EXHIBIT 1.1
[ ] SHARES
AQUILA, INC.
CLASS A COMMON STOCK
UNDERWRITING AGREEMENT
March __, 2001
LEHMAN BROTHERS INC.,
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED,
SALOMON SMITH BARNEY INC.,
CREDIT LYONNAIS SECURITIES (USA) INC. AND
J.P. MORGAN SECURITIES INC.
As Representatives of the several
U.S. Underwriters named in Schedule 1,
c/o Lehman Brothers Inc.
Three World Financial Center
New York, New York 10285
and
Merrill Lynch, Pierce, Fenner & Smith Incorporated
World Financial Center--North Tower
New York, New York 10281-1327
LEHMAN BROTHERS INTERNATIONAL (EUROPE),
MERRILL LYNCH INTERNATIONAL,
SALOMON BROTHERS INTERNATIONAL LIMITED,
CREDIT LYONNAIS SECURITIES AND
J.P. MORGAN SECURITIES LTD.
As Representatives of the several
International Underwriters named in Schedule 2,
c/o Lehman Brothers International (Europe)
One Broadgate
London EC2M 7HA
England
and
Merrill Lynch International
World Financial Center--North Tower
New York, New York 10281-1327
Dear Sirs:
Aquila, Inc., a Delaware corporation (the "COMPANY"), proposes to sell
[ ] shares (the "FIRM STOCK") of the Company's Class A Common Stock, par value
$0.01 per share (the "COMMON STOCK") upon the terms and conditions stated in
this letter.
It is understood that [ ] 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 [ ] 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. Lehman Brothers Inc.,
Merrill Lynch, Pierce, Fenner & Smith Incorporated, Salomon Smith Barney Inc.,
Credit Lyonnais Securities (USA) Inc. and J.P. Morgan Securities Inc. shall act
as representatives (the "U.S. REPRESENTATIVES") of the several U.S.
Underwriters, and Lehman Brothers International (Europe), Merrill Lynch
International, Salomon Brothers International Limited, Credit Lyonnais
Securities and J.P. Morgan Securities Ltd. 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 an
option to purchase up to an additional [ ] shares of the Common Stock on the
terms and for the purposes set forth in Sections 2 and 4 (the "OPTION STOCK").
The Firm Stock and the Option Stock, if purchased, are hereinafter collectively
called the "STOCK." This Agreement is to confirm the agreement concerning the
purchase of the Stock from the Company by the Underwriters.
It is further understood that [ ] shares of the Firm Stock (the
"DIRECTED SHARES") will initially be reserved by the Underwriters for offer and
sale to directors and employees of the Company and its affiliates (collectively,
the "PARTICIPANTS") upon the terms and conditions set forth in the Prospectus
and in accordance with the rules and regulations of the National Association of
Securities Dealers, Inc. (the "DIRECTED SHARE PROGRAM"). Under no circumstances
will any Representative or Underwriter be liable to the Company or to any
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 Participant by the
end of the business day after the date of this Agreement, such Directed Shares
may be offered to the public as part of the public offering contemplated hereby.
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 and back cover pages. 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
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
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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 "PROSPECTUS"
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.
(b) The Registration Statement conforms, and the Prospectus
and any further amendments or supplements to the
Registration Statement or the Prospectus 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 Prospectus 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 (in
the case of the Prospectus, in light of the circumstances
under which they were made); provided that no representation
or warranty is made as to information contained in or
omitted from the Registration Statement or the Prospectus 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. The Commission has not issued any order preventing
or suspending the use of any Preliminary Prospectus.
(c) Each of the Company and its significant subsidiaries (as
defined in Section 16) has been duly incorporated and is
validly existing as a corporation in good standing under the
laws of the jurisdiction of its incorporation, with full
power and authority (corporate and other) to own or lease
its properties and conduct its business as described in the
Prospectus, and is duly qualified to do business and is in
good standing in each jurisdiction in which the character of
the business conducted by it or the location of the
properties owned or leased by it makes such qualification
necessary (except where the failure to be so qualified and
in good standing could not be reasonably expected to have a
material adverse effect on the Company and its subsidiaries
taken as a whole).
(d) The Company has an authorized capitalization as set
forth in the Prospectus, and all of the outstanding shares
of capital stock of the Company and all of the outstanding
shares of capital stock of each significant subsidiary, have
been duly authorized and validly issued, and are fully paid
and nonassessable. All of the outstanding shares of capital
stock of each significant subsidiary that are owned directly
or indirectly by the Company are owned free and clear of any
claim, lien, encumbrance or security interest except as
otherwise disclosed in writing to the Representatives.
(e) The shares of the Stock to be issued and sold by the
Company to the Underwriters hereunder, upon issuance and
delivery and payment therefor in the manner described
herein, will be duly authorized, validly issued, fully paid
and nonassessable. Such shares of Stock conform to the
descriptions thereof in the Preliminary Prospectus, dated
[ ], 2001, and the Prospectus. There are no preemptive or
other rights to subscribe for or to purchase, or any
restriction upon the transfer of, any shares of the
Company's capital stock, including the Stock when issued,
pursuant to the Company's certificate of incorporation,
bylaws or other governing documents or any agreement or
other instrument to which the Company or any of its
subsidiaries is a party or by which it may be bound.
