Exhibit 1.1
_____________ SHARES
CHICAGO MERCANTILE EXCHANGE HOLDINGS INC.
CLASS A COMMON STOCK $ .01 PAR VALUE
UNDERWRITING AGREEMENT
December ___, 2002
December ___, 2002
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
UBS Warburg LLC
▇.▇. ▇▇▇▇▇▇ Securities Inc.
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc.
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Company, L.L.C.
c/o Morgan ▇▇▇▇▇▇▇ & Co. Incorporated
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Dear Sirs and Mesdames:
Chicago Mercantile Exchange Holdings Inc., a Delaware corporation (the
"COMPANY"), proposes to issue and sell to the several Underwriters named in
Schedule II hereto (the "UNDERWRITERS"), and certain shareholders of the Company
(the "SELLING SHAREHOLDERS") named in Schedule I hereto severally propose to
sell to the several Underwriters, an aggregate of _____________ shares of the
Class A Common Stock, $ .01 par value, of the Company (the "FIRM SHARES"), of
which _________ shares are to be issued and sold by the Company and ___________
shares are to be sold by the Selling Shareholders, each Selling Shareholder
selling the amount set forth opposite such Selling Shareholder's name in
Schedule I hereto. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated ("▇▇▇▇▇▇ ▇▇▇▇▇▇▇"), UBS
Warburg LLC ("UBS WARBURG"), ▇.▇. ▇▇▇▇▇▇ Securities Inc., ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
Inc. and ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Company, L.L.C. shall act as representatives (the
"REPRESENTATIVES") of the several Underwriters.
The Company also proposes to issue and sell to the several
Underwriters not more than an additional ________ shares of the Class A Common
Stock, $ .01 par value, of the Company (the "ADDITIONAL SHARES") if and to the
extent that the Representatives shall have determined to exercise, on behalf of
the Underwriters, the right to purchase such shares of common stock granted to
the Underwriters in Section 3 hereof. The Firm Shares and the Additional Shares
are hereinafter collectively referred to as the "SHARES". The shares of the
Class A Common Stock, $ .01 par value, of the Company to be outstanding after
giving effect to the sales contemplated hereby are hereinafter referred to as
the "COMMON STOCK". The Company and the Selling Shareholders are hereinafter
sometimes collectively referred to as the "SELLERS".
The Company has filed with the Securities and Exchange Commission (the
"COMMISSION") a registration statement (File No. 333-90106), including a
prospectus, relating to
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the Shares. The registration statement as amended at the time it becomes
effective, including the information deemed to be part of the registration
statement at the time of effectiveness pursuant to Rule 430A under the
Securities Act of 1933, as amended (the "SECURITIES ACT"), is hereinafter
referred to as the "REGISTRATION STATEMENT"; the prospectus in the form first
used to confirm sales of Shares is hereinafter referred to as the "PROSPECTUS".
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.
UBS Warburg has agreed to reserve a portion of the Shares to be
purchased by it under this Agreement for sale to directors, employees and
shareholders of the Company and employees of Chicago Mercantile Exchange Inc., a
Delaware corporation ("CME") (collectively, the "PARTICIPANTS"), as set forth in
the Prospectus under the heading "Underwriters" (the "DIRECTED SHARE PROGRAM").
The Shares to be sold by UBS Warburg and its affiliates pursuant to the Directed
Share Program are referred to hereinafter as the "DIRECTED SHARES". Any Directed
Shares not confirmed for purchase by any Participants by the end of the business
day on which this Agreement is executed will be offered to the public by the
Underwriters as set forth in the Prospectus.
1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND CME. (I) The
Company represents and warrants to and agrees with each of the Underwriters
that:
(a) The Registration Statement has become effective; no stop order
suspending the effectiveness of the Registration Statement is in effect, and no
proceedings for such purpose are pending before or, to the knowledge of the
Company, threatened by the Commission.
(b) (i) The Registration Statement, when it became effective, did not
contain and, as amended or supplemented, if applicable, will not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading,
(ii) the Registration Statement and the Prospectus comply and, as amended or
supplemented, if applicable, will comply in all material respects with the
Securities Act and the applicable rules and regulations of the Commission
thereunder and (iii) the Prospectus does not contain and, as amended or
supplemented, if applicable, will not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading,
except that the representations and warranties set forth in this paragraph do
not apply to statements or omissions in the Registration Statement or the
Prospectus (1) based upon information relating to any Underwriter furnished to
the Company in writing by such Underwriter through you expressly for use therein
or (2) based upon information relating to any Selling Shareholder furnished to
the Company in writing by such Selling Shareholder expressly for use therein
other than information with respect to any position, office or other
relationship
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which any Selling Shareholder has had with, and which is material to, the
Company or any of its predecessors or affiliates within three years prior to the
date of the Prospectus.
(c) The Company has been duly incorporated, is validly existing as a
corporation in good standing under the laws of the State of Delaware, has the
corporate power and authority to own its property and to conduct its business as
described in the Prospectus and 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 to the
extent that the failure to be so qualified or be in good standing would not have
a material adverse effect on the Company, CME and the subsidiaries of CME
(collectively, the "CME GROUP"), taken as a whole.
(d) Each of CME and each subsidiary of CME has been duly
incorporated, is validly existing as a corporation in good standing under the
laws of the jurisdiction of its incorporation, has the corporate power and
authority to own its property and to conduct its business as described in the
Prospectus and 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 to the extent that the
failure to be so qualified or be in good standing would not have a material
adverse effect on the CME Group, taken as a whole; all of the issued shares of
capital stock of CME have been duly and validly authorized and issued, are fully
paid and non-assessable and are owned directly by the Company, free and clear of
all liens, encumbrances, equities or claims; and the Company has no direct
subsidiaries other than CME.
(e) This Agreement has been duly authorized, executed and delivered
by the Company and CME.
(f) The authorized capital stock of the Company conforms as to legal
matters to the description thereof contained in the Prospectus; the transfer
restrictions in Article Four of the Company's certificate of incorporation are
valid, binding and enforceable; and except as disclosed in the Prospectus, there
are no outstanding securities convertible into or exchangeable for, or warrants,
rights or options to subscribe to or purchase from the Company or CME, or
obligation of the Company or CME to issue, shares of the Company or CME.
(g) The shares of Class A Common Stock of the Company (including the
Shares to be sold by the Selling Shareholders) outstanding prior to the issuance
of the Shares to be sold by the Company have been duly authorized and are
validly issued, fully paid and non-assessable; upon the closing of the sale of
the Shares to the Underwriters in accordance with the terms of this Agreement,
each of the Shares to be sold by a Selling Shareholder pursuant to this
Agreement will be duly converted from the Company's Class A-1, Class A-2, Class
A-3 or Class A-4 Common Stock, as the case may be, to Class A Common Stock, and
there will be no restrictions on transfer of or encumbrances on such Shares
under the certificate of incorporation or by-laws of the Company.
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(h) The Shares to be sold by the Company have been duly authorized
and, when issued and delivered in accordance with the terms of this Agreement,
will be validly issued, fully paid and non-assessable, and the issuance of such
Shares will not be subject to any preemptive or similar rights.
(i) The execution and delivery by the Company and CME of, and the
performance by the Company and CME of their respective obligations under, this
Agreement will not contravene (i) any provision of applicable law, (ii) the
certificate of incorporation or by-laws of the Company, CME or any of CME's
subsidiaries, (iii) any indenture, mortgage, deed of trust, credit agreement,
lease or other agreement or instrument binding upon the Company, CME or any of
CME's subsidiaries that is material to the CME Group, taken as a whole, or (iv)
any judgment, order or decree of any governmental body, agency or court having
jurisdiction over the Company, CME or any of CME's subsidiaries, except for any
breach or contravention described in clause (i), (iii) or (iv) which would not,
singly or in the aggregate, have a material adverse effect on the CME Group,
taken as a whole; and no consent, approval, authorization or order of, or
qualification with, any governmental body or agency, including but not limited
to the Commodity Futures Trading Commission ("CFTC"), is required for the
performance by the Company or by CME of their respective obligations under this
Agreement, except such as may be required by the securities or Blue Sky laws of
the various states or any applicable law, rule or regulation of any foreign
jurisdiction in connection with the offer and sale of the Shares and except, in
each case, as would not singly or in the aggregate have a material adverse
effect on the CME Group, taken as a whole.
(j) There has not occurred any material adverse change, or any
development reasonably likely to result in a prospective material adverse
change, in the condition, financial or otherwise, or in the earnings, business
or operations of the CME Group, taken as a whole, from that set forth in the
Prospectus (exclusive of any amendments or supplements thereto subsequent to the
date of this Agreement).
(k) There are no legal or governmental proceedings pending or, to the
knowledge of the Company or CME, threatened to which the Company or CME or any
of CME's subsidiaries is a party or to which any of the properties of the
Company or CME or any of CME's subsidiaries is subject that are required to be
described in the Registration Statement or the Prospectus and are not so
described or any statutes, regulations, contracts or other documents that are
required to be described in the Registration Statement or the Prospectus or to
be filed as exhibits to the Registration Statement that are not described or
filed as required; and there are no legal or governmental proceedings
challenging the offering of the Shares by the Underwriters.
(l) The preliminary prospectus dated November 18, 2002, or any
amendment thereto, complied in all material respects with the Securities Act and
the applicable rules and regulations of the Commission thereunder.
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(m) Neither the Company nor CME is, and after giving effect to the
offering and sale of the Shares and the application of the proceeds thereof as
described in the Prospectus neither of them will be, required to register as an
"investment company" as such term is defined in the Investment Company Act of
1940, as amended.
