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CARTER HAWLEY HALE STORES, INC.
$125,000,000 Principal Amount of(1)
6-1/4% Convertible Senior Subordinated Notes due 2000
PURCHASE AGREEMENT
New York, New York
December 14, 1993
__________________________________
(1) Plus an option to purchase up to $18,750,000 principal amount of
6-1/4% Convertible Senior Subordinated Notes from Carter Hawley Hale
Stores, Inc. to cover over-allotments.
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Salomon Brothers Inc
The Initial Purchaser
Seven World Trade Center
New York, New York 10048
Ladies and Gentlemen:
Carter Hawley Hale Stores, Inc., a Delaware corporation (the "Company"),
proposes to issue and sell to Salomon Brothers Inc (the "Initial Purchaser"),
$125,000,000 principal amount of 6-1/4% Convertible Senior Subordinated Notes
due 2000 ("Notes"), of the Company (the "Firm Securities"). The Company also
proposes to grant to the Initial Purchaser an option to purchase up to
$18,750,000 aggregate principal amount of additional Notes to cover
over-allotments, if any (the "Option Securities" and, together with the Firm
Securities, the "Securities").
The Securities are to be issued pursuant to an indenture dated as of
December 21, 1993 between the Company and Continental Bank National
Association, as trustee (the "Trustee"), which shall contain the terms
described in the Final Memorandum (as defined below), including certain matters
relating to the registration of the Securities pursuant to the Registration
Agreement described in the Final Memorandum (the "Registration Rights
Agreement"). The Securities are convertible into shares of common stock of the
Company ("Common Stock") at the conversion rate and in the manner specified in
the Indenture.
The sale of the Securities to the Initial Purchaser will be made without
registration of the Securities under the Securities Act of 1933, as amended
(the "Securities Act"), in reliance upon exemptions from the registration
requirements of the Securities Act. The Initial Purchaser has advised the
Company that it will offer and sell the Securities purchased by it hereunder in
accordance with Section 4 hereof as soon as it deems advisable.
In connection with the sale of the Securities, the Company has prepared a
preliminary offering memorandum, dated December 9, 1993 (including any and all
exhibits thereto and any information incorporated by reference therein, the
"Preliminary Memorandum"), and a final offering memorandum, dated December 21,
1993 (including all exhibits thereto and any information incorporated by
reference therein, the "Final Memorandum"). Each of the Preliminary Memorandum
and the Final Memorandum sets forth certain information concerning the Company
and the Securities. The Company hereby confirms that it has authorized the use
of the Preliminary Memorandum and the Final Memorandum, and any amendment or
supplement thereto, in connection with the offer and sale of the Securities by
the Initial Purchaser. Unless stated to the contrary, all references herein to
the Final Memorandum are to the Final Memorandum at the Execution Time (as
defined below) and are not meant to include any amendment or supplement, or any
information incorporated by reference therein, subsequent to the Execution
Time. Any references herein to the Final Memorandum "as amended or
supplemented" at or as of a certain date shall be deemed to refer to and
include any information filed under the
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Securities Exchange Act of 1934, as amended (the "Exchange Act"), which is
incorporated by reference therein.
1. Representations and Warranties. The Company represents and warrants to
the Initial Purchaser as set forth below in this Section 1.
(a) The Preliminary Memorandum, at the date thereof, did not contain any
untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading. The Final Memorandum, at the
date hereof, does not, and at the Closing Date will not (and any amendment
or supplement thereto, at the date thereof and at the Closing Date, will
not), contain any untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided, however,
that the Company makes no representation or warranty as to the information
contained in or omitted from the Preliminary Memorandum or the Final
Memorandum, or any amendment or supplement thereto, in reliance upon and in
conformity with information furnished in writing to the Company by or on
behalf of the Initial Purchaser specifically for inclusion therein.
(b) Neither the Company, nor any of its Affiliates (as defined in Rule
501(b) of Regulation D under the Securities Act ("Regulation D")), nor any
person acting on its or their behalf has, directly or indirectly, made
offers or sales of any security, or solicited offers to buy any security,
under circumstances that would require the registration of the Securities
under the Securities Act.
(c) Neither the Company, nor any of its Affiliates, nor any person acting
on its or their behalf has engaged in any form of general solicitation or
general advertising (within the meaning of Regulation D) in connection with
any offer or sale of the Securities in the United States.
(d) The Securities satisfy the eligibility requirements of Rule
144A(d)(3) under the Securities Act.
(e) Neither the Company, nor any of its Affiliates, nor any person acting
on its or their behalf has engaged in any directed selling efforts with
respect to the Securities, and each of them has complied with the offering
restrictions requirement of Regulation S ("Regulation S") under the
Securities Act. Terms used in this paragraph have the meanings given to
them by Regulation S.
(f) The Company is not an "investment company" within the meaning of the
Investment Company Act of 1940, as amended (the "Investment Company Act")
without taking account of any exemption arising out of the number of holders
of the Company's securities.
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(g) The Company is subject to and in full compliance with the reporting
requirement of Section 13 or Section 15(d) of the Exchange Act.
(h) The Company has not paid or agreed to pay to any person any
compensation for soliciting another to purchase any securities of the
Company (except as contemplated by this Agreement).
(i) Each of the Company and CHH Receivables, Inc., a Delaware corporation
(the "Subsidiary") is a Delaware corporation validly existing in good
standing under the laws of the State of Delaware, with full corporate power
and authority to own its properties and conduct its business as presently
conducted and as described in the Preliminary Memorandum and Final
Memorandum, and is duly qualified to do business as a foreign corporation
and is in good standing under the laws of each jurisdiction which requires
such qualification wherein it owns or leases properties or conducts
business.
(j) The Company's authorized equity capitalization is as set forth in the
Preliminary Memorandum and Final Memorandum. The capital stock and
indebtedness of the Company conforms to the description thereof contained in
the Preliminary Memorandum and Final Memorandum. The outstanding shares of
the Company's Common Stock, par value $.01 per share, have been duly and
validly authorized and issued and are fully paid and nonassessable. The
Securities being sold hereunder have been duly and validly authorized and,
when validly authenticated, issued and delivered in accordance with the
Indenture and paid for by the Initial Purchaser pursuant to this Agreement,
will be validly issued and outstanding obligations enforceable in accordance
with their terms and entitled to the benefits of the Indenture. Upon
delivery of the Securities pursuant to this Agreement and payment therefore
as contemplated herein, the Initial Purchaser will acquire good and
marketable title to the Securities, free and clear of any liens, claims,
encumbrances, and security interests ("Liens"), restriction on transfer
(other than those imposed by state or Federal securities laws) or other
defect in title. The appropriate number of shares of Common Stock issuable
upon conversion of the Securities has been duly reserved for issuance, and
such shares have been duly and validly authorized, and will when issued upon
conversion of the Securities against delivery thereof, be validly issued,
fully paid and non-assessable.
