EXHIBIT 1.1
EXECUTION COPY
LOWE'S COMPANIES, INC.
(a North Carolina corporation)
7 1/2% Notes due December 15, 2005
PURCHASE AGREEMENT
Dated: December 12, 2000
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LOWE'S COMPANIES, INC.
(a North Carolina corporation)
7 1/2% Notes due December 15, 2005
PURCHASE AGREEMENT
December 12, 2000
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
GOLDMAN, SACHS & CO.
MORGAN STANLEY & CO. INCORPORATED
c/o MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Merrill Lynch World Headquarters
North Tower
World Financial Center
250 Vesey Street
New York, New York 10281-1201
Ladies and Gentlemen:
Lowe's Companies, Inc., a North Carolina corporation (the "Company"),
proposes to issue and sell to you, as underwriters (the "Underwriters"), its 7
1/2% Notes due December 15, 2005 (the "Securities") on the terms and conditions
stated herein and in Schedule B. The Securities are to be sold to each
Underwriter, acting severally and not jointly, in the respective principal
amounts as are set forth in Schedule A hereto opposite the name of such
Underwriter. The Securities are to be issued pursuant to an Amended and Restated
Indenture dated as of December 1, 1995, as supplemented by a First Supplemental
Indenture, dated as of February 23, 1999 (the "Indenture"), between the Company
and Bank One, N.A. (formerly known as The First National Bank of Chicago), as
trustee (the "Trustee"). The Securities and the Indenture are more fully
described in the Prospectus referred to below.
The Company has prepared and filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-3 (Registration
No. 333-34580). The registration statement includes a combined prospectus
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prepared in accordance with Rule 429 under the Securities Act of 1933, as
amended (the "1933 Act"), relating to certain of its debt securities, preferred
stock, depositary shares, common stock, preferred stock purchase rights and
warrants and the offering thereof from time to time in accordance with Rule 415
under the 1933 Act pursuant to the registration statement. The registration
statement has been declared effective by the Commission. As provided in Section
3(a), a prospectus supplement reflecting the terms of the Securities, the terms
of the offering thereof and other matters set forth therein has been prepared
and will be filed pursuant to Rule 424 under the 1933 Act. Such prospectus
supplement, in the form first filed after the date hereof pursuant to Rule 424,
is herein referred to as the "Prospectus Supplement." Such registration
statement as amended at the date hereof, including the exhibits thereto and the
documents incorporated by reference therein, is hereinafter referred to as the
"Registration Statement" and the basic prospectus included in the Registration
Statement relating to all offerings of securities under the Registration
Statement, as supplemented by the Prospectus Supplement, is herein called the
"Prospectus," except that, if such basic prospectus is amended or supplemented
on or prior to the date on which the Prospectus Supplement is first filed
pursuant to Rule 424, the term "Prospectus" shall refer to the basic prospectus
as so amended or supplemented and as supplemented by the Prospectus Supplement,
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.
All references in this Agreement to financial statements and schedules
and other information which is "contained," "included" or "stated" in the
Registration Statement or the Prospectus (or other references of like import)
shall be deemed to mean and include all such financial statements and schedules
and other information which is incorporated by reference in the Registration
Statement or the Prospectus, as the case may be; and all references in this
Agreement to amendments or supplements to the Registration Statement or the
Prospectus shall be deemed to mean and include the filing of any document under
the Securities Exchange Act of 1934 (the "1934 Act") which is incorporated by
reference in the Registration Statement or the Prospectus, as the case may be.
The Company understands that the Underwriters propose to make a public
offering of the Securities as soon as you deem advisable after this Agreement
has been executed and delivered.
