Exhibit 1.1
EXECUTION COPY
VERITAS DGC INC.
Floating Rate Convertible Senior Notes Due
2024
PURCHASE AGREEMENT
February 26, 2004
Deutsche Bank Securities Inc.
60 Wall Street
New York, New York 10005
Ladies and Gentlemen:
Veritas DGC Inc.,
a Delaware corporation (the “Company”), proposes,
subject to the terms and conditions contained herein, to issue and
sell to you (the “Initial Purchaser”) $125,000,000
aggregate principal amount of its Floating Rate Convertible Senior
Notes Due 2024 (the “Firm Securities”). The Company
also proposes to issue and sell at your option an additional
$30,000,000 aggregate principal amount of its Floating Rate
Convertible Senior Notes Due 2024 (the “Option
Securities” and together with the Firm Securities, the
“Securities”) as set forth below. The Securities will
be issued pursuant to an indenture (the “Indenture”),
to be dated as of the Closing Date (as defined in Section 2
hereof), between the Company and U.S. Bank National Association, as
trustee (the “Trustee”).
The
Securities will be convertible into shares of common stock of the
Company, $.01 par value (“Common Stock”), together with
the rights (the “Rights”) evidenced by such Common
Stock to the extent provided for in the Rights Agreement dated as
of May 15, 1997 between the Company and ChaseMellon
Shareholder Services, L.L.C., as Rights Agent (the “Rights
Agreement”). The shares of Common Stock and accompanying
Rights into which the Securities may be convertible are referred to
herein as the “Underlying Securities”.
The
sale of the Securities and the Underlying Securities will be made
without registration under the Securities Act of 1933, as amended
(the “Securities Act”), in reliance on exemptions from
the registration requirements of the Securities Act. The Initial
Purchaser has advised the Company that the Initial
Purchaser will offer and sell the
Securities purchased by it hereunder (the “Offering”)
in accordance with Section 3 hereof as soon as it deems
advisable.
In
connection with the Offering, the Company has prepared a
preliminary Offering Memorandum dated February 25, 2004
(including the information incorporated by reference therein, the
“Preliminary Offering Memorandum”) and a final Offering
Memorandum, dated February 26, 2004 (including the information
incorporated by reference therein, the “Offering
Memorandum”). Each of the Preliminary Offering Memorandum and
the Offering Memorandum sets forth or incorporates by reference
certain information regarding the Company, the Securities and the
Underlying Securities. The Company hereby confirms that it has
authorized the use of the Preliminary Offering Memorandum and the
Offering Memorandum, and any amendment or supplement thereto, in
connection with the Offering. Unless stated to the contrary, all
references herein to the Offering Memorandum are to the Offering
Memorandum at the date thereof and are not meant to include any
amendment or supplement, or any information incorporated by
reference therein subsequent to the date thereof and any references
herein to the terms “amend”, amendment” or
“supplement” with respect to the Offering Memorandum
shall be deemed to refer to and include any information filed under
the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), subsequent to the date of the Offering
Memorandum which is incorporated by reference therein.
In
connection with the Offering , the Company also proposes to enter
into a Registration Rights Agreement, to be dated as of the Closing
Date, between the Company and the Initial Purchaser (the
“Registration Rights Agreement”).
In
connection with the Offering, the Company has entered into an
Amendment, dated as of February 20, 2004 (the “Credit
Agreement Amendment”), to its Credit Agreement dated as of
February 14, 2003 among the Company, Veritas Energy Services
Inc., Veritas Energy Services Partnership, Veritas DGC Limited, the
Lenders party thereto, Deutsche Bank AG, New York Branch, as
Administrative Agent, and Deutsche Bank AG, Canada Branch, as
Canadian Administrative Agent (the “Credit Agreement”),
that amends the Credit Agreement to permit the transactions
contemplated by this Agreement.
In
consideration of the mutual agreements contained herein and of the
interests of the parties in the transactions contemplated hereby,
the parties hereto agree as follows:
1. REPRESENTATIONS
AND WARRANTIES OF THE COMPANY.