(k) All the outstanding shares of capital stock of the Subsidiary have
been duly and validly authorized and issued and are fully paid and
nonassessable, and are owned of record and beneficially by the Company free
and clear of any Liens other than those described in the Preliminary
Memorandum and Final Memorandum. Other than as disclosed in the Preliminary
Memorandum and Final Memorandum, there are no outstanding rights, warrants,
or options to acquire or instruments convertible into or exchangeable for,
any shares of capital stock or equity interest in the Subsidiary. The
Company's only subsidiaries (other than the Subsidiary) are
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those listed on Exhibit 22 to the Company's Annual Report on Form 10-K for
the fifty-two week period ended January 30, 1993, and individually or in the
aggregate do not constitute a "significant subsidiary" as defined in
Regulation S-X under the Act.
(l) Each of the Company and the Subsidiary have good and marketable title
to their respective properties, free and clear of all Liens other than those
referred to in the Preliminary Memorandum and Final Memorandum and for such
Liens as do not materially affect the aggregate value of such property taken
as a whole and that do not materially interfere with the uses or proposed
uses of such properties. The properties of the Company and the Subsidiary
necessary to the conduct of their businesses (as presently conducted and as
described in the Preliminary Memorandum and Final Memorandum) are in good
repair (reasonable wear and tear excepted), insured in accordance with
industry practice and suitable for their uses. The real properties referred
to in the Preliminary Memorandum and Final Memorandum as held under lease by
the Company are held by it under valid, subsisting and enforceable leases
with such exceptions as are not, separately or in the aggregate, material
and do not interfere with the conduct of the business of the Company, and no
defaults are existing under any such leases that, separately or in the
aggregate, would have a material adverse effect on the business or financial
condition of the Company.
(m) There is no pending or, to the Company's knowledge, threatened
action, suit or proceeding before any court or governmental agency,
authority or body or any arbitrator involving the Company or the Subsidiary
or to which the business or property of either of them is or may be subject
of a character required to be disclosed in the Preliminary Memorandum and
Final Memorandum which is not adequately disclosed in the Preliminary
Memorandum and Final Memorandum, and there is no statute, regulation,
franchise, contract or other document of a character required to be
described in the Preliminary Memorandum and Final Memorandum, or required to
be filed under the Exchange Act, which is not described or filed as
required. The statements in the Preliminary Memorandum and Final Memorandum
under the captions "Business - Recapitalization" and "Business - Legal
Proceedings - Chapter 11 Proceedings; Unresolved Claims" fairly summarize
the matters therein described.
(n) The consolidated financial statements of the Company and the related
notes and schedules included and incorporated by reference in the
Preliminary Memorandum and Final Memorandum comply as to form with the
requirements of the Act and the Exchange Act and the respective rules
thereunder, and present fairly the consolidated financial position,
consolidated results of operations, consolidated cash flows, and
consolidated shareholders' equity of the Company for the periods or at the
dates therein specified. Such consolidated financial statements and the
related notes and schedules have been prepared in conformity with generally
accepted accounting principles,
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consistently applied throughout the periods therein specified except as
otherwise set forth in the Preliminary Memorandum and Final Memorandum.
Price Waterhouse are independent accountants within the meaning of the Act
and the Exchange Act and the respective rules thereunder. The financial
information of the Company set forth in the Preliminary Memorandum and Final
Memorandum under the headings "Offering Memorandum Summary",
"Capitalization," "Selected Consolidated Financial Data" and "Management's
Discussion and Analysis of Financial Condition and Results of Operations" has
been fairly stated in all material respects in relation to the relevant
consolidated financial statements of the Company from which it has been
derived.
(o) Subsequent to July 1, 1993, the Company and the Subsidiary have not
sustained any material loss or interference with their respective businesses
or properties from fire, flood, earthquake, accident or other calamity,
whether or not covered by insurance, or from any labor dispute or court or
governmental action, order or decree; and subsequent to the dates as of
which information is given in the Preliminary Memorandum and Final
Memorandum, except as set forth therein, neither the Company nor the
Subsidiary has incurred any liabilities or obligations, direct or
contingent, or entered into any transactions, not in the ordinary course of
business and material, separately or in the aggregate, to the business of
the Company or the Subsidiary, and there has not been any material change in
the working capital, receivables based financing, long-term debt and
capitalized lease obligations, or capital stock of the Company or the
Subsidiary, or the issuance of any options, warrants or rights to purchase
the capital stock of the Company, or any payment or declaration of any
dividend or other distribution with respect to the Company's capital stock,
or any material adverse change, or any development involving a prospective
material adverse change, in the business, financial position, net worth or
results of operations of the Company or the Subsidiary.
(p) Neither the Company nor the Subsidiary is in violation of any term or
provision of its certificate of incorporation or bylaws, or any franchise,
license, certificate, permit, judgment, authorization, approval, decree,
order, statute, rule or regulation which violation is reasonably expected to
have a material adverse effect on the business of the Company or the
Subsidiary. No default exists, and no event has occurred which, with
notice or lapse of time, or both, would constitute a default, in the due
performance and observance of any term, covenant or condition of any
indenture, note, mortgage, deed of trust, bank loan or other credit
agreement, or any other agreement or instrument to which the Company or the
Subsidiary is a party or by which either of them or any of their property is
or may be bound or affected, which default would, separately or in the
aggregate, have a material adverse effect on the business or financial
condition of the Company or the Subsidiary.
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(q) Neither the Company nor the Subsidiary is involved in any labor
dispute with any union or group of employees nor, to the knowledge of the
Company, is any dispute threatened which dispute or disputes would,
separately or in the aggregate, have a material adverse effect on the
business or financial condition of the Company or the Subsidiary.