Section 1. Representations and Warranties. (a) Representations and
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Warranties of the Company. The Company represents and warrants to and agrees
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with each of the Underwriters that:
(i) Compliance with Registration Requirements. The Company
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meets the requirements for use of Form S-3 under the 1933 Act. The
Registration Statement has become effective under the 1933 Act and no
stop order suspending the effectiveness of the 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. On the original effective date of the Registration Statement, on
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the effective date of the most recent post-effective amendment thereto,
if any, and on the date of the filing by the Company of any annual
report on Form 10-K after the original filing of the Registration
Statement, the Registration Statement complied in all material respects
with the requirements of the 1933 Act, the rules and regulations of the
Commission thereunder (the "1933 Act Regulations"), the Trust Indenture
Act of 1939, as amended (the "1939 Act") and the rules and regulations
of the Commission under the 1939 Act (the "1939 Act Regulations") and
did 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; on the date hereof and at the
Closing Time (as defined below), (A) the Registration Statement, and
any amendments and supplements thereto, comply and will comply in all
material respects with the requirements of the 1933 Act, the 1933 Act
Regulations, the 1939 Act and the 1939 Act Regulations, (B) neither the
Registration Statement nor any amendment or supplement thereto includes
or will include an untrue statement of a material fact or omits or will
omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading and (C) neither
the Prospectus nor any amendment or supplement thereto includes or will
include an untrue statement of a material fact or omits 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
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representations or warranties as to statements in or omissions from the
Registration Statement or the Prospectus made in reliance upon and in
conformity with information furnished in writing to the Company by or
on behalf of or relating to any Underwriter, directly or through you,
expressly for use in the Registration Statement or the Prospectus.
Each Prospectus and Prospectus Supplement 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 Prospectus and Prospectus Supplement 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
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deemed to be incorporated by reference in the Registration Statement
and the Prospectus pursuant to Item 12 of Form S-3 under the 1933 Act,
at the time they were filed with the Commission, complied 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 Prospectus 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.
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(iii) Independent Accountants. Deloitte & Touche LLP, who have
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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
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authorized, executed and delivered by the Company.
(v) Financial Statements. The consolidated financial
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statements included or incorporated by reference in the Registration
Statement and the Prospectus 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 Prospectus 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
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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 Prospectus; 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
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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 non-assessable 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.
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(viii) Authorization of Indenture. The Indenture and any
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supplement thereto or board resolution or action of authorized officers
of the Company setting forth the terms of the Securities (the
Indenture, as so supplemented by the supplement, board resolutions or
action of authorized officers being herein referred to as the
"Indenture") has been duly authorized by the Company, will be
substantially in the form heretofore delivered to you and, when duly
executed and delivered by the Company and the Trustee, will constitute
a valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms, except as enforcement thereof may
be limited by bankruptcy, insolvency (including, without limitation,
all laws relating to fraudulent transfers), reorganization, moratorium
or similar laws affecting enforcement of creditors' rights generally
and except as enforcement thereof is subject to general principles of
equity (regardless of whether enforcement is considered in a proceeding
in equity or at law); and the Indenture conforms to the description
thereof in the Prospectus.
(ix) Authorization of Securities. The Securities have been
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duly authorized by the Company. When executed, authenticated, issued
and delivered in the manner provided for in the Indenture and sold and
paid for as provided in this Agreement, the Securities will constitute
valid and binding obligations of the Company entitled to the benefits
of the Indenture and enforceable against the Company in accordance with
their terms, except as enforcement thereof may be limited by
bankruptcy, insolvency (including, without limitation, all laws
relating to fraudulent transfers), reorganization, moratorium or
similar laws affecting enforcement of creditors' rights generally and
except as enforcement thereof is subject to general principles of
equity (regardless of whether enforcement is considered in a proceeding
in equity or at law); and the Securities conform to the description
thereof in the Prospectus.
(x) Validity of Capital Stock. All of the outstanding shares
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of capital stock of the Company have been duly authorized and validly
issued and are fully paid and non-assessable; 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.
(xi) No Material Adverse Change in Business. Since the
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respective dates as of which information is given in the Registration
Statement and the Prospectus, 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.
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(xii) Absence of Defaults and Conflicts. Neither the Company
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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
Indenture by the Company, the issuance and delivery of the Securities,
the consummation by the Company of the transactions contemplated in
this Agreement, in the Prospectus and in the Registration Statement and
compliance by the Company with the terms of this Agreement and the
Indenture, 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
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authorization, approval, consent or license of any government,
governmental instrumentality or court, domestic or foreign (other than
under the 1933 Act, the 1939 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 Securities hereunder or the
consummation of the transactions contemplated by this Agreement, for
the valid authorization, issuance, sale and delivery of the Securities,
or for the execution, delivery or performance of the Indenture by the
Company.
