EXHIBIT 1
3,000,000 Shares
THE MULTICARE COMPANIES, INC.
Common Stock
UNDERWRITING AGREEMENT
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September , 1996
SMITH BARNEY INC.
COWEN & COMPANY
DEAN WITTER REYNOLDS INC.
NATWEST SECURITIES LIMITED
As Representatives of the Several Underwriters
c/o SMITH BARNEY INC.
388 Greenwich Street
New York, New York 10013
Dear Sirs:
The Multicare Companies, Inc., a Delaware corporation (the "Company"),
proposes to issue and sell an aggregate of 3,000,000 shares of its common stock,
$0.01 par value per share, to the several Underwriters named in Schedule I
hereto (the "Underwriters"). The Company's common stock, $0.01 par value, is
hereinafter referred to as the "Common Stock" and the 3,000,000 shares of Common
Stock to be issued and sold to the Underwriters by the Company are hereinafter
referred to as the "Firm Shares". The persons named in Part A of Schedule I
hereto (the "Selling Stockholders") also propose to sell to the Underwriters,
upon the terms and conditions set forth in Section 2 hereof, up to an additional
450,000 shares (the "Additional Shares") of Common Stock. The Firm Shares and
the Additional Shares are hereinafter collectively referred to as the "Shares".
The Company and the Selling Stockholders are hereinafter sometimes referred to
as the "Sellers".
The Company and the Selling Stockholders wish to confirm as follows
their respective agreements with you (the "Representatives") and the other
several Underwriters on whose behalf you are acting, in connection with the
several purchases of the Shares by the Underwriters.
1. Registration Statement and Prospectus. The Company has prepared and
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filed with the Securities and Exchange Commission (the "Commission") in
accordance with the provisions of the Securities Act of 1933, as amended, and
the rules and regulations of the Commission thereunder (collectively, the
"Act"), a registration statement on Form S-3 under the Act (the "registration
statement"), including a prospectus subject to completion relating to the
Shares. The term "Registration Statement" as used in this Agreement means the
registration statement (including all financial schedules and exhibits), as
amended or supplemented, together with any Rule 462(b) Registration Statement.
The term "Rule 462(b) Registration Statement" means a registration statement
filed pursuant to Rule 462(b) under the Act relating to the offering covered by
the registration statement (No. 333- ______). The term "Prospectus" as used in
this Agreement means the prospectus in the form included in the Registration
Statement, or, if the prospectus included in the Registration Statement omits
information in reliance on Rule 430A under the Act and such information is
included in a prospectus filed with the Commission pursuant to Rule 424(b) under
the Act, the term "Prospectus" as used in this Agreement means the prospectus in
the form included in the Registration Statement as supplemented by the addition
of the Rule 430A information contained in the prospectus filed with the
Commission pursuant to Rule 424(b). The term "Prepricing Prospectus" as used in
this Agreement means the prospectus subject to completion in the form included
in the registration statement at the time of the initial filing of the
registration statement with the Commission, and as such prospectus shall have
been amended from time to time prior to the date of the Prospectus. Any
reference in this Agreement to the registration statement, the Registration
Statement, any Prepricing Prospectus or the
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Prospectus shall be deemed to refer to and include the documents incorporated by
reference therein pursuant to Item 12 of Form S-3 under the Act, as of the date
of the registration statement, the Registration Statement, such Prepricing
Prospectus or the Prospectus, as the case may be, and any reference to any
amendment or supplement to the registration statement, the Registration
Statement, any Prepricing Prospectus or the Prospectus shall be deemed to refer
to and include any documents filed after such date under the Securities Exchange
Act of 1934, as amended, and the rules and regulations of the Commission
thereunder (collectively, the "Exchange Act") which, upon filing, are
incorporated by reference therein, as required by paragraph (b) of Item 12 of
Form S-3. As used herein, the term "Incorporated Documents" means the documents
which at the time are incorporated by reference in the registration statement,
the Registration Statement, any Prepricing Prospectus, the Prospectus, or any
amendment or supplement thereto.
2. Agreements to Sell and Purchase. Subject to such adjustments as you
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may determine in order to avoid fractional shares, the Company hereby agrees,
subject to all the terms and conditions set forth herein, to issue and sell to
each Underwriter and, upon the basis of the representations, warranties and
agreements of the Company and the Selling Stockholders herein contained and
subject to all the terms and conditions set forth herein, each Underwriter
agrees, severally and not jointly, to purchase from the Company, at a purchase
price of $_______ per Share (the "purchase price per share"), the number of Firm
Shares which bears the same proportion to the aggregate number of Firm Shares to
be issued and sold by the Company as the number of Firm Shares set forth
opposite the name of such Underwriter in Schedule II hereto (or such number of
Firm Shares increased as set forth in Section 12 hereof) bears to the aggregate
number of Firm Shares to be sold by the Company.
The Selling Stockholders also agree, subject to all the terms and
conditions set forth herein, to sell to the Underwriters, and, upon the basis of
the representations, warranties and agreements of the Company and the Selling
Stockholders herein contained and subject to all the terms and conditions set
forth herein, the Underwriters shall have the right to purchase from the Selling
Stockholders, at the purchase price per share, pursuant to an option (the
"over-allotment option") which may be exercised at any time and from time to
time prior to 9:00 P.M., New York City time, on the 30th day after the date of
the Prospectus (or, if such 30th day shall be a Saturday or Sunday or a holiday,
on the next business day thereafter when the New York Stock Exchange is open for
trading), up to an aggregate of 450,000 Additional Shares. Additional Shares may
be purchased only for the purpose of covering over-allotments made in connection
with the offering of the Firm Shares. The number of Additional Shares which the
Underwriters elect to purchase upon any exercise of the
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over-allotment option shall be provided by the Selling Stockholders in
proportion to the respective maximum numbers of Additional Shares which the
Selling Stockholders have agreed to sell. Upon any exercise of the
over-allotment option, each Underwriter, severally and not jointly, agrees to
purchase from the Selling Stockholders the number of Additional Shares (subject
to such adjustments as you may determine in order to avoid fractional shares)
which bears the same proportion to the number of Additional Shares to be sold by
the Selling Stockholders as the number of Firm Shares set forth opposite the
name of such Underwriter in Schedule I hereto (or such number of Firm Shares
increased as set forth in Section 12 hereof) bears to the aggregate number of
Firm Shares to be sold by the Company.
Certificates in transferable form for the Additional Shares which each
of the Selling Stockholders agrees to sell pursuant to this Agreement have been
placed in custody with _______________ (the "Custodian") for delivery under this
Agreement pursuant to a Custody Agreement and Power of Attorney (the "Custody
Agreement") executed by each of the Selling Stockholders appointing ____________
and ___________ as agents and attorneys-in-fact (the "Attorneys-in-Fact"). Each
Selling Stockholder agrees that (i) the Additional Shares represented by the
certificates held in custody pursuant to the Custody Agreement are subject to
the interests of the Underwriters, the Company and each other Selling
Stockholder, (ii) the arrangements made by the Selling Stockholders for such
custody are, except as specifically provided in the Custody Agreement,
irrevocable, and (iii) the obligations of the Selling Stockholders hereunder and
under the Custody Agreement shall not be terminated by any act of such Selling
Stockholder or by operation of law, whether by the death or incapacity of any
Selling Stockholder or the occurrence of any other event. If any Selling
Stockholder shall die or be incapacitated or if any other event shall occur
before the delivery of the Additional Shares hereunder, certificates for the
Additional Shares of such Selling Stockholder shall be delivered to the
Underwriters by the Attorneys-in-Fact in accordance with the terms and
conditions of this Agreement and the Custody Agreement as if such death or
incapacity or other event had not occurred, regardless of whether or not the
Attorneys-in-Fact or any Underwriter shall have received notice of such death,
incapacity or other event. Each Attorney-in-Fact is authorized, on behalf of
each of the Selling Stockholders, to execute this Agreement and any other
documents necessary or desirable in connection with the sale of the Additional
Shares to be sold
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hereunder by such Selling Stockholder, to make delivery of the certificates for
such Additional Shares, to receive the proceeds of the sale of such Additional
Shares, to give receipts for such proceeds, to pay therefrom any expenses to be
borne by such Selling Stockholder in connection with the sale and public
offering of such Additional Shares, to distribute the balance thereof to such
Selling Stockholder, and to take such other action as may be necessary or
desirable in connection with the transactions contemplated by this Agreement.
