SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
-----------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT of 1934
March 2, 1999
Date of Report (Date of earliest event reported)
LOWE'S COMPANIES, INC.
(Exact Name of Registrant as Specified in Charter)
North Carolina 1-7898 56-0578072
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
Highway 268 East
North Wilkesboro, North Carolina 28656
(Address of Principal Executive Offices)
(336) 658-4000
(Registrant's telephone number, including area code)
N/A
(Former Name or Former Address, if Changed Since Last Report)
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Item 5. Other Events.
Lowe's Companies, Inc. (the "Company") is filing this Current Report on
Form 8-K so as to file with the Securities and Exchange Commission certain items
that are to be incorporated by reference into its Registration Statement on Form
S-3 (Registration No. 333-72905) in connection with the completion on March 2,
1999, of the public offering of 6,206,895 shares of the Company's common stock,
par value $.50 per share.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
a) Financial Statements.
None.
b) Pro Forma Financial Information.
None.
c) Exhibits.
1.1 U.S. Purchase Agreement, dated February 24, 1999,
among the Company and Merrill Lynch & Co., Merrill
Lynch, Pierce, Fenner & Smith Incorporated, as the
U.S Representative of the U.S. Underwriters.
1.2 International Purchase Agreement, dated February 24,
1999, among the Company and Merrill Lynch
International, as the Lead Manager of the
International Managers.
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
LOWE'S COMPANIES, INC.
(Registrant)
Date: March 4, 1999 By: /s/ Kenneth W. Black, Jr.
-------------------------
Kenneth W. Black, Jr.
Vice President and Corporate
Controller
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EXHIBIT INDEX
Exhibit Number and Description.
1.1 U.S. Purchase Agreement, dated February 24, 1999, among the Company and
Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated, as the U.S. Representative of the U.S. Underwriters.
1.2 International Purchase Agreement, dated February 24, 1999, among the
Company and Merrill Lynch International, as Lead Manager of the
International Managers.
EXHIBIT 1.1
LOWE'S COMPANIES, INC.
(a North Carolina corporation)
4,400,000 Shares of Common Stock
U.S. PURCHASE AGREEMENT
Dated: February 24, 1999
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<TABLE>
TABLE OF CONTENTS
<S> <C>
PAGE
Section 1. Representations and Warranties........................................................................4
(a) Representations and Warranties by the Company..............................................................4
(i) Compliance with Registration Requirements................................................................4
(ii) Incorporated Documents..................................................................................5
(iii) Independent Accountants................................................................................5
(iv) Authorization of Agreement..............................................................................5
(v) Financial Statements.....................................................................................5
(vi) Good Standing of the Company............................................................................6
(vii) Good Standing of Subsidiaries..........................................................................6
(viii) Authorization and Description of Shares...............................................................6
(ix) Validity of Capital Stock...............................................................................7
(x) Authorization of Rights..................................................................................7
(xi) No Material Adverse Change in Business..................................................................7
(xii) Absence of Defaults and Conflicts......................................................................7
(xiii) Absence of Further Requirements.......................................................................8
(xiv) Absence of Proceedings.................................................................................8
(xv) Accuracy of Exhibits....................................................................................9
(xvi) Possession of Licenses and Permits.....................................................................9
(xvii) Possession of Intellectual Property...................................................................9
(xviii) Absence of Labor Dispute.............................................................................9
(xix) Market Stabilization...................................................................................9
(xx) Environmental Laws......................................................................................9
(xxi) Year 2000 Compliance..................................................................................10
(b) Officer's Certificates....................................................................................10
Section 2. Sale and Delivery to the U.S. Underwriters; Closing..................................................10
(a) Initial Shares............................................................................................10
(b) Option Shares.............................................................................................11
(c) Payment...................................................................................................11
(d) Denominations; Registration...............................................................................12
(e) Closing of Sale of Initial International Shares...........................................................12
Section 3. Certain Covenants of the Company.....................................................................12
(a) Prospectus Supplement; Delivery of Prospectuses...........................................................12
(b) Continued Compliance with Securities Laws.................................................................13
(c) Reporting Requirements....................................................................................13
(d) Filing of Amendments......................................................................................13
(e) Notice Upon Effectiveness; Commission Requests............................................................13
(f) Delivery of Registration Statements.......................................................................14
(g) Blue Sky Qualifications...................................................................................14
(h) Rule 158..................................................................................................15
(i) Listing...................................................................................................15
(j) Reports to U.S. Underwriters..............................................................................15
(k) Restriction or Sale of Shares.............................................................................15
Section 4. Payment of Expenses..................................................................................15
(a) Expenses..................................................................................................15
(b) Termination of Agreement..................................................................................16
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Section 5. Conditions of U.S. Underwriters' Obligations.........................................................16
(a) Effectiveness of Registration Statement...................................................................16
(b) Opinion of Hunton & Williams, Counsel for the Company.....................................................17
(c) Opinion of Counsel to the U.S. Underwriters...............................................................20
(d) Officers'Certificate......................................................................................21
(e) Accountants'Comfort Letter................................................................................21
(f) Bring-Down Comfort Letter.................................................................................22
(g) Additional Documents......................................................................................22
(h) Approval of Listing.......................................................................................22
(i) Lock-up Agreements........................................................................................22
(j) Termination of Agreement..................................................................................22
Section 6. Conditions to Purchase of U.S. Option Shares.........................................................22
(a) Registration Statement Effective..........................................................................23
(b) Officers'Certificate......................................................................................23
(c) Opinion of Counsel for Company............................................................................23
(d) Opinion of Counsel for U.S. Underwriters..................................................................23
(e) Bring-down Comfort Letter.................................................................................23
(f) Additional Documents......................................................................................23
(g) Termination of Option Closing.............................................................................24
Section 7. Indemnification......................................................................................24
(a) Indemnification of the Underwriters.......................................................................24
(b) Indemnification of the Company, Directors and Officers....................................................25
(c) Actions Against Parties, Notification.....................................................................25
(d) Settlement Without Consent if Failure to Reimburse........................................................26
Section 8. Contribution.........................................................................................26
Section 9. Representations, Warranties and Agreements to Survive Delivery.......................................27
Section 10. Termination of Agreement............................................................................28
(a) Termination Generally.....................................................................................28
(b) Liabilities...............................................................................................28
(c) Alternative Termination...................................................................................28
Section 11. Default by One or More of the U.S. Underwriters.....................................................28
Section 12. Notices.............................................................................................29
Section 13. Parties.............................................................................................29
Section 14. Representation of U.S. Underwriters.................................................................29
Section 15. GOVERNING LAW AND TIME..............................................................................30
Section 16. Effect of Headings..................................................................................30
Section 17. Counterparts........................................................................................30
SCHEDULE A -- List of U.S. Underwriters
SCHEDULE B -- Pricing Information
SCHEDULE C -- List of Persons or Entities subject to Lock-Up
</TABLE>
<PAGE>
LOWE'S COMPANIES, INC.
(a North Carolina corporation)
4,400,000 Shares of Common Stock
(Par Value $.50 Per Share)
U.S. PURCHASE AGREEMENT
February 24, 1999
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
as U.S. Representative of the several U.S. Underwriters
c/o MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
North Tower
World Financial Center
250 Vesey Street
New York, New York 10281
Ladies and Gentlemen:
Lowe's Companies, Inc., a North Carolina corporation (the "Company"),
confirms its agreement with Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner &
Smith Incorporated ("Merrill Lynch"), and each of the other U.S. Underwriters
named in Schedule A hereto (collectively, the "U.S. Underwriters", which term
shall also include any underwriter substituted as hereinafter provided in
Section 11 hereof), for whom Merrill Lynch is acting as representative (in such
capacity, the "U.S. Representative") with respect to the issue and sale by the
Company and the purchase by the U.S. Underwriters, acting severally and not
jointly, of 4,400,000 authorized but unissued shares of Common Stock, par value
$.50 per share, of the Company ("Common Stock"), set forth in Schedule A hereto
opposite the name of each U.S. Underwriter. The Company also grants to the U.S.
Underwriters, severally and not jointly, the option described in Section 2
hereof to purchase all or any part of 565,516 additional shares of Common Stock
solely to cover over-allotments, if any. The aforesaid 4,400,000 shares of
Common Stock (the "Initial U.S. Shares") to be purchased by the U.S.
Underwriters, together with all or any part of the 565,516 shares of Common
Stock subject to the option described in Section 2 hereof (the "U.S. Option
Shares"), are collectively herein called the "U.S. Shares". The U.S. Shares and
the Rights (as hereinafter defined) are more fully described in the Prospectuses
referred to below.
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2
It is understood that the Company is concurrently entering into an
agreement, dated the date hereof (the "International Purchase Agreement"),
providing for the sale by the Company of an aggregate of 1,100,000 shares of
Common Stock (the "Initial International Shares") through arrangements with
Merrill Lynch International, Morgan Stanley & Co. International Limited,
PaineWebber International (U.K.) Ltd., William Blair & Company, L.L.C. and
Prudential-Bache Securities (U.K.) Inc. outside of the United States
(collectively, the "International Managers"), for whom Merrill Lynch
International is acting as Lead Manager (the "Lead Manager"). It is further
understood that the Company is concurrently granting the International Managers
an option to purchase all or any part of 141,379 additional shares of Common
Stock (the "International Option Shares" and, together with the U.S. Option
Shares, the "Option Shares") solely to cover over-allotments, if any. The
Initial International Shares and the International Option Shares are hereinafter
collectively referred to as the "International Shares."
The U.S. Underwriters and the International Managers are hereinafter
collectively called the "Underwriters"; the Initial U.S. Shares and the Initial
International Shares are hereinafter collectively called the "Initial Shares";
and the U.S. Shares and the International Shares are hereinafter collectively
referred to as the "Shares."
Each Share will include one preferred share purchase right (a "Right").
Each Right entitles the holder thereof to purchase, under certain circumstances,
one one-thousandth of a share of the Company's participating cumulative
preferred stock, series A (the "Preferred Stock"). The Company issued the Rights
pursuant to a Rights Agreement, dated as of September 8, 1998 (the "Rights
Plan"). Each reference herein to a "Share" or "Shares" shall include the Right
or Rights associated with such Share or Shares, unless the context otherwise
requires.
The Underwriters will concurrently enter into an Intersyndicate
Agreement of even date herewith (the "Intersyndicate Agreement") providing for
the coordination of certain transactions among the U.S. Underwriters and the
International Managers under the direction of Merrill Lynch (in such capacity,
the "Global Coordinator").
The Company understands that the U.S. Underwriters propose to make a
public offering of the U.S. Securities as soon as the U.S. Representative deems
advisable after this Agreement has been executed and delivered.
The Company has prepared and filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-3 (Registration
No. 333-42733) ("Registration Statement"), covering the registration of certain
of its debt securities, shares of preferred stock, depositary shares, shares of
common stock (including the Shares), preferred stock purchase rights (including
the Rights) and warrants, and the offering thereof from time to time in
accordance with Rule 415 under the Securities Act of 1933, as amended (the "1933
Act"), including the related preliminary prospectus or prospectuses. Such
registration statement has been declared effective by the Commission. As
provided in Section 3(a), the Company has prepared two forms of prospectus
supplement reflecting the terms of the Shares, the terms of the offering thereof
and other matters set forth therein and, promptly after the execution and
delivery of this Agreement, the Company will file such prospectus supplements
pursuant to Rule 430A of the rules and regulations of the Commission under the
1933 Act (the "1933 Act Regulations") and paragraph (b) of Rule 424 of the 1933
Act Regulations. The forms of prospectus supplement are to be used in connection
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3
with the offering and sale of the Shares: one relating to the U.S. Shares (the
"Form of U.S. Prospectus Supplement"); and one relating to the International
Shares (the "Form of International Prospectus Supplement"). Such prospectus
supplements, each in the form first filed after the date hereof pursuant to Rule
424, are herein referred to collectively as the "Prospectus Supplements," and
individually as a "Prospectus Supplement." The Form of U.S. Prospectus
Supplement is identical to the Form of International Prospectus Supplement,
except for the front cover page, the inside front cover page and the back cover
page and the information contained under the caption "Underwriting." In
addition, the International Prospectus Supplement contains an additional section
entitled "United States Federal Tax Considerations to Non-U.S. Holders." The
information included in any such prospectus that was omitted from such
registration statement at the time it became effective but that is deemed to be
part of such registration statement at the time it became effective pursuant to
paragraph (b) of Rule 430A is referred to as "Rule 430A Information." Each Form
of U.S. Prospectus and Form of International Prospectus used before such
registration statement became effective, and any prospectus that omitted, as
applicable, the Rule 430A Information or the Rule 434 Information, that was used
after such effectiveness and prior to the execution and delivery of this
Agreement, is herein called a "preliminary prospectus." Such registration
statement, as amended at the date hereof, including the exhibits thereto and the
documents incorporated by reference therein pursuant to Item 12 of Form S-3
under the 1933 Act, at the time it became effective and including the Rule 430A
Information, is herein called the "Registration Statement." Any registration
statement filed pursuant to Rule 462(b) of the rules and regulations of the
Commission under the 1933 Act is herein referred to as the "Rule 462(b)
Registration Statement" and after such filing the term "Registration Statement"
shall include the Rule 462(b) Registration Statement. The base prospectus
included in the Registration Statement relating to all offerings of securities
under the Registration Statement, as supplemented by the Form of U.S. Prospectus
Supplement and the Form of International Prospectus Supplement, are herein
called the "U.S. Prospectus" and the "International Prospectus," respectively,
and collectively, the "Prospectuses," and individually, a "Prospectus," except
that, if such base prospectus is amended or supplemented on or prior to the date
on which the U.S. Prospectus Supplement and the International Prospectus
Supplement are first filed pursuant to Rule 424, the terms "U.S. Prospectus,"
"International Prospectus," and "Prospectuses" and "Prospectus" shall refer to
the base prospectus as so amended or supplemented and as supplemented by the
U.S. Prospectus Supplement and the International Prospectus Supplement, as the
case may be, in either case including the documents filed by the Company with
the Commission pursuant to the Securities Exchange Act of 1934, as amended (the
<PAGE>
4
"1934 Act"), that are incorporated by reference therein. For purposes of this
Agreement, all references to the Registration Statement, the Prospectuses or any
amendment or supplement to any of the foregoing shall be deemed to include the
copy filed with the Commission pursuant to its Electronic Data Gathering,
Analysis and Retrieval system ("EDGAR").
All references in this Agreement to financial statements and schedules
and other information which is "contained," "included" or "stated" in the
Registration Statement, any preliminary prospectus (including the preliminary
Form of U.S. Prospectus and Form of International Prospectus) or the
Prospectuses (or other references of like import) shall be deemed to mean and
include all such financial statements and schedules and other information which
are incorporated by reference in the Registration Statement, any preliminary
prospectus (including the preliminary Form of U.S. Prospectus and Form of
International Prospectus) or the Prospectuses, as the case may be; and all
references in this Agreement to amendments or supplements to the Registration
Statement any preliminary prospectus or the Prospectuses shall be deemed to mean
and include the filing of any document under the 1934 Act which is incorporated
by reference in the Registration Statement, such preliminary prospectus or the
Prospectuses, as the case may be.
Section 1. Representations and Warranties.
(a) Representations and Warranties by the Company. The Company
represents and warrants to each of the U.S. Underwriters as of the date
hereof, as of the Closing Time referred to in Section 2(c) hereof, and as
of the Date of Delivery, if any, referred to in Section 2(b) hereof, and
agrees with each U.S.
Underwriter, as follows:
(i) Compliance with Registration Requirements. The Company
meets the requirements for use of Form S-3 under the 1933 Act. Each of
the Registration Statement and any Rule 462(b) Registration Statement
has become effective under the 1933 Act and no stop order suspending
the effectiveness of the Registration Statement or any Rule 462(b)
Registration Statement has been issued under the 1933 Act and no
proceedings for that purpose have been instituted or are pending or, to
the knowledge of the Company, are contemplated by the Commission, and
any request on the part of the Commission for additional information
has been complied with.
At the respective times the Registration Statement, any Rule
462(b) Registration Statement and any post-effective amendments thereto
became or will become effective and at the Closing Time (and, if any
U.S. Option Shares are purchased, at the date of delivery), the
Registration Statement, the Rule 462(b) Registration Statement and any
amendments and supplements thereto complied and will comply in all
material respects with the requirements of the 1933 Act and the 1933
Act Regulations and did not and will not contain an untrue statement of
a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading.
Neither of the Prospectuses, nor any amendments or supplements thereto,
at the time the Prospectuses or any amendments or supplements thereto
were issued and at the Closing Time (and, if any U.S. Option Shares are
<PAGE>
5
purchased, at the Date of Delivery), included or will include an untrue
statement of a material fact or omitted or will 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;
provided, however, that the Company makes no representations or
warranties as to statements in or omissions from the Registration
Statement or the Prospectuses made in reliance upon and in conformity
with information furnished in writing to the Company by or on behalf of
and relating to any U.S. Underwriter or International Manager, directly
or through the U.S. Representative or, in the case of the International
Managers, through the Lead Manager, expressly for use in the
Registration Statement or the Prospectuses.
Each preliminary prospectus and the prospectuses filed as part
of the Registration Statement, as originally filed or as part of any
amendment thereto, or filed pursuant to Rule 424 under the 1933 Act,
complied when so filed in all material respects with the 1933 Act
Regulations and each preliminary prospectus and the Prospectuses
delivered to the Underwriters for use in connection with this offering
was identical to the electronically transmitted copies thereof filed
with the Commission pursuant to EDGAR, except to the extent permitted
by Regulation S-T.
(ii) Incorporated Documents. The documents incorporated or
deemed to be incorporated by reference in the Registration Statement
and the Prospectuses, at the time they were or hereafter are filed with
the Commission, complied and will comply in all material respects with
the requirements of the 1934 Act, and the rules and regulations of the
Commission thereunder (the "1934 Act Regulations"), as applicable, and,
when read together and with the other information in the Prospectuses,
at the time the Registration Statement became effective, at the time
the Prospectuses were issued and at the Closing Time (and if any U.S.
Option Shares are purchased, at the Date of Delivery), did not and will
not contain an 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, in the light of the circumstances under
which they were made, not misleading.
(iii) Independent Accountants. Deloitte & Touche LLP, who have
reported upon the audited financial statements and schedules included
or incorporated by reference in the Registration Statement, are
independent public accountants as required by the 1933 Act and the 1933
Act Regulations.
(iv) Authorization of Agreement. This Agreement has been duly
authorized, executed and delivered by the Company.
(v) Financial Statements. The consolidated financial
statements included or incorporated by reference in the Registration
Statement and the Prospectuses present fairly the consolidated
financial position of the Company and its subsidiaries as of the dates
indicated and the consolidated results of operations and the
consolidated cash flows of the Company and its subsidiaries for the
periods specified. Such financial statements have been prepared in
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6
conformity with generally accepted accounting principles applied on a
consistent basis throughout the periods involved. The financial
statement schedules, if any, included in the Registration Statement
present fairly the information required to be stated therein. The
selected financial data included or incorporated by reference in the
Prospectuses present fairly the information shown therein and have been
compiled on a basis consistent with that of the audited consolidated
financial statements included or incorporated by reference in the
Registration Statement.
(vi) Good Standing of the Company. The Company is a
corporation duly organized, validly existing and in good standing under
the laws of the State of North Carolina with corporate power and
authority under such laws to own, lease and operate its properties and
conduct its business as described in the Prospectuses; and the Company
is duly qualified to transact business as a foreign corporation and is
in good standing in each other jurisdiction in which it owns or leases
property of a nature, or transacts business of a type, that would make
such qualification necessary, except to the extent that the failure to
so qualify or be in good standing would not have a material adverse
effect on the Company and its subsidiaries, considered as one
enterprise.
(vii) Good Standing of Subsidiaries. Each of Lowe's Home
Centers, Inc., a North Carolina corporation and LF Corporation, a
Delaware corporation (together, the "Significant Subsidiaries"; such
term has the meaning set forth in Rule 1-02 under Regulation S-X), is a
corporation duly organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation with corporate power
and authority under such laws to own, lease and operate its properties
and conduct its business; and each Significant Subsidiary is duly
qualified to transact business as a foreign corporation and is in good
standing in each other jurisdiction in which it owns or leases property
of a nature, or transacts business of a type, that would make such
qualification necessary, except to the extent that the failure to so
qualify or be in good standing would not have a material adverse effect
on the Company and its subsidiaries, considered as one enterprise. All
of the outstanding shares of capital stock of each Significant
Subsidiary have been duly authorized and validly issued and are fully
paid and nonassessable and are owned by the Company, directly or
through one or more Significant Subsidiaries, free and clear of any
pledge, lien, security interest, charge, claim, equity or encumbrance
of any kind. The only Significant Subsidiaries of the Company are those
subsidiaries listed above in this subparagraph (vii). If the
consummation of the merger of the Company and Eagle Hardware & Garden,
Inc., a Washington corporation ("Eagle"), were to occur as of the date
hereof, it would not be necessary to provide pro forma financial
information with respect to Eagle and such merger in the Prospectuses
in order for the disclosure therein to comply with Rule 11-01 of
Regulation S-X based on Eagle's financial statements as of January 31,
1998.
