EXHIBIT 1.1
3,000,000 SHARES
KARRINGTON HEALTH, INC.
COMMON SHARES
UNDERWRITING AGREEMENT
July __, 1996
SMITH BARNEY INC.
J.C. BRADFORD & CO.
AS REPRESENTATIVES OF THE SEVERAL UNDERWRITERS
c/o SMITH BARNEY INC.
388 Greenwich Street
New York, New York 10013
Dear Sirs:
Karrington Health, Inc., an Ohio corporation (the "Company"), proposes
to issue and sell an aggregate of 2,350,000 of its common shares, no par
value per share (the "Common Shares"), to the several Underwriters named in
Schedule I hereto (the "Underwriters"), and JMAC, Inc. (the "Selling
Shareholder") proposes to sell to the several Underwriters 650,000 Common
Shares. The 2,350,000 Common Shares to be issued and sold to the
Underwriters by the Company and the 650,000 Common Shares to be sold to the
Underwriters by the Selling Shareholder are hereinafter referred to as the
"Firm Shares." In addition, solely for the purpose of covering
over-allotments, the Company and the Selling Shareholder each proposes to
sell to the Underwriters, upon the terms and conditions set forth in Section
2 hereof, up to an additional 225,000 Common Shares (the "Additional
Shares"). The Firm Shares and the Additional Shares are hereinafter
collectively referred to as the "Shares." The Company and the Selling
Shareholder are hereinafter sometimes referred to as the "Sellers."
The Sellers wish to confirm as follows their agreement with you (the
"Representatives") and the other several Underwriters on whose behalf you are
acting, in connection with the several purchases of the Shares by the
Underwriters.
1. REGISTRATION STATEMENT AND PROSPECTUS. The Company has prepared and
filed with the Securities and Exchange Commission (the "Commission") in
accordance with the provisions of the Securities Act of 1933, as amended, and
the rules and regulations of the Commission thereunder (collectively, the
"Act"), a registration statement on Form S-1 under the Act (the "registration
statement"),
including a prospectus subject to completion, relating to the Shares.
The term "Registration Statement" as used in this Agreement means the
registration statement (including all financial schedules and exhibits) as
amended at the time it becomes effective or, if the registration statement
became effective prior to the execution of this Agreement, as supplemented or
amended prior to the execution of this Agreement. If it is contemplated, at
the time this Agreement is executed, that a post-effective amendment to the
registration statement will be filed and must be declared effective before
the offering of the Shares may commence, the term "Registration Statement" as
used in this Agreement means the registration statement as amended by said
post-effective amendment. If an abbreviated registration statement is
prepared and filed with the Commission in accordance with Rule 462(b) under
the Act (an " Abbreviated Registration Statement"), the term "Registration
Statement" as used in this Agreement includes the Abbreviated Registration
Statement. The term "Prospectus" as used in this Agreement means the
prospectus in the form included in the Registration Statement, or, if the
prospectus included in the Registration Statement omits information in
reliance on Rule 430A under the Act and such information is included in a
prospectus filed with the Commission pursuant to Rule 424(b) under the Act,
the term "Prospectus" as used in this Agreement means the prospectus in the
form included in the Registration Statement as supplemented by the addition
of the Rule 430A information contained in the prospectus filed with the
Commission pursuant to Rule 424(b). The term "Prepricing Prospectus" as used
in this Agreement means the prospectus subject to completion in the form
included in the registration statement at the time of the initial filing of
the registration statement with the Commission, and as such prospectus shall
have been amended from time to time prior to the date of the Prospectus.
2. AGREEMENTS TO SELL AND PURCHASE. Subject to such adjustments as you
may determine in order to avoid fractional shares, the Company hereby agrees,
subject to all the terms and conditions set forth herein, to issue and sell
to each Underwriter and, upon the basis of the representations, warranties
and agreements of the Sellers herein contained and subject to all the terms
and conditions set forth herein, each Underwriter agrees, severally and not
jointly, to purchase from the Company, at a purchase price of $ per
share (the "Purchase Price Per Share"), that number of Firm Shares which
bears the same proportion to the aggregate number of Firm Shares to be issued
and sold by the Company as the number of Firm Shares set forth opposite the
name of such Underwriter in Schedule I hereto (or such number of Firm Shares
increased as set forth in Section 12 hereof) bears to the aggregate number of
Firm Shares to be sold by the Sellers.
Subject to such adjustments as you may determine in order to avoid
fractional shares, the Selling Shareholder agrees, subject to all the terms
and conditions set forth herein, to sell to each Underwriter and, upon the
basis of the representations, warranties and agreements of the Sellers herein
contained and subject to all the terms and conditions set forth herein, each
Underwriter agrees to purchase from the Selling Shareholder at the Purchase
Price Per Share that number of Firm Shares which bears the same proportion to
the number of Firm Shares to be sold by the Selling Shareholder as the number
of Firm Shares set forth opposite the name of such Underwriter in Schedule I
hereto (or such number of Firm Shares increased as set forth in Section 12
hereof) bears to the aggregate number of Firm Shares to be sold by the
Sellers.
The Company and the Selling Shareholder each also agrees, subject to
all the terms and conditions set forth herein, to sell to the Underwriters,
and, upon the basis of the representations, warranties and agreements of the
Sellers herein contained and subject to all the terms and conditions set
forth herein, the Underwriters shall have the right to purchase from each of
the Company and the Selling Shareholder, at the purchase price per share,
pursuant to an option (the "over-allotment option") which may be exercised at
any time and from time to time prior to 9:00 P.M., New York City time, on the
30th day after the date of the Prospectus (or, if such 30th day shall be a
Saturday or Sunday or a holiday, on the next business day
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thereafter when the New York Stock Exchange is open for trading), up to an
aggregate of 225,000 Additional Shares. Upon any exercise of the
over-allotment option, each Underwriter, severally and not jointly, agrees to
purchase from the Company and the Selling Shareholder, on a pro rata basis,
the number of Additional Shares (subject to such adjustments as you may
determine in order to avoid fractional shares) which bears the same
proportion to the number of Additional Shares to be purchased by the
Underwriters as the number of Firm Shares set forth opposite the name of such
Underwriter in Schedule I hereto (or such number of Firm Shares increased as
set forth in Section 12 hereof) bears to the aggregate number of Firm Shares.
Certificates in transferable form for the Shares the Selling
Shareholder agrees to sell pursuant to this Agreement have been placed in
custody with National City Bank (the "Custodian") for delivery under this
Agreement pursuant to a Custody Agreement and Power of Attorney (the "Custody
Agreement") executed by the Selling Shareholder appointing Michael H. Thomas
and John S. Christie as agents and attorneys-in-fact (the
"Attorneys-in-Fact"). The Selling Shareholder agrees that (i) the Shares
represented by the certificates held in custody pursuant to the Custody
Agreement are subject to the interests of the Underwriters and the Company,
(ii) the arrangements made by the Selling Shareholder for such custody are,
except as specifically provided in the Custody Agreement, irrevocable and
(iii) the obligations of the Selling Shareholder hereunder and under the
Custody Agreement shall not be terminated by any act of the Selling
Shareholder or by operation of law, whether by the dissolution, winding up,
distribution of assets or other event affecting the legal existence of the
Selling Shareholder or the occurrence of any other event. If any event
listed in the preceding sentence shall occur before the delivery of the
Shares hereunder, certificates for the Shares to be sold by the Selling
Shareholder shall be delivered to the Underwriters by the Attorneys-in-Fact
in accordance with the terms and conditions of this Agreement and the Custody
Agreement as if such event had not occurred, regardless of whether or not the
Attorneys-in-Fact or any Underwriter shall have received notice of such
event.
3. TERMS OF PUBLIC OFFERING. The Sellers have been advised by you that
the Underwriters propose to make a public offering of their respective
portions of the Shares as soon after the Registration Statement and this
Agreement have become effective as in your judgment is advisable and
initially to offer the Shares upon the terms set forth in the Prospectus.
4. DELIVERY OF THE SHARES AND PAYMENT THEREFOR. Delivery to the
Underwriters of and payment for the Firm Shares shall be made at the office
of Smith Barney Inc., 388 Greenwich Street, New York, New York 10013, at
10:00 A.M., New York City time, on , 1996 (the "Closing Date").
The place of closing for the Firm Shares and the Closing Date may be varied
by agreement between you, the Company and the Attorneys-in-Fact.
Delivery to the Underwriters of and payment for any Additional Shares
to be purchased by the Underwriters shall be made at the aforementioned
office of Smith Barney Inc. at such time on such date (the "Option Closing
Date"), which may be the same as the Closing Date but shall in no event be
earlier than the Closing Date nor earlier than two nor later than ten
business days after the giving of the notice hereinafter referred to, as
shall be specified in a written notice from you on behalf of the Underwriters
to the Company and the Attorneys-in-Fact of the Underwriters' determination
to purchase a number, specified in such notice, of Additional Shares. The
place of closing for any Additional Shares and the Option Closing Date for
such Shares may be varied by agreement between you, the Company and the
Attorneys-in-Fact.
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Certificates for the Firm Shares and for any Additional Shares to be
purchased hereunder shall be registered in such names and in such
denominations as you shall request by written notice, it being understood
that a facsimile transmission shall be deemed written notice, prior to 9:30
A.M., New York City time, on the second business day preceding the Closing
Date or any Option Closing Date, as the case may be. Such certificates shall
be made available to you in New York City for inspection and packaging not
later than 9:30 A.M., New York City time, on the business day next preceding
the Closing Date or the Option Closing Date, as the case may be. The
certificates evidencing the Firm Shares and any Additional Shares to be
purchased hereunder shall be delivered to you on the Closing Date or the
Option Closing Date, as the case may be, against payment of the purchase
price therefor in immediately available funds.
5. AGREEMENTS OF THE COMPANY. The Company agrees with the several
Underwriters as follows:
(a) If, at the time this Agreement is executed and delivered, it is
necessary for the registration statement or a post-effective amendment
thereto or any Abbreviated Registration Statement to be declared, or, in the
case of an Abbreviated Registration Statement, to become effective before the
offering of the Shares may commence, the Company will endeavor to cause the
Registration Statement or such post-effective amendment or Abbreviated
Registration Statement to become effective as soon as possible and will
advise you promptly and, if requested by you, will confirm such advice in
writing, when the Registration Statement or such post-effective amendment or
Abbreviated Registration Statement has become effective.
