EXHIBIT 4.6
$100,000,000
HOMEBASE, INC.
5.25% Convertible Subordinated Notes Due 2004/1/
PURCHASE AGREEMENT
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November 10, 1997
PRUDENTIAL SECURITIES INCORPORATED
As the Initial Purchaser
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▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Dear Sirs:
HomeBase, Inc., a Delaware corporation (the "Company"), confirms its
agreement with you (the "Initial Purchaser"), with respect to the issue and sale
by the Company and the purchase by the Initial Purchaser, subject to the terms
and conditions contained in this Agreement, of an aggregate of $100,000,000
principal amount of 5.25% Convertible Subordinated Notes Due 2004, convertible
into common stock, par value $.01 per share ("Common Stock"), of the Company
(the "Firm Securities") and, if requested by the Initial Purchaser, up to an
aggregate of $15,000,000 additional principal amount (the "Option Securities").
The Firm Securities and the Option Securities are herein collectively referred
to as the "Securities."
1. Securities. The Securities will be offered and sold without being
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registered under the Securities Act of 1933, as amended (the "Securities Act"),
in reliance on exemptions therefrom. The Company understands that the Initial
Purchaser will resell a portion of the Securities (the "Rule 144A Securities")
inside the United States to qualified institutional buyers ("QIBs") in reliance
on Rule 144A ("Rule 144A") under the Securities Act and the remaining Securities
(the "Regulation S Securities") outside the United States to persons other than
U.S. persons in reliance on Regulation S under the Securities Act ("Regulation
S"). The Rule 144A Securities will initially be issued in the
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/1/ Plus an option to purchase from the Company up to an aggregate of
$15,000,000 additional aggregate principal amount to cover over-allotments.
form of a single, permanent global certificate (the "Rule 144A Global
Security"). The Regulation S Securities will initially be issued in the form of
a single, permanent global certificate (the "Regulation S Global Security," and
together with the Rule 144A Global Securities, the "Global Securities").
It is also understood and acknowledged that holders (including subsequent
transferees) of the Securities and, if such Securities are subsequently
converted into shares of Common Stock that are restricted for purposes of Rule
144 under the Securities Act ("Restricted Securities"), the holders of
Restricted Securities will have the registration rights set forth in the
Registration Agreement to be dated the date hereof, reflecting the terms set
forth in the Offering Memorandum (as hereinafter defined) and other customary
matters (the "Registration Agreement"), for so long as the Securities or any
Restricted Securities constitute "Transfer Restricted Securities" (as defined in
the Registration Agreement). Pursuant to the Registration Agreement, the
Company will agree, subject to the terms and conditions set forth therein (i) to
file with the Securities and Exchange Commission (the "Commission") a
registration statement on Form S-1 or Form S-3 under the Securities Act relating
to the resale of the Securities and the Transfer Restricted Securities by
certain holders thereof from time to time in accordance with the methods of
distribution set forth in such registration statement and Rule 415 under the
Securities Act (the "Shelf Registration Statement") and (ii) to use its
reasonable best efforts to cause such Shelf Registration Statement to be
declared and to remain effective.
2. Representations and Warranties of the Company. The Company represents
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and warrants to, and agrees with, the Initial Purchaser that:
(a) a preliminary offering memorandum dated November 3, 1997 and an
offering memorandum dated November 10, 1997 have been prepared by the
Company in connection with the offering of the Securities (the preliminary
offering memorandum being hereinafter referred to as the "Preliminary
Offering Memorandum" and the offering memorandum being hereinafter referred
to as the "Offering Memorandum"; any reference to the Preliminary Offering
Memorandum or the Offering Memorandum shall be deemed to refer to and
include the Additional Company Information (as defined in Section 5(c)), if
any). The Preliminary Offering Memorandum and the Offering Memorandum and
any amendments or supplements thereto did not and will not, as of their
respective dates, contain any untrue statement of a material fact or omit
to state a material fact necessary in order to make the statements therein,
in light of the circumstances under which they were made, not misleading.
The foregoing provisions of this paragraph (a) do not apply to statements
or omissions made in the Preliminary Offering Memorandum or the Offering
Memorandum in reliance upon and in conformity with written information
furnished to the Company by the Initial Purchaser specifically for use
therein.
(b) When the Securities are issued and delivered pursuant to this
Agreement, (i) such Securities will not be of the same class (within the
meaning of Rule 144A) as securities of the Company which are listed on a
national securities exchange registered under Section 6 of the
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Securities Exchange Act of 1934, as amended (the "Exchange Act"), or quoted
in a U.S. automated inter-dealer quotation system; (ii) the Company will be
subject to Section 13 or 15(d) of the Exchange Act; (iii) the Company is
not an investment company or a company "controlled" by an investment
company within the meaning of the Investment Company Act of 1940, as
amended (the "Investment Company Act"); (iv) neither the Company nor any
affiliate (as defined in Rule 501(b) under the Securities Act) of the
Company has, directly or through any agent, sold, offered for sale,
solicited offers to buy or otherwise negotiated in respect of, any security
(as defined in the Securities Act) which is or will be integrated with the
sale of the Securities in a manner that would require the registration of
the Securities or the Common Stock issuable upon conversion of the
Securities (the "Conversion Securities") under the Securities Act; and (v)
neither the Company nor any person acting on its behalf (other than the
Initial Purchaser) has engaged or will engage, in connection with the
offering of the Securities, in any form of general solicitation or general
advertising within the meaning of Rule 502(c) under the Securities Act or
in any manner involving a public offering within the meaning of Section
4(2) of the Securities Act, or, with respect to Securities sold in reliance
on Rule 903 ("Rule 903") under the Securities Act, in any directed selling
efforts within the meaning of Rule 903 with respect to the Securities and
each of them has complied and will comply with the offering restrictions
requirement of Regulation S.
(c) Based on the Initial Purchaser's representations and
warranties in Section 4 and compliance by the Initial Purchaser with their
covenants in Section 4, it is not necessary in connection with (i) the
offer, sale and delivery of the Securities in the manner contemplated by
this Agreement or (ii) the issuance and delivery of the Common Stock, to
register the Securities or any Conversion Securities under the Securities
Act. The Indenture, dated as of November 10, 1997 (the "Indenture"),
between the Company and State Street Bank and Trust Company of California,
N.A. (the "Trustee") meets the requirements for an indenture to be
qualified under the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act").
(d) The Company is a corporation duly organized and validly existing
as a corporation in good standing under the laws of the State of Delaware.
Each of the Company's subsidiaries has been duly organized and is validly
existing as a corporation in good standing under the laws of their
respective jurisdictions. The Company and each of its subsidiaries are
duly qualified to transact business as foreign corporations and are in good
standing under the laws of all other jurisdictions where the ownership or
leasing of their respective properties or the conduct of their respective
businesses requires such qualification, except where the failure to be so
qualified does not amount to a material liability or disability to the
Company and its subsidiaries, taken as a whole.
(e) The Company and each of the subsidiaries have full power
(corporate or partnership, as applicable, and other) to own or lease their
respective properties and conduct their respective businesses as described
in the Offering Memorandum; and the Company has full power (corporate and
other) to execute and deliver this Agreement and the Registration
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Agreement and the Indenture (the "Other Company Agreements") and to carry
out all the terms and provisions hereof and thereof to be carried out by
it.
(f) The issued shares of capital stock of each of the Company's
subsidiaries have been duly authorized and validly issued, are fully paid
and nonassessable and are owned of record and beneficially by the Company,
directly or indirectly through one or more of the subsidiaries, free and
clear of any security interests, liens, encumbrances, equities or claims;
except as described in the Offering Memorandum there are not any
outstanding rights, warrants or options to acquire any shares of capital
stock of the Company or any subsidiary, other than employee stock options
granted since January 25, 1997 in accordance with ordinary Company
practice; and none of the shares of the Company or any subsidiary was
issued in violation of the rights or other rights to subscribe for or
purchase securities, including preemptive rights or other rights to
subscribe for or purchase securities, of any stockholders of the Company or
any subsidiary.
(g) The Company has an authorized, issued and outstanding
capitalization as set forth in the Offering Memorandum under the caption
"Capitalization." The outstanding shares of Common Stock have been duly
authorized and validly issued and are fully paid and nonassessable; the
issuance of all outstanding shares of Common Stock is not and may not be
void or voidable, including being voidable by virtue of any statutory right
of preemption or other rights to subscribe for or purchase securities; the
holders of the outstanding shares of Common Stock are not entitled to
preemptive or other rights to acquire any Securities or Conversion
Securities or other securities as a result of the transactions contemplated
hereunder (which shall include the issuance and sale of the Securities and
the Conversion Securities); the Conversion Securities are freely issuable
by the Company upon conversion of the Securities and, other than as
described in the Offering Memorandum, there are no restrictions on the
ownership or subsequent transfers of the Conversion Securities. Conversion
Securities have been duly authorized and reserved for issuance upon such
conversion of the Securities and, when they are issued and delivered upon
conversion of the Securities in accordance with the terms thereof and the
Indenture, will be validly issued, fully paid and not subject to calls for
additional payments of any kind; the Common Stock conforms to the
description thereof contained in the Offering Memorandum.
(h) The Indenture has been duly authorized by the Company and, when
executed and delivered by the Company, the Indenture will constitute the
valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms, except as enforcement thereof may be
limited by the effect of any applicable bankruptcy, insolvency,
reorganization, receivership, moratorium or other similar laws affecting
the rights and remedies of creditors generally and to general principles of
equity (regardless of whether enforcement is considered in a proceeding in
equity or at law).