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(f) This Agreement has been duly authorized, executed and
delivered by the Company and conforms in all material
respects to the description thereof in the Prospectus.
(g) Neither the Company nor any of its subsidiaries is, nor
with the giving of notice or lapse of time or both would be,
in violation of or in default under, nor will the execution
or delivery of this Agreement or consummation of the
transactions contemplated by this Agreement result in a
violation of, or constitute a default under, the certificate
of incorporation, bylaws or other governing documents of the
Company or any of its subsidiaries, or any agreement,
indenture or other instrument to which the Company or any of
its subsidiaries is a party or by which any of them is
bound, or to which any of their properties is subject, nor
will the performance by the Company of its obligations under
this Agreement violate any law, rule, administrative
regulation or decree of any court or any governmental agency
or body having jurisdiction over the Company, its
subsidiaries or any of their properties, result in the
creation or imposition of any lien, charge, claim or
encumbrance upon any property or asset of the Company or any
of its subsidiaries which would be material to the Company
and its subsidiaries taken as a whole, except with reference
to the result of a violation of, or a default under, the
certificate of incorporation, bylaws or other governing
documents of the Company or any of its subsidiaries. Except
for permits and similar authorizations required under the
Securities Act, the Federal Power Act and the securities or
Blue Sky laws of certain jurisdictions, and except for such
permits and authorizations as have been obtained, no
consent, approval, authorization or order of any court,
governmental agency or body or financial institution is
required in connection with the consummation of the
transactions contemplated by this Agreement.
(h) Except as described in the Prospectus, 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.
(i) Except as described in the Prospectus, the Company has
not sold or issued any shares of its capital stock during
the six-month period preceding the date of the Prospectus,
including but not limited to any sales pursuant to Rule 144A
under, or Regulations D or S of, the Securities Act.
(j) Since the date of the latest audited financial
statements included in the Prospectus, neither the Company
nor any of its subsidiaries has incurred any liability or
obligation, direct or contingent, or entered into any
transaction, not in the ordinary course of business, that is
material to the Company and its subsidiaries taken as a
whole, or sustained 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
Prospectus, that is material to the Company and its
subsidiaries taken as a whole; and, since the date as of
which information is given in the Prospectus, there has not
been any material change in the capital stock, or material
increase in the short-term debt or long-term debt, of the
Company or any of its subsidiaries or any material adverse
change, or any development involving, or which may
reasonably be expected to involve, a prospective material
adverse change in or affecting the condition (financial or
other), business, prospects, properties, net worth or
results of operations of the Company and its subsidiaries
taken as a whole, otherwise than as set forth or
contemplated in the Prospectus.
(k) The financial statements, together with related
schedules and notes, included in the Registration Statement
and the Prospectus (and any amendment or supplement
thereto),
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present fairly the consolidated financial position, results
of operations and changes in financial position of the
Company and its subsidiaries on the basis stated in the
Registration Statement and the Prospectus at the respective
dates or for the respective periods to which they apply;
such statements and related schedules and notes have been
prepared in accordance with generally accepted accounting
principles consistently applied throughout the periods
involved, except as disclosed therein; and the other
financial and statistical information and data included in
the Registration Statement and the Prospectus (and any
amendment or supplement thereto) are accurately presented
and prepared on a basis consistent with such financial
statements and the books and records of the Company and its
subsidiaries.
(l) The accountants who have certified or shall certify the
financial statements included in the Registration Statement
and the Prospectus (or any amendment or supplement thereto)
are independent public accountants as required by the
Securities Act.
(m) The Company and its significant subsidiaries have good
and marketable title to all material real and personal
property owned by them, in each case free and clear of all
mortgages, liens, encumbrances and defects, except such as
are described or referred to in the Prospectus or such as do
not materially affect the values of such property and do not
interfere with the use made or proposed to be made of such
property by the Company or such significant subsidiaries;
and any real property and buildings held under lease by the
Company and its significant subsidiaries are held by them
under valid, existing and enforceable leases with such
exceptions as are not material and do not interfere with the
use made or proposed to be made of such property and
buildings by the Company or such significant subsidiaries.
(n) Except as described in the Prospectus, the Company and
each of its significant subsidiaries carry, or are covered
by, insurance in such amounts and covering such risks as are
adequate for the conduct of their respective businesses and
the value of their respective properties and as is customary
for companies engaged in similar businesses in similar
industries.
(o) The Company and each of its subsidiaries own or possess
adequate rights to use all material patents, patent
applications, trademarks, service marks, trade names,
trademark registrations, service mark registrations,
copyrights and licenses necessary for the conduct of their
respective businesses and have no knowledge of any
infringement by them of, and have not received any notice of
any claim of infringement of, any such rights of others,
which might result in any material adverse change in the
condition (financial or other), results of operations,
business, prospects, net worth or assets of the Company and
its subsidiaries taken as a whole.
(p) Except as described in the Prospectus, there is no
litigation or governmental proceeding to which the Company
or any of its subsidiaries is a party or to which any
property of the Company or any of its subsidiaries is
subject or which is pending or, to the knowledge of the
Company, contemplated against the Company or any of its
subsidiaries which might result in any material adverse
change in the condition (financial or other), results of
operations, business, prospects, net worth or assets of the
Company and its subsidiaries taken as a whole.
