Draft of August 6, 1996
$325,000,000
PARACELSUS HEALTHCARE CORPORATION
__% SENIOR SUBORDINATED NOTES DUE 2006
UNDERWRITING AGREEMENT
August __, 1996
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
BA SECURITIES, INC.
NATIONSBANC CAPITAL MARKETS, INC.
c/o Donaldson, Lufkin & Jenrette
Securities Corporation
277 Park Avenue
New York, New York 10172
THE CHICAGO CORPORATION
208 S. LaSalle Street
Chicago, Illinois 60604
Dear Sirs:
Paracelsus Healthcare Corporation, a California corporation (the
"Company"), proposes to issue and sell to Donaldson, Lufkin & Jenrette
Securities Corporation ("DLJ"), BA Securities, Inc. and NationsBanc Capital
Markets, Inc. (collectively, the "Underwriters") $325,000,000 principal amount
of its __% Senior Subordinated Notes due 2006 (the "Securities"). The
Securities are to be issued pursuant to the provisions of an Indenture to be
dated as of August __, 1996 (the "Indenture") between the Company and AmSouth
Bank of Alabama, as Trustee (the "Trustee").
The Securities are being issued and sold in connection with the
acquisition (the "Acquisition") of Champion Healthcare Corporation, a Delaware
corporation ("Champion"), by the Company. The Acquisition is being effected
pursuant to an Agreement and Plan of Merger, as amended and restated on May 29,
1996 (the "Merger Agreement"), by and among the Company, PC Merger Sub, Inc., a
Delaware corporation and a wholly owned subsidiary of the Company (the "Merger
Sub"), and Champion. Pursuant to the Merger Agreement, the Company will acquire
all of the issued and outstanding capital stock of Champion (the "Merger"). At
the time the Merger is consummated (the "Effective Time of the Merger") and
pursuant to the Merger Agreement, Merger Sub will be merged with and into
Champion with Champion as the surviving corporation. The Merger Agreement, this
Agreement, the Securities and the Indenture are collectively referred to herein
as the "Transaction Documents."
The Company and the Underwriters, in accordance with the requirements
of Rule 2710(c)(8) of the Rules of Conduct of the National Association of
Securities Dealers, Inc. (the "NASD") and subject to the terms and conditions
stated herein also hereby confirm the engagement of the services of The Chicago
Corporation (the "Independent Underwriter") as a "qualified independent
underwriter" within the meaning of Rule 2720(b)(15) of such Rules of Conduct in
connection with the offering and sale of the Securities.
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 called the
"Act"), a registration statement on Form S-1 (File No. 333-06713) including a
preliminary prospectus, subject to completion, relating to the Securities. The
registration statement as amended at the time when it becomes effective,
including a registration statement (if any) filed pursuant to Rule 462(b) under
the Act increasing the size of the offering registered under the Act and
information (if any) deemed to be part of the registration statement at the time
of effectiveness pursuant to Rule 430A under the Act, is hereinafter referred to
as the "Registration Statement"; and the prospectus in the form first used to
confirm sales of Securities is hereinafter referred as the "Prospectus."
2. AGREEMENTS TO SELL AND PURCHASE. On the basis of the
representations and warranties contained in this Agreement, and subject to its
terms and conditions, the Company agrees to issue and sell, and each Underwriter
agrees, severally and not jointly, to purchase from the Company the principal
amount of Firm Securities set forth opposite the name of such Underwriter in
Schedule I hereto, at ____% of the principal amount thereof (the "Purchase
Price") plus accrued interest thereon, if any, from August __, 1996 to the date
of payment and delivery.
3. DELIVERY AND PAYMENT. Delivery to the Underwriters of and
payment for the Securities shall be made at 10:00 A.M., New York City time, on
the third or, if the pricing occurs after 4:30 p.m., New York City time, fourth
business day, unless otherwise permitted by the Commission (the "Closing Date")
following the date of the initial public offering of the Securities as advised
by the Underwriters to the Company, at such place as the Underwriters and the
Company shall agree. The Closing Date and the location of delivery of payment
for the Securities may be varied by agreement between the Underwriters and the
Company.
Certificates for the Securities shall be registered in such names and
issued in such denominations as the Underwriters shall request in writing not
later than two full business days prior to the Closing Date. Such certificates
shall be made available to the Underwriters at the offices of DLJ (or at such
other place as shall be acceptable to the Underwriters) for inspection not later
than 9:30 A.M., New York City time, on the business day next preceding the
Closing Date. Certificates in definitive form evidencing the Securities shall
be delivered to the Underwriters on the Closing Date, with any transfer taxes
thereon duly paid by the Company, for the respective accounts of the
Underwriters against payment of the Purchase Price therefor by wire or certified
or official bank checks payable in Federal funds to the order of the Company.
3A. ENGAGEMENT OF INDEPENDENT UNDERWRITER.
(a) The Company hereby confirms its engagement of the services of the
Independent Underwriter as, and the Independent Underwriter hereby confirms
its agreement with the Company to render services as, a "qualified
independent underwriter" within the meaning of Rule 2720(b)(15) of the NASD
Rules of Conduct with respect to the offering and sale of the Securities.
(b) The Independent Underwriter hereby represents and warrants to,
and agrees with, the Company and the Underwriters that with respect to the
offering and sale of the Securities as described in the Prospectus:
(i) The Independent Underwriter constitutes a "qualified
independent underwriter" within the meaning of Rule 2720(b)(15) of the
NASD Rules of Conduct;
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(ii) The Independent Underwriter has participated in the
preparation of the Registration Statement and the Prospectus and has
exercised the usual standards of "due diligence" in respect thereto;
(iii) The Independent Underwriter has undertaken the legal
responsibilities and liabilities of an underwriter under the Act
specifically including those inherent in Section 11 thereof;
(iv) Based upon (A) a review of the Company, including an
examination of the Registration Statement, information regarding the
earnings, assets, capital structure and growth rate of the Company and
other pertinent financial and statistical data, (B) inquiries of and
conferences with the management of the Company and independent public
accountants regarding the business and operations of the Company,
(C) consideration of the prospects for the industry in which the
Company competes, estimates of the business potential of the Company,
assessments of its management, the general condition of the securities
markets, market prices of the capital stock and debt securities of,
and financial and operating data concerning, companies believed by the
Independent Underwriter to be comparable to the Company with debt
securities of maturity and seniority similar to the Securities and the
demand for securities of comparable companies similar to the
Securities and (D) such other studies, analyses and investigations as
the Independent Underwriter has deemed appropriate, and assuming that
the offering and sale of the Securities is made as contemplated herein
and in the Prospectus, the Independent Underwriter recommends, as of
the date of the execution and delivery of this Agreement, that the
yield on the Securities be not less than ___% (corresponding to an
initial public offering price of ___%), which minimum yield should in
no way be considered or relied upon as an indication of the value of
the Securities; and
(v) Subject to the provisions of Section 7 hereof, the Independent
Underwriter will furnish to the Underwriters at the Closing Date a
letter, dated the Closing Date, in form and substance satisfactory to
the Underwriters, to the effect of clauses (i) through (iv) above.
(c) The Independent Underwriter hereby agrees with the Company and
the Underwriters that, as part of its services hereunder, in the event of
any amendment or supplement to the Prospectus, the Independent Underwriter
will render services as a "qualified independent underwriter" within the
meaning of Rule 2720(b)(15) of the NASD Rules of Conduct with respect to
the offering and sale of the Securities as described in the Prospectus as
so amended or supplemented that are substantially the same as those
services being rendered with respect to the offering and sale of the
Securities as described in the Prospectus (including those described in
subsection (b) above).
(d) The Company, the Underwriters and the Independent Underwriter
agree to comply in all material respects with all of the requirements of
Rule 2710(c)(8) of the NASD Rules of Conduct applicable to them in
connection with the offering and sale of the Securities. The Company
agrees to use its reasonable efforts to cooperate with the Underwriters and
the Independent Underwriter to enable the Underwriters to comply with
Rule 2710(c)(8) of the NASD Rules of Conduct and the Independent
Underwriter to perform the services contemplated by this Agreement.
