EXHIBIT 10.1
BANC OF AMERICA SECURITIES LLC
$85,000,000 AGGREGATE PRINCIPAL AMOUNT
CBIZ, INC.
3.125% CONVERTIBLE SENIOR SUBORDINATED NOTES DUE 2026
PURCHASE AGREEMENT
DATED MAY 23, 2006
PURCHASE AGREEMENT
May 23, 2006
BANC OF AMERICA SECURITIES LLC
As Representative of the several Initial Purchasers
c/o BANC OF AMERICA SECURITIES LLC
0 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
CBIZ, Inc., a Delaware corporation (the "Company"), proposes to issue and
sell to the several purchasers named in Schedule A (the "Initial Purchasers")
$85,000,000 in aggregate principal amount of its 3.125% Convertible Senior
Subordinated Notes due 2026 (the "Firm Notes"). In addition, the Company has
granted to the Initial Purchasers an option to purchase up to an additional
$15,000,000 in aggregate principal amount of its 3.125% Convertible Senior
Subordinated Notes due 2026 (the "Optional Notes" and, together with the Firm
Notes, the "Notes"). Banc of America Securities LLC ("BAS") has agreed to act as
representative of the several Initial Purchasers (in such capacity, the
"Representative") in connection with the offering and sale of the Notes. To the
extent that there are no additional Initial Purchasers listed on Schedule A
other than you, the terms Representative and Initial Purchasers as used herein
shall mean you, as Initial Purchasers. The terms Representative and Initial
Purchasers shall mean either the singular or plural as the context requires.
The Notes will be convertible on the terms, and subject to the conditions,
set forth in the Indenture (as defined below). As used herein, "Conversion
Shares" means the shares of common stock, par value $0.01 per share, of the
Company (the "Common Stock") to be received by the holders of the Notes upon
conversion of the Notes pursuant to the terms of the Notes. The Notes will be
issued pursuant to an indenture (the "Indenture") to be dated May 30, 2006,
between the Company and U.S. Bank National Association, as trustee (the
"Trustee").
The Notes will be offered and sold to the Initial Purchasers without being
registered under the Securities Act of 1933, as amended, and the rules and
regulations of the Securities and Exchange Commission (the "Commission")
thereunder (the "Securities Act"), in reliance upon an exemption therefrom.
The Company has obtained an approval and consent, dated as of May 23, 2006
(the "Credit Agreement Waiver"), from the Lenders under its Credit Agreement
dated as of February 13, 2006 (as may be amended from time to time, the "Credit
Agreement") by and among the Company as borrower and Bank of America, N.A., as
agent, lender, issuing bank and swing line bank and the other financial
institutions party thereto, to permit the issuance of the Notes.
Holders of the Notes (including the Initial Purchasers and their direct
and indirect transferees) will be entitled to the benefits of a Registration
Rights Agreement, dated the Closing Date, between the Company and the Initial
Purchasers (the "Registration Rights Agreement"), pursuant to which the Company
will agree to file with the Commission a shelf registration
statement pursuant to Rule 415 under the Securities Act (the "Registration
Statement") covering the resale of the Notes and the Conversion Shares. This
Agreement, the Indenture, the Credit Agreement Waiver, the Notes and the
Registration Rights Agreement are referred to herein collectively as the
"Operative Documents."
The Company understands that the Initial Purchasers propose to make an
offering of the Notes on the terms and in the manner set forth herein and in the
Preliminary Offering Memorandum (as defined below) and the Final Offering
Memorandum (as defined below) and agrees that the Initial Purchasers may resell,
subject to the conditions set forth herein, all or a portion of the Notes to
purchasers (the "Subsequent Purchasers") at any time after the date of this
Agreement.
The Company has prepared an offering memorandum, dated the date hereof,
setting forth information concerning the Company, the Notes, the Registration
Rights Agreement and the Common Stock, in form and substance reasonably
satisfactory to the Initial Purchasers. As used in this Agreement, "Offering
Memorandum" means, collectively, the Preliminary Offering Memorandum dated as of
May 22, 2006 (the "Preliminary Offering Memorandum") and the offering memorandum
dated the date hereof (the "Final Offering Memorandum"), each as then amended or
supplemented by the Company. As used herein, each of the terms "Offering
Memorandum", "Preliminary Offering Memorandum" and "Final Offering Memorandum"
shall include in each case the documents incorporated or deemed to be
incorporated by reference therein. The term "Disclosure Package" shall mean (i)
the Preliminary Offering Memorandum, as amended and supplemented as of the
Applicable Time (as defined herein) and (ii) the term sheet attached as Exhibit
C hereto.
The Company hereby confirms its agreements with the Initial Purchasers as
follows:
SECTION 1. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY.
The Company hereby represents, warrants and covenants to each Initial
Purchaser as follows:
(a) No Registration. Assuming the accuracy of the representations and
warranties of the Initial Purchasers contained in Section 6 and their compliance
with the agreements set forth therein, it is not necessary, in connection with
the issuance and sale of the Notes to the Initial Purchasers, the offer, resale
and delivery of the Notes by the Initial Purchasers and the conversion of the
Notes into Conversion Shares, in each case in the manner contemplated by this
Agreement, the Indenture and the Offering Memorandum, to register the Notes or
the Conversion Shares under the Securities Act or to qualify the Indenture under
the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act").
(b) No Integration. None of the Company or any of its subsidiaries has,
directly or through any agent, sold, offered for sale, solicited offers to buy
or otherwise negotiated in respect of, any "security" (as defined in the
Securities Act) that is or will be integrated with the sale of the Notes or the
Conversion Shares in a manner that would require registration under the
Securities Act of the Notes or the Conversion Shares.
(c) Rule 144A. No securities of the same class (within the meaning of Rule
144A(d)(3) under the Securities Act) as the Notes are listed on any national
securities exchange registered under Section 6 of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), or quoted on an automated inter-dealer
quotation system.
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(d) Exclusive Agreement. The Company has not paid or agreed to pay to any
person any compensation for soliciting another person to purchase any securities
of the Company (other than you and except as otherwise contemplated in this
Agreement).
(e) Offering Memoranda. The Company hereby confirms that it has authorized
the use of the Preliminary Offering Memorandum and the Final Offering Memorandum
in connection with the offer and sale of the Notes by the Initial Purchasers.
Each document, if any, filed or to be filed pursuant to the Exchange Act and
incorporated by reference in the Preliminary Offering Memorandum or the Final
Offering Memorandum complied or will comply when it is filed in all material
respects with the Exchange Act and the rules and regulations of the Commission
thereunder. The Preliminary Offering Memorandum, at the date thereof, did not
contain any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. At the date of this
Agreement, the Closing Date and on any Subsequent Closing Date, the Final
Offering Memorandum did not and will not (and any amendment or supplement
thereto, at the date thereof, at the Closing Date and on any Subsequent Closing
Date, will not) contain any untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading; provided
that the Company makes no representation or warranty as to information contained
in or omitted from the Preliminary Offering Memorandum or the Final Offering
Memorandum in reliance upon and in conformity with written information furnished
to the Company by or on the behalf of the Initial Purchasers specifically for
inclusion therein, it being understood and agreed that the only such information
furnished by or on the behalf of the Initial Purchasers consists of the
information described as such in Section 8 hereof.
(f) Disclosure Package. The Disclosure Package as of 10:00 pm (Eastern
time) on the date hereof (the "Applicable Time") did not contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading. The preceding sentence does not apply to
statements in or omissions from the Disclosure Package in reliance upon and in
conformity with written information furnished to the Company by any Initial
Purchaser through the Representative specifically for use therein, it being
understood and agreed that the only such information furnished by or on behalf
of any Initial Purchaser consists of the information described as such in
Section 8 hereof.
(g) Statements in Offering Memorandum. The statements (i) in each of the
Disclosure Package and the Final Offering Memorandum under the captions "Risk
Factors -- Restrictions imposed by independence requirements and conflict of
interest rules may limit our ability to provide services to clients of the
attest firms with which we have contractual relationships and the ability of
those firms to provide attestation services to clients of ours", "Risk Factors
-- Governmental regulations and interpretations are subject to changes",
"Description of Certain Indebtedness -- Credit Facility", "Material U.S. Federal
Income Tax Considerations", "Description of the Notes", Transfer Restrictions"
(insofar as it relates to matters of Federal Law only) and "Description of
Capital Stock", (ii) in the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 2005 under the headings "Business -- Business Services
-- Accounting, Tax and Advisory", "Business -- Regulation", "Risk Factors --
Restrictions imposed by independence requirements and conflict of interest rules
may limit our ability to provide services to clients of the attest firms with
which we have contractual relationships and the ability of those firms to
provide attestation services to clients of ours", "Risk Factors -- Governmental
regulations and interpretations are subject to changes", "Legal Proceedings",
and (iii) in the Company's Quarterly Report on Form 10-Q for the quarterly
period ended March 31, 2006 under
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the headings "Legal Proceedings" insofar as such statements summarize legal
matters, agreements, documents or proceedings discussed therein, are accurate
and fair summaries of such legal matters, agreements, documents or proceedings.
(h) Offering Materials Furnished to Initial Purchasers. The Company has
delivered to the Representative copies of the Preliminary Offering Memorandum,
and will deliver to the Representatives copies of the Final Offering Memorandum,
each as amended or supplemented, in such quantities and at such places as the
Representative has reasonably requested for each of the Initial Purchasers.
(i) Distribution of Offering Material by the Company. The Company has not
distributed and will not distribute, prior to the later of the Closing Date (as
defined below) and the completion of the Initial Purchaser's resale of the
Notes, any offering material constituting written communications under Rule 405
of the Securities Act in connection with the offering and sale of the Notes
other than the Offering Memorandum and the term sheet included in the Disclosure
Package.
(j) Authorization of the Purchase Agreement. This Agreement has been duly
authorized, executed and delivered by the Company.
(k) Authorization of the Indenture. The Indenture has been duly authorized
by the Company and, upon the effectiveness of the Registration Statement, will
be qualified under the Trust Indenture Act; on the Closing Date, the Indenture
will have been duly executed and delivered by the Company and, assuming due
authorization, execution and delivery thereof by the Trustee, will constitute a
legally valid and binding agreement of the Company enforceable against the
Company in accordance with its terms, except as enforcement thereof may be
limited by bankruptcy, insolvency, fraudulent transfer and conveyance,
reorganization, moratorium or other similar laws relating to or affecting the
rights and remedies of creditors or by general equitable principles (regardless
of whether such enforceability is considered in a proceeding in equity or at
law); and, on the Closing Date, the Indenture will conform in all material
respects to the description thereof contained in the Preliminary Offering
Memorandum and the Final Offering Memorandum.