(b) The Company will advise you promptly and, if requested by you,
will confirm such advice in writing: (i) of any request by the Commission
for amendment of or a supplement to the Registration Statement, any
Prepricing Prospectus or the Prospectus or for additional information; (ii)
of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or of the suspension of
qualification of the Shares for offering or sale in any jurisdiction or the
initiation of any proceeding for such purpose; and (iii) within the period of
time referred to in paragraph (f) below, of any change in the Company's
condition (financial or other), business, prospects, properties, net worth or
results of operations, or of the happening of any event, which in any of
these cases makes any statement of a material fact made in the Registration
Statement or the Prospectus (as then amended or supplemented) untrue or which
requires the making of any additions to or changes in the Registration
Statement or the Prospectus (as then amended or supplemented) in order to
state a material fact required by the Act or the regulations thereunder to be
stated therein or necessary in order to make the statements therein not
misleading, or of the necessity to amend or supplement the Prospectus (as
then amended or supplemented) to comply with the Act or any other law. If at
any time the Commission shall issue any stop order suspending the
effectiveness of the Registration Statement, the Company will make every
reasonable effort to obtain the withdrawal of such order at the earliest
possible time.
(c) The Company will furnish to you, without charge, three copies of
the registration statement as originally filed with the Commission and of
each amendment thereto, including, executed signature pages, financial
statements and all exhibits to the registration statement and will also
furnish to you, without charge, such number of conformed copies of the
registration statement as originally filed and of each amendment thereto, but
without exhibits, as you may reasonably request.
(d) The Company will not (i) file any amendment to the Registration
Statement or make any amendment or supplement to the Prospectus of which you
shall not previously have been advised or to which you shall reasonably
object after being so advised or (ii) so long as, in the opinion of counsel
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for the Underwriters, a prospectus is required to be delivered in connection
with sales by any Underwriter or dealer, file any information, documents or
reports pursuant to the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), without delivering a copy of such information, documents or
reports to you, as Representatives of the Underwriters, prior to or
concurrently with such filing.
(e) Prior to the execution and delivery of this Agreement, the
Company has delivered or will deliver to you, without charge, in such
quantities as you have reasonably requested or may hereafter reasonably
request, copies of each form of the Prepricing Prospectus. The Company
consents to the use, in accordance with the provisions of the Act and with
the securities or Blue Sky laws of the jurisdictions in which the Shares are
offered by the several Underwriters and by dealers, prior to the date of the
Prospectus, of each Prepricing Prospectus so furnished by the Company.
(f) As soon after the execution and delivery of this Agreement as
possible and thereafter from time to time for such period as in the
reasonable opinion of counsel for the Underwriters a prospectus is required
by the Act to be delivered in connection with sales by any Underwriter or
dealer, the Company will expeditiously deliver to each Underwriter and each
dealer, without charge, as many copies of the Prospectus (and of any
amendment or supplement thereto) as you may reasonably request. The Company
consents to the use of the Prospectus (and of any amendment or supplement
thereto) in accordance with the provisions of the Act and with the securities
or Blue Sky laws of the jurisdictions in which the Shares are offered by the
several Underwriters and by all dealers to whom Shares may be sold, both in
connection with the offering and sale of the Shares and for such period of
time thereafter as the Prospectus is required by the Act to be delivered in
connection with sales by any Underwriter or dealer. If during such period of
time any event shall occur that in the judgment of the Company or in the
reasonable opinion of counsel for the Underwriters is required to be set
forth in the Prospectus (as then amended or supplemented) or should be set
forth therein in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or if it is
necessary to supplement or amend the Prospectus to comply with the Act or any
other law, the Company will forthwith prepare and, subject to the provisions
of paragraph (d) above, file with the Commission an appropriate supplement or
amendment thereto and will expeditiously furnish copies thereof to the
Underwriters and dealers in such quantities as you shall reasonably request.
In the event that the Company and you, as Representatives of the several
Underwriters, agree that the Prospectus should be amended or supplemented,
the Company, if requested by you, will promptly issue a press release
announcing or disclosing the matters to be covered by the proposed amendment
or supplement.
(g) The Company will cooperate with you and with counsel for the
Underwriters in connection with the registration or qualification of the
Shares for offering and sale by the several Underwriters and by dealers under
the securities or Blue Sky laws of such jurisdictions as you may designate
and will file such consents to service of process or other documents
necessary or appropriate in order to effect such registration or
qualification; provided that in no event shall the Company be obligated to
qualify to do business in any jurisdiction where it is not now so qualified
or to take any action that would subject it to service of process in suits,
other than those arising out of the offering or sale of the Shares, in any
jurisdiction where it is not now so subject.
(h) The Company will make generally available to its security holders
a consolidated earnings statement, which need not be audited, covering a
twelve-month period commencing after the effective date of the Registration
Statement and ending not later than 15 months thereafter, as soon as
practicable after the end of such period, which consolidated earnings
statement shall satisfy the provisions of Section 11(a) of the Act.
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(i) During the period of five years hereafter, the Company will
furnish to you (i) as soon as available, a copy of each report of the Company
mailed to stockholders or filed with the Commission, and (ii) from time to
time such other information concerning the Company as you may reasonably
request.
(j) If this Agreement shall terminate or shall be terminated after
execution pursuant to any provisions hereof (otherwise than pursuant to the
second paragraph of Section 12 hereof or by notice given by you terminating
this Agreement pursuant to Section 12 or Section 13 hereof) or if this
Agreement shall be terminated by the Underwriters because of any failure or
refusal on the part of the Company or the Selling Shareholder to comply with
the terms or fulfill any of the conditions of this Agreement, the Company
agrees to reimburse the Representatives for all out-of-pocket expenses
(including reasonable fees and expenses of counsel for the Underwriters)
incurred by you in connection herewith.
(k) The Company will apply the net proceeds from the sale of the
Shares substantially in accordance with the description set forth in the
Prospectus.
(l) If Rule 430A of the Act is employed, the Company will timely file
the Prospectus pursuant to Rule 424(b) under the Act and will advise you of
the time and manner of such filing.
(m) Except as provided in this Agreement, the Company will not sell,
offer to sell, contract to sell or otherwise transfer or dispose of any
Common Shares (or any securities convertible into or exercisable or
exchangeable for Common Shares), or grant any options or warrants to purchase
Common Shares, for a period of 180 days after the date of the Prospectus,
without the prior written consent of Smith Barney Inc., except for issuances
of options pursuant to the Company's incentive stock plan (provided that such
options shall not be exercisable for a period of 180 days after the date of
the Prospectus).
(n) The Company has furnished or will furnish to you "lock-up"
letters, in form and substance satisfactory to you, signed by each of its
current officers and directors.
(o) Except as stated in this Agreement and in the Prepricing
Prospectus and Prospectus, the Company has not taken, nor will it take,
directly or indirectly, any action designed to or that might reasonably be
expected to cause or result in stabilization or manipulation of the price of
the Common Shares to facilitate the sale or resale of the Shares.
(p) The Company will use its best efforts to have the Common Shares
approved for quotation, subject to notice of issuance, on the Nasdaq National
Market prior to or concurrently with the effectiveness of the registration
statement.
6. AGREEMENTS OF THE SELLING SHAREHOLDER. The Selling Shareholder agrees
with the several Underwriters as follows:
(a) The Selling Shareholder will take all reasonable actions in
cooperation with the Company and the Underwriters to cause the registration
statement, any Abbreviated Registration Statement and any post-effective
amendment thereto to become effective at the earliest possible time.
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(b) The Selling Shareholder will pay all federal and other taxes, if
any, on the transfer or sale of any Shares that are sold by the Selling
Shareholder to the Underwriters.
(c) The Selling Shareholder will do or perform all things required to
be done or performed by the Selling Shareholder prior to the Closing Date or
any Option Closing Date, as the case may be, to satisfy all conditions
precedent to the delivery of the Shares by the Selling Shareholder pursuant
to this Agreement.
(d) The Selling Shareholder will not offer, sell, contract to sell or
otherwise dispose of, or grant any option to purchase, any Common Shares (or
any securities convertible into or exercisable or exchangeable for Common
Shares) owned by such Selling Shareholder, except for the sale of Shares to
the Underwriters pursuant to this Agreement, or exercise any registration
rights with respect to the sale of Common Shares, without the prior written
consent of Smith Barney Inc. for a period of 180 days after the date of the
Prospectus.
(e) Except as stated in this Agreement and in the Prepricing
Prospectus and the Prospectus, the Selling Shareholder will not take,
directly or indirectly, any action designed to or that might reasonably be
expected to cause or result in stabilization or manipulation of the price of
the Common Shares to facilitate the sale or resale of the Shares.
(f) The Selling Shareholder will advise you promptly, and if
requested by you, will confirm such advice in writing, within the period of
time referred to in Section 5(f) hereof, of any change in information
relating to the Selling Shareholder and of any change in the Company's
condition (financial or other), business, prospects, properties, net worth or
results of operations or any other information relating to the Company or
relating to any matter stated in the Prospectus or any amendment or
supplement thereto that comes to the attention of the Selling Shareholder
that suggests that any statement made in the Registration Statement (as then
amended or supplemented, if amended or supplemented) is or may be untrue in
any material respect or that the Registration Statement (as then amended or
supplemented, if amended or supplemented) omits or may omit to state a
material fact or a fact necessary to be stated therein in order to make the
statements therein not misleading in any material respect or that any
statement made in the Prospectus (as then amended or supplemented, if amended
or supplemented) is or may be untrue in any material respect or that the
Prospectus (as then amended or supplemented, if amended or supplemented)
omits or may omit to state a material fact or a fact necessary to be stated
therein in order to make the statements therein, in light of the
circumstances under which they were made, not misleading in any material
respect.
(g) In order to document the Underwriters' compliance with the
reporting and withholding provisions of the Tax Equity and Fiscal
Responsibility Act of 1982, as amended, with respect to the transactions
herein contemplated, the Selling Shareholder agrees to deliver to you prior
to or on the Closing Date a properly completed and executed United States
Treasury Department Form W-9 (or other applicable form or statement specified
by Treasury Department regulations in lieu thereof).
7. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents
and warrants to each Underwriter that:
(a) Each Prepricing Prospectus included as part of the registration
statement as originally filed or as part of any amendment or supplement
thereto, or filed pursuant to Rule 424 under the
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Act, complied when so filed in all material respects with the provisions of
the Act. The Commission has not issued any order preventing or suspending
the use of any Prepricing Prospectus.