The
Company represents and warrants to the Initial Purchaser as
follows:
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(a) the Company
has been duly incorporated and is validly existing as a corporation
in good standing under the laws of the State of Delaware, with the
corporate power and authority to own or lease its properties and
conduct its business as described in the Offering Memorandum; each
of the subsidiaries of the Company (each, a
“Subsidiary” and collectively, the
“Subsidiaries”), has been duly incorporated or formed,
as the case may be, and is validly existing and in good standing
under the laws of the jurisdiction of its organization, with the
power and authority to own or lease its properties and conduct its
business as described in the Offering Memorandum; the Company and
each of the Subsidiaries are duly qualified to transact business in
all jurisdictions in which the conduct of their business requires
such qualification, except to the extent that the failure to be so
qualified would not have a material adverse effect on the Company
and the Subsidiaries, taken as a whole;
(b) the
outstanding shares of capital stock or other equity interests of
each of the Subsidiaries have been duly authorized and validly
issued, are fully paid and non-assessable, except for directors
qualifying shares and for Subsidiaries in jurisdictions where
native ownership is required or was required at the time of
formation, and are owned by the Company or another Subsidiary free
and clear of all liens, encumbrances and equities and claims,
except those securing obligations under the Credit Agreement; and,
except for an option to purchase and a right of first refusal with
respect to the shares of capital stock of Veritas Geophysical
(Nigeria) Ltd., no options, warrants or other rights to purchase,
agreements or other obligations to issue or other rights to convert
any obligations into or exchange any securities for shares of
capital stock of or ownership interests in the Subsidiaries are
outstanding;
(c) the Securities
have been duly and validly authorized by all necessary corporate
action on the part of the Company and, when executed by the
Company, authenticated by the Trustee in accordance with the terms
of the Indenture and delivered to and paid for by the Initial
Purchaser in accordance with the terms of this Agreement, the
Securities will be valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms,
except to the extent that enforcement thereof may be limited by
bankruptcy, insolvency or other similar laws affecting
creditors’ rights generally and equitable principles of
general applicability, and will be entitled to the benefits of the
Indenture and the Registration Rights Agreement;
(d) the
outstanding shares of capital stock of the Company have been duly
authorized and validly issued and are fully paid and
non-assessable; the Common Stock included in the Underlying
Securities have been duly authorized and reserved, and when issued
upon conversion of the Securities will be validly issued, fully
paid and non-assessable; and no
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preemptive or similar rights of stockholders
exist with respect to any of the Underlying Securities;
(e) the Rights
included in the Underlying Securities have been duly authorized and
reserved, and when issued upon conversion of the Securities will be
validly issued;
(f) the execution
and delivery of and the performance by the Company of its
obligations under this Agreement have been duly and validly
authorized by all necessary corporate action on the part of the
Company, and this Agreement has been duly executed and delivered by
the Company;
(g) the execution
and delivery of and the performance by the Company of its
obligations under the Indenture have been duly and validly
authorized by all necessary corporate action on the part of the
Company and, when duly executed and delivered by the Company and
the Trustee, the Indenture will be a valid and binding agreement of
the Company, enforceable against the Company in accordance with its
terms, except to the extent that enforcement thereof may be limited
by bankruptcy, insolvency or other similar laws affecting
creditors’ rights generally and equitable principles of
general applicability;
(h) the execution
and delivery of and the performance by the Company of its
obligations under the Registration Rights Agreement have been duly
and validly authorized by all necessary corporate action on the
part of the Company and, when duly executed and delivered by the
Company and the Initial Purchaser, the Registration Rights
Agreement will be a valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms,
except to the extent that (x) enforcement thereof may be
limited by bankruptcy, insolvency and other similar laws affecting
creditors’ rights generally and equitable principles of
general applicability, and (y) any right to indemnification
and contribution thereunder may be limited by applicable
law;
(i) the execution
and delivery of and the performance by the Company of its
obligations under the Credit Agreement Amendment have been duly and
validly authorized by all necessary corporate action on the part of
the Company, and the Credit Agreement Amendment is a valid and
binding agreement of the Company, enforceable against the Company
