Exhibit 1.1
15,000,000 Shares
PEABODY ENERGY CORPORATION
Common Stock
UNDERWRITING AGREEMENT
May 21, 2001
▇▇▇▇▇▇ Brothers Inc.
Bear, ▇▇▇▇▇▇▇ & Co. Inc.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
UBS Warburg LLC
▇.▇. ▇▇▇▇▇▇▇ & Sons, Inc.
As Representatives of the several
Underwriters named in Schedule 1,
c/▇ ▇▇▇▇▇▇ Brothers Inc.
Three World ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ Brothers International (Europe)
Bear, ▇▇▇▇▇▇▇ International Limited
▇▇▇▇▇▇▇ ▇▇▇▇▇ International
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. International Limited
UBS AG, acting through its business group UBS Warburg
Cazenove & Co.
As Representatives of the several
Underwriters named in Schedule 2,
c/▇ ▇▇▇▇▇▇ Brothers
Three World Financial Center
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Dear Sirs:
Peabody Energy Corporation, a Delaware corporation (the "Company"),
proposes to sell 15,000,000 shares (the "Firm Stock") of the Company's Common
Stock, par value $0.01 per share (the "Common Stock").
It is understood that, subject to the conditions hereinafter stated,
12,000,000 shares of the Firm Stock (the "U.S. Firm Stock") will be sold to the
several U.S. Underwriters named in Schedule 1 hereto (the "U.S. Underwriters")
in connection with the offering and sale of such U.S. Firm Stock in the United
States and Canada to United States and Canadian Persons (as such terms are
defined in the Agreement Between U.S. and International Underwriters of even
date herewith), and 3,000,000 shares of the Firm Stock (the "International Firm
Stock") will be sold to the several
International Underwriters named in Schedule 2 hereto (the "International
Underwriters") in connection with the offering and sale of such International
Firm Stock outside the United States and Canada to persons other than United
States and Canadian Persons. ▇▇▇▇▇▇ Brothers Inc., Bear, ▇▇▇▇▇▇▇ & Co. Inc.,
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co.
Incorporated, UBS Warburg LLC and ▇.▇. ▇▇▇▇▇▇▇ & Sons, Inc. shall act as
representatives (the "U.S. Representatives") of the several U.S. Underwriters,
and ▇▇▇▇▇▇ Brothers International (Europe), Bear, ▇▇▇▇▇▇▇ International Limited,
▇▇▇▇▇▇▇ ▇▇▇▇▇ International, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. International Limited, UBS AG,
acting through its business group UBS Warburg, and Cazenove & Co. shall act as
representatives (the "International Representatives") of the several
International Underwriters. The U.S. Underwriters and the International
Underwriters are hereinafter collectively referred to as the "Underwriters." The
U.S. Representatives and the International Representatives are hereinafter
collectively referred to as the "Representatives."
In addition, the Company proposes to grant to the Underwriters named
in Schedule 1 hereto (the "Underwriters") an option to purchase up to an
additional 3,000,000 shares of the Common Stock on the terms and for the
purposes set forth in Section 2 (the "Option Stock"). The Firm Stock and the
Option Stock, if purchased, are hereinafter collectively called the "Stock."
This is to confirm the agreement concerning the purchase of the Stock from the
Company by the Underwriters.
SECTION 1. Representations, Warranties and Agreements of the Company.
The Company represents, warrants and agrees that:
(a) A registration statement on Form S-1 with respect to the Stock has
(i) been prepared by the Company in conformity with the requirements of the
Securities Act of 1933, as amended (the "Securities Act"), and the rules and
regulations (the "Rules and Regulations") of the Securities and Exchange
Commission (the "Commission") thereunder, (ii) been filed with the Commission
under the Securities Act, and (iii) become effective under the Securities Act.
The registration statement contains two prospectuses to be used in connection
with the offering and sale of the Stock: the U.S. prospectus, to be used in
connection with the offering and sale of Stock in the United States and Canada
to United States and Canadian Persons, and the international prospectus, to be
used in connection with the offering and sale of Stock outside the United States
and Canada to persons other than United States and Canadian Persons. The
international prospectus is identical to the U.S. prospectus except for the
outside front cover page. Copies of such registration statement and each of the
amendments thereto have been delivered by the Company to you. Copies of such
registration statement and each of the amendments thereto have been delivered by
the Company to you. As used in this Agreement, "Effective Time" means the date
and the time as of which such registration statement, or the most recent post-
effective amendment thereto, if any, was declared effective by the Commission;
"Effective Date" means the date of the Effective Time; "Preliminary Prospectus"
means each prospectus included in such registration statement, or amendments
thereof, before it became effective under the Securities Act and any prospectus
filed with the Commission by the Company with the consent of the
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Representatives pursuant to Rule 424(a) of the Rules and Regulations;
"Registration Statement" means such registration statement, as amended at the
Effective Time, including all information contained in the final prospectus
filed with the Commission pursuant to Rule 424(b) of the Rules and Regulations
and deemed to be a part of the registration statement as of the Effective Time
pursuant to Rule 430A of the Rules and Regulations; and "Prospectuses" means the
U.S. prospectus and the international prospectus in the respective forms first
used to confirm sales of Stock. If the Company has filed an abbreviated
registration statement to register additional shares of Common Stock pursuant to
Rule 462(b) under the Securities Act (the "Rule 462 Registration Statement"),
then any reference herein to the term "Registration Statement" shall be deemed
to include such Rule 462 Registration Statement. The Commission has not issued
any order preventing or suspending the use of any Preliminary Prospectus.
(b) The Registration Statement conforms, and the Prospectuses and
any further amendments or supplements to the Registration Statement or the
Prospectuses will, when they become effective or are filed with the Commission,
as the case may be, conform, in all material respects to the requirements of the
Securities Act and the Rules and Regulations and do not and will not, as of the
applicable effective date (as to the Registration Statement and any amendment
thereto) and as of the applicable filing date (as to the Prospectuses and any
amendment or supplement thereto) contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading; provided that no representation or
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warranty is made as to information contained in or omitted from the Registration
Statement or the Prospectuses in reliance upon and in conformity with written
information furnished to the Company through the Representatives by or on behalf
of any Underwriter specifically for inclusion therein.
(c) The Company and each of its subsidiaries (as defined in Section
16) have been duly incorporated or organized, as the case may be, and are
validly existing as their respective business entities and in good standing
under the laws of their respective jurisdictions of incorporation or
organization, as the case may be, are duly qualified to do business and are in
good standing as foreign corporations in each jurisdiction in which their
respective ownership or lease of property or the conduct of their respective
businesses requires such qualification, and have all power and authority
necessary to own or hold their respective properties and to conduct the
businesses in which they are engaged, except where the failure to so qualify to
be in good standing would not reasonably be expected to have a material adverse
effect on the financial condition, business, properties or results of operations
of the Company and its subsidiaries taken as a whole (a "Material Adverse
Effect"); and none of the subsidiaries of the Company other than Black Beauty
Coal Company, Caballo Coal Company, Coal Properties Corporation, Gold Fields
Mining Corporation, Peabody Coal Company, Peabody Development Company, Peabody
Holding Company, Inc., Peabody Natural Resources Company, Peabody Western Coal
Company and Powder River Coal Company is a "significant subsidiary," as such
term is defined in Rule 405 of the Rules and Regulations.
(d) The Company has an authorized capitalization as set forth in the
Prospectuses, and all of the issued shares of capital stock of the Company have
been duly and validly authorized and issued, are fully paid and non-assessable
and conform to the description thereof contained in the Prospectuses; and all of
the issued shares of capital
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stock or membership interests, as the case may be, of each wholly-owned
subsidiary of the Company have been duly and validly authorized and issued and
are fully paid and non-assessable and (except for directors' qualifying shares)
are owned directly or indirectly by the Company, free and clear of all liens,
encumbrances, equities or claims.
(e) The shares of the Stock to be issued and sold by the Company to
the Underwriters hereunder have been duly and validly authorized and, when
issued and delivered against payment therefor in accordance with this Agreement,
will be duly and validly issued, fully paid and non-assessable; and the Stock
will conform to the description thereof contained in the Prospectuses.
(f) This Agreement has been duly authorized, executed and delivered
by the Company.
(g) The execution, delivery and performance of this Agreement by the
Company, the compliance by the Company with all of the provisions of this
Agreement and the consummation of the transactions contemplated hereby will not
(i) conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any indenture, mortgage, deed of
trust, loan agreement 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 is bound or to which any of the property or assets of the Company
or any of its subsidiaries is subject, (ii) result in any violation of the
provisions of the Certificate of Incorporation or by-laws of the Company or any
of its subsidiaries or (iii) result in the violation of any statute or any
order, rule or regulation of any court or governmental agency or body having
jurisdiction over the Company or any of its subsidiaries or any of their
properties or assets, except in the case of clauses (i) and (iii), such
conflicts, breaches or violations that in the aggregate would not reasonably be
expected to have a Material Adverse Effect; and except for the registration of
the Stock under the Securities Act and such consents, approvals, authorizations,
registrations or qualifications as may be required under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and applicable state securities
laws in connection with the purchase and distribution of the Stock by the
Underwriters, no consent, approval, authorization or order of, or filing or
registration with, any such court or governmental agency or body is required for
the execution, delivery and performance of this Agreement by the Company and the
consummation of the transactions contemplated hereby.
