Exhibit 10.1

 

KBR, INC.

 

(a Delaware corporation)

 

$350,000,000

 

2.50% Convertible Senior Notes due 2023

 

PURCHASE AGREEMENT

 

Dated: November 12, 2018

 

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KBR, INC.

 

(a Delaware corporation)

 

$350,000,000

 

2.50% Convertible Senior Notes due 2023

 

PURCHASE AGREEMENT

 

November 12, 2018

 

Merrill Lynch, Pierce, Fenner & Smith
Incorporated

 

as Representative of the several Initial Purchasers

 

c/o  Merrill Lynch, Pierce, Fenner & Smith
             Incorporated

 

One Bryant Park
New York, New York  10036

 

Ladies and Gentlemen:

 

KBR, Inc., a Delaware corporation (the “Company”), confirms its agreement with
Merrill Lynch, Pierce, Fenner & Smith Incorporated (“Merrill Lynch”) and each of
the other Initial Purchasers named in Schedule A hereto (collectively, the
“Initial Purchasers,” which term shall also include any initial purchaser
substituted as hereinafter provided in Section 10 hereof), for whom Merrill
Lynch is acting as representative (in such capacity, the “Representative”), with
respect to (i) the sale by the Company and the purchase by the Initial
Purchasers, acting severally and not jointly, of the respective principal
amounts set forth in said Schedule A of $350,000,000 aggregate principal amount
of the Company’s 2.50% Convertible Senior Notes due 2023 (the “Initial
Securities”) and (ii) the grant by the Company to the Initial Purchasers, acting
severally and not jointly, of the option to purchase all or any part of an
additional $52,500,000 aggregate principal amount of its 2.50% Convertible
Senior Notes due 2023 (the “Option Securities” and, together with the Initial
Securities, the “Securities”) solely to cover overallotments.  The Securities
are to be issued pursuant to an indenture to be dated as of November 15, 2018
(the “Indenture”) between the Company and Citibank, N.A., as trustee (the
“Trustee”). The Securities will be convertible into cash, shares of common stock
of the Company, par value $0.001 per share (“Common Stock”), or a combination of
cash and shares of Common Stock, at the option of the Company, on the terms, and
subject to the conditions, set forth in the Indenture.

 

In connection with the offering of the Initial Securities, the Company is
separately entering into convertible note hedge transactions and warrant
transactions with certain of the Initial Purchasers or their respective
affiliates (the “Call Spread Counterparties”), in each case pursuant to
convertible note hedge confirmations (the “Base Bond Hedge Confirmations”) and
warrant confirmations (the “Base Warrant Confirmations” and, the Base Warrant
Confirmations together with the Base Bond Hedge Confirmations, the “Base Call
Spread Confirmations”), each to be dated the date hereof, and in connection with
any exercise by the Initial Purchasers of their option to purchase any Option
Securities, the Company and the

 

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Call Spread Counterparties may enter into additional convertible note hedge
transactions and additional warrant transactions pursuant to additional
convertible note hedge confirmations (the “Additional Bond Hedge Confirmations”)
and additional warrant confirmations (the “Additional Warrant Confirmations”
and, the Additional Warrant Confirmations together with the Additional Bond
Hedge Confirmations, the “Additional Call Spread Confirmations”), each to be
dated the date on which the Initial Purchasers exercise their option to purchase
such Option Securities. We refer to the Base Call Spread Confirmations and the
Additional Call Spread Confirmations collectively herein as the “Call Spread
Confirmations.”

 

The Company understands that the Initial Purchasers propose to make an offering
of the Securities on the terms and in the manner set forth herein and agrees
that the Initial Purchasers may resell, subject to the conditions set forth
herein, all or a portion of the Securities to purchasers (“Subsequent
Purchasers”) at any time after this Agreement has been executed and delivered. 
The Securities are to be offered and sold through the Initial Purchasers without
being registered under the Securities Act of 1933, as amended (the “1933 Act”),
in reliance upon exemptions therefrom.  Pursuant to the terms of the Securities
and the Indenture, investors that acquire Securities may only resell or
otherwise transfer such Securities if such Securities are hereafter registered
under the 1933 Act or if an exemption from the registration requirements of the
1933 Act is available (including the exemption afforded by Rule 144A
(“Rule 144A”) of the rules and regulations promulgated under the 1933 Act (the
“1933 Act Regulations”) by the Securities and Exchange Commission (the
“Commission”)).

 

The Company has prepared and delivered to each Initial Purchaser copies of a
preliminary offering memorandum dated November 12, 2018 prior to the Applicable
Time (as defined below) (the “Preliminary Offering Memorandum”) and has prepared
and will deliver to each Initial Purchaser, on the date hereof or the next
succeeding day, copies of a final offering memorandum dated November 12, 2018
(the “Final Offering Memorandum”), each for use by such Initial Purchaser in
connection with its solicitation of purchases of, or offering of, the
Securities.  “Offering Memorandum” means, with respect to any date or time
referred to in this Agreement, the most recent offering memorandum (whether the
Preliminary Offering Memorandum or the Final Offering Memorandum, or any
amendment or supplement to either such document), including exhibits thereto and
any documents incorporated therein by reference, which has been prepared and
delivered by the Company to the Initial Purchasers, in the case of the
Preliminary Offering Memorandum prior to the Applicable Time, in connection with
their solicitation of purchases of, or offering of, the Securities.  The Company
will prepare a final term sheet reflecting the final terms of the Securities, in
the form set forth in Schedule B hereto (the “Final Term Sheet”), and will
deliver such Final Term Sheet to the Initial Purchasers prior to the Applicable
Time in connection with their solicitation of purchases of, or offering of, the
Securities.  The Company agrees that, unless it obtains the prior written
consent of the Representatives, it will not make any offer relating to the
Securities by any written materials other than the Offering Memorandum and the
Issuer Written Information. “Issuer Written Information” means (i) any writing
intended for general distribution to investors as evidenced by its being
specified in Schedule C hereto, including the Final Term Sheet, and (ii) any
“road show” that is a “written communication” within the meaning of the 1933
Act.  “General Disclosure Package” means the Preliminary Offering Memorandum and
any Issuer Written Information specified on Schedule C hereto and issued at or
prior to 10:30 P.M., New York City time, on November 12, 2018 or such other time
as agreed by the Company and Merrill Lynch (such date and time, the “Applicable
Time”).

 

All references in this Agreement to financial statements and schedules and other
information which is “contained,” “included” or “stated” in the Offering
Memorandum (or other references of like import) shall be deemed to mean and
include all such financial statements and schedules and other information which
are incorporated by reference in the Offering Memorandum; and all references in
this Agreement to amendments or supplements to the Offering Memorandum shall be
deemed to mean and

 

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include the filing of any document under the Securities Exchange Act of 1934
(the “1934 Act”) which is incorporated by reference in the Offering Memorandum.

 

SECTION 1.                            Representations and Warranties.

 

(a)                                 Representations and Warranties by the
Company.  The Company represents and warrants to each Initial Purchaser as of
the date hereof, the Applicable Time, the Closing Time (as defined below) and
any Date of Delivery (as defined below), and agrees with each Initial Purchaser,
as follows:

 

(i)                                     General Disclosure Package; Rule 144A
Eligibility.  The Company hereby confirms that it has authorized the use of the
General Disclosure Package, including the Preliminary Offering Memorandum and
the Final Term Sheet, and the Final Offering Memorandum in connection with the
offer and sale of the Securities by the Initial Purchasers.  The Securities are
eligible for resale pursuant to Rule 144A and will not be, at the Closing Time,
of the same class as securities listed on a national securities exchange
registered under Section 6 of the 1934 Act, or quoted in a U.S. automated
interdealer quotation system.

 

(ii)                                  No Registration Required; No General
Solicitation.  Subject to compliance by the Initial Purchasers with the
representations and warranties of the Initial Purchasers and the procedures set
forth in Section 6 hereof, it is not necessary in connection with the offer,
sale and delivery of the offered Securities to the Initial Purchasers and to
each Subsequent Purchaser in the manner contemplated by this Agreement, the
General Disclosure Package and the Final Offering Memorandum to register the
Securities under the 1933 Act or to qualify the Indenture under the Trust
Indenture Act of 1939, as amended (the “1939 Act”).  None of the Company, its
Affiliates or any person acting on its or any of their behalf (other than the
Initial Purchasers, as to whom the Company makes no representation) has engaged,
in connection with the offering of the offered Securities, in any form of
general solicitation or general advertising within the meaning of
Rule 502(c) under the 1933 Act Regulations.

 

(iii)                               Accurate Disclosure.  As of the Applicable
Time, neither (A) the General Disclosure Package nor (B) any Issuer Written
Information, when considered together with the General Disclosure Package,
included, includes or will include an untrue statement of a material fact or
omitted, omits or will omit 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.  The Final Offering Memorandum, as of its date, at the
Closing Time or at any Date of Delivery, did not, does not and will not contain
an untrue statement of a material fact or omit 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.  The documents
incorporated or deemed to be incorporated by reference in the General Disclosure
Package and the Final Offering Memorandum, when such documents incorporated by
reference were filed with the Commission, when read together with the other
information in the General Disclosure Package or the Final Offering Memorandum,
as the case may be, did not, does not and will not contain an untrue statement
of a material fact or omit 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.

 

The representations and warranties in this subsection shall not apply to
statements in or omissions from the General Disclosure Package or the Final
Offering Memorandum made in reliance upon and in conformity with written
information furnished to the Company by any Initial Purchaser through Merrill
Lynch expressly for use therein.  For purposes of this Agreement, the only
information so furnished shall be the names of the Initial Purchasers on the
cover page and under the heading “Plan of Distribution,” the information in the
first paragraph under the heading

 

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“Plan of Distribution—Commissions and Discounts,” and the third sentence under
the heading “Plan of Distribution—New Issue of Notes” (collectively, the
“Initial Purchaser Information”).

 

(iv)                              Incorporation of Documents by Reference.  The
documents incorporated or deemed to be incorporated by reference in the Offering
Memorandum, when they became effective or at the time they were or hereafter are
filed with the Commission, complied and will comply in all material respects
with the requirements of the 1934 Act and the rules and regulations of the
Commission under the 1934 Act (the “1934 Act Regulations”).

 

(v)                                 Independent Accountants.  The accountants
who certified the financial statements and supporting schedules included in the
Offering Memorandum are independent public accountants as required by the 1933
Act, the 1933 Act Regulations, the 1934 Act, the 1934 Act Regulations and the
Public Company Accounting Oversight Board.

 

(vi)                              Financial Statements.  The financial
statements included or incorporated by reference in the General Disclosure
Package and the Final Offering Memorandum, together with the related schedules
and notes, present fairly in all material respects the financial position of the
Company and its consolidated subsidiaries at the dates indicated and the
statement of operations, stockholders’ equity and cash flows of the Company and
its consolidated subsidiaries for the periods specified; said financial
statements have been prepared in conformity with U.S. generally accepted
accounting principles (“GAAP”) applied on a consistent basis throughout the
periods involved.  The supporting schedules, if any, present fairly in all
material respects in accordance with GAAP the information required to be stated
therein.  The selected financial data and the summary financial information
included in the Offering Memorandum present fairly in all material respects the
information shown therein and have been compiled on a basis consistent with that
of the audited financial statements included therein.  Except as included
therein, no historical or pro forma financial statements or supporting schedules
are required to be included or incorporated by reference in the Offering
Memorandum under the 1933 Act or the 1933 Act Regulations.  The interactive data
in eXtensible Business Reporting Language or incorporated by reference in the
General Disclosure Package and the Final Offering Memorandum fairly presents the
information called for in all material respects and has been prepared in
accordance with the Commission’s rules and guidelines applicable thereto.

 

(vii)                           No Material Adverse Change in Business.  Except
as otherwise stated therein, since the respective dates as of which information
is given in the General Disclosure Package or the Final Offering Memorandum,
(A) there has been no material adverse change in the condition, financial or
otherwise, or in the earnings, business affairs or business prospects of the
Company and its subsidiaries considered as one enterprise, whether or not
arising in the ordinary course of business (a “Material Adverse Effect”),
(B) there have been no transactions entered into by the Company or any of its
subsidiaries, other than those in the ordinary course of business, which are
material with respect to the Company and its subsidiaries considered as one
enterprise, and (C) except for regular quarterly dividends on the Company’s
Common Stock, in amounts per share that are consistent with past practice, there
has been no dividend or distribution of any kind declared, paid or made by the
Company on any class of its capital stock.

