Draft of August 6, 1996
[7,709,000] Shares
PARACELSUS HEALTHCARE CORPORATION
Common Stock, no par value per share
UNDERWRITING AGREEMENT
August ___, 1996
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
BEAR, STEARNS & CO. INC.
SMITH BARNEY INC.
THE CHICAGO CORPORATION
As Representatives of the several
underwriters named in Schedule I hereto
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"), and the shareholders of the Company named in Schedule II hereto
(collectively, the "Selling Shareholders"), severally propose to sell an
aggregate of [7,709,000] shares of Common Stock, no par value per share, of the
Company (the "Firm Shares"), to the several underwriters named in Schedule I
hereto (the "Underwriters"). The Firm Shares consist of 5,200,000 shares to be
issued and sold by the Company and [2,509,000] shares to be sold by the Selling
Shareholders. The Selling Shareholders also propose to issue and sell to the
several Underwriters not more than [1,156,350] additional shares of Common
Stock, no par value per share, of the Company (the "Additional Shares"), if
requested by the Underwriters as provided in Section 2 hereof. The Firm Shares
and the Additional Shares are herein collectively called the Shares. The shares
of common stock of the Company to be outstanding after giving effect to the
sales contemplated hereby are hereinafter referred to as the Common Stock. The
Company and the Selling Shareholders are hereinafter collectively called the
Sellers.
The Shares 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 and the Shares 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 Shares.
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. 333-07289) including a
preliminary prospectus, subject to completion, relating to the Shares. 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 Shares is hereinafter referred to 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, (i) the Company agrees to issue and sell 5,200,000 Firm
Shares, (ii) each Selling Shareholder agrees, severally and not jointly, to sell
the number of Firm Shares set forth opposite such Selling Shareholder's name in
Schedule II hereto and (iii) each Underwriter agrees, severally and not jointly,
to purchase from each Seller at a price per share of $______ (the "Purchase
Price") the number of Firm Shares (subject to such adjustments to eliminate
fractional shares as the Representatives may determine) which bears the same
proportion to the total number of Firm Shares to be sold by such Seller as the
number of Firm Shares set forth opposite the name of such Underwriter in
Schedule I hereto bears to the total number of Firm Shares.
On the basis of the representations and warranties contained in this
Agreement, and subject to its terms and conditions, (i) the Selling Shareholders
agree to issue and sell up to 1,156,350 Additional Shares and (ii) the
Underwriters shall have the right to purchase, severally and not jointly, up to
an aggregate 1,156,350 Additional Shares from the Selling Shareholders at the
Purchase Price. Additional Shares may be purchased solely for the purpose of
covering over-allotments made in connection with the offering of the Firm
Shares. The Underwriters may exercise their right to purchase Additional Shares
in whole or in part from time to time by giving written notice thereof to the
Selling Shareholders within 30 days after the date of this Agreement. The
Representatives shall give any such notice on behalf of the Underwriters and
such notice shall specify the aggregate number of Additional Shares to be
purchased pursuant to such exercise and the date for payment and delivery
thereof. The date specified in any such notice shall be a business day (i) no
earlier than the Closing Date (as hereinafter defined), (ii) no later than ten
business days after such notice has been given and (iii) no earlier than two
business days after such notice has been given. If any Additional Shares are to
be purchased, each Underwriter, severally and not jointly, agrees to purchase
from the Selling Shareholders the number of Additional Shares (subject to such
adjustment to eliminate fractional shares as the Representatives may determine)
which bears the same proportion to the total number of Additional Shares to be
purchased from the Company as the number of Firm Shares set forth opposite the
name of such Underwriter in Schedule I bears to the total number of Firm Shares.
The Sellers hereby agree, severally and not jointly, and the Company
shall, concurrently with the execution of this Agreement, deliver an agreement
executed by (i) each of the directors and officers of the Company who is not a
Selling Shareholder and (ii) each shareholder listed on Annex I hereto, pursuant
to which each such person agrees not to offer, sell, contract to sell, grant
any option to purchase or otherwise dispose of any common stock of the Company
or any securities convertible into or exercisable or exchangeable for such
common stock, except to the Underwriters pursuant to this Agreement, for a
period of [120] days after the date
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of the Prospectus without the prior written consent of Donaldson, Lufkin &
Jenrette Securities Corporation ("DLJ"). Notwithstanding the foregoing, during
such period (i) the Company may grant stock options pursuant to the Company's
existing stock option plans and (ii) the Company may issue shares of its common
stock upon the exercise of an option or warrant or the conversion of a security
outstanding on the date hereof.