(e) As compensation for the services of the Independent Underwriter
hereunder, the Company agrees to pay the Independent Underwriter $75,000 at
the Closing Date. In addition, the Company agrees promptly to reimburse
the Independent Underwriter for all out-of-pocket expenses reasonably
incurred in connection with this Agreement and the services to be rendered
hereunder.
4. AGREEMENTS OF THE COMPANY. The Company agrees with each of the
Underwriters:
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(a) It will, if necessary, file an amendment to the Registration
Statement including, if necessary, a post-effective amendment to the
Registration Statement, in each case as soon as practicable after the
execution and delivery of this Agreement, and will use its best efforts to
cause the Registration Statement or such post-effective amendment to become
effective at the earliest possible time. The Company will comply and in a
timely manner with the applicable provisions of Rule 424 and Rule 430A
under the Act.
(b) To advise DLJ promptly and, if requested by DLJ, to confirm such
advice in writing, (i) when the Registration Statement has become effective
and when any post-effective amendment to it becomes effective, (ii) of the
receipt of any comments from the Commission or any state securities
commission or regulatory authority that relate to the Registration
Statement or of any request by the Commission or any state securities
commission or regulatory authority for amendments to the Registration
Statement or amendments or supplements to the Prospectus or for additional
information, (iii) 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 Securities for offering or sale in any
jurisdiction, or the initiation of any proceeding for such purposes by the
Commission or any state securities commission or other regulatory
authority, and (iv) of the happening of any event during the period
referred to in paragraph (e) below which makes any statement of a material
fact made in the Registration Statement (as amended or supplemented from
time to time) untrue or which requires the making of any additions to or
changes in the Registration Statement (as amended or supplemented from time
to time) in order to make the statements therein not misleading or that
makes any statement of a material fact made in the Prospectus (as amended
or supplemented from time to time) untrue or which requires the making of
any addition to or change in the Prospectus (as amended or supplemented
from time to time) in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The Company
shall use commercially reasonable efforts to prevent the issuance of any
stop order or order suspending the qualification or exemption of the
Securities under any Federal or state securities or Blue Sky laws, and, if
at any time the Commission shall issue any stop order suspending the
effectiveness of the Registration Statement, or any state securities
commission or any other regulatory authority shall issue an order
suspending the qualification or exemption of the Securities under any state
securities or Blue Sky laws, the Company shall use every reasonable effort
to obtain the withdrawal or lifting of such order at the earliest possible
time.
(c) To furnish to DLJ, without charge, 3 signed copies of the
Registration Statement as first filed with the Commission and of each
amendment to it, including all exhibits, and will furnish such number of
conformed copies of the Registration Statement as so filed and of each
amendment to it, without exhibits, as DLJ may reasonably request.
(d) Not to file any amendment or supplement to the Registration
Statement, whether before or after the time when it becomes effective, or
to make any amendment or supplement to the Prospectus of which the
Underwriters shall not previously have been advised and provided a copy or
to which the Underwriters shall reasonably object unless, in the opinion of
counsel to the Company, such amendment or supplement is necessary to comply
with applicable law; and to prepare and file with the Commission, promptly
upon the reasonable request of the Underwriters, any amendment to the
Registration Statement or supplement to the Prospectus which may be
necessary or advisable in connection with the distribution of the
Securities by the Underwriters, and to use its best efforts to cause the
same to become promptly effective.
(e) Promptly after the Registration Statement becomes effective, and
from time to time thereafter for such period, not in excess of six months,
in the reasonable judgment of DLJ as a prospectus is required by law to be
delivered in connection with sales by an Underwriter or a dealer, to
furnish to each Underwriter and dealer as many copies of the Prospectus
(and of any amendment or
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supplement to the Prospectus) as such Underwriter or dealer may reasonably
request, and in case any Underwriter is required by law to deliver a
prospectus in connection with any offers or any sales of the Securities
at any time six months or more after the effective date of the
Registration Statement, upon the request of such Underwriter but at the
expense of such Underwriter, to deliver to such Underwriter as many
copies of the Prospectus (and of any amendment or supplement to the
Prospectus) as such Underwriter may request. The Company consents to
the use of the Prospectus and any amendment or supplement thereto by the
Underwriters or any dealer in accordance with the provisions of the Act
and of the securities or Blue Sky laws of the jurisdictions in which the
Securities are being offered, both in connection with the offering or
sale of the Securities by an Underwriter or dealer and for such period
of time thereafter as the Prospectus is required by law to be delivered
in connection therewith.
(f) If during the period specified in paragraph (e) any event shall
occur as a result of which it becomes necessary to amend or supplement the
Prospectus in order to make the statements therein, in the light of the
circumstances when the Prospectus is delivered to a purchaser, not
misleading, or if it is necessary to amend or supplement the Prospectus to
comply with any law, it will promptly prepare and file with the Commission
an appropriate amendment or supplement to the Prospectus so that the
statements in the Prospectus, as so amended or supplemented, will not, in
the light of the circumstances existing as of the date the Prospectus is so
delivered, be misleading, and will comply with applicable law, and will
furnish to each Underwriter and dealer without charge such number of copies
thereof as such Underwriters and dealers may reasonably request.
(g) Prior to any public offering of the Securities, to cooperate with
the Underwriters and counsel for the Underwriters in connection with the
registration or qualification of the Securities for offer and sale by the
several Underwriters and by dealers under the state securities or Blue Sky
laws of such United States jurisdictions as DLJ may reasonably request
(provided that the Company shall not be obligated to qualify as a foreign
corporation in any jurisdiction in which it is not so qualified or to take
any action that would subject it to general service of process or taxation
in any jurisdiction in which it is not now so subject). The Company will
continue such qualification in effect so long as required by law for the
distribution of the Securities.
(h) To mail and make generally available to its security holders as
soon as reasonably practicable an earnings statement covering a period of
at least twelve months after the effective date of the Registration
Statement (but in no event commencing later than 90 days after such date)
which shall satisfy the provisions of Section 11(a) including, at the
option of the Company, Rule 158 under the Act.
(i) So long as any of the Securities are outstanding, to mail to each
of the Underwriters, without charge, as soon as available a copy of each
report mailed to the security holders of the Company generally.
(j) Whether or not the transactions contemplated hereby are
consummated or this Agreement is terminated, to pay all costs, expenses,
fees and taxes incident to (i) the preparation, printing, processing,
filing, distribution and delivery under the Act of the Registration
Statement, each preliminary prospectus, the Prospectus and all amendments
or supplements thereto, (ii) the printing and delivery of this Agreement
and the Indenture, (iii) the registration with the Commission and the
issuance and delivery of the Securities, (iv) the registration or
qualification of the Securities for offer and sale under the securities or
Blue Sky laws of the several states (including in each case the reasonable
fees and disbursements of counsel for the Underwriters relating to such
registration or qualification and memoranda relating thereto), (v) filings
and clearance with the NASD in connection with the offering (including the
reasonable fees and disbursements of counsel relating thereto), (vi) the
rating of the Securities by rating agencies, (vii) furnishing such copies
of the Registration Statement,
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the Prospectus and all amendments and supplements thereto as may be
reasonably requested for use in connection with the offering or sale of
the Securities by the Underwriters or by dealers to whom Securities may
be sold and (viii) the performance by the Company of its other
obligations under this Agreement, including (without limitation) the
fees of the Trustee, the cost of its personnel and other internal costs,
the cost of printing the certificates representing the Securities, and
all expenses incident to the sale and delivery of the Securities to the
Underwriters.
(k) During the period beginning on the date hereof and continuing to
and including the Closing Date, not to offer, sell contract to sell or
otherwise dispose of any debt securities of the Company or warrants to
purchase debt securities of the Company substantially similar to the
Securities (other than (i) the Securities and (ii) commercial paper issued
in the ordinary course of business), without DLJ's prior written consent,
which shall not be unreasonably withheld.
(l) It will use the proceeds from the sale of the Securities in the
manner described in the Prospectus under the caption "Use of Proceeds."
(m) It will not voluntarily claim, and will actively resist any
attempts to claim, the benefit of any usury laws against the holders of the
Securities.
(n) To use commercially reasonable efforts to do and perform all
things required or necessary to be done and performed under this Agreement
by the Company prior to or after the Closing Date and to satisfy all
conditions precedent to the delivery of the Securities.