Each Attorney-in-Fact agrees to perform his duties under the Custody Agreement.
Each Selling Stockholder hereby agrees to waive during the period
between the date of this Agreement and the last Option Closing Date (as
hereinafter defined) all rights to acquire shares of Common Stock from the other
Selling Stockholders in the event of his death, as provided for under that
certain Option Agreement, dated as of ____________, between Moshael Straus and
Daniel Straus.
3. Terms of Public Offering; Certain Representations. (a) The Sellers
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have been advised by you that the Underwriters propose to make a public offering
of their respective portions of the Shares as soon after the Registration
Statement and this Agreement have become effective as in your judgment is
advisable and initially to offer the Shares upon the terms set forth in the
Prospectus.
(b) NatWest Securities Limited represents and agrees that (i) it
has not offered or sold and will not offer or sell any Shares to persons in the
United Kingdom, except to persons whose ordinary activities involve them in
acquiring, holding, managing or disposing of investments (whether as principal
or agent) for the purposes of their businesses or otherwise in circumstances
which have not resulted and will not result in an offer to the public in the
United Kingdom within the meaning of the Public Offers of Securities Regulations
1995 or the Financial Services Act 1986 (the "UK Act"); (ii) it has complied and
will comply with all applicable provisions of the UK Act with respect to
anything done by it in relation to the Shares in, from or otherwise involving
the United Kingdom; and (iii) it has only issued or passed on, and will only
issue or pass on, in the United Kingdom any document which consists of or any
part of listing particulars, supplementary listing particulars, or any other
document required or permitted to be published by listing
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rules under Part IV of the UK Act, to a person who is of a kind described in
Article 11(3) of the Financial Services Act 1986 (Investment Advertisements)
(Exemptions) Order 1995 or is a person to whom the document may otherwise
lawfully be issued or passed on.
4. Delivery of the Shares and Payment Therefor. Delivery to the
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Underwriters of and payment for the Firm Shares shall be made at the office of
Smith Barney Inc., 388 Greenwich Street, New York, NY 10013, at 10:00 A.M., New
York City time, on ___________, 1996 (the "Closing Date"). The place of closing
for the Firm Shares and the Closing Date may be varied by agreement between you
and the Company.
Delivery to the Underwriters of and payment for any Additional Shares to
be purchased by the Underwriters shall be made at the aforementioned office of
Smith Barney Inc. at such time on such date (the "Option Closing Date"), which
may be the same as the Closing Date but shall in no event be earlier than the
Closing Date nor earlier than two nor later than ten business days after the
giving of the notice hereinafter referred to, as shall be specified in a written
notice from you on behalf of the Underwriters to the Attorneys-In-Fact of the
Underwriters' determination to purchase a number, specified in such notice, of
Additional Shares. The place of closing for any Additional Shares and the Option
Closing Date for such Shares may be varied by agreement among you, the Company
and the Attorneys-In-Fact.
Certificates for the Firm Shares and for any Additional Shares to be
purchased hereunder shall be registered in such names and in such denominations
as you shall request prior to 9:30 A.M., New York City time, on the second
business day preceding the Closing Date or any Option Closing Date, as the case
may be. Such certificates shall be made available to you in New York City for
inspection and packaging not later than 9:30 A.M., New York City time, on the
business day next preceding the Closing Date or the Option Closing Date, as the
case may be. The certificates evidencing the Firm Shares and any Additional
Shares to be purchased hereunder shall be delivered to you on the Closing Date
or the Option Closing Date, as the case may be, against payment of the purchase
price therefor by certified or official bank check or checks payable in New York
Clearing House (next day) funds to the order of the Company, with respect to the
Firm Shares and the Attorneys-in-Fact, with respect to the Additional Shares.
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5. Agreements of the Company. The Company agrees with the several
Underwriters as follows:
(a) If, at the time this Agreement is executed and delivered, it
is necessary for the Registration Statement to be declared effective before the
offering of the Shares may commence or be consummated, the Company will endeavor
to cause the Registration Statement to become effective as soon as possible and
will advise you promptly and, if requested by you, will confirm such advice in
writing, when the Registration Statement has become effective.
(b) The Company will advise you promptly and, if requested by
you, will confirm such advice in writing: (i) of any request by the Commission
for amendment of or a supplement to the Registration Statement, any Prepricing
Prospectus or the Prospectus or for additional information; (ii) of the issuance
by the Commission of any stop order suspending the effectiveness of the
Registration Statement or of the suspension of qualification of the Shares for
offering or sale in any jurisdiction or the initiation of any proceeding for
such purpose; and (iii) within the period of time referred to in paragraph (f)
below, of any change in the Company's condition (financial or other), business,
prospects, properties, net worth or results of operations, or of the happening
of any event, which makes any statement of a material fact made in the
Registration Statement or the Prospectus (as then amended or supplemented)
untrue or which requires the making of any additions to or changes in the
Registration Statement or the Prospectus (as then amended or supplemented) in
order to state a material fact required by the Act to be stated therein or
necessary in order to make the statements therein not misleading, or of the
necessity to amend or supplement the Prospectus (as then amended or
supplemented) to comply with the Act or any other law. If at any time the
Commission shall issue any stop order suspending the effectiveness of the
Registration Statement, the Company will make every reasonable effort to obtain
the withdrawal of such order at the earliest possible time.
(c) The Company will furnish to you, without charge (i) four
signed copies of the registration
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statement as originally filed with the Commission and of each amendment thereto,
together with any Rule 462(b) Registration Statement, including financial
statements and all exhibits thereto, (ii) such number of conformed copies of the
registration statement as originally filed and of each amendment thereto,
together with any Rule 462(b) Registration Statement, but without exhibits, as
you may request, (iii) such number of copies of the Incorporated Documents,
without exhibits, as you may request, and (iv) four copies of the exhibits to
the Incorporated Documents.
(d) The Company will not file any amendment to the Registration
Statement or make any amendment or supplement to the Prospectus or, prior to the
end of the period of time referred to in the first sentence in subsection (f)
below, file any document which, upon filing becomes an Incorporated Document, of
which you shall not previously have been advised or to which, after you shall
have received a copy of the document proposed to be filed, you shall reasonably
object.
(e) Prior to the execution and delivery of this Agreement, the
Company has delivered to you, without charge, in such quantities as you have
requested, copies of each form of the Prepricing Prospectus. The Company
consents to the use, in accordance with the provisions of the Act and with the
securities or Blue Sky laws of the jurisdictions in which the Shares are offered
by the several Underwriters and by dealers, prior to the date of the Prospectus,
of each Prepricing Prospectus so furnished by the Company.
(f) As soon after the execution and delivery of this Agreement as
possible and thereafter from time to time for such period as in the opinion of
counsel for the Underwriters a prospectus is required by the Act to be delivered
in connection with sales by any Underwriter or dealer, the Company will
expeditiously deliver to each Underwriter and each dealer, without charge, as
many copies of the Prospectus (and of any amendment or supplement thereto) as
you may request. The Company consents to the use of the Prospectus (and of any
amendment or supplement thereto) in accordance with the provisions of the Act
and with the securities or Blue Sky laws of the jurisdictions in which the
Shares are offered by the several Underwriters and by all dealers to whom Shares
may be sold, both in connection with the offering and sale of the Shares and for
such period of time thereafter as the Prospectus is required by the Act to be
delivered in connection with sales by any Underwriter or dealer. If during such
period of time any event shall occur that in the judgment of the Company or in
the opinion of counsel for the Underwriters is required to be set forth in the
Prospectus (as then amended or supplemented) or should be set forth therein in
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order to make the statements therein, in the light of the circumstances under
which they were made, not misleading, or if it is necessary to supplement or
amend the Prospectus (or to file under the Exchange Act any document which, upon
filing, becomes an Incorporated Document) in order to comply with the Act or any
other law, the Company will forthwith prepare and, subject to the provisions of
paragraph (d) above, file with the Commission an appropriate supplement or
amendment thereto (or to such document), and will expeditiously furnish to the
Underwriters and dealers a reasonable number of copies thereof. In the event
that the Company and you, as Representatives of the several Underwriters, agree
that the Prospectus should be amended or supplemented, the Company, if requested
by you, will promptly issue a press release announcing or disclosing the matters
to be covered by the proposed amendment or supplement.