3. DELIVERY AND PAYMENT. Delivery to the Underwriters of and payment
for the Firm Shares 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, at such place as the
Representatives and the Company shall agree. The Closing Date and the location
of delivery of payment for the Firm Shares may be varied by agreement between
the Representatives and the Sellers.
Delivery to the Underwriters of and payment for any Additional Shares
to be purchased by the Underwriters shall be made at such place as the
Representatives shall designate at 10:00 A.M., New York City time, on the date
specified in the applicable exercise notice given by the Representatives
pursuant to Section 2 (an "Option Closing Date"). Any such Option Closing Date
and the location of delivery of and the form of payment for such Additional
Shares may be varied by agreement between the Representatives and the Selling
Shareholders.
Certificates for the Shares shall be registered in such names and
issued in such denominations as the Representatives shall request in writing not
later than two full business days prior to the Closing Date or an Option Closing
Date, as the case may be. Such certificates shall be made available to the
Representatives at the offices of DLJ (or at such other place as shall be
acceptable to the Representatives) for inspection not later than 9:30 A.M., New
York City time, on the business day next preceding the Closing Date or Option
Closing Date, as the case may be. Certificates in definitive form evidencing
the Shares shall be delivered to the Representatives on the Closing Date or
Option Closing Date, as the case may be, with any transfer taxes thereon duly
paid by the respective Sellers, for the respective accounts of the Several
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
applicable Sellers.
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 Shares.
(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 Shares 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;
(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;
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(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 and the demand
for securities of comparable companies and (D) such other studies,
analyses and investigations as the Independent Underwriter has deemed
appropriate, and assuming that the offering and sale of the Shares 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 price of the Shares be not less than $___
per share, which price should in no way be considered or relied upon
as an indication of the value of the Shares; and
(v) Subject to the provisions of Section 8 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 Shares 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 Shares 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 Shares. 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) 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 the
Representatives [and with the Selling Shareholders]:
(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.
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(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 Shares 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 Shares
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 Shares 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
Representatives shall not previously have been advised and provided a copy
or to which the Representatives 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 Representatives,
any amendment to the Registration Statement or supplement to the Prospectus
which may be necessary or advisable in connection with the distribution of
the Shares by the Representatives, 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, but 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 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 Shares 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
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of the securities or Blue Sky laws of the jurisdictions in which the Shares
are being offered, both in connection with the offering or sale of the
Shares 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 Shares, to cooperate with the
Representatives and counsel for the Underwriters in connection with the
registration or qualification of the Shares 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 Shares and file such consents to service of process or
other documents as may be necessary in order to effect such registration or
qualification.
(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 Shares 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,
(iii) the registration with the Commission and the issuance and delivery of
the Shares, (iv) the registration or qualification of the Shares 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 listing of the Shares,
if any, on the New York Stock Exchange ("NYSE"), (vii) furnishing such
copies of the Registration Statement, the Prospectus and all amendments and
supplements thereto as may be reasonably requested for use in connection
with the offering or sale of the Shares by the Underwriters or by dealers
to whom Shares may be sold and (viii) the performance by the Company of its
other obligations under this Agreement, including (without limitation) the
cost of its personnel and other internal costs, the cost of printing the
certificates representing the Shares and all expenses incident to the sale
and delivery of the Shares to the Underwriters.
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(k) To use its best efforts to maintain the inclusion of the Common
Stock on the NYSE for a period of five years after the effective date of
the Registration Statement.
(l) To use the proceeds from the sale of the Shares in the manner
described in the Prospectus under the caption "Use of Proceeds."
(m) 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 Shares.
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to each 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 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 through DLJ 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 seventh 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 expressly for use in the Registration Statement or the
Prospectus (or any amendment or supplement to them).
(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
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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
Shares, to execute, deliver and perform this Agreement and to issue, sell
and deliver the Shares; "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, on a pro forma basis
after giving effect to the Merger, that 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) All the outstanding shares of capital stock of the Company
(including the Shares to be sold by the Selling Shareholders) have been
duly authorized and validly issued and are fully paid, nonassessable and
not subject to any preemptive or similar rights; and the Shares to be
issued and sold by the Company hereunder have been duly authorized and,
when issued and delivered to the Underwriters against payment therefor as
provided by this Agreement, will be validly issued, fully paid and
nonassessable, and the issuance of such Shares will not be subject to any
preemptive or similar rights.
(g) The authorized capital stock of the Company, including the Common
Stock, conforms as to legal matters to the description thereof contained in
the Prospectus.
(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.