(h) Except as set forth in the Prospectuses, there are no contracts,
agreements or understandings between the Company and any person granting such
person the right to require the Company to file a registration statement under
the Securities Act with respect to any securities of the Company owned or to be
owned by such person or to require the Company to include such securities in the
securities registered pursuant to the Registration Statement or in any
securities being registered pursuant to any other registration statement filed
by the Company under the Securities Act.
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(i) Except as set forth in the Registration Statement, the Company
has not sold or issued any shares of Common Stock during the six-month period
preceding the date of the Prospectuses, including any sales pursuant to Rule
144A under, or Regulations D or S of, the Securities Act.
(j) Neither the Company nor any of its subsidiaries has sustained,
since the date of the latest audited financial statements included in the
Prospectuses, any material loss or interference with its business that has had a
Material Adverse Effect, whether from fire, explosion, flood or other calamity,
whether or not covered by insurance, or from any labor dispute or court or
governmental action, order or decree, otherwise than as set forth or
contemplated in the Prospectuses; and, since such date, there has not been any
material change in the capital stock or material increase in the long-term debt
of the Company or any of its subsidiaries or any change, in or affecting the
general affairs, management, consolidated financial position, stockholders'
equity, results of operations, business or prospects of the Company and its
subsidiaries that has had or could reasonably be expected to have a Material
Adverse Effect, other than as set forth or contemplated in the Prospectuses.
(k) The financial statements (including the related notes and
supporting schedules) filed as part of the Registration Statement or included in
the Prospectuses present fairly the financial condition and results of
operations of the entities purported to be shown thereby, at the dates and for
the periods indicated, and the consolidated historical financial statements have
been prepared in conformity with generally accepted accounting principles
("GAAP") applied on a consistent basis throughout the periods involved.
(l) Ernst & Young LLP, who have certified certain financial
statements of the Company, whose report appears in the Prospectuses and who have
delivered the initial letter referred to in Section 8(e) hereof, are and have
been independent public accountants as required by the Securities Act and the
Rules and Regulations during the periods covered by the financial statements on
which they reported.
(m) The Company and each of its subsidiaries have good and
marketable title in fee simple to all real property and good and marketable
title to all personal property owned by them, in each case free and clear of all
liens, encumbrances and defects, except such as are described in the
Prospectuses or that would not reasonably be expected to have a Material Adverse
Effect; and all real property held under lease by the Company and its
subsidiaries that is material to the Company and its subsidiaries, taken as a
whole, is held by them under valid, subsisting and enforceable leases, with such
exceptions as are not material and do not interfere with the use made and
proposed to be made of such property and buildings by the Company and its
subsidiaries.
(n) To the knowledge of the Company, the Company and each of its
subsidiaries carry, or are covered by, insurance in such amounts and covering
such risks as is adequate for the conduct of their respective businesses and the
value of their
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respective properties and as is customary for companies engaged in similar
businesses in similar industries.
(o) There are no legal or governmental proceedings pending to which
the Company or any of its subsidiaries is a party or of which any property or
assets of the Company or any of its subsidiaries is the subject which, if
determined adversely to the Company or any of its subsidiaries, would be
reasonably likely to have a Material Adverse Effect; and to the best of the
Company's knowledge, no such proceedings are threatened or contemplated by
governmental authorities or threatened by others.
(p) There are no contracts or other documents that are required to
be described in the Prospectuses or filed as exhibits to the Registration
Statement by the Securities Act or by the Rules and Regulations that have not
been described in the Prospectuses or filed as exhibits to the Registration
Statement.
(q) No relationship, direct or indirect, exists between or among the
Company on the one hand, and the directors, officers, stockholders, customers or
suppliers of the Company on the other hand, which is required to be described in
the Prospectuses which is not so described.
(r) No labor disturbance by the employees of the Company exists or,
to the knowledge of the Company, is imminent, which would reasonably be expected
to have a Material Adverse Effect, except as disclosed in the Prospectuses.
(s) Except as would not reasonably be expected to have a Material
Adverse Effect, the Company is in compliance in all material respects with all
presently applicable provisions of the Employee Retirement Income Security Act
of 1974, as amended, including the regulations and published interpretations
thereunder ("ERISA"); no "reportable event" (as defined in ERISA) has occurred
with respect to any "pension plan" (as defined in ERISA) for which the Company
would have any liability; the Company has not incurred and does not expect to
incur liability under (i) Title IV of ERISA with respect to termination of, or
withdrawal from, any "pension plan" or (ii) Sections 412 or 4971 of the Internal
Revenue Code of 1986, as amended, including the regulations and published
interpretations thereunder (the "Code"); and each "pension plan" for which the
Company would have any liability that is intended to be qualified under Section
401(a) of the Code is so qualified in all material respects and nothing has
occurred, whether by action or by failure to act, which would cause the loss of
such qualification, except as would not reasonably be expected to have a
Material Adverse Effect.
(t) The Company has filed (or obtained extensions in filing) all
federal, state and local income and franchise tax returns required to be filed
through the date hereof (other than those the nonfiling of which would not be
reasonably likely to have a Material Adverse Effect and has paid all taxes due
thereon, other than those being contested in good faith and for which reserves
have been provided in accordance with GAAP, those currently payable without
penalty or interest or the nonpayment of which
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would not be reasonably likely to have a Material Adverse Effect. No tax
deficiency has been determined adversely to the Company or any of its
subsidiaries that has had (nor does the Company have any knowledge of any tax
deficiency which, if determined adversely to the Company or any of its
subsidiaries, would reasonably be expected to have) a Material Adverse Effect.
(u) Since the date as of which information is given in the
Prospectuses through the date hereof, and except as may otherwise be disclosed
in the Prospectuses, the Company has not (i) issued or granted any securities
(other than pursuant to the Company's employee benefit plans), (ii) incurred any
liability or obligation, direct or contingent, other than liabilities and
obligations that were incurred in the ordinary course of business, (iii) entered
into any transaction not in the ordinary course of business, or (iv) declared or
paid any dividend on its capital stock.
(v) The Company (i) makes and keeps accurate books and records and
(ii) maintains internal accounting controls that provide reasonable assurance
that (A) transactions are executed in accordance with management's
authorization, (B) transactions are recorded as necessary to permit preparation
of its financial statements and to maintain accountability for its assets, (C)
access to its assets is permitted only in accordance with management's
authorization and (D) the reported accountability for its assets is compared
with existing assets at reasonable intervals.
(w) Neither the Company nor any of its subsidiaries (i) is in
violation of its organizational documents, (ii) is in default, and no event has
occurred which, with notice or lapse of time or both, would constitute such a
default, in the due performance or observance of any term, covenant or condition
contained in any material indenture, mortgage, deed of trust, loan agreement or
other agreement or instrument to which it is a party or by which it is bound or
to which any of its properties or assets is subject, or (iii) is in violation of
any law, ordinance, governmental rule, regulation or court decree to which it or
its property or assets may be subject or has failed to obtain any material
license, permit, certificate, franchise or other governmental authorization or
permit necessary to the ownership of its property or to the conduct of its
business, except, in the cases of clauses (ii) and (iii), such defaults, events,
violations or failures that in the aggregate would not reasonably be expected to
have a Material Adverse Effect.
(x) Except as set forth in the Prospectuses, there has been no
storage, disposal, generation, manufacture, refinement, transportation, handling
or treatment of toxic wastes, medical wastes, hazardous wastes or hazardous
substances by the Company or any of its subsidiaries (or, to the knowledge of
the Company, any of their predecessors in interest) at, upon or from any of the
property now or previously owned or leased by the Company or its subsidiaries in
violation of any applicable law, ordinance, rule, regulation, order, judgment,
decree or permit or that would require remedial action under any applicable law,
ordinance, rule, regulation, order, judgment, decree or permit, except for any
violation or remedial action that would not have, or would not be reasonably
likely to have, singularly or in the aggregate with all such violations and
remedial actions, a Material Adverse Effect, except as set forth in, or
specifically contemplated by, the
7
Prospectuses; there has been no material spill, discharge, leak, emission,
injection, escape, dumping or release of any kind onto such property or into the
environment surrounding such property of any toxic wastes, medical wastes, solid
wastes, hazardous wastes or hazardous substances due to or caused by the Company
or any of its subsidiaries or with respect to which the Company or any of its
subsidiaries have knowledge, except for any such spill, discharge, leak,
emission, injection, escape, dumping or release that would not have or would not
be reasonably likely to have, singularly or in the aggregate with all such
spills, discharges, leaks, emissions, injections, escapes, dumpings and
releases, a Material Adverse Effect; and the terms "hazardous wastes," "toxic
wastes," "hazardous substances" and "medical wastes" shall have the meanings
specified in any applicable local, state, federal and foreign laws or
regulations with respect to environmental protection.
