EQUITY DISTRIBUTION AGREEMENT

 

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                                                                     Exhibit 1.1

 

 

                                FLUOR CORPORATION

 

                        2,000,000 Shares of Common Stock

                           (par value $0.01 per share)

 

                           EQUITY DISTRIBUTION AGREEMENT

 

March 14, 2005

 

UBS Securities LLC

299 Park Avenue

New York, New York 10171

 

Ladies and Gentlemen:

 

     Fluor Corporation (the "Company"), confirms its agreement with UBS

Securities LLC (the "Manager"), as follows:

 

     SECTION 1. Description of Securities. The Company proposes to issue and

sell through or to the Manager, as sales agent and/or principal, up to 2,000,000

shares (the "Shares") of the Company's common stock, par value $0.01 per share

(the "Common Stock"), on the terms set forth in Section 3 of this Agreement. The

Company agrees that whenever it determines to sell Shares directly to the

Manager as principal, it will enter into a separate agreement (each, a "Terms

Agreement") in substantially the form of Annex I hereto, relating to such sale

in accordance with Section 3 of this Agreement.

 

     SECTION 2. Representations and Warranties of the Company. The Company

represents and warrants to the Manager that:

 

     (a) The Company meets the requirements for use of Form S-3 under the

Securities Act of 1933, as amended, and the rules and regulations thereunder

(collectively called the "Act"). A registration statement on Form S-3

(Registration No. 333-121626) including a form of prospectus and such amendments

or supplements to such registration statement as may have been required prior to

the date of this Agreement, has been prepared by the Company under the

provisions of the Act, has been filed with the Securities and Exchange

Commission (the "Commission"), and has become effective and which incorporates

by reference documents which the Company has filed in accordance with the

provisions of the Securities Exchange Act of 1934, as amended, and the rules and

regulations thereunder (collectively called the "Exchange Act"). The Company has

prepared a prospectus supplement with respect to the Shares (the "Prospectus

Supplement"), including the prospectus included in the registration statement

referred to above and the documents incorporated by reference therein, setting

forth the terms of the offering, sale and plan of distribution of the Shares and

additional information concerning the Company and its business. No stop order

suspending the effectiveness of the registration statement or any post-effective

amendment thereto has been issued and served on the Company, and no proceedings

for that purpose are pending or, to the

 

 

 

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knowledge of the Company, threatened by the Commission. Copies of such

registration statement and prospectus, any such amendment or supplement and all

documents incorporated by reference therein that were filed with the Commission

on or prior to the date of this Agreement have been made available or delivered

to the Manager. Such registration statement, as it may have heretofore been

amended, is referred to herein as the "Registration Statement," and the

Prospectus Supplement, including the final form of prospectus included in the

Registration Statement, as the same may be amended or supplemented from time to

time, other than by a prospectus supplement relating solely to the offering of

securities other than the Shares, is referred to herein as the "Prospectus." Any

reference herein to the Registration Statement, the Prospectus or any amendment

or supplement thereto shall be deemed to refer to and include the documents

incorporated (or deemed to be incorporated) by reference therein, and any

reference herein to the terms "amend," "amendment" or "supplement" with respect

to the Registration Statement or Prospectus shall be deemed to refer to and

include the filing after the execution hereof of any document with the

Commission deemed to be incorporated by reference therein. As of the close of

business on March 10, 2005, 8,787,346 shares of the Common Stock were available

for issuance pursuant to the Registration Statement, which permits their sale in

the manner contemplated by this Agreement.

 

     (b) The Registration Statement, when it became effective, and the

Prospectus and any amendment or supplement thereto, on the date of filing

thereof with the Commission and at each Filing Date (as defined below), did or

will in all material respects comply with all applicable provisions of the Act

and the Exchange Act. The Registration Statement, when it became effective, did

not or will not contain any untrue statement of a material fact or omit to state

a material fact required to be stated therein or necessary in order to make the

statements therein not misleading. The Prospectus and any amendment or

supplement thereto, on the date of filing thereof with the Commission, did not

or will not contain any untrue statement of a material fact or omit to state a

material fact necessary to make the statements therein, in the light of the

circumstances under which they were made, not misleading; and any statutes,

regulations, contracts or other documents that are required to be described in

the Registration Statement or the Prospectus or to be filed as exhibits to the

Registration Statement have been so described or filed. The foregoing

representations and warranties in this Section 2(b) do not apply to any

statements or omissions made in reliance on and in conformity with information

relating to the Manager furnished in writing to the Company by the Manager

specifically for inclusion in the Registration Statement or Prospectus or any

amendment or supplement thereto. The Company has not distributed any offering

material in connection with the offering or sale of the Shares other than the

Registration Statement, the Prospectus or any other materials, if any, permitted

by the Act.