 

(viii)                        Good Standing of the Company.  The Company has
been duly organized and is validly existing as a corporation in good standing
under the laws of the General Corporation Law of the State of Delaware and has
corporate power and authority to own, lease and operate its properties and to
conduct its business as described in the General Disclosure Package and the
Final Offering Memorandum and to enter into and perform its obligations under
this Agreement, the Securities, the Indenture and the Call Spread Confirmations;
and the Company is duly

 

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qualified as a foreign corporation to transact business and is in good standing
in each other jurisdiction in which such qualification is required, whether by
reason of the ownership or leasing of property or the conduct of business,
except where the failure so to qualify or to be in good standing would not
result in a Material Adverse Effect.

 

(ix)                              Good Standing of Subsidiaries.  Each
“significant subsidiary” of the Company (as such term is defined in Rule 1-02 of
Regulation S-X) (each, a “Subsidiary” and, collectively, the “Subsidiaries”) has
been duly organized and is validly existing in good standing under the laws of
the jurisdiction of its incorporation or organization, has corporate or similar
power and authority to own, lease and operate its properties and to conduct its
business as described in the General Disclosure Package and the Final Offering
Memorandum and is duly qualified to transact business and is in good standing in
each jurisdiction in which such qualification is required, whether by reason of
the ownership or leasing of property or the conduct of business, except where
the failure to so qualify or to be in good standing would not result in a
Material Adverse Effect.  Except as otherwise disclosed in the General
Disclosure Package and the Final Offering Memorandum, all of the issued and
outstanding capital stock of each Subsidiary has been duly authorized and
validly issued, is fully paid and non-assessable and is owned by the Company,
directly or through subsidiaries, free and clear of any security interest,
mortgage, pledge, lien, encumbrance, claim or equity.  None of the outstanding
shares of capital stock of any Subsidiary was issued in violation of the
preemptive or similar rights of any securityholder of such Subsidiary.

 

(x)                                 Capitalization.  The authorized, issued and
outstanding shares of capital stock of the Company are as set forth in the
General Disclosure Package and the Final Offering Memorandum in the column
entitled “Actual” under the caption “Capitalization” (except for subsequent
issuances, if any, pursuant to this Agreement, pursuant to reservations,
agreements, employee stock purchase plans, equity incentive plans or employee
benefit plans referred to in the General Disclosure Package and the Final
Offering Memorandum or pursuant to the exercise of convertible securities or
options referred to in the General Disclosure Package and the Final Offering
Memorandum).

 

(xi)                              Authorization of Agreement.  This Agreement
has been duly authorized, executed and delivered by the Company.

 

(xii)                           Authorization of the Indenture.  The Indenture
has been duly authorized by the Company and, when duly executed and delivered by
the Company and the Trustee, will constitute a valid and binding agreement of
the Company, enforceable against the Company in accordance with its terms,
except as the enforcement thereof may be limited by bankruptcy, insolvency
(including, without limitation, all laws relating to fraudulent transfers),
reorganization, moratorium or similar laws affecting enforcement of creditors’
rights generally and except as enforcement thereof is subject to general
principles of equity (regardless of whether enforcement is considered in a
proceeding in equity or at law).

 

(xiii)                        Authorization of the Call Spread Confirmations. 
The Base Call Spread Confirmations have been duly authorized, executed and
delivered by the Company and are enforceable against the Company in accordance
with their terms, and any Additional Call Spread Confirmations will, on or prior
to the date such Additional Call Spread Confirmations are entered into, have
been duly authorized, executed and delivered by the Company and will be
enforceable against the Company in accordance with their terms, except, in each
case, as the enforcement thereof may be limited by bankruptcy, insolvency
(including, without limitation, all laws relating to fraudulent transfers),
reorganization, moratorium or similar laws affecting enforcement of

 

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creditors’ rights generally and except as enforcement thereof is subject to
general principles of equity (regardless of whether enforcement is considered in
a proceeding in equity or at law).

 

(xiv)                       Authorization of the Securities and the Common
Stock.  The Securities have been duly authorized and, at the Closing Time or the
relevant Date of Delivery, as the case may be, will have been duly executed by
the Company and, when authenticated, issued and delivered in the manner provided
for in the Indenture and delivered against payment of the purchase price
therefor as provided in this Agreement, will constitute valid and binding
obligations of the Company, enforceable against the Company in accordance with
their terms, except as the enforcement thereof may be limited by bankruptcy,
insolvency (including, without limitation, all laws relating to fraudulent
transfers), reorganization, moratorium or similar laws affecting enforcement of
creditors’ rights generally and except as enforcement thereof is subject to
general principles of equity (regardless of whether enforcement is considered in
a proceeding in equity or at law), and will be in the form contemplated by, and
entitled to the benefits of, the Indenture.  The maximum number of shares of
Common Stock issuable upon conversion of the Securities (including the maximum
number of additional shares of Common Stock by which the Conversion Rate (as
such term is defined in the Indenture) may be increased upon conversion in
connection with a Make-Whole Fundamental Change (as such term is defined in the
Indenture) and assuming (x) a single holder of Securities converted all of the
Securities, (y) the Company elects, upon such conversion of the Securities, to
deliver solely shares of Common Stock, other than cash in lieu of any fractional
shares, in settlement of such conversion and (z) the Initial Purchasers exercise
their option to purchase the Option Securities in full) (the “Maximum Number of
Underlying Securities”) have been duly authorized and reserved for issuance upon
such conversion by all necessary corporate action and such Maximum Number of
Underlying Securities, when issued upon such conversion, will be validly issued
and will be fully paid and non-assessable; no holder of such shares will be
subject to personal liability by reason of being such a holder; and the issuance
of such shares upon such conversion will not be subject to the preemptive or
other similar rights of any securityholder of the Company.  The maximum number
of shares of Common Stock issuable upon exercise and settlement or termination
of the warrants issued pursuant to the Base Warrant Confirmations and any
Additional Warrant Confirmations (the “Warrant Securities”) have been duly
authorized and reserved for issuance by all necessary corporate action and such
Warrant Securities, when issued upon exercise and settlement or termination of
such warrants in accordance with the terms of such warrants, will be validly
issued and will be fully paid and non-assessable; no holder of such shares will
be subject to personal liability by reason of being such a holder; and the
issuance of such Warrant Securities upon such conversion will not be subject to
the preemptive or other similar rights of any securityholder of the Company.

 

(xv)                          Description of the Securities, the Common Stock
and the Indenture.  The Securities and the Indenture will conform in all
material respects to the respective statements relating thereto contained in the
General Disclosure Package and the Final Offering Memorandum.  The Common Stock
conforms in all material respects to all statements relating thereto contained
or incorporated by reference in the General Disclosure Package and the Final
Offering Memorandum and such description conforms in all material respects to
the rights set forth in the instruments defining the same.

 

(xvi)                       Absence of Violations, Defaults and Conflicts. 
Neither the Company nor any of its subsidiaries is (A) in violation of its
charter, by-laws or similar organizational document, (B) in default in the
performance or observance of any obligation, agreement, covenant or condition
contained in any contract, indenture, mortgage, deed of trust, loan or credit
agreement, note, lease or other agreement or instrument to which the Company or
any of its subsidiaries is a party or by

 

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which it or any of them may be bound or to which any of the properties or assets
of the Company or any subsidiary is subject (collectively, “Agreements and
Instruments”), except for such defaults that would not, singly or in the
aggregate, result in a Material Adverse Effect, or (C) in violation of any law,
statute, rule, regulation, judgment, order, writ or decree of any arbitrator,
court, governmental body, regulatory body, administrative agency or other
authority, body or agency having jurisdiction over the Company or any of its
subsidiaries or any of their respective properties, assets or operations (each,
a “Governmental Entity”), except for such violations that would not, singly or
in the aggregate, result in a Material Adverse Effect.  The execution, delivery
and performance of this Agreement, the Securities, the Indenture and the Call
Spread Confirmations and the consummation of the transactions contemplated
herein and therein, and in the General Disclosure Package and the Final Offering
Memorandum (including the issuance and sale of the Securities (including the
issuance of any shares of Common Stock upon conversion thereof) and the use of
the proceeds from the sale of the Securities as described therein under the
caption “Use of Proceeds”), the issuance of any Warrant Securities and
compliance by the Company with its obligations hereunder and thereunder have
been duly authorized by all necessary corporate action and do not and will not,
whether with or without the giving of notice or passage of time or both,
conflict with or constitute a breach of, or default or Repayment Event (as
defined below) under, or result in the creation or imposition of any lien,
charge or encumbrance upon any properties or assets of the Company or any
subsidiary pursuant to, the Agreements and Instruments and except for such
conflicts, breaches, defaults or Repayment Events or liens, charges or
encumbrances that would not, singly or in the aggregate, result in a Material
Adverse Effect), nor will such action result in any violation of (a) the
provisions of the charter, by-laws or similar organizational document of the
Company or any of its subsidiaries or (b) any law, statute, rule, regulation,
judgment, order, writ or decree of any Governmental Entity,  except, in the case
of (b), for such violations that would not, singly or in the aggregate, result
in a Material Adverse Effect.  As used herein, a “Repayment Event” means any
event or condition that gives the holder of any note, debenture or other
evidence of indebtedness (or any person acting on such holder’s behalf) the
right to require the repurchase, redemption or repayment of all or a portion of
such indebtedness by the Company or any of its subsidiaries.

 

(xvii)                    Absence of Labor Dispute.  No labor dispute with the
employees of the Company or any of its subsidiaries exists or, to the knowledge
of the Company, is imminent, and the Company is not aware of any existing or
imminent labor disturbance by the employees of any of its or any subsidiary’s
principal suppliers, manufacturers, customers or contractors, which, in either
case, would result in a Material Adverse Effect.

 

(xviii)                 Absence of Proceedings.  Except as disclosed in the
General Disclosure Package and the Final Offering Memorandum, there is no
action, suit, proceeding, inquiry or investigation before or brought by any
Governmental Entity now pending or, to the knowledge of the Company, threatened,
against or affecting the Company or any of its subsidiaries, which might result
in a Material Adverse Effect, or which might materially and adversely affect
their respective properties or assets or the consummation of the transactions
contemplated in this Agreement, the Securities, the Indenture and the Call
Spread Confirmations or the performance by the Company of its obligations
hereunder and thereunder; and the aggregate of all pending legal or governmental
proceedings to which the Company or any such subsidiary is a party or of which
any of their respective properties or assets is the subject which are not
described in the General Disclosure Package and the Final Offering Memorandum,
including ordinary routine litigation incidental to the business, could not
result in a Material Adverse Effect.

 

(xix)                       Absence of Further Requirements.  No filing with, or
authorization, approval, consent, license, order, registration, qualification or
decree of, any Governmental Entity is

 

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necessary or required for the performance by the Company of its obligations
hereunder, in connection with the offering, issuance or sale of the Securities
hereunder (including the issuance of any shares of Common Stock upon conversion
thereof), the issuance of any Warrant Securities or the consummation of the
transactions contemplated by this Agreement (including the entry into and
performance by the Company of its obligations under the Call Spread
Confirmations) or for the due execution, delivery and performance of the
Indenture, the Securities and the Call Spread Confirmations, except such as have
been already obtained and excluding any filing, authorization, approval,
consent, license, order, registration, qualification or decree the failure of
which to obtain or make would not have a Material Adverse Effect.

 

(xx)                          Possession of Licenses and Permits.  The Company
and its subsidiaries possess such permits, licenses, approvals, consents and
other authorizations (collectively, “Governmental Licenses”) issued by the
appropriate Governmental Entities necessary to conduct the business now operated
by them, except where the failure so to possess would not, singly or in the
aggregate, result in a Material Adverse Effect.  The Company and its
subsidiaries are in compliance with the terms and conditions of all Governmental
Licenses, except where the failure so to comply would not, singly or in the
aggregate, result in a Material Adverse Effect.  All of the Governmental
Licenses are valid and in full force and effect, except when the invalidity of
such Governmental Licenses or the failure of such Governmental Licenses to be in
full force and effect would not, singly or in the aggregate, result in a
Material Adverse Effect.  Neither the Company nor any of its subsidiaries has
received any notice of proceedings relating to the revocation or modification of
any Governmental Licenses which, singly or in the aggregate, if the subject of
an unfavorable decision, ruling or finding, would result in a Material Adverse
Effect.

 

(xxi)                       Title to Property.  The Company and its subsidiaries
have good and marketable title to all real property owned by them and good title
to all other properties owned by them, in each case, free and clear of all
mortgages, pledges, liens, security interests, claims, restrictions or
encumbrances of any kind except such as (A) are described in the General
Disclosure Package and the Final Offering Memorandum or (B) do not, singly or in
the aggregate, result in a Material Adverse Effect; and all of the leases and
subleases material to the business of the Company and its subsidiaries,
considered as one enterprise, and under which the Company or any of its
subsidiaries holds properties described in the General Disclosure Package and
the Final Offering Memorandum, are in full force and effect, except as would not
reasonably be expected to result in a Material Adverse Effect, and neither the
Company nor any such subsidiary has any notice of any material claim of any sort
that has been asserted by anyone adverse to the rights of the Company or any
subsidiary under any of the leases or subleases mentioned above, or affecting or
questioning the rights of the Company or such subsidiary to the continued
possession of the leased or subleased premises under any such lease or sublease,
except as would not reasonably be expected to result in a Material Adverse
Effect.

