EXHIBIT 1.1
DEALER MANAGER AGREEMENT
LABORATORY CORPORATION OF AMERICA HOLDINGS
RIGHTS OFFERING
DEALER MANAGER AGREEMENT
May , 1997
CREDIT SUISSE FIRST BOSTON CORPORATION
Eleven Madison Avenue
New York, New York 10010-3629
Ladies and Gentlemen:
1. The Rights Offering.
(a) Laboratory Corporation of America Holdings, a Delaware corporation (the
"Company") proposes to distribute (the "Rights Offering") transferable rights
(the "Rights") to subscribe for and purchase, at the election of the holders
of the Rights (the "Rights Holders"), up to an aggregate of 10,000,000 shares
(the "Underlying Shares") of either its % Series A Convertible Exchangeable
Preferred Stock, par value $0.10 per share (the "Series A Exchangeable
Preferred Stock"), or its % Series B Convertible Pay-in-Kind Preferred
Stock, par value $0.10 per share (the "Series B PIK Preferred Stock" and,
together with the Series A Exchangeable Preferred Stock, the "Preferred
Stock"), to the holders of record of its common stock, par value $0.01 per
share (the "Common Stock"), at a subscription price of $50 per share. Each
Right consists of a basic subscription privilege under which the Rights
Holders may purchase one share of Preferred Stock for each Right held. In
addition, Rights Holders who exercise their basic subscription privilege in
full will also be eligible to subscribe for shares of the same series of
Preferred Stock not otherwise purchased pursuant to the exercise of Rights,
subject to availability and proration. It is anticipated that the Rights will
be exercisable for a period of days (the "Subscription Period"), subject to
extension by the Company, and that through the next to last day in such period
the Rights will be eligible for trading on the New York Stock Exchange (the
"NYSE"). Shares of Series A Exchangeable Preferred Stock issued pursuant to
the Rights Offering will be convertible into Common Stock at the option of the
holder thereof at any time after , 1997, will pay dividends in cash and
will be exchangeable at the option of the Company on or after , 2000 for
the Company's % Convertible Subordinated Notes due 2012 (the "Notes") to be
issued pursuant to an indenture (the "Indenture") between the Company and
, as trustee (the "Trustee"), in substantially the form of the
indenture filed as an exhibit to the registration statement referred to below.
The Notes will be convertible into Common Stock. Shares of Series B PIK
Preferred Stock will be convertible into Common Stock at the option of the
holder thereof at any time after , 2000 and will pay dividends in kind
until , 2003 after which dividends will be paid in cash. Shares of
Common Stock issuable upon conversion of shares of Preferred Stock and Notes,
in accordance with the terms thereof, are referred to herein as "Conversion
Shares." The Rights, the Underlying Shares, the Conversion Shares and the
Notes are referred to herein as the "Securities." This Dealer Manager
Agreement, as amended, supplemented or modified from time to time is referred
to herein as this "Agreement."
(b) In connection with the Rights Offering, the Company filed with the
Securities and Exchange Commission (the "Commission") pursuant to the
Securities Act of 1933, as amended, and the rules and regulations thereunder
(collectively, the "Securities Act"), a Registration Statement on Form S-3
(Registration No. 333-22427) containing a prospectus relating to the Rights,
the Underlying Shares and the Notes. Such registration statement, as amended
as of the date and time when it is declared effective by the Commission (the
"Effective Time"), including all materials incorporated by reference therein,
all exhibits thereto and any information contained in the form of a final
prospectus filed with the Commission as part of the registration statement at
the Effective Time, including any form of prospectus or prospectus supplement
filed pursuant to Rule 424 under the Securities Act, is hereinafter called the
"Registration
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Statement"; such final prospectus with respect to the Rights, the Underlying
Shares and the Notes, including any form of prospectus or prospectus
supplement filed pursuant to Rule 424 under the Securities Act is hereinafter
called the "Prospectus".
2. Appointment as Dealer Manager.
(a) The Company has previously engaged you as financial advisor pursuant to
a letter agreement dated , 1997 (as such letter agreement may be amended
or modified, and, together with the separate indemnification letter, dated
, 1997 and delivered in connection therewith, the "Engagement Letter"). The
Company hereby appoints you as exclusive Dealer Manager with respect to the
Rights Offering (in this capacity, the "Dealer Manager"), and authorizes you
to act on its behalf in connection with the Rights Offering as specified
herein, all in accordance with, and subject to the terms and conditions of,
this Agreement, and the procedures described in the Registration Statement. In
such capacity you shall act as an independent contractor, and each of your
duties arising out of your engagement pursuant to this Agreement shall be owed
solely to the Company.
(b) As Dealer Manager, you agree, in accordance with customary practice, to
perform those services in connection with the Rights Offering as are
customarily performed by investment banks in connection with acting as a
dealer manager of rights offerings of like nature, including, without
limitation, using reasonable efforts to solicit the exercise of Rights
pursuant to the Rights Offering and communicating generally regarding the
Rights Offering with brokers, dealers, commercial banks and trust companies
and other persons, including other Rights Holders
(c) In connection with the performance of your duties and obligations
hereunder, you agree that you will comply in all material respects with the
laws, rules and regulations of the United States and any other relevant
jurisdiction, and of any stock exchange, which laws, rules and regulations are
applicable to the Rights Offering.
3. The Rights Offering Material.
(a) The Company agrees to furnish you, at its expense, with as many copies
as you may reasonably request of (i) each of the documents that is filed with
the Commission or any other Federal, state, local or foreign governmental or
regulatory authorities or any court (each an "Other Agency" and collectively,
the "Other Agencies") in connection with the Rights Offering, including each
Registration Statement, preliminary and final prospectus filed with the
Commission and all documents incorporated therein by reference, (ii) each
offering circular, solicitation statement, disclosure document, or other
explanatory statement, or other report, filing, document, release or
communication mailed, delivered, published, or filed by or on behalf of the
Company in connection with the Rights Offering, including a copy of the form
of the Rights Certificate, the Instructions for Rights Certificates and the
Notice of Guaranteed Delivery for Rights Certificates, (iii) each document
required to be filed with the Commission pursuant to the provisions of the
Securities Act and the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), pertaining to either the Rights Offering or the Company
during the term of this Agreement and (iv) each appendix, attachment,
modification, amendment or supplement to any of the foregoing and all related
documents (each of (i), (ii), (iii) and (iv), together with each document
incorporated by reference into any of the foregoing, the "Rights Offering
Material"). The Rights Offering Material has been or will be prepared and
approved by, and is the sole responsibility of, the Company. At the
commencement of the Rights Offering, the Company shall cause to be delivered
in a timely manner to each registered holder of any Common Stock legally or
contractually entitled thereto, to the extent required by the rules of the
NYSE, a press release setting forth the material terms of the Rights Offering,
the Prospectus (as defined below), a Rights Certificate or Rights Certificates
representing such holder's Rights and the Instructions for Use of Rights
Certificates and the attached Notice of Guaranteed Delivery and any other
offering materials prepared expressly for use by Rights Holders in connection
with the Rights Offering. Thereafter, to the extent practicable, the Company
shall use its reasonable best efforts to cause copies of such materials to be
mailed to each person who makes a request therefor.