 

     (c) The documents which are incorporated by reference in the Registration

Statement or the Prospectus, or any amendment or supplement thereto, or from

which information is so incorporated by reference, when they become effective or

were filed with the Commission, as the case may be, complied in all material

respects with the requirements of the Act or the Exchange Act, as applicable,

and none of such

 

 

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documents contained an untrue statement of a material fact or omitted to state a

material fact required to be stated therein or necessary to make the statements

therein not misleading or omitted to state a material fact necessary in order to

make the statements therein, in the light of the circumstances under which they

were made, not misleading and any further documents so filed and incorporated by

reference shall, when they became or become effective under the Act or when they

were or are filed with the Commission, as the case may be, conform in all

material respects with the requirements of the Act or the Exchange Act, as

applicable.

 

     (d) Fluor Enterprises, Inc. is the Company's only "significant subsidiary"

as that term is defined in Rule 1-02 of Regulation S-X. Complete and correct

copies of the certificates of incorporation or other organizational documents

and of the bylaws of the Company and Fluor Enterprises, Inc. (the "Subsidiary")

and all amendments thereto have been made available or delivered to the Manager.

The Company and the Subsidiary are each a corporation duly organized, validly

existing and in good standing under the laws of its jurisdiction of

incorporation. The Company and the Subsidiary each has the corporate power and

authority to conduct all the activities conducted by it, to own or lease all the

assets owned or leased by it and to conduct its business as described in the

Prospectus. The Company and the Subsidiary each is duly licensed or qualified to

do business and is in good standing as a foreign corporation in all

jurisdictions in which the nature of the activities conducted by it, or the

character of the assets owned or leased by it, makes such licensing or

qualification necessary, except where the failure to so qualify would not

reasonably be expected to have a material adverse effect on the condition,

financial or otherwise, earnings, business, operations or prospects, whether or

not arising from transactions in the ordinary course of business of the Company

and the Subsidiary taken as a whole (a "Material Adverse Effect"). All of the

outstanding shares of the capital stock of the Subsidiary have been duly

authorized and validly issued and are fully paid and non-assessable and are

owned by the Company free and clear of all liens, encumbrances and claims

whatsoever. Except for the stock of the Subsidiary and as disclosed in the

Prospectus, the Company does not own, directly or indirectly, any shares of

stock or any other equity or long-term debt securities of any corporation or

have any equity interest in any firm, partnership, joint venture, association or

other entity.

 

     (e) Ernst & Young LLP (the "Accountants"), who have expressed their opinion

with respect to the financial statements (which term as used in this Agreement

includes the related notes thereto) filed with the Commission as a part of the

Registration Statement and included in the Prospectus, are, to the knowledge of

the Company, independent public or certified public accountants as required by

the Exchange Act. The financial statements filed with the Commission as a part

of the Registration Statement and included in the Prospectus present fairly, in

all material respects, the consolidated financial position of the Company and

its subsidiaries as of and at the dates indicated and the consolidated results

of operations and cash flows of the Company and its subsidiaries for the periods

specified. Such financial statements 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

otherwise disclosed in

 

 

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the Prospectus, including the financial statements and supporting schedules

required to be included in the Registration Statement

 

     (f) All of the outstanding shares of Common Stock have been duly authorized

and validly issued, are fully paid and non-assessable, have been issued in

compliance with all federal and state securities laws and were not issued in

violation of any preemptive right, right of first refusal or similar right; the

Shares to be issued and sold by the Company pursuant to this Agreement and any

Terms Agreement have been duly authorized and upon such issuance will be validly

issued, fully paid and non-assessable and are not subject to any preemptive

right, right of first refusal or similar right and the holders of the Shares

will not be subject to personal liability by reason of being such holders under

the Delaware General Corporation Law or the Company's Certificate of

Incorporation or bylaws. The description of the Common Stock in the Prospectus

is complete and accurate in all material respects. Except as set forth in the

Prospectus and except for such amounts that would not have a Material Adverse

Effect, there are no options to purchase, or any rights or warrants to subscribe

for, or any securities or obligations convertible or exchangeable into, or any

contracts, commitments, plans or arrangements to issue or sell, any shares of

capital stock of the Company, any shares of capital stock of the Subsidiary or

any such warrants, convertible or exchangeable securities or obligations. The

descriptions of the Company's stock option and other stock plans or

arrangements, and the options or other rights granted and exercised thereunder,

set forth in the Prospectus, accurately present the information required to be

shown with respect to such plans, arrangements, options and rights.