(r) There has not been any generation, use, handling, transportation,
treatment, storage, release or disposal of any Hazardous Substance (as
defined herein) in connection with the conduct of the business of the
Company or its subsidiaries or the use of any property or facility of the
Company or any of its subsidiaries which has created any liability under any
Environmental Laws that is or could reasonably be expected to be material to
the business or financial condition of the Company and its subsidiaries,
taken as a whole. Neither the Company nor any subsidiary has received
(1) any notice or claim to the effect that it is or may be liable to any
person as a result of the release or threatened release of any Hazardous
Substance which liability is or could reasonably be expected to be material
to the business or financial condition of the Company and its subsidiaries,
taken as a whole or (2) any letter or request for information under
Section 104 of the Comprehensive Environmental Response, Compensation and
Liability Act (42 U.S.C. Section 9604) or comparable state laws, and to the
best of the Company's knowledge, none of the operations of the Company or
any Subsidiary is the subject of any federal or state investigation
evaluating whether any remedial action is needed to respond to a release
or threatened release of any Hazardous Substance at any facility of the
Company or any Subsidiary or at any other location.
The term "Hazardous Substance" shall mean any (1) substance that is
defined or listed in, or otherwise classified pursuant to any applicable
laws or regulations as a "hazardous substance," "hazardous material,"
"hazardous waste," "toxic substance," or any other formulation intended to
define, list or classify substances by reason of deleterious properties such
as ignitability, corrosivity, reactivity, carcinogenicity, reproductive
toxicity, "TCLP toxicity" or "EP toxicity," (2) oil, petroleum or
petroleum-derived substances and drilling fluid, produced water, and other
waste associated with the exploration, development, or production of crude
oil, natural gas or geothermal resources, or (3) any flammable substance or
explosive, any radioactive material, any hazardous waste or substance, any
toxic waste or substance or any other material or pollutant which poses a
hazard to any property of the Company or to persons on or about such
property.
(s) The Company and its subsidiaries have filed all federal, state, local
and foreign tax returns which are required to be filed or have requested
extensions thereof and have paid all taxes shown on such returns and all
assessments received by them to the extent that the same have become due,
other than assessments being contested in good faith.
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(t) This Agreement, the Indenture and the Registration Agreement have
been duly authorized, executed and delivered by the Company and are the
valid and binding agreements of the Company enforceable against the Company
in accordance with their terms. Neither the issue and sale of the
Securities, nor the execution and delivery of this Agreement, the Indenture
or the Registration Agreement, nor the consummation of the transactions
contemplated herein or therein, nor the fulfillment of the terms hereof or
thereof will conflict with, result in a breach or violation of, or
constitute a default under any applicable law or the charter or bylaws of
the Company or the terms of any indenture or other agreement or instrument
to which the Company or the Subsidiary is a party or bound or any judgment,
order or decree applicable to the Company or the Subsidiary of any court,
regulatory body, administrative agency, governmental body or arbitrator
having jurisdiction over the Company or the Subsidiary. No consent,
approval, authorization or order of any court or governmental agency or body
is required for the consummation of the transactions contemplated herein,
except such as have been obtained or such as may be required under the Act
or securities or blue sky laws of any jurisdiction in connection with the
purchase and distribution of the Securities by you.
(u) The Company owns, or is licensed or otherwise has the full exclusive
right to use, all trademarks, trade names, and service marks which are used
in or necessary for the conduct of its business as described in the
Preliminary Memorandum and Final Memorandum. No claims have been asserted
by any person to the use of any such trademarks, trade names, or service
marks or challenging or questioning the validity or effectiveness of any
such trademark, trade name, or service mark. The use, in connection with
the business and operations of the Company, of such trademarks, trade names,
and service marks does not, to the Company's knowledge, infringe on the
rights of any person.
(v) The Company and the Subsidiary possess such certificates, authorities
or permits issued by the appropriate local, state, federal or foreign
regulatory agencies or bodies necessary to conduct the business now operated
by them, and neither the Company nor the Subsidiary has received any notice
of proceedings relating to the revocation or modification of any such
certificate, authority or permit which, separately or in the aggregate, if
the subject of any unfavorable decision, ruling or finding, would have a
material adverse effect upon the business or financial condition of the
Company or the Subsidiary.
(w) The Company maintains 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 accountability for assets; (iii) access to assets
is permitted only in accordance with management's general or specific
authorizations; and (iv) the
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recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(x) Except for registration rights held by First Plaza Group Trust
("First Plaza") pursuant to that certain Stockholder's Agreement dated as of
January 25, 1993 (the "First Plaza Stockholder's Agreement"), which rights
have been waived by First Plaza with respect to the Shelf Registration
Statement for a period of 90 days after the date of the Final Memorandum,
provided such Final Memorandum is dated no later than January 30, 1994, no
holders of securities of the Company have rights to the registration of such
securities under the Shelf Registration Statement.
(y) The Company's plan of reorganization (the "Plan of Reorganization")
was confirmed by order (the "Confirmation Order") of the United States
Bankruptcy Court for the Central District of California (the "Bankruptcy
Court") on September 14, 1992 after adequate notice and a hearing, both in
compliance with the United States Bankruptcy Code, 11 U.S.C. Section 101
et. seq. (the "Code"), and applicable national and local bankruptcy rules
(the "Bankruptcy Rules"). Notice in compliance with the Code, the
Bankruptcy Rules and the Confirmation Order was given of the time fixed for
filing proofs of claims by the order of the Bankruptcy Court entered
September 6, 1991 (Dkt. No. 1367). Each of the Plan of Reorganization and
the Confirmation Order remains in force and effect, without amendment, and
the Plan of Reorganization has been substantially consummated (within the
meaning of 11 U.S.C. Section 1101(2)) in accordance with its terms. The
Company is not in violation of, and no default by the Company exists with
respect to, any term or provision of the Plan of Reorganization or the
Confirmation Order. There is no condition specified in the Plan of
Reorganization the occurrence of which would result in the termination of
the Plan of Reorganization. No appeal of the Confirmation Order has been
filed, and no request for revocation of the Confirmation Order under 11
U.S.C. Section 1144 has been made; and there is no other legal or
governmental proceeding pending or, to the Company's knowledge, threatened
challenging or questioning the Plan of Reorganization, the Confirmation
Order, or the implementation of either of them.
2. Purchase and Sale.
(a) Subject to the terms and conditions and in reliance upon the
representations and warranties herein set forth, the Company agrees to sell
to the Initial Purchaser, and the Initial Purchaser agrees to purchase from
the Company, at a purchase price of 96.5% of the principal amount thereof,
the Firm Securities. The initial conversion price is $12.19 per share.
(b) Subject to the terms and conditions and in reliance upon the
representations and warranties herein set forth, the Company hereby grants
an option (the "Option") to the Initial Purchaser to purchase the Option
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Securities at the same purchase price per share as the Initial Purchaser
shall pay for the Firm Securities. The Option may be exercised only to cover
over-allotments in the sale of the Firm Securities by the Initial Purchaser.