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to each Underwriter and the Independent Underwriter
that:
(a) The Registration Statement has become effective; no stop order
suspending the effectiveness of the Registration Statement is in effect,
and, to the best of the Company's knowledge, no proceedings for such
purpose are pending before or threatened by the Commission.
(b) (i) The Registration Statement, when it became effective, did
not contain and as amended, if applicable, will not, at the date of any
such amendment, contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make
the statements therein not misleading, (ii) the Registration Statement and
the Prospectus comply and, as amended or supplemented, if applicable, will
comply in all material respects with the Act and (iii) the Prospectus does
not contain and, as amended or supplemented, if applicable, will not, at
the date of the Prospectus, at the date of any such amendment or supplement
and at the Closing Date or an Option Closing Date, as the case may be,
contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, except that the
representations and warranties set forth in this paragraph (b) do not apply
to statements or omissions in the Registration Statement or the Prospectus
based upon information relating to any Underwriter furnished to the Company
in writing by or on behalf of such Underwriter or relating to the
Independent Underwriter furnished to the Company in writing by the
Independent Underwriter, in each case expressly for use therein. The
Company acknowledges for all purposes under this Agreement that the
statements set forth in the first sentence of the last paragraph on the
cover page and in the third and fifth paragraphs under the caption
"Underwriting" in the Prospectus (or any amendment or supplement)
constitute the only written information furnished to the Company by any
Underwriter or the Independent Underwriter expressly for use in the
Registration Statement or the Prospectus (or any amendment or supplement to
them).
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(c) Each preliminary prospectus filed as part of the Registration
Statement as originally filed or as part of any amendment thereto, or filed
pursuant to Rule 424 or 430A under the Act, and each Registration Statement
filed pursuant to Rule 462(b) under the Act, if any, complied when so filed
in all material respects with the Act; and did not contain an untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading.
(d) The Company and each of its Significant Subsidiaries (as defined
below) has been duly organized or formed, as the case may be, is validly
existing as a corporation or partnership, as the case may be, in good
standing under the laws of its jurisdiction of incorporation or formation
and has the power and authority to carry on its business as it is currently
being conducted and to own, lease and operate its properties, and the
Company and each of its Significant Subsidiaries is duly qualified and is
in good standing as a foreign corporation or partnership, as the case may
be, authorized to do business in each jurisdiction where the operation,
ownership or leasing of property or the conduct of its business requires
such qualification, except where the failure to be so qualified would not
reasonably be expected to have a material adverse effect on the properties,
business, results of operations or financial condition of the Company and
its subsidiaries, taken as a whole (a "Material Adverse Effect"); the
Company has the corporate power and authority to authorize the offering of
the Securities, to execute, deliver and perform this Agreement and to
issue, sell and deliver the Securities; "Significant Subsidiary" means any
subsidiary of the Company that would constitute a "Significant Subsidiary"
under Rule 1-02 of Regulation S-X of the Commission, including, upon
consummation of the Merger, Champion and any of its subsidiaries that, on a
pro forma basis after giving effect to the Merger, meet the foregoing
criteria.
(e) All of the issued and outstanding shares of capital stock of, or
other ownership interests in, each Significant Subsidiary of the Company
have been duly and validly authorized and issued, and, except as described
in the Prospectus, all of the shares of capital stock of, or other
ownership interests in, each Significant Subsidiary are owned, directly or
through subsidiaries, by the Company. Except as set forth in the
Paracelsus Disclosure Letter dated April 12, 1996, all such shares of
capital stock are fully paid and nonassessable, and, except as described in
the Prospectus, all such shares of capital stock or other ownership
interests are owned free and clear of any security interest, mortgage,
pledge, claim, lien or encumbrance (each, a "Lien"). Except as described
in the Prospectus, there are no outstanding subscriptions, rights,
warrants, options, calls, convertible securities, commitments of sale or
Liens related to or entitling any person to purchase or otherwise to
acquire any shares of the capital stock of, or other ownership interest in,
any Significant Subsidiary.
(f) The Indenture has been duly authorized by the Company and, when
duly executed and delivered in accordance with its terms, will be a valid
and binding agreement of the Company, enforceable against the Company in
accordance with its terms except to the extent that (i) enforcement thereof
may be limited by (A) bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance or other similar laws now or hereafter in effect
relating to or affecting creditors' rights generally and (B) general
principles of equity (regardless of whether enforceability is considered in
a proceeding at law or in equity) and (ii) the waiver contained in
section 515 of the Indenture may be deemed unenforceable. The Indenture
has been duly qualified under the Trust Indenture Act of 1939, as amended
(the "TIA").
(g) The Securities have been duly authorized by the Company and, on
the Closing Date or Option Closing Date, as the case may be, will have been
duly executed by the Company and will conform in all material respects to
the description thereof in the Registration Statement and the Prospectus.
When the Securities are issued, authenticated and delivered in accordance
with the Indenture and paid for in accordance with the terms of this
Agreement, the Securities will constitute
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valid and binding obligations of the Company, enforceable against the
Company in accordance with their terms and entitled to the benefits of
the Indenture, except to the extent that enforcement thereof may be
limited by (1) bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance or other similar laws now or hereafter in effect
relating to creditors' rights generally and (2) general principles of
equity regardless of whether enforceability is considered in a
proceeding at law or in equity.
(h) Neither the Company nor any of its subsidiaries is in violation
of, or in default under (nor has any event occurred which with notice,
lapse of time or both would constitute a breach of or default under) its
respective charter or bylaws or in the performance of any bond, debenture,
note or any other evidence of indebtedness or any indenture, mortgage, deed
of trust or other contract, lease or other instrument to which the Company
or any of the Subsidiaries is a party or by which any of them is bound, or
to which any of the property or assets of the Company or any of the
Subsidiaries is subject, except as would not reasonably be expected to
have, singly or in the aggregate, a Material Adverse Effect.
(i) This Agreement has been duly authorized and validly executed and
delivered by the Company, and this Agreement constitutes a legal, valid and
binding agreement of the Company, enforceable against the Company in
accordance with its terms, except to the extent that (i) enforcement
thereof may be limited by (A) bankruptcy, insolvency, reorganization,
fraudulent conveyance, or other similar laws now or hereafter in effect
relating to creditors' rights generally and (B) general principles of
equity (regardless of whether enforceability is considered in a proceeding
at law or in equity); and (ii) rights to indemnity and contribution
hereunder may be limited by state or Federal securities laws or the
policies underlying such laws.
(j) The execution and delivery of this Agreement, the Indenture and
the Securities by the Company, the issuance and sale of the Securities, the
execution and delivery of each of the Transaction Documents by each of the
Company, Merger Sub and Champion (each a "Merger Party" and collectively,
the "Merger Parties"), to the extent each is a party thereto, the
performance of this Agreement, the Indenture and the Transaction Documents
and the consummation of the transactions contemplated by this Agreement,
the Indenture and the other Transaction Documents will not conflict with or
result in a breach or violation (or constitute an event that with notice or
the lapse of time, or both, would constitute a breach or violation) of any
of the respective charters or bylaws of the Company or any of its
subsidiaries, or any partnership agreement to which the Company or any of
its subsidiaries is a party, or any of the terms or provisions of, or
constitute a default under, or cause an acceleration of any obligation
under, or result in the imposition or creation of (or the obligation to
create or impose) a Lien (or an event that with notice or the lapse of
time, or both, would constitute a default, cause an acceleration or result
in a Lien) with respect to, any bond, note, debenture or other evidence of
indebtedness or any indenture, mortgage, deed of trust or other agreement
or instrument to which the Company or any of its subsidiaries is a party or
by which it or any of them is bound, or to which any properties of the
Company or any of its subsidiaries is or may be subject, or contravene any
order of any court or governmental agency or body having jurisdiction over
the Company or any of its subsidiaries or any of their properties, or
violate or conflict with any statute, rule or regulation or administrative
or court decree applicable to the Company or any of its subsidiaries, or
any of their respective properties, except, with respect to all matters
covered by this paragraph (j), as would not reasonably be expected to have,
singly or in the aggregate, a Material Adverse Effect.