 

     (g) The Company maintains a system of accounting controls sufficient to

provide reasonable assurances that (i) transactions are executed in accordance

with management's general or specific authorization; (ii) transactions are

recorded as necessary to permit preparation of financial statements in

conformity with generally accepted accounting principles as applied in the

United States and to maintain accountability for assets; (iii) access to assets

is permitted only in accordance with management's general or specific

authorization; and (iv) the recorded accountability for assets is compared with

existing assets at reasonable intervals and appropriate action is taken with

respect to any differences.

 

     (h) Subsequent to the respective dates as of which information is given in

the Prospectus, except as set forth in or contemplated by the Prospectus, (i)

there has not been and will not have been any material change in the

capitalization of the Company or the Subsidiary, or any material adverse change

in the condition, financial or otherwise, earnings, business, operations or

prospects of the Company and the Subsidiary, taken as a whole, (ii) neither the

Company nor the Subsidiary has incurred nor will incur any material liabilities

or obligations, direct or contingent, nor has it entered into nor will it enter

into any material transactions other than pursuant to this Agreement and the

transactions referred to herein or in the ordinary course of business or as

otherwise disclosed on a Current Report on Form 8-K filed with the Commission

and (iii) except for dividends on shares of its capital stock, if and when

declared, neither the Company

 

 

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nor the Subsidiary has and neither of them will have paid or declared any

dividends or other distributions of any kind on any class of their respective

classes of capital stock.

 

     (i) Except as set forth in the Prospectus, there are no legal or

governmental actions, suits or proceedings pending, or to the knowledge of the

Company, after due inquiry threatened (i) against or affecting the Company or

the Subsidiary, (ii) which has as the subject thereof any officer or director

of, or property owned or leased by, the Company or the Subsidiary or (iii)

relating to environmental or discrimination matters, where in any such case (A)

it is reasonably expected that such action, suit or proceeding will be

determined against the Company or the Subsidiary and (B) any such action, suit

or proceeding, if so determined adversely would have a Material Adverse Effect

on the Company or the Subsidiary or on the transactions contemplated hereby.

Except as set forth in the Prospectus, no material labor dispute with the

employees of the Company or the Subsidiary exists or the knowledge of the

Company, is threatened or imminent.

 

     (j) The Company and the Subsidiary each has (i) all governmental licenses,

permits, consents, orders, approvals and other authorizations, and has made all

governmental or regulatory filings, as are necessary to carry on its business as

contemplated in the Prospectus, (ii) complied in all respects with all laws,

regulations and orders applicable to it or its business and (iii) performed all

its obligations required to be performed by it, and is not in breach of or

default under, any indenture, mortgage, deed of trust, voting trust agreement,

loan agreement, bond, debenture, note agreement, lease, contract or other

agreement or instrument (collectively, a "contract or other agreement") to which

it is a party or by which its property is bound or affected, except where the

effect such failures to obtain, make, comply or perform or such breaches,

individually or in the aggregate, would not reasonably be expected result in a

Material Adverse Effect and no event has occurred which with notice, lapse of

time or both would result in such breach or default. Neither the Company nor the

Subsidiary is in violation of any provision of its charter or by-laws.