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7
(viii) Authorization and Description of Shares. The Shares
have been duly authorized and, when issued and paid for in accordance
with this Agreement and the International Purchase Agreement, will be
validly issued, fully paid and nonassessable; no holder thereof will be
subject to personal liability by reason of being such a holder; the
Common Stock conforms to all statements relating thereto contained in
the Prospectuses and such description conforms to the rights set forth
in the instruments defining the same; such Shares are not subject to
the preemptive rights of any stockholder of the Company; and all
corporate action required to be taken for the authorization, issue and
sale of the Shares has been validly and sufficiently taken.
(ix) Validity of Capital Stock. All of the outstanding shares
of capital stock of the Company have been duly authorized and validly
issued and are fully paid and nonassessable; no holder thereof is or
will be subject to personal liability by reason of being such a holder;
and none of the outstanding shares of capital stock of the Company
issued since December 19, 1979 was issued in violation of the
preemptive rights of any stockholder of the Company.
(x) Authorization of Rights. The Rights associated with the
Shares have been duly authorized and validly reserved for issuance upon
the issuance of the Shares and, when so issued in accordance with the
terms of the Rights Plan, will be validly issued; the shares of
Preferred Stock that may be issued to holders of Rights pursuant to the
Rights Plan have been duly authorized and validly reserved for issuance
upon the exercise of the Rights and, when issued and delivered in
accordance with the terms of the Rights Plan, will be validly issued,
fully paid and nonassessable and, except as otherwise set forth in the
Prospectuses, the issuance of such shares of Preferred Stock is not
subject to any preemptive or similar rights; and the Rights and the
Preferred Stock conform to the descriptions thereof contained in the
Prospectuses.
(xi) No Material Adverse Change in Business. Since the
respective dates as of which information is given in the Registration
Statement and the Prospectuses, except as otherwise stated therein or
contemplated thereby, there has not been (A) any material adverse
change in the condition (financial or otherwise), earnings, business
affairs or business prospects of the Company and its subsidiaries,
considered as one enterprise, whether or not arising in the ordinary
course of business, (B) any transaction entered into by the Company or
any subsidiary, other than in the ordinary course of business, that is
material to the Company and its subsidiaries, considered as one
enterprise, or (C) any dividend (other than ordinary quarterly
dividends declared, paid or made in the ordinary course of business) or
distribution of any kind declared, paid or made by the Company on its
capital stock.
(xii) Absence of Defaults and Conflicts. Neither the Company
nor any Significant Subsidiary is in default in the performance or
observance of any obligation, agreement, covenant or condition
contained in any contract, indenture, mortgage, loan agreement, note,
lease or other agreement or instrument to which it is a party or by
which it may be bound or to which any of its properties may be subject,
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8
except for such defaults that would not have a material adverse effect
on the condition (financial or otherwise), earnings, business affairs
or business prospects of the Company and its subsidiaries, considered
as one enterprise. The execution and delivery of this Agreement and the
International Purchase Agreement by the Company, the issuance and
delivery of the Shares and the Rights, the consummation by the Company
of the transactions contemplated in this Agreement and the
International Purchase Agreement, in the Rights Plan, in the
Prospectuses and in the Registration Statement and compliance by the
Company with the terms of this Agreement, the International Purchase
Agreement and the Rights Plan have been duly authorized by all
necessary corporate action on the part of the Company and do not and
will not result in any violation of the charter or by-laws of the
Company or any Significant Subsidiary, and do not and will not conflict
with, or result in a breach of any of the terms or provisions of, or
constitute a 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 Significant Subsidiary under (A) any contract,
indenture, mortgage, loan agreement, note, lease or other agreement or
instrument to which the Company or any Significant Subsidiary is a
party or by which it may be bound or to which any of its properties may
be subject (except for such conflicts, breaches or defaults or liens,
charges or encumbrances that would not have a material adverse effect
on the condition (financial or otherwise), earnings, business affairs
or business prospects of the Company and its subsidiaries, considered
as one enterprise) or (B) any existing applicable law, rule,
regulation, judgment, order or decree of any government, governmental
instrumentality or court, domestic or foreign, having jurisdiction over
the Company or any Significant Subsidiary or any of their respective
properties.
(xiii) Absence of Further Requirements. No filing with, or
authorization, approval, consent or license of any government,
governmental instrumentality or court, domestic or foreign (other than
under the 1933 Act and the securities or blue sky laws of the various
states), is necessary or required for the performance by the Company of
its obligations hereunder, in connection with the offering, issuance or
sale of the Shares hereunder or the consummation of the transactions
contemplated by this Agreement, for the valid authorization, issuance,
sale and delivery of the Shares and the Rights, or for the execution,
delivery or performance of the Rights Plan by the Company.
(xiv) Absence of Proceedings. Except as disclosed in the
Prospectuses, there is no action, suit or proceeding before or by any
government, governmental instrumentality or court, domestic or foreign,
now pending or, to the knowledge of the Company, threatened against or
affecting the Company or any Significant Subsidiary that could result
in any material adverse change in the condition (financial or
otherwise), earnings, business affairs or business prospects of the
Company and its subsidiaries, considered as one enterprise, or that
could materially and adversely affect the properties or assets of the
Company and its subsidiaries, considered as one enterprise, or that
could adversely affect the consummation of the transactions
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9
contemplated in this Agreement and the International Purchase
Agreement; the aggregate of all pending legal or governmental
proceedings that are not described in the Prospectuses to which the
Company or any Significant Subsidiary is a party or which affect any of
their respective properties, including ordinary routine litigation
incidental to the business of the Company or any Significant
Subsidiary, would not have a material adverse effect on the condition
(financial or otherwise), earnings, business affairs or business
prospects of the Company and its subsidiaries, considered as one
enterprise.
(xv) Accuracy of Exhibits. There are no contracts or documents
of a character required to be described in the Registration Statement
or the Prospectuses or to be filed as exhibits to the Registration
Statement that are not described and filed as required.
(xvi) Possession of Licenses and Permits. Each of the Company
and the Significant Subsidiaries owns, possesses or has obtained all
material governmental licenses, permits, certificates, consents,
orders, approvals and other authorizations necessary to own or lease,
as the case may be, and to operate its properties and to carry on its
business as presently conducted (other than such licenses, permits,
certificates, consents, orders, approvals and authorizations which, if
neither owned, possessed nor obtained, would not have a material
adverse impact on the business of the Company and its subsidiaries,
considered as one enterprise), and neither the Company nor any
Significant Subsidiary has received any notice of proceedings relating
to revocation or modification of any such licenses, permits,
certificates, consents, orders, approvals or authorizations.
(xvii) Possession of Intellectual Property. Each of the
Company and the Significant Subsidiaries owns or possesses, or can
acquire on reasonable terms, adequate patents, patent licenses,
trademarks, service marks and trade names necessary to carry on its
business as presently conducted, and neither the Company nor any
Significant Subsidiary has received any notice of infringement of or
conflict with asserted rights of others with respect to any patents,
patent licenses, trademarks, service marks or trade names that in the
aggregate, if the subject of an unfavorable decision, ruling or
finding, could materially adversely affect the condition (financial or
otherwise), earnings, business affairs or business prospects of the
Company and its subsidiaries, considered as one enterprise.
(xviii) Absence of Labor Dispute. To the best knowledge of the
Company, no material labor problem exists with its employees or with
employees of the Significant Subsidiaries or is imminent and there is
no existing or imminent labor disturbance by the employees of any of
its or the Significant Subsidiaries' principal suppliers, contractors
or customers, in each case, that could be expected to materially
adversely affect the condition (financial or otherwise), earnings,
business affairs or business prospects of the Company and its
subsidiaries, considered as one enterprise.
<PAGE>
10
(xix) Market Stabilization. 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 the Common Stock.
(xx) Environmental Laws. Except as disclosed in the
Registration Statement and except as would not individually or in the
aggregate have a material adverse effect on the condition (financial or
otherwise), earnings, business affairs or business prospects of the
Company and its subsidiaries, considered as one enterprise, (A) the
Company and the Significant Subsidiaries are each in compliance with
all applicable Environmental Laws, (B) the Company and the Significant
Subsidiaries have all permits, authorizations and approvals required
under any applicable Environmental Laws and are each in compliance with
their requirements, (C) there are no pending or threatened
Environmental Claims against the Company or any of the Significant
Subsidiaries, and (D) there are no circumstances with respect to any
property or operations of the Company or the Significant Subsidiaries
that could reasonably be anticipated to form the basis of an
Environmental Claim against the Company or the Significant
Subsidiaries.
For purposes of this Agreement, the following terms
shall have the following meanings: "Environmental Law" means any United
States (or other applicable jurisdiction's) federal, state, local or
municipal statute, law, rule, regulation, ordinance, code, policy or
rule of common law and any judicial or administrative interpretation
thereof including any judicial or administrative order, consent decree
or judgment, relating to the environment, health, safety or any
chemical, material or substance, exposure to which is prohibited,
limited or regulated by any governmental authority. "Environmental
Claims" means any and all administrative, regulatory or judicial
actions, suits, demands, demand letters, claims, liens, notices of
noncompliance or violation, investigation or proceedings relating in
any way to any Environmental Law.
(xxi) Year 2000 Compliance. The disclosure of the Company
regarding Year 2000 issues that is included or incorporated by reference in
the Registration Statement, including the Rule 462(b) Registration
Statement, and the Prospectuses complies in all material respects with the
disclosure requirements of the Commission as stated in Staff Legal Bulletin
No. 6, SEC Release No. 33-7558 (July 29, 1998) and SEC Release No. 33-7609
(November 9, 1998). Other than as disclosed in the Prospectuses, the
Company and its subsidiaries will not incur material operating expenses or
costs to ensure that its information systems will be year 2000 compliant or
to adjust its operating and information systems to the conversion to a
single currency in Europe.
(b) Officer's Certificates. Any certificate signed by any officer of
the Company or any Significant Subsidiary and delivered to the Global
Coordinator, the U.S. Representative or to counsel for the U.S.
Underwriters shall be deemed a representation and warranty by the Company
to each U.S. Underwriter as to the matters covered thereby.
<PAGE>
11
Section 2. Sale and Delivery to the U.S. Underwriters; Closing.
(a) Initial Shares. On the basis of the representations and warranties
herein contained, and subject to the terms and conditions herein set forth,
the Company agrees to sell to each U.S. Underwriter, severally and not
jointly, and each U.S. Underwriter, severally and not jointly, agrees to
purchase from the Company, at the purchase price per share for the Initial
U.S. Shares set forth in Schedule B to this Agreement, the number of
Initial U.S. Shares set forth opposite the name of such Underwriter in
Schedule A, plus any additional number of Initial U.S. Shares that such
U.S. Underwriter may become obligated to purchase pursuant to Section 11 of
this Agreement.
(b) Option Shares. 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 U.S. Underwriters,
severally and not jointly, to purchase up to an additional 565,516 U.S.
Option Shares at the price per share set forth in Schedule B. The option
hereby granted will expire 30 days after the date of this Agreement, and
may be exercised, in whole or in part (but not more than once), only for
the purpose of covering over-allotments that may be made in connection with
the offering and distribution of the Initial U.S. Shares upon notice by the
U.S. Representative to the Company setting forth the number of U.S. Option
Shares as to which the several U.S. Underwriters are exercising the option,
and the time and date of payment and delivery of such U.S. Option Shares.
Such time and date of delivery (the "Date of Delivery") shall be determined
by the Global Coordinator, but shall not be later than seven full business
days after the exercise of such option, nor in any event prior to the
Closing Time, as hereinafter defined. If the option is exercised as to all
or any portion of the U.S. Option Shares, each of the U.S. Underwriters,
acting severally and not jointly, will purchase from the Company that
portion of the aggregate number of U.S. Option Shares being purchased which
the number of Initial U.S. Shares set forth in Schedule A opposite the name
of such U.S. Underwriter bears to the total number of Initial U.S. Shares
(such proportion is hereinafter referred to as such U.S. Underwriter's
"underwriting obligation proportion"), subject to such adjustments as the
Global Coordinator, in its discretion, shall make to eliminate any sales or
purchases of fractional shares.
(c) Payment. Payment of the purchase price for, and delivery of
certificates for, the Initial U.S. Shares shall be made at the offices of
Shearman & Sterling, 599 Lexington Avenue, New York, New York 10022, or at
such other place as shall be agreed upon by the Company and the Global
Coordinator, at 9:00 A.M. on the third (fourth, if the pricing occurs after
4:30 P.M. (Eastern time) on any given day) business day after the date
hereof (unless postponed pursuant to Section 11), or at such other time not
more than ten business days thereafter as the Global Coordinator and the
Company shall determine (such date and time of payment and delivery being
herein called the "Closing Time").
<PAGE>
12
In addition, in the event that any or all of the U.S. Option Shares are
purchased by the U.S. Underwriters, payment of the purchase price for, and
delivery of certificates for, such U.S. Option Shares shall be made at the
offices of Shearman & Sterling set forth above, or at such other place as
the Company and the Global Coordinator shall determine, on the Date of
Delivery as specified in the notice from the Global Coordinator to the
Company.
Payment shall be made to the Company by wire transfer of immediately
available funds to a bank account designated by the Company, against
delivery to the U.S. Representative for the respective accounts of the
several U.S. Underwriters of certificates for the U.S. Shares to be
purchased by them. It is understood that each U.S. Underwriter has
authorized the U.S. Representative, for its account, to accept delivery of,
receipt for, and make payment of the purchase price for, the U.S. Shares
that it has agreed to purchase. Merrill Lynch, individually and not as U.S.
Representative, may (but shall not be obligated to) make payment of the
purchase price for the Initial U.S. Shares or U.S. Option Shares, if any,
to be purchased by any U.S. Underwriter whose funds shall not have been
received by the Closing Time or the Date of Delivery, as the case may be,
but such payment shall not relieve such Underwriter from its obligations
hereunder.
(d) Denominations; Registration. Certificates for the Initial U.S.
Shares and U.S. Option Shares, if any, shall be in such denominations and
registered in such names as the U.S. Representative may request in writing
at least two full business days before the Closing Time or the Date of
Delivery, as the case may be. The certificates for the Initial U.S. Shares
and U.S. Option Shares, if any, will be made available in New York City for
examination and packaging by the U.S. Representative not later than 10:00
A.M. (Eastern time) on the business day prior to the Closing Time or the
Date of Delivery, as the case may be.
(e) Closing of Sale of Initial International Shares. The obligations of
the Company to sell to each U.S. Underwriter the Initial U.S. Shares and
the U.S. Option Shares and the several and not joint obligations of the
U.S. Underwriters to purchase and pay for the U.S. Shares, upon the terms
and subject to the conditions contained herein, are subject to the
concurrent closing of the sale of the Initial International Shares to the
International Managers pursuant to the International Purchase Agreement.
Section 3. Certain Covenants of the Company. The Company covenants with
each U.S. Underwriter as follows:
(a) Prospectus Supplement; Delivery of Prospectuses. If reasonably
requested by the Global Coordinator in connection with the offering of the
Shares, the Company will prepare preliminary prospectus supplements
containing such information as the Global Coordinator and the Company deem
appropriate, and, immediately following the execution of this Agreement,
the Company will prepare Prospectus Supplements that comply with the 1933
Act and the 1933 Act Regulations. The U.S. Prospectus Supplement shall set
forth the number of Shares, the number of U.S. Shares, the name of each
U.S. Underwriter participating in the offering and the number of U.S.
Shares that each severally and not jointly has agreed to purchase, the
price at which the U.S. Shares are to be purchased by the U.S. Underwriters
from the Company, any initial public offering price and any selling
concession and reallowance, and such other information as the U.S.
Representative and the Company deem appropriate in connection with the
<PAGE>
13
offering of the U.S. Shares; and the International Prospectus Supplement
shall set forth the number of Shares, the number of International Shares,
the name of each International Manager participating in the offering and
the number of International Shares that each severally and not jointly has
agreed to purchase, the price at which the International Shares are to be
purchased by the International Managers from the Company, any initial
public offering price and any selling concession and reallowance, and such
other information as the Lead Manager and the Company deem appropriate in
connection with the offering of the International Shares. The Company will
promptly transmit copies of the Prospectus Supplements to the Commission
for filing pursuant to Rule 424(b) under the 1933 Act and will furnish to
the U.S. Underwriters as many copies of any preliminary prospectus
supplements and the Prospectuses as the U.S. Representative shall
reasonably request. The Company will give the Global Coordinator notice of
its intention to file or prepare any amendment to the Registration
Statement (including any filing under Rule 462(b)) or any amendment,
supplement or revision to either the Prospectuses included in the
Registration Statement at the time it became effective or to the
Prospectuses, whether pursuant to the 1933 Act, the 1934 Act or otherwise,
will furnish the U.S. Underwriters with copies of any such documents a
reasonable amount of time prior to such proposed filing or use, as the case
may be, and will not file or use any such document to which the U.S.
Underwriters or counsel for the U.S. Underwriters shall reasonably object.
(b) Continued Compliance with Securities Laws. The Company will comply
to the best of its ability with the 1933 Act and the 1933 Act Regulations
and the 1934 Act and the 1934 Act Regulations so as to permit the
completion of the distribution of the Shares as contemplated in this
Agreement, the International Purchase Agreement and the Prospectuses. If at
any time when a prospectus is required by the 1933 Act to be delivered in
connection with sales of the Shares, any event shall occur or condition
exist as a result of which it is necessary, in the opinion of counsel for
the U.S. Underwriters or counsel for the Company, to amend the Registration
Statement or amend or supplement the Prospectuses in order that such
Prospectuses 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 not misleading in the light of the circumstances existing at the
time it is delivered to a purchaser, or if it shall be necessary, in the
opinion of either such counsel, at any such time to amend the Registration
Statement or amend or supplement the Prospectuses in order to comply with
the requirements of the 1933 Act or the 1933 Act Regulations, the Company
will promptly prepare and file with the Commission, subject to Section
3(d), such amendment or supplement as may be necessary to correct such
untrue statement or omission or to make the Registration Statement or such
Prospectuses comply with such requirements.
(c) Reporting Requirements. During the period when a prospectus is
required by the 1933 Act to be delivered in connection with sales of the
Shares, the Company will, subject to Section 3(d) hereof, file promptly all
documents required to be filed with the Commission pursuant to Section 13,
14 or 15(d) of the 1934 Act.
<PAGE>
14
(d) Filing of Amendments. During the period when a prospectus is
required by the 1933 Act to be delivered in connection with sales of the
Shares, the Company will inform the Global Coordinator of its intention to
file any amendment to the Registration Statement, any supplement to the
Prospectuses or any document that would as a result thereof be incorporated
by reference in the Prospectuses; will furnish the Global Coordinator with
copies of any such amendment, supplement or other document a reasonable
time in advance of filing; and will not file any such amendment, supplement
or other document in a form to which the Global Coordinator or counsel to
the U.S. Underwriters shall reasonably object.
(e) Notice Upon Effectiveness; Commission Requests. During the period
when a prospectus is required by the 1933 Act to be delivered in connection
with sales of the Shares, the Company will notify the Global Coordinator
immediately, and confirm the notice in writing, (i) of the effectiveness of
any amendment to the Registration Statement, (ii) of the mailing or the
delivery to the Commission for filing of any supplement to the Prospectuses
or any document that would as a result thereof be incorporated by reference
in the Prospectuses, (iii) of the receipt of any comments from the
Commission with respect to the Registration Statement, the Prospectuses or
the Prospectus Supplements, (iv) of any request by the Commission for any
amendment to the Registration Statement or any supplement to the
Prospectuses or for additional information relating thereto or to any
document incorporated by reference in the Prospectuses and (v) of the
issuance by the Commission of any stop order suspending the effectiveness
of the Registration Statement or of the suspension of the qualification of
the Shares for offering or sale in any jurisdiction, or of the institution
or threatening of any proceeding for any of such purposes. The Company will
use every reasonable effort to prevent the issuance of any such stop order
or of any order suspending such qualification and, if any such order is
issued, to obtain the lifting thereof at the earliest possible moment.