(q) There are no contracts or other documents which are
required to be described in the Prospectus or filed as
exhibits to the Registration Statement by the Securities Act
or by the Rules and Regulations which have not been
described in the Prospectus or filed as exhibits to the
Registration Statement.
(r) No relationship, direct or indirect, exists between or
among the Company on the one hand, and the directors,
officers, stockholder, customers or suppliers of the Company
on
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the other hand, which is required to be described in the
Prospectus which is not so described.
(s) No labor disturbance by the employees of the Company
exists or, to the knowledge of the Company, is imminent,
which might be expected to have a material adverse effect on
the general affairs, management, consolidated financial
position, stockholders' equity, results of operations,
business or prospects of the Company and its subsidiaries
taken as a whole.
(t) 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
material liability; the Company has not incurred and does
not expect to incur any material 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.
(u) The Company has filed or has had filed on its behalf,
all material federal, state and local income and franchise
tax returns required to be filed through the date hereof and
has paid all taxes due thereon, and no tax deficiency has
been determined adversely to the Company or any of its
subsidiaries which 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, might
have) a material adverse effect on the consolidated
financial position, stockholders' equity, results of
operations, business or prospects of the Company and its
subsidiaries taken as a whole.
(v) Since the date as of which information is given in the
Prospectus through the date hereof, and except as may
otherwise be disclosed in the Prospectus, the Company has
not (i) issued or granted any securities, (ii) incurred any
liability or obligation, direct or contingent, other than
liabilities and obligations which 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.
(w) The Company (i) makes and keeps accurate books and
records in all material respects and (ii) maintains a system
of internal accounting controls sufficient to provide
reasonable assurances that (A) transactions are executed in
accordance with management's general or specific
authorization; (B) transactions are recorded as necessary to
permit preparation of financial statements in conformity
with generally accepted accounting principles and to
maintain accountability for assets; (C) access to assets is
permitted only in accordance with management's general or
specific authorization; and (D) the recorded accountability
for assets is compared with existing assets at reasonable
intervals and appropriate action is taken with respect to
any differences.
(x) Neither the Company nor any of its significant
subsidiaries is in violation in any material respect 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, which would have a material
adverse effect on the consolidated financial position,
stockholders' equity,
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results of operations, business or prospects of the Company
and its significant subsidiaries taken as a whole.
(y) To the best knowledge of the Company, neither the
Company nor any of its subsidiaries, nor any director,
officer, agent, employee or other person associated with or
acting on behalf of the Company or any of its subsidiaries,
has used any funds of the Company for any unlawful
contribution, gift, entertainment or other unlawful expense
relating to political activity; made any direct or indirect
unlawful payment to any foreign or domestic government
official or employee from funds of the Company; violated or
is in violation of any provision of the Foreign Corrupt
Practices Act of 1977; or made any unlawful bribe, rebate,
payoff, influence payment, kickback or other unlawful
payment.
(z) 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 which would require remedial action under any
applicable law, ordinance, rule, regulation, order,
judgment, decree or permit, except for any violation or
remedial action which would not have, singularly or in the
aggregate with all such violations and remedial actions, a
material adverse effect on the general affairs, management,
consolidated financial position, stockholders' equity or
results of operations of the Company and its subsidiaries
taken as a whole; 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 which would not have, singularly or in the aggregate
with all such spills, discharges, leaks, emissions,
injections, escapes, dumpings and releases, a material
adverse effect on the general affairs, management,
consolidated financial position, stockholders' equity or
results of operations of the Company and its subsidiaries
taken as a whole; 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.
(aa)Neither the Company nor any significant subsidiary is,
or, as of the Delivery Date (as hereinafter defined) after
giving effect to the sale of the Stock pursuant to this
Agreement and the application of the net proceeds therefrom
as described in the Prospectus, will be, an "INVESTMENT
COMPANY" as defined in the Investment Company Act of 1940,
as amended.
(bb)None of the Directed Shares distributed in connection
with the Directed Share Program will be offered or sold
outside of the United States.
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
issue and sell 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 Schedule 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.
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In addition, the Company grants to the Underwriters an option to
purchase up to [ ] shares of Option Stock. Such option is granted for the
purpose of covering over-allotments in the sale of Firm Stock and is exercisable
as provided in Section 4 hereof. Shares of Option Stock shall be purchased
severally for the account of the Underwriters in proportion to the number of
shares of Firm Stock set forth opposite the name of such Underwriters in
Schedules 1 and 2 hereto. The respective purchase obligations of each
Underwriter with respect to the Option Stock shall be adjusted by the
Representatives so that no 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 will offer the Firm Stock for sale upon the
terms and conditions set forth in the Prospectus.
Section 4. DELIVERY OF AND PAYMENT FOR THE STOCK.
Delivery of and payment for the Firm Stock shall be made at the offices
of Milbank, Tweed, Hadley & McCloy LLP, 1 Chase Manhattan Plaza, New York, New
York 10005, 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 in U.S. dollars. Time
shall be of the essence, and delivery at the time and place specified pursuant
to this Agreement is a further condition of the obligations of each of the
parties 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 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 Representatives, when the
shares of Option Stock are to be delivered; provided, however, that this date
and time shall not be earlier than the First Delivery 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 4 (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 in U.S. Dollars. Time shall be of the essence, and
delivery at the time and place specified pursuant to this Agreement is a further
condition of the obligations of each of the parties hereunder. Upon delivery,
the Option Stock shall be registered in such names and
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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 5. FURTHER AGREEMENTS OF THE COMPANY.