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(j) The execution and delivery of this Agreement and the Shares by the
Company, the issuance and sale of the Shares, 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 and
the Transaction Documents, the compliance by the Company, Merger Sub and
Champion with all of the provisions of this Agreement and the other
Transaction Documents and the consummation of the transactions contemplated
by this Agreement 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 disclosed 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 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.
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(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 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 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 or Option Closing Date, as the case may be, 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 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 or Champion to facilitate the sale or resale of the Shares
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 Shares or (B) paid or agreed to pay to
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any person other than DLJ any compensation for soliciting another to
purchase any other securities of the Company or Champion.
(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.
(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.
(v) The Company has filed a registration statement pursuant to Section
12(b) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), to register the Common Stock, has filed an application to list the
Shares on the NYSE and has received notification that the listing has been
approved, subject to notice of issuance.
6. REPRESENTATIONS AND WARRANTIES OF THE SELLING SHAREHOLDERS. Each
Selling Shareholder severally and not jointly represents and warrants to each
Underwriter that as to itself:
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(a) Such Selling Shareholder is the lawful owner of the Shares to be
sold by such Selling Shareholder pursuant to this Agreement and has, and on
the Closing Date or Option Closing Date, as the case may be, will have,
good and clear title to such Shares, free of all restrictions on transfer,
liens, encumbrances, security interests and claims whatsoever.
(b) Upon delivery of and payment for such Shares pursuant to this
Agreement, such Selling Shareholder will convey to the Underwriters good
and clear title to such Shares, free of all restrictions on transfer,
liens, encumbrances, security interests and claims whatsoever.
(c) Such Selling Shareholder has, and on the Closing Date or Option
Closing Date, as the case may be, will have, full legal right, power and
authority to enter into this Agreement and the Custody Agreement between
the Selling Shareholders and __________________, as Custodian (the "Custody
Agreement") and to sell, assign, transfer and deliver such Shares in the
manner provided herein and therein, and this Agreement and the Custody
Agreement have been duly authorized, executed and delivered by such Selling
Shareholder and each of this Agreement and the Custody Agreement is a valid
and binding agreement of such Selling Shareholder enforceable in accordance
with its terms, except as rights to indemnity and contribution hereunder
may be limited by applicable law.
(d) The power of attorney (the "Power of Attorney") signed by such
Selling Shareholder appointing _______________ and __________________, or
either one of them, as his attorney-in-fact to the extent set forth therein
with regard to the transactions contemplated hereby and by the Registration
Statement and the Custody Agreement has been duly authorized, executed and
delivered by or on behalf of such Selling Shareholder and is a valid and
binding instrument of such Selling Shareholder enforceable in accordance
with its terms, and, pursuant to such Power of Attorney, such Selling
Shareholder has authorized _______________ and _______________, or either
one of them, to execute and deliver on his behalf this Agreement and any
other document necessary or desirable in connection with transactions
contemplated by this Agreement, the Custody Agreement or the Power of
Attorney and to deliver the Shares to be sold by such Selling Shareholder
pursuant to this Agreement.
(e) Such Selling Shareholder has not taken, and will not take,
directly or indirectly, any action designed to, or which might reasonably
be expected to, cause or result in stabilization or manipulation of the
price of any security of the Company or Champion to facilitate the sale or
resale of the Shares pursuant to the distribution contemplated by this
Agreement, except for the lock-up arrangements described in Sections 2 and
6(h) hereof and in the Registration Statement and other than as permitted
by the Act, the Selling Shareholder has not distributed and will not
distribute any prospectus or other offering material in connection with the
offering and sale of the Shares.
(f) The execution, delivery and performance of this Agreement and the
Custody Agreement by such Selling Shareholder, the compliance by such
Selling Shareholder with all the provisions of this Agreement, the Custody
Agreement and the Power of Attorney and the consummation of the
transactions contemplated herein and therein will not require any consent,
approval, authorization or other order of any court, regulatory body,
administrative agency or other governmental body (except as such may be
required under the Act, state securities laws or Blue Sky laws, as to which
the undersigned makes no representation or warranty hereunder) and will not
conflict with or constitute a breach of any of the terms or provisions of,
or a default under, organizational documents of such Selling Shareholder,
if not an individual, or any agreement, indenture or other instrument to
which such Selling Shareholder is a party or by which such Selling
Shareholder or property of such Selling Shareholder is bound, or violate or
conflict with any laws, administrative regulation or ruling or court decree
applicable to such Selling Shareholder or property of such Selling
Shareholder.
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(g) Such parts of the Registration Statement under the caption
"Selling Shareholders" that specifically relate to statements or omissions
made in reliance on and in conformity with written information furnished to
the Company by the undersigned expressly for use therein do not, and will
not on the Closing Date or Option Closing Date, as the case may be, contain
any 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,
in light of circumstances under which they were made, not misleading.
