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EXHIBIT 1.1
RightCHOICE Managed Care, Inc.
3,500,000 Shares
Common Stock
($.01 Par Value)
UNDERWRITING AGREEMENT
______ __, 2001
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RightCHOICE Managed Care, Inc.
Common Stock
($.01 Par Value)
UNDERWRITING AGREEMENT
________ ___, 2001
UBS Warburg LLC
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc.
▇▇▇-▇▇▇▇, ▇▇▇▇▇▇ Inc.
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & Company Incorporated
c/o UBS Warburg LLC
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Ladies and Gentlemen:
RightCHOICE Managed Care, Inc., a Delaware corporation (the
"Company"), proposes to issue and sell, and The Missouri Foundation for Health,
a Missouri non-profit public benefit corporation (the "Selling Stockholder"),
proposes to sell, to the underwriters named in Schedule A annexed hereto (the
"Underwriters") an aggregate of 3,500,000 shares (the "Firm Shares") of Common
Stock, $.01 par value (the "Common Stock"), of the Company, of which 750,000
shares are to be issued and sold by the Company and 2,750,000 shares are to be
sold by the Selling Stockholder as set forth under the caption "Firm Shares" in
Schedule B annexed hereto. In addition, solely for the purpose of covering
over-allotments, the Selling Stockholder proposes to grant to the Underwriters
the option to purchase from the Selling Stockholder up to an additional 525,000
shares of Common Stock (the "Additional Shares"). The Firm Shares to be sold by
the Company are sometimes referred to hereinafter as the "Company Shares", and
the Firm Shares to be sold and the Additional Shares that may be sold by the
Selling Stockholder are sometimes referred to hereinafter as the "Selling
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Stockholder Shares". The Firm Shares and the Additional Shares are hereinafter
collectively sometimes referred to as the "Shares." The Shares are described in
the prospectus which is referred to below. The Company and Selling Stockholder
are hereinafter sometimes collectively referred to as the "Sellers."
The Company has filed, in accordance with the provisions of the
Securities Act of 1933, as amended, and the rules and regulations thereunder
(collectively called the "Act"), with the Securities and Exchange Commission
(the "Commission") a registration statement on Form S-1, (File No. 333-57728)
including a prospectus relating to the Shares. The Company has furnished to you,
for use by the Underwriters and by dealers, copies of one or more preliminary
prospectuses (herein referred to as the "Preliminary Prospectus") relating to
the Shares. Except where the context otherwise requires, the registration
statement, as amended when it becomes effective, including any information
contained in a prospectus subsequently filed with the Commission pursuant to
Rule 424(b) under the Act and deemed to be part of the registration statement at
the time of effectiveness pursuant to Rule 430A under the Act and also including
any registration statement filed pursuant to Rule 462(b) under the Act, is
herein called the "Registration Statement," and the prospectus, in the form
filed by the Company with the Commission pursuant to Rule 424(b) under the Act
on or before the second business day after the date hereof (or such earlier time
as may be required under the Act) or, if no such filing is required, the form of
final prospectus included in the Registration Statement at the time it became
effective, is herein called the "Prospectus."
The Company, the Selling Stockholder and the Underwriters agree as
follows:
1. Sale and Purchase. Upon the basis of the warranties and
representations and subject to the terms and conditions herein set forth, the
Company and the Selling Stockholder, severally and not jointly, agree to sell to
the respective Underwriters and each of the Underwriters, severally and not
jointly, agrees to purchase from the Company and the Selling Stockholder the
respective number of Firm Shares (subject to such adjustment as you may
determine to avoid fractional shares) which bears the same proportion to the
number of Firm Shares to be sold by the Company or by the Selling Stockholder,
as the case may be, as the number of Firm Shares set forth opposite the name of
such Underwriter in Schedule A annexed hereto bears to the total number of Firm
Shares to be sold by the Company and the Selling Stockholder, in each case at a
purchase price of $____ per Share. The Sellers are advised by you that the
Underwriters intend (i) to make a public offering of their respective portions
of the Firm Shares as soon after the effective date of the Registration
Statement as in your judgment is advisable and (ii) initially to offer the Firm
Shares upon the terms set forth in the Prospectus. You may from time to time
increase or decrease the public offering price after the initial public offering
to such extent as you may determine.
In addition, the Selling Stockholder hereby grants to the several
Underwriters the option to purchase, and upon the basis of the warranties and
representations and subject to
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the terms and conditions herein set forth, the Underwriters shall have the right
to purchase, severally and not jointly, from the Selling Stockholder, ratably in
accordance with the number of Firm Shares to be purchased by each of them
(subject to such adjustment as you shall determine to avoid fractional shares),
all or a portion of the Additional Shares as may be necessary to cover
over-allotments made in connection with the offering of the Firm Shares, at the
same purchase price per Share to be paid by the Underwriters to the Company and
the Selling Stockholder for the Firm Shares. This option may be exercised by you
on behalf of the several Underwriters at any time (but not more than once) on or
before the thirtieth day following the date hereof, by written notice to the
Company and the Selling Stockholder. Such notice shall set forth the aggregate
number of Additional Shares as to which the option is being exercised and the
date and time when the Additional Shares are to be delivered (such date and time
being herein referred to as the "Additional Time of Purchase"); provided,
however, that the Additional Time of Purchase shall not be earlier than the Time
of Purchase (as defined below) nor earlier than the second business day(1) after
the date on which the option shall have been exercised nor later than the tenth
business day after the date on which the option shall have been exercised. The
number of Additional Shares to be sold to each Underwriter shall be the number
which bears the same proportion to the aggregate number of Additional Shares
being purchased as the number of Firm Shares set forth opposite the name of such
Underwriter on Schedule A hereto bears to the total number of Firm Shares
(subject, in each case, to such adjustment as you may determine to eliminate
fractional shares).