(y) Neither the Company nor any subsidiary is, or, after giving
effect to the offering and sale of the Stock and the application of the net
proceeds therefrom as described in the Prospectuses, will be, an "investment
company" as defined in the Investment Company Act of 1940, as amended.
(z) The Company has taken no action to offer or sell the Directed
Shares (as defined in Section 4) distributed in connection with the Directed
Share Program outside of the United States.
(aa) The market-related and industry data included in the
Prospectuses are based upon estimates by the Company derived from sources that
the Company believes to be reliable and accurate in all material respects.
(bb) The Company has such permits, licenses, franchises,
certificates, consents, orders and other approvals or authorizations of any
governmental or regulatory authority ("Permits"), including, without limitation,
any permits or approvals required by the United States Environmental Protection
Agency, the United States Office of Surface Mining Reclamation and Enforcement
and corresponding state agencies, as are necessary under applicable law to own
its properties and to conduct its businesses in the manner described in the
Prospectuses, except to the extent that the failure to have such Permits would
not reasonably be expected to have a Material Adverse Effect. The Company has
fulfilled and performed in all material respects, all its material obligations
with respect to the Permits, and, to the best knowledge of the Company, no event
has occurred that allows, or after notice or lapse of time would allow,
revocation or termination thereof or results in any other material impairment of
the rights of the holder of any such Permit, subject in each case to such
qualification as may be set forth in the Prospectuses and except to the extent
that any such revocation or termination would not reasonably be expected to have
a Material Adverse Effect.
(cc) ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & Associates, whose report is referred to in the
Prospectuses, were as of the date of such report, and are as of the date hereof,
independent mining and geological consultants with respect to the Company.
8
SECTION 2. Purchase of the Stock by the Underwriters. On the basis of
the representations and warranties contained in, and subject to the terms and
conditions of, this Agreement, the Company agrees to sell 15,000,000 shares of
the Firm Stock to the several Underwriters and each of the Underwriters,
severally and not jointly, agrees to purchase the number of shares of the Firm
Stock set forth opposite that Underwriter's name in Schedules 1 and 2 hereto.
The respective purchase obligations of the Underwriters with respect to the
Firm Stock shall be rounded among the Underwriters to avoid fractional shares,
as the Representatives may determine.
In addition, on the basis of the representations and warranties
contained in, and subject to the terms and conditions of, this Agreement, the
Company grants to the U.S. Underwriters an option to purchase up to 2,250,000
shares of Option Stock. Such option is granted solely for the purpose of
covering over-allotments in the sale of Firm Stock and is exercisable as
provided in Section 5 hereof. Shares of Option Stock shall be purchased
severally for the account of the U.S. Underwriters in proportion to the number
of shares of Firm Stock set forth opposite the name of such U.S. Underwriters
in Schedule 1 hereto. The respective purchase obligations of each U.S.
Underwriter with respect to the Option Stock shall be adjusted by the U.S.
Representatives so that no U.S. Underwriter shall be obligated to purchase
Option Stock other than in 100 share amounts.
The price of both the Firm Stock and any Option Stock shall be $[ ]
per share.
The Company shall not be obligated to deliver any of the Stock to be
delivered on any Delivery Date (as hereinafter defined), except upon payment
for all the Stock to be purchased on such Delivery Date as provided herein.
SECTION 3. Offering of Stock by the Underwriters. Upon authorization by
the Representatives of the release of the Firm Stock, the several Underwriters
propose to offer the Firm Stock for sale upon the terms and conditions set forth
in the Prospectuses.
SECTION 4. Directed Share Program. It is understood that approximately
750,000 shares of the Firm Stock ("Directed Shares") will initially be reserved
by the Underwriters for offer and sale to employees and persons having business
relationships with the Company and its subsidiaries ("Directed Share
Participants") upon the terms and conditions set forth in the Prospectuses and
in accordance with the rules and regulations of the National Association of
Securities Dealers, Inc. Under no circumstances will ▇▇▇▇▇▇ Brothers or any
Underwriter be liable to the Company or to any Directed Share Participant for
any action taken or omitted to be taken in good faith in connection with such
Directed Share Program. To the extent that any Directed Shares are not
affirmatively reconfirmed for purchase by any Directed Share Participant on or
immediately after the date of this Agreement, such Directed Shares may be
offered to the public as part of the public offering contemplated hereby.
9
The Company agrees to pay all fees and disbursements incurred by the
Underwriters in connection with the Directed Share Program, and any stamp duties
or other taxes incurred by the Underwriters in connection with the Directed
Share Program.
SECTION 5. Delivery of and Payment for the Stock. Delivery of and payment
for the Firm Stock shall be made at the offices of Weil, Gotshal & ▇▇▇▇▇▇ LLP,
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, at 10:00 A.M., New York City time,
on the fourth full business day following the date of this Agreement or at such
other date or place as shall be determined by agreement between the
Representatives and the Company. This date and time are sometimes referred to as
the "First Delivery Date." On the First Delivery Date, the Company shall deliver
or cause to be delivered certificates representing the Firm Stock to the
Representatives for the account of each Underwriter against payment to or upon
the order of the Company of the purchase price by wire transfer in immediately
available funds. Time shall be of the essence, and delivery at the time and
place specified pursuant to this Agreement is a further condition of the
obligation of each Underwriter hereunder. Upon delivery, the Firm Stock shall be
registered in such names and in such denominations as the Representatives shall
request in writing not less than two full business days prior to the First
Delivery Date. For the purpose of expediting the checking and packaging of the
certificates for the Firm Stock, the Company shall make the certificates
representing the Firm Stock available for inspection by the Representatives in
New York, New York, not later than 2:00 P.M., New York City time, on the
business day prior to the First Delivery Date.
The option granted in Section 2 will expire 30 days after the date of
this Agreement and may be exercised in whole or in part from time to time by
written notice being given to the Company by the U.S. Representatives. Such
notice shall set forth the aggregate number of shares of Option Stock as to
which the option is being exercised, the names in which the shares of Option
Stock are to be registered, the denominations in which the shares of Option
Stock are to be issued and the date and time, as determined by the U.S.
Representatives, when the shares of Option Stock are to be delivered; provided,
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however, that this date and time shall not be earlier than the First Delivery
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Date nor earlier than the second business day after the date on which the option
shall have been exercised nor later than the fifth business day after the date
on which the option shall have been exercised. The date and time the shares of
Option Stock are delivered are sometimes referred to as a "Second Delivery
Date" and the First Delivery Date and any Second Delivery Date are sometimes
each referred to as a "Delivery Date."
Delivery of and payment for the Option Stock shall be made at the
place specified in the first sentence of the first paragraph of this Section 5
(or at such other place as shall be determined by agreement between the U.S.
Representatives and the Company) at 10:00 A.M., New York City time, on such
Second Delivery Date. On such Second Delivery Date, the Company shall deliver
or cause to be delivered the certificates representing the Option Stock to the
U.S. Representatives for the account of each U.S. Underwriter against payment to
or upon the order of the Company of the purchase price by wire transfer in
immediately available funds. Time shall be of the essence, and delivery at the
time and place specified pursuant to this Agreement is a further condition
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of the obligation of each U.S. Underwriter hereunder. Upon delivery, the Option
Stock shall be registered in such names and in such denominations as the U.S.
Representatives shall request in the aforesaid written notice. For the purpose
of expediting the checking and packaging of the certificates for the Option
Stock, the Company shall make the certificates representing the Option Stock
available for inspection by the U.S. Representatives in New York, New York, not
later than 2:00 P.M., New York City time, on the business day prior to such
Second Delivery Date.
SECTION 6. Further Agreements of the Company. The Company agrees:
(a) To prepare the Prospectuses in a form approved by the Representatives
and to file such Prospectus pursuant to Rule 424(b) under the Securities Act not
later than Commission's close of business on the second business day following
the execution and delivery of this Agreement or, if applicable, such earlier
time as may be required by Rule 430A(a)(3) under the Securities Act; to make no
further amendment or any supplement to the Registration Statement or to the
Prospectuses except as permitted herein; to advise the Representatives, promptly
after it receives notice thereof, of the time when any amendment to the
Registration Statement has been filed or becomes effective or any supplement to
the Prospectuses or any amended Prospectus has been filed and to furnish the
Representatives with copies thereof; to advise the Representatives, promptly
after it receives notice thereof, of the issuance by the Commission of any stop
order or of any order preventing or suspending the use of any Preliminary
Prospectus or the Prospectuses, of the suspension of the qualification of the
Stock for offering or sale in any jurisdiction, of the initiation or threatening
of any proceeding for any such purpose, or of any request by the Commission for
the amending or supplementing of the Registration Statement or the Prospectuses
or for additional information; and, in the event of the issuance of any stop
order or of any order preventing or suspending the use of any Preliminary
Prospectus or the Prospectuses or suspending any such qualification, to use
promptly its best efforts to obtain its withdrawal;
(b) To furnish promptly to each of the Representatives and to counsel
for the Underwriters a signed copy of the Registration Statement as originally
filed with the Commission, and each amendment thereto filed with the Commission,
including all consents and exhibits filed therewith;
(c) To deliver promptly to the Representatives such number of the
following documents as the Representatives shall reasonably request: (i)
conformed copies of the Registration Statement as originally filed with the
Commission and each amendment thereto (in each case excluding exhibits) and
(ii) each Preliminary Prospectus, the Prospectuses and any amended or
supplemented Prospectus; and, if the delivery of a prospectus is required at
any time after the Effective Time in connection with the offering or sale of
the Stock or any other securities relating thereto and if at such time any
events shall have occurred as a result of which the Prospectuses 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 when such Prospectus
is delivered, not
11
misleading, or, if for any other reason it shall be necessary to amend or
supplement the Prospectuses in order to comply with the Securities Act, to
notify the Representatives and, upon their request, to prepare and furnish
without charge to each Underwriter and to any dealer in securities as many
copies as the Representatives may from time to time reasonably request of an
amended or supplemented Prospectus that will correct such statement or omission
or effect such compliance.