(k) Except as described in the Prospectus, there is no action, suit
or proceeding before or by any court or governmental agency or body,
domestic or foreign, pending against or affecting the Company or any of the
Subsidiaries, or any of their respective properties, which is required to
be disclosed in the Registration Statement or the Prospectus, or which is
reasonably likely to result, singly
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or in the aggregate, in a Material Adverse Effect or which is reasonably
likely to materially and adversely affect the consummation of this
Agreement or the transactions contemplated hereby, and to the best of
the Company's knowledge, no such proceedings are contemplated or
threatened. Neither the Company nor any of the Subsidiaries is subject
to any judgment, order, decree, rule or regulation of any court,
governmental authority or arbitration board or tribunal which has had or
which can reasonably be expected to have a Material Adverse Effect. No
contract or document of a character required to be described in the
Registration Statement or the Prospectus or to be filed as an exhibit to
the Registration Statement is not so described or filed.
(l) The Company and each of its subsidiaries has such permits,
consents, licenses, franchises, exemptions, orders, authorizations, or
other approvals (including, without limitation, certificate of need
approvals) (collectively, "Authorizations") of and from, and has made all
declarations and filings with, all Federal, state, local and other
governmental authorities, all self-regulatory organizations and all courts
and other tribunals, necessary or required to own, lease, license and use
its properties and assets and to conduct its business in the manner
described in the Prospectus, except those the absence of which would not
have a Material Adverse Effect. All such Authorizations are valid and in
full force and effect and the Company and each of its subsidiaries (i) has
fulfilled and performed all of its material obligations with respect to,
and is in compliance in all material respects with the terms and conditions
of, such Authorizations and with the rules and regulations of the
regulatory authorities and governing bodies having jurisdiction with
respect thereto, and no event has occurred which allows, or after notice or
lapse of time would allow, revocation or termination thereof or result in
any other material impairment of the rights of the holder of any such
Authorization, except where the effect would not have a Material Adverse
Effect and (ii) has no reason to believe that any governmental body or
agency is considering limiting, suspending or revoking any such
Authorization.
(m) The firms of accountants that have certified the applicable
consolidated financial statements and supporting schedules of (i) the
Company, (ii) Champion, (iii) Davis Hospital and Medical Center, Pioneer
Valley Hospital and Santa Rosa Medical Center, (iv) Dakota Heartland Health
System, (v) Jordan Valley Hospital, and (vi) Salt Lake Regional Medical
Center, filed with the Commission as part of the Registration Statement and
the Prospectus are, to the best of the Company's knowledge, independent
public accountants with respect to the Company and the Subsidiaries and
Champion and its subsidiaries, respectively, as required by the Act. The
consolidated historical financial statements, together with related
schedules and notes, set forth in the Prospectus and the Registration
Statement, comply as to form in all material respects with the requirements
of the Act. Such historical financial statements fairly present the
consolidated financial position of the Company and the Subsidiaries at the
respective dates indicated and the results of their operations and their
cash flows for the respective periods indicated, in accordance with
generally accepted accounting principles ("GAAP") consistently applied
throughout such periods. Such PRO FORMA financial statements have been
prepared in conformity with the standards set forth in Rule 11-02 of
Regulation S-X and on a basis consistent with such historical statements
and give effect to assumptions made on a reasonable basis and present
fairly the historical and proposed transactions contemplated by the
Prospectus and this Agreement. The Company's and Champion's ratios of
earnings to fixed charges included in the Prospectus under the captions
"Company Unaudited Pro Forma Condensed Financial Statements," "Paracelsus
Selected Historical Consolidated Financial and Operating Data," "Paracelsus
and Champion Unaudited Pro Forma Condensed Combining Financial Statements,"
"Paracelsus Unaudited Pro Forma Condensed Combining Financial Statements"
and "Champion Unaudited Pro Forma Condensed Combining Statements of Income
and Unaudited Historical Condensed Balance Sheet" have been calculated in
compliance with Item 503(d) of the Commission's Regulation S-K. The other
financial and statistical information and data included in the Prospectus
and in the Registration Statement, historical and PRO FORMA, are, in all
material respects, accurately presented and prepared on a basis
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consistent with such financial statements and the books and records of the
Company and the Subsidiaries.
(n) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus and up to the
Closing Date, except as set forth or contemplated in the Prospectus,
neither the Company nor any of the subsidiaries has incurred any
liabilities or obligations, direct or contingent, which are material to the
Company and the subsidiaries taken as a whole, nor entered into any
transaction not in the ordinary course of business, and there has not been,
singly or in the aggregate, any material adverse change in the properties,
business, results of operations or financial condition of the Company and
its subsidiaries, taken as a whole (a "Material Adverse Change"), or, to
the best knowledge of the Company, any development which may reasonably be
expected to involve a Material Adverse Change.
(o) No authorization, approval or consent or order of, or filing
with, any court or governmental body or agency is necessary in connection
with the transactions contemplated by this Agreement, except such as may be
required by the NASD or have been obtained and made under the Act, the TIA
or state securities or Blue Sky laws or regulations. The Company has
complied with all provisions of Section 517.075, Florida Statutes (Chapter
92-198, Laws of Florida) relating to the disclosure of business with Cuba.
(p) The Company is not (i) an "investment company" within the meaning
of the Investment Company Act of 1940, as amended, or (ii) a "holding
company" or a "subsidiary company" of a holding company, or an "affiliate"
thereof within the meaning of the Public Utility Holding Company Act of
1935, as amended.
(q) Except as set forth in the Prospectus or as would not, based upon
advice from the Commission, result in a violation of the Exchange Act and
the rules and regulations of the Commission thereunder, the Company has not
(i) taken, directly or indirectly, any action designed to cause or to
result in, or that has constituted or which might reasonably be expected to
constitute, the stabilization or manipulation of the price of any security
of the Company to facilitate the sale or resale of the Securities or
(ii) since the initial filing of the Registration Statement (A) sold, bid
for, purchased, or paid anyone any compensation for soliciting purchases
of, the Securities or (B) paid or agreed to pay to any person other than
DLJ any compensation for soliciting another to purchase any other
securities of the Company.
(r) Each Merger Party has, to the extent each is or will be a party
thereto, all requisite corporate power and authority to execute, deliver
and perform their respective obligations under each of the Transaction
Documents; each of the Transaction Documents has been duly and validly
authorized, executed and delivered by the Merger Parties, to the extent
each is a party thereto, and each constitutes a valid and legally binding
agreement of the Merger Party enforceable against each Merger Party in
accordance with its terms (assuming due authorization, execution and
delivery of each Transaction Document by any other party thereto); and
neither the Company nor Merger Sub nor, to the best knowledge of the
Company, Champion is in default in the performance or observance of any
obligation, agreement, covenant or condition contained in any of the
Transaction Documents, which default would have a Material Adverse Effect.
(s) The Merger has been duly authorized by the Merger Parties and the
Merger has been approved by stockholders of Champion holding the requisite
number of shares required to approve the Merger; insofar as the Prospectus
contains summaries of the Merger Agreement, the Merger and the other
transactions and agreements ancillary thereto, such summaries are in all
material respects accurate.
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(t) Immediately after the consummation of the Merger and the
transactions contemplated by the Transaction Documents, the fair value and
present fair salable value of the assets of the Company will exceed the sum
of its stated liabilities and identified contingent liabilities; neither
the Company nor Champion will be, after giving effect to the execution,
delivery and performance of the Transaction Documents, to the extent each
is a party thereto, and the consummation of the transactions contemplated
thereby, (i) left with unreasonably small capital with which to carry on
its business as it is proposed to be conducted, (ii) unable to pay its
debts (contingent or otherwise) as they mature or (iii) otherwise
insolvent.
(u) The Company has delivered to the Underwriters a true and correct
copy of each of the Transaction Documents that have been executed and
delivered prior to the date of this Agreement and each other Transaction
Document in the form substantially as it will be executed and delivered on
or prior to the Closing Date, together with all related agreements and all
schedules and exhibits thereto, and there have been no amendments,
alterations, modifications or waivers of any of the provisions of any of
the Transaction Documents since their date of execution or from the form in
which it has been delivered to the Underwriters; there exists as of the
date hereof (after giving effect to the transactions contemplated by the
Transaction Documents) no event or condition which would constitute a
default or an event of default (in each case as defined in the New Credit
Facility) under the New Credit Facility and no event or condition which
would constitute a default or an event of default (in each case as defined
in each of the Transaction Documents) under any of the Transaction
Documents which would reasonably be expected to result in a Material
Adverse Effect or materially adversely effect the ability of each of the
Merger Parties to consummate the Merger and the transactions contemplated
by the Merger Agreement.
