Document:

Exhibit
10.1

EXECUTION
COPY

 

6,000,000
Shares

ENERSYS

Common
Stock (Par Value $0.01 Per Share)

 

UNDERWRITING
AGREEMENT

 

 

December 7, 2006

 

December 7, 2006

Lehman Brothers Inc.

745 Seventh Avenue

New York, New York 10019

Dear Sirs and Mesdames:

The stockholders
named in Schedule I hereto (the “Selling
Stockholders”) of EnerSys, a Delaware corporation (the “Company”), propose to sell to Lehman
Brothers Inc. (the “Underwriter”)
an aggregate of 6,000,000 shares (the “Shares”)
of common stock, par value $0.01 per share (the “Common  Stock”) of
the Company.

1.             Representations and Warranties. The
Company represents and warrants to and agrees with the Underwriter that:

(a)          A
registration statement on Form S-3 relating to the Shares has (i) been prepared
by the Company in conformity with the requirements of the Securities Act of
1933, as amended (the “Securities Act”),
and the rules and regulations (the “Rules and
Regulations”) of the Securities and Exchange Commission (the “Commission”) thereunder; (ii) been filed
with the Commission under the Securities Act; and (iii) become effective under
the Securities Act.  Copies of such
registration statement and any amendment thereto have been delivered by the
Company to you. As used in this Agreement:

(i)       “Applicable Time” means 8:45 a.m. (New York
City time) on the date of this Agreement;

(ii)      “Effective Date” means any date as of which
any part of such registration statement relating to the Shares became, or is
deemed to have become, effective under the Securities Act in accordance with
the Rules and Regulations;

(iii)     “Issuer Free Writing Prospectus” means each “free
writing prospectus” (as defined in Rule 405 of the Rules and Regulations)
prepared by or on behalf of the Company or used or referred to by the Company
in connection with the offering of the Shares;

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(iv)     “Preliminary Prospectus” means any
preliminary prospectus relating to the Shares included in such registration
statement or filed with the Commission pursuant to Rule 424(b) of the Rules and
Regulations, including the base prospectus included in the Registration
Statement as supplemented by any preliminary prospectus supplement thereto
relating to the Shares;

(v)      “Pricing Disclosure Package” means, as of
the Applicable Time, the most recent Preliminary Prospectus, together with each
Issuer Free Writing Prospectus filed or used by the Company on or before the
Applicable Time, other than a road show that is an Issuer Free Writing
Prospectus under Rule 433 of the Rules and Regulations;

(vi)     “Prospectus” means the final prospectus
relating to the Shares, including any prospectus supplement thereto relating to
the Shares, as filed with the Commission pursuant to Rule 424(b) of the Rules
and Regulations; and

(vii)    “Registration Statement” means,
collectively, the various parts of such registration statement, each as amended
as of the Effective Date for such part, including the information, if any,
deemed pursuant to Rule 430A, 430B or 430C of the Rules and Regulations to be
part thereof as of the Effective Date, any Preliminary Prospectus or the
Prospectus and all exhibits to such registration statement.

Any reference to any Preliminary Prospectus or the Prospectus shall be
deemed to refer to and include any documents incorporated by reference therein
pursuant to Form S-3 under the Securities Act as of the date of such
Preliminary Prospectus or the Prospectus, as the case may be.  Any reference to the “most recent Preliminary Prospectus” shall
be deemed to refer to the latest Preliminary Prospectus included in the
Registration Statement or filed pursuant to Rule 424(b) prior to or on the date
hereof (including, for purposes hereof, any documents incorporated by reference
therein prior to or on the date hereof). 
Any reference to any amendment or supplement to any Preliminary
Prospectus or the Prospectus shall be deemed to refer to and include any
document filed under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), after the date of such
Preliminary Prospectus or the Prospectus, as the case may be, and incorporated
by reference in such Preliminary Prospectus or the Prospectus, as the case may
be; and any reference to any amendment to the Registration Statement shall be
deemed to include any annual report of the Company on Form 10-K and any
quarterly report on Form 10-Q, in

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each case filed with the Commission pursuant to Section 13(a) or 15(d)
of the Exchange Act after the Effective Date that is incorporated by reference
in the Registration Statement.  The
Commission has not issued any order preventing or suspending the use of any
Preliminary Prospectus or the Prospectus or suspending the effectiveness of the
Registration Statement, and no proceeding or examination for such purpose has
been instituted or threatened by the Commission.

(b)           The Company is not an ineligible
issuer as defined under the Securities Act, in each case at the times specified
in Rules 164, 405 and 433 of the Rules and Regulations in connection with the
offering of the Shares.

(c)           (i) The Registration Statement as of
the Effective Date did not contain, and any post-effective amendment thereto at
the time it becomes effective will not contain, any untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, (ii) the Registration
Statement, as of the Effective Date, complied and any post-effective amendment
thereto at the time it becomes effective will comply, each Preliminary
Prospectus complied and the Prospectus complies and, as amended or
supplemented, if applicable, will comply in all material respects when filed
with the Commission pursuant to Rule 424(b) and on the Closing Date with the
Securities Act and the Rules and Regulations and (iii) the Prospectus, as of
its date and the Closing Date, will not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, except that the representations and warranties set forth in this
paragraph do not apply to statements or omissions in the Registration Statement
or the Prospectus based upon information relating to the Underwriter or any
Selling Stockholder furnished to the Company in writing by the Underwriter or
such Selling Stockholder, as the case may be, expressly for use therein.

(d)           The documents incorporated by
reference in any Preliminary Prospectus or the Prospectus (i) conformed, and
any further documents so incorporated will conform, when filed with the
Commission, in all material respects to the requirements of the Exchange Act or
the Securities Act, as applicable, and the rules and regulations of the
Commission thereunder and (ii) did not, and any further documents filed and
incorporated by reference therein will not, when filed with the Commission,
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the

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statements therein, in the light of the circumstances under which they
were made, not misleading.

(e)           The Pricing Disclosure Package,
together with the price of the Shares and
disclosures directly relating thereto included on the cover page of the
Prospectus, did not, as of the Applicable Time, contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided that no representation or
warranty is made as to information contained in or omitted from the Pricing
Disclosure Package in reliance upon and in conformity with written information
furnished to the Company by the Underwriter specifically for inclusion therein.

(f)            Each Preliminary Prospectus did not,
as of its date, contain an untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, provided
that no representation or warranty is made as to information contained in or
omitted from such Preliminary Prospectus in reliance upon and in conformity
with written information furnished to the Company by the Underwriter or any
Selling Stockholder specifically for inclusion therein.

(g)           Each Issuer Free Writing Prospectus
(including, without limitation, any road show that is a free writing prospectus
under Rule 433), does not conflict with the information contained in the most
recent Preliminary Prospectus or the Prospectus and when considered together
with the Pricing Disclosure Package as of the Applicable Time, and the price of the Shares and disclosures directly
relating thereto included on the cover page of the Prospectus, did not
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading.

(h)           Each Issuer Free Writing Prospectus
conformed or will conform in all material respects to the requirements of the
Securities Act and the Rules and Regulations on the date of first use, and the
Company has complied with any filing requirements applicable to such Issuer
Free Writing Prospectus pursuant to the Rules and Regulations.  The Company has not made any offer relating
to the Shares that would constitute an Issuer Free Writing Prospectus without
the prior written consent of the Underwriter. 
The Company has retained in accordance with the Rules and

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Regulations all Issuer Free Writing Prospectuses that were not required
to be filed pursuant to the Rules and Regulations.

(i)            The
Company has been duly incorporated, is validly existing as a corporation in
good standing under the laws of the State of Delaware, has the corporate power
and authority to own its property and to conduct its business as described in
each of the Pricing Disclosure Package and the Prospectus and is duly qualified
to transact business and is in good standing in each jurisdiction in which the
conduct of its business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so qualified or be
in good standing would not have a material adverse effect on the Company and
its subsidiaries, taken as a whole.

(j)            Each
significant subsidiary of the Company within the meaning of Rule 1-02(w) of
Regulation S-X under the Securities Act (each a “Significant Subsidiary”, collectively the “Significant Subsidiaries”) has been duly
incorporated or formed, is validly existing as a corporation, limited liability
company or limited partnership, as the case may be, in good standing under the
laws of the jurisdiction of its incorporation or formation, has the corporate
or other power and authority to own its property and to conduct its business as
described in each of the Pricing Disclosure Package and the Prospectus and is duly
qualified to transact business and is in good standing in each jurisdiction in
which the conduct of its business or its ownership or leasing of property
requires such qualification, except to the extent that the failure to be so
qualified or be in good standing would not have a material adverse effect on
the Company and its subsidiaries, taken as a whole; all of the issued shares of
capital stock of each Significant Subsidiary of the Company that is a
corporation have been duly and validly authorized and issued, are fully paid
and non-assessable and are owned directly or indirectly by the Company, free
and clear of all liens, encumbrances, equities or adverse claims, except in the
case of shares pledged pursuant to that certain Credit Agreement dated March
17, 2004, among the Company, EnerSys Capital Inc., various lending institutions
party thereto, Bank of America, N.A., Morgan Stanley Senior Funding, Inc. and
Lehman Commercial Paper Inc., as amended (the “Credit Agreement”); all of the issued limited liability
company interests of each Significant Subsidiary of the Company that is a
limited liability company have been duly and validly authorized and issued and
are owned directly or indirectly by the Company, free and clear of all liens,
encumbrances, equities or adverse claims, except in the case of limited
liability company interests pledged pursuant to the Credit Agreement; all of
the issued limited partnership interests of each Significant Subsidiary of the
Company that is a limited partnership have

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been duly and validly authorized and issued and are owned directly or
indirectly by the Company, free and clear of all liens, encumbrances, equities
or adverse claims, except in the case of limited partnership interests pledged
pursuant to the Credit Agreement.