2. Payment and Delivery. Payment of the purchase price for the Firm
Shares shall be made to the Company and the Selling Stockholder by Federal
Funds wire transfer against delivery of the certificates for the Firm Shares to
you through the facilities of the Depository Trust Company ("DTC") for the
respective accounts of the Underwriters. Such payment and delivery shall be made
at 10:00 A.M., New York City time, on ____________, 2001 (unless another time
shall be agreed to by you, the Company and the Selling Stockholder or unless
postponed in accordance with the provisions of Section 10 hereof). The time at
which such payment and delivery are actually made is hereinafter referred to as
the "Time of Purchase." Certificates for the Firm Shares shall be delivered to
you in definitive form in such names and in such denominations as you shall
specify no later than the second business day preceding the Time of Purchase.
For the purpose of expediting the checking of the certificates for the Firm
Shares by you, the Company and the Selling Stockholder agree to make such
certificates available to you for such purpose at least one full business day
preceding the Time of Purchase.
__________
(1) As used herein "business day" shall mean a day on which the New York Stock
Exchange is open for trading.
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Payment of the purchase price for the Additional Shares shall be made
to the Selling Stockholder at the Additional Time of Purchase in the same manner
and at the same office as the payment for the Firm Shares. Certificates for the
Additional Shares shall be delivered to you by the Selling Stockholder in
definitive form in such names and in such denominations as you shall specify no
later than the second business day preceding the Additional Time of Purchase.
For the purpose of expediting the checking of the certificates for the
Additional Shares by you, the Selling Stockholder agrees to make such
certificates available to you for such purpose at least one full business day
preceding the Additional Time of Purchase.
3. Representations and Warranties of the Company. The Company
represents and warrants to each of the Underwriters that:
(a) the Company has not received, and has no notice of, any order of
the Commission preventing or suspending the use of any Preliminary
Prospectus, or instituting proceedings for that purpose, and each
Preliminary Prospectus, at the time of filing thereof, conformed in all
material respects to the requirements of the Act; when the Registration
Statement becomes effective, the Registration Statement and Prospectus will
conform in all material respects with the applicable provisions of the Act,
and the Registration Statement will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, and the
Prospectus will not contain an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading; 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
have been so described or filed; provided, however, that the Company makes
no warranty or representation with respect to any statement contained in
the Registration Statement or the Prospectus in reliance upon and in
conformity with the Underwriter Information (as defined herein); the
Company has not distributed any offering material in connection with the
offering or sale of the Shares other than the Registration Statement, the
Preliminary Prospectus, the Prospectus or any other materials, if any,
permitted by the Act;
(b) as of the date of this Agreement, the Company has an authorized
capitalization as set forth under the heading entitled "Actual" in the
section of the Registration Statement and Prospectus entitled
"Capitalization" and, as of the Time of Purchase and the Additional Time of
Purchase, as the case may be, the Company shall have an authorized
capitalization as set forth under the heading entitled "As Adjusted" in the
section of the Registration Statement and Prospectus
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entitled "Capitalization"; all of the issued and outstanding shares of
capital stock (including Common Stock) of the Company have been duly and
validly authorized and issued and are fully paid and non-assessable, have
been issued in compliance in all material respects with all federal and
state securities laws and were not issued in violation of any preemptive
right, resale right, right of first refusal or similar right;
(c) the Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the State of Delaware,
with full power and authority to own, lease and operate its properties and
conduct its business as described in the Registration Statement;
(d) the Company is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction where the
ownership or leasing of its properties or the conduct of its business
requires such qualification, except where the failure to so qualify would
not reasonably be expected to have a material adverse effect on the
business, prospects, properties, condition (financial or otherwise) or
results of operation of the Company and its Subsidiaries (as hereinafter
defined) taken as a whole (a "Material Adverse Effect"). The Company has no
subsidiaries (as defined in the Act) other than those subsidiaries listed
in Exhibit A (collectively, the "Subsidiaries"); except as described in the
Registration Statement and Prospectus with respect to The Epoch Group, L.C.
("Epoch"), the Company owns 100% of the outstanding common stock or other
equity interests of the Subsidiaries; the Company does not own, directly or
indirectly, any shares of stock or any other equity or long-term debt
securities of any corporation or have any equity interest in any firm,
partnership, joint venture, association or other entity other than (i)
interests in the Subsidiaries and (ii) equity interests of one or more
corporations or other entities acquired for investment purposes in the
ordinary course of business and constituting as to any such corporation or
entity less than 5% of the outstanding equity interests of such corporation
or entity; complete and correct copies of the certificates of incorporation
and of the bylaws of the Company and the Subsidiaries and all amendments
thereto have been delivered to you, and no changes therein will be made
subsequent to the date hereof and prior to the Time of Purchase or, if
later, the Additional Time of Purchase; each Subsidiary has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of the jurisdiction of its incorporation, with full
corporate power and authority to own, lease and operate its properties and
to conduct its business as described in the Registration Statement; each
Subsidiary is duly qualified to do business as a foreign corporation and is
in good standing in each jurisdiction where the ownership or leasing of the
properties or the conduct of its business requires such
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qualification, except where the failure to so qualify would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect; all of the outstanding shares of capital stock of each of
the Subsidiaries have been duly authorized and validly issued, are fully
paid and, except with respect to any obligations of the members of Epoch
set forth in the Amended and Restated Operating Agreement of Epoch Group,
L.C. dated December 29, 1995 (the "Epoch Operating Agreement"), are
non-assessable and (except as otherwise described in this Section 3(d) or
in the Registration Statement and Prospectus with respect to the pledge of