(h) During the period beginning from the date hereof and continuing to
and including the date [120] days after the date of the Prospectus, not to
offer, sell, contract to sell, grant any option to purchase or otherwise
dispose of, except as provided hereunder, any common stock of the Company
or any securities convertible into or exchangeable for such common stock,
except to the Underwriters pursuant to this Agreement, without the prior
written consent of DLJ.
(i) In order to document the Underwriters' compliance with the
reporting and withholding provisions of the Tax Equity and Fiscal
Responsibility Act of 1982 with resect to the transactions herein
contemplated, such Selling Shareholder will deliver to the Representatives
prior to or at the Closing Date or Option Closing Date, as the case may be,
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).
(j) At any time during the period described in paragraph 4(e) hereof,
if there is any change in the information referred to in paragraph 6(g)
above, such Selling Shareholder will immediately notify the Representatives
of such change; PROVIDED, HOWEVER, that nothing in this paragraph 6(j)
shall be construed as imposing upon the undersigned an affirmative duty to
investigate or inquire as to 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 any matter stated in the
Registration Statement or Prospectus or any amendment or supplement
thereto.
7. INDEMNIFICATION. (a) (i) 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
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 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 Shares, or any person controlling such Underwriter, if a copy
of the Prospectus (as then amended or supplemented, if the Company shall have
furnished any amendments or supplements thereto) was not sent or given by or on
behalf of such Underwriter to such person, if such is required by law, at or
prior to the written confirmation of the sale of such Shares 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).
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
-13-
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 Shares; 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.
(ii) Each Selling Shareholder severally 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
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 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, 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 furnished in writing
to the Company by or on behalf of the Selling Shareholder expressly for use
therein. Notwithstanding the foregoing, the aggregate liability of any Selling
Shareholder pursuant to the provisions of this paragraph (ii) shall be limited
to an amount equal to the aggregate purchase price received by such Selling
Shareholder from the sale of such Selling Shareholder's Shares hereunder.
(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 or any Selling Shareholder, as the case may be, such
Underwriter or the Independent Underwriter, as the case may be, shall promptly
notify the Company or such Selling Shareholder, as the case may be, 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 or a Selling
Shareholder of their obligations pursuant to paragraph (a) of this Section 7
unless and to the extent that such delay or omission materially adversely
affects the ability of the Company or such Selling Shareholder to defend or
assume the defense of such action and, in case indemnity shall be sought against
the Company, 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, as the case may be,
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 or the
Selling Shareholder, as the case may be, (ii) the Company or such Selling
Shareholder 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 or any Selling
Shareholder, as the case may be, 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 and, in either case,
in conflict with those available to the Company or such Selling Shareholder, as
the case may be, (in which case the Company or such Selling Shareholder, as the
case may be, 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
-14-
Company or any Selling Shareholder 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 7(a)(i), 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. A Seller shall not be
liable for any settlement of any such action effected without the written
consent of such Seller but if settled with the written consent of such Seller,
such Seller agrees to indemnify and hold harmless any Underwriter and any such
controlling person from and against any loss or liability by reason of such
settlement, subject, in the case of a Selling Shareholder, to the limitations in
Section 7(a)(ii). Notwithstanding the immediately preceding sentence, if in any
case where the fees and expenses of counsel are at the expense of the
indemnifying party and an indemnified party shall have requested the
indemnifying party to reimburse the indemnified party for such fees and expenses
of counsel as incurred, such indemnifying party agrees that it shall be liable,
subject, in the case of a Selling Shareholder, to the limitations in
Section 7(a)(ii), for any settlement of any action effected without its written
consent if (i) such settlement is entered into more than ten business days after
the receipt by such indemnifying party of the aforesaid request and (ii) such
indemnifying party shall have failed to reimburse the indemnified party in
accordance with such request for reimbursement prior to the date 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 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, the Independent Underwriter, 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, each Selling
Shareholder and each person, if any, controlling such Selling Shareholder,
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 Sellers 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, or any Selling Shareholder or any person controlling such Selling
Shareholder 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 any Seller or the Independent Underwriter, as the case
may be, 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, any person controlling the Company or the
Independent Underwriter, as the case may be, and any Selling Shareholder and any
person controlling such Selling Shareholder shall have the rights and duties
given to the Underwriter by Section 7(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, 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
-15-
20 of the Exchange Act, each Selling Shareholder and each person, if any,
controlling such Selling Shareholder, 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 the Independent 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, or any Selling Shareholder or
any person controlling such Selling Shareholder 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, any of its directors, any such officer, any Underwriter, any
person controlling the Company or any Underwriter, as the case may be, any
Selling Shareholder or any person controlling such Selling Shareholder 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, any Selling Shareholder and any person
controlling such Selling Shareholder shall have the rights and duties given to
the Underwriter by Section 7(b) hereof.