 

(xxii)                    Possession of Intellectual Property.  Except as would
not, singly or in the aggregate, result in a Material Adverse Effect, the
Company and its subsidiaries own or possess, or can acquire on reasonable terms,
adequate 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,
trade names or other intellectual property (collectively, “Intellectual
Property”) necessary to carry on the business now operated by them, and neither
the Company nor any of its subsidiaries has received any notice of any
infringement of or conflict with asserted rights of others with respect to any
Intellectual Property that would render any Intellectual Property invalid or
inadequate to protect the interest of the Company or any of its subsidiaries
therein, and which infringement or

 

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conflict (if the subject of any unfavorable decision, ruling or finding) or
invalidity or inadequacy, singly or in the aggregate, would result in a Material
Adverse Effect.

 

(xxiii)                 Environmental Laws.  Except as described in the General
Disclosure Package and the Final Offering Memorandum or would not, singly or in
the aggregate, result in a Material Adverse Effect, (A) neither the Company nor
any of its subsidiaries is in violation of any federal, state, local or foreign
statute, law, rule, regulation, ordinance, code, policy or rule of common law or
any judicial or administrative interpretation thereof, including any judicial or
administrative order, consent, decree or judgment, relating to pollution or
protection of human health, the environment (including, without limitation,
ambient air, surface water, groundwater, land surface or subsurface strata) or
wildlife, including, without limitation, laws and regulations relating to the
release or threatened release of chemicals, pollutants, contaminants, wastes,
toxic substances, hazardous substances, petroleum or petroleum products,
asbestos-containing materials or mold (collectively, “Hazardous Materials”) or
to the manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Materials (collectively, “Environmental
Laws”), (B) the Company and its subsidiaries have all permits, authorizations
and approvals required under any applicable Environmental Laws and are each in
compliance with their requirements, (C) there are no pending or threatened
administrative, regulatory or judicial actions, suits, demands, demand letters,
claims, liens, notices of noncompliance or violation, investigation or
proceedings relating to any Environmental Law against the Company or any of its
subsidiaries and (D) there are no events or circumstances that would reasonably
be expected to form the basis of an order for clean-up or remediation, or an
action, suit or proceeding by any private party or Governmental Entity, against
or affecting the Company or any of its subsidiaries relating to Hazardous
Materials or any Environmental Laws.

 

(xxiv)                Accounting Controls and Disclosure Controls.  The Company
and each of its subsidiaries maintain effective internal control over financial
reporting (as defined under Rule 13-a15 and 15d-15 under the 1934 Act
Regulations) and a system of internal accounting controls sufficient to provide
reasonable assurances that (A) transactions are executed in accordance with
management’s general or specific authorization; (B) transactions are recorded as
necessary to permit preparation of financial statements in conformity with GAAP
and to maintain accountability for assets; (C) access to assets is permitted
only in accordance with management’s general or specific authorization; (D) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences; and (E) the interactive data in eXtensible Business Reporting
Language or incorporated by reference in the General Disclosure Package and the
Final Offering Memorandum fairly presents the information called for in all
material respects and is prepared in accordance with the Commission’s rules and
guidelines applicable thereto. Except as described in the General Disclosure
Package and the Final Offering Memorandum, since the end of the Company’s most
recent audited fiscal year, there has been (1) no material weakness in the
Company’s internal control over financial reporting (whether or not remediated)
and (2) no change in the Company’s internal control over financial reporting
that has materially affected, or is reasonably likely to materially affect, the
Company’s internal control over financial reporting. The Company and each of its
subsidiaries maintain an effective system of disclosure controls and procedures
(as defined in Rule 13a-15 and Rule 15d-15 under the 1934 Act Regulations) that
are designed to ensure that information required to be disclosed by the Company
in the reports that it files or submits under the 1934 Act is recorded,
processed, summarized and reported, within the time periods specified in the
Commission’s rules and forms, and is accumulated and communicated to the
Company’s management, including its principal executive officer or officers and
principal financial officer or officers, as appropriate, to allow timely
decisions regarding disclosure.

 

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(xxv)                   Compliance with the Sarbanes-Oxley Act.  There is and
has been no failure on the part of the Company or any of the Company’s directors
or officers, in their capacities as such, to comply in all material respects
with any provision of the Sarbanes-Oxley Act of 2002 and the rules and
regulations promulgated in connection therewith, including Section 402 related
to loans and Sections 302 and 906 related to certifications.

 

(xxvi)                Payment of Taxes.  All United States federal income tax
returns of the Company and its subsidiaries required by law to be filed have
been filed and all material taxes shown by such returns or otherwise assessed,
which are due and payable, have been paid, except assessments against which
appeals have been or will be promptly taken and as to which adequate reserves
have been provided. The Company and its subsidiaries have filed all other tax
returns that are required to have been filed by them pursuant to applicable
foreign, state, local or other law except insofar as the failure to file such
returns would not result in a Material Adverse Effect, and has paid all taxes
due pursuant to such returns or pursuant to any assessment received by the
Company and its subsidiaries, except for such taxes, if any, as are being
contested in good faith and as to which adequate reserves have been established
by the Company or where the failure to pay such taxes would not have a Material
Adverse Effect. The charges, accruals and reserves on the books of the Company
in respect of any income and corporation tax liability for any years not finally
determined are adequate to meet any assessments or re-assessments for additional
income tax for any years not finally determined, except to the extent of any
inadequacy that would not result in a Material Adverse Effect.

 

(xxvii)             Insurance.  The Company and its subsidiaries carry or are
entitled to the benefits of insurance, with financially sound and reputable
insurers, in such amounts and covering such risks as the Company and its
subsidiaries reasonably deem sufficient, and all such insurance is in full force
and effect.  The Company has no reason to believe that it or any of its
subsidiaries will not be able (A) to renew its existing insurance coverage as
and when such policies expire or (B) to obtain comparable coverage from similar
institutions as may be necessary or appropriate to conduct its business as now
conducted and at a cost that would not result in a Material Adverse Effect.

 

(xxviii)          Investment Company Act.  The Company is not required, and upon
the issuance and sale of the Securities as herein contemplated and the
application of the net proceeds therefrom as described in the General Disclosure
Package and the Final Offering Memorandum will not be required, to register as
an “investment company” under the Investment Company Act of 1940, as amended
(the “1940 Act”).

 

(xxix)                Absence of Manipulation.  Neither the Company nor any
affiliate of the Company has taken, nor will the Company or any affiliate take,
directly or indirectly, any action which is designed, or would be expected, to
cause or result in, or which constitutes, the stabilization or manipulation of
the price of any security of the Company to facilitate the sale or resale of the
Securities or to result in a violation of Regulation M under the 1934 Act.

 

(xxx)                   Foreign Corrupt Practices Act.  None of the Company, any
of its subsidiaries or, to the knowledge of the Company, any director, officer,
agent, employee, affiliate or other person acting on behalf of the Company or
any of its subsidiaries is aware of or has taken any action, directly or
indirectly, that would result in a violation by such persons of the Foreign
Corrupt Practices Act of 1977, as amended, and the rules and regulations
thereunder (the “FCPA”), including, without limitation, making use of the mails
or any means or instrumentality of interstate commerce corruptly in furtherance
of an offer, payment, promise to pay or authorization of the payment of any
money, or other property, gift, promise to give, or

 

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authorization of the giving of anything of value to any “foreign official” (as
such term is defined in the FCPA) or any foreign political party or official
thereof or any candidate for foreign political office, in contravention of the
FCPA and the Company and, to the knowledge of the Company, its affiliates have
conducted their businesses in compliance with the FCPA and have instituted and
maintain policies and procedures designed to ensure, and which are reasonably
expected to continue to ensure, continued compliance therewith.

 

(xxxi)                Money Laundering Laws.  The operations of the Company and
its subsidiaries are and have been conducted at all times in compliance with
applicable financial recordkeeping and reporting requirements of the Currency
and Foreign Transactions Reporting Act of 1970, as amended, the money laundering
statutes of all jurisdictions, the rules and regulations thereunder and any
related or similar rules, regulations or guidelines, issued, administered or
enforced by any Governmental Entity (collectively, the “Money Laundering Laws”);
and no action, suit or proceeding by or before any Governmental Entity involving
the Company or any of its subsidiaries with respect to the Money Laundering Laws
is pending or, to the knowledge of the Company, threatened.

 

(xxxii)             OFAC.  None of the Company, any of its subsidiaries or, to
the knowledge of the Company, any director, officer, agent, employee, affiliate
or representative of the Company or any of its subsidiaries is an individual or
entity (“Person”) currently the subject or target of any  sanctions administered
or enforced by the United States Government, including, without limitation, the
U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”), the
United Nations Security Council (“UNSC”), the European Union, Her Majesty’s
Treasury (“HMT”), or other relevant sanctions authority (collectively,
“Sanctions”). Except as permitted by U.S. and other applicable law, the Company
is not located, organized or resident in a country or territory that is the
subject of Sanctions; and the Company will not directly or indirectly use the
proceeds of the sale of the Securities, or lend, contribute or otherwise make
available such proceeds to any subsidiaries, joint venture partners or other
Person, to fund any activities of or business with any Person, or in any country
or territory, that, at the time of such funding, is the subject of Sanctions or
in any other manner that will result in a violation by any Person (including any
Person participating in the transaction, whether as underwriter, advisor,
investor or otherwise) of Sanctions.

 

(xxxiii)          Lending Relationship.  Except as disclosed in the General
Disclosure Package and the Final Offering Memorandum, the Company (i) does not
have any material lending or other relationship with any bank or lending
affiliate of any Initial Purchaser and (ii) does not intend to use any of the
proceeds from the sale of the Securities to repay any outstanding debt owed to
any affiliate of any Initial Purchaser.

 

(xxxiv)         Statistical and Market-Related Data.  Any statistical and
market-related data included in the General Disclosure Package or the Final
Offering Memorandum are based on or derived from sources that the Company
believes, after reasonable inquiry, to be reliable and accurate and, to the
extent required, the Company has obtained the written consent to the use of such
data from such sources.

 

(xxxv)            Cybersecurity.  Except as disclosed in the General Disclosure
Package and the Final Offering Memorandum, (A) to the knowledge of the Company,
there has been no security breach or incident, unauthorized access or
disclosure, or other compromise of or relating to the Company or its
subsidiaries information technology and computer systems, networks, hardware,
software, data and databases (including the data and information of their
respective customers, employees, suppliers, vendors and any third party data
maintained, processed or stored by the

 

11

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Company and its subsidiaries, and any such data processed or stored by third
parties on behalf of the Company and its subsidiaries), equipment or technology
(collectively, “IT Systems and Data”) that would reasonably be expected to have
a Material Adverse Effect, (B) neither the Company nor its subsidiaries have
been notified of, and have no knowledge of any event or condition that would
result in, any security breach or incident, unauthorized access or disclosure or
other compromise to their IT Systems and Data that would reasonably be expected
to have a Material Adverse Effect and (C) the Company and its subsidiaries have
implemented appropriate controls, policies, procedures, and technological
safeguards to maintain and protect the integrity, continuous operation,
redundancy and security of their IT Systems and Data reasonably consistent with
industry standards and practices, or as required by applicable regulatory
standards.  The Company and its subsidiaries are presently in material
compliance with all applicable laws or statutes and all judgments, orders,
rules and regulations of any court or arbitrator or governmental or regulatory
authority, internal policies and contractual obligations relating to the privacy
and security of IT Systems and Data and to the protection of such IT Systems and
Data from unauthorized use, access, misappropriation or modification, except for
such noncompliance as would not reasonably be expected to have a Material
Adverse Effect.

 

(b)                                 Officer’s Certificates.  Any certificate
signed by any officer of the Company or any of its subsidiaries delivered to the
Representative or to counsel for the Initial Purchasers shall be deemed a
representation and warranty by the Company to each Initial Purchaser as to the
matters covered thereby.

 

SECTION 2.                            Sale and Delivery to Initial Purchasers;
Closing.