in accordance with its terms, except to the extent that enforcement
thereof may be limited by bankruptcy, insolvency and other similar
laws affecting creditors’ rights generally and equitable
principles of general applicability;
(j) the
consolidated capitalization of the Company set forth under the
caption “Capitalization” in the Offering Memorandum is
true and correct; all of the Underlying Securities conform to the
description
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thereof contained in the Offering Memorandum in
all material respects; the form of certificate for the shares of
Common Stock conforms to the corporate law of the jurisdiction of
the Company’s incorporation;
(k) except as
described in or contemplated by the Offering Memorandum, there are
no outstanding securities of the Company convertible or
exchangeable into or evidencing the right to purchase or subscribe
for any shares of capital stock of the Company and there are no
outstanding or authorized options, warrants or rights of any
character obligating the Company to issue any shares of its capital
stock or any securities convertible or exchangeable into or
evidencing the right to purchase or subscribe for any shares of
such stock;
(l) each document
filed, or to be filed, by the Company pursuant to the Exchange Act
and incorporated, or to be incorporated, by reference in either the
Preliminary Offering Memorandum or the Offering Memorandum (or any
amendment or supplement thereto) at the time filed with the
Securities and Exchange Commission (the “Commission”)
conformed, or will conform, in all material respects with the
Exchange Act and the applicable rules and regulations thereunder;
the Preliminary Offering Memorandum as of the date thereof did not,
and the Offering Memorandum and any amendment or supplement thereto
do not contain, and will not contain, any untrue statement of a
material fact, and do not omit, and will not omit, any material
fact necessary in order to make the statements made, in the light
of the circumstances under which they were made, not misleading;
provided, however, that the Company makes no representation
or warranty as to statements or omissions made in the Preliminary
Offering Memorandum, the Offering Memorandum or any amendment or
supplement thereto in reliance upon and in conformity with written
information relating to the Initial Purchaser furnished to the
Company by the Initial Purchaser specifically for use
therein;
(m) the
consolidated financial statements of the Company and the
Subsidiaries, together with related notes and schedules
incorporated by reference in the Offering Memorandum, present
fairly the financial position and the results of operations and
cash flows of the Company and its consolidated Subsidiaries, at the
indicated dates and for the indicated periods; such financial
statements and related notes and schedules have been prepared in
accordance with generally accepted accounting principles in the
United States, consistently applied throughout the periods
involved, except as disclosed therein, and all adjustments
necessary for a fair presentation of results for such periods have
been made; the summary financial and statistical data of the
Company and the Subsidiaries included or incorporated by reference
in the Offering Memorandum presents fairly the information shown
therein and such data has been compiled on a basis consistent with
the financial statements presented therein and the books and
records of the Company;
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(n)
PricewaterhouseCoopers LLP, who have certified certain of the
financial statements incorporated by reference in the Offering
Memorandum, are independent public accountants as required by the
Securities Act and the applicable rules and regulations
thereunder;
(o) except as set
forth in the Offering Memorandum, there is no action, suit, claim,
proceeding or labor dispute pending or, to the knowledge of the
Company, threatened against the Company or any of the Subsidiaries
before any court or administrative agency or otherwise which might
result in a material adverse change in the earnings, business,
management, properties, assets, rights, operations, condition
(financial or otherwise) or prospects of the Company and the
Subsidiaries taken as a whole (a “Material Adverse
Change”), or prevent the consummation of the transactions
contemplated hereby or in the Indenture, the Securities or the
Registration Rights Agreement;
(p) the Company
and the Subsidiaries have good and marketable title to all of the
properties and assets reflected in the consolidated financial
statements hereinabove described or described in the Offering
Memorandum, subject to no lien, mortgage, pledge, charge or
encumbrance of any kind, except those securing obligations under
the Credit Agreement or reflected in such financial statements or
described in the Offering Memorandum or inchoate ad valorem
property tax liens or which are not material in amount; the Company
and the Subsidiaries occupy their leased properties under valid and
enforceable leases, except to the extent that the failure of a
lease to be enforceable would not have a material adverse effect on
the Company and the Subsidiaries, taken as a whole;
(q) the Company
and the Subsidiaries have filed all material Federal, State, local