(g) The Company will cooperate with you and with counsel for the
Underwriters in connection with the registration or qualification of the Shares
for offering and sale by the several Underwriters and by dealers under the
securities or Blue Sky laws of such jurisdictions as you may designate and will
file such consents to service of process or other documents necessary or
appropriate in order to effect such registration or qualification; provided that
in no event shall the Company be obligated to qualify to do business in any
jurisdiction where it is not now so qualified or to take any action which would
subject it to service of process in suits, other than those arising out of the
offering or sale of the Shares, in any jurisdiction where it is not now so
subject.
(h) The Company will make generally available to its security
holders a consolidated earnings statement, which need not be audited, covering a
twelve-month period commencing after the effective date of the Registration
Statement and ending not later than 15 months thereafter, as soon as practicable
after the end of such period, which consolidated earnings statement shall
satisfy the provisions of Section ll(a) of the Act.
(i) During the period of five years hereafter, the Company will
furnish to you (i) as soon as available, a copy of each report of the Company
mailed to stockholders or filed with the Commission, and (ii) from time to time
such other information concerning the Company as you may request.
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(j) If this Agreement shall terminate or shall be terminated
after execution pursuant to any provisions hereof (otherwise than pursuant to
the second paragraph of Section 12 hereof or by notice given by you terminating
this Agreement pursuant to Section 12 or Section 13 hereof) or if this Agreement
shall be terminated by the Underwriters because of any failure or refusal on the
part of the Company or the Selling Stockholders to comply with the terms or
fulfill any of the conditions of this Agreement, the Company agrees to reimburse
the Representatives for all out-of-pocket expenses (including fees and expenses
of counsel for the Underwriters) incurred by you in connection herewith.
(k) The Company will apply the net proceeds from the sale of the
Shares to be sold by it hereunder substantially in accordance with the
description set forth in the Prospectus.
(l) If Rule 430A of the Act is employed, the Company will timely
file the Prospectus pursuant to Rule 424(b) under the Act and will advise you of
the time and manner of such filing.
(m) Except as provided in this Agreement, the Company will not
sell, contract to sell or otherwise dispose of any Common Stock or any
securities convertible into or exercisable or exchangeable for Common Stock
(other than Common Stock issued pursuant to employee benefit plans, stock
options plans or other employee compensation plans existing on the date hereof),
or grant any options or warrants to purchase Common Stock (other than the grant
of options pursuant to option plans existing on the date hereof, consistent with
past practice), for a period of 90 days after the date of the Prospectus,
without the prior written consent of Smith Barney Inc.
(n) The Company has furnished or will furnish to you "lock-up"
letters, in form and substance satisfactory to you, signed by each of its
current officers and directors and each of its stockholders designated by you.
(o) Except as stated in this Agreement and in the Prepricing
Prospectus and Prospectus, the Company has not taken, nor will it take, directly
or indirectly, any action designed to or that might reasonably be expected to
cause or result in stabilization or manipulation of the price of the Common
Stock to facilitate the sale or resale of the Shares.
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(p) The Company will use its best efforts to have the Shares
listed, subject to notice of issuance, on the New York Stock Exchange on or
before the Closing Date.
6. Agreements of the Selling Stockholders. Each of the Selling
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Stockholders agrees with the several Underwriters as follows:
(a) Such Selling Stockholder will cooperate to the extent
necessary to cause the Registration Statement to become effective at the
earliest possible time.
(b) Such Selling Stockholder will pay all Federal and other
taxes, if any on the transfer or sale of the Additional Shares, if any, being
sold by the Selling Stockholder to the Underwriters.
(c) Such Selling Stockholder will do or perform all things
required to be done or performed by the Selling Stockholder prior to the Closing
Date or any Option Closing Date, as the case may be, to satisfy all conditions
precedent to the delivery of the Additional Shares pursuant to this Agreement.
(d) Such Selling Stockholder has executed or will execute a
"lock-up" letter as provided in Section 5(n) above and will not sell, contract
to sell or otherwise dispose of any Common Stock, except for the sale of
Additional Shares to the Underwriters pursuant to this Agreement, prior to the
expiration of 90 days after the date of the Prospectus, without the prior
written consent of Smith Barney Inc.
(e) Except as stated in this Agreement and in the Prepricing
Prospectus and the Prospectus, such Selling Stockholder will not take, directly
or indirectly, any action designed to or that might reasonably be expected to
cause or result in stabilization or manipulation of the price of the Common
Stock to facilitate the sale or resale of the Shares.
(f) Such Selling Stockholder will advise you promptly, and if
requested by you, will confirm such advice in writing, within the period of time
referred to in Section 5(f) hereof, of any change in the Company's condition
(financial or other), business, prospects, properties, net worth or results of
operations or of any change in information relating to such Selling Stockholder
or the Company or any new information relating to the Company or relating to any
matter stated in the
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Prospectus or any amendment or supplement thereto which comes to the attention
of such Selling Stockholder that suggests that any statement made in the
Registration Statement or the Prospectus (as then amended or supplemented, if
amended or supplemented) is or may be untrue in any material respect or that the
Registration Statement or Prospectus (as then amended or supplemented, if
amended or supplemented) omits or may omit to state a material fact or a fact
necessary to be stated therein in order to make the statements therein not
misleading in any material respect, or of the necessity to amend or supplement
the Prospectus (as then amended or supplemented, if amended or supplemented) in
order to comply with the Act or any other law.
7. Representations and Warranties of the Company. The Company
represents and warrants to each Underwriter that:
(a) The Registration Statement has (i) been prepared by the
Company in conformity with the requirements of the Act, (ii) been filed with the
Commission under the Act and (iii) become effective under the Act. Copies of
such Registration Statement have been delivered by the Company to you as the
Representatives of the Underwriters. The Commission has not issued any order
preventing or suspending the use of any Prospectus.
(b) The Registration Statement conforms, and the Prospectus and
any further amendments or supplements to the Registration Statement or the
Prospectus will, when they become effective or are filed with the Commission, as
the case may be, conform in all material respects to the requirements of the Act
and do not and will not, as of the applicable effective date (as to the
Registration Statement and any amendment thereto) and as of the applicable
filing date (as to the Prospectus and any amendment or supplement thereto)
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading; provided that no representation or warranty is made as to
information contained in or omitted from the Registration Statement or the
Prospectus in reliance upon and in conformity with written information furnished
to the Company through the Representatives by or on behalf of any Underwriter
specifically for inclusion therein.
(c) The documents incorporated by reference in the Prospectus,
when they became effective or were filed with the
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Commission, as the case may be, conformed in all material respects to the
requirements of the Act or the Exchange Act, as applicable, and none of such
documents 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; and any further documents so filed and incorporated by
reference in the Prospectus, when such documents become effective or are filed
with the Commission, as the case may be, will conform in all material respects
to the requirements of the Act or the Exchange Act, as applicable, and will not
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading; provided that no representation or warranty is made as to
information contained in or omitted from any document incorporated by reference
in the Prospectus in reliance upon and in conformity with written information
furnished to the Company through the Representatives by or on behalf of any
Underwriter specifically for inclusion therein.
(d) The Company and each of its Subsidiaries (such term having
the meaning set forth in Rule 405 under the Act) have been duly incorporated or
organized and are validly existing as corporations or partnerships in good
standing under the laws of their respective jurisdictions of incorporation or
organization, are duly qualified to do business and are in good standing as
foreign corporations or partnerships in each jurisdiction in which their
respective ownership or lease of property or the conduct of their respective
businesses requires such qualification, except where the failure to so qualify
would not have a material adverse effect on the condition, financial or
otherwise, or in the earnings or business affairs of the Company and its
Subsidiaries considered as one enterprise (a "Material Adverse Effect"); the
Company and each of its Subsidiaries have all power and authority necessary to
own or hold their respective properties and to conduct the businesses in which
they are engaged.