 

(a)                                 Initial Securities.  On the basis of the
representations and warranties herein contained and subject to the terms and
conditions herein set forth, the Company agrees to sell to each Initial
Purchaser, severally and not jointly, and each Initial Purchaser, severally and
not jointly, agrees to purchase from the Company, at the price set forth in
Schedule A, the aggregate principal amount of Initial Securities set forth in
Schedule A, plus any additional principal amount of Initial Securities which
such Initial Purchaser may become obligated to purchase pursuant to the
provisions of Section 11 hereof, subject to such adjustments as Merrill Lynch in
its discretion shall make to ensure that any sales or purchases are in
authorized denominations.

 

(b)                                 Option Securities.  In addition, on the
basis of the representations and warranties herein contained and subject to the
terms and conditions herein set forth, the Company hereby grants an option to
the Initial Purchasers, severally and not jointly, to purchase the Option
Securities, at the price set forth in Schedule A.  The option hereby granted may
be exercised for 30 days after the date hereof and may be exercised in whole or
in part from time to time only for the purpose of covering overallotments made
in connection with the offering and distribution of the Initial Securities upon
notice by the Representative to the Company setting forth the amount of Option
Securities as to which the several Initial Purchasers are then exercising the
option and the time and date of payment and delivery for such Option
Securities.  Any such time and date of delivery (a “Date of Delivery”) shall be
determined by the Representative, but shall not be later than seven full
business days after the exercise of said option, nor in any event prior to the
Closing Time.  If the option is exercised as to all or any portion of the Option
Securities, each of the Initial Purchasers, acting severally and not jointly,
will purchase that proportion of the total principal amount of Option Securities
then being purchased which the number of Initial Securities set forth in
Schedule A opposite the name of such Initial Purchaser bears to the total
principal amount of Initial Securities, subject in each case to such adjustments
as Merrill Lynch in its discretion shall make to ensure that any sales or
purchases are in authorized denominations.

 

(c)                                  Payment.  Payment of the purchase price
for, and delivery of certificates or security entitlements for, the Initial
Securities shall be made at the offices of Davis Polk & Wardwell LLP, 450

 

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Lexington Avenue, New York, New York 10017, or at such other place as shall be
agreed upon by the Representative and the Company, at 9:00 A.M. (New York City
time) on the second (third, if the pricing occurs after 4:30 P.M. (New York City
time) on any given day) business day after the date hereof (unless postponed in
accordance with the provisions of Section 11), or such other time not later than
ten business days after such date as shall be agreed upon by the Representative
and the Company (such time and date of payment and delivery being herein called
“Closing Time”).

 

In addition, in the event that any or all of the Option Securities are purchased
by the Initial Purchasers, payment of the purchase price for, and delivery of
certificates or security entitlements for, such Option Securities shall be made
at the above-mentioned offices, or at such other place as shall be agreed upon
by the Representative and the Company, on each Date of Delivery as specified in
the notice from Merrill Lynch to the Company.

 

Payment shall be made to the Company by wire transfer of immediately available
funds to a bank account designated by the Company, against delivery to the
Representative for the respective accounts of the Initial Purchasers of
certificates or security entitlements for the Securities to be purchased by
them.  It is understood that each Initial Purchaser has authorized the
Representative, for its account, to accept delivery of, receipt for, and make
payment of the purchase price for, the Initial Securities and the Option
Securities, if any, which it has agreed to purchase.  Merrill Lynch,
individually and not as representative of the Initial Purchasers, may (but shall
not be obligated to) make payment of the purchase price for the Initial
Securities or the Option Securities, if any, to be purchased by any Initial
Purchaser whose funds have not been received by the Closing Time or the relevant
Date of Delivery, as the case may be, but such payment shall not relieve such
Initial Purchaser from its obligations hereunder.

 

SECTION 3.                            Covenants of the Company.  The Company
covenants with each Initial Purchaser as follows:

 

(a)                                 Delivery of Offering Memorandum.  The
Company has delivered to each Initial Purchaser, without charge, as many copies
of the Preliminary Offering Memorandum (as amended or supplemented) thereto and
documents incorporated by reference therein as such Initial Purchaser reasonably
requested, and the Company hereby consents to the use of such copies.  The
Company will furnish to each Initial Purchaser, without charge, such number of
copies of the Final Offering Memorandum thereto and documents incorporated by
reference therein as such Initial Purchaser may reasonably request.

 

(b)                                 Notice and Effect of Material Events.  If at
any time prior to the completion of resales of the Securities by the Initial
Purchasers, any event shall occur or condition shall exist as a result of which
it is necessary, in the opinion of counsel for the Initial Purchasers or for the
Company, to amend or supplement the General Disclosure Package or the Final
Offering Memorandum in order that the General Disclosure Package or the Final
Offering Memorandum, as the case may be, will not include any untrue statement
of a material fact or omit to state a material fact necessary in order to make
the statements therein not misleading in the light of the circumstances existing
at the time it is delivered to a Subsequent Purchaser, the Company will promptly
(A) give the Representative notice of such event and (B) prepare any amendment
or supplement as may be necessary to correct such statement or omission and, a
reasonable amount of time prior to any proposed use or distribution, furnish the
Representative with copies of any such amendment or supplement; provided that
the Company shall not use or distribute any such amendment or supplement to
which the Representative or counsel for the Initial Purchasers shall object. 
The Company will furnish to the Initial Purchasers such number of copies of such
amendment or supplement as the Initial Purchasers may reasonably request.

 

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(c)                                  Reporting Requirements.  Until the
completion of resales of the Securities by the Initial Purchasers, the Company
will file all documents required to be filed with the Commission pursuant to the
1934 Act within the time periods required by the 1934 Act and the 1934 Act
Regulations. The Company will give the Representative notice of its intention to
make any such filing from the Applicable Time to the Closing Time and will
furnish the Representative with copies of any such documents a reasonable amount
of time prior to such proposed filing, as the case may be, and will not file or
use any such document to which the Representative or counsel for the Initial
Purchasers shall reasonably object.

 

(d)                                 Blue Sky Qualifications.  The Company will
use its commercially reasonable efforts, in cooperation with the Initial
Purchasers, to qualify the Securities for offering and sale under the applicable
securities laws of such states and other jurisdictions (domestic or foreign) as
the Representative may designate and to maintain such qualifications in effect
so long as required to complete the distribution of the Securities; provided,
however, that the Company shall not be obligated to file any general consent to
service of process or to qualify as a foreign corporation or as a dealer in
securities in any jurisdiction in which it is not so qualified or to subject
itself to taxation in respect of doing business in any jurisdiction in which it
is not otherwise so subject.

 

(e)                                  Use of Proceeds.  The Company will use the
net proceeds received by it from the sale of the Securities in the manner
specified in the General Disclosure Package and the Final Offering Memorandum
under “Use of Proceeds.”

 

(f)                                   DTCC.  The Company will cooperate with the
Initial Purchasers and use its commercially reasonable efforts to permit the
offered Securities to be eligible for clearance and settlement through the
facilities of The Depository Trust & Clearing Corporation (“DTCC”).

 

(g)                                  Reservation; Listing.  The Company will use
its commercially reasonable efforts to reserve and keep available at all times,
free of preemptive or other similar rights, a number of shares of Common Stock
equal to the Maximum Number of Underlying Securities and the Warrant Securities.
The Company will use its commercially reasonable efforts to effect and maintain
the listing of the Maximum Number of Underlying Securities and the Warrant
Securities on the New York Stock Exchange.

 

(h)                                 Restriction on Sale of Securities.  During a
period of 90 days from the date of the Final Offering Memorandum (the “Lock-Up
Period”), the Company will not, without the prior written consent of Merrill
Lynch, (i) directly or indirectly, 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 or otherwise transfer or dispose
of any shares of Common Stock or any securities convertible into or exercisable
or exchangeable for Common Stock or file or confidentially submit any
registration statement under the 1933 Act with respect to any of the foregoing
or (ii) enter into any swap or any other agreement or any transaction that
transfers, in whole or in part, directly or indirectly, the economic consequence
of ownership of the Common Stock, whether any such swap or transaction described
in clause (i) or (ii) above is to be settled by delivery of Common Stock or
other securities, in cash or otherwise.  The foregoing sentence shall not apply
to (A) the Securities to be sold hereunder and any shares of Common Stock issued
upon conversion thereof, (B) any shares of Common Stock issued by the Company
upon the settlement, vesting or exercise of an option, stock appreciation right,
restricted stock unit, restricted stock award, performance share award or
warrant or the conversion of a security outstanding on the date hereof and
referred to in the General Disclosure Package and the Final Offering Memorandum,
(C) any shares of Common Stock issued or options to purchase Common Stock or
other equity-based awards granted pursuant to existing employee benefit plans or
equity incentive plans of the Company referred to in the General Disclosure
Package and the Final Offering Memorandum, (D) any shares of Common Stock issued
pursuant to any non-employee director stock plan, deferred compensation plan,
employee stock purchase plan or dividend reinvestment plan referred to in the
General Disclosure Package and the Final

 

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Offering Memorandum, (E) any shares of Common Stock or any securities
convertible into or exercisable or exchangeable for Common Stock issued in
connection with acquisitions, joint ventures and similar types of arrangements
of up to 5% of outstanding Common Stock in aggregate at the time of this
Agreement, as long as the recipients of such securities also agree not to sell
or transfer those securities without the prior written consent of Merrill Lynch
during the Lock-Up Period, (F) the establishment of a trading plan pursuant to
Rule 10b5-1 under the 1934 Act, provided that no public announcement or filing
is voluntarily made or required regarding such plan during the Lock-Up Period,
(G) the entry into the Warrant Confirmations or (H) any Common Stock issued upon
exercise and settlement or termination of the warrant transactions evidenced by
the Base Warrant Confirmations and any Additional Warrant Confirmations.

 

SECTION 4.                            Payment of Expenses.

 

(a)                                 Expenses.  The Company will pay or cause to
be paid all expenses incident to the performance of their obligations under this
Agreement, including (i) preparation, issuance and delivery of the Securities to
the Initial Purchasers and the Common Stock issuable upon conversion thereof and
any charges of DTCC in connection therewith, (ii) the fees and disbursements of
the Company’s counsel, accountants and other advisors, (iii) the qualification
of the Securities under securities laws in accordance with the provisions of
Section 3(d) hereof, including filing fees and the reasonable fees and
disbursements of a single counsel for the Initial Purchasers in connection
therewith and in connection with the preparation of the Blue Sky Survey and any
supplement thereto (provided that the Company’s obligation to pay such fees and
expenses shall not exceed $5,000), (iv) the preparation, printing and delivery
to the Initial Purchasers of copies of each Preliminary Offering Memorandum, any
Issuer Written Information, the Final Term Sheet and the Final Offering
Memorandum and any amendments or supplements thereto and any costs associated
with electronic delivery of any of the foregoing by the Initial Purchasers to
investors, (v) all fees and expenses of the Trustee and any expenses of any
transfer agent or registrar for the Securities or the Common Stock issuable upon
conversion of the Securities, (vi) the costs and expenses of the Company
relating to investor presentations on any “road show” undertaken in connection
with the marketing of the Securities, including without limitation, expenses
associated with the production of road show slides and graphics, and fees and
expenses of any consultants engaged in connection with the road show
presentations, and (vii) the fees and expenses incurred in connection with the
listing of the Common Stock issuable upon conversion of the Securities and the
exercise of the warrant transactions evidenced by the Base Warrant Confirmations
and any Additional Warrant Confirmations on the New York Stock Exchange. It is
understood, however, that, except as provided in this Section 4(a) and
Section 4(b), the Initial Purchasers will pay all of their own costs and
expenses, including the fees of their counsel and any advertising expenses
connected with any offers they may make.

 

(b)                                 Termination of Agreement.  If this Agreement
is terminated by the Representative in accordance with the provisions of
Section 5 or Section 10(a)(i) or (iii) hereof, the Company shall reimburse the
non-defaulting Initial Purchasers for all of their out-of-pocket expenses,
including the reasonable fees and disbursements of counsel for the Initial
Purchasers.

 

SECTION 5.                            Conditions of Initial Purchasers’
Obligations.  The obligations of the several Initial Purchasers hereunder are
subject to the accuracy of the representations and warranties of the Company
contained herein or in certificates of any officer of the Company or any of its
subsidiaries, to the performance by the Company of its covenants and other
obligations hereunder, and to the following further conditions:

 

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(a)                                 Opinion of Counsel for Company.

 

(i)                                     At the Closing Time, the Representative
shall have received the favorable opinion, dated the Closing Time, of Mayer
Brown LLP, counsel for the Company, in form and substance satisfactory to
counsel for the Initial Purchasers, together with signed or reproduced copies of
such letter for each of the other Initial Purchasers, to the effect set forth in
Exhibit A-1 hereto.