(i) The execution and delivery of this Agreement and the Registration
Agreement have been duly authorized by the Company; this Agreement has been
duly executed and delivered
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by the Company, and this Agreement is, and upon execution and delivery of
the Registration Agreement such agreement will be, the valid and binding
agreements of the Company, enforceable against the Company in accordance
with their terms, except as enforcement thereof may be limited by the
effect of any applicable bankruptcy, insolvency, reorganization,
receivership, moratorium or other similar laws affecting the rights and
remedies of creditors generally and to general principles of equity
(regardless of whether enforcement is considered in a proceeding in equity
or at law).
(j) The Securities have been duly authorized by the Company and when
duly executed by the Company and authenticated by the Trustee and issued
and delivered by the Company in accordance with the Indenture, will have
been duly and validly executed, authenticated, issued and delivered and
will constitute valid and binding obligations of the Company, enforceable
against the Company in accordance with their terms except as enforcement
thereof may be limited by the effect of any applicable bankruptcy,
insolvency, reorganization, receivership, moratorium or other similar laws
affecting the rights and remedies of creditors generally and to general
principles of equity (regardless of whether enforcement is considered in a
proceeding in equity or at law); and the Securities are entitled to the
benefits provided by the Indenture.
(k) The consolidated financial statements and schedules of the
Company and its consolidated subsidiaries included or incorporated by
reference in the Offering Memorandum fairly present the financial position
of the Company and its consolidated subsidiaries and the results of
operations and changes in financial condition as of the dates and for the
periods therein specified. Such financial statements and schedules have
been prepared in accordance with United States generally accepted
accounting principles consistently applied throughout the periods involved
(except as otherwise noted therein). The selected financial data set forth
under the caption "Selected Consolidated Financial and Operating Data" in
the Offering Memorandum fairly present, on the basis stated in the Offering
Memorandum, the information included therein.
(l) Coopers & ▇▇▇▇▇▇▇, LLP, who have certified certain financial
statements of the Company and its consolidated subsidiaries and delivered
their report with respect to the audited consolidated financial statements
and schedules included in the Offering Memorandum, are independent public
accountants within the meaning of the Securities Act, the Exchange Act and
the applicable rules and regulations thereunder.
(m) No legal or governmental proceedings are pending to which the
Company or any of its subsidiaries is a party or to which the property of
the Company or any of its subsidiaries is subject that (i) would affect the
offering, issuance sale or marketability of the Securities or the
Conversion Securities or in any manner draw into question the validity of
this Agreement or any Other Company Agreement or any of the transactions
contemplated herein or therein, or (ii) is of a character that would be
required to be disclosed in a registration statement on Form S-1 or the
related prospectus relating to the offer and sale of the Securities and
which
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is not described in the Offering Memorandum, and no such proceedings
have been threatened against the Company or any of its subsidiaries or with
respect to any of their respective properties.
(n) There are no contracts or other documents of a character that
would be required to be described in a registration statement on Form S-1
or the related prospectus relating to the offer and sale of the Securities
which are not described in the Offering Memorandum; except as otherwise
described in the Offering Memorandum, all contracts and other documents
described in the Offering Memorandum are in full force and effect; there
are no statutes that would be required to be described in a registration
statement on Form S-1 or the related prospectus relating to the offer and
sale of the Securities that are not described as would be so required; and
no relationship, direct or indirect, exists between the Company or any
affiliate of the Company, on the one hand, and any director, officer,
stockholder, customer or supplier of any of them, on the other hand, which
would be required by the Securities Act, the Trust Indenture Act or the
rules and regulations of the Commission under the Securities Act or the
Trust Indenture Act to be described in a registration statement on Form S-1
or the related prospectus relating to the offer and sale of the Securities
which is not so described or is not adequately described in the Offering
Memorandum.
(o) The offering, sale, issuance and delivery of the Securities to
the Initial Purchaser by the Company pursuant to this Agreement, compliance
by the Company with the provisions of this Agreement and the Other Company
Agreements, and the consummation of the transactions herein and therein
contemplated (including the issuance and delivery of the Conversion
Securities) do not (i) require any authorization, approval, consent, order
of, license of, registration, filing or qualification of or with any
governmental authority of the United States, except (x) such as have been
obtained, (y) such as may be required under state securities or blue sky
laws and (z) such as may be required in connection with the Shelf
Registration Statement, or (ii) conflict with or result in a breach or
violation of any of the terms and provisions of, or constitute a default
under, (w) any indenture, mortgage, deed of trust, lease or other agreement
or instrument to which the Company or any of its subsidiaries is a party or
by which the Company or any of its subsidiaries or any of their respective
properties are bound, or (y) the charter documents or bylaws of the Company
or any of its subsidiaries, or (z) any statute or other provision of law or
any judgment, decree, order, rule or regulation of any court or other
governmental authority or any arbitrator applicable to the Company or any
of its subsidiaries.
(p) The Company has not, directly or indirectly, (i) taken any action
designed to cause or to result in, or that has constituted or which might
reasonably be expected to constitute, the stabilization or manipulation of
the price of any security of the Company or to facilitate the sale or
resale of the Securities or the Common Stock or (ii) since the date of the
Preliminary Offering Memorandum (A) sold, bid for, purchased, or paid
anyone any compensation for soliciting purchases of, the Securities or the
Common Stock, or (B) paid or agreed to pay to
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any person any compensation for soliciting another to purchase any other
securities of the Company.
(q) Subsequent to the date as of which information is given in the
Offering Memorandum, (i) neither the Company nor any of its subsidiaries
has incurred any material liability or obligation, direct or contingent, or
entered into any material transaction not in the ordinary course of
business; (ii) the Company has not purchased any of its outstanding capital
stock, nor declared, paid or otherwise made any dividend or distribution of
any kind on its capital stock; and (iii) there has not been any material
change in the capital stock, short-term debt or long-term debt of the
Company and its consolidated subsidiaries, except in each case as described
in or contemplated by the Offering Memorandum.
(r) Each of the Company and each of its subsidiaries has good and
marketable title in fee simple to all items of real property and title to
all personal property described in the Offering Memorandum as being owned
by each of them, in each case free and clear of any security interests,
liens, encumbrances, equities, claims and other defects, except such as do
not materially and adversely affect the value of any such property and do
not interfere with the use made or proposed to be made of such property by
the Company or such subsidiary and any real property and buildings held
under lease by the Company or such subsidiary are held under valid,
subsisting and enforceable leases, with such exceptions as are not material
and do not interfere with the use made or proposed to be made of such
property and buildings by the Company or such subsidiary in each case,
other than those arising pursuant to loan agreements and other obligations
described in the Offering Memorandum.
(s) No labor dispute with the employees of the Company or any of its
subsidiaries exists or, to the knowledge of the Company, is threatened
against any of them that could result in a material adverse change in the
condition (financial or otherwise), business prospects, net worth or
results of operations of the Company and its subsidiaries.
(t) The Company and its subsidiaries own or possess, or can acquire on
reasonable terms, all material patents, patent applications, trademarks,
service marks, trade names, licenses, copyrights and proprietary or other
confidential information currently employed by them in connection with
their respective businesses, and neither the Company, nor any such
subsidiary has received any notice of infringement of or conflict with
asserted rights of any third party with respect to any of the foregoing
which, singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, would result in a material adverse change in
the condition (financial or otherwise), business prospects, net worth or
results of operations of the Company and its subsidiaries.
(u) The Company and each of its subsidiaries maintain reasonably
adequate insurance against such losses and risks and in such amounts as are
prudent and customary in the businesses in which they are engaged; and
neither the Company nor any such subsidiary has any reason to believe that
it will not be able to renew its existing insurance coverage as and
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when such coverage expires or to obtain similar coverage from similar
insurers as may be necessary to continue its business at a cost that would
not materially and adversely affect the condition (financial or otherwise),
business prospects, net worth, or results of operations of the Company and
its subsidiaries.
(v) No subsidiary of the Company is currently prohibited, directly or
indirectly, from paying any dividends to the Company, from making any other
distribution on such subsidiary's capital stock, from repaying to the
Company any loans or advances to such subsidiary from the Company or from
transferring any of such subsidiary's property or assets to the Company or
any other subsidiary of the Company, except for customary lease assignment
provisions and as generally referred to in or contemplated by the Offering
Memorandum.
(w) The Company and its subsidiaries possess all certificates,
authorizations and permits issued by the appropriate federal, state or
foreign regulatory authorities necessary to conduct their respective
businesses, and neither the Company nor any such subsidiary has received
any notice of proceedings relating to the revocation or modification of any
such certificate, authorization or permit which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or finding,
would result in a material adverse change in the condition (financial or
otherwise), business prospects, net worth or results of operations of the
Company and its subsidiaries, except as described in or contemplated by the
Offering Memorandum.
(x) The Company has filed all foreign, federal, state and local tax
returns that are required to be filed or has requested extensions thereof
(except in any case in which the failure so to file would not have a
material adverse effect on the Company and its subsidiaries, taken as a
whole) and has paid all taxes required to be paid by it and any other
assessment, fine or penalty levied against it, to the extent that any of
the foregoing is due and payable, except for any such assessment, fine or
penalty that is currently being contested in good faith.