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

(l)            The authorized capital stock of the
Company conforms as to legal matters to the description thereof contained in
each of the Pricing Disclosure Package and the Prospectus.

(m)          The shares of Common Stock outstanding
prior to the sale of the Shares have been duly authorized and are validly
issued, fully paid and non-assessable.

(n)           The Shares have been duly authorized
and issued, and are  fully paid and
non-assessable, and after they are delivered against payment therefor as
provided herein, the Shares will not be subject to any preemptive or similar
rights.

(o)           The execution and delivery by the
Company of, and the performance by the Company of its obligations under, this
Agreement will not contravene any provision of (i) applicable law, (ii) the
certificate of incorporation or by-laws of the Company, (iii) any
agreement or other instrument binding upon the Company or any of its
subsidiaries, or (iv) any judgment, order or decree of any governmental body,
agency or court having jurisdiction over the Company or any subsidiary except,
in the case of the foregoing clauses (i), (iii) or (iv), where such
contravention would not, singly or in the aggregate, have a material adverse
effect on the Company and its subsidiaries, taken as a whole, and no consent,
approval, authorization or order of, or qualification with, any governmental
body or agency is required to be obtained by the Company for the performance by
the Company of its obligations under this Agreement, except such as have been
obtained under the Securities Act or as may be required by the securities or
Blue Sky laws of the various states in connection with the offer and sale of
the Shares.

(p)           There has not occurred any material
adverse change, or any development that would reasonably be expected to result
in a prospective material adverse change, in the condition, financial or
otherwise, or in the earnings, business or operations of the Company and its
subsidiaries, taken as a whole, from that set forth in each of the Pricing
Disclosure Package

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and the Prospectus (exclusive of any amendments or supplements thereto
subsequent to the date of this Agreement).

(q)           There are no legal or governmental
proceedings pending or threatened to which the Company or any of its
subsidiaries is a party or to which any of the properties of the Company or any
of its subsidiaries is subject that are required to be described in the
Registration Statement, the Pricing Disclosure Package or the Prospectus and
are not so described or any statutes, regulations, contracts or other documents
that are required to be described in the Registration Statement, the Pricing
Disclosure Package or the Prospectus or to be filed as exhibits to the Registration
Statement that are not described or filed as required.

(r)            The Company is not, and after giving
effect to the offering and sale of the Shares described in the Pricing
Disclosure Package and the Prospectus will not be, required to register as an “investment
company” as such term is defined in the Investment Company Act of 1940, as
amended.

(s)           Except as described in the Pricing
Disclosure Package and the Prospectus, the Company and its Significant
Subsidiaries (i) are in compliance with any and all applicable foreign,
federal, state and local laws and regulations relating to the protection of
human health and safety, the environment or hazardous or toxic substances or
wastes, pollutants or contaminants (“Environmental
Laws”), (ii) have received all permits, licenses or other approvals
required of them under applicable Environmental Laws to conduct their
respective businesses and (iii) are in compliance with all terms and conditions
of any such permit, license or approval, except where such noncompliance with
Environmental Laws, failure to receive required permits, licenses or other
approvals or failure to comply with the terms and conditions of such permits,
licenses or approvals would not, singly or in the aggregate, have a material
adverse effect on the Company and its subsidiaries, taken as a whole.

(t)            Except as described in the Pricing
Disclosure Package and the Prospectus, there are no costs or liabilities
associated with Environmental Laws (including, without limitation, any capital
or operating expenditures required for clean-up, closure of properties or
compliance with Environmental Laws or any permit, license or approval, any
related constraints on operating activities and any potential liabilities to
third parties) which would, singly or in the aggregate, have a material adverse
effect on the Company and its subsidiaries, taken as a whole.

(u)           Except as described in the Pricing
Disclosure Package and the Prospectus, there are no contracts, agreements or
understandings

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between the Company and any person granting such person the right to
require the Company to file a registration statement under the Securities Act
with respect to any securities of the Company or to require the Company to
include such securities with the Shares registered pursuant to the Registration
Statement.

(v)           Subsequent to the respective dates as
of which information is given in the Registration Statement, the Pricing
Disclosure Package and the Prospectus, (i) the Company and its subsidiaries
have not incurred any material liability or obligation, direct or contingent,
nor entered into any material transaction not in the ordinary course of
business, that in either case is required to be disclosed in the Pricing
Disclosure Package or the Prospectus; (ii) the Company has not purchased any of
its outstanding capital stock, nor declared, paid or otherwise made any
dividend or distribution of any kind on its capital stock other than ordinary
and customary dividends; and (iii) there has not been any material change in
the capital stock, short-term debt or long-term debt of the Company
and its subsidiaries, except with respect to each of the foregoing clauses (i),
(ii), and (iii) as described in the Pricing Disclosure Package and the
Prospectus.

(w)          The Company and its Significant
Subsidiaries have good and marketable title in fee simple to all real property
and good and marketable title to all personal property owned by them which is
material to the business of the Company and its subsidiaries taken as a whole,
in each case free and clear of all liens, encumbrances and defects except such
as are described in the Pricing Disclosure Package or which would not, singly
or in the aggregate, reasonably be expected to result in a material adverse
effect on the Company and its subsidiaries, taken as a whole; and any real
property and buildings held under lease by the Company and its subsidiaries
which are material to the business of the Company and its subsidiaries taken as
a whole are held by them under valid, subsisting and enforceable leases with such
exceptions as would not, singly or in the aggregate, reasonably be expected to
result in a material adverse effect on the Company and its subsidiaries, taken
as a whole, except in each case as described in the Pricing Disclosure Package
and the Prospectus.

(x)            Except as described in the Pricing
Disclosure Package and the Prospectus, the Company and its subsidiaries own or
possess, or can acquire on reasonable terms, all patents, patent rights,
licenses, inventions, copyrights, know-how (including trade secrets and
other unpatented and/or unpatentable proprietary or confidential information,
systems or procedures), trademarks, service marks and trade names currently
employed by them in connection with the business now operated by them,

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except where the failure to own or possess, or the ability to acquire
on reasonable terms, any of the foregoing would not, singly or in the
aggregate, reasonably be expected to result in a material adverse effect on the
Company and its subsidiaries, taken as a whole, and neither the Company nor any
of its subsidiaries has received any notice of infringement of or conflict with
asserted rights of others with respect to any of the foregoing which, singly or
in the aggregate, would reasonably be expected to result in a material adverse
affect on the Company and its subsidiaries, taken as a whole.

(y)           No material labor dispute with the
employees of the Company or any of its Significant Subsidiaries exists, except
as described in the Pricing Disclosure Package and the Prospectus, or, to the
knowledge of the Company, is imminent.

(z)            The Company and each of its
Significant Subsidiaries are insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as in
management’s judgment are prudent; neither the Company nor any of its
Significant Subsidiaries has been refused any insurance coverage sought or
applied for, except such refusals of coverage relating to directors and
officers liability insurance; and neither the Company nor any of its Significant
Subsidiaries has any reason to believe that it will not be able to renew its
existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue its
business at a cost that would not have a material adverse affect on the Company
and its subsidiaries, taken as a whole, except as described in the Pricing
Disclosure Package and the Prospectus and except for such non-renewals of
coverage or inability to obtain similar coverage from similar insurers relating
to directors and officers liability insurance.

(aa)         The Company and its Significant
Subsidiaries possess all certificates, authorizations and permits issued by the
appropriate federal, state or foreign regulatory authorities that are necessary
to conduct their respective businesses in all material respects, and neither
the Company nor any of its Significant Subsidiaries has received any notice of
proceedings relating to the revocation or modification of any such certificate,
authorization or permit which, singly or in the aggregate, would reasonably be
expected to have a material adverse affect on the Company and its subsidiaries,
taken as a whole, except as described in the Pricing Disclosure Package and the
Prospectus.

(bb)         The Company and its Significant
Subsidiaries maintain a consolidated system of internal accounting controls
sufficient to provide

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reasonable assurance that (i) transactions are executed in accordance
with management’s general or specific authorizations; (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain asset
accountability; (iii) access to assets is permitted only in accordance with management’s
general or specific authorization; and (iv) the recorded accountability for
assets is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.

(cc)         Except as described in the Pricing
Disclosure Package and the Prospectus (exclusive of any amendments or
supplements thereto subsequent to the date of this Agreement), the Company has
not sold, issued or distributed any shares of Common Stock during the six-month
period preceding the date hereof, including any sales pursuant to Rule 144A
under, or Regulation D or S of, the Securities Act, other than shares issued
pursuant to employee benefit plans, qualified stock option plans or other
employee compensation plans or pursuant to outstanding options, rights or
warrants.

(dd)         The Company and its Significant
Subsidiaries have filed all foreign, federal, state and local tax returns that
are required to be filed, or have duly requested extensions thereof, and have
paid all taxes required to be paid by them, any other assessment, fine or
penalty levied against them, except in each case in which the failure to so
file or pay would not have a material adverse affect on the Company and its
subsidiaries, taken as a whole.  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 have a material adverse affect on the Company and its
subsidiaries, taken as a whole.