and foreign tax returns which have been required to be filed and
have paid all taxes indicated by such returns and all assessments
received by them or any of them to the extent that such taxes have
become due other than those taxes contested in good faith; all tax
liabilities have been adequately provided for in the financial
statements of the Company, and the Company does not know of any
actual or proposed additional material tax assessments;
(r) since the
respective dates as of which information is given in the Offering
Memorandum, there has not been any Material Adverse Change or any
development involving a prospective Material Adverse Change,
whether or not arising in the ordinary course of business, and
there has not been any material transaction entered into or any
material transaction that is probable of being entered into by the
Company or any of the Subsidiaries, other than transactions in the
ordinary course of business and transactions described in the
Offering Memorandum; neither the Company nor any of the
Subsidiaries has any material contingent
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obligations which are not disclosed in the
Company’s financial statements that are incorporated by
reference in the Offering Memorandum;
(s) neither the
Company nor any of the Subsidiaries is or, with the giving of
notice or lapse of time or both, will be, in violation of or in
default under (i) its certificate of incorporation or bylaws
or similar organizational documents or (ii) any indenture,
mortgage, deed of trust, lease, contract or other agreement or
instrument to which any of them is a party or to which any of them
or any of their respective properties is bound (collectively,
“Contracts”) and, solely with respect to this clause
(ii), which violation or default would result in a Material Adverse
Change;
(t) the execution
and delivery of this Agreement, the Securities, the Indenture and
the Registration Rights Agreement by the Company, the issuance and
sale of the Securities to the Initial Purchaser by the Company
pursuant to this Agreement, the issuance by the Company of the
Underlying Securities, and the consummation by the Company of the
transactions contemplated in this Agreement, the Securities, the
Indenture and the Registration Rights Agreement and the fulfillment
of the terms hereof and thereof by the Company will not conflict
with or result in a breach of any of the terms or provisions of, or
constitute a default under, (i) any Contract, (ii) the
certificate of incorporation or bylaws of the Company, or
(iii) any law, order, rule, regulation, judgment, order, writ
or decree of any court applicable to the Company or any Subsidiary
or of any government, regulatory body or administrative agency or
other governmental body having jurisdiction over the Company or any
Subsidiary, except, in the case of clauses (i) and (iii) to
the extent that any such conflict, breach or default would not have
a material adverse effect on the Company and the Subsidiaries,
taken as a whole;
(u) assuming the
accuracy of the acknowledgements and agreements of the Initial
Purchaser in Section 3, each approval, consent, order,
authorization, designation, declaration or filing by or with any
regulatory, administrative or other governmental body necessary in
connection with the execution and delivery by the Company of this
Agreement, the Securities, the Indenture and the Registration
Rights Agreement, the issuance and sale of the Securities to the
Initial Purchaser by the Company pursuant to this Agreement, the
issuance of the Underlying Securities and the consummation by the
Company of the transactions contemplated in this Agreement, the
Securities, the Indenture and the Registration Rights Agreement has
been obtained or made and is in full force and effect, except for
(i) the effectiveness of the Shelf Registration Statement (as
such term is defined in the Registration Rights Agreement) under
the Securities Act and the qualification of the Indenture under the
Trust Indenture Act of 1939, as amended (the “Trust Indenture
Act”), in each case as contemplated by the Registration
Rights Agreement, and (ii) such additional steps as may be
necessary to qualify the Securities
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for
public offering by the Initial Purchaser under state securities or
“Blue Sky” laws;
(v) the Company
and each of the Subsidiaries hold all material licenses,
certificates and permits from governmental authorities which are
necessary to the conduct of their businesses;
(w) the Company
and the Subsidiaries each own or possess the right to use all
patents, patent rights, trademarks, trade names, service marks,
service names, copyrights, license rights, know-how (including
trade secrets and other unpatented and unpatentable proprietary or
confidential information, systems or procedures) and other
intellectual property rights (“Intellectual Property”)
currently employed by the Company and the Subsidiaries to carry on
their business in all material respects; to the knowledge of the
Company none of the Company or any of the Subsidiaries has
infringed, and none of the Company or any of the Subsidiaries has
received notice of conflict with, any Intellectual Property of any
other person or entity, except to the extent that such conflict
would not have a material adverse effect on the Company and the