(l) Authorization of the Notes. The Notes have been duly authorized by the
Company; when the Notes are executed, authenticated and issued in accordance
with the terms of the Indenture and delivered to and paid for by the Initial
Purchasers pursuant to this Agreement on the Closing Date or any Subsequent
Closing Date, as the case may be (assuming due authentication of the Notes by
the Trustee), such Notes will constitute legally 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 enforcement
thereof may be limited by bankruptcy, insolvency, fraudulent transfer and
conveyance, reorganization, moratorium or other similar laws relating to or
affecting the rights and remedies of creditors or by general equitable
principles (regardless of whether such enforceability is considered in a
proceeding in equity or at law); and, on the Closing Date, the Notes will
conform in all material respects to the description thereof contained in the
Preliminary Offering Memorandum and the Final Offering Memorandum.
(m) Authorization of the Conversion Shares. The Conversion Shares have
been duly authorized and reserved and, when issued upon conversion of the Notes
in accordance with the terms of the Notes, will be validly issued, fully paid
and non-assessable, and the issuance of any such shares will not be subject to
any preemptive or similar rights.
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(n) Authorization of the Registration Rights Agreement. The Registration
Rights Agreement has been duly authorized, executed and delivered by the
Company.
(o) No Material Adverse Change. Except as otherwise disclosed in the
Disclosure Package and the Final Offering Memorandum (exclusive of any
amendments or supplements thereto subsequent to the date of this Agreement),
subsequent to the respective dates as of which information is given in the
Disclosure Package and the Final Offering Memorandum: (i) there has been no
material adverse change, or any development that could reasonably be expected to
result in a material adverse change, in the condition, financial or otherwise,
or in the earnings, business, properties, operations or prospects, whether or
not arising from transactions in the ordinary course of business, of the Company
and its subsidiaries, considered as one entity (a "Material Adverse Change");
(ii) the Company and its subsidiaries, considered as one entity, have not
incurred any material liability or obligation, indirect, direct or contingent,
nor entered into any material transaction or agreement; and (iii) there has been
no dividend or distribution of any kind declared, paid or made by the Company
or, except for dividends paid to the Company or other subsidiaries, any of its
subsidiaries on any class of capital stock or repurchase or redemption by the
Company or any of its subsidiaries of any class of capital stock.
(p) Independent Accountants. KPMG LLP, which has expressed its opinion
with respect to the financial statements (which term as used in this Agreement
includes the related notes thereto) and supporting schedules included in the
Disclosure Package and the Final Offering Memorandum, are independent registered
public accountants with respect to the Company as required by the Securities Act
and the Exchange Act and the applicable rules and regulations thereunder.
(q) Preparation of the Financial Statements. The historical financial
statements included in the Disclosure Package and the Final Offering Memorandum
present fairly in all material respects the consolidated financial position of
the Company and its consolidated subsidiaries as of and at the dates indicated
and the results of their operations and cash flows for the periods specified.
Such financial statements comply as to form with the applicable accounting
requirements of Regulation S-X and have been prepared in conformity with
generally accepted accounting principles as applied in the United States applied
on a consistent basis throughout the periods involved, except as may be
expressly stated in the related notes thereto. No other financial statements
would be required to be included in the Preliminary Offering Memorandum and the
Final Offering Memorandum if they were a Registration Statement on Form S-3. The
financial data set forth in the Preliminary Offering Memorandum and the Final
Offering Memorandum under the captions " -- Summary of Historical Consolidated
Financial Information" and "Capitalization" fairly present in all material
respects the information set forth therein on a basis consistent with that of
the audited financial statements contained in the Preliminary Offering
Memorandum and the Final Offering Memorandum.
(r) Incorporation and Good Standing of the Company and its Subsidiaries.
Each of the Company and its subsidiaries has been duly incorporated or formed
and is validly existing as a corporation or limited liability company in good
standing under the laws of the jurisdiction of its incorporation or formation
and has corporate or limited liability company power and authority to own or
lease, as the case may be, and operate its properties and to conduct its
business as described in the Disclosure Package and the Final Offering
Memorandum and, in the case of the Company, to enter into and perform its
obligations under this Agreement. Each of the Company and its subsidiaries is
duly qualified as a foreign corporation or limited liability company, as
applicable, 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 for such jurisdictions
where the failure to so qualify or to be in good standing
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would not, individually or in the aggregate, result in a material adverse effect
on the condition, financial or otherwise, or on the earnings, business,
properties or operations, whether or not arising from transactions in the
ordinary course of business, of the Company and its subsidiaries, considered as
one entity (a "Material Adverse Effect"). All of the issued limited liability
company interests or shares of capital stock, as applicable, of each subsidiary
have been duly authorized and validly issued in accordance with the
organizational documents of such subsidiary, and are fully paid (to the extent
required under such subsidiary's organizational documents) and non-assessable,
except as such non-assessability may be affected by Section 18-607 of the
Delaware Limited Liability Company Act (the "Delaware LLC Act") or Section
101.206 of the Texas Business Organizations Code; all shares of capital stock or
limited liability company interests (except for directors' qualifying shares or
interests) of the subsidiaries are owned directly or indirectly by the Company,
free and clear of all liens, encumbrances, equities or claims other than as
described in the Preliminary Offering Memorandum. The subsidiaries listed in
Exhibit 21 to the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 2005 are the only "subsidiaries" (within the meaning of Rule 405
under the Securities Act) of the Company (excluding those subsidiaries that may
be omitted from such list pursuant to Form 10-K and subsidiaries that may have
been acquired since the date of Exhibit 21).
(s) Capitalization and Other Capital Stock Matters. The authorized, issued
and outstanding capital stock of the Company is as set forth in each of the
Disclosure Package and the Final Offering Memorandum under the caption
"Capitalization" (other than for subsequent issuances, if any, pursuant to
employee benefit plans described in the Disclosure Package and the Final
Offering Memorandum or upon exercise of outstanding options or warrants
described in the Disclosure Package and the Final Offering Memorandum, as the
case may be). The Common Stock (including the Conversion Shares) conforms in all
material respects to the description thereof contained in the Disclosure Package
and the Final Offering Memorandum. All of the issued and outstanding shares of
Common Stock have been duly authorized and validly issued, are fully paid and
nonassessable and have been issued in compliance with federal and state
securities laws. None of the outstanding shares of Common Stock were issued in
violation of any preemptive rights, rights of first refusal or other similar
rights to subscribe for or purchase securities of the Company. There are no
authorized or outstanding options, warrants, preemptive rights, rights of first
refusal or other rights to purchase, or equity or debt securities convertible
into or exchangeable or exercisable for, any capital stock of the Company or any
of its subsidiaries other than those described in the Disclosure Package and the
Final Offering Memorandum. The description of the Company's stock option, stock
bonus and other stock plans or arrangements, and the options or other rights
granted thereunder, set forth in the Disclosure Package and the Final Offering
Memorandum accurately and fairly presents and summarizes in all material
respects such plans, arrangements, options and rights.
(t) Non-Contravention of Existing Instruments; No Further Authorizations
or Approvals Required. Neither the Company nor any of its subsidiaries (i) is in
violation of its charter or by-laws, (ii) is (or, with the giving of notice or
lapse of time, would be) in default ("Default") under any indenture, mortgage,
loan or credit agreement, note, contract, franchise, lease or other instrument
to which the Company or any of its subsidiaries is a party or by which it or any
of them may be bound (including, without limitation, the Credit Agreement), or
to which any of the property or assets of the Company or any of its subsidiaries
is subject (each, an "Existing Instrument"), or (iii) is in violation of 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 such subsidiary or any of its
properties, as
6
applicable, except with respect to clauses (ii) and (iii), for such Defaults as
would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
The Company's execution, delivery and performance of the Operative
Documents and consummation of the transactions contemplated thereby, by the
Disclosure Package and by the Final Offering Memorandum (i) have been duly
authorized by all necessary corporate action and will not result in any
violation of the charter or by-laws of the Company or any subsidiary, (ii) after
giving effect to the Credit Agreement Waiver, will not conflict with or
constitute a breach of, or Default 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, or require the consent of any
other party to, any Existing Instrument and (iii) will not result in any
violation of 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 any of its subsidiaries or any of its or
their properties, except in the case of clauses (ii) and (iii), as would not
reasonably be expected to have a Material Adverse Effect.
No consent, approval, authorization or other order of, or registration or
filing with, any court or other governmental or regulatory authority or agency
is required for the Company's execution, delivery and performance of the
Operative Documents and consummation of the transactions contemplated thereby,
by the Disclosure Package and the Final Offering Memorandum, except (i) with
respect to the transactions contemplated by the Registration Rights Agreement,
as may be required under the Securities Act, the Trust Indenture Act and the
rules and regulations promulgated thereunder and (ii) for such consents,
approvals, authorizations, orders, filings, registrations or qualifications as
may be required under state securities or Blue Sky laws in connection with the
purchase and distribution of the Notes by the Initial Purchasers.
(u) No Stamp or Transfer Taxes. 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 Notes or upon the issuance of Common Stock upon the
conversion thereof.
(v) No Material Actions or Proceedings. Except as otherwise disclosed in
the Preliminary Offering Memorandum and the Final Offering Memorandum, there are
no legal or governmental actions, suits or proceedings pending or, to the best
of the Company's knowledge, threatened (i) against or affecting the Company or
any of its subsidiaries, (ii) which has as the subject thereof any officer or
director of, or property owned or leased by, the Company or any of its
subsidiaries or (iii) relating to environmental or discrimination matters, where
in any such case (A) there is a reasonable possibility that such action, suit or
proceeding might be determined adversely to the Company or such subsidiary and
(B) any such action, suit or proceeding, if so determined adversely, would
reasonably be expected to have a Material Adverse Effect or adversely affect the
consummation of the transactions contemplated by this Agreement.
(w) Labor Matters. 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.
(x) Intellectual Property Rights. The Company or its subsidiaries own or
are licensed or otherwise have the right to use all of the material patents,
trademarks, service marks, trade names, copyrights, contractual franchises,
authorizations and other material rights that are reasonably necessary for the
operation of their respective businesses, without conflict with the rights of
any other person. To the best knowledge of the Company, no slogan or other
advertising device, product, process, method, substance, part or other material
now employed, or now contemplated
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to be employed, by the Company or any subsidiary infringes upon any rights held
by any other person, and no claim or litigation regarding any of the foregoing
is pending or threatened, which, in any case, could reasonably be expected to
have a Material Adverse Effect.