(xiv) Absence of Proceedings. Except as disclosed in the
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Prospectus, 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 subsidiary of the Company 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
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could adversely affect the consummation of the transactions
contemplated in this Agreement; the aggregate of all pending legal or
governmental proceedings that are not described in the Prospectus to
which the Company or any subsidiary of the Company is a party or which
affect any of their respective properties, including ordinary routine
litigation incidental to the business of the Company or any subsidiary
of the Company, 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
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of a character required to be described in the Registration Statement
or the Prospectus or to be filed as exhibits to the Registration
Statement that are not described and filed as required.
(xvi) Possession of Licenses and Permits. The Company and the
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Significant Subsidiaries each 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 effect 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. The Company and
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the Significant Subsidiaries each 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
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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
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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 Securities.
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(xx) Environmental Laws. Except as disclosed in the
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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 its subsidiaries are each in compliance with all applicable
Environmental Laws, (B) the Company and its 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 its subsidiaries, and (D) there are no circumstances
with respect to any property or operations of the Company or its
subsidiaries that could reasonably be anticipated to form the basis of
an Environmental Claim against the Company or its 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, investigations or proceedings relating in any way to any
Environmental Law.
(b) Officer's Certificate. Any certificate signed by any officer of the
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Company or any Significant Subsidiary and delivered to you or to counsel for the
Underwriters shall be deemed a representation and warranty by the Company to
each Underwriter as to the matters covered thereby.
Section 2. Sale and Delivery to the Underwriters; Closing. (a)
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Securities. On the basis of the representations and warranties herein contained,
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and subject to the terms and conditions herein set forth, the Company agrees to
sell to each Underwriter, and each Underwriter agrees, severally and not
jointly, to purchase from the Company, at the purchase price to the Underwriters
set forth in Schedule B, the principal amount of Securities set forth opposite
the name of such Underwriter in Schedule A, plus any additional principal amount
of Securities that such Underwriter may become obligated to purchase pursuant to
Section 10 of this Agreement.
(b) Payment. Payment of the purchase price for, and delivery of, the
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Securities 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 you, at 10:00 A.M. on the third full business day after the
date of this Agreement (unless postponed pursuant to Section 10), or at such
other time not more than ten full business days thereafter as you and the
Company shall determine (such date and time of payment and delivery being herein
called the "Closing Time"). Payment shall be made to the Company by wire
transfer of immediately available funds to an account designated by the Company,
against delivery to you for the respective accounts of the several Underwriters
of the Securities to be purchased by them.
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(c) Denominations; Registration. The Securities to be purchased by the
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Underwriters shall be in such denominations and registered in such names as you
may request in writing at least two full business days before the Closing Time.
The Securities will be made available in New York City for examination and
packaging by you not later than 10:00 A.M. (Eastern time) on the business day
prior to the Closing Time.
Section 3. Certain Covenants of the Company. The Company covenants with
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each Underwriter as follows:
(a) Prospectus Supplement; Delivery of Prospectus. Immediately
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following the execution of this Agreement, the Company will prepare a
Prospectus Supplement that complies with the 1933 Act and the 1933 Act
Regulations and that sets forth the principal amount of the Securities
and their terms not otherwise specified in the Indenture, the name of
each Underwriter participating in the offering and the principal amount
of the Securities that each severally and not jointly has agreed to
purchase, the name of each Underwriter, if any, acting as
representative of the Underwriters in connection with the offering, the
price at which the Securities are to be purchased by the Underwriters
from the Company, any initial public offering price, any selling
concession and reallowance and any delayed delivery arrangements, and
such other information as you and the Company deem appropriate in
connection with the offering of the Securities. The Company will
promptly transmit copies of the Prospectus Supplement to the Commission
for filing pursuant to Rule 424 under the 1933 Act and will furnish to
the Underwriters as many copies of the Prospectus as you shall
reasonably request.