Subsidiaries, taken as a whole; the Company has taken all
reasonable steps necessary to secure interests in such Intellectual
Property from its contractors; except for licenses of seismic data,
software and other geophysical products entered into in the
ordinary course of business, there are no outstanding options,
licenses or agreements of any kind relating to the Intellectual
Property of the Company that are material to the Company and its
Subsidiaries taken as a whole; the Company is not a party to or
bound by any options, licenses or agreements with respect to the
Intellectual Property of any other person or entity that are
material to the Company and its Subsidiaries taken as a whole; the
Company knows of no technology employed by the Company that has
been obtained or is being used by the Company in violation of any
contractual obligation binding on the Company or any of its
officers, directors or employees or otherwise in violation of the
rights of any persons; the Company has not received any written
communications alleging that the Company has violated, infringed or
conflicted with, or, by conducting its business as set forth in the
Offering Memorandum, would violate, infringe or conflict with, any
of the Intellectual Property of any other person or entity, except
to the extent that such violation, infringement or conflict would
not have a material adverse effect on the Company and the
Subsidiaries, taken as a whole; the Company knows of no
infringement by others of Intellectual Property owned by or
licensed to the Company;
(x) neither the
Company nor, to the Company’s knowledge, any of its
affiliates (as defined in Rule 501(b) of Regulation D under
the Securities Act, each, an “Affiliate”), has taken or
will take, directly or indirectly, any action designed to cause or
result in, or which has
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constituted or which might reasonably be
expected to constitute, the unlawful stabilization or manipulation
of the price of the Securities;
(y) the Company is
not, and after giving effect to the offering and sale of the
Securities contemplated hereunder and the application of the net
proceeds from such sale as described in the Offering Memorandum
will not be, required to register as an “investment
company” as such term is defined in the Investment Company
Act of 1940, as amended (the “Investment Company Act”)
and the applicable rules and regulations thereunder;
(z) the Company
and each of the Subsidiaries maintain a system of internal
accounting controls sufficient to provide reasonable assurances
that (A) transactions are executed in accordance with
management’s general or specific authorization;
(B) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally
accepted accounting principles and to maintain accountability for
assets; (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 existing
assets at reasonable intervals and appropriate action is taken with
respect to any differences;
(aa) the Company
and the Subsidiaries comply in all material respects with all
Environmental Laws (as defined below), except to the extent that
failure to comply with such Environmental Laws would not,
individually or in the aggregate, have a material adverse effect on
the Company and the Subsidiaries taken as a whole; to the knowledge
of the Company, none of the Company or any of the Subsidiaries is
the subject of any pending or threatened federal, state or local
investigation evaluating whether any remedial action by the Company
or any of the Subsidiaries is needed to respond to a release of any
Hazardous Materials (as defined below) into the environment
resulting from the Company’s or any of the
Subsidiaries’ business operations or ownership or possession
of any of their properties or assets, or is in contravention of any
Environmental Law that could reasonably be expected, individually
or in the aggregate, to result in any material adverse effect on
the Company and the Subsidiaries, taken as a whole; none of the
Company or any of the Subsidiaries has received any notice or
claim, nor, to the knowledge of the Company, are there pending or
threatened lawsuits against them, with respect to violations of an
Environmental Law or in connection with any release of any
Hazardous Material into the environment that could reasonably be
expected in the aggregate to result in a material adverse effect on
the Company and the Subsidiaries, taken as a whole; as used herein,
“Environmental Laws” means any federal, state or local
law or regulation applicable to the Company’s or any of the
Subsidiaries’ business operation or ownership or possession
of any of their properties or assets relating to
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environmental matters, and “Hazardous
Materials” means those substances that are regulated by or
form the basis of liability under any Environmental
Laws;
(bb) the Company
and each of its Subsidiaries carry, or are covered by, insurance in
such amounts and covering such risks as is reasonably adequate for
the conduct of their respective businesses and the value of their
respective properties and as is customary for companies engaged in
similar businesses;
(cc) the Company
and each Subsidiary are in compliance in all material respects with
all presently applicable provisions of the Employee Retirement
