EXHIBIT 1.1
8,433,333 SHARES
WELLCARE GROUP, INC.
COMMON STOCK, PAR VALUE $.01
UNDERWRITING AGREEMENT
June ___, 2004
June ___, 2004
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
▇▇ ▇▇▇▇▇ & Co., LLC
UBS Securities LLC
Wachovia Capital Markets, LLC
c/o Morgan ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Dear Sirs and Mesdames:
WellCare Group, Inc., a Delaware corporation (the "COMPANY"), proposes to
issue and sell to the several Underwriters named in Schedule II hereto (the
"UNDERWRITERS") an aggregate of 8,433,333 shares of the common stock, par value
$.01, of the Company (the "FIRM SHARES"), of which 7,333,333 shares are to be
issued and sold by the Company and 1,100,000 shares are to be sold by the
Selling Shareholder.
A certain shareholder of the Company (the "SELLING SHAREHOLDER") named in
Schedule I hereto proposes to sell to the several Underwriters not more than an
additional 1,100,000 shares of common stock, par value $.01 of the Company (the
"ADDITIONAL SHARES"), if and to the extent that you, as Managers of the
offering, shall have determined to exercise, on behalf of the Underwriters, the
right to purchase such shares of common stock granted to the Underwriters in
Section 3 hereof. The Firm Shares and the Additional Shares are hereinafter
collectively referred to as the "SHARES." The shares of common stock, par value
$.01, of the Company to be outstanding after giving effect to the sales
contemplated hereby are hereinafter referred to as the "COMMON STOCK." The
Company and the Selling Shareholder are hereinafter sometimes collectively
referred to as the "SELLERS."
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated ("▇▇▇▇▇▇ ▇▇▇▇▇▇▇") has agreed to reserve
a portion of the Shares to be purchased by it under this Agreement for sale to
the Company's directors, officers, employees and business associates and other
parties related to the Company (collectively, "PARTICIPANTS"), as set forth in
the Prospectus under the heading "Underwriters" (the "DIRECTED SHARE PROGRAM").
The Shares to be sold by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and its affiliates pursuant to the
Directed Share Program are referred to hereinafter as the "DIRECTED SHARES." Any
Directed Shares not confirmed for purchase by any Participants by the end of the
business day on which this Agreement is executed will be offered to the public
by the Underwriters as set forth in the Prospectus.
It is understood that in connection with the reorganization of the
business of the Company from a limited liability company to a corporation,
WellCare Holdings, LLC, a Delaware limited liability company ("LLC HOLDINGS"),
will, immediately prior to the Closing Date (as defined below), be merged into
the Company. In addition, immediately prior to the Closing Date, pursuant to
such merger, (i) the holders of outstanding Class A Common Units of LLC Holdings
will receive, in exchange for their Class A Common Units, a number of shares of
the Common Stock of the Company equal to an aggregate of an 8% per annum yield
on their unreturned capital in Class A Common Units and a return of $3.00 per
Class A Common Unit (without regard to such 8% per annum yield) divided by the
offer price per share of the Common Stock of the Company in the IPO (the "IPO
OFFER PRICE"), (ii) all the remaining shares of the Company to be issued
pursuant to the Reorganization (as defined below) will be allocated among the
holders of outstanding Common Units of LLC Holdings, pro rata based on the
number of Common Units then outstanding, (iii) each outstanding option to
purchase Class A Common Units of LLC Holdings issued to employees of LLC
Holdings under the Employee Option Plan (collectively, the "EMPLOYEE OPTIONS")
will be converted into the right to purchase the number of shares of Common
Stock of the Company that the holder of such Employee Option would have received
in the merger had such holder exercised such Employee Option in full prior to
the merger, and (iv) each outstanding option to purchase Class A Common Units of
LLC Holdings issued to certain consultants of LLC Holdings (collectively, the
"CONSULTANT OPTIONS") will be converted into the right to purchase the number of
shares of Common Stock of the Company that the holder of such Consultant Option
would have received in the merger had such holder exercised such Consultant
Option in full prior to the merger. This series of transactions consummated or
to be consummated is hereinafter referred to as the "REORGANIZATION."
The Company has filed with the Securities and Exchange Commission (the
"COMMISSION") a registration statement, including a prospectus, relating to the
Shares. The registration statement as amended at the time it becomes effective,
including the information (if any) deemed to be part of the registration
statement at the time of effectiveness pursuant to Rule 430A under the
Securities Act of 1933, as amended (the "SECURITIES ACT"), is hereinafter
referred to as the "REGISTRATION STATEMENT"; the prospectus in the form first
used to confirm sales of Shares is hereinafter referred to as the "PROSPECTUS."
If the Company has filed an abbreviated registration statement to register
additional shares of Common Stock pursuant to Rule 462(b) under the Securities
Act (the "RULE 462 REGISTRATION STATEMENT"), then any reference herein to the
term "REGISTRATION STATEMENT" shall be deemed to include such Rule 462
Registration Statement.
1. Representations and Warranties of the Company and LLC Holdings. Each of
the Company and LLC Holdings, jointly and severally, represents and warrants to
and agrees with each of the Underwriters that:
2
(a) Based on advice from the Commission, the Registration Statement
has become effective; no stop order suspending the effectiveness of the
Registration Statement is in effect, and no proceedings for such purpose
are pending before or, to the knowledge of the Company and LLC Holdings,
threatened by the Commission.
(b) (i) The Registration Statement, when it became effective, did
not contain and, as amended or supplemented, if applicable, will 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 therein not misleading, (ii) the Registration Statement and the
Prospectus comply and, as amended or supplemented, if applicable, will
comply in all material respects with the Securities Act and the applicable
rules and regulations of the Commission thereunder and (iii) the
Prospectus does not contain and, as amended or supplemented, if
applicable, will not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading,
except that the representations and warranties set forth in this paragraph
do not apply to statements or omissions in the Registration Statement or
the Prospectus based upon information relating to any Underwriter
furnished to the Company in writing by such Underwriter through you
expressly for use therein.
(c) The Company has been duly incorporated, is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation, has the corporate power and authority to own its property
and to conduct its business as described in the Prospectus and is duly
qualified to transact business and is in good standing in each
jurisdiction in which the conduct of its business or its ownership or
leasing of property requires such qualification, except to the extent that
the failure to be so qualified or be in good standing would not have a
material adverse effect on the Company, LLC Holdings and its subsidiaries,
taken as a whole (collectively, the "WELLCARE GROUP").
(d) Each of LLC Holdings and each subsidiary of LLC Holdings (each,
a "SUBSIDIARY") has been duly incorporated or organized, as the case may
be, is validly existing as a corporation in good standing under the laws
of the jurisdiction of its incorporation or organization, as the case may
be, has the power (corporate or limited liability company, as the case may
be) and authority to own its property and to conduct its business as
described in the Prospectus and is duly qualified to transact business and
is in good standing in each jurisdiction in which the conduct of its
business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so qualified or
be in good standing would not have a material adverse effect on the
WellCare Group; all of the issued shares of capital stock or membership
interest, as the case may be,
3
of LLC Holdings and each Subsidiary have been duly and validly authorized
and issued or created, as the case may be, and, in the case of shares of
capital stock, are fully paid and non-assessable; and in each case such
capital stock or membership interest, as the case may be, are or after the
Reorganization will be owned directly or indirectly by the Company, free
and clear of all liens, encumbrances, equities or claims, except as
described in the Prospectus.
(e) This Agreement has been duly authorized, executed and delivered
by the Company and by LLC Holdings.
(f) The authorized capital stock of the Company conforms as to legal
matters to the description thereof contained in the Prospectus; and except
as disclosed in the Prospectus, there are no outstanding securities
convertible into or exchangeable for, or warrants, rights or options to
subscribe to or purchase from the Company or LLC Holdings, or obligation
of the Company or LLC Holdings to issue, shares of the Company or
membership interests in LLC Holdings.
(g) The shares of Common Stock (including the Shares to be sold by
the Selling Shareholder) outstanding prior to the issuance of the Shares
to be sold by the Company have been duly authorized and are or after the
Reorganization will be validly issued, fully paid and non-assessable; the
Shares to be sold by the Selling Shareholder pursuant to this Agreement
have been or after the Reorganization will be duly converted from
membership interests of LLC Holdings to Common Stock, and there are no
restrictions on transfer of or encumbrances on such additional Shares
under the laws of the State of Delaware or the certificate of
incorporation of the Company.
(h) The Shares to be sold by the Company have been duly authorized
and, when issued and delivered in accordance with the terms of this
Agreement, will be validly issued, fully paid and non-assessable, and the
issuance of such Shares will not be subject to any preemptive or similar
rights.
(i) The execution and delivery by the Company and LLC Holdings of,
and the performance by the Company and LLC Holdings of its obligations
under, this Agreement will not contravene any provision of applicable law
or the certificate of incorporation or by-laws or other organizational
document of the Company or LLC Holdings, or any agreement or other
instrument binding upon the Company or LLC Holdings or any of the
Subsidiaries that is material to the WellCare Group, or any judgment,
order or decree of any governmental body, agency or court having
jurisdiction over the Company, LLC Holdings or any Subsidiary, and no
consent, approval, authorization or order of, or qualification with, any
governmental body or agency is required for the
4
performance by the Company or LLC Holdings of their respective obligations
under this Agreement, except such as may be required by the securities or
Blue Sky laws of the various states in connection with the offer and sale
of the Shares.
(j) All shareholder, warrant or option holder and limited liability
company member approvals necessary to consummate the Reorganization have
been obtained and are in full force and effect; the Reorganization will
not contravene any provision of applicable law or the certificate of
incorporation or bylaws or the organizational document, as the case may
be, of the Company, LLC Holdings or the other parties to the
Reorganization, or any agreement or other instrument binding upon the
Company, LLC Holdings or any of the Subsidiaries that is material to the
WellCare Group, or any judgment, order or decree of any governmental body,
agency or court having jurisdiction over the Company, LLC Holdings or any
of the Subsidiaries, and no consent, approval, authorization or order of,
or qualification with, any governmental body or agency was or will be
required for the performance by the Company, LLC Holdings or any other
party to the Reorganization of their respective obligations under the
Reorganization, except for those obtained (and previously disclosed in
writing) and except where the failure to obtain such consents, approvals,
authorizations, orders or qualifications would not, singly or in the
aggregate, have a material adverse effect on the WellCare Group; and prior
to the Closing Date each of the actions required to occur and conditions
required to be satisfied pursuant to the Reorganization will have occurred
or been satisfied, as applicable.