The Option may be exercised in whole or in part at any time (but not more
than once) on or before the 30th day after the date of the Final Memorandum
upon written or telegraphic notice by the Initial Purchaser to the Company
setting forth the number of Option Securities as to which the Initial
Purchaser is exercising the Option and the settlement date therefor.
Delivery of certificates for the Option Securities, and payment therefor,
shall be made as provided in Section 3 hereof.
3. Delivery and Payment. Delivery of and payment for the Firm Securities
and the Option Securities (if the Option provided for in Section 2(b) hereof
shall have been exercised on or before the third business day prior to the
Closing Date) shall be made at 10:00 AM, New York City time, on December 21,
1993, or such later date (not later than December 28, 1993) as the Initial
Purchaser shall designate, which date and time may be postponed by agreement
between the Initial Purchaser and the Company or as provided in Section 9
hereof (such date and time of delivery and payment for the Securities being
herein called the "Closing Date"). Delivery of the Securities shall be made to
the Initial Purchaser against payment by the Initial Purchaser of the purchase
price thereof to or upon the order of the Company by certified or official bank
check or checks drawn on or by a New York Clearing House bank and payable in
next day funds or such other manner of payment as may be agreed by the Company
and the Initial Purchaser. Delivery of the Securities shall be made at such
location as the Initial Purchaser shall reasonably designate at least one
business day in advance of the Closing Date and payment for the Securities
shall be made at the office of Millbank, Tweed, Hadley & McCloy ("Counsel for
the Company"), 601 South Figueroa Street, Los Angeles, California.
Certificates for the Securities shall be registered in such names and in such
denominations as the Initial Purchaser may request not less than three full
business days in advance of the Closing Date.
The Company agrees to have the Securities available for inspection, checking
and packaging by the Initial Purchaser in New York, New York, not later that
1:00 PM on the business day prior to the Closing Date.
If the Option is exercised after the third business day prior to the Closing
Date, the Company will deliver (at the expense of the Company) to the Initial
Purchaser, at Seven World Trade Center, New York, New York, on the date
specified by the Initial Purchaser (which shall be within three business days
after exercise of the Option), certificates for the Option Securities in such
names and denominations as the Initial Purchaser shall have requested against
payment of the purchase price thereof to or upon order of the Company by
certified or official bank check or checks drawn on or by a New York Clearing
House bank and payable in next day funds or such other manner of payment as may
be agreed by the Company and the Initial Purchaser. If settlement for the
Option Securities occurs after the Closing Date, the Company will deliver to
the Initial Purchaser on the settlement date for the Option Securities, and the
obligation of the Initial Purchaser to purchase the Option Securities shall be
conditioned upon receipt of, supplemental opinions, certificates and letters
confirming as of such date the opinions, certificates and letters delivered on
the Closing Date pursuant to Section 6 hereof.
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4. Offering of Securities. The Initial Purchaser represents and warrants
to and agrees with the Company that:
(a) It is a qualified institutional buyer as defined in Rule 144A under
the Act (a "QIB"). The Initial Purchaser agrees with the Company that (i)
it has not and will not solicit offers for, or offer or sell, the Securities
by any form of general solicitation or general advertising (as those terms
are used in Regulation D under the Act) or in any manner involving a public
offering within the meaning of Section 4(2) of the Act; and (ii) it has and
will solicit offers for the Securities only from, and will offer the
Securities only to, persons that it reasonably believes to be (A) in the
case of offers inside the United States, (x) QIBs or (y) other accredited
investors (as defined in Rule 501(a)(1), (2), (3), (4) or (7) under the
Securities Act ("Accredited Investors") that, prior to their purchase of the
the Securities, deliver to the Initial Purchaser a letter containing
representations and agreements set forth in Exhibit A to the Final
Memorandum and (B) in the case of offers outside the United States, to
persons other than U.S. persons ("foreign purchasers," which term shall
include dealers or other professional fiduciaries in the United States
acting on a discretionary basis for foreign beneficial owners (other than an
estate or trust)) that, in each case, in purchasing such Securities are
deemed to have represented and agreed as provided in the Final Memorandum
(or, if the Final Memorandum is not in existence, in the most recent
Offering Memorandum).
(b) With respect to offers and sales outside the United States as set
forth in Exhibit B.
5. Agreements. The Company agrees with the Initial Purchaser that:
(a) The Company will furnish to the Initial Purchaser and to Counsel for
the Initial Purchaser, without charge, during the period referred to in
paragraph (c) below, as many copies of the Final Memorandum and any
amendments and supplements thereto as it may reasonably request. The
Company will pay the expenses of printing or other production of all
documents relating to the offering.
(b) The Company will not amend or supplement the Final Memorandum, other
than by filing documents under the Exchange Act which are incorporated by
reference therein, without the prior written consent of the Initial
Purchaser; provided, however, that, prior to the completion of the
distribution of the Securities by the Initial Purchaser (as determined by
the Initial Purchaser), the Company will not file any document under the
Exchange Act which is incorporated by reference in the Final Memorandum
unless, prior to such proposed filing, the Company has furnished the Initial
Purchaser with a copy of such document for their review and the Initial
Purchaser has not reasonably objected to the filing of such document. The
Company will promptly advise the Initial Purchaser when any document filed
under the Exchange Act which is incorporated by reference in the Final
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Memorandum shall have been filed with the Securities and Exchange Commission
(the "Commission").
(c) If at any time prior to the completion of the sale of the Securities
by the Initial Purchaser, any event occurs as a result of which the Final
Memorandum, as then amended or supplemented, would include any untrue
statement of a material fact or omit to state any material fact necessary to
make the statements therein, in the light of the circumstances under which
they were made, not misleading, or if it should be necessary to amend or
supplement the Final Memorandum to comply with applicable law, the Company
will promptly notify the Initial Purchaser of the same and, subject to the
prior written consent of the Initial Purchaser as provided by paragraph (b)
of this Section 5, will prepare and provide to the Initial Purchaser
pursuant to paragraph (a) of this Section 5 an amendment or supplement which
will correct such statement or omission or effect such compliance.
(d) The Company will arrange for the qualification of the Securities for
sale by the Initial Purchaser under the laws of such jurisdictions as the
Initial Purchaser may designate and will maintain such qualifications in
effect so long as required for the sale of the Securities. 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. The Company will use its best efforts to
have the Securities designated for trading on PORTAL.
(e) Neither the Company, nor any of its Affiliates, nor any person acting
on its or their behalf will, directly or indirectly, make offers or sales of
any security, or solicit offers to buy any security, under circumstances
that would require the registration of the Securities under the Securities
Act.