Income Security Act of 1974, as amended, including the regulations
and published interpretations thereunder (“ERISA”); to
the knowledge of the Company, no “reportable event” (as
defined in ERISA) has occurred with respect to any “pension
plan” (as defined in ERISA) for which the Company or any
Subsidiary would have any liability; neither the Company nor any
Subsidiary has incurred or expects to incur liability under
(i) Title IV of ERISA with respect to termination of, or
withdrawal from, any “pension plan” or
(ii) Sections 412 or 4971 of the Internal Revenue Code of
1986, as amended, including the regulations and published
interpretations thereunder (the “Code”); and each
“pension plan” for which the Company or any Subsidiary
would have any liability that is intended to be qualified under
Section 401(a) of the Code is so qualified in all material respects
and nothing has occurred, whether by action or by failure to act,
which would cause the loss of such qualification;
(dd) neither the
Company, nor any of its Affiliates, nor any person acting on its or
their behalf has, directly or indirectly, made offers or sales of
any security (as defined in the Securities Act), or solicited
offers to buy any security, under circumstances that would require
the registration of the Securities or the Underlying Securities
under the Securities Act;
(ee) neither the
Company, nor any of its Affiliates, nor any person acting on its or
their behalf has engaged in any form of general solicitation or
general advertising (as those terms are used in Rule 502(c) of
Regulation D under the Securities Act) in connection with any
offer or sale of the Securities or the Underlying
Securities;
(ff) the
Securities satisfy the eligibility requirements of Rule 144A(d)(3)
under the Securities Act;
(gg) the Company
is subject to and in full compliance with the reporting
requirements of Section 13 or Section 15(d) of the Exchange
Act;
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(hh) the
Securities, the Indenture, the Registration Rights Agreement and
the Credit Agreement each conform in all material respects to the
descriptions thereof contained in the Offering
Memorandum;
(ii) assuming the
accuracy of the acknowledgements and agreements of the Initial
Purchaser in Section 3, the purchase and sale of the
Securities pursuant hereto (including the Initial Purchaser’s
proposed offering of the Securities on the terms and in the manner
set forth in the Offering Memorandum and Section 3 hereof) is
exempt from the registration requirements of the Securities Act and
does not require the qualification of an indenture under the Trust
Indenture Act;
(jj) there is and
has been no failure on the part of the Company or any of the
Company’s directors or officers, in their capacities as such,
to comply in all material respects with any provision of the
Sarbanes-Oxley Act of 2002 and the rules and regulations
promulgated in connection therewith, including Section 402
related to loans and Sections 302 and 906 related to
certifications; and
(kk) no holder of
securities of the Company (other than the Registrable Securities
(as defined in the Registration Rights Agreement)) will be entitled
to have such securities registered under the registration
statements required to be filed by the Company pursuant to the
Registration Rights Agreement.
2. PURCHASE,
SALE AND DELIVERY OF THE SECURITIES.
(a) On the basis
of the representations, warranties and covenants herein contained,
and subject to the conditions herein set forth, the Company agrees
to issue and sell to the Initial Purchaser and the Initial
Purchaser agrees to purchase from the Company, at a purchase price
of 96.75% of the aggregate principal amount thereof (the
“Purchase Price”), plus accrued interest, if any, from
March 3, 2004 to the Closing Date, the Firm Securities. Each
Security will be convertible at the option of the holder into the
Underlying Securities at the conversion price set forth in the
Securities (the “Conversion Price”), which Conversion
Price is subject to adjustment in certain events as provided in the
Securities and the Indenture. One or more global securities
representing the Firm Securities shall be registered by the Trustee
in the name of the nominee of The Depository Trust Company
(“DTC”), Cede & Co., credited to the account of the
Initial Purchaser and deposited with the Trustee as custodian for
DTC on the Closing Date, against payment by or on behalf of the
Initial Purchaser to the account of the Company of the aggregate
Purchase Price therefor by wire transfer in immediately available
funds. Delivery of and payment for the Firm Securities shall be
made at the offices of Davis Polk &
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Wardwell, 450 Lexington Avenue, New York, New
York 10017 at 9:30 A.M., New York City time, on the fourth full
business day following the date of this Agreement, or at such other
place, time or date not later than five business days thereafter as
the Initial Purchaser and the Company may agree upon. Such time and
date of delivery against payment are herein referred to as the
“Closing Date”. (As used herein, “business
day” means a day on which the New York Stock Exchange is open
for trading and on which banks in New York are open for business
and are not permitted by law or executive order to be
closed.)