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(b) The Company acknowledges and agrees that you may use the Rights Offering
Material as specified herein without assuming any responsibility for
independent investigation or verification on your part and the Company
represents and warrants to you that you may rely on the accuracy and adequacy
of any information delivered to you by or on behalf of the Company without
assuming any responsibility for independent verification of such information
or without performing or receiving any appraisal or evaluation of the
Company's assets or liabilities, except with respect to any statements
contained in, or any matter omitted from, the Rights Offering Material in
reliance upon and in conformity with information furnished or confirmed in
writing by you to the Company expressly for use therein.
(c) You hereby agree, as Dealer Manager, that you will not disseminate any
written material in connection with the Rights Offering other than the Rights
Offering Material, and you agree that you will not make any statements in
connection with such solicitation, other than the statements that are set
forth in the Rights Offering Material.
(d) The Company agrees that no Rights Offering Material will be used in
connection with the Rights Offering or filed with the Commission or any Other
Agency with respect to the Rights Offering without first obtaining your prior
approval, which approval shall not be unreasonably withheld.
4. Compensation. Your fees, compensation and reimbursement for acting as
Dealer Manager hereunder shall be as set forth in the Engagement Letter.
Nothing in this Agreement shall affect your rights to receive any fees,
compensation or reimbursement set forth in the Engagement Letter in accordance
with the terms thereof.
5. Expenses of Dealer Manager and Others. In addition to your compensation
for services hereunder pursuant to Section 4 hereof, the Company agrees to pay
directly, or reimburse you, as the case may be, for (i) all expenses relating
to the preparation, printing, filing, mailing and publishing of the Rights
Offering Material, (ii) all fees and expenses of other persons rendering
services on the Company's behalf in connection with the Rights Offering,
including the Subscription and Information Agent (as defined in the Rights
Offering Materials), (iii) all advertising charges in connection with the
Rights Offering, including those of any public relations firm or other person
or entity rendering services in connection therewith, (iv) all fees, if any,
payable to dealers, banks, trust companies and other financial intermediaries
as reimbursement for their customary mailing and handling expenses incurred in
forwarding the Rights Offering Material to their customers, (v) all fees and
expenses payable in connection with the registration or qualification of the
Securities under state securities or "blue sky" laws, (vi) all listing fees
and any other fees and expenses incurred in connection with the listing on the
NYSE of the Preferred Stock and the Conversion Shares, (vii) the filing fee of
the National Association of Securities Dealers, Inc. relating to the Rights
Offering and (viii) reasonable fees and expenses incurred by you to the extent
set forth in the Engagement Letter. All payments to be made by the Company
pursuant to this Section 5 shall be made promptly against delivery to the
Company of statements therefor. The Company shall be liable for the foregoing
payments whether or not the Rights Offering is commenced, withdrawn,
terminated or canceled or whether you withdraw pursuant to Section 13 hereof.
6. Rights Holder Lists. The Company will cause you to be provided with cards
or lists or other records in such form as you may reasonably request showing
the names and addresses of, and the number of Rights held by, the Rights
Holders, as of the Record Date (as defined in the Rights Offering Material)
and will cause you to be advised from time to time during the period of the
Rights Offering as to any transfers of record of Rights.
7. Additional Obligations of the Company.
(a) The Company will furnish to you, without charge, one signed copy of the
Registration Statement and any post-effective amendments thereto, including
all of the documents incorporated by reference therein and all financial
statements and schedules.
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(b) To the extent required under the Securities Act, the Company will file
the Prospectus with the Commission pursuant to and in accordance with Rule
424(b) thereunder.
(c) Prior to the issuance of the Securities, the Company shall obtain the
registration or qualification thereof under the securities or "blue sky" laws
of such jurisdictions as may be required for the consummation of the Rights
Offering; provided, that in connection therewith the Company shall not be
required to qualify as a foreign corporation or as a dealer in securities, to
file a general consent to service of process in any jurisdiction or to subject
itself to taxation for doing business in such jurisdiction, and shall furnish
you with "blue sky" memoranda evidencing such registration and qualification
or otherwise inform you in writing of any restrictions on the conduct of the
Rights Offering pursuant to such laws.
(d) The Company, acting through its Board of Directors, shall, to the extent
it has not already done so, in accordance with applicable law and its
Certificate of Incorporation and By-Laws: (i) promptly and duly call, give
notice of, convene and hold as soon as practicable following the date hereof a
meeting of its stockholders (the "Stockholders' Meeting") for the purpose of
voting to approve an amendment to the Company's Certificate of Incorporation
to increase (x) the authorized number of shares of Common Stock to permit the
full conversion of all shares of Preferred Stock to be outstanding following
consummation of the Rights Offering and (y) the authorized number of shares of
Preferred Stock to permit the payment of dividends in kind on the Series B PIK
Preferred Stock (the "Charter Amendment"); (ii) as promptly as practicable
following the date hereof prepare and file with the Commission a preliminary
proxy statement relating to the Stockholders' Meeting and the Charter
Amendment, respond to any comments of the Commission with respect to such
preliminary proxy statement and cause the definitive proxy statement to be
mailed to its stockholders, and (iii) recommend approval of the Charter
Amendment by the stockholders of the Company and include in the definitive
proxy statement such recommendation and take all lawful action to solicit such
approval.
(e) The Company will use its best efforts to cause the Registration
Statement (if such has not been declared effective as of the date of this
Agreement) and any post-effective amendments thereto to become effective as
promptly as practicable. The Company will prepare and file, as required, any
and all necessary amendments or supplements to any of the Rights Offering
Material, will promptly furnish to you true and complete copies of each such
amendment and supplement within a reasonable period of time prior to the
filing thereof and, as applicable, will use its best efforts to cause the same
to become effective as promptly as practicable.
(f) The Company shall advise you promptly of (i) the time when the
Registration Statement has become effective and when any post-effective
amendment thereto becomes effective, (ii) the occurrence of any event which
could cause the Company to withdraw, rescind, terminate or modify the Rights
Offering, (iii) the occurrence of any event, or the discovery of any fact, the
occurrence or existence of which it believes would require the making of any
change in any of the Rights Offering Material then being used in connection
with the Rights Offering or would cause any representation or warranty
contained in this Agreement to be untrue or inaccurate in any material
respect, (iv) the issuance by the Commission or any Other Agency of any
comment or order or the taking of any other action concerning the Rights
Offering (and, if in writing, the Company will furnish you with a copy
thereof), (v) the suspension of qualification of the Rights, the Preferred
Stock, the Common Stock or the Notes in any jurisdiction, (vi) any material
developments in connection with the Rights Offering, including, without
limitation, the commencement of any lawsuit concerning the Rights Offering and
(vii) any other information relating to the Rights Offering, the Rights
Offering Material or this Agreement which you may from time to time reasonably
request.
(g) For so long as any of the Preferred Stock or Notes is outstanding, the
Company will deliver to you, promptly upon their becoming available, copies of
all financial statements, reports, notices and proxy statements sent by the
Company to its security holders, and of all current, regular and periodic
reports filed by the Company or any of its subsidiaries with any securities
exchange or with the Commission or any governmental authority succeeding to
any of the Commission's functions.