(d) To file promptly with the Commission any amendment to the
Registration Statement or the Prospectuses or any supplement to the Prospectuses
that may, in the judgment of the Company and the Representatives, be required by
the Securities Act or requested by the Commission;
(e) Prior to filing with the Commission any amendment to the
Registration Statement or supplement to the Prospectuses or any Prospectus
pursuant to Rule 424 of the Rules and Regulations, to furnish a copy thereof to
the Representatives and counsel for the Underwriters and obtain the consent of
the Representatives to the filing which consent shall not be unreasonably
withheld;
(f) As soon as practicable after the Effective Date, to make
generally available to the Company's security holders and to deliver to the
Representatives an earning statement of the Company and its subsidiaries (which
need not be audited) complying with Section 11(a) of the Securities Act and the
Rules and Regulations (including, at the option of the Company, Rule 158);
(g) For a period of five years following the Effective Date, to
furnish to the Representatives, to the extent such information is not freely
available on the Internet, copies of all materials furnished by the Company to
its shareholders and all public reports and all reports and financial statements
furnished by the Company to the principal national securities exchange upon
which the Common Stock may be listed pursuant to requirements of or agreements
with such exchange or to the Commission pursuant to the Exchange Act or any rule
or regulation of the Commission thereunder;
(h) Promptly from time to time to take such action as the
Representatives may reasonably request to qualify the Stock for offering and
sale under the securities laws of such jurisdictions as the Representatives may
request and to comply with such laws so as to permit the continuance of sales
and dealings therein in such jurisdictions for as long as may be necessary to
complete the distribution of the Stock; provided that in connection therewith
--------
the Company shall not be required to qualify as a foreign corporation, to file a
general consent to service of process in any jurisdiction or to subject itself
to taxation in respect of doing business in any jurisdiction in which it is
otherwise not subject;
(i) For a period of 180 days from the date of the Prospectuses, not
to, directly or indirectly, (1) offer for sale, sell, pledge or otherwise
dispose of (or enter into any transaction or device that is designed to, or
could be expected to, result in the disposition by any person at any time in the
future of) any shares of Common Stock or
12
securities convertible into or exchangeable for Common Stock (other than the
Stock and shares issued pursuant to employee benefit plans, qualified stock
option plans or other employee compensation plans existing on the date hereof or
pursuant to currently outstanding options, warrants or rights and shares to be
issued as consideration in an acquisition), or sell or grant options, rights or
warrants with respect to any shares of Common Stock or securities convertible
into or exchangeable for Common Stock (other than the grant of options pursuant
to option plans existing on the date hereof), or (2) enter into any swap or
other derivatives transaction that transfers to another, in whole or in part,
any of the economic benefits or risks of ownership of such shares of Common
Stock, whether any such transaction described in clause (1) or (2) above is to
be settled by delivery of Common Stock or other securities, in cash or
otherwise, in each case without the prior written consent of ▇▇▇▇▇▇ Brothers
Inc. on behalf of the Underwriters; and to use reasonable efforts to cause each
stockholder, optionholder, officer and director of the Company to furnish to the
Representatives, prior to the First Delivery Date, a letter or letters,
substantially in the form of Exhibit A-1 hereto, with respect to holders of the
Company's Class A Common Stock and substantially in the form of Exhibit A-2
hereto with respect to the holders of the Company's Class B Common Stock,
pursuant to which each such person shall agree not to, directly or indirectly,
(1) offer for sale, sell, pledge or otherwise dispose of (or enter into any
transaction or device that is designed to, or could be expected to, result in
the disposition by any person at any time in the future of) any shares of Common
Stock or securities convertible into or exchangeable for Common Stock or (2)
enter into any swap or other derivatives transaction that transfers to another,
in whole or in part, any of the economic benefits or risks of ownership of such
shares of Common Stock, whether any such transaction described in clause (1) or
(2) above is to be settled by delivery of Common Stock or other securities, in
cash or otherwise, in each case for a period of 180 days from the date of the
Prospectuses, without the prior written consent of ▇▇▇▇▇▇ Brothers Inc. on
behalf of the Underwriters;
(j) To apply for the listing of the Stock on the New York Stock
Exchange, and to use its best efforts to complete that listing, subject only to
official notice of issuance, prior to the First Delivery Date;
(k) To apply the net proceeds from the sale of Stock as set forth in
the Prospectuses;
(l) To take such steps as shall be necessary to ensure that neither
the Company nor any subsidiary shall become an "investment company" as defined
in the Investment Company Act of 1940, as amended; and
(m) In connection with the Directed Share Program, to use its best
efforts to ensure that the Directed Shares will be restricted to the extent
required by the National Association of Securities Dealers, Inc. or the rules of
such association from sale, transfer, assignment, pledge or hypothecation for a
period of three months following the date of the effectiveness of the
Registration Statement; provided that ▇▇▇▇▇▇ Brothers Inc. will notify the
--------
Company as to which Directed Share Participants will need to be so
13
restricted. At the request of ▇▇▇▇▇▇ Brothers Inc., the Company will direct the
transfer agent to place stop transfer restrictions upon such securities for such
period of time.
SECTION 7. Expenses. The Company agrees to pay (a) the costs incident to
the authorization, issuance, sale and delivery of the Stock and any taxes
payable in that connection; (b) the costs incident to the preparation, printing
and filing under the Securities Act of the Registration Statement and any
amendments and exhibits thereto; (c) the costs of distributing the Registration
Statement as originally filed and each amendment thereto and any post-effective
amendments thereof (including, in each case, exhibits), any Preliminary
Prospectus, the Prospectuses and any amendment or supplement to the
Prospectuses, all as provided in this Agreement; (d) the costs of producing and
distributing this Agreement, the Agreement Between U.S. Underwriters and
International Managers, any Supplemental Agreement Among U.S. Underwriters and
any other related documents in connection with the offering, purchase, sale and
delivery of the stock; (e) the filing fees incident to securing the review by
the National Association of Securities Dealers, Inc. of the terms of sale of the
Stock; (f) any applicable listing or other fees; (g) the fees and expenses (not
in excess, in the aggregate, of $10,000) of qualifying the Stock under the
securities laws of the several jurisdictions as provided in Section 6(h) and of
preparing, printing and distributing a Blue Sky Memorandum (including related
fees and expenses of counsel to the Underwriters); (h) all costs and expenses of
the Underwriters, including the fees and disbursements of counsel for the
Underwriters, incident to the Directed Share Program described in Section 4; (i)
the costs and expenses of the Company relating to investor presentations on any
"road show" undertaken in connection with the marketing of the offering of the
Stock, including, without limitation, expenses associated with the production of
road show slides and graphics, fees and expenses of any consultants engaged in
connection with the road show presentations with the prior approval of the
Company, travel and lodging expenses of the representatives and officers of the
Company and any such consultants, and the cost of any aircraft chartered in
connection with the road show; and (j) all other costs and expenses incident to
the performance of the obligations of the Company under this Agreement; provided
--------
that, except as provided in this Section 7 and in Section 12, the Underwriters
shall pay their own costs and expenses, including the fees and expenses of their
counsel, any transfer taxes on the Stock that they may sell and the expenses of
advertising any offering of the Stock made by the Underwriters.
SECTION 8. Conditions of Underwriters' Obligations. The respective
obligations of the Underwriters hereunder are subject to the accuracy, when made
and on each Delivery Date, of the representations and warranties of the Company
contained herein, to the performance by the Company of its obligations
hereunder, and to each of the following additional terms and conditions:
(a) The Prospectus shall have been timely filed with the Commission
in accordance with Section 6(a); no stop order suspending the effectiveness of
the Registration Statement or any part thereof shall have been issued and no
proceeding for that purpose shall have been initiated by the Commission; and any
request of the
14
Commission for inclusion of additional information in the Registration Statement
or the Prospectuses or otherwise shall have been complied with.
(b) All corporate proceedings and other legal matters incident to
the authorization, form and validity of this Agreement, the Stock, the
Registration Statement and the Prospectuses, and all other legal matters
relating to this Agreement and the transactions contemplated hereby shall be
reasonably satisfactory in all material respects to counsel for the
Underwriters, and the Company shall have furnished to such counsel all documents
and information that they may reasonably request to enable them to pass upon
such matters.