(f) Neither the Company, nor any of its Affiliates, nor any person acting
on its or their behalf will engage in any form of general solicitation or
general advertising (within the meaning of Regulation D) in connection with
any offer or sale of the Securities in the United States.
(g) So long as any of the Securities are "restricted securities" within
the meaning of Rule 144(a)(3) under the Securities Act, the Company will,
during any period in which it is not subject to and in compliance with
Section 13 or 15(d) of the Exchange Act, provide to each holder of such
restricted securities and to each prospective purchaser (as designated by
such holder) of such restricted securities, upon the request of such holder
or prospective purchaser, any information required to be provided by Rule
144A(d)(4) under the Securities Act. This covenant is intended to be for
the benefit of the holders, and the prospective purchasers designated by
such holders, from time to time of such restricted securities.
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(h) Neither the Company, nor any of its Affiliates, nor any person acting
on its or their behalf will engage in any directed selling efforts with
respect to the Securities, and each of them will comply with the offering
restrictions requirement of Regulation S. Terms used in this paragraph have
the meanings given to them by Regulation S.
(i) The Company will cooperate with the Initial Purchaser and use its
best efforts to permit the Securities to be eligible for clearance and
settlement through The Depository Trust Company.
(j) The Company will not, until 90 days following the Closing Date,
without the prior written consent of the Initial Purchaser, offer, sell or
contract to sell, or otherwise dispose of, directly or indirectly, or
announce the offering of, any other shares of Common Stock or any securities
convertible into, or exchangeable for, shares of Common Stock; provided,
however, that the Company may issue and sell Common Stock pursuant to any
employee stock option plan, stock ownership plan or dividend reinvestment
plan of the Company described in the Final Memorandum and in effect on the
date hereof, and the Company may issue Common Stock issuable upon the
conversion of securities or the exercise of warrants outstanding on the date
hereof and described in the Final Memorandum or contemplated by the Plan of
Reorganization as it is in effect as of the Execution Time.
6. Conditions to the Obligations of the Initial Purchaser. The obligations
of the Initial Purchaser to purchase the Firm Securities and the Option
Securities, as the case may be, shall be subject to the accuracy of the
representations and warranties on the part of the Company contained herein at
the date and time that this Agreement is executed and delivered by the parties
hereto (the "Execution Time"), and, the Closing Date and any settlement date
pursuant to Section 3 hereof, to the accuracy of the statements of the Company
made in any certificates pursuant to the provisions hereof, to the performance
by the Company of its obligations hereunder and to the following additional
conditions:
(a) The Company shall have furnished to the Initial Purchaser the opinions
of the following:
(i) Marc E. Bercoon, General Counsel of the Company, in form and
substance satisfactory to the Initial Purchaser, dated the Closing Date, to
the effect set forth in Exhibit 6A hereto. In rendering such opinion, such
counsel may rely (A) as to matters involving the application of laws of any
jurisdiction other than the States of California, Delaware, or New York or
the United States, to the extent he deems proper and as specified in such
opinion, upon the opinion of other counsel of good standing whom he believes
to be reliable and who are satisfactory to counsel to the Initial Purchaser
and (B) as to matters of fact, to the extent proper, on certificates of
responsible officers of the Company and public officials.
[L120321.2] 13
14
(ii) Millbank, Tweed, Hadley & McCloy, Counsel for the Company, dated
the Closing Date, in form and substance satisfactory to the Initial
Purchaser, to the effect set forth in Exhibit 6B hereto. In rendering
such opinion, such counsel may rely (A) as to matters involving the
application of laws of any jurisdiction other than the State of New York,
the General Corporate Law of Delaware or the Federal laws of the United
States, to the extent they deem proper and as specified in such opinion,
upon the opinion of other counsel of good standing whom they believe to
be reliable and who are satisfactory to Counsel for the Initial Purchaser
and (B) as to matters of fact, to the extent they deem proper, on
certificates of responsible officers of the Company and public officials.
(b) The Initial Purchaser shall have received from Munger, Tolles & Olson,
counsel for the Initial Purchaser, such opinion or opinions, dated the
Closing Date, with respect to the issuance and sale of the Securities, the
Final Memorandum (as amended or supplemented at the Closing Date) and other
related matters as the Initial Purchaser may reasonably require, and the
Company shall have furnished to such counsel such documents as they request
for the purpose of enabling them to pass upon such matters.
(c) The Company shall have furnished to the Initial Purchaser a
certificate of the Company, signed by the Chairman of the Board or the
President and the principal financial or accounting officer of the Company,
dated the Closing Date, to the effect that the signers of such certificate
have carefully examined the Final Memorandum, any amendment or supplement to
the Final Memorandum and this Agreement, and that:
(i) to the best of their knowledge, the representations and warranties
of the Company in this Agreement are true and correct in all material
respects on and as of the Closing Date with the same effect as if made on
the Closing Date, and the Company has complied with all the agreements
and satisfied all the conditions on its part to be performed or satisfied
hereunder at or prior to the Closing Date; and
(ii) to the best of their knowledge, since the date of the most recent
financial statements included in the Final Memorandum, there has been no
material adverse change in the condition (financial or other), earnings,
business or properties of the Company and its subsidiaries, whether or
not arising from transactions in the ordinary course of business, except
as set forth in or contemplated by the Final Memorandum (exclusive of any
amendment or supplement thereto).