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(h) Prior to the consummation or termination of the Rights Offering, the
Company shall furnish to you, as soon as they have been prepared by the
Company, a copy of any consolidated financial statements of the Company and
its consolidated subsidiaries for any period subsequent to the period covered
by the financial statements appearing in the Registration Statement and the
Prospectus.
(i) The Company will use its best efforts to comply in all material respects
with the applicable provisions of the Securities Act and the Exchange Act, and
other applicable securities laws.
(j) The Company will not exercise its option to exchange the Notes for
Series A Exchangeable Preferred Stock unless, as of the date of exercise of
such option, (i) the Company has duly authorized the exercise of its option to
exchange the Notes for the Preferred Stock; (ii) the Company has corporate
power and authority to enter into the Indenture and to perform its obligations
under the Indenture and to issue and deliver the Notes; (iii) the Indenture
has been executed and delivered and is a valid and legally binding obligation
of the Company enforceable in accordance with its terms (assuming due
authorization, execution and delivery by the Trustee), except (x) as such
enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors' rights and remedies generally
and (y) as such enforcement may be limited by general principles of equity,
regardless of whether enforcement is sought in a proceeding at law or in
equity; (iv) no consent or approval of any governmental authority or other
United States (State or Federal) person or entity which has not been obtained
is required in connection with the issuance of the Notes; (v) the Notes will
be, when issued in accordance with the terms of the Series A Certificate of
Designation and the Indenture, and approved by the Board of Directors of the
Company the valid and legally binding obligations of the Company enforceable
in accordance with their terms, except (x) as such enforcement may be limited
by bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights and remedies generally and (y) as such enforcement
may be limited by general principles of equity, regardless of whether
enforcement is sought in a proceeding at law or in equity; and (vi) the
issuance of the Notes in exchange for Series A Exchangeable Preferred Stock
pursuant to the Series A Certificate of Designation and the Indenture will not
(x) result in a violation of any of the provisions of the certificate or
articles of incorporation or by-laws (or similar organizational documents) of
the Company or any of its subsidiaries or (y) result in a breach of any of the
material terms or provisions of, or constitute a default (with or without due
notice or lapse of time) under, any loan or credit agreement, indenture, deed
of trust, mortgage, note, lease or other agreement or instrument to which the
Company or any of its subsidiaries is a party or by which any of them or any
of their respective properties or assets is or may be bound, except for any
such conflict, violation, breach or default which would not have a Material
Adverse Effect (as defined below) or (z) result in the Company being an
"investment company" under the Investment Company Act of 1940, as amended, and
the rules and regulations promulgated by the Commission thereunder. The
respective forms of the Indenture and the Notes filed as exhibits to the
Registration Statement conform in all material respects, and, if and when
executed by the Company, the Indenture and the Notes so executed will conform
in all material respects, to the respective descriptions thereof contained in
the Prospectus.
(k) The Company will use the net proceeds received by it from the sale of
the Preferred Stock in the manner specified in the Prospectus under the
caption "Use of Proceeds."
(l) To the extent the same has not already been covered through due
diligence investigations performed by you or on your behalf through the date
hereof, the Company shall cooperate with your reasonable additional due
diligence investigations to verify the accuracy and completeness of the
disclosure contained in the Registration Statement, any post-effective
amendment to the Registration Statement, the Prospectus and the other Rights
Offering Materials (as amended or supplemented), and the accuracy and
completeness of any of the representations, warranties or statements of the
Company, or the fulfillment of any of the conditions herein contained.
(m) As soon as practicable, but not later than the Availability Date (as
defined below), the Company will make generally available to its security
holders an earnings statement that will satisfy the provisions of
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Section 11(a) of the Securities Act covering a period of at least 12 months
beginning after the "effective date of the Registration Statement" (as defined
in Rule 158 of the General Rules and Regulations of the Securities Act). For
purposes of the preceding sentence, "Availability Date" means the 45th day
after the end of the fourth fiscal quarter following the fiscal quarter that
includes the "effective date of the Registration Statement," except that if
such fourth fiscal quarter is the last quarter of the Company's fiscal year
"Availability Date" means the 90th day after the end of such fourth fiscal
quarter.
(n) The Company will not accept the subscription of any Rights Holder (as
defined in the Registration Statement) unless (i) Rights have been exercised
to purchase 10,000,000 shares of Preferred Stock or (ii) the Prospectus shall
have been amended or supplemented to disclose that less than 10,000,000 shares
of Preferred Stock may be issued pursuant to the exercise of Rights and such
amendment or supplement shall be reasonably acceptable to you.
(o) Subject to meeting the listing requirements of the NYSE, the Company
will use its reasonable best efforts to cause the Preferred Stock to be
approved for listing on the NYSE. The Company will also use its reasonable
best efforts to cause the Conversion Shares to be approved for listing on the
NYSE, subject to official notice of issuance.
8. Additional Representations and Warranties of the Company. The Company
represents and warrants to you:
(a) The Company and each of its subsidiaries is duly organized, validly
existing and in good standing under the laws of the jurisdiction in which
it is incorporated, with full corporate power and authority to own, lease
and operate its respective properties and to conduct its respective
business as presently conducted and as described in the Prospectus; and the
Company and each of its subsidiaries is duly qualified to transact business
and is in good standing in each jurisdiction in which the conduct of its
business or the ownership or leasing of property requires such
qualification, except to the extent that the failure to be so qualified or
to be in good standing, considering all such cases in the aggregate, would
not be reasonably likely to have a material adverse effect on the business,
properties, financial position or result of operations of the Company and
its subsidiaries taken as a whole (a "Material Adverse Effect").
(b) The Company has all corporate power and authority necessary to
commence and consummate the Rights Offering, to execute and deliver this
Agreement, the Engagement Letter and the Indenture and to perform its
obligations under this Agreement, the Engagement Letter and the Indenture.
The execution and delivery of, and the performance by the Company of its
obligations under, this Agreement and the Engagement Letter have been duly
and validly authorized by the Company; and each of this Agreement and the
Engagement Letter has been duly executed and delivered by the Company and
is a legal, valid and binding obligation of the Company enforceable against
it in accordance with its terms, except that the enforceability hereof or
thereof may be limited by and subject to (i) bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium and other similar laws
now or hereafter in effect relating to rights and remedies of creditors,
(ii) the effect of general principles of equity, whether enforcement is
considered in a proceeding in equity or at law and (iii) the effect of
United States Federal securities or other United States laws or principles
of public policy with respect to the indemnification, contribution,
exculpation or similar provisions herein or therein. The Indenture, the
execution and delivery thereof by the Company, and, subject to action by
the Company to authorize the exchange of Notes for Series A Exchangeable
Preferred Stock, the execution and delivery by the Company of the Notes,
have been duly authorized by the Company. If the Notes are issued in
accordance with the Certificate of Designation of the Series A Exchangeable
Preferred Stock (the "Series A Certificate of Designation") and the
Indenture (when the Indenture has been executed and delivered by the
Company and assuming due authorization, execution and delivery thereof by
the Trustee) and approved by the Board of Directors, assuming the Notes
have been duly authorized, executed and authenticated in accordance with
the provisions of the Indenture, the Notes
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will be valid and legally binding obligations of the Company enforceable in
accordance with their terms, except (x) as such enforcement may be limited
by bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights and remedies generally and (y) as such
enforcement may be limited by general principles of equity, regardless of
whether enforcement is sought in a proceeding at law or in equity.