(k) There has not occurred any material adverse change, or any
development involving a prospective material adverse change, in the
condition, financial or otherwise, or in the earnings, business or
operations of the WellCare Group, from that set forth in the Prospectus
(exclusive of any amendments or supplements thereto subsequent to the date
of this Agreement).
(l) There are no legal or governmental proceedings pending or, to
the knowledge of the Company and LLC Holdings, threatened to which the
Company, LLC Holdings or any Subsidiaries is a party or to which any of
the properties of the Company, LLC Holdings or any Subsidiaries is subject
that are required to be described in the Registration Statement or the
Prospectus and are not so described or any statutes, regulations,
contracts or other documents that are required to be described in the
Registration Statement or the Prospectus or to be filed as exhibits to the
Registration Statement that are not described or filed as required, and
there are no legal or governmental proceedings challenging the
Reorganization or the offering of the Shares by the Underwriters.
5
(m) Each preliminary prospectus filed as part of the registration
statement as originally filed or as part of any amendment thereto, or
filed pursuant to Rule 424 under the Securities Act, complied when so
filed in all material respects with the Securities Act and the applicable
rules and regulations of the Commission thereunder.
(n) The Company is not, and, after giving effect to (i) the
Reorganization and (ii) the offering and sale of the Shares and the
application of the proceeds thereof as described in the Prospectus, will
not be, required to register as an "investment company" as such term is
defined in the Investment Company Act of 1940, as amended.
(o) The Company, LLC Holdings and the Subsidiaries (i) are in
compliance with any and all applicable federal, state and local laws and
regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("ENVIRONMENTAL LAWS"), (ii) have received all permits,
licenses or other approvals required of them under applicable
Environmental Laws to conduct their respective businesses and (iii) are in
compliance with all terms and conditions of any such permit, license or
approval, except where such noncompliance with Environmental Laws, failure
to receive required permits, licenses or other approvals or failure to
comply with the terms and conditions of such permits, licenses or
approvals would not, singly or in the aggregate, have a material adverse
effect on the WellCare Group.
(p) There are no costs or liabilities associated with Environmental
Laws (including, without limitation, any capital or operating expenditures
required for clean-up, closure of properties or compliance with
Environmental Laws or any permit, license or approval, any related
constraints on operating activities and any potential liabilities to third
parties) which would, singly or in the aggregate, have a material adverse
effect on the WellCare Group.
(q) There are no contracts, agreements or understandings between the
Company or LLC Holdings and any person granting such person the right to
require the Company or LLC Holdings to file a registration statement under
the Securities Act with respect to any securities of the Company or LLC
Holdings or to require the Company or LLC Holdings to include such
securities with the Shares registered pursuant to the Registration
Statement, in each case except as described in the Prospectus.
(r) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, (i) each of the
Company, LLC Holdings and the Subsidiaries has not incurred any material
liability or obligation, direct or contingent, nor entered into any
material transaction not in the ordinary course of business; (ii) none of
the
6
Company, LLC Holdings or the Subsidiaries has purchased any of its
outstanding capital stock or membership units, nor declared, paid or
otherwise made any dividend or distribution of any kind on its capital
stock or membership units; and (iii) there has not been any material
change in the capital stock, membership units, short-term debt or
long-term debt of any of the Company, LLC Holdings or the Subsidiaries,
except in each case as described in the Prospectus.
(s) The Company, LLC Holdings and the Subsidiaries have good and
marketable title in fee simple to all real property and good and
marketable title to all personal property owned by them which is material
to the WellCare Group, in each case free and clear of all liens,
encumbrances and defects except such as are described in the Prospectus or
such as do not materially affect the value of such property and do not
interfere with the use made and proposed to be made of such property by
the WellCare Group; and any real property and buildings held under lease
by the Company, LLC Holdings and the 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 and proposed to be made of
such property and buildings by the Company, LLC Holdings and the
Subsidiaries, in each case except as described in the Prospectus.
(t) Except as set forth in the Registration Statement, (i) the
Company, LLC Holdings, and the Subsidiaries own, possess, license or have
other rights to use on reasonable terms, all material patents, patent
rights, licenses, inventions, copyrights, know-how (including trade
secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems, or procedures), trademarks, service
marks and trade names, and domain names (in each case including all
registrations and applications to register same), and other intellectual
property, (collectively, the "INTELLECTUAL PROPERTY") necessary for the
operation of the business of the Company, LLC Holdings, and the
Subsidiaries as now conducted; (ii) neither the Company, LLC Holdings nor
any of the Subsidiaries has received any notice of infringement of or
conflict with asserted rights of other parties with respect to such
Intellectual Property, and the Company and LLC Holdings are unaware of any
facts which would form a reasonable basis for a party to send such a
notice; (iii) to the knowledge of the Company or LLC Holdings, there is no
material infringement by third parties of any such Intellectual Property
that is owned by or exclusively licensed to the Company, LLC Holdings or
the Subsidiaries; and (iv) there is no pending or, to the Company or LLC
Holdings' knowledge, threatened action, suit, proceeding or claim by any
third party that the conduct of the business of the Company, LLC Holdings,
or the Subsidiaries infringes or otherwise violates any Intellectual
Property Rights of any third party, and the Company and LLC Holdings are
unaware of any other fact which would form a reasonable basis for any such
claim.
7
(u) No material labor dispute with the employees of the Company, LLC
Holdings or any of the Subsidiaries exists or, to the knowledge of the
Company or LLC Holdings, is imminent; and the Company, LLC Holdings and
the Subsidiaries are not aware of any existing, threatened or imminent
labor disturbance by the employees of any of its principal suppliers,
manufacturers or contractors that could have a material adverse effect on
the WellCare Group.
(v) None of the following events has occurred or exists: (i) a
failure to fulfill the obligations, if any, under the minimum funding
standards of ▇▇▇▇▇▇▇ ▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), and the regulations and
published interpretations thereunder with respect to a Plan, determined
without regard to any waiver of such obligations or extension of any
amortization period; (ii) an audit or investigation by the Internal
Revenue Service, the U.S. Department of Labor, the Pension Benefit
Guaranty Corporation or any other federal or state governmental agency or
any foreign regulatory agency with respect to the employment or
compensation of employees by any member of the WellCare Group that could
have a material adverse effect on the WellCare Group; or (iii) any breach
by any member of the WellCare Group of any contractual obligation to
employees that could have a material adverse effect on the WellCare Group.
None of the following events has or is reasonably likely to occur: (i) a
material increase in the aggregate amount of contributions required to be
made to all Plans in the current fiscal year of the WellCare Group
compared to the amount of such contributions made in the WellCare Group's
most recently completed fiscal year; (ii) a material increase in the
WellCare Group's "accumulated post-retirement benefit obligations" (within
the meaning of Statement of Financial Accounting Standards 106) compared
to the amount of such obligations in the WellCare Group's most recently
completed fiscal year; (iii) the termination of any Plan the assets of
which are not sufficient to pay benefit liabilities; or (iv) the filing of
a claim by one or more employees or former employees of the WellCare Group
related to their employment that could have a material adverse effect on
the WellCare Group. For purposes of this paragraph, the term "Plan" means
a plan (within the meaning of Section 3(3) of ERISA) subject to Title IV
of ERISA with respect to which any member of the WellCare Group may have
any liability.
(w) The Company, LLC Holdings and the Subsidiaries are insured by
insurers of recognized financial responsibility against such losses and
risks and in such amounts as are prudent and customary in the businesses
in which they are engaged; and none of the Company, LLC Holdings or any of
the Subsidiaries has any reason to believe that it will not be able to
renew its existing insurance coverage as and when such coverage expires or
to obtain similar coverage from similar insurers as may be necessary to
8
continue its business at a cost that would not have a material adverse
effect on the WellCare Group.
(x) In connection with the Reorganization, the Company and its
subsidiaries have made all required filings and have received all
necessary governmental or other approvals of, or exemptions in respect of,
acquisition of control and/or affiliate transactions in each jurisdiction
in which such filings, approvals or exemptions are required; each of the
Company, LLC Holdings and the Subsidiaries has all necessary consents,
licenses, authorizations, approvals, exemptions, orders, certificates and
permits (collectively, the "CONSENTS") of and from, and has made all
filings and declarations (collectively, the "FILINGS") with, all federal,
state and local governmental and regulatory authorities, all
self-regulatory organizations and all courts and other tribunals,
necessary to own, lease, license and use its properties and assets and to
conduct its business in the manner described in the Prospectus, except
where the failure to have such Consents or to make such Filings would not,
individually or in the aggregate, have a material adverse effect on the
WellCare Group; all such Consents and Filings are in full force and
effect, the Company, LLC Holdings and the Subsidiaries are in compliance
with such Consents and none of the Company, LLC Holdings nor any of the
Subsidiaries has received any notice of any inquiry, investigation or
proceeding that would reasonably be expected to result in the suspension,
revocation or limitation of any such Consent or otherwise impose any
limitation on the conduct of the business of the Company, LLC Holdings or
any of the Subsidiaries, except as set forth in the Prospectus or any such
failure to be in full force and effect, failure to be in compliance with,
suspension, revocation or limitation which would not, singly or in the
aggregate, have a material adverse effect on the WellCare Group.
(y) None of the Company, LLC Holdings or the Subsidiaries is (i) in
violation of its certificate of incorporation or bylaws or other
organizational document, as the case may be, or (ii) 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, credit agreement or other agreement or instrument
to which it is a party or by which it is bound or to which any of its
property or assets is subject.
(z) The Company, LLC Holdings and the Subsidiaries (i) are in
compliance with, and conduct their respective businesses in conformity
with, all applicable federal, state and local laws and regulations, except
where the failure to so comply or conform would not have a material
adverse effect on the WellCare Group, (ii) have received all permits,
licenses and other approvals issued by the appropriate federal, state or
local regulatory authorities necessary to conduct their respective
9
businesses, except where the failure to receive such permits, licenses or
other approvals would not have a material adverse effect on the WellCare
Group, (iii) are in compliance with all terms and conditions of any such
permit, license or other approval, except where such noncompliance would
not have a material adverse effect on the WellCare Group, (iv) and none of
the Company, LLC Holdings or any Subsidiaries has received any notice of
proceedings relating to the revocation or modification of any such permit,
license or other approval which, singly or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would have a
material adverse effect on the WellCare Group, except as described in the
Prospectus.