(e) The Company has an authorized capitalization as set forth in
the Prospectus, and all of the issued shares of capital stock of the Company
have been duly and validly authorized and issued, are fully paid and
non-
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assessable and conform to the description thereof contained in the Prospectus;
and all of the issued shares of capital stock or partnership interests of each
Subsidiary of the Company have been duly and validly authorized and issued and
are fully paid and non-assessable and (except for directors' qualifying shares
or as disclosed in the Prospectus) are owned directly or indirectly by the
Company, free and clear of all liens, encumbrances, equities or claims, except
as disclosed in the Prospectus.
(f) The unissued Shares to be issued and sold by the Company to
the Underwriters hereunder have been duly and validly authorized and, when
issued and delivered against payment therefor as provided herein will be duly
and validly issued, fully paid and non-assessable and the Shares will conform to
the description thereof contained in the Prospectus.
(g) The execution, delivery and performance of this Agreement by
the Company and the consummation of the transactions contemplated hereby will
not conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any indenture, mortgage, deed of
trust, loan agreement or other material agreement or instrument to which the
Company or any of its Subsidiaries is a party or by which the Company or any of
its Subsidiaries is bound or to which any of the property or assets of the
Company or any of its Subsidiaries is subject, nor will such actions result in
any violation of the provisions of the charter or by-laws or other
organizational documents of the Company or any of its Subsidiaries or any
statute or any order, rule or regulation of any court or governmental agency or
body having jurisdiction over the Company or any of its Subsidiaries or any of
their properties or assets; and except for the registration of the Shares under
the Act and such consents, approvals, authorizations, registrations or
qualifications as may be required under the Exchange Act and applicable state
securities laws in connection with the purchase and distribution of the Shares
by the Underwriters, no consent, approval, authorization or order of, or filing
or registration with, any such court or governmental agency or body (except such
as have been obtained, including without limitation, approval from the State of
Connecticut with respect to the "change of control" that is deemed to be
affected by the sale of Shares by the Company) is required for the execution,
delivery and performance of this Agreement by the Company and the consummation
of the transactions contemplated hereby.
(h) There are no contracts, agreements or understandings between
the Company and any person granting such person the right to require the Company
to file a registration statement under the Act with respect to any securities
of the
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Company owned or to be owned by such person or to require the Company to
include such securities in the securities registered pursuant to the
Registration Statement or except as described in the Prospectus in any
securities being registered pursuant to any other registration statement filed
by the Company under the Act.
(i) Except as described in the Prospectus, the Company has not
sold or issued any shares of Common Stock during the six-month period preceding
the date of the Prospectus, including any sales pursuant to Rule 144A under, or
Regulations D or S of, the Act, other than shares issued pursuant to employee
benefit plans, qualified stock option plans or other employee compensation plans
or pursuant to outstanding options, rights or warrants.
(j) Neither the Company nor any of its Subsidiaries has
sustained, since the date of the latest audited financial statements included or
incorporated by reference in the Prospectus, any loss or interference with its
business from fire, explosion, flood or other calamity, whether or not covered
by insurance, or from any labor dispute or court or governmental action, order
or decree, except for such losses or interferences that have not had, whether
individually or in the aggregate, a Material Adverse Effect; and, since such
date, there has not been any change in the capital stock or long-term debt of
the Company or any of its Subsidiaries or any Material Adverse Effect, or any
development involving a prospective Material Adverse Effect, in or affecting the
general affairs, management, financial position, stockholders' equity or results
of operations of the Company and its Subsidiaries, otherwise than as set forth
or contemplated in the Prospectus.
(k) The financial statements (including the related notes and
supporting schedules) filed as part of the Registration Statement or included or
incorporated by reference in the Prospectus present fairly the financial
position of the entities purported to be shown thereby, at the dates and for the
periods indicated, and have been prepared in conformity with generally accepted
accounting principles applied on a consistent basis throughout the periods
involved.
(l) KPMG Peat Marwick, LLP, who have certified certain financial
statements of the Company, whose report appears in the Prospectus or is
incorporated by reference therein and who have delivered the initial letter
referred to in Section 10(g) hereof, are independent public accountants as
required by the Act.
15
(m) Deloitte & Touche, LLP, who have certified certain financial
statements of the Company, whose report appears in the Prospectus or is
incorporated by reference therein and who have delivered the initial letter
referred to in Section 10(g) hereof, are independent public accountants as
required by the Act.
(n) Coopers & Lybrand, LLP, who have certified certain financial
statements of the Company, whose report appears in the Prospectus or is
incorporated by reference therein and who have delivered the initial letter
referred to in Section 10(g) hereof, are independent public accountants as
required by the Act.
(o) Landa & Altsher, P.C., who have certified certain financial
statements of the ADS Group, whose report appears in the Prospectus or is
incorporated by reference therein and who have delivered the initial letter
referred to in Section 10(g) hereof, are independent public accountants as
required by the Act.
(p) Except as set forth in the Registration Statement, the
Company and each of its Subsidiaries have good and marketable title in fee
simple to all real property owned by them and described in the Registration
Statement, and good and marketable title to all personal property owned by them,
in each case free and clear of all liens, encumbrances and defects, except for
such liens, encumbrances and defects that, individually or in the aggregate,
would not have a Material Adverse Effect and do not materially interfere with
the use made thereof by the Company and its Subsidiaries; and all real property
and buildings held under lease by the Company and its Subsidiaries are held by
them under valid, subsisting and enforceable leases, with such exceptions as are
not material and do not interfere with the use made thereof by the Company and
its Subsidiaries.
(q) The Company and each of its Subsidiaries maintains reasonably
adequate insurance or has reserved reasonable amounts for non-insured risks.
(r) Except as described in the Prospectus, there are no legal or
governmental proceedings pending to which the Company or any of its Subsidiaries
is a party or of which any property or assets of the Company or any of its
Subsidiaries is the subject which, if determined adversely to the Company or any
of its Subsidiaries, could, whether individually or in the aggregate, be
reasonably expected to have a Material Adverse Effect; and to the
16
best of the Company's knowledge, no such proceedings are threatened or
contemplated by governmental authorities or threatened by others.
(s) The conditions for use of Form S-3, as set forth in the
General Instructions thereto, have been satisfied.
(t) There are no contracts or other documents which are required
to be described in the Prospectus or filed as exhibits to the Registration
Statement by the Act which have not been described in the Prospectus or filed as
exhibits to the Registration Statement or incorporated therein by reference as
permitted by the Act.
(u) Neither the Company nor any Subsidiary has violated any
safety or similar law applicable to its business, nor any Federal or state law
relating to discrimination in the hiring, promotion or pay of employees, nor any
applicable Federal or state wages and hours law which in each case, individually
or in the aggregate, could reasonably be expected to have a Material Adverse
Effect.
(v) No relationship, direct or indirect, exists between or among
the Company on the one hand, and the directors, officers, stockholders,
customers or suppliers of the Company on the other hand, which is required to be
described in the Prospectus which is not so described.
(w) No labor disturbance by the employees of the Company or any
of its Subsidiaries exists or, to the knowledge of the Company, is imminent
which is reasonably expected to have a Material Adverse Effect and the Company
is not aware of any existing or imminent labor disturbance by the employees of
any of its principal suppliers, manufacturers or contractors which is reasonably
expected to have a Material Adverse Effect.
(x) The Company has filed or caused to be filed all federal,
state and local income and franchise tax returns required to be filed through
the date hereof and has paid all taxes due thereon, and no tax deficiency has
been determined adversely to the Company or any of its Subsidiaries which has
had (nor does the Company have any knowledge of any tax deficiency that has been
or could reasonably be asserted against the Company or any of its Subsidiaries
which, if determined adversely would, individually or in the aggregate, have) a
Material Adverse
17
Effect; all material tax liabilities are adequately provided for on the books of
the Company and its Subsidiaries.