(y) Neither the Company nor any of its subsidiaries is in violation of
any federal, state or foreign law or regulation relating to occupational
safety and health or to the storage, handling or transportation of
hazardous or toxic material and the Company and its subsidiaries have
received all permits, licenses or other approvals required of them under
applicable federal, state and foreign occupational safety and health and
environmental laws and regulations to conduct their respective businesses,
and the Company and each such subsidiary is in compliance with all terms
and conditions of any such permit, license or approval, except any such
violation of law or regulation, failure to receive required permits,
licenses or other approvals or failure to comply with the terms and
conditions of such permits, licenses or approvals which would not, singly
or in the aggregate, result in a material adverse change in the condition
(financial or otherwise), business prospects, net worth or results of
operations of the Company and its subsidiaries, taken as a whole.
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(z) Each certificate signed by any officer of the Company and
delivered to the Initial Purchaser or counsel for the Initial Purchaser
shall be deemed to be a representation and warranty by the Company to the
Initial Purchaser as to the matters covered thereby.
(aa) Except for the shares of capital stock of each of the
subsidiaries owned by the Company and such subsidiaries or as otherwise
described in the Offering Memorandum neither the Company nor any such
subsidiary owns any shares of stock or any other equity securities of any
corporation or has any equity interest in any firm, partnership,
association or other entity.
(bb) There are no holders of securities of the Company, who, by reason
of the filing of the Shelf Registration Statement contemplated under the
Registration Agreement, will have the right to request the Company to
register under the Securities Act, or to include in the Shelf Registration
Statement, any securities held by them.
(cc) The Company and each of its subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurance
that (i) transactions are executed in accordance with management's general
or specific authorizations; (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset accountability; (iii)
access to assets is permitted only in accordance with management's general
or specific authorization; and (iv) the recorded accountability for assets
is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
(dd) No default exists, and no event has occurred which, with notice
or lapse or time or both, would constitute a default in the due performance
and observance of any term, covenant or condition of any indenture,
mortgage, deed of trust, lease or other agreement or instrument to which
the Company or any of its subsidiaries is a party or by which the Company
or any of its subsidiaries or any of their respective properties is bound
or may be affected in any material adverse respect with regard to property,
business or operations of the Company and its subsidiaries, taken as a
whole.
3. Purchase Sale and Delivery of the Securities.
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(a) On the basis of the representations, warranties, agreements and
covenants herein contained and subject to the terms and conditions herein
set forth, the Company agrees to issue and sell to the Initial Purchaser,
and the Initial Purchaser agrees to purchase from the Company, at a
purchase price of 97.0% of the principal amount thereof, plus accrued
interest from November 17, 1997, if any, to the Firm Closing Date (as
defined), the Firm Securities. The Firm Securities to be delivered shall
be delivered by the Company in the form of one or more Global Securities
delivered on behalf of the Company to the Depositary Trust Company ("DTC"),
and registered in the name of Cede & Co., as DTC's nominee, for the account
of the Initial Purchaser, against payment by wire transfer on the Firm
Closing Date to the
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Company by or on behalf of the Initial Purchaser of the purchase price
therefor in immediately available funds. Such payment for the Firm
Securities shall be made at the offices of King & ▇▇▇▇▇▇▇▇, ▇▇▇▇ Avenue of
the Americas, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ at 9:30 A.M., New York time, on
November 17, 1997, or at such other place, time or date as the Initial
Purchaser and the Company may agree upon or as the Initial Purchaser may
determine pursuant to Section 9 hereof, such time and date of delivery
against payment being herein referred to as the "Firm Closing Date." The
Company will make such certificate or certificates for the Firm Securities
available for checking and packaging by the Initial Purchaser at the
offices in New York, New York of the Trustee at least 24 hours prior to the
Firm Closing Date.
(b) For the purpose of covering any over-allotments in connection
with the distribution and sale of the Firm Securities as contemplated by
the Offering Memorandum, the Company hereby grants to the Initial Purchaser
an option to purchase, up to $15,000,000 aggregate principal amount of
Option Securities. The purchase price to be paid for any Option Securities
shall be 97.0% of the principal amount thereof, plus accrued interest from
November 17, 1997, if any, to the Option Closing Date (as defined). The
option granted hereby may be exercised as to all or any part of the Option
Securities from time to time within 30 days after the date of the Offering
Memorandum (or, if such 30th day shall be a Saturday or Sunday or a
holiday, on the next business day thereafter when the New York Stock
Exchange is open for trading). The Initial Purchaser shall not be under
any obligation to purchase any of the Option Securities prior to the
exercise of such option. The Initial Purchaser may from time to time
exercise the option granted hereby by giving notice in writing or by
telephone (confirmed in writing) to the Company setting forth the aggregate
principal amount of Option Securities as to which the Initial Purchaser is
then exercising the option and the date and time for delivery of and
payment for such Option Securities. Any such date of delivery shall be
determined by the Initial Purchaser, but shall not be earlier than two
business days or later than seven business days after such exercise of the
option and, in any event, shall not be earlier than the Firm Closing Date.
The time and date set forth in such notice, or such other time on such
other date as the Initial Purchaser and the Company may agree upon or as
the Initial Purchaser may determine pursuant to Section 9 hereof, is herein
called the "Option Closing Date" with respect to such Option Securities.
Upon exercise of the option as provided herein, the Company shall become
obligated to sell to the Initial Purchaser, and, subject to the terms and
conditions herein set forth, the Initial Purchaser shall become obligated
to purchase from the Company, the principal amount of the Option Securities
as to which the Initial Purchaser is then exercising the option. If the
option is exercised as to all or any portion of the Option Securities, one
or more Global Securities representing such Option Securities shall be
delivered by the Company on behalf of the Initial Purchaser to DTC and
registered in the name of Cede & Co., as DTC's nominee, against payment for
such Option Securities, on the related Option Closing Date in the manner,
and upon the terms and conditions set forth in paragraph (a) of this
Section 3, except that reference therein to the Firm Securities and the
Firm Closing Date shall be deemed, for purposes of this paragraph (b), to
refer to such Option Securities and Option Closing Date, respectively.
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(c) It is understood and acknowledged that upon original issuance
thereof, and until such time as the same is no longer required under the
applicable requirements of the Securities Act, the Securities (and all
securities in exchange therefor, in substitution thereof or upon conversion
thereof), shall bear a legend to the following effect:
THE NOTES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY
NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED, EXCEPT (A)(1) TO A
PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL
BUYER WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT ("RULE
144A") ACQUIRING FOR ITS OWN ACCOUNT OF FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A,
(2) IN AN OFFSHORE TRANSACTION MEETING THE REQUIREMENTS OF RULE 903 OR RULE
904 OF REGULATIONS UNDER THE SECURITIES ACT, (3) PURSUANT TO AN EXEMPTION
FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER
(IF AVAILABLE), (4) TO AN INSTITUTION THAT IS AN ACCREDITED INVESTOR WITHIN
THE MEANING OF RULE 501 (A) (1), (2), (3) OR (7) OF REGULATION D UNDER THE
SECURITIES ACT IN A TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT (IF AVAILABLE) OR (5) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND (B) IN ACCORDANCE WITH
ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE UNITED STATES.
CONVERSION OF THIS SECURITY IS SUBJECT TO CERTIFICATION AND OTHER
REQUIREMENTS, AND ANY COMMON STOCK ISSUED ON SUCH CONVERSION WILL BE
SUBJECT TO THE TRANSFER RESTRICTIONS REFERRED TO ABOVE.
4. Offering by the Initial Purchaser.
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(a) The Initial Purchaser represents and warrants that it is a
"qualified institutional buyer" within the meaning of Rule 144A.
(b) The Initial Purchaser acknowledges that the Securities have not
been registered under the Securities Act and may not be offered or sold
within the United States or to, or for the benefit of, United States
persons except pursuant to an exemption from, or a transaction not subject
to, the registration requirements of the Securities Act or pursuant to an
effective registration statement under the Securities Act. The Initial
Purchaser represents, warrants and agrees that it has offered the
Securities, and will offer and sell the Securities, only: (i) inside the
United States to persons whom it reasonably believes are "qualified
institutional buyers" in accordance with Rule 144A or (ii) to non-U.S.
persons pursuant to offers and sales that occur outside the United States
in accordance with Regulation S under the Securities Act. The
11
Initial Purchaser represents, warrants and agrees that, with respect to
Securities offered or sold in reliance on Regulation S, (i) neither it nor
its affiliates nor any person acting on its behalf has engaged or will
engage in any directed selling efforts in the United States within the
meaning of Regulation S with respect to the Securities, (ii) the Initial
Purchaser, its affiliates and all persons acting on its or their behalf
have complied and will comply with the offering restrictions requirements
of Regulation S in connection with the offering of the Securities outside
of the United States and (iii) with respect to resales by the Initial
Purchaser made in reliance on Regulation S, to deliver either with the
confirmation of such resale by such Initial Purchaser or otherwise prior to
settlement of such resale a notice substantially to the following effect:
"The Securities covered hereby have not been registered under the U.S.
Securities Act of 1933, as amended (the "Securities Act") and may not
be offered and sold within the United States or to, or for the account
or benefit of, U.S. persons (i) as part of the distribution thereof at
any time or (ii) otherwise until 40 days after the later of the date
of the commencement of the offering and the latest closing date,
except in either case in accordance with Regulation S under the
Securities Act. Terms used above have the meaning given them by
Regulation S."