(aa) The Company, LLC Holdings and each of the Subsidiaries have
filed all federal, state and local tax returns required to be filed
through the date of this Agreement or has requested extensions thereof
(except for cases in which the failure to file would not have a material
adverse effect on the WellCare Group) and have paid all taxes due thereon,
and, except as currently being contested in good faith and for which
reserves required by generally accepted accounting principles have been
created on the financial statements of LLC Holdings, no tax deficiency has
been determined adversely to the Company, LLC Holdings or any of the
Subsidiaries which has had (nor does the Company, LLC Holdings and each of
the Subsidiaries have any knowledge of any tax deficiency which, if
determined adversely to the Company, LLC Holdings or the Subsidiaries,
could reasonably be expected to have) a material adverse effect on the
WellCare Group.
(bb) The Company, LLC Holdings and each of the Subsidiaries
maintains a system of internal accounting controls sufficient to provide
reasonable assurance that (i) transactions are executed in accordance with
management's general or specific authorizations; (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain
asset accountability; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv)
the recorded accountability for assets is compared with the existing
assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(cc) LLC Holdings has established and maintains disclosure controls
and procedures (as such term is defined in Rule 13a-14 and 15d-14 under
the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"));
such disclosure controls and procedures are designed to ensure that
material information relating to LLC Holdings, including its consolidated
subsidiaries, is made known to LLC Holdings' Chief Executive Officer and
Chief Financial Officer by others within LLC Holdings, and such disclosure
controls and procedures are effective to perform the functions for which
they were established; LLC Holdings'
10
auditor and the Audit Committee of its Board of Directors have been
advised of: (i) any significant deficiencies in the design or operation of
internal controls which could adversely affect LLC Holdings' ability to
record, process, summarize, and report financial data; and (ii) any fraud,
whether or not material, that involves management or other employees who
have a role in LLC Holdings' internal controls; any material weaknesses in
internal controls have been identified for LLC Holdings' auditors; and
since the date of the most recent evaluation of such disclosure controls
and procedures, there have been no significant changes in internal
controls or in other factors that could significantly affect internal
controls, including any corrective actions with regard to significant
deficiencies and material weaknesses.
(dd) The Company and LLC Holdings have provided ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ true,
correct, and complete copies of all documentation pertaining to any
extension of credit in the form of a personal loan made, directly or
indirectly, by the Company or LLC Holdings to any director or executive
officer of the Company or LLC Holdings, or to any family member or
affiliate of any director or executive officer of the Company or LLC
Holdings; and since July 30, 2002, neither the Company nor LLC Holdings
has, directly or indirectly, including through any subsidiary: (i)
extended credit, arranged to extend credit, or renewed any extension of
credit, in the form of a personal loan, to or for any director or
executive officer of the Company or LLC Holdings, or to or for any family
member or affiliate of any director or executive officer of the Company or
LLC Holdings; or (ii) made any material modification, including any
renewal thereof, to any term of any personal loan to any director or
executive officer of the Company or LLC Holdings, or any family member or
affiliate of any director or executive officer, which loan was outstanding
on July 30, 2002.
(ee) The Company and LLC Holdings have 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
stabilization or manipulation of the price of any security of the Company
or LLC Holdings to facilitate the sale or resale of the Shares.
(ff) The Registration Statement, the Prospectus and any preliminary
prospectus comply, and any amendments or supplements thereto will comply,
with any applicable laws or regulations of foreign jurisdictions in which
the Prospectus or any preliminary prospectus, as amended or supplemented,
if applicable, are distributed in connection with the Directed Share
Program.
(gg) No consent, approval, authorization or order of, or
qualification with, any governmental body or agency, other than those
11
obtained, is required in connection with the offering of the Directed
Shares in any jurisdiction where the Directed Shares are being offered.
(hh) The Company has not offered, or caused ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or its
affiliates to offer, Shares to any person pursuant to the Directed Share
Program with the intent to influence unlawfully (i) a customer or supplier
of the Company to alter the customer's or supplier's level or type of
business with the Company, or (ii) a trade journalist or publication to
write or publish favorable information about the Company or its products
and services.
(ii) Deloitte & Touche LLP, who have certified certain financial
statements of LLC Holdings and the Subsidiaries, are independent public
accountants as required by the Securities Act and the rules and
regulations of the Commission thereunder.
(jj) It is not necessary in connection with (i) the grant, issuance,
offer, sale and delivery of the Common Stock or options for Common Stock
to be issued by the Company pursuant to the Reorganization, or (ii) the
contribution of Common Stock to any deferred compensation or other benefit
plan to register any such Common Stock under the Securities Act, or to
qualify any indenture under the Trust Indenture Act of 1939, as amended.
2. Representations and Warranties of the Selling Shareholder. The Selling
Shareholder represents and warrants to and agrees with each of the Underwriters
that:
(a) This Agreement has been duly authorized, executed and delivered
by or on behalf of the Selling Shareholder.
(b) The execution and delivery by the Selling Shareholder of, and
the performance by the Selling Shareholder of its obligations under, this
Agreement will not contravene any provision of applicable law or the
partnership agreement of the Selling Shareholder or any agreement or other
instrument binding upon the Selling Shareholder or any judgment, order or
decree of any governmental body, agency or court having jurisdiction over
the Selling Shareholder, and no consent, approval, authorization or order
of, or qualification with, any governmental body or agency is required for
the performance by the Selling Shareholder of its obligations under this
Agreement, except such as may be required by the securities or Blue Sky
laws of the various states in connection with the offer and sale of the
Shares or has been obtained prior to the date of this Agreement.
(c) The Selling Shareholder has, and on the Option Closing Date (as
defined below) will have, valid title to, or a valid "security
12
entitlement" within the meaning of Section 8-501 of the New York Uniform
Commercial Code in respect of, the Shares to be sold by the Selling
Shareholder, free and clear of all security interests, claims, liens,
equities or other encumbrances, and the legal right and power, and all
authorization and approval required by law, to enter into this Agreement
and to sell, transfer and deliver the Shares to be sold by such Selling
Shareholder or a security entitlement in respect of such Shares.
(e) Upon payment for the Additional Shares to be sold by the Selling
Shareholder pursuant to this Agreement, delivery of such Additional
Shares, as directed by the Underwriters, to Cede & Co. ("Cede") or such
other nominee as may be designated by The Depository Trust Company
("DTC"), registration of such Additional Shares in the name of Cede or
such other nominee and the crediting of such Additional Shares on the
books of DTC to securities accounts of the Underwriters (assuming that
neither DTC nor any such Underwriter has notice of any adverse claim
(within the meaning of Section 8-105 of the New York Uniform Commercial
Code (the "UCC")) to such Additional Shares), (A) DTC shall be a
"protected purchaser" of such Additional Shares within the meaning of
Section 8-303 of the UCC, (B) under Section 8-501 of the UCC, the
Underwriters will acquire a valid security entitlement in respect of such
Additional Shares and (C) no action based on any "adverse claim", within
the meaning of Section 8-102 of the UCC, to such Additional Shares may be
asserted against the Underwriters with respect to such security
entitlement; for purposes of this representation, such Selling Shareholder
may assume that when such payment, delivery and crediting occur, (x) such
Additional Shares will have been registered in the name of Cede or another
nominee designated by DTC, in each case on the Company's share registry in
accordance with its certificate of incorporation, bylaws and applicable
law, (y) DTC will be registered as a "clearing corporation" within the
meaning of Section 8-102 of the UCC and (z) appropriate entries to the
accounts of the several Underwriters on the records of DTC will have been
made pursuant to the UCC.
(f) The Selling Shareholder is not prompted by any information
concerning the Company or its subsidiaries which is not set forth in the
Prospectus to sell its Additional Shares pursuant to this Agreement.
(g) (i) The Registration Statement, when it became effective, did
not contain and, as amended or supplemented, if applicable, will 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 therein not misleading and (ii) the Prospectus does not contain
and, as amended or supplemented, if applicable, will not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided that
the representations and
13
warranties set forth in this paragraph 2(g) are limited to statements or
omissions made in reliance upon information relating to the Selling
Shareholder furnished to the Company in writing by the Selling Shareholder
expressly for use in the Registration Statement, the Prospectus or any
amendments or supplements thereto.
(h) The Selling Shareholder 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
stabilization or manipulation of the price of any security of the Company
or LLC Holdings to facilitate the sale or resale of its Additional Shares.
(i) Except as disclosed by the Selling Shareholder in writing to
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, neither the Selling Shareholder nor any of his, her or its
affiliates directly, or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with, or has any
other association with (within the meaning of Article 1(q) of the Bylaws
of the National Association of Securities Dealers, Inc. (the "NASD")), any
member firm of the NASD.
3. Agreements to Sell and Purchase. The Company hereby agrees to sell to
the several Underwriters, and each Underwriter, upon the basis of the
representations and warranties herein contained, but subject to the conditions
hereinafter stated, agrees, severally and not jointly, to purchase from the
Company at $[mid dot] a share (the "PURCHASE PRICE") the number of Firm Shares
(subject to such adjustments to eliminate fractional shares as you may
determine) that bears the same proportion to the number of Firm Shares to be
sold by the Company as the number of Firm Shares set forth in Schedule II hereto
opposite the name of such Underwriter bears to the total number of Firm Shares.
On the basis of the representations and warranties contained in this
Agreement, and subject to its terms and conditions, the Selling Shareholder
agrees to sell to the Underwriters the Additional Shares, and the Underwriters
shall have the right to purchase, severally and not jointly, up to 1,100,000
Additional Shares at the Purchase Price. You may exercise this right on behalf
of the Underwriters in whole or from time to time in part by giving written
notice of each election to exercise the option not later than 30 days after the
date of this Agreement. Any exercise notice shall specify the number of
Additional Shares to be purchased by the Underwriters and the date on which such
shares are to be purchased. Each purchase date must be at least one business day
after the written notice is given and may not be earlier than the Closing Date
for the Firm Shares nor later than ten business days after the date of such
notice. Additional Shares may be purchased as provided in Section 5 hereof
solely for the purpose of covering over-allotments made in connection with the
offering of the Firm Shares. On each day, if any, that Additional Shares are to
be purchased (an "OPTION CLOSING DATE"), each Underwriter agrees, severally and
not jointly, to purchase the number of Additional Shares (subject to such
adjustments to eliminate fractional shares as
14
you may determine) that bears the same proportion to the total number of
Additional Shares to be purchased on such Option Closing Date as the number of
Firm Shares set forth in Schedule II hereto opposite the name of such
Underwriter bears to the total number of Firm Shares.