(f) Delivery of Registration Statements. The Company has furnished or
will furnish to the U.S. Representative, without charge, as many signed
copies of the Registration Statement (as originally filed) and of all
amendments thereto, whether filed before or after the Registration
Statement became effective, copies of all exhibits and documents filed
therewith or incorporated by reference therein (through the end of the
period when a prospectus is required by the 1933 Act to be delivered in
connection with sales of the Shares) and signed copies of all consents and
certificates of experts, as the U.S. Representative may reasonably request,
and has furnished or will furnish to the U.S. Representative, for each of
the U.S. Underwriters, one conformed copy of the Registration Statement (as
originally filed) and of each amendment thereto (including documents
incorporated by reference into the Prospectuses but without exhibits). The
copies of the Registration Statement and each amendment thereto furnished
to the U.S. Underwriters will be identical to the electronically
transmitted copies thereof filed with the Commission pursuant to EDGAR,
except to the extent permitted by Regulation S-T.
<PAGE>
15
(g) Blue Sky Qualifications. The Company will use its best efforts, in
cooperation with the U.S. Underwriters, to qualify the Shares for offering
and sale under the applicable securities laws of such states and other
jurisdictions as the Global Coordinator may designate and to maintain such
qualifications in effect for a period of not less than one year from the
later of the date hereof and the effective date of any Rule 462(b)
Registration Statement; provided, however, that the Company shall not be
obligated to file any general consent to service of process or to qualify
as a foreign corporation or as a dealer in securities in any jurisdiction
in which it is not so qualified or to subject itself to taxation in respect
of doing business in any jurisdiction in which it is not otherwise so
subject. The Company will file such statements and reports as may be
required by the laws of each jurisdiction in which the Shares have been
qualified as above to continue such qualification in effect for a period of
not less than one year from the date hereof and the effective date of any
Rule 462(b) Registration Statement. The Company will also supply the U.S.
Representative with such information as is necessary for the determination
of the legality of the Shares for investment under the laws of such
jurisdictions as the U.S. Representative may request.
(h) Rule 158. The Company will make generally available to its security
holders as soon as practicable, but not later than 45 days after the close
of the period covered thereby, an earnings statement of the Company (in
form complying with the provisions of Rule 158 of the 1933 Act
Regulations), covering (i) a period of 12 months beginning after the
effective date of the Registration Statement and covering a period of 12
months beginning after the effective date of any post-effective amendment
to the Registration Statement but not later than the first day of the
Company's fiscal quarter next following such respective effective dates and
(ii) a period of 12 months beginning after the date of this Agreement but
not later than the first day of the Company's fiscal quarter next following
the date of this Agreement.
(i) Listing. The Company will use its best efforts to maintain the
listing of the Shares on the New York, London and Pacific Stock Exchanges
and to cause the Shares to be registered under the 1934 Act.
(j) Reports to U.S. Underwriters. For a period of five years after the
Closing Time, the Company will furnish to the Global Coordinator and, upon
request, to each U.S. Underwriter, copies of all annual reports, quarterly
reports and current reports filed with the Commission on Forms 10-K, 10-Q
and 8-K, or such other similar forms as may be designated by the
Commission, and such other documents, reports and information as shall be
furnished by the Company to its stockholders or security holders generally.
(k) Restriction or Sale of Shares. During a period of 90 days from the
date of the Prospectuses, the Company will not, without the prior written
consent of the Global Coordinator, (i) directly or indirectly, offer,
pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant
to purchase or otherwise transfer or dispose of any share of Common Stock
or any securities convertible into or exercisable or exchangeable for
Common Stock or file any registration statement under the 1933 Act with
respect to any of the foregoing or (ii) enter into any swap or any other
agreement or any transaction that transfers, in whole or in part, directly
or indirectly, the economic consequence of ownership of the Common Stock,
whether any such swap or transaction described in clause (i) or (ii) above
is to be settled by delivery of Common Stock or such other securities, in
<PAGE>
16
cash or otherwise. The foregoing sentence shall not apply to (A) the
Securities to be sold hereunder or under the International Purchase
Agreement, and (B) any shares of Common Stock issued pursuant to employee
benefit plans (including contributions of Common Stock to the Company's
Employee Stock Ownership Plan), dividend reinvestment plans and exercise of
currently outstanding options.
Section 4. Payment of Expenses.
(a) Expenses. The Company will pay and bear all costs and expenses
incident to the performance of its obligations under this Agreement,
including (i) the preparation, printing and filing of the Registration
Statement (including financial statements and any schedules or exhibits and
any documents incorporated therein by reference), as originally filed and
as amended, the preliminary prospectus supplements and the Prospectuses and
any amendments or supplements thereto, and the cost of furnishing copies
thereof in accordance with Section 3 of this Agreement and the
International Purchase Agreement, to the U.S. Underwriters and the
International Managers, (ii) the preparation and distribution of this
Agreement, the International Purchase Agreement, any agreement among
Underwriters, the Shares and the Blue Sky Survey, (iii) the delivery of the
Shares to the U.S. Underwriters and the International Managers, including
any stock transfer taxes payable upon the sale of the Shares to the U.S.
Underwriters and the International Managers, (iv) the fees and
disbursements of the Company's counsel and accountants, (v) the
qualification of the Shares under the applicable securities laws in
accordance with Section 3(g) and any filing for review of the offering with
the National Association of Securities Dealers, Inc., including filing fees
and fees and disbursements of counsel for the U.S. Underwriters in
connection therewith and in connection with the Blue Sky Survey and (vi)
any fees and expenses incurred in connection with the listing of the Shares
on the New York, London and Pacific Stock Exchanges.
(b) Termination of Agreement. If this Agreement is terminated by the
U.S. Representative in accordance with the provisions of Section 5 or
10(a)(i) hereof, the Company shall reimburse the U.S. Underwriters for all
their out-of-pocket expenses, including the fees and disbursements of
counsel for the U.S. Underwriters.
Section 5. Conditions of U.S. Underwriters' Obligations. The
obligations of the several U.S. Underwriters to purchase and pay for the U.S.
Shares that they have respectively agreed to purchase pursuant to this Agreement
(including any Option U.S. Shares as to which the option granted in Section 2
has been exercised and the Date of Delivery determined by the Global Coordinator
is the same as the Closing Time) are subject to the accuracy of the
<PAGE>
17
representations and warranties of the Company contained herein or in
certificates of any officer of the Company or any Significant Subsidiary
delivered pursuant to the provisions hereof, to the performance by the Company
of its obligations hereunder, and to the following further conditions:
(a) Effectiveness of Registration Statement. The Registration
Statement, including any Rule 462(b) Registration Statement, has become
effective and at the Closing Time, no stop order suspending the
effectiveness of the Registration Statement shall have been issued under
the 1933 Act and no proceedings for that purpose shall have been instituted
or shall be pending or, to the knowledge of the Company or the U.S.
Representative, shall be contemplated by the Commission, and any request on
the part of the Commission for additional information shall have been
complied with to the satisfaction of counsel for the U.S. Underwriters. A
prospectus containing the Rule 430A Information shall have been filed with
the Commission in accordance with Rule 424(b) (or a post-effective
amendment providing such information shall have been filed and declared
effective in accordance with the requirements of Rule 430A).
(b) At the Closing Time, the U. S. Representative shall have received
a signed opinion of Hunton & Williams, counsel for the Company, dated as of
the Closing Time, together with signed or reproduced copies of such opinion
for each of the other U.S. Underwriters, in form and substance satisfactory
to counsel for the U.S. Underwriters, to the effect that:
(i) The Company is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of North
Carolina, with corporate power and authority under such laws to own,
lease and operate its properties and conduct its business as described
in the Prospectuses.
(ii) Each Significant Subsidiary is a corporation duly
incorporated, validly existing and in good standing under the laws of
the jurisdiction of its incorporation with corporate power and
authority under such laws to own, lease and operate its properties and
conduct its business.
(iii) All of the outstanding shares of capital stock of the
Company have been duly authorized and validly issued and are fully paid
and non-assessable, and no holder thereof is or will be subject to
personal liability by reason of being such a holder; and none of the
outstanding shares of capital stock of the Company was issued in
violation of the preemptive rights of any stockholder of the Company.
(iv) All of the outstanding shares of capital stock of each
Significant Subsidiary have been duly authorized and validly issued and
are fully paid and non-assessable; all of such shares are owned by the
Company, directly or through one or more Significant Subsidiaries, free
and clear of any perfected security interest and, to such counsel's
knowledge, any unperfected pledge, lien, security interest, charge,
claim, equity or encumbrance of any kind; no holder thereof is subject
to personal liability by reason of being such a holder and none of such
shares was issued in violation of the preemptive rights of any
stockholder of the Significant Subsidiaries.
<PAGE>
18
(v) The Shares have been duly authorized and validly issued
and are fully paid and non-assessable; no holder thereof will be
subject to personal liability by reason of being such a holder; and the
issuance of such Shares is not subject to preemptive rights and all
corporate action required to be taken for the authorization, issue and
sale of such Shares has been validly and sufficiently taken.
(vi) The Rights to which holders of Common Stock are entitled
have been duly authorized and validly issued; the shares of Preferred
Stock that may be issued to holders of Rights pursuant to the Rights
Plan have been duly authorized and validly reserved for issuance upon
the exercise of the Rights; and the Rights and the Preferred Stock
conform to the descriptions thereof contained in the Prospectuses.
(vii) The authorized, issued and outstanding capital stock of
the Company is as set forth in the Prospectuses under the heading
"Description of Preferred Stock" and Description of Common Stock."
(viii) The Shares conform in all material respects as to legal
matters to the descriptions thereof in the Prospectuses.
(ix) This Agreement has been duly authorized, executed and
delivered by the Company.
(x) No authorization, approval, consent or license of any
government, governmental instrumentality or court, domestic or foreign
(other than such approvals under the 1933 Act as have already been
obtained and the securities or blue sky laws of the various states), is
required for the valid authorization, issuance, sale and delivery of
the Shares.
(xi) Such counsel does not know of any statutes or
regulations, or any pending or threatened legal or governmental
proceedings, required to be described in the Prospectuses that are not
described as required, nor of any contracts or documents of a character
required to be described or referred to in the Registration Statement
or the Prospectuses or to be filed as exhibits to the Registration
Statement that are not described, referred to or filed as required.
(xii) To the knowledge of such counsel, no default exists in
the performance or observance of any material obligation, agreement,
covenant or condition contained in any contract, indenture, loan
agreement, note, lease or other agreement or instrument that is
described or referred to in the Registration Statement or the
Prospectuses or filed as an exhibit to the Registration Statement.
<PAGE>
19
(xiii) The execution and delivery of this Agreement and the
International Purchase Agreement by the Company, the issuance and
delivery of the Shares and the Rights, the consummation by the Company
of the transactions contemplated in this Agreement and the
International Purchase Agreement, in the Prospectuses and in the
Registration Statement, and the compliance by the Company with the
terms of this Agreement and the International Purchase Agreement do not
and will not result in any violation of the charter or by-laws of the
Company or any Significant Subsidiary, and do not and will not conflict
with, or result in a breach of any of the terms or provisions of, or
constitute a 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 Significant Subsidiary under (A) any contract,
indenture, mortgage, loan agreement, note, lease or any other agreement
or instrument known to such counsel, to which the Company or any
Significant Subsidiary is a party or by which it may be bound or to
which any of its properties may be subject (except for such conflicts,
breaches or defaults or liens, charges or encumbrances that would not
have a material adverse effect on the condition (financial or
otherwise), earnings, business affairs or business prospects of the
Company and its subsidiaries, considered as one enterprise), (B) any
existing applicable law, rule or regulation (other than the securities
or blue sky laws of the various states, as to which such counsel need
express no opinion), or (C) any judgment, order or decree of any
government, governmental instrumentality or court, domestic or foreign,
having jurisdiction over the Company or any Significant Subsidiary or
any of their respective properties.
(xiv) The statements made in the International Prospectus
under "United States Federal Tax Considerations to Non-U.S. Holders of
Common Stock," to the extent that they constitute matters of law or
legal conclusions, have been reviewed by such counsel and fairly
present the information disclosed therein in all material respects.
(xv) Registration Statement No. 333-42733 became effective
under the 1933 Act on December 23, 1997; any required filing of any
preliminary prospectus supplement or the Prospectus Supplements
pursuant to Rule 424(b) has been made in the manner and within the time
period required by Rule 424(b); the Rule 462(b) Registration Statement
became effective under the 1933 Act on February 24, 1999; and, to the
knowledge of such counsel, the Registration Statement is still
effective, no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that
purpose have been instituted or are pending or are contemplated under
the 1933 Act.
(xvi) The Registration Statement and the Prospectuses,
excluding the documents incorporated by reference therein, and each
amendment or supplement thereto (except for the financial statements
and other financial information and statistical data in tabular format
included or incorporated by reference therein or omitted therefrom, as
to which such counsel need express no opinion), as of their respective
effective or issue dates, appear on their face to have been
appropriately responsive in all material respects to the requirements
of the 1933 Act and the 1933 Act Regulations.
<PAGE>
20
(xvii) The documents incorporated by reference in the
Prospectuses (except for the financial statements and other financial
information and statistical data in tabular format included or
incorporated by reference therein or omitted therefrom, as to which
such counsel need express no opinion, and except to the extent that any
statement therein is modified or superseded in the Prospectuses), as of
the dates they were filed with the Commission, appear on their face to
have been appropriately responsive in all material respects to the
requirements of the 1934 Act and the 1934 Act Regulations.
(xviii) The descriptions in the Prospectuses of the statutes,
regulations, legal or governmental proceedings, contracts or other
documents therein described are accurate and fairly summarize the
information required to be shown.
(xix) Such counsel have participated in the preparation of the
Registration Statement and the Prospectuses and are familiar with or
have participated in the preparation of the documents incorporated by
reference in the Prospectuses and no facts have come to the attention
of such counsel to lead them to believe (A) that the Registration
Statement or any amendment thereto (except for the financial statements
and other financial information and statistical data in tabular format
included or incorporated by reference therein or omitted therefrom, as
to which such counsel need express no opinion), on the original
effective date of the Registration Statement, on the date of the filing
of any annual report on Form 10-K after the filing of the Registration
Statement, on the effective date of the most recent post-effective
amendment thereto, if any, on the date of this Agreement, or on the
date any such amendment (including from the date of effectiveness of
the Rule 462(b) Registration Statement) that became effective after the
date of this Agreement, contained any 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 (B) that
the Prospectuses or any amendment or supplement thereto (except for the
financial statements and other financial information and statistical
data in tabular format included therein or omitted therefrom, as to
which such counsel need express no opinion), at the time the
Prospectuses were issued, at the time any such amended or supplemented
prospectuses were issued or at the Closing Time (or, if any U.S. Option
Shares are purchased, at the Date of Delivery), included or include an
untrue statement of a material fact or omitted 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
or (C) that the documents incorporated by reference in the Prospectuses
(except for the financial statements and other financial information
and statistical data in tabular format included therein or omitted
therefrom, as to which such counsel need express no opinion, and except
to the extent that any statement therein is modified or superseded in
the Prospectuses), as of the dates they were filed with the Commission,
included 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, in the light of the circumstances under which they
were made, not misleading.
<PAGE>
21
Such opinion shall be to such further effect with respect to other legal
matters relating to this Agreement and the sale of the Shares pursuant to
this Agreement as counsel for the U.S. Underwriters may reasonably request.
In giving such opinion, such counsel may rely, as to all matters governed
by the laws of jurisdictions other than the law of the States of New York
and North Carolina and the federal law of the United States, upon opinions
of other counsel, who shall be counsel satisfactory to counsel for the U.S.
Underwriters, in which case the opinion shall state that they believe that
the U.S. Representative and they are entitled to so rely. Such counsel may
also state that, insofar as such opinion involves factual matters, they
have relied, to the extent they deem proper, upon certificates of officers
of the Company and the Significant Subsidiaries and certificates of public
officials; provided that such certificates have been delivered to the U.S.
Underwriters.
(c) Opinion of Counsel to the U.S. Underwriters. At the Closing Time,
the U.S. Representative shall have received the favorable opinion of
Shearman & Sterling, counsel for the U.S. Underwriters, dated as of the
Closing Time, together with signed or reproduced copies of such opinion for
each of the other U.S. Underwriters, to the effect that the opinion
delivered pursuant to Sections 5(b) hereof appears on its face to be
appropriately responsive to the requirements of this Agreement except,
specifying the same, to the extent waived by the U.S. Representative, and
with respect to the incorporation and legal existence of the Company, the
Shares, this Agreement, the International Purchase Agreement, the
Registration Statement, the Prospectuses, the documents incorporated by
reference and such other related matters as the U.S. Representative may
require. In giving such opinion such counsel may rely, as to all matters
governed by the laws of jurisdictions other than the law of the State of
New York and the federal law of the United States, upon the opinions of
counsel satisfactory to the U.S. Representative. Such counsel may also
state that, insofar as such opinion involves factual matters, they have
relied, to the extent they deem proper, upon certificates of officers of
the Company and the Significant Subsidiaries and certificates of public
officials; provided that such certificates have been delivered to the U.S.
Underwriters.
(d) Officers' Certificate. At the Closing Time, (i) the Registration
Statement, including any Rule 462(b) Registration Statement and the
Prospectuses, as they may then be amended or supplemented, shall contain
all statements that are required to be stated therein under the 1933 Act
and the 1933 Act Regulations and in all material respects shall conform to
the requirements of the 1933 Act and the 1933 Act Regulations, and neither
the Registration Statement nor the Prospectuses, as they may then be
amended or supplemented, shall contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, (ii) there shall
not have been, since the respective dates as of which information is given
in the Registration Statement, any material adverse change in the condition
(financial or otherwise), earnings, business affairs or business prospects
of the Company and its subsidiaries, considered as one enterprise, whether
or not arising in the ordinary course of business, (iii) no action, suit or
proceeding shall be pending or, to the knowledge of the Company, threatened
against the Company or any Significant Subsidiary that would be required to
be set forth in the Prospectuses other than as set forth therein and no
proceedings shall be pending or, to the knowledge of the Company,
threatened against the Company or any Significant Subsidiary before or by
any government, governmental instrumentality or court, domestic or foreign,
that could result in any material adverse change in the condition
(financial or otherwise), earnings, business affairs or business prospects
of the Company and its subsidiaries, considered as one enterprise, other
than as set forth in the Prospectuses, (iv) the Company shall have complied
with all agreements and satisfied all conditions on its part to be
performed or satisfied relating to the transactions contemplated by this
Agreement, the International Purchase Agreement, the Registration
<PAGE>
22
Statement, including the Rule 462(b) Registration Statement, and the
Prospectuses at or prior to the Closing Time and (v) the other
representations and warranties of the Company set forth in Section 1(a)
shall be accurate as though expressly made at and as of the Closing Time.
At the Closing Time, the U.S. Representative shall have received a
certificate of the President or an Executive Vice President, and the
Treasurer or Assistant Treasurer or Controller, of the Company, dated as of
the Closing Time, to such effect.
(e) Accountants' Comfort Letter. At the time that this Agreement is
executed by the Company, the U.S. Representative shall have received from
Deloitte & Touche LLP a letter, dated such date, in form and substance
satisfactory to the U.S. Representative, together with signed or reproduced
copies of such letter for each of the other U.S. Underwriters, containing
statements and information of the type ordinarily included in accountants'
"comfort letters" to underwriters with respect to the financial statements
and certain financial information incorporated by reference in the
Registration Statement and Prospectuses.
(f) Bring-Down Comfort Letter. At the Closing Time, the U.S.
Representative shall have received from Deloitte & Touche LLP a letter, in
form and substance satisfactory to the U.S. Representative and dated as of
the Closing Time, to the effect that they reaffirm the statements made in
the letter furnished pursuant to Section 5(e), except that the specified
date referred to shall be a date not more than three business days prior to
the Closing Time.
(g) Additional Documents. At the Closing Time, counsel for the U.S.
Underwriters shall have been furnished with all such documents,
certificates and opinions as they may reasonably request for the purpose of
enabling them to pass upon the issuance and sale of the Shares as
contemplated in this Agreement and the matters referred to in Section 5(c)
and in order to evidence the accuracy and completeness of any of the
representations, warranties or statements of the Company, the performance
of any of the covenants of the Company, or the fulfillment of any of the
conditions herein contained; and all proceedings taken by the Company at or
prior to the Closing Time in connection with the authorization, issuance
and sale of the Shares as contemplated in this Agreement shall be
satisfactory in form and substance to the U.S. Representative and to
counsel for the U.S. Underwriters.