(c) The Initial Purchaser represents and agrees that (i) it has not
offered or sold and, prior to the date six months after the latest Closing
Date, will not offer or sell, directly or indirectly, any Securities in the
United Kingdom by means of any document other than to persons whose
ordinary business it is to buy or sell shares or notes, whether as
principal or agent, for the purposes of their business or otherwise in
circumstances which have not resulted in or will not result in an offer to
the public in the United Kingdom within the meaning of the Public Offers of
Securities Regulations 1995; (ii) it has complied and will comply with all
applicable provisions of the Financial Services ▇▇▇ ▇▇▇▇ with respect to
anything done by it in relation to the Securities in, from or otherwise
involving the United Kingdom, including any stabilization activities as
referred to in the Offering Memorandum, and (iii) it has only issued or
passed on and will only issue or pass on in the United Kingdom any document
received by it in connection with the issue of the Securities to a person
who is of a kind described in Article 11(3) of the Financial Services ▇▇▇
▇▇▇▇ (Investment Advertisements) (Exemptions) Order 1996 or to a person to
whom the document may otherwise lawfully be issued or passed on.
(d) The Initial Purchaser agrees that it will not offer or sell the
Securities purchased from the Company hereunder by means of any form of
general solicitation or general advertising. (It is understood, however,
that such limitation shall not preclude the Initial Purchaser from placing
any tombstone announcement with respect to the resale by the Initial
Purchaser of the Securities outside the United States, provided that such
announcement does not constitute directed selling efforts within the
meaning of Regulation S, or, following 40 days after the later of the
commencement of the offering and the latest Closing Date, inside the United
States.) The Initial Purchaser agrees, with respect to resales made in
reliance on
12
Rule 144A, other than through the National Association of Securities
Dealers, Inc. Private Offerings, Resales and Trading through Automated
Linkages ("PORTAL") Market, of any of the Securities purchased from the
Company hereunder, to deliver either with the confirmation of such resale
or otherwise prior to settlement of such resale a notice to the effect that
the resale of such Securities has been made in reliance upon the exemption
from the registration requirements of the Securities Act provided by Rule
144A.
(e) The Initial Purchaser agrees that, during the "40-day restricted
period" (within the meaning of Regulation S), it will hold the Regulation S
Global Security as provided in the Offering Memorandum and, in connection
therewith, it will not (i) effect transfers of interests in the Regulation
S Global Security unless such transfers are made to QIBs or (ii) effect
transfers of interests in the Regulation S Global Security (x) by any
"dealer" or person "receiving a selling concession, fee or other
remuneration" (within the meaning of Regulation S) (y) within the United
States (within the meaning of Regulation S) or (z) to a U.S. person or for
the account or benefit of a U.S. person (within the meaning of Rule 902(o)
under the Securities Act).
(f) The Initial Purchaser understands that the Securities have not
been and will not be registered under the Securities and Exchange Law of
Japan, and represents that it has not offered or sold, and agrees not to
offer or sell, directly or indirectly, any Securities in Japan or for the
account of any resident thereof except pursuant to any exemption from the
registration requirements of the Securities and Exchange Law of Japan and
otherwise in compliance with applicable provisions of Japanese law.
5. Covenants of the Company. The Company covenants and agrees with the
-------------------------
Initial Purchaser that:
(a) If, when the Offering Memorandum is required to be used in
connection with the offer and sale in the United States of the Securities
by the Initial Purchaser as contemplated hereunder, any event occurs as a
result of which the Offering Memorandum as then amended or supplemented
would include an untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading, or
if it is necessary at such time to amend or supplement the Offering
Memorandum to comply with any applicable law, the Company will promptly
prepare an amendment or supplement which will correct such statement or
omission or effect such compliance (except that in case the Initial
Purchaser is required to deliver an offering memorandum under applicable
law in connection with the offer or sale of Securities at any time more
than nine months after the Firm Closing Date, the cost of such preparation
and furnishing of such amended or supplemented offering memorandum shall be
borne by the Initial Purchaser), and the Company will not effect any
amendment or supplement to the Offering Memorandum of which the Initial
Purchaser shall not have previously been advised or to which it shall have
previously objected without the consent of the Initial Purchaser, which
consent will not be unreasonably withheld. Neither your consent
13
to, nor the delivery by the Initial Purchaser of, any such amendment or
supplement shall constitute a waiver of any of the conditions set forth in
Section 7.
(b) The Company will arrange for the qualification of the Securities
and the Conversion Securities for offering and sale under the securities or
blue sky laws of such jurisdictions as the Initial Purchaser may designate
and will continue such qualifications in effect for as long as may be
necessary to complete the distribution of the Securities, provided that in
--------
connection therewith the Company shall not be required to qualify to
conduct business as a foreign corporation or to execute a general consent
to service of process in any jurisdiction. The Company will promptly
advise the Initial Purchaser of the receipt by the Company of any
notification with respect to the suspension of the qualification of the
Securities for sale in any jurisdiction or the initiation or threatening of
any proceeding for such purpose.
(c) The Company will, without charge, provide to the Initial
Purchaser as many copies of each Preliminary Offering Memorandum or the
Offering Memorandum or any amendment or supplement thereto as the Initial
Purchaser and its counsel may reasonably request; without limiting the
application of this sentence, the Company, not later than (1) 6:00 PM, New
York City time, on the date of determination of the offering price, if such
determination occurred at or prior to 10:00 AM, New York City time, on such
date or (2) 2:00 PM, New York City time, on the business day following the
date of determination of the offering price; if such determination occurred
after 10:00 AM, New York City time, on such date, will deliver to the
Initial Purchaser, without charge, as many copies of the Offering
Memorandum and any amendment or supplement thereto as the Initial Purchaser
may reasonably request for purposes of confirming orders that are expected
to settle on the Firm Closing Date. In addition, the Company will furnish
to the Initial Purchaser, on the date hereof, five copies of the
independent auditors' report included in the Offering Memorandum signed by
the auditors rendering such report. If, at any time prior to three years
after the later of the Firm Closing Date and the Option Closing Date and at
a time when any of the Securities, the Global Securities or the Conversion
Securities are "restricted securities" within the meaning of Rule 144(a)(3)
under the Securities Act, the Company is not subject to Section 13 or 15(d)
of the Exchange Act and is not exempt from reporting pursuant to Rule 12g3-
2(b) thereunder, the Company will furnish, as soon as available, to the
Initial Purchaser or to any holder of the Securities, or the Conversion
Securities, copies of the information required to be delivered to holders
and prospective purchasers of the Securities, the Global Securities or the
Conversion Securities pursuant to Rule 144A(d)(4) to permit compliance with
Rule 144A in connection with resales of the Securities, the Global
Securities or the Conversion Securities (the "Additional Company
Information").
(d) During the period of three years after the later of the Firm
Closing Date and the Option Closing Date or until the effectiveness of the
Shelf Registration Statement to be filed by the Company with the Commission
pursuant to the Registration Agreement, the Company will, upon request,
furnish to the Initial Purchaser and any holder of Securities or Conversion
14
Securities a copy of the restrictions on transfer applicable to such
Securities or Conversion Securities.
(e) The Company will not, and will not permit any of its subsidiaries
to, resell any Securities or Conversion Securities which have been acquired
by any of them during the period of three years after the later of the Firm
Closing Date and the Option Closing Date and which constitute "restricted
securities" under Rule 144, otherwise than pursuant to an effective
registration statement under the Securities Act.
(f) The Company will apply the net proceeds from the sale of the
Securities substantially as set forth under "Use of Proceeds" in the
Offering Memorandum.
(g) The Company will not, directly or indirectly, without the prior
written consent of the Initial Purchaser, offer, sell, offer to sell,
contract to sell, pledge, grant any option to purchase or otherwise sell or
dispose (or announce any offer, sale, offer of sale, contract of sale,
pledge, grant of any option to purchase or other sale or disposition) of
any shares of Common Stock or any securities convertible into, or
exchangeable or exercisable for, shares of Common Stock, for a period until
90 days after the date hereof (the "Lock-Up Period"), except (i) pursuant
to this Agreement, (ii) upon the conversion of the Securities or (iii)
grants of employee stock options in accordance with ordinary Company
practice and issuances pursuant to the exercise of employee stock options
outstanding on the date hereof.
(h) Except following the effectiveness of the Shelf Registration
Statement, neither the Company nor any subsidiary of the Company will
solicit any offer to buy or offer or sell the Securities by means of any
form of general solicitation or general advertising (within the meaning of
Rule 502(c) under the Securities Act) in a manner which would result in the
proposed sale of the Securities in accordance with this Agreement and the
Offering Memorandum failing to be exempt from the registration requirements
of the Securities Act or take any other action that would have required the
registration of the resale by the Initial Purchaser of the Securities under
the Securities Act.
(i) The Company will not, and will not permit any of its affiliates
(as defined in Rule 501(b) under the Securities Act) to, sell, offer for
sale or solicit offers to buy or otherwise negotiate in respect of any
security (as defined in the Securities Act) the offering of which security
could be integrated with sale of the Securities or Conversion Securities in
a manner which would require the registration of the Securities or
Conversion Securities under the Securities Act.
(j) The Company shall use its best efforts in cooperation with the
Initial Purchaser to permit the Securities to be eligible for clearance and
settlement through DTC, Cedel and Euroclear.