Each Seller hereby agrees that, without the prior written consent of
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ on behalf of the Underwriters, it will not, during the period
ending 180 days after the date of the Prospectus, (a) offer, pledge, sell,
contract to sell, sell any option or contract to purchase, purchase any option
or contract to sell, grant any option, right or warrant to purchase, lend, or
otherwise transfer or dispose of, directly or indirectly, any shares of Common
Stock or any securities convertible into or exercisable or exchangeable for
Common Stock, (b) file any registration statement with the Commission relating
to the offering of any shares of Common Stock or any securities convertible into
or exercisable or exchangeable for Common Stock or (c) enter into any swap or
other arrangement that transfers to another, in whole or in part, any of the
economic consequences of ownership of the Common Stock, whether any such
transaction described in clause (a), (b) or (c) above is to be settled by
delivery of Common Stock or such other securities, in cash or otherwise.
Notwithstanding the foregoing, if (a) during the last 17 days of the
180-day restricted period the Company issues an earnings release or material
news or a material event relating to the Company occurs; or (b) prior to the
expiration of the 180-day restricted period, the Company announces that it will
release earnings results during the 16-day period beginning on the last day of
the 180-day period, the restrictions imposed by this letter shall continue to
apply until the expiration of the 18-day period beginning on the issuance of the
earnings release or the occurrence of the material news or material event.
The restrictions contained in the second preceding paragraph shall not
apply to (a) the Shares to be sold hereunder, (b) the issuance by the Company of
shares of Common Stock upon the exercise of an option or warrant or the
conversion of a security outstanding on the date hereof of which the
Underwriters have been advised in writing, (c) issuance by the Company of Common
Stock pursuant to the Reorganization, (d) transactions by any person other than
the Company relating to shares of Common Stock or other securities acquired in
open market transactions after the completion of the offering of the Shares, (e)
the grant of options or the issuance of shares of Common Stock by the Company to
employees, officers, directors, advisors or consultants pursuant to an employee
benefit plan described in the Prospectus, (f) the filing of any registration
statement on Form S-8 in respect of any employee benefit plan described in the
Prospectus or (g) transfers of shares of Common Stock or any security
convertible into Common Stock as a bona fide gift or gifts or transfers to
controlled affiliates, provided that each transferee also agrees to the
restrictions described above. In addition, the Selling Shareholder agrees that,
without the prior written consent of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ on behalf of the
Underwriters, it will not, during the period ending 180 days after the date of
the Prospectus, make any demand for, or
15
exercise any right with respect to, the registration of any shares of Common
Stock or any security convertible into or exercisable or exchangeable for Common
Stock.
4. Terms of Public Offering. The Sellers are 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. The Sellers are further
advised by you that the Shares are to be offered to the public initially at
$[mid dot] a share (the "PUBLIC OFFERING PRICE") and to certain dealers selected
by you at a price that represents a concession not in excess of $[mid dot] a
share under the Public Offering Price, and that any Underwriter may allow, and
such dealers may reallow, a concession, not in excess of $[mid dot] a share, to
any Underwriter or to certain other dealers.
5. Payment and Delivery. Payment for the Firm Shares to be sold by the
Company shall be made to the Company in federal or other funds immediately
available in New York City against delivery of such Firm Shares for the
respective accounts of the several Underwriters at 10:00 a.m., New York City
time, on [mid dot], 2004, or at such other time on the same or such other date,
not later than [mid dot], 2004, as shall be designated in writing by you. The
time and date of such payment are hereinafter referred to as the "CLOSING DATE."
Payment for any Additional Shares shall be made to the Selling
Shareholders in federal or other funds immediately available in New York City
against delivery of such Additional Shares for the respective accounts of the
several Underwriters at 10:00 a.m., New York City time, on the date specified in
the corresponding notice described in Section 3 or at such other time on the
same or on such other date, in any event not later than [mid dot], 2004, as
shall be designated in writing by you.
The Firm Shares and Additional Shares shall be registered in such names
and in such denominations as you shall request in writing not later than one
full business day prior to the Closing Date or the applicable Option Closing
Date, as the case may be. The Firm Shares and Additional Shares shall be
delivered to you on the Closing Date or an Option Closing Date, as the case may
be, for the respective accounts of the several Underwriters, with any transfer
taxes payable in connection with the transfer of the Shares to the Underwriters
duly paid, against payment of the Purchase Price therefor.
6. Conditions to the Underwriters' Obligations. The obligations of the
Company to sell the Firm Shares to the Underwriters and the several obligations
of the Underwriters to purchase and pay for the Firm Shares on the Closing Date
are subject to the condition that the Registration Statement shall have become
effective not later than 5:00 pm (New York City time) on the date hereof.
The several obligations of the Underwriters are subject to the following
further conditions:
16
(a) Subsequent to the execution and delivery of this Agreement and
prior to the Closing Date:
(i) there shall not have occurred any downgrading, nor shall
any notice have been given of any intended or potential downgrading
or of any review for a possible change that does not indicate the
direction of the possible change, in the rating accorded any of the
Company's or LLC Holdings' securities by any "nationally recognized
statistical rating organization," as such term is defined for
purposes of Rule 436(g)(2) under the Securities Act;
(ii) there shall not have occurred any change, or any
development involving a prospective change, in the condition,
financial or otherwise, or in the earnings, business or operations
of the WellCare Group, from that set forth in the Prospectus
(exclusive of any amendments or supplements thereto subsequent to
the date of this Agreement) that, in your judgment, is material and
adverse and that makes it, in your judgment, impracticable to market
the Shares on the terms and in the manner contemplated in the
Prospectus; and
(iii) all the transactions contemplated by the Reorganization
shall have occurred, and the Reorganization shall have been
consummated in the manner described in the Prospectus.
(b) The Underwriters shall have received on the Closing Date a
certificate, dated the Closing Date and signed by an executive officer of
the Company, to the effect set forth in Sections 6(a)(i) and 6(a)(iii)
above and to the effect that the representations and warranties of the
Company and LLC Holdings contained in this Agreement are true and correct
as of the Closing Date and that the Company and LLC Holdings, as the case
may be, has complied in all material respects with all of the agreements
and satisfied all of the conditions on its part to be performed or
satisfied hereunder on or before the Closing Date, that no stop order
suspending the effectiveness of the Registration Statement has been issued
and no proceedings for that purpose have been instituted or, to the
Company's knowledge, threatened.
The officer signing and delivering such certificate may rely upon
the best of his or her knowledge as to proceedings threatened.
(c) The Underwriters shall have received on the Closing Date an
opinion of ▇▇▇▇▇▇▇▇▇ Traurig, LLP, outside counsel for the Company and LLC
Holdings, dated the Closing Date, to the effect that:
(i) each of the Company and the Subsidiaries has been duly
incorporated, is validly existing as a corporation in good
17
standing under the laws of the jurisdiction of its incorporation,
has the corporate power and authority to own its property and to
conduct its business as described in the Prospectus and (based
solely on an examination of certificates of government officials and
agencies) is duly qualified to transact business and is in good
standing in each jurisdiction in which the conduct of its business
or its ownership or leasing of property requires such qualification,
except to the extent that the failure to be so qualified or be in
good standing would not have a material adverse effect on the
WellCare Group;
(ii) the authorized capital stock of the Company conforms as
to legal matters to the description thereof contained in the
Prospectus;
(iii) the shares of Common Stock (including the Shares to be
sold by the Selling Shareholder) outstanding prior to the issuance
of the Shares to be sold by the Company have been duly authorized
and are validly issued, fully paid and non-assessable, and there are
no restrictions on transfer of or encumbrances on such Common Stock
under the laws of the State of Delaware or the certificate of
incorporation of the Company;
(iv) all of the issued shares of capital stock of each
Subsidiary have been duly and validly authorized and issued and are
fully paid and non-assessable; and in each case such capital stock
is owned directly or indirectly by the Company, free and clear of
all liens, encumbrances, equities or claims, except as described in
the Prospectus;
(v) the Shares to be sold by the Company have been duly
authorized and, when issued and delivered in accordance with the
terms of this Agreement, will be validly issued, fully paid and
non-assessable, and the issuance of such Shares will not be subject
to any preemptive or similar rights;
(vi) this Agreement has been duly authorized, executed and
delivered by the Company and LLC Holdings;
(vii) the execution and delivery by the Company and LLC
Holdings of, and the performance by the Company and LLC Holdings of
their respective obligations under, this Agreement will not
contravene any provision of the certificate of incorporation or
by-laws or other organizational documents, as the case may be, of
the Company, LLC Holdings or the Subsidiaries or, to the best of
such counsel's knowledge, any agreement or other instrument binding
upon the Company, LLC Holdings or the Subsidiaries and
18
filed or required to be filed as an exhibit to the Registration
Statement, or to the best of such counsel's knowledge, any judgment,
order or decree of any governmental body, agency or court having
jurisdiction over the Company, LLC Holdings or the Subsidiaries or
any applicable U.S. federal, New York or Florida state law, and no
consent, approval, authorization or order of, or qualification with,
any governmental body or agency is required for the performance by
the Company, LLC Holdings or the Subsidiaries of their respective
obligations under this Agreement, except such as may be required by
the securities or Blue Sky laws of the various states in connection
with the offer and sale of the Shares as to which no opinion is
expressed;
(viii) all shareholder, option or warrant holder and limited
liability company member approvals necessary to consummate the
Reorganization have been obtained and are in full force and effect;
the Reorganization has been duly consummated in the manner described
in the Prospectus, the Reorganization did not contravene any
provision of applicable law or the certificate of incorporation or
bylaws or other organizational documents, as the case may be, of the
Company, LLC Holdings, or the other parties to the Reorganization,
or any agreement or other instrument binding upon the Company, LLC
Holdings or any Subsidiaries that is material to the WellCare Group,
or to such counsel's knowledge, but without having performed a
docket search, any judgment, order or decree of any governmental
body, agency or court having jurisdiction over the Company, LLC
Holdings or any of the Subsidiaries that is material to the WellCare
Group, and no consent, approval, authorization or order of, or
qualification with, any governmental body or agency was required for
the performance by the Company or by LLC Holdings of their
respective obligations under the Reorganization, except for those
obtained and except where the failure to obtain such consents,
approvals, authorizations, orders or qualifications would not,
singly or in the aggregate, have a material adverse effect on the
WellCare Group;
(ix) in connection with the Reorganization, each of the
Company, LLC Holdings and each Subsidiary has made all required
filings and has received all necessary governmental or other
approvals (including the approval of the Board of Directors of LLC
Holdings and approval of ▇▇▇▇▇ Private Equity Investors LP) of, or
exemptions in respect of, acquisition of control and/or affiliate
transactions in each jurisdiction in which such filings, approvals
or exemptions are required;
19
(x) it is not necessary in connection with (A) the grant,
issuance, offer, sale and delivery of the Common Stock to be issued
by the Company pursuant to the Reorganization, or (B) the grant,
offer or sale of any options for Common Stock, to register any such
Common Stock or options for Common Stock under the Securities Act;
(xi) the statements relating to legal matters, documents or
proceedings included in (A) the Prospectus under the captions "Risk
Factors," "Management's Discussion and Analysis of Financial
Condition and Results of Operations--Overview," "Our Business,"
"Management," "Certain Transactions," "Description of Capital
Stock," and "Underwriters" and (B) the Registration Statement in
Items 14 and 15, in each case fairly summarize in all material
respects such matters, documents or proceedings;
(xii) after due inquiry, such counsel does not know of any
legal or governmental proceedings pending or threatened to which the
Company or any of the Subsidiaries is a party or to which any of the
properties of the Company or any of the Subsidiaries is subject that
are required to be described in the Registration Statement or the
Prospectus and are not so described or of any statutes, regulations,
contracts or other documents that are required to be described in
the Registration Statement or the Prospectus or to be filed as
exhibits to the Registration Statement that are not described or
filed as required;
(xiii) the Company is not, and, after giving effect to (A) the
Reorganization and (B) the offering and sale of the Shares and the
application of the proceeds thereof as described in the Prospectus,
will not be, required to register as an "investment company" as such
term is defined in the Investment Company Act of 1940, as amended;
(xiv) the WellCare Group (A) has received all permits,
licenses and other approvals issued by the appropriate federal and
Florida, New York and Illinois state or local regulatory authorities
necessary to conduct its businesses, except where the failure to
receive such permits, licenses or other approvals would not have a
material adverse effect on the WellCare Group, (B) is in compliance
with all terms and conditions of any such permit, license or other
approval, except where such noncompliance would not have a material
adverse effect on the WellCare Group, (C) and none of the Company,
LLC Holdings or any Subsidiaries has received any notice of
proceedings relating to the revocation or modification of any such
permit, license or other approval, except where such revocation or
modification would not have a material
20
adverse effect on the WellCare Group, except as described in the
Prospectus;
(xv) (A) such counsel is of the opinion that the Registration
Statement and the Prospectus (except for the financial statements
and financial schedules and other financial and statistical data
included therein, as to which such counsel need not express any
opinion) comply as to form in all material respects with the
Securities Act and the applicable rules and regulations of the
Commission thereunder, (B) nothing has come to the attention of such
counsel to lead such counsel to believe that (i) the Registration
Statement and the prospectus included therein at the time the
Registration Statement became effective (except for the financial
statements and financial schedules and other financial and
statistical data included therein, as to which such counsel need not
express any belief) contained any 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 (ii) the Prospectus (except for the financial statements and
financial schedules and other financial and statistical data
included therein, as to which such counsel need not express any
belief) as of its date or as of the Closing Date contained or
contains any 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.