(ee)          The financial statements incorporated
by reference in the Registration Statement, the Pricing Disclosure Package and
the Prospectus, together with the related schedules and notes, present fairly
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
generally accepted accounting principles (“GAAP”)
applied on a consistent basis throughout the periods involved.  The supporting schedules, if any, included or
incorporated by reference in the Registration Statement present fairly in
accordance with GAAP the information required to be stated therein.  The selected financial data

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incorporated by reference in the Pricing Disclosure Package and the
Prospectus present fairly the information shown therein and have been compiled
on a basis consistent with that of the audited financial statements
incorporated by reference in the Registration Statement.

(ff)           The Company has not distributed and,
prior to the later to occur of the Closing Date and completion of the
distribution of the Shares, will not distribute any offering material in
connection with the offering and sale of the Shares other than any Preliminary
Prospectus, the Prospectus, any Issuer Free Writing Prospectus to which the
Underwriter has consented in accordance with Section 1(g) and or 7(a)(vii).

(gg)         There is and has been no failure on the
part of the Company and any of the Company’s directors or officers, in their
capacities as such, to comply in all material respects with the applicable
provisions of the Sarbanes-Oxley Act of 2002 and the rules and regulations
promulgated in connection therewith.

2.          Representations and Warranties of the
Selling Stockholders. Each Selling Stockholder, severally and
not jointly, represents and warrants that:

(a)           Neither such Selling
Stockholder nor any person acting on behalf of such Selling Stockholder (other
than, if applicable, the Company and the Underwriter) has used or referred to
any “free writing prospectus” (as defined in Rule 405), relating to the Shares.

(b)           Such Selling
Stockholder has, and immediately prior to the Closing Date on which such
Selling Stockholder is selling the Shares, such Selling Stockholder will have,
good and valid title to or a valid “security entitlement” within the meaning of
Section 8-501 of the New York Uniform Commercial Code (the “UCC”) in respect of, the Shares to be sold by such Selling
Stockholder hereunder on such Closing Date free and clear of all liens, encumbrances,
equities or claims.

(c)           Upon payment for the
Shares to be sold by such Selling Stockholder, delivery of such Shares, as
directed by the Underwriter, to Cede & Co. (“Cede”) or such other nominee as may be designated by The
Depository Trust Company (“DTC”),
registration of such Shares in the name of Cede or such other nominee and the
crediting of such Shares on the books of DTC to securities accounts of the
Underwriter (assuming that neither DTC nor the Underwriter has notice of any
adverse claim (within the meaning of Section 8-105 of the UCC) to such
Shares), (i) DTC shall be a “protected purchaser” of such Shares within
the meaning of Section 8-303 of the UCC, (ii) under Section 8-501
of the UCC, the Underwriter will

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acquire a
valid security entitlement in respect of such Shares and (iii) no action
based on any “adverse claim,” within the meaning of Section 8-102 of the
UCC, to such Shares may be asserted against the Underwriter with respect to
such security entitlement.  For purposes
of this representation, such Selling Stockholder may assume that when such
payment, delivery and crediting occur, (A) such Shares will have been
registered in the name of Cede or another nominee designated by DTC, in each
case on the Company’s share registry in accordance with its certificate of
incorporation, bylaws and applicable law, (B) DTC will be registered as a “clearing
corporation” within the meaning of Section 8-102 of the UCC and
(C) appropriate entries to the accounts of the Underwriter on the records
of DTC will have been made pursuant to the UCC.

(d)           Such Selling
Stockholder has full right, power and authority, corporate or otherwise, to
enter into this Agreement.

(e)           This Agreement has
been duly and validly authorized, executed and delivered by or on behalf of
such Selling Stockholder.

(f)            The execution,
delivery and performance of this Agreement by such Selling Stockholder and the
consummation by such Selling Stockholder of the transactions contemplated
hereby and thereby do not and will not (i) conflict with or result in a breach
or violation of any of the terms or provisions of, or constitute a default
under, any indenture, mortgage, deed of trust, loan agreement, license or other
agreement or instrument to which such Selling Stockholder is a party or by which
such Selling Stockholder is bound or to which any of the property or assets of
such Selling Stockholder is subject, (ii) result in any violation of the
provisions of the charter or by-laws or deed of trust (or similar
organizational documents) of such Selling Stockholder, or (iii) result in any
violation of any statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over such Selling Stockholder
or the property or assets of such Selling Stockholder.

(g)           No consent,
approval, authorization or order of, or filing or registration with, any court
or governmental agency or body having jurisdiction over such Selling
Stockholder or the property or assets of such Selling Stockholder is required
for the execution, delivery and performance of this Agreement by such Selling
Stockholder and the consummation by such Selling Stockholder of the
transactions contemplated hereby and thereby, except for the registration of
the Shares under the Securities Act and such consents, approvals,
authorizations, registrations or qualifications as may be required under the
Exchange Act and applicable state securities

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laws in connection with the
purchase and sale of the Shares by the Underwriter.

(h)           All material
information with respect to such Selling Stockholder contained in each of the
Registration Statement, the Prospectus and the Pricing Disclosure Package (as
amended and supplemented, if the Company shall have filed with the Commission
any amendment or supplement thereto) (i) complied and will comply in all
material respects with all applicable provisions of the Securities Act and the
Rules and Regulations, (ii) contains and will contain all statements of
material fact required to be stated therein in accordance with the Securities
Act and the Rules and Regulations, and (iii) does not and will not contain an
untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary in order to make the statements therein not
misleading.  Solely with respect to the
Metalmark Selling Stockholders (as defined in Schedule I hereto), such Selling
Stockholder is not prompted to sell the Shares by any material non-public
information relating to the business, results of operations or prospects of the
Company and its subsidiaries of an adverse nature that is required to be
disclosed in the Registration Statement, the Pricing Disclosure Package or the
Prospectus.  For this purpose,
information that is set forth or incorporated by reference in the Registration
Statement, the Pricing Disclosure Package or the Prospectus or that otherwise
has been made publicly available about the Company shall be deemed to be public
information, and any opinion or conclusion that a Metalmark Selling Stockholder
may hold, or analysis performed by a Metalmark Selling Stockholder, in its
capacity as an investor about the business, results of operations or prospects
of the Company and its subsidiaries shall not be information that relates to
the business, results of operations or prospects of the Company.

(i)            Such Selling
Stockholder has not taken and will not take, directly or indirectly, any action
that is designed to or that has constituted or that could reasonably be
expected to cause or result in the stabilization or manipulation of the price
of any security of the Company to facilitate the sale or resale of the Shares.

(j)            The sale of the
Shares by such Selling Stockholder does not violate any of the Company’s
internal policies regarding the sale of stock by its affiliates.

Any certificate
signed by any officer of any Selling Stockholder and delivered to the
Underwriter or counsel for the Underwriter in connection with the offering of
the Shares shall be deemed a representation and warranty by such Selling
Stockholder, as to matters covered thereby, to the Underwriter.

 13

 

3.             Agreements to Sell and Purchase.  The Selling Stockholders
hereby agree, severally and not jointly, to sell to the Underwriter, and the
Underwriter, upon the basis of the representations and warranties herein
contained, but subject to the conditions hereinafter stated, agrees to purchase
from the Selling Stockholders the respective number of Shares set forth in
Schedule I hereof opposite its name at $16.02 a share (the “Purchase  Price”).

The Company and
each Selling Shareholder hereby agrees that, without the prior written consent
of the Underwriter, it will not, during the period ending 45 days after the
date of the Prospectus, (i) offer, pledge, sell, contract to sell, sell
any option or contract to purchase, purchase any option or contract to sell,
grant any option, right or warrant to purchase, lend, or otherwise transfer or
dispose of, directly or indirectly, any shares of Common Stock or any
securities convertible into or exercisable or exchangeable for Common Stock;
(ii) file any registration statement with the Commission relating to the
offering of any shares of Common Stock or any securities convertible into or
exercisable or exchangeable for Common Stock; or (iii) enter into any swap
or other arrangement that transfers to another, in whole or in part, any of the
economic consequences of ownership of the Common Stock, whether any such
transaction described in clause (i), (ii) or (iii) above is to be settled
by delivery of Common Stock or such other securities, in cash or otherwise.  The foregoing sentence shall not apply
to the issuance by the Company of shares of Common Stock, any option to
purchase shares of Common Stock or any securities convertible into or
exercisable or exchangeable for Common Stock to directors, officers and
employees of the Company and its subsidiaries pursuant to bonus, option,
incentive, employee stock purchase or other compensatory plans of the Company
existing on the date hereof that are described in the Pricing Disclosure
Package or filed as an exhibit to the Registration Statement.

4.             Terms of Public Offering.  The Company and the Selling Stockholders are
advised by you that the Underwriter proposes to make a public offering of the
Shares as soon after the Registration Statement and this Agreement have become
effective as in your judgment is advisable. 
The Company and the Selling Stockholders are further advised by you that
the Shares are to be offered to the public initially at $16.25 a share (the “Public Offering Price”) and to certain
dealers selected by you at a price that represents a concession not in excess
of $0.05 a share under the Public Offering Price.