15
(k) So long as any of the Securities are outstanding, the Company
will furnish to the Initial Purchaser, as soon as practicable after the end
of the fiscal year, a copy of its annual report to stockholders for such
year; and the Company will furnish to the Initial Purchaser (i) as soon as
available, a copy of each report or definitive proxy statement of the
Company filed with the Commission under the Exchange Act or mailed to
stockholders and (ii) from time to time, such other information concerning
the Company as the Initial Purchaser may reasonably request.
(l) The Company will at all times reserve and keep available, free of
preemptive rights, shares of Common Stock for the purpose of enabling the
Company to satisfy any obligations to issue shares of its Common Stock upon
conversion of the Securities.
(m) The Company will use its best efforts to list, subject to notice
of issuance, the shares of Common Stock issuable upon conversion of the
Securities on the New York Stock Exchange.
6. Expenses. The Company will pay all costs and expenses incident to the
--------
performance of its obligations under this Agreement, whether or not the
transactions contemplated herein are consummated or this Agreement is terminated
pursuant to Section 10 hereof, including all costs and expenses (i) incident to
the preparation and delivery of the Securities in global and definitive forms,
the preparation and printing of the Preliminary Offering Memorandum and the
Offering Memorandum and all other amendments and supplements thereto and the
mailing and delivering of copies thereof to the Initial Purchaser, but not
including the fees and disbursements of counsel to the Initial Purchaser except
with respect to any Preliminary and Supplemental Blue Sky Memoranda, as provided
in (iv) below; (ii) of the Company's counsel and accountants and listing agents
in connection with the issuing and listing of the Securities, (iii) incurred in
connection with the approval of the Securities for trading in the PORTAL market
and the registration or qualification and determination of eligibility for
investment of the Securities under the laws of such jurisdictions as the Initial
Purchaser may designate (including all counsel fees), (iv) in connection with
the preparation, printing (including word processing and duplication costs) and
delivery of this Agreement, the Other Company Agreements and any Preliminary and
Supplemental Blue Sky Memoranda, including mailing and shipping, (v) payable to
rating agencies in connection with the rating of the Securities; (vi) the
reasonable fees and expenses of the Trustee, any successor Trustee and any agent
of any Trustee; and (vii) any "road show" meetings with prospective investors in
the Securities (other than as shall have been specifically approved by the
Initial Purchaser to be paid for by the Initial Purchaser). If the sale of the
Securities provided for herein is not consummated because this Agreement is
terminated pursuant to Section 10 hereof or because of any failure, refusal or
inability on the part of the Company to perform and satisfy any of the
conditions set forth in Sections 7(a)(iii), 7(b), 7(e), 7(f) (as a result of an
inability to make the statement in clause (ii) thereof), 7(g), 7(j) or 7(k),
other than by reason of a default by the Initial Purchaser, the Company will
reimburse the Initial Purchaser upon demand for all out-of-pocket expenses
(including counsel fees and disbursements) that shall have been incurred by it
in connection with the proposed purchase and sale of the Securities. The
Company
16
shall not in any event be liable to the Initial Purchaser for the loss
of anticipated profits from the transactions covered by this Agreement.
7. Conditions of the Obligations of the Initial Purchaser. The obligation
------------------------------------------------------
of the Initial Purchaser to purchase and pay for the Firm Securities shall be
subject, in the sole discretion of the Initial Purchaser, to the accuracy of the
representations and warranties of the Company contained herein as of the date
hereof and as of the Firm Closing Date, as if made on and as of the Firm Closing
Date, to the accuracy of the certifications, representations and warranties of
the Company's officers made pursuant to the provisions hereof, to the
performance by the Company of its respective covenants and agreements hereunder
and to the following additional conditions:
(a) Subsequent to the execution and delivery of this Agreement, (i)
there shall not have occurred any downgrading in the rating of the
Securities or of any debt securities of the Company by any "nationally
recognized statistical rating organization" (as defined for purposes of
Rule 436(g) under the Securities Act), or any public announcement that any
such organization has under surveillance or review its rating of the
Securities or of any debt securities of the Company other than an
announcement with positive implications of a possible upgrading, and no
implication of a possible downgrading, of such rating; (ii) no order or
decree preventing the use of the Offering Memorandum or any amendment or
supplement thereto, or any order asserting that the transactions
contemplated by this Agreement are subject to the registration requirements
of the Securities Act, shall have been issued and no proceedings for that
purpose shall have been commenced or shall be pending or, to the knowledge
of the Company, be contemplated and no stop order suspending the sale of
the Securities in any jurisdiction designated by the Initial Purchaser
shall have been issued and no proceedings for that purpose shall have been
commenced or shall be pending or, to the knowledge of the Company, shall be
contemplated; (iii) the Initial Purchaser shall not have discovered or
disclosed to the Company that the Offering Memorandum or any amendment or
supplement thereto contains an untrue statement of fact which, in the
Initial Purchaser's opinion, is material or fails to state a fact which is
material or is necessary to make the statements therein, in light of the
circumstances under which they are made, not misleading; or (iv) there
shall not have occurred any invalidation of Rule 144A or Regulation S under
the Securities Act by any court or any withdrawal or proposed withdrawal of
any rule or regulation under the Securities Act or the Exchange Act by the
Commission or any amendment or proposed amendment thereof by the Commission
which in the judgment of the Initial Purchaser would materially impair its
ability to purchase, hold or effect resales of the Securities as
contemplated hereby.
(b) The Initial Purchaser shall have received an opinion, dated the
Firm Closing Date, of ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, counsel for the Company,
substantially to the effect that:
(i) The Company is a corporation duly organized and validly existing
as a corporation in good standing under the laws of the State of
Delaware. Each of HomeClub, Inc., a Nevada corporation, HomeClub,
Inc. of Texas, a Delaware
17
corporation, and Fullerton Corporation, a Delaware corporation
(collectively, the "Subsidiaries"), has been duly organized and is
validly existing as a corporation in good standing under the laws of
its respective jurisdiction of incorporation; no subsidiary of the
Company other than the Subsidiaries may be deemed to be a "significant
subsidiary" as defined in Rule 1-02(w) of Regulation S-X; the Company
and each of the Subsidiaries are duly qualified to transact business
as foreign corporations and are in good standing under the laws of all
United States jurisdictions where the ownership or leasing of their
respective properties or the conduct of their respective businesses
requires such qualification, except where the failure to be so
qualified does not amount to a material liability or disability to the
Company and the Subsidiaries, taken as a whole;
(ii) The Company and each of the Subsidiaries has full corporate
power, to own or lease its properties and conduct its business as
described in the Offering Memorandum;
(iii) The authorized, issued and outstanding capital stock of the
Company is as set forth in the Offering Memorandum under the caption
"Capitalization," the Common Stock conforms to the description thereof
contained in the Offering Memorandum and such description is a fair
summary of the rights and privileges of a holder of such Common Stock;
(iv) The issued shares of capital stock of each of the Subsidiaries
have been duly authorized and validly issued, are fully paid and
nonassessable and are owned of record by the Company, directly or
through one or more of the Subsidiaries; the issued shares of capital
stock of each of the Subsidiaries are, to the knowledge of such
counsel, free and clear of any perfected security interests or any
other security interests, liens, encumbrances, equities or claims;
and, to the knowledge of such counsel, except for the Securities and
as described in the Offering Memorandum under the caption
"Capitalization," there are no outstanding rights, warrants or options
to acquire any capital stock of the Company or any subsidiary, other
than stock options granted to officers, employees, directors,
consultants and advisors under the Company's stock incentive plans;
(v) To the knowledge of such counsel, all of the outstanding shares
of capital stock of the Company issued after July 26, 1997 have been
issued in compliance with all applicable federal and state securities
laws and regulations of the United States, and, other than rights
pursuant to the Registration Agreement, no holders of securities of
the Company are entitled to have such securities registered under the
Securities Act as a result of the issuance and sale of the Securities
hereunder or as a result of the Company filing the Shelf Registration
Statement pursuant to the terms of the Registration Agreement;
18
(vi) The Indenture has been duly authorized, executed and delivered
by the Company; assuming the due authorization, execution and delivery
of the Indenture by the Trustee, the Indenture 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 the effect of any applicable bankruptcy, insolvency,
reorganization, receivership, moratorium or other similar laws
affecting the rights and remedies of creditors generally and to
general principles of equity (regardless of whether enforcement is
considered in a proceeding in equity or at law); the Indenture
complies as to form in all material respects with the requirements of
the Trust Indenture Act of 1939, as amended (the "TIA"), and the rules
and regulations of the Commission applicable to an indenture which is
qualified thereunder; and it is not necessary in connection with the
offer, sale and delivery of the Securities to the Initial Purchaser or
in connection with the initial resales of the Securities delivered on
the Closing Date by the Company to the Initial Purchaser, in each case
in the manner contemplated by this Agreement and the Offering
Memorandum, to qualify the Indenture under the TIA;
(vii) The Securities have been duly authorized, executed and
delivered by the Company and, assuming they have been duly
authenticated by the Trustee in accordance with the terms of the
Indenture, upon delivery of the Securities in accordance with the
Indenture, the Securities will constitute legal, valid and binding
obligations of the Company, enforceable against the Company in
accordance with their terms, except as enforcement thereof may be
limited by the effect of any applicable bankruptcy, insolvency,
reorganization, receivership, moratorium or other similar laws
affecting the rights and remedies of creditors generally and to
general principles of equity (regardless of whether enforcement is