(d) The Underwriters shall have received on any Option Closing Date
an opinion of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP, counsel for the Selling Shareholder,
dated the Option Closing Date, to the effect that:
(i) the Selling Stockholder has duly authorized, executed
and delivered this Agreement;
(ii) the execution and delivery of this Agreement by the
Selling Shareholder, the sale of the Additional Shares to be sold by
the Selling Shareholder in accordance with the provisions of this
Agreement and the consummation by the Selling Shareholder of the
transactions therein contemplated will not (A) violate the
organizational documents or by-laws of the Selling Shareholder, (B)
constitute a violation by such Selling Shareholder of any applicable
provision of any law, statute or regulation of any governmental
agency or body having jurisdiction over such Selling Shareholder or
the property of such Selling Shareholder (except with respect to
compliance with any disclosure requirement or any prohibition
against fraud or misrepresentation or as to whether performance of
the indemnification or contribution provisions in this Agreement
would be permitted, as to which such counsel need
21
not express an opinion) or (C) breach, or result in a default under,
any existing obligation of the Selling Shareholder under any of the
agreements or forms of agreements set forth on an exhibit attached
to such opinion, which representatives of the Selling Shareholder
have advised such counsel include all material debt agreements and
instruments of or binding on the Selling Shareholder, in each case
other than such violations, breaches or defaults which, individually
or in the aggregate, would not materially adversely affect the
Selling Shareholder's ability to perform its obligations under this
Agreement;
(iii) to the knowledge of such counsel, no consent, approval,
authorization or order of or filing with any court or governmental
agency or body is required for the transfer and sale of the
Additional Shares by the Selling Shareholder or the consummation by
the Selling Shareholder of the transactions contemplated by this
Agreement, other than such consents, approvals, AUTHORIZATIONS,
orders or filings (A) as may be required under foreign securities or
state "blue sky" laws in connection with the purchase and
distribution of Additional Shares by the Underwriters (as to which
laws we have not been requested to express and therefore do not
express an opinion) or (B) as have been obtained and remain in full
force and effect; and
(iv) the Selling Shareholder will be, immediately prior to
the Option Closing Date, the sole registered owner of the Additional
Shares to be sold by the Selling Shareholder; upon payment for the
Additional Shares to be sold by the Selling Shareholder to each of
the several Underwriters as provided in this Agreement, the delivery
of such Additional Shares to Cede or such other nominee as may be
designated by DTC, the registration of such Additional Shares in the
name of Cede or such other nominee and the crediting of such
Additional Shares on the records of DTC to security accounts in the
name of such Underwriter (assuming neither DTC nor such Underwriter
has notice of any adverse claim (as such term is defined in Section
8-102(a)(1) of the UCC) to any "security entitlement" (within the
meaning of Section 8-102(a)(17) of the UCC) in respect of such
Additional Shares), (A) under Section 8-501 of the UCC, such
Underwriter will acquire a "security entitlement" (within the
meaning of Section 8-102(a)(17) of the UCC) in respect of such
Additional Shares and (B) no action based on any "adverse claim" (as
defined in Section 8-102(a)(1) of the UCC) to such security
entitlement may be asserted against such Underwriter, it being
understood that for purposes of such opinion, such counsel may
assume that when such payment, delivery, registration and crediting
occur, (x) the Additional Shares will have been registered in the
name of Cede or such other nominee as
22
may be designated by DTC, in each case on the Company's share
registry in accordance with its certificate of incorporation,
by-laws and applicable law, (y) DTC will be a "securities
intermediary" within the meaning of Section 8-102 of the UCC and (z)
appropriate entries to the securities account or accounts in the
name of such Underwriter on the records of DTC will have been made
pursuant to the UCC.
(e) The Underwriters shall have received on the Closing Date an
opinion of Cleary, Gottlieb, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, counsel for the
Underwriters, dated the Closing Date, covering the matters referred to in
Sections 6(c)(v), 6(c)(vi), 6(c)(xi) (but only as to the statements in the
Prospectus under "Description of Capital Stock" and "Underwriters") and a
letter covering the matters referred to in 6(c)(xiv)(B) above.
(f) (f) The Underwriters shall have received on the Closing Date an
opinion of ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ and Green P.C., special regulatory counsel for
the Underwriters, dated the Closing Date, covering the matters referred to
in Section 6(c)(xi)(A) (solely with respect to statements summarizing the
federal and state statutes, rules and regulations, and legal or
governmental proceedings involving health regulatory matters contained in
specified sections under "Risk Factors," "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and "Our
Business" in the Prospectus) and 6(c)(xiv)(B) (solely with respect to
health regulatory matters contained in specified sections under "Risk
Factors," "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and "Our Business" in the Prospectus).
With respect to Section 6(c)(xiv) above, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and Green
P.C., and with respect to Section 6(d)(vi) above, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
LLP, may state that their beliefs are based upon their participation
in the preparation of the Registration Statement and Prospectus and
any amendments or supplements thereto and review and discussion of
the contents thereof, but are without independent check or
verification, except as specified. With respect to Section 6(d)
above, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP may rely upon an opinion or opinions of
counsel for the Selling Shareholder and, with respect to factual
matters and to the extent such counsel deems appropriate, upon the
representations of the Selling Shareholder contained herein and in
other documents and instruments; provided that (A) each such counsel
for the Selling Shareholder is satisfactory to your counsel, (B) a
copy of each opinion so relied upon is delivered to you and is in
form and substance satisfactory to your counsel, (C) copies of any
such other documents and instruments shall be delivered to you and
shall be in form and substance satisfactory to your counsel and (D)
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP shall
23
state in their opinion that they are justified in relying on each
such other opinion. With respect to Section 6(c) above, ▇▇▇▇▇▇▇▇▇
Traurig, LLP may rely, with respect to factual matters and to the
extent such counsel deems appropriate, upon the representations of
the Company and LLC Holdings contained herein and in other documents
and instruments; provided that copies of such other documents and
instruments shall be delivered to you and shall be in form and
substance satisfactory to your counsel.
The opinions of ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, LLP, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP
and ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ and Green P.C. described in Sections 6(c), 6(e)
and 6(f) above (and any opinions of counsel for the Selling
Shareholder referred to in the immediately preceding paragraph)
shall be rendered to the Underwriters at the request of the Company
or the Selling Shareholder, as the case may be, and shall so state
therein.
(g) The Underwriters shall have received, on each of the date hereof
and the Closing Date, a letter dated the date hereof or the Closing Date,
as the case may be, in form and substance satisfactory to the
Underwriters, from Deloitte & Touche LLP, independent public accountants,
containing statements and information of the type ordinarily included in
accountants' "comfort letters" to underwriters with respect to the
financial statements and certain financial information contained in the
Registration Statement and the Prospectus; provided that the letter
delivered on the Closing Date shall use a "cut-off date" not earlier than
the date hereof.
(h) The "lock-up" agreements, each substantially in the form of
Exhibit A hereto, between you and certain shareholders, officers and
directors of the Company relating to sales and certain other dispositions
of shares of Common Stock or certain other securities, delivered to you on
or before the date hereof, shall be in full force and effect on the
Closing Date.
(i) The Shares shall have been approved for listing on the New York
Stock Exchange (the "NYSE"), subject only to official notice of issuance.
The several obligations of the Underwriters to purchase Additional Shares
hereunder are subject to the delivery to you on the applicable Option Closing
Date of such documents as you may reasonably request with respect to the good
standing of the Company, the due authorization and issuance of the Additional
Shares to be sold on such Option Closing Date and other matters related to the
issuance of such Additional Shares.