5.             Payment and Delivery. 
Payment for the Shares shall be made to the Selling
Stockholders in Federal or other funds immediately available in New York City
against delivery of the Shares for the respective accounts of the Underwriter
at 10:00 a.m., New York City time, on December 12, 2006, or at such other time
on the same or such other date, not later than December 20, 2006,

 14
 

 

as shall be designated in
writing by you.  The time and date of
such payment are hereinafter referred to as the “Closing Date”.

The Shares shall
be registered in such names and in such denominations as you shall request in
writing not later than one full business day prior to the Closing Date.  The Shares shall be delivered to you on the
Closing Date for the account of the Underwriter, with any transfer taxes
payable in connection with the transfer of the Shares to the Underwriter duly
paid, against payment of the Purchase Price therefor.

6.                                       Conditions to the Underwriter’s Obligations.  The obligations of the Underwriter are
subject to the following further conditions:

(a)           Subsequent to the execution and
delivery of this Agreement and prior to the Closing Date:

(i)             there shall not have occurred any
downgrading, nor shall any notice have been given of any intended or potential
downgrading or of any review for a possible change that does not indicate the
direction of the possible change, in the rating accorded any of the Company’s
securities by any “nationally recognized statistical rating organization,” as
such term is defined for purposes of Rule 436(g)(2) under the Securities Act;
and

(ii)         there
shall not have occurred any change, or any development that would reasonably be
expected to result in a prospective change, in the condition, financial or
otherwise, or in the earnings, business or operations of the Company and its
subsidiaries, taken as a whole, from that set forth in the most recent
Preliminary Prospectus and the Prospectus (exclusive of any amendments or
supplements thereto subsequent to the date of this Agreement) that, in your
judgment, is material and adverse and that makes it, in your judgment,
impracticable to market the Shares on the terms and in the manner contemplated
in the most recent Preliminary Prospectus and the Prospectus.

(b)           The
Underwriter shall have received on the Closing Date a certificate, dated the
Closing Date and signed by an executive officer of the Company, to the effect
set forth in Section 6(a)(i) above and to the effect that the representations
and warranties of the Company contained in this Agreement are true and correct
as of the Closing Date and that the Company has complied with all of the
agreements and satisfied all of the conditions on its part to be performed or
satisfied hereunder on or before the Closing Date.

 15
 

 

The officer
signing and delivering such certificate may rely upon the best of his or her
knowledge as to proceedings threatened.

(c)           The
Underwriter shall have received on the Closing Date an opinion,  tax opinion and negative assurance letter of
Skadden, Arps, Slate, Meagher, & Flom LLP, special counsel for the Company,
dated the Closing Date, in form and substance reasonably satisfactory to the
Underwriter, to the effect set forth in Exhibits B, C and D.

(d)           The
Underwriter shall have received on the Closing Date an opinion of Frank
Macerato, general counsel for the Company, dated the Closing Date, in form and
substance reasonably satisfactory to the Underwriter, to the effect set forth
in Exhibit E.

The opinions of Skadden, Arps, Slate, Meagher, &
Flom LLP and Frank Macerato described in Sections 6(c) and 6(d), respectively,
above shall be rendered to the Underwriter at the request of the Company and
shall so state therein.

(e)           The
Underwriter shall have received on the Closing Date an opinion of Davis Polk
& Wardwell, counsel for the Underwriter, dated the Closing Date, with
respect to the issuance and sale of the shares, the Registration Statement, the
Pricing Disclosure Package, the Prospectus and other related matters as the
Underwriter may reasonably require, and the Company shall have furnished to
such counsel such documents as they request for the purpose of enabling them to
pass upon such matters.

(f)            The
Underwriter shall have received on the Closing Date an opinion of Gibson Dunn
& Crutcher LLP, counsel for the Selling Stockholders dated the Closing
Date, in form and substance reasonably satisfactory to the Underwriter, to the
effect set forth in Exhibit F.

(g)           The
Underwriter shall have received, on each of the date hereof and the Closing
Date, a letter dated the date hereof or the Closing Date, as the case may be,
in form and substance satisfactory to the Underwriter, from Ernst & Young
LLP, 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 and incorporated by
reference in the Registration Statement, the most recent Preliminary Prospectus
and the Prospectus; provided that
the letter delivered on the Closing Date shall use a “cut-off date” not earlier
than the date hereof.

(h)           The
“lock-up” agreements, each substantially in the form of Exhibit A hereto,
between you and executive officers and directors of the

 16
 

 

Company relating to sales and certain other dispositions of shares of
Common Stock or certain other securities, delivered to you on or before the
date hereof, shall be in full force and effect on the Closing Date.

(i)          Each
Selling Stockholder shall have furnished to the Underwriter on the Closing Date
a certificate, dated the Closing Date, signed by, or on behalf of, the Selling
Stockholder stating that the representations and warranties of such Selling
Stockholder contained herein are true and correct on and as of such Closing
Date and that such Selling Stockholder has complied with all its agreements
contained herein and has satisfied all the conditions on its part to be
performed or satisfied hereunder at or prior to such Closing Date.

7.             Covenants of the Company.  (a) In further consideration of the
agreements of the Underwriter herein contained, the Company covenants with the
Underwriter as follows:

(i)             To prepare the Prospectus in a form
approved by the Underwriter and to file such Prospectus pursuant to Rule 424(b)
under the Securities Act within the time periods specified by Rule 424(b)
(without reliance on Rule 424(b)(8)).

(ii)            To file promptly all reports and any
definitive proxy or information statements required to be filed by the Company
with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act subsequent to the date of the Prospectus and for so long as the
delivery of a prospectus is required in connection with the offering or sale of
the Shares;

(iii)           To advise the Underwriter, promptly
after it receives notice thereof, of the issuance by the Commission of any stop
order or of any order preventing or suspending the use of the Prospectus or any
Issuer Free Writing Prospectus, of the suspension of the qualification of the
Shares for offering or sale in any jurisdiction, of the initiation or
threatening of any proceeding or examination for any such purpose or of any
request by the Commission for the amending or supplementing of the Registration
Statement, the Prospectus or any Issuer Free Writing Prospectus or for
additional information; and, in the event of the issuance of any stop order or
of any order preventing or suspending the use of the Prospectus or any Issuer
Free Writing Prospectus or suspending any such qualification, to use promptly
its best efforts to obtain its withdrawal;

 17
 

 

(iv)          To furnish to you, without charge,
five (5) signed copies of the Registration Statement (including exhibits
thereto) and to furnish to you in New York City, without charge, prior to 10:00
a.m. New York City time on the business day next succeeding the date of this
Agreement and during the period mentioned in Section 7(a)(vi) below, as many
copies of the most recent Preliminary Prospectus, the Prospectus, each Issuer Free
Writing Prospectus, any document incorporated by reference in any Preliminary
Prospectus or the Prospectus and any supplements and amendments thereto or to
the Registration Statement as you may reasonably request.

(v)           Before amending or supplementing the
Registration Statement or the Prospectus, to furnish to you a copy of each such
proposed amendment or supplement and not to file any such proposed amendment or
supplement to which you reasonably object, and to file with the Commission
within the applicable period specified in Rule 424(b) under the Securities Act
any prospectus required to be filed pursuant to such Rule.

(vi)          If, during such period after the first
date of the public offering of the Shares as in the opinion of counsel for the
Underwriter the Prospectus is required by law to be delivered in connection
with sales by the Underwriter or any dealer, any event shall occur or condition
exist as a result of which it is necessary to amend or supplement the
Prospectus in order to make the statements therein, in the light of the
circumstances when the Prospectus is delivered to a purchaser, not misleading,
or if, in the opinion of counsel for the Underwriter, it is necessary to amend
or supplement the Prospectus to comply with applicable law, forthwith to
prepare, file with the Commission and furnish, at its own expense, to the
Underwriter and to the dealers (whose names and addresses you will furnish to
the Company) to which Shares may have been sold by you, either amendments or
supplements to the Prospectus so that the statements in the Prospectus as so
amended or supplemented will not, in the light of the circumstances when the
Prospectus is delivered to a purchaser, be misleading or so that the
Prospectus, as amended or supplemented, will comply with law.

(vii)         Not to make any offer relating to the
Shares that would constitute an Issuer Free Writing Prospectus without the
prior written consent of the Underwriter.

 18
 

 

(viii)        To retain in accordance with the Rules
and Regulations all Issuer Free Writing Prospectuses not required to be filed
pursuant to the Rules and Regulations; and if at any time after the date hereof
any events shall have occurred as a result of which any Issuer Free Writing
Prospectus, as then amended or supplemented, would conflict with the
information in the Registration Statement, the most recent Preliminary
Prospectus or the Prospectus or would include an untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, or, if for any other reason it shall be necessary to
amend or supplement any Issuer Free Writing Prospectus, to notify the
Underwriter and, upon its request, to file such document and to prepare and
furnish without charge to the Underwriter as many copies as the Underwriter may
from time to time reasonably request of an amended or supplemented Issuer Free
Writing Prospectus that will correct such conflict, statement or omission or
effect such compliance;

(ix)           To endeavor to qualify the Shares for
offer and sale under the securities or Blue Sky laws of such jurisdictions as
you shall reasonably request.

(x)            As soon as practicable after the
Effective Date and in any event not later than 16 months after the date hereof,
to make generally available to the Company’s security holders and  to you an earning statement that satisfies
the provisions of Section 11(a) of the Securities Act and the Rules and
Regulations.