5A. The Independent Underwriter hereby consents to the references to
it as set forth under the caption "Underwriting" in the Prospectus and in any
amendment or supplement thereto made in accordance with Section 4(a) hereof.
6. INDEMNIFICATION. (a) The Company agrees to indemnify and hold
harmless each Underwriter and the Independent Underwriter and each person, if
any, who controls any Underwriter or the Independent Underwriter, as the case
may be, within the meaning of Section 15 of the Act or Section 20 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), from and
against any and all losses, claims, damages, liabilities and judgments caused by
any untrue statement or alleged untrue statement of a material fact contained in
the Registration Statement or the Prospectus (as amended or supplemented if the
Company shall have furnished any amendments or supplements thereto) or any
preliminary prospectus, or caused by any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, provided, however, that (i) except insofar as
such losses, claims, damages, liabilities or judgments are caused by any such
untrue statement or omission or alleged untrue statement or omission based upon
information relating to any Underwriters or the Independent Underwriter, as the
case may be, furnished in writing to the Company by or on behalf of any
Underwriter through DLJ or the Independent Underwriter, respectively, expressly
for use therein or that constitutes a reference to the Independent Underwriter
consented to by it pursuant to Section 5A hereof and (ii) the foregoing
indemnity agreement with respect to any untrue statement contained in or
omission from a preliminary prospectus shall not inure to the benefit of an
Underwriter from whom the person asserting any such losses, liabilities, claims,
damages or expenses purchased Securities, or any person controlling such
Underwriter, if a copy of the Prospectus (as then amended or supplemented, if
the Company shall have furnished any amendments or supplements thereto) was not
sent or given by or on behalf of such Underwriter to such person, if such is
required by law, at or prior to the written confirmation of the sale of such
Securities to such person and the untrue statement contained in or omission from
such preliminary prospectus was corrected in the Prospectus (or the Prospectus
as amended or supplemented).
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The Company also agrees to indemnify and hold harmless the Independent
Underwriter and each person, if any, who controls such Independent Underwriter
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act
from and against all losses, claims, damages, liabilities and judgments incurred
as a result of the Independent Underwriter's participation as a "qualified
independent underwriter" within the meaning of Rule 2720(b)(15) of the NASD
Rules of Conduct in connection with the offering of the Securities; PROVIDED,
HOWEVER, that to the extent that any such losses, claims, damages, liabilities
or judgments are found in a final judgment by a court of competent jurisdiction,
not subject to further appeal, to have resulted from the willful misconduct or
gross negligence of the Independent Underwriter, the Company shall not be liable
to that extent.
(b) In case any action shall be brought against any Underwriter or
the Independent Underwriter, as the case may be, or any person controlling such
Underwriter or the Independent Underwriter, as the case may be, based upon any
preliminary prospectus, the Registration Statement or the Prospectus or any
amendment or supplement thereto and with respect to which indemnity may be
sought against the Company, such Underwriter or the Independent Underwriter, as
the case may be, shall promptly notify the Company in writing; PROVIDED, that
the failure of any Underwriter or the Independent Underwriter, as the case may
be, to give notice shall not relieve the Company of its obligations pursuant to
paragraph (a) of this Section 6 unless and to the extent that such delay or
omission materially adversely affects the ability of the Company to defend or
assume the defense of such action and the Company shall assume the defense
thereof, including the employment of counsel reasonably satisfactory to such
indemnified party and payment of all reasonable fees and expenses, subject to
repayment to the Company if it is determined that such Underwriter or the
Independent Underwriter, as the case may be, is not entitled to indemnification
hereunder. Any Underwriter, the Independent Underwriter or any such controlling
person shall have the right to employ separate counsel in any such action and
participate in the defense thereof, but the fees and expenses of such counsel
shall be at the expense of such Underwriter, the Independent Underwriter or such
controlling person, as the case may be, unless (i) the employment of such
counsel shall have been specifically authorized in writing by the Company, (ii)
the Company shall have failed, within a reasonable time, to assume the defense
and employ counsel or (iii) the named parties to any such action (including any
impleaded parties) include both such Underwriter, the Independent Underwriter or
such controlling person, as the case may be, and the Company and such
Underwriter, the Independent Underwriter or such controlling person, as the case
may be, shall have been advised in writing by such counsel that there may be one
or more legal defenses available to it which are different from or additional to
those available to the Company (in which case the Company shall not have the
right to assume the defense of such action on behalf of such Underwriter, the
Independent Underwriter or such controlling person, as the case may be, it being
understood, however, that the Company shall not, in connection with any one such
action or separate but substantially similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the reasonable fees and expenses of more than one separate firm of
attorneys (in addition to any local counsel) for all such Underwriters, the
Independent Underwriter and controlling persons, which firm shall be designated
in writing by DLJ and that all such fees and expenses shall be reimbursed as
they are incurred); PROVIDED, HOWEVER, that if indemnity is sought pursuant to
the second paragraph of Section 6(a), then the Company shall be liable for the
reasonable fees and expenses of not more than one separate counsel (in addition
to any local counsel) for the Independent Underwriter in its capacity as
"qualified independent underwriter" if in the opinion of the Independent
Underwriter there may exist a conflict of interest between the Independent
Underwriter and the Company or other indemnified parties. In the case of any
such separate counsel for the Independent Underwriter, such counsel shall be
designated in writing by the Independent Underwriter. The Company shall not be
liable for any settlement of any such action effected without its written
consent but if settled with the written consent of the Company, the Company
agrees to indemnify and hold harmless any Underwriter, the Independent
Underwriter and any such controlling person, as the case may be, from and
against any loss or liability by reason of such settlement. No indemnifying
party shall, without the prior written consent of the indemnified party, effect
any settlement of any pending or threatened proceeding in respect of which any
indemnified party is or could have been a party and indemnity
-12-
could have been sought hereunder by such indemnified party, unless such
settlement includes an unconditional release of such indemnified party from
all liability on claims that are the subject matter of such proceeding.
(c) Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless the Company, its directors, its officers who sign the
Registration Statement and the Independent Underwriter and any person
controlling the Company or the Independent Underwriter, as the case may be,
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act,
to the same extent as the foregoing indemnity from the Company to each
Underwriter and the Independent Underwriter but only with reference to
information relating to such Underwriter furnished in writing by or on behalf of
such Underwriter expressly for use in the Registration Statement, the Prospectus
or any preliminary prospectus. In case any action shall be brought against the
Company, any of its directors, any such officer, the Independent Underwriter or
any person controlling the Company or the Independent Underwriter, as the case
may be, based on the Registration Statement, the Prospectus or any preliminary
prospectus and in respect of which indemnity may be sought against any
Underwriter, the Underwriter shall have the rights and duties given to the
Company (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 the expense of such Underwriter), and the Company, its
directors, any such officers, the Independent Underwriter and any person
controlling the Company or the Independent Underwriter, as the case may be,
shall have the rights and duties given to the Underwriter, by Section 6(b)
hereof.
(d) The Independent Underwriter agrees to indemnify and hold harmless
the Company, its directors and officers who sign the Registration Statement,
each Underwriter and any person controlling the Company or any such Underwriter,
as the case may be, within the meaning of Section 15 of the Act or Section 20 of
the Exchange Act, to the same extent as the foregoing indemnity from the Company
to each Underwriter and the Independent Underwriter but only with reference to
information relating to the Independent Underwriter furnished in writing by or
on behalf of such Underwriter expressly for use in the Registration Statement,
the Prospectus or any preliminary prospectus. In case any action may be brought
against the Company, any of its directors, any such officer, any Underwriter or
any person controlling the Company or such Underwriter, as the case may be,
based on the Registration Statement, the Prospectus or any preliminary
prospectus and in respect of which indemnity may be sought against the
Independent Underwriter, the Independent Underwriter shall have the rights and
duties given to the Company (except that if the Company shall have assumed the
defense thereof, the Independent 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 the expense of the Independent
Underwriter), and the Company, its directors, any such officers, any Underwriter
and any person controlling the Company or such Underwriter, as the case may be,
shall have the rights and duties given to the Underwriter, by Section 7(b)
hereof.