24
7. Covenants of the Company. In further consideration of the agreements of
the Underwriters herein contained, the Company covenants with each Underwriter
as follows:
(a) To furnish to you, without charge, five signed copies of the
Registration Statement (including exhibits thereto) and for delivery to
each other Underwriter a conformed copy of the Registration Statement
(without exhibits thereto) and to furnish to you in New York City, without
charge, prior to 10:00 a.m. New York City time on the business day next
succeeding the date of this Agreement and during the period mentioned in
Section 7(c) below, as many copies of the Prospectus and any supplements
and amendments thereto or to the Registration Statement as you may
reasonably request.
(b) Before amending or supplementing the Registration Statement or
the Prospectus, to furnish to you a copy of each such proposed amendment
or supplement and not to file any such proposed amendment or supplement to
which you reasonably object, and to file with the Commission within the
applicable period specified in Rule 424(b) under the Securities Act any
prospectus required to be filed pursuant to such Rule.
(c) If, during such period after the first date of the public
offering of the Shares as in the opinion of counsel for the Underwriters
the Prospectus is required by law to be delivered in connection with sales
by an Underwriter or dealer, any event shall occur or condition exist as a
result of which it is necessary to amend or supplement the Prospectus in
order to make the statements therein, in the light of the circumstances
when the Prospectus is delivered to a purchaser, not misleading, or if, in
the opinion of counsel for the Underwriters, it is necessary to amend or
supplement the Prospectus to comply with applicable law, forthwith to
prepare, file with the Commission and furnish, at its own expense, to the
Underwriters and to the dealers (whose names and addresses you will
furnish to the Company) to which Shares may have been sold by you on
behalf of the Underwriters and to any other dealers upon request, either
amendments or supplements to the Prospectus so that the statements in the
Prospectus as so amended or supplemented will not, in the light of the
circumstances when the Prospectus is delivered to a purchaser, be
misleading or so that the Prospectus, as amended or supplemented, will
comply with law.
(d) To endeavor to qualify the Shares for offer and sale under the
securities or Blue Sky laws of such jurisdictions as you shall reasonably
request.
(e) To make generally available to the Company's security holders
and to you as soon as practicable an earning statement covering the
25
twelve-month period ending September 30, 2005 that satisfies the
provisions of Section 11(a) of the Securities Act and the rules and
regulations of the Commission thereunder.
(f) To comply with all applicable securities and other applicable
laws, rules and regulations in each jurisdiction in which the Directed
Shares are offered in connection with the Directed Share Program.
8. Expenses. Whether or not the transactions contemplated in this
Agreement are consummated or this Agreement is terminated, the Company agrees to
pay or cause to be paid all expenses incident to the performance of their
obligations under this Agreement, including: (i) the fees, disbursements and
expenses of the Company's and LLC Holdings' counsel and the Company's and LLC
Holdings' accountants and counsel for the Selling Shareholder in connection with
the registration and delivery of the Shares under the Securities Act and all
other fees or expenses in connection with the preparation and filing of the
Registration Statement, any preliminary prospectus, the Prospectus and
amendments and supplements to any of the foregoing, including all printing costs
associated therewith, and the mailing and delivering of copies thereof to the
Underwriters and dealers, in the quantities hereinabove specified, (ii) all
costs and expenses related to the transfer and delivery of the Shares to the
Underwriters, including any transfer or other taxes payable thereon, (iii) the
cost of printing or producing any Blue Sky or Legal Investment memorandum in
connection with the offer and sale of the Shares under state securities laws and
all expenses in connection with the qualification of the Shares for offer and
sale under state securities laws as provided in Section 7(d) hereof, including
filing fees and the reasonable fees and disbursements of counsel for the
Underwriters in connection with such qualification and in connection with the
Blue Sky or Legal Investment memorandum, (iv) all filing fees and the reasonable
fees and disbursements of counsel to the Underwriters incurred in connection
with the review and qualification of the offering of the Shares by the National
Association of Securities Dealers, Inc., (v) all fees and expenses in connection
with the preparation and filing of the registration statement on Form 8-A
relating to the Common Stock and all costs and expenses incident to listing the
Shares on the NYSE, (vi) the cost of printing certificates representing the
Shares, (vii) the costs and charges of any transfer agent, registrar or
depositary, (viii) the costs and expenses of the Company relating to investor
presentations on any "road show" undertaken in connection with the marketing of
the offering of the Shares, including, without limitation, expenses associated
with the production of road show slides and graphics, fees and expenses of any
consultants engaged in connection with the road show presentations with the
prior approval of the Company or LLC Holdings, travel and lodging expenses of
the representatives and officers of the Company or LLC Holdings and any such
consultants, and the cost of any aircraft chartered in connection with the road
show (it being understood that the Underwriters shall be responsible for paying
travel and lodging expenses of the representatives of the Underwriters, one-half
of the cost of any aircraft chartered in connection with the road show, and for
any ground
26
transportation used by representatives of the Company or the Underwriters in
connection with the road show), (ix) the document production charges and
expenses associated with printing this Agreement, (x) all fees and disbursements
of counsel incurred by the Underwriters in connection with the Directed Share
Program and stamp duties, similar taxes or duties or other taxes, if any,
incurred by the Underwriters in connection with the Directed Share Program and
(xi) all other costs and expenses incident to the performance of the obligations
of the Company or LLC Holdings hereunder for which provision is not otherwise
made in this Section. It is understood, however, that except as provided in this
Section, Section 9 entitled "Indemnity and Contribution", Section 10 entitled
"Directed Share Program Indemnification," and the last paragraph of Section 12
below, the Underwriters will pay all of their costs and expenses, including fees
and disbursements of their counsel, stock transfer taxes payable on resale of
any of the Shares by them and any advertising expenses connected with any offers
they may make.
The provisions of this Section shall not supersede or otherwise affect any
agreement that the Sellers may otherwise have for the allocation of such
expenses among themselves.
9. Indemnity and Contribution. (a) The Company and LLC Holdings, jointly
and severally, agree to indemnify and hold harmless each Underwriter, each
person, if any, who controls any Underwriter within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act and each
affiliate of any Underwriter within the meaning of Rule 405 under the Securities
Act, from and against any and all losses, claims, damages and liabilities
(including, without limitation, any legal or other expenses reasonably incurred
in connection with defending or investigating any such action or claim) caused
by any untrue statement or alleged untrue statement of a material fact contained
in the Registration Statement or any amendment thereof, any preliminary
prospectus or the Prospectus (as amended or supplemented if the Company or LLC
Holdings shall have furnished any amendments or supplements thereto), or caused
by any omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading,
except insofar as such losses, claims, damages or liabilities are caused by any
such untrue statement or omission or alleged untrue statement or omission based
upon information relating to any Underwriter furnished to the Company in writing
by such Underwriter through you expressly for use therein; provided, however,
that the foregoing indemnity agreement with respect to any preliminary
prospectus shall not inure to the benefit of any Underwriter from whom the
person asserting such losses, claims, damages or liabilities purchased Shares,
or any person controlling such Underwriter, if it is established that a copy of
the Prospectus (as then amended or supplemented if the Company shall have
furnished any amendments or supplements thereto) was not sent or given by or on
behalf of such Underwriter to such person, if required by law so to have been
delivered, at or prior to the written confirmation of the sale of the Shares to
such person, and if
27
the Prospectus (as so amended or supplemented) would have cured the defect
giving rise to such losses, claims, damages or liabilities.
(b) The Selling Shareholder agrees to indemnify and hold harmless
each Underwriter and each person, if any, who controls any Underwriter
within the meaning of either Section 15 of the Securities Act or Section
20 of the Exchange Act, from and against any and all losses, claims,
damages and liabilities (including, without limitation, any legal or other
expenses reasonably incurred in connection with defending or investigating
any such action or claim) caused by any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement or
any amendment thereof, any preliminary prospectus or the Prospectus (as
amended or supplemented if the Company or LLC Holdings shall have
furnished any amendments or supplements thereto), or caused by any
omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not
misleading, but only with reference to information relating specifically
to the Selling Shareholder, as set forth under the caption "Principal and
Selling Stockholders" (including the notes thereto); provided, however,
that the foregoing indemnity agreement with respect to any preliminary
prospectus shall not inure to the benefit of any Underwriter from whom the
person asserting such losses, claims, damages or liabilities purchased
Shares, or any person controlling such Underwriter, if it is established
that a copy of the Prospectus (as then amended or supplemented if the
Company shall have furnished any amendments or supplements thereto) was
not sent or given by or on behalf of such Underwriter to such person, if
required by law so to have been delivered, at or prior to the written
confirmation of the sale of the Shares to such person, and if the
Prospectus (as so amended or supplemented) would have cured the defect
giving rise to such losses, claims, damages or liabilities; provided,
further, that with respect to any amount due an indemnified person under
this paragraph (b), the Selling Shareholder shall be liable only to the
extent of the net proceeds received by the Selling Shareholder from the
sale of the Selling Shareholder's Shares.
(c) Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless the Company or LLC Holdings, as applicable, the Selling
Shareholder, the directors of the Company, the officers of the Company who
sign the Registration Statement and each person, if any, who controls the
Company or LLC Holdings or any Selling Shareholder within the meaning of
either Section 15 of the Securities Act or Section 20 of the Exchange Act
from and against any and all losses, claims, damages and liabilities
(including, without limitation, any legal or other expenses reasonably
incurred in connection with defending or investigating any such action or
claim) caused by any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or any amendment
thereof, any preliminary prospectus or the
28
Prospectus (as amended or supplemented if the Company or LLC Holdings
shall have furnished any amendments or supplements thereto), or caused by
any omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, but only with reference to information relating to such
Underwriter furnished to the Company in writing by such Underwriter
through you expressly for use in the Registration Statement, any
preliminary prospectus, the Prospectus or any amendments or supplements
thereto.