(xi)           Whether or not the transactions
contemplated in this Agreement are consummated or this Agreement is terminated,
to pay or cause to be paid all expenses incident to the performance of its
obligations under this Agreement, including: (A) the fees, disbursements and
expenses of the Company’s counsel and the Company’s accountants in connection
with the registration and delivery of the Shares under the Securities Act and
all other fees or expenses in connection with the preparation and filing of the
Registration Statement, any Preliminary Prospectus, the Prospectus, any Issuer
Free Writing Prospectus and amendments and supplements to any of the foregoing,
including all printing costs associated therewith, and the mailing and
delivering of copies thereof to the Underwriter and dealers, in the quantities
hereinabove specified, (B) all costs and expenses related to the transfer and
delivery of the Shares by the Selling Stockholders to

 19
 

 

the Underwriter, including any transfer or other taxes
payable thereon, (C) the cost of printing or producing any Blue Sky or Legal
Investment memorandum in connection with the offer and sale of the Shares under
state securities laws and all expenses in connection with the qualification of
the Shares for offer and sale under state securities laws as provided in Section
7(a)(vii) hereof, including filing fees and the reasonable fees and
disbursements of counsel for the Underwriter in connection with such
qualification and in connection with the Blue Sky or Legal Investment
memorandum, (D) the costs and charges of any transfer agent, registrar or
depositary, (E) the costs and expenses of the Company and the Selling
Stockholders relating to investor presentations on any “road show” undertaken
in connection with the marketing of the offering of the Shares, including, without
limitation, expenses associated with the production of road show slides and
graphics, fees and expenses of any consultants engaged in connection with the
road show presentations with the prior approval of the Company, travel and
lodging expenses of the representatives and officers of the Company and any
such consultants, and the cost of any aircraft chartered in connection with the
road show, (F) the document production charges and expenses, if any, associated
with printing this Agreement, and (G) all other costs and expenses incident to
the performance of the obligations of the Company and the Selling Stockholders
hereunder for which provision is not otherwise made in this Section.  It is understood, however, that except as
provided in this Section 7(a)(xi)(C), Section 9 entitled “Indemnity and
Contribution”, and the last paragraph of Section 11 below, the Underwriter will
pay all of their costs and expenses, including fees and disbursements of its
counsel, stock transfer taxes payable on resale of any of the Shares by it and
any advertising expenses connected with any offers it may make.  It is further understood that the Company
shall be required to pay and cause to be paid fees and disbursements of no more
than one counsel for the Selling Stockholders taken as a group.  The Selling Stockholders designate Gibson,
Dunn & Crutcher LLP as their counsel for purposes of this Agreement and the
fees and disbursements of any other counsel engaged by a Selling Stockholder in
connection with the offering of the Shares shall be for the account of the
Selling Stockholder engaging such other counsel.

(b)           The
Underwriter agrees that it shall not include any “issuer information” (as
defined in Rule 433) in any “free writing prospectus” (as defined in Rule 405)
used or referred to by the Underwriter without the

 20
 

 

prior consent of the Company (any such issuer information with respect
to whose use the Company has given its consent, “Permitted Issuer Information”);
provided that (i) no such consent
shall be required with respect to any such issuer information contained in any
document filed by the Company with the Commission prior to the use of such free
writing prospectus and (ii) “issuer information,” as used in this Section 7(b),
shall not be deemed to include information prepared by the Underwriter on the
basis of or derived from issuer information.

8.             Covenants
of the Selling Stockholders. Each Selling Stockholder agrees:

(a)   During the period ending 45 days after the
date of the Prospectus, such Selling Stockholder will not, (1) offer, pledge,
sell, contract to sell, sell any option or contract to purchase, purchase any
option or contract to sell, grant any option, right or warrant to purchase,
lend, or otherwise transfer or dispose of, directly or indirectly, any shares
of Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock (other than the Shares), (2) enter into any swap
or other arrangement that transfers to another, in whole or in part, any of the
economic consequences of ownership of the Common Stock, whether any such
transaction described in clause (1) or (2) above is to be settled by delivery
of Common Stock or other securities, in cash or otherwise, (3) make any demand
for or exercise any right or file or cause to be filed a registration
statement, including any amendments, with respect to the registration of any
shares of Common Stock or securities convertible, exercisable or exchangeable
into Common Stock or any other securities of the Company or (4) publicly
disclose the intention to do any of the foregoing, in each case without the
prior written consent of the Underwriter.

(b)   Neither
such Selling Stockholder nor any person acting on behalf of such Selling
Stockholder (other than, if applicable, the Company and the Underwriter) shall
use or refer to any “free writing prospectus” (as defined in Rule 405),
relating to the Shares; and

(c)   To deliver
to the Underwriter prior to the Closing Date a properly completed and executed
United States Treasury Department Form W-8 (if such Selling Stockholder is a
non-United States person) or Form W-9 (if such Selling Stockholder is a United
States person).

9.             Indemnity and Contribution.  (a) The Company agrees to indemnify and hold
harmless the Underwriter, each person, if any, who controls the Underwriter
within the meaning of either Section 15 of the Securities Act or

 21
 

 

Section 20 of the
Exchange Act, and each affiliate of the Underwriter within the meaning of Rule
405 under the Securities Act from and against any and all losses, claims,
damages and liabilities (including, without limitation, any legal or other
expenses reasonably incurred in connection with defending or investigating any
such action or claim) caused by any untrue statement or alleged untrue
statement of a material fact contained in (i) the Registration Statement or any
amendment thereof, any Preliminary Prospectus or the Prospectus (as amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto), (ii) any Issuer Free Writing Prospectus or in any amendment or
supplement thereto, (iii) any Permitted Issuer Information used or referred to
in any “free writing prospectus” (as defined in Rule 405) used or referred to
by the Underwriter, or (iv) any “road show” (as defined in Rule 433) not
constituting an Issuer Free Writing Prospectus ( a “Non-Prospectus Road Show”) or caused by any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, except insofar as
such losses, claims, damages or liabilities are caused by any such untrue
statement or omission or alleged untrue statement or omission based upon
information relating to the Underwriter furnished to the Company in writing by
the Underwriter through you expressly for use therein, which information
consists solely of the statements regarding delivery of Shares by the
Underwriter set forth on the cover page of, and the concession and reallowance
figures and the paragraph relating to stabilization by the Underwriter
appearing under the caption “Underwriting” in the most recent Preliminary
Prospectus and the Prospectus.

(b)   The Selling Stockholders, severally but not
jointly, shall indemnify and hold harmless the Underwriter, each person, if
any, who controls the Underwriter within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, and each affiliate of the
Underwriter within the meaning of Rule 405 under the Securities Act from and
against any and all losses, claims, damages and liabilities (including, without
limitation, any legal or other expenses reasonably incurred in connection with
defending or investigating any such action or claim) caused by (i) any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement or any amendment thereof, any Preliminary Prospectus,
the Prospectus (as amended or supplemented), any Issuer Free Writing Prospectus
or any amendment or supplement thereto, any Permitted Issuer Information or any
Non-Prospectus Road Show, as it relates to such Selling Stockholder, or (ii)
the omission or alleged omission to state in any Preliminary Prospectus,
Registration Statement, the Prospectus, any Issuer Free Writing Prospectus or
in any amendment or supplement thereto or in any Permitted Issuer Information
or any Non-Prospectus Road Show, any material fact required to be stated
therein or necessary to make the statements therein not misleading, as it
relates to such Selling Stockholder, and shall reimburse the Underwriter, each
such controlling person and each affiliate promptly upon

 22
 

 

demand for any legal or
other expenses reasonably incurred by the Underwriter, such controlling person
and each affiliate in connection with investigating or defending or preparing
to defend against any such loss, claim, damage or liability as such expenses
are incurred; provided that in the case of (i) and (ii) above only insofar as
any such loss, claim, damage or liability arises out of or is based upon any
untrue statement or alleged untrue statement or omission or alleged omission of
a material fact contained in and in conformity with information furnished in
writing by such Selling Stockholder to the Company expressly for use in such
Registration Statement, Preliminary Prospectus, Prospectus, Issuer Free Writing
Prospectus, Permitted Issuer Information or Non-Prospectus Road Show.   The liability of the Selling Stockholder
under the indemnity agreement contained in this paragraph shall be limited to
an amount equal to the total gross proceeds from the offering of the Shares
purchased under the Agreement received by such Selling Stockholder, as set
forth in the table on the cover page of the Prospectus.  The foregoing indemnity agreement is in
addition to any liability that the Selling Stockholders may otherwise have to
the Underwriter or any officer, employee or controlling person of the
Underwriter.

(c)   The Underwriter agrees to indemnify and hold
harmless the Company, the Selling Stockholders, their respective directors, the
officers of the Company who sign the Registration Statement and each person, if
any, who controls the Company within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act to the same extent as the
foregoing indemnity from the Company and the Selling Stockholders to the
Underwriter, but only with reference to information relating to the Underwriter
furnished to the Company in writing by the Underwriter expressly for use in the
Registration Statement, any Preliminary Prospectus, the Prospectus, any Issuer
Free Writing Prospectus or any amendments or supplements thereto.