(c) ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ shall have furnished to the
Representatives its written opinion, as counsel to the Company, addressed to the
Underwriters and dated such Delivery Date, in form and substance reasonably
satisfactory to the Representatives, to the effect set forth in Exhibit B:
(d) The Representatives shall have received from Weil, Gotshal &
▇▇▇▇▇▇ LLP, counsel for the Underwriters, such opinion or opinions, dated such
Delivery Date, with respect to the issuance and sale of the Stock, the
Registration Statement, the Prospectuses and other related matters as the
Representatives may reasonably require, and the Company shall have furnished to
such counsel such documents as they reasonably request for the purpose of
enabling them to pass upon such matters.
(e) At the time of execution of this Agreement, the Representatives
shall have received from Ernst & Young LLP a letter or letters, in form and
substance satisfactory to the Representatives, addressed to the Underwriters and
dated the date hereof (i) confirming that they are independent public
accountants within the meaning of the Securities Act and are in compliance with
the applicable requirements relating to the qualification of accountants under
Rule 2-01 of Regulation S-X of the Commission and (ii) stating, as of the date
hereof (or, with respect to matters involving changes or developments since the
respective dates as of which specified financial information is given in the
Prospectuses, as of a date not more than five days prior to the date hereof),
the conclusions and findings of such firm with respect to the financial
information and other matters ordinarily covered by accountants' "comfort
letters" to underwriters in connection with registered public offerings.
(f) With respect to the letter or letters of Ernst & Young LLP
referred to in the preceding paragraph and delivered to the Representatives
concurrently with the execution of this Agreement (the "initial letters"), the
Representatives shall have received from Ernst & Young LLP a letter (the "bring-
down letter"), addressed to the Underwriters and dated such Delivery Date (i)
confirming that they are independent public accountants within the meaning of
the Securities Act and are in compliance with the applicable requirements
relating to the qualification of accountants under Rule 2-01 of Regulation S-X
of the Commission, (ii) stating, as of the date of the bring-down letter (or,
with respect to matters involving changes or developments since the respective
dates
15
as of which specified financial information is given in the Prospectuses, as of
a date not more than five days prior to the date of the bring-down letter), the
conclusions and findings of such firm with respect to the financial information
and other matters covered by the initial letters, and (iii) confirming in all
material respects the conclusions and findings set forth in the initial letters.
(g) The Company shall have furnished to the Representatives a
certificate, dated such Delivery Date, of its Chairman of the Board, its
President or a Vice President and its Chief Financial Officer stating that:
(i) The representations, warranties and agreements of the
Company in Section 1 are true and correct as of such Delivery Date; the Company
has complied in all material respects with all its agreements contained herein;
and the conditions set forth in Sections 8(a), 8(h) and 8(i) have been
fulfilled; and
(ii) They have carefully examined the Registration Statement and
the Prospectuses and, in their opinion (A) as of the Effective Date, the
Registration Statement and Prospectus did not include any untrue statement of a
material fact and did not omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, and (B)
since the Effective Date no event has occurred that should have been set forth
in a supplement or amendment to the Registration Statement or the Prospectuses.
(h) Neither the Company nor any of its subsidiaries shall have
sustained since the date of the latest audited financial statements included in
the Prospectuses (A) any loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by insurance, or from
any labor dispute or court or governmental action, order or decree, otherwise
than as set forth or contemplated in the Prospectuses or (B) since such date
there shall not have been any material change in the capital stock or material
increase in the long-term debt of the Company or any of its subsidiaries or any
change in or affecting the general affairs, management, financial position,
stockholders' equity or results of operations of the Company and its
subsidiaries, otherwise than as set forth or contemplated in the Prospectuses,
the effect of which, in any such case described in clause (A) or (B), is, in the
judgment of the Representatives, so material and adverse as to make it
impracticable or inadvisable to proceed with the public offering or the delivery
of the Stock being delivered on such Delivery Date on the terms and in the
manner contemplated in the Prospectuses.
(i) Subsequent to the execution and delivery of this Agreement (i)
no downgrading shall have occurred in the rating accorded the Company's debt
securities by any "nationally recognized statistical rating organization," as
that term is defined by the Commission for purposes of Rule 436(g)(2) of the
Rules and Regulations and (ii) no such organization shall have publicly
announced that it has under surveillance or review, with possible negative
implications, its rating of any of the Company's debt securities.
16
(j) Subsequent to the execution and delivery of this Agreement there
shall not have occurred any of the following: (i) trading in securities
generally on the New York Stock Exchange or the American Stock Exchange or in
the over-the-counter market, or trading in any securities of the Company on any
exchange or in the over-the-counter market, shall have been suspended or minimum
prices shall have been established on any such exchange or such market by the
Commission, by such exchange or by any other regulatory body or governmental
authority having jurisdiction, (ii) a banking moratorium shall have been
declared by Federal or state authorities, (iii) the United States shall have
become engaged in hostilities, there shall have been an escalation in
hostilities involving the United States or there shall have been a declaration
of a national emergency or war by the United States, or (iv) there shall have
occurred such a material adverse change in general economic, political or
financial conditions (or the effect of international conditions on the financial
markets in the United States shall be such) as to make it, in the judgment of
the Representatives, impracticable or inadvisable to proceed with the public
offering or delivery of the Stock being delivered on such Delivery Date on the
terms and in the manner contemplated in the Prospectuses.
(k) The New York Stock Exchange, Inc. shall have approved the Stock
for listing, subject only to official notice of issuance.
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably
satisfactory to counsel for the Underwriters.
SECTION 9. Indemnification and Contribution.
(a) The Company shall indemnify and hold harmless each Underwriter
(including ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated ("▇▇▇▇▇▇ ▇▇▇▇▇▇▇") in its role as
"Qualified Independent Underwriter" under Rule 2720 of the Conduct Rules of the
National Association of Securities Dealers, Inc.), its officers and employees
and each person, if any, who controls any Underwriter within the meaning of
either Section 15 of the Securities Act or Section 20 of the Exchange Act, from
and against any loss, claim, damage or liability, joint or several, or any
action in respect thereof (including, but not limited to, any loss, claim,
damage, liability or action relating to purchases and sales of Stock), to which
that Underwriter, officer, employee or controlling person may become subject,
under the Securities Act or otherwise, insofar as such loss, claim, damage,
liability or action arises out of, or is based upon, (i) any untrue statement or
alleged untrue statement of a material fact contained (A) in any Preliminary
Prospectus, the Registration Statement or the Prospectuses or in any amendment
or supplement thereto, or (B) in any materials or information provided to
investors by, or with the approval of, the Company in connection with the
marketing of the offering of the Stock ("Marketing Materials"), including any
road show or investor presentations made to investors by the Company (whether in
person or electronically), (ii) the omission or alleged omission to state in
any Preliminary Prospectus, the Registration Statement or the Prospectuses, or
in any amendment or supplement thereto, or in any Marketing Materials, any
material fact
17
required to be stated therein or necessary to make the statements therein not
misleading, or (iii) any act or failure to act or any alleged act or failure to
act by any Underwriter in connection with, or relating in any manner to, the
Stock or the offering contemplated hereby, and that is included as part of or
referred to in any loss, claim, damage, liability or action arising out of or
based upon matters covered by clause (i) or (ii) above (provided that the
--------
Company shall not be liable under this clause (iii) to the extent that it is
determined in a final judgment by a court of competent jurisdiction that such
loss, claim, damage, liability or action resulted directly from any such acts or
failures to act undertaken or omitted to be taken by such Underwriter through
its gross negligence or willful misconduct), and shall reimburse each
Underwriter and each such officer, employee or controlling person promptly upon
demand for any legal or other expenses reasonably incurred by that Underwriter,
officer, employee or controlling person in connection with investigating or
defending or preparing to defend against any such loss, claim, damage, liability
or action as such expenses are incurred; provided, however, that the Company
-------- -------
shall not be liable in any such case to the extent that any such loss, claim,
damage, liability or action (i) arises out of, or is based upon, any untrue
statement or alleged untrue statement or omission or alleged omission made in
any Preliminary Prospectus, the Registration Statement or the Prospectuses, or
in any such amendment or supplement, in reliance upon and in conformity with
written information concerning such Underwriter furnished to the Company through
the Representatives by or on behalf of any Underwriter specifically for
inclusion therein which information consists solely of the information specified
in Section 9(e); or (ii) results solely from an untrue statement of material
fact contained in, or the omission of a material fact from, such preliminary
prospectus, which untrue statement or omission was corrected in the Prospectuses
(as then amended or supplemented) if the Company shall sustain the burden of
proving that the Underwriters sold Shares to the person alleging such loss,
claim, damage, liability or action without sending or giving, at or prior to the
written confirmation of such sale, a copy of the Prospectuses (as then amended
or supplemented) if the Company had previously furnished copies thereof to the
Underwriters within a reasonable amount of time prior to such sale or such
confirmation, and the Underwriters failed to deliver the corrected Prospectus,
if required by law to have so delivered it and if delivered would have cured the
defect giving rise to such loss, claim, damage, liability or action. The
foregoing indemnity agreement is in addition to any liability that the Company
may otherwise have to any Underwriter or to any officer, employee or controlling
person of that Underwriter.