(c) When the Indenture is executed and delivered by the Company and
assuming the Indenture has been duly authorized, executed and delivered by
the Trustee, the Indenture will constitute a legal, valid and binding
obligation of the Company enforceable against the Company in accordance
with its terms, except (i) as such enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights and remedies generally and (ii) as such
enforcement may be limited by general principles of equity, regardless of
whether enforcement is sought in a proceeding at law or in equity.
(d) The Registration Statement as of the Effective Time and the
Prospectus as of its date complied in all material respects with the
applicable requirements of the Securities Act and the rules and regulations
thereunder as of such dates did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements made therein, in the light of
the circumstances under which they are made, not misleading; provided,
however, that no representation is made with respect to any statements
contained in, or any matter omitted from, the Registration Statement or
Prospectus in reliance upon and in conformity with information furnished or
confirmed in writing by you to the Company expressly for use therein.
(e) The documents incorporated by reference or deemed to be incorporated
by reference in the Registration Statement and the Prospectus, at the time
they were or hereafter are filed with the Commission, complied or when so
filed will comply in all material respects with the requirements of the
Exchange Act.
(f) The information in the Prospectus under the captions "Risk Factors--
Government Regulation," "Regulation and Reimbursement," "Certain
Relationships and Related Transactions," "Description of the Amended Credit
Agreement," "Description of Capital Stock," "Description of Rights
Offering," "Description of Preferred Stock," "Description of the Notes" and
"Certain Federal Income Tax Consequences" to the extent that it constitutes
summaries of legal matters or documents referred to therein, has been
reviewed by the Company and fairly and accurately summarizes the matters
referred to therein.
(g) The Rights Offering, the issuance and sale of shares of Preferred
Stock pursuant to the Rights Offering, the issuance of the Notes in
exchange for Series A Exchangeable Preferred Stock pursuant to the Series A
Certificate of Designation and the Indenture, the issuance of Conversion
Shares upon conversion of the Preferred Stock or the Notes and the
execution, delivery and performance of this Agreement by the Company comply
and will comply in all material respects with all applicable requirements
of Federal, state, local and foreign law, including, without limitation,
any applicable regulations of the Commission and Other Agencies, and all
applicable judgments, orders or decrees; and no consent, authorization,
approval, order, exemption, registration, qualification or other action of,
or filing with or notice to, the Commission or any Other Agency is required
in connection with the execution, delivery and performance of this
Agreement by the Company, the commencement or consummation by the Company
of the Rights Offering or the issuance of the Notes in exchange for Series
A Exchangeable Preferred Stock or the issuance of Conversion Shares, except
(i) as described in the Rights Offering Materials, (ii) such as have been
obtained or made, and (iii) such as could not reasonably be expected to
materially adversely affect the ability of the Company to execute, deliver
and perform this Agreement or to commence and consummate the Rights
Offering in accordance with its terms.
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(h) The Rights Offering, the issuance and sale of shares of Preferred
Stock pursuant to the Rights Offering, the issuance of Conversion Shares
upon conversion of the Preferred Stock or the Notes and the execution,
delivery and performance of this Agreement by the Company, do not and will
not (i) result in a violation of any of the provisions of the certificate
or articles of incorporation or by-laws (or similar organizational
documents) of the Company or any of its subsidiaries or (ii) result in a
breach of any of the material terms or provisions of, or constitute a
default (with or without due notice or lapse of time) under, any loan or
credit agreement, indenture, deed of trust, mortgage, note, lease or other
agreement or instrument to which the Company or any of its subsidiaries is
a party or by which any of them or any of their respective properties or
assets is or may be bound, except as to such conflict, violation, breach or
default (A) which is described in the Rights Offering Materials or (B)
which could not be reasonably expected to have a Material Adverse Effect or
to materially adversely affect the ability of the Company to execute,
deliver and perform this Agreement or to commence and consummate the Rights
Offering in accordance with its terms.
(i) No stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose are pending
or, to the knowledge of the Company, threatened by the Commission; and any
request of the Commission for additional information (to be included in the
Registration Statement or in the Prospectus or otherwise) has been complied
with or otherwise satisfied.
(j) Since the respective dates as of which information is given or
incorporated by reference in the Registration Statement, and except as
otherwise stated or contemplated therein, (i) there has been no material
adverse change and no development reasonably likely to result in a
prospective material adverse change in the condition (financial or
otherwise), business, properties, or results of operations of the Company
and its subsidiaries taken as a whole (a "Material Adverse Change") whether
or not arising in the ordinary course of business; (ii) there have been no
transactions entered into by the Company or any of its subsidiaries which
are material to the Company and its subsidiaries, taken as a whole, other
than those entered into in the ordinary course of business or in connection
with the Rights Offering; (iii) except for changes occurring in connection
with the Rights Offering or pursuant to the issuance or exercise of options
pursuant to the Company's stock option or other employee benefit plans
described in the Registration Statement, there has been no material change
in the capital stock of the Company or any of its subsidiaries; and (iv)
except in connection with the Rights Offering, there has been no dividend
or distribution of any kind declared, paid or made by the Company or any of
its wholly owned subsidiaries on any class of their capital stock.
(k) Except as disclosed in the Rights Offering Material, there is no
action, suit or proceeding which has been served upon the Company or any of
its subsidiaries or of which any of their properties or assets is the
subject that is now pending or, to the best knowledge of the Company,
threatened, against or affecting the Company or any of its subsidiaries or
any of their properties or assets, that, if determined adversely to the
Company or any of its subsidiaries, is reasonably likely to result in a
Material Adverse Change or could reasonably be expected to have a Material
Adverse Effect or to materially adversely affect the ability of the Company
to execute, deliver and perform this Agreement or to commence or consummate
the Rights Offering in accordance with its terms.
(l) The authorized, issued and outstanding capital stock of the Company
conforms to the description thereof in the Prospectus, and all of the
issued and outstanding shares of capital stock of the Company have been
duly authorized and validly issued, are fully paid and non-assessable and
except as set forth in the Prospectus are not subject to any preemptive or
similar rights. Following approval by the stockholders of the Company of
the Charter Amendment and the filing thereof with the Secretary of State of
the State of Delaware, there will be sufficient authorized shares of Common
Stock to permit conversion of the Preferred Stock and Notes in accordance
with their terms and, if
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and when issued upon such conversion in accordance with the provisions of
the terms of the Preferred Stock or the Indenture, as the case may be, the
Conversion Shares will be validly issued, fully paid, non-assessable and
not subject to any preemptive or similar rights.
(m) The Rights conform in all material respects to the description
thereof contained in the Prospectus, have been duly authorized for
issuance, and, when issued and delivered in accordance with the terms of
the Rights Offering, will be validly issued and no holder thereof is or
will be subject to personal liability by reason of being such a holder.
(n) The issuance of the Series A Exchangeable Preferred Stock and the
Series B PIK Preferred Stock has been duly and validly authorized and, when
issued and delivered against payment therefor in accordance with the terms
of the Rights Offering, will be duly and validly issued, fully paid and
non-assessable, with no personal liability attaching to the ownership
thereof, and will conform in all material respects to the description of
the Preferred Stock in the Prospectus. Following approval by the
stockholders of the Company of the Charter Amendment and the filing thereof
with the Secretary of State of the State of Delaware there will be
sufficient authorized shares of preferred stock of the Company to permit
payment of dividends on the Series B PIK Preferred Stock.