(y) All Necessary Permits, etc. The Company and each subsidiary possess
such valid and current licenses, certificates, authorizations or permits issued
by the appropriate state, federal or foreign regulatory agencies or bodies
necessary to conduct their respective businesses, except where the failure to
possess such licenses, certificates, authorizations or permits would not
reasonably be expected to have a Material Adverse Effect. Neither the Company
nor any subsidiary has received any notice of proceedings relating to the
revocation or modification of, or non-compliance with, any such certificate,
authorization or permit which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would reasonably be expected to have a
Material Adverse Effect.
(z) Title to Properties. The Company and each of its subsidiaries has good
and defensible title to all the properties and assets reflected as owned in the
financial statements included in the Disclosure Package and the Final Offering
Memorandum, in each case free and clear of any security interests, mortgages,
liens, encumbrances, equities, claims and other defects, except such as may be
described in the Offering Memorandum or such as do not, in the aggregate,
materially and adversely affect the value of such property and do not, in the
aggregate, materially interfere with the use made or proposed to be made of such
property by the Company or such subsidiary. The real property, improvements,
equipment and personal property held under lease by the Company or any
subsidiary are held under valid and enforceable leases, with such exceptions as
may be described in the Offering Memorandum or are not material and do not, in
the aggregate, materially interfere with the use made or proposed to be made of
such real property, improvements, equipment or personal property by the Company
or such subsidiary.
(aa) Tax Law Compliance. The Company and its subsidiaries have filed all
necessary federal, state, local and foreign income and franchise tax returns in
a timely manner or have properly requested extensions thereof and have paid all
taxes required to be paid by any of them and, if due and payable, any related or
similar assessment, fine or penalty levied against any of them, except for any
taxes, assessments, fines or penalties as may be being contested in good faith
and by appropriate proceedings or which, if not paid, would not reasonably be
expected to have a Material Adverse Effect.
(bb) Company Not an "Investment Company". The Company has been advised of
the rules and requirements under the Investment Company Act of 1940, as amended
(the "Investment Company Act"). The Company is not, and, after receipt of
payment for the Notes and application of the proceeds as described under "Use of
Proceeds" in the Disclosure Package and the Final Offering Memorandum will not
be, required to register as an "investment company" within the meaning of the
Investment Company Act and will conduct its business in a manner so that it will
not become subject to the Investment Company Act.
(cc) Compliance with Reporting Requirements. The Company is subject to and
in full compliance in all material respects with the reporting requirements of
Section 13 or Section 15(d) of the Exchange Act.
(dd) Insurance. The properties of the Company and its subsidiaries are
insured with financially sound and reputable insurance companies not affiliates
of the Company, in such amounts, with such deductibles and covering such risks
as are customarily carried by companies engaged in similar businesses and owning
similar properties in localities where the Company or
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such subsidiary operates, except to the extent the Company maintains reasonable
self-insurance with respect to such risks (through an affiliate or otherwise).
(ee) No Restriction on Distributions. No subsidiary of the Company is
currently prohibited under any agreement or instrument, 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 by the Disclosure Package and
the Final Offering Memorandum.
(ff) No Price Stabilization or Manipulation. The Company has not taken and
will not take, directly or indirectly, any action designed to or that might be
reasonably expected to cause or result in stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale of the
Notes.
(gg) Related Party Transactions. There are no material business
relationships or related party transactions involving the Company or any
subsidiary or any other person that have not been described in the Disclosure
Package or the Final Offering Memorandum.
(hh) No General Solicitation. None of the Company or any of its affiliates
(as defined in Rule 501(b) of Regulation D under the Securities Act ("Regulation
D")), has, directly or through an agent (other than you, as to whom the Company
makes no representation), engaged in any form of general solicitation or general
advertising in connection with the offering of the Notes or the Conversion
Shares (as those terms are used in Regulation D) under the Securities Act or in
any manner involving a public offering within the meaning of Section 4(2) of the
Securities Act; the Company has not entered into any contractual arrangement
with respect to the distribution of the Notes or the Conversion Shares except
for this Agreement and the agreements contemplated hereby, and the Company will
not enter into any such arrangement except for the Registration Rights Agreement
and as may be contemplated thereby.
(ii) Disclosure Controls and Procedures. The Company has established and
maintains disclosure controls and procedures (as such term is defined in Rule
13a-15(e) under the Exchange Act), which (i) are designed to ensure that
material information relating to the Company, including its consolidated
subsidiaries, is made known to the Company's principal executive officer and its
principal financial officer by others within those entities, particularly during
the periods in which the periodic reports required under the Exchange Act are
being prepared, (ii) have been evaluated for effectiveness as of a date within
90 days prior to the filing of the Company's most recent annual or quarterly
report filed with the Commission and (iii) are effective in all material
respects to perform the functions for which they were established. Based on the
evaluation of the Company's disclosure controls and procedures described above,
the Company is not aware of (a) any significant deficiency in the design or
operation of internal control over financial reporting (as such term is defined
in Rule 13a-15(f) under the Exchange Act) which could adversely affect the
Company's ability to record, process, summarize and report financial data or any
material weaknesses in internal control over financial reporting or (b) any
fraud, whether or not material, that involves management or other employees who
have a significant role in the Company's internal control over financial
reporting. Since the most recent evaluation of the Company's disclosure controls
and procedures described above, there have been no significant changes in
internal control over financial reporting or in other factors that could
significantly affect internal control over financial reporting.
9
(jj) No Unlawful Contributions or Other Payments. Neither the Company nor
any of its subsidiaries nor, 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 the FCPA (as defined below), 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. "FCPA" means Foreign Corrupt Practices
Act of 1977, as amended, and the rules and regulations thereunder.
(kk) No Conflict with Money Laundering Laws. 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 applicable 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.
(ll) No Conflict with OFAC Laws. Neither the Company nor any of its
subsidiaries nor, 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. Treasury Department ("OFAC"); and the Company will not
directly or indirectly use the proceeds of the offering, 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.
(mm) Compliance with Environmental Laws. Except as otherwise disclosed in
the Preliminary Offering Memorandum and the Final Offering Memorandum, (i) the
on-going operations of the Company and each of its subsidiaries comply in all
material respects with all federal, state or local laws, statutes, common law
duties, rules, regulations, ordinances and codes, together with all
administrative orders, directed duties, requests, licenses, authorizations and
permits of, and agreements with, any Governmental Authorities, in each case
relating to environmental, health, safety and land use matters (collectively,
"Environmental Laws"), except such non-compliance which would not (if enforced
in accordance with applicable law) result in liability in excess of $500,000 in
the aggregate; (ii) the Company and each of its subsidiaries have obtained all
material licenses, permits, authorizations and registrations required under any
Environmental Law ("Environmental Permits") and necessary for their respective
ordinary course operations, all such Environmental Permits are in good standing,
and the Company and each of its subsidiaries are in compliance with all material
terms and conditions of such Environmental Permits; (iii) none of the Company,
any of its subsidiaries or any of their respective present property or
operations, is subject to any outstanding written order from or agreement with
any Governmental Authority, nor subject to any judicial or docketed
administrative proceeding, respecting any Environmental Law, Environmental Claim
or Hazardous Material; and (iv) there
10
are no Hazardous Materials or other conditions or circumstances existing with
respect to any property, or arising from operations prior to the Closing Date,
of the Company or any of its subsidiaries that would reasonably be expected to
give rise to Environmental Claims with a potential liability of the Company and
its subsidiaries in excess of $500,000 in the aggregate for any such condition,
circumstance or property. In addition, (i) neither the Company nor any of its
subsidiaries has any underground storage tanks (x) that are not properly
registered or permitted under applicable Environmental Laws, or (y) that are
leaking or disposing of Hazardous Materials off-site, and (ii) the Company and
its subsidiaries have met all material notification requirements under Title III
of CERCLA and all other Environmental Laws. As used herein, "Governmental
Authority" means any nation or government, any state or other political
subdivision thereof, any central bank (or similar monetary or regulatory
authority) thereof, any entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government
(including, without limitation, any board of insurance, insurance department or
insurance commissioner and any taxing authority or political subdivision), and
any corporation or other entity owned or controlled, through stock or capital
ownership or otherwise, by any of the foregoing; "Environmental Claims" means
all claims, however asserted, by any Governmental Authority or other person
alleging potential liability or responsibility for violation of any
Environmental Law, or for release or injury to the environment and "Hazardous
Materials" means any toxic or hazardous waste, substance or chemical or any
pollutant, contaminant, chemical or other substance defined or regulated
pursuant to any Environmental Law, including, without limitation, asbestos,
petroleum, crude oil or any fraction thereof.
(nn) ERISA Compliance. None of the following events has occurred or
exists: (i) a failure to fulfill the obligations, if any, under the minimum
funding standards of Section 302 of the United States Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), and the regulations and published
interpretations thereunder with respect to a Plan, determined without regard to
any waiver of such obligations or extension of any amortization period; (ii) an
audit or investigation by the Internal Revenue Service, the U.S. Department of
Labor, the Pension Benefit Guaranty Corporation or any other federal or state
governmental agency or any foreign regulatory agency with respect to the
employment or compensation of employees by any member of the Company that could
have a Material Adverse Effect; (iii) any breach of any contractual obligation,
or any violation of law or applicable qualification standards, with respect to
the employment or compensation of employees by any member of the Company that
could have a Material Adverse Effect. None of the following events has occurred
or is reasonably likely to occur: (i) a material increase in the aggregate
amount of contributions required to be made to all Plans in the current fiscal
year of the Company compared to the amount of such contributions made in the
Company's most recently completed fiscal year; (ii) a material increase in the
Company's "accumulated post-retirement benefit obligations" (within the meaning
of Statement of Financial Accounting Standards 106) compared to the amount of
such obligations in the Company's most recently completed fiscal year; (iii) any
event or condition giving rise to a liability under Title IV of ERISA that could
have a Material Adverse Effect; or (iv) the filing of a claim by one or more
employees or former employees of the Company related to their employment that
could have a Material Adverse Effect on the Company. For purposes of this
paragraph, the term "Plan" means a plan (within the meaning of Section 3(3) of
ERISA) subject to Title IV of ERISA with respect to which any member of the
Company may have any liability.
(oo) Brokers. There is no broker, finder or other party (other than you)
that is entitled to receive from the Company any brokerage or finder's fee or
other fee or commission as a result of any transactions contemplated by this
Agreement.