The Company agrees to indemnify and hold harmless ▇▇▇▇▇▇ Brothers
Inc. (including its officers and employees) and each person, if any, who
controls ▇▇▇▇▇▇ Brothers Inc. within the meaning of the Securities Act ("▇▇▇▇▇▇
Brothers Entities"), from and against any loss, claim, damage or liability or
any action in respect thereof to which any of the ▇▇▇▇▇▇ Brothers Entities
may become subject, under the Securities Act or otherwise, insofar as such
loss, claim, damage, liability or action arises out of, or is based upon the
failure of any Directed Share Participant to pay for and accept delivery of the
Directed Shares sold pursuant to the Directed Share Program which, immediately
following the effectiveness of the Registration Statement, were subject to a
properly
18
confirmed agreement to purchase or (ii) the Directed Share Program, provided
--------
that, the Company shall not be responsible under this subparagraph (ii) for any
loss, claim, damage, liability or action that is finally judicially determined
to have resulted from the gross negligence or willful misconduct of the ▇▇▇▇▇▇
Brothers Entities. The Company shall reimburse the ▇▇▇▇▇▇ Brothers Entities
promptly upon demand for any legal or other expenses reasonably incurred by them
in connection with investigating or defending or preparing to defend against any
such loss, claim, damage, liability or action as such expenses are incurred.
(b) Each Underwriter, severally and not jointly, shall indemnify and
hold harmless the Company, its officers and employees, each of its directors,
and each person, if any, who controls the Company within the meaning of the
Securities Act, from and against any loss, claim, damage or liability, joint or
several, or any action in respect thereof, to which the Company or any such
director, officer or controlling person may become subject, under the Securities
Act or otherwise, insofar as such loss, claim, damage, liability or action
arises out of, or is based upon, (i) any untrue statement or alleged untrue
statement of a material fact contained in any Preliminary Prospectus, the
Registration Statement or the Prospectuses or in any amendment or supplement
thereto, or (ii) the omission or alleged omission to state in any Preliminary
Prospectus, the Registration Statement or the Prospectuses, or in any amendment
or supplement thereto, any material fact required to be stated therein or
necessary to make the statements therein not misleading, but in each case only
to the extent that the untrue statement or alleged untrue statement or omission
or alleged omission was made in reliance upon and in conformity with written
information concerning such Underwriter furnished to the Company through the
Representatives by or on behalf of that Underwriter specifically for inclusion
therein, and shall reimburse the Company and any such director, officer or
controlling person for any legal or other expenses reasonably incurred by the
Company or any such director, officer or controlling person in connection with
investigating or defending or preparing to defend against any such loss, claim,
damage, liability or action as such expenses are incurred. The foregoing
indemnity agreement is in addition to any liability that any Underwriter may
otherwise have to the Company or any such director, officer, employee or
controlling person.
(c) Promptly after receipt by an indemnified party under this
Section 9 of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party under this Section 9, notify the indemnifying party in
writing of the claim or the commencement of that action; provided, however, that
-------- -------
the failure to notify the indemnifying party shall not relieve it from any
liability that it may have under this Section 9 except to the extent it has been
materially prejudiced by such failure and, provided further, that the failure to
-------- -------
notify the indemnifying party shall not relieve it from any liability that it
may have to an indemnified party otherwise than under this Section 9. If any
such claim or action shall be brought against an indemnified party, and it shall
notify the indemnifying party thereof, the indemnifying party shall be entitled
to participate therein and, to the extent that it wishes, jointly with any other
similarly notified indemnifying party, to assume the
19
defense thereof with counsel reasonably satisfactory to the indemnified party.
After notice from the indemnifying party to the indemnified party of its
election to assume the defense of such claim or action, the indemnifying party
shall not be liable to the indemnified party under this Section 9 for any legal
or other expenses subsequently incurred by the indemnified party in connection
with the defense thereof other than reasonable costs of investigation; provided,
--------
however, that the Representatives shall have the right to employ counsel to
-------
represent jointly the Representatives and those other Underwriters and their
respective officers, employees and controlling persons who may be subject to
liability arising out of any claim in respect of which indemnity may be sought
by the Underwriters against the Company under this Section 9 if, in the
reasonable judgment of the Representatives, it is advisable for the
Representatives and those Underwriters, officers, employees and controlling
persons to be jointly represented by separate counsel, and in that event the
reasonable fees and expenses of such separate counsel shall be paid by the
Company. Notwithstanding anything contained herein to the contrary, if indemnity
may be sought pursuant to Section 9(a) hereof in respect of such claim or
action, then in addition to such separate firm for the indemnified parties, the
indemnifying party shall be liable for the fees and expenses of not more than
one separate firm (in addition to any local counsel) for the ▇▇▇▇▇▇ Brothers
Entities for the defense of any loss, claim, damage, liability or action arising
out of the Directed Share Program. Notwithstanding anything contained herein to
the contrary, if indemnity may be sought pursuant to Section 9(a) hereof in
respect of such action or proceeding, then in addition to such separate firm for
the indemnified parties, the indemnifying party shall be liable for the
reasonable fees and expenses of not more than one separate firm (in addition to
any local counsel) for ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ in its capacity as a "qualified
independent underwriter" and all persons, if any, who control ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
within the meaning of either Section 15 of the Securities Act or Section 20 of
the Exchange Act. No indemnifying party shall (i) without the prior written
consent of the indemnified parties (which consent shall not be unreasonably
withheld), 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, or (ii) be liable for any settlement
of any such action effected without its written consent (which consent shall not
be unreasonably withheld), but if settled with the consent of the indemnifying
party or if there be a final judgment of the plaintiff in any such action, the
indemnifying party agrees to indemnify and hold harmless any indemnified party
from and against any loss or liability by reason of such settlement or judgment.
(d) If the indemnification provided for in this Section 9 shall for
any reason be unavailable to or insufficient to hold harmless an indemnified
party under Section 9(a) or 9(b) in respect of any loss, claim, damage or
liability, or any action in respect thereof, referred to therein, then each
indemnifying party shall, in lieu of indemnifying such indemnified party,
contribute to the amount paid or payable by such indemnified party as a result
of such loss, claim, damage or liability, or action in respect
20
thereof, (i) in such proportion as shall be appropriate to reflect the relative
benefits received by the Company on the one hand and the Underwriters on the
other from the offering of the Stock or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company on the one hand and the
Underwriters on the other with respect to the statements or omissions that
resulted in such loss, claim, damage or liability, or action in respect thereof,
(i) in such proportion as shall be appropriate to reflect the relative benefits
received by the Company on the one hand and the Underwriters on the other from
the offering of the Stock or (ii) if the allocation provided by clause (i) above
is not permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause (i) above but also
the relative fault of the Company on the one hand and the Underwriters on the
other with respect to the statements or omissions that resulted in such loss,
claim, damage or liability, or action in respect thereof, as well as any other
relevant equitable considerations. The relative benefits received by the Company
on the one hand and the Underwriters on the other with respect to such offering
shall be deemed to be in the same proportion as the total net proceeds from the
offering of the Stock purchased under this Agreement (before deducting expenses)
received by the Company, on the one hand, and the total underwriting discounts
and commissions received by the Underwriters with respect to the shares of the
Stock purchased under this Agreement, on the other hand, bear to the total gross
proceeds from the offering of the Stock under this Agreement, in each case as
set forth in the table on the cover page of the Prospectuses. The relative fault
shall be determined by reference to whether the untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a material
fact relates to information supplied by the Company or the Underwriters, the
intent of the parties and their relative knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Company and
the Underwriters agree that it would not be just and equitable if contributions
pursuant to this Section were to be determined by pro rata allocation (even if
the Underwriters were treated as one entity for such purpose) or by any other
method of allocation that does not take into account the equitable
considerations referred to herein. The amount paid or payable by an indemnified
party as a result of the loss, claim, damage or liability, or action in respect
thereof, referred to above in this Section shall be deemed to include, for
purposes of this Section 9(d), any legal or other expenses reasonably incurred
by such indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 9(d), no
Underwriter shall be required to contribute any amount in excess of the amount
by which the total price at which the Stock underwritten by it and distributed
to the public was offered to the public exceeds the amount of any damages that
such Underwriter has otherwise paid or become liable to pay by reason of any
untrue or alleged untrue statement or omission or alleged omission. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation. The Underwriters' obligations
to contribute as provided in this Section 9(d) are several in proportion to
their respective underwriting obligations and not joint.
(e) The Underwriters severally confirm and the Company acknowledges that
the statements with respect to the public offering of the Stock by the
Underwriters set forth on the cover page of, the legend concerning prospectus
delivery requirements on the inside front cover page of and the fourth, eighth,
ninth, tenth, eleventh, twelfth, fourteenth, fifteenth, seventeenth, nineteenth
and twenty-third paragraphs appearing under the caption "Underwriting" in, the
Prospectuses are correct
21
and constitute the only information concerning such Underwriters furnished in
writing to the Company by or on behalf of the Underwriters specifically for
inclusion in the Registration Statement and the Prospectuses.