the shares of the Company's direct Subsidiaries to secure the obligations
of the Company under its credit agreement) are owned by the Company subject
to no security interest, other encumbrance or adverse claims; no options,
warrants or other rights to purchase, agreements or other obligations to
issue or other rights to convert any obligation into shares of capital
stock or ownership interests in the Subsidiaries are outstanding, except
for those buy-sell arrangements with respect to Epoch set forth in Section
7.8 of the Epoch Operating Agreement;
(e) the Company and each of its Subsidiaries are duly qualified or
licensed by and are in good standing in each jurisdiction in which they
conduct their respective businesses, except where the failure to be so
licensed or qualified would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect; and the Company
and each of its Subsidiaries are in compliance with the laws, orders,
rules, regulations and directives issued or administered by such
jurisdictions, except for such noncompliance that would not, individually
or in the aggregate, reasonably be expected to have a Material Adverse
Effect;
(f) neither the Company nor any of its Subsidiaries is in breach of,
or in default under (nor has any event occurred which with notice, lapse of
time, or both would result in any breach of, or constitute a default
under), its respective charter or by-laws; neither the Company nor any of
its Subsidiaries is in breach of, or in default in (and no event has
occurred which with notice, lapse of time, or both would result in any
breach of, or constitute a default in) the performance or observance of any
obligation, agreement, covenant or condition contained in any indenture,
mortgage, deed of trust, bank loan or credit agreement or other evidence of
indebtedness, or any lease, contract or other agreement or instrument to
which the Company or any of its Subsidiaries is a party or by which any of
them or any of their properties is bound, except for such breaches or
defaults that would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect; the execution, delivery and
performance of this Agreement, the issuance and sale of the Shares and the
consummation of the
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transactions contemplated hereby will not conflict with, or result in any
breach of or constitute a default under (nor constitute any event which
with notice, lapse of time, or both would result in any breach of, or
constitute a default under) any provision of any license, indenture,
mortgage, deed of trust, bank loan or credit agreement or other evidence of
indebtedness, or any lease, contract or other agreement or instrument to
which the Company or any of its Subsidiaries is a party or by which any of
them or their respective properties may be bound or affected, except for
such conflicts, breaches or defaults that would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect, nor
will it conflict with, or result in any breach of or constitute a default
under (nor constitute any event which with notice, lapse of time, or both
would result in any breach of, or constitute a default under), any
provisions of the charter or by-laws of the Company or any of its
Subsidiaries or under any federal, state, local or foreign law, regulation
or rule or any decree, judgment or order applicable to the Company or any
of its Subsidiaries;
(g) this Agreement has been duly authorized, executed and delivered
by the Company;
(h) the capital stock of the Company, including the Shares, conforms
in all material respects to the description thereof contained in the
Registration Statement and Prospectus, the certificates for the Shares are
in due and proper form, and the holders of the Shares will not be subject
to personal liability by reason of being such holders;
(i) the Shares to be issued and sold by the Company have been duly
and validly authorized and, when issued and delivered against payment
therefor as provided herein, will be duly and validly issued and fully paid
and non-assessable;
(j) no approval, authorization, consent or order of or filing with
any national, state or local governmental or regulatory commission, board,
body, authority or agency is required in connection with the issuance and
sale of the Shares or the consummation by the Company of the transaction as
contemplated hereby other than registration of the offer and sale of the
Shares under the Act, which has been effected as described herein, and any
necessary qualification under the securities or blue sky laws of the
various jurisdictions in which the Shares are being offered by the
Underwriters or under the rules and regulations of the National Association
of Securities Dealers, Inc. ("NASD"), and any approvals, authorizations,
consents or orders the failure to obtain or make would not adversely affect
consummation of the transactions contemplated by this Agreement;
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(k) Except as described in the Registration Statement and Prospectus:
(i) no person has the right, contractual or otherwise, to cause the Company
to issue to it, or register pursuant to the Act, any shares of capital
stock or other equity interests; and (ii) no person has preemptive rights,
co-sale rights, rights of first refusal or other rights to purchase any
shares of Common Stock. Except as described in the Registration Statement
and Prospectus, no person has the right, contractual or otherwise, to cause
the Company to register under the Act any shares of capital stock or other
equity interests as a result of the filing or effectiveness of the
Registration Statement or the sale of Shares contemplated thereby;
(l) PricewaterhouseCoopers LLP, whose report on the consolidated
financial statements of the Company and its Subsidiaries are filed with the
Commission as part of the Registration Statement and Prospectus, are
independent public accountants as required by the Act;
(m) each of the Company and its Subsidiaries has all necessary
licenses, authorizations, consents and approvals and has made all necessary
filings required under any federal, state, local or foreign law, regulation
or rule, and has obtained all necessary authorizations, consents and
approvals from other persons, in order to conduct its respective business,
other than such licenses, authorizations, consents and approvals the
failure to obtain which would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect; neither the
Company nor any of its Subsidiaries is in violation of, or in default
under, any such license, authorization, consent or approval or any federal,
state, local or foreign law, regulation or rule or any decree, order or
judgment applicable to the Company or any of its Subsidiaries the effect of
which would, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect;
(n) the Company and, as applicable, each of Healthy Alliance Life
Insurance Company ("HALIC") and HMO Missouri, Inc. ("HMO Missouri") is in
full compliance with the requirements of (i) the Blue Cross License
Agreement, dated as of November 30, 2000, between the Company and the Blue
Cross Blue Shield Association (the "BCBSA"), (ii) the Blue Shield License
Agreement, dated as of November 30, 2000, between the Company and the
BCBSA, (iii) the Missouri Blue Cross/Blue Shield License Addendum, dated as
of November 30, 2000, between the BCBSA and the Company, (iv) the Blue
Cross Controlled Affiliate License Agreement, dated as of November 30,
2000, among the Company, the BCBSA and HALIC, (v) the Blue Shield