11
(pp) Xxxxxxxx-Xxxxx Compliance. There is and has been no failure on the
part of the Company and, to the Company's knowledge, any of the Company's
directors or officers, in their capacities as such, to comply in all material
respects with any provision of the Xxxxxxxx-Xxxxx Act of 2002 and the rules and
regulations promulgated in connection therewith (the "Xxxxxxxx-Xxxxx Act"),
including Section 402 related to loans and Sections 302 and 906 related to
certifications.
(qq) Internal Controls and Procedures. The Company maintains (i) effective
internal control over financial reporting as defined in Rule 13a-15 under the
Securities Exchange Act of 1934, as amended, and (ii) a system of internal
accounting controls sufficient to provide reasonable assurance that (A) material
transactions are executed in accordance with management's general or specific
authorizations; (B) transactions are recorded as necessary to permit preparation
of financial statements in conformity with generally accepted accounting
principles and to maintain asset accountability; (C) access to assets is
permitted only in accordance with management's general or specific
authorization; and (D) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(rr) No Material Weakness in Internal Controls. Except as disclosed in the
Preliminary Offering Memorandum and the Final Offering Memorandum, since the end
of the Company's most recent audited fiscal year, there has been (i) no material
weakness in the Company's internal control over financial reporting (whether or
not remediated) and (ii) no change in the Company's internal control over
financial reporting that has materially affected, or is reasonably likely to
materially affect, the Company's internal control over financial reporting.
(ss) Lending Relationship. Except as disclosed in the Disclosure Package
and the Final Offering Memorandum, the Company does not have any material
lending or other relationship with any bank or lending affiliate of any Initial
Purchaser.
(tt) Credit Agreement Waiver. On the Closing Date, the Credit Agreement
Waiver will have been delivered and will be in full force and effect.
Any certificate signed by an officer of the Company and delivered to the
Representative or to counsel for the Initial Purchasers shall be deemed to be a
representation and warranty by the Company to each Initial Purchaser as to the
matters set forth therein.
SECTION 2. PURCHASE, SALE AND DELIVERY OF THE NOTES
(a) The Firm Notes. The Company agrees to issue and sell to the several
Initial Purchasers the Firm Notes upon the terms herein set forth. On the basis
of the representations, warranties and agreements herein contained, and upon the
terms but subject to the conditions herein set forth, the Initial Purchasers
agree, severally and not jointly, to purchase from the Company the respective
aggregate principal amount of Firm Notes set forth opposite their names on
Schedule A at a purchase price of 97.25% of the aggregate principal amount
thereof.
(b) The Closing Date. Delivery of the Firm Notes to be purchased by the
Initial Purchasers and payment therefor shall be made at the offices of Xxxxx
Xxxx & Xxxxxxxx, 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (or such other
place as may be agreed to by the Company and the Representatives) at 9:00 a.m.
New York City time, on May 30, 2006, or such other time and date not later than
June 6, 2006 as the Representative shall designate by notice to the Company (the
time and date of such closing are called the "Closing Date").
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(c) The Optional Notes; any Subsequent Closing Date. In addition, on the
basis of the representations, warranties and agreements herein contained, and
upon the terms but subject to the conditions herein set forth, the Company
hereby grants an option to the several Initial Purchasers to purchase, severally
and not jointly, up to $15,000,000 aggregate principal amount of Optional Notes
from the Company at the same price as the purchase price to be paid by the
Initial Purchasers for the Firm Notes. The option granted hereunder may be
exercised at any time and from time to time upon notice by the Representative to
the Company, which notice may be given at any time within 13 days from the date
of this Agreement. Such notice shall set forth (i) the amount (which shall be an
integral multiple of $1,000 in aggregate principal amount) of Optional Notes as
to which the Initial Purchasers are exercising the option, (ii) the names and
denominations in which the Optional Notes are to be registered and (iii) the
time, date and place at which such Notes will be delivered (which time and date
may be simultaneous with, but not earlier than, the Closing Date; and in such
case the term "Closing Date" shall refer to the time and date of delivery of the
Firm Notes and the Optional Notes). Such time and date of delivery, if
subsequent to the Closing Date, is called a "Subsequent Closing Date" and shall
be determined by the Representative. A Subsequent Closing Date shall be within
the 13-day period beginning on the Closing Date. If any Optional Notes are to be
purchased, each Initial Purchaser agrees, severally and not jointly, to purchase
the principal amount of Optional Notes (subject to such adjustments to eliminate
fractional amount as the Representative may determine) that bears the same
proportion to the total principal amount of Optional Notes to be purchased as
the principal amount of Firm Notes set forth on Schedule A opposite the name of
such Initial Purchaser bears to the total principal amount of Firm Notes.
(d) Payment for the Notes. Payment for the Notes shall be made at the
Closing Date (and, if applicable, at any Subsequent Closing Date) by wire
transfer of immediately available funds to the order of the Company.
It is understood that the Representative has been authorized, for its own
account and the accounts of the several Initial Purchasers, to accept delivery
of and receipt for, and make payment of the purchase price for, the Firm Notes
and any Optional Notes the Initial Purchasers have agreed to purchase. BAS,
individually and not as the Representative of the Initial Purchasers, may (but
shall not be obligated to) make payment for any Notes to be purchased by any
Initial Purchaser whose funds shall not have been received by the Representative
by the Closing Date or any Subsequent Closing Date, as the case may be, for the
account of such Initial Purchaser, but any such payment shall not relieve such
Initial Purchaser from any of its obligations under this Agreement.
(e) Delivery of the Notes. The Company shall deliver, or cause to be
delivered, to the Representative for the accounts of the several Initial
Purchasers the Firm Notes at the Closing Date, against the irrevocable release
of a wire transfer of immediately available funds for the amount of the purchase
price therefor. The Company shall also deliver, or cause to be delivered, to the
Representative for the accounts of the several Initial Purchasers, the Optional
Notes the Initial Purchasers have agreed to purchase at the Closing Date or any
Subsequent Closing Date, as the case may be, against the irrevocable release of
a wire transfer of immediately available funds for the amount of the purchase
price therefor. Delivery of the Notes shall be made through the facilities of
The Depository Trust Company unless the Representative shall otherwise instruct.
Time shall be of the essence, and delivery at the time and place specified in
this Agreement is a further condition to the obligations of the Initial
Purchasers.
13
SECTION 3. COVENANTS OF THE COMPANY
The Company covenants and agrees with each Initial Purchaser as follows:
(a) Representative's Review of Proposed Amendments and Supplements. During
such period beginning on the date hereof and ending on the date of the
completion of the resale of the Notes by the Initial Purchasers (as notified by
the Initial Purchasers to the Company), prior to amending or supplementing the
Disclosure Package or the Final Offering Memorandum, the Company shall furnish
to the Representative for review a copy of each such proposed amendment or
supplement, and the Company shall not print, use or distribute such proposed
amendment or supplement to which the Representative reasonably objects.
(b) Amendments and Supplements to the Disclosure Package, the Offering
Memorandum and Other Securities Act Matters. If, at any time prior to the
completion of the resale of the Notes by the Initial Purchasers (as notified by
the Initial Purchasers to the Company), any event or development shall occur or
condition exist as a result of which it is necessary to amend or supplement the
Disclosure Package or the Final Offering Memorandum in order that the Disclosure
Package or 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 under which they were made
or then prevailing, as the case may be, not misleading, or if in the opinion of
the Representative or counsel for the Initial Purchasers it is otherwise
necessary to amend or supplement the Disclosure Package or the Final Offering
Memorandum to comply with law, the Company shall promptly notify the Initial
Purchasers and prepare, subject to Section 3(a) hereof, and furnish at its own
expense to the Initial Purchasers and to dealers, amendments or supplements to
the Disclosure Package or the Final Offering Memorandum so that the statements
in the Disclosure Package or the Final Offering Memorandum as so amended or
supplemented will not, in the light of the circumstances then prevailing or
under which they were made, as the case may be, be misleading or so that the
Disclosure Package or the Final Offering Memorandum, as amended or supplemented,
will comply with law.
(c) Copies of Offering Memorandum. The Company agrees to furnish to the
Representative, without charge, until the earlier of nine months after the date
hereof or the completion of the resale of the Notes by the Initial Purchasers
(as notified by the Initial Purchasers to the Company) as many copies of the
Disclosure Package and the Final Offering Memorandum and any amendments and
supplements thereto as the Representative may reasonably request.
(d) Blue Sky Compliance. The Company shall cooperate with the
Representative and counsel for the Initial Purchasers, as the Initial Purchasers
may reasonably request from time to time, to qualify or register the Notes for
sale under (or obtain exemptions from the application of) the state securities
or blue sky laws or Canadian provincial Securities laws of those jurisdictions
designated by the Representative, shall comply with such laws and shall continue
such qualifications, registrations and exemptions in effect so long as required
for the distribution of the Notes. The Company shall not be required to qualify
as a foreign corporation or to take any action that would subject it to general
service of process in any such jurisdiction where it is not presently qualified
or where it would be subject to taxation as a foreign corporation. The Company
will advise the Representative promptly of the suspension of the qualification
or registration of (or any such exemption relating to) the Notes for offering,
sale or trading in any jurisdiction or any initiation or threat of any
proceeding for any such purpose, and in the event of the issuance of any order
suspending such qualification, registration or exemption, the Company shall use
its best efforts to obtain the withdrawal thereof at the earliest possible
moment.
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(e) Rule 144A Information. For so long as any of the Notes are "restricted
securities" within the meaning of Rule 144(a)(3) under the Securities Act, the
Company shall provide to any holder of the Notes or to any prospective purchaser
of the Notes designated by any holder, upon request of such holder or
prospective purchaser, information required to be provided by Rule 144A(d)(4) of
the Securities Act if, at the time of such request, the Company is not subject
to the reporting requirements under Section 13 or 15(d) of the Exchange Act.
(f) Compliance with Securities Law. The Company will comply in all
material respects with all applicable securities and other laws, rules and
regulations, including, without limitation, the Xxxxxxxx-Xxxxx Act.
(g) Legends. Each of the Notes will bear, to the extent applicable, the
legend contained in "Notice to Investors" in the Preliminary Offering Memorandum
and the Final Offering Memorandum for the time period and upon the other terms
stated therein.
(h) Written Information Concerning the Offering. Without the prior written
consent of the Representative, the Company will not give to any prospective
purchaser of the Notes or any other person not in its employ (and other than its
professional advisors) any written information concerning the offering of the
Notes other than the Disclosure Package, the Final Offering Memorandum or any
other offering materials prepared by or with the prior consent of the
Representative.