 

(ii)                                  At the Closing Time, the Representative
shall have received the favorable opinion, dated the Closing Time, of Eileen G.
Akerson, General Counsel of the Company, in form and substance satisfactory to
counsel for the Initial Purchasers, together with signed or reproduced copies of
such letter for each of the other Initial Purchasers, to the effect set forth in
Exhibit A-2 hereto.

 

(b)                                 Opinion of Counsel for Initial Purchasers. 
At the Closing Time, the Representative shall have received the favorable
opinion, dated the Closing Time, of Davis Polk & Wardwell LLP, counsel for the
Initial Purchasers, together with signed or reproduced copies of such letter for
each of the other Initial Purchasers in form and substance satisfactory to the
Representative.  In giving such opinion such counsel may rely, as to all matters
governed by the laws of jurisdictions other than the law of the State of New
York, the General Corporation Law of the State of Delaware and the federal
securities laws of the United States, upon the opinions of counsel satisfactory
to the Representative.  Such counsel may also state that, insofar as such
opinion involves factual matters, they have relied, to the extent they deem
proper, upon certificates of officers and other representative of the Company
and its subsidiaries and certificates of public officials.

 

(c)                                  Officers’ Certificate.  At the Closing
Time, there shall not have been, since the date hereof or since the respective
dates as of which information is given in the General Disclosure Package or the
Final Offering Memorandum, any material adverse change in the condition,
financial or otherwise, or in the earnings, business affairs or business
prospects of the Company and its subsidiaries considered as one enterprise,
whether or not arising in the ordinary course of business, and the
Representative shall have received a certificate of the Chief Executive Officer
or the President of the Company and of the chief financial or chief accounting
officer of the Company, dated the Closing Time, to the effect that to their
knowledge, (i) there has been no such material adverse change, (ii) the
representations and warranties of the Company in this Agreement are true and
correct with the same force and effect as though expressly made at and as of the
Closing Time and (iii) the Company has complied with all agreements and
satisfied all conditions on its part to be performed or satisfied at or prior to
the Closing Time.

 

(d)                                 Accountant’s Comfort Letter.  At the time of
the execution of this Agreement, the Representative shall have received from
KPMG LLP a letter, dated such date, in form and substance satisfactory to the
Representative, together with signed or reproduced copies of such letter for
each of the other Initial Purchasers 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 Offering Memorandum.

 

(e)                                  Bring-down Comfort Letter.  At the Closing
Time, the Representative shall have received from KPMG LLP a letter, dated as of
the Closing Time, to the effect that they reaffirm the statements made in the
letter furnished pursuant to subsection (d) of this Section, except that the
specified date referred to shall be a date not more than three business days
prior to the Closing Time.

 

(f)                             Approval of Listing.  At the Closing Time, the
Maximum Number of Underlying Securities and the Warrant Securities shall have
been approved for listing on the New York Stock Exchange, subject only to
official notice of issuance.

 

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(g)                            Lock-up Agreements.  At the date of this
Agreement, the Representative shall have received an agreement substantially in
the form of Exhibit B hereto signed by the persons listed on Schedule D hereto.

 

(h)                           Maintenance of Rating.  Since the execution of
this Agreement, there shall not have been any decrease in or withdrawal of the
rating of any securities of the Company or any of its subsidiaries by any
“nationally recognized statistical rating organization” (as defined in
Section 3(a)(62) of the 1934 Act) or any notice given of any intended or
potential decrease in or withdrawal of any such rating or of a possible change
in any such rating that does not indicate the direction of the possible change.

 

(i)                                     Conditions to Purchase of Option
Securities.  In the event that the Initial Purchasers exercise their option
provided in Section 2(b) hereof to purchase all or any portion of the Option
Securities, the representations and warranties of the Company contained herein
and the statements in any certificates furnished by the Company and any of its
subsidiaries hereunder shall be true and correct as of each Date of Delivery
and, at the relevant Date of Delivery, the Representative shall have received:

 

(i)                                     Officers’ Certificate.  A certificate,
dated such Date of Delivery, of the President or a Vice President of the Company
and of the chief financial or chief accounting officer of the Company confirming
that to their knowledge, the certificate delivered at the Closing Time pursuant
to Section 6(c) hereof remains true and correct as of such Date of Delivery.

 

(ii)                                  Opinion of Counsel for Company.  If
requested by the Representative, the favorable opinion of Mayer Brown LLP,
counsel for the Company, in form and substance satisfactory to counsel for the
Initial Purchasers, dated such Date of Delivery, relating to the Option
Securities to be purchased on such Date of Delivery and otherwise to the same
effect as the opinion required by Section 5(a)(i) hereof. If requested by the
Representative, the favorable opinion of Eileen G. Akerson, General Counsel of
the Company, in form and substance satisfactory to counsel for the Initial
Purchasers, dated such Date of Delivery, relating to the Option Securities to be
purchased on such Date of Delivery and otherwise to the same effect as the
opinion required by Section 5(a)(ii) hereof.

 

(iii)                               Opinion of Counsel for Initial Purchasers. 
If requested by the Representative, the favorable opinion of Davis Polk &
Wardwell LLP, counsel for the Initial Purchasers, dated such Date of Delivery,
relating to the Option Securities to be purchased on such Date of Delivery and
otherwise to the same effect as the opinion required by Section 5(b) hereof.

 

(iv)                              Bring-down Comfort Letter.  If requested by
the Representative, a letter from KPMG LLP, in form and substance satisfactory
to the Representative and dated such Date of Delivery, substantially in the same
form and substance as the letter furnished to the Representative pursuant to
Section 5(d) hereof, except that the “specified date” in the letter furnished
pursuant to this paragraph shall be a date not more than three business days
prior to such Date of Delivery.

 

(j)                                    Additional Documents.  At the Closing
Time and at each Date of Delivery (if any), counsel for the Initial Purchasers
shall have been furnished with such documents and opinions as they may require
for the purpose of enabling them to pass upon the issuance and sale of the
Securities as herein contemplated, or in order to evidence the accuracy of any
of the representations or warranties, or the fulfillment of any of the
conditions, herein contained; and all proceedings taken by the Company in
connection with the issuance and sale of the Securities as herein contemplated
shall be satisfactory in form and substance to the Representative and counsel
for the Initial Purchasers.

 

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(k)                                 Termination of Agreement.  If any condition
specified in this Section shall not have been fulfilled when and as required to
be fulfilled, this Agreement, or, in the case of any condition to the purchase
of Option Securities on a Date of Delivery which is after the Closing Time, the
obligations of the several Initial Purchasers to purchase the relevant Option
Securities, may be terminated by the Representative by notice to the Company at
any time at or prior to Closing Time or such Date of Delivery, as the case may
be, and such termination shall be without liability of any party to any other
party except as provided in Section 4 and except that Sections 1, 7, 8, 9, 14,
15, 16 and 17 shall survive any such termination and remain in full force and
effect.

 

SECTION 6.                            Subsequent Offers and Resales of the
Securities.

 

(a)         Offer and Sale Procedures.  Each of the Initial Purchasers and the
Company hereby establish and agree to observe the following procedures in
connection with the offer and sale of the Securities:

 

(i)                                     Offers and Sales.  Offers and sales of
the Securities shall be made to such persons and in such manner as is
contemplated by the Offering Memorandum.  Each Initial Purchaser severally
agrees that it will not offer, sell or deliver any of the Securities in any
jurisdiction outside the United States except under circumstances that will
result in compliance with the applicable laws thereof, and that it will take at
its own expense whatever action is required to permit its purchase and resale of
the Securities in such jurisdictions. The Company has not entered into any
contractual arrangement, other than this Agreement, with respect to the
distribution of the Securities or the Common Stock issuable upon conversion of
the Securities and the Company will not enter into any such arrangement except
as contemplated thereby.

 

(ii)                                  No General Solicitation.  No general
solicitation or general advertising (within the meaning of Rule 502(c) under the
1933 Act Regulations) will be used in the United States in connection with the
offering or sale of the Securities.

 

(iii)                               Legends.  Each of the Securities will bear,
to the extent applicable, the legend contained in “Notice to Investors” in the
General Disclosure Package and the Final Offering Memorandum for the time period
and upon the other terms stated therein.

 

(iv)                              Minimum Principal Amount.  No sale of the
Securities to any one Subsequent Purchaser will be for less than U.S. $1,000
principal amount and no Security will be issued in a smaller principal amount. 
If the Subsequent Purchaser is a non-bank fiduciary acting on behalf of others,
each person for whom it is acting must purchase at least U.S. $1,000 principal
amount of the Securities.

 

(b)         Covenants of the Company.  The Company covenants with each Initial
Purchaser as follows:

 

(i)                                     Integration.  The Company agrees that it
will not and will cause its Affiliates not to, directly or indirectly, solicit
any offer to buy, sell or make any offer or sale of, or otherwise negotiate in
respect of, securities of the Company of any class if, as a result of the
doctrine of “integration” referred to in Rule 502 under the 1933 Act
Regulations, such offer or sale would render invalid (for the purpose of (i) the
sale of the offered Securities by the Company to the Initial Purchasers,
(ii) the resale of the offered Securities by the Initial Purchasers to
Subsequent Purchasers or (iii) the resale of the offered Securities by such
Subsequent Purchasers to others) the exemption from the registration
requirements of the 1933 Act provided by Section 4(2) thereof or by Rule 144A
thereunder or otherwise.

 

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(ii)                                  Rule 144A Information.  The Company agrees
that, in order to render the offered Securities eligible for resale pursuant to
Rule 144A, while any of the offered Securities remain outstanding, it will make
available, upon request, to any holder of offered Securities or prospective
purchasers of Securities the information specified in Rule 144A(d)(4), unless
the Company furnishes information to the Commission pursuant to Section 13 or
15(d) of the 1934 Act.

 

(iii)                               Restriction on Repurchases.  Until the
expiration of one year after the original issuance of the offered Securities,
the Company will not, and will cause its Affiliates not to, resell any offered
Securities which are “restricted securities” (as such term is defined under
Rule 144(a)(3)), whether as beneficial owner or otherwise (except as agent
acting as a securities broker on behalf of and for the account of customers in
the ordinary course of business in unsolicited broker’s transactions).

 

(c)                                  Representations, Warranties and Agreements
of the Initial Purchasers.  Each Initial Purchaser severally and not jointly
represents and warrants to, and agrees with, the Company that it is a Qualified
Institutional Buyer and an “accredited investor” within the meaning of
Rule 501(a) under the 1933 Act Regulations. Each Initial Purchaser understands
that the offered Securities have not been and will not be registered under the
1933 Act and may not be offered or sold within the United States except pursuant
to an exemption from, or in a transaction not subject to, the registration
requirements of the 1933 Act.  Each Initial Purchaser severally represents and
agrees that it has not offered or sold, and will not offer or sell, any offered
Securities constituting part of its allotment within the United States except in
accordance with Rule 144A or another applicable exemption from the registration
requirements of the 1933 Act.  Accordingly, neither it nor any person acting on
its behalf has made or will make offers or sales of the Securities in the United
States by means of any form of general solicitation or general advertising
(within the meaning of Regulation D) in the United States.  Each Initial
Purchaser will take reasonable steps to inform, and cause each of its affiliates
(as such term is defined in Rule 501(b) under the 1933 Act Regulations (each, an
“Affiliate”)) to take reasonable steps to inform, persons acquiring Securities
from such Initial Purchaser or Affiliate, as the case may be, in the United
States that the Securities (A) have not been and will not be registered under
the 1933 Act, (B) are being sold to them without registration under the 1933 Act
in reliance on Rule 144A or in accordance with another exemption from
registration under the 1933 Act, as the case may be, and (C) may not be offered,
sold or otherwise transferred except (1) to the Company, (2) outside the United
States in accordance with Regulation S or (3) inside the United States in
accordance with (x) Rule 144A to a person whom the seller reasonably believes is
a Qualified Institutional Buyer that is purchasing such Securities for its own
account or for the account of a Qualified Institutional Buyer to whom notice is
given that the offer, sale or transfer is being made in reliance on Rule 144A or
(y) pursuant to another available exemption from registration under the
1933 Act.

 

SECTION 7.                            Indemnification.