<PAGE>
23
(h) Approval of Listing. The Shares shall have been duly authorized for
listing by the New York, London and Pacific Stock Exchanges at the Closing
Time.
(i) Lock-up Agreements. At the Closing Time, the U.S. Representative
shall have received from each of the persons listed on Schedule C hereto, a
lock-up agreement, in form and substance satisfactory to the U.S.
Representative, executed by such person and dated as of the Closing Time.
(j) Termination of Agreement. If any of the conditions specified in
this Section 5 shall not have been fulfilled when and as required by this
Agreement, this Agreement may be terminated by the U.S. Representative on
notice to the Company at any time at or prior to the Closing Time, and such
termination shall be without liability of any party to any other party,
except as provided in Section 4. Notwithstanding any such termination, the
provisions of Sections 7, 8 and 9 shall survive any such termination and
remain in full force and effect.
Section 6. Conditions to Purchase of U.S. Option Shares. In the event
that the U.S. Underwriters exercise their option granted in Section 2 hereof to
purchase all or any of the U.S. Option Shares and the Date of Delivery
determined by the U.S. Representative pursuant to Section 2 hereof is later than
the Closing Time, the obligations of the several U.S. Underwriters to purchase
and pay for the U.S. Option Shares that they shall have respectively agreed to
purchase pursuant to this Agreement are subject to the accuracy of the
representations and warranties of the Company herein contained, to the
performance by the Company of its obligations hereunder and to the following
further conditions:
(a) Registration Statement Effective. The Registration Statement,
including any Rule 462(b) Registration Statement, shall remain effective at
the Date of Delivery, and, at the Date of Delivery, no stop order
suspending the effectiveness of the Registration Statement shall have been
issued under the 1933 Act and no proceedings for that purpose shall have
been instituted or shall be pending or, to the knowledge of the Company or
the U.S. Representative, shall be contemplated by the Commission, and any
request on the part of the Commission for additional information shall have
been complied with to the satisfaction of counsel for the U.S.
Underwriters.
(b) Officers' Certificate. At the Date of Delivery, the provisions of
Sections 5(d)(i) through 5(d)(v) shall have been complied with at and as of
the Date of Delivery and, at the Date of Delivery, the U.S. Representative
shall have received a certificate of the President or an Executive Vice
President, and the Treasurer or Assistant Treasurer or Controller, of the
Company, dated as of the Date of Delivery, to such effect.
(c) Opinion of Counsel for Company. At the Date of Delivery, the U.S.
Representative shall have received the favorable opinion of Hunton &
Williams, counsel for the Company, together with signed or reproduced
copies of such opinion for each of the other U.S. Underwriters, in each
<PAGE>
24
case in form and substance satisfactory to counsel for the U.S.
Underwriters, dated as of the Date of Delivery, relating to the U.S. Option
Shares and otherwise to the same effect as the opinion required by Section
5(b).
(d) Opinion of Counsel for U.S. Underwriters. At the Date of Delivery,
the U.S. Representative shall have received the favorable opinion of
Shearman & Sterling, counsel for the U.S. Underwriters, dated as of the
Date of Delivery, relating to the U.S. Option Shares and otherwise to the
same effect as the opinion required by Section 5(c).
(e) Bring-down Comfort Letter. At the Date of Delivery, the U.S.
Representative shall have received a letter from Deloitte & Touche LLP, in
form and substance satisfactory to the U.S. Representative and dated as of
the Date of Delivery, to the effect that they reaffirm the statements made
in the letter furnished pursuant to Section 5(e), except that the specified
date referred to shall be a date not more than three business days prior to
the Date of Delivery.
(f) Additional Documents. At the Date of Delivery, counsel for the U.S.
Underwriters shall have been furnished with all such documents,
certificates and opinions as they may request for the purpose of enabling
them to pass upon the issuance and sale of the U.S. Option Shares as
contemplated in this Agreement and the matters referred to in Section 6(d)
and in order to evidence the accuracy and completeness of any of the
representations, warranties or statements of the Company, the performance
of any of the covenants of the Company, or the fulfillment of any of the
conditions herein contained; and all proceedings taken by the Company at or
prior to the Date of Delivery in connection with the authorization,
issuance and sale of the U.S. Option Shares as contemplated in this
Agreement shall be satisfactory in form and substance to the U.S.
Representative and to counsel for the U.S. Underwriters.
(g) Termination of Option Closing. If any of the conditions specified
in this Section 6 shall not have been fulfilled at or prior to the Date of
Delivery, the closing of the U.S. Underwriters' exercise of their option
under Section 2 of this Agreement may be terminated by the U.S.
Representative on notice to the Company at any time at or prior to the
specified closing time on the Date of Delivery, and such termination shall
be without liability of any party to any other party, except as provided in
Section 4. Notwithstanding any such termination, the provisions of Sections
7, 8 and 9 shall remain in effect.
Section 7. Indemnification.
(a) Indemnification of the Underwriters. The Company agrees to
indemnify and hold harmless each U.S. Underwriter and each person, if any,
who controls any U.S. Underwriter within the meaning of Section 15 of the
1933 Act or Section 20 of the 1934 Act as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of an untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement
(or any amendment thereto), including the Rule 430A Information, if
applicable, all documents incorporated therein by reference, or the
<PAGE>
25
omission or alleged omission therefrom of a material fact required to be
stated therein or necessary to make the statements therein not misleading
or arising out of an untrue statement or alleged untrue statement of a
material fact contained in any preliminary prospectus or the Prospectuses
(or any amendment or supplement thereto) or the omission or alleged
omission therefrom of a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission; provided that (subject to Section
7(d) hereof) any such settlement is effected with the written consent of
the Company; and
(iii) against any and all expense whatsoever, as incurred (including
the fees and disbursements of counsel chosen by Merrill Lynch), reasonably
incurred in investigating, preparing or defending against any litigation,
or investigation or proceeding by any governmental agency or body,
commenced or threatened, or any claim whatsoever based upon any such untrue
statement or omission, or any such alleged untrue statement or omission, to
the extent that any such expense is not paid under subparagraph (i) or (ii)
above;
provided, however, that this indemnity agreement does not apply to any loss,
liability, claim, damage or expense to the extent arising out of an untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by and
relating to any Underwriter through the U.S. Representative expressly for use in
the Registration Statement (or any amendment thereto) or any preliminary
prospectus or the Prospectuses (or any amendment or supplement thereto).
(b) Indemnification of the Company, Directors and Officers. Each U.S.
Underwriter severally agrees to indemnify and hold harmless the Company, its
directors, each of its officers who signed the Registration Statement and each
person, if any, who controls the Company within the meaning of Section 15 of the
1933 Act or Section 20 of the 1934 Act, against any and all loss, liability,
claim, damage and expense described in the indemnity contained in Section 7(a),
as incurred, but only with respect to untrue statements or omissions, or alleged
untrue statements or omissions, made in the Registration Statement (including
any amendment thereto), including the Rule 430A Information, if applicable, or
any preliminary prospectus or the Prospectuses (or any amendment or supplement
thereto) in reliance upon and in conformity with written information furnished
to the Company by and relating to such U.S. Underwriter through the U.S.
Representative expressly for use in the Registration Statement (including any
amendment thereto) or such preliminary prospectus supplement or the Prospectuses
(or any amendment or supplement thereto).
<PAGE>
26
(c) Actions Against Parties, Notification. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party of
any action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve it
from any liability which it may have otherwise than on account of this indemnity
agreement. In the case of parties indemnified pursuant to Section 7(a) hereof,
counsel to the indemnified parties shall be selected by Merrill Lynch, and, in
the case of parties indemnified pursuant to Section 7(b) hereof, counsel to the
indemnified parties shall be selected by the Company. An indemnifying party may
participate at its own expense in the defense of any such action; provided,
however, that counsel to the indemnifying party shall not (except with the
consent of the indemnified party) also be counsel to the indemnified party. In
no event shall the indemnifying parties be liable for the fees and expenses of
more than one counsel (in addition to any local counsel) separate from their own
counsel for all indemnified parties in connection with any one action or
separate but similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances.
No indemnifying party shall, without the prior written consent
of the indemnified parties, settle or compromise or consent to the entry of any
judgment with respect to any litigation, or any investigation or proceeding by
any governmental agency or body, commenced or threatened, or any claim
whatsoever in respect of which indemnification or contribution could be sought
under this Section 7 or Section 8 hereof (whether or not the indemnified parties
are actual or potential parties thereto), unless such settlement, compromise or
consent (i) includes an unconditional release of each indemnified party from all
liability arising out of such litigation, investigation, proceeding or claim and
(ii) does not include a statement as to or an admission of fault, culpability or
a failure to act by or on behalf of any indemnified party.
(d) Settlement Without Consent if Failure to Reimburse. If at any time
an indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, such indemnifying party
agrees that it shall be liable for any settlement of the nature contemplated by
Section 7(a)(ii) hereof effected without its written consent if (i) such
settlement is entered into more than 45 days after receipt by such indemnifying
party of the aforesaid request, (ii) such indemnifying party shall have received
notice of the terms of such settlement at least 30 days prior to such settlement
being entered into and (iii) such indemnifying party shall not have reimbursed
such indemnified party in accordance with such request prior to the date of such
settlement. The indemnified party shall promptly reimburse the indemnifying
party for all amounts advanced to it pursuant to this Section 7(d) hereof
(unless it is entitled to such amounts under Section 8 hereof) if it shall be
finally judicially determined that such indemnified party was not entitled to
indemnification hereunder and such loss, liability, claim, damage or expense
arose out of (i) an untrue statement or omission or alleged untrue statement or
<PAGE>
27
omission made in reliance upon and in conformity with written information
furnished to the Company by and relating to the indemnified party expressly for
use in the Registration Statements (or any amendment thereto) or any preliminary
prospectus supplement or the Prospectus (or any amendment or supplement thereto)
or (ii) a fraudulent misrepresentation (within the meaning of Section 11 of the
1933 Act) by the indemnified party.
Section 8. Contribution.
If the indemnification provided for in Section 7 hereof is for any
reason held to be unavailable or insufficient to hold harmless an indemnified
party in respect of any losses, liabilities, claims, damages or expenses
referred to therein, then each indemnifying party shall contribute to the
aggregate losses, liabilities, claims, damages and expenses incurred by such
indemnified party as incurred, (i) in such proportion as is appropriate to
reflect the relative benefits received by the Company, on the one hand, and the
U.S. Underwriters, on the other hand, from the offering of the U.S. Shares
pursuant to this Agreement or (ii) if the allocation provided by clause (i) is
not permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) above but also the
relative fault of the Company, on the one hand, and of the U.S. Underwriters, on
the other hand, in connection with the statements or omissions which resulted in
such losses, liabilities, claims, damages or expenses, as well as any other
relevant equitable considerations.
The relative benefits received by the Company, on the one hand, and the
U.S. Underwriters, on the other hand, in connection with the offering of the
U.S. Shares pursuant to this Agreement shall be deemed to be in the same
respective proportions as the total net proceeds from the offering of the U.S.
Shares pursuant to this Agreement (before deducting expenses) received by the
Company and the total underwriting discount received by the U.S. Underwriters,
in each case as set forth on the cover of the U.S. Prospectus, bear to the
aggregate initial public offering price of the U.S. Shares as set forth on such
cover.
The relative fault of the Company, on the one hand, and the U.S.
Underwriters, on the other hand, shall be determined by reference to, among
other things, whether the 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 or by the U.S. Underwriters and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
The Company and the U.S. Underwriters agree that it would not be just
and equitable if contribution pursuant to this Section 8 were determined by pro
rata allocation (even if the U.S. Underwriters were treated as one entity for
such purpose) or by any other method of allocation which does not take account
of the equitable considerations referred to above in this Section 8. The
aggregate amount of losses, liabilities, claims, damages and expenses incurred
by an indemnified party and referred to above in this Section 8 shall be deemed
to include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission.
<PAGE>
28
Notwithstanding the provisions of this Section 8, no U.S. Underwriter
shall be required to contribute any amount in excess of the amount by which the
total price at which the U.S. Shares underwritten by it and distributed to the
public were offered to the public exceeds the amount of any damages which such
U.S. Underwriter has otherwise been required to pay by reason of any such untrue
or alleged untrue statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the 1933 Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 8, each person, if any, who controls a
U.S. Underwriter within the meaning of Section 15 of the 1933 Act or Section 20
of the 1934 Act shall have the same rights to contribution as such U.S.
Underwriter, and each director of the Company, each officer of the Company who
signed the Registration Statement, and each person, if any, who controls the
Company within the meaning of Section 15 of the 1933 Act or Section 20 of the
1934 Act shall have the same rights to contribution as the Company. The U.S.
Underwriters' respective obligations to contribute pursuant to this Section 8
are several in proportion to the number of U.S. Shares set forth opposite their
respective names in Schedule A hereto and not joint.
Section 9. Representations, Warranties and Agreements to Survive
Delivery. All representations, warranties, indemnities, agreements and other
statements of the Company or its officers set forth in or made pursuant to this
Agreement shall remain operative and in full force and effect, regardless of any
investigation made by or on behalf of the Company, any U.S. Underwriter or any
person who controls the Company or any U.S. Underwriter within the meaning of
Section 15 of the 1933 Act or Section 20 of the 1934 Act, and shall survive
delivery of and payment for the Shares.
Section 10. Termination of Agreement.
(a) Termination Generally. The U.S. Representative may terminate this
Agreement, by notice to the Company, at any time at or prior to the Closing Time
(i) if there has been, since the time of execution of this Agreement or since
the respective dates as of which information is given in the Prospectus, any
material adverse change in the condition (financial or otherwise), earnings,
business affairs or business prospects of the Company and its subsidiaries,
considered as one enterprise, whether or not arising in the ordinary course of
business, or (ii) if there has occurred any material adverse change in the
financial markets in the United States or the international financial markets,
any outbreak of hostilities or escalation thereof or other calamity or crisis or
any change or development involving a prospective change in national or
international political, financial or economic conditions, in each case the
effect of which is such as to make it, in the judgment of the U.S.
<PAGE>
29
Representative, impracticable to market the Shares or enforce contracts for the
sale of the Shares, or (iii) if trading in any securities of the Company has
been suspended by the Commission or the New York Stock Exchange, or if trading
generally on either the American Stock Exchange or the New York Stock Exchange
or in the Nasdaq National Market has been suspended, or minimum or maximum
prices for trading have been fixed, or maximum ranges for prices have been
required, by any of such exchanges or by such system or by order of the
Commission, the National Association of Securities Dealers, Inc. or any other
governmental authority, or (iv) if a banking moratorium has been declared by
either federal, New York or North Carolina authorities.
(b) Liabilities. If this Agreement is terminated pursuant to this
Section, such termination shall be without liability of any party to any other
party, except to the extent provided in Section 4. Notwithstanding any such
termination, the provisions of Sections 7, 8 and 9 shall survive such
termination and remain in full force and effect.
(c) Alternative Termination. This Agreement may also terminate pursuant
to the provisions of Section 2, with the effect stated in such Section.
Section 11. Default by One or More of the U.S. Underwriters. If one or
more of the U.S. Underwriters shall fail at the Closing Time to purchase the
Initial U.S. Shares that it or they are obligated to purchase pursuant to this
Agreement (the "Defaulted Shares"), the U.S. Representative shall have the
right, within 24 hours thereafter, to make arrangements for one or more of the
non-defaulting U.S. Underwriters, or any other underwriters, to purchase all,
but not less than all, of the Defaulted Shares in such amounts as may be agreed
upon and upon the terms set forth in this Agreement; if, however, the
non-defaulting U.S. Underwriter has not completed such arrangements within such
24-hour period, then:
(a) if the number of Defaulted Shares does not exceed 10% of the total
number of Initial U.S. Shares to be purchased on such date, the
non-defaulting U.S. Underwriters shall be obligated each severally and not
jointly, to purchase the full amount thereof in the proportions that their
respective Initial U.S. Share underwriting obligations hereunder bear to
the underwriting obligations of all non-defaulting U.S. Underwriters; or
(b) if the number of Defaulted Shares exceeds 10% of the total number
of Initial U.S. Shares, this Agreement or, with respect to a Date of
Delivery which occurs after the Closing Time, the obligation of the U.S.
Underwriters to purchase, and of the Company to sell, the U.S. Option
Shares to be purchased and sold on such Date of Delivery, shall terminate
without liability on the part of any non-defaulting U.S.
Underwriter.
No action taken pursuant to this Section shall relieve any defaulting
U.S. Underwriter from liability in respect of its default.
<PAGE>
30
In the event of any such default that does not result in a termination
of this Agreement, or, in the case of a Date of Delivery which is after Closing
Time, which does not result in a termination of the obligation of the U.S.
Underwriters to purchase and the Company to sell the relevant U.S. Option
Shares, as the case may be, either the U.S. Representative or the Company shall
have the right to postpone the Closing Time or the Date of Delivery, as the case
may be, for a period not exceeding seven days in order to effect any required
changes in the Registration Statement or Prospectuses or in any other documents
or arrangements. As used herein, the term "U.S. Underwriter" includes any person
substituted for a U.S. Underwriter under this Section 11.
Section 12. Notices. All notices and other communications under this
Agreement shall be in writing and shall be deemed to have been duly given if
delivered, mailed or transmitted by any standard form of telecommunication.
Notices to the Global Coordinator, the U.S. Representative or the U.S.
Underwriters shall be directed to the U.S. Representative at North Tower, World
Financial Center, 250 Vesey Street, New York, New York 10281-1209, attention of
A. Scott Lemone, telecopy number: (212) 449-1245; notices to the Company shall
be directed to it at Lowe's Companies, Inc., P.O. Box 1111, North Wilkesboro,
North Carolina 28656, telecopy number: (336) 658-2073, attention of William C.
Warden, Jr., Executive Vice President and General Counsel.
Section 13. Parties. This Agreement herein set forth is made solely for
the benefit of the several U.S. Underwriters, the Company and, to the extent
expressed, any person who controls the Company or any of the U.S. Underwriters
within the meaning of Section 15 of the 1933 Act, and the directors of the
Company, its officers who have signed the Registration Statement, and their
respective executors, administrators, successors and assigns and, subject to the
provisions of Section 11, no other person shall acquire or have any right under
or by virtue of this Agreement. The term "successors and assigns" shall not
include any purchaser, as such purchaser, from any of the several U.S.
Underwriters of the Shares. All of the obligations of the U.S.
Underwriters hereunder are several and not joint.
Section 14. Representation of U.S. Underwriters. Merrill Lynch will act
for the several U.S. Underwriters in connection with the transactions
contemplated by this Agreement, and any action under or in respect of this
Agreement taken by Merrill Lynch as U.S. Representative will be binding upon all
U.S. Underwriters.
Section 15. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. UNLESS
OTHERWISE INDICATED, SPECIFIED TIMES OF THE DAY REFER TO NEW YORK CITY TIME.
Section 16. Effect of Headings. The Article and Section heading herein
and the Table of Contents are for convenience only and shall not affect the
construction hereof.
Section 17. Counterparts. This Agreement may be executed in one or more
counterparts, and when a counterpart has been executed by each party, all such
counterparts taken together shall constitute one and the same agreement.
------------------------------
<PAGE>
31
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof, whereupon
this instrument, along with all counterparts, will become a binding agreement
between the Company and the several U.S. Underwriters in accordance with its
terms.
Very truly yours,
LOWE'S COMPANIES, INC.
By /s/ Marshall A. Croom
-------------------------------
Name: Marshall A. Croom
Title: Assistant Treasurer
Attest:
By /s/ William C. Warden, Jr.
-------------------------------
Name: William C. Warden, Jr.
Title: Executive Vice President and
Secretary
Confirmed and Accepted,
as of the date first above written:
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By: MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By /s/ A. Scott Lemone
----------------------------
Name: A. Scott Lemone
Title: Director
For itself and as U.S. Representative of the other
U.S. Underwriters named in Schedule A.
<PAGE>
SCHEDULE A
U.S. Underwriter Number of
Initial Shares
to Be Purchased
---------------
Merrill Lynch, Pierce, Fenner & Smith
Incorporated.............................. 1,100,000
Morgan Stanley & Co. Incorporated........................... 1,100,000
PaineWebber Incorporated.................................... 1,100,000
Prudential Securities Incorporated.......................... 550,000
William Blair & Company, L.L.C.............................. 550,000
Total................................... 4,400,000
=========
<PAGE>
SCHEDULE B
Lowe's Companies, Inc.