(i) No General Solicitation. Except following the effectiveness of the
Registration Statement (as defined in the Registration Rights Agreement), the
Company will not, and will cause its subsidiaries not to, solicit any offer to
buy or offer to sell the Notes by means of any form of general solicitation or
general advertising (as those terms are used in Regulation D under the
Securities Act) or in any manner involving a public offering within the meaning
of Section 4(2) of the Securities Act.
(j) No Integration. The Company will not, and will cause its subsidiaries
not to, sell, offer for sale or solicit offers to buy or otherwise negotiate in
respect of any "security" (as defined in the Securities Act) in a transaction
that could be integrated with the sale of the Notes in a manner that would
require the registration under the Securities Act of the Notes.
(k) Information to Publishers. Any information provided by the Company to
publishers of publicly available databases about the terms of the Notes shall
include a statement that the Notes have not been registered under the Act and
are subject to restrictions under Rule 144A of the Act.
(l) DTC. The Company will cooperate with the Representative and use its
best efforts to permit the Notes to be eligible for clearance and settlement
through The Depository Trust Company.
(m) Rule 144 Tolling. During the period of two years after the last
Closing Date, 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 Notes
which constitute "restricted securities" under Rule 144 that have been
reacquired by any of them.
(n) Use of Proceeds. The Company shall apply the net proceeds from the
sale of the Notes sold by it in the manner described under the caption "Use of
Proceeds" in the Disclosure Package and the Final Offering Memorandum.
15
(o) Transfer Agent. The Company shall engage and maintain, at its expense,
a registrar and transfer agent for the Common Stock.
(p) Available Conversion Shares. The Company will reserve and keep
available at all times, free of pre-emptive rights, the full number of
Conversion Shares.
(q) Adjustment of Conversion Price. 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 of the Notes.
(r) Company to Provide Interim Financial Statements and Other Information.
Prior to the Closing Date, the Company will furnish the Initial Purchasers, as
soon as they have been prepared by or are available to the Company, a copy of
any unaudited interim financial statements of the Company for any period
subsequent to the period covered by the most recent financial statements
appearing in the Disclosure Package and the Final Offering Memorandum.
(s) Agreement Not to Offer or Sell Additional Notes. During the period
commencing on the date hereof and ending on the 90th day following the date of
the Final Offering Memorandum, the Company will not, without the prior written
consent of BAS (which consent may be withheld at the sole discretion of BAS),
directly or indirectly, sell, offer, contract or grant any option to sell,
pledge, transfer or establish an open "put equivalent position" or liquidate or
decrease a "call equivalent position" within the meaning of Rule 16a-1(h) under
the Exchange Act, or otherwise dispose of or transfer (or enter into any
transaction which is designed to, or might reasonably be expected to, result in
the disposition of), or announce the offering of, or file any registration
statement under the Securities Act in respect of, any shares of Common Stock,
options or warrants to acquire shares of the Common Stock or securities
exchangeable or exercisable for or convertible into shares of Common Stock
(other than as contemplated by this Agreement with respect to the Notes,
including any Conversion Shares); provided, however, that the Company may (i)
grant restricted stock and issue shares of its Common Stock or options to
purchase its Common Stock, or Common Stock upon exercise of options, pursuant to
any stock option, stock bonus or other stock plan, warrant or arrangement
outstanding or in effect on the date hereof and described in the Preliminary
Offering Memorandum and the Final Offering Memorandum, and (ii) issue shares of
its Common Stock in connection with any prior or future acquisition of
businesses by the Company, including in connection with related earn-out
obligations, provided that (x) the aggregate value of such stock, measured on
the date of issuance, does not exceed $50,000,000 and (y) that any such stock
issued in connection with acquisitions consummated after the date hereof may not
be transferred, sold or otherwise disposed of prior to the date 90 days after
the date hereof.
(t) Future Reports to the Representative. During the period of five years
after the Closing Date the Company will furnish or make available (including via
the Commission's web site) to the Representative at 0 Xxxx 00xx Xxxxxx, Xxx
Xxxx, XX 00000, Attention: Xxxxxxx X. Xx: (i) as soon as practicable after the
end of each fiscal year, copies of the annual report of the Company containing
the balance sheet of the Company as of the close of such fiscal year and
statements of income, stockholders' equity and cash flows for the year then
ended and the opinion thereon of the Company's independent public or certified
public accountants; (ii) as soon as practicable after the filing thereof, copies
of each proxy statement, Annual Report on Form 10-K, Quarterly Report on Form
10-Q, Current Report on Form 8-K or other report filed by the Company with the
Commission, the NASD or any securities exchange; and (iii) as soon as available,
copies of any report or communication of the Company mailed generally to holders
of its capital stock.
16
(u) Investment Limitation. The Company shall not invest or otherwise use
the proceeds received by the Company from its sale of the Notes in such a manner
as would require the Company or any of its subsidiaries to register as an
investment company under the Investment Company Act.
(v) No Manipulation of Price. The Company will not take, directly or
indirectly, any action designed to cause or result in, or that has constituted
or might reasonably be expected to constitute, under the Exchange Act or
otherwise, the stabilization or manipulation of the price of any securities of
the Company to facilitate the sale or resale of the Notes.
(w) New Lock-Up Agreements. The Company will enforce all agreements
between the Company and any of its security holders to be entered into pursuant
to this agreement that prohibit the sale, transfer, assignment, pledge or
hypothecation of any of the Company's securities. In addition, the Company will
direct the transfer agent to place stop transfer restrictions upon any such
securities of the Company that are bound by such "lock-up" agreements for the
duration of the periods contemplated in such agreements.
SECTION 4. PAYMENT OF EXPENSES
The Company agrees to pay all costs, fees and expenses incurred in
connection with the performance of its obligations hereunder and in connection
with the transactions contemplated hereby, including without limitation (i) all
expenses incident to the issuance and delivery of the Notes (including all
printing and engraving costs), (ii) all fees and expenses of the Trustee under
the Indenture, (iii) all necessary issue, transfer and other stamp taxes in
connection with the issuance and sale of the Notes to the Initial Purchasers,
(iv) all fees and expenses of the Company's counsel, independent public or
certified public accountants and other advisors, (v) all costs and expenses
incurred in connection with the preparation, printing, shipping and distribution
of the Preliminary Offering Memorandum and the Final Offering Memorandum, all
amendments and supplements thereto, the Disclosure Package and this Agreement,
(vi) all filing fees, attorneys' fees and expenses incurred by the Company or
the Initial Purchasers in connection with qualifying or registering (or
obtaining exemptions from the qualification or registration of) all or any part
of the Notes for offer and sale under the state securities or blue sky laws or
the provincial securities laws of Canada, and, if requested by the
Representative, preparing and printing a "Blue Sky Survey" or memorandum, and
any supplements thereto, advising the Initial Purchasers of such qualifications,
registrations and exemptions, (vii) the expenses of the Company and the Initial
Purchasers in connection with the marketing and offering of the Notes, including
all transportation and other expenses incurred in connection with presentations
to prospective purchasers of the Notes, except that the Company and the Initial
Purchasers will each pay 50% of the cost of privately chartered airplanes used
for such purposes, (viii) the fees and expenses associated with approving the
Conversion Shares for quotation on the Nasdaq National Market and (ix) all
expenses and fees in connection with admitting the Notes for trading in the
PORTAL Market. Except as provided in this Section 4, Section 7, Section 10 and
Section 11 hereof, the Initial Purchasers shall pay their own expenses,
including the fees and disbursements of their counsel.
SECTION 5. CONDITIONS OF THE OBLIGATIONS OF THE INITIAL PURCHASERS
The obligations of the several Initial Purchasers to purchase and pay for
the Notes as provided herein on the Closing Date and, with respect to the
Optional Notes, any Subsequent Closing Date, shall be subject to the accuracy of
the representations, warranties and agreements on the part of the Company set
forth in Section 1 hereof as of the date hereof and as of the Closing Date as
though then made and, with respect to the Optional Notes, as of the related
17
Subsequent Closing Date as though then made, to the accuracy of the statements
of the Company made in any certificates pursuant to the provisions hereof, to
the timely performance by the Company of its covenants and other obligations
hereunder, and to each of the following additional conditions:
(a) Accountants' Comfort Letter. On the date hereof, the Representative
shall have received from KPMG LLP, independent public accountants for the
Company, a letter dated the date hereof addressed to the Initial Purchasers, in
form and substance satisfactory to the Representative, containing statements and
information of the type ordinarily included in accountant's "comfort letters" to
initial purchasers, delivered according to Statement of Auditing Standards No.
72 (or any successor bulletin), with respect to the audited and unaudited
financial statements and certain financial information contained in the
Preliminary Offering Memorandum and the Final Offering Memorandum.
(b) No Material Adverse Change or Rating Agency Change. For the period
from and after the date of this Agreement and prior to the Closing Date and,
with respect to the Optional Notes, any Subsequent Closing Date:
(i) in the judgment of the Representative there shall not have
occurred any Material Adverse Change;
(ii) there shall not have been any change or decrease specified in
the letter or letters referred to in paragraph (a) of this Section 5 which
is, in the sole judgment of the Representative, so material and adverse as
to make it impractical or inadvisable to proceed with the offering or
delivery of the Notes as contemplated by the Disclosure Package and the
Final Offering Memorandum; and
(iii) there shall not have occurred any downgrading, nor shall any
notice have been given of any intended or potential downgrading or of any
review for a possible change that does not indicate the direction of the
possible change, in the rating accorded any securities of the Company or
any of its subsidiaries by any "nationally recognized statistical rating
organization" as such term is defined for purposes of Rule 436(g)(2) under
the Securities Act.
(c) Opinion of Counsel for the Company. On each of the Closing Date and
any Subsequent Closing Date, the Representative shall have received the
favorable opinion of Xxxx Xxxx Xxxxxxx Xxxxx & Xxxx LLP, counsel for the
Company, and Xxxxxxx X. Xxxxxxxx, General Counsel of the Company, in each case
dated as of such Closing Date, the forms of which are attached as Exhibit A-1
and Exhibit A-2, respectively.
(d) Opinion of Counsel for the Initial Purchasers. On each of the Closing
Date and any Subsequent Closing Date, the Representative shall have received the
favorable opinion of Xxxxx Xxxx & Xxxxxxxx, counsel for the Initial Purchasers,
dated as of such Closing Date, in form and substance satisfactory to, and
addressed to, the Representative, with respect to the issuance and sale of the
Shares, the Preliminary Offering Memorandum, the Final Offering Memorandum and
other related matters as the Representative 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.