(d) At the Execution time and at the Closing Date, Price Waterhouse shall
have furnished to the Initial Purchaser a letter or letters, dated
respectively as of the Execution Time and as of the Closing Date, in form and
substance satisfactory to the Initial Purchaser, confirming that they are
independent accountants within the meaning of the Securities Act and the
Exchange Act and the applicable rules and regulations thereunder and Rule 101
of the Code of Professional Conduct of the
[L120321.2] 14
15
American Institute of Certified Public Accountants (the "AICPA") and stating
in effect that:
(i) in their opinion the consolidated financial statements and financial
statement schedules included or incorporated in the Final Memorandum and
audited by them comply in form in all material respects with the applicable
accounting requirements of the Act and the Exchange Act and the related
published rules and regulations thereunder;
(ii) on the basis of a reading of the latest unaudited financial
statements made available by the Company and its subsidiaries; their limited
review in accordance with the standards established by the AICPA of the
unaudited interim financial information as indicated in their reports
included or incorporated in the Final Memorandum; carrying out certain
specified procedures (but not an examination in accordance with generally
accepted auditing standards) which would not necessarily reveal matters of
significance with respect to the comments set forth in such letter; a
reading of the minutes of the meetings of the stockholders, directors and
Audit, Compensation and Other Special committees of the Company and the
Subsidiaries; and inquiries of certain officials of the Company who have
responsibility for financial and accounting matters of the Company and its
subsidiaries as to transactions and events subsequent to January 30, 1993,
nothing came to their attention which caused them to believe that:
(1) any unaudited financial statements included or incorporated in the
Final Memorandum do not comply in form in all material respects with
applicable accounting requirements and with the published rules and
regulations of the Commission with respect to financial statements
included or incorporated in quarterly reports on Form 10-Q under the
Exchange Act; and said unaudited financial statements are not, in all
material respects, in conformity with generally accepted accounting
principles applied on a basis substantially consistent with that of the
audited financial statements included or incorporated in the Final
Memorandum; or
(2) with respect to the period subsequent to January 30, 1993, there were
any changes, at a specified date not more than five business days prior to
the date of the letter, in the working capital, receivables based
financing, long-term debt and capitalized lease obligations or capital
stock of the Company or decreases in total shareholders' equity of the
Company as compared with the amounts shown on the January 30, 1993
consolidated balance sheet included or incorporated in the Final
Memorandum, or for the period from January 31, 1993 to such specified date
there were any decreases, as compared with the corresponding period in the
preceding year in sales, in earnings from operations before interest
expense, reorganization items, and income taxes, or in total or per share
amounts of net earnings of the Company, except in all instances for
changes or decreases set forth in
[L120321.2] 15
16
such letter, in which case the letter shall be accompanied by an explanation
by the Company as to the significance thereof unless said explanation is not
deemed necessary by the Initial Purchaser; or
(3) the information included under the headings "Summary of Consolidated
Financial Data and Certain Operating Data" and "Selected Consolidated
Financial Data" is not in conformity with the disclosure requirements of
Regulation S-K; or
(iii) they have performed certain other specified procedures as a
result of which they determined that certain information of an accounting,
financial or statistical nature (which is limited to accounting, financial
or statistical information derived from the general accounting records of
the Company and its subsidiaries) set forth in the Final Memorandum,
including the information set forth under the captions "Selected
Consolidated Financial Information" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" in the Final
Memorandum, the information included or incorporated in Items 1, 2, 6, 7,
11, 13 and 14 of the Company's Annual Report on Form 10-K, incorporated in
the Final Memorandum, and the information included in the "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
included or incorporated in the Company's Quarterly Reports on Form 10-Q,
incorporated in the Final Memorandum, agree with the accounting records of
the Company and its subsidiaries, excluding any questions of legal
interpretation.
All references in this Section 6(d) to the Final Memorandum shall be deemed
to include any amendment or supplement thereto at the date of the letter.
(e) Subsequent to the Execution Time or, if earlier, the dates as of which
information is given in the Final Memorandum, there shall not have been (i)
any change or decrease specified in the letter or letters referred to in
paragraph (d) of this Section 6 or (ii) any change, or any development
involving a prospective change, in or affecting the business or properties of
the Company and its subsidiaries the effect of which, in any case referred to
in clause (i) or (ii) above, is, in the judgment of the Initial Purchaser, so
material and adverse as to make it impractical or inadvisable to market the
Securities as contemplated by the Final Memorandum.
(f) Prior to the Closing Date, the Company shall have furnished to the
Initial Purchaser a letter substantially in the form of Exhibit 6C hereto
from each of Zell/Chilmark Fund, L.P., each director of the Company and
certain executive officers of the Company addressed to the Initial Purchaser,
in which each such person agrees not to offer, sell or contract to sell or
otherwise dispose of, directly or indirectly, or announce an offering of, any
shares of Common Stock or any securities convertible into, or exchangeable
for, shares of Common Stock for a period of 90 days following the Execution
Time without the prior written consent of the Initial Purchaser.
[L120321.2] 16
17
(g) Prior to the Closing Date, the Company shall have furnished to the
Initial Purchaser a copy of that certain agreement, dated as of December 8,
1993 by and between First Plaza and the Company.
(h) The Common Stock issuable upon conversion of the Securities shall have
been duly authorized for listing on the New York Stock Exchange subject only
to official notice of issuance.
(i) Prior to the Closing Date, the Company shall have furnished to the
Initial Purchaser such further information, certificates and documents as the
Initial Purchaser may reasonably request.
If any of the conditions specified in this Section 6 shall not have been
fulfilled in all material respects when and as provided in this Agreement, or
if any of the opinions and certificates mentioned above or elsewhere in this
Agreement shall not be in all material respects reasonably satisfactory in form
and substance to the Initial Purchaser and Counsel for the Initial Purchaser,
this Agreement and all obligations of the Initial Purchaser hereunder may be
cancelled at, or at any time prior to, the Closing Date by the Initial
Purchaser. Notice of such cancellation shall be given to the Company in
writing or by telephone or telegraph confirmed in writing.
The documents required to be delivered by this Section 6 will be delivered
at the Office of Counsel for the Initial Purchaser, at One Liberty Plaza, New
York, New York, on the Closing Date.
7. Reimbursement of Expenses. If the sale of the Securities provided for
herein is not consummated because any condition to the obligations of the
Initial Purchaser set forth in Section 6 hereof is not satisfied, because of
any termination pursuant to Section 9 hereof or because of any refusal,
inability or failure on the part of the Company to perform any agreement herein
or comply with any provision hereof 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 fees and disbursements of counsel)
that shall have been incurred by them in connection with the proposed purchase
and sale of the Securities.
8. Indemnification and Contribution. (a) The Company agrees to indemnify
and hold harmless the Initial Purchaser, the directors, officers, employees and
agents of each Initial Purchaser and each person who controls the Initial
Purchaser within the meaning of either the Securities Act or the Exchange Act
against any and all losses, claims, damages or liabilities, joint or several,
to which it may become subject under the Securities Act, the Exchange Act or
other Federal or state statutory law or regulation, at common law or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in the Preliminary Memorandum, the Final
Memorandum or any information provided by the Company to any holder or
prospective purchaser of Securities pursuant to Section 5(h), or in any
amendment thereof or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the
[L120321.2] 17
18
statements therein not misleading, and agrees to reimburse each such
indemnified party, as incurred, for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, 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 such untrue statement or
alleged untrue statement or omission or alleged omission made in the
Preliminary Memorandum or the Final Memorandum, or in any amendment thereof or
supplement thereto, in reliance upon and in conformity with written information
furnished to the Company by or on behalf of any Initial Purchaser specifically
for inclusion therein, provided, further, that the indemnity agreement
contained in this subsection (a) with respect to any Preliminary Memorandum
shall not inure to the benefit of any Initial Purchaser (or to the benefit of
any person employed by or controlling such Initial Purchaser) from whom the
person asserting any such loss, expense, liability or claim purchased the
Securities which is the subject thereof if the Final Memorandum corrected any
such alleged untrue statement or omission and if such Initial Purchaser failed
to send or give a copy of the Final Memorandum to such person at or prior to
the written confirmation of the sale of such Securities to such person. This
indemnity agreement will be in addition to any liability which the Company may
otherwise have.