(b) The registration statement in the form in which it became or
becomes effective and also in such form as it may be when any post-effective
amendment thereto or any Abbreviated Registration Statement shall become
effective, and the Prospectus and any supplement or amendment thereto when
filed with the Commission under Rule 424(b) under the Act, complied or will
comply in all material respects with the provisions of the Act and, in the
case of such registration statement or Abbreviated Registration Statement,
did not or will not at any such times contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein not misleading, or in the case of
such Prospectus, did not or will 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 light of the circumstances
under which they were made, not misleading, except that this representation
and warranty does not apply to statements in or omissions from the
registration statement or the Prospectus made in reliance upon and in
conformity with information relating to any Underwriter furnished to the
Company in writing by or on behalf of any Underwriter through you expressly
for use therein.
(c) All the outstanding shares of capital stock of the Company have
been duly authorized and validly issued, are fully paid and nonassessable,
are free of any preemptive or similar rights and have been issued and sold in
compliance with all federal and state securities laws; the Shares to be
issued and sold by the Company have been duly authorized and, when issued and
delivered to the Underwriters against payment therefor in accordance with the
terms hereof, will be validly issued, fully paid and nonassessable and free
of any preemptive or similar rights; and the capital stock of the Company
conforms in all material respects to the description thereof in the
Registration Statement and the Prospectus.
(d) The Company is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Ohio with full corporate
power and authority to own, lease and operate its properties and to conduct
its business as described in the Registration Statement and the Prospectus,
and is duly registered and qualified to conduct its business and is in good
standing in each jurisdiction or place where the nature of its properties or
the conduct of its business requires such registration or qualification,
except where the failure so to register or qualify would not have a material
adverse effect on the condition (financial or other), business, prospects,
properties, net worth or results of operations of the Company and the
Subsidiaries (as hereinafter defined) taken as a whole (a "Material Adverse
Effect").
(e) All the Company's subsidiaries (as defined in the Act), including,
without limitation, the Partnerships (as defined below), are listed in
Exhibit 21.1 to the Registration Statement and are referred to herein
individually as a "Subsidiary" and collectively as the "Subsidiaries." Each
Subsidiary that is a corporation (a "Corporate Subsidiary") has been duly
incorporated and is validly existing and in good standing in the jurisdiction
of its incorporation, with full corporate power and authority to own, lease
and operate its properties and to conduct its business as described in the
Registration Statement and the Prospectus and is duly registered and
qualified to conduct its business and is in good standing in each
jurisdiction or place where the nature of its properties or the conduct of
its business requires such registration or qualification, except where the
failure so to register or qualify would not have a Material Adverse Effect.
All the outstanding shares of capital stock of each Corporate Subsidiary have
been duly authorized and validly issued, are fully paid and nonassessable,
and are wholly-owned by the Company directly or indirectly through one or
more of the other Subsidiaries, free and clear of any lien, adverse
8
claim, security interest, equity or other encumbrance, except as disclosed in
the Registration Statement and the Prospectus (or any amendment or supplement
thereto).
(f) Each of the partnerships in which the Company or a Subsidiary
holds a general partnership interest or is the managing general partner
(collectively, the "Partnerships") has been duly organized and is an existing
partnership under the laws of the jurisdiction of its organization, with the
partnership power and authority to own, lease and operate its properties and
to conduct its business as currently operated and conducted and is duly
qualified to conduct its business as a foreign partnership in each
jurisdiction in which the nature of its properties or the conduct of its
business requires such qualification, except where the failure so to qualify
does not have a Material Adverse Effect. The partnership interests held
directly or indirectly by the Company are owned free and clear of any lien,
adverse claim, security interest, equity or other encumbrance, except as
disclosed in the Prospectus. To the knowledge of the Company, each
partnership agreement pursuant to which the Company or a Subsidiary holds a
general partnership interest in a Partnership is in full force and effect and
constitutes the legal, valid and binding agreement of the parties thereto,
enforceable against such parties in accordance with the terms thereof, except
as enforcement thereof may be limited by bankruptcy, insolvency or other
similar laws affecting the enforcement of creditors' rights generally and by
general equitable principles. There has been no material breach of or
default under, and no event which with notice or lapse of time would
constitute a material breach of or default under, such agreements by the
Company or any Subsidiary or, to the Company's knowledge, any other party to
such agreements.
(g) There are no legal or governmental proceedings pending or, to the
knowledge of the Company, threatened, against the Company or any of the
Subsidiaries, or to which the Company or any of the Subsidiaries or any of
their respective properties is subject, that are required to be described in
the Registration Statement or the Prospectus but are not described as
required. There are no agreements, contracts, indentures, leases or other
instruments that are required to be described in the Registration Statement
or the Prospectus or to be filed as an exhibit to the Registration Statement
that are not described or filed as required by the Act. Neither the Company
nor any of the Subsidiaries is involved in any strike, job action or labor
dispute, and to the Company's knowledge, no such action or dispute is
threatened.
(h) Neither the Company nor any of the Subsidiaries is (i) in
violation of its articles of incorporation or regulations or other
organizational documents, or of any law, ordinance, administrative or
governmental rule or regulation applicable to the Company or any of the
Subsidiaries or of any decree of any court or governmental agency or body
having jurisdiction over the Company or any of the Subsidiaries, or (ii) in
default in the performance of any material obligation, agreement or condition
contained in any bond, debenture, note or any other evidence of indebtedness
or in any material agreement, indenture, lease or other material instrument
to which the Company or any of the Subsidiaries is a party or by which any of
them or any of their respective properties is bound.
(i) Neither the issuance and sale of the Shares, the execution,
delivery or performance of this Agreement by the Company nor the consummation
by the Company of the transactions contemplated hereby (i) requires any
consent, approval, authorization or other order of, or registration or filing
with, any court, regulatory body, administrative agency or other governmental
body, agency or official (except such as may be required for the registration
of the Shares under the Act and the Exchange Act, all of which have been or
will be effected in accordance with this Agreement, or such as are required
under the securities or Blue Sky laws of various jurisdictions) or conflicts
or will conflict with or constitutes or will constitute a breach of, or a
default under, the articles of incorporation or regulations or other
organizational documents of the Company or any of the Subsidiaries or (ii)
conflicts or will conflict with or constitutes or will
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constitute a breach of, or a default under, any agreement, indenture, lease
or other instrument to which the Company or any of the Subsidiaries is a
party or by which the Company or any of the Subsidiaries or any of their
respective properties is bound which is material to the Company and its
Subsidiaries taken as a whole, or violates or will violate any statute, law,
regulation or filing or judgment, injunction, order or decree applicable to
the Company or any of the Subsidiaries or any of their respective properties,
or will result in the creation or imposition of any material lien, charge or
encumbrance upon any property or assets of the Company or any of the
Subsidiaries pursuant to the terms of any agreement or instrument to which
any of them is a party or by which any of them may be bound or to which any
of their respective properties or assets is subject.
(j) The accountants, Ernst & Young LLP and Deloitte & Touche LLP, who
have certified or shall certify the financial statements filed or to be filed
as part of the Registration Statement or the Prospectus (or any amendment or
supplement thereto), are independent public accountants as required by the
Act.
(k) The historical financial statements, together with related notes
forming part of the Registration Statement and the Prospectus (and any
amendment or supplement thereto), comply in all material respects with the
requirements of the Act and present fairly, in all material respects, the
consolidated financial position, results of operations and changes in
partners' equity and cash flows of the Company and the Subsidiaries on the
basis stated in the Registration Statement at the respective dates or for the
respective periods to which they apply; such statements and related notes
have been prepared in accordance with generally accepted accounting
principles consistently applied throughout the periods involved, except as
disclosed therein; and the other financial and statistical information and
data set forth in the Registration Statement and the Prospectus (and any
amendment or supplement thereto) are accurately presented in all material
respects and prepared on a basis consistent with such financial statements
and the books and records of the Company.
(l) The Company has all requisite corporate power and authority to
execute, deliver and perform its obligations under this Agreement; the
execution and delivery of, and the performance by the Company of its
obligations under, this Agreement have been duly and validly authorized by
the Company, and this Agreement has been duly executed and delivered by the
Company and constitutes the valid and legally binding agreement of the
Company, enforceable against the Company in accordance with its terms, except
as rights to indemnity and contribution hereunder may be limited by federal
or state securities laws or principles of public policy and subject to the
qualification that the enforceability of the Company's obligations hereunder
may be limited by bankruptcy, fraudulent conveyance, insolvency,
reorganization, moratorium and other laws relating to or affecting creditors'
rights generally and by general equitable principles.
(m) Except as disclosed in the Registration Statement and the
Prospectus (or any amendment or supplement thereto), subsequent to the
respective dates as of which such information is given in the Registration
Statement and the Prospectus (or any amendment or supplement thereto),
neither the Company nor any of the Subsidiaries has incurred any liability or
obligation, direct or contingent, or entered into any transaction, that is
material to the Company and the Subsidiaries taken as a whole, and there has
not been any material change in the capital stock, or material increase in
the short-term or long-term debt, of the Company or any of the Subsidiaries,
or any material adverse change in the condition (financial or other),
business, prospects, properties, net worth or results of operations of the
Company and the Subsidiaries taken as a whole.
10
(n) Each of the Company and the Subsidiaries has good and marketable
title to all property (real and personal) described in the Prospectus as
being owned by it, free and clear of all liens, claims, security interests or
other encumbrances except such as are described in the Registration Statement
and the Prospectus or in a document filed as an exhibit to the Registration
Statement or such as (i) do not materially affect the value of such property
or (ii) would not have a Material Adverse Effect, and all the property
described in the Prospectus as being held under lease by the Company or any
of the Subsidiaries is held by it under valid, subsisting and enforceable
leases with such exceptions as do not materially interfere with the use made
of such property.
(o) 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 the Registration Statement, the Prepricing
Prospectus, the Prospectus or other materials, if any, permitted by the Act.