(o) The financial statements of the Company included or incorporated by
reference in the Registration Statement present fairly the financial
position of the Company and its subsidiaries as of the dates indicated and
the results of their operations for the periods specified; except as
otherwise stated therein, said financial statements have been prepared in
conformity with generally accepted accounting principles applied on a
consistent basis; and any supporting schedules to such financial statements
included or incorporated by reference in the Registration Statement present
fairly the information required to be included therein.
(p) To the best of the Company's knowledge, the accountants who have
certified the financial statements and supporting schedules included or
incorporated by reference in the Rights Offering Material are independent
public accountants with respect to the Company and its subsidiaries as
required by the Securities Act.
(q) The Rights have been approved for trading on the NYSE.
(r) The Company is not, and will not be as a result of the issuance of
the Rights or the purchase of Preferred Stock by the holders of the Rights,
pursuant to the terms of the Rights Offering, an "investment company" under
the Investment Company Act of 1940, as amended, and the rules and
regulations promulgated by the Commission thereunder.
(s) Any certificate signed by any officer of the Company and delivered to
you or to your counsel shall be deemed a representation of the Company to
you as to the matters covered thereby.
9. Conditions to Obligations of the Dealer Manager. Subject to applicable
laws, rules and regulations, your obligation to render services pursuant to
this Agreement shall at all times be subject, in your discretion, to the
following conditions:
(a) The Company at all times shall have performed in all material
respects all of its obligations hereunder and under the Engagement Letter
theretofore to be performed.
(b) All representations, warranties and other statements of the Company
contained in this Agreement are now and at the commencement of, at all
times during the continuance of, and upon the consummation of, the Rights
Offering shall be, true and correct in all material respects.
(c) The Registration Statement shall have been declared effective by the
Commission and no stop order suspending the effectiveness of the
Registration Statement or any part thereof shall have
9
been issued and no proceeding for that purpose shall have been initiated or
threatened by the Commission; and all requests for additional information
on the part of the Commission shall have been complied with to your
reasonable satisfaction.
(d) You shall have received opinions, dated the date hereof and addressed
to you, of Bradford T. Smith, Executive Vice President, General Counsel,
Corporate Compliance Officer and Secretary of the Company, and Davis Polk &
Wardwell, special counsel to the Company, with respect to the matters set
forth in Exhibits A and B, respectively.
(e) You shall have received opinion, dated the date hereof and addressed
to you, of Skadden, Arps, Slate, Meagher & Flom LLP, counsel to the Dealer
Manager, in form and substance reasonably satisfactory to you.
(f) You shall have received a letter, satisfactory in form to you and
your counsel, dated the date hereof and addressed to you, of KPMG Peat
Marwick LLP, independent auditors for the Company, subject to your
providing the appropriate representation letters to such accountants,
containing statements and information of the type ordinarily included in
accountants' comfort letters with respect to the financial statements and
certain financial information contained in the Prospectus.
(g) You shall have received a certificate, dated the Record Date (as
defined in the Prospectus), of a duly authorized officer of the Company,
substantially in the form of Exhibit C hereto, and your counsel shall have
been furnished with all such other documents and certificates as they may
reasonably request in order to evidence the accuracy and completeness of
any of the representations, warranties or statements of the Company
hereunder, the performance of any of the obligations of the Company
hereunder, or the fulfillment of any of the conditions contained herein.
(h) It shall not have become unlawful under any law, rule or regulation,
Federal, state or local, for you to render services pursuant to this
Agreement, or to continue so to act, as the case may be.
10. Indemnification.
(a) The Company agrees to hold harmless and indemnify you (including any
affiliated companies) and any officer, director, partner, employee or agent of
you or any such affiliated companies and any entity or person controlling
(within the meaning of Section 20(a) of the Exchange Act) you or any
affiliated companies (collectively, the "Dealer Manager Indemnified Persons"),
from and against any and all losses, claims, damages, liabilities and expenses
whatsoever (including, but not limited to, any and all expenses incurred in
investigating, preparing or defending against any litigation or proceeding,
commenced or threatened, or any claims whatsoever whether or not resulting in
any liability) (each a "Loss" and collectively, the "Losses"), (i) arising out
of or based upon any untrue statement or alleged untrue statement of material
fact contained or incorporated by reference in the Rights Offering Material or
in any other material used by the Company, or authorized by the Company for
use in connection with the Rights Offering or the transactions contemplated
thereby, or arising out of or based upon the omission or alleged omission to
state in any such document 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 (other than statements or omissions made
in reliance upon information furnished by you to the Company expressly for use
therein), (ii) arising out of, or based upon, any withdrawal, rescission,
amendment or termination by the Company of, or failure by the Company to
commence or consummate, the Rights Offering or the transactions contemplated
thereby or any other failure to comply with the terms and conditions specified
in the Rights Offering Material, (iii) arising out of the breach or alleged
breach by the Company of any representation, warranty or covenant set forth in
this Agreement, (iv) arising out of, relating to or in connection with any
other action taken or omitted to be taken by an indemnified person, or (v)
otherwise arising out of, relating to or in connection with the Rights
Offering, the other transactions described in the
10
Rights Offering Material or the services of the Dealer Manager hereunder. The
Company shall not, however, be responsible for any Loss pursuant to clauses
(iv) or (v) of the preceding sentence of this Section 10 which has been
finally judicially determined to have resulted primarily from the bad faith or
gross negligence on the part of any indemnified person, other than any Loss
arising out of or resulting from actions performed at the request of, with the
consent of or in conformity with actions taken or omitted to be taken by, the
Company.
(b) The Dealer Manager agrees to hold harmless and indemnify the Company,
its officers and employees, each of its directors and such person, if any, who
controls the Company (within the meaning of Section 20(a) of the Exchange
Act), from and against any and all Losses, to which the Company or any such
director, officer or controlling person may become subject, rising out of or
based upon any untrue statement or alleged untrue statement of material fact
contained in the Rights Offering Materials or the omission or alleged omission
to state in any such document 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, but in each case only to the extent that
the untrue statement of alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with the written
information furnished to the Company by the Dealer Manager specifically for
inclusion therein.
(c) The Company and you agree that if any indemnification sought by any
indemnified person pursuant to this Section 10 is unavailable for any reason
or insufficient to hold the indemnified person harmless, then the Company and
you shall contribute to the Losses for which such indemnification is held
unavailable or insufficient in such proportion as is appropriate to reflect
the relative benefits received (or anticipated to be received) by the Company,
on the one hand, and actually received by you, on the other hand, in
connection with the transactions contemplated by this Agreement or, if such
allocation is not permitted by applicable law, not only such relative benefits
but also the relative faults of the Company, on the one hand, and you, on the
other hand, as well as any other equitable considerations, subject to the
limitation that in any event the aggregate contribution by you to all Losses
with respect to which contribution is available hereunder shall not exceed the
fees actually received by you in connection with your engagement hereunder. It
is hereby agreed that the relative benefits to the Company, on the one hand,
and you, on the other hand, with respect to the Rights Offering and the
transactions contemplated thereby shall be deemed to be in the same proportion
as (i) the total net proceeds from the Rights Offering (before deducting
expenses) received (or anticipated to be received) by the Company bears to
(ii) the fees actually received by you from the Company in connection with
your engagement hereunder.