(n) The Company, CME and CME's subsidiaries (i) are in compliance
with any and all applicable foreign, federal, state and local laws and
regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("ENVIRONMENTAL LAWS"), (ii) have received all permits, licenses or
other approvals required of them under applicable Environmental Laws to conduct
their respective businesses and (iii) are in compliance with all terms and
conditions of any such permit, license or approval, except where such
noncompliance with Environmental Laws, failure to receive required permits,
licenses or other approvals or failure to comply with the terms and conditions
of such permits, licenses or approvals would not, singly or in the aggregate,
have a material adverse effect on the CME Group, taken as a whole.
(o) Except as described in the Prospectus, there are no contracts,
agreements or understandings between the Company or CME and any person granting
such person the right to require the Company or CME to file a registration
statement under the Securities Act with respect to any securities of the Company
or CME or to require the Company to include any securities of the Company with
the Shares registered pursuant to the Registration Statement.
(p) No subsidiary of the Company is currently prohibited, directly or
indirectly, from paying any dividend to the Company, from making any other
distribution on such subsidiary's capital stock, from repaying to the Company
any loans or advances to such subsidiary from the Company or from transferring
any of such subsidiary's property or assets to the Company or any other
subsidiary of the Company.
(q) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, (i) each of the Company,
CME and CME's subsidiaries has not incurred any material liability or
obligation, direct or contingent, nor entered into any material transaction not
in the ordinary course of business; (ii) each of the Company, CME and CME's
subsidiaries has not purchased any of its outstanding capital stock, nor
declared, paid or otherwise made any dividend or distribution of any kind on its
capital stock other than ordinary and customary dividends; and (iii) there has
not been any material change in the capital stock, short-term debt or long-term
debt of the Company, CME and CME's subsidiaries, except in each case as
described in the Prospectus.
(r) The Company, CME and CME's subsidiaries (i) do not own any real
property and (ii) have good and marketable title to all personal property owned
by them which is material to the business of the CME Group, taken as a whole, in
each case free and clear of all liens, encumbrances and defects except such as
are described in the Prospectus or such as do not materially affect the value of
such property and do not interfere with the use made and proposed
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to be made of such property by the CME Group, taken as a whole; and any real
property and buildings held under lease by the Company, CME or CME's
subsidiaries are held by them under valid, subsisting and enforceable leases
with such exceptions as are not material and do not interfere with the use made
and proposed to be made of such property and buildings by the Company, CME and
CME's subsidiaries, in each case except as described in the Prospectus.
(s) The Company, CME and CME's subsidiaries own or possess, or can
acquire on reasonable terms, all material patents, patent rights, licenses,
inventions, copyrights, know-how (including trade secrets and other unpatented
and/or unpatentable proprietary or confidential information, systems or
procedures), trademarks, service marks and trade names currently employed by
them in connection with the business now operated by them, and, except as
described in the Prospectus, none of the Company, CME nor any of CME's
subsidiaries has received any notice of infringement of or conflict with
asserted rights of others with respect to any of the foregoing which, singly or
in the aggregate, if the subject of an unfavorable decision, ruling or finding,
would have a material adverse affect on the CME Group, taken as a whole.
(t) No labor dispute with the employees of the Company, CME or any of
CME's subsidiaries exists, except as described in the Prospectus, or, to the
knowledge of the Company or CME, is imminent, except such disputes that would
not have a material adverse effect on the CME Group, taken as a whole.
(u) The Company, CME and CME's subsidiaries have fulfilled their
obligations, if any, under the minimum funding standards of ▇▇▇▇▇▇▇ ▇▇▇ ▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇ Employee Retirement Income Security Act of 1974 ("ERISA") and the
regulations and published interpretations thereunder with respect to each "plan"
(as defined in Section 3(3) of ERISA and such regulations and published
interpretations) in which employees of the Company, CME and CME's subsidiaries
are eligible to participate, except such as would not, individually or in the
aggregate, have a material adverse effect on the CME Group, taken as a whole;
the Company, CME and CME's subsidiaries have not incurred and do not expect to
incur any material liability under Title IV of ERISA with respect to the
termination of, or withdrawal from, any pension plan for which the Company, CME
or any of CME's subsidiaries would have any liability.
(v) None of the Company, CME nor any of CME's subsidiaries has any
reason to believe that it will not be able to renew any existing insurance
coverage (which is material to the operations of the CME Group, taken as a
whole) as and when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue its business at a cost that
would not have a material adverse effect on the CME Group, taken as a whole,
except as described in the Prospectus.
(w) Each of the Company, CME and CME's subsidiaries has all necessary
consents, licenses, authorizations, approvals, exemptions, orders, certificates
and permits (collectively, the "CONSENTS") of and from, and has made all filings
and declarations
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(collectively, the "FILINGS") with, all federal, state, local and foreign
governmental and regulatory authorities, all self-regulatory organizations and
all courts and other tribunals, necessary to own, lease, license and use its
properties and assets and to conduct its business in the manner described in the
Prospectus, except where the failure to have such Consents or to make such
Filings would not, individually or in the aggregate, have a material adverse
effect on the CME Group, taken as a whole; all such Consents and Filings are in
full force and effect, the Company, CME and CME's subsidiaries are in compliance
with such Consents and none of the Company, CME nor any of CME's subsidiaries
has received any notice of any inquiry, investigation or proceeding that would
reasonably be expected to result in the suspension, revocation or limitation of
any such Consent or otherwise impose any limitation on the conduct of the
business of the Company, CME or any of CME's subsidiaries, except as set forth
in the Prospectus or any such failure to be in full force and effect, failure to
be in compliance with, suspension, revocation or limitation which would not,
singly or in the aggregate, have a material adverse effect on the CME Group,
taken as a whole; the Company, CME and CME's subsidiaries are in compliance
with, and conduct their businesses in conformity with, all applicable laws and
regulations, except where the failure to so comply or conform would not have a
material adverse effect on the CME Group, taken as a whole.
(x) None of the Company, CME or CME's subsidiaries is (i) in
violation of its certificate of incorporation or by-laws or (ii) in default in
any material respect, and no event has occurred which, with notice or lapse of
time or both, would constitute such a default, in the due performance or
observance of any term, covenant or condition contained in any indenture,
mortgage, deed of trust, credit agreement or other agreement or instrument to
which it is a party or by which it is bound or to which any of its property or
assets is subject, except for any default described in clause (ii) which would
not have a material adverse effect on the CME Group, taken as a whole.
(y) The Company, CME and each of CME's subsidiaries have filed all
federal, state, local and foreign tax returns required to be filed through the
date of this Agreement or has requested extensions thereof (except for cases in
which the failure to file would not have a material adverse effect on the CME
Group, taken as a whole) and have paid all taxes required to be paid thereon,
and, except as currently being contested in good faith and for which reserves
required by generally accepted accounting principles have been created on the
financial statements of the Company, no tax deficiency has been determined
adversely to the Company, CME or any of CME's subsidiaries which has had (nor
does the Company, CME and each of CME's subsidiaries have any notice or
knowledge of any tax deficiency which could reasonably be expected to be
determined adversely to the Company, CME or CME's subsidiary and which could
reasonably be expected to have) a material adverse effect on the CME Group,
taken as a whole.
(z) The Company, CME and each of CME's subsidiaries maintain a system
of internal accounting controls sufficient to provide reasonable assurance that
(i) transactions are executed in accordance with management's general or
specific authorizations; (ii) transactions
7
are recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain asset
accountability; (iii) access to assets is permitted only in accordance with
management's general or specific authorization; and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
(aa) The Shares have been approved for listing on the New York Stock
Exchange, Inc. (the "EXCHANGE"), subject to notice of issuance, and, at the
Closing Date and the Option Closing Date (as defined in Section 3 hereunder),
the Shares issued at or prior to the time of delivery on such closing date will
be listed thereon.
(bb) The Company and CME have not taken and will not take, directly or
indirectly, any action which is designed to or which has constituted or which
might reasonably be expected to cause or result in stabilization or manipulation
of the price of any security of the Company or CME to facilitate the sale or
resale of the Shares.
(cc) The Registration Statement, the Prospectus and any preliminary
prospectus comply, and any amendments or supplements thereto will comply, with
any applicable laws or regulations of foreign jurisdictions in which the
Prospectus or any preliminary prospectus, as amended or supplemented, if
applicable, are distributed in connection with the Directed Share Program.
(dd) No consent, approval, authorization or order of, or qualification
with, any governmental body or agency, other than those obtained, is required in
connection with the offering of the Directed Shares in any jurisdiction where
the Directed Shares are being offered.
(ee) The Company has not offered, or caused UBS Warburg or its
affiliates to offer, Shares to any person pursuant to the Directed Share Program
with the intent to influence unlawfully (i) a customer or supplier of the
Company to alter the customer's or supplier's level or type of business with the
Company, or (ii) a trade journalist or publication to write or publish favorable
information about the Company or its products.
(ff) Ernst & Young LLP, who have certified certain financial
statements of CME and its subsidiaries, are independent public accountants as
required by the Securities Act and the rules and regulations of the Commission
thereunder.
(II) CME represents and warrants to and agrees with each of the
Underwriters as to the matters in clauses (a), (b), (d), (e), (f), (g), (h),
(i), (j), (l), (cc), (dd) and (ee) of Section 1(I) above.
2. REPRESENTATIONS AND WARRANTIES OF THE SELLING SHAREHOLDERS. Each
Selling Shareholder severally represents and warrants to and agrees with each of
the Underwriters that:
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(a) This Agreement has been duly authorized, executed and delivered
by or on behalf of such Selling Shareholder.