 

     (k) The Company has corporate power and authority to enter into this

Agreement and will have, at the time of execution thereof, corporate power and

authority to enter into any Terms Agreement. This Agreement has been and any

Terms Agreement will have been, at the time of execution and delivery thereof,

duly authorized, executed and delivered by the Company and constitutes and, in

the case of any Terms Agreement, will constitute, a valid and binding agreement

of the Company and is enforceable, and, in the case of any Terms Agreement, will

be enforceable, against the Company in accordance with its terms, except as the

enforceability hereof and thereof may be limited by applicable bankruptcy,

insolvency, reorganization and similar laws affecting creditors' rights

generally and moratorium laws in effect from time to time and by equitable

principles restricting the availability of equitable remedies. The execution and

delivery by the Company of, and the performance by the Company of its

obligations under, this Agreement and any Terms Agreement and the consummation

of the transactions contemplated hereby will not result in the creation or

imposition of any lien, charge or

 

 

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encumbrance upon any of the assets of the Company or the Subsidiary pursuant to

the terms or provisions of, or result in a breach or violation of any of the

terms or provisions of, or constitute a default under, or give any other party a

right to terminate any of its obligations under, or result in the acceleration

of any obligation under, the charter or by-laws of the Company or the

Subsidiary, any contract or other agreement to which the Company or the

Subsidiary is a party or by which the Company or the Subsidiary or any of its

properties is bound or affected, or violate or conflict with any judgment,

ruling, decree, order, statute, rule or regulation of any court or other

governmental agency or body applicable to the business or properties of the

Company or the Subsidiary the effect of any of which, individually or in the

aggregate, would reasonably be expected to have a Material Adverse Effect.

 

     (l) No consent, approval, authorization or order of, or any filing or

declaration with, any court or any national, state or local governmental agency,

regulatory commission, board, authority or body is required in connection with

the (i) authorization, issuance, sale or delivery of the Shares by the Company,

(ii) the execution, delivery and performance of this Agreement and any Terms

Agreement by the Company or (iii) the taking by the Company of any other action

contemplated hereby, except in each case as have been obtained under the Act and

such as may be required under state securities or Blue Sky laws or the by-laws

and rules of the National Association of Securities Dealers, Inc. (the "NASD")

in connection with the offer and sale through the Manager of the Shares.

 

     (m) Except as set forth in the Prospectus, the Company and the Subsidiary

each has good and marketable title to all the properties and assets reflected as

owned by it in the financial statements referred to in paragraph (e) above (or

elsewhere in the Prospectus), in each case free and clear of any security

interests, mortgages, liens, encumbrances, equities, claims and other defects,

except such as would not, individually or in the aggregate, reasonably be

expected to have a Material Adverse Effect. The real property, improvements,

equipment and personal property held under lease by the Company or the

Subsidiary are held under valid and enforceable leases, with such exceptions as

would not reasonably be expected to have a Material Adverse Effect.

 

     (n) The Company and the Subsidiary each own, license or otherwise have the

full and exclusive right to use sufficient trademarks and trade names which are

reasonably necessary for the conduct of their respective businesses as described

in the Prospectus. To the Company's knowledge, no claims have been asserted by

any person to the use of any such trademarks or trade names or challenging or

questioning the validity or effectiveness of any such trademark or trade name

that, if the subject of an unfavorable decision, would have a Material Adverse

Effect. The use, in connection with the business and operations of the Company

and its Subsidiary, of such trademarks and trade names does not, to the

Company's knowledge, infringe on the rights of any person.

 

     (o) The Company is not, and after receipt of payment for the Shares and

application of the proceeds as described in the Prospectus, will not be,

required to register

 

 

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as an "investment company" within the meaning of the Investment Company Act of

1940, as amended.

 

     (p) The Company has not taken, directly or indirectly, any action intended,

or which might reasonably be 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 Shares.

 

     (q) No person has the right, contractual or otherwise, to cause the Company

to issue to it, or register pursuant to the Act, any securities of the Company

because of the filing of the Registration Statement or the offering of the

Shares, nor does any person have preemptive rights, co-sale rights, rights of

first refusal or other rights to purchase any of the Shares other than those

that have been expressly waived prior to the date hereof.

 

     (r) The Shares are duly authorized for listing, subject to official notice

of issuance, on the New York Stock Exchange (the "NYSE").

 

     (s) Neither the Company nor the Subsidiary nor, to the knowledge of the

Company, any officer, director, employee or agent acting on behalf of the

Company or the Subsidiary is aware of or has taken any action, directly or

indirectly, that would result in a violation by such persons of the FCPA,

including, without limitation, making use of the mails or any means or

instrumentality of interstate commerce corruptly in furtherance of an offer,

payment, promise to pay or authorization of the payment of any money, or other

property, gift, promise to give, or authorization of the giving of anything of

value to any "foreign official" (as such term is defined in the FCPA) or any

foreign political party or official thereof or any candidate for foreign

political office, in contravention of the FCPA and the Company and the

Subsidiary have conducted their respective 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, except where failure to be so in compliance would not

reasonably be expected to result in a Material Adverse Effect. "FCPA" means the

Foreign Corrupt Practices Act of 1977, as amended, and the rules and regulations

thereunder.