(d) The foregoing rights to indemnity and contribution shall be in addition
to any other right which indemnified persons may have at common law or
otherwise. If any litigation or proceeding is brought against any indemnified
person in respect of which indemnification may be sought pursuant to this
Section 10, such indemnified person shall promptly notify the indemnifying
person in writing of the commencement of such litigation or proceeding, but
the failure so to notify the indemnifying person shall relieve the
indemnifying person from any liability which it may have hereunder only if,
and to the extent that, such failure results in the forfeiture by the
indemnifying person of substantial rights and defenses, and will not in any
event relieve the indemnifying person from any other obligation or liability
that it may have to any indemnified person other than under this Agreement. In
case any such litigation or proceeding shall be brought against any
indemnified person and such indemnified person shall notify the indemnifying
person in writing of the commencement of such litigation or proceeding, the
indemnifying person shall be entitled to participate in such litigation or
proceeding, and, after written notice from the indemnifying person to such
indemnified person, to assume the defense of such litigation or proceeding
with counsel of its choice at its expense, provided, however, that such
counsel shall be satisfactory to the indemnified person in the exercise of its
reasonable judgment. Notwithstanding the election of the indemnifying person
to assume the defense of such litigation or proceeding, such indemnified
person shall have the right to employ separate counsel and to participate in
the defense of such litigation or proceeding and the indemnifying person shall
bear the reasonable fees, costs and expenses of such separate counsel and
shall pay such fees, costs and
11
expenses at least quarterly (provided that with respect to any single
litigation or proceeding or with respect to several litigations or proceedings
involving substantially similar legal claims, the indemnifying person shall
not be required to bear the fees, costs and expenses of more than one such
counsel) if (i) in the reasonable judgment of such indemnified person the use
of counsel chosen by the indemnifying person to represent such indemnified
person would present such counsel with a conflict of interest, (ii) the
defendants, or targets of, any such litigation or proceeding include both an
indemnified person and the indemnifying person, and such indemnified person
shall have reasonably concluded that there may be legal defenses available to
it or to other indemnified persons which are different from or additional to
those available to the indemnifying person (in which case the indemnifying
person shall not have the right to direct the defense of such action on behalf
of the indemnified person), (iii) the indemnifying person shall not have
employed counsel satisfactory to such indemnified person, in the exercise of
the indemnified person's reasonable judgment, to represent such indemnified
person within a reasonable time after notice of the institution of such
litigation or proceeding or (iv) the indemnifying person shall authorize in
writing such indemnified person to employ separate counsel at the expense of
the indemnifying person. In any action or proceeding the defense of which the
indemnifying person assumes, the indemnified person shall have the right to
participate in such litigation and retain its own counsel at such indemnified
person's own expense. The Company and you agree to notify the other promptly
of the assertion of any claim against it, any of its officers or directors or
any entity or person who controls it within the meaning of Section 20(a) of
the Exchange Act in connection with the Rights Offering. The foregoing
indemnification commitments shall apply whether or not the indemnified person
is a formal party to such litigation or proceeding.
(e) The indemnifying person also agrees to reimburse each indemnified person
for all expenses (including fees and disbursements of counsel) as they are
incurred by such indemnified person in connection with investigating,
preparing for, defending or providing evidence (including appearing as a
witness) with respect to any action, claim, investigation, inquiry,
arbitration or other proceeding referred to in this Section 10 or enforcing
this Agreement, whether or not in connection with pending or threatened
litigation in which any indemnified person is a party.
(f) The Company agrees that it will not, without the prior written consent
of the indemnified party, settle, compromise or consent to the entry of any
judgment in any pending or threatened claim, action or proceeding, in respect
of which indemnification or contribution may be sought hereunder (whether or
not you, any other Dealer Manager Indemnified Person or the Company is an
actual or potential party), unless such settlement, compromise or judgment (i)
includes an unconditional release of each Dealer Manager Indemnified Person
from all liability arising out of such claim, action or proceeding and (ii)
does not include a statement as to, or an admission of, fault, culpability or
a failure to act, by or on behalf of any Dealer Manager Indemnified Person. No
indemnifying party shall be liable for any settlement of any action or claim
for monetary damages which an indemnified party may effect without the consent
of the indemnifying person, which consent shall not be unreasonably withheld.
11. Reference to Dealer Manager. The Company agrees that any reference to
you in any Rights Offering Material, or any other release, publication or
communication to any party outside the Company is subject to your prior
approval. If you resign or are terminated prior to the dissemination of any
Rights Offering Material or any other release or communication, no reference
shall be made therein to you without your prior written permission.
12. Access to Information. In connection with the activities hereunder, the
Company agrees to furnish you and your counsel with all information concerning
the Company that you reasonably deem appropriate and agrees to provide you
with reason-able access to the Company's officers, directors, accountants,
counsel, consultants and other appropriate agents and representatives, it
being understood that you will be entitled to rely upon such information
supplied by the Company and such persons without assuming any responsibility
for independent investigation or verification thereof. Any such investigations
by you shall not relieve the Company of any responsibility for its
representations, warranties or indemnities.
12
13. Withdrawal. In the event that (i) the Company uses or permits the use of
any Rights Offering Material in connection with the Rights Offering or files
any such material with the Commission without your prior approval, (ii) the
Company shall have breached in any material respect any of its
representations, warranties, agreements or covenants herein, (iii) at any time
during the Subscription Period, a stop order suspending the effectiveness of
the Registration Statement shall have been issued or a proceeding for that
purpose shall have been instituted or shall be pending or threatened in
writing by the Commission, or a request for additional information on the part
of the Commission shall not have been satisfied to your reasonable
satisfaction or there shall have been issued, at any time during the Rights
Offering, any temporary restraining order or injunction restraining or
enjoining you from acting in your capacities as Dealer Manager hereunder and
such temporary restraining order or injunction is then in effect and has not
been stayed or vacated, or (iv) the Company shall have amended the terms of
the Rights Offering without your prior consent, then you shall be entitled to
withdraw by written notice as Dealer Manager in connection with the Rights
Offering without any liability or penalty to you or any Dealer Manager
Indemnified Person for such withdrawal, and without loss of any right to the
indemnification provided in Section 10 hereof, the payment of all fees and
expenses payable under this Agreement which have accrued to the date of such
withdrawal or would otherwise be due to you on such date, or the benefit of
any other provisions surviving such withdrawal pursuant to Section 14 hereof.
If you withdraw as Dealer Manager pursuant to this paragraph, the fees accrued
and reimbursement for your expenses through the date of such withdrawal shall
be paid to you on or promptly after such date, unless such fees or expenses
are due at some later date in accordance with the express terms of any
applicable agreement.
14. Termination. This Agreement shall terminate upon the expiration,
termination or withdrawal of the Rights Offering, upon the date you give
notice that any of the conditions specified in Section 9 hereof have not been
fulfilled or upon your withdrawal as Dealer Manager pursuant to Section 13
hereof, it being understood that Sections 4, 5, 10, 11, 14, 16, 19 and 21
hereof shall survive any termination of this Agreement.