(e) If the indemnification provided for in this Section 7 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 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 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 Sellers, 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 Sellers, 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 total price
to the public of the Shares, 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 written information
supplied by the Company, any of the Selling Shareholders, the Underwriters or
the Independent Underwriter expressly for use in the Registration Statement, the
Prospectus or any preliminary prospectus or any amendment or supplement thereto
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Company, the
Selling Shareholders and the Underwriters agree that The Chicago Corporation
will not receive any additional benefits hereunder for serving as the
Independent Underwriter in connection with the offering and sale of the Shares.
The Sellers, the Underwriters and the Independent Underwriter agree
that it would not be just and equitable if contribution pursuant to this Section
7(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
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this Section 7, (i) no Underwriter shall be required to contribute any amount in
excess of the amount by which the total underwriting discount applicable to the
Shares 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, (ii) the Independent
Underwriter as Independent Underwriter shall not be required to contribute in
excess of the amount by which the total underwriting discount applicable to the
Shares purchased by the 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 and (iii) no Selling Shareholder shall be required to contribute any
amount in excess of the amount by which the product of the number of Shares sold
by such Selling Shareholder and the initial public offering price of the Shares
as set forth in Section 2 hereof exceeds the amount of any damages which such
Selling Shareholder 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 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 7(e) are several in proportion to the respective number of Shares
purchased by each of the Underwriters hereunder and not joint.
(f) Each Seller hereby designates [NAME OF COMPANY], [ADDRESS OF
COMPANY], (a ____________ corporation) as its authorized agent, upon which
process may be served in any action, suit or proceeding which may be instituted
in any state or Federal court in the State of New York by any Underwriter or
person controlling an Underwriter asserting a claim for indemnification or
contribution under or pursuant to this Section 7, and each Seller will accept
the jurisdiction of such court in such action, and waives, to the fullest extent
permitted by applicable law, any defense based upon lack of personal
jurisdiction or venue. A copy of any such process shall be sent or given to
such Seller, at the address for notices specified in Section 11 hereof.
8. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The several obligations
of the Underwriters to purchase the Firm Shares under this Agreement on the
Closing Date and any Additional Shares under this Agreement on any Option
Closing Date are subject to the satisfaction or waiver in the sole discretion of
the Underwriters 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 or Option
Closing Date, as the case may be, 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 in all material respects with
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 or Option
Closing Date, as the case may be.
(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 or Option Closing Date, as the case may be, 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 Shares 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.
(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 or Option
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Closing Date, as the case may be, prevent the issuance of any of the
Shares; 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 or Option Closing Date, as the case may be, which would
prevent the issuance of any of the Shares.
(d) Subsequent to the execution and delivery of this Agreement and
prior to the Closing Date or Option Closing Date, as the case may be, 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 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) All the representations and warranties of each of the Selling
Shareholders contained in this Agreement shall be true and correct on the
Closing Date or Option Closing Date, as the case may be, 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, and the Underwriters shall have received a
certificate to such effect, dated the Closing Date, from each Selling
Shareholder. Each of the Selling Shareholders shall have performed or
complied with 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 or Option Closing Date, as the case may be.
(g) The Representatives shall have received on the Closing Date or
Option Closing Date, as the case may be, a certificate dated the Closing
Date or Option Closing Date, as the case may be, 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 8 (the
"Company Certificate").
(h) The Representatives shall have received on the Closing Date or
Option Closing Date, as the case may be, an opinion (satisfactory to the
Representatives and counsel for the Underwriters), dated the Closing Date
or Option Closing Date, as the case may be, 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) all the outstanding shares of Common Stock (including the
Shares to be sold by the Selling Shareholders) have been duly
authorized and validly issued and are fully paid, nonassessable and
not subject to any preemptive or similar rights;
(iii) the Shares to be issued and sold by the Company hereunder
have been duly authorized, and when issued and delivered to the
Underwriters against payment therefor as
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provided by this Agreement, will have been validly issued and will be
fully paid and nonassessable, and the issuance of such Shares is not
subject to any preemptive or similar rights;
(iv) the Company has the requisite corporate power and authority
to execute, deliver and perform this Agreement and to authorize, issue
and sell the Shares as contemplated by this Agreement;
(v) this Agreement has been duly authorized, executed and
delivered by the Company;
(vi) the authorized capital stock of the Company, including the
Common Stock, conforms as to legal matters to the description 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;
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 Shares, 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 this
Agreement 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 this Agreement
and the issuance and sale of the Shares pursuant to this Agreement 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;
(xi) to the best of such counsel's knowledge, the Company is not
in violation of its charter or by-laws;
(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
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included therein, as to which no opinion need be expressed) complied
as to form in all material respects with the Act; and
(xiii) except as set forth in the Prospectus, no holder of any
security of the Company has any right to require registration of
shares of Common Stock or any other security of the Company.