 

     (t) The Company and the Subsidiary have insurance of the types and in such

amounts as are generally deemed adequate in the business in which they engage as

described in the Prospectus; and the Company has no reason to believe that it or

the Subsidiary will not be able to renew its existing insurance coverage as and

when such coverage expires or to obtain similar coverage from similar insurers

as may be necessary to continue its proposed business at a cost that would not

reasonably be expected to result in a Material Adverse Effect.

 

     (u) Except as set forth in the Prospectus, the Company and the Subsidiary

and any "employee benefit plan" (as defined under the Employee Retirement Income

Security Act of 1974, as amended, and the regulations and published

interpretations thereunder (collectively, "ERISA")) established or maintained by

the Company, the

 

 

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Subsidiary or their "ERISA Affiliates" (as defined below) are in compliance in

all material respects with ERISA, except to the extent that any such

noncompliance would not result in a Material Adverse Effect. "ERISA Affiliate"

means, with respect to the Company or the Subsidiary, any member of any group of

organizations described in Sections 414(b), (c), (m) or (o) of the Internal

Revenue Code of 1986, as amended, and the regulations and published

interpretations thereunder (the "Code") of which the Company or the Subsidiary

is a member. No "reportable event" (as defined under section 4043 of ERISA) for

which reporting has not been waived has occurred in the past three (3) years or

is reasonably expected to occur with respect to any "employee benefit plan"

established or maintained by the Company, the Subsidiary or any of their ERISA

Affiliates. No "employee benefit plan" established or maintained by the Company,

the Subsidiary or any of their ERISA Affiliates, if such "employee benefit plan"

were terminated, would have any "amount of unfunded benefit liabilities" (as

defined under ERISA) that would have a Material Adverse Effect. Neither the

Company, the Subsidiary nor any of their ERISA Affiliates has incurred or

reasonably expects to incur any material liability under (i) Title IV of ERISA

with respect to termination of, or withdrawal from, any "employee benefit plan"

or (ii) Sections 412, 4971, 4975 or 4980B of the Code. Each "employee benefit

plan" established or maintained by the Company, the Subsidiary or any of their

ERISA Affiliates that is intended to be qualified under Section 401(a) of the

Code is so qualified and nothing has occurred, whether by action or failure to

act, which would reasonably be expected to cause the loss of such qualification.

 

     (v) Neither the Company nor the Subsidiary is, and if operated in the

manner described in the Prospectus, will not be a "broker" within the meaning of

Section 3(a)(4) of the Exchange Act or a "dealer" within the meaning of Section

3(a)(5) of the Exchange Act or required to be registered pursuant to Section

15(a) of the Exchange Act.

 

     (w) The Common Stock is an "actively-traded security" excepted from the

requirements of Rule 101 of Regulation M under the Exchange Act by subsection

(c)(1) of such rule.

 

     (x) Except as contemplated by Section 3 of this Agreement, the Company has

not incurred any liability for any finder's fees or similar payments for the

shares in connection with the transactions herein contemplated.

 

     (y) The Company has not entered into any other sales agency agreements or

other similar arrangements with any agent or other representative in respect of

the Shares.

 

     (z) Each of the Company and the Subsidiary employs disclosure controls and

procedures that are designed to ensure that information required to be disclosed

by the Company in the reports that it files or submits under the Exchange Act is

recorded, processed, summarized and reported, within the time periods specified

in the Commission's rules and forms, and is accumulated and communicated to the

Company's

 

 

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management, including its principal executive officer or officers and principal

financial officer or officers, as appropriate to allow timely decisions

regarding disclosure.

 

     (aa) Each of the principal executive officer and the principal financial

officer of the Company (or each former principal executive officer of the

Company and each former principal financial officer of the Company as

applicable) has made all certifications required by Sections 302 and 906 of the

Sarbanes-Oxley Act of 2002 and the rules and regulations of the Commission

promulgated thereunder (the "Sarbanes-Oxley Act") with respect to all reports,

schedules, forms, statements and other documents required to be filed by it or

furnished by it to the Commission. For purposes of the preceding sentence,

"principal executive officer" and "principal financial officer" shall have the

meanings given to such terms in the Sarbanes-Oxley Act.