Controlled Affiliate License Agreement, dated as of November 30, 2000,
among the Company, the BCBSA and HALIC, (vi) the Blue Cross Controlled
Affiliate License Agreement, dated as of November 30, 2000, among the
Company, the BCBSA and HMO Missouri and (vii) the Blue Shield Controlled
Affiliate License Agreement,
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dated as of November 30, 2000, among the Company, the BCBSA and HMO
Missouri, except in each case where such noncompliance would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. Each of the Company's Subsidiaries that is required by the
BCBSA as of the date hereof, or that will be required by the BCBSA as of
the Time of Purchase or the Additional Time of Purchase, to be a party to a
Blue Cross Affiliate License Agreement or a Blue Shield Affiliate License
Agreement is in full compliance with the requirements of such agreement,
except in each case where such noncompliance would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect;
(o) all legal or governmental proceedings, contracts, leases or
documents of a character required to be described in the Registration
Statement or the Prospectus or to be filed as an exhibit to the
Registration Statement have been so described or filed as required;
(p) except as described in the Registration Statement and Prospectus,
there are no private or governmental actions, suits, claims, investigations
or proceedings pending or threatened to which the Company or any of its
Subsidiaries or any of their respective officers is a party or of which any
of their respective properties is subject at law or in equity, or before or
by any federal, state, local or foreign governmental or regulatory
commission, board, body, authority or agency which would, individually or
in the aggregate, reasonably be expected to result in a judgment, decree or
order having a Material Adverse Effect or prevent consummation of the
transactions contemplated hereby in the manner contemplated hereby;
(q) the audited financial statements included in the Registration
Statement and Prospectus present fairly the consolidated financial position
of the Company and its Subsidiaries as of the dates indicated and the
consolidated results of operations and cash flows of the Company and its
Subsidiaries for the periods specified; such financial statements have been
prepared in conformity with generally accepted accounting principles
applied on a consistent basis during the periods involved; the financial
statements included in the Registration Statement and Prospectus comply in
all material respects with the applicable accounting requirements of
Regulation S-X of the Act; the other financial and statistical data set
forth in the Registration Statement and Prospectus have been prepared on a
basis consistent with the financial statements and books and records of the
Company; and there are no financial statements (historical or pro forma)
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that are required to be included in the Registration Statement and
Prospectus that are not included as required;
(r) subsequent to the respective dates as of which information is
given in the Registration Statement and Prospectus, there has not been (i)
any material adverse change, or any development involving a prospective
material adverse change, in the business, properties, condition (financial
or otherwise), or results of operations of the Company and its Subsidiaries
taken as a whole, (ii) any transaction which is material to the Company and
its Subsidiaries taken as a whole, (iii) any obligation, direct or
contingent, which is material to the Company and its Subsidiaries taken as
a whole, incurred by the Company or its Subsidiaries, (iv) any change in
the capital stock or outstanding indebtedness of the Company or its
Subsidiaries, other than in the ordinary course of business and, with
respect to the capitalization of the Company, resulting from the exercise
of employee stock options, or (v) any dividend or distribution of any kind
declared, paid or made on the capital stock of the Company. Neither the
Company nor its Subsidiaries has any contingent obligation which is not
disclosed in the Registration Statement and which would, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect;
(s) the Company has obtained the agreement (the "Lock-Up Letter
Agreement") of the Selling Stockholder, each of the Company's directors and
the Company's five "named executive officers" that for a period of 90 days
after the date of the Prospectus, without the prior written consent of UBS
Warburg LLC ("UBS Warburg"), such person or entity will not (i) sell, offer
to sell, contract to sell, hypothecate, pledge, grant any option to
purchase or otherwise dispose of, directly or indirectly, or establish or
increase a put equivalent position or liquidate or decrease a call
equivalent position within the meaning of Section 16 of the Exchange Act
(as hereinafter defined), any shares of Common Stock or securities
convertible into or exchangeable for Common Stock or warrants or other
rights to purchase Common Stock, or (ii) enter into any swap or other
arrangement that transfers to another, in whole or in part, any of the
economic consequences of ownership of Common Stock or any securities
convertible into or exercisable or exchangeable for Common Stock, or
warrants or other rights to purchase Common Stock whether any such
transaction is to be settled by delivery of Common Stock or such other
securities, in cash or otherwise, except in connection with (w) the offer
and sale of the Shares pursuant to this Agreement, (x) bona fide gifts,
provided the recipient or recipients thereof agree in writing to be bound
by the terms of a Lock-Up Letter Agreement, (y) dispositions to any trust
for the direct or indirect benefit of the undersigned and/or the immediate
family of the undersigned, provided that such trust agrees in writing to be
bound
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by the terms of a Lock-Up Letter Agreement or (z) in connection with a
simultaneous sale of all of the Common Stock of the Company (by means of a
merger, consolidation or otherwise);
(t) the Company and the Subsidiaries have good and marketable title
to all property (real and personal) described in the Prospectus as being
owned by them, free and clear of all liens, claims, security interests or
other encumbrances, except such as are described in the Registration
Statement and Prospectus and except as would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect. All
the property being held under lease by the Company and the Subsidiaries are
held under valid, subsisting and, with respect to the Company or such
Subsidiary, enforceable leases;
(u) the Company and the Subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks and in
such amount as are customary in the business in which it is engaged. All
policies of insurance insuring the Company and the Subsidiaries or any of
their businesses, assets, employees, officers and directors are in full
force and effect, and the Company and the Subsidiaries are in compliance
with the terms of such policies in all material respects. There are no
claims by the Company or any of the Subsidiaries under any such policy or
instrument as to which any insurance company is denying liability or
defending under a reservation of rights clause, except where such claims
would not, individually or in the aggregate, reasonably be expected to have
a Material Adverse Effect;