(y) Since the date as of which information is given in the
Prospectus through the date hereof, and except as may otherwise be disclosed in
the Prospectus, the Company has not declared or paid any dividend on its capital
stock.
(z) The Company maintains internal accounting controls which
provide reasonable assurance that (A) transactions are executed in accordance
with management's authorization, (B) transactions are recorded as necessary to
permit preparation of its financial statements and to maintain accountability
for its assets, (C) access to its assets is permitted only in accordance with
management's authorization and (D) the reported accountability for its assets is
compared with existing assets at reasonable intervals and appropriate action is
taken with respect to any difference.
(aa) Neither the Company nor any of its Subsidiaries (i) is in
violation of its charter, by-laws or other organizational documents, (ii) is in
default in any material respect, and no event has occurred which, with notice or
lapse of time or both, would constitute such a default, in the due performance
or observance of any term, covenant or condition contained in any indenture,
mortgage, deed of trust, loan agreement or other material agreement or
instrument to which it is a party or by which it is bound or to which any of its
properties or assets is subject, except for such defaults that would not,
whether individually or in the aggregate, be reasonably expected to have a
Material Adverse Effect, (iii) is in violation of any law, ordinance,
governmental rule, regulation or court decree to which it or its property or
assets may be subject (including all laws, rules and regulations of the United
States and the States of Connecticut, Illinois, New Jersey, Ohio, Pennsylvania,
Rhode Island, Vermont, Virginia, West Virginia and Wisconsin governing
organizations that provide long-term care and specialized health care services),
except for such violations that would not have a Material Adverse Effect or (iv)
has failed to obtain any license, permit, certificate, franchise or other
governmental authorization or permit necessary to the ownership of its property
or to the conduct of its business, except for such failures that would not,
whether individually or in the aggregate, have a Material Adverse Effect. Except
as set forth in the Prospectus, all of the facilities operated by the Company
18
are eligible to participate in the Medicare and Medicaid programs.
(bb) Except as disclosed to you in environmental reports, copies
of which have been delivered to you, or as disclosed in the Prospectus (i) the
property, assets and operations of the Company and each of its Subsidiaries
comply in all material respects with all applicable Environmental Laws (as
hereinafter defined), except to the extent that failure to comply with such
Environmental Laws would not have, individually or in the aggregate (taking into
consideration any other potential liability pursuant to the other clauses of
this subsection (bb)), an Environmental Material Adverse Effect (as hereinafter
defined), (ii) to the knowledge of the Company after reasonable inquiry, none of
the property, assets or operations of the Company or any Subsidiary is the
subject of any Federal, state or local investigation evaluating whether any
remedial action is needed to respond to a release of any Hazardous Materials (as
hereinafter defined) into the environment or that is in contravention of any
Federal, state or local law, order or regulation that could reasonably be
expected to have, individually or in the aggregate (taking into consideration
any other potential liability pursuant to the other clauses of this subsection
(bb)), an Environmental Material Adverse Effect, (iii) none of the Company or
any of its Subsidiaries has received any notice or claim, nor are there pending,
threatened or reasonably anticipated lawsuits against them, with respect to
violations of an Environmental Law or in connection with any release of any
Hazardous Materials into the environment that could reasonably be expected to
have, individually or in the aggregate (taking into consideration any other
potential liability pursuant to the other clauses of this subsection (bb)), an
Environmental Material Adverse Effect and (iv) none of the Company or any of its
Subsidiaries has any contingent liability in connection with any release of any
Hazardous Materials into the environment that could reasonably be expected to
have, individually or in the aggregate (taking into consideration any other
potential liability pursuant to the other clauses of this subsection (bb)), an
Environmental Material Adverse Effect. As used herein, "Environmental Laws"
means any Federal, state, territorial, provincial or local law, common law
doctrine, rule, order, decree, judgment, injunction, license, permit or
regulation relating to environmental matters, "Environmental Material Adverse
Effect" means a liability or liabilities under this subsection (bb) involving in
the aggregate expenses greater
19
than $2,500,000 to the Company and its Subsidiaries taken as a whole, and
"Hazardous Materials" means those substances that are regulated by or the
release of which forms the basis of liability under any Environmental Laws.
(cc) Neither the Company nor any Subsidiary is an "investment
company" within the meaning of such term under the Investment Company Act of
1940 and the rules and regulations of the Commission thereunder.
(dd) The Company has not taken and will not take, directly or
indirectly, any action which is designed to or which has constituted or which
might reasonably be expected to cause or result in the stabilization or
manipulation of the price of any security of the Company to facilitate the sale
or resale of the Shares, except for any actions that do not constitute a
violation of any law, rule, regulation or ordinance.
(ee) This Agreement has been duly and validly executed and
delivered by the Company and constitutes a legal, valid and binding obligation
of the Company enforceable against the Company in accordance with the terms
herein.
8. Representations and Warranties of the Selling Stockholders. Each
----------------------------------------------------------
Selling Stockholder represents and warrants to each Underwriter that:
(a) Such Selling Stockholder now has, and on the Closing Date and
any Option Closing Date will have, valid and marketable title to the Additional
Shares to be sold by such Selling Stockholder, free and clear of any lien,
claim, security interest or other encumbrance, including, without limitation,
any restriction on transfer.
(b) Such Selling Stockholder now has, and on the Closing Date and
any Option Closing Date will have, full legal right, power and authorization,
and any approval required by law, to sell, assign transfer and deliver such
Additional Shares in the manner provided in this Agreement, and upon delivery of
and payment for such Additional Shares hereunder, the several Underwriters will
acquire valid and marketable title to such Additional Shares free and clear of
any lien, claim, security interest, or other encumbrance.
(c) This Agreement and the Custody Agreement have been duly
authorized, executed and delivered by or on behalf of such
20
Selling Stockholder and are the valid and binding agreements of such Selling
Stockholder enforceable against such Selling Stockholder in accordance with
their terms.
(d) Neither the execution and delivery of this Agreement or the
Custody Agreement by or on behalf of such Selling Stockholder nor the
consummation of the transactions herein or therein contemplated by or on behalf
of such Selling Stockholder requires any consent, approval, authorization or
order of, or filing or registration with, any court, regulatory body,
administrative agency or other governmental body, agency or official (except
such as may be required under the Act and the Exchange Act or such as may be
required under state securities or Blue Sky laws governing the purchase and
distribution of the Shares) or conflicts or will conflict with or constitutes or
will constitute a breach of, or default under, or violates or will violate, any
agreement, indenture or other instrument to which such Selling Stockholder is a
party or by which such Selling Stockholder is or may be bound or to which any of
such Selling Stockholder's property or assets is subject, or any statute, law,
rule, regulation, ruling, judgment, injunction, order or decree applicable to
such Selling Stockholder or to any property or assets of such Selling
Stockholder.
(e) The Registration Statement and the Prospectus, insofar as
they relate to such Selling Stockholder, do not and will not contain an untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading.
(f) Such Selling Stockholder does not have any knowledge or any
reason to believe that the Registration Statement or the Prospectus (or any
amendment or supplement thereto) contains any untrue statement of a material
fact or omits to state any material fact required to be stated therein or
necessary to make the statements therein not misleading.
(g) The representations and warranties of such Selling
Stockholder in the Custody Agreement are, and on the Closing Date and any Option
Closing Date will be, true and correct.
(h) Such Selling Stockholder has not taken, directly or
indirectly, any action designed to or that might reasonably be expected to cause
or result in stabilization or manipulation of the price of the Common Stock to
facilitate the sale or resale of
21
the Shares, except for the lock-up arrangements described in the Prospectus.
