York.
"Citigroup" shall mean Citigroup Global Markets Inc.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Commission" shall mean the Securities and Exchange Commission.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the Commission promulgated thereunder.
"Execution Time" shall mean the date and time that this Agreement is
executed and delivered by the parties hereto.
"Investment Company Act" shall mean the Investment Company Act of 1940, as
amended, and the rules and regulations of the Commission promulgated thereunder.
"NASD" shall mean the National Association of Securities Dealers, Inc.
"PORTAL" shall mean the Private Offerings, Resales and Trading through
Automated Linkages system of the NASD.
"Regulation D" shall mean Regulation D under the Act.
"Rule 144A" shall mean Rule 144A under the Act.
"Trust Indenture Act" shall mean the Trust Indenture Act of 1939, as
amended, and the rules and regulations of the Commission promulgated thereunder.
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to us the enclosed duplicate hereof, whereupon this
letter and your acceptance shall represent a binding agreement between the
Company and the several Initial Purchasers.
Very truly yours,
DST SYSTEMS, INC.
By: /s/ Xxxxx Xx. Xxxxxx
--------------------------------------------
Name: Xxxxx Xx. Xxxxxx
Title: Vice President and Chief Accounting
Officer
The foregoing Agreement is hereby confirmed and accepted as of the date first
above written.
CITIGROUP GLOBAL MARKETS INC.
BANC OF AMERICA SECURITIES LLC
Acting as Representatives of the
several Initial Purchasers named in
Schedule I to this Agreement.
By: Citigroup Global Markets Inc.
By: /s/ Xxx Xxxxxxx
----------------------------------
Name: Xxx Xxxxxxx
Title: Vice President
SCHEDULE I
Original Principal
Amount Original Principal
of Series A Amount of Series B
Securities to be Securities to be
Initial Purchasers Purchased Purchased
------------------ ----------------- ------------------
Citigroup Global Markets Inc............................ $135,000,000 $75,000,000
Banc of America Securities LLC.......................... 135,000,000 75,000,000
Xxxxxx Xxxxxxx & Co. Incorporated....................... 31,500,000 17,250,000
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated...... 31,500,000 17,250,000
Wachovia Capital Markets, LLC........................... 21,000,000 11,500,000
Fleet Securities, Inc. ................................. 16,000,000 9,000,000
U.S. Bancorp Xxxxx Xxxxxxx Inc. ........................ 16,000,000 9,000,000
Deutsche Bank Securities Inc. .......................... 16,000,000 9,000,000
Bear, Xxxxxxx & Co. Inc. ............................... 16,000,000 9,000,000
Xxxx Xxxxx Xxxxxx Xxxx, Incorporated.................... 16,000,000 9,000,000
Xxxxx Fargo Securities, LLC ............................ 16,000,000 9,000,000
Total................................. $450,000,000 $250,000,000
SCHEDULE II
A. Xxxxxx Xxxxxxxx
Xxxxxxx X. Xxxx
Xxxxxx X. Xxxxxx
Xxxxxx X. XxXxxxxxxx
Xxxxxx X. XxXxxxxxx
Xxxxxxx X. Xxxxxx
Xxxxxx X. Xxxx
Xxxxxxx X. Xxxxxxxxxx
M. Xxxxxxxx Xxxxxxxxxx
J. Xxxxxxx Xxxx
EXHIBIT A
August 5, 2003
Citigroup Global Markets Inc.
Banc of America Securities LLC
As Representatives of the Initial Purchasers
c/o Citigroup Global Markets Inc.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
This letter is being delivered to you in connection with a proposed
Purchase Agreement (the "Purchase Agreement") between DST Systems, Inc., a
corporation organized under the laws of Delaware (the "Company"), and you, as
representatives of a group of Initial Purchasers named therein, relating to an
offering of one or more series of Convertible Senior Debentures due 2023, each
of which will be convertible into common stock, par value $0.01 per share (the
"Common Stock"), of the Company.