 

(a)                                 Indemnification of Initial Purchasers.  The
Company agrees to indemnify and hold harmless each Initial Purchaser, its
Affiliates, its selling agents and each person, if any, who controls any Initial
Purchaser within the meaning of Section 15 of the 1933 Act or Section 20 of the
1934 Act as follows:

 

(i)                                     against any and all loss, liability,
claim, damage and expense whatsoever, as incurred, arising out of any untrue
statement or alleged untrue statement of a material fact included in any
Preliminary Offering Memorandum, the Final Offering Memorandum, the information
contained in the Final Term Sheet, road show presentation materials or any
Issuer Written Information in connection with the offer or sale of the
Securities (or any amendment or

 

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supplement to the foregoing) or the omission or alleged omission therefrom of a
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading;

 

(ii)                                  against any and all loss, liability,
claim, damage and expense whatsoever, as incurred, to the extent of the
aggregate amount paid in settlement of any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or threatened, or of
any claim whatsoever based upon any such untrue statement or omission, or any
such alleged untrue statement or omission; provided that (subject to
Section 7(d) below) any such settlement is effected with the written consent of
the Company;

 

(iii)                               against any and all expense whatsoever, as
incurred (including the fees and disbursements of counsel chosen by Merrill
Lynch), reasonably incurred in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever based upon any such
untrue statement or omission, or any such alleged untrue statement or omission,
to the extent that any such expense is not paid under (i) or (ii) above;

 

provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in any
Preliminary Offering Memorandum, the Final Offering Memorandum or the
information contained in the Final Term Sheet (or any amendment or supplement to
the foregoing) in reliance upon and in conformity with the Initial Purchaser
Information.

 

(b)                                 Indemnification of Company, Directors and
Officers.  Each Initial Purchaser severally agrees to indemnify and hold
harmless the Company, its directors, its officers and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act, against any and all loss, liability, claim, damage
and expense described in the indemnity contained in subsection (a) of this
Section, as incurred, but only with respect to untrue statements or omissions,
or alleged untrue statements or omissions, made in any Preliminary Offering
Memorandum, the Final Offering Memorandum or the information contained in the
Final Term Sheet (or any amendment or supplement to the foregoing) in reliance
upon and in conformity with the Initial Purchaser Information.

 

(c)                                  Actions against Parties; Notification. 
Each indemnified party shall give notice as promptly as reasonably practicable
to each indemnifying party of any action commenced against it in respect of
which indemnity may be sought hereunder, but failure to so notify an
indemnifying party shall not relieve such indemnifying party from any liability
hereunder to the extent it is not materially prejudiced as a result thereof and
in any event shall not relieve it from any liability which it may have otherwise
than on account of this indemnity agreement.  In the case of parties indemnified
pursuant to Section 7(a) above, counsel to the indemnified parties shall be
selected by Merrill Lynch, and, in the case of parties indemnified pursuant to
Section 7(b) above, counsel to the indemnified parties shall be selected by the
Company; provided, however, if the defendants in any such action include both
the indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that a conflict may arise between the positions of the
indemnifying party and the indemnified party in conducting the defense of any
such action or that there may be legal defenses available to it and/or other
indemnified parties that are different from or additional to those available to
the indemnifying party, the indemnified party or parties shall have the right to
select separate counsel to assume such legal defenses and to otherwise
participate in the defense of such action on behalf of such indemnified party or
parties.  An indemnifying party may participate at its own expense in the
defense of any such action; provided, however, that counsel to the indemnifying
party shall not (except with the consent of the indemnified party) also be
counsel to the indemnified party.  In no event shall the indemnifying parties be
liable for

 

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fees and expenses of more than one counsel (in addition to any local counsel)
separate from their own counsel for all indemnified parties in connection with
any one action or separate but similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances.  No
indemnifying party shall, without the prior written consent of the indemnified
parties, settle or compromise or consent to the entry of any judgment with
respect to any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim whatsoever in
respect of which indemnification or contribution could be sought under this
Section 7 or Section 8 hereof (whether or not the indemnified parties are actual
or potential parties thereto), unless such settlement, compromise or consent
(i) includes an unconditional release of each indemnified party from all
liability arising out of such litigation, investigation, proceeding or claim and
(ii) does not include a statement as to or an admission of fault, culpability or
a failure to act by or on behalf of any indemnified party.

 

(d)                                 Settlement without Consent if Failure to
Reimburse.  If at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for fees and expenses of
counsel, such indemnifying party agrees that it shall be liable for any
settlement of the nature contemplated by Section 7(a)(ii) effected without its
written consent if (i) such settlement is entered into more than 45 days after
receipt by such indemnifying party of the aforesaid request, (ii) such
indemnifying party shall have received notice of the terms of such settlement at
least 30 days prior to such settlement being entered into and (iii) such
indemnifying party shall not have reimbursed such indemnified party in
accordance with such request prior to the date of such settlement.

 

SECTION 8.                            Contribution.  If the indemnification
provided for in Section 7 hereof is for any reason unavailable to or
insufficient to hold harmless an indemnified party in respect of any losses,
liabilities, claims, damages or expenses referred to therein, then each
indemnifying party shall contribute to the aggregate amount of such losses,
liabilities, claims, damages and expenses incurred by such indemnified party, as
incurred, (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company, on the one hand, and the Initial Purchasers,
on the other hand, from the offering of the Securities pursuant to this
Agreement or (ii) if the allocation provided by clause (i) is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the Company, on the one hand, and of the Initial Purchasers, on the other hand,
in connection with the statements or omissions which resulted in such losses,
liabilities, claims, damages or expenses, as well as any other relevant
equitable considerations.

 

The relative benefits received by the Company, on the one hand, and the Initial
Purchasers, on the other hand, in connection with the offering of the Securities
pursuant to this Agreement shall be deemed to be in the same respective
proportions as the total net proceeds from the offering of the Securities
pursuant to this Agreement (before deducting expenses) received by the Company,
on the one hand, and the total underwriting discount received by the Initial
Purchasers, on the other hand, bear to the aggregate initial offering price of
the Securities as set forth on the cover of the Final Offering Memorandum.

 

The relative fault of the Company, on the one hand, and the Initial Purchasers,
on the other hand, shall be determined by reference to, among other things,
whether any such untrue or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact relates to information
supplied by the Company or by the Initial Purchasers and the parties’ relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.

 

The Company and the Initial Purchasers agree that it would not be just and
equitable if contribution pursuant to this Section 8 were determined by pro rata
allocation (even if the Initial Purchasers were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to above in this Section 8.  The aggregate

 

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amount of losses, liabilities, claims, damages and expenses incurred by an
indemnified party and referred to above in this Section 8 shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission.

 

Notwithstanding the provisions of this Section 8, no Initial Purchaser shall be
required to contribute any amount in excess of the amount by which the total
price at which the Securities purchased by it and distributed to the public were
offered to the public exceeds the amount of any damages that such Initial
Purchaser has otherwise been required to pay by reason of any 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 1933 Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.

 

For purposes of this Section 8, each person, if any, who controls an Initial
Purchaser within the meaning of Section 15 of the 1933 Act or Section 20 of the
1934 Act and each Initial Purchaser’s Affiliates and selling agents shall have
the same rights to contribution as such Initial Purchaser, and each director of
the Company, each officer of the Company, and each person, if any, who controls
the Company within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act shall have the same rights to contribution as the Company.  The
Initial Purchasers’ respective obligations to contribute pursuant to this
Section 8 are several in proportion to the aggregate principal amount of Initial
Securities set forth opposite their respective names in Schedule A hereto and
not joint.

 

SECTION 9.                            Representations, Warranties and Agreements
to Survive.  All representations, warranties and agreements contained in this
Agreement or in certificates of officers of the Company or any of its
subsidiaries submitted pursuant hereto, shall remain operative and in full force
and effect regardless of (i) any investigation made by or on behalf of any
Initial Purchaser or its Affiliates or selling agents, any person controlling
any Initial Purchaser, its officers or directors or any person controlling the
Company and (ii) delivery of and payment for the Securities.

 

SECTION 10.                     Termination of Agreement.

 

(a)                                 Termination.  The Representative may
terminate this Agreement, by notice to the Company, at any time at or prior to
the Closing Time (i) if there has been, in the judgment of the Representative,
since the time of execution of this Agreement or since the respective dates as
of which information is given in the General Disclosure Package or the Final
Offering Memorandum, any material adverse change in the condition, financial or
otherwise, or in the earnings, business affairs or business prospects of the
Company and its subsidiaries considered as one enterprise, whether or not
arising in the ordinary course of business, or (ii) if there has occurred any
material adverse change in the financial markets in the United States or the
international financial markets, any outbreak of hostilities or escalation
thereof or other calamity or crisis or any change or development involving a
prospective change in national or international political, financial or economic
conditions, in each case the effect of which is such as to make it, in the
judgment of the Representative, impracticable or inadvisable to proceed with the
completion of the offering or to enforce contracts for the sale of the
Securities, or (iii) if trading in any securities of the Company has been
suspended or materially limited by the Commission or the New York Stock
Exchange, or (iv) if trading generally on the NYSE MKT or the New York Stock
Exchange or in the Nasdaq Global Market has been suspended or materially
limited, or minimum or maximum prices for trading have been fixed, or maximum
ranges for prices have been required, by any of said exchanges or by order of
the Commission, FINRA or any other governmental authority, or (v) a

 

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material disruption has occurred in commercial banking or securities settlement
or clearance services in the United States, or (vi) if a banking moratorium has
been declared by either Federal or New York authorities.

 

(b)                                 Liabilities.  If this Agreement is
terminated pursuant to this Section, such termination shall be without liability
of any party to any other party except as provided in Section 4 hereof, and
provided further that Sections 1, 7, 8, 9, 14, 15, 16 and 17 shall survive such
termination and remain in full force and effect.

 

SECTION 11.                     Default by One or More of the Initial
Purchasers.  If one or more of the Initial Purchasers shall fail at the Closing
Time or a Date of Delivery to purchase the Securities which it or they are
obligated to purchase under this Agreement (the “Defaulted Securities”), the
Representative shall have the right, within 24 hours thereafter, to make
arrangements for one or more of the non-defaulting Initial Purchasers, or any
other initial purchasers, to purchase all, but not less than all, of the
Defaulted Securities in such amounts as may be agreed upon and upon the terms
herein set forth; if, however, the Representative shall not have completed such
arrangements within such 24-hour period, then:

 

(i)                                     if the number of Defaulted Securities
does not exceed 10% of the aggregate principal amount of the Securities to be
purchased on such date, each of the non-defaulting Initial Purchasers shall be
obligated, severally and not jointly, to purchase the full amount thereof in the
proportions that their respective underwriting obligations hereunder bear to the
underwriting obligations of all non-defaulting Initial Purchasers, or

 

(ii)                                  if the number of Defaulted Securities
exceeds 10% of the aggregate principal amount of the Securities to be purchased
on such date, the Company shall have the right, within 48 hours thereafter, to
make arrangements for any other the Initial Purchasers to purchase all, but not
less than all, of the Defaulted Securities in such amounts as may be agreed upon
the terms herein set forth. In the event such arrangements are not made within
48 hours after such default, this Agreement or, with respect to any Date of
Delivery which occurs after the Closing Time, the obligation of the Initial
Purchasers to purchase, and the Company to sell, the Option Securities to be
purchased and sold on such Date of Delivery shall terminate without liability on
the part of any non-defaulting Initial Purchaser.

 

No action taken pursuant to this Section shall relieve any defaulting Initial
Purchaser from liability in respect of its default.

 

In the event of any such default which does not result in a termination of this
Agreement or, in the case of a Date of Delivery which is after the Closing Time,
which does not result in a termination of the obligation of the Initial
Purchasers to purchase and the Company to sell the relevant Option Securities,
as the case may be, either the (i) Representative or (ii) the Company shall have
the right to postpone Closing Time or the relevant Date of Delivery, as the case
may be, for a period not exceeding seven days in order to effect any required
changes in the General Disclosure Package or the Final Offering Memorandum or in
any other documents or arrangements.  As used herein, the term “Initial
Purchaser” includes any person substituted for an Initial Purchaser under this
Section 11.

 

SECTION 12.                     Notices.  All notices and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
mailed or transmitted by any standard form of telecommunication.  Notices to the
Initial Purchasers shall be directed to Merrill Lynch at One Bryant Park, New
York, New York 10036, attention of Syndicate Department (facsimile: (646)
855-3073), with a copy to ECM Legal (facsimile: (212) 230-8730); notices to the
Company shall be directed to it at 601

 

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Jefferson Street, Suite 3400, Houston, Texas 77002, attention of KBR, Inc., 601
Jefferson Street, Houston, Texas 77002, Attention: Chief Financial Officer, with
a copy to the General Counsel .