(b) Continued Compliance with Securities Laws. The Company
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will comply to the best of its ability with the 1933 Act and the 1933
Act Regulations, the 1934 Act and the 1934 Act Regulations, and the
1939 Act and the 1939 Act Regulations so as to permit the completion of
the distribution of the Securities as contemplated in this Agreement
and the Prospectus. If at any time when a prospectus is required by the
1933 Act to be delivered in connection with sales of the Securities,
any event shall occur or condition exist as a result of which it is
necessary, in the opinion of counsel for the Underwriters or counsel
for the Company, to amend the Registration Statement or amend or
supplement the Prospectus in order that the Prospectus 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 Prospectus 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 the
Prospectus comply with such requirements.
(c) Reporting Requirements. During the period when a
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prospectus is required by the 1933 Act to be delivered in connection
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with sales of the Securities, 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
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is required by the 1933 Act to be delivered in connection with sales of
the Securities, the Company will inform you of its intention to file
any amendment to the Registration Statement, any supplement to the
Prospectus or any document that would as a result thereof be
incorporated by reference in the Prospectus; will furnish you 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 you or your counsel
shall reasonably object.
(e) Notice Upon Effectiveness; Commission Requests. During the
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period when a prospectus is required by the 1933 Act to be delivered in
connection with sales of the Securities, the Company will notify you
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 Prospectus or any document that would as a result
thereof be incorporated by reference in the Prospectus, (iii) of the
receipt of any comments from the Commission with respect to the
Registration Statement, the Prospectus or the Prospectus Supplement,
(iv) of any request by the Commission for any amendment to the
Registration Statement or any supplement to the Prospectus or for
additional information relating thereto or to any document incorporated
by reference in the Prospectus 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
Securities 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 the Registration Statement. The Company has
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furnished or will furnish to you, without charge, as many signed copies
of the Registration Statement (as originally filed) and of all
amendments thereto, whether filed before or after such 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 Securities) and signed copies of all
consents and certificates of experts, as you may reasonably request,
and has furnished or will furnish to you, for each of the Underwriters,
one conformed copy of the Registration Statement (as originally filed)
and of each amendment thereto (including documents incorporated by
reference into the Prospectus but without exhibits). The copies of the
Registration Statement and each amendment thereto furnished to the
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.
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(g) Blue Sky Qualifications. The Company will use its best
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efforts, in cooperation with the Underwriters, to qualify the
Securities for offering and sale under the applicable securities laws
of such states and other jurisdictions as you may designate and to
maintain such qualifications in effect for a period of not less than
one year from the date hereof; provided, however, that the Company
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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 Securities have been qualified as above to
continue such qualification in effect for a period of not less than one
year from the date hereof. The Company will also supply you with such
information as is necessary for the determination of the legality of
the Securities for investment under the laws of such jurisdictions as
you may request.
(h) Rule 158. The Company will timely file such reports
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pursuant to the 1934 Act as are necessary in order to make generally
available to its security holders as soon as practicable an earnings
statement for the purposes of, and to provide the benefits contemplated
by, the last paragraph of Section 11(a) of the 1933 Act.
(i) Use of Proceeds. The Company will use the net proceeds
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received by it from the sale of the Securities in the manner specified
in the Prospectus under the caption "Use of Proceeds."
(j) Reports to Underwriters. For a period of five years after
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the Closing Time, the Company will furnish to you and, upon request, to
each 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.
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, and the
Prospectus and any amendments or supplements thereto, and the cost of furnishing
copies thereof in accordance with Section 3 of this Agreement thereto to the
Underwriters, (ii) the preparation, printing and distribution of this Agreement,
the Indenture, the Securities, the Blue Sky Survey and the Legal Investment
Survey, (iii) the delivery of the Securities to the Underwriters, (iv) the fees
and disbursements of the Company's counsel and accountants, (v) the
qualification of the Securities 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 Underwriters in connection therewith and in
<PAGE>
12
connection with the Blue Sky Survey and the Legal Investment Survey, (vi) any
fees charged by rating agencies for rating the Securities and (vii) the fees and
expenses of the Trustee, including the fees and disbursements of counsel for the
Trustee, in connection with the Indenture and the Securities.
(b) Termination of Agreement. If this Agreement is terminated by you in
-------------------------
accordance with the provisions of Section 5 or 9(a)(i), the Company shall
reimburse the Underwriters for all their out-of-pocket expenses, including the
fees and disbursements of counsel for the Underwriters.