15. Notices. All notices and other communications required or permitted to
be given under this Agreement shall be in writing and shall be given (and
shall be deemed to have been given upon receipt) by delivery in person, by
cable, by telecopy, by telegram, by telex or by registered or certified mail
(postage prepaid return receipt requested) to the applicable party at the
addresses indicated below:
(a)if to the Dealer Manager:
Credit Suisse First Boston Corporation
Eleven Madison Avenue
New York, New York 10010-3629
Telecopy No: (212) 325-8278
Attention: Investment Banking Department--
Transactions Advisory Group
(b)if to the Company:
Laboratory Corporation of America Holdings
358 South Main Street
Burlington, North Carolina 27215
Telecopy No.: (910) 226-3835
Attention: General Counsel
16. Consent to Jurisdiction; Service of Process. The Company hereby (a)
submits to the jurisdiction of any New York State or Federal court sitting in
the City of New York, (b) agrees that all claims with respect to such actions
or proceedings may be heard and determined in such New York State or Federal
court, (c) waives the defense of an inconvenient forum, (d) agrees not to
commence any action or
13
proceeding relating to this Agreement other than in a New York State or
Federal court sitting in the City of New York and (e) agrees that a final
judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law.
17. Entire Agreement. This Agreement and the Engagement Letter constitute
the entire agreement among the parties hereto with respect to the subject
matter hereof and supersede all prior agreements and undertakings, both
written and oral, among the parties, or any of them, with respect to the
subject matter hereof.
18. Amendment. This Agreement may not be amended except in writing signed by
each party to be bound thereby.
19. Governing Law. The validity and interpretation of this Agreement shall
be governed by, and construed and enforced in accordance with, the laws of the
State of New York, without regard to conflicts of laws principles.
20. Counterparts; Severability. This Agreement may be executed in two or
more separate counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument. Any term or
provision of this Agreement which is invalid or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such invalidity or unenforceability without rendering invalid or unenforceable
the remaining terms and provisions of this Agreement or affecting the validity
or enforceability of any of the terms or provisions of this Agreement in any
other jurisdiction.
21. Parties in Interest. This Agreement, including rights to indemnity and
contribution hereunder, shall be binding upon and inure solely to the benefit
of each party hereto, the Indemnified Persons and their respective successors,
heirs and assigns, and nothing in this Agreement, express or implied, is
intended to or shall confer upon any other person any right, benefit or remedy
of any nature whatsoever under or by reason of this Agreement.
Please indicate your willingness to act as Dealer Manager and your
acceptance of the foregoing provisions by signing in the space provided below
for that purpose and returning to us a copy of this Agreement so signed,
whereupon this Agreement and your acceptance shall constitute a binding
agreement between us.
Very truly yours,
Laboratory Corporation of America
Holdings
By: __________________________________
Name:
Title:
Accepted as of the date first above written:
Credit Suisse First Boston Corporation
By: _________________________________
Name:
Title:
14
EXHIBIT A
OPINION OF BRADFORD T. SMITH
Matters to be addressed in the opinion of Bradford T. Smith, Executive Vice
President, General Counsel, Corporate Compliance Officer and Secretary of the
Company:
(a) The Company is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation, with
corporate power and authority to own, lease and operate its properties and
to conduct its business as presently conducted and as described in the
Prospectus, and to the best of such counsel's knowledge the Company is duly
qualified to transact business and is in good standing in each jurisdiction
in which the conduct of its business or the ownership or leasing of
property requires such qualification, except to the extent that the failure
to be so qualified or to be in good standing, considering all such cases in
the aggregate, would not have a Material Adverse Effect.
(b) Each of the Company's subsidiaries is duly organized, validly
existing and in good standing in the jurisdiction of its incorporation,
with corporate power and authority to own, lease and operate its respective
properties and to conduct its respective business as presently conducted
and as described in the Prospectus, and to the best of such counsel's
knowledge each of the Company's subsidiaries is duly qualified to transact
business and is in good standing in each jurisdiction in which the conduct
of its business or the ownership or leasing of property requires such
qualification, except to the extent that the failure to be so qualified or
to be in good standing, considering all such cases in the aggregate, would
not have a Material Adverse Effect.
(c) The Company has all corporate power and authority necessary to
commence and consummate the Rights Offering, to execute and deliver this
Agreement, the Engagement Letter and the Indenture and to perform its
obligations under this Agreement, the Engagement Letter and the Indenture.
This Agreement, the Engagement Letter and the Indenture have been duly
authorized, executed and delivered by the Company. Subject to action by the
Company to authorize the exchange of Notes for Series A Exchangeable
Preferred Stock, the execution and delivery by the Company of the Notes
have been duly authorized by the Company.
(d) The Rights Offering, the issuance and sale of shares of Preferred
Stock pursuant to the Rights Offering, and the execution, delivery and
performance of this Agreement by the Company will not (i) result in a
violation of any of the provisions of the certificate of incorporation or
by-laws of the Company or any of its subsidiaries or (ii) to the best of
such counsel's knowledge result in a breach of any of the material terms or
provisions of, or constitute a default (with or without due notice or lapse
of time) under, any loan or credit agreement, indenture, deed of trust,
mortgage, note, lease or other agreement or instrument to which the Company
or any of its subsidiaries is a party or by which any of them or any of
their respective properties or assets is or may be bound, except as to any
such violation, breach or default which would not have a Material Adverse
Effect or materially adversely affect the ability of the Company to
execute, deliver and perform this Agreement or to commence and consummate
the Rights Offering in accordance with its terms.
(e) There is no action, suit or proceeding before or by the Commission or
any Other Agency, that is now pending, or to the best of such counsel's
knowledge, threatened against or affecting the Company or any of its
subsidiaries, which is required to be disclosed in the Prospectus which is
not disclosed therein, or which would materially adversely affect the
ability of the Company to execute, deliver and perform this Agreement or to
consummate the Rights Offering in accordance with its terms; and there are
no contracts or other documents to which the Company or any of its
subsidiaries is a party which are required to be filed as exhibits to the
Registration Statement which have not been so filed.
A-1
(f) The authorized, issued and outstanding capital stock of the Company
conforms to the description thereof in the Prospectus, and all of the
issued and outstanding shares of capital stock of the Company have been
duly authorized and validly issued, are fully paid and non-assessable and,
except as described in the Prospectus, are not subject to any preemptive or
similar rights.
(g) The information set forth in the Prospectus under the captions "Risk
Factors--Government Regulation," "Regulation and Reimbursement" and
"Certain Relationships and Related Transactions" insofar as such statements
purport to describe the provisions of law or documents referred to therein
fairly present the information called for with respect to such laws and
documents.
(h) Each document filed pursuant to the Exchange Act and incorporated by
reference in the Registration Statement or the Prospectus (except for
financial statements, including the notes thereto and schedules thereto,
and other financial and statistical data contained or incorporated by
reference therein or omitted therefrom as to which such counsel need
express no opinion) complied when so filed as to form in all material
respects with the requirements of the Exchange Act and the applicable rules
and regulations of the Commission thereunder.