(p) Each of the Company and the Subsidiaries has such permits,
licenses, franchises, authorizations and clearances ("Permits") of
governmental and regulatory authorities as are necessary to own, lease and
operate its properties and to conduct its business in the manner described in
the Prospectus, including, without limitation, such Permits as are required
under such federal and state healthcare laws as are applicable to the Company
and the Subsidiaries and their respective businesses, subject to such
qualifications as may be set forth in the Prospectus and except where the
failure to have such Permits would not have a Material Adverse Effect;
subject to such qualifications as may be set forth in the Prospectus, each of
the Company and the Subsidiaries has fulfilled and performed all its material
obligations with respect to the Permits, and no event has occurred which
allows, or after notice or lapse of time would allow, revocation or
termination thereof or results in any other material impairment of the rights
of the holder of any Permit, subject in each case to such qualification as
may be set forth in the Prospectus. Except as described in the Prospectus,
none of the Permits contains any restriction that is materially burdensome to
the Company and the Subsidiaries taken as a whole. The Company's and each
Subsidiary's business practices do not violate any federal or state laws
regarding physician ownership of (or financial relationship with) and
referral to entities providing healthcare related goods or services, or laws
requiring disclosure of financial interests held by physicians in entities to
which they may refer patients for the provisions of health care related goods
or services.
(q) The Company and the Subsidiaries own or possess all patents,
trademarks, trademark registrations, service marks, service mark
registrations, trade names, copyrights, licenses, inventions, trade secrets
and rights described in the Prospectus as being owned by any of them or
necessary for the conduct of their respective businesses, and the Company is
not aware of any claim to the contrary or any challenge by any other person
to the rights of the Company and the Subsidiaries with respect to the
foregoing.
(r) The property, assets and operations of the Company and the
Subsidiaries comply in all material respects with all applicable federal,
state and local laws, rules, orders, decrees, judgments, injunctions,
licenses, permits or regulations relating to environmental matters (the
"Environmental Laws"), except to the extent that the lack of compliance with
such Environmental Laws would not, singularly or in the aggregate, have a
Material Adverse Effect. To the Company's knowledge, none of the Company's
or any Subsidiary's property, assets or operations is the subject of any
federal, state or local investigation evaluating whether any remedial action
is needed to respond to a release of any substance regulated by or form the
basis of liability under any Environmental Laws (a "Hazardous Material") into
the environment. Neither the Company nor any Subsidiary has received any
notice or claim, nor are there any pending or, to the Company's best
knowledge, threatened or reasonably anticipated lawsuits against it with
respect to
11
violations of an Environmental Law or in connection with the release of any
Hazardous Material into the environment. Neither the Company nor any
Subsidiary has any material contingent liability in connection with any
release of Hazardous Material into the environment.
(s) The Company and the Subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks and in such
amounts as are customary in the businesses in which they are engaged; all
policies of insurance insuring the Company or any of the Subsidiaries or
their respective businesses, assets, employees, officers and directors are in
full force and effect; the Company and the Subsidiaries are in compliance
with the terms of such policies and instruments in all material respects; and
there are no material claims by the Company or any of the Subsidiaries under
any such policy or instrument as to which any insurance company is denying
liability or defending under a reservation of rights clause.
(t) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurances that (i) transactions are
executed in accordance with management's general or specific authorization;
(ii) transactions are recorded as necessary to permit preparation of
financial statements in conformity with generally accepted accounting
principles and to maintain accountability for assets; (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 existing assets at reasonable intervals and appropriate action is taken
with respect to any differences.
(u) Neither the Company nor any Subsidiary nor, to the Company's
knowledge, any employee or agent of the Company or any Subsidiary has made
any payment of funds of the Company or any Subsidiary or received or retained
any funds in violation of any law, rule or regulation, which payment, receipt
or retention of funds is of a character required to be disclosed in the
Prospectus.
(v) The Company and the Subsidiaries have filed all federal, state,
local and foreign tax returns and tax forms required to be filed, other than
those filings being contested in good faith; such returns and forms are
complete and correct in all material respects; and all taxes shown by such
returns or otherwise assessed that are due or payable have been paid, except
such taxes as are being contested in good faith and as to which adequate
reserves have been provided. All payroll withholdings required to be made by
the Company with respect to employees have been made. The charges, accruals
and reserves on the books of the Company and the Subsidiaries in respect of
any tax liability for any year not finally determined are adequate to meet
any assessments or reassessments for additional taxes; and there have been no
tax deficiencies asserted and, to the knowledge of the Company, no tax
deficiency might be reasonably asserted or threatened against the Company or
any of the Subsidiaries that could, singularly or in the aggregate, have a
Material Adverse Effect.
(w) No holder of any security of the Company has any right to require
registration of Common Shares or any other security of the Company because of
the filing of the registration statement or the consummation of the
transactions contemplated by this Agreement and, except as disclosed in the
Prospectus under the caption "Description of Capital Stock -- Registration
Rights Agreement," no person has the right to require registration under the
Act of any Common Shares or other securities of the Company. No person has
the right, contractual or otherwise, to cause the Company to permit such
person to underwrite the sale of any of the Shares. Except as described in
or contemplated by the Prospectus, there are no outstanding options, warrants
or other rights calling for the issuance of, and there are no commitments,
plans or arrangements to issue, any shares of capital stock of the Company or
any
12
Subsidiary or any security convertible into or exchangeable or exercisable
for capital stock of the Company or any Subsidiary.
(x) Neither the Company nor any of the Subsidiaries is, nor upon the
sale of the Shares to be issued and sold by the Company hereunder and
application of the net proceeds from such sale as described in the Prospectus
under the caption "Use of Proceeds" will be, an "investment company" within
the meaning of the Investment Company Act of 1940, as amended.
(y) The Company is in compliance with all provisions of Florida
Statutes Section 517.075 and the regulations thereunder relating to issuers
doing business with Cuba.
8. REPRESENTATIONS AND WARRANTIES OF THE SELLING SHAREHOLDER. The Selling
Shareholder represents and warrants to each Underwriter that:
(a) The Selling Shareholder now has or has the right to acquire, and
on the Closing Date and any Option Closing Date will have, valid and
marketable title to the Shares to be sold by the Selling Shareholder, free
and clear of any lien, claim, security interest or other encumbrance,
including, without limitation, any restriction on transfer or other defect in
title.
(b) The Selling Shareholder now has, and on the Closing Date will
have, full legal right, power and authorization, and any approval required by
law (except such as may be required under the Act, the Exchange Act or state
securities or Blue Sky laws governing the purchase and distribution of the
Shares), to sell, assign, transfer and deliver such Shares in the manner
provided in this Agreement, and upon delivery of and payment for such Shares
hereunder, the several Underwriters will acquire valid and marketable title
to such Shares, free and clear of any lien, claim, security interest, or
other encumbrance, restriction on transfer or other defect in title.
(c) This Agreement and the Custody Agreement have been duly
authorized, and in the case of this Agreement, when executed and delivered on
behalf of the Selling Shareholder in accordance with the Custody Agreement,
have been duly executed and delivered by or on behalf of the Selling
Shareholder and are the valid and binding agreements of the Selling
Shareholder enforceable against the Selling Shareholder in accordance with
their respective terms, except as rights to indemnity and contribution
hereunder may be limited by federal or state securities laws or principles of
public policy and except as enforcement hereof and thereof may be limited by
bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium and
other laws relating to or affecting creditors' rights generally and by
general equitable principles.
(d) Neither the execution and delivery of this Agreement or the
Custody Agreement by or on behalf of the Selling Shareholder nor the
consummation of the transactions herein or therein contemplated by or on
behalf of the Selling Shareholder requires any consent, approval,
authorization or order of, or filing or registration with, any court,
regulatory body, administrative agency or other governmental body, agency or
official (except such as may be required under the Act, the Exchange Act or
state securities or Blue Sky laws governing the purchase and distribution of
the Shares) or conflicts or will conflict with or constitutes or will
constitute a material breach of, or default under, or violates or will
violate, any material agreement, indenture or other instrument to which the
Selling Shareholder is a party or by which the Selling Shareholder is or may
be bound or to which any of the Selling Shareholder's property or assets is
subject, or any statute, law, rule, regulation, ruling, judgement,
injunction, order or decree applicable to the Selling Shareholder or to any
property or assets of the Selling Shareholder.
13
(e) The Selling Shareholder has reviewed the Registration Statement
and the Prospectus. The Registration Statement does not contain an untrue
statement of a material fact or omit to state any material fact required to
be stated therein or necessary to make the statements therein not misleading,
and the Prospectus and any amendment or supplement thereto does not contain
an untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make statements therein, in
light of the circumstances under which they were made, not misleading.
(f) The representation and warranties of the Selling Shareholder in
the Custody Agreement are, and on the Closing Date will be, true and correct.
(g) The Selling Shareholder has not taken, directly or indirectly,
any action designed to or that might reasonably be expected to cause or
result in stabilization or manipulation of the price of the Common Shares to
facilitate the sale or resale of the Shares, except for the lock-up
arrangements described in the Prospectus.
9. INDEMNIFICATION AND CONTRIBUTION. (a) The Company agrees to indemnify
and hold harmless each of you and each other Underwriter and each person, if
any, who controls any Underwriter within the meaning of Section 15 of the Act
or Section 20 of the Exchange Act from and against any and all losses,
claims, damages, liabilities and expenses (including reasonable costs of
investigation) arising out of or based upon any untrue statement or alleged
untrue statement of a material fact contained in any Prepricing Prospectus or
in the Registration Statement or the Prospectus or in any amendment or
supplement thereto, or arising out of or based upon 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, liabilities or expenses arise out of or are
based upon any untrue statement or omission or alleged untrue statement or
omission which has been made therein or omitted therefrom in reliance upon
and in conformity with the information relating to such Underwriter furnished
in writing to the Company by or on behalf of any Underwriter through you
expressly for use in connection therewith; PROVIDED, HOWEVER, that the
indemnification contained in this paragraph (a) with respect to any
Prepricing Prospectus shall not inure to the benefit of any Underwriter (or
to the benefit of any person controlling such Underwriter) on account of any
such loss, claim, damage, liability or expense arising from the sale of
Shares by such Underwriter to any person if (i) a copy of the Prospectus
shall not have been delivered or sent to such person within the time required
by the Act and the untrue statement or alleged untrue statement or omission
or alleged omission of a material fact contained in such Prepricing
Prospectus was corrected in the Prospectus and (ii) the Company has delivered
the Prospectus to the several Underwriters in requisite quantity on a timely
basis to permit such delivery or sending. The foregoing indemnity agreement
shall be in addition to any liability which the Company may otherwise have.