The Company agrees:
(a) To prepare the Prospectus 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
Prospectus 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
Prospectus 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 Prospectus, of the suspension
of the qualification of the Stock for offering or sale in
any jurisdiction, of the initiation or threatening by the
Commission 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 Prospectus 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 Prospectus or
suspending any such qualification, to use promptly
commercially reasonable 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 Prospectus 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
Prospectus 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 misleading,
or, if for any other reason it shall be necessary to amend
or supplement the Prospectus 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 which 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 Prospectus or any
supplement to the Prospectus that may, in the reasonable
-9-
judgment of the Company or 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 Prospectus 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;
(f) As soon as practicable but in any event no later than
the date on which the first filing by the Company under the
Securities Exchange Act of 1934 is required to be filed
following the first anniversary of the Effective Date, to
make generally available to the Company's security holders
and to deliver to the Representatives an earnings 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 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 capital stock of the Company 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 reasonably 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 or
to file a general consent to service of process in any
jurisdiction;
(i) For a period of 180 days from the date of the
Prospectus, not to, directly or indirectly, (1) offer for
sale, sell, pledge or otherwise dispose of (or enter into
any transaction or device which 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 the common stock of the
Company or securities convertible into or exchangeable for
the common stock of the Company (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), or sell or grant
options, rights or warrants with respect to any shares of
the common stock of the Company or securities convertible
into or exchangeable for the common stock of the Company
(other than the grant of options, rights or warrants
pursuant to employee compensation 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 the common stock of the Company, whether any such
transaction described in clause (1) or (2) above is to be
settled by delivery of the common stock of the Company or
other securities, in cash or otherwise, in each case without
the prior written consent of Lehman Brothers Inc. on behalf
of the Underwriters; and to cause each shareholder of the
Company and each officer and director set forth in SCHEDULE
3 to furnish to the Representatives, prior to the First
Delivery Date, a letter or letters, substantially in the
form of Exhibit A hereto, pursuant to which each such person
shall agree not to, directly or indirectly, with certain
limited exceptions, (1) offer for sale, sell, pledge or
otherwise dispose of (or enter into any transaction or
device which is designed to, or could be expected to, result
in the
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disposition by any person at any time in the future of) any
shares of the common stock of the Company or securities
convertible into or exchangeable for the common stock of the
Company 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 the common stock of the Company, whether any such
transaction described in clause (1) or (2) above is to be
settled by delivery of the common stock of the Company or
other securities, in cash or otherwise, in each case for a
period of 180 days from the date of the Prospectus, without
the prior written consent of Lehman 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 commercially reasonable 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 the Stock
pursuant to this Agreement as set forth in the Prospectus;
(l) For a period of one year after the Effective Date, to
take such steps as shall be necessary to ensure that the
Company shall not 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 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, and Lehman Brothers Inc. will notify
the Company as to which Participants will need to be so
restricted. At the request of Lehman Brothers Inc., the
Company will direct the transfer agent to place stop
transfer restrictions upon such securities for such period
of time.
Section 6. 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 incurred within nine months of the Effective Date; (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 Prospectus and any amendment or
supplement to the Prospectus, 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 stock exchange listing or
other stock exchange 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 5(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, including counsel fees and any stamp duties or
other taxes incurred by the Underwriters in connection with the Directed Share
Program; (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
6 and in Section 11 the Underwriters shall pay their own costs and expenses,
-11-
including the costs and expenses of their counsel, any transfer taxes on the
Stock which they may sell and the expenses of advertising any offering of the
Stock made by the Underwriters.
Section 7. 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 5(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 or, to the best
knowledge of the Company, threatened by the Commission; and
any request of the Commission for inclusion of additional
information in the Registration Statement or the Prospectus
or otherwise shall have been complied with.