Section 5. Conditions of Underwriters' Obligations. The obligations of
----------------------------------------
the several Underwriters to purchase and pay for the Securities that they have
respectively agreed to purchase pursuant to this Agreement 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:
(a) Effectiveness of Registration Statement. The 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 your knowledge or
the knowledge of the Company, 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 Underwriters.
(b) Opinion of Hunton & Williams, Counsel for the Company. At
-------------------------------------------------------
the Closing Time, you 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 Underwriters, in form and substance satisfactory to counsel
for the 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 Prospectus.
(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) The authorized, issued and outstanding capital
stock of the Company conforms to the descriptions set forth in
the Prospectus under the headings "Description of Preferred
Stock" and "Description of Common Stock".
(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
<PAGE>
13
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.
(v) The Indenture has been duly authorized, executed
and delivered by the Company and, assuming due authorization,
execution and delivery by the Trustee, constitutes a valid and
binding obligation of the Company, enforceable against the
Company in accordance with its terms, except as enforcement
thereof may be limited by bankruptcy, insolvency (including,
without limitation, all laws relating to fraudulent
transfers), reorganization, moratorium or similar laws
affecting enforcement of creditors' rights generally and
except as enforcement thereof is subject to general principles
of equity (regardless of whether enforcement is considered in
a proceeding in equity or at law) and except to the extent
that enforcement thereof is contrary to public policy
regarding the exculpation of criminal violations, intentional
harm, acts of gross negligence or recklessness or violations
of securities laws and regulations.
(vi) The Securities have been duly authorized by the
Company and, assuming that the Securities have been duly
authenticated by the Trustee in the manner described in its
certificate delivered to you at the Closing Time (which fact
such counsel need not determine by an inspection of the
Securities), the Securities have been duly executed, issued
and delivered by the Company and constitute valid and binding
obligations of the Company entitled to the benefits of the
Indenture and enforceable against the Company in accordance
with their terms, except as enforcement thereof may be limited
by bankruptcy, insolvency (including, without limitation, all
laws relating to fraudulent transfers), reorganization,
moratorium or similar laws affecting enforcement of creditors'
rights generally and except as enforcement thereof is subject
to general principles of equity (regardless of whether
enforcement is considered in a proceeding in equity or at law)
and except to the extent that enforcement thereof is contrary
to public policy regarding the exculpation of criminal
violations, intentional harm, acts of gross negligence or
recklessness or violations of securities laws and regulations.
(vii) 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
Prospectus 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 Prospectus
or to be filed as exhibits to the Registration Statement that
are not described, referred to or filed as required.
<PAGE>
14
(viii) 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 Prospectus or filed as an
exhibit to the Registration Statement.
(ix) The execution and delivery of this Agreement and
the Indenture by the Company, the issuance and delivery of the
Securities, the consummation by the Company of the
transactions contemplated in this Agreement, in the Indenture,
in the Prospectus and in the Registration Statement, and the
compliance by the Company with the terms of this Agreement and
the Indenture 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.
(x) The descriptions in the Prospectus 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.
(xi) This Agreement has been duly authorized,
executed and delivered by the Company.
(xii) The Indenture has been duly qualified under the
1939 Act.
(xiii) The Securities and the Indenture conform in
all material respects as to legal matters to the descriptions
thereof in the Prospectus.
(xiv) No authorization, approval, consent or license
of any government, governmental instrumentality or court,
domestic or foreign (other than under the 1933 Act, the 1939
Act and the securities or blue sky laws of the various
states), is required for the valid authorization, issuance,
sale and delivery of the Securities or for the execution,
delivery or performance of the Indenture by the Company.
<PAGE>
15
(xv) The Registration Statement became effective
under the 1933 Act on April 20, 2000; the required filing of
the Prospectus Supplement pursuant to Rule 424(b) has been
made in the manner and within the time period required by Rule
424(b); and, to the best of 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 Prospectus,
excluding the documents incorporated by reference therein, and
each amendment or supplement thereto (except for the financial
statements and other financial or statistical data included
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, and the Indenture and
the Statement of Eligibility of the Trustee on Form T-1 filed
with the Commission as part of the Registration Statement
appear on their face to have been appropriately responsive in
all material respects to the requirements of the 1939 Act and
the 1939 Act Regulations.