In giving their opinion required by subsection (h) of this Section 8,
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, the 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 or Option Closing Date, as
the case may be, 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.
(i) The Representatives shall have received an opinion (satisfactory
to the Representatives and counsel for the Underwriters), dated the Closing
Date or Option Closing Date, as the case may be, 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, administrative or regulatory body,
including, without limitation, the Commission (each a "Governmental
Authority") with respect to (A) the issuance and sale of the Shares or
(B) the execution, delivery or performance by the Company of this
Agreement;
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(iv) the issuance and sale of the Shares, 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.
(j) The Underwriters shall have received on the Closing Date or Option
Closing Date, as the case may be, an opinion (satisfactory to the
Representatives and counsel for the Underwriters), dated the Closing Date
or Option Closing Date, as the case may be, of the respective counsels for
each of the Selling Shareholders, to the effect that:
(i) this Agreement has been duly authorized, executed and
delivered by or on behalf of such Selling Shareholder and is a valid
and binding agreement of such Selling Shareholder;
(ii) the Custody Agreement has been duly authorized, executed and
delivered by such Selling Shareholder and is a valid and binding
agreement of such Selling Shareholder enforceable in accordance with
its terms;
(iii) the Power of Attorney signed by such Selling Shareholder has
been duly authorized, executed and delivered by or on behalf of such
Selling Shareholder and is a valid and binding instrument of such
Selling Shareholder enforceable in accordance with it terms, and
pursuant to such Power of Attorney, such Selling Shareholder has
authorized _____________ and _____________, or either of them, to
execute and deliver on their behalf this Agreement and any other
document necessary or desirable in connection with transactions
contemplated hereby and to deliver the Shares to be sold by them
pursuant to this Agreement.
(iv) to the best of such counsel's knowledge, no authorization,
approval, consent or order of, or filing with, any United States
Federal, New York or [insert additional appropriate state(s)] court or
governmental body or agency is required for the consummation by such
Selling Shareholder of the transactions contemplated by this
Agreement, except such as have been obtained and made under the Act
and such as may be required under the rules and regulations of the
National Association of Securities Dealers, Inc. or under state or
foreign securities or Blue Sky laws;
(v) to the best of such counsel's knowledge, the execution and
delivery of this Agreement, the Custody Agreement and the Power of
Attorney by such Selling Shareholder,
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the sale of the Shares, the compliance by such Selling Shareholder
with all of the provisions of this Agreement, the Custody Agreement
and the Power of Attorney and the consummation of the transactions
contemplated by this Agreement, the Custody Agreement and the Power of
Attorney 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 the charters or bylaws or
other organizational documents of such Selling Shareholder that is not
an individual, or any partnership agreement to which such Selling
Shareholder 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 such Selling Shareholder is a
party or by which it or any of them is bound, or to which any
properties of such Selling Shareholder is or may be subject, or
contravene any order of any court or governmental agency or body
having jurisdiction over such Selling Shareholder or any of its
respective properties, or violate or conflict with any statute, rule
or regulation or administrative or court decree applicable to such
Selling Shareholder, or any of its properties;
(vi) such Selling Shareholder has full legal right, power and
authority, and any approval required by law (other than any approval
imposed by the applicable state securities and Blue Sky laws) to sell,
assign, transfer and deliver the Shares to be sold by him in the
manner provided in this Agreement and the Custody Agreement; and
(vii) upon delivery of the certificates for the Shares to be sold
by such Selling Shareholder, pursuant hereto and payment therefor,
good and marketable title will pass to the Underwriters who have
purchased such Shares in good faith and without notice of any adverse
claim within the meaning of the Uniform Commercial Code as currently
in effect in the State of New York, severally, free of all
restrictions on transfer, liens, encumbrances, security interests,
equities and claims whatsoever, other than restrictions on transfer
under applicable securities laws, claims under this Agreement and any
claims, security interests, voting trusts or other restrictions
created by the Underwriters.
(k) The Representatives shall have received on the Closing Date or
Option Closing Date, as the case may be, an opinion (satisfactory to the
Representatives and counsel for the Underwriters), dated the Closing Date
or Option Closing Date, as the case may be, 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
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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 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.