3,840,000 Shares of Common Stock
(Par Value $0.50 per Share)
1. The initial public offering price per share for the Shares shall be
$ 58.00.
2. The purchase price per share for the U.S. Shares to be paid by the
several U.S. Underwriters shall be $56.115, being an amount equal to the initial
public offering price set forth above less $1.885 per share; provided that the
purchase price per share for any U.S. Option Shares purchased upon the exercise
of the over-allotment option described in Section 2(b) shall be reduced by an
amount per share equal to any dividends or distributions declared by the Company
and payable on the Initial U.S. Shares but not payable on the U.S. Option
Shares.
<PAGE>
SCHEDULE C
Robert Tillman, Chairman and Chief Executive Officer
Larry D. Stone, Executive Vice President and Chief Operating Officer
William C. Warden, Jr., Executive Vice President, Chief Administrative
Officer, General Counsel and Secretary
Thomas E. Whiddon, Executive Vice President and Chief Financial Officer
EXHIBIT 1.2
LOWE'S COMPANIES, INC.
(a North Carolina corporation)
1,100,000 Shares of Common Stock
INTERNATIONAL PURCHASE AGREEMENT
Dated: February 24, 1999
<PAGE>
<TABLE>
TABLE OF CONTENTS
<S> <C>
PAGE
Section 1. Representations and Warranties........................................................................4
(a) Representations and Warranties by the Company..............................................................4
(i) Compliance with Registration Requirements................................................................4
(ii) Incorporated Documents..................................................................................5
(iii) Independent Accountants................................................................................5
(iv) Authorization of Agreement..............................................................................5
(v) Financial Statements.....................................................................................6
(vi) Good Standing of the Company............................................................................6
(vii) Good Standing of Subsidiaries..........................................................................6
(viii) Authorization and Description of Shares...............................................................7
(ix) Validity of Capital Stock...............................................................................7
(x) Authorization of Rights..................................................................................7
(xi) No Material Adverse Change in Business..................................................................7
(xii) Absence of Defaults and Conflicts......................................................................8
(xiii) Absence of Further Requirements.......................................................................8
(xiv) Absence of Proceedings.................................................................................9
(xv) Accuracy of Exhibits....................................................................................9
(xvi) Possession of Licenses and Permits.....................................................................9
(xvii) Possession of Intellectual Property..................................................................10
(xviii) Absence of Labor Dispute............................................................................10
(xix) Market Stabilization..................................................................................10
(xx) Environmental Laws.....................................................................................10
(xxi) Year 2000 Compliance..................................................................................11
(b) Officer's Certificates....................................................................................11
Section 2. Sale and Delivery to the International Managers; Closing.............................................11
(a) Initial Shares............................................................................................11
(b) Option Shares.............................................................................................11
(c) Payment...................................................................................................12
(d) Denominations; Registration...............................................................................13
(e) Closing of Sale of Initial U.S. Shares....................................................................13
Section 3. Certain Covenants of the Company.....................................................................13
(a) Prospectus Supplement; Delivery of Prospectuses...........................................................13
(b) Continued Compliance with Securities Laws.................................................................14
(c) Reporting Requirements....................................................................................14
(d) Filing of Amendments......................................................................................14
(e) Notice Upon Effectiveness; Commission Requests............................................................15
(f) Delivery of Registration Statements.......................................................................15
(g) Blue Sky Qualifications...................................................................................15
(h) Rule 158..................................................................................................16
(i) Listing...................................................................................................16
(j) Reports to International Managers.........................................................................16
(k) Restriction or Sale of Shares.............................................................................16
Section 4. Payment of Expenses..................................................................................17
(a) Expenses..................................................................................................17
(b) Termination of Agreement..................................................................................17
<PAGE>
Section 5. Conditions of International Managers' Obligations....................................................17
(a) Effectiveness of Registration Statement...................................................................18
(b) Opinion of Hunton & Williams, Counsel for Company.........................................................18
(c) Opinion of Counsel to the International Managers..........................................................22
(d) Officers'Certificate......................................................................................23
(e) Accountants'Comfort Letter................................................................................23
(f) Bring-Down Comfort Letter.................................................................................23
(g) Additional Documents......................................................................................24
(h) Approval of Listing.......................................................................................24
(i) Lock-up Agreements........................................................................................24
(j) Termination of Agreement..................................................................................24
Section 6. Conditions to Purchase of International Option Shares................................................24
(a) Registration Statement Effective..........................................................................24
(b) Officers'Certificate......................................................................................25
(c) Opinion of Counsel for Company............................................................................25
(d) Opinion of Counsel for International Managers.............................................................25
(e) Bring-down Comfort Letter.................................................................................25
(f) Additional Documents......................................................................................25
(g) Termination of Option Closing.............................................................................26
Section 7. Indemnification......................................................................................26
(a) Indemnification of the International Managers.............................................................26
(b) Indemnification of the Company, Directors and Officers....................................................27
(c) Actions Against Parties, Notification.....................................................................27
(d) Settlement Without Consent if Failure to Reimburse........................................................28
Section 8. Contribution.........................................................................................28
Section 9. Representations, Warranties and Agreements to Survive Delivery.......................................30
Section 10. Termination of Agreement............................................................................30
(a) Termination General.......................................................................................30
(b) Liabilities...............................................................................................30
(c) Alternative Termination...................................................................................30
Section 11. Default by One or More of the International Managers................................................30
Section 12. Notices.............................................................................................31
Section 13. Parties.............................................................................................32
Section 14. Representation of International Managers............................................................32
Section 15. GOVERNING LAW AND TIME..............................................................................32
Section 16. Effect of Headings...................................................................................32
Section 17. Counterparts........................................................................................32
SCHEDULE A -- List of International Managers
SCHEDULE B -- Pricing Information
SCHEDULE C -- List of Persons or Entities subject to Lock-Up
</TABLE>
<PAGE>
LOWE'S COMPANIES, INC.
(a North Carolina corporation)
1,100,000 Shares of Common Stock
(Par Value $.50 Per Share)
INTERNATIONAL PURCHASE AGREEMENT
February 24, 1999
MERRILL LYNCH INTERNATIONAL
as Lead Manager of the several International Managers
c/o MERRILL LYNCH INTERNATIONAL
Ropemaker Place
25 Ropemaker Street
London EC2Y 9LY
Ladies and Gentlemen:
Lowe's Companies, Inc., a North Carolina corporation (the
"Company"), confirms its agreement with Merrill Lynch International ("Merrill
Lynch"), and each of the other international managers named in Schedule A hereto
(collectively, the "International Managers", which term shall also include any
underwriter substituted as hereinafter provided in Section 11 hereof), for whom
Merrill Lynch is acting as representative (in such capacity, the "Lead Manager")
with respect to the issue and sale by the Company and the purchase by the
International Managers, acting severally and not jointly, of 1,100,000
authorized but unissued shares of Common Stock, par value $.50 per share, of the
Company ("Common Stock"), set forth in Schedule A hereto opposite the name of
each International Manager. The Company also grants to the International
Managers, severally and not jointly, the option described in Section 2 hereof to
purchase all or any part of 141,379 additional shares of Common Stock solely to
cover over-allotments, if any. The aforesaid 1,100,000 shares of Common Stock
(the "Initial International Shares") to be purchased by the International
Managers, together with all or any part of the 141,379 shares of Common Stock
subject to the option described in Section 2 hereof (the "International Option
Shares"), are collectively herein called the "International Shares". The
International Shares and the Rights (as hereinafter defined) are more fully
described in the Prospectuses referred to below.
<PAGE>
2
It is understood that the Company is concurrently entering
into an agreement, dated the date hereof (the "U.S. Purchase Agreement"),
providing for the sale by the Company of an aggregate of 4,400,000 shares of
Common Stock (the "Initial U.S. Shares") through arrangements with Merrill Lynch
& Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Morgan Stanley & Co.,
Incorporated, PaineWebber Incorporated, Prudential Securities Incorporated and
William Blair & Company L.L.C. in the United States (collectively, the "U.S.
Underwriters"), for whom Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner &
Smith Incorporated is acting as representative (in such capacity, the "U.S.
Representative"). It is further understood that the Company is concurrently
granting the U.S. Underwriters an option to purchase all or any part of 565,516
additional shares of Common Stock (the "U.S. Option Shares" and, together with
the International Option Shares, the "Option Shares") solely to cover
over-allotments, if any. The Initial U.S. Shares and the U.S. Option Shares are
hereinafter collectively referred to as the "U.S. Shares."
The International Managers and the U.S. Underwriters are
hereinafter collectively called the "Underwriters"; the Initial International
Shares and the Initial U.S. Shares are hereinafter collectively called the
"Initial Shares"; and the International Shares and the U.S. Shares are
hereinafter collectively referred to as the "Shares."
Each Share will include one preferred share purchase right (a
"Right"). Each Right entitles the holder thereof to purchase, under certain
circumstances, one one-thousandth of a share of the Company's participating
cumulative preferred stock, series A (the "Preferred Stock"). The Company issued
the Rights pursuant to a Rights Agreement, dated as of September 8, 1998 (the
"Rights Plan"). Each reference herein to a "Share" or "Shares" shall include the
Right or Rights associated with such Share or Shares, unless the context
otherwise requires.
The Underwriters will concurrently enter into an
Intersyndicate Agreement of even date herewith (the "Intersyndicate Agreement")
providing for the coordination of certain transactions among the International
Managers and the U.S. Underwriters under the direction of Merrill Lynch (in such
capacity, the "Global Coordinator").
The Company understands that the International Managers
propose to make a public offering of the International Shares as soon as the
Lead Manager deems advisable after this Agreement has been executed and
delivered.
The Company has prepared and filed with the Securities and
Exchange Commission (the "Commission") a registration statement on Form S-3
(Registration No. 333-42733) ("Registration Statement"), covering the
registration of certain of its debt securities, shares of preferred stock,
depositary shares, shares of common stock (including the Shares), preferred
stock purchase rights (including the Rights) and warrants, and the offering
thereof from time to time in accordance with Rule 415 under the Securities Act
of 1933, as amended (the "1933 Act"), including the related preliminary
prospectus or prospectuses. Such registration statement has been declared
effective by the Commission. As provided in Section 3(a), the Company has
prepared two forms of prospectus supplement reflecting the terms of the Shares,
the terms of the offering thereof and other matters set forth therein and,
promptly after the execution and delivery of this Agreement, the Company will
file such prospectus supplements pursuant to Rule 430A of the rules and
regulations of the Commission under the 1933 Act (the "1933 Act Regulations")
and paragraph (b) of Rule 424 of the 1933 Act Regulations. The forms of
<PAGE>
3
prospectus supplement are to be used in connection with the offering and sale of
the Shares: one relating to the International Shares (the "Form of International
Prospectus Supplement"); and one relating to the U.S. Shares (the "Form of U.S.
Prospectus Supplement"). Such prospectus supplements, each in the form first
filed after the date hereof pursuant to Rule 424, are herein referred to
collectively as the "Prospectus Supplements," and individually as a "Prospectus
Supplement." The Form of International Prospectus Supplement is identical to the
Form of U.S. Prospectus Supplement, except for the front cover page, the inside
front cover page and the back cover page and the information contained under the
caption "Underwriting." In addition, the International Prospectus Supplement
contains an additional section entitled "United States Federal Tax
Considerations to Non-U.S. Holders." The information included in any such
prospectus that was omitted from such registration statement at the time it
became effective but that is deemed to be part of such registration statement at
the time it became effective pursuant to paragraph (b) of Rule 430A is referred
to as "Rule 430A Information." Each Form of International Prospectus and Form of
U.S. Prospectus used before such registration statement became effective, and
any prospectus that omitted, as applicable, the Rule 430A Information or the
Rule 434 Information, that was used after such effectiveness and prior to the
execution and delivery of this Agreement, is herein called a "preliminary
prospectus." Such registration statement, as amended at the date hereof,
including the exhibits thereto and the documents incorporated by reference
therein pursuant to Item 12 of Form S-3 under the 1933 Act, at the time it
became effective and including the Rule 430A Information, is herein called the
"Registration Statement." Any registration statement filed pursuant to Rule
462(b) of the rules and regulations of the Commission under the 1933 Act is
herein referred to as the "Rule 462(b) Registration Statement" and after such
filing the term "Registration Statement" shall include the Rule 462(b)
Registration Statement. The base prospectus included in the Registration
Statement relating to all offerings of securities under the Registration
Statement, as supplemented by the Form of International Prospectus Supplement
and the Form of U.S. Prospectus Supplement, are herein called the "International
Prospectus" and the "U.S. Prospectus," respectively, and collectively, the
"Prospectuses," and individually, a "Prospectus," except that, if such base
prospectus is amended or supplemented on or prior to the date on which the
International Prospectus Supplement and the U.S. Prospectus Supplement are first
filed pursuant to Rule 424, the terms "International Prospectus," "U.S.
Prospectus," and "Prospectuses" and "Prospectus" shall refer to the base
<PAGE>
4
prospectus as so amended or supplemented and as supplemented by the
International Prospectus Supplement and the U.S. Prospectus Supplement, as the
case may be, in either case including the documents filed by the Company with
the Commission pursuant to the Securities Exchange Act of 1934, as amended (the
"1934 Act"), that are incorporated by reference therein. For purposes of this
Agreement, all references to the Registration Statement, the Prospectuses or any
amendment or supplement to any of the foregoing shall be deemed to include the
copy filed with the Commission pursuant to its Electronic Data Gathering,
Analysis and Retrieval system ("EDGAR").
All references in this Agreement to financial statements and
schedules and other information which is "contained," "included" or "stated" in
the Registration Statement, any preliminary prospectus (including the
preliminary Form of International Prospectus and Form of U.S. Prospectus) or the
Prospectuses (or other references of like import) shall be deemed to mean and
include all such financial statements and schedules and other information which
are incorporated by reference in the Registration Statement, any preliminary
prospectus (including the preliminary Form of International Prospectus and Form
of U.S. Prospectus) or the Prospectuses, as the case may be; and all references
in this Agreement to amendments or supplements to the Registration Statement any
preliminary prospectus or the Prospectuses shall be deemed to mean and include
the filing of any document under the 1934 Act which is incorporated by reference
in the Registration Statement, such preliminary prospectus or the Prospectuses,
as the case may be.
Section 1. Representations and Warranties.
(a) Representations and Warranties by the Company. The Company
represents and warrants to each of the International Managers as of the
date hereof, as of the Closing Time referred to in Section 2(c) hereof,
and as of the Date of Delivery, if any, referred to in Section 2(b)
hereof, and agrees with each International Manager, as follows:
(i) Compliance with Registration Requirements. The
Company meets the requirements for use of Form S-3 under the
1933 Act. Each of the Registration Statement and any Rule
462(b) Registration Statement has become effective under the
1933 Act and no stop order suspending the effectiveness of the
Registration Statement or any Rule 462(b) Registration
Statement has been issued under the 1933 Act and no
proceedings for that purpose have been instituted or are
pending or, to the knowledge of the Company, are contemplated
by the Commission, and any request on the part of the
Commission for additional information has been complied with.
At the respective times the Registration Statement,
any Rule 462(b) Registration Statement and any post-effective
amendments thereto became or will become effective and at the
Closing Time (and, if any International Option Shares are
purchased, at the date of delivery), the Registration
Statement, the Rule 462(b) Registration Statement and any
amendments and supplements thereto complied and will comply in
all material respects with the requirements of the 1933 Act
and the 1933 Act Regulations and did not and will not contain
an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to
make the statements therein not misleading. Neither of the
Prospectuses, nor any amendments or supplements thereto, at
the time the Prospectuses or any amendments or supplements
thereto were issued and at the Closing Time (and, if any
<PAGE>
5
International Option Shares are purchased, at the Date of
Delivery), included or will include an untrue statement of a
material fact or omitted or will 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; provided, however, that the Company makes no
representations or warranties as to statements in or omissions
from the Registration Statement or the Prospectuses made in
reliance upon and in conformity with information furnished in
writing to the Company by or on behalf of and relating to any
International Manager or U.S. Underwriter, directly or through
the Lead Manager or, in the case of the U.S. Underwriters,
through the U.S. Representative, expressly for use in the
Registration Statement or the Prospectuses.
Each preliminary prospectus and the prospectuses
filed as part of the Registration Statement, as originally
filed or as part of any amendment thereto, or filed pursuant
to Rule 424 under the 1933 Act, complied when so filed in all
material respects with the 1933 Act Regulations and each
preliminary prospectus and the Prospectuses delivered to the
Underwriters for use in connection with this offering was
identical to the electronically transmitted copies thereof
filed with the Commission pursuant to EDGAR, except to the
extent permitted by Regulation S-T.
(ii) Incorporated Documents. The documents
incorporated or deemed to be incorporated by reference in the
Registration Statement and the Prospectuses, at the time they
were or hereafter are filed with the Commission, complied and
will comply in all material respects with the requirements of
the 1934 Act, and the rules and regulations of the Commission
thereunder (the "1934 Act Regulations"), as applicable, and,
when read together and with the other information in the
Prospectuses, at the time the Registration Statement became
effective, at the time the Prospectuses were issued and at the
Closing Time (and if any International Option Shares are
purchased, at the Date of Delivery), did not and will not
contain an 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, in the
light of the circumstances under which they were made, not
misleading.
(iii) Independent Accountants. Deloitte & Touche LLP,
who have reported upon the audited financial statements and
schedules included or incorporated by reference in the
Registration Statement, are independent public accountants as
required by the 1933 Act and the 1933 Act Regulations.
<PAGE>
6
(iv) Authorization of Agreement. This Agreement has
been duly authorized, executed and delivered by the Company.
(v) Financial Statements. The consolidated financial
statements included or incorporated by reference in the
Registration Statement and the Prospectuses present fairly the
consolidated financial position of the Company and its
subsidiaries as of the dates indicated and the consolidated
results of operations and the consolidated 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 applied on a
consistent basis throughout the periods involved. The
financial statement schedules, if any, included in the
Registration Statement present fairly the information required
to be stated therein. The selected financial data included or
incorporated by reference in the Prospectuses present fairly
the information shown therein and have been compiled on a
basis consistent with that of the audited consolidated
financial statements included or incorporated by reference in
the Registration Statement.
(vi) Good Standing of the Company. The Company is a
corporation duly organized, validly existing and in good
standing under the laws of the State of North Carolina with
corporate power and authority under such laws to own, lease
and operate its properties and conduct its business as
described in the Prospectuses; and the Company is duly
qualified to transact business as a foreign corporation and is
in good standing in each other jurisdiction in which it owns
or leases property of a nature, or transacts business of a
type, that would make such qualification necessary, except to
the extent that the failure to so qualify or be in good
standing would not have a material adverse effect on the
Company and its subsidiaries, considered as one enterprise.
(vii) Good Standing of Subsidiaries. Each of Lowe's
Home Centers, Inc., a North Carolina corporation and LF
Corporation, a Delaware corporation (together, the
"Significant Subsidiaries"; such term has the meaning set
forth in Rule 1-02 under Regulation S-X), is a corporation
duly organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation with
corporate power and authority under such laws to own, lease
and operate its properties and conduct its business; and each
Significant Subsidiary is duly qualified to transact business
as a foreign corporation and is in good standing in each other
jurisdiction in which it owns or leases property of a nature,
or transacts business of a type, that would make such
qualification necessary, except to the extent that the failure
to so qualify or be in good standing would not have a material
adverse effect on the Company and its subsidiaries, considered
<PAGE>
7
as one enterprise. All of the outstanding shares of capital
stock of each Significant Subsidiary have been duly authorized
and validly issued and are fully paid and nonassessable and
are owned by the Company, directly or through one or more
Significant Subsidiaries, free and clear of any pledge, lien,
security interest, charge, claim, equity or encumbrance of any
kind. The only Significant Subsidiaries of the Company are
those subsidiaries listed above in this subparagraph (vii). If
the consummation of the merger of the Company and Eagle
Hardware & Garden, Inc., a Washington corporation ("Eagle")
were to occur as of the date hereof, it would not be necessary
to provide pro forma financial information with respect to
Eagle and such merger in the Prospectuses in order for the
disclosure therein to comply with Rule 11-01 of Regulation S-X
based on Eagle's financial statements as of January 31, 1998.