(v) neither the Company nor any of the Subsidiaries has either sent
or received any notice of termination of any of the contracts or agreements
referred to or described in, or filed as an exhibit to, the Registration
Statement, and no such termination has been threatened by the Company or
any of the Subsidiaries or, to the knowledge of the Company, any other
party to any such contract or agreement;
(w) all statistical and market-related data included in the
Prospectus are based on or derived from sources that the Company believes
to be reliable and accurate, and the Company has obtained the written
consent to the use of such data from such sources to the extent required;
(x) neither the Company nor any of the Subsidiaries or any of their
respective affiliates has taken, directly or indirectly, any action
designed to or which has constituted or which might reasonably be expected
to cause or result, under the Securities Exchange Act of 1934 (the
"Exchange Act") or otherwise, in
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stabilization or manipulation of the price of any security of the Company
to facilitate the sale or resale of the Shares;
(y) the Company and the Subsidiaries own or have obtained licenses
(which such licenses are enforceable against the Company and/or the
Subsidiaries, as applicable, and, to the Company's knowledge, the other
parties thereto) for the patents, patent applications, inventions,
technology, trademarks, trademark registrations, service marks, service
▇▇▇▇ registrations, trade names, copyrights, trade secrets and rights
described in the Prospectus as being owned or used by or licensed to the
Company and the Subsidiaries or necessary for the conduct of their business
as currently conducted (collectively, the "Intellectual Property"), except
as would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect. Except as described in the Registration
Statement and Prospectus or as would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect: (i) there are no
rights of third parties to any such Intellectual Property; (ii) to the
Company's knowledge, there is no infringement by third parties of any such
Intellectual Property; (iii) there is no pending or, to the Company's
knowledge, threatened action, suit, proceeding or claim by others
challenging the Company's or any Subsidiary's rights in or to any such
Intellectual Property, and the Company is unaware of any facts which would
form a reasonable basis for any such claim; (iv) there is no pending or, to
the Company's knowledge, threatened action, suit, proceeding or claim by
others challenging the validity or scope of any such Intellectual Property,
and the Company is unaware of any facts which would form a reasonable basis
for any such claim; (v) there is no pending or, to the Company's knowledge,
threatened action, suit, proceeding or claim by others that the Company or
any Subsidiary infringes or otherwise violates, or would infringe upon or
otherwise violate commercialization of its product candidates described in
the Prospectus, any trademark, copyright, trade secret or other proprietary
rights of others, and the Company is unaware of any facts which would form
a reasonable basis for any such claim.
(z) the Company and the Subsidiaries have not sustained since the
date of the latest audited financial statements included in the Prospectus
any loss or interference with their businesses from fire, explosion, flood
or other calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree, otherwise than as
disclosed in the Prospectus or other than any loss or interference which
would not, individually or in the aggregate, reasonably be expected to have
a Material Adverse Effect;
(aa) the Company and the Subsidiaries have not violated any federal,
state, local or foreign law or regulation relating to discrimination in the
hiring,
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promotion or pay of employees or any applicable wages and hours laws, nor
any provisions of the Employee Retirement Income Security Act of 1976, as
amended, or the rules and regulations promulgated thereunder or any similar
act or law which would, individually or in the aggregate, reasonably be
expected to result in a Material Adverse Effect;
(bb) the Company and the Subsidiaries have not violated any federal,
state, local or foreign law or regulation relating to the protection of
human health and safety, the environment or hazardous or toxic substances
or wastes, pollutants or contaminants, which would, individually or in the
aggregate, reasonably be expected to result in a Material Adverse Effect;
(cc) the Company and the Subsidiaries maintain a system of internal
accounting controls sufficient to provide reasonable assurances that (i)
transactions are executed in accordance with management's general or
specific authorization; (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain accountability for assets;
(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 existing assets at reasonable intervals and
appropriate action is taken with respect to any differences;
(dd) the Company and the Subsidiaries have filed all material federal,
state, local and foreign tax returns and tax forms required to be filed.
Such returns and forms are complete and correct in all material respects,
and all taxes shown by such returns that are due or payable have been paid,
except such taxes as are being contested in good faith and as to which
adequate reserves have been provided. All material payroll withholdings
required to be made by the Company and the Subsidiaries with respect to
employees have been made. The charges, accruals and reserves on the books
of the Company and the Subsidiaries in respect of any tax liability for any
year not finally determined are adequate to meet any assessments or
reassessments for additional taxes. There have been no tax deficiencies
asserted and, to the Company's knowledge, no tax deficiency might be
reasonably asserted or threatened against the Company and/or the
Subsidiaries that would, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect;
(ee) The Company has not distributed and will not distribute, prior to
the later of the Additional Time of Purchase and the completion of the
Underwriters' distribution of the Shares, any offering material in
connection with the offering and sale of the Shares other than any
Preliminary Prospectus, the Prospectus or the Registration Statement;
15
-14-
(ff) The Common Stock is registered pursuant to Section 12(b) of the
Exchange Act and is listed on the New York Stock Exchange ("NYSE"), and the
Company has taken no action designed to, or likely to have the effect of,
terminating the registration of the Common Stock under the Exchange Act or
delisting the Common Stock from the NYSE, nor has the Company received any
notification that the Commission or the NYSE is contemplating terminating
such registration or listing;
(gg) the Company is not and, after giving effect to the offering and
sale of the Shares, will not be an "investment company" or an entity
"controlled" by an "investment company," as such terms are defined in the
Investment Company Act of 1940, as amended (the "Investment Company Act");
and
(hh) Any certificate signed by an officer of the Company or any
Subsidiary delivered to you or to counsel for the Underwriters pursuant to
this Agreement or in connection with the Closing contemplated hereby shall
be deemed to be a representation and warranty by the Company to each
Underwriter as to the matters covered thereby.