 

SECTION 13.                     No Advisory or Fiduciary Relationship.  The
Company acknowledges and agrees that (a) the purchase and sale of the Securities
pursuant to this Agreement, including the determination of the initial offering
price of the Securities and any related discounts and commissions, is an
arm’s-length commercial transaction between the Company, on the one hand, and
the several Initial Purchasers, on the other hand, (b) in connection with the
offering of the Securities and the process leading thereto, each Initial
Purchaser is and has been acting solely as a principal and is not the agent or
fiduciary of the Company, any of its subsidiaries or their respective
stockholders, creditors, employees or any other party, (c) no Initial Purchaser
has assumed or will assume an advisory or fiduciary responsibility in favor of
the Company with respect to the offering of the Securities or the process
leading thereto (irrespective of whether such Initial Purchaser has advised or
is currently advising the Company or any of its subsidiaries on other matters)
and no Initial Purchaser has any obligation to the Company with respect to the
offering of the Securities except the obligations expressly set forth in this
Agreement, (d) the Initial Purchasers and their respective affiliates may be
engaged in a broad range of transactions that involve interests that differ from
those of the Company and (e) the Initial Purchasers have not provided any legal,
accounting, regulatory or tax advice with respect to the offering of the
Securities and the Company has consulted its own respective legal, accounting,
regulatory and tax advisors to the extent it deemed appropriate.

 

SECTION 14.                     Parties.  This Agreement shall each inure to the
benefit of and be binding upon the Initial Purchasers and the Company and their
respective successors.  Nothing expressed or mentioned in this Agreement is
intended or shall be construed to give any person, firm or corporation, other
than the Initial Purchasers and the Company and their respective successors and
the controlling persons and officers and directors referred to in Sections 7 and
8 and their heirs and legal representatives, any legal or equitable right,
remedy or claim under or in respect of this Agreement or any provision herein
contained.  This Agreement and all conditions and provisions hereof are intended
to be for the sole and exclusive benefit of the Initial Purchasers and the
Company and their respective successors, and said controlling persons and
officers and directors and their heirs and legal representatives, and for the
benefit of no other person, firm or corporation.  No purchaser of Securities
from any Initial Purchaser shall be deemed to be a successor by reason merely of
such purchase.

 

SECTION 15.                     Waiver of Trial by Jury.  The Company (on its
behalf and, to the extent permitted by applicable law, on behalf of its
stockholders and affiliates) and each of the Initial Purchasers hereby
irrevocably waives, to the fullest extent permitted by applicable law, any and
all right to trial by jury in any legal proceeding arising out of or relating to
this Agreement or the transactions contemplated hereby.

 

SECTION 16.                     GOVERNING LAW.  THIS AGREEMENT AND ANY CLAIM,
CONTROVERSY OR DISPUTE ARISING UNDER OR RELATED TO THIS AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF, THE STATE OF NEW YORK
WITHOUT REGARD TO ITS CHOICE OF LAW PROVISIONS.

 

SECTION 17.                     Consent to Jurisdiction; Waiver of Immunity. Any
legal suit, action or proceeding arising out of or based upon this Agreement or
the transactions contemplated hereby (“Related Proceedings”) shall be instituted
in (i) the federal courts of the United States of America located in the City
and County of New York, Borough of Manhattan or (ii) the courts of the State of
New York located in the City and County of New York, Borough of Manhattan
(collectively, the “Specified Courts”), and each party irrevocably submits to
the exclusive jurisdiction (except for proceedings instituted in regard to the
enforcement of a judgment of any such court (a “Related Judgment”), as to which
such jurisdiction is non-exclusive) of such courts in any such suit, action or
proceeding.  Service of any process, summons, notice or document by mail to such
party’s address set forth above shall be

 

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effective service of process for any suit, action or other proceeding brought in
any such court.  The parties irrevocably and unconditionally waive any objection
to the laying of venue of any suit, action or other proceeding in the Specified
Courts and irrevocably and unconditionally waive and agree not to plead or claim
in any such court that any such suit, action or other proceeding brought in any
such court has been brought in an inconvenient forum.

 

SECTION 18.                     TIME. TIME SHALL BE OF THE ESSENCE OF THIS
AGREEMENT. EXCEPT AS OTHERWISE SET FORTH HEREIN, SPECIFIED TIMES OF DAY REFER TO
NEW YORK CITY TIME.

 

SECTION 19.                     Counterparts.  This Agreement may be executed in
any number of counterparts, each of which shall be deemed to be an original, but
all such counterparts shall together constitute one and the same Agreement.

 

SECTION 20.                     Effect of Headings.  The Section headings herein
are for convenience only and shall not affect the construction hereof.

 

SECTION 21.                     Xtract Research LLC.  The Company hereby agrees
that the Initial Purchasers may provide copies of the Preliminary Offering
Memorandum and the Final Offering Memorandum relating to the offering of the
Securities and any other agreements or documents relating thereto, including,
without limitation, any trust indentures, to Xtract Research LLC (“Xtract”)
following the completion of the offering for inclusion in an online research
service sponsored by Xtract, access to which is restricted to “qualified
institutional buyers” as defined in Rule 144A under the 1933 Act.

 

SECTION 22.                     EU Bail-in Regime.  Notwithstanding any other
term of this Agreement or any other agreements, arrangements or understanding
between the Initial Purchasers and the Company, the Company acknowledges,
accepts, and agrees to be bound by:

 

(i)        the effect of the exercise of Bail-in Powers by the Relevant
Resolution Authority in relation to any BRRD Liability of the Initial Purchasers
to the Company under this Agreement, that (without limitation) may include and
result in any of the following, or some combination thereof:

 

(A)                                   the reduction of all, or a portion, of the
BRRD Liability or outstanding amounts due thereon;

 

(B)                                   the conversion of all, or a portion, of
the BRRD Liability into shares, other securities or other obligations of the
Initial Purchasers  or another person (and the issue to or conferral on the
Company of such shares, securities or obligations);

 

(C)                                   the cancellation of the BRRD Liability;

 

(D)                                   the amendment or alteration of any
interest, if applicable, on the amounts due in relation to the BRRD Liability,
the maturity or the dates on which any payments are due, including by suspending
payment for a temporary period;

 

(ii)     the variation of the terms of this Agreement, as deemed necessary by
the Relevant Resolution Authority, to give effect to the exercise of Bail-in
Powers by the Relevant Resolution Authority.

 

25

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(iii)  For purposes of this Section 22, the terms that follow shall have the
meanings indicated:

 

“Bail-in Legislation” means in relation to a member state of the European
Economic Area which has implemented, or which at any time implements, the BRRD,
the relevant implementing law, regulation, rule or requirement as described in
the EU Bail-in Legislation Schedule from time to time.

 

“Bail-in Powers” means any Write-down and Conversion Powers as defined in the EU
Bail-in Legislation Schedule, in relation to the relevant Bail-in Legislation.

 

“BRRD” means Directive 2014/59/EU establishing a framework for the recovery and
resolution of credit institutions and investment firms.

 

“BRRD Liability” means a liability in respect of which the relevant Bail-in
Powers in the applicable Bail-in Legislation may be exercised.

 

“EU Bail-in Legislation Schedule” means the document described as such, then in
effect, and published by the Loan Market Association (or any successor person)
from time to time at http://www.lma.eu.com/pages.aspx?p=499.

 

“Relevant Resolution Authority” means the resolution authority with the ability
to exercise any Bail-in Powers in relation to the Initial Purchasers.

 

[Signature page follows.]

 

26

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If the foregoing is in accordance with your understanding of our agreement,
please sign and return to the Company a counterpart hereof, whereupon this
instrument, along with all counterparts, will become a binding agreement among
the Initial Purchasers and the Company in accordance with its terms.

 

 

Very truly yours,

 

 

 

KBR, INC.

 

 

 

 

By

/s/ Stuart J. B. Bradie

 

 

Name:

Stuart J. B. Bradie

 

 

Title:

President and Chief Executive Officer

 

 

 

CONFIRMED AND ACCEPTED,

 

 

as of the date first above written:

 

 

 

 

 

MERRILL LYNCH, PIERCE, FENNER & SMITH

 

 

INCORPORATED

 

 

 

By: MERRILL LYNCH, PIERCE, FENNER & SMITH

 

INCORPORATED

 

 

 

 

By

/s/ Clemence Rasigni

 

 

 

Authorized Signatory

 

 

 

 

For itself and as Representative of the other Initial Purchasers named in
Schedule A hereto.

 

27

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SCHEDULE A

 

The initial offering price of the Securities shall be 100% of the principal
amount thereof, plus accrued interest, if any, from the date of issuance.

 

The purchase price to be paid by the Initial Purchasers for the Securities shall
be 97.50% of the principal amount thereof.

 

The interest rate on the Securities shall be 2.50% per annum.

 

Name of Initial Purchaser

 

Principal
Amount of
Securities

 

 

 

 

 

Merrill Lynch, Pierce, Fenner & Smith
Incorporated

 

175,000,000

 

BNP Paribas Securities Corp.

 

36,750,000

 

BBVA Securities Inc.

 

19,250,000

 

Citigroup Global Markets Inc.

 

19,250,000

 

MUFG Securities Americas Inc.

 

19,250,000

 

Scotia Capital (USA) Inc.

 

19,250,000

 

SunTrust Robinson Humphrey, Inc.

 

19,250,000

 

Capital One Securities, Inc.

 

7,000,000

 

Citizens Capital Markets, Inc.

 

7,000,000

 

HSBC Securities (USA) Inc.

 

7,000,000

 

Regions Securities LLC

 

7,000,000

 

SMBC Nikko Securities America, Inc.

 

7,000,000

 

Standard Chartered Bank

 

7,000,000

 

Total

 

$

350,000,000

 

 

Sch A-1

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SCHEDULE B

 

Final Term Sheet

 

[Insert Final Term Sheet]

 

Sch B - 1

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SCHEDULE C

 

Issuer Written Information

 

Final Term Sheet in the form set forth on Schedule B

 

Sch C - 1

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SCHEDULE D

 

List of Persons and Entities Subject to Lock-up

 

1.

Loren K. Carroll

2.

Stuart J.B. Bradie

3.

Mark Sopp

4.

Lester L. Lyles

5.

Jack B. Moore

6.

James R. Blackwell

7.

Umberto della Sala

8.

Mark E. Baldwin

9.

Ann D. Pickard

10.

Wendy M. Masiello

11.

Eileen Akerson

12.

Raymond L Carney Jr.

13.

Byron Bright

14.

Jalal Jay Ibrahim

15.

Farhan Mujib

16.

John T. Derbyshire

17.

Ian J. Mackey

18.

Greg S. Conlon

 

Sch D - 1

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Exhibit A-1

 

FORM OF OPINION OF COMPANY’S COUNSEL
TO BE DELIVERED PURSUANT TO SECTION 5(a)(i)

 

(i)                                     The Company 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 General Disclosure Package and the Final Offering Memorandum
and to enter into and perform its obligations under the Purchase Agreement, the
Securities, the Indenture, the Call Spread Confirmations and the documents
entered into by the Company in connection therewith (collectively, the
“Transaction Documents”), and is duly qualified to transact business and is in
good standing in each other jurisdiction where such qualification and status is
required, except to the extent that the failure to be so qualified or be in good
standing would not have a Material Adverse Effect.

 

(ii)                                  The authorized capital stock of the
Company conforms as to legal matters to the description thereof contained in the
General Disclosure Package and the Final Offering Memorandum.

 

(iii)                               [       ](1) shares of Common Stock issuable
upon conversion of the Securities have been duly authorized and reserved for
issuance upon such conversion by all necessary corporate action, all outstanding
shares of Common Stock have been duly authorized and are validly issued, fully
paid and non-assessable and the Common Stock issuable upon conversion of the
Securities will be, when issued in accordance with the terms of the Indenture,
validly issued, fully paid and non-assessable and will not be subject to the
preemptive or other similar rights of any securityholder of the Company arising
under the Delaware General Corporation Law or the Amended and Restate
Certificate of Incorporation of the Company or its bylaws, and no holder of such
shares will be subject to personal liability by reason of being such a holder.

 

(iv)                              The Purchase Agreement has been duly
authorized, executed and delivered by the Company.

 

(v)                                 The Indenture has been duly authorized,
executed and delivered by the Company and (assuming the due authorization,
execution and delivery thereof by the Trustee) constitutes a valid and binding
agreement of the Company, enforceable against the Company in accordance with its
terms, except as the enforcement thereof may be limited by bankruptcy,
insolvency (including, without limitation, all laws relating to fraudulent
transfers), reorganization, moratorium or similar laws affecting enforcement of
creditors’ rights generally or by general equitable principles (regardless of
whether enforcement is considered in a proceeding in equity or at law).

 

(vi)                              The Securities are in the form contemplated by
the Indenture, have been duly authorized, executed, issued and delivered by the
Company and, assuming that the Securities have been duly authenticated by the
Trustee in the manner required by the Indenture, the Securities constitute valid
and binding obligations of the Company, enforceable against the

 

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(1)  To be the maximum number of shares of Common Stock issuable upon conversion
of the Securities (including the maximum number of additional shares of Common
Stock by which the conversion rate may be increased upon conversion in
connection with a make-whole fundamental change and assuming (x) a single holder
of Securities converted all of the Securities, (y) the Company elects physical
settlement of such conversion and (z) the Initial Purchasers exercise their
option to purchase the Option Securities in full).