considered in a proceeding in equity or at law); and the Securities
conform in all material respects to the descriptions thereof contained
in the Offering Memorandum and are entitled to the benefits provided
by the Indenture;
(viii) The shares of Common Stock to be issued upon conversion of
the Securities have been duly authorized and reserved for issuance
upon such conversion of the Securities and, when they are issued and
delivered upon conversion of the Securities in accordance with the
terms of the Indenture, will be validly issued, fully paid and
nonassessable and not subject to any preemptive rights;
(ix) The statements under the captions "Senior Bank Facility,"
"Description of Notes", "Description of Capital Stock" "Certain
Federal Income Tax Considerations" and "Notice to Investors" in the
Offering Memorandum insofar as such statements constitute a general
summary of matters of United States law or of documents referred to
therein are true and accurate in all material respects and fairly
summarize the matters referred to therein;
(x) This Agreement and the Registration Agreement have been duly
authorized, executed and delivered by the Company and each such
agreement constitutes a valid and
19
binding obligation of the Company, enforceable against the Company in
accordance with its terms, except as enforcement thereof may be
limited by the effect of any applicable bankruptcy, insolvency,
reorganization, receivership, moratorium or other similar laws
affecting the rights and remedies of creditors generally and to
general principles of equity (regardless of whether enforcement is
considered in a proceeding in equity or at law) and except that any
rights to indemnity and contribution may be limited by federal and
state securities laws and public policy considerations;
(xi) To the knowledge of such counsel, no legal or governmental
proceedings are pending to which the Company or any of the
Subsidiaries is a party or to which the property of the Company or any
of the Subsidiaries is subject, that (i) would affect the subject
matter of this Agreement or any Other Company Agreement or any of the
transactions contemplated herein or therein, or (ii) is of a character
that would be required to be disclosed in a registration statement on
Form S-1 or the related prospectus relating to the offer and sale of
the Securities, and no such proceedings have been threatened against
the Company or any of the Subsidiaries or with respect to any of their
respective properties;
(xii) To the knowledge of such counsel, there are no contracts or
other documents of a character that would be required to be described
in Part I of a registration statement on Form S-1 or the related
prospectus relating to the offer and sale of the Securities which are
not described in the Offering Memorandum;
(xiii) The offering, sale, issuance and delivery of the Securities
to the Initial Purchaser by the Company pursuant to this Agreement,
compliance by the Company with the provisions of this Agreement and of
the Other Company Agreements, and the consummation of the transactions
herein and therein contemplated (including the issuance and delivery
of the Conversion Securities) do not (A) require any authorization,
approval, consent, order of, license of, registration, filing or
qualification of or with any governmental authority of the United
States, except such as may be required under state securities or blue
sky laws (and, in the case of compliance with the Registration
Agreement, the filing of the Shelf Registration Statement (as defined
therein) and the registration thereunder of the Securities and the
Common Stock to be issued upon conversion of the Securities under the
Securities Act), or (B) conflict with or result in a breach or
violation of any of the terms and provisions of, or constitute a
default under, (i) any indenture, mortgage, deed or other agreement or
instrument or any material lease filed as an exhibit to the Company's
Annual Report on Form 10-K for the fiscal year ended January 25, 1997
or otherwise identified in an officer's certificate of the Company
identifying the material agreements and instruments of the Company and
the Subsidiaries, to which the Company or any of the Subsidiaries is a
party or by which the Company or any of the Subsidiaries or any of
their respective properties are bound, or (ii) the charter documents
or bylaws of any of the Company or any of the Subsidiaries, or (iii)
any statute or regulation of United States, California or New York law
or the
20
General Corporation law of the State of Delaware or any judgment,
decree or order of any court or other governmental authority or any
arbitrator known to such counsel and applicable to the Company or any
of the Subsidiaries, except, with respect to clauses (i) and (iii),
for such conflicts, breaches, violations or defaults that would not,
individually or in the aggregate, have a material adverse effect on
the condition (financial or other), business, properties, net worth or
results of operations of the Company and its subsidiaries, taken as a
whole, and would not adversely affect the ability of the Company to
perform its obligations under this Agreement and the Other Company
Agreements;
(xiv) Neither the Company nor any Subsidiary is an "investment
company", or a company "controlled" by an investment company within
the meaning of the Investment Company Act; and
(xv) Assuming the accuracy of the representations and warranties and
compliance with the agreements of the Company and the Initial
Purchaser herein and referred to under the captions "Plan of
Distribution" and "Notice to Investors" in the Offering Memorandum, in
connection with (A) the offer, sale and delivery of the Securities on
the Closing Date by the Company to the Initial Purchaser pursuant to
this Agreement, (B) the initial resale of the Securities delivered on
the Closing Date by the Initial Purchaser as contemplated by this
Agreement and the Offering Memorandum, or (C) the issuance and
delivery of the Conversion Securities in the manner contemplated by
the Indenture, it is not necessary to register the Securities or any
Conversion Securities under the Securities Act, it being understood
that no opinion is expressed as to any subsequent resale of any
Securities or Conversion Securities.
Such counsel shall state that they have participated in conferences
with representatives of the Company, some of which have been attended by
the Initial Purchaser and their counsel, at which conferences the contents
of the Offering Memorandum, each amendment thereof (if any) and supplement
thereto (if any) and related matters were discussed, and, although such
counsel assumes no responsibility for the accuracy, fairness or
completeness of the Offering Memorandum, any amendment thereof or
supplement thereto (except as expressly provided above), nothing has come
to the attention of such counsel to cause such counsel to believe that the
Offering Memorandum or any amendment thereof, if any, or supplement
thereto, if any (other than the financial statements and related notes and
schedules and other financial and statistical data included therein, as to
which such counsel need express no belief) contains, as of the date thereof
and as of the Firm Closing Date or the Option Closing Date, as the case may
be, any untrue statement of a material fact or omits to state a material
fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
21
In rendering any such opinion, such counsel may rely, as to matters of
fact, to the extent such counsel deems proper, on certificates of
responsible officers of the Company and public officials.
(c) The Initial Purchaser shall have received the opinion, dated the
Firm Closing Date, of ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, counsel for the Trustee under
the Indenture, with respect to such matters as the Initial Purchaser may
reasonably require.
(d) The Initial Purchaser shall have received an opinion, dated the
Firm Closing Date, of King & Spalding, counsel for the Initial Purchaser,
with respect to the issuance and sale of the Firm Securities, the Offering
Memorandum, and such other related matters as the Initial Purchaser may
reasonably require, and the Company shall have furnished to such counsel
such documents as they may reasonably request for the purpose of enabling
them to pass upon such matters.
(e) The Initial Purchaser shall have received from Coopers & ▇▇▇▇▇▇▇,
LLP a letter or letters dated, respectively, the date hereof and the Firm
Closing Date, in form and substance satisfactory to the Initial Purchaser
that:
(i) they are independent accountants with respect to the Company
within the meaning of the Act and the applicable rules and regulations
thereunder;
(ii) in their opinion, the audited financial statements and
schedules of the Company included in the Offering Memorandum comply in
form in all material respects with the applicable accounting
requirements of the Act and the related published rules and
regulations;
(iii) on the basis of their limited review in accordance with
standards established by the American Institute of Certified Public
Accountants of any interim unaudited financial statements of the
Company included or incorporated by reference in the Offering
Memorandum, carrying out certain specified procedures (which do not
constitute an examination made in accordance with generally accepted
auditing standards) that would not necessarily reveal matters of
significance with respect to the comments set forth in this paragraph
(iii), a reading of the minute books of the stockholders, the board of
directors and any committees thereof of the Company, officials of the
Company, and inquiries of certain officials of the Company who have
responsibility for financial and accounting matters, nothing came to
their attention that caused them to believe that:
(1) the unaudited financial statements of the Company
included or incorporated by reference in the Offering Memorandum
do not comply in form in all material respects with the
applicable accounting requirements of the Act and the related
published rules and regulations thereunder or are not in
conformity with
22
generally accepted accounting principles applied on a basis
substantially consistent with that of the audited financial
statements included or incorporated by reference in the Offering
Memorandum;
(2) at a specific date not more than five business days
prior to the date of such letter, there was any change in long-
term debt of the Company or any decreases in net current assets
or stockholders' equity of the Company, in each case compared
with amounts shown on the July 27, 1997 consolidated balance
sheet included in the Offering Memorandum, or for the period from
July 27, 1997 to such specified date there were any decreases, as
compared with the prior comparable period, in the net sales,
income before income taxes or net income of the Company, except
in all instances for changes, decreases or increases set forth in
such letter; and
(iv) they have carried out certain specified procedures (as
requested by the Initial Purchaser), not constituting an audit, with
respect to certain amounts, percentages and financial information that
are derived from the general accounting records of the Company and are
included in the Offering Memorandum, and have compared such amounts,
percentages and financial information with such records of the Company
or with information derived from such records and have found them to
be in agreement, excluding any questions of legal interpretation.
Reference to the Offering Memorandum in this paragraph (e) with
respect to the letter referred to above shall include any amendment or
supplement thereto at the date of such letter.