4. Representations and Warranties of the Selling Stockholder. The
Selling Stockholder represents and warrants to each Underwriter that:
(a) the Selling Stockholder now is and at the Time of Purchase and the
Additional Time of Purchase will be the lawful beneficial owner of the
Selling Stockholder Shares then to be sold by the Selling Stockholder
pursuant to this Agreement; the trustee, under the Voting Trust and
Divestiture Agreement ("Voting Trust Agreement") dated as of November 30,
2000, pursuant to which the Selling Stockholder Shares are held by such
trustee, has and, at the time of delivery thereof, will have valid and
marketable title to the Selling Stockholder Shares, free and clear of any
claim, lien, encumbrance, security interest, community property right,
equities, claims or other defect in title, or other restriction on
transfer, except for such restrictions as (i) are generally applicable to
holders of Common Stock and described in the Registration Statement and
Prospectus and (ii) as are set forth in the Voting Trust Agreement and the
Registration Rights Agreement (as defined herein) and which shall terminate
as to the Selling Stockholder Shares upon delivery of the Selling
Stockholder Shares to the Underwriters; the Selling Stockholder is the sole
beneficiary of the Selling Stockholder Shares held by the trustee under the
Voting Trust Agreement;
(b) the Selling Stockholder has caused the trustee under the Voting
Trust Agreement to duly endorse the Selling Stockholder Shares in blank,
and upon delivery of and payment for the Selling Stockholder Shares
(whether at the Time of Purchase or the Additional Time of Purchase),
assuming each
16
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Underwriter has no notice of any adverse claim (within the meaning of
Section 8-105 of the New York Uniform Commercial Code (the "UCC")), (i)
each Underwriter will acquire valid and marketable title to the Selling
Stockholder Shares free and clear of any claim, lien, encumbrance, security
interest, community property right, equities, claims or other defect in
title, or other restriction on transfer, except for such restrictions as
are generally applicable to holders of Common Stock described in the
Registration Statement and Prospectus and (ii) each Underwriter that has
purchased Selling Stockholder Shares delivered at the Time of Purchase or
at the Additional Time of Purchase, as the case may be, to DTC by making
payment therefor as provided herein, and that has had such Selling
Stockholder Shares credited to the securities account or accounts of such
Underwriters maintained with DTC, will acquire a security entitlement
(within the meaning of Section 8-102(a)(17) of the UCC), and no action
based on an adverse claim (within the meaning of Section 8-102(a)(1) of the
UCC) may be asserted against such Underwriter with respect to the Selling
Stockholder Shares;
(c) the Selling Stockholder has and at the time of delivery of the
Selling Stockholder Shares (whether at the Time of Purchase or the
Additional Time of Purchase) will have, full legal right, power and
capacity, and any approval required by law (other than those imposed by the
Act and the securities or blue sky laws of certain jurisdictions), to sell,
assign, transfer and cause to deliver the Selling Stockholder Shares in the
manner provided in this Agreement;
(d) this Agreement has been duly authorized, executed and delivered by
the Selling Stockholder;
(e) Certificates in negotiable form for all the Shares to be sold by
the Selling Stockholder under this Agreement have been validly placed in
custody with the Custodian for the purpose of effecting delivery under this
Agreement, under a Custody Agreement duly authorized executed and delivered
by the Selling Stockholder, in the form furnished to you (the "Custody
Agreement"), with ____ as Custodian (the "Custodian"). The Custody
Agreement has been duly authorized, executed and delivered by the Selling
Stockholder. The Selling Stockholder agrees the Shares represented by the
certificates are subject to the interests of the Underwriters, that the
arrangements made for such custody are to that extent irrevocable, and that
the obligations of the Selling Stockholder hereunder shall not be
terminated, except as provided in this Agreement or in the Custody
Agreement, by any act of the Selling Stockholder, by operation of law, by
the dissolution of the Selling Stockholder, or by the occurrence of any
other event. If any of the events referred to in the immediately preceding
sentence should occur, or any other event should occur, before the delivery
of the Shares to be sold by the Selling Stockholder hereunder, the
documents evidencing the
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Shares to be sold by the Selling Stockholder then in custody with the
Custodian shall be delivered by the Custodian in accordance with the terms
and conditions of this Agreement as if such event had not occurred,
regardless of whether or not the Custodian shall have received notice
thereof;
(f) Neither the execution, delivery and performance of this Agreement,
the issuance and sale of the Shares being sold by the Selling Stockholder
nor the consummation of any other of the transactions contemplated herein
or in the Custody Agreement or the fulfillment of the terms hereof and
thereof, will conflict with, result in a breach or violation of, or
constitute a default under (nor constitute any event which with notice,
lapse of time, or both would result in any breach of, or constitute a
default under), any provisions of the charter or by-laws of the Selling
Stockholder, nor will it conflict with, result in a material breach or
violation of, or constitute a material default under the terms of any
license, indenture mortgage, deed of trust, bank loan or credit agreement
or other evidence of indebtedness, or any lease, contract or other
agreement or instrument to which the Selling Stockholder is a party or
bound (or to which any of its property or assets is subject) or any
material law, or any judgment, order or decree applicable to the Selling
Stockholder;
(g) the proper officers of the Selling Stockholder are duly authorized
to execute and deliver this Agreement and any other document necessary or
desirable in connection with the transactions contemplated hereby, for and
on behalf of the Selling Stockholder and to cause the delivery of the
Selling Stockholder Shares and receive payment therefor pursuant hereto;
(h) the Selling Stockholder does not have, or has waived prior to the
date hereof, any preemptive right, co-sale right or right of first refusal
or other similar right to purchase any of the Shares that are to be sold by
the Company to the Underwriters pursuant to this Agreement; and the Selling
Stockholder does not own any warrants, options or similar rights to
acquire, and does not have any right or arrangement to acquire, any capital
stock, rights, warrants, options or other securities from the Company,
other than those described in the Registration Statement and Prospectus;
(i) the Selling Stockholder has not taken, directly or indirectly, any
action designed to or which has constituted or which might reasonably be
expected to cause or result, under the Exchange Act or otherwise, in