(b) The execution and delivery by such Selling Shareholder of, and
the performance by such Selling Shareholder of its obligations under, this
Agreement and the Agreement and Power of Attorney appointing certain individuals
as such Selling Shareholder's attorneys-in-fact to the extent set forth therein,
relating to the transactions contemplated hereby and by the Registration
Statement (the "POWER OF ATTORNEY") will not contravene any provision of
applicable law, or the certificate of incorporation or by-laws of such Selling
Shareholder (if such Selling Shareholder is a corporation), or any agreement or
other instrument binding upon such Selling Shareholder or any judgment, order or
decree of any governmental body, agency or court having jurisdiction over such
Selling Shareholder, and no consent, approval, authorization or order of, or
qualification with, any governmental body or agency is required for the
performance by such Selling Shareholder of its obligations under this Agreement
or the Power of Attorney of such Selling Shareholder, except such as may be
required by the securities or Blue Sky laws of the various states or any
applicable law, rule or regulation of any foreign jurisdiction in connection
with the offer and sale of the Shares.
(c) Such Selling Shareholder has, and on the Closing Date will have,
valid title to, or a valid "security entitlement" within the meaning of Section
8-501 of the New York Uniform Commercial Code (the "UCC") in respect of, the
Shares to be sold by such Selling Shareholder free and clear of all security
interests, claims, liens, equities or other encumbrances and the legal right and
power, and all authorization and approval required by law or the certificate of
incorporation or by-laws or other organizational documents of such Selling
Shareholder (if such Selling Shareholder is not a natural person), to enter into
this Agreement and the Power of Attorney and to sell, transfer and deliver the
Shares to be sold by such Selling Shareholder or a security entitlement in
respect of such Shares.
(d) The Power of Attorney has been duly authorized, executed and
delivered by such Selling Shareholder.
(e) Upon payment for the Shares to be sold by such Selling
Shareholder pursuant to this Agreement, delivery of such Shares, as directed by
the Underwriters, to Cede & Co. ("CEDE") or such other nominee as may be
designated by The Depository Trust Company ("DTC"), registration of such Shares
in the name of Cede or such other nominee and the crediting of such Shares on
the books of DTC to securities accounts of the Underwriters (assuming that
neither DTC nor any such Underwriter has notice of any adverse claim (within the
meaning of Section 8-105 of the UCC) to such Shares), (A) DTC shall be a
"protected purchaser" of such Shares within the meaning of Section 8-303 of the
UCC, (B) under Section 8-501 of the UCC, the Underwriters will acquire a valid
security entitlement in respect of such Shares and (C) no action based on any
"adverse claim", within the meaning of Section 8-102 of the UCC, to such Shares
may be asserted against the Underwriters with respect to such security
entitlement; for purposes of this representation, such Selling Shareholder may
assume that when
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such payment, delivery and crediting occur, (x) such Shares will have been
registered in the name of Cede or another nominee designated by DTC, in each
case on the Company's share registry in accordance with its certificate of
incorporation, bylaws and applicable law, (y) DTC will be registered as a
"clearing corporation" within the meaning of Section 8-102 of the UCC and (z)
appropriate entries to the accounts of the several Underwriters on the records
of DTC will have been made pursuant to the UCC.
(f) (i) The Registration Statement, when it became effective, did not
contain and, as amended or supplemented, if applicable, will not contain any
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 and
(ii) the Prospectus does not contain and, as amended or supplemented, if
applicable, will not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading; PROVIDED that the
representations and warranties set forth in this paragraph 2(f) are limited to
statements or omissions made in reliance upon information relating to such
Selling Shareholder furnished to the Company in writing by such Selling
Shareholder expressly for use in the Registration Statement, the Prospectus or
any amendments or supplements thereto.
(g) Such Selling Shareholder has not taken and will not take,
directly or indirectly, any action which is designed to or which has constituted
or which might reasonably be expected to cause or result in stabilization or
manipulation of the price of any security of the Company or CME to facilitate
the sale or resale of the Shares.
(h) In order to document the Underwriters' compliance with the
reporting and withholding provisions of the Tax Equity and Fiscal Responsibility
Act of 1982 with respect to the transactions herein contemplated, such Selling
Shareholder will deliver to the Representatives prior to or at the Closing Date
a properly completed and executed U.S. Treasury Department Form W-9 (or other
applicable form or statement specified by the U.S. Treasury Department
regulations in lieu thereof).
(i) Except as disclosed by such Selling Shareholder in writing to the
Representatives, neither such Selling Shareholder nor any of his, her or its
affiliates directly, or indirectly through one or more intermediaries, controls,
or is controlled by, or is under common control with, or has any other
association with (within the meaning of Article 1(q) of the By-laws of the
National Association of Securities Dealers, Inc. (the "NASD")), any member firm
of the NASD.
3. AGREEMENTS TO SELL AND PURCHASE. Each Seller, severally and not
jointly, hereby agrees to sell to the several Underwriters, and each
Underwriter, upon the basis of the representations and warranties herein
contained, but subject to the conditions hereinafter stated, agrees, severally
and not jointly, to purchase from such Seller at $______ a share (the "PURCHASE
PRICE") the number of Firm Shares (subject to such adjustments to eliminate
fractional shares as
10
you may determine) that bears the same proportion to the number of Firm Shares
to be sold by such Seller as the number of Firm Shares set forth in Schedule II
hereto opposite the name of such Underwriter bears to the total number of Firm
Shares.
On the basis of the representations and warranties contained in this
Agreement, and subject to its terms and conditions, the Company agrees to issue
and sell to the Underwriters the Additional Shares, and the Underwriters shall
have the right to purchase, severally and not jointly, up to ___________
Additional Shares at the Purchase Price. You may exercise this right on behalf
of the Underwriters in whole or from time to time in part by giving written
notice of each election to exercise the option not later than 30 days after the
date of this Agreement. Any exercise notice shall specify the number of
Additional Shares to be purchased by the Underwriters and the date on which such
shares are to be purchased. Each purchase date must be at least one business day
after the written notice is given and may not be earlier than the closing date
for the Firm Shares nor later than ten business days after the date of such
notice. Additional Shares may be purchased as provided in Section 5 hereof
solely for the purpose of covering over-allotments made in connection with the
offering of the Firm Shares. On each day, if any, that Additional Shares are to
be purchased (an "OPTION CLOSING DATE"), each Underwriter agrees, severally and
not jointly, to purchase the number of Additional Shares (subject to such
adjustments to eliminate fractional shares as you may determine) that bears the
same proportion to the total number of Additional Shares to be purchased on such
Option Closing Date as the number of Firm Shares set forth in Schedule II hereto
opposite the name of such Underwriter bears to the total number of Firm Shares.
The Company hereby agrees that, without the prior written consent of
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and UBS Warburg on behalf of the Underwriters, it will not,
during the period ending 180 days after the date of the Prospectus, (i) offer,
pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant to
purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any
shares of Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock or (ii) enter into any swap or other arrangement
that transfers to another, in whole or in part, any of the economic consequences
of ownership of the Common Stock, whether any such transaction described in
clause (i) or (ii) above is to be settled by delivery of Common Stock or such
other securities, in cash or otherwise. In addition, the board of directors of
the Company shall not, without the prior written consent of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and
UBS Warburg on behalf of the Underwriters, approve any transfer of Common Stock
as a "Conversion Transfer" (as defined in the Company's certificate of
incorporation) during such 180-day period.
The restrictions contained in the preceding paragraph shall not apply
to (A) the Shares to be sold hereunder, (B) the issuance by the Company of
shares of Common Stock upon the exercise of an option or warrant or the
conversion of a security outstanding on the date hereof of which the
Underwriters have been advised in writing, (C) the issuance by the Company of
options under the Company's stock option plan, and (D) the issuance by the
Company of shares of Common Stock in connection with any acquisitions, mergers
or strategic investments that the
11
Company enters into, subject to the requirement that parties receiving shares of
Common Stock in such transactions agree to be bound by the same restrictions as
those set forth in the preceding paragraph for the remainder of the 180-day
period.
4. TERMS OF PUBLIC OFFERING. The Sellers are advised by you that the
Underwriters propose to make a public offering of their respective portions of
the Shares as soon after the Registration Statement and this Agreement have
become effective as in your judgment is advisable. The Sellers are further
advised by you that the Shares are to be offered to the public initially at
$_____________ a share (the "PUBLIC OFFERING PRICE") and to certain dealers
selected by you at a price that represents a concession not in excess of $______
a share under the Public Offering Price, and that any Underwriter may allow, and
such dealers may reallow, a concession, not in excess of $_____ a share, to any
Underwriter or to certain other dealers.
5. PAYMENT AND DELIVERY. Payment for the Firm Shares to be sold by
each Seller shall be made to such Seller in Federal or other funds immediately
available in New York City against delivery of such Firm Shares for the
respective accounts of the several Underwriters at 10:00 a.m., New York City
time, on December ___, 2002, or at such other time on the same or such other
date, not later than December ___, 2002, as shall be designated in writing by
you. The time and date of such payment are hereinafter referred to as the
"CLOSING DATE".
Payment for any Additional Shares shall be made to the Company in
Federal or other funds immediately available in New York City against delivery
of such Additional Shares for the respective accounts of the several
Underwriters at 10:00 a.m., New York City time, on the date specified in the
notice described in Section 3 or at such other time on the same or on such other
date, in any event not later than January __, 2003, as shall be designated in
writing by you.
The Firm Shares and Additional Shares shall be registered in such
names and in such denominations as you shall request in writing not later than
one full business day prior to the Closing Date or the applicable Option Closing
Date, as the case may be. The Firm Shares and Additional Shares shall be
delivered to you on the Closing Date or an Option Closing Date, as the case may
be, for the respective accounts of the several Underwriters, unless the
Representatives shall otherwise instruct, with any transfer taxes payable in
connection with the transfer of the Shares to the Underwriters duly paid,
against payment of the Purchase Price therefor.