(xvii) The documents incorporated by reference in the
Prospectus (except for the financial statements and other
financial or 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
Prospectus), 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) Such counsel have participated in the
preparation of the Registration Statement and the Prospectus
and are familiar with or have participated in the preparation
of the documents incorporated by reference in the Prospectus
and no facts have come to the attention of such counsel to
lead them to believe that (A) 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 and the Statement of Eligibility of the
Trustee on Form T-1 filed in connection with such Registration
Statement, 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 that became effective after the date of
this Agreement, contained any untrue statement of a material
fact or omitted to state any material fact required to be
stated therein or necessary to make the statements therein not
misleading, (B) the Prospectus or any amendment or supplement
thereto (except for the financial statements and other
<PAGE>
16
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 the date of the Prospectus Supplement and as of the
Closing Time, 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) the documents incorporated by reference in
the Prospectus (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
Prospectus), 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 Securities
pursuant to this Agreement as counsel for the 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 Underwriters, in which case the opinion
shall state that they believe you 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 Underwriters.
(c) Opinion of Counsel to the Underwriters. At the Closing
----------------------------------------
Time, you shall have received the favorable opinion of Shearman &
Sterling, counsel for the Underwriters, dated as of the Closing Time,
together with signed or reproduced copies of such opinion for each of
the other Underwriters, to the effect that the opinion delivered
pursuant to Sections 5(b) hereof appear on its face to be appropriately
responsive to the requirements of this Agreement except, specifying the
same, to the extent waived by you, and with respect to the
incorporation and legal existence of the Company, the Securities, this
Agreement, the Indenture, the Registration Statement, the Prospectus,
the documents incorporated by reference and such other related matters
as you 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 you. 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 Underwriters.
<PAGE>
17
(d) Officers' Certificate. At the Closing Time, (i) the
-----------------------
Registration Statement and the Prospectus, 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 the 1939 Act and the 1939 Act
Regulations, and neither the Registration Statement nor the Prospectus,
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 subsidiary of the Company that would be
required to be set forth in the Prospectus 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 subsidiary of the
Company 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
Prospectus, (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
Indenture, the Registration Statement and the Prospectus 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, you
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 date of this
-------------------------------
Agreement, you shall receive from Deloitte & Touche LLP a letter, dated
as of the date of this Agreement, in form and substance satisfactory to
you, together with signed or reproduced copies of such letter for each
of the other 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 Prospectus and the specified date referred to therein
shall be a date not more than three days prior to the date of this
Agreement.
(f) Bring-down Comfort Letter. At the Closing Time, you shall
---------------------------
have received from Deloitte & Touche LLP a letter, dated as of the
Closing Time, to the effect that they reaffirm the statements made in
the letter furnished pursuant to subsection (e) of this Section, except
that the specified date referred to shall be a date not more than two
business days prior to the Closing Time.
<PAGE>
18
(g) Rating Agencies. Subsequent to the execution and delivery
----------------
of this Agreement and prior to the Closing Time, there shall not have
been any downgrading, nor any notice given of any intended or potential
downgrading or of a possible change that does not indicate the
direction of the possible change, in the rating accorded any of the
Company's securities, including the Securities, by any "nationally
recognized statistical rating organization," as such term is defined
for purposes of Rule 436(g)(2) under the 1933 Act.
(h) Additional Documents. At the Closing Time, counsel for the
---------------------
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
Securities 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 Securities
as contemplated in this Agreement shall be satisfactory in form and
substance to you and to counsel for the Underwriters.
(i). 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 you 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 6, 7 and 8 shall remain in
effect.
Section 6. Indemnification.
----------------
(a) Indemnification of the Underwriters. The Company agrees to
------------------------------------
indemnify and hold harmless each Underwriter and each person, if any,
who controls such 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 all documents incorporated therein by
reference, or the omission or alleged omission therefrom of a
material fact contained 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 included in the Prospectus (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;
<PAGE>
19
(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
any 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, provided that (subject
to Section 6(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 you), reasonably incurred 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 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 Merrill Lynch & Co., Merrill Lynch, Pierce,
Fenner & Smith Incorporated ("Merrill Lynch") expressly for use in the
Registration Statement (or any amendment thereto) or the Prospectus (or any
amendment or supplement thereto).