 

     SECTION 3. Sale and Delivery of Securities. (a) On the basis of the

representations, warranties and agreements herein contained, but subject to the

terms and conditions herein set forth, the Company agrees to issue and sell

through the Manager, as sales agent, and the Manager agrees to use its

reasonable efforts to sell, as sales agent for the Company, the Shares on the

following terms.

 

     (i) The Shares are to be sold on a daily basis or otherwise as shall be

agreed to by the Company and the Manager on any day that is a trading day for

the NYSE (other than a day on which the NYSE is scheduled to close prior to its

regular weekday closing time). The Company will designate the maximum amount of

Shares to be sold by the Manager daily as reasonably agreed to by the Manager

and in any event not in excess of the amount available for issuance under the

currently effective Registration Statement. Subject to the terms and conditions

hereof, the Manager shall use its reasonable efforts to sell all of the

designated Shares. The gross sales price of any Shares sold under this Section

3(a) shall be the aggregate market price for shares of the Company's Common

Stock sold by the Manager under this Section 3(a) on the NYSE at the time of

such sale for such Shares.

 

     (ii) Notwithstanding the foregoing, the Company may, at any time from time

to time, instruct the Manager by telephone (confirmed promptly by facsimile) not

to sell Shares if such sales cannot be effected at or above the price designated

by the Company in any such instruction. Furthermore, the Company shall not

authorize the issuance and sale of, and the Manager shall not be obligated to

use its reasonable efforts to sell, any Share at a price lower than the minimum

price therefor designated from time to time by the Company's Board of Directors

and notified to the Manager in writing. In addition, the Company or the Manager

may, upon notice to the other party hereto by telephone (confirmed promptly by

facsimile), suspend the offering of the Shares for any reason and at any time;

provided, however, that such suspension shall not affect or impair the parties'

respective obligations with respect to the Shares sold hereunder prior to the

giving of such notice.

 

 

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     (iii) The Manager hereby covenants and agrees not to make any sales of

Shares on behalf of the Company, pursuant to this Section 3(a), other than (a)

by means of ordinary brokers' transactions between members of the NYSE that

qualify for delivery of a Prospectus to the NYSE in accordance with Rule 153

under the Act (such transactions are hereinafter referred to as "At the Market

Offerings") and (b) such other sales of Shares on behalf of the Company in its

capacity as agent of the Company as shall be agreed by the Company and the

Manager. The Company acknowledges and agrees that in the event a sale of Shares

on behalf of the Company would constitute the sale of a "block" under Rule

10b-18(a)(5) under the Exchange Act or a "distribution" within the meaning of

Rule 100 of Regulation M under the Exchange Act or the Manager reasonably

believes it may be deemed an "underwriter" under the Act in a transaction that

is not an At the Market Offering, the Company will provide to the Manager, at

the Manager's request and upon reasonable advance notice to the Company, on or

prior to the Settlement Date (as defined below), the opinions of counsel,

accountants' letters and officers' certificates pursuant to Section 5 hereof

that the Company would be required to provide to the Manager in connection with

a sale of Shares pursuant to a Terms Agreement, each dated the Settlement Date,

and such other documents and information as the Manager shall reasonably

request.

 

     (iv) The compensation to the Manager for sales of Shares, as an agent of

the Company, shall be 2.0% of the gross sales price of the Shares sold pursuant

to this Section 3(a), and such rate of compensation shall not apply when the

Manager acts as principal. The remaining proceeds, after further deduction for

any transaction fees imposed on the Manager by any governmental or

self-regulatory organization in respect of such sales, shall constitute the net

proceeds to the Company for such Shares (the "Net Proceeds").

 

     (v) The Manager shall provide written confirmation to the Company following

the close of trading on the NYSE each day in which Shares are sold under this

Section 3(a) setting forth the number of Shares sold on such day, the gross

sales price, the Net Proceeds to the Company, and the compensation payable by

the Company to the Manager with respect to such sales.