6. CONDITIONS TO THE UNDERWRITERS' OBLIGATIONS. The obligations of
the Sellers to sell the Shares to the Underwriters and the several obligations
of the Underwriters to purchase and pay for the Shares on the Closing Date are
subject to the condition that the Registration Statement shall have become
effective not later than __________ (New York City time) on the date hereof.
The several obligations of the Underwriters are subject to the
following further conditions:
12
(a) Subsequent to the execution and delivery of this Agreement and
prior to the Closing Date:
(i) there shall not have occurred any downgrading, nor shall
any notice have been given of any intended or potential downgrading or
of any review for a possible change that does not indicate the
direction of the possible change, in the rating accorded any of the
Company's or CME's securities by any "nationally recognized
statistical rating organization," as such term is defined for purposes
of Rule 436(g)(2) under the Securities Act; and
(ii) there shall not have occurred any change, or any
development reasonably likely to result in a prospective change, in
the condition, financial or otherwise, or in the earnings, business or
operations of the CME Group, taken as a whole, from that set forth in
the Prospectus (exclusive of any amendments or supplements thereto
subsequent to the date of this Agreement) that, in your judgment, is
material and adverse and that makes it, in your judgment,
impracticable to market the Shares on the terms and in the manner
contemplated in the Prospectus.
(b) The Underwriters shall have received on the Closing Date a
certificate, dated the Closing Date and signed by an executive officer of
the Company and CME, to the effect set forth in Section 6(a)(i) above and
to the effect that the representations and warranties of the Company and
CME contained in this Agreement are true and correct as of the Closing
Date, that no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose have been
instituted or, to the Company's and CME's knowledge, threatened, and that
the Company and CME, as the case may be, has complied with all of the
agreements and satisfied all of the conditions on its part to be performed
or satisfied hereunder on or before the Closing Date.
(c) The Underwriters shall have received on the Closing Date a
certificate, dated the Closing Date and signed by ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
Executive Vice President and Chief Administrative Officer of the Company,
to the effect that he has no reason to believe that (except for the
financial statements and financial schedules and other financial and
statistical data included therein or excluded therefrom or the exhibits
thereto as to which he need not express any belief) the Registration
Statement at the time the Registration Statement became effective contained
any 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 and has no reason to believe that (except for the financial
statements and financial schedules and other financial and statistical data
included therein or excluded therefrom as to which he need not express any
belief) the Prospectus as of its date or as of the Closing Date contained
or contains an untrue statement of a material fact or omitted or omits to
state a material fact necessary in order
13
to make the statements therein, in the light of the circumstances under
which they were made, not misleading.
The officers signing and delivering such certificate may rely upon the
best of their knowledge as to proceedings threatened.
(d) The Underwriters shall have received on the Closing Date an
opinion of Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ (Illinois), outside counsel
for the Company, dated the Closing Date, to the effect of the following and
otherwise in form and substance satisfactory to you:
(i) the Company has been duly incorporated and is validly
existing and in good standing under the laws of the State of Delaware,
with the corporate power and corporate authority to own its property
and to conduct its business as described in the Prospectus (with such
exceptions as would not have a material adverse effect on the CME
Group, taken as a whole); and based solely upon a review of "good
standing" certificates of such states, the Company is qualified to
transact business and is in good standing in each jurisdiction set
forth in Exhibit A to such counsel's opinion;
(ii) CME is validly existing and in good standing under the
laws of the State of Delaware, with the corporate power and corporate
authority to own its property and to conduct its business as described
in the Prospectus (with such exceptions as would not have a material
adverse effect on the CME Group, taken as a whole); and based solely
upon a review of "good standing" certificates of such states, CME is
qualified to transact business and is in good standing in each
jurisdiction set forth in Exhibit A to such counsel's opinion;
(iii) the authorized capital stock of the Company conforms, in
all material respects, as to legal matters to the description thereof
contained in the Prospectus under the heading "Description of Capital
Stock";
(iv) the shares of Class A Common Stock of the Company
(including the Shares to be sold by the Selling Shareholders)
outstanding prior to the issuance of the Shares to be sold by the
Company have been duly authorized and are validly issued, fully paid
and non-assessable; based solely on their review of the certificate of
incorporation and by-laws of the Company, and assuming that, at the
Closing Date, the Shares are listed on the New York Stock Exchange,
each share of Class A-1 Common Stock, Class A-2 Common Stock, Class
A-3 Common Stock and Class A-4 Common Stock, as applicable, to be sold
by a Selling Shareholder pursuant to this Agreement shall
automatically convert (without any action by the holder) into one
Share of Class A Common Stock, upon the sale of such Share pursuant to
this Agreement; and, upon the sale of such
14
Share pursuant to this Agreement, there shall be no restriction on
transfer of such Share under the certificate of incorporation or
by-laws of the Company;
(v) all of the issued shares of capital stock of CME have been
duly authorized and validly issued, are fully paid and non-assessable
and, to such counsel's knowledge, are owned of record by the Company,
free and clear of all liens, encumbrances, equities or claims;
(vi) the issuance and sale of Shares to be sold by the Company
have been duly authorized by the Company for sale to the Underwriters
under this Agreement and such Shares, when delivered to and paid for
by the Underwriters in accordance with the terms of this Agreement,
will be validly issued, fully paid and non-assessable, and the
issuance of such Shares will not, to such counsel's knowledge, be
subject to any preemptive or similar rights to subscribe for the
Shares under the certificate of incorporation or by-laws of the
Company or under the laws of the State of Delaware;
(vii) this Agreement has been duly authorized, executed and
delivered by the Company and CME;
(viii) the execution and delivery by the Company and CME of, and
the performance by the Company and CME of their respective obligations
under, this Agreement will not violate or breach any provision of the
certificate of incorporation or by-laws of the Company or CME or any
agreement or instrument of the Company or CME set forth as an exhibit
to the Registration Statement (except for such violations or breaches
which would not materially impair the performance of the Company or
CME of its obligations under this Agreement);
(ix) Except as would not have a material adverse effect on the
CME Group, taken as a whole: (A) the compliance by the Company or by
CME with all of the provisions of this Agreement will not contravene
any provision of any Applicable Laws or Applicable Orders (it being
understood that, for purposes of this opinion, (1) the term
"Applicable Laws" means those laws, rules and regulations of the State
of Illinois and the United States of America that, in such counsel's
experience, are normally applicable to transactions of the type
contemplated by this Agreement, including the U.S. federal commodities
laws and the rules and regulations of the CFTC, all as of the date
hereof; (2) the term "Applicable Orders" means those judgments, orders
or decrees of Governmental Authorities (as such term is hereinafter
defined) by which the Company or CME is bound, the existence of which
is known to such counsel or has been specifically disclosed to such
counsel in writing by the Company or CME; and (3) the term
"Governmental Authorities" means any Illinois or federal executive,
legislative, judicial, administrative or regulatory body established
under Applicable Laws),
15
PROVIDED that, in rendering such opinions, such counsel need not
express any opinion with respect to (x) any securities or Blue Sky
laws of the various states or the securities laws of foreign
jurisdictions or (y) the information contained in, or the accuracy,
completeness or correctness of, the Prospectus or the Registration
Statement or the compliance thereof as to form with the Securities Act
and the rules and regulations promulgated thereunder; and (B) no
Governmental Approval is required for the execution, delivery and
performance of this Agreement by the Company or CME (it being
understood that, for purposes of such opinion, the term "Governmental
Approval" means any consent, approval, license, authorization or
validation of, or notice to, or filing, recording or registration
with, any Governmental Authority pursuant to Applicable Laws),
PROVIDED that, in rendering such opinions, such counsel does not
express any opinion with respect to (x) any securities or Blue Sky
laws of the various states or the securities laws of foreign
jurisdictions, (y) such Governmental Approvals as have been obtained
or made or (z) the rules and regulations of the National Association
of Securities Dealers, Inc. (the "NASD").
(x) the statements (A) in the Prospectus under the captions
"Description of Capital Stock" and "Material U.S. Federal Tax
Consequences to Non-U.S. Holders," "Business--Regulatory Matters,"
"Business--Licensing Agreements," "Business--Legal Proceedings" and
"Underwriters" and (B) in the Registration Statement in Items 14 and
15, in each case insofar as such statements purport to summarize
certain provisions of the specific agreements, statutes or regulations
referred to therein, fairly summarize such provisions in all material
respects;
(xi) to such counsel's knowledge, there are no (A) legal or
governmental proceedings pending or threatened to which the Company,
CME or any of CME's subsidiaries is a party that are required to be
described in the Registration Statement or the Prospectus and are not
so described or (B) contracts or other documents that are required to
be described in the Registration Statement or the Prospectus or to be
filed as exhibits to the Registration Statement that are not described
or filed as required;
(xii) neither the Company nor CME is, and solely after giving
effect to the offering and sale of the Shares and the application of
the proceeds thereof as described in the Prospectus neither of them
will be, an "investment company" as such term is defined in the
Investment Company Act of 1940, as amended;
(xiii) the Registration Statement, at the time it became
effective, and the Prospectus as of its date (in each case except for
financial statements and financial schedules and other financial and
statistical data included therein or excluded therefrom or the
exhibits thereto as to which such counsel need not express any
16
opinion) appeared on their face to be appropriately responsive, in all
material respects, to the requirements of the Securities Act and the
applicable rules and regulations of the Commission thereunder, and,
except to the extent expressly stated in paragraph (x) above, such
counsel need not assume any responsibility for the accuracy,
completeness or fairness of the statements contained in the
Registration Statement and the Prospectus.