9. Indemnification and Contribution. (a) The Company and each Selling
--------------------------------
Stockholder (subject to the last sentence of this Section 9(a)), jointly and
severally, agree to indemnify and hold harmless each of you and each other
Underwriter and each person, if any, who controls any Underwriter within the
meaning of Section 15 of the Act or Section 20(a) of the Exchange Act from and
against any and all losses, claims, damages, liabilities and expenses (including
reasonable costs of investigation) arising out of or based upon any untrue
statement or alleged untrue statement of a material fact contained in any
Prepricing Prospectus or in the Registration Statement or the Prospectus or in
any amendment or supplement thereto, or arising out of or based upon any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading,
except insofar as such losses, claims, damages, liabilities or expenses arise
out of or are based upon any untrue statement or omission or alleged untrue
statement or omission which has been made therein or omitted therefrom in
reliance upon and in conformity with the information relating to such
Underwriter furnished in writing to the Company by or on behalf of any
Underwriter through you expressly for use in connection therewith; provided,
however, that the indemnification contained in this paragraph (a) with respect
to any Prepricing Prospectus shall not inure to the benefit of any Underwriter
(or to the benefit of any person controlling such Underwriter) on account of any
such loss, claim, damage, liability or expense arising from the sale of the
Shares by such Underwriter to any person if a copy of the Prospectus shall not
have been delivered or sent to such person within the time required by the Act,
and the untrue statement or alleged untrue statement or omission or alleged
omission of a material fact contained in such Prepricing Prospectus was
corrected in the Prospectus, provided that the Company has delivered the
Prospectus to the several Underwriters in requisite quantity on a timely basis
to permit such delivery or sending. The foregoing indemnity agreement shall be
in addition to any liability which the Company or any Selling Stockholder may
otherwise have. Notwithstanding the foregoing, the Selling Stockholders shall
provide indemnity pursuant to this Section if and only if Additional Shares are
purchased pursuant to the over-allotment option.
22
(b) If any action, suit or proceeding shall be brought against
any Underwriter or any person controlling any Underwriter in respect of which
indemnity may be sought against the Company or any Selling Stockholder, such
Underwriter or such controlling person shall promptly notify the parties against
whom indemnification is being sought (the "indemnifying parties"), and such
indemnifying parties shall assume the defense thereof, including the employment
of counsel and payment of all fees and expenses. Such Underwriter or any such
controlling person shall have the right to employ separate counsel in any such
action, suit or proceeding and to participate in the defense thereof, but the
fees and expenses of such counsel shall be at the expense of such Underwriter or
such controlling person unless (i) the indemnifying parties have agreed in
writing to pay such fees and expenses, (ii) the indemnifying parties have failed
to assume the defense and employ counsel, or (iii) the named parties to any such
action, suit or proceeding (including any impleaded parties) include both such
Underwriter or such controlling person and the indemnifying parties and such
Underwriter or such controlling person shall have been advised by its counsel
that representation of such indemnified party and any indemnifying party by the
same counsel would be inappropriate under applicable standards of professional
conduct (whether or not such representation by the same counsel has been
proposed) due to actual or potential differing interests between them (in which
case the indemnifying party shall not have the right to assume the defense of
such action, suit or proceeding on behalf of such Underwriter or such
controlling person). It is understood, however, that the indemnifying parties
shall, in connection with any one such action, suit or proceeding or separate
but substantially similar or related actions, suits or proceedings in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the reasonable fees and expenses of only one separate firm of
attorneys (in addition to any local counsel) at any time for all such
Underwriters and controlling persons not having actual or potential differing
interests with you or among themselves, which firm shall be designated in
writing by Smith Barney Inc., and that all such fees and expenses shall be
reimbursed as they are incurred. The indemnifying parties shall not be liable
for any settlement of any such action, suit or proceeding effected without their
written consent, but if settled with such written consent, or if there be a
final judgment for the plaintiff in any such action, suit or proceeding, the
indemnifying parties agree to indemnify and hold harmless any Underwriter, to
the extent provided in the preceding paragraph,
23
and any such controlling person from and against any loss, claim, damage,
liability or expense by reason of such settlement or judgment.
(c) Each Underwriter agrees, severally and not jointly, to
indemnify and hold harmless the Company, its directors, its officers who sign
the Registration Statement, each Selling Stockholder, and any person who
controls the Company within the meaning of Section 15 of the Act or Section
20(a) of the Exchange Act, to the same extent as the foregoing indemnity from
the Company and the Selling Stockholders to each Underwriter, but only with
respect to information relating to such Underwriter furnished in writing by or
on behalf of such Underwriter through you expressly for use in the Registration
Statement, the Prospectus or any Prepricing Prospectus, or any amendment or
supplement thereto. If any action, suit or proceeding shall be brought against
the Company, any of its directors, any such officer, any Selling Stockholder, or
any such controlling person based on the Registration Statement, the Prospectus
or any Prepricing Prospectus, or any amendment or supplement thereto, and in
respect of which indemnity may be sought against any Underwriter pursuant to
this paragraph (c), such Underwriter shall have the rights and duties given to
the Company by paragraph (b) above (except that if the Company shall have
assumed the defense thereof such Underwriter shall not be required to do so, but
may employ separate counsel therein and participate in the defense thereof, but
the fees and expenses of such counsel shall be at such Underwriter's expense),
and the Company, its directors, any such officer, the Selling Stockholders, and
any such controlling person shall have the rights and duties given to the
Underwriters by paragraph (b) above. The foregoing indemnity agreement shall be
in addition to any liability which any Underwriter may otherwise have.
(d) If the indemnification provided for in this Section 9 is
unavailable to an indemnified party under paragraph (a) hereof in respect of any
losses, claims, damages, liabilities or expenses referred to therein, then an
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities or expenses (i) in such proportion
as is appropriate to reflect the relative benefits received by the Company and
the Selling Stockholders on the one hand and the Underwriters on the other hand
from the offering of the Shares, or (ii) if the allocation provided by
24
clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company and the Selling Stockholders on
the one hand and the Underwriters on the other in connection with the statements
or omissions that resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations. The relative
benefits received by the Company and the Selling Stockholders on the one hand
and the Underwriters on the other shall be deemed to be in the same proportion
as the total net proceeds from the offering (before deducting expenses) received
by the Company and the Selling Stockholders bear to the total underwriting
discounts and commissions received by the Underwriters, in each case as set
forth in the table on the cover page of the Prospectus; provided that, in the
event that the Underwriters shall have purchased any Additional Shares
hereunder, any determination of the relative benefits received by the Company,
the Selling Stockholders or the Underwriters from the offering of the Shares
shall include the net proceeds (before deducting expenses) received by the
Company and the Selling Stockholders, and the underwriting discounts and
commissions received by the Underwriters, from the sale of such Additional
Shares, in each case computed on the basis of the respective amounts set forth
in the notes to the table on the cover page of the Prospectus. The relative
fault of the Company and the Selling Stockholders on the one hand and the
Underwriters on the other hand shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company or the Selling Stockholders on the one hand or by the
Underwriters on the other hand and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission.
(e) The Company, the Selling Stockholders and the Underwriters
agree that it would not be just and equitable if contribution pursuant to this
Section 9 were determined by a pro rata allocation (even if the Underwriters
were treated as one entity for such purpose) or by any other method of
allocation that does not take account of the equitable considerations referred
to in paragraph (d) above. The amount paid or payable by an indemnified party as
a result of the losses, claims, damages, liabilities and expenses referred to in
paragraph (d) above shall be deemed to include, subject to the limitations set
25
forth above, any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating any claim or defending any such action,
suit or proceeding. Notwithstanding the provisions of this Section 9, no
Underwriter shall be required to contribute any amount in excess of the amount
by which the total price of the Shares underwritten by it and distributed to the
public exceeds the amount of any damages which such Underwriter has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute pursuant to this
Section 9 are several in proportion to the respective numbers of Firm Shares set
forth opposite their names in Schedule II hereto (or such numbers of Firm Shares
increased as set forth in Section 12 hereof) and not joint.
(f) No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened action, suit or proceeding in respect of which any indemnified party
is or could have been a party and indemnity could have been sought hereunder by
such indemnified party, unless such settlement includes an unconditional release
of such indemnified party from all liability on claims that are the subject
matter of such action, suit or proceeding.