SECTION 10. Defaulting Underwriters. If, on either Delivery Date, any
Underwriter defaults in the performance of its obligations under this Agreement,
the remaining non-defaulting Underwriters shall be obligated to purchase the
Stock that the defaulting Underwriter agreed but failed to purchase on such
Delivery Date in the respective proportions that the number of shares of the
Firm Stock set opposite the name of each remaining non-defaulting Underwriter in
Schedule 1 or Schedule 2 hereto bears to the total number of shares of the Firm
Stock set opposite the names of all the remaining non-defaulting Underwriters in
Schedule 1 or Schedule 2 hereto; provided, however, that the remaining non-
-------- -------
defaulting Underwriters shall not be obligated to purchase any of the Stock on
such Delivery Date if the total number of shares of the Stock that the
defaulting Underwriter or Underwriters agreed but failed to purchase on such
date exceeds 9.09% of the total number of shares of the Stock to be purchased on
such Delivery Date, and any remaining non-defaulting Underwriter shall not be
obligated to purchase more than 110% of the number of shares of the Stock that
it agreed to purchase on such Delivery Date pursuant to the terms of Section 3.
If the foregoing maximums are exceeded, the remaining non-defaulting
Underwriters, or those other underwriters satisfactory to the Representatives
who so agree, shall have the right, but shall not be obligated, to purchase, in
such proportion as may be agreed upon among them, all the Stock to be purchased
on such Delivery Date. If the remaining Underwriters or other underwriters
satisfactory to the Representatives do not elect to purchase the shares that the
defaulting Underwriter or Underwriters agreed but failed to purchase on such
Delivery Date, this Agreement (or, with respect to the Second Delivery Date, the
obligation of the Underwriters to purchase, and of the Company to sell, the
Option Stock) shall terminate without liability on the part of any non-
defaulting Underwriter or the Company, except that the Company will continue to
be liable for the payment of expenses to the extent set forth in Sections 7 and
12. As used in this Agreement, the term "Underwriter" includes, for all purposes
of this Agreement unless the context requires otherwise, any party not listed in
Schedule 1 hereto who, pursuant to this Section 10, purchases Stock that a
defaulting Underwriter agreed to, but failed to, purchase.
Nothing contained herein shall relieve a defaulting Underwriter of any
liability it may have to the Company for damages caused by its default. If other
underwriters are obligated or agree to purchase the Stock of a defaulting or
withdrawing Underwriter, either the Representatives or the Company may postpone
the Delivery Date for up to seven full business days in order to effect any
changes that in the opinion of counsel for the Company or counsel for the
Underwriters may be necessary in the Registration Statement, the Prospectuses or
in any other document or arrangement.
SECTION 11. Termination. The obligations of the Underwriters hereunder may
be terminated by the Representatives by notice given to and received by the
Company prior to delivery of and payment for the Firm Stock if, prior to that
time, any of the events described in Sections 8(h), 8(i) or 8(j), shall have
occurred or if the
22
Underwriters shall decline to purchase the Stock for any reason permitted under
this Agreement.
SECTION 12. Reimbursement of Underwriters' Expense. If the Company shall
fail to tender the Stock for delivery to the Underwriters by reason of any
failure, refusal or inability on the part of the Company to perform any
agreement on its part to be performed, or because any other condition of the
Underwriters' obligations hereunder required to be fulfilled by the Company
(including, without limitation, with respect to the transactions) is not
fulfilled, the Company will reimburse the Underwriters for all reasonable
out-of-pocket expenses (including fees and disbursements of counsel) incurred
by the Underwriters in connection with this Agreement and the proposed purchase
of the Stock, and upon demand the Company shall pay the full amount thereof to
the Representatives. If this Agreement is terminated pursuant to Section 10 by
reason of the default of one or more Underwriters, the Company shall not be
obligated to reimburse any defaulting Underwriter on account of those expenses.
SECTION 13. Notices, Etc. All statements, requests, notices and
agreements hereunder shall be in writing, and:
(a) if to the Underwriters, shall be delivered or sent by mail, telex
or facsimile transmission to ▇▇▇▇▇▇ Brothers Inc., Three World Financial Center,
New York, New York 10285, Attention: Syndicate Department (Fax: ▇▇▇-▇▇▇-▇▇▇▇),
with a copy, in the case of any notice pursuant to Section 9(c), to the Director
of Litigation, Office of the General Counsel, ▇▇▇▇▇▇ Brothers Inc., ▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇;
(b) if to the Company, shall be delivered or sent by mail, telex or
facsimile transmission to the address of the Company set forth in the
Registration Statement, Attention: Chief Financial Officer (Fax: ▇▇▇-▇▇▇-▇▇▇▇);
(c) provided, however, that any notice to an Underwriter pursuant to
-------- -------
Section 9(c) shall be delivered or sent by mail, telex or facsimile
transmission to such Underwriter at its address set forth in its acceptance
telex to the Representatives, which address will be supplied to any other party
hereto by the Representatives upon request. Any such statements, requests,
notices or agreements shall take effect at the time of receipt thereof. The
Company shall be entitled to act and rely upon any request, consent, notice or
agreement given or made on behalf of the Underwriters by ▇▇▇▇▇▇ Brothers Inc. on
behalf of the Representatives.
SECTION 14. Persons Entitled to Benefit of Agreement. This Agreement
shall inure to the benefit of and be binding upon the Underwriters, the Company,
and their respective successors. This Agreement and the terms and provisions
hereof are for the sole benefit of only those persons, except that (A) the
representations, warranties, indemnities and agreements of the Company
contained in this Agreement shall also be deemed to be for the benefit of the
person or persons, if any, who control any Underwriter within the meaning of
Section 15 of the Securities Act and (B) the indemnity
23
agreement of the Underwriters contained in Section 9(b) of this Agreement shall
be deemed to be for the benefit of directors of the Company, its officers and
employees and any person controlling the Company within the meaning of Section
15 of the Securities Act. Nothing in this Agreement is intended or shall be
construed to give any person, other than the persons referred to in this Section
14, any legal or equitable right, remedy or claim under or in respect of this
Agreement or any provision contained herein.
SECTION 15. Survival. The respective indemnities, representations,
warranties and agreements of the Company and the Underwriters contained in this
Agreement or made by or on behalf on them, respectively, pursuant to this
Agreement, shall survive the delivery of and payment for the Stock and shall
remain in full force and effect, regardless of any investigation made by or on
behalf of any of them or any person controlling any of them.
SECTION 16. Definition of the Terms "Business Day" and "Subsidiary." For
purposes of this Agreement, (a) "business day" means each Monday, Tuesday,
Wednesday, Thursday or Friday that is not a day on which banking institutions in
New York are generally authorized or obligated by law or executive order to
close and (b) "subsidiary" has the meaning set forth in Rule 405 of the Rules
and Regulations.
SECTION 17. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of New York.
SECTION 18. Counterparts. This Agreement may be executed in one or more
counterparts and, if executed in more than one counterpart, the executed
counterparts shall each be deemed to be an original but all such counterparts
shall together constitute one and the same instrument.
SECTION 19. Headings. The headings herein are inserted for convenience
of reference only and are not intended to be part of, or to affect the meaning
or interpretation of, this Agreement.
24
If the foregoing correctly sets forth the agreement between the
Company and the Underwriters, please indicate your acceptance in the space
provided for that purpose below.
Very truly yours,
PEABODY ENERGY CORPORATION
By
Name:
Title:
Accepted:
▇▇▇▇▇▇ Brothers Inc.
Bear, ▇▇▇▇▇▇▇ & Co. Inc.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
UBS Warburg LLC
▇.▇. ▇▇▇▇▇▇▇ & Sons, Inc.
For themselves and as Representatives
of the several Underwriters named
in Schedule 1 hereto
By ▇▇▇▇▇▇ Brothers Inc.
By
Authorized Representative
▇▇▇▇▇▇ Brothers International (Europe)
Bear, ▇▇▇▇▇▇▇ International Limited
▇▇▇▇▇▇▇ ▇▇▇▇▇ International
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. International Limited
UBS AG, acting through its business group UBS Warburg
Cazenove & Co.
For themselves and as Representatives
of the several Underwriters named
in Schedule 2 hereto
By ▇▇▇▇▇▇ Brothers Inc.
By
Authorized Representative
SCHEDULE 1
Number of Shares of
Underwriters Firm Stock to be Purchased
------------ --------------------------
▇▇▇▇▇▇ Brothers Inc................................
Bear, ▇▇▇▇▇▇▇ & Co. Inc............................
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated..................
UBS Warburg LLC....................................
▇.▇. ▇▇▇▇▇▇▇ & Sons, Inc...........................
[Names of other Underwriters]
----------
Total.............................................. 12,000,000
==========
SCHEDULE 2
Number of Shares of
International Underwriters Firm Stock to be Purchased
-------------------------- --------------------------
▇▇▇▇▇▇ Brothers International (Europe)..............