(b) Blackwell Sanders Peper Martin LLP shall have furnished
to the Representatives their 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 that:
(i) The Company has been duly incorporated, is validly
existing as a corporation in good standing under the
laws of the State of Delaware, is duly qualified to
transact business and is in good standing in each
jurisdiction in which the conduct of its business or
its ownership or leasing of property requires such
qualification (except where the failure to be so
qualified and in good standing could not be reasonably
expected to have a material adverse effect on the
Company and its subsidiaries taken as a whole), has
duly obtained or has succeeded to and holds all
material franchises and other governmental and
corporate authority necessary to carry on the business
in which it is engaged and to own, lease and operate
the properties in use in such business and the
maintenance of such authority is not subject to any
burdensome restriction or condition of an unusual
character, except as described in the Registration
Statement;
(ii) Each significant subsidiary of the Company (other
than the Company's foreign subsidiaries) has been duly
incorporated and is validly existing as a corporation
in good standing under the laws of the jurisdiction of
its incorporation;
(iii) The shares of the Company's capital stock
outstanding prior to the issuance of the Stock have
been duly authorized and are validly issued, fully
paid and nonassessable;
(iv) The Stock has been duly authorized, and, when
delivered in accordance with the terms of this
Agreement, will be validly issued, fully paid and
nonassessable;
(v) There are no preemptive or other rights to
subscribe for or to purchase, or any restriction upon
the transfer of, any shares of the Company's common
stock, including the Stock when issued, pursuant to
the Company's certificate of incorporation, bylaws, or
any agreement or other instrument known to such
counsel to which the Company or any of its significant
subsidiaries is a party or by which any of them may be
bound, and neither the filing of the Registration
Statement nor the offering or sale of the Stock as
contemplated by this Agreement gives rise to any
rights, other than those which have been waived or
satisfied, for or relating to
-12-
the registration of any shares of the Company's common
stock under the Company's certificate of
incorporation, bylaws or any agreement or other
instrument binding upon the Company known to such
counsel;
(vi) After due inquiry, such counsel does not know of
any legal or governmental proceeding pending or
threatened to which the Company or its significant
subsidiaries is a party or to which any of the
properties of the Company or its significant
subsidiaries is subject that is required to be
described in the Registration Statement or the
Prospectus as amended or supplemented and is not so
described or of any contract or other document that is
required to be described in the Registration Statement
or the Prospectus as amended or supplemented or to be
filed as an exhibit to the Registration Statement that
is not described or filed as required;
(vii) The Registration Statement has become effective
under the Securities Act and no stop order suspending
the effectiveness of the Registration Statement has
been issued and, to such counsel's knowledge, no
proceedings for that purpose have been instituted or
are pending before or contemplated by the Commission
and all filings required by Rule 424 under the
Securities Act have been made; the Registration
Statement and the Prospectus and any amendments and
supplements thereto (other than the financial
statements and related schedules and the other
financial information and data therein, as to which
such counsel need express no opinion), comply as to
form in all material respects with the requirements of
the Securities Act and the Rules and Regulations
thereunder; such counsel has no reason to believe
that, as of its Effective Date, the Registration
Statement or amendment thereto (other than the
financial statements and related schedules and the
other financial information and data therein, as to
which such counsel need express no opinion) contained
an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or
necessary to make the statements therein not
misleading or that, as of its date, the Preliminary
Prospectus dated [____], 2001 and the Prospectus or
any amendment or supplement thereto (other than the
financial statements and related schedules and the
other financial information and data therein, as to
which such counsel need express no opinion) contained
an untrue statement of a material fact or omitted to
state a material fact necessary to make the statements
therein, in light of the circumstances in which they
were made, not misleading or that, as of the Delivery
Date for the Stock, either the Registration Statement
or the Prospectus as amended or supplemented or any
further amendment or supplement thereto made by the
Company prior to the Delivery Date for the Stock
(other than the financial statements and related
schedules and the other financial information and data
therein, as to which such counsel need express no
opinion) contains an untrue statement of a material
fact or omits to state a material fact necessary to
make the statements therein, in light of the
circumstances in which they were made, not misleading;
and they do not know of any amendment to the
Registration Statement required to be filed;
(viii) The statements made in the Registration
Statement, the Preliminary Prospectus dated [____],
2001 and the Prospectus under the captions
"Description of Our Capital Stock", "U.S. Federal Tax
Considerations for Non-U.S. Holders" and "Relationship
with UtiliCorp and Related Party Transactions",
insofar as such statements constitute a summary of the
legal matters, documents, proceedings, federal
statutes, rules and regulations, fairly summarize such
legal matters, documents, proceedings, federal
statutes and rules and regulations;
-13-
(ix) The Company has full corporate power and
corporate authority to enter into and perform its
obligations under this Agreement with respect to the
Stock and to issue the Stock; this Agreement has been
duly authorized, executed and delivered by the
Company;
(x) The orders of the Federal Energy Regulatory
Commission authorizing the issuance and sale of the
Stock are in effect on the Delivery Date and no other
approval, authorization, consent or order of any
federal, state or local commission or governmental
authority (other than under state securities or Blue
Sky laws, as to which such counsel need express no
opinion) is required for the issuance and sale of the
Stock or the performance by the Company of its other
obligations under this Agreement, except such as are
specified, obtained and in effect, and the issuance
and sale of the Stock hereunder are in conformity with
each such approval, authorization, consent and order;
(xi) The execution, delivery and performance by the
Company of this Agreement will not violate the
certificate of incorporation or the bylaws of the
Company or its significant subsidiaries or violate any
provision of applicable law that would be material to
the Company and its subsidiaries taken as a whole, or
breach, or result in a default under, any existing
obligation of the Company or its significant
subsidiaries under any agreement filed as an exhibit;
(xii) The Company is not an "INVESTMENT COMPANY" as
defined in the Investment Company Act of 1940, as
amended.
In giving the foregoing opinions, Blackwell Sanders Peper Martin LLP
may rely on the opinions of Denman & Corbetta, P.C., Dickinson, Mackaman, Tyler
& Hogen, P.C., Foulston & Siefkin L.L.P., Honigman Miller Schwartz and Cohn,
Moss & Barnett, a Professional Association, Brydon, Swearengen & England, P.C.,
May, Adam, Gerdes & Thompson LLP, and Hogan & Hartson, L.L.P., with respect to
the opinions set forth in paragraphs (i) and (x) above. Denman & Corbetta, P.C.,
Dickinson, Mackaman, Tyler & Hogen, P.C., Foulston & Siefkin L.L.P., Honigman
Miller Schwartz and Cohn, Moss & Barnett, a Professional Association, Brydon,
Swearengen & England, P.C., May, Adam, Gerdes & Thompson LLP, and Hogan &
Hartson, L.L.P., shall state that Blackwell Sanders Peper Martin LLP is
justified in relying on such opinions.