(d) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of
which indemnity may be sought pursuant to Section 9(a), 9(b) or 9(c), such
person (the "INDEMNIFIED PARTY") shall promptly notify the person against
whom such indemnity may be sought (the "INDEMNIFYING PARTY") in writing
and the indemnifying party, upon request of the indemnified party, shall
retain counsel reasonably satisfactory to the indemnified party to
represent the indemnified party and any others the indemnifying party may
designate in such proceeding and shall pay the fees and disbursements of
such counsel related to such proceeding. In any such proceeding, any
indemnified party shall have the right to retain its own counsel, but the
fees and expenses of such counsel shall be at the expense of such
indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii)
the named parties to any such proceeding (including any impleaded parties)
include both the indemnifying party and the indemnified party and
representation of both parties by the same counsel would be inappropriate
due to actual or potential differing interests between them. It is
understood that the indemnifying party shall not, in respect of the legal
expenses of any indemnified party in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for (i) the fees
and expenses of more than one separate firm (in addition to any local
counsel) for all Underwriters and all persons, if any, who control any
Underwriter within the meaning of either Section 15 of the Securities Act
or Section 20 of the Exchange Act or who are affiliates of any Underwriter
within the meaning of Rule 405 under the Securities Act, (ii) the fees and
expenses of more than one separate firm (in addition to any local counsel)
for the Company, its directors, its officers who sign the Registration
Statement and each person, if any, who controls the Company within the
meaning of either such Section and (iii) the fees and expenses of more
than one separate firm (in addition to any local counsel) for the Selling
Shareholder and all persons, if any, who control the Selling Shareholder
within the meaning of either such Section, and that all such fees and
expenses shall be reimbursed as they are incurred. In the case of any such
separate firm for the Underwriters and such control persons and affiliates
of any Underwriters, such firm shall be designated in writing by ▇▇▇▇▇▇
▇▇▇▇▇▇▇. In the case of any such separate firm for the Company, and such
directors,
29
officers and control persons of the Company, such firm shall be designated
in writing by the Company. In the case of any such separate firm for the
Selling Shareholder and such control persons of the Selling Shareholder,
such firm shall be designated in writing by the Selling Shareholder. The
indemnifying party shall not be liable for any settlement of any
proceeding effected without its written consent, but if settled with such
consent or if there be a final judgment for the plaintiff, the
indemnifying party agrees to indemnify the indemnified party from and
against any loss or liability by reason of such settlement or judgment.
Notwithstanding the foregoing sentence, if at any time an indemnified
party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel as contemplated by the
second and third sentences of this paragraph, the indemnifying party
agrees that it shall be liable for any settlement of any proceeding
effected without its written consent if (i) such settlement is entered
into more than 30 days after receipt by such indemnifying party of the
aforesaid request and (ii) such indemnifying party shall not have
reimbursed the indemnified party in accordance with such request prior to
the date of such settlement. No indemnifying party shall, without the
prior written consent of the indemnified party, effect any settlement of
any pending or threatened proceeding in respect of which any indemnified
party is or could have been a party and indemnity could have been sought
hereunder by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability on
claims that are the subject matter of such proceeding.
(e) To the extent the indemnification provided for in Section 9(a),
9(b) or 9(c) is unavailable to an indemnified party or insufficient in
respect of any losses, claims, damages or liabilities referred to therein,
then each indemnifying party under such paragraph, in lieu of indemnifying
such indemnified party thereunder, shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims,
damages or liabilities (i) in such proportion as is appropriate to reflect
the relative benefits received by the indemnifying party or parties on the
one hand and the indemnified party or parties on the other hand from the
offering of the Shares or (ii) if the allocation provided by clause
9(e)(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 9(e)(i) above but also the relative fault of the indemnifying party
or parties on the one hand and of the indemnified party or parties on the
other hand in connection with the statements or omissions that resulted in
such losses, claims, damages or liabilities, as well as any other relevant
equitable considerations. The relative benefits received by the Sellers on
the one hand and the Underwriters on the other hand in connection with the
offering of the Shares shall be deemed to be in the same respective
proportions as the net proceeds from the offering of the Shares (before
deducting expenses) received by each Seller and the total underwriting
discounts and commissions received by the Underwriters, in each case as
30
set forth in the table on the cover of the Prospectus, bear to the
aggregate Public Offering Price of the Shares. The relative fault of the
Sellers 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
Sellers or by the Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent
such statement or omission. The Underwriters' respective obligations to
contribute pursuant to this Section 9 are several in proportion to the
respective number of Shares they have purchased hereunder, and not joint.
In no event shall the liability of the Selling Shareholder under this
Section 9(e) exceed the amount that the Selling Shareholder would have
been required to pay under Section 9(b) had such indemnification been held
to be available thereunder.
(f) The Sellers, LLC Holdings and the Underwriters agree that it
would not be just or equitable if contribution pursuant to this Section 9
were determined by 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 Section 9(e). The amount paid or payable by an indemnified
party as a result of the losses, claims, damages and liabilities referred
to in the immediately preceding paragraph shall be deemed to include,
subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 9, no Underwriter shall be required to
contribute any amount in excess of the amount by which the total price at
which the Shares underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages that 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 Securities Act) shall be entitled to contribution from any person who
was not guilty of such fraudulent misrepresentation. The remedies provided
for in this Section 9 are not exclusive and shall not limit any rights or
remedies which may otherwise be available to any indemnified party at law
or in equity. The provisions of this Section 9 shall not supersede or
otherwise affect any agreement that the Sellers may otherwise have with
respect to indemnification between them.
(g) The indemnity and contribution provisions contained in this
Section 9 and the representations, warranties and other statements of the
Company, LLC Holdings and the Selling Shareholders contained in this
Agreement shall remain operative and in full force and effect regardless
of (i) any termination of this Agreement, (ii) any investigation made by
or on
31
behalf of any Underwriter, any person controlling any Underwriter or any
affiliate of any Underwriter, the Selling Shareholder or any person
controlling the Selling Shareholder, or the Company, its officers or
directors or any person controlling the Company and (iii) acceptance of
and payment for any of the Shares.
10. Directed Share Program Indemnification. (a) Each of the Company and
LLC Holdings agrees to indemnify and hold harmless ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and its
affiliates and each person, if any, who controls ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or its
affiliates within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act ("▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ENTITIES"), from and against any
and all losses, claims, damages and liabilities (including, without limitation,
any legal or other expenses reasonably incurred in connection with defending or
investigating any such action or claim) (i) caused by any untrue statement or
alleged untrue statement of a material fact contained in any material prepared
by or with the consent of the Company or LLC Holdings for distribution to
Participants in connection with the Directed Share Program, or caused by any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading; (ii)
caused by the failure of any Participant to pay for and accept delivery of
Directed Shares that the Participant has agreed to purchase; or (iii) related
to, arising out of, or in connection with the Directed Share Program other than
losses, claims, damages or liabilities (or expenses relating thereto) that are
finally judicially determined to have resulted from the bad faith or gross
negligence of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entities.
(b) In case any proceeding (including any governmental
investigation) shall be instituted involving any ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entity in
respect of which indemnity may be sought pursuant to Section 10(a), the
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entity seeking indemnity shall promptly notify the Company
or LLC Holdings in writing, and the Company or LLC Holdings, upon request
of the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entity, shall retain counsel reasonably satisfactory
to the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entity to represent the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entity and
any others the Company or LLC Holdings may designate in such proceeding
and shall pay the fees and disbursements of such counsel related to such
proceeding. In any such proceeding, any ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entity shall have
the right to retain its own counsel, but the fees and expenses of such
counsel shall be at the expense of such ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entity unless (i)
the Company or LLC Holdings shall have agreed to the retention of such
counsel or (ii) the named parties to any such proceeding (including any
impleaded parties) include both the Company and/or LLC Holdings on the one
hand and the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entity on the other hand and representation of
both such parties by the same counsel would be inappropriate due to actual
or potential differing interests between them. The Company and LLC
Holdings shall not, in respect of the legal expenses of the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Entities in connection with any proceeding or related proceedings the same
jurisdiction, be liable for the fees and expenses of more than one
separate firm (in addition to
32
any local counsel) for all ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entities. Any such firm for the
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entities shall be designated in writing by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇.
The Company and LLC Holdings shall not be liable for any settlement of any
proceeding effected without their written consent, but if settled with
such consent or if there be a final judgment for the plaintiff, the
Company and LLC Holdings agree to indemnify the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entities
from and against any loss or liability by reason of such settlement or
judgment. Notwithstanding the foregoing sentence, if at any time a ▇▇▇▇▇▇
▇▇▇▇▇▇▇ Entity shall have requested the Company or LLC Holdings to
reimburse it for fees and expenses of counsel as contemplated by the
second and third sentences of this paragraph, the Company and LLC Holdings
agree that they shall be liable for any settlement of any proceeding
effected without their written consent if (i) such settlement is entered
into more than 30 days after receipt by the Company or LLC Holdings of the
aforesaid request and (ii) the Company or LLC Holdings shall not have
reimbursed the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entity in accordance with such request prior
to the date of such settlement. The Company and LLC Holdings shall not,
without the prior written consent of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, effect any settlement
of any pending or threatened proceeding in respect of which any ▇▇▇▇▇▇
▇▇▇▇▇▇▇ Entity is or could have been a party and indemnity could have been
sought hereunder by such ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entity, unless such settlement
includes an unconditional release of the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entities from all
liability on claims that are the subject matter of such proceeding.
(c) To the extent the indemnification provided for in Section
10(a) is unavailable to a ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entity or insufficient in respect
of any losses, claims, damages or liabilities referred to therein, then
the Company and LLC Holdings, in lieu of indemnifying the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Entity thereunder, shall contribute to the amount paid or payable by the
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entity as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the
relative benefits received by the Company and LLC Holdings on the one hand
and the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entities on the other hand from the offering of the
Directed Shares or (ii) if the allocation provided by clause 10(c)(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 10(c)(i) above but also the relative fault of the Company and LLC
Holdings on the one hand and of the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entities on the other
hand in connection with the statements or omissions that resulted in such
losses, claims, damages or liabilities, as well as any other relevant
equitable considerations. The relative benefits received by the Company
and LLC Holdings on the one hand and of the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entities on the
other hand in connection with the offering of the Directed Shares shall be
deemed to be in the same respective proportions as the net proceeds from
the offering of the Directed Shares (before deducting expenses) and the
total underwriting discounts and commissions received by the ▇▇▇▇▇▇
▇▇▇▇▇▇▇ Entities for
33
the Directed Shares bear to the aggregate Public Offering Price of the
Shares. If the loss, claim, damage or liability is caused by an untrue or
alleged untrue statement of a material fact, the relative fault of the
Company and LLC Holdings on the one hand and the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entities
on the other hand shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement or the omission or alleged
omission relates to information supplied by the Company or LLC Holdings or
by the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entities and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent
such statement or omission.