(e) Officers' Certificate. On each of the Closing Date and any Subsequent
Closing Date, the Representative shall have received a written certificate
executed by the Chairman of the Board, Chief Executive Officer or President of
the Company and the Chief Financial Officer or
18
Chief Accounting Officer of the Company, dated as of such Closing Date, to the
effect that the signers of such certificate have carefully examined the
Preliminary Offering Memorandum, the Disclosure Package, the Final Offering
Memorandum, any amendments or supplements thereto, and this Agreement, to the
effect set forth in subsection (b)(iii) of this Section 5, and further to the
effect that:
(i) for the period from and after the date of this Agreement and
prior to such Closing Date or such Subsequent Closing Date, as the case
may be, there has not occurred any Material Adverse Change;
(ii) the representations, warranties and covenants of the Company
set forth in Section 1 of this Agreement are true and correct on and as of
the Closing Date or the Subsequent Closing Date, as the case may be, with
the same force and effect as though expressly made on and as of such
Closing Date or such Subsequent Closing Date, as the case may be; and
(iii) the Company has complied with all the agreements hereunder and
satisfied all the conditions on its part to be performed or satisfied
hereunder at or prior to such Closing Date or such Subsequent Closing
Date, as the case may be.
(f) Bring-down Comfort Letter. On each of the Closing Date and any
Subsequent Closing Date, the Representative shall have received from KPMG LLP,
independent public accountants for the Company, a letter dated such date, in
form and substance satisfactory to the Representative, to the effect that they
reaffirm the statements made in the letter furnished by them pursuant to
subsection (a) of this Section 5, except that the specified date referred to
therein for the carrying out of procedures shall be no more than three business
days prior to the Closing Date or Subsequent Closing Date, as the case may be.
(g) Registration Rights Agreement. The Company and the Initial Purchasers
shall have executed and delivered the Registration Rights Agreement (in form and
substance satisfactory to the Initial Purchasers), and the Registration Rights
Agreement shall be in full force and effect.
(h) Credit Agreement Waiver. The Credit Agreement Waiver shall have been
delivered and shall be in full force and effect.
(i) Lock-Up Agreement from Certain Securityholders of the Company. On or
prior to the date hereof, the Company shall have furnished to the Representative
an agreement in the form of Exhibit B hereto from each of the Company's
directors and executive officers, and such agreement shall be in full force and
effect on each of the Closing Date and any Subsequent Closing Date.
(j) PORTAL Designation. The Notes shall have been designated
PORTAL-eligible securities in accordance with the rules and regulations of the
National Association of Securities Dealers, Inc.
(k) The Company shall have taken all action necessary to cause the
Conversion Shares to be approved for quotation, subject to issuance, on The
Nasdaq Stock Market.
(l) Additional Documents. On or before each of the Closing Date and any
Subsequent Closing Date, the Representative and counsel for the Initial
Purchasers shall have received such information, documents and opinions as they
may reasonably require for the purposes of enabling them to pass upon the
issuance and sale of the Notes as contemplated herein, or in order to
19
evidence the accuracy of any of the representations and warranties, or the
satisfaction of any of the conditions or agreements, herein contained.
If any condition specified in this Section 5 is not satisfied when and as
required to be satisfied, this Agreement may be terminated by the Representative
by notice to the Company at any time on or prior to the Closing Date and, with
respect to the Optional Notes, at any time prior to the applicable Subsequent
Closing Date, which termination shall be without liability on the part of any
party to any other party, except that Section 4, Section 7, Section 8, Section 9
and Section 12 shall at all times be effective and shall survive such
termination.
SECTION 6. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF INITIAL
PURCHASERS
Each of the Initial Purchasers represents and warrants that it is a
"qualified institutional buyer", as defined in Rule 144A of the Securities Act.
Each Initial Purchaser agrees with the Company that:
(a) it has not offered or sold, and will not offer or sell, any Notes
within the United States or to, or for the account or benefit of, U.S. persons
(x) as part of its distribution at any time or (y) otherwise until one year
after the later of the commencement of the offering and the date of closing of
the offering except to those it reasonably believes to be "qualified
institutional buyers" (as defined in Rule 144A under the Act);
(b) neither it nor any person acting on its behalf has made or will make
offers or sales of the Notes in the United States by means of any form of
general solicitation or general advertising (within the meaning of Regulation D)
in the United States;
(c) in connection with each sale pursuant to Section 6(a), it has taken or
will take reasonable steps to ensure that the purchaser of such Notes is aware
that such sale is being made in reliance on Rule 144A;
(d) any information provided by the Initial Purchasers to publishers of
publicly available databases about the terms of the Notes shall include a
statement that the Notes have not been registered under the Act and are subject
to restrictions under Rule 144A under the Act;
(e) it acknowledges that additional restrictions on the offer and sale of
the Notes and the Conversion Shares are described in the Preliminary Offering
Memorandum and the Final Offering Memorandum;
(f) it has complied and will comply with all applicable provisions of the
FSMA with respect to anything done by it in relation to the Notes in, from or
otherwise involving the United Kingdom;
(g) it has only communicated or caused to be communicated and will only
communicate or cause to be communicated any invitation or inducement to engage
in investment activity (within the meaning of section 21 of the FSMA) received
by it in connection with the issue or sale of any Notes, in circumstances in
which section 21(1) of the FSMA does not apply to the Company;
(h) In relation to each Member State of the European Economic Area which
has implemented the Prospectus Directive (each, a "Relevant Member State"), each
of the Initial Purchasers has represented and agreed that with effect from and
including the date on which the Prospectus Directive is implemented in that
Member State (the "Relevant Implementation Date")
20
it has not made and will not make an offer of Notes to the public in that
Relevant Member State prior to the publication of a prospectus in relation to
the Notes which has been approved by the competent authority in that Relevant
Member State or, where appropriate, published in another Relevant Member State
and notified to the competent authority in that Relevant Member State, all in
accordance with the Prospectus Directive, except that it may, with effect from
and including the Relevant Implementation Date, make an offer of Notes to the
public in that Relevant Member State at any time:
(i) to legal entities which are authorized or regulated to operate
in the financial markets or, if not so authorized or regulated, whose
corporate purpose is solely to invest in securities;
(ii) to any legal entity which has two or more of (1) an average of
at least 250 employees during the last financial year, (2) a total balance
sheet of more than (euro)43,000,000 and (3) an annual turnover of more
than (euro)50,000,000, as shown in its last annual or consolidated
accounts; or
(iii) in any other circumstances which do not require the
publication by the issuer of a prospectus pursuant to Article 3 of the
Prospectus Directive.
For the purposes of this provision, the expression an "offer of Notes to
the public" in relation to any Notes in any Relevant Member State means the
communication in any form and by any means of sufficient information on the
terms of the offer and the Notes to be offered so as to enable an investor to
decide to purchase or subscribe the Notes, as the same may be varied in that
Member State by any measure implementing the Prospectus Directive in that Member
State and the expression "Prospectus Directive" means Directive 2003/71/EC and
includes any relevant implementing measure in each Relevant Member State.
The Initial Purchasers acknowledge that the Company and, for purposes of
the opinions to be delivered to the Initial Purchasers pursuant to Sections 5(c)
and 5(d) hereof, counsel for the Company and counsel for the Initial Purchasers
will rely upon the accuracy and truth of the foregoing representations and
hereby consent to such reliance.
SECTION 7. REIMBURSEMENT OF INITIAL PURCHASERS' EXPENSES
If this Agreement is terminated by the Representative pursuant to Section
5, Section 10 or Section 11, or if the sale to the Initial Purchasers of the
Notes on the Closing Date is not consummated because of any refusal, inability
or failure on the part of the Company to perform any agreement herein or to
comply with any provision hereof, the Company agrees to reimburse the
Representative and the other Initial Purchasers (or such Initial Purchasers as
have terminated this Agreement with respect to themselves), severally, upon
demand for all out-of-pocket expenses that shall have been reasonably incurred
by the Representative and the Initial Purchasers in connection with the proposed
purchase and the offering and sale of the Notes, including but not limited to
reasonable fees and disbursements of counsel, printing expenses, travel
expenses, postage, facsimile and telephone charges.
SECTION 8. INDEMNIFICATION
(a) Indemnification of the Initial Purchasers. The Company agrees to
indemnify and hold harmless each Initial Purchaser, its directors, officers and
employees, agents, and each person, if any, who controls any Initial Purchaser
within the meaning of the Securities Act and the Exchange Act against any loss,
claim, damage, liability or expense, as incurred, to which such
21
Initial Purchaser or such controlling person may become subject, insofar as such
loss, claim, damage, liability or expense (or actions in respect thereof as
contemplated below) arises out of or is based upon any untrue statement or
alleged untrue statement of a material fact contained or incorporated by
reference in the Preliminary Offering Memorandum, the Final Offering Memorandum,
the Disclosure Package or the investor presentation attached hereto as Exhibit D
(or any amendment or supplement thereto), or the omission or alleged omission
therefrom of a material fact, in each case, necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, and to reimburse each Initial Purchaser, its officers,
directors, employees, agents and each such controlling person for any and all
expenses (including the fees and disbursements of counsel chosen by BAS) as such
expenses are reasonably incurred by such Initial Purchaser, its officers,
directors, employees, agents or such controlling person in connection with
investigating, defending, settling, compromising or paying any such loss, claim,
damage, liability, expense or action; provided, however, that the foregoing
indemnity agreement shall not apply to any loss, claim, damage, liability or
expense to the extent, but only to the extent, arising out of or based upon any
untrue statement or alleged untrue statement or omission or alleged omission
made in reliance upon and in conformity with written information furnished to
the Company by the Representative expressly for use in the Preliminary Offering
Memorandum, the Final Offering Memorandum or the Disclosure Package (or any
amendment or supplement thereto). The indemnity agreement set forth in this
Section 8(a) shall be in addition to any liabilities that the Company may
otherwise have.