(e) If the indemnification provided for in this Section 6 is
applicable in accordance with its terms but is finally determined by a court to
be unavailable to an indemnified party in respect of any losses, claims,
damages, liabilities or judgments referred to therein, then each 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 and judgments (i) in such proportion as is
appropriate to reflect the relative benefits received by each party to this
Agreement from the offering of the Securities 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 each party to this Agreement in connection
with the statements or omissions which resulted in such losses, claims, damages,
liabilities or judgments, as well as any other relevant equitable
considerations. The relative benefits received by the Company, the Underwriters
and the Independent Underwriter shall be deemed to be in the same proportion as
the total net proceeds from the offering (before deducting expenses) received by
the Company, the total underwriting discounts and commissions received by the
Underwriters and the fee payable to the Independent Underwriter pursuant to the
first sentence of Section 3A(e) hereof, respectively, bear to the
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total price to the public of the Securities, in each case as set forth in the
table on the cover page of the Prospectus. The relative fault shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission to state a material fact
relates to information supplied by the Company, the Underwriters or the
Independent Underwriter and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or
omission.
The Company, the Underwriters and the Independent Underwriter agree
that it would not be just and equitable if contribution pursuant to this Section
6(e) were determined by pro rata allocation (even if the Underwriters and the
Independent Underwriter were treated as one entity for such purpose) or by any
other method of allocation which does not take account of the equitable
considerations referred to in the immediately preceding paragraph. The amount
paid or payable by an indemnified party as a result of the losses, claims,
damages, liabilities or judgments referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such indemnified party
in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 6, no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
underwriting discount applicable to the Securities purchased by such Underwriter
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 and the Independent Underwriter shall not be required to
contribute in excess of the amount by which its fee received for acting as
Independent Underwriter exceeds the amount of any damages which the Independent
Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. Notwithstanding
anything to the contrary contained herein, 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 6(e) are several in proportion to the respective number of Securities
purchased by each of the Underwriters hereunder and not joint.
7. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The several obligations
of the Underwriters to purchase the Firm Securities under this Agreement on the
Closing Date and the obligations of the Independent Underwriter under this
Agreement are subject to the satisfaction or waiver in the sole discretion of
the Underwriters or the Independent Underwriter, as the case may be, of each of
the following conditions:
(a) All the representations and warranties of the Company contained
in this Agreement shall be true and correct on the Closing Date with the
same force and effect as if made on and as of the Closing Date or Option
Closing Date, as the case may be. The Company shall have performed or
complied with in all material respects all of its obligations and
agreements herein contained and required to be performed or complied with
by it at or prior to the Closing Date.
(b) The Registration Statement shall have become effective (or, if a
post-effective amendment is required to be filed, such post-effective
amendment shall have become effective) not later than 10:00 A.M. (and in
the case of a Registration Statement filed under Rule 462(b) of the Act,
not later than 10:00 P.M.), New York City time, on the date of this
Agreement or at such later date and time as DLJ may approve in writing, and
at the Closing Date no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall have been commenced or shall be pending before or threatened
by the Commission and every request for additional information on the part
of the Commission shall have been complied with in all material respects;
and no stop order suspending the sale of the Securities in any jurisdiction
referred to in Section 4(g) shall have been issued and no proceeding for
that purpose shall have been commenced or shall be pending or threatened.
-14-
(c) No action shall have been taken and no statute, rule, regulation
or order shall have been enacted, adopted or issued by any governmental
agency which would, as of the Closing Date prevent the issuance of any of
the Securities; and no injunction, restraining order or order of any nature
by a Federal or state court of competent jurisdiction shall have been
issued as of the Closing Date which would prevent the issuance of any of
the Securities.
(d) Subsequent to the execution and delivery of this Agreement and
prior to the Closing Date, there shall not have been any downgrading, nor
shall any notice have been given of any intended or potential downgrading
or of any review for a possible change that does not indicate the direction
of the possible change, in the rating accorded any of the Company's
securities by any "nationally recognized statistical rating organization",
as such term is defined for purposes of Rule 436(g)(2) under the Securities
Act.
(e)(i) Except as reflected in or contemplated by the Registration
Statement and the Prospectus, since the earlier of the date hereof or the
dates as of which information is given in the Registration Statement and
the Prospectus, there shall not have been any Material Adverse Change or,
to the best knowledge of the Company, any development involving a
prospective Material Adverse Change, (ii) since the date of the latest
balance sheet included in the Registration Statement and the Prospectus
there shall not have been any change in the capital stock or in the
long-term debt of the Company and the Subsidiaries, taken as a whole, and
(iii) the Company and the Subsidiaries shall have no liability or
obligation, direct or contingent, which is material to the Company and the
Subsidiaries, taken as a whole.
(f) The Underwriters or the Independent Underwriter, as the case may
be, shall have received a certificate dated the Closing Date signed by the
President and the Chief Financial Officer of the Company, confirming the
matters set forth in paragraphs (a), (b), (c), (d) and (e) of this Section
7 (the "Company Certificate").
(g) The Underwriters or the Independent Underwriter, as the case may
be, shall have received on the Closing Date an opinion (satisfactory to the
Underwriters or the Independent Underwriter, as the case may be, and
counsel for the Underwriters), dated the Closing Date, of Skadden Arps,
Slate Meagher & Flom, counsel for the Company, to the effect that:
(i) the Company is validly existing and in good standing as a
corporation under the laws of the State of California and has the
requisite corporate power and corporate authority to carry on its
business as it is currently being conducted and to own, lease and
operate its properties;
(ii) the Company has the requisite corporate power and authority to
execute, deliver and perform this Agreement and to authorize, issue
and sell the Securities as contemplated by this Agreement;
(iii) each of this Agreement and the Indenture have been duly
authorized, executed and delivered by the Company;
(iv) when authenticated in accordance with the terms of the
Indenture and delivered to and paid for by the Underwriters in
accordance with the terms of this Agreement, the Securities will
constitute valid and binding obligations of the Company, enforceable
against the Company in accordance with their respective terms and
entitled to the benefits of the Indenture, except (x) to the extent
that enforcement thereof may be affected by (A) bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance and
other
-15-
similar laws now or hereafter in effect relating to or affecting
creditors' rights and remedies generally and (B) general principles of
equity (regardless of whether enforcement is sought in a proceeding at
law or in equity) and (y) such counsel need not express any opinion
with respect to the enforceability of Section 515 of the Indenture.
(v) the Indenture, assuming due authorization, execution and
delivery thereof by the Trustee, constitutes a valid and binding
agreement of the Company, enforceable against the Company in
accordance with its terms, (x) except to the extent that enforcement
thereof may be affected by (A) bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance and other similar laws now or
hereafter in effect relating to or affecting creditors' rights and
remedies generally and (B) general principles of equity (regardless of
whether enforcement is sought in a proceeding at law or in equity) and
(y) such counsel need not express any opinion with respect to the
enforceability of Section 515 of the Indenture.
(vi) the Securities and the Indenture conform in all material
respects to the descriptions thereof contained in the Prospectus;
(vii) the Company is not (A) an "investment company" within the
meaning of the Investment Company Act of 1940, as amended, or (B) a
"holding company" or a "subsidiary company" of a holding company, or
an "affiliate" thereof within the meaning of the Public Utility
Holding Company Act of 1935, as amended;
(viii) the staff of the Commission has orally advised such counsel
that the Registration Statement has become effective under the Act and
the Indenture has been duly qualified under the TIA; any required
filing of the Prospectus, and any supplements thereto, pursuant to
Rule 424(b) has been made in the manner and within the time period
required by Rule 424(b); and to the knowledge of such counsel no stop
order suspending the effectiveness of the Registration Statement or
any part thereof has been issued and no proceedings therefor have been
instituted or are pending or contemplated under the Act;
(ix) no authorization, approval, consent or order of, or filing
with, any court or governmental body or agency is required for the
issuance and sale of the Securities, under Applicable Laws (as
hereinafter defined). "Applicable Laws" shall mean those laws, rules
and regulations of the States of California and New York and of the
United States of America which, in the experience of such counsel, are
normally applicable to transactions of the type contemplated by the
Underwriting Agreement, the Indenture, the Notes and the other
Transaction documents and are not the subject of a specific opinion
with such opinion referring expressly to a particular law or laws.