(l) The Representatives shall have received on the Closing Date or
Option Closing Date, as the case may be, an opinion, dated the Closing Date
or Option Closing Date, as the case may be, of Sullivan & Cromwell, counsel
for the Underwriters, in form and substance reasonably satisfactory to the
Representatives.
(m) The Representatives shall have received letters on and as of the
date hereof as well as on and as of the Closing Date or Option Closing
Date, as the case may be, in the latter case constituting an affirmation of
the statements set forth in the earlier letters, in form and substance
satisfactory to the Representatives, 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 Representatives shall reasonably require.
(n) All corporate proceedings and other legal matters incident to the
authorization, form and validity of this Agreement, the Shares, 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 8, 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 8(l).
(o) The Company and the Selling Shareholders 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 or the Selling
Shareholders, as the case may be, at or prior to the Closing Date or Option
Closing Date, as the case may be.
(p) 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.
(q) 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.
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(r) 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 Shares hereunder
at the Closing Date.
(s) Except as is disclosed to the Underwriters in writing, the
representations and warranties of the Company set forth in the Transaction
Documents shall be true, accurate and complete in all respects.
(t) The Representatives shall have received on the Closing Date a
certificate of each Selling Shareholder who is not a U.S. Person to the
effect that such Selling Shareholder is not a U.S. Person (as defined under
applicable U.S. Federal tax legislation), which certificate may be in the
form of a properly completed and executed United States Treasury Department
Form W-8 (or other applicable form or statement specified by Treasury
Department regulations in lieu thereof).
9. 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 Representatives 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 Representatives, make it impracticable or inadvisable to market
the Shares 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, in the judgment of the
Representatives, is material and adverse and would, in the judgment of the
Representatives, make it impracticable or inadvisable to market the Shares on
the terms and in the manner contemplated in the Prospectus or to enforce
contracts for the sale of the Shares, (iii) the suspension or material
limitation of trading in securities generally on the NYSE 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 NYSE, (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 Representatives has a material adverse effect on the financial
markets in the United States.
If on the Closing Date or on an Option Closing Date, as the case may
be, any one or more of the Underwriters shall fail or refuse to purchase the
Firm Shares or Additional Shares, as the case may be, which it or they have
agreed to purchase hereunder on such date and the aggregate number of Firm
Shares or Additional Shares, as the case may be, 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 Shares to be
purchased on such date by all Underwriters, each non-defaulting Underwriter
shall be obligated severally, in the proportion which the number of Firm Shares
or Additional Shares, as the case may be, set forth opposite its name in
Schedule I bears to the total number of Firm Shares or Additional Shares, as the
case may be, which all the non-defaulting Underwriters, as the case may be, have
agreed to purchase, or in such other proportion as the Representatives may
specify, to purchase the Firm Shares or Additional Shares, as the case may be,
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 Firm Shares or Additional Shares which any Underwriter has agreed
to purchase pursuant to Section 2 hereof be increased pursuant to this Section 9
by an amount in
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excess of one-fifth of such number of Firm Shares or Additional Shares, as the
case may be, without the written consent of such Underwriter. If on the Closing
Date or an Option Closing Date, as the case may be, any Underwriter or
Underwriters shall fail or refuse to purchase Firm Shares, or Additional Shares,
as the case may be, and the aggregate number of Firm Shares or Additional
Shares, as the case may be, with respect to which such default occurs is more
than one-fifth of the aggregate number of Shares to be purchased on such date by
all Underwriters and arrangements satisfactory to the Representatives and the
Sellers for purchase of such Shares 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 applicable Sellers. In any such case which
does not result in termination of this Agreement, either the Underwriters or the
Sellers shall have the right to postpone the Closing Date, but in no event for
longer than seven days, in order that the required changes, if any, in the
Registration Statement and 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.
10. AGREEMENTS OF THE SELLING SHAREHOLDERS. Each Selling Shareholder
severally, and not jointly, agrees with the Underwriters and the Company as to
itself:
(a) To pay or cause to be paid all transfer taxes with respect to the
Shares to be sold by such Selling Shareholder; and
(b) To take all reasonable actions in cooperation with the Company and
the Underwriters to cause the Registration Statement to become effective at
the earliest possible time, to do and perform all things to be done and
performed under this Agreement prior to the Closing Date and to satisfy all
conditions precedent to the delivery of the Shares pursuant to this
Agreement.