(b) If any action, suit or proceeding shall be brought against any
Underwriter or any person controlling any Underwriter in respect of which
indemnity may be sought against the Company, such Underwriter or such
controlling person shall promptly notify the Company, and the Company shall
assume the defense thereof, including the employment of counsel and payment
of all fees and expenses. Such Underwriter or any such controlling person
shall have the right to employ separate counsel in any such action, suit or
proceeding and to participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of such Underwriter or such
controlling person unless (i) the Company has agreed in writing to pay such
fees and expenses, (ii) the Company has failed to assume the defense and
employ counsel or (iii) the named parties to any such action, suit or
proceeding (including any impleaded parties) include both such Underwriter or
such controlling person and the Company and such Underwriter
14
or such controlling person shall have been advised by its counsel that
representation of such indemnified party and the Company by the same counsel
would be inappropriate under applicable standards of professional conduct
(whether or not such representation by the same counsel has been proposed)
due to actual or potential differing interests between them (in which case
the Company shall not have the right to assume the defense of such action,
suit or proceeding on behalf of such Underwriter or such controlling person).
It is understood, however, that if the Company is obligated to pay the fees
and expenses of Underwriters' counsel under the preceding sentence, then the
Company shall, in connection with any one such action, suit or proceeding or
separate but substantially similar or related actions, suits or proceedings
in the same jurisdiction arising out of the same general allegations or
circumstances, be liable for the reasonable fees and expenses of only one
separate firm of attorneys (in addition to no more than one local counsel per
jurisdiction) at any time for all such Underwriters and controlling persons
not having actual or potential differing interests with you or among
themselves, which firm shall be designated in writing by Smith Barney Inc.
and shall be reasonably acceptable to the Company, and that all such fees and
expenses shall be reimbursed as they are incurred. The Company shall not be
liable for any settlement of any such action, suit or proceeding effected
without its written consent, but if settled with such written consent, or if
there be a final judgment for the plaintiff in any such action, suit or
proceeding, the Company agrees to indemnify and hold harmless any Underwriter
and any such controlling person, to the extent provided in the preceding
paragraph, from and against any loss, claim, damage, liability or expense by
reason of such settlement or judgment.
(c) The Selling Shareholder agrees to indemnify and hold harmless
each Underwriter and each person, if any, who controls any Underwriter within
the meaning of Section 15 of the Act or Section 20 of the Exchange Act to the
same extent as the indemnity from the Company to each Underwriter set forth
in Section 9(a) hereof (but subject to Section 9(g) hereof). In case any
action or claim shall be brought or asserted against any Underwriter or any
such controlling person in respect of which indemnity may be sought against
the Selling Shareholder pursuant to this paragraph (c), the Selling
Shareholder shall have the rights and duties given to the Company, and each
Underwriter and any such controlling person shall have the rights and duties
given to the Underwriters, under paragraph (b) above. The foregoing
indemnity agreement shall be in addition to any liability which the Selling
Shareholder may otherwise have.
(d) Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless the Company, its directors, its officers who sign the
Registration Statement, the Selling Shareholder and any person who controls
the Company within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act, to the same extent as the indemnity from the Company to each
Underwriter set forth in Section 9(a) hereof, but only with respect to
information relating to such Underwriter furnished in writing to the Company
by or on behalf of such Underwriter through you expressly for use in the
Registration Statement, the Prospectus or any Prepricing Prospectus, or any
amendment or supplement thereto. If any action, suit or proceeding shall be
brought against the Company, any of its directors, any such officer, the
Selling Shareholder or any such controlling person based on the Registration
Statement, the Prospectus or any Prepricing Prospectus, or any amendment or
supplement thereto, and in respect of which indemnity may be sought against
any Underwriter pursuant to this paragraph (d), such Underwriter shall have
the rights and duties given to the Company by paragraph (b) above (except
that if the Company shall have assumed the defense thereof such Underwriter
shall not be required to do so, but may employ separate counsel therein and
participate in the defense thereof, but the fees and expenses of such counsel
shall be at such Underwriter's expense), and the Company, its directors, any
such officer, the Selling Shareholder and any such controlling person shall
have the rights and duties given to the Underwriters by paragraph (b) above.
The foregoing indemnity agreement shall be in addition to any liability which
the Underwriters may otherwise have.
15
(e) If the indemnification provided for in this Section 9 is
unavailable to an indemnified party under paragraphs (a), (c) or (d) hereof
in respect of any losses, claims, damages, liabilities or expenses referred
to therein, then an indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages, liabilities or
expenses (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company and the Selling Shareholder on the one hand
and the Underwriters on the other hand from the offering of the Shares, or
(ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault
of the Company and the Selling Shareholder on the one hand and the
Underwriters on the other hand in connection with the statements or omissions
that resulted in such losses, claims, damages, liabilities or expenses, as
well as any other relevant equitable considerations. The relative benefits
received by the Company and the Selling Shareholder on the one hand and the
Underwriters on the other hand shall be deemed to be in the same proportion
as the total net proceeds from the offering (before deducting expenses)
received by the Company and the Selling Shareholders bear to the total
underwriting discounts and commissions received by the Underwriters, in each
case as set forth in the table on the cover page of the Prospectus; provided
that, in the event that the Underwriters shall have purchased any Additional
Shares hereunder, any determination of the relative benefits received by the
Company and the Selling Shareholder, and the Underwriters from the offering
of the Shares shall include the net proceeds (before deducting expenses)
received by the Company and the Selling Shareholder, and the underwriting
discounts and commissions received by the Underwriters, from the sale of such
Additional Shares, in each case computed on the basis of the respective
amounts set forth in the notes to the table on the cover page of the
Prospectus. The relative fault of the Company and the Selling Shareholder on
the one hand and the Underwriters on the other hand shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Company and the Selling
Shareholder on the one hand or the Underwriters on the other hand and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.
(f) The Company, the Selling Shareholders and the Underwriters agree
that it would not be just and equitable if contribution pursuant to this
Section 9 were determined by a pro rata allocation (even if the Underwriters
were treated as one entity for such purpose) or by any other method of
allocation that does not take account of the equitable considerations
referred to in paragraph (e) above. The amount paid or payable by an
indemnified party as a result of the losses, claims, damages, liabilities and
expenses referred to in paragraph (e) above 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 any claim or defending any such action, suit or proceeding.
Notwithstanding the provisions of this Section 9, no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price of the Shares underwritten by it and distributed to the public exceeds
the amount of any damages which such Underwriter has otherwise been required
to pay by reason of such untrue or alleged untrue statement or omission or
alleged omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Act) shall be entitled to contribution
from any person who was not guilty of such fraudulent misrepresentation. The
Underwriters' obligations to contribute pursuant to this Section 9 are
several in proportion to the respective numbers of Firm Shares set forth
opposite their names in Schedule I hereto (or such numbers of Firm Shares
increased as set forth in Section 12 hereof) and not joint.
(g) Notwithstanding any other provision of this Section 9, the
liability of the Selling Shareholder for indemnification or contribution
under this Section 9 shall not exceed an amount equal to
16
the number of Shares sold by the Selling Shareholder hereunder multiplied by
the purchase price per share set forth in Section 2 hereof.
(h) No indemnifying party shall, without the prior written consent of
the indemnified party, effect any settlement of any pending or threatened
action, suit or 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 action, suit or proceeding.
(i) Any losses, claims, damages, liabilities or expenses for which an
indemnified party is entitled to indemnification or contribution under this
Section 9 shall be paid by the indemnifying party to the indemnified party as
such losses, claims, damages, liabilities or expenses are incurred. The
indemnity and contribution agreements contained in this Section 9 and the
representations and warranties of the Company and the Selling Shareholder,
respectively, set forth in this Agreement shall remain operative and in full
force and effect, regardless of (i) any investigation made by or on behalf of
any Underwriter or any person controlling any Underwriter, the Company, its
directors or officers, the Selling Shareholder or any person controlling the
Company, (ii) acceptance of any Shares and payment therefor hereunder, and
(iii) any termination of this Agreement. A successor to any Underwriter or
any person controlling any Underwriter, or to the Company, its directors or
officers, the Selling Shareholder or any person controlling the Company,
shall be entitled to the benefits of the indemnity, contribution and
reimbursement agreements contained in this Section 9.
10. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The several obligations of
the Underwriters to purchase the Firm Shares hereunder are subject to the
following conditions:
(a) If, at the time this Agreement is executed and delivered, it is
necessary for the registration statement or a post-effective amendment
thereto or an Abbreviated Registration Statement to be declared effective
before the offering of the Shares may commence, the registration statement or
such post-effective amendment or Abbreviated Registration Statement shall
have become effective not later than 5:30 P.M., New York City time, on the
date hereof, or at such later date and time as shall be consented to in
writing by you, and all filings, if any, required by Rules 424 and 430A under
the Act shall have been timely made.
(b) Subsequent to the effective date of this Agreement, there shall
not have occurred (i) any change, or any development involving a prospective
change, in or affecting the condition (financial or other), business,
properties, net worth, or results of operations of the Company not
contemplated by the Prospectus, which in your reasonable opinion, as
Representatives of the several Underwriters, would materially adversely
affect the market for the Shares, or (ii) any event or development relating
to or involving the Company, any officer or director of the Company or the
Selling Shareholder, which makes any statement made in the Prospectus untrue
or which, in the reasonable opinion of the Company and its counsel or the
Underwriters and their counsel, requires the making of any addition to or
change in the Prospectus in order to state a material fact required by the
Act or any other law to be stated therein or necessary in order to make the
statements therein not misleading, if amending or supplementing the
Prospectus to reflect such event or development would, in your reasonable
opinion, as Representatives of the several Underwriters, materially adversely
affect the market for the Shares.
17
(c) You shall have received on the Closing Date an opinion of Vorys,
Sater, Seymour and Pease, counsel for the Company, JMAC Properties, Inc.