In the event that the letter referred to above set forth any such
changes, decreases or increases, it shall be a further condition to the
obligation of the Initial Purchaser that (A) such letters shall be
accompanied by a written explanation of the Company as to the significance
thereof, unless the Initial Purchaser deems such explanation unnecessary,
and (B) such changes, decreases or increases do not, in the sole judgment
of the Initial Purchaser, make it impractical or inadvisable to proceed
with the purchase and delivery of the Securities as contemplated by the
Offering Memorandum, as amended as of the date hereof.
(f) The Initial Purchaser shall have received a certificate, dated
the Firm Closing Date, of the Chief Executive Officer and the Chief
Financial Officer of the Company, on behalf of the Company, to the effect
that:
(i) the representations and warranties of the Company in this
Agreement are true and correct as if made on and as of the Firm
Closing Date; the Offering Memorandum, as amended as of the Firm
Closing Date, does not include any untrue statement of a material fact
or omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading;
23
and the Company has performed all covenants and agreements and
satisfied all conditions on its part to be performed or satisfied at
or prior to the Firm Closing Date; and
(ii) subsequent to the respective dates as of which information is
given in the Offering Memorandum, neither the Company nor any of its
subsidiaries has sustained any material loss or interference with
their respective businesses or properties from fire, flood, hurricane,
accident or other calamity, whether or not covered by insurance, or
from any labor dispute or any legal or governmental proceeding, and
there has not been any material adverse change, or any development
involving a prospective material adverse change, in the condition
(financial or otherwise), management, business prospects, net worth or
results of operations of the Company and its subsidiaries, taken as a
whole, except in each case as described in or contemplated by the
Offering Memorandum (exclusive of any amendment or supplement
thereto).
(g) The Initial Purchaser shall have received from each person who is
a director or executive officer of the Company an agreement to the effect
that such person will not, directly or indirectly, without the prior
written consent of the Initial Purchaser, offer, sell, offer to sell,
contract to sell, pledge, grant any option to purchase or otherwise sell or
dispose (or announce any offer, sale, offer of sale, contract of sale,
pledge, grant of any option to purchase or other sale or disposition) of
any Common Stock or any securities convertible into, or exchangeable or
exercisable for, Common Stock for a period of 90 days after the date of
this Agreement.
(h) On or before the Firm Closing Date, the Initial Purchaser and
counsel for the Initial Purchaser shall have received such further
certificates, documents or other information as they may have reasonably
requested from the Company.
(i) The Securities shall have been approved by the National
Association of Securities Dealers, Inc. for trading in the PORTAL market,
subject to the issuance of the Securities.
(j) The Indenture shall have been duly executed and delivered by the
Company and the Trustee, and the Securities shall have been executed and
delivered by the Company and duly authenticated by the Trustee.
(k) The Registration Agreement shall have been executed and delivered
by the Company.
All opinions, certificates, letters and documents delivered pursuant
to this Agreement will comply with the provisions hereof only if they are
reasonably satisfactory in all material respects to the Initial Purchaser
and counsel for the Initial Purchaser. The Company shall furnish to the
Initial Purchaser such conformed copies of such opinions, certificates,
letters
24
and documents in such quantities as the Initial Purchaser and counsel for
the Initial Purchaser shall reasonably request.
The obligation of the Initial Purchaser to purchase and pay for any
Option Securities shall be subject, in its discretion, to each of the
foregoing conditions to purchase the Firm Securities, except that all
references to the Firm Securities and the Firm Closing Date shall be deemed
to refer to such Option Securities and the related Option Closing Date,
respectively.
8. Indemnification and Contribution.
--------------------------------
(a) The Company agrees to indemnify and hold harmless the Initial
Purchaser and each person, if any, who controls any Initial Purchaser
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act, against any losses, claims, damages or liabilities, joint or
several, to which they or any of them may become subject under the
Securities Act or the Exchange Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of
or are based upon:
(i) any untrue statement or alleged untrue statement made by the
Company in Section 2 of this Agreement,
(ii) any untrue statement or alleged untrue statement of any
material fact contained in (A) the Offering Memorandum or the
Preliminary Offering Memorandum or any amendment or supplement
thereto, (B) any application or other document, or any amendment or
supplement thereto, executed by the Company or based upon written
information furnished by or on behalf of the Company filed in any
jurisdiction in order to qualify the Securities under the securities
or blue sky laws thereof or filed with or any securities association
or securities exchange (each an "Application"), or (C) any Additional
Company Information provided by the Company to any holder or
prospective purchaser of Securities pursuant to Section 5(c), or
(iii) the omission or alleged omission to state in the Offering
Memorandum or the Preliminary Offering Memorandum or any amendment or
supplement thereto, any Application or any Additional Company
Information provided by the Company to any holder or prospective
purchaser of Securities pursuant to Section 5(c), a material fact
required to be stated therein or necessary to make the statements
therein not misleading
and will reimburse, as incurred, each indemnified person for any legal or
other expenses reasonably incurred by each indemnified person in connection
with investigating, defending against or appearing as a third-party witness
in connection with any such loss, claim, damage, liability or action;
provided that the Company will not be liable in any such case to the extent
--------
that any such loss, claim, damage or liability arises out of or is based
upon any untrue statement or alleged untrue statement or omission or
alleged omission made in such Offering
25
Memorandum or Preliminary Offering Memorandum or any Application in
reliance upon and in conformity with written information furnished to the
Company by the Initial Purchaser specifically for use therein. This
indemnity agreement will be in addition to any liability which the Company
may otherwise have. The Company will not, without the prior written consent
of the Initial Purchaser, settle or compromise or consent to the entry of
any judgment in any pending or threatened claim, action, suit or proceeding
in respect of which indemnification may be sought hereunder (whether or not
the Initial Purchaser or any person who controls the Initial Purchaser
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act is a party to such claim, action, suit or proceeding), unless
such settlement, compromise or consent includes an unconditional release of
the Initial Purchaser and such directors, officers, employees, agents or
controlling persons from all liability arising out of such claim, action,
suit or proceeding.
(b) The Initial Purchaser, severally and not jointly, will indemnify
and hold harmless the Company, each of its directors, officers, employees
and agents and each person, if any, who controls the Company within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act against any losses, claims, damages or liabilities to which the Company
or any such director, officer, employee or agent or controlling person may
become subject under the Securities Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon (i) any untrue statement or alleged untrue
statement of any material fact contained in the Offering Memorandum or the
Preliminary Offering Memorandum or any amendment or supplement thereto, or
any Application or (ii) the omission or the alleged omission to state
therein a material fact required to be stated in the Offering Memorandum or
the Preliminary Offering Memorandum or any amendment or supplement thereto,
or any Application or necessary to make the statements therein not
misleading, in each case to the extent, but only to the extent, that such
untrue statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with written
information furnished to the Company by the Initial Purchaser specifically
for use therein; and, subject to the limitation set forth immediately
preceding this clause, will reimburse, as incurred, any legal or other
expenses reasonably incurred by the Company or any such director, officer,
employee or agent or controlling person in connection with investigating or
defending any such loss, claim, damage, liability or any action in respect
thereof. This indemnity agreement will be in addition to any liability
which the Initial Purchaser may otherwise have.
(c) Promptly after receipt by an indemnified party under this Section 8
of notice of the commencement of any action, such indemnified party will,
if a claim in respect thereof is to be made against the indemnifying party
under this Section 8, notify the indemnifying party of the commencement
thereof; but the omission so to notify the indemnifying party will not
relieve it from any liability which it may have to any indemnified party
otherwise than under this Section 8. In case any such action is brought
against any indemnified party, and it notifies the indemnifying party of
the commencement thereof, the indemnifying party will be entitled to
participate therein and, to the extent that it may wish, jointly with any
other
26
indemnifying party similarly notified, to assume the defense thereof,
with counsel satisfactory to such indemnified party; provided, however,
-------- -------
that if the defendants in any such action include both the indemnified
party and the indemnifying party and the indemnified party shall have
reasonably concluded that there may be one or more legal defenses available
to it and/or other indemnified parties which are different from or
additional to those available to the indemnifying party, the indemnifying
party shall not have the right to direct the defense of such action on
behalf of such indemnified party or parties and such indemnified party or
parties shall have the right to select separate counsel to defend such
action on behalf of such indemnified party or parties. After notice from
the indemnifying party to such indemnified party of its election so to
assume the defense thereof and approval by such indemnified party of
counsel appointed to defend such action, the indemnifying party will not be
liable to such indemnified party under this Section 8 for any legal or
other expenses, other than reasonable costs of investigation, subsequently
incurred by such indemnified party in connection with the defense thereof,
unless (i) the indemnified party shall have employed separate counsel in
accordance with the proviso to the next preceding sentence (it being
understood, however, that in connection with such action the indemnifying
party shall not be liable for the expenses of more than one separate
counsel (in addition to local counsel) in any one action or separate but
substantially similar actions in the same jurisdiction arising out of the
same general allegations or circumstances, designated by the Initial
Purchaser in the case of paragraph (a) of this Section 8, representing the
indemnified parties under such paragraph (a) who are parties to such action
or actions) or (ii) the indemnifying party does not promptly retain counsel
satisfactory to the indemnified party or (iii) the indemnifying party has
authorized the employment of counsel for the indemnified party at the
expense of the indemnifying party. After such notice from the indemnifying
party to such indemnified party, the indemnifying party will not be liable
for the costs and expenses of any settlement of such action effected by
such indemnified party without the consent of the indemnifying party.