(viii) Authorization and Description of Shares. The
Shares have been duly authorized and, when issued and paid for
in accordance with this Agreement and the U.S. Purchase
Agreement, will be validly issued, fully paid and
nonassessable; no holder thereof will be subject to personal
liability by reason of being such a holder; the Common Stock
conforms to all statements relating thereto contained in the
Prospectuses and such description conforms to the rights set
forth in the instruments defining the same; such Shares are
not subject to the preemptive rights of any stockholder of the
Company; and all corporate action required to be taken for the
authorization, issue and sale of the Shares has been validly
and sufficiently taken.
(ix) Validity of Capital Stock. All of the
outstanding shares of capital stock of the Company have been
duly authorized and validly issued and are fully paid and
nonassessable; no holder thereof is or will be subject to
personal liability by reason of being such a holder; and none
of the outstanding shares of capital stock of the Company
issued since December 19, 1979 was issued in violation of the
preemptive rights of any stockholder of the Company.
(x) Authorization of Rights. The Rights associated
with the Shares have been duly authorized and validly reserved
for issuance upon the issuance of the Shares and, when so
issued in accordance with the terms of the Rights Plan, will
be validly issued; the shares of Preferred Stock that may be
issued to holders of Rights pursuant to the Rights Plan have
been duly authorized and validly reserved for issuance upon
the exercise of the Rights and, when issued and delivered in
accordance with the terms of the Rights Plan, will be validly
issued, fully paid and nonassessable and, except as otherwise
set forth in the Prospectuses, the issuance of such shares of
Preferred Stock is not subject to any preemptive or similar
rights; and the Rights and the Preferred Stock conform to the
descriptions thereof contained in the Prospectuses.
(xi) No Material Adverse Change in Business. Since
the respective dates as of which information is given in the
Registration Statement and the Prospectuses, except as
otherwise stated therein or contemplated thereby, there has
not been (A) any material adverse change in the condition
(financial or otherwise), earnings, business affairs or
business prospects of the Company and its subsidiaries,
<PAGE>
8
considered as one enterprise, whether or not arising in the
ordinary course of business, (B) any transaction entered into
by the Company or any subsidiary, other than in the ordinary
course of business, that is material to the Company and its
subsidiaries, considered as one enterprise, or (C) any
dividend (other than ordinary quarterly dividends declared,
paid or made in the ordinary course of business) or
distribution of any kind declared, paid or made by the Company
on its capital stock.
(xii) Absence of Defaults and Conflicts. Neither the
Company nor any Significant Subsidiary is in default in the
performance or observance of any obligation, agreement,
covenant or condition contained in any contract, indenture,
mortgage, loan agreement, note, lease or other agreement or
instrument to which it is a party or by which it may be bound
or to which any of its properties may be subject, except for
such defaults that would not have a material adverse effect on
the condition (financial or otherwise), earnings, business
affairs or business prospects of the Company and its
subsidiaries, considered as one enterprise. The execution and
delivery of this Agreement and the U.S. Purchase Agreement by
the Company, the issuance and delivery of the Shares and the
Rights, the consummation by the Company of the transactions
contemplated in this Agreement and the U.S. Purchase
Agreement, in the Rights Plan, in the Prospectuses and in the
Registration Statement and compliance by the Company with the
terms of this Agreement, the U.S. Purchase Agreement and the
Rights Plan have been duly authorized by all necessary
corporate action on the part of the Company and do not and
will not result in any violation of the charter or by-laws of
the Company or any Significant Subsidiary, and do not and will
not conflict with, or result in a breach of any of the terms
or provisions of, or constitute a 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 Significant
Subsidiary under (A) any contract, indenture, mortgage, loan
agreement, note, lease or other agreement or instrument to
which the Company or any Significant Subsidiary is a party or
by which it may be bound or to which any of its properties may
be subject (except for such conflicts, breaches or defaults or
liens, charges or encumbrances that would not have a material
adverse effect on the condition (financial or otherwise),
earnings, business affairs or business prospects of the
Company and its subsidiaries, considered as one enterprise) or
(B) any existing applicable law, rule, regulation, judgment,
order or decree of any government, governmental
instrumentality or court, domestic or foreign, having
jurisdiction over the Company or any Significant Subsidiary or
any of their respective properties.
<PAGE>
9
(xiii) Absence of Further Requirements. No filing
with, or authorization, approval, consent or license of any
government, governmental instrumentality or court, domestic or
foreign (other than under the 1933 Act and the securities or
blue sky laws of the various states), is necessary or required
for the performance by the Company of its obligations
hereunder, in connection with the offering, issuance or sale
of the Shares hereunder or the consummation of the
transactions contemplated by this Agreement, for the valid
authorization, issuance, sale and delivery of the Shares and
the Rights, or for the execution, delivery or performance of
the Rights Plan by the Company.
(xiv) Absence of Proceedings. Except as disclosed in
the Prospectuses, there is no action, suit or proceeding
before or by any government, governmental instrumentality or
court, domestic or foreign, now pending or, to the knowledge
of the Company, threatened against or affecting the Company or
any Significant Subsidiary that could result in any material
adverse change in the condition (financial or otherwise),
earnings, business affairs or business prospects of the
Company and its subsidiaries, considered as one enterprise, or
that could materially and adversely affect the properties or
assets of the Company and its subsidiaries, considered as one
enterprise, or that could adversely affect the consummation of
the transactions contemplated in this Agreement and the U.S.
Purchase Agreement; the aggregate of all pending legal or
governmental proceedings that are not described in the
Prospectuses to which the Company or any Significant
Subsidiary is a party or which affect any of their respective
properties, including ordinary routine litigation incidental
to the business of the Company or any Significant Subsidiary,
would not have a material adverse effect on the condition
(financial or otherwise), earnings, business affairs or
business prospects of the Company and its subsidiaries,
considered as one enterprise.
(xv) Accuracy of Exhibits. There are no contracts or
documents of a character required to be described in the
Registration Statement or the Prospectuses or to be filed as
exhibits to the Registration Statement that are not described
and filed as required.
(xvi) Possession of Licenses and Permits. Each of the
Company and the Significant Subsidiaries owns, possesses or
has obtained all material governmental licenses, permits,
certificates, consents, orders, approvals and other
authorizations necessary to own or lease, as the case may be,
and to operate its properties and to carry on its business as
presently conducted (other than such licenses, permits,
certificates, consents, orders, approvals and authorizations
which, if neither owned, possessed nor obtained, would not
have a material adverse impact on the business of the Company
and its subsidiaries, considered as one enterprise), and
neither the Company nor any Significant Subsidiary has
received any notice of proceedings relating to revocation or
modification of any such licenses, permits, certificates,
consents, orders, approvals or authorizations.
<PAGE>
10
(xvii) Possession of Intellectual Property. Each of
the Company and the Significant Subsidiaries owns or
possesses, or can acquire on reasonable terms, adequate
patents, patent licenses, trademarks, service marks and trade
names necessary to carry on its business as presently
conducted, and neither the Company nor any Significant
Subsidiary has received any notice of infringement of or
conflict with asserted rights of others with respect to any
patents, patent licenses, trademarks, service marks or trade
names that in the aggregate, if the subject of an unfavorable
decision, ruling or finding, could materially adversely affect
the condition (financial or otherwise), earnings, business
affairs or business prospects of the Company and its
subsidiaries, considered as one enterprise.
(xviii) Absence of Labor Dispute. To the best
knowledge of the Company, no material labor problem exists
with its employees or with employees of the Significant
Subsidiaries or is imminent and there is no existing or
imminent labor disturbance by the employees of any of its or
the Significant Subsidiaries' principal suppliers, contractors
or customers, in each case, that could be expected to
materially adversely affect the condition (financial or
otherwise), earnings, business affairs or business prospects
of the Company and its subsidiaries, considered as one
enterprise.
(xix) Market Stabilization. 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 the Common
Stock.
(xx) Environmental Laws. Except as disclosed in the
Registration Statement and except as would not individually or
in the aggregate have a material adverse effect on the
condition (financial or otherwise), earnings, business affairs
or business prospects of the Company and its subsidiaries,
considered as one enterprise, (A) the Company and the
Significant Subsidiaries are each in compliance with all
applicable Environmental Laws, (B) the Company and the
Significant Subsidiaries have all permits, authorizations and
approvals required under any applicable Environmental Laws and
are each in compliance with their requirements, (C) there are
no pending or threatened Environmental Claims against the
Company or any of the Significant Subsidiaries, and (D) there
are no circumstances with respect to any property or
operations of the Company or the Significant Subsidiaries that
could reasonably be anticipated to form the basis of an
Environmental Claim against the Company or the Significant
Subsidiaries.
For purposes of this Agreement, the
following terms shall have the following meanings:
"Environmental Law" means any United States (or other
applicable jurisdiction's) federal, state, local or municipal
statute, law, rule, regulation, ordinance, code, policy or
rule of common law and any judicial or administrative
<PAGE>
11
interpretation thereof including any judicial or
administrative order, consent decree or judgment, relating to
the environment, health, safety or any chemical, material or
substance, exposure to which is prohibited, limited or
regulated by any governmental authority. "Environmental
Claims" means any and all administrative, regulatory or
judicial actions, suits, demands, demand letters, claims,
liens, notices of noncompliance or violation, investigation or
proceedings relating in any way to any Environmental Law.
(xxi) Year 2000 Compliance. The disclosure of the
Company regarding Year 2000 issues that is included or
incorporated by reference in the Registration Statement,
including the Rule 462(b) Registration Statement, and the
Prospectuses complies in all material respects with the
disclosure requirements of the Commission as stated in Staff
Legal Bulletin No. 6, SEC Release No. 33-7558 (July 29, 1998)
and SEC Release No. 33-7609 (November 9, 1998). Other than as
disclosed in the Prospectuses, the Company and its
subsidiaries will not incur material operating expenses or
costs to ensure that its information systems will be year 2000
compliant or to adjust its operating and information systems
to the conversion to a single currency in Europe.
(b) Officer's Certificates. Any certificate signed by any
officer of the Company or any Significant Subsidiary and delivered to
the Global Coordinator, the Lead Manager or to counsel for the
International Managers shall be deemed a representation and warranty by
the Company to each International Manager as to the matters covered
thereby.
Section 2. Sale and Delivery to the International Managers;
Closing.
(a) Initial Shares. On the basis of the representations and
warranties herein contained, and subject to the terms and conditions
herein set forth, the Company agrees to sell to each International
Manager, severally and not jointly, and each International Manager,
severally and not jointly, agrees to purchase from the Company, at the
purchase price per share for the Initial International Shares set forth
in Schedule B to this Agreement, the number of Initial International
Shares set forth opposite the name of such International Manager in
Schedule A, plus any additional number of Initial International Shares
that such International Manager may become obligated to purchase
pursuant to Section 11 of this Agreement.
(b) Option Shares. 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 International Managers, severally and not jointly, to
purchase up to an additional 141,379 shares of Common Stock at the
price per share set forth in Schedule B. The option hereby granted will
expire 30 days after the date of this Agreement, and may be exercised,
in whole or in part (but not more than once), only for the purpose of
covering over-allotments that may be made in connection with the
offering and distribution of the Initial International Shares upon
notice by the Lead Manager to the Company setting forth the number of
International Option Shares as to which the several International
<PAGE>
12
Managers are exercising the option, and the time and date of payment
and delivery of such International Option Shares. Such time and date of
delivery (the "Date of Delivery") shall be determined by the Global
Coordinator, but shall not be later than seven full business days after
the exercise of such option, nor in any event prior to the Closing
Time, as hereinafter defined. If the option is exercised as to all or
any portion of the International Option Shares, each of the
International Managers, acting severally and not jointly, will purchase
from the Company that portion of the aggregate number of International
Option Shares being purchased which the number of Initial International
Shares set forth in Schedule A opposite the name of such International
Manager bears to the total number of Initial International Shares (such
proportion is hereinafter referred to as such International Manager's
"underwriting obligation proportion"), subject to such adjustments as
the Global Coordinator, in its discretion, shall make to eliminate any
sales or purchases of fractional shares.
(c) Payment. Payment of the purchase price for, and delivery
of certificates for, the Initial International Shares shall be made at
the offices of Shearman & Sterling, 599 Lexington Avenue, New York, New
York 10022, or at such other place as shall be agreed upon by the
Company and the Global Coordinator, at 9:00 A.M. on the third (fourth,
if the pricing occurs after 4:30 P.M. (Eastern time) on any given day)
business day after the date hereof (unless postponed pursuant to
Section 11), or at such other time not more than ten business days
thereafter as the Global Coordinator and the Company shall determine
(such date and time of payment and delivery being herein called the
"Closing Time").
In addition, in the event that any or all of the International
Option Shares are purchased by the International Managers, payment of
the purchase price for, and delivery of certificates for, such
International Option Shares shall be made at the offices of Shearman &
Sterling set forth above, or at such other place as the Company and the
Global Coordinator shall determine, on the Date of Delivery as
specified in the notice from the Global Coordinator to the Company.
Payment shall be made to the Company by wire transfer of
immediately available funds to a bank account designated by the
Company, against delivery to the Lead Manager for the respective
accounts of the several International Managers of certificates for the
International Shares to be purchased by them. It is understood that
each International Manager has authorized the Lead Manager, for its
account, to accept delivery of, receipt for, and make payment of the
purchase price for, the International Shares that it has agreed to
purchase. Merrill Lynch, individually and not as Lead Manager, may (but
<PAGE>
13
shall not be obligated to) make payment of the purchase price for the
Initial International Shares or International Option Shares, if any, to
be purchased by any International Manager whose funds shall not have
been received by the Closing Time or the Date of Delivery, as the case
may be, but such payment shall not relieve such International Manager
from its obligations hereunder.
(d) Denominations; Registration. Certificates for the Initial
International Shares and International Option Shares, if any, shall be
in such denominations and registered in such names as the Lead Manager
may request in writing at least two full business days before the
Closing Time or the Date of Delivery, as the case may be. The
certificates for the Initial International Shares and International
Option Shares, if any, will be made available in New York City for
examination and packaging by the Lead Manager not later than 10:00 A.M.
(Eastern time) on the business day prior to the Closing Time or the
Date of Delivery, as the case may be.
(e) Closing of Sale of Initial U.S. Shares. The obligations of
the Company to sell to each International Manager the Initial
International Shares and the International Option Shares and the
several and not joint obligations of the International Managers to
purchase and pay for the International Shares, upon the terms and
subject to the conditions contained herein, are subject to the
concurrent closing of the sale of the Initial U.S. Shares to the U.S.
Underwriters pursuant to the U.S.
Purchase Agreement.
Section 3. Certain Covenants of the Company. The Company
covenants with each International Manager as follows:
(a) Prospectus Supplement; Delivery of Prospectuses. If
reasonably requested by the Global Coordinator in connection with the
offering of the Shares, the Company will prepare preliminary prospectus
supplements containing such information as the Global Coordinator and
the Company deem appropriate, and, immediately following the execution
of this Agreement, the Company will prepare Prospectus Supplements that
comply with the 1933 Act and the 1933 Act Regulations. The
International Prospectus Supplement shall set forth the number of
Shares, the number of International Shares, the name of each
International Manager participating in the offering and the number of
International Shares that each severally and not jointly has agreed to
purchase, the price at which the International Shares are to be
purchased by the International Managers from the Company, any initial
public offering price and any selling concession and reallowance, and
such other information as the Lead Manager and the Company deem
appropriate in connection with the offering of the International
Shares; and the U.S. Prospectus Supplement shall set forth the number
of Shares, the number of U.S. Shares, the name of each U.S. Underwriter
participating in the offering and the number of U.S. Shares that each
severally and not jointly has agreed to purchase, the price at which
the U.S. Shares are to be purchased by the U.S. Underwriters from the
<PAGE>
14
Company, any initial public offering price and any selling concession
and reallowance, and such other information as the U.S. Representative
and the Company deem appropriate in connection with the offering of the
U.S. Shares. The Company will promptly transmit copies of the
Prospectus Supplements to the Commission for filing pursuant to Rule
424(b) under the 1933 Act and will furnish to the International
Managers as many copies of any preliminary prospectus supplements and
the Prospectuses as the Lead Manager shall reasonably request. The
Company will give the Global Coordinator notice of its intention to
file or prepare any amendment to the Registration Statement (including
any filing under Rule 462(b)) or any amendment, supplement or revision
to either the Prospectuses included in the Registration Statement at
the time it became effective or to the Prospectuses, whether pursuant
to the 1933 Act, the 1934 Act or otherwise, will furnish the
International Managers with copies of any such documents a reasonable
amount of time prior to such proposed filing or use, as the case may
be, and will not file or use any such document to which the
International Managers or counsel for the International Managers shall
reasonably object.
(b) Continued Compliance with Securities Laws. The Company
will comply to the best of its ability with the 1933 Act and the 1933
Act Regulations and the 1934 Act and the 1934 Act Regulations so as to
permit the completion of the distribution of the Shares as contemplated
in this Agreement, the U.S. Purchase Agreement and the Prospectuses. If
at any time when a prospectus is required by the 1933 Act to be
delivered in connection with sales of the Shares, any event shall occur
or condition exist as a result of which it is necessary, in the opinion
of counsel for the International Managers or counsel for the Company,
to amend the Registration Statement or amend or supplement the
Prospectuses in order that such Prospectuses 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 not misleading in the light of
the circumstances existing at the time it is delivered to a purchaser,
or if it shall be necessary, in the opinion of either such counsel, at
any such time to amend the Registration Statement or amend or
supplement the Prospectuses in order to comply with the requirements of
the 1933 Act or the 1933 Act Regulations, the Company will promptly
prepare and file with the Commission, subject to Section 3(d), such
amendment or supplement as may be necessary to correct such untrue
statement or omission or to make the Registration Statement or such
Prospectuses comply with such requirements.
(c) Reporting Requirements. During the period when a
prospectus is required by the 1933 Act to be delivered in connection
with sales of the Shares, the Company will, subject to Section 3(d)
hereof, file promptly all documents required to be filed with the
Commission pursuant to Section 13, 14 or 15(d) of the 1934 Act.
(d) Filing of Amendments. During the period when a prospectus
is required by the 1933 Act to be delivered in connection with sales of
the Shares, the Company will inform the Global Coordinator of its
intention to file any amendment to the Registration Statement, any
supplement to the Prospectuses or any document that would as a result
thereof be incorporated by reference in the Prospectuses; will furnish
<PAGE>
15
the Global Coordinator with copies of any such amendment, supplement or
other document a reasonable time in advance of filing; and will not
file any such amendment, supplement or other document in a form to
which the Global Coordinator or counsel to the International Managers
shall reasonably object.
(e) Notice Upon Effectiveness; Commission Requests. During the
period when a prospectus is required by the 1933 Act to be delivered in
connection with sales of the Shares, the Company will notify the Global
Coordinator immediately, and confirm the notice in writing, (i) of the
effectiveness of any amendment to the Registration Statement, (ii) of
the mailing or the delivery to the Commission for filing of any
supplement to the Prospectuses or any document that would as a result
thereof be incorporated by reference in the Prospectuses, (iii) of the
receipt of any comments from the Commission with respect to the
Registration Statement, the Prospectuses or the Prospectus Supplements,
(iv) of any request by the Commission for any amendment to the
Registration Statement or any supplement to the Prospectuses or for
additional information relating thereto or to any document incorporated
by reference in the Prospectuses and (v) of the issuance by the
Commission of any stop order suspending the effectiveness of the
Registration Statement or of the suspension of the qualification of the
Shares for offering or sale in any jurisdiction, or of the institution
or threatening of any proceeding for any of such purposes. The Company
will use every reasonable effort to prevent the issuance of any such
stop order or of any order suspending such qualification and, if any
such order is issued, to obtain the lifting thereof at the earliest
possible moment.
(f) Delivery of Registration Statements. The Company has
furnished or will furnish to the Lead Manager, without charge, as many
signed copies of the Registration Statement (as originally filed) and
of all amendments thereto, whether filed before or after the
Registration Statement became effective, copies of all exhibits and
documents filed therewith or incorporated by reference therein (through
the end of the period when a prospectus is required by the 1933 Act to
be delivered in connection with sales of the Shares) and signed copies
of all consents and certificates of experts, as the Lead Manager may
reasonably request, and has furnished or will furnish to the Lead
Manager, for each of the International Managers, one conformed copy of
the Registration Statement (as originally filed) and of each amendment
thereto (including documents incorporated by reference into the
Prospectuses but without exhibits). The copies of the Registration
Statement and each amendment thereto furnished to the International
Managers will be identical to the electronically transmitted copies
thereof filed with the Commission pursuant to EDGAR, except to the
extent permitted by Regulation S-T.