 

     (vi) Settlement for sales of Shares pursuant to this Section 3(a) will

occur on the third business day following the date on which such sales are made

(each such day, a "Settlement Date"). On each Settlement Date, the Shares sold

through the Manager for settlement on such date shall be issued and delivered by

the Company to the Manager against payment of the Net Proceeds for the sale of

such Shares. Settlement for all such Shares shall be effected by free delivery

of Shares to the Manager's account at The Depository Trust Company in return for

payments in same day funds delivered to the account designated by the Company.

If the Company shall default on its obligation to deliver Shares on any

Settlement Date, the Company shall (a) hold the Manager harmless against any

loss, claim or damage arising from or as a result of such default by the Company

and (b) pay the Manager any commission to which it would otherwise be entitled

absent such default. If the Manager breaches this Agreement by failing to

deliver

 

 

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proceeds on any Settlement Date for Shares delivered by the Company, the Manager

shall pay the Company interest on the amount of the proceeds to which the

Company is entitled based on the effective overnight Federal Funds Rate (as

defined below) until such proceeds plus interest are paid. For purposes of this

Agreement, "Federal Funds Rate" means, for any day, the weighted average of the

rates on overnight Federal funds transactions with members of the Federal

Reserve System arranged by Federal funds brokers, as published on the next

succeeding business day by the Federal Reserve Bank of New York or, if such is

not published for any day that is a business day, the average quotations, for

the day, of such transactions received by the Manager from three Federal funds

brokers of recognized standing.

 

     (vii) At each Settlement Date and Filing Date, the Company shall be deemed

to have affirmed each representation and warranty contained in this Agreement,

except that the Company shall be deemed to have affirmed the representations and

warranties contained in Sections 2(s), 2(u) and 2(aa) only at each Filing Date.

The Company covenants and agrees with the Manager that (a) on or prior to each

Filing Date for periods in which sales of Shares were made by the Manager

pursuant to this Section 3(a), the Company will file a prospectus supplement

with the Commission under the applicable paragraph of Rule 424(b), which

prospectus supplement will set forth, with regard to such quarter, the number of

Shares sold through the Manager as agent pursuant to this Section 3(a) in At the

Market Offerings, the Net Proceeds to the Company and the compensation paid by

the Company to the Manager with respect to such sales of Shares pursuant to this

Section 3(a) and deliver such number of copies of each such prospectus

supplement to the NYSE as are required by such Exchange. For purposes of this

Agreement, "Filing Date" shall mean each date on which the Company is required

under the Exchange Act to file a quarterly report on Form 10-Q or an annual

report on Form 10-K, as applicable. Any obligation of the Manager to use its

reasonable efforts to sell the Shares on behalf of the Company shall be subject

to the continuing accuracy of the representations and warranties of the Company

herein, to the performance by the Company of its obligations hereunder and to

the continuing satisfaction of the additional conditions specified in Section 5

of this Agreement.

 

     (b) (i) If the Company wishes to issue and sell Shares other than as set

forth in Section 3(a) of this Agreement (each, a "Placement"), it will notify

the Manager of the proposed terms of such Placement. If the Manager, acting as

principal, wishes to accept such proposed terms (which it may decline to do for

any reason in its sole discretion) or, following discussions with the Company,

wishes to accept amended terms, the Manager and the Company will enter into a

Terms Agreement setting forth the terms of such Placement.

 

     (ii) The terms set forth in a Terms Agreement will not be binding on the

Company or the Manager unless and until the Company and the Manager have each

executed and delivered such Terms Agreement accepting all of the terms of such

Terms Agreement. In the event of a conflict between the terms of this Agreement

and the terms of a Terms Agreement, the terms of such Terms Agreement will

control.

 

 

                                        11

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     (c) (i) Under no circumstances shall the number of Shares sold pursuant to

this Agreement and any Terms Agreement exceed the number set forth in Section 1

or the number of shares of Common Stock available for issuance under the

currently effective Registration Statement.

 

     (ii) If either party has reason to believe that the exemptive provisions

set forth in Rule 101(c)(1) of Regulation M under the Exchange Act are not

satisfied with respect to the Shares, it shall promptly notify the other party

and sales of Shares under this Agreement and any Terms Agreement shall be

suspended until that or other exemptive provisions have been satisfied in the

judgment of each party. The Manager shall calculate on a weekly basis the ADTV

(as defined by Rule 100 of Regulation M under the Exchange Act) of the Common

Stock.