(c) The Representatives shall have received from Milbank,
Tweed, Hadley & McCloy 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 Prospectus 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.
(d) At the time of execution of this Agreement, the
Representatives shall have received from Arthur Andersen LLP
a letter or letters, in form and substance reasonably
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 Prospectus, 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.
-14-
(e) With respect to the letter or letters of Arthur Andersen
LLP referred to in the preceding paragraph and delivered to
the Representatives concurrently with the execution of this
Agreement (the "INITIAL LETTERS"), the Company shall have
furnished to the Representatives a letter (the "BRING-DOWN
LETTER") of such accountants, 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 as of which specified financial
information is given in the Prospectus, 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.
(f) 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 with all
its agreements contained herein; and the conditions
set forth in Sections 7(a) and 7(h) have been
fulfilled; and
(ii) They have carefully examined the Registration
Statement and the Prospectus 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 which
should have been set forth in a supplement or
amendment to the Registration Statement or the
Prospectus.
(g) Neither the Company nor any of its subsidiaries shall
have sustained since the date of the latest audited
financial statements included in the Prospectus (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 Prospectus or (B) since such
date there shall not have been any change in the capital
stock or any material increase in the long-term debt of the
Company or any of its subsidiaries (other than in the
ordinary course of business) or any change, or any
development involving a prospective 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 Prospectus, the effect of which, in any
such case described in clause (A) or (B), is, in the
reasonable 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 Prospectus.
(h) Subsequent to the execution and delivery of this
Agreement (i) no downgrading shall have occurred in F 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.
-15-
(i) Subsequent to the execution and delivery of this
Agreement there shall not have occurred any of the
following: (i) (A) trading in securities generally on the
New York Stock Exchange, the American Stock Exchange or the
Nasdaq National Market shall have been suspended or
materially limited, (B) a banking moratorium in New York or
Missouri shall have been declared by Federal, New York or
Missouri authorities, (C) 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 (D) there shall have
occurred 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), and (ii) the effect of the
event in (i)(C) or (D) would, in the reasonable judgment of
the Representatives, make it 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 Prospectus.
(j) 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 8. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company shall indemnify and hold harmless each
Underwriter, its officers and employees and each person, if
any, who controls any Underwriter 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 (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 Prospectus or in any amendment
or supplement thereto, or (B) in any materials or
information provided electronically 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 (where such
presentations are made electronically and not in person), or
(ii) the omission or alleged omission to state in any
Preliminary Prospectus, the Registration Statement or the
Prospectus, or in any amendment or supplement thereto, or in
any Marketing Materials, any material fact 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 which 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 by an independent third party 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 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
-16-
loss, claim, damage, liability or action 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
Prospectus, 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
8(e), and provided, further, that with respect to any such
untrue statement in or omission from the Preliminary
Prospectus, the indemnity agreement contained in this
Section 8(a) shall not inure to the benefit of an
Underwriter to the extent that the sale to the person
asserting any such loss, claim, damage, liability or action
was an initial resale by the Underwriter and any such loss,
claim, damage, liability or action of or with respect to the
Underwriter results from the fact that both (A) to the
extent required by applicable law, a copy of the Prospectus
was not sent or given to such person at or prior to the
written confirmation of the sale of such Shares to such
person and (B) the untrue statement in or omission from the
Preliminary Prospectus was corrected in the Prospectus
unless, in either case, such failure to deliver the
Prospectus was a result of non-compliance by the Company
with Section 5(c). The foregoing indemnity agreement is in
addition to any liability which the Company may otherwise
have to any Underwriter or to any officer, employee or
controlling person of that Underwriter.
In connection with the offer and sale of the Directed Shares, the
Company agrees, promptly upon a request in writing, to indemnify and
hold harmless Lehman Brothers Inc. and the other Underwriters from and
against any loss, claim, damage, expense, liability or action which (i)
arises out of, or is based upon, any untrue statement or alleged untrue
statement of a material fact contained in any material prepared by or
with the approval of the Company for distribution to Participants in
connection with the Directed Share Program or any omission or alleged
omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, (ii) arises
out of the failure of any Directed Share Program participant to pay for
and accept delivery of Directed Shares that the Participant agreed to
purchase or (iii) is otherwise related to the Directed Share Program,
other than losses, claims, damages or liabilities (or expenses relating
thereto) that are finally judicially determined to have resulted
directly from the bad faith or gross negligence of Lehman Brothers Inc.
or the other Underwriters.
(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,
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 in any Preliminary Prospectus, the
Registration Statement or the Prospectus 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 Prospectus, 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, employee or
controlling person for any legal or other expenses
reasonably incurred by the Company or any such director,
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. The foregoing indemnity agreement is
in addition to any liability which any Underwriter may
otherwise have to the Company or any such director, officer,
employee or controlling person.