In order to induce you and the other Initial Purchasers to enter into the
Purchase Agreement, the undersigned will not, without the prior written consent
of Citigroup Global Markets Inc., directly or indirectly, offer, sell, contract
to sell, pledge or otherwise dispose of, enter into any transaction which is
designed to, or might reasonably be expected to, result in the disposition
(whether by actual disposition or effective economic disposition due to cash
settlement or otherwise) by the undersigned, or any affiliate of the
undersigned, or any person in privity with the undersigned or any affiliate of
the undersigned, file (or participate in the filing of) a registration statement
with the U.S. Securities and Exchange Commission in respect of, or establish or
increase a put equivalent position or liquidate or decrease a call equivalent
position within the meaning of Section 16 of the Securities Exchange Act of
1934, as amended, and the rules and regulations of the U.S. Securities and
Exchange Commission promulgated thereunder, with respect to, any shares of
capital stock of the Company or any securities convertible into, or exercisable
or exchangeable for such capital stock, or publicly announce an intention to
effect any such transaction, for a period of 90 days after the date of the
Purchase Agreement; provided, however, that the foregoing shall not restrict (i)
transfers of shares of common stock in the form of charitable contributions to
an organization exempted under section 501(c)(3) of the Internal Revenue Code of
1986, as amended, provided, further, that the donee agrees to be bound by the
provisions of this letter agreement, or (ii) the payment of the exercise price
for any employee stock option with shares of common stock, the exchange of any
employee stock option for shares of restricted common stock or the withholding
of shares of common stock in satisfaction of applicable taxes in connection with
the exercise of employee stock options.
If for any reason the Purchase Agreement shall be terminated prior to the
Closing Date (as defined in the Purchase Agreement), the agreement set forth
above shall likewise be terminated.
Very truly yours,
By:
---------------------------------------
Name:
Title:
EXHIBIT B
Form of Opinion of Counsel for the Company
(a) Each of the Company and the subsidiaries listed on Annex A hereto
(individually, a "Subsidiary" and collectively, the "Subsidiaries") has been
duly incorporated and is validly existing as a corporation in good standing
under the laws of the jurisdiction in which it is chartered or organized, with
full corporate power and authority to own or lease, as the case may be, and to
operate its properties and conduct its business as described in the Final
Memorandum, and is duly qualified to do business as a foreign corporation and is
in good standing under the laws of each jurisdiction which requires such
qualification.
(b) All the outstanding shares of capital stock of each Subsidiary have
been duly authorized and validly issued and are fully paid and nonassessable,
and, except as otherwise set forth in the Final Memorandum, all outstanding
shares of capital stock of the Subsidiaries are owned by the Company either
directly or through wholly owned subsidiaries free and clear of any perfected
security interest and, to the knowledge of such counsel, after due inquiry, any
other security interest, claim, lien or encumbrance.
(c) The Company's authorized equity capitalization is as set forth in the
Final Memorandum and the capital stock of the Company conforms to the
description thereof contained in the Final Memorandum and the Securities conform
to the description thereof contained in the Final Memorandum; the outstanding
shares of Common Stock have been duly authorized and validly issued and are
fully paid and nonassessable; the shares of Common Stock issuable upon
conversion of the Securities have been duly authorized and, when issued upon
conversion of the Securities, will be validly issued, fully paid and
nonassessable; the Board of Directors of the Company has duly and validly
adopted resolutions reserving such shares of Common Stock for issuance upon
conversion of the Securities; the holders of the outstanding shares of capital
stock of the Company are not entitled to any preemptive or, to the knowledge of
such counsel, after due inquiry, other rights to subscribe for the Securities or
the shares of Common Stock issuable upon conversion thereof; and, except as set
forth in the Final Memorandum, to the knowledge of such counsel, after due
inquiry, no options, warrants or other rights to purchase, agreements or other
obligations to issue, or rights to convert any obligations into or exchange any
securities for, shares of capital stock of or ownership interests in the Company
are outstanding.
(d) The Indenture has been duly authorized, executed and delivered, and
constitutes a legal, valid and binding instrument enforceable against the
Company in accordance with its terms (subject, as to the enforcement of
remedies, to applicable bankruptcy, reorganization, insolvency moratorium or
other laws affecting creditors' rights generally from time to time in effect and
to general principles of equity); the Securities have been duly authorized and,
when executed and authenticated in accordance with the provisions of the
Indenture and delivered to and paid for by the Initial Purchasers under this
Agreement, will constitute legal, valid, binding and enforceable obligations of
the Company entitled to the benefits of the Indenture (subject, as to the
enforcement of remedies, to applicable bankruptcy, reorganization, insolvency,
moratorium or other laws affecting creditors' rights generally from time to time
in effect and to general principles of equity) and will be convertible into
Common Stock in accordance with their terms; the Registration Rights Agreement
has been duly authorized, executed and delivered and constitutes the legal,
valid, binding and enforceable instrument of the Company (subject, as to the
enforcement of remedies, to applicable bankruptcy, reorganization, insolvency,
moratorium or other laws affecting creditors' rights generally from time to time
in effect and to general principles of equity), provided that no representation
is made with respect to the indemnification provisions thereof; and the
statements set forth (i) under the headings "Description of the Series A
Debentures," "Description of the Series B Debentures," "Description of Capital
Stock" and "Registration Rights" and (ii) in the thirteenth risk factor relating
to certain regulatory matters under the heading "Risk Factors-Risks Related to
DST" in the Final Memorandum, insofar as such statements purport to summarize
certain provisions of the Securities, the Indenture, the Common Stock, the
Registration Rights Agreement and such regulatory matters, provide a fair
summary of such provisions.