(b) Indemnification of the Company, its Directors and Officers. Each
Initial Purchaser agrees, severally and not jointly, to indemnify and hold
harmless the Company, each of its directors, each of its officers and employees,
agents, and each person, if any, who controls the Company within the meaning of
the Securities Act or the Exchange Act, against any loss, claim, damage,
liability or expense, as incurred, to which the Company, or any such director,
officer or controlling person may become subject, insofar as such loss, claim,
damage, liability or expense (or actions in respect thereof as contemplated
below) arises out of or is based upon any untrue or alleged untrue statement of
a material fact contained in the Preliminary Offering Memorandum, the Final
Offering Memorandum or the Disclosure Package (or any amendment or supplement
thereto), or arises out of or is based upon the omission or alleged omission to
state therein a material fact necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not misleading, in
each case to the extent, and only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in the
Preliminary Offering Memorandum, the Final Offering Memorandum or the Disclosure
Package (or any amendment or supplement thereto), in reliance upon and in
conformity with written information furnished to the Company by the
Representative expressly for use therein; and to reimburse the Company, or any
such director, officer, employee, agent or controlling person for any legal and
other expense reasonably incurred by the Company, or any such director, officer,
employee, agent or controlling person in connection with investigating,
defending, settling, compromising or paying any such loss, claim, damage,
liability, expense or action. The Company hereby acknowledges that the only
information that the Initial Purchasers have furnished to the Company expressly
for use in the Preliminary Offering Memorandum, the Final Offering Memorandum or
the Disclosure Package (or any amendment or supplement thereto) are the
statements set forth in Schedule B hereto. The indemnity agreement set forth in
this Section 8(b) shall be in addition to any liabilities that each Initial
Purchaser may otherwise have.
(c) Notifications and Other Indemnification Procedures. 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 an indemnifying party under this Section 8, notify
the indemnifying party in writing of the commencement thereof, but
22
the failure to so 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. In case any such action is brought against any indemnified party and such
indemnified party seeks or intends to seek indemnity from an indemnifying party,
the indemnifying party will be entitled to participate in, and, to the extent
that it shall elect, jointly with all other indemnifying parties similarly
notified, by written notice delivered to the indemnified party promptly after
receiving the aforesaid notice from such indemnified party, to assume the
defense thereof with counsel satisfactory to such indemnified party; provided,
however, if the defendants in any such action include both the indemnified party
and the indemnifying party and the indemnified party shall have reasonably
concluded that a conflict may arise between the positions of the indemnifying
party and the indemnified party in conducting the defense of any such action or
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, the indemnified party or parties shall have the right to
select separate counsel to assume such legal defenses and to otherwise
participate in the defense of such action on behalf of such indemnified party or
parties. Upon receipt of notice from the indemnifying party to such indemnified
party of such indemnifying party's election so to assume the defense of such
action and approval by the indemnified party of counsel, the indemnifying party
will not be liable to such indemnified party under this Section 8 for any legal
or other expenses subsequently incurred by such indemnified party in connection
with the defense thereof unless (i) the indemnified party shall have employed
separate counsel in accordance with the proviso to the preceding sentence (it
being understood, however, that the indemnifying party shall not be liable for
the expenses of more than one separate counsel (other than local counsel),
reasonably approved by the indemnifying party (or by BAS in the case of Section
8(b)), representing the indemnified parties who are parties to such action) or
(ii) 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 commencement of the action, in each of which cases the fees and
expenses of counsel shall be at the expense of the indemnifying party.
(d) Settlements. The indemnifying party under this Section 8 shall not be
liable for any settlement of any proceeding effected without its written
consent, which shall not be withheld unreasonably, but if settled with such
consent or if there is a final judgment for the plaintiff, the indemnifying
party agrees to indemnify the indemnified party against any loss, claim, damage,
liability or expense by reason of such settlement or judgment. Notwithstanding
the foregoing sentence, if at any time an indemnified party shall have requested
an indemnifying party to reimburse the indemnified party for fees and expenses
of counsel as contemplated by Section 8(c) hereof, the indemnifying party agrees
that it shall be liable for any settlement of any proceeding effected without
its written consent if (i) such settlement is entered into more than 30 days
after receipt by such indemnifying party of the aforesaid request and (ii) such
indemnifying party shall not have reimbursed the indemnified party in accordance
with such request prior to the date of such settlement; provided that the
indemnifying party shall not be liable for any such settlement if the
indemnifying party has reimbursed the indemnified party for such fees and
expenses other than that portion which the indemnifying party is contesting in
good faith as being unreasonable. No indemnifying party shall, without the prior
written consent of the indemnified party, effect any settlement, compromise or
consent to the entry of judgment in any pending or threatened action, suit or
proceeding in respect of which any indemnified party is or could have been a
party and indemnity was or could have been sought hereunder by such indemnified
party, unless such settlement, compromise or consent (x) includes an
unconditional release of such indemnified party from all liability on claims
that are the subject matter of such action, suit or proceeding and
23
(y) 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.
SECTION 9. CONTRIBUTION
If the indemnification provided for in Section 8 is for any reason
unavailable to or otherwise insufficient to hold harmless an indemnified party
in respect of any losses, claims, damages, liabilities or expenses referred to
therein, then each indemnifying party shall contribute to the aggregate amount
paid or payable by such indemnified party, as incurred, as a result of any
losses, claims, damages, liabilities or expenses referred to therein (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 Notes pursuant to this Agreement or (ii) if the allocation
provided by clause (i) above 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 the Initial Purchasers, on the other hand, in connection with the
statements or omissions or alleged statements or alleged omissions that resulted
in such losses, claims, damages, liabilities 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 Notes pursuant to this Agreement shall be
deemed to be in the same respective proportions as the total net proceeds from
the offering of the Notes pursuant to this Agreement (before deducting expenses)
received by the Company, and the total discount received by the Initial
Purchasers bear to the aggregate initial offering price of the Notes. The
relative fault of the Company, on the one hand, and the Initial Purchasers, 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 information supplied by the
Company, on the one hand, or the Initial Purchasers, on the other hand, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.
The amount paid or payable by a party as a result of the losses, claims,
damages, liabilities and expenses referred to above shall be deemed to include,
subject to the limitations set forth in Section 8(c), any legal or other fees or
expenses reasonably incurred by such party in connection with investigating or
defending any action or claim.
The Company and the Initial Purchasers agree that it would not be just and
equitable if contribution pursuant to this Section 9 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 in this Section 9.
Notwithstanding the provisions of this Section 9, no Initial Purchaser
shall be required to contribute any amount in excess of the purchase discount or
commission received by such Initial Purchaser in connection with the Notes
purchased by it hereunder. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Initial Purchasers' obligations to contribute pursuant to
this Section 9 are several, and not joint, in proportion to their respective
commitments as set forth opposite their names in Schedule A. For purposes of
this Section 9, each director, officer, employee and agent of an Initial
Purchaser and each person, if any, who controls an Initial Purchaser within the
meaning of the Securities Act and the Exchange Act shall have the same rights to
contribution as such Initial Purchaser, and each director of the Company, each
officer of the Company, and each person, if any, who controls the Company within
the meaning of the Securities Act and the Exchange Act shall have the same
rights to contribution as the Company.
24
SECTION 10. DEFAULT OF ONE OR MORE OF THE SEVERAL INITIAL PURCHASERS
If, on the Closing Date or any Subsequent Closing Date, as the case may
be, any one or more of the several Initial Purchasers shall fail or refuse to
purchase Notes that it or they have agreed to purchase hereunder on such date,
and the aggregate principal amount of Notes which such defaulting Initial
Purchaser or Initial Purchasers agreed but failed or refused to purchase does
not exceed 10% of the aggregate principal amount of the Notes to be purchased on
such date, the other Initial Purchasers shall be obligated, severally, in the
proportions that the principal amount of Firm Notes set forth opposite their
respective names on Schedule A bears to the aggregate principal amount of Firm
Notes set forth opposite the names of all such non-defaulting Initial
Purchasers, or in such other proportions as may be specified by the
Representative with the consent of the non-defaulting Initial Purchasers, to
purchase the Notes which such defaulting Initial Purchaser or Initial Purchasers
agreed but failed or refused to purchase on such date. If, on the Closing Date
or any Subsequent Closing Date, as the case may be, any one or more of the
Initial Purchasers shall fail or refuse to purchase Notes and the aggregate
principal amount of Notes with respect to which such default occurs exceeds 10%
of the aggregate principal amount of Notes to be purchased on such date, and
arrangements satisfactory to the Representative and the Company for the purchase
of such Notes are not made within 48 hours after such default, this Agreement
shall terminate without liability of any party (other than a defaulting Initial
Purchaser) to any other party except that the provisions of Section 4, Section
7, Section 8 and Section 9 shall at all times be effective and shall survive
such termination. In any such case either the Representative or the Company
shall have the right to postpone the Closing Date or any Subsequent Closing
Date, as the case may be, but in no event for longer than seven full business
days in order that the required changes, if any, to the Final Offering
Memorandum or any other documents or arrangements may be effected; provided that
any Subsequent Closing Date, as postponed, shall be on a date within a 13-day
period beginning on the Closing Date. Nothing contained herein shall relieve a
defaulting Initial Purchaser of any liability it may have to the Company for
damages caused by its default.
As used in this Agreement, the term "Initial Purchaser" shall be deemed to
include any person substituted for a defaulting Initial Purchaser under this
Section 10. Any action taken under this Section 10 shall not relieve any
defaulting Initial Purchaser from liability in respect of any default of such
Initial Purchaser under this Agreement.
SECTION 11. TERMINATION OF THIS AGREEMENT
On or prior to the Closing Date this Agreement may be terminated by the
Representative by notice given to the Company if at any time (i) trading or
quotation in any of the Company's securities shall have been suspended or
limited by the Commission or by The Nasdaq National Market, or trading in
securities generally on either The New York Stock Exchange or The Nasdaq Stock
Market shall have been suspended or limited, or minimum or maximum prices shall
have been generally established on any of such stock exchanges by the Commission
or the NASD; (ii) a general banking moratorium shall have been declared by any
federal or New York authority or a material disruption in commercial banking or
securities settlement or clearance services in the United States has occurred;
or (iii) there shall have occurred any outbreak or escalation of national or
international hostilities or any crisis or calamity, or any change in the United
States or international financial markets, or any substantial change or
development involving a prospective substantial change in United States' or
international political, financial or economic conditions, as in the judgment of
the Representative is material and adverse and makes it impracticable or
inadvisable to market the Notes in the manner and on the terms described in the
Final Offering Memorandum or to enforce contracts for the sale of securities.
Any termination pursuant to this Section 11 shall be without liability on the
part of (A) the Company to any Initial Purchaser,
25
except that the Company shall be obligated to reimburse the expenses of the
Representative and the Initial Purchasers pursuant to Sections 4 and 7 hereof or
(B) any Initial Purchaser to the Company, and the provisions of Section 8 and
Section 9 hereof shall at all times be effective and shall survive such
termination.