(x) the execution and delivery by the Company of each of this
Agreement, the Indenture and the Securities and the issuance and sale
of the Securities pursuant to this Agreement and the Indenture do not
(i) conflict with the articles of incorporation or bylaws of the
Company, (ii) constitute a violation of or a default under or result
in the creation of any Lien upon any of the property of the Company or
any of its subsidiaries pursuant to any Applicable Contracts or
(iii) violate any Applicable Law or any Applicable Order (as defined).
"Applicable Contracts" mean those agreements or instruments set forth
on Schedule __ to the Officer's Certificate of the Company and which
have been identified as all the agreements and instruments which are
material to the business or financial condition of the Company and its
subsidiaries. For purposes of this paragraph (x), the term
"Applicable Orders" means those orders or decrees of Governmental
Authorities (as defined below) identified on Schedule __ to the
Officers' Certificate of the Company;
-16-
(xi) to the best of such counsel's knowledge, the Company is not in
violation of its charter or by-laws; and
(xii) at the time it became effective and on the Closing Date, the
Registration Statement (except for financial statements, the notes
thereto and related schedules and other financial data included
therein and the part of the Registration Statement that constitutes
the Statement of Eligibility of the Trustee on Form T-1, including the
exhibits thereto, (the "Form T-1"), as to which no opinion need be
expressed) complied as to form in all material respects with the Act
and the TIA.
In giving their opinion required by subsection (g) of this Section 7,
such counsel also shall state that such counsel has participated in conferences
with officers and other representatives of the Company and Champion,
representatives of the independent public accountants for the Company and
Champion, representatives of the Underwriters and counsel to the Underwriters at
which the contents of the Registration Statement and the Prospectus and related
matters were discussed and, although such counsel is not passing upon and does
not assume any responsibility for, the accuracy, completeness or fairness of the
statements contained in the Registration Statement or the Prospectus on the
basis of the foregoing, no fact has come to the attention of such counsel that
leads it to believe that the Registration Statement, at the time it 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, 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, in light of the circumstances under which they were made,
not misleading, it being understood that such counsel is not expressing any
opinion or belief as to the financial statements, schedules and other financial,
numerical, accounting or statistical data included in or excluded from the
Registration Statement or the Prospectus, or the Form T-1.
(h) The Underwriters or the Independent Underwriter, as the case may
be, shall have received an opinion (satisfactory to the Underwriters or the
Independent Underwriter, as the case may be, and counsel for the
Underwriters), dated the Closing Date, of the general counsel for the
Company to the effect that:
(i) The Company and each of the Company's Significant Subsidiaries
has been duly incorporated or formed as the case may be, and is
validly existing as a corporation or partnership, as the case may be,
in good standing under the laws of its jurisdiction or incorporation
or formation; and the Company and each of its Significant Subsidiaries
is duly qualified and is in good standing as a foreign corporation or
partnership, as the case may be, except where the failure to be so
qualified would not reasonably be expected to have a Material Adverse
Effect;
(ii) to the best of such general counsel's knowledge, after
reasonable investigation, except as otherwise set forth in the
Prospectus, there is no action, suit or proceeding before or by any
court of governmental agency or body, domestic or foreign, pending
against or affecting the Company of any of its subsidiaries, or any of
their respective assets or properties, which is reasonably likely to
have, singly or in the aggregate, a Material Adverse Effect, and to
the best of such general counsel's knowledge, after reasonable
investigation, no such proceedings are threatened;
(iii) to the best of such general counsel's knowledge, after
reasonable investigation, no restraining order or injunction has been
issued by, and no investigation, action, claim, suit or proceeding has
been initiated or, to the best of such general counsel's knowledge,
threatened by or before any United States, California or New York
executive, legislative, judicial,
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administrative or regulatory body, including, without limitation,
the Commission (each a "Governmental Authority") with respect to
(A) the issuance and sale of the Securities or (B) the execution,
delivery or performance by the Company of this Agreement;
(iv) the issuance and sale of the Securities, the consummation of
the transactions contemplated by the Transaction Documents, the
execution, delivery and performance by the Company of this Agreement
and the Transaction Documents and the compliance by the Company with
all the provisions of this Agreement and the Transaction Documents
will not conflict with or result in a breach of any of the terms or
provisions or, or constitute a default or cause an acceleration of any
obligation under, any bond, note, debenture or any other evidence of
indebtedness or any indenture, mortgage, deed of trust or other
agreement or instrument to which the Company or any of its
subsidiaries is a party or by which it or any of them is bound, except
as would not have, singly or in the aggregate, a Material Adverse
Effect; and
(v) the descriptions in the Registration Statement and the
Prospectus of statutes, legal and governmental proceedings and
contracts and other documents are accurate in all material respects;
and such general counsel does not know of any legal or governmental
proceedings required to be described in the Registration Statement or
Prospectus which are not described as required or of any contracts or
documents of a character required to be described in the Registration
Statement or Prospectus or to be filed as exhibits to the Registration
Statement which are not described and filed as required; it being
understood that such general counsel need express no opinion as to the
financial statements, notes or schedules or other financial data
included therein or as to the Form T-1.
(i) The Underwriters or the Independent Underwriter, as the case may
be, shall have received an opinion (satisfactory to the Underwriters or the
Independent Underwriter, as the case may be, and counsel for the
Underwriters), dated the Closing Date, of _____________, [regulatory
counsel for the Company], to the effect that:
(i) the descriptions in the Registration Statement and the
Prospectus of statutes, legal and governmental proceedings, contracts
and other documents and regulatory matters described in the Prospectus
under the captions "Risk Factors--Limits on Reimbursement," "--
Extensive Regulation" and "--Healthcare Reform Legislation," and
"Business--Medicare, Medicaid and Other Revenues" and "--Regulation
and Other Factors," insofar as such statements constitute summaries of
legal matters, documents or proceedings referred to therein, are
accurate in all material respects and fairly present the information
shown as of the dates thereof; and
(ii) the Company and each of its subsidiaries has such
Authorizations of and from, and has made all declarations and filings
with, all Federal, state, local and other governmental authorities,
all self-regulatory organizations and all courts and other tribunals,
necessary or required to own, lease, license and use its properties
and assets and to conduct its business in the manner described in the
Prospectus, except those the absence of which would not have a
Material Adverse Effect. To the best knowledge of such counsel (after
reasonable inquiry) all such Authorizations are valid and in full
force and effect and the Company and each of its Subsidiaries has
fulfilled and performed all of its material obligations with respect
to, and is in compliance in all material respects with the terms and
conditions of, such Authorizations and with the rules and regulations
of the regulatory authorities and governing bodies having jurisdiction
with respect thereto, and no event has occurred which allows, or after
notice or lapse of time would allow, revocation or termination thereof
or result in any other material impairment of the rights of the holder
of any such Authorization, except where the effect
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would not have a Material Adverse Effect, and such counsel has no
reason to believe that any governmental body or agency is considering
limiting, suspending or revoking any such Authorization.
(j) The Underwriters or the Independent Underwriter, as the case may
be, shall have received an opinion, dated the Closing Date, of Sullivan &
Cromwell, counsel for the Underwriters, in form and substance reasonably
satisfactory to the Underwriters or the Independent Underwriter, as the
case may be.
(k) The Underwriters or the Independent Underwriter, as the case may
be, shall have received letters on and as of the date hereof as well as on
and as of the Closing Date in the latter case constituting an affirmation
of the statements set forth in the earlier letters, in form and substance
satisfactory to the Underwriters or the Independent Underwriter, as the
case may be, from Ernst & Young LLP and Coopers & Lybrand L.L.P.,
independent public accountants to the Company and Champion, respectively,
with respect to the financial statements and certain financial information
contained in the Registration Statement and the Prospectus as the
Underwriters and the Independent Underwriter, as the case may be, shall
reasonably require.