(g) Any losses, claims, damages, liabilities or expenses for
which an indemnified party is entitled to indemnification or contribution under
this Section 9 shall be paid by the indemnifying party to the indemnified party
as such losses, claims, damages, liabilities or expenses are incurred. The
indemnity and contribution agreements contained in this Section 9 and the
representations and warranties of the Company and the Selling Stockholders set
forth in this Agreement shall remain operative and in full force and effect,
regardless of (i) any investigation made by or on behalf of any Underwriter or
any person controlling any Underwriter, the Company, its directors or officers
or the Selling Stockholders or any person controlling the Company, (ii)
acceptance of any Shares and payment therefor hereunder, and (iii) any
termination of this Agreement. A successor to any Underwriter or any person
controlling any Underwriter, or to the Company, its directors or officers, or
any
26
person controlling the Company, shall be entitled to the benefits of the
indemnity, contribution and reimbursement agreements contained in this Section
9.
10. Conditions of Underwriters' Obligations. The several
obligations of the Underwriters to purchase the Firm Shares hereunder are
subject to the following conditions:
(a) If, at the time this Agreement is executed and delivered, it
is necessary for the Registration Statement to be declared effective before the
offering of the Shares may commence or be consummated, the Registration
Statement shall have become effective not later than 5:30 P.M., New York City
time, on the date hereof, or at such later date and time as shall be consented
to in writing by you, and all filings, if any, required by Rules 424 and 430A
under the Act shall have been timely made; no stop order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceeding for that purpose shall have been instituted or, to the knowledge of
the Company or any Underwriter, threatened by the Commission, and any request of
the Commission for additional information (to be included in the Registration
Statement or the Prospectus or otherwise) shall have been complied with to your
satisfaction.
(b) Subsequent to the effective date of this Agreement, there
shall not have occurred (i) any change, or any development involving a
prospective change, in or affecting the condition (financial or other),
business, properties, net worth, or results of operations of the Company or the
Subsidiaries not contemplated by the Prospectus, which in your opinion, as
Representatives of the several Underwriters, would materially adversely affect
the market for the Shares, or (ii) any event or development relating to or
involving the Company or any officer or director of the Company or any Selling
Stockholder which makes any statement made in the Prospectus untrue or which, in
the opinion of the Company and its counsel or the Underwriters and their
counsel, requires the making of any addition to or change in the Prospectus in
order to state a material fact required by the Act or any other law to be stated
therein or necessary in order to make the statements therein not misleading, if
amending or supplementing the Prospectus to reflect such event or development
would, in your opinion, as Representatives of the several Underwriters,
materially adversely affect the market for the Shares.
27
(c) You shall have received on the Closing Date, an opinion of
Paul, Weiss, Rifkind, Wharton & Garrison, counsel for the Company and the
Selling Stockholders, dated the Closing Date and addressed to you, as
Representatives of the several Underwriters, in the form set forth on Exhibit A
attached hereto.
(d) You shall have received on the Closing Date, an opinion of
Bradford C. Burkett, General Counsel to the Company, dated the Closing Date and
addressed to you, as Representatives of the several Underwriters, in the form
set forth on Exhibit B attached hereto.
(e) You shall have received on the Closing Date, the following
opinions dated the Closing Date and addressed to you, as Representatives of the
several Underwriters, in the form set forth on Exhibit C attached hereto:
(i) Murphy & Desmond, S.C.
(ii) Winston & Strawn
(iii) Wolff & Samson, P.C.
(iv) McNees, Wallace & Nurick
(v) Benesch, Friedlander, Coplan & Aronoff
(vi) Susman, Duffy & Segaloff, P.C.
(vii) Steptoe & Johnson
[Counsel for new jurisdictions]
(f) You shall have received on the Closing Date an opinion of
Willkie, Farr & Gallagher, counsel for the Underwriters, dated the Closing Date
and addressed to you, as Representatives of the several Underwriters, in the
form set forth on Exhibit D attached hereto.
(g) You shall have received letters addressed to you, as
Representatives of the several Underwriters, and dated the date hereof and the
Closing Date from each of KPMG Peat Marwick, LLP, Deloitte & Touche, LLP,
Coopers & Lybrand LLP, and Landa Altsher, P.C., independent certified public
accountants, substantially in the forms heretofore approved by you.
(h)(i) No stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall have been taken or, to the knowledge of the Company, shall be
contemplated by the Commission at or prior to the Closing Date; (ii) there shall
not have been any change in the capital stock of the Company nor any material
increase in the short-term or long-term debt of the Company
28
increase in the short-term or long-term debt of the Company (other than in the
ordinary course of business) from that set forth or contemplated in the
Registration Statement or the Prospectus (or any amendment or supplement
thereto); (iii) there shall not have been, since the respective dates as of
which information is given in the Registration Statement and the Prospectus
(or any amendment or supplement thereto), except as may otherwise be stated
in the Registration Statement and Prospectus (or any amendment or supplement
thereto), any material adverse change in the condition (financial
or other), business, prospects, properties, net worth or results of operations
of the Company and the Subsidiaries taken as a whole; (iv) the Company and the
Subsidiaries shall not have any liabilities or obligations, direct or contingent
(whether or not in the ordinary course of business), that are material to the
Company and the Subsidiaries, taken as a whole, other than those reflected in
the Registration Statement or the Prospectus (or any amendment or supplement
thereto); and (v) all the representations and warranties of the Company
contained in this Agreement shall be true and correct on and as of the date
hereof and on and as of the Closing Date as if made on and as of the Closing
Date, and you shall have received a certificate, dated the Closing Date and
signed by the chief executive officer and the chief financial officer of the
Company (or such other officers as are acceptable to you), to the effect set
forth in this Section 10(h) and in Section 10(i) hereof.
(i) The Company shall not have failed at or prior to the Closing
Date to have performed or complied with any of its agreements herein contained
and required to be performed or complied with by it hereunder at or prior to the
Closing Date.
(j) All the representations and warranties of the Selling
Stockholders contained in this Agreement shall be true and correct on and as of
the date hereof and on and as of the Closing Date as if made on and as of the
Closing Date, and you shall have received a certificate, dated the Closing Date
and signed by or on behalf of the Selling Stockholders to the effect set forth
in this Section 10(j) and in Section 10(k) hereof.
(k) The Selling Stockholders shall not have failed at or prior to
the Closing Date to have performed or complied with any of their agreements
herein contained and required to be performed or complied with by them hereunder
at or prior to the Closing Date.
29
(l) Prior to the Closing Date the Shares shall have been listed,
subject to notice of issuance, on the New York Stock Exchange.
(m) The Company and the Selling Stockholders shall have delivered
the "lock-up letters" described in Section 5(n) and Section 6(d).
(n) The Sellers shall have furnished or caused to be furnished to
you such further certificates and documents as you shall have requested.
All such opinions, certificates, letters and other documents will be in
compliance with the provisions hereof only if they are satisfactory in form and
substance to you and your counsel.
Any certificate or document signed by any officer of the Company or any
Attorney-in-Fact or any Selling Stockholder and delivered to you, as
Representatives of the Underwriters, or to counsel for the Underwriters, shall
be deemed a representation and warranty by the Company, the Selling Stockholders
or the particular Selling Stockholder, as the case may be, to each Underwriter
as to the statements made therein.
The several obligations of the Underwriters to purchase Additional
Shares hereunder are subject to the satisfaction on and as of any Option Closing
Date of the conditions set forth in this Section 10, except that, if any Option
Closing Date is other than the Closing Date, the certificates, opinions and
letters referred to in paragraphs (c) through (j) shall be dated the Option
Closing Date in question and the opinions called for by paragraphs (c) through
(f) shall be revised to reflect the sale of Additional Shares.