(d)   In case any proceeding (including any
governmental investigation) shall be instituted involving any person in respect
of which indemnity may be sought pursuant to Section 9(a), 9(b) or 9(c), such
person (the “indemnified party”) shall promptly
notify the person against whom such indemnity may be sought (the “indemnifying party”) in writing and the indemnifying party,
upon request of the indemnified party, shall retain counsel reasonably
satisfactory to the indemnified party to represent the indemnified party and
any others the indemnifying party may designate in such proceeding and shall
pay the fees and disbursements of such counsel related to such proceeding.  In any such proceeding, any indemnified party
shall have the right to retain its own counsel, but the fees and expenses of
such counsel shall be at the expense of such indemnified party unless (i) the
indemnifying party and the indemnified party shall have mutually agreed to the
retention of such counsel or (ii) the named parties to any such proceeding
(including any impleaded parties) include both the indemnifying party and the
indemnified party and representation of both parties

 23
 

 

by the same counsel would
be inappropriate due to actual or potential differing interests between
them.  It is understood that the
indemnifying party shall not, in respect of the legal expenses of any
indemnified party in connection with any proceeding or related proceedings in the
same jurisdiction, be liable for the reasonable fees and expenses of more than
one separate firm (in addition to any local counsel) for all such indemnified
parties and that all such reasonable fees and expenses shall be reimbursed as
they are incurred.  Such firm shall be
designated in writing by the Underwriter, in the case of parties indemnified
pursuant to Section 9(a) and 9(b), and by the Company and the Selling
Stockholders, in the case of parties indemnified pursuant to Section 9(c).  The indemnifying party shall not be liable
for any settlement of any proceeding effected without its written consent, but
if settled with such consent or if there be a final judgment for the plaintiff,
the indemnifying party agrees to indemnify the indemnified party from and
against any loss or liability by reason of such settlement or judgment.  No indemnifying party shall, without the
prior written consent of the indemnified party, effect any settlement of any
pending or threatened proceeding in respect of which any indemnified party is
or could have been a party and indemnity could have been sought hereunder by
such indemnified party, unless such settlement includes an unconditional
release of such indemnified party from all liability on claims that are the
subject matter of such proceeding.

(e)   To the extent the indemnification provided
for in Section 9(a), 9(b) or 9(c) is unavailable to an indemnified party or
insufficient in respect of any losses, claims, damages or liabilities referred
to therein, then each indemnifying party under such paragraph, in lieu of
indemnifying such indemnified party thereunder, shall contribute to the amount
paid or payable by such indemnified party as a result of such losses, claims,
damages or liabilities (i) in such proportion as is appropriate to reflect the
relative benefits received by the Company and the Selling Stockholders on the
one hand and the Underwriter on the other hand from the offering of the Shares
or (ii) if the allocation provided by clause 9(e)(i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause 9(e)(i) above but also the relative
fault of the Company and the Selling Stockholders on the one hand and of the
Underwriter on the other hand in connection with the statements or omissions
that resulted in such losses, claims, damages or liabilities, as well as any
other relevant equitable considerations. 
The relative benefits received by the Company and the Selling
Stockholders on the one hand and the Underwriter on the other hand in
connection with the offering of the Shares shall be deemed to be in the same
respective proportions as the net proceeds from the offering of the Shares
(before deducting expenses) received by the Selling Stockholders and the total
underwriting discounts and commissions received by the Underwriter, in each
case as set forth in the table on the cover of the Prospectus, bear to the
aggregate Public Offering Price of the Shares. 
The

 24
 

 

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

(f)    The Company, the Selling Stockholders and
the Underwriter agree that it would not be just or equitable if contribution
pursuant to this Section 9 were determined by pro rata
allocation or by any other method of allocation that does not take account of
the equitable considerations referred to in Section 9(e).  The amount paid or payable by an indemnified
party as a result of the losses, claims, damages and liabilities referred to in
the immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending any such
action or claim.  Notwithstanding the
provisions of this Section 9, the Underwriter shall not be required to
contribute any amount in excess of the amount by which the total price at which
the Shares underwritten by it and distributed to the public were offered to the
public exceeds the amount of any damages that the Underwriter has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission.  No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation.  The remedies provided for in this Section 9
are not exclusive and shall not limit any rights or remedies which may
otherwise be available to any indemnified party at law or in equity.

(g)   The indemnity and contribution provisions
contained in this Section 9 and the representations, warranties and other
statements of the Company and the Selling Stockholders contained in this
Agreement shall remain operative and in full force and effect regardless of (i)
any termination of this Agreement, (ii) any investigation made by or on behalf
of the Underwriter, any person controlling the Underwriter or any affiliate of
the Underwriter or by or on behalf of the Company, its officers or directors or
any person controlling the Company and (iii) acceptance of and payment for any
of the Shares.

10.           Termination.  The Underwriter may terminate this Agreement
by notice given to the Company, if  after
the execution and delivery of this Agreement and prior to the Closing Date (i)
trading generally shall have been suspended or materially limited on, or by, as
the case may be, any of the New York Stock Exchange, the American Stock
Exchange or the Nasdaq National Market, (ii) trading of any securities of the
Company shall have been suspended

 25
 

 

on any exchange or in any
over-the-counter market, (iii) a material disruption in securities
settlement, payment or clearance services in the United States shall have
occurred, (iv) any moratorium on commercial banking activities shall have been
declared by Federal or New York State authorities or (v) there shall have
occurred any outbreak or escalation of hostilities, or any change in financial
markets or any calamity or crisis that, in your judgment, is material and
adverse and which, singly or together with any other event specified in this
clause (v), makes it, in your judgment, impracticable or inadvisable to proceed
with the offer, sale or delivery of the Shares on the terms and in the manner
contemplated in the Pricing Disclosure Package and the Prospectus.

11.           Effectiveness.  This Agreement shall become effective upon
the execution and delivery hereof by the parties hereto.

If this Agreement
shall be terminated by the Underwriter because of any failure or refusal on the
part of the Company or any Selling Stockholder to comply with the terms or to
fulfill any of the conditions of this Agreement, or if for any reason (other
than a termination of this Agreement by the Underwriter pursuant to Section
10(i), (iii), (iv) or (v) hereof) the Company or any Selling Stockholder shall
be unable to perform their respective obligations under this Agreement, the
Company and the Selling Stockholders will reimburse the Underwriter for all out-of-pocket
expenses (including the fees and disbursements of its counsel) reasonably
incurred by the Underwriter in connection with this Agreement or the offering
contemplated hereunder.

12.        No Fiduciary Duty.  The Company and Selling Stockholders
acknowledge and agree that in connection with this offering, sale of the Shares
or any other services the Underwriter may be deemed to be providing hereunder,
notwithstanding any preexisting relationship, advisory or otherwise, between
the parties or any oral representations or assurances previously or
subsequently made by the Underwriter: (i) no fiduciary or agency relationship
between the Company, Selling Stockholders and any other person, on the one
hand, and the Underwriter, on the other, exists with respect to this Offering;
(ii) the Underwriter is not acting as an advisor, expert or otherwise, to the
Company or the Selling Stockholders, including without limitation, with respect
to the determination of the public offering price of the Shares, and such
relationship between the Company and the Selling Stockholders, on the one hand,
and the Underwriter, on the other, is entirely and solely commercial, based on
arms-length negotiations; (iii) any duties and obligations that the Underwriter
may have to the Company or Selling Stockholders shall be limited to those
duties and obligations specifically stated herein; and (iv) the Underwriter and
its affiliates may have interests that differ from those of the Company and the
Selling Stockholders. The Company and the Selling Stockholders hereby waive any
claims that the Company or the Selling

 26
 

 

Stockholders may have
against the Underwriter with respect to any breach of fiduciary duty in
connection with this offering.

13.           Notices.  All statements, requests, notices and
agreements hereunder shall be in writing, and:

(a)         if to the Underwriter, shall be
delivered or sent by mail or facsimile transmission to Lehman Brothers Inc.,
745 Seventh Avenue, New York, New York 10019, Attention: Syndicate Registration
(Fax: 646-834-8133), with a copy, in the case of any notice pursuant to Section
9(d), to the Director of Litigation, Office of the General Counsel, Lehman
Brothers Inc., 399 Park Avenue, 10th Floor, New York, New York 10022 (Fax:
212-520-0421);

(b)        if to
the Company, shall be delivered or sent by mail or facsimile transmission to
2366 Bernville Road, Reading, PA 19605, Attention: Frank Macerato (Fax:
610-208-1807);

(c)         if to
the Metalmark Selling Stockholders (as defined in Schedule I hereto), shall be
delivered or sent by mail to such Selling Stockholder at 1221 Avenue of the
Americas; New York, NY 10020;

(d)        if to
the Morgan Stanley Selling Stockholders (as defined in Schedule I hereto),
shall be delivered or sent by mail to such Selling Stockholder at 1585
Broadway, New York, NY 10036;

(e)         if to
the JP Morgan Selling Stockholders (as defined in Schedule I hereto), shall be
delivered or sent by mail to such Selling Stockholder c/o J.P. Morgan
Investment Management, 522 Fifth Avenue, New York, NY 10036; and

(f)         if to
First Plaza Group Trust, shall be delivered or sent by mail or facsimile transmission
c/o JPMorgan Chase Bank, National Association, 1 Chase Manhattan Plaza, 17th
Floor, New York, NY, 10005-1401, Attn: Edward J. Petrow (Fax: 212-552-4535);

(g)        if to
Performance Direct Investments I, L.P., shall be delivered or sent by mail or facsimile
transmission to Performance Equity Management, LLC, C/O PDI I, L.P., Two
Pickwick Plaza Suite 310, Greenwich, CT 06830, Attn M. Pinsky (Fax:
203-742-2343).