(l) All corporate proceedings and other legal matters incident to the
authorization, form and validity of this Agreement, the Securities, the
Registration Statement and the Prospectus, and all other legal matters
relating to this Agreement and the transactions contemplated hereby shall
be reasonably satisfactory in all respects to Sullivan & Cromwell, and such
counsel shall have been furnished with such documents and opinions, in
addition to those set forth above, as they may reasonably require for the
purpose of enabling them to review or pass upon the matters referred to in
this Section 7, in order to evidence the accuracy, completeness and
satisfaction in all material respects of any of the representations,
warranties or conditions herein contained and to render the opinion
referred to in Section 7(j).
(m) The Company shall have performed or complied in all material
respects with the agreements herein contained and required to be performed
or complied with by the Company at or prior to the Closing Date.
(n) There shall have been no amendments, alterations, modifications,
or waivers of any provisions of the Transaction Documents since the date of
the execution and delivery thereof by the parties thereto other than those
which are disclosed in the Registration Statement or the Prospectus or any
supplement thereto or which under the Act are not required to be disclosed
in the Prospectus or any supplement thereto and which have been disclosed
to the Underwriters prior to the date hereof.
(o) Each of the Merger Parties shall, to the extent each is a party
thereto, have complied in all respects with all agreements and covenants in
the Transaction Documents and performed all conditions specified therein
that the terms thereof require to be complied with or performed at or prior
to the Effective Time of the Merger, except to the extent that such
compliance or performance has been waived by the other parties to the
applicable Transaction Documents.
(p) The certificate of merger with respect to the Merger shall have
been filed with the Secretary of State of the State of Delaware and shall
have become effective, the Merger shall have occurred and all other
transactions contemplated by the Transaction Documents to be consummated at
or prior to the Effective Time of the Merger shall have been consummated
prior to the consummation of the purchase and sale of the Securities
hereunder.
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(q) Except as is disclosed to the Underwriters and the Independent
Underwriter in writing, the representations and warranties of the Company
set forth in the Transaction Documents shall be true, accurate and complete
in all respects.
8. EFFECTIVE DATE OF AGREEMENT AND TERMINATION. This Agreement
shall become effective upon the later of (i) execution of this Agreement and
(ii) if a post-effective amendment is required, when notification of the
effectiveness of such post-effective amendment to the Registration Statement has
been released by the Commission.
This Agreement may be terminated at any time prior to the Closing Date
by the Underwriters by written notice to the Company if any of the following has
occurred: (i) subsequent to the date the Registration Statement is declared
effective or the date of this Agreement, any Material Adverse Change or
development involving a prospective Material Adverse Change which would, in the
judgment of the Underwriters, make it impracticable or inadvisable to market the
Securities on the terms and in the manner contemplated in the Prospectus, (ii)
any outbreak or escalation of hostilities or other national or international
calamity or crisis or change in economic conditions or in the financial markets
of the United States or elsewhere or any other substantial national or
international calamity or emergency that would, in the judgment of the
Underwriters, make it impracticable or inadvisable to market the Securities on
the terms and in the manner contemplated in the Prospectus or to enforce
contracts for the sale of the Securities, (iii) the suspension or material
limitation of trading in securities generally on the New York Stock Exchange or
limitation on prices for securities on such exchange, (iv) the suspension or
material limitation of trading in any of the Company's securities on the New
York Stock Exchange, (v) the declaration of a banking moratorium by either
Federal or New York State authorities or (vi) the taking of any action by any
Federal, state or local government or agency in respect of its monetary or
fiscal affairs which in the opinion of the Underwriters has a material adverse
effect on the financial markets in the United States generally.
If on the Closing Date or Option Closing Date, as the case may be, any
one or more of the Underwriters shall fail or refuse to purchase the Securities
which it or they have agreed to purchase hereunder on such date and the
aggregate number of Securities which such defaulting Underwriter or
Underwriters, as the case may be, agreed but failed or refused to purchase is
not more than one-fifth of the total number of Securities to be purchased on
such date by all Underwriters, each non-defaulting Underwriter shall be
obligated severally, in the proportion which the number of Securities set forth
opposite its name in Schedule I bears to the total number of Securities which
all the non-defaulting Underwriters, as the case may be, have agreed to
purchase, or in such other proportion as the Underwriters may specify, to
purchase the Securities which such defaulting Underwriter or Underwriters, as
the case may be, agreed but failed or refused to purchase on such date; PROVIDED
that in no event shall the number of Securities which any Underwriter has agreed
to purchase pursuant to Section 2 hereof be increased pursuant to this Section 8
by an amount in excess of one-fifth of such number of Securities without the
written consent of such Underwriter. If on the Closing Date or Option Closing
Date, as the case may be, any Underwriter or Underwriters shall fail or refuse
to purchase Securities and the aggregate number of Securities with respect to
which such default occurs is more than one-fifth of the aggregate number of
Securities to be purchased on such date by all Underwriters and arrangements
satisfactory to the Underwriters and the Company for purchase of such Securities
are not made within 48 hours after such default, this Agreement will terminate
without liability on the part of any non-defaulting Underwriter and the Company.
In any such case which does not result in termination of this Agreement, either
the Underwriters 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 default of any such Underwriter under this Agreement.
9. MISCELLANEOUS. Notices given pursuant to any provision of this
Agreement shall be addressed as follows: (a) if to the Company, to it at
_____________, (b) if to any Underwriter, to such
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Underwriter c/o Donaldson, Lufkin & Jenrette Securities Corporation, 277 Park
Avenue, New York, New York 10172, Attention: Syndicate Department, and (c)
if to the Independent Underwriter, to it at 208 S. LaSalle Street, Chicago,
Illinois 60604, Attention: _____________, or in any case to such other
address as the person to be notified may have requested in writing.
The respective indemnities, contribution agreements, representations,
warranties and other statements of the Company, its officers and directors, the
several Underwriters and the Independent Underwriter set forth in or made
pursuant to this Agreement shall remain operative and in full force and effect,
and will survive delivery of and payment for the Securities, regardless of (i)
any investigation, or statement as to the results thereof, made by or on behalf
of any Underwriter or by or on behalf of the Company, the officers or directors
of the Company or any controlling person of the Company, (ii) acceptance of the
Securities and payment for them hereunder and (iii) termination of this
Agreement.
If this Agreement shall be terminated by the Underwriters pursuant to
clause (i) or (iv) of the second paragraph of Section 8 or because of any
failure or refusal on the part of the Company to comply with the terms or to
fulfill any of the conditions of this Agreement, the Company agrees to reimburse
the several Underwriters and the Independent Underwriter for all out-of-pocket
expenses (including the reasonable fees and disbursements of counsel) incurred
by them. Notwithstanding any termination of this Agreement, the Company shall
be liable for all expenses which it has agreed to pay pursuant to Section 4(k)
or the second sentence of Section 3A(e) hereof.
Except as otherwise provided, this Agreement has been and is made
solely for the benefit of and shall be binding upon the Company, the
Underwriters, the Independent Underwriter, any controlling persons referred to
herein and their respective successors and assigns, all as and to the extent
provided in this Agreement, and no other person shall acquire or have any right
under or by virtue of this Agreement. The term "successors and assigns" shall
not include a purchaser of any of the Securities from any of the several
Underwriters merely because of such purchase.
THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK.
This Agreement may be signed in various counterparts which together
shall constitute one and the same instrument.
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Please confirm that the foregoing correctly sets forth the agreement
between the Company and the several Underwriters.
Very truly yours,
PARACELSUS HEALTHCARE CORPORATION
By______________________________
Name:
Title:
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
BA SECURITIES, INC.
NATIONSBANC CAPITAL MARKETS, INC.
By: DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By__________________________
Name:
Title:
THE CHICAGO CORPORATION
By__________________________
Name:
Title:
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SCHEDULE I
Principal
Amount of
Securities
Underwriters to be Purchased
------------ ---------------
Donaldson, Lufkin & Jenrette
Securities Corporation. . . . . . . . . . . . . . . . . .
BA Securities, Inc. . . . . . . . . . . . . . . . . . . . .
NationsBanc Capital Markets, Inc. . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . 325,000,000
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