In addition, such counsel shall state that it has no reason to
believe that (except for the financial statements and financial
schedules and other financial and statistical data included therein or
excluded therefrom or the exhibits thereto as to which such counsel
need not express any belief) the Registration Statement at the time
the Registration Statement became effective contained any 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 and has no reason to believe that (except for
the financial statements and financial schedules and other financial
and statistical data included therein or excluded therefrom or the
exhibits thereto as to which such counsel need not express any belief)
the Prospectus as of its date or as of the Closing Date contained or
contains an untrue statement of a material fact or omitted or omits to
state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading.
(e) The Underwriters shall have received on the Closing Date an
opinion of Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ (Illinois), counsel for the
Selling Shareholders, dated the Closing Date, to the effect of the
following and otherwise in form and substance satisfactory to you:
(i) this Agreement has been duly authorized, executed and
delivered by or on behalf of each of the Selling Shareholders;
(ii) the Power of Attorney of each Selling Shareholder has been
duly authorized, executed and delivered by such Selling Shareholder;
and
(iii) an action based on an adverse claim to the financial asset
consisting of the Shares sold by the Selling Shareholders deposited in
or held by DTC, whether such action is framed in conversion, replevin,
constructive trust, equitable lien or other theory, may not be
asserted successfully against the Representatives assuming that
neither the Representatives nor any Underwriter has notice of any
adverse claims with respect to such financial asset.
In addition, (I) such counsel or other counsel for the Selling
Shareholders named in Schedule III hereto (which may be an in-house
counsel) reasonably acceptable to the Underwriters shall provide an
opinion to the effect that the
17
execution and delivery by each Selling Shareholder named in Schedule
III hereto of, and the performance by such Selling Shareholder of its
obligations under, this Agreement and the Power of Attorney of such
Selling Shareholder will not contravene any provision of the
certificate of incorporation or by-laws or similar organizational
documents of such Selling Shareholder; and (II) such counsel shall
state that it (A) has no reason to believe that (except for the
financial statements and financial schedules and other financial and
statistical data included therein or excluded therefrom or the
exhibits thereto as to which such counsel need not express any belief)
the Registration Statement and the prospectus included therein at the
time the Registration Statement became effective contained any 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 and (B) has no reason to believe that (except
for the financial statements and financial schedules and other
financial and statistical data included therein or excluded therefrom
or the exhibits thereto as to which such counsel need not express any
belief) the Prospectus as of its date or as of the Closing Date
contained or contains an untrue statement of a material fact or
omitted or omits to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under which
they were made, not misleading, except that such statement relates
only to statements or omissions in the Registration Statement or the
Prospectus based upon information relating to each Selling Shareholder
furnished in writing by or on behalf of such Selling Shareholder
expressly for use in the Registration Statement, the Prospectus or any
amendments or supplements thereto.
(f) The Underwriters shall have received on the Closing Date an
opinion of Cleary, Gottlieb, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, counsel for the
Underwriters, dated the Closing Date, covering the matters referred to in
Sections 6(d)(vi), 6(d)(vii) and 6(d)(x) (but only as to the statements in
the Prospectus under "Description of Capital Stock" and "Underwriters") and
a letter covering the matters referred to in Section 6(d)(xiii) and in the
last paragraph of Section 6(d) above.
With respect to the last paragraph of Section 6(d) above, Skadden,
Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ (Illinois) and Cleary, Gottlieb, ▇▇▇▇▇ &
▇▇▇▇▇▇▇▇ and with respect to clause (II) of the last paragraph of Section
6(e) above, Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ (Illinois), may state that
their beliefs are based upon their participation in the preparation of the
Registration Statement and Prospectus and any amendments or supplements
thereto and review and discussion of the contents thereof, but are without
independent check or verification, except as specified. With respect to
Section 6(e) above, Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ (Illinois) may
rely upon an opinion or opinions of counsel for any Selling Shareholders
and, with respect to factual matters and to the extent such counsel deems
appropriate, upon the representations of each Selling Shareholder contained
herein and in the Power of Attorney of such Selling Shareholder
18
and in other documents and instruments; PROVIDED that a copy of each
opinion so relied upon is delivered to you and is in form and substance
satisfactory to your counsel and copies of such Powers of Attorney and of
any such other documents and instruments shall be delivered to you and
shall be in form and substance satisfactory to your counsel.
The opinions of Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ (Illinois)
described in Sections 6(d) and 6(e) above (and any opinions of counsel for
any Selling Shareholder referred to in the immediately preceding paragraph)
shall be rendered to the Underwriters at the request of the Company or one
or more of the Selling Shareholders, as the case may be, and shall so state
therein.
(g) The Underwriters shall have received, on each of the date hereof
and the Closing Date, a letter dated the date hereof or the Closing Date,
as the case may be, in form and substance satisfactory to the Underwriters,
from Ernst & Young LLP, independent public accountants, containing
statements and information of the type ordinarily included in accountants'
"comfort letters" to underwriters with respect to the financial statements
and certain financial information contained in the Registration Statement
and the Prospectus; PROVIDED that the letter delivered on the Closing Date
shall use a "cut-off date" not earlier than the date hereof.
(h) The "lock-up" agreements, each substantially in the form of
Exhibit A hereto, between you and officers and directors of the Company
relating to sales and certain other dispositions of shares of Common Stock
or certain other securities, delivered to you on or before the date hereof,
shall be in full force and effect on the Closing Date.
(i) The Shares shall have been approved for listing on the Exchange,
subject only to official notice of issuance.
(j) Prior to the Closing Date, the Company, CME and each of the
Selling Shareholders shall have furnished to the Representatives such
further information, certificates and documents as the Representatives may
reasonably request.
The several obligations of the Underwriters to purchase Additional
Shares hereunder are subject to the delivery to you on the applicable Option
Closing Date of such documents as you may reasonably request with respect to the
good standing of the Company and CME, the due authorization and issuance of the
Additional Shares to be sold on such Option Closing Date and other matters
related to the issuance of such Additional Shares.
7. COVENANTS OF THE COMPANY. In further consideration of the
agreements of the Underwriters herein contained, the Company covenants with each
Underwriter as follows:
(a) To furnish to you, without charge, six signed copies of the
Registration Statement (including exhibits thereto) and for delivery to
each other Underwriter a
19
conformed copy of the Registration Statement (without exhibits thereto) and
to furnish to you in New York City, without charge, prior to 10:00 a.m. New
York City time on the business day next succeeding the date of this
Agreement and during the period mentioned in Section 7(c) below, as many
copies of the Prospectus and any supplements and amendments thereto or to
the Registration Statement as you may reasonably request.
(b) Before amending or supplementing the Registration Statement or
the Prospectus, to furnish to you a copy of each such proposed amendment or
supplement and not to file any such proposed amendment or supplement to
which you reasonably object, and to file with the Commission within the
applicable period specified in Rule 424(b) under the Securities Act any
prospectus required to be filed pursuant to such Rule.
(c) If, during such period after the first date of the public
offering of the Shares as in the opinion of counsel for the Underwriters
the Prospectus is required by law to be delivered in connection with sales
by an Underwriter or dealer, any event shall occur or condition exist as a
result of which it is necessary to amend or supplement the Prospectus in
order to make the statements therein, in the light of the circumstances
when the Prospectus is delivered to a purchaser, not misleading, or if, in
the opinion of counsel for the Underwriters, it is necessary to amend or
supplement the Prospectus to comply with applicable law, forthwith to
prepare, file with the Commission and furnish, at its own expense, to the
Underwriters and to the dealers (whose names and addresses you will furnish
to the Company) to which Shares may have been sold by you on behalf of the
Underwriters and to any other dealers upon request, either amendments or
supplements to the Prospectus so that the statements in the Prospectus as
so amended or supplemented will not, in the light of the circumstances when
the Prospectus is delivered to a purchaser, be misleading or so that the
Prospectus, as amended or supplemented, will comply with law.
(d) To endeavor to qualify the Shares for offer and sale under the
securities or Blue Sky laws of such jurisdictions as you shall reasonably
request, PROVIDED, however, that in connection therewith, the Company shall
not be required to qualify as a foreign corporation or consent to service
of process in any jurisdiction where it has not already so qualified or
consented.
(e) To make generally available to the Company's security holders and
to you as soon as practicable an earning statement covering the
twelve-month period ending December 31, 2003 that satisfies the provisions
of Section 11(a) of the Securities Act and the rules and regulations of the
Commission thereunder.
(f) To place stop transfer orders on any Directed Shares that have
been sold to Participants subject to the three month restriction on sale,
transfer, assignment, pledge or hypothecation imposed by NASD Regulation,
Inc. under its Interpretative Material 2110-1
20
on free-riding and withholding to the extent necessary to ensure compliance
with the three month restrictions.
(g) To comply in all material respects with all applicable securities
and other applicable laws, rules and regulations in each jurisdiction in
which the Directed Shares are offered in connection with the Directed Share
Program.