Such counsel shall also advise that he has not himself checked the accuracy
or completeness of, or otherwise verified, the information furnished with
respect to other matters in the Registration Statement and the Prospectus, but
has generally reviewed and discussed with certain officers and other
representatives of the Company, its independent public accountants and your
representatives and counsel the information furnished, whether or not subject
to his check or verification. On the basis of such review and discussion, but
without independent check or verification, except as stated, nothing came to
his attention that causes him to believe that (except for the financial
statements, including the notes thereto and schedules thereto, and other
financial and statistical data contained or incorporated by reference therein
or omitted therefrom and the Statement of Eligibility (Form T-1) included as
an exhibit to the Registration Statement, as to which he need express no
opinion) as of its effective date, the Registration Statement 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 the date hereof, included or
includes an untrue statement of a material fact or omitted or omits to state a
material fact necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading.
A-2
EXHIBIT B
Matters to be addressed in the opinion of Davis Polk & Wardwell, special
counsel to the Company:
(a) The Registration Statement is effective under the Securities Act and,
to the best of such counsel's knowledge, no stop order suspending the
effectiveness of the Registration Statement has been issued under the
Securities Act and no proceedings for that purpose have been instituted or
threatened by the Commission.
(b) This Agreement has been duly authorized, executed and delivered by
the Company.
(c) The Indenture has been qualified under the Trust Indenture Act of
1939, as amended.
(d) When the Indenture is executed and delivered by the Company and
assuming the Indenture has been duly authorized, executed and delivered by
the Trustee, the Indenture will constitute a legal, valid and binding
obligation of the Company enforceable against the Company in accordance
with its terms, except (i) as such enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights and remedies generally and (ii) as such
enforcement may be limited by general principles of equity, regardless of
whether enforcement is sought in a proceeding at law or in equity.
(e) If and when issued in accordance with the provisions of the Series A
Certificate of Designation and the Indenture (when the Indenture is
executed and delivered by the Company and assuming it has been duly
authorized, executed and delivered by the Trustee) and approved by the
Board of Directors of the Company, and assuming the Notes have been duly
authorized, executed and authenticated in accordance with the provisions of
the Indenture, the Notes will constitute legal, valid and binding
obligations of the Company enforceable against the Company in accordance
with their terms, except (i) as such enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights and remedies generally and (ii) as such
enforcement may be limited by general principles of equity, regardless of
whether enforcement is sought in a proceeding at law or in equity.
(f) The Registration Statement, as of the effective date, and the
Prospectus, as of its date (except for financial statements, including the
notes thereto and schedules thereto and other financial and statistical
data contained or incorporated by reference therein, or omitted therefrom
and the Statement of Eligibility (Form T-1) included as an exhibit to the
Registration Statement as to which such counsel need express no opinion)
complied as to form in all material respects with the requirements of the
Securities Act and the applicable rules and regulations of the Commission
thereunder.
(g) The information in the Prospectus under the captions "Description of
the Amended Credit Agreement," "Description of Capital Stock," "Description
of Rights Offering," "Description of Preferred Stock," "Description of the
Notes" and "Certain Federal Income Tax Consequences" insofar as such
statements purport to describe the provisions of law or documents referred
to therein, fairly present the information called for with respect to such
laws and documents.
(h) The Rights Offering, the Preferred Stock, the Common Stock and the
Notes conform in all material respects to the descriptions thereof
contained in the Registration Statement.
(i) The terms of the Rights Offering, the issuance and sale of shares of
Preferred Stock pursuant to the Rights Offering, the issuance of the Notes
in exchange for Series A Exchangeable Preferred Stock pursuant to the
Series A Certificate of Designation and the Indenture, the issuance of
Conversion Shares upon conversion of the Preferred Stock and Notes and the
execution, delivery and performance of this Agreement by the Company,
comply in all material respects with all applicable requirements of Federal
and New York law, including, without limitation, any administrative
regulation, and no consent, authorization, approval, order, exemption,
registration, qualification or other action of,
B-1
or filing with, the Commission or any Other Agency is required in
connection with the execution, delivery and performance of this Agreement
by the Company or the commencement or consummation by the Company of the
Rights Offering, except such as may be required and have been obtained
under the Securities Act and the rules and regulations thereunder, under
state securities or Blue Sky laws and under the Trust Indenture Act of
1939, as amended, or where the failure to obtain or make such consent,
authorization, approval, order, exemption, registration, qualification, or
other action or filing or notification would not materially adversely
affect the ability of the Company to execute, deliver and perform this
Agreement or to commence and consummate the Rights Offering in accordance
with its terms.
(j) The issuance of the Preferred Stock has been duly and validly
authorized and upon the proper filing with the Secretary of State of the
State of Delaware of the Certificate of Designation relating to such series
of Preferred Stock when issued and delivered against payment therefor in
accordance with the terms of the Rights Offering, the Preferred Stock will
be duly and validly issued, fully paid and non-assessable, with no personal
liability attaching to the ownership thereof. Following approval by the
stockholders of the Company of the Charter Amendment and the filing thereof
with the Secretary of State of the State of Delaware there will be
sufficient authorized shares of preferred stock of the Company to permit
payment of dividends on the Series B PIK Preferred Stock and there will be
sufficient authorized shares of Common Stock to permit conversion of the
Preferred Stock and the Notes in accordance with their terms. Such
Conversion Shares, if and when issued upon such conversion in accordance
with the provisions of the Preferred Stock or the Notes, as the case may
be, will be validly issued, fully paid, non-assessable and not subject to
any statutory preemptive or similar statutory rights.
(k) The Company is not, and following consummation of the Rights Offering
will not be, an "investment company" under the Investment Company Act of
1940, as amended, and the rules and regulations promulgated by the
Commission thereunder.
Such counsel shall also advise that they have not themselves checked the
accuracy or completeness of, or otherwise verified, the information furnished
with respect to other matters in the Registration Statement and the
Prospectus, but have generally reviewed and discussed with certain officers
and other representatives of the Company, its independent public accountants
and your representatives and counsel the information furnished, whether or not
subject to their check or verification. On the basis of such review and
discussion, but without independent check or verification, except as stated,
nothing came to their attention that causes them to believe that (except for
the financial statements, including the notes thereto and schedules thereto,
and other financial and statistical data contained or incorporated by
reference therein or omitted therefrom and the Statement of Eligibility (Form
T-1) included as an exhibit to the Registration Statement, as to which they
need express no opinion) as of its effective date, the Registration Statement
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 the date
hereof, included or includes an untrue statement of a material fact or omitted
or omits to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
B-2
EXHIBIT C
FORM OF OFFICER'S CERTIFICATE
A duly authorized officer of the Company shall have furnished to the Dealer
Manager a certificate, dated the Record Date, in form and substance reasonably
satisfactory to the Dealer Manager to the effect that, to the best of his
knowledge after reasonable investigation:
1. The representations and warranties of the Company set forth in the
Dealer Manager Agreement are true and correct in all material respects as
of the Record Date, and the Company has performed all of its obligations
under the Dealer Manager Agreement to be performed at or prior to the
Record Date in all material respects.
2. From the date of the Dealer Manager Agreement through the Record Date,
there has been no amendment to the Registration Statement other than any
amendments as to which you have been notified and provided copies and no
stop order suspending the effectiveness of the Registration Statement has
been issued and no proceeding for such purpose has been initiated or
threatened by the Commission.
C-1