14.        Counterparts.  This Agreement may be signed in two or more
counterparts, each of which shall be an original, with the same effect as if
the signatures thereto and hereto were upon the same instrument.

 27

 

15.      Applicable Law.  This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York.

16.      Survival.   The respective indemnities, representations,
warranties and agreements of the Company, the Selling Stockholders and the
Underwriter contained in this Agreement or made by or on behalf of them,
respectively, pursuant to this Agreement, shall survive the delivery of and
payment for the Shares and shall remain in full force and effect, regardless of
any investigation made by or on behalf of any of them or any person controlling
any of them.

17.      Headings.  The headings of the sections of this
Agreement have been inserted for convenience of reference only and shall not be
deemed a part of this Agreement.

 28
 

 

 

	
  

  	
   

  	
  Very truly yours,

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  EnerSys

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   /s/ John D. Craig

  	
   

  
	
   

  	
   

  	
   

  	
  John D. Craig

  
	
   

  	
   

  	
   

  	
  President and Chief Executive Officer

  

 

 29
 

 

 

	
  

  	
   

  	
  Morgan Stanley
  Dean Witter Capital Partners

  IV, L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  MSDW CAPITAL
  PARTNERS IV,

  LLC, as General Partner

  
	
   

  	
   

  	
  By:

  	
  MSDW Capital
  Partners IV, Inc.,

  as Member

  
	
   

  	
   

  	
  By:

  	
  METALMARK
  SUBADVISOR LLC,

  as attorney-in-fact

  
	
   

  	
   

  	
  By:

  	
   /s/ Kenneth F. Clifford

  
	
   

  	
   

  	
   

  	
  Kenneth F. Clifford

  
	
   

  	
   

  	
   

  	
  Managing Director

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  MSDW IV 892 Investors, L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  MSDW CAPITAL
  PARTNERS IV,

  LLC, as General Partner

  
	
   

  	
   

  	
  By:

  	
  MSDW Capital
  Partners IV, Inc.,

  as Member

  
	
   

  	
   

  	
  By:

  	
  METALMARK
  SUBADVISOR LLC,

  as attorney-in-fact

  
	
   

  	
   

  	
  By:

  	
   /s/ Kenneth F. Clifford

  
	
   

  	
   

  	
   

  	
  Kenneth F. Clifford

  
	
   

  	
   

  	
   

  	
  Managing Director

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Morgan Stanley
  Dean Witter Capital Investors

  IV, L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  MSDW CAPITAL
  PARTNERS IV,

  LLC, as General Partner

  
	
   

  	
   

  	
  By:

  	
  MSDW Capital
  Partners IV, Inc.,

  as Member

  
	
   

  	
   

  	
  By:

  	
  METALMARK
  SUBADVISOR LLC,

  as attorney-in-fact

  
	
   

  	
   

  	
  By:

  	
   /s/ Kenneth F. Clifford

  
	
   

  	
   

  	
   

  	
  Kenneth F. Clifford

  
	
   

  	
   

  	
   

  	
  Managing Director

  

 

 30
 

 

 

	
  

  	
   

  	
  Morgan Stanley
  Global Emerging Markets

  Private Investment Fund, L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  MSGEM, LLC,

  as General Partner

  
	
   

  	
   

  	
  By:

  	
  MORGAN STANLEY
  GLOBAL

  EMERGING
  MARKETS, INC.,

  as Member

  
	
   

  	
   

  	
  By:

  	
   /s/ Pratish Patel

  
	
   

  	
   

  	
   

  	
  Pratish Patel

  
	
   

  	
   

  	
   

  	
  Executive Director

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Morgan Stanley
  Global Emerging Markets

  Private Investors, L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  MSGEM, LLC,

  as General Partner

  
	
   

  	
   

  	
  By:

  	
  MORGAN STANLEY
  GLOBAL

  EMERGING
  MARKETS, INC.,

  as Member

  
	
   

  	
   

  	
  By:

  	
   /s/ Pratish Patel

  
	
   

  	
   

  	
   

  	
  Pratish Patel

  
	
   

  	
   

  	
   

  	
  Executive Director

  

 

 31
 

 

 

	
  

  	
   

  	
  J.P. Morgan
  Direct Corporate Finance

  Institutional Investors LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  JPMorgan Chase Bank, N.A., as

  investment advisor

  
	
   

  	
   

  	
  By:

  	
   /s/ Julian Shles

  
	
   

  	
   

  	
   

  	
  Julian Shles

  
	
   

  	
   

  	
   

  	
  Managing Director

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  J.P. Morgan Direct
  Corporate Finance Private

  Investors LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  J.P. Morgan Investment Management

  Inc., as investment advisor

  
	
   

  	
   

  	
  By:

  	
   /s/ Julian Shles

  
	
   

  	
   

  	
   

  	
  Julian Shles

  
	
   

  	
   

  	
   

  	
  Managing Director

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  522 Fifth Avenue Fund, L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  J.P. Morgan Investment Management

  Inc., as investment advisor

  
	
   

  	
   

  	
  By:

  	
   /s/ Julian Shles

  
	
   

  	
   

  	
   

  	
  Julian Shles

  
	
   

  	
   

  	
   

  	
  Managing Director

  

 

 32
 

 

 

	
  

  	
   

  	
  First Plaza Group Trust

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  JPMorgan Chase Bank, N.A., as Trustee

  for First Plaza Group Trust

  
	
   

  	
   

  	
  By:

  	
   /s/ Edward J. Perrow

  
	
   

  	
   

  	
   

  	
  Edward J. Perrow

  
	
   

  	
   

  	
   

  	
  Vice President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Performance Direct Investments I, L.P. (f/k/a GM Capital
  Partners I, L.P.)

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  Performance Equity Management, LLC,

  with respect to its Series Performance

  Direct Investors I, its general partner

  
	
   

  	
   

  	
  By:

  	
   /s/ Jeffrey A. Reals

  
	
   

  	
   

  	
   

  	
  Jeffrey A. Reals

  
	
   

  	
   

  	
   

  	
  Managing Director

  

 

 33
 

 

 

	
  Accepted as of the date hereof

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Lehman Brothers Inc.

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   /s/ Michael Hrynuik

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Michael Hrynuik

  	
   

  	
   

  	
   

  
	
   

  	
  Senior Vice President

  	
   

  	
   

  	
   

  
						

 

 34

 

SCHEDULE
I

List of Selling
Stockholders

	
  Selling Stockholder

  	
   

  	
  Number of Shares to

  be Sold

  	
   

  
	
  Morgan Stanley Dean
  Witter Capital Partners IV, L.P.

  	
   

  	
  4,168,456

  	
   

  
	
  MSDW IV 892 Investors,
  L.P. (collectively, the “Metalmark Selling Stockholders”)

  	
   

  	
  355,184

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Morgan Stanley Dean
  Witter Capital Investors IV, L.P.

  	
   

  	
  113,922

  	
   

  
	
  Morgan Stanley Global
  Emerging Markets Private Investment Fund, L.P.

  	
   

  	
  405,558

  	
   

  
	
  Morgan Stanley Global
  Emerging Markets Private Investors, L.P. (collectively, the “Morgan Stanley
  Selling Stockholders”)

  	
   

  	
  24,685

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  J.P. Morgan Direct
  Corporate Finance Institutional Investors LLC

  	
   

  	
  382,073

  	
   

  
	
  J.P. Morgan Direct
  Corporate Finance Private Investors LLC

  	
   

  	
  99,802

  	
   

  
	
  522 Fifth Avenue Fund,
  L.P. (collectively, the “JP Morgan Selling Stockholders”)

  	
   

  	
  20,077

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  First Plaza Group Trust

  	
   

  	
  183,268

  	
   

  
	
  Performance Direct
  Investments I, L.P. (collectively, the “GM Selling Stockholders”)

  	
   

  	
  246,975

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  6,000,000

  	
   

  

 

 I-1

 

SCHEDULE
II

List of Company
Subsidiaries

EnerSys Capital Inc.

EnerSys European Holding Co.

EnerSys Cayman L.P.

EnerSys Holdings (Luxembourg) Sarl

EnerSys Delaware Inc.

EH France Sarl

Hawker SARL (France)

EnerSys Del. LLC I

EnerSys Ltd.

EnerSys Holdings UK Ltd.

Hawker GmbH

EnerSys Energy Products Inc.

EnerSys S.R.L.

 II-1

 

EXHIBIT
A

FORM OF
LOCK-UP LETTER

                                          ,
2006

Lehman Brothers Inc.

745 Seventh Avenue

New York, NY 10019

Dear Sirs and Mesdames:

The undersigned
understands that Lehman Brothers Inc., (the “Underwriter”)
proposes to enter into an Underwriting Agreement (the “Underwriting Agreement”) with EnerSys, a
Delaware corporation (the “Company”)
and certain selling stockholders named therein (the “Selling  Stockholders”),
providing for the public offering (the “Public
Offering”) by the Underwriter of shares (the “Shares”) of the Common Stock (par value
$0.01 per share) of the Company (the “Common
Stock”).