("JMAC Properties") and the Selling Shareholder, dated the Closing Date and
addressed to you, as Representatives of the several Underwriters, that:
(i) The Company is a corporation duly incorporated and validly
existing in good standing under the laws of the State of Ohio with full
corporate power and authority to own, lease and operate its properties and
to conduct its business as described in the Registration Statement and the
Prospectus (and any amendment or supplement thereto);
(ii) JMAC Properties is a corporation duly incorporated and validly
existing and in good standing under the laws of the State of Ohio, with
full corporate power and authority to own, lease and operate its properties
and to conduct its business as described in the Registration Statement and
the Prospectus (and any amendment or supplement thereto); and all the
outstanding shares of capital stock of JMAC Properties have been duly
authorized and validly issued, are fully paid and nonassessable, and are
owned of record by the Company, free and clear of any perfected security
interest or, to such counsel's knowledge, any other lien, adverse claim,
equity or other encumbrance, except as disclosed in the Registration
Statement and the Prospectus (or any amendment or supplement thereto);
(iii) The partnership interests in the Partnerships held by JMAC
Properties are, to such counsel's knowledge, owned free and clear of any
lien, adverse claim, security interest, equity or other encumbrance, except
as disclosed in the Prospectus. To such counsel's knowledge, each
partnership agreement pursuant to which JMAC Properties holds a general
partnership interest in a Partnership constitutes the legal, valid and
binding agreement of JMAC Properties enforceable against JMAC Properties in
accordance with the terms thereof, except as enforcement thereof may be
limited by bankruptcy, insolvency or other similar laws affecting
creditors' rights generally and by general equitable principles;
(iv) The authorized capital stock of the Company is as set forth
under the caption "Capitalization" in the Prospectus, and the authorized
capital stock of the Company conforms in all material respects as to legal
matters to the description contained in the Prospectus under the caption
"Description of Capital Stock";
(v) All the shares of capital stock of the Company outstanding
prior to the issuance of the Shares have been duly authorized and validly
issued, are fully paid and nonassessable and were issued and sold in
compliance with all applicable federal and state securities laws;
(vi) The Shares to be issued and sold to the Underwriters by the
Company have been duly authorized and, when issued and delivered to the
Underwriters against payment therefor in accordance with the terms hereof,
will be validly issued, fully paid and nonassessable and free of (A) any
preemptive rights arising under the Company's articles of incorporation or
the Ohio General Corporation Law or (B) to the knowledge of such counsel,
similar rights that entitle or will entitle any person to acquire any
shares of capital stock of the Company upon the issuance and sale of the
Shares by the Company;
(vii) The form of certificate for the Shares conforms in all
material respects to the requirements of the Ohio General Corporation Law;
18
(viii) The Registration Statement and all post-effective
amendments, if any, have become effective under the Act and, to the
knowledge of such counsel, no stop order suspending the effectiveness of
the Registration Statement has been issued and no proceedings for that
purpose are pending before or contemplated by the Commission; and any
required filing of the Prospectus pursuant to Rule 424(b) has been made in
accordance with Rule 424(b);
(ix) The Company has the corporate power and authority to enter
into this Agreement and to issue, sell and deliver the Shares to be sold
by it to the Underwriters as provided herein, and this Agreement has been
duly authorized, executed and delivered by the Company and is a valid,
legal and binding agreement of the Company, enforceable against the
Company in accordance with its terms, except as enforcement of rights to
indemnity or contribution hereunder may be limited by federal or state
securities laws or principles of public policy and subject to the
qualification that the enforceability of the Company's obligations
hereunder may be limited by bankruptcy, fraudulent conveyance, insolvency,
reorganization, moratorium and other laws relating to or affecting
creditors' rights generally or by general equitable principles;
(x) To the knowledge of such counsel, neither the Company nor JMAC
Properties is in violation of its articles of incorporation or regulations
or other organizational documents or in default in the performance of any
material obligation, agreement or condition contained in any bond,
debenture, note or other evidence of indebtedness made an exhibit to the
Registration Statement;
(xi) Neither the offer, sale or delivery of the Shares, the
execution, delivery or performance of this Agreement, compliance by the
Company with the provisions hereof nor consummation by the Company of the
transactions contemplated hereby conflicts or will conflict with or
constitutes or will constitute a breach of, or a default under, the
articles of incorporation or regulations or other organizational documents
of the Company or JMAC Properties or any agreement, indenture, lease or
other instrument to which the Company or JMAC Properties is a party or by
which the Company or JMAC Properties or any of their respective properties
is bound that is an exhibit to the Registration Statement or to the
knowledge of such counsel will result in the creation or imposition of any
material lien, charge or encumbrance upon any property or assets of the
Company or JMAC Properties, nor will any such action result in any
violation of any existing law, regulation, ruling (assuming compliance
with all applicable state securities and Blue Sky laws), judgment,
injunction, order or decree known to such counsel and applicable to the
Company or JMAC Properties or any of their respective properties;
(xii) No consent, approval, authorization or other order of, or
registration or filing with, any court, regulatory body, administrative
agency or other governmental body, agency or official is required on the
part of the Company (except such as have been obtained under the Act and
the Exchange Act or such as may be required under state securities or Blue
Sky laws governing the purchase and distribution of the Shares) for the
valid issuance and sale of the Shares to the Underwriters as contemplated
by this Agreement;
(xiii) The Registration Statement and the Prospectus and any
supplements or amendments thereto (except for the financial statements and
the notes thereto and the schedules and other financial and statistical
data included therein, as to which such counsel need not express any
opinion) comply as to form in all material respects with the requirements
of the Act;
19
(xiv) To the knowledge of such counsel, (A) there are no legal or
governmental proceedings pending or threatened against the Company or JMAC
Properties or to which the Company or JMAC Properties or any of their
respective properties is subject, which are required to be described in
the Registration Statement or Prospectus (or any amendment or supplement
thereto) that are not described as required and (B) there are no
agreements, contracts, indentures, leases or other instruments to which the
Company or JMAC Properties is a party that are required to be described in
the Registration Statement or the Prospectus (or any amendment or
supplement thereto) or to be filed as an exhibit to the Registration
Statement that are not described or filed as required, as the case may be;
(xv) Each of the Company and JMAC Properties has full corporate
power and authority and all necessary Permits (except where the failure
to so have any such Permits, individually or in the aggregate, would not
have a Material Adverse Effect) to own its properties and to conduct its
business as now being conducted as described in the Prospectus;
(xvi) The statements in the Registration Statement and Prospectus
under the captions "History and Organization--Reorganization Transactions,"
"Management--Incentive Stock Plan," "Description of Capital Stock" and
"Shares Eligible for Future Sale," insofar as they are descriptions of
contracts, agreements or other legal documents, or refer to statements of
law or legal conclusions, are accurate in all material respects and present
fairly the information required to be shown;
(xvii) Except as described in the Prospectus, such counsel does
not know of any holder of any securities of the Company or any other person
who has the right, contractual or otherwise, to cause the Company to sell
or otherwise issue to them, or to permit them to underwrite the sale of,
any of the Shares or the right to have any Common Shares or other securities
of the Company included in the Registration Statement or the right, as a
result of the filing of the Registration Statement, to require the Company
to register under the Act any Common Shares or other securities of the
Company;
(xviii) Neither the Company nor JMAC Properties is an "investment
company" or a person "controlled" by an "investment company" within the
meaning of the Investment Company Act of 1940, as amended;
(xix) This Agreement and the Custody Agreement have each been duly
executed and delivered by or on behalf of the Selling Shareholder and are
valid and binding agreements of the Selling Shareholder, enforceable
against the Selling Shareholder in accordance with their terms, except (A)
as enforcement of rights to indemnity or contribution hereunder and
thereunder may be limited by federal or state securities laws or principles
of public policy and (B) subject to the qualification that the
enforceability of its obligations hereunder and thereunder may be limited
by bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium
and other laws relating to or affecting creditors' rights generally or by
general equitable principles;
(xx) To the knowledge of such counsel, the Selling Shareholder has
the corporate power and authority to execute this Agreement and the Custody
Agreement and to perform its agreements hereunder and thereunder; and the
Selling Shareholder owns the Shares to be sold by it pursuant to this
Agreement free and clear of any adverse claim; and
20
(xxi) To the knowledge of such counsel, the execution and delivery
of this Agreement and the Custody Agreement by the Selling Shareholder and
the consummation of the transactions contemplated hereby and thereby will
not conflict with, violate, result in a breach of or constitute a default
under the terms or provisions of any material agreement, indenture,
mortgage or other instrument known such counsel to which the Selling
Shareholder is a party or by which it or any of its assets or property is
bound, or any court order or decree or any law, rule, or regulation known
to such counsel to be applicable to the Selling Shareholder or to any of
the property or assets of the Selling Shareholder.
In addition, such counsel shall state that although such counsel has
not undertaken, except as otherwise indicated in their opinion, to determine
independently, and does not assume any responsibility for, the accuracy,
completeness or fairness of the statements in the Registration Statement,
such counsel has participated in the preparation of the Registration
Statement and the Prospectus, including review and discussion of the contents
thereof, and nothing has come to the attention of such counsel that has
caused it to believe that the Registration Statement, at the time the
Registration Statement became effective, contained an untrue statement of a
material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, or that
the Prospectus, as of its date and as of the Closing Date or the Option
Closing Date, as the case may be, contained an untrue statement of a material
fact or omitted or omits to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading, or that any amendment or supplement to the
Prospectus, as of its date, and as of the Closing Date or the Option Closing
Date, as the case may be, contained or contains an untrue statement of a
material fact or omitted or omits to state a material fact necessary in order
to make the statements therein, in light of the circumstances under which
they were made, not misleading (it being understood that such counsel need
express no opinion with respect to the financial statements and the notes
thereto and the schedules and other financial and statistical data included
in the Registration Statement or the Prospectus).
In rendering their opinion as aforesaid, counsel may rely upon (A) an
opinion or opinions, each dated the Closing Date, of other counsel retained
by them or the Company as to laws of any jurisdiction other than the federal
laws of the United States or the State of Ohio provided that (1) each such
local counsel is acceptable to the Representatives, (2) such reliance is
expressly authorized by each opinion so relied upon and a copy of each such
opinion is delivered to the Representatives and is, in form and substance,
reasonably satisfactory to them and counsel for the Underwriters and (3)
counsel shall state in their opinion that they believe that they and the
Underwriters are justified in relying thereon and (B) as to matters of fact,
to the extent they deem proper, certificates of responsible officers of the
Company, JMAC Properties, the Selling Shareholder and public officials; and
such opinion may state that such counsel has assumed for the purposes of the
opinions in paragraphs (ix) and (xix) above as to this Agreement being the
valid, binding and enforceable obligation of the Company and this Agreement
and the Custody Agreement being the valid, binding and enforceable
obligations of the Selling Shareholder that the internal laws of the State of
New York and the judicial interpretations thereof (which law this Agreement
and the Custody Agreement specify as the governing law with respect hereto
and thereto) do not differ, in any respect material to such opinion, from the
internal laws of the State of Ohio and the judicial interpretations thereof.