Bear, ▇▇▇▇▇▇▇ International Limited.................
▇▇▇▇▇▇▇ ▇▇▇▇▇ International.........................
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. International Limited..........
UBS AG, acting through its business group
UBS Warburg......................................
Cazenove & Co.......................................
[Names of other International Underwriters]
---------
Total............................................... 3,000,000
=========
Exhibit A-1
LOCK-UP LETTER AGREEMENT
▇▇▇▇▇▇ Brothers Inc.
Bear, ▇▇▇▇▇▇▇ & Co. Inc.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
UBS Warburg LLC
▇.▇. ▇▇▇▇▇▇▇ & Sons, Inc.
As Representatives of the several
Underwriters named in Schedule 1,
c/▇ ▇▇▇▇▇▇ Brothers Inc.
Three World ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ Brothers International (Europe)
Bear, ▇▇▇▇▇▇▇ International Limited
▇▇▇▇▇▇▇ ▇▇▇▇▇ International
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. International Limited
UBS AG, acting through its business group UBS Warburg
Cazenove & Co.
As Representatives of the several
Underwriters named in Schedule 2,
c/▇ ▇▇▇▇▇▇ Brothers
Three World Financial Center
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Dear Sirs:
The undersigned understands that you and certain other firms propose
to enter into an Underwriting Agreement (the "Underwriting Agreement") providing
for the purchase by you and such other firms (the "Underwriters") of shares (the
"Shares") of Common Stock, par value $0.01 per share (the "Common Stock"), of
Peabody Energy Corporation, a Delaware corporation (the "Company"), and that
the Underwriters propose to reoffer the Shares to the public (the "Offering").
In consideration of the execution of the Underwriting Agreement by the
Underwriters, and for other good and valuable consideration, the undersigned
hereby irrevocably agrees that, without the prior written consent of ▇▇▇▇▇▇
Brothers Inc., on behalf of the Underwriters, the undersigned will not,
directly or indirectly, (1) offer for sale, sell, pledge, or otherwise dispose
of (or enter into any transaction or device that is
designed to, or could be expected to, result in the disposition by any person at
any time in the future of) any shares of Common Stock (including, without
limitation, shares of Common Stock that may be deemed to be beneficially owned
by the undersigned in accordance with the rules and regulations of the
Securities and Exchange Commission and shares of Common Stock that may be issued
upon exercise of any option or warrant) or securities convertible into or
exchangeable for Common Stock owned by the undersigned on the date of execution
of this Lock-Up Letter Agreement or on the date of the completion of the
Offering, or (2) enter into any swap or other derivatives transaction that
transfers to another, in whole or in part, any of the economic benefits or risks
of ownership of such shares of Common Stock, whether any such transaction
described in clause (1) or (2) above is to be settled by delivery of Common
Stock or other securities, in cash or otherwise, for a period of 180 days after
the date of the final Prospectus relating to the Offering.
Notwithstanding the foregoing, gifts or transfers to (A) the
undersigned's immediate family or (B) a trust or partnership the beneficiary and
sole partners of which are members of the undersigned's immediate family and/or
the undersigned, shall not be prohibited by this agreement if the donee or
transferee agrees in writing to be bound by the foregoing in the same manner as
it applies to the undersigned. In addition, this agreement shall not prohibit
the exercise of any stock options or warrants, or rights relating to the
conversion of convertible debt, except that the shares of Common Stock obtained
upon any such exercise shall be subject to the limitations on disposition
herein.
In furtherance of the foregoing, the Company and its Transfer Agent
are hereby authorized to decline to make any transfer of securities if such
transfer would constitute a violation or breach of this Lock-Up Letter
Agreement.
It is understood that, if the Company notifies you that it does not
intend to proceed with the Offering, if the Underwriting Agreement does not
become effective, or if the Underwriting Agreement (other than the provisions
thereof which survive termination) shall terminate or be terminated prior to
payment for and delivery of the Shares, we will be released from our obligations
under this Lock-Up Letter Agreement.
The undersigned understands that the Company and the Underwriters will
proceed with the Offering in reliance on this Lock-Up Letter Agreement.
Whether or not the Offering actually occurs depends on a number of
factors, including market conditions. Any Offering will only be made pursuant
to an Underwriting Agreement, the terms of which are subject to negotiation
between the Company and the Underwriters.
2
The undersigned hereby represents and warrants that the undersigned
has full power and authority to enter into this Lock-Up Letter Agreement and
that, upon request, the undersigned will execute any additional documents
necessary in connection with the enforcement hereof. Any obligations of the
undersigned shall be binding upon the heirs, personal representatives,
successors and assigns of the undersigned.
Very truly yours,
By:______________________________
Name:
Title:
Dated: _______________
Exhibit A-2
LOCK-UP LETTER AGREEMENT
▇▇▇▇▇▇ Brothers Inc.
Bear, ▇▇▇▇▇▇▇ & Co. Inc.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
UBS Warburg LLC
▇.▇. ▇▇▇▇▇▇▇ & Sons, Inc.
As Representatives of the several
Underwriters named in Schedule 1,
c/▇ ▇▇▇▇▇▇ Brothers Inc.
Three World ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ Brothers International (Europe)
Bear, ▇▇▇▇▇▇▇ International Limited
▇▇▇▇▇▇▇ ▇▇▇▇▇ International
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. International Limited
UBS AG, acting through its business group UBS Warburg
Cazenove & Co.
As Representatives of the several
Underwriters named in Schedule 2,
c/▇ ▇▇▇▇▇▇ Brothers Inc.
Three World ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Dear Sirs:
The undersigned understands that you and certain other firms propose
to enter into an Underwriting Agreement (the "Underwriting Agreement") providing
for the purchase by you and such other firms (the "Underwriters") of shares (the
"Shares") of Common Stock, par value $0.01 per share (the "Common Stock"), of
Peabody Energy Corporation, a Delaware corporation (the "Company"), and that the
Underwriters propose to reoffer the Shares to the public (the "Offering").
In consideration of the execution of the Underwriting Agreement by the
Underwriters, and for other good and valuable consideration, the undersigned
hereby irrevocably agrees that, without the prior written consent of ▇▇▇▇▇▇
Brothers Inc., on behalf of the Underwriters, the undersigned will not, directly
or indirectly, (1) offer for sale, sell, pledge (except with respect to pledges
to the Company), or otherwise dispose
2
of (or enter into any transaction or device that is designed to, or could be
expected to, result in the disposition by any person at any time in the future
of) any shares of Common Stock (including, without limitation, shares of Common
Stock that may be deemed to be beneficially owned by the undersigned in
accordance with the rules and regulations of the Securities and Exchange
Commission and shares of Common Stock that may be issued upon exercise of any
option or warrant) or securities convertible into or exchangeable for Common
Stock owned by the undersigned on the date of execution of this Lock-Up Letter
Agreement or on the date of the completion of the Offering, or (2) enter into
any swap or other derivatives transaction that transfers to another, in whole or
in part, any of the economic benefits or risks of ownership of such shares of
Common Stock, whether any such transaction described in clause (1) or (2) above
is to be settled by delivery of Common Stock or other securities, in cash or
otherwise, for a period of 180 days after the date of the final Prospectus
relating to the Offering.
Notwithstanding the foregoing, gifts or transfers to (A) the
undersigned's immediate family or (B) a trust or partnership the beneficiary and
sole partners of which are members of the undersigned's immediate family and/or
the undersigned, shall not be prohibited by this agreement if the donee or
transferee agrees in writing to be bound by the foregoing in the same manner as
it applies to the undersigned. In addition, this agreement shall not prohibit
the exercise of any stock options or warrants, or rights relating to the
conversion of convertible debt, except that the shares of Common Stock obtained
upon any such exercise shall be subject to the limitations on disposition
herein.
In furtherance of the foregoing, the Company and its Transfer Agent
are hereby authorized to decline to make any transfer of securities if such
transfer would constitute a violation or breach of this Lock-Up Letter
Agreement.
It is understood that if the Company notifies you that it does not
intend to proceed with the Offering, if the Underwriting Agreement does not
become effective, or if the Underwriting Agreement (other than the provisions
thereof which survive termination) shall terminate or be terminated prior to
payment for and delivery of the Shares, we will be released from our obligations
under this Lock-Up Letter Agreement.
The undersigned understands that the Company and the Underwriters will
proceed with the Offering in reliance on this Lock-Up Letter Agreement.
Whether or not the Offering actually occurs depends on a number of
factors, including market conditions. Any Offering will only be made pursuant to
an Underwriting Agreement, the terms of which are subject to negotiation between
the Company and the Underwriters.
3
The undersigned hereby represents and warrants that the undersigned
has full power and authority to enter into this Lock-Up Letter Agreement and
that, upon request, the undersigned will execute any additional documents
necessary in connection with the enforcement hereof. Any obligations of the
undersigned shall be binding upon the heirs, personal representatives,
successors and assigns of the undersigned.
Very truly yours,
By:______________________________
Name:
Title:
Dated: _______________