stabilization or manipulation of the price of any security of the Company
to facilitate the sale or resale of the Shares;
18
-17-
(j) when the Registration Statement becomes effective, the
Registration Statement will not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, and the Prospectus
will not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading; provided, however, that this representation and
warranty shall only apply to statements contained in the Registration
Statement or Prospectus in the last sentence of the first paragraph on the
outside front cover page of the Prospectus and the third and fourth
sentences under the caption "Prospectus summary - Reorganization"; the
second paragraph under the caption "Risk factors - Trading volume for our
common stock has been limited..."; all but the last three sentences of the
caption "Risk factors - We will not be able to sell or merge without the
approval of the Foundation..."; all but the last two sentences under the
caption "Risk factors - Our directors will be able to control the outcome
of all matters..."; the first sentence under the caption "Risk factors -
The Foundation may have interests in our company..."; the first sentence of
the last paragraph under the caption "Risk factors - The Foundation's
registration rights and obligations to sell..."; the third bullet in the
third paragraph and the fourth, fifth, sixth, eighth, ninth, tenth and
eleventh paragraphs under the caption "Reorganization"; and "Related party
transactions - Transactions with the Missouri Foundation for Health"
relating to the Selling Stockholder and omissions from such statements (the
"Selling Stockholder Information"). The Selling Stockholder is not prompted
to offer and sell the Selling Stockholder Shares hereunder by any material
nonpublic information concerning the Company or any subsidiary of the
Company which is not set forth in the Registration Statement and
Prospectus;
(k) no approval, authorization, consent or order of or filing with any
national, state or local governmental or regulatory commission, board,
body, authority or agency is required in connection with the issuance and
sale of the Selling Stockholder Shares or the consummation by the Selling
Stockholder of the transaction as contemplated hereby, other than
registration of the offer and sale of the Shares under the Act and any
necessary qualification under the securities or blue sky laws of the
various jurisdictions in which the Selling Stockholder Shares are being
offered by the Underwriters or under the rules and regulations of the NASD;
(l) except as described in the Registration Statement and Prospectus,
there are no private or governmental actions, suits, claims, investigations
or proceedings pending or threatened to which the Selling Stockholder or
any of its respective officers is a party or of which any of its
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properties is subject at law or in equity, or before or by any federal,
state, local or foreign governmental or regulatory commission, board, body,
authority or agency which could reasonably be expected to prevent
consummation of the transactions contemplated hereby in the manner
contemplated hereby, including the offer and sale of the Selling
Stockholder Shares at the Time of Purchase and the Additional Time of
Purchase;
(m) any certificate signed by or on behalf of the Selling Stockholder
and delivered to you or to counsel for the Underwriters in connection with
the offering of the Selling Stockholder Shares shall be deemed to be a
representation and warranty by the Selling Stockholder, as to the matters
covered thereby, to each Underwriter.
5. Certain Covenants of the Sellers. The Company hereby agrees:
(a) to furnish such information as may be required and otherwise to
cooperate in qualifying the Shares for offering and sale under the
securities or blue sky laws of such states as you may designate and to
maintain such qualifications in effect so long as required for the
distribution of the Shares; provided that the Company shall not be required
to qualify as a foreign corporation or to consent to the service of process
under the laws of any such state (except service of process with respect to
the offering and sale of the Shares); and to promptly advise you of the
receipt by the Company of any notification with respect to the suspension
of the qualification of the Shares for sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose;
(b) to make available to the Underwriters in New York City, as soon as
practicable after the Registration Statement becomes effective, and
thereafter from time to time to furnish to the Underwriters, as many copies
of the Prospectus (or of the Prospectus as amended or supplemented if the
Company shall have made any amendments or supplements thereto after the
effective date of the Registration Statement) as the Underwriters may
reasonably request for the purposes contemplated by the Act; in case any
Underwriter is required to deliver a prospectus beyond the nine-month
period referred to in Section 10(a)(3) of the Act in connection with the
sale of the Shares, the Company will prepare promptly upon request such
amendment or amendments to the Registration Statement and such prospectuses
as may be necessary to permit compliance with the requirements of Section
10(a)(3) of the Act;
(c) to advise you promptly and (if requested by you) to confirm such
advice in writing, (i) when the Registration Statement has become effective
and when any post-effective amendment thereto becomes effective and (ii) if
Rule
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-19-
430A under the Act is used, when the Prospectus is filed with the
Commission pursuant to Rule 424(b) under the Act (which the Company agrees
to file in a timely manner under such rules);
(d) to advise you promptly, confirming such advice in writing, of any
request by the Commission for amendments or supplements to the Registration
Statement or Prospectus or for additional information with respect thereto,
or of notice of institution of proceedings for, or the entry of a stop
order suspending the effectiveness of the Registration Statement and, if
the Commission should enter a stop order suspending the effectiveness of
the Registration Statement, to use its best efforts to obtain the lifting
or removal of such order as soon as possible; to advise you promptly of any
proposal to amend or supplement the Registration Statement or Prospectus
and to file no such amendment or supplement to which you shall object in
writing;
(e) to file promptly all reports and any definitive proxy or
information statement required to be filed by the Company with the
Commission in order to comply with the Exchange Act subsequent to the date
of the Prospectus and for so long as the delivery of a prospectus is
required in connection with the offering or sale of the Shares, and to
promptly notify you of such filing;
(f) if necessary or appropriate, to file promptly a registration
statement pursuant to Rule 462(b) under the Act;
(g) upon your request, to furnish to you and each of the other
Underwriters for a period of five years from the date of this Agreement (i)