11. Expenses. Except as set forth in Section 6(b), the Company agrees to
pay the following costs and expenses and all other costs and expenses incident
to the performance by it and the Selling Stockholders of their obligations
hereunder: (i) the preparation, printing or reproduction, and filing with the
Commission of the Registration Statement (including financial statements and
exhibits thereto), each Prepricing Prospectus, the Prospectus, and each
amendment or supplement to any of them; (ii) the printing (or reproduction) and
delivery (including postage, air freight charges and charges for counting and
packaging) of such copies of the Registration Statement, each Prepricing
Prospectus, the Prospectus, the Incorporated Documents, and all
30
amendments or supplements to any of them, as may be reasonably requested for use
in connection with the offering and sale of the Shares; (iii) the preparation,
printing, authentication, issuance and delivery of certificates for the Shares,
including any stamp taxes in connection with the original issuance and sale of
the Shares; (iv) the printing (or reproduction) and delivery of this Agreement,
the preliminary and supplemental Blue Sky Memoranda and all other agreements or
documents printed (or reproduced) and delivered in connection with the offering
of the Shares; (v) the listing of the Shares on the New York Stock Exchange;
(vi) the registration or qualification of the Shares for offer and sale under
the securities or Blue Sky laws of the several states as provided in Section
5(g) hereof (including the reasonable fees, expenses and disbursements of
counsel for the Underwriters relating to the preparation, printing or
reproduction, and delivery of the preliminary and supplemental Blue Sky
Memoranda and such registration and qualification); (vii) the filing fees and
the fees and expenses of counsel for the Underwriters in connection with any
filings required to be made with the National Association of Securities Dealers,
Inc.; (viii) the transportation and other expenses incurred by or on behalf of
Company representatives in connection with presentations to prospective
purchasers of the Shares; and (ix) the fees and expenses of the Company's
accountants and the fees and expenses of counsel (including local and special
counsel) for the Company and the Selling Stockholders.
12. Effective Date of Agreement. This Agreement shall become effective:
(i) upon the execution and delivery hereof by the parties hereto; or (ii) if, at
the time this Agreement is executed and delivered, it is necessary for the
Registration Statement to be declared effective before the offering of the
Shares may commence, when notification of the effectiveness of the Registration
Statement has been released by the Commission. Until such time as this Agreement
shall have become effective, it may be terminated by the Company, by notifying
you, or by you, as Representatives of the several Underwriters, by notifying the
Company and the Selling Stockholders.
If any one or more of the Underwriters shall fail or refuse to purchase
Shares which it or they are obligated to purchase hereunder on the Closing Date,
and the aggregate number of Shares which such defaulting Underwriter or
Underwriters are obligated but fail or refuse to purchase is not more than
one-tenth of the aggregate number of Shares which the Underwriters are obligated
to
purchase on the Closing Date, each non-defaulting Underwriter shall be
obligated, severally, in the proportion which the number of Firm Shares set
forth opposite its name in Schedule II hereto bears to the aggregate number of
Firm Shares set forth opposite the names of all non-defaulting Underwriters or
in such other proportion as you may specify in accordance with Section 20 of the
Master Agreement Among Underwriters of Smith Barney Inc., to purchase the Shares
which such defaulting Underwriter or Underwriters are obligated, but fail or
refuse, to purchase. If any one or more of the Underwriters shall fail or refuse
to purchase Shares which it or they are obligated to purchase on the Closing
Date and the aggregate number of Shares with respect to which such default
occurs is more than one-tenth of the aggregate number of Shares which the
Underwriters are obligated to purchase on the Closing Date and arrangements
satisfactory to you and the Company for the purchase of such Shares by one or
more non-defaulting Underwriters or other party or parties approved by you and
the Company are not made within 36 hours after such default, this Agreement will
terminate without liability on the part of any non-defaulting Underwriter or the
Company. In any such case which does not result in termination of this
Agreement, either you or the Company shall have the right to postpone the
Closing Date, but in no event for longer than seven days, in order that the
required changes, if any, in the Registration Statement and the Prospectus or
any other documents or arrangements may be effected. Any action taken under this
paragraph shall not relieve any defaulting Underwriter from liability in respect
of any such default of any such Underwriter under this Agreement. The term
"Underwriter" as used in this Agreement includes, for all purposes of this
Agreement, any party not listed in Schedule II hereto who, with your approval
and the approval of the Company, purchases Shares which a defaulting Underwriter
is obligated, but fails or refuses, to purchase.
Any notice under this Section 12 may be given by telegram, telecopy or
telephone but shall be subsequently confirmed by letter.
13. Termination of Agreement. This Agreement shall be subject to
------------------------
termination in your absolute discretion, without liability on the part of any
Underwriter to the Company or any Selling Stockholder, by notice to the Company,
if prior to the Closing Date or any Option Closing Date (if different from the
Closing Date and then only as to the Additional Shares), as the case may be, (i)
trading in securities generally on the New York
31
Stock Exchange, the American Stock Exchange, the Nasdaq National Market or the
International Stock Exchange of the United Kingdom and the Republic of Ireland,
Limited shall have been suspended or materially limited, (ii) a general
moratorium on commercial banking activities in New York, New Jersey or the
United Kingdom shall have been declared by either federal, state or United
Kingdom authorities, or (iii) there shall have occurred any outbreak or
escalation of hostilities or other international or domestic calamity, crisis or
change in political, financial or economic conditions, the effect of which on
the financial markets of the United States or United Kingdom is such as to make
it, in your judgment, impracticable or inadvisable to commence or continue the
offering of the Shares at the offering price to the public set forth on the
cover page of the Prospectus or to enforce contracts for the resale of the
Shares by the Underwriters. Notice of such termination may be given to the
Company by telegram, telecopy or telephone and shall be subsequently confirmed
by letter.
14. Information Furnished by the Underwriters. The statements set forth
-----------------------------------------
in the last paragraph on the cover page, the stabilization legend on the inside
cover page, and the statements in the first and third paragraphs under the
caption "Underwriting" in any Prepricing Prospectus and in the Prospectus,
constitute the only information furnished by or on behalf of the Underwriters
through you as such information is referred to in Sections 7(c) and 9 hereof.
15. Severability. If any provision of this Agreement is or becomes
------------
invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein shall not be
affected thereby.
16. Miscellaneous. Except as otherwise provided in Sections 5, 12 and 13
-------------
hereof, notice given pursuant to any provision of this Agreement shall be in
writing and shall be delivered (i) if to the Company, at the office of the
Company at 411 Hackensack Avenue, Hackensack, New Jersey 07601, Attention:
Bradford C. Burkett, Senior Vice President and General Counsel; or (ii) if to
the Selling Stockholders, at 411 Hackensack Avenue, Hackensack, New Jersey
07601, Attention: Moshael J. Straus and Daniel E. Straus, or (iii) if to you, as
Representatives of the several Underwriters, care of Smith Barney Inc., 388
Greenwich Street, New York, New York 10013, Attention: Manager, Investment
Banking Division.
32
This Agreement has been and is made solely for the benefit of the
several Underwriters, the Company, its directors and officers, and the other
controlling persons referred to in Section 9 hereof and their respective
successors and assigns, to the extent provided herein, and no other person shall
acquire or have any right under or by virtue of this Agreement. Neither the term
"successor" nor the term "successors and assigns" as used in this Agreement
shall include a purchaser from any Underwriter of any of the Shares in his
status as such purchaser.
17. Applicable Law; Counterparts. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York applicable to
contracts made and to be performed within the State of New York.
This Agreement may be signed in various counterparts which together
constitute one and the same instrument. If signed in counterparts, this
Agreement shall not become effective unless at least one counterpart hereof
shall have been executed and delivered on behalf of each party hereto.
Please confirm that the foregoing correctly sets forth the agreement
among the Company, the Selling Stockholders and the several Underwriters.
Very truly yours,
THE MULTICARE COMPANIES, INC.
By_________________________________
Name:
Title:
Each of the Selling Stockholders
named in Schedule I hereto
By_________________________________
Attorney-in-Fact
By_________________________________
Attorney-in-Fact
Confirmed as of the date first above
mentioned on behalf of themselves and
the other several
33
Underwriters named in Schedule I
hereto.
SMITH BARNEY INC.
COWEN & COMPANY
DEAN WITTER REYNOLDS INC.
NATWEST SECURITIES LIMITED
As Representatives of the Several Underwriters
By SMITH BARNEY INC.
By_________________________________________________
Name:
Title:
34
SCHEDULE I
PART A: SELLING STOCKHOLDERS
Moshael J. Straus
Daniel E. Straus
I-1
SCHEDULE I
THE MULTICARE COMPANIES, INC.
Number of
Underwriter Firm Shares Underwriter Firm Shares
----------- ----------- -----------------------
Smith Barney Inc.....................
Cowen & Company......................
Dean Witter Reynolds Inc.............
Natwest Securities Limited
-----------
Total.......... 3,000,000
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II-2