(d) You shall have received on the Closing Date an opinion of Bricker
and Eckler, counsel for the Subsidiaries other than JMAC Properties, dated
the Closing Date and addressed to you, as Representatives of the several
Underwriters, that:
21
(i) Each Subsidiary other than JMAC Properties, with respect to which
no opinion is given, that is a corporation is a corporation duly
incorporated and validly existing and in good standing under the laws
of the jurisdiction of its organization, with full corporate power and
authority to own, lease and operate its properties and to conduct its
business as described in the Registration Statement and the Prospectus
(and any amendment or supplement thereto); and all the outstanding shares
of capital stock of each of the Subsidiaries other than JMAC Properties,
as to which no opinion is given, that is a corporation have been duly
authorized and validly issued, are fully paid and nonassessable, and are
owned of record by the Company directly, or indirectly through one or more
of the other Subsidiaries, free and clear of any perfected security interest
or, to such counsel's knowledge, any other lien, adverse claim, equity or
other encumbrance, except as disclosed in the Registration Statement and
the Prospectus (or any amendment or supplement thereto);
(ii) Each Subsidiary that is a Partnership has been duly organized and
is an existing partnership under the laws of the jurisdiction of its
organization, with the partnership power and authority to own, lease and
operate its properties and to conduct its business as currently operated
and conducted. The partnership interests in the Partnerships held
directly or indirectly by any Subsidiary are, to such counsel's knowledge,
owned free and clear of any lien, adverse claim, security interest, equity
or other encumbrance, except as disclosed in the Prospectus. To such
counsel's knowledge, each partnership agreement pursuant to which a
Subsidiary holds a general partnership interest in a Partnership is in full
force and effect and constitutes the legal, valid and binding agreement of
such Subsidiary, enforceable against such Subsidiary in accordance with the
terms thereof, except as enforcement thereof may be limited by bankruptcy,
insolvency or other similar laws affecting creditors' rights generally and
by general equitable principles;
(iii) To the knowledge of such counsel, none of the Subsidiaries other
than JMAC Properties, with respect to which no opinion is given, is in
violation of its articles of incorporation or regulations or other
organizational documents or in default in the performance of any material
obligation, agreement or condition contained in any bond, debenture, note
or other evidence of indebtedness made an exhibit to the Registration
Statement;
(iv) Neither the offer, sale or delivery of the Shares, the execution,
delivery or performance of this Agreement, compliance by the Company with
the provisions hereof nor consummation by the Company of the transactions
contemplated hereby conflicts or will conflict with or constitutes or will
constitute a breach of, or a default under, the articles of incorporation
or regulations or other organizational documents of any of the Subsidiaries
other than JMAC Properties, with respect to which no opinion is given, or
any agreement, indenture, lease or other instrument to which any of the
Subsidiaries other than JMAC Properties, with respect to which no opinion
is given, is a party or by which any of the Subsidiaries other than JMAC
Properties, with respect to which no opinion is given, or any of their
respective properties is bound that is an exhibit to the Registration
Statement or to the knowledge of such counsel will result in the creation
or imposition of any material lien, charge or encumbrance upon any property
or assets of any of the Subsidiaries other than JMAC Properties, with
respect to which no opinion is given, nor will any such action result in
any violation of any existing law, regulation, ruling (assuming compliance
with all applicable state securities and Blue Sky laws), judgment,
injunction, order or decree known to such counsel and applicable to any of
the Subsidiaries other than JMAC Properties, with respect to which no
opinion is given, or any of their respective properties;
22
(v) To the knowledge of such counsel, (A) there are no legal or
governmental proceedings pending or threatened against any of the
Subsidiaries other than JMAC Properties, with respect to which no opinion
is given, or to which any of the Subsidiaries other than JMAC Properties,
with respect to which no opinion is given, or any of their respective
properties is subject, which are required to be described in the
Registration Statement or Prospectus (or any amendment or supplement
thereto) that are not described as required and (B) there are no
agreements, contracts, indentures, leases or other instruments to which
any of the Subsidiaries other than JMAC Properties, with respect to which
no opinion is given, are a party that are required to be described in the
Registration Statement or the Prospectus (or any amendment or supplement
thereto) or to be filed as an exhibit to the Registration Statement that
are not described or filed as required, as the case may be;
(vi) Each of the Subsidiaries other than JMAC Properties, with respect
to which no opinion is given, has full corporate power and authority and
all necessary Permits (except where the failure to so have any such
Permits, individually or in the aggregate, would not have a Material Adverse
Effect) to own its properties and to conduct its business as now being
conducted as described in the Prospectus;
(vii) None of the Subsidiaries other than JMAC Properties, with
respect to which no opinion is given, is an "investment company" or a
person "controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended; and
(viii) The statements in the Registration Statement and Prospectus
under the captions "History and Organization - History," "Management's
Discussion and Analysis of Financial Condition and Results of
Operations - Liquidity and Capital Resources," "Business - Regulations"
and "Certain Transactions," insofar as they are descriptions of contracts,
agreements or other legal documents, or refer to statements of law or legal
conclusions, are accurate in all material respects and present fairly the
information required to be shown.
In addition, such counsel shall state that although such counsel has
not undertaken, except as otherwise indicated in their opinion, to determine
independently, and does not assume any responsibility for, the accuracy,
completeness or fairness of the statements in the Registration Statement,
such counsel has participated in the preparation of the Registration
Statement and the Prospectus, including review and discussion of the contents
thereof, and nothing has come to the attention of such counsel that has
caused it to believe that the Registration Statement, at the time the
Registration Statement became effective, contained an untrue statement of a
material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, or that
the Prospectus, as of its date and as of the Closing Date or the Option
Closing Date, as the case may be, contained an untrue statement of a material
fact or omitted or omits to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading, or that any amendment or supplement to the
Prospectus, as of its date, and as of the Closing Date or the Option Closing
Date, as the case may be, contained or contains an untrue statement of a
material fact or omitted or omits to state a material fact necessary in order
to make the statements therein, in light of the circumstances under which
they were made, not misleading (it being understood that such counsel need
express no opinion with respect to the financial statements and the notes
thereto and the schedules and other financial and statistical data included
in the Registration Statement or the Prospectus).
23
In rendering their opinion as aforesaid, counsel may rely upon (A) an
opinion or opinions, each dated the Closing Date, of other counsel retained
by the Company as to laws of any jurisdiction other than the federal laws of
the United States or the State of Ohio PROVIDED that (1) each such local
counsel is acceptable to the Representatives, (2) such reliance is expressly
authorized by each opinion so relied upon and a copy of each such opinion is
delivered to the Representatives and is, in form and substance, reasonably
satisfactory to them and counsel for the Underwriters and (3) counsel shall
state in their opinion that they believe that they and the Underwriters are
reasonably justified in relying thereon and (B) as to matters of fact, to the
extent they deem proper, certificates of responsible officers of the Company,
the Subsidiaries, the Selling Shareholder and public officials.
(e) You shall have received on the Closing Date an opinion of Dewey
Ballantine, counsel for the Underwriters, dated the Closing Date and
addressed to you, as Representatives of the several Underwriters, with
respect to the matters referred to in clauses (vi) (other than subclause (B)
thereof), (viii), (ix), (xiii) and the penultimate paragraph of Section 10(c)
hereof and such other related matters as you may request. In rendering their
opinion, Dewey Ballantine may rely as to matters of Ohio law upon the opinion
of Vorys, Sater, Seymour and Pease.
(f) You shall have received letters addressed to you and dated the
date hereof from Ernst & Young LLP and Deloitte & Touche LLP, independent
certified public accountants, substantially in the forms heretofore approved
by you, and you shall have received a letter addressed to you and dated the
Closing Date from Ernst & Young LLP, independent certified public
accountants, substantially in the form heretofore approved by you.
(g)(i) No stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceedings for that purpose shall
have been instituted or, to the knowledge of the Company, contemplated by the
Commission at or prior to the Closing Date and any request of the Commission
for additional information (to be included in the registration statement or
the prospectus or otherwise) shall have been complied with; (ii) there shall
not have been any material change in the capital stock of the Company nor any
material increase in the short-term or long-term debt of the Company from
that set forth or contemplated in the Registration Statement or the
Prospectus (or any amendment or supplement thereto); (iii) there shall not
have been, since the respective dates as of which information is given in the
Registration Statement and the Prospectus (or any amendment or supplement
thereto), except as may otherwise be stated in the Registration Statement and
Prospectus (or any amendment or supplement thereto), any material adverse
change in the condition (financial or other), business, prospects,
properties, net worth or results of operations of the Company; (iv) the
Company and the Subsidiaries shall not have any liabilities or obligations,
direct or contingent (whether or not in the ordinary course of business),
that are material to the Company and the Subsidiaries, taken as a whole,
other than those reflected in or contemplated by the Registration Statement
or the Prospectus (or any amendment or supplement thereto); and (v) all the
representations and warranties of the Company contained in this Agreement
shall be true and correct in all material respects on and as of the date
hereof and on and as of the Closing Date as if made on and as of the Closing
Date, and you shall have received a certificate, dated the Closing Date and
signed by the chief executive officer and the chief financial officer of the
Company (or such other officers as are acceptable to you), as to the matters
set forth in this Section 10(g) and in Section 10(h) hereof.
(h) The Company shall have performed or complied in all material
respects with all of its agreements herein contained and required to be
performed or complied with by it hereunder at or prior to the Closing Date.
24
(i) You shall have received a certificate dated the Closing Date
signed by the chief accounting officer of the Company substantially in the
form heretofore approved by you, respecting the Company's compliance with the
financial covenants contained in financing agreements to which the Company is
a party.
(j) All the representations and warranties of the Selling Shareholder
contained in this Agreement shall be true and correct in all material
respects on and as of the date hereof and on and as of the Closing Date as if
made on and as of the Closing Date, and you shall have received a certificate,
dated the Closing Date and signed by or on behalf of the Selling Shareholder
as to the matters set forth in this Section 10(j) and in Section 10(k) hereof.
(k) The Selling Shareholder shall have performed or complied in all
material respects with all of its agreements herein contained and required to
be performed or complied with by it hereunder at or prior to the Closing Date.
(l) The Shares shall have been approved for quotation subject to
notice of issuance on the Nasdaq National Market.