 

A-1-1

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Company in accordance with their terms, except as the enforcement thereof may be
limited by bankruptcy, insolvency (including, without limitation, all laws
relating to fraudulent transfers), reorganization, moratorium or similar laws
affecting enforcement of creditors’ rights generally or by general equitable
principles (regardless of whether enforcement is considered in a proceeding in
equity or at law), and will be entitled to the benefits of the Indenture.

 

(vii)                           The Call Spread Confirmations and the
transaction documents entered into by the Company in connection therewith have
been duly authorized, executed and delivered by the Company and constitute valid
and binding agreements of the Company, enforceable against the Company in
accordance with their terms, except as the enforcement thereof may be limited by
bankruptcy, insolvency (including, without limitation, all laws relating to
fraudulent transfers), reorganization, moratorium or similar laws affecting
enforcement of creditors’ rights generally or by general equitable principles
(regardless of whether enforcement is considered in a proceeding in equity or at
law).

 

(viii)                        The execution and delivery by the Company of, and
the performance by the Company of its obligations under, each of the Transaction
Documents, and the consummation of the transactions contemplated therein and in
the General Disclosure Package and the Final Offering Memorandum under the
caption “Use of Proceeds”, will not contravene any provision of (A) any United
States federal or New York State statute or the Delaware General Corporation Law
which, in our opinion, based on our experience, are normally applicable to
transactions of the type contemplated by the Transaction Documents (“United
States Applicable Laws”), except that we do not express any opinion with respect
to state securities laws, (B) the certificate of incorporation or bylaws of the
Company, (C) assuming the Company will meet the conditions set forth in
Section 7.02(m) of the [Credit Agreement], as stated in an Officer’s Certificate
(as defined in the Credit Agreement), any agreement listed on Exhibit A hereto
(except as would not have a Material Adverse Effect), or (D) any judgment, order
or decree of any United States federal or New York or Delaware State
governmental body, agency or court having jurisdiction over the Company or any
subsidiary of the Company and known to us;

 

(ix)                              Based upon our review of the United States
Applicable Laws, no consent, approval, authorization or order of, or
qualification with, any United States federal or New York or Delaware State
governmental body or agency is required for the performance by the Company of
its obligations under the Transaction Documents, except that we express no
opinion regarding federal or state securities or Blue Sky laws.

 

(x)                                 The statements relating to legal matters,
documents or proceedings included in the General Disclosure Package and the
Final Offering Memorandum under the captions “Certain United States Federal
Income Tax Considerations,” “Description of Notes,” and “Description of Capital
Stock” fairly summarize in all material respects such legal matters, documents
or proceedings.

 

(xi)                              The Company is not, and after giving effect to
the offering and sale of the Securities or the Call Spread Confirmations and the
application of the proceeds thereof as described in the General Disclosure
Package and the Final Offering Memorandum will not be, required to register as
an “investment company” under the 1940 Act.

 

(xii)                           Assuming the accuracy of the representations and
warranties of the Company and the Initial Purchasers in the Purchase Agreement
and compliance with the agreements of the Company and the Initial Purchasers in
the Purchase Agreement, it is not necessary in connection with the offer, sale
and delivery of the Securities to the Initial Purchasers and to each subsequent

 

A-1-2

--------------------------------------------------------------------------------

 

purchaser under the circumstances contemplated by the Purchase Agreement, the
General Disclosure Package and the Final Offering Memorandum, as of its date, to
register the Securities under the 1933 Act or to qualify the Indenture under the
Trust Indenture Act of 1939, as amended, and the rules and regulations of the
Commission promulgated thereunder; except we express no opinion regarding any
resales of the Securities by any person other than the Initial Purchasers.

 

As indicated above, we examined various documents and participated in
conferences with representatives of the Company and its accountants and with
representatives of the Initial Purchasers and their counsel at which times the
contents of the General Disclosure Package and the Final Offering Memorandum and
related matters were discussed.  However, except as specifically noted in our
opinion in paragraph (x) above, we are not passing upon and assume no
responsibility for the accuracy, completeness or fairness of the statements
contained in the General Disclosure Package or the Final Offering Memorandum or
making any representation that we have independently verified or checked the
accuracy, completeness or fairness of such statements.  Also, we are expressing
no view as to the financial statements or schedules or other financial or
statistical information included in or omitted from the General Disclosure
Package and the Final Offering Memorandum.  Subject to the foregoing, we advise
you that no facts have come to our attention that caused us to believe that
(i) the General Disclosure Package, as of the Applicable Time, contained any
untrue statement of a material fact or omitted 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, or (ii) the Final
Offering Memorandum, as of its date or at the Closing Time, contained or
contains any 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.

 

In rendering such opinion, such counsel may rely as to matters of fact (but not
as to legal conclusions), to the extent they deem proper, on certificates of
responsible officers of the Company and public officials.  Such opinion shall
not state that it is to be governed or qualified by, or that it is otherwise
subject to, any treatise, written policy or other document relating to legal
opinions, including, without limitation, the Legal Opinion Accord of the ABA
Section of Business Law (1991).

 

A-1-3

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Exhibit A-2

 

[FORM OF OPINION OF COMPANY’S GENERAL COUNSEL
TO BE DELIVERED PURSUANT TO SECTION 5(a)(ii)]

 

To the best of my knowledge, there is not pending or threatened any action,
suit, proceeding, inquiry or investigation, to which the Company or any
subsidiary is a party, or to which the property of the Company or any subsidiary
is subject, before or brought by any court or governmental agency or body,
domestic or foreign, which would reasonably be expected to result in a Material
Adverse Effect, or which would reasonably be expected to materially and
adversely affect the properties or assets thereof or the consummation of the
transactions contemplated in the Purchase Agreement or the performance by the
Company of its obligations thereunder.

 

A-2-1

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Exhibit B

 

FORM OF LOCK-UP TO BE DELIVERED PURSUANT TO SECTION 5(g)

 

November 12, 2018

 

Merrill Lynch, Pierce, Fenner & Smith

Incorporated,

 

as Representative of the several
  Initial Purchasers to be named in the
  within-mentioned Purchase Agreement

 

c/o   Merrill Lynch, Pierce, Fenner & Smith

Incorporated

 

One Bryant Park
New York, New York  10036

 

Re:                             Proposed Offering by KBR, Inc.

 

Dear Sirs:

 

The undersigned, a stockholder and an officer and/or director of KBR, Inc., a
Delaware corporation (the “Company”), understands that Merrill Lynch, Pierce,
Fenner & Smith Incorporated (“Merrill Lynch”) proposes to enter into a Purchase
Agreement (the “Purchase Agreement”) with the Company providing for the offering
of $350,000,000 aggregate principal amount of the Company’s 2.50% Convertible
Senior Notes due 2023 (the “Securities”).  In recognition of the benefit that
such an offering will confer upon the undersigned as a stockholder and an
officer and/or director of the Company, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
undersigned agrees with each initial purchaser to be named in the Purchase
Agreement that, during the period beginning on the date hereof and ending on the
date that is 90 days from the date of the Purchase Agreement (the “Lock-up
Period”), the undersigned will not, without the prior written consent of Merrill
Lynch, (i) directly or indirectly, 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 or otherwise transfer or dispose
of any shares of the Company’s common stock, par value $0.001 per share (the
“Common Stock”), or any securities convertible into or exercisable or
exchangeable for Common Stock, whether now owned or hereafter acquired by the
undersigned or with respect to which the undersigned has or hereafter acquires
the power of disposition (collectively, the “Lock-Up Securities”), or exercise
any right with respect to the registration of any of the Lock-up Securities, or
file, cause to be filed or cause to be confidentially submitted any registration
statement in connection therewith, under the Securities Act of 1933, as amended,
or (ii) enter into any swap or any other agreement or any transaction that
transfers, in whole or in part, directly or indirectly, the economic consequence
of ownership of the Lock-Up Securities, whether any such swap or transaction is
to be settled by delivery of Common Stock or other securities, in cash or
otherwise.

 

Notwithstanding the foregoing, and subject to the conditions below, the
undersigned may transfer the Lock-Up Securities without the prior written
consent of Merrill Lynch, provided that (1) Merrill

 

B-1

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Lynch receives a signed lock-up agreement for the balance of the lockup period
from each donee, trustee, distributee, or transferee, as the case may be,
(2) any such transfer shall not involve a disposition for value, (3) such
transfers are not required to be reported with the Securities and Exchange
Commission (the “SEC”) on Form 4 in accordance with Section 16 of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), and (4) the undersigned
does not otherwise voluntarily effect any public filing or report regarding such
transfers:

 

(i)                                     as a bona fide gift or gifts; or

 

(ii)                                  to any trust for the direct or indirect
benefit of the undersigned or the immediate family of the undersigned (for
purposes of this lock-up agreement, “immediate family” shall mean any
relationship by blood, marriage or adoption, not more remote than first cousin);
or

 

(iii)                               as a distribution to limited partners or
stockholders of the undersigned; or

 

(iv)                              by testate succession or intestate succession;
or

 

(v)                                 to the undersigned’s affiliates or to any
investment fund or other entity controlled or managed by the undersigned.

 

Furthermore, the undersigned may sell shares of Common Stock of the Company
purchased by the undersigned on the open market following the Public Offering if
and only if (i) such sales are not required to be reported in any public report
or filing with the Securities and Exchange Commission, or otherwise and (ii) the
undersigned does not otherwise voluntarily effect any public filing or report
regarding such sales.

 

Furthermore, the restrictions set forth in this letter agreement shall not apply
to:

 

(i)                                     transfers to a bona fide third party
pursuant to the consummation of a merger, consolidation or other similar
transaction, approved by the board of directors of the Company, the result of
which is that any “person” (as defined in Section 13(d)(3) of the Exchange Act),
or group of persons, other than the Company, becomes the beneficial owner (as
defined in Rules 13d-3 and 13d-5 of the Exchange Act) of a majority of the total
voting power of the common stock of the Company (each, a “Change of Control”),
or (b) the entry into any lock-up, voting or similar agreement in connection
with a Change of Control, pursuant to which the undersigned may agree to
transfer, sell, tender or otherwise dispose of Lock-Up Securities in connection
with such Change of Control, or vote any Lock-Up Securities in favor of any such
Change of Control, and the satisfaction of such obligations thereunder, provided
that, in either case, if such Change in Control is not consummated, the
undersigned’s Lock-Up Securities shall remain subject to the restrictions
contained herein;

 

(ii)                                  the conversion or exercise of stock
options or other equity securities convertible into or exercisable for Common
Stock granted pursuant to the Company’s equity incentive plans that are
outstanding as of the date of the Purchase Agreement and described in the
General Disclosure Package and the Final Offering Memorandum (including the
documents incorporated by reference therein) and which options or other
securities would expire within the Lock-Up Period; provided that the
restrictions set forth in this letter agreement shall apply to any of the
undersigned’s shares of Common Stock or any security convertible into or
exercisable for Common Stock issued upon such conversion or exercise except as
otherwise provided herein;

 

B-2

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(iii)                               transfers of Lock-Up Securities to the
Company (a) for the purpose of satisfying any tax or other governmental
withholding obligation with respect to Lock-Up Securities issued upon the
vesting or exercise of stock options or other equity securities convertible into
or exercisable for Common Stock or (b) in connection with the “cashless
exercise” of an option exercised pursuant to clause (ii) hereunder; provided
that, to the extent such transaction requires a filing under Section 16 of the
Exchange Act, such transfers are reported with the SEC on the applicable form
under the transaction code “F;” and provided further, that any shares of Common
Stock received by the undersigned upon any such exercise and not transferred to
the Company will be subject to the restrictions of this letter agreement; or

 

(iv)                              the establishment of a trading plan pursuant
to Rule 10b5-1 under the Exchange Act (a “10b5-1 Plan”) for the transfer of
shares of Common Stock, provided that such 10b5-1 Plan does not provide for the
transfer of Common Stock during the Lock-Up Period and no public announcement or
filing under the Exchange Act regarding the establishment of such 10b5-1 Plan
shall be required of or voluntarily made by or on behalf of the undersigned
during the Lock-Up Period;

 

provided, that (A) in the case of clauses (ii) and (iii) above, any public
filing or report made with the SEC or otherwise shall state the reason for such
transfer, and (B) in no case shall the undersigned or the Company voluntarily
effect any public filing or report regarding such transfers.

 

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 Lock-Up Securities except in compliance with the foregoing
restrictions.

 

 

Very truly yours,

 

 

 

 

Signature:

 

 

 

 

 

Print Name:

 

 

B-3

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