(d) In circumstances in which the indemnity agreement provided for in
the preceding paragraphs of this Section 8 is unavailable or insufficient,
for any reason, to hold harmless an indemnified party in respect of any
losses, claims, damages or liabilities (or actions in respect thereof) that
by the terms of the preceding paragraphs of this Section 8 could otherwise
be the subject of an indemnity claim, each indemnifying party, in order to
provide for just and equitable contribution, shall contribute to the amount
paid or payable by such indemnified party as a result of such losses,
claims, damages or liabilities (or actions in respect thereof) in such
proportion as is appropriate to reflect (i) the relative benefits received
by the indemnifying party or parties on the one hand and the indemnified
party on the other from the offering of the Securities or (ii) if the
allocation provided by the foregoing clause (i) is not permitted by
applicable law, not only such relative benefits but also the relative fault
of the indemnifying party or parties on the one hand and the indemnified
party on the other in connection with the statements or omissions or
alleged statements or omissions that resulted in such losses, claims,
damages or liabilities (or actions in respect thereof) that by the terms of
the preceding paragraphs of this Section 8 could otherwise be the subject
of an indemnity claim, as well as any other relevant equitable
considerations. The relative benefits received
27
by the Company on the one hand and the Initial Purchaser on the other shall
be deemed to be in the same proportion as the total proceeds from the
offering (before deducting expenses) received by the Company bear to the
total discounts and commissions received by the Initial Purchaser. The
relative fault of the parties shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates
to information supplied by the Company or the Initial Purchaser, the
parties' relative intents, knowledge, access to information and opportunity
to correct or prevent such statement or omission, and any other equitable
considerations appropriate in the circumstances. The Company and the
Initial Purchaser agree that it would not be equitable if the amount of
such contribution were determined by pro rata or per capita allocation or
by any other method of allocation that does not take into account the
equitable considerations referred to above in this paragraph (d).
Notwithstanding any other provision of this paragraph (d), the Initial
Purchaser shall not be obligated to make contributions hereunder that in
the aggregate exceed the total offering price of the Securities purchased
by the Initial Purchaser under this Agreement, less the aggregate amount of
any damages that the Initial Purchaser has otherwise been required to pay
in respect of the same or any substantially similar claim, and no person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f)
of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. For purposes of
this paragraph (d), each person, if any, who controls the Initial Purchaser
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act shall have the same rights to contribution as the Initial
Purchaser, and each director of the Company and each person, if any, who
controls the Company within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act, shall have the same rights to
contribution as the Company.
9. Survival. The respective representations, warranties, agreements,
--------
covenants, indemnities and other statements of the Company and the Initial
Purchaser set forth in this Agreement or made by or on behalf of them,
respectively, pursuant to this Agreement shall remain in full force and effect,
regardless of (i) any investigation made by or on behalf of the Company, any of
its officers or directors, the Initial Purchaser or any controlling person
referred to in Section 8 hereof and (ii) delivery of and payment for the
Securities. The respective agreements, covenants, indemnities and other
statements set forth in Sections 5 and 8 hereof shall remain in full force and
effect, regardless of any termination or cancellation of this Agreement.
10. Termination.
-----------
(a) This Agreement may be terminated with respect to the Firm
Securities or any Option Securities in the sole discretion of the Initial
Purchaser by notice to the Company given prior to the Firm Closing Date or
the related Option Closing Date, respectively, in the event that the
Company shall have failed, refused or been unable to perform all
obligations and satisfy all conditions on its part to be performed or
satisfied hereunder at or prior thereto or, if at or prior to the Firm
Closing Date or such Option Closing Date, respectively,
28
(i) the Company or any of its subsidiaries shall have, in the sole
judgment of the Initial Purchaser, sustained any material loss or
interference with their respective businesses or properties from fire,
flood, hurricane, accident or other calamity, whether or not covered
by insurance, or from any labor dispute or any legal or governmental
proceeding or there shall have been any material adverse change, or
any development involving a prospective material adverse change
(including without limitation a change in management or control of the
Company), in the condition (financial or otherwise), business
prospects, net worth or results of operations of the Company and its
subsidiaries, taken as a whole, except in each case as described in
or contemplated by the Offering Memorandum (exclusive of any amendment
or supplement thereto);
(ii) trading in the Common Stock shall have been suspended by the
New York Stock Exchange, or securities trading generally on the New
York Stock Exchange or the Nasdaq Stock Market's National Market shall
have been suspended or minimum or maximum prices shall have been
established on any such exchange or market system on the date of
pricing or the business day immediately preceeding the date of
pricing;
(iii) a banking moratorium shall have been declared by New York
authorities on the date of pricing or the business day immediately
preceeding the date of pricing; or
(iv) there shall have been (A) an outbreak or escalation of
hostilities between the United States and any foreign power, (B) an
outbreak or escalation of any other insurrection or armed conflict
involving the United States or (C) any other calamity or crisis or
material adverse change in general economic, political or financial
conditions having an effect on the United States financial markets
that, in the reasonable judgment of the Initial Purchaser, makes it
impractical or inadvisable to proceed with the offering or the
delivery of the Securities as contemplated by the Offering Memorandum,
as amended as of the date hereof.
(b) Termination of this Agreement pursuant to this Section 10 shall be
without liability of any party to any other party except as provided in
Section 9 hereof.
11. Information Supplied by Initial Purchaser. The statements set forth in
-----------------------------------------
the last paragraph on the front cover page and under the heading "Plan of
Distribution" in any Preliminary Offering Memorandum or the Offering Memorandum
(to the extent such statements relate to the Initial Purchaser) constitute the
only information furnished by the Initial Purchaser to the Company for the
purposes of Sections 1(a) and 8 hereof. The Initial Purchaser confirms that
such statements (to such extent) are correct.
12. Notices. All communications hereunder shall be in writing and, if sent
-------
to any of the Initial Purchaser, shall be delivered or sent by mail, telex or
facsimile transmission and confirmed in writing to Prudential Securities
Incorporated, ▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Equity
Transactions Group; and if sent to the Company, shall be delivered or sent by
29
mail, telex or facsimile transmission and confirmed in writing to the Company at
HomeBase, Inc., ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇
▇. ▇▇▇▇▇, Vice President and Secretary (or, in each case, to such other address
as may be hereafter notified by the respective parties hereto in accordance
herewith).
13. Successors. This Agreement shall inure to the benefit of and shall be
----------
binding upon the Initial Purchaser, the Company and their respective successors
and legal representatives, and nothing expressed or mentioned in this Agreement
is intended or shall be construed to give any other person any legal or
equitable right, remedy or claim under or in respect of this Agreement, or any
provisions herein contained, this Agreement and all conditions and provisions
hereof being intended to be and being for the sole and exclusive benefit of such
persons and for the benefit of no other person except that (i) the indemnities
of the Company contained in Section 8 of this Agreement shall also be for the
benefit of any person or persons who control the Initial Purchaser within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act
and (ii) the indemnities of the Initial Purchaser contained in Section 8 of this
Agreement shall also be for the benefit of the directors of the Company and any
person or persons who control the Company within the meaning of Section 15 of
the Securities Act or Section 20 of the Exchange Act. No purchaser of
Securities from the Initial Purchaser shall be deemed a successor because of
such purchase.
14. Applicable Law. The validity and interpretation of this Agreement, and
--------------
the terms and conditions set forth herein, shall be governed by and construed in
accordance with the laws of the State of New York, without giving effect to any
provisions relating to conflicts of laws.
15. Consent to Jurisdiction and Service of Process. All judicial
----------------------------------------------
proceedings arising out of or relating to this Agreement may be brought in any
state or federal court of competent jurisdiction in the State of New York, and
by execution and delivery of this Agreement, the Company accepts for itself and
in connection with its properties, generally and unconditionally, the
nonexclusive jurisdiction of the aforesaid courts and waives any defense of
forum non convenience and irrevocably agrees to be bound by any judgment
rendered thereby in connection with this Agreement. The Company designates and
appoints CT Corporation, and such other persons as may hereafter by selected by
the Company and the Company irrevocably agreeing in writing to so serve, as its
agent to receive on its behalf service of all process in any such proceedings in
any such court, such service being hereby acknowledged by the Company to be
effective and binding service in every respect. A copy of any such process so
served shall be mailed by registered mail to the Company at the address provided
in Section 12 hereof; provided, however, that, unless otherwise provided by
-------- -------
applicable law, any failure to mail such copy shall not affect the validity of
service of such process. If any agent appointed by the Company refuses to
accept service, the Company hereby agrees that service of process sufficient for
personal jurisdiction in any action against the Company in the State of New York
may be made by registered or certified mail, return receipt requested, to the
Company at its address provided in Section 12 hereof, and the Company hereby
acknowledges that such service shall be effective and binding in every respect.
Nothing herein shall affect the right to serve process in any other manner
permitted by law or shall limit the right of the Initial Purchaser to bring
proceedings against the Company in the courts of any other jurisdiction.
30
16. Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
31
If the foregoing correctly sets forth our understanding, please indicate
your acceptance thereof in the space provided below for that purpose, whereupon
this letter shall constitute an agreement binding the Company and the Initial
Purchaser.
Very truly yours,
HOMEBASE, INC.
By ______________________________________________________
Name:
Title:
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
PRUDENTIAL SECURITIES INCORPORATED
/s/ ▇▇▇▇-▇▇▇▇▇▇ Canfin
By: _____________________________________________________
▇▇▇▇-▇▇▇▇▇▇ Canfin
Managing Director
32