8. EXPENSES. Whether or not the transactions contemplated in this
Agreement are consummated or this Agreement is terminated, the Sellers agree to
pay or cause to be paid all expenses incident to the performance of their
obligations under this Agreement, including: (i) the fees, disbursements and
expenses of the Company's counsel, the Company's accountants and counsel for the
Selling Shareholders (provided that each Selling Shareholder shall pay a
proportionate share of the fees and expenses of Skadden, Arps, Slate, ▇▇▇▇▇▇▇ &
▇▇▇▇ (Illinois), counsel for the Selling Shareholders, incurred in connection
with delivering its opinion required under Section 6(e) in an amount not to
exceed $1,000 per Selling Shareholder) in connection with the registration and
delivery of the Shares under the Securities Act and all other fees or expenses
in connection with the preparation and filing of the Registration Statement, any
preliminary prospectus, the Prospectus and amendments and supplements to any of
the foregoing, including all printing costs associated therewith, and the
mailing and delivering of copies thereof to the Underwriters and dealers, in the
quantities hereinabove specified, (ii) all costs and expenses related to the
transfer and delivery of the Shares to the Underwriters, including any transfer
or other taxes payable thereon, (iii) the cost of printing or producing any Blue
Sky or Legal Investment memorandum in connection with the offer and sale of the
Shares under state securities laws and all expenses in connection with the
qualification of the Shares for offer and sale under state securities laws as
provided in Section 7(d) hereof, including filing fees and the reasonable fees
and disbursements of counsel for the Underwriters in connection with such
qualification and in connection with the Blue Sky or Legal Investment
memorandum, (iv) all filing fees and the reasonable fees and disbursements of
counsel to the Underwriters incurred in connection with the review and
qualification of the offering of the Shares by the NASD, (v) all fees and
expenses in connection with the preparation and filing of the registration
statement on Form 8-A relating to the Common Stock and all costs and expenses
incident to listing the Shares on the Exchange, (vi) the cost of printing
certificates representing the Shares, (vii) the costs and charges of any
transfer agent, registrar or depositary, (viii) 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 Shares, 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 or CME and
any such consultants, and the cost of any aircraft chartered in connection with
the road show, (ix) the document production charges and expenses associated with
printing this Agreement, (x) all fees and disbursements of counsel incurred by
the Underwriters in connection with the Directed Share Program and stamp duties,
similar taxes or duties or other taxes, if any, incurred by the Underwriters in
connection with the Directed Share Program, (xi) all expenses of the Company
21
and CME in connection with any offer and sale of the Shares outside of the
United States, and filing fees and the reasonable fees and disbursements of
counsel for the Underwriters in connection with offers and sales outside of the
United States, and (xii) all other costs and expenses incident to the
performance of the obligations of the Company hereunder for which provision is
not otherwise made in this Section. It is understood, however, that except as
provided in this Section, Section 9 entitled "Indemnity and Contribution", and
the last paragraph of Section 12 below, the Underwriters will pay all of their
costs and expenses, including fees and disbursements of their counsel, stock
transfer taxes payable on resale of any of the Shares by them and any
advertising expenses connected with any offers they may make.
The provisions of this Section shall not supersede or otherwise affect
any agreement that the Sellers may otherwise have for the allocation of such
expenses among themselves.
9. INDEMNITY AND CONTRIBUTION. (a) The Company and CME agree to
indemnify and hold harmless each Underwriter, each person, if any, who controls
any Underwriter within the meaning of either Section 15 of the Securities Act or
Section 20 of the Securities Exchange Act of 1934, as amended (the "EXCHANGE
ACT"), and each affiliate of any Underwriter within the meaning of Rule 405
under the Securities Act, from and against any and all losses, claims, damages
and liabilities (including, without limitation, any legal or other expenses
reasonably incurred in connection with defending or investigating any such
action or claim) caused by any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or any amendment thereof,
any preliminary prospectus or the Prospectus (as amended or supplemented if the
Company or CME shall have furnished any amendments or supplements thereto), or
caused by 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, except insofar as such losses, claims, damages or liabilities are
caused by any such untrue statement or omission or alleged untrue statement or
omission based upon information relating to (i) any Underwriter furnished to the
Company in writing by such Underwriter through you expressly for use therein or
(ii) any Selling Shareholder furnished to the Company in writing by the Selling
Shareholder expressly for use therein other than information with respect to any
position, office or other relationship which any Selling Shareholder has had
with, and which is material to, the Company or any of its predecessors or
affiliates within three years prior to the date of the Prospectus; PROVIDED,
however, that the foregoing indemnity agreement with respect to any preliminary
prospectus shall not inure to the benefit of any Underwriter from whom the
person asserting any such losses, claims, damages or liabilities purchased
Shares, or any person controlling such Underwriter, if a copy of the Prospectus
(as then amended or supplemented if the Company shall have furnished any
amendments or supplements thereto) was not sent or given by or on behalf of such
Underwriter to such person, if required by law so to have been delivered, at or
prior to the written confirmation of the sale of the Shares to such person, and
if the Prospectus (as so amended or supplemented) would have cured the defect
giving rise to such losses, claims, damages or liabilities, unless such failure
is the result of noncompliance by the Company with Section 7(a) hereof.
22
Notwithstanding the foregoing, and subject to Section 9(b), the parties
hereto agree that CME shall only be liable for amounts payable under Section
9(a) in the event that (i) the Company is bankrupt or insolvent or (ii) an
indemnified party (as defined below) shall have obtained a judicial judgment,
order or decree (in each case which has not been appealed) for amounts payable
to such indemnified party under this Section 9(a) (including reimbursement of
reasonable legal fees or other expenses) and such indemnified party shall have
made a demand upon the Company for payment of such amounts following such
judgment, order or decree, which demand remains unsatisfied for 60 days or more.
(b) Each Selling Shareholder agrees, severally and not jointly, to
indemnify and hold harmless the Company, the directors of the Company and the
officers of the Company who sign the Registration Statement, each Underwriter,
each person, if any, who controls the Company or any Underwriter within the
meaning of either Section 15 of the Securities Act or Section 20 of the Exchange
Act and each affiliate of any Underwriter within the meaning of Rule 405 under
the Securities Act, from and against any and all losses, claims, damages and
liabilities (including, without limitation, any legal or other expenses
reasonably incurred in connection with defending or investigating any such
action or claim) caused by any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or any amendment thereof,
any preliminary prospectus or the Prospectus (as amended or supplemented if the
Company shall have furnished any amendments or supplements thereto), or caused
by 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,
but only with reference to information relating to such Selling Shareholder
furnished in writing to the Company by or on behalf of such Selling Shareholder
expressly for use in the Registration Statement, any preliminary prospectus, the
Prospectus or any amendments or supplements thereto. The liability of each
Selling Shareholder under the indemnity agreement contained in this paragraph
shall be limited to an amount equal to the aggregate Public Offering Price of
the Shares sold by such Selling Shareholder under this Agreement.
(c) Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless the Company, the Selling Shareholders, the directors and
officers of the Company who sign the Registration Statement and each person, if
any, who controls the Company or any Selling Shareholder within the meaning of
either Section 15 of the Securities Act or Section 20 of the Exchange Act from
and against any and all losses, claims, damages and liabilities (including,
without limitation, any legal or other expenses reasonably incurred in
connection with defending or investigating any such action or claim) caused by
any untrue statement or alleged untrue statement of a material fact contained in
the Registration Statement or any amendment thereof, any preliminary prospectus
or the Prospectus (as amended or supplemented if the Company shall have
furnished any amendments or supplements thereto), or caused by 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, but only with
reference to information relating to such Underwriter furnished to the Company
in writing by such Underwriter through
23
you expressly for use in the Registration Statement, any preliminary prospectus,
the Prospectus or any amendments or supplements thereto.
(d) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be
sought pursuant to Section 9(a), 9(b) or 9(c), such person (the "INDEMNIFIED
PARTY") shall promptly notify the person against whom such indemnity may be
sought (the "INDEMNIFYING PARTY") in writing, and the indemnifying party, upon
request of the indemnified party, shall retain counsel reasonably satisfactory
to the indemnified party to represent the indemnified party and any others the
indemnifying party may designate in such proceeding and shall pay the reasonable
fees and disbursements of such counsel related to such proceeding. In any such
proceeding, any indemnified party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the indemnifying party
shall not, in respect of the legal expenses of any indemnified party in
connection with any proceeding or related proceedings in the same jurisdiction,
be liable for (i) the reasonable fees and expenses of more than one separate
firm (in addition to any local counsel) for all Underwriters and all persons, if
any, who control any Underwriter within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act or who are affiliates of any
Underwriter within the meaning of Rule 405 under the Securities Act, (ii) the
reasonable fees and expenses of more than one separate firm (in addition to any
local counsel) for the Company, its directors, its officers who sign the
Registration Statement and each person, if any, who controls the Company within
the meaning of either such Section and (iii) the reasonable fees and expenses of
more than one separate firm (in addition to any local counsel) for all Selling
Shareholders and all persons, if any, who control any Selling Shareholder within
the meaning of either such Section, and that all such fees and expenses shall be
reimbursed as they are incurred. In the case of any such separate firm for the
Underwriters and such control persons and affiliates of any Underwriters, such
firm shall be designated in writing by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇. In the case of any such
separate firm for the Company, and such directors, officers and control persons
of the Company, such firm shall be designated in writing by the Company. In the
case of any such separate firm for the Selling Shareholders and such control
persons of any Selling Shareholders, such firm shall be designated in writing by
the persons named as attorneys-in-fact for the Selling Shareholders under the
Powers of Attorney. The indemnifying party shall not be liable for any
settlement of any proceeding effected without its written consent, but if
settled with such consent or if there be a final judgment for the plaintiff, the
indemnifying party agrees to indemnify the indemnified party from and against
any loss or liability by reason of such settlement or judgment. No indemnifying
party shall, without the prior written consent of the indemnified party, effect
any settlement of any pending or threatened proceeding in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party, unless such
24
settlement includes an unconditional release of such indemnified party from all
liability on claims that are the subject matter of such proceeding.