(g) Blue Sky Qualifications. The Company will use its best
efforts, in cooperation with the International Managers, to qualify the
Shares for offering and sale under the applicable securities laws of
such states and other jurisdictions as the Global Coordinator may
designate and to maintain such qualifications in effect for a period of
not less than one year from the later of the date hereof and the
effective date of any Rule 462(b) Registration Statement; provided,
however, that the Company shall not be obligated to file any general
consent to service of process or to qualify as a foreign corporation or
<PAGE>
16
as a dealer in securities in any jurisdiction in which it is not so
qualified or to subject itself to taxation in respect of doing business
in any jurisdiction in which it is not otherwise so subject. The
Company will file such statements and reports as may be required by the
laws of each jurisdiction in which the Shares have been qualified as
above to continue such qualification in effect for a period of not less
than one year from the date hereof and the effective date of any Rule
462(b) Registration Statement. The Company will also supply the Lead
Manager with such information as is necessary for the determination of
the legality of the Shares for investment under the laws of such
jurisdictions as the Lead Manager may request.
(h) Rule 158. The Company will make generally available to its
security holders as soon as practicable, but not later than 45 days
after the close of the period covered thereby, an earnings statement of
the Company (in form complying with the provisions of Rule 158 of the
1933 Act Regulations), covering (i) a period of 12 months beginning
after the effective date of the Registration Statement and covering a
period of 12 months beginning after the effective date of any
post-effective amendment to the Registration Statement but not later
than the first day of the Company's fiscal quarter next following such
respective effective dates and (ii) a period of 12 months beginning
after the date of this Agreement but not later than the first day of
the Company's fiscal quarter next following the date of this Agreement.
(i) Listing. The Company will use its best efforts to maintain
the listing of the Shares on the New York, London and Pacific Stock
Exchanges and to cause the Shares to be registered under the 1934 Act.
(j) Reports to International Managers. For a period of five
years after the Closing Time, the Company will furnish to the Global
Coordinator and, upon request, to each International Manager, copies of
all annual reports, quarterly reports and current reports filed with
the Commission on Forms 10-K, 10-Q and 8-K, or such other similar forms
as may be designated by the Commission, and such other documents,
reports and information as shall be furnished by the Company to its
stockholders or security holders generally.
(k) Restriction or Sale of Shares. During a period of 90 days
from the date of the Prospectuses, the Company will not, without the
prior written consent of the Global Coordinator, (i) directly or
indirectly, offer, pledge, sell, contract to sell, sell any option or
contract to purchase, purchase any option or contract to sell, grant
any option, right or warrant to purchase or otherwise transfer or
dispose of any share of Common Stock or any securities convertible into
or exercisable or exchangeable for Common Stock or file any
registration statement under the 1933 Act with respect to any of the
foregoing or (ii) enter into any swap or any other agreement or any
<PAGE>
17
transaction that transfers, in whole or in part, directly or
indirectly, the economic consequence of ownership of the Common Stock,
whether any such swap or transaction described in clause (i) or (ii)
above is to be settled by delivery of Common Stock or such other
securities, in cash or otherwise. The foregoing sentence shall not
apply to (A) the Securities to be sold hereunder or under the U.S.
Purchase Agreement, and (B) any shares of Common Stock issued pursuant
to employee benefit plans (including contributions of Common Stock to
the Company's Employee Stock Ownership Plan), dividend reinvestment
plans and exercise of currently outstanding options.
Section 4. Payment of Expenses.
(a) Expenses. The Company will pay and bear all costs and
expenses incident to the performance of its obligations under this
Agreement, including (i) the preparation, printing and filing of the
Registration Statement (including financial statements and any
schedules or exhibits and any documents incorporated therein by
reference), as originally filed and as amended, the preliminary
prospectus supplements and the Prospectuses and any amendments or
supplements thereto, and the cost of furnishing copies thereof in
accordance with Section 3 of this Agreement and the U.S. Purchase
Agreement, to the International Managers and the U.S. Underwriters,
(ii) the preparation and distribution of this Agreement, the U.S.
Purchase Agreement, any agreement among Underwriters, the Shares and
the Blue Sky Survey, (iii) the delivery of the Shares to the
International Managers and the U.S. Underwriters, including any stock
transfer taxes payable upon the sale of the Shares to the International
Managers and the U.S. Underwriters, (iv) the fees and disbursements of
the Company's counsel and accountants, (v) the qualification of the
Shares under the applicable securities laws in accordance with Section
3(g) and any filing for review of the offering with the National
Association of Securities Dealers, Inc., including filing fees and fees
and disbursements of counsel for the International Managers in
connection therewith and in connection with the Blue Sky Survey and
(vi) any fees and expenses incurred in connection with the listing of
the Shares on the New York, London and Pacific Stock Exchanges.
(b) Termination of Agreement. If this Agreement is terminated
by the Lead Manager in accordance with the provisions of Section 5 or
10(a)(i) hereof, the Company shall reimburse the International Managers
for all their out-of-pocket expenses, including the fees and
disbursements of counsel for the International Managers.
Section 5. Conditions of International Managers' Obligations.
The obligations of the several International Managers to purchase and pay for
the International Shares that they have respectively agreed to purchase pursuant
to this Agreement (including any International Option Shares as to which the
option granted in Section 2 has been exercised and the Date of Delivery
determined by the Global Coordinator is the same as the Closing Time) are
subject to the accuracy of the representations and warranties of the Company
contained herein or in certificates of any officer of the Company or any
Significant Subsidiary delivered pursuant to the provisions hereof, to the
performance by the Company of its obligations hereunder, and to the following
further conditions:
<PAGE>
18
(a) Effectiveness of Registration Statement. The Registration
Statement, including any Rule 462(b) Registration Statement, has become
effective and at the Closing Time, no stop order suspending the
effectiveness of the Registration Statement shall have been issued
under the 1933 Act and no proceedings for that purpose shall have been
instituted or shall be pending or, to the knowledge of the Company or
the Lead Manager, shall be contemplated by the Commission, and any
request on the part of the Commission for additional information shall
have been complied with to the satisfaction of counsel for the
International Managers. A prospectus containing the Rule 430A
Information shall have been filed with the Commission in accordance
with Rule 424(b) (or a post-effective amendment providing such
information shall have been filed and declared effective in accordance
with the requirements of Rule 430A).
(b) Opinion of Hunton & Williams, Counsel for Company. At the
Closing Time, the Lead Manager shall have received a signed opinion of
Hunton & Williams, counsel for the Company, dated as of the Closing
Time, together with signed or reproduced copies of such opinion for
each of the other International Managers, in form and substance
satisfactory to counsel for the International Managers, to the effect
that:
(i) The Company is a corporation duly incorporated,
validly existing and in good standing under the laws of the
State of North Carolina, with corporate power and authority
under such laws to own, lease and operate its properties and
conduct its business as described in the Prospectuses.
(ii) Each Significant Subsidiary is a corporation
duly incorporated, validly existing and in good standing under
the laws of the jurisdiction of its incorporation with
corporate power and authority under such laws to own, lease
and operate its properties and conduct its business.
(iii) All of the outstanding shares of capital stock
of the Company have been duly authorized and validly issued
and are fully paid and non-assessable, and no holder thereof
is or will be subject to personal liability by reason of being
such a holder; and none of the outstanding shares of capital
stock of the Company was issued in violation of the preemptive
rights of any stockholder of the Company.
(iv) All of the outstanding shares of capital stock
of each Significant Subsidiary have been duly authorized and
validly issued and are fully paid and non-assessable; all of
such shares are owned by the Company, directly or through one
or more Significant Subsidiaries, free and clear of any
<PAGE>
19
perfected security interest and, to such counsel's knowledge,
an unperfected pledge, lien, security interest, charge, claim,
equity or encumbrance of any kind; no holder thereof is
subject to personal liability by reason of being such a holder
and none of such shares was issued in violation of the
preemptive rights of any stockholder of the Significant
Subsidiaries.
(v) The Shares have been duly authorized and validly
issued and are fully paid and non-assessable; no holder
thereof will be subject to personal liability by reason of
being such a holder; and the issuance of such Shares is not
subject to preemptive rights and all corporate action required
to be taken for the authorization, issue and sale of such
Shares has been validly and sufficiently taken.
(vi) The Rights to which holders of Common Stock are
entitled have been duly authorized and validly issued; the
shares of Preferred Stock that may be issued to holders of
Rights pursuant to the Rights Plan have been duly authorized
and validly reserved for issuance upon the exercise of the
Rights; and the Rights and the Preferred Stock conform to the
descriptions thereof contained in the Prospectuses.
(vii) The authorized, issued and outstanding capital
stock of the Company is as set forth in the Prospectuses under
the heading "Description of Preferred Stock" and "Description
of Common Stock."
(viii) The Shares conform in all material respects as
to legal matters to the descriptions thereof in the
Prospectuses.
(ix) This Agreement has been duly authorized,
executed and delivered by the Company.
(x) No authorization, approval, consent or license of
any government, governmental instrumentality or court,
domestic or foreign (other than such approvals under the 1933
Act as have already been obtained and the securities or blue
sky laws of the various states), is required for the valid
authorization, issuance, sale and delivery of the Shares.
(xi) Such counsel does not know of any statutes or
regulations, or any pending or threatened legal or
governmental proceedings, required to be described in the
Prospectuses that are not described as required, nor of any
contracts or documents of a character required to be described
or referred to in the Registration Statement or the
Prospectuses or to be filed as exhibits to the Registration
Statement that are not described, referred to or filed as
required.
(xii) To the knowledge of such counsel, no default
exists in the performance or observance of any material
obligation, agreement, covenant or condition contained in any
<PAGE>
20
contract, indenture, loan agreement, note, lease or other
agreement or instrument that is described or referred to in
the Registration Statement or the Prospectuses or filed as an
exhibit to the Registration Statement.
(xiii) The execution and delivery of this Agreement
and the U.S. Purchase Agreement by the Company, the issuance
and delivery of the Shares and the Rights, the consummation by
the Company of the transactions contemplated in this Agreement
and the U.S. Purchase Agreement, in the Prospectuses and in
the Registration Statement, and the compliance by the Company
with the terms of this Agreement and the U.S. Purchase
Agreement do not and will not result in any violation of the
charter or by-laws of the Company or any Significant
Subsidiary, and do not and will not conflict with, or result
in a breach of any of the terms or provisions of, or
constitute a 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 Significant
Subsidiary under (A) any contract, indenture, mortgage, loan
agreement, note, lease or any other agreement or instrument
known to such counsel, to which the Company or any Significant
Subsidiary is a party or by which it may be bound or to which
any of its properties may be subject (except for such
conflicts, breaches or defaults or liens, charges or
encumbrances that would not have a material adverse effect on
the condition (financial or otherwise), earnings, business
affairs or business prospects of the Company and its
subsidiaries, considered as one enterprise), (B) any existing
applicable law, rule or regulation (other than the securities
or blue sky laws of the various states, as to which such
counsel need express no opinion), or (C) any judgment, order
or decree of any government, governmental instrumentality or
court, domestic or foreign, having jurisdiction over the
Company or any Significant Subsidiary or any of their
respective properties.
(xiv) The statements made in the International
Prospectus under "United States Federal Tax Considerations to
Non-U.S. Holders of Common Stock," to the extent that they
constitute matters of law or legal conclusions, have been
reviewed by such counsel and fairly present the information
disclosed therein in all material respects.
(xv) Registration Statement No. 333-42733 became
effective under the 1933 Act on December 23, 1997; any
required filing of any preliminary prospectus supplement or
the Prospectus Supplements pursuant to Rule 424(b) has been
made in the manner and within the time period required by Rule
424(b); the Rule 462(b) Registration Statement became
effective under the 1933 Act on February 24, 1999; and, to the
knowledge of such counsel, the Registration Statement is still
effective, no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for
that purpose have been instituted or are pending or are
contemplated under the 1933 Act.
<PAGE>
21
(xvi) The Registration Statement and the
Prospectuses, excluding the documents incorporated by
reference therein, and each amendment or supplement thereto
(except for the financial statements and other financial
information and statistical data in tabular format included or
incorporated by reference therein or omitted therefrom, as to
which such counsel need express no opinion), as of their
respective effective or issue dates, appear on their face to
have been appropriately responsive in all material respects to
the requirements of the 1933 Act and the 1933 Act Regulations.
(xvii) The documents incorporated by reference in the
Prospectuses (except for the financial statements and other
financial information and statistical data in tabular format
included or incorporated by reference therein or omitted
therefrom, as to which such counsel need express no opinion,
and except to the extent that any statement therein is
modified or superseded in the Prospectuses), as of the dates
they were filed with the Commission, appear on their face to
have been appropriately responsive in all material respects to
the requirements of the 1934 Act and the 1934 Act Regulations.
(xviii) The descriptions in the Prospectuses of the
statutes, regulations, legal or governmental proceedings,
contracts or other documents therein described are accurate
and fairly summarize the information required to be shown.
(xix) Such counsel have participated in the
preparation of the Registration Statement and the Prospectuses
and are familiar with or have participated in the preparation
of the documents incorporated by reference in the Prospectuses
and no facts have come to the attention of such counsel to
lead them to believe (A) that the Registration Statement or
any amendment thereto (except for the financial statements and
other financial information and statistical data in tabular
format included or incorporated by reference therein or
omitted therefrom, as to which such counsel need express no
opinion), on the original effective date of the Registration
Statement, on the date of the filing of any annual report on
Form 10-K after the filing of the Registration Statement, on
the effective date of the most recent post-effective amendment
thereto, if any, on the date of this Agreement, or on the date
any such amendment (including from the date of effectiveness
of the Rule 462(b) Registration Statement) that became
effective after the date of this Agreement, contained any
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 (B) that the
Prospectuses or any amendment or supplement thereto (except
<PAGE>
22
for the financial statements and other financial information
and statistical data in tabular format included therein or
omitted therefrom, as to which such counsel need express no
opinion), at the time the Prospectuses were issued, at the
time any such amended or supplemented prospectuses were issued
or at the Closing Time (or, if any International Option Shares
are purchased, at the Date of Delivery), included or include
an untrue statement of a material fact or omitted 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 or (C) that the documents
incorporated by reference in the Prospectuses (except for the
financial statements and other financial information and
statistical data in tabular format included therein or omitted
therefrom, as to which such counsel need express no opinion,
and except to the extent that any statement therein is
modified or superseded in the Prospectuses), as of the dates
they were filed with the Commission, included 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, in the light of the circumstances under
which they were made, not misleading.
Such opinion shall be to such further effect with respect to other
legal matters relating to this Agreement and the sale of the Shares
pursuant to this Agreement as counsel for the International Managers
may reasonably request. In giving such opinion, such counsel may rely,
as to all matters governed by the laws of jurisdictions other than the
law of the States of New York and North Carolina and the federal law of
the United States, upon opinions of other counsel, who shall be counsel
satisfactory to counsel for the International Managers, in which case
the opinion shall state that they believe that the Lead Manager and
they are entitled to so rely. Such counsel may also state that, insofar
as such opinion involves factual matters, they have relied, to the
extent they deem proper, upon certificates of officers of the Company
and the Significant Subsidiaries and certificates of public officials;
provided that such certificates have been delivered to the
International Managers.
(c) Opinion of Counsel to the International Managers. At the
Closing Time, the Lead Manager shall have received the favorable
opinion of Shearman & Sterling, counsel for the International Managers,
dated as of the Closing Time, together with signed or reproduced copies
of such opinion for each of the other International Managers, to the
effect that the opinion delivered pursuant to Section 5(b) hereof
appears on its face to be appropriately responsive to the requirements
of this Agreement except, specifying the same, to the extent waived by
the Lead Manager, and with respect to the incorporation and legal
existence of the Company, the Shares, this Agreement, the U.S. Purchase
Agreement, the Registration Statement, the Prospectuses, the documents
incorporated by reference and such other related matters as the Lead
Manager may require. In giving such opinion such counsel may rely, as
to all matters governed by the laws of jurisdictions other than the law
of the State of New York and the federal law of the United States, upon
the opinions of counsel satisfactory to the Lead Manager. Such counsel
may also state that, insofar as such opinion involves factual matters,
they have relied, to the extent they deem proper, upon certificates of
officers of the Company and the Significant Subsidiaries and
certificates of public officials; provided that such certificates have
been delivered to the International Managers.
<PAGE>
23
(d) Officers' Certificate. At the Closing Time, (i) the
Registration Statement, including any Rule 462(b) Registration
Statement and the Prospectuses, as they may then be amended or
supplemented, shall contain all statements that are required to be
stated therein under the 1933 Act and the 1933 Act Regulations and in
all material respects shall conform to the requirements of the 1933 Act
and the 1933 Act Regulations, and neither the Registration Statement
nor the Prospectuses, as they may then be amended or supplemented,
shall contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading, (ii) there shall not have been,
since the respective dates as of which information is given in the
Registration Statement, any material adverse change in the condition
(financial or otherwise), earnings, business affairs or business
prospects of the Company and its subsidiaries, considered as one
enterprise, whether or not arising in the ordinary course of business,
(iii) no action, suit or proceeding shall be pending or, to the
knowledge of the Company, threatened against the Company or any
Significant Subsidiary that would be required to be set forth in the
Prospectuses other than as set forth therein and no proceedings shall
be pending or, to the knowledge of the Company, threatened against the
Company or any Significant Subsidiary before or by any government,
governmental instrumentality or court, domestic or foreign, that could
result in any material adverse change in the condition (financial or
otherwise), earnings, business affairs or business prospects of the
Company and its subsidiaries, considered as one enterprise, other than
as set forth in the Prospectuses, (iv) the Company shall have complied
with all agreements and satisfied all conditions on its part to be
performed or satisfied relating to the transactions contemplated by
this Agreement, the U.S. Purchase Agreement, the Registration
Statement, including the Rule 462(b) Registration Statement, and the
Prospectuses at or prior to the Closing Time and (v) the other
representations and warranties of the Company set forth in Section 1(a)
shall be accurate as though expressly made at and as of the Closing
Time. At the Closing Time, the Lead Manager shall have received a
certificate of the President or an Executive Vice President, and the
Treasurer or Assistant Treasurer or Controller, of the Company, dated
as of the Closing Time, to such effect.
(e) Accountants' Comfort Letter. At the time that this
Agreement is executed by the Company, the Lead Manager shall have
received from Deloitte & Touche LLP a letter, dated such date, in form
and substance satisfactory to the Lead Manager, together with signed or
reproduced copies of such letter for each of the other International
Managers, containing statements and information of the type ordinarily
included in accountants' "comfort letters" to underwriters with respect
to the financial statements and certain financial information
incorporated by reference in the Registration Statement and
Prospectuses.
<PAGE>
24
(f) Bring-Down Comfort Letter. At the Closing Time, the Lead
Manager shall have received from Deloitte & Touche LLP a letter, in
form and substance satisfactory to the Lead Manager and dated as of the
Closing Time, to the effect that they reaffirm the statements made in
the letter furnished pursuant to Section 5(e), except that the
specified date referred to shall be a date not more than three business
days prior to the Closing Time.
(g) Additional Documents. At the Closing Time, counsel for the
International Managers shall have been furnished with all such
documents, certificates and opinions as they may reasonably request for
the purpose of enabling them to pass upon the issuance and sale of the
Shares as contemplated in this Agreement and the matters referred to in
Section 5(c) and in order to evidence the accuracy and completeness of
any of the representations, warranties or statements of the Company,
the performance of any of the covenants of the Company, or the
fulfillment of any of the conditions herein contained; and all
proceedings taken by the Company at or prior to the Closing Time in
connection with the authorization, issuance and sale of the Shares as
contemplated in this Agreement shall be satisfactory in form and
substance to the Lead Manager and to counsel for the International
Managers.
(h) Approval of Listing. The Shares shall have been duly
authorized for listing by the New York, London and Pacific Stock
Exchanges at the Closing Time.
(i) Lock-up Agreements. At the Closing Time, the Lead Manager
shall have received from each of the persons listed on Schedule C
hereto, a lock-up agreement, in form and substance satisfactory to the
Lead Manager, executed by such person and dated as of the Closing Time.
(j) Termination of Agreement. If any of the conditions
specified in this Section 5 shall not have been fulfilled when and as
required by this Agreement, this Agreement may be terminated by the
Lead Manager on notice to the Company at any time at or prior to the
Closing Time, and such termination shall be without liability of any
party to any other party, except as provided in Section 4.
Notwithstanding any such termination, the provisions of Sections 7, 8
and 9 shall survive any such termination and remain in full force and
effect.