(b) Indemnification of the Company, Directors and Officers. Each
------------------------------------------------------------
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 agreement contained in
Section 6(a) hereof, 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) or the Prospectus (or any amendment
or supplement thereto) in reliance upon and in conformity with written
information furnished to the Company by and relating to such Underwriter through
you expressly for use in the Registration Statement (including any amendment
thereto) or the Prospectus (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 6(a) hereof,
counsel to the indemnified parties shall be selected by Merrill Lynch and, in
the case of parties indemnified pursuant to Section 6(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
--------
<PAGE>
20
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 6 or Section 7 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 6(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 6(d) hereof
(unless it is entitled to such amounts under Section 7 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 Statement (or any amendment thereto) 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 7. Contribution.
-------------
If the indemnification provided for in Section 6 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
Underwriters, on the other hand, from the offering of the Securities pursuant to
this Agreement or (ii) if the allocation provided by clause (i) is not permitted
<PAGE>
21
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 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
Underwriters, on the other hand, in connection with the offering of the
Securities pursuant to this Agreement shall be deemed to be in the same
respective proportions as the total net proceeds from the offering of the
Securities pursuant to this Agreement (before deducting expenses) received by
the Company and the total underwriting discount received by the Underwriters, in
each case as set forth on the cover of the Prospectus bear to the aggregate
initial public offering price of the Securities as set forth on such cover.
The relative fault of the Company, on the one hand, and the
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 Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
The Company and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 7 were determined by pro rata
allocation (even if the 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 7. The aggregate
amount of losses, liabilities, claims, damages and expenses incurred by an
indemnified party and referred to above in this Section 7 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 7, no Underwriter shall
be required to contribute any amount in excess of the amount by which the total
price at which the Securities underwritten by it and distributed to the public
were offered to the public exceeds the amount of any damages which such
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 7, each person, if any, who controls an
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 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 Underwriters'
<PAGE>
22
respective obligations to contribute pursuant to this Section 7 are several in
proportion to the number of Securities set forth opposite their respective names
in Schedule A hereto and not joint.
Section 8. 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 will remain operative and in full force and effect regardless of any
investigation made by or on behalf of the Company, any Underwriter or any person
who controls the Company or any Underwriter within the meaning of Section 15 of
the 1933 Act or Section 20 of the 1934 Act and will survive delivery of and
payment for the Securities.
Section 9. Termination of Agreement.
-------------------------
(a) Termination Generally. You 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 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 is such as to make it, in your judgment, impracticable to
market the Securities or enforce contracts for the sale of the Securities or
(iii) if trading in any securities of the Company has been suspended by the
Commission or the National Association of Securities Dealers, Inc., or if
trading generally on either the American Stock Exchange or the New York Stock
Exchange or in the over-the-counter market has been suspended, or minimum or
maximum prices for trading have been fixed, or maximum ranges for prices for
securities have been required, by any of such exchanges or 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. As used in
this Section 9(a), the term "Prospectus" means the Prospectus in the form first
used to confirm sales of the Securities.
(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 6, 7 and 8 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 5, with the effect stated in such Section.
Section 10. Default by One or More of the Underwriters. If one or more
-------------------------------------------
of the Underwriters shall fail at the Closing Time to purchase the Securities
that it or they are obligated to purchase pursuant to this Agreement (the
"Defaulted Securities"), you shall have the right, within 24 hours thereafter,
<PAGE>
23
to make arrangements for one or more of the non-defaulting Underwriters, or any
other underwriters, to purchase all, but not less than all, of the Defaulted
Securities in such amounts as may be agreed upon and upon the terms set forth in
this Agreement; if, however, the non-defaulting Underwriters have not completed
such arrangements within such 24-hour period, then:
(a) if the aggregate principal amount of Defaulted Securities
does not exceed 10% of the aggregate principal amount of the Securities
to be purchased pursuant to this Agreement, each non-defaulting
Underwriter shall be obligated, each severally and not jointly, to
purchase the full amount thereof in the proportions that their
respective Securities underwriting obligation proportions bear to the
underwriting obligations of all non-defaulting Underwriters; or
(b) if the aggregate principal amount of Defaulted Securities
exceeds 10% of the aggregate principal amount of the Securities to be
purchased pursuant to this Agreement, this Agreement shall terminate
without liability on the part of any non-defaulting Underwriter.