(e) To the extent the indemnification provided for in Section 9(a),
9(b) or 9(c) is unavailable to an indemnified party or insufficient in respect
of any losses, claims, damages or liabilities referred to therein, then each
indemnifying party under such paragraph, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by the indemnifying party or parties on the one hand and the
indemnified party or parties on the other hand from the offering of the Shares
or (ii) if the allocation provided by clause 9(e)(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 9(e)(i) above but also the relative
fault of the indemnifying party or parties on the one hand and of the
indemnified party or parties on the other hand in connection with the statements
or omissions that resulted in such losses, claims, damages or liabilities, as
well as any other relevant equitable considerations. The relative benefits
received by the Sellers on the one hand and the Underwriters on the other hand
in connection with the offering of the Shares shall be deemed to be in the same
respective proportions as the net proceeds from the offering of the Shares
(before deducting expenses) received by each Seller and the total underwriting
discounts and commissions received by the Underwriters, in each case as set
forth in the table on the cover of the Prospectus, bear to the aggregate Public
Offering Price of the Shares. The relative fault of the Sellers on the one hand
and the Underwriters on the other hand shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the Sellers or by the Underwriters and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Underwriters' respective obligations to
contribute pursuant to this Section 9 are several in proportion to the
respective number of Shares they have purchased hereunder, and not joint.
The parties hereto agree that CME shall only be liable for amounts payable
under this Section 9(e) in the event that (i) the Company is bankrupt or
insolvent or (ii) an indemnified party shall have obtained a judicial judgment,
order or decree (in each case which has not been appealed) for amounts payable
to such indemnified party under this Section 9(e) (including reimbursement of
legal fees or other expenses) and such indemnified party shall have made a
demand upon the Company for payment of such amounts following such judgment,
order or decree, which demand remains unsatisfied for 60 days or more.
(f) The Sellers, CME and the Underwriters agree that it would not be
just or equitable if contribution pursuant to this Section 9 were determined by
PRO RATA allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation that does not take account of
the equitable considerations referred to in Section 9(e). The amount paid or
payable by an indemnified party as a result of the losses, claims, damages and
liabilities referred to in the immediately preceding paragraph shall be deemed
to include,
25
subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
Section 9, no Underwriter shall be required to contribute any amount in excess
of the amount by which the total price at which the Shares underwritten by it
and distributed to the public were offered to the public exceeds the amount of
any damages that such Underwriter has otherwise been required to pay by reason
of such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. The remedies provided
for in this Section 9 are not exclusive and shall not limit any rights or
remedies which may otherwise be available to any indemnified party at law or in
equity.
(g) The indemnity and contribution provisions contained in this
Section 9 and the representations, warranties and other statements of the
Company, CME and the Selling Shareholders contained in this Agreement shall
remain operative and in full force and effect regardless of (i) any termination
of this Agreement, (ii) any investigation made by or on behalf of any
Underwriter, any person controlling any Underwriter or any affiliate of any
Underwriter, any Selling Shareholder or any person controlling any Selling
Shareholder, or the Company, its officers or directors or any person controlling
the Company and (iii) acceptance of and payment for any of the Shares.
10. DIRECTED SHARE PROGRAM INDEMNIFICATION. (a) The Company and CME
agree to indemnify and hold harmless UBS Warburg and its affiliates, within the
meaning of Rule 405 under the Securities Act, and each person, if any, who
controls UBS Warburg or its affiliates within the meaning of either Section 15
of the Securities Act or Section 20 of the Exchange Act ("UBS WARBURG
ENTITIES"), from and against any and all losses, claims, damages and liabilities
(including, without limitation, any legal or other expenses reasonably incurred
in connection with defending or investigating any such action or claim) (i)
caused by any untrue statement or alleged untrue statement of a material fact
contained in any material prepared by or with the consent of the Company or CME
for distribution to Participants in connection with the Directed Share Program,
or caused by 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) caused by the failure of any Participant to pay for and accept
delivery of Directed Shares that the Participant has agreed to purchase; or
(iii) related to, arising out of, or in connection with the Directed Share
Program other than losses, claims, damages or liabilities (or expenses relating
thereto) that are finally judicially determined to have resulted from the bad
faith or gross negligence of UBS Warburg Entities.
The parties hereto agree that CME shall only be liable for amounts
payable under this Section 10(a) in the event that (i) the Company is bankrupt
or insolvent or (ii) any UBS Warburg Entity shall have obtained a judicial
judgment, order or decree (in each case which has not been appealed) for amounts
payable to such UBS Warburg Entity under this Section 10(a) (including
reimbursement of legal fees or other expenses) and such UBS Warburg Entity shall
26
have made a demand upon the Company for payment of such amounts following such
judgment, order or decree, which demand remains unsatisfied for 60 days or more.
(b) In case any proceeding (including any governmental investigation)
shall be instituted involving any UBS Warburg Entity in respect of which
indemnity may be sought pursuant to Section 10(a), the UBS Warburg Entity
seeking indemnity shall promptly notify the Company or CME in writing, and the
Company or CME, upon request of the UBS Warburg Entity, shall retain counsel
reasonably satisfactory to the UBS Warburg Entity to represent the UBS Warburg
Entity and any others the Company or CME may designate in such proceeding and
shall pay the reasonable fees and disbursements of such counsel related to such
proceeding. In any such proceeding, any UBS Warburg Entity shall have the right
to retain its own counsel, but the fees and expenses of such counsel shall be at
the expense of such UBS Warburg Entity unless (i) the Company or CME shall have
agreed to the retention of such counsel or (ii) the named parties to any such
proceeding (including any impleaded parties) include both the Company and/or CME
on the one hand, and the UBS Warburg Entity on the other hand and representation
of both such parties by the same counsel would be inappropriate due to actual or
potential differing interests between them. The Company and CME shall not, in
respect of the legal expenses of the UBS Warburg Entities in connection with any
proceeding or related proceedings in the same jurisdiction, be liable for the
reasonable fees and expenses of more than one separate firm (in addition to any
local counsel) for all UBS Warburg Entities. Any such firm for the UBS Warburg
Entities shall be designated in writing by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇. The Company and CME
shall not be liable for any settlement of any proceeding effected without their
written consent, but if settled with such consent or if there be a final
judgment for the plaintiff, the Company and CME agree to indemnify the UBS
Warburg Entities from and against any loss or liability by reason of such
settlement or judgment. The Company and CME shall not, without the prior written
consent of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, effect any settlement of any pending or threatened
proceeding in respect of which any UBS Warburg Entity is or could have been a
party and indemnity could have been sought hereunder by such UBS Warburg Entity,
unless such settlement includes an unconditional release of the UBS Warburg
Entities from all liability on claims that are the subject matter of such
proceeding.
(c) To the extent the indemnification provided for in Section 10(a)
is unavailable to a UBS Warburg Entity or insufficient in respect of any losses,
claims, damages or liabilities referred to therein, then the Company and CME, in
lieu of indemnifying the UBS Warburg Entity thereunder, shall contribute to the
amount paid or payable by the UBS Warburg Entity as a result of such losses,
claims, damages or liabilities (i) in such proportion as is appropriate to
reflect the relative benefits received by the Company and CME on the one hand
and the UBS Warburg Entities on the other hand from the offering of the Directed
Shares or (ii) if the allocation provided by clause 10(c)(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 10(c)(i) above but also the
relative fault of the Company and CME on the one hand and of the UBS Warburg
Entities on the other hand in connection with the statements or omissions that
resulted in such losses, claims, damages or liabilities, as well as any other
relevant equitable
27
considerations. The relative benefits received by the Company and CME on the one
hand and of the UBS Warburg Entities on the other hand in connection with the
offering of the Directed Shares shall be deemed to be in the same respective
proportions as the net proceeds from the offering of the Directed Shares (before
deducting expenses) and the total underwriting discounts and commissions
received by the UBS Warburg Entities for the Directed Shares, bear to the
aggregate Public Offering Price of the Shares. If the loss, claim, damage or
liability is caused by an untrue or alleged untrue statement of a material fact,
the relative fault of the Company and CME on the one hand and the UBS Warburg
Entities on the other hand shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement or the omission or
alleged omission relates to information supplied by the Company or by the UBS
Warburg Entities and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The parties hereto agree that CME shall only be liable for amounts
payable under this Section 10(c) in the event that (i) the Company is bankrupt
or insolvent or (ii) any UBS Warburg Entity shall have obtained a judicial
judgment, order or decree (in each case which has not been appealed) for amounts
payable to such UBS Warburg Entity under this Section 10(c) (including
reimbursement of legal fees or other expenses) and such UBS Warburg Entity shall
have made a demand upon the Company for payment of such amounts following such
judgment, order or decree, which demand remains unsatisfied for 60 days or more.
(d) The Company, CME and the UBS Warburg Entities agree that it would
not be just or equitable if contribution pursuant to this Section 10 were
determined by PRO RATA allocation (even if the UBS Warburg Entities were treated
as one entity for such purpose) or by any other method of allocation that does
not take account of the equitable considerations referred to in Section 10(c).
The amount paid or payable by the UBS Warburg Entities as a result of the
losses, claims, damages and liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by the UBS Warburg
Entities in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 10, no UBS Warburg Entity shall
be required to contribute any amount in excess of the amount by which the total
price at which the Directed Shares distributed to the public were offered to the
public exceeds the amount of any damages that such UBS Warburg Entity has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The remedies provided for in this Section 10 are
not exclusive and shall not limit any rights or remedies which may otherwise be
available to any UBS Warburg Entity at law or in equity.
(e) The indemnity and contribution provisions contained in this
Section 10 shall remain operative and in full force and effect regardless of (i)
any termination of this Agreement, (ii) any investigation made by or on behalf
of any UBS Warburg Entity or the
28
Company or CME, the officers or directors of the Company or CME or any person
controlling the Company or CME and (iii) acceptance of and payment for any of
the Directed Shares.