To induce the
Underwriter to continue its efforts in connection with the Public Offering, the
undersigned hereby agrees that, without the prior written consent of the
Underwriter, it will not, during the period commencing on the date hereof and
ending 45 days after the date of the final prospectus relating to the Public
Offering (the “Prospectus”), (1)
offer, pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant to
purchase, lend, or otherwise transfer or dispose of, directly or indirectly,
any shares of Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock or (2) enter into any swap or other arrangement
that transfers to another, in whole or in part, any of the economic
consequences of ownership of the Common Stock, whether any such transaction
described in clause (1) or (2) above is to be settled by delivery of Common
Stock or such other securities, in cash or otherwise.  The foregoing sentence shall not apply to:

(a) transactions
relating to shares of Common Stock or other securities acquired in open market
transactions after the completion of the Public Offering;

(b) transfers of
shares of Common Stock or Common Stock equivalents as a bona fide gift or by
will or intestacy, including transfers to a trust where the beneficiaries of
the trust are drawn solely from a group consisting of the

 

undersigned and immediate
family members of the undersigned, provided that (i) each transferee of shares
of Common Stock or Common Stock equivalents executes and delivers to the
Underwriter a duplicate form of this lock-up letter and (ii) no party,
including the undersigned, shall be required to, nor shall it voluntarily, file
a report under Section 16(a) of the Securities Exchange Act of 1934, as
amended, in connection with such transfer or distribution (other than a filing
on Form 5 made after the expiration of the restricted period referred to in the
foregoing sentence);

(c) transactions
pursuant to a trading plan established pursuant to Rule 10b5-1 under the
Securities Exchange Act of 1934, as amended, in existence as of the date of the
Prospectus; or

(d) the exercise
of options to purchase shares of common stock pursuant to the surrender of
options to purchase shares of Common Stock to satisfy the applicable aggregate
exercise price (and applicable withholding taxes, if applicable) required to be
paid upon such exercise.

Immediate family member
of a person means the spouse, lineal descendants, father, mother, brother,
sister, father-in-law, mother-in-law, brother-in-law and sister-in-law of such
person.  In addition, the undersigned
agrees that, without the prior written consent of the Underwriter, it will not,
during the period commencing on the date hereof and ending 45 days after the
date of the Prospectus, make any demand for or exercise any right with respect to
the registration of any shares of Common Stock or any security convertible into
or exercisable or exchangeable for Common Stock.  The undersigned also agrees and consents to
the entry of stop transfer instructions with the Company’s transfer agent and
registrar against the transfer of the undersigned’s shares of Common Stock
except in compliance with the foregoing restrictions.

The undersigned
understands that the Company, the Selling Stockholders and the Underwriter are
relying upon this Lock-Up Agreement in proceeding toward consummation of the
Public Offering.  The undersigned further
understands that this Lock-Up Agreement is irrevocable and shall be binding
upon the undersigned’s heirs, legal representatives, successors and assigns.

Whether or not the
Public Offering actually occurs depends on a number of factors, including
market conditions.  Any Public Offering
will only be made pursuant to an Underwriting Agreement, the terms of which are
subject to negotiation between the Company, the Selling Stockholders and the
Underwriter.

	
   

  	
   

  	
  Very truly yours,

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Name)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Address)Exhibit 10.1

OPTIUM CORPORATION

EXECUTIVE OFFICER

FISCAL YEAR BONUS PLAN

I.  THE PLAN

The eligible
participants (each, a “Participant”) in the Optium Corporation (the “Company”)
Fiscal Year Executive Officer Bonus Plan (the “Plan”) shall initially be Chief
Executive Officer Eitan Gertel, Senior Vice President of Engineering and
General Manager Mark Colyar, Chief Financial Officer David Renner, Vice
President of Sales and Marketing Anthony Musto and General Counsel and Vice
President of Corporate Development Christopher Brown.  The Plan will be effective for fiscal year
2007.  The Compensation Committee may add
any Company employee at the Vice President level and above to the Plan as a
Participant at any time.

II. EXECUTIVE OFFICER
ANNUAL BONUS

Each Participant
will be eligible to receive a bonus for an applicable fiscal year based on the
Company’s achievement of targets adopted by the Compensation Committee for
Company revenue and non-GAAP operating profit (the “Metrics”) for the fiscal
year. The maximum bonus amount that each Participant will be eligible for under
the Plan during an applicable fiscal year shall be as follows:

	
  Target Achievement

  	
   

  	
  Maximum
  Annual Bonus Amount

  
	
   

  	
   

  	
   

  
	
  100% of Targets

  	
   

  	
  30% of annual salary rate at time

  
	
  130% of Targets

  	
   

  	
  60% of annual salary rate at time

  
	
  150% of Targets

  	
   

  	
  100% of annual salary rate at time

  

 

Key aspects of the operation of this Section II are:

·                  Bonuses
under this Section II will be payable semi-annually, but tracked on an annual
basis.  For example, if 130% of Metrics
targets are met for the first and second fiscal quarter, a Participant shall be
eligible to receive a maximum semi-annual bonus of 30% of annual salary rate
(1/2 of the 60% maximum annual bonus for meeting the 110% Metrics targets), but
if only 100% of the Metrics targets are ultimately met for the full fiscal
year, the Participant’s maximum bonus payment for the second half of the fiscal
year will be $0.00 so that, on an annual basis, the Participant will have been
eligible to receive maximum total bonuses for the fiscal year of 30% of annual
salary rate; provided, that in no event shall a Participant be required to
re-pay any previously paid bonus amount;

·                  Payment
of a semi-annual bonus amount at less than the maximum permissible amount shall
not limit the Compensation Committee from making total bonus payments under
this Section II to a Participant in any fiscal year of up to 100% of the
maximum annual bonus amount determined above;

 

 

·                  Between
100% and 130% performance, the maximum bonus award is linearly interpolated
with the range of 30% to 60% and between 130% and 150% performance, the maximum
bonus award is linearly interpolated with the range of 60% and 100%, in each
case to determine the final maximum bonus amount for each Participant for the
semi-annual bonus period;

·                  In
each case, achievement of the target for each of the Metrics shall be weighed
equally for each bonus measurement period (e.g., if 110% of revenue Metric is
met and 100% of operating profit Metric is met, the maximum bonus amount for
the period would be 35% of annual salary rate at the time);

·                  Forty
percent of each bonus payment amount for each Participant shall be
discretionary (i.e., any bonus payment indicated by the chart above may be
reduced by up to 40%) with the final award determined the Compensation
Committee; provided that, notwithstanding the foregoing, 100% of the maximum
bonus amount for a fiscal year for each Participant shall be discretionary in
the event that the Company performs at less that 100% of any publicly-announced
forecast for one or more of the Metrics in any quarter of the applicable fiscal
year; and

·                  For
performance during any bonus measurement period of at or above 90% but below
100% of Metrics targets:

·                  at
90% performance, the annualized maximum bonus amount will be 20% of annual
salary rate at the time;

·                  for
performance above 90% but below 100% of Metrics targets, the maximum bonus
amount will be determined by linear interpolation with the annualized
percentage of annual salary rate equal being to 30% at 100% of Metrics targets;
and

·                  100%
of the maximum bonus amount for each Participant shall be discretionary in the
event of performance at or above 90% but below 100% of Metrics targets (i.e.,
any bonus payment indicated by the method above may be reduced by up to 100%)
with the final award determined the Compensation Committee.

III. CHIEF EXECUTIVE
OFFICER ADDITIONAL BONUS

In addition to the
semi-annual bonus amounts that the Company’s Chief Executive Officer is
eligible to receive under Section II above, the Chief Executive Officer will be
eligible to receive an additional annual bonus of up to $350,000.  Any such additional bonus amount shall be
paid annually.  Payment of this
additional bonus amount shall be 100% discretionary with the final award
determined the Compensation Committee. 
In determining the size, if any, of this additional bonus amount, the 

 2
 

 

Compensation Committee will consider the Company’s
achievement in strategic development, investor relations, human resources and
corporate citizenship, as well as the Company’s stock trading price
performance, in each case during the applicable fiscal year.

IV. VICE PRESIDENT OF
SALES AND MARKETING ADDITIONAL BONUS

In addition to the
semi-annual bonus amounts that the Company’s Vice President of Sales and
Marketing is eligible to receive under Section II above, the Vice President of
Sales and Marketing will be eligible to receive an additional quarterly bonus
of up to $10,000 per fiscal quarter.  Any
such bonus amount shall be paid semi-annually with respect to the two most
recently completed fiscal quarters. 
Payment of this additional bonus amount shall be 100% discretionary with
the final award determined the Compensation Committee.  In determining the size, if any, of each
additional quarterly bonus amount, the Compensation Committee will consider the
Company’s achievement in product order development during the applicable fiscal
quarter.

V. ADDITIONAL ELIGIBILITY
REQUIREMENTS

Additional
eligibility requirements to receive any bonus payments under the Plan include:

·                  Any
bonus amount payable under the Plan shall be pro-rated with respect to any
Participant for the portion of the bonus measuring period that the Participant
has been employed by the Company or has been included as a Participant in the
Plan by the Committee, whichever is less; and

·                  To
be eligible to receive a bonus payment under the Plan, a Participant must be
employed by the Company on the date the date the applicable bonus is actually
paid.

VI. AMENDMENT; OTHER
PLANS AND INTERPRETATION

The Plan may be
amended or modified by the Compensation Committee at any time.  Interpretation of the Plan by the
Compensation Committee shall be final. 
In addition, the Compensation Committee shall not be limited in creating
additional bonus plans applicable to one or more Participants under this Plan
or in paying other bonuses to one or more Participants.

 

 3

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00114-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00114-of-00352.parquet"}]]