No action taken pursuant to this Section shall relieve any defaulting
Underwriter from liability in respect of its default.
In the event of any such default that does not result in a termination
of this Agreement, either the non-defaulting Underwriters or the Company shall
have the right to postpone the Closing Time for a period not exceeding seven
days in order to effect any required changes in the Registration Statement or
Prospectus or in any other documents or arrangements. As used herein, the term
"Underwriter" includes any person substituted for a Underwriter under this
Section 10.
Section 11. 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 Underwriters and the Company shall be directed to the addresses
specified below.
To the Company:
Lowe's Companies, Inc.
P.O. Box 1111
North Wilkesboro, North Carolina 28656
Attention: Stephen A. Hellrung, Senior Vice President,
General Counsel and Secretary
Telecopy No.: (336) 658-2073
To the Underwriters:
c/o Merrill Lynch, Pierce, Fenner & Smith
Incorporated
World Financial Center
250 Vesey Street
North Tower - 10th Floor
New York, New York 10281-1209
Attention: A. Scott Lemone
Telecopy No.: (212) 449-1245
<PAGE>
24
Section 12. Parties. This Agreement herein set forth is made solely for
--------
the benefit of the several Underwriters, the Company and, to the extent
expressed, any person who controls the Company or any of the 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 10, 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 Underwriters of the
Securities. All of the obligations of the Underwriters hereunder are several and
not joint.
Section 13. Representation of Underwriters. Merrill Lynch will act for
-------------------------------
the several Underwriters in connection with the transactions contemplated by
this Agreement, and any action under or in respect of this Agreement taken by
Merrill Lynch will be binding upon all Underwriters.
Section 14. 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 15. Effect of Headings. The Article and Section headings herein
-------------------
and the Table of Contents are for convenience only and shall not affect the
construction hereof.
Section 16. 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 us a counterpart hereof, whereupon this
instrument, along with all counterparts, will become a binding agreement between
the Company and the several Underwriters in accordance with its terms.
Very truly yours,
LOWE'S COMPANIES, INC.
By /s/ Robert A. Niblock
--------------------------
Name: Robert A. Niblock
Title: Senior Vice President
and Chief Financial Officer
CONFIRMED AND ACCEPTED as of the date first above written:
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
GOLDMAN, SACHS & CO.
MORGAN STANLEY & CO. INCORPORATED
By: Merrill Lynch, Pierce, Fenner & Smith Incorporated
By /s/ Perry E. Hall
-----------------------------
Name: Perry E. Hall
Title: Vice President
<PAGE>
SCHEDULE A
Principal
amount of
Underwriter Securities
----------- ----------
Merrill Lynch, Pierce, Fenner & Smith
Incorporated $250,000,000
Goldman, Sachs & Co. 125,000,000
Morgan Stanley & Co. Incorporated 125,000,000
-----------
Total $500,000,000
<PAGE>
SCHEDULE B
Dated: December 12, 2000
LOWE'S COMPANIES, INC.
7 1/2% Notes due December 15, 2005
Principal amount to be issued: $500,000,000
Current ratings: Moody's A3 Standard & Poor's A
-- --
Interest rate: 7 1/2%, payable semiannually on June 15 and December 15 of each
year, beginning June 15, 2001
Interest accrues from: December 15, 2000
Date of maturity: December 15, 2005
Redemption provisions: None
Sinking fund requirements: None
Initial public offering price: 99.947% of the principal amount plus accrued
interest from December 15, 2000.
Purchase price: 99.347% of the principal amount plus accrued interest from
December 15, 2000.
Closing date, time and location: December 15, 2000, 10:00 A.M., New York City
time, at Shearman & Sterling, 599 Lexington
Avenue, New York, New York
Delayed delivery contracts: Not authorized
Listing requirement: None
Other terms and conditions: None