(d) The Company, LLC Holdings and the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entities
agree that it would not be just or equitable if contribution pursuant to
this Section 10 were determined by pro rata allocation (even if the ▇▇▇▇▇▇
▇▇▇▇▇▇▇ Entities 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 Section 10(c). The amount paid or payable by
the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entities as a result of the losses, claims, damages and
liabilities referred to in the immediately preceding paragraph shall be
deemed to include, subject to the limitations set forth above, any legal
or other expenses reasonably incurred by the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entities in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 10, no ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Entity shall be required to contribute any amount in excess of the amount
by which the total price at which the Directed Shares distributed to the
public were offered to the public exceeds the amount of any damages that
such ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entity 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 Securities Act) shall be entitled to contribution
from any person who was not guilty of such fraudulent misrepresentation.
The remedies provided for in this Section 10 are not exclusive and shall
not limit any rights or remedies which may otherwise be available to any
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entity at law or in equity.
(e) The indemnity and contribution provisions contained in this
Section 10 shall remain operative and in full force and effect regardless
of (i) any termination of this Agreement, (ii) any investigation made by
or on behalf of any ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Entity or the Company or LLC Holdings,
the officers or directors of the Company or LLC Holdings or any person
controlling the Company or LLC Holdings and (iii) acceptance of and
payment for any of the Directed Shares.
11. Termination. The Underwriters may terminate this Agreement by notice
given by you to the Company, if after the execution and delivery of this
Agreement and prior to the Closing Date (i) trading generally shall have been
suspended or materially limited on, or by, as the case may be, any of the NYSE,
34
the American Stock Exchange or the Nasdaq National Market, (ii) trading of any
securities of the Company or LLC Holdings shall have been suspended on any
exchange or in any over-the-counter market, (iii) a material disruption in
securities settlement, payment or clearance services in the United States shall
have occurred, (iv) any moratorium on commercial banking activities shall have
been declared by Federal or New York State authorities or (v) there shall have
occurred any outbreak or escalation of hostilities, or any change in financial
markets or any calamity or crisis that, in your judgment, is material and
adverse and which, singly or together with any other event specified in this
clause (v), makes it, in your judgment, impracticable or inadvisable to proceed
with the offer, sale or delivery of the Shares on the terms and in the manner
contemplated in the Prospectus.
12. Effectiveness; Defaulting Underwriters. This Agreement shall become
effective upon the execution and delivery hereof by the parties hereto.
If, on the Closing Date or an Option Closing Date, as the case may be, any
one or more of the Underwriters shall fail or refuse to purchase Shares that it
has or they have agreed to purchase hereunder on such date, and the aggregate
number of Shares which such defaulting Underwriter or Underwriters agreed but
failed or refused to purchase is not more than one-tenth of the aggregate number
of the Shares to be purchased on such date, the other Underwriters shall be
obligated severally in the proportions that the number of Firm Shares set forth
opposite their respective names in Schedule II bears to the aggregate number of
Firm Shares set forth opposite the names of all such non-defaulting
Underwriters, or in such other proportions as you may specify, to purchase the
Shares which such defaulting Underwriter or Underwriters agreed but failed or
refused to purchase on such date; provided that in no event shall the number of
Shares that any Underwriter has agreed to purchase pursuant to this Agreement be
increased pursuant to this Section 12 by an amount in excess of one-ninth of
such number of Shares without the written consent of such Underwriter. If, on
the Closing Date, any Underwriter or Underwriters shall fail or refuse to
purchase Firm Shares and the aggregate number of Firm Shares with respect to
which such default occurs is more than one-tenth of the aggregate number of Firm
Shares to be purchased, and arrangements satisfactory to you, the Company, LLC
Holdings and the Selling Shareholder for the purchase of such Firm Shares are
not made within 36 hours after such default, this Agreement shall terminate
without liability on the part of any non-defaulting Underwriter, the Company,
LLC Holdings or the Selling Shareholder. In any such case either you or the
relevant Sellers shall have the right to postpone the Closing Date, but in no
event for longer than seven days, in order that the required changes, if any, in
the Registration Statement and in the Prospectus or in any other documents or
arrangements may be effected. If, on an Option Closing Date, any Underwriter or
Underwriters shall fail or refuse to purchase Additional Shares and the
aggregate number of Additional Shares with respect to which such default occurs
is more than one-tenth of the aggregate number of Additional Shares to be
purchased on such Option Closing Date, the non-defaulting Underwriters shall
have the option to (i) terminate their obligation
35
hereunder to purchase the Additional Shares to be sold on such Option Closing
Date or (ii) purchase not less than the number of Additional Shares that such
non-defaulting Underwriters would have been obligated to purchase in the absence
of such default. Any action taken under this paragraph shall not relieve any
defaulting Underwriter from liability in respect of any default of such
Underwriter under this Agreement.
If this Agreement shall be terminated by the Underwriters, or any of them,
because of any failure or refusal on the part of any Seller or LLC Holdings to
comply with the terms or to fulfill any of the conditions of this Agreement, or
if for any reason any Seller shall be unable to perform its obligations under
this Agreement, the Sellers and LLC Holdings will reimburse the Underwriters or
such Underwriters as have so terminated this Agreement with respect to
themselves, severally, for all out-of-pocket expenses (including the reasonable
fees and disbursements of their counsel) reasonably incurred by such
Underwriters in connection with this Agreement or the offering contemplated
hereunder; provided, however, that the Selling Shareholder shall not have any
obligation under this paragraph unless this Agreement was terminated by the
Underwriters because of any failure or refusal on the part of the Selling
Shareholder to comply with the terms or to fulfill any of the conditions of this
Agreement.
13. Counterparts. This Agreement may be signed in two or more
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
14. Applicable Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York.
15. Headings. The headings of the sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed a part of
this Agreement.
36
Very truly yours,
WELLCARE GROUP, INC.
By: ____________________________________
Name:
Title:
WELLCARE HOLDINGS, LLC
By: ____________________________________
Name:
Title:
▇▇▇▇▇ PRIVATE EQUITY INVESTORS LP
By: ____________________________________
Name:
Title:
Accepted as of the date hereof
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
▇▇ ▇▇▇▇▇ & Co., LLC
UBS Securities LLC
Wachovia Capital Markets, LLC
Acting severally on behalf of themselves
and the several Underwriters named in
Schedule II hereto.
By: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
By: ____________________________________
Name:
Title:
37
SCHEDULE I
SELLING SHAREHOLDER NUMBER OF ADDITIONAL SHARES
TO BE SOLD
▇▇▇▇▇ Private Equity Investors LP.......................... 1,100,000
Total............................................. 1,100,000
I-1
SCHEDULE II
NUMBER OF FIRM SHARES TO BE
UNDERWRITER PURCHASED
----------- ---------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated..........................
▇▇ ▇▇▇▇▇ & Co., LLC........................................
UBS Securities LLC.........................................
Wachovia Capital Markets, LLC..............................
---------
Total:............................................ 7,333,333
II-1
EXHIBIT A
FORM OF LOCK-UP LETTER
June ___, 2004
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
▇▇ ▇▇▇▇▇ & Co., LLC
UBS Securities LLC
Wachovia Capital Markets, LLC
c/o Morgan ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Dear Sirs and Mesdames:
The undersigned understands that ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ("▇▇▇▇▇▇ ▇▇▇▇▇▇▇")
proposes to enter into an Underwriting Agreement (the "UNDERWRITING AGREEMENT")
with WellCare Group, Inc., a Delaware corporation (the "COMPANY"), providing for
the public offering (the "PUBLIC OFFERING") by the several Underwriters,
including ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (the "UNDERWRITERS"), of 8,433,333 shares (the
"SHARES") of the common stock, par value $.01 per share, of the Company (the
"COMMON STOCK").
To induce the Underwriters that may participate in the Public Offering to
continue their efforts in connection with the Public Offering, the undersigned
hereby agrees that, without the prior written consent of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ on
behalf of the Underwriters, it will not, during the period commencing on the
date hereof and ending 180 days after the date of the final prospectus relating
to the Public Offering (the "PROSPECTUS"), (1) offer, pledge, sell, contract to
sell, sell any option or contract to purchase, purchase any option or contract
to sell, grant any option, right or warrant to purchase, lend, or otherwise
transfer or dispose of, directly or indirectly, any shares of Common Stock or
any securities convertible into or exercisable or exchangeable for Common Stock,
or (2) enter into any swap or other arrangement that transfers to another, in
whole or in part, any of the economic consequences of ownership of the Common
Stock, whether any such transaction described in clause (1) or (2) above is to
be settled by delivery of Common Stock or such other securities, in cash or
otherwise. The foregoing sentence shall not apply to (a) transactions relating
to shares of Common Stock or other securities acquired in open market
transactions after the completion of the Public Offering, (b) transfers of
shares of Common Stock or any security convertible into Common Stock as a bona
fide gift or gifts or in connection with
A-1
estate planning, or (c) distributions or transfers of shares of Common Stock or
any security convertible into Common Stock to limited partners, stockholders or
controlled affiliates of the undersigned; provided that in the case of any
transfer or distribution pursuant to clause (b) or (c) each donee, distributee
or transferee shall sign and deliver a lock-up letter substantially in the form
of this letter. In addition, the undersigned agrees that, without the prior
written consent of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ on behalf of the Underwriters, it will not,
during the period commencing on the date hereof and ending 180 days after the
date of the Prospectus, make any demand for or exercise any right with respect
to, the registration of any shares of Common Stock or any security convertible
into or exercisable or exchangeable for Common Stock. The undersigned also
agrees and consents to the entry of stop transfer instructions with the
Company's transfer agent and registrar against the transfer of the undersigned's
share of Common Stock except in compliance with the foregoing restrictions.
If:
(1) during the last 17 days of the 180-day restricted period the Company
issues an earnings release or material news or a material event relating
to the Company occurs; or
(2) prior to the expiration of the 180-day restricted period, the Company
announces that it will release earnings results during the 16-day period
beginning on the last day of the 180-day period,
the restrictions imposed by this letter shall continue to apply until the
expiration of the 18-day period beginning on the issuance of the earnings
release or the occurrence of the material news or material event.
The undersigned understands that the Company and the Underwriters are
relying upon this agreement in proceeding toward consummation of the Public
Offering. The undersigned further understands that this agreement is irrevocable
and shall be binding upon the undersigned's heirs, legal representatives,
successors and assigns.
Whether or not the Public Offering actually occurs depends on a number of
factors, including market conditions. Any Public Offering will only be made
pursuant to an Underwriting Agreement, the terms of which are subject to
negotiation between the Company and the Underwriters. This agreement shall
automatically terminate if the purchase of the Firm Shares (as defined in the
Underwriting Agreement) pursuant to the Underwriting Agreement is not completed
within 10 business days of the date of the Prospectus.
A-2
Very truly yours,
____________________________________
(Name)
____________________________________
(Address)
A-3