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(c) Promptly after receipt by an indemnified party under
this Section 8 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 8, 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
which it may have under this Section 8 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
which it may have to an indemnified party otherwise than
under this Section 8. 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 parties, to assume the 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 8 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 8
if, the named parties to any such claim (including impleaded
parties) include both such Representative, any Underwriter
or any officer, employee or controlling person of a
Representative or Underwriter and the Company, and the
Representatives are advised in writing by counsel that
representation of such indemnified party and the Company by
the same counsel will be inappropriate under applicable
standards of professional conduct (whether or not such
representation by the same counsel has been proposed) due to
actual or potential differing interests between them. It is
understood, however, that in connection with any one such
action, suit or proceeding or separate but substantially
similar or related actions, suits or proceedings in the same
jurisdiction arising out of the same general allegations or
circumstances, the indemnifying party shall be liable for
the reasonable fees and expenses of only one separate firm
of attorneys (in addition to any local counsel) at any time
for all such indemnified parties not having actual or
potential differing interests, which firm shall be
designated in writing. 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 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 8
shall for any reason be unavailable to or insufficient to
hold harmless an indemnified party under Section 8(a) or
8(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 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
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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 which 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 shares of the Stock under
this Agreement, in each case as set forth in the table on
the cover page of the Prospectus. 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 which 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 8(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 8(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 which 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 8(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 (i) on
the cover page of the Prospectus and (ii) such information
under the caption "Underwriting" in the Prospectus relating
to (A) any concession and reallowance figures including the
public offering price and any underwriting discount or
commission, (B) the allocation of shares to the
Underwriters, (C) agreements among the Underwriters and not
the Company, (D) factors considered in determining the
initial public offering price, (E) stabilizing transactions,
(F) representations of the international underwriters, (G)
the role of Fidelity Capital Markets in this offering and
(H) the Underwriters' intention to not confirm sales, are
correct 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 Prospectus.
Section 9. 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 which the
defaulting Underwriter agreed but failed to purchase on such Delivery Date in
the respective proportions which the number of
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shares of the Firm Stock set opposite the name of each remaining non-defaulting
Underwriter in SCHEDULE 1 and SCHEDULE 2 hereto bears to the total number of
shares of the Firm Stock set forth opposite the names of all the remaining
non-defaulting Underwriters in SCHEDULE 1 and 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 which the defaulting Underwriter or Underwriters agreed but failed
to purchase on such date exceeds 10.0% of the total number of shares of the
Stock to be purchased on such Delivery Date. If the foregoing maximums are
exceeded, the remaining non-defaulting Underwriters, or those other underwriters
satisfactory to the Representatives and the Company who so agree, shall have the
right (exercisable within 72 hours of the initial default), 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 and the Company do not
elect to purchase the Stock which 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 6 and 11. 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 or 2 hereto who, pursuant
to this Section 9, purchases Stock which a defaulting Underwriter agreed 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 Prospectus or
in any other document or arrangement.
Section 10. 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 7(h), 7(i) or 7(j), shall have occurred or if the
Underwriters shall decline to purchase the Stock for any reason permitted under
this Agreement.
Section 11. 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 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 9 by reason of the default of one or more
Underwriters, the Company shall not be obligated to reimburse any Underwriter
(other than those Underwriters approved by the Company) on account of those
expenses.
Section 12. 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 (i) Lehman Brothers Inc., Three World
Financial Center, New York, New York 10285, Attention: Syndicate
Department (Fax: 212-526-6588), with a copy, in the case of any notice
pursuant to Section 8(c), to the Director of Litigation, Office of the
General Counsel, Lehman Brothers Inc., 3 World Financial Center, 10th
Floor, New York, NY 10285 and (ii) Merrill Lynch, Pierce, Fenner &
Smith Incorporated, World Financial Center, North Tower, New York, New
York 10281, Attention: Fritz Schlopy (Fax: 212-
-20-
449-1787), with a copy to Milbank, Tweed, Hadley & McCloy LLP, 1 Chase
Manhattan Plaza, New York, New York 10005, Attention: Robert W.
Mullen, Jr. (Fax: 212-530-5219);
(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: General Counsel (Fax:
816-527-4170), with a copy to Jeff Haughey, Blackwell Sanders Peper
Martin LLP, Suite 1000, 2300 Main Street, Kansas City, Missouri 64108
(Fax: 816-983-8080);
provided, however, that any notice to an Underwriter pursuant to Section 8(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 Lehman Brothers Inc. and Merrill Lynch,
Pierce, Fenner & Smith Incorporated on behalf of the Representatives.
Section 13. 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, with respect to the indemnities
and agreements contained in Section 8(a), for the benefit of the persons named
therein, and (B) the indemnity agreement of the Underwriters contained in
Section 8(b) of this Agreement shall be deemed to be for the benefit the person
or persons identified in Section 8(b). Nothing in this Agreement is intended or
shall be construed to give any person, other than the persons referred to in
this Section 13, any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provision contained herein.
Section 14. 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 15. GOVERNING LAW.
This Agreement shall be governed by and construed in accordance with
the laws of New York.
Section 16. DEFINITION OF THE TERMS "BUSINESS DAY,"
"SUBSIDIARY" AND "SIGNIFICANT SUBSIDIARY."
For purposes of this Agreement, (a) "BUSINESS DAY" means each Monday,
Tuesday, Wednesday, Thursday or Friday which is not a day on which banking
institutions in New York are generally authorized or obligated by law or
executive order to close, (b) "SUBSIDIARY" has the meaning set forth in Rule 405
of the Rules and Regulations and (c) "SIGNIFICANT SUBSIDIARY" means each of the
subsidiaries of the Company meeting the requirements of Rule 1-02 of Regulation
S-X under the Securities Act.