(b) In addition,
on the basis of the representations and warranties herein contained
and subject to the terms and conditions herein set forth, the
Company hereby grants an option to the Initial Purchaser to
purchase the Option Securities at the Purchase Price set forth in
Section 2(a) plus accrued interest, if any, from March 3, 2004
to the Option Closing Date (as defined below). The option granted
hereby may be exercised in whole or in part by giving written
notice (i) at any time before the Closing Date and
(ii) only once thereafter within 30 days after the date of
this Agreement by the Initial Purchaser to the Company, setting
forth the aggregate principal amount of Option Securities as to
which the Initial Purchaser is exercising the option and the time
and date for delivery of and payment for such Option Securities.
The time and date for delivery of and payment for such Option
Securities shall be determined by the Initial Purchaser but shall
not be later than ten full business days after the exercise of such
option, nor in any event prior to the Closing Date (such time and
date being herein referred to as the “Option Closing
Date”). If the date of exercise of the option is two or more
days before the Closing Date, the notice of exercise shall set the
Closing Date as the Option Closing Date. The Initial Purchaser may
cancel such option at any time prior to its expiration by giving
written notice of such cancellation to the Company.
3. OFFERING
BY THE INITIAL PURCHASER.
(a) It is
understood that the Initial Purchaser will offer and sell the
Securities in accordance with this Section as soon as the Initial
Purchaser deems it advisable to do so. The Securities are to be
initially offered at the offering price set forth in the Offering
Memorandum. The Initial Purchaser may from time to time thereafter
change the price and other selling terms.
(b) The Initial
Purchaser understands and acknowledges that the Securities and the
Underlying Securities have not been and will not be registered
under the Securities Act (except as contemplated by the
Registration Rights Agreement) and may not be offered or sold,
except in compliance with the registration requirements of the
Securities Act or pursuant to an exemption from, or in a
transaction not subject to, the
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registration requirements of the Securities Act.
Accordingly, the Initial Purchaser agrees that it will offer and
sell the Securities only to persons that it reasonably believes to
be qualified institutional buyers as defined in Rule 144A
under the Securities Act.
(c) The Initial
Purchaser agrees that neither it nor any person acting on its
behalf has engaged or will engage in any form of general
solicitation or general advertising (as those terms are used in
Rule 502(c) of Regulation D under the Securities Act) in
connection with any offer or sale of the Securities in the United
States.
4. COVENANTS
OF THE COMPANY.
The
Company covenants and agrees with the Initial Purchaser
that:
(a) The Company
will furnish to the Initial Purchaser and counsel for the Initial
Purchaser, without charge, prior to the date on which all of the
Securities shall have been sold by the Initial Purchaser, as many
copies of the Preliminary Offering Memorandum and Offering
Memorandum, any documents incorporated by reference therein and any
supplements or amendments thereto as they may reasonably
request.
(b) The Company
will not amend or supplement the Offering Memorandum, other than by
filing documents under the Exchange Act which are incorporated by
reference therein, and prior to the completion of the distribution
of the Securities by the Initial Purchaser, the Company will not
file any document under the Exchange Act which is incorporated by
reference in the Offering Memorandum, unless the Initial Purchaser
previously has been advised of and furnished with a copy within a
reasonable period of time prior to the proposed filing and the
Initial Purchaser shall have given its consent to such filing,
which consent shall not be unreasonably withheld. The Company will
prepare promptly upon request by the Initial Purchaser or counsel
for the Initial Purchaser any amendments or supplements to the
Offering Memorandum that may be necessary or advisable in
connection with the distribution of the Securities by the Initial
Purchaser. The Company will advise the Initial Purchaser of the
time when any amendment or supplement to the Offering Memorandum
has been made or when any document filed under the Exchange Act
which is incorporated by reference in the Offering Memorandum has
been filed with the Commission and will provide evidence
satisfactory to the Initial Purchaser of each such amendment,
supplement or filing.