(b) The Initial Purchaser agrees to indemnify and hold harmless the
Company, each of its directors, each of its officers, and each person who
controls the Company within the meaning of either the Securities Act or the
Exchange Act, to the same extent as the foregoing indemnity from the Company to
the Initial Purchaser, but only with reference to written information relating
to the Initial Purchaser furnished to the Company by or on behalf of the
Initial Purchaser specifically for inclusion in the Preliminary Memorandum or
the Final Memorandum (or in any amendment or supplement thereto). This
indemnity agreement will be in addition to any liability which the Initial
Purchaser may otherwise have. The Company acknowledges that the statements set
forth in the last paragraph of the cover page and under the heading "Plan of
Distribution" in the Preliminary Memorandum and the Final Memorandum constitute
the only information furnished in writing by or behalf of the Initial Purchaser
for inclusion in the Preliminary Memorandum or the Final Memorandum (or in any
amendment or supplement thereto).
(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 in writing of the commencement
thereof; but the failure so to notify the indemnifying party (i) will not
relieve it from liability under paragraph (a) or (b) above unless and to the
extent it did not otherwise learn of such action and such failure results in
the forfeiture by the indemnifying party of substantial rights and defenses and
(ii) will not, in any event, relieve the indemnifying party from any
obligations to any indemnified party other than the indemnification obligation
provided in paragraph (a) or (b) above. The indemnifying party shall be
entitled to appoint counsel of the indemnifying party's choice at the
indemnifying party's expense to represent the indemnified party in any action
for which indemnification is sought (in which case the indemnifying party shall
not thereafter be responsible for the fees and expenses of any separate counsel
retained by the indemnified party or parties except as set forth below);
provided, however, that such counsel shall be
[L120321.2] 18
19
satisfactory to the indemnified party. Notwithstanding the indemnifying
party's election to appoint counsel to represent the indemnified party in an
action, the indemnified party shall have the right to employ separate counsel
(including local counsel), and the indemnifying party shall bear the reasonable
fees, costs and expenses of such separate counsel if (i) the use of counsel
chosen by the indemnifying party to represent the indemnified party would
present such counsel with a conflict of interest, (ii) the actual or potential
defendants in, or targets of, any such action include both the indemnified
party and the indemnifying party and the indemnified party shall have
reasonably concluded that there may be legal defenses available to it and/or
other indemnified parties which are different from or additional to those
available to the indemnifying party, (iii) the indemnifying party shall not
have employed counsel satisfactory to the indemnified party to represent the
indemnified party within a reasonable time after notice of the institution of
such action or (iv) the indemnifying party shall authorize the indemnified
party to employ separate counsel at the expense of the indemnifying party. An
indemnifying party will not, without the prior written consent of the
indemnified parties, settle or compromise or consent to the entry of any
judgment with respect to any pending or threatened claim, action, suit or
proceeding in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified parties are actual or potential
parties to such claim or action) unless such settlement, compromise or consent
includes an unconditional release of each indemnified party from all liability
arising out of such claim, action, suit or proceeding.
(d) In the event that the indemnity provided in paragraph (a) or (b) of
this Section 8 is unavailable to or insufficient to hold harmless an
indemnified party for any reason, the Company and the Initial Purchaser agree
to contribute to the aggregate losses, claims, damages and liabilities
(including legal or other expenses reasonably incurred in connection with
investigating or defending same) (collectively "Losses") to which the Company
and the Initial Purchaser may be subject in such proportion as is appropriate
to reflect the relative benefits received by the Company and by the Initial
Purchaser from the offering of the Securities; provided, however, that in no
case shall the Initial Purchaser be responsible for any amount in excess of the
purchase discount or commission applicable to the Securities purchased by such
Initial Purchaser hereunder. If the allocation provided by the immediately
preceding sentence is unavailable for any reason, the Company and the Initial
Purchaser shall contribute in such proportion as is appropriate to reflect not
only such relative benefits but also the relative fault of the Company and of
the Initial Purchaser in connection with the statements or omissions which
resulted in such Losses as well as any other relevant equitable considerations.
Benefits received by the Company shall be deemed to be equal to the total net
proceeds from the offering (before deducting expenses) and benefits received by
the Initial Purchaser shall be deemed to be equal to the total purchase
discounts and commissions received by the Initial Purchaser from the Company in
connection with the purchase of the Securities hereunder. Relative fault shall
be determined by reference to whether any alleged untrue statement or omission
relates to information provided by the Company or the Initial Purchaser. The
Company and the Initial Purchaser agree that it would not be just and equitable
if contribution were determined by pro rata allocation or any other method of
allocation which does not take account of the equitable considerations referred
to above. Notwithstanding the provisions of this paragraph (d), 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 Section
8, each person who controls the
[L120321.2] 19
20
Initial Purchaser within the meaning of either the Securities Act or the
Exchange Act and each director, officer, employee and agent of an Initial
Purchaser shall have the same rights to contribution as such Initial Purchaser,
and each person who controls the Company within the meaning of either the
Securities Act or the Exchange Act and each officer and director of the Company
shall have the same rights to contribution as the Company, subject in each case
to the applicable terms and conditions of this paragraph (d).
9. Termination. This Agreement shall be subject to termination in the
absolute discretion of the Initial Purchaser, by notice given to the Company
prior to delivery of and payment for the Securities, if prior to such time (i)
trading in the Common Stock shall have been suspended by the Commission or the
New York Stock Exchange or trading generally on the New York Stock Exchange
shall have been suspended or limited or minimum prices shall have been
established on such exchange, (ii) a banking moratorium shall have been
declared either by Federal or New York State authorities or (iii) there shall
have occurred any outbreak or escalation of hostilities, declaration by the
United States of a national emergency or war or other calamity or crisis the
effect of which on financial markets is such as to make it, in the judgment of
the Initial Purchaser, impractical or inadvisable to proceed with the offering
or delivery of the Securities as contemplated by the Final Memorandum.