(m) The Sellers shall have furnished or caused to be furnished to you
such further certificates and documents as you shall have reasonably
requested.
All such opinions, certificates, letters and other documents will be in
compliance with the provisions hereof only if they are reasonably
satisfactory in form and substance to you, as Representatives of the
Underwriters, and counsel for the Underwriters.
Any certificate or document signed by any officer of the Company or by
or on behalf of the Selling Shareholder and delivered to you, as
Representatives of the several Underwriters, or to counsel for the
Underwriters, shall be deemed a representation or warranty by the Company or
the Selling Shareholder, as the case may be, to each Underwriter as to the
statements made therein.
The several obligations of the Underwriters to purchase Additional
Shares hereunder are subject to the satisfaction on and as of any Option
Closing Date of the conditions set forth in this Section 10, except that, if
any Option Closing Date is other than the Closing Date, the certificates,
opinions and letters referred to in paragraphs (c) through (g) and paragraphs
(i), (j) and (m) shall be dated the Option Closing Date in question and the
opinions called for by paragraphs (c), (d) and (e) shall be revised to
reflect the sale of Additional Shares.
11. EXPENSES. The Company agrees to pay the following costs and
expenses and all other costs and expenses incident to the performance by it
of its obligations hereunder: (i) the preparation, printing or reproduction,
and filing with the Commission of the registration statement (including
financial statements and exhibits thereto), each Prepricing Prospectus, the
Prospectus, and each amendment or supplement to any of them; (ii) the
printing (or reproduction) and delivery (including postage, air freight
charges and charges for counting and packaging) of such copies of the
registration statement, each Prepricing Prospectus, the Prospectus, and all
amendments or supplements to any of them as may be reasonably requested for
use in connection with the offering and sale of the Shares; (iii) the
preparation, printing, authentication, issuance and delivery of certificates
for the Shares, including any stamp taxes in connection with the offering of
the Shares; (iv) the printing (or reproduction) and delivery of this
Agreement, the preliminary and supplemental Blue Sky Memoranda and all other
agreements or documents
25
printed (or reproduced) and delivered in connection with the offering of the
Shares; (v) the registration of the Common Shares under the Exchange Act and
the listing of the Shares on the Nasdaq National Market; (vi) the
registration or qualification of the Shares for offer and sale under the
securities or Blue Sky laws of the several states as provided in Section 5(g)
hereof (including the reasonable fees (not to exceed $15,000 in the
aggregate, including fees paid pursuant to (vii) below), expenses and
disbursements of counsel for the Underwriters relating to the preparation,
printing or reproduction, and delivery of the preliminary and supplemental
Blue Sky Memoranda and such registration and qualification); (vii) the filing
fees and the reasonable fees (not to exceed $15,000 in the aggregate,
including fees paid pursuant to (vi) above) and expenses of counsel for the
Underwriters in connection with any filings required to be made with the
National Association of Securities Dealers, Inc. in connection with the
offering; and (viii) the transportation and other expenses incurred by or on
behalf of representatives of the Company (other than employees of Smith
Barney Inc., J.C. Bradford & Co. or any other Underwriter) in connection with
presentations to prospective purchasers of the Shares; (ix) the fees and
expenses of the Company's accountants and the fees and expenses of counsel
(including local and special counsel) for the Company and the Selling
Shareholder; and (x) the performance by the Company of its other obligations
under this Agreement.
12. EFFECTIVE DATE OF AGREEMENT. This Agreement shall become effective:
(i) upon the execution and delivery hereof by the parties hereto; or (ii)
if, at the time this Agreement is executed and delivered, it is necessary for
the registration statement or a post-effective amendment thereto or an
Abbreviated Registration Statement to be declared effective before the
offering of the Shares may commence, when notification of the effectiveness
of the registration statement or such post-effective amendment or Abbreviated
Registration Statement has been released by the Commission. Until such time
as this Agreement shall have become effective, it may be terminated by the
Company, by notifying you, or by you, as Representatives of the several
Underwriters, by notifying the Company.
If any one or more of the Underwriters shall fail or refuse to purchase
Shares which it or they have agreed to purchase hereunder, and the aggregate
number of Shares which such defaulting Underwriter or Underwriters agreed but
failed or refused to purchase is not more than one-tenth of the aggregate
number of Shares which the Underwriters are obligated to purchase on the
Closing Date, each non-defaulting Underwriter shall be obligated, severally,
in the proportion which the number of Firm Shares set forth opposite its name
in Schedule I hereto bears to the aggregate number of Firm Shares set forth
opposite the names of all non-defaulting Underwriters or in such other
proportion as you may specify in accordance with Section 20 of the Master
Agreement Among Underwriters of Smith Barney, Harris Upham & Co. Incorporated
(predecessor of Smith Barney Inc.), to purchase the Shares which such
defaulting Underwriter or Underwriters agreed, but failed or refused, to
purchase. If any Underwriter or Underwriters shall fail or refuse to
purchase Shares which it or they are obligated to purchase on the Closing
Date and the aggregate number of Shares with respect to which such default
occurs is more than one-tenth of the aggregate number of Shares which the
Underwriters are obligated to purchase on the Closing Date and arrangements
satisfactory to you and the Company for the purchase of such Shares by one or
more non-defaulting Underwriters or other party or parties approved by you
and the Company are not made within 36 hours after such default, this
Agreement will terminate without liability on the part of any non-defaulting
Underwriter or any Seller. In any such case which does not result in
termination of this Agreement, either you or the Company shall have the right
to postpone the Closing Date, but in no event for longer than seven days, in
order that the required changes, if any, in the Registration Statement and
the Prospectus or any other documents or arrangements may be effected. Any
action taken under this paragraph shall not relieve any defaulting
Underwriter from liability in respect of any such default of any such
Underwriter under this Agreement. The term "Underwriter" as used in this
Agreement includes, for all purposes of this Agreement, any party not listed
in Schedule I hereto who, with your approval and the
26
approval of the Company, purchases Shares which a defaulting Underwriter
agreed, but failed or refused, to purchase.
Any notice under this Section 12 may be given by telegram, telecopy or
telephone but shall be subsequently confirmed by letter.
13. TERMINATION OF AGREEMENT. This Agreement shall be subject to
termination in your absolute discretion, without liability on the part of any
Underwriter to the Sellers, by notice to the Company and the
Attorneys-in-Fact, if prior to the Closing Date or any Option Closing Date
(if different from the Closing Date and then only as to the Additional
Shares), as the case may be, (i) trading in securities generally on the New
York Stock Exchange, the American Stock Exchange or the Nasdaq National
Market shall have been suspended or materially limited, (ii) a general
moratorium on commercial banking activities in New York shall have been
declared by either federal or state authorities, or (iii) there shall have
occurred any outbreak or escalation of hostilities or other international or
domestic calamity, crisis or change in political, financial or economic
conditions, the effect of which on the financial markets of the United States
is such as to make it, in your reasonable judgment, impracticable or
inadvisable to commence or continue the offering of the Shares at the
offering price to the public set forth on the cover page of the Prospectus or
to enforce contracts for the resale of the Shares by the Underwriters.
Notice of such termination may be given by telegram, telecopy or telephone
and shall be subsequently confirmed by letter.
14. INFORMATION FURNISHED BY THE UNDERWRITERS. The statements set forth
in the last paragraph on the cover page, the stabilization legend on the
inside front cover page and the statements in the first and third paragraphs
under the caption "Underwriting" in any Prepricing Prospectus and in the
Prospectus constitute the only information furnished by or on behalf of the
Underwriters through you as such information is referred to in Sections 7(b)
and 9 hereof.
15. MISCELLANEOUS. Except as otherwise provided in Sections 5, 12 and
13 hereof, notice given pursuant to any provision of this Agreement shall be
in writing and shall be delivered (i) if to the Company, at the office of the
Company at 919 Old Henderson Road, Columbus, Ohio 43220, Attention: Alan B.
Satterwhite, with a copy to Vorys, Sater, Seymour and Pease, 52 East Gay
Street, Columbus, Ohio 43215, Attention: Susan E. Brown, Esq.; (ii) if to
the Selling Shareholder, at 150 E. Wilson, Bridge Road, Suite 230,
Worthington, Ohio 43085 Attention: Michael H. Thomas, with a copy to Vorys,
Sater, Seymour and Pease, 52 East Gay Street, Columbus, Ohio 43215,
Attention: Russell R. Rosler; or (iii) if to you, as Representatives of the
several Underwriters, care of Smith Barney Inc., 388 Greenwich Street, New
York, New York 10013, Attention: Manager, Investment Banking Division, with a
copy to Dewey Ballantine, 1301 Avenue of the Americas, New York, New York
10019, Attention: Frederick W. Kanner, Esq.
27
This Agreement has been and is made solely for the benefit of the
several Underwriters, the Company, its directors, its officers who sign the
Registration Statement, the Selling Shareholder and the controlling persons
referred to in Section 9 hereof and, to the extent provided herein, their
respective successors and assigns and no other person shall acquire or have
any right under or by virtue of this Agreement. Neither the term "successor"
nor the term "successors and assigns" as used in this Agreement shall include
a purchaser from any Underwriter of any of the Shares in his status as such
purchaser.
16. APPLICABLE LAW; COUNTERPARTS. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York applicable
to contracts made and to be performed within the State of New York.
This Agreement may be signed in various counterparts which together
constitute one and the same instrument. If signed in counterparts, this
Agreement shall not become effective unless at least one counterpart hereof
shall have been executed and delivered on behalf of each party hereto.
28
Please confirm that the foregoing correctly sets forth the agreement
between the Company and the several Underwriters.
Very truly yours,
KARRINGTON HEALTH, INC.
By: ___________________________________
JMAC, INC.
By: ___________________________________
Confirmed as of the date first
above-mentioned on behalf of
themselves and the other several
Underwriters named in Schedule I
hereto.
SMITH BARNEY INC.
J.C. BRADFORD & CO.
AS REPRESENTATIVES OF THE SEVERAL UNDERWRITERS
By: SMITH BARNEY INC.
By: ___________________________________
Managing Director
29
SCHEDULE I
KARRINGTON HEALTH, INC.
Number of
Underwriter Firm Shares
----------- -----------
Smith Barney Inc. . . . . . . . . . . . . . . . . .
J.C. Bradford & Co. . . . . . . . . . . . . . . . .
---------
Total . . . . . . . . . . . . . . . . . . . . . 3,000,000
---------
---------