(c) The Company
will cooperate with the Initial Purchaser in endeavoring to qualify
the Securities for sale under the securities laws of such
jurisdictions in the United States as the Initial Purchaser may
reasonably have designated in writing and will make such
applications,
13
file
such documents and furnish such information as may be reasonably
required for that purpose; provided that the Company shall
not be required to qualify as a foreign corporation or to file a
general consent to service of process in any jurisdiction where it
is not now so qualified or required to file such a consent. The
Company will, from time to time, prepare and file such statements,
reports and other documents, as are or may be required to continue
such qualifications in effect for so long a period as the Initial
Purchaser may reasonably request for distribution of the
Securities.
(d) If at any time
prior to the date on which all of the Securities shall have been
sold by the Initial Purchaser, any event shall occur as a result of
which, in the judgment of the Company or in the reasonable opinion
of the Initial Purchaser, it becomes necessary to amend or
supplement the Offering Memorandum in order to make the statements
therein, in the light of the circumstances under which they were
made, not misleading, or if it is necessary at any time to amend or
supplement the Offering Memorandum to comply with applicable law,
the Company promptly will prepare an appropriate amendment or
supplement to the Offering Memorandum so that the Offering
Memorandum as so amended or supplemented will not contain
statements that, in the light of the circumstances under which they
were made, are misleading, or so that the Offering Memorandum will
comply with applicable law.
(e) The Company
will not, without the prior written consent of the Initial
Purchaser, directly or indirectly offer, sell, pledge, contract to
sell, (including any short sale), grant any option to purchase or
otherwise dispose of any shares of Common Stock or enter into any
Hedging Transaction (as defined below) relating to the Common Stock
for a period from the date hereof until and including the date that
is 90 days after the date of the Offering Memorandum. “
Hedging Transaction ” means any short sale (whether or
not against the box) or any purchase, sale or grant of any right
(including, without limitation, any put or call option) with
respect to any security (other than a broad-based market basket or
index) that includes, relates to or derives any significant part of
its value from the Common Stock. The foregoing sentence shall not
apply to (A) the sale of the Securities under this Agreement,
(B) the issuance by the Company of shares of Common Stock and
associated Rights, upon conversion of the Securities pursuant to
the terms of the Indenture, (C) the issuance by the Company of
shares of Common Stock and associated Rights, pursuant to any
employee, officer or director stock option plan or other benefit
plan in effect on the date hereof, (D) the issuance by the
Company of any shares of Common Stock and associated Rights upon
the exercise of an option or warrant or the conversion of a
security outstanding on the date hereof, E) the filing of shelf
registration statements in respect of the Securities and shares of
Common Stock and associated Rights issuable upon conversion of the
Securities pursuant to the terms of the Registration
Rights
14
Agreement or (F) the purchase by the
Company of up to $20 million of Common Stock and associated
rights in connection with the Offering.
(f) The Company
will not, nor will it permit any of its Affiliates to, resell any
Securities that have been acquired by any of them.
(g) Except as
contemplated by the Registration Rights Agreement, neither the
Company, nor any of its Affiliates, nor any person acting on its
behalf will, directly or indirectly, make offers or sales of any
security, or solicit offers to buy any security, under
circumstances that would require the registration of the Securities
or the Underlying Securities under the Securities Act.
(h) Neither the
Company nor any of its Affiliates nor any person acting on its
behalf will engage in any form of general solicitation or general
advertising (as those terms are used in Rule 502(c) of
Regulation D under the Securities Act) in connection with any
offer or sale of the Securities in the United States.
(i) So long as any
of the Securities or the Underlying Securities are
“restricted securities” within the meaning of
Rule 144(a)(3) under the Securities Act, the Company will,
during any period in which it is not subject to and in compliance
with Section 13 or 15(d) of the Exchange Act or exempt from
such reporting requirements pursuant to and in compliance with
Rule 12g3-2(b) under the Exchange Act, provide to each holder
of such restricted sec
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