Section 17. 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.
-21-
Section 18. 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.
-22-
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,
AQUILA, INC.
By:
-----------------------------
Name:
Title:
Accepted:
LEHMAN BROTHERS INC.,
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED,
SALOMON SMITH BARNEY INC.,
CREDIT LYONNAIS SECURITIES (USA) INC. AND
J.P. MORGAN SECURITIES INC.
For themselves and as U.S. Representatives
for each of the several U.S. Underwriters
named in Schedule 1 hereto
By LEHMAN BROTHERS INC. By MERRILL LYNCH, PIERCE, FENNER
& SMITH INCORPORATED
By:
---------------------------------
Authorized Representative By:
-----------------------------
Authorized Representative
LEHMAN BROTHERS INTERNATIONAL (EUROPE),
MERRILL LYNCH INTERNATIONAL,
SALOMON BROTHERS INTERNATIONAL LIMITED,
CREDIT LYONNAIS SECURITIES AND
J.P. MORGAN SECURITIES LTD.
For themselves and as International Representatives
for each of the several International Underwriters
named in Schedule 2 hereto
By LEHMAN BROTHERS INTERNATIONAL (EUROPE) By MERRILL LYNCH INTERNATIONAL
By: By:
----------------------------- -----------------------------
Authorized Representative Authorized Representative
SCHEDULE 1
Number of Shares of Firm
U.S. Underwriters Stock to be Purchased
- ----------------- ---------------------
Lehman Brothers Inc........................................................... [ ]
Merrill Lynch, Pierce, Fenner & Smith Incorporated............................ [ ]
Salomon Smith Barney, Inc..................................................... [ ]
Credit Lyonnais Securities (USA) Inc.......................................... [ ]
J.P. Morgan Securities Inc.................................................... [ ]
[NAMES OF OTHER U.S. UNDERWRITERS]............................................ [ ]
--------
Total................................................................ [ ]
========
S1-1
SCHEDULE 2
Number of Shares of Firm
International Underwriters Stock to be Purchased
- -------------------------- ---------------------
Lehman Brothers International (Europe) ....................................... [ ]
Merrill Lynch International................................................... [ ]
Salomon Brothers International Limited........................................ [ ]
Credit Lyonnais Securities.................................................... [ ]
J.P. Morgan Securities Ltd.................................................... [ ]
[NAMES OF OTHER INTERNATIONAL UNDERWRITERS]................................... [ ]
--------
Total................................................................ [ ]
========
S2-1
SCHEDULE 3
Keith G. Stamm
Edward K. Mills
Dan Streek
Jeffrey D. Ayers
John A. Shealy
Brock A. Shealy
Kevin Foss
Ruth Sotak
Beth Armstrong
Bruce Reed
Richard C. Green, Jr.
Robert K. Green
James G. Miller
Leslie J. Parrette, Jr.
John R. Baker
Herman Cain
Irvine O. Hockaday, Jr.
Dr. Stanley O. Ikenberry
Robert F. Jackson, Jr.
Dr. Shirley Ann Jackson
L. Patton Kline
S3-1
EXHIBIT A
LOCK-UP LETTER AGREEMENT
LEHMAN BROTHERS INC.,
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED,
SALOMON SMITH BARNEY INC.,
CREDIT LYONNAIS SECURITIES (USA) INC. AND
J.P. MORGAN SECURITIES INC.
As Representatives of the several
U.S. Underwriters named in SCHEDULE 1,
c/o Lehman Brothers Inc.
Three World Financial Center
New York, New York 10285
and
Merrill Lynch, Pierce, Fenner & Smith Incorporated
World Financial Center--North Tower
New York, New York 10281-1327
LEHMAN BROTHERS INTERNATIONAL (EUROPE),
MERRILL LYNCH INTERNATIONAL,
SALOMON BROTHERS INTERNATIONAL LIMITED,
CREDIT LYONNAIS SECURITIES AND
J.P. MORGAN SECURITIES LTD.
As Representatives of the several
International Underwriters named in Schedule 2,
c/o Lehman Brothers International (Europe)
One Broadgate
London EC2M 7HA
England
and
Merrill Lynch International
World Financial Center--North Tower
New York, New York 10281-1327
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 Class A Common Stock, par value $0.01 per share, of Aquila, Inc., 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 Lehman
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 the common stock of the Company (including, without limitation, the
Shares and shares of the common stock of the Company that may be deemed to be
beneficially owned by the undersigned in accordance with the rules and
regulations of the Securities
A-1
and Exchange Commission and shares of the common stock of the Company that may
be issued upon exercise of any option or warrant) or securities convertible into
or exchangeable for the common stock of the Company 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 the common stock of the
Company, whether any such transaction described in clause (1) or (2) above is to
be settled by delivery of the common stock of the Company or other securities,
in cash or otherwise, for a period of 180 days after the date of the final
Prospectus relating to the Offering, except that the undersigned may make gifts
of such securities to members of the undersigned's "immediate family" (as such
term is defined under Item 404 of Regulation S-K under the Securities Act of
1933) or transfer such securities to one or more trusts established for the
benefit of members of the undersigned's immediate family and make involuntary
transfers; provided, that any such transferee agrees in writing to be bound by
the terms hereof.
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.
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: March__, 2001
A-2