SECTION 12. NO ADVISORY OR FIDUCIARY RESPONSIBILITY
The Company acknowledges and agrees that: (i) the purchase and sale of the
Notes pursuant to this Agreement, including the determination of the offering
price of the Notes and any related discounts and commissions, is an arm's-length
commercial transaction between the Company, on the one hand, and the several
Initial Purchasers, on the other hand, and the Company is capable of evaluating
and understanding and understands and accepts the terms, risks and conditions of
the transactions contemplated by this Agreement; (ii) in connection with each
transaction contemplated hereby and the process leading to such transaction each
Initial Purchaser is and has been acting solely as a principal and is not the
financial advisor, agent or fiduciary of the Company or its affiliates,
stockholders, creditors or employees or any other party; (iii) no Initial
Purchaser has assumed or will assume an advisory, agency or fiduciary
responsibility in favor of the Company with respect to any of the transactions
contemplated hereby or the process leading thereto (irrespective of whether such
Initial Purchaser has advised or is currently advising the Company on other
matters) and no Initial Purchaser has any obligation to the Company with respect
to the offering contemplated hereby except the obligations expressly set forth
in this Agreement; (iv) the several Initial Purchasers and their respective
affiliates may be engaged in a broad range of transactions that involve
interests that differ from those of the Company and that the several Initial
Purchasers have no obligation to disclose any of such interests by virtue of any
advisory, agency or fiduciary relationship; and (v) the Initial Purchasers have
not provided any legal, accounting, regulatory or tax advice with respect to the
offering contemplated hereby and the Company has consulted its own legal,
accounting, regulatory and tax advisors to the extent it deemed appropriate.
This Agreement supersedes all prior agreements and understandings (whether
written or oral) between the Company and the several Initial Purchasers, or any
of them, with respect to the subject matter hereof. The Company hereby waives
and releases, to the fullest extent permitted by law, any claims that the
Company may have against the several Initial Purchasers with respect to any
breach or alleged breach of agency or fiduciary duty.
26
SECTION 13. REPRESENTATIONS AND INDEMNITIES TO SURVIVE DELIVERY
The respective indemnities, contribution, agreements, representations,
warranties and other statements of the Company, of its officers and of the
several Initial Purchasers set forth in or made pursuant to this Agreement shall
remain operative and in full force and effect, regardless of (i) any
investigation, or statement as to the result hereof, made by or on behalf of any
Initial Purchaser or the Company or any of its or their partners, officers,
directors, employees, agents or any controlling person, as the case may be, (ii)
acceptance of the Notes and payment for them hereunder or (iii) any termination
of this Agreement.
SECTION 14. NOTICES
All communications hereunder shall be in writing and shall be mailed, hand
delivered or telecopied and confirmed to the parties hereto as follows:
If to the Representative:
Banc of America Securities LLC
0 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: 000-000-0000
Attention: Xxxxxxx X. Xx
with a copy to:
Xxxxx Xxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx Xxxxxx
If to the Company:
CBIZ, Inc.
0000 Xxx Xxxx Xxxxxxxxx Xxxxx
Xxxxx 000
Xxxxxxxxx, Xxxx 00000
Facsimile: (000) 000-0000
Attention: General Counsel
with a copy to:
Xxxx Xxxx Xxxxxxx Xxxxx & Xxxx LLP
0000 Xxxxxxx Xxxx Xxxx
Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Facsimile: (000) 000-0000
Attention: Xxxxx Xxxxxx
Any party hereto may change the address for receipt of communications by
giving written notice to the others.
SECTION 15. SUCCESSORS
This Agreement will inure to the benefit of and be binding upon the
parties hereto, including any substitute Initial Purchasers pursuant to Section
10 hereof, and to the benefit of the
27
employees, officers and directors and controlling persons referred to in Section
8 and Section 9, and in each case their respective successors, and no other
person will have any right or obligation hereunder. The term "successors" shall
not include any purchaser of the Notes as such from any of the Initial
Purchasers merely by reason of such purchase.
SECTION 16. PARTIAL UNENFORCEABILITY
The invalidity or unenforceability of any Section, paragraph or provision
of this Agreement shall not affect the validity or enforceability of any other
Section, paragraph or provision hereof. If any Section, paragraph or provision
of this Agreement is for any reason determined to be invalid or unenforceable,
there shall be deemed to be made such minor changes (and only such minor
changes) as are necessary to make it valid and enforceable.
SECTION 17. GOVERNING LAW PROVISIONS
(a) Governing Law Provisions. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
(b) Consent to Jurisdiction. Any legal suit, action or proceeding arising
out of or based upon this Agreement or the transactions contemplated hereby
("Related Proceedings") may be instituted in the federal courts of the United
States of America located in the City and County of New York, Borough of
Manhattan or the courts of the State of New York in each case located in the
City and County of New York, Borough of Manhattan (collectively, the "Specified
Courts"), and each party irrevocably submits to the exclusive jurisdiction
(except for proceedings instituted in regard to the enforcement of a judgment of
any such court (a "Related Judgment"), as to which such jurisdiction is
non-exclusive) of such courts in any such suit, action or proceeding. Service of
any process, summons, notice or document by mail to such party's address set
forth above shall be effective service of process for any suit, action or other
proceeding brought in any such court. The parties irrevocably and
unconditionally waive any objection to the laying of venue of any suit, action
or other proceeding in the Specified Courts and irrevocably and unconditionally
waive and agree not to plead or claim in any such court that any such suit,
action or other proceeding brought in any such court has been brought in an
inconvenient forum.
SECTION 18. GENERAL PROVISIONS
This Agreement constitutes the entire agreement of the parties to this
Agreement and supersedes all prior written or oral and all contemporaneous oral
agreements, understandings and negotiations with respect to the subject matter
hereof. This Agreement may be executed in two or more counterparts, each one of
which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument. This Agreement may not be amended or
modified unless in writing by all of the parties hereto. The Section headings
herein are for the convenience of the parties only and shall not affect the
construction or interpretation of this Agreement.
[SIGNATURE PAGE FOLLOWS]
28
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to the Company the enclosed copies hereof,
whereupon this instrument, along with all counterparts hereof, shall become a
binding agreement in accordance with its terms.
Very truly yours,
CBIZ, INC.
By: /s/ Xxxx X. Xxxxx
------------------------------
Name: Xxxx X. Xxxxx
Title: Chief Financial Officer
The foregoing Purchase Agreement is hereby confirmed and accepted by the
Representative as of the date first above written.
BANC OF AMERICA SECURITIES LLC
Acting as Representative of the
several Initial Purchasers named in
the attached Schedule A.
BANC OF AMERICA SECURITIES LLC
By: /s/ Xxxxx Xxxxxx
------------------------------
Name: Xxxxx Xxxxxx
Title: Managing Director
29
SCHEDULE A
AGGREGATE
PRINCIPAL AMOUNT
OF FIRM NOTES TO
INITIAL PURCHASERS BE PURCHASED
Banc of America Securities LLC ........................... $100,000,000
Total............................................ $100,000,000
SCHEDULE B
The last sentence on the cover page of the Offering Memorandum and the seventh
paragraph, the fourth sentence of the eight paragraph, the ninth paragraph and
the thirteenth paragraph of the section of the Offering Memorandum entitled
"Plan of Distribution".
EXHIBIT A-1
FORM OF OPINION OF COUNSEL FOR THE COMPANY
EXHIBIT A-2
FORM OF OPINION OF COUNSEL FOR THE COMPANY
EXHIBIT B
[FORM OF LOCK-UP AGREEMENTS]
EXHIBIT C
Banc of America Securities LLC
CBIZ, INC.
3.125% CONVERTIBLE SENIOR
SUBORDINATED NOTES DUE 2026
Issuer: CBIZ, Inc.
Title of securities: 3.125% Convertible Senior Subordinated Notes due 2026
Issue price 100%
Aggregate principal amount offered: $85,000,000 ($100,000,000 after giving effect to the exercise of
the option to purchase additional notes in full)
Net proceeds: $82,250,000 ($96,837,500 after giving effect to the exercise of
the option to purchase additional notes in full)
Maturity: June 1, 2026
Annual interest rate: 3.125% per annum plus contingent interest
Interest payment dates June 1, December 1
Call dates: Issuer may, at its option, redeem all or a portion of the notes
on or after June 6, 2011
Put dates: Holders may require the issuer to repurchase all or a portion of
their notes on June 1, 2011, 2016, and 2021
Conversion price: $10.63 (approx.) per share of common stock
Conversion rate: 94.1035 shares of common stock per $1,000 aggregate principal
amount of notes
Settlement: May 30, 2006
U.S. Federal Income Tax Considerations: Comparable yield is 9.0%
Adjustment to conversion rate upon a Change of The following table sets forth the stock price, effective date
Control: and number of additional shares to be issuable per $1,000
principal amount of notes. The maximum number of additional
shares issuable per $1,000 is 31.5246.
Stock Price
Effective Date $ 7.96 $ 9.00 $10.63 $12.50 $15.00 $20.00 $25.00 $30.00 $40.00 $50.00 $60.00 $70.00 $80.00
23-May-06 31.52 24.44 17.38 12.46 8.64 4.98 3.28 2.37 1.34 0.78 0.45 0.24 0.10
1-Jun-07 31.52 23.15 15.83 10.96 7.36 4.06 2.64 1.91 1.09 0.64 0.37 0.19 0.08
1-Jun-08 31.52 22.57 14.11 9.20 5.88 3.07 2.01 1.45 0.85 0.50 0.29 0.15 0.06
1-Jun-09 31.52 21.22 12.72 7.44 3.92 1.86 1.24 0.91 0.54 0.33 0.19 0.10 0.04
1-Jun-10 31.52 18.84 9.52 4.39 1.54 0.56 0.37 0.27 0.15 0.07 0.02 0.00 0.00
6-Jun-11 31.52 15.52 5.97 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
This communication is intended for the sole use of the person to whom it is
provided by the sender.
These securities have not been registered under the Securities Act of 1933, as
amended, and may only be sold to qualified institutional buyers pursuant to Rule
144A or pursuant to another applicable exemption.
ANY DISCLAIMER OR OTHER NOTICES THAT MAY APPEAR BELOW ARE NOT APPLICABLE TO THIS
COMMUNICATION AND SHOULD BE DISREGARDED. SUCH DISCLAIMERS OR OTHER NOTICES WERE
AUTOMATICALLY GENERATED AS A RESULT OF THIS COMMUNICATION BEING SENT VIA
BLOOMBERG OR ANOTHER EMAIL SYSTEM.
C-1
EXHIBIT D
INVESTOR PRESENTATION
D-1