 

     (d) Each sale of Shares to the Manager shall be made in accordance with the

terms of this Agreement and, if applicable, a Terms Agreement, which will

provide for the sale of such Shares to, and the purchase thereof by, the

Manager. A Terms Agreement may also specify certain provisions relating to the

reoffering of such Shares by the Manager. The commitment of the Manager to

purchase Shares pursuant to any Terms Agreement shall be deemed to have been

made on the basis of the representations and warranties of the Company herein

contained and shall be subject to the terms and conditions herein set forth.

Each Terms Agreement shall specify the number of Shares to be purchased by the

Manager pursuant thereto, the price to be paid to the Company for such Shares,

any provisions relating to rights of, and default by, underwriters acting

together with the Manager in the reoffering of the Shares, and the time and date

(each such time and date being referred to herein as a "Time of Delivery") and

place of delivery of and payment for such Shares. Such Terms Agreement shall

also specify any requirements for opinions of counsel, accountants' letters and

officers' certificates pursuant to Section 5 of this Agreement and any other

information or documents reasonably required by the Manager.

 

     SECTION 4. Covenants of the Company. The Company agrees with the Manager:

 

     (a) During the period in which a prospectus relating to the Shares is

required to be delivered under the Act, (i) to notify the Manager promptly of

the time when any subsequent amendment to the Registration Statement has become

effective or any subsequent supplement to the Prospectus has been filed and of

any request by the Commission for any amendment or supplement to the

Registration Statement or Prospectus or for additional information with respect

thereto; (ii) provided that the Company has not suspended the offering of the

Shares in accordance with Section 3(a)(ii), to prepare and file with the

Commission, promptly upon the Manager's request, any amendments or supplements

to the Registration Statement or Prospectus that, in the Manager's reasonable

opinion, may be necessary or advisable in connection with the offering of the

Shares by the Manager; (iii) not to file any amendment or supplement to the

Registration Statement or Prospectus (other than any prospectus supplement

relating

 

 

                                       12

 

<PAGE>

 

to the offering of other securities (including, without limitation, Common

Stock) other than pursuant to this Agreement) unless a copy thereof has been

submitted to the Manager a reasonable period of time before the filing; (iv) to

file promptly all reports and any definitive proxy or information statements

required to be filed by the Company with the Commission pursuant to Section

13(a), 13(c), 14 or 15(d) of the Exchange Act and to advise the Manager of any

such filing; and (v) to cause each amendment or supplement to the Prospectus to

be filed with the Commission as required pursuant to the applicable paragraph of

Rule 424(b) of the Act or, in the case of any document to be incorporated

therein by reference, to be filed with the Commission as required pursuant to

the Exchange Act, within the time period prescribed.

 

     (b) To promptly advise the Manager, of any request by the Commission for

amendments or supplements to the Registration Statement or Prospectus or for

additional information with respect thereto, or of notice of institution of

proceedings for, or the entry of a stop order suspending the effectiveness of

the Registration Statement and, if the Commission should enter a stop order

suspending the effectiveness of the Registration Statement, and provided that

the Company has not suspended the offering of the Shares in accordance with

Section 3(a)(ii), to make every reasonable effort to obtain the lifting or

removal of such order as soon as possible; to promptly advise the Manager of any

proposal to amend or supplement the Registration Statement or Prospectus,

including by filing any documents that would be incorporated therein by

reference, and to file no such amendment or supplement to which the Manager

shall reasonably object in writing within one business day.

 

     (c) To make available to the Manager, as soon as practicable after the

Registration Statement becomes effective, and thereafter from time to time to

furnish to the Manager, copies of the Prospectus (or of the Prospectus as

amended or supplemented if the Company shall have made any amendments or

supplements thereto after the effective date of the Registration Statement) in

such quantities and at such locations as the Manager may reasonably request for

the purposes contemplated by the Act, which Prospectus and any amendments or

supplements thereto furnished to the Manager will be materially identical to the

version created to be transmitted to the Commission for filing via EDGAR, except

to the extent permitted by Regulation S-T; and for so long as this Agreement is

in effect and provided that the Company has not suspended the offering of the

Shares in accordance with Section 3(a)(ii), the Company will prepare and file

promptly such amendment or amendments to the Registration Statement and the

Prospectus as may be necessary to comply with the requirements of Section

10(