11. 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 a Selling Shareholder, to it at the address set forth
in Schedule II, (c) if to any Underwriter or to the Representatives, to the
Representatives c/o Donaldson, Lufkin & Jenrette Securities Corporation, 277
Park Avenue, New York, New York 10172, Attention: Syndicate Department, and (d)
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 Selling Shareholders, 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 Shares,
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 Sellers, the
officers or directors of the Company or any controlling person of the Sellers,
(ii) acceptance of the Shares 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 9 or because of any
failure or refusal on the part of the Sellers 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 Sellers, the
Underwriters, any controlling persons referred to herein and their
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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 Sellers from any of the several Underwriters merely
because of such purchase.
THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE
INTERNAL LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO LAWS PERTAINING TO
CONFLICTS OF LAWS).
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:
VIRGINIA RETIREMENT SYSTEM
EQUITY-LINKED INVESTORS, L.P.
EQUITY-LINKED INVESTORS-II
WILLIAM BLAIR VENTURE PARTNERSHIP III
RFE INVESTMENT PARTNERS IV, L.P.
RFE CAPITAL PARTNERS, L.P.
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
LINCOLN NATIONAL INCOME FUND, INC.
SECURITY-CONNECTICUT COMPANY
By:______________________________
As Attorney-in-Fact acting on behalf of each of the
Selling Shareholders named in Schedule II to this
Agreement
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
BEAR, STEARNS & CO. INC.
SMITH BARNEY INC.
THE CHICAGO CORPORATION
Acting severally on behalf of themselves
and the several Underwriters named
in Schedule I hereto
By: DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By__________________________
Name:
Title:
THE CHICAGO CORPORATION
By__________________________
Name:
Title:
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SCHEDULE I
Number of
Additional Shares
Total Number to be Purchased
of Firm Shares if Maximum
Underwriters to be Purchased Option Exercised
------------ --------------- ------------------
Donaldson, Lufkin & Jenrette
Securities Corporation. . . . . . .
Bear, Stearns & Co. Inc.. . . . . . .
Smith Barney Inc. . . . . . . . . . .
The Chicago Corporation . . . . . . .
Total . . . . . . . . . . . . . . [7,709,000] [1,184,250]
=========== ===========
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SCHEDULE II
Number of
Additional Shares
Total Number to be Sold if
of Firm Shares Maximum Option
to be Sold Exercised
--------------- -----------------
The Company . . . . . . . . . . . . .. . . . . . . 5,200,000 0
The Selling Shareholders:
Virginia Retirement System. . . . . . . . . . . 1,163,558 536,261
Equity-Linked Investors, L.P. . . . . . . . . . 85,165 39,251
Equity-Linked Investors-II. . . . . . . . . . . 61,269 28,236
William Blair Venture Partnership III . . . . . 269,072 124,009
RFE Investment Partners IV, L.P.. . . . . . . . 102,664 47,316
RFE Capital Partners, L.P.. . . . . . . . . . . 68,443 31,544
The Lincoln National Life Insurance Company . . 47,910 22,081
Lincoln National Income Fund, Inc.. . . . . . . 1,711 789
Security-Connecticut Company. . . . . . . . . . 1,711 789
--------------- -----------------
Total. . . . . . . . . . . . . . . . [1,801,503] [830,276]
=============== =================
(a) This Selling Shareholder is represented by [NAME AND ADDRESS OF
COUNSEL] and has appointed [NAMES OF ATTORNEYS-IN-FACT (NOT LESS THAN TWO)], and
each of them, as the Attorneys-in-Fact for such Selling Shareholder.
(b) This Selling Shareholder is represented by [NAME AND ADDRESS OF
COUNSEL] and has appointed [NAMES OF ATTORNEYS-IN-FACT (NOT LESS THAN TWO)], and
each of them, as the Attorneys-in-Fact for such Selling Shareholder.
(c) This Selling Shareholder is represented by [NAME AND ADDRESS OF
COUNSEL] and has appointed [NAMES OF ATTORNEYS-IN-FACT (NOT LESS THAN TWO)], and
each of them, as the Attorneys-in-Fact for such Selling Shareholder.
(d) This Selling Shareholder is represented by [NAME AND ADDRESS OF
COUNSEL] and has appointed [NAMES OF ATTORNEYS-IN-FACT (NOT LESS THAN TWO)], and
each of them, as the Attorneys-in-Fact for such Selling Shareholder.
(e) This Selling Shareholder is represented by [NAME AND ADDRESS OF
COUNSEL] and has appointed [NAMES OF ATTORNEYS-IN-FACT (NOT LESS THAN TWO)], and
each of them, as the Attorneys-in-Fact for such Selling Shareholder.
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ANNEX I
Required Shareholder Lock-ups
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