(e) To the knowledge of such counsel, there is no pending or threatened
action, suit or proceeding by or before any court or governmental agency,
authority or body or any arbitrator involving the Company or any of its
Subsidiaries or its or their property that is not adequately disclosed in the
Final Memorandum, except in each case for such proceedings that, if the subject
of an unfavorable decision, ruling or finding would not singly or in the
aggregate, have a Material Adverse Effect.
(f) Such counsel has no reason to believe that, at the Execution Time or on
the Closing Date, the Final Memorandum contained or contains any untrue
statement of a material fact or omitted or omits to state any material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading (in each case, other than the
financial statements and other financial information contained therein, as to
which such counsel need express no opinion).
(g) This Agreement has been duly authorized, executed and delivered by the
Company.
(h) No consent, approval, authorization, filing with or order of any court
or governmental agency or body is required in connection with the transactions
contemplated in this Agreement, in the Indenture or in the Registration Rights
Agreement, except such as may be required under the blue sky or securities laws
of any jurisdiction in which the Securities are offered or sold (as to which
such counsel need express no opinion beyond that set forth in paragraph (j)
below) and such other approvals (specified in such opinion) as have been
obtained.
(i) Neither the execution and delivery of the Indenture, this Agreement or
the Registration Rights Agreement, the issuance and sale of the Securities, nor
the consummation of any other of the transactions herein or therein
contemplated, nor the fulfillment of the terms hereof or thereof, including the
issuance of the Common Stock upon the conversion of the Securities, will
conflict with, result in a breach or violation of, or imposition of any lien,
charge or encumbrance upon any property or asset of the Company or of any of its
Subsidiaries pursuant to, (i) the charter or by-laws of the Company or any of
its Subsidiaries; (ii) the terms of any indenture, contract, lease, mortgage,
deed of trust, note agreement, loan agreement or other agreement, obligation,
condition, covenant or instrument to which the Company or any of its
Subsidiaries is a party or bound or to which its or their property is subject
which is known to such counsel; or (iii) any statute, law, rule, regulation,
judgment, order or decree applicable to the Company or any of its Subsidiaries
of any court, regulatory body, administrative agency, governmental body,
arbitrator or other authority having jurisdiction over the Company, any of its
Subsidiaries or any of their respective properties; except for such violation or
default, in the case of clauses (ii) and (iii) above, as would not, either
individually or in the aggregate with all other violations and defaults referred
to in this paragraph (if any), have (x) a Material Adverse Effect or (y) a
material adverse effect upon the transactions contemplated herein.
(j) Assuming the accuracy of the representations and warranties and
compliance with the agreements contained in this Agreement by the Initial
Purchasers (without regard to the representation found in Section 1(f) hereof),
no registration under the Act of the Securities or the Common Stock issuable
upon conversion thereof, and no qualification of the Indenture under the Trust
Indenture Act, are required for the sale and delivery of the Securities by the
Company to the Initial Purchasers or the offer and sale by the Initial
Purchasers of the Securities in the manner contemplated in this Agreement and
the Final Memorandum.
(k) The Company is not and, after giving effect to the offering and sale of
the Securities and the application of the proceeds thereof as described in the
Final Memorandum, will not be an "investment company" as defined in the
Investment Company Act, without taking account of any exemption arising out of
the number of holders of the Company's securities.
(l) Subject to the limitations set forth therein, the statements made in the
Final Memorandum under the heading "Material U.S. Federal Income Tax
Considerations" fairly summarize the matters described therein.
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws of any jurisdiction other than the
jurisdiction of incorporation of the Company, the State of New York or the
federal laws of the United States, to the extent they deem proper and specify in
such opinion, upon the opinion of other counsel of good standing whom they
believe to be reliable and who are satisfactory to counsel for the Initial
Purchasers; and (B) as to matters of fact, to the extent they deem proper, on
certificates of responsible officers of the Company and public officials.
References to the Final Memorandum in this Exhibit B include any amendment or
supplement thereto at the Closing Date.
ANNEX A
Significant Subsidiaries
DST International Limited
DST Realty, Inc.
DST Systems of California, Inc.
EquiServe, Inc.
West Side Investments, Inc.