11. TERMINATION. The Underwriters may terminate this Agreement by
notice given by you to the Company, if after the execution and delivery of this
Agreement and prior to the Closing Date (i) trading generally shall have been
suspended or materially limited on, or by, as the case may be, any of the New
York Stock Exchange, the American Stock Exchange or the Nasdaq National Market,
(ii) trading of any securities of the Company or CME shall have been suspended
on any exchange or in any over-the-counter market, (iii) a material disruption
in securities settlement, payment or clearance services in the United States
shall have occurred, (iv) any moratorium on commercial banking activities shall
have been declared by Federal or New York State authorities, or (v) there shall
have occurred any outbreak or escalation of hostilities, or any change in
financial markets or any calamity or crisis that, in your judgment, is material
and adverse and which, singly or together with any other event specified in this
clause (v), makes it, in your judgment, impracticable or inadvisable to proceed
with the offer, sale or delivery of the Shares on the terms and in the manner
contemplated in the Prospectus.
12. EFFECTIVENESS; DEFAULTING UNDERWRITERS. This Agreement shall
become effective upon the execution and delivery hereof by the parties hereto.
If, on the Closing Date or an Option Closing Date, as the case may be,
any one or more of the Underwriters shall fail or refuse to purchase Shares that
it has or they have agreed to purchase hereunder on such date, and the aggregate
number of Shares which such defaulting Underwriter or Underwriters agreed but
failed or refused to purchase is not more than one-tenth of the aggregate number
of the Shares to be purchased on such date, the other Underwriters shall be
obligated severally in the proportions that the number of Firm Shares set forth
opposite their respective names in Schedule II bears to the aggregate number of
Firm Shares set forth opposite the names of all such non-defaulting
Underwriters, or in such other proportions as you may specify, to purchase the
Shares which such defaulting Underwriter or Underwriters agreed but failed or
refused to purchase on such date; PROVIDED that in no event shall the number of
Shares that any Underwriter has agreed to purchase pursuant to this Agreement be
increased pursuant to this Section 12 by an amount in excess of one-ninth of
such number of Shares without the written consent of such Underwriter. If, on
the Closing Date, any Underwriter or Underwriters shall fail or refuse to
purchase Firm Shares and the aggregate number of Firm Shares with respect to
which such default occurs is more than one-tenth of the aggregate number of Firm
Shares to be purchased, and arrangements satisfactory to you, the Company and
the Selling Shareholders for the purchase of such Firm Shares are not made
within 36 hours after such default, this Agreement shall terminate without
liability on the part of any non-defaulting Underwriter, the Company or the
Selling Shareholders. In any such case either you or the relevant Sellers shall
have the right to postpone the Closing Date, but in no event for longer than
seven days, in order that the required changes, if any, in the Registration
Statement and in the Prospectus or in any other documents or arrangements may be
effected. If, on an Option Closing Date, any Underwriter or Underwriters shall
fail or refuse to purchase Additional Shares and the
29
aggregate number of Additional Shares with respect to which such default occurs
is more than one-tenth of the aggregate number of Additional Shares to be
purchased on such Option Closing Date, the non-defaulting Underwriters shall
have the option to (i) terminate their obligation hereunder to purchase the
Additional Shares to be sold on such Option Closing Date or (ii) purchase not
less than the number of Additional Shares that such non-defaulting Underwriters
would have been obligated to purchase in the absence of such default. Any action
taken under this paragraph shall not relieve any defaulting Underwriter from
liability in respect of any default of such Underwriter under this Agreement.
If this Agreement shall be terminated by the Underwriters, or any of
them, because of any failure or refusal on the part of any Seller to comply with
the terms or to fulfill any of the conditions of this Agreement, or if for any
reason any Seller shall be unable to perform its obligations under this
Agreement, the Sellers will reimburse the Underwriters or such Underwriters as
have so terminated this Agreement with respect to themselves, severally, for all
out-of-pocket expenses (including the fees and disbursements of their counsel)
reasonably incurred by such Underwriters in connection with this Agreement or
the offering contemplated hereunder.
13. COUNTERPARTS. This Agreement may be signed in two or more
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
14. APPLICABLE LAW. This Agreement shall be governed by and construed
in accordance with the internal laws of the State of New York.
15. HEADINGS. The headings of the sections of this Agreement have
been inserted for convenience of reference only and shall not be deemed a part
of this Agreement.
30
Very truly yours,
CHICAGO MERCANTILE EXCHANGE HOLDINGS INC.
By:
-----------------------------------
Name:
Title:
CHICAGO MERCANTILE EXCHANGE INC.
By:
-----------------------------------
Name:
Title:
The Selling Shareholders named in
Schedule I hereto, acting severally
By:
-----------------------------------
Attorney-in-Fact
Accepted as of the date hereof
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
UBS Warburg LLC
▇.▇. ▇▇▇▇▇▇ Securities Inc.
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc.
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Company, L.L.C.
Acting severally on behalf of themselves
and the several Underwriters named in
Schedule II hereto.
By: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
By:
-----------------------------------
Name:
Title:
31
SCHEDULE I
NUMBER OF
FIRM SHARES
SELLING SHAREHOLDER TO BE SOLD
[NAMES OF SELLING SHAREHOLDERS]
------------------
Total........
------------------
1
SCHEDULE II
NUMBER OF
FIRM SHARES
UNDERWRITER TO BE PURCHASED
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
UBS Warburg LLC
▇.▇. ▇▇▇▇▇▇ Securities Inc.
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc.
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Company, L.L.C.
[NAMES OF OTHER UNDERWRITERS]
------------------
Total........
------------------
1
SCHEDULE III
SELLING SHAREHOLDERS
1
EXHIBIT A
[FORM OF LOCK-UP LETTER]
________________, 2002
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
UBS Warburg LLC
▇.▇. ▇▇▇▇▇▇ Securities Inc.
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc.
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Company, L.L.C.
c/o Morgan ▇▇▇▇▇▇▇ & Co. Incorporated
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Dear Sirs and Mesdames:
The undersigned understands that ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated, UBS
Warburg LLC, ▇.▇. ▇▇▇▇▇▇ Securities Inc., ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc. and ▇▇▇▇▇▇▇
▇▇▇▇▇ & Company, L.L.C. (the "REPRESENTATIVES") propose to enter into an
Underwriting Agreement (the "UNDERWRITING AGREEMENT") with Chicago Mercantile
Exchange Holdings Inc., a Delaware corporation (the "COMPANY"), Chicago
Mercantile Exchange Inc., a Delaware corporation, and the Selling Shareholders
named in Schedule I to the Underwriting Agreement providing for the public
offering (the "PUBLIC OFFERING") by the several Underwriters named in Schedule
II thereto, including the Representatives (the "UNDERWRITERS"), of ______ shares
(the "SHARES") of the Class A Common Stock, $ .01 par value, of the Company (the
"COMMON STOCK").
To induce the Underwriters that may participate in the Public Offering to
continue their efforts in connection with the Public Offering, the undersigned
hereby agrees that, without the prior written consent of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co.
Incorporated ("▇▇▇▇▇▇ ▇▇▇▇▇▇▇") and UBS Warburg LLC ("UBS Warburg") on behalf of
the Underwriters, it will not, during the period commencing on the date hereof
and ending 180 days after the date of the final prospectus relating to the
Public Offering (the "PROSPECTUS"), (1) offer, pledge, sell, contract to sell,
sell any option or contract to purchase, purchase any option or contract to
sell, grant any option, right or warrant to purchase, lend, or otherwise
transfer or dispose of, directly or indirectly, any shares of Common Stock or
any securities convertible into or exercisable or exchangeable for Common Stock
or (2) enter into any swap or other arrangement that transfers to another, in
whole or in part, any of the economic consequences of ownership of Common Stock,
whether any such transaction described in clause (1) or (2) above is to be
settled by delivery of Common Stock or such other securities, in cash or
otherwise. The foregoing sentence shall not apply to (a) the sale of any Shares
to the Underwriters pursuant to the Underwriting Agreement, (b) transactions
relating to shares of Common Stock or other securities acquired in open market
transactions after the completion of the Public Offering, and (c) transactions
relating to shares of Common Stock in connection with "Permitted Transfers", as
defined in the Company's certificate of incorporation, PROVIDED that, for
transactions under clause (c), parties receiving shares of Common Stock in such
transactions agree to be bound by
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the same restrictions as those set forth in the foregoing sentence for the
remainder of the 180-day period. In addition, the undersigned agrees that,
without the prior written consent of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and UBS Warburg on behalf of
the Underwriters, it will not, during the period commencing on the date hereof
and ending 180 days after the date of the Prospectus, make any demand for or
exercise any right with respect to, the registration of any shares of Common
Stock or any security convertible into or exercisable or exchangeable for Common
Stock. The undersigned also agrees and consents to the entry of stop transfer
instructions with the Company's transfer agent and registrar against the
transfer of the undersigned's shares of Common Stock except in compliance with
the foregoing restrictions.
The undersigned understands that the Company and the Underwriters are
relying upon this Lock-Up Agreement in proceeding toward consummation of the
Public Offering. The undersigned further understands that this Lock-Up Agreement
is irrevocable and shall be binding upon the undersigned's heirs, legal
representatives, successors and assigns.
Whether or not the Public Offering actually occurs depends on a number of
factors, including market conditions. Any Public Offering will only be made
pursuant to an Underwriting Agreement, the terms of which are subject to
negotiation between the Company and the Underwriters.
Very truly yours,
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(Name)
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(Address)
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