Section 6. Conditions to Purchase of International Option
Shares. In the event that the International Managers exercise their option
granted in Section 2 hereof to purchase all or any of the International Option
Shares and the Date of Delivery determined by the Lead Manager pursuant to
Section 2 hereof is later than the Closing Time, the obligations of the several
International Managers to purchase and pay for the International Option Shares
that they shall have respectively agreed to purchase pursuant to this Agreement
are subject to the accuracy of the representations and warranties of the Company
herein contained, to the performance by the Company of its obligations hereunder
and to the following further conditions:
<PAGE>
25
(a) Registration Statement Effective. The Registration
Statement, including any Rule 462(b) Registration Statement, shall
remain effective at the Date of Delivery, and, at the Date of Delivery,
no stop order suspending the effectiveness of the Registration
Statement shall have been issued under the 1933 Act and no proceedings
for that purpose shall have been instituted or shall be pending or, to
the knowledge of the Company or the Lead Manager, shall be contemplated
by the Commission, and any request on the part of the Commission for
additional information shall have been complied with to the
satisfaction of counsel for the International Managers.
(b) Officers' Certificate. At the Date of Delivery, the
provisions of Sections 5(d)(i) through 5(d)(v) shall have been complied
with at and as of the Date of Delivery and, at the Date of Delivery,
the Lead Manager shall have received a certificate of the President or
an Executive Vice President, and the Treasurer or Assistant Treasurer
or Controller, of the Company, dated as of the Date of Delivery, to
such effect.
(c) Opinion of Counsel for Company. At the Date of Delivery,
the Lead Manager shall have received the favorable opinion of Hunton &
Williams, counsel for the Company, together with signed or reproduced
copies of such opinion for each of the other International Managers, in
each case in form and substance satisfactory to counsel for the
International Managers, dated as of the Date of Delivery, relating to
the International Option Shares and otherwise to the same effect as the
opinion required by Section 5(b).
(d) Opinion of Counsel for International Managers. At the Date
of Delivery, the Lead Manager shall have received the favorable opinion
of Shearman & Sterling, counsel for the International Managers, dated
as of the Date of Delivery, relating to the International Option Shares
and otherwise to the same effect as the opinion required by Section
5(c).
(e) Bring-down Comfort Letter. At the Date of Delivery, the
Lead Manager shall have received a letter from Deloitte & Touche LLP,
in form and substance satisfactory to the Lead Manager and dated as of
the Date of Delivery, to the effect that they reaffirm the statements
made in the letter furnished pursuant to Section 5(e), except that the
specified date referred to shall be a date not more than three business
days prior to the Date of Delivery.
(f) Additional Documents. At the Date of Delivery, counsel for
the International Managers shall have been furnished with all such
documents, certificates and opinions as they may request for the
purpose of enabling them to pass upon the issuance and sale of the
International Option Shares as contemplated in this Agreement and the
matters referred to in Section 6(d) and in order to evidence the
accuracy and completeness of any of the representations, warranties or
statements of the Company, the performance of any of the covenants of
the Company, or the fulfillment of any of the conditions herein
contained; and all proceedings taken by the Company at or prior to the
Date of Delivery in connection with the authorization, issuance and
sale of the International Option Shares as contemplated in this
Agreement shall be satisfactory in form and substance to the Lead
Manager and to counsel for the International Managers.
<PAGE>
26
(g) Termination of Option Closing. If any of the conditions
specified in this Section 6 shall not have been fulfilled at or prior
to the Date of Delivery, the closing of the International Managers'
exercise of their option under Section 2 of this Agreement may be
terminated by the Lead Manager on notice to the Company at any time at
or prior to the specified closing time on the Date of Delivery, and
such termination shall be without liability of any party to any other
party, except as provided in Section 4. Notwithstanding any such
termination, the provisions of Sections 7, 8 and 9 shall remain in
effect.
Section 7. Indemnification.
(a) Indemnification of the International Managers. The Company
agrees to indemnify and hold harmless each International Manager and
each person, if any, who controls any International Manager within the
meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act as
follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of an untrue statement or
alleged untrue statement of a material fact contained in the
Registration Statement (or any amendment thereto), including the Rule
430A Information, if applicable, all documents incorporated therein by
reference, or the omission or alleged omission therefrom of a material
fact required to be stated therein or necessary to make the statements
therein not misleading or arising out of an untrue statement or alleged
untrue statement of a material fact contained in any preliminary
prospectus or the Prospectuses (or any amendment or supplement thereto)
or the omission or alleged omission therefrom of a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount
paid in settlement of any litigation, or investigation or proceeding by
any governmental agency or body, commenced or threatened, or of any
claim whatsoever based upon any such untrue statement or omission, or
any such alleged untrue statement or omission; provided that (subject
to Section 7(d) hereof) any such settlement is effected with the
written consent of the Company; and
(iii) against any and all expense whatsoever, as incurred
(including the fees and disbursements of counsel chosen by Merrill
Lynch), reasonably incurred in investigating, preparing or defending
against any litigation, or investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim
whatsoever based upon any such untrue statement or omission, or any
such alleged untrue statement or omission, to the extent that any such
expense is not paid under subparagraph (i) or (ii) above;
<PAGE>
27
provided, however, that this indemnity agreement does not apply to any loss,
liability, claim, damage or expense to the extent arising out of an untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by and
relating to any Underwriter through the Lead Manager expressly for use in the
Registration Statement (or any amendment thereto) or any preliminary prospectus
or the Prospectuses (or any amendment or supplement thereto).
(b) Indemnification of the Company, Directors and Officers.
Each International Manager severally agrees to indemnify and hold harmless the
Company, its directors, each of its officers who signed the Registration
Statement and each person, if any, who controls the Company within the meaning
of Section 15 of the 1933 Act or Section 20 of the 1934 Act, against any and all
loss, liability, claim, damage and expense described in the indemnity contained
in Section 7(a), as incurred, but only with respect to untrue statements or
omissions, or alleged untrue statements or omissions, made in the Registration
Statement (including any amendment thereto), including the Rule 430A
Information, if applicable, or any preliminary prospectus or the Prospectuses
(or any amendment or supplement thereto) in reliance upon and in conformity with
written information furnished to the Company by and relating to such
International Manager through the Lead Manager expressly for use in the
Registration Statement (including any amendment thereto) or such preliminary
prospectus supplement or the Prospectuses (or any amendment or supplement
thereto).
(c) Actions Against Parties, Notification. Each indemnified
party shall give notice as promptly as reasonably practicable to each
indemnifying party of any action commenced against it in respect of which
indemnity may be sought hereunder, but failure to so notify an indemnifying
party shall not relieve such indemnifying party from any liability hereunder to
the extent it is not materially prejudiced as a result thereof and in any event
shall not relieve it from any liability which it may have otherwise than on
account of this indemnity agreement. In the case of parties indemnified pursuant
to Section 7(a) hereof, counsel to the indemnified parties shall be selected by
Merrill Lynch, and, in the case of parties indemnified pursuant to Section 7(b)
hereof, counsel to the indemnified parties shall be selected by the Company. An
indemnifying party may participate at its own expense in the defense of any such
action; provided, however, that counsel to the indemnifying party shall not
(except with the consent of the indemnified party) also be counsel to the
indemnified party. In no event shall the indemnifying parties be liable for the
fees and expenses of more than one counsel (in addition to any local counsel)
separate from their own counsel for all indemnified parties in connection with
any one action or separate but similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances.
<PAGE>
28
No indemnifying party shall, without the prior written consent
of the indemnified parties, settle or compromise or consent to the entry of any
judgment with respect to any litigation, or any investigation or proceeding by
any governmental agency or body, commenced or threatened, or any claim
whatsoever in respect of which indemnification or contribution could be sought
under this Section 7 or Section 8 hereof (whether or not the indemnified parties
are actual or potential parties thereto), unless such settlement, compromise or
consent (i) includes an unconditional release of each indemnified party from all
liability arising out of such litigation, investigation, proceeding or claim and
(ii) does not include a statement as to or an admission of fault, culpability or
a failure to act by or on behalf of any indemnified party.
(d) Settlement Without Consent if Failure to Reimburse. If at
any time an indemnified party shall have requested an indemnifying party to
reimburse the indemnified party for fees and expenses of counsel, such
indemnifying party agrees that it shall be liable for any settlement of the
nature contemplated by Section 7(a)(ii) hereof effected without its written
consent if (i) such settlement is entered into more than 45 days after receipt
by such indemnifying party of the aforesaid request, (ii) such indemnifying
party shall have received notice of the terms of such settlement at least 30
days prior to such settlement being entered into and (iii) such indemnifying
party shall not have reimbursed such indemnified party in accordance with such
request prior to the date of such settlement. The indemnified party shall
promptly reimburse the indemnifying party for all amounts advanced to it
pursuant to this Section 7(d) hereof (unless it is entitled to such amounts
under Section 8 hereof) if it shall be finally judicially determined that such
indemnified party was not entitled to indemnification hereunder and such loss,
liability, claim, damage or expense arose out of (i) an untrue statement or
omission or alleged untrue statement or omission made in reliance upon and in
conformity with written information furnished to the Company by and relating to
the indemnified party expressly for use in the Registration Statements (or any
amendment thereto) or any preliminary prospectus supplement or the Prospectus
(or any amendment or supplement thereto) or (ii) a fraudulent misrepresentation
(within the meaning of Section 11 of the 1933 Act) by the indemnified party.
Section 8. Contribution.
If the indemnification provided for in Section 7 hereof is for
any reason held to be unavailable or insufficient to hold harmless an
indemnified party in respect of any losses, liabilities, claims, damages or
expenses referred to therein, then each indemnifying party shall contribute to
the aggregate losses, liabilities, claims, damages and expenses incurred by such
indemnified party as incurred, (i) in such proportion as is appropriate to
reflect the relative benefits received by the Company, on the one hand, and the
International Managers, on the other hand, from the offering of the
International Shares pursuant to this Agreement or (ii) if the allocation
provided by clause (i) is not permitted by applicable law, in such proportion as
is appropriate to reflect not only the relative benefits referred to in clause
(i) above but also the relative fault of the Company, on the one hand, and of
the International Managers, on the other hand, in connection with the statements
or omissions which resulted in such losses, liabilities, claims, damages or
expenses, as well as any other relevant equitable considerations.
<PAGE>
29
The relative benefits received by the Company, on the one
hand, and the International Managers, on the other hand, in connection with the
offering of the International Shares pursuant to this Agreement shall be deemed
to be in the same respective proportions as the total net proceeds from the
offering of the International Shares pursuant to this Agreement (before
deducting expenses) received by the Company and the total underwriting discount
received by the International Managers, in each case as set forth on the cover
of the International Prospectus, bear to the aggregate initial public offering
price of the International Shares as set forth on such cover.
The relative fault of the Company, on the one hand, and the
International Managers, on the other hand, shall be determined by reference to,
among other things, whether the 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 or by the International Managers and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.
The Company and the International Managers agree that it would
not be just and equitable if contribution pursuant to this Section 8 were
determined by pro rata allocation (even if the International Managers were
treated as one entity for such purpose) or by any other method of allocation
which does not take account of the equitable considerations referred to above in
this Section 8. The aggregate amount of losses, liabilities, claims, damages and
expenses incurred by an indemnified party and referred to above in this Section
8 shall be deemed to include any legal or other expenses reasonably incurred by
such indemnified party in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever based upon any such
untrue or alleged untrue statement or omission or alleged omission.
Notwithstanding the provisions of this Section 8, no
International Manager shall be required to contribute any amount in excess of
the amount by which the total price at which the International Shares
underwritten by it and distributed to the public were offered to the public
exceeds the amount of any damages which such International Manager has otherwise
been required to pay by reason of any such untrue or alleged untrue statement or
omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 8, each person, if any, who
controls an International Manager within the meaning of Section 15 of the 1933
Act or Section 20 of the 1934 Act shall have the same rights to contribution as
such International Manager, and each director of the Company, each officer of
the Company who signed the Registration Statement, and each person, if any, who
<PAGE>
30
controls the Company within the meaning of Section 15 of the 1933 Act or Section
20 of the 1934 Act shall have the same rights to contribution as the Company.
The International Managers' respective obligations to contribute pursuant to
this Section 8 are several in proportion to the number of International Shares
set forth opposite their respective names in Schedule A hereto and not joint.
Section 9. Representations, Warranties and Agreements to
Survive Delivery. All representations, warranties, indemnities, agreements and
other statements of the Company or its officers set forth in or made pursuant to
this Agreement shall remain operative and in full force and effect, regardless
of any investigation made by or on behalf of the Company, any International
Manager or any person who controls the Company or any International Manager
within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act,
and shall survive delivery of and payment for the Shares.
Section 10. Termination of Agreement.
(a) Termination Generally. The Lead Manager may terminate this
Agreement, by notice to the Company, at any time at or prior to the Closing Time
(i) if there has been, since the time of execution of this Agreement or since
the respective dates as of which information is given in the Prospectus, any
material adverse change in the condition (financial or otherwise), earnings,
business affairs or business prospects of the Company and its subsidiaries,
considered as one enterprise, whether or not arising in the ordinary course of
business, or (ii) if there has occurred any material adverse change in the
financial markets in the United States or the international financial markets,
any outbreak of hostilities or escalation thereof or other calamity or crisis or
any change or development involving a prospective change in national or
international political, financial or economic conditions, in each case the
effect of which is such as to make it, in the judgment of the Lead Manager,
impracticable to market the Shares or enforce contracts for the sale of the
Shares, or (iii) if trading in any securities of the Company has been suspended
by the Commission or the New York Stock Exchange, or if trading generally on
either the American Stock Exchange or the New York Stock Exchange or in the
Nasdaq National Market has been suspended, or minimum or maximum prices for
trading have been fixed, or maximum ranges for prices have been required, by any
of such exchanges or by such system or by order of the Commission, the National
Association of Securities Dealers, Inc. or any other governmental authority, or
(iv) if a banking moratorium has been declared by either federal, New York or
North Carolina authorities.
(b) Liabilities. If this Agreement is terminated pursuant to
this Section, such termination shall be without liability of any party to any
other party, except to the extent provided in Section 4. Notwithstanding any
such termination, the provisions of Sections 7, 8 and 9 shall survive such
termination and remain in full force and effect.
(c) Alternative Termination. This Agreement may also terminate
pursuant to the provisions of Section 2, with the effect stated in such Section.
<PAGE>
31
Section 11. Default by One or More of the International
Managers. If one or more of the Managers shall fail at the Closing Time to
purchase the Initial International Shares that it or they are obligated to
purchase pursuant to this Agreement (the "Defaulted Shares"), the Lead Manager
shall have the right, within 24 hours thereafter, to make arrangements for one
or more of the non-defaulting International Managers, or any other underwriters,
to purchase all, but not less than all, of the Defaulted Shares in such amounts
as may be agreed upon and upon the terms set forth in this Agreement; if,
however, the non-defaulting International Manager has not completed such
arrangements within such 24-hour period, then:
(a) if the number of Defaulted Shares does not exceed 10% of
the total number of Initial International Shares to be purchased on
such date, the non-defaulting International Managers shall be obligated
each severally and not jointly, to purchase the full amount thereof in
the proportions that their respective Initial International Share
underwriting obligations hereunder bear to the underwriting obligations
of all non-defaulting International Managers; or
(b) if the number of Defaulted Shares exceeds 10% of the total
number of Initial International Shares, this Agreement or, with respect
to a Date of Delivery which occurs after the Closing Time, the
obligation of the International Managers to purchase, and of the
Company to sell, the International Option Shares to be purchased and
sold on such Date of Delivery, shall terminate without liability on the
part of any non-defaulting International Manager.
No action taken pursuant to this Section shall relieve any
defaulting International Manager from liability in respect of its default.
In the event of any such default that does not result in a
termination of this Agreement, or, in the case of a Date of Delivery which is
after Closing Time, which does not result in a termination of the obligation of
the International Managers to purchase and the Company to sell the relevant
International Option Shares, as the case may be, either the Lead Manager or the
Company shall have the right to postpone the Closing Time or the Date of
Delivery, as the case may be, for a period not exceeding seven days in order to
effect any required changes in the Registration Statement or Prospectuses or in
any other documents or arrangements. As used herein, the term "International
Manager" includes any person substituted for an International Manager under this
Section 11.
Section 12. Notices. All notices and other communications
under this Agreement shall be in writing and shall be deemed to have been duly
given if delivered, mailed or transmitted by any standard form of
telecommunication. Notices to the Global Coordinator, the Lead Manager or the
International Managers shall be directed to the Lead Manager at North Tower,
World Financial Center, 250 Vesey Street, New York, New York 10281-1209,
attention of A. Scott Lemone, telecopy number: (212) 449-1245; notices to the
Company shall be directed to it at Lowe's Companies, Inc., P.O. Box 1111, North
Wilkesboro, North Carolina 28656, telecopy number: (336) 658-2073, attention of
William C. Warden, Jr., Executive Vice President and General Counsel.
<PAGE>
32
Section 13. Parties. This Agreement herein set forth is made
solely for the benefit of the several International Managers, the Company and,
to the extent expressed, any person who controls the Company or any of the
International Managers within the meaning of Section 15 of the 1933 Act, and the
directors of the Company, its officers who have signed the Registration
Statement, and their respective executors, administrators, successors and
assigns and, subject to the provisions of Section 11, no other person shall
acquire or have any right under or by virtue of this Agreement. The term
"successors and assigns" shall not include any purchaser, as such purchaser,
from any of the several International Managers of the Shares. All of the
obligations of the International Managers hereunder are several and not joint.
Section 14. Representation of International Managers. Merrill
Lynch will act for the several International Managers in connection with the
transactions contemplated by this Agreement, and any action under or in respect
of this Agreement taken by Merrill Lynch as Lead Manager will be binding upon
all International Managers.
Section 15. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
UNLESS OTHERWISE INDICATED, SPECIFIED TIMES OF THE DAY REFER TO NEW YORK CITY
TIME.
Section 16. Effect of Headings. The Article and Section
heading herein and the Table of Contents are for convenience only and shall not
affect the construction hereof.
Section 17. Counterparts. This Agreement may be executed in
one or more counterparts, and when a counterpart has been executed by each
party, all such counterparts taken together shall constitute one and the same
agreement.
------------------------------
<PAGE>
If the foregoing is in accordance with your understanding of
our agreement, please sign and return to the Company a counterpart hereof,
whereupon this instrument, along with all counterparts, will become a binding
agreement between the Company and the several International Managers in
accordance with its terms.
Very truly yours,
LOWE'S COMPANIES, INC.
By /s/ Marshall A. Croom
------------------------------
Name: Marshall A. Croom
Title: Assistant Treasurer
Attest:
By /s/ William C. Warden, Jr.
------------------------------
Name: William C. Warden, Jr.
Title: Executive Vice President and
Secretary
Confirmed and Accepted,
as of the date first above written:
MERRILL LYNCH INTERNATIONAL
By: MERRILL LYNCH INTERNATIONAL
By /s/ A. Scott Lemone
----------------------------
Name: A. Scott Lemone
Title: Director
For itself and as Lead Manager of the other International Managers named in
Schedule A.
<PAGE>
SCHEDULE A
International Manager Number of
Initial Shares
to Be Purchased
Merrill Lynch International............................... 275,000
Morgan Stanley & Co. International Limited................ 275,000
PaineWebber International (U.K.) Ltd...................... 275,000
Prudential-Bache Securities (U.K.) Inc.................... 137,500
William Blair & Company, L.L.C............................ 137,500
Total...................................... 1,100,000
=========
<PAGE>
SCHEDULE B
Lowe's Companies, Inc.
960,000 Shares of Common Stock
(Par Value $0.50 per Share)
1. The initial public offering price per share for the International
Shares shall be $58.00.
2. The purchase price per share for the International Shares to be paid
by the several International Managers shall be $56.115, being an amount equal to
the initial public offering price set forth above less $1.885 per share;
provided that the purchase price per share for any International Option Shares
purchased upon the exercise of the over-allotment option described in Section
2(b) shall be reduced by an amount per share equal to any dividends or
distributions declared by the Company and payable on the Initial International
Shares but not payable on the International Option Shares.
<PAGE>
SCHEDULE C
Robert Tillman, Chairman and Chief Executive Officer
Larry D. Stone, Executive Vice President and Chief Operating Officer
William C. Warden, Jr., Executive Vice President, Chief Administrative
Officer, General Counsel and Secretary
Thomas E. Whiddon, Executive Vice President and Chief Financial Officer