10. Representations and Indemnities to Survive. The respective
agreements, representations, warranties, indemnities and other statements of
the Company or its officers and of the Initial Purchaser set forth in or made
pursuant to this Agreement will remain in full force and effect, regardless of
any investigation made by or on behalf of the Initial Purchaser or the Company
or any of the officers, directors or controlling persons referred to in Section
8 hereof, and will survive delivery of and payment for the Securities. The
provisions of Sections 7 and 8 hereof shall survive the termination or
cancellation of this Agreement.
11. Notices. All communications hereunder will be in writing and
effective only on receipt, and, if sent to the Initial Purchaser, will be
mailed, delivered or telegraphed and confirmed to them, care of Salomon
Brothers Inc, at Seven World Trade Center, New York, New York 10048; or, if
sent to the Company, will be mailed, delivered or telegraphed and confirmed to
it at 3880 North Mission Road, Los Angeles, California 90031, attention: Legal
Department.
12. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and the
officers and directors and controlling persons referred to in Section 8 hereof,
and, except as expressly set forth in Section 5(h) hereof, no other person will
have any right or obligation hereunder.
13. Applicable Law. This Agreement will be governed by and construed in
accordance with the laws of the State of New York.
14. Business Day. For purposes of this Agreement, "business day" means
each Monday, Tuesday, Wednesday, Thursday and Friday that is not a day on which
[L120321.2] 20
21
banking institutions in The City of New York, New York are authorized or
obligated by law, executive order or regulation to close.
15. Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original, but all such
counterparts will together constitute one and the same instrument.
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to us the enclosed duplicate hereof, whereupon this
Agreement and your acceptance shall represent a binding agreement between the
Company and the Initial Purchaser.
Very truly yours,
Carter Hawley Hale Stores, Inc.
By________________________
Name:
Title:
The foregoing Agreement is hereby
confirmed and accepted as of
the date first above written
Salomon Brothers Inc
By__________________________
Name:
Title:
As the Initial Purchaser
[L120321.2]
21
22
EXHIBIT A
[L120321.2] A-1
23
EXHIBIT B
Selling Restrictions for Offers and
Sales Outside the United States
(1) (a) The Securities have not been and will not be registered
under the Securities Act and may not be offered or sold within the United
States or to, or for the account or benefit of, U.S. persons except in
accordance with Regulation S under the Securities Act or pursuant to an
exemption from the registration requirements of the Securities Act. The
Initial Purchaser represents and agrees that, except as otherwise permitted by
Section 4(a)(i) or (ii) of the Agreement to which this is an exhibit, it has
offered and sold the Securities, and will offer and sell the Securities, (i) as
part of its distribution at any time and (ii) otherwise until 40 days after the
later of the commencement of the Offering and the Closing Date, only in
accordance with Rule 903 of Regulation S under the Securities Act.
Accordingly, the Initial Purchaser represents and agrees that neither it, nor
any of its affiliates nor any person acting on its or their behalf has engaged
or will engage in any directed selling efforts with respect to the Securities
and that it and they have complied and will comply with the offering
restrictions requirement of Regulation S. Each Initial Purchaser agrees that,
at or prior to the confirmation of sale of Securities (other than a sale of
Securities pursuant to Section 4(a)(i) or (ii) of the Agreement to which this
is an exhibit), it shall have sent to each distributor, dealer or person
receiving a selling concession, fee or other remuneration that purchases
Securities from it during the restricted period a confirmation or notice to
substantially the following effect:
"The Securities covered hereby have not been registered under
the U.S. Securities Act of 1933 (the "Securities Act") and may not be
offered or sold within the United States or to, or for the account or
benefit of, U.S. persons (i) as part of their distribution at any time
or (ii) otherwise until 40 days after the later of the commencement of
the offering and [specify closing date of the offering], except in
either case in accordance with Regulation S or Rule 144A under the
Securities Act. Terms used above have the meanings given to them by
Regulation S."
(b) The Initial Purchaser also represents and agrees that
it has not entered and will not enter into any contractual arrangement with any
distributor (as that term is defined by Regulation S) with respect to the
distribution of the Securities, except with its affiliates or with the prior
written consent of the Company.
(c) Terms used in this paragraph have the meanings given
to them by Regulation S.
(2) The Initial Purchaser represents and agrees that (i) it has
not offered or sold, and will not offer or sell, in the United Kingdom, by
means of any document, any Securities other than to persons whose ordinary
business it is to buy or sell shares or debentures, whether as principal or as
agent (except in circumstances which do not constitute an offer to the public
within the meaning of the Companies Act 1985 of Great
[L120321.2] B-1
24
Britain), (ii) it has complied and will comply with all applicable provisions
of the Financial Services Act 1986 of the United Kingdom with respect to
anything done by it in relation to the Securities in, from or otherwise
involving the United Kingdom, 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 9(3) of the Financial Services Act 1986 (Investment
Advertisements) (Exemptions) Order 1988 or is a person to whom the document may
otherwise lawfully be issued or passed on.
[L120321.2] B-2
25
EXHIBIT C
[L120321.2] C-1
26
SALOMON BROTHERS INC
Seven World Trade Center
New York, New York 10048
December 14, 1993
Price Waterhouse
400 South Hope Street
Los Angeles, California 90071
Dear Sirs:
Salomon Brothers Inc, as principal or agent, in the placement
of 6-1/4% Convertible Senior Subordinated Notes due 2000 (the "Securities") to
be issued by Carter Hawley Hale Stores, Inc. will be reviewing certain
information relating to Carter Hawley Hale Stores, Inc. that will be included
in the Offering Memorandum which may be delivered to investors and utilized by
them as a basis for their investment decision. This review process, applied to
the information relating to the issuer, will be substantially consistent* with
the due diligence review process that we would perform if this placement of
Securities were being registered pursuant to the Securities Act of 1933, as
amended (the "Act). We are knowledgeable with respect to the due diligence
review process that would be performed if this placement of Securities were
being registered pursuant to the Act. We hereby request that you deliver to us
a "comfort letter" concerning the financial statements of the issuer and
certain statistical and other data included in the Offering Memorandum. We
will contact you to identify the procedures we wish you to follow and the form
we wish the comfort letter to take.
Very truly yours,
SALOMON BROTHERS INC
By:________________________________
Name:
Title:
__________________________________
* It is recognized that what is "substantially consistent" may vary from
situation to situation and may not necessarily be the same as that
done in a registered offering of the same securities for the same
issuer; whether the procedures being, or to be, followed will be
"substantially consistent" will be determined by us on a case-by-case
basis.
[L120321.2] C-2