copies of any reports or other communications which the Company shall send
to its stockholders or shall from time to time publish or publicly
disseminate, (ii) copies of all annual, quarterly and current reports filed
with the Commission on Forms 10-K, 10-Q and 8-K, or such other similar form
as may be designated by the Commission, (iii) copies of documents or
reports filed with any national securities exchange on which any class of
securities of the Company is listed, and (iv) such other information as you
may reasonably request regarding the Company or its Subsidiaries, in each
case as soon as such communications, documents or information becomes
available;
(h) to advise the Underwriters promptly of the happening of any event
known to the Company within the time during which a Prospectus relating to
the Shares is required to be delivered under the Act which, in the judgment
of the Company, would require the making of any change in the Prospectus
then being used, so that the Prospectus would not include an untrue
statement of material fact or omit to state a material fact necessary to
make the statements therein, in the
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light of the circumstances under which they are made, not misleading, and,
during such time, to prepare and furnish, at the Company's expense, to the
Underwriters promptly such amendments or supplements to such Prospectus as
may be necessary to reflect any such change and to furnish you a copy of
such proposed amendment or supplement before filing any such amendment or
supplement with the Commission;
(i) to make generally available to its security holders, and to
deliver to you, as soon as it is practicable to do so, but in any event not
later than 15 months after the effective date of the Registration
Statement, an earnings statement of the Company (which will satisfy the
provisions of Section 11(a) of the Act) covering a period of twelve months
beginning after the effective date of the Registration Statement (as
defined in Rule 158(c) of the Act);
(j) to furnish to its stockholders as soon as practicable after the
end of each fiscal year an annual report (including a balance sheet and
statements of income, stockholders' equity and of cash flow of the Company)
for such fiscal year, accompanied by a copy of the certificate or report
thereon of nationally recognized independent certified public accountants;
(k) to furnish to you conformed copies of the Registration Statement,
as initially filed with the Commission, and of all amendments thereto
(including all exhibits thereto) in such quantities as you shall reasonably
request for distribution to each of the Underwriters;
(l) to furnish to you as early as practicable prior to the Time of
Purchase and the Additional Time of Purchase, as the case may be, but not
later than two business days prior thereto, a copy of the latest available
unaudited interim consolidated financial statements, if any, of the Company
and its Subsidiaries which have been read by the Company's independent
certified public accountants, as stated in their letter to be furnished
pursuant to Section 8(d) hereof;
(m) not to take, directly or indirectly, any action designed to cause
or result in, or that has constituted or might reasonably be expected to
constitute, the stabilization or manipulation of the price of any
securities of the Company;
(n) to apply the net proceeds from the sale of the Company Shares in
the manner set forth under the caption "Use of Proceeds" in the Prospectus;
(o) to furnish to you, before filing with the Commission subsequent to
the effective date of the Registration Statement and during the period
referred to
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in paragraph (e) above, a copy of any document proposed to be filed
pursuant to Section 13, 14 or 15(d) of the Exchange Act; and
(p) not to sell, offer or agree to sell, contract to sell, grant any
option to sell or otherwise dispose of, directly or indirectly, any shares
of Common Stock or securities convertible into or exchangeable or
exercisable for Common Stock or warrants or other rights to purchase Common
Stock or any other securities of the Company that are substantially similar
to Common Stock or permit the registration under the Act of any shares of
Common Stock, for a period of 90 days after the date hereof, without the
prior written consent of UBS Warburg, except for (i) the registration of
the Shares and the sales to the Underwriters pursuant to this Agreement,
(ii) issuances of Common Stock upon the exercise of outstanding options,
warrants and debentures disclosed as outstanding in the Registration
Statement, (iii) the granting of options and the issuances of Common Stock
upon the exercise thereof pursuant to stock option and employee benefit
plans of the Company described in the Registration Statement and Prospectus
and the Company's 2001 Stock Incentive Plan, and (iv) issuances as
consideration for the acquisition of assets, businesses or companies.
The Selling Stockholder agrees:
(q) not to take, directly or indirectly, any action designed to cause
or result in, or that has constituted or might reasonably be expected to
constitute, the stabilization or manipulation of the price of any
securities of the Company to facilitate the sale or resale of the Shares;
and
(r) for a period of 90 days after the date of the Prospectus, without
the prior written consent of UBS Warburg, not to (i) sell, offer to sell,
contract to sell, hypothecate, pledge, grant any option to purchase or
otherwise dispose of, directly or indirectly, or establish or increase a
put equivalent position or liquidate or decrease a call equivalent position
within the meaning of Section 16 of the Exchange Act (as hereinafter
defined), any shares of Common Stock or securities convertible into or
exchangeable for Common Stock or warrants or other rights to purchase
Common Stock, or (ii) enter into any swap or other arrangement that
transfers to another, in whole or in part, any of the economic consequences
of ownership of Common Stock or any securities convertible into or
exercisable or exchangeable for Common Stock, or warrants or other rights
to purchase Common Stock whether any such transaction is to be settled by
delivery of Common Stock or such other securities, in cash or otherwise,
except in connection with (w) the offer and sale of the Shares pursuant to
this Agreement, (x) bona fide gifts, provided the recipient or recipients
thereof agree in writing to be bound by the terms of a Lock-Up Letter
Agreement, (y) dispositions to any
23
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trust for the direct or indirect benefit of the undersigned and/or the
immediate family of the undersigned, provided that such trust agrees in
writing to be bound by the terms of a Lock-Up Letter Agreement or (z) in
connection with a simultaneous sale of all of the Common Stock of the
Company (by means of a merger, consolidation or otherwise).
6. Payment of Expenses. The Company agrees with each Underwriter to
pay all expenses, fees and taxes (other than any transfer taxes incurred by the
Underwriters for the resale of the Shares and, except as set forth under Section
7 hereof and (iv) and (vi) below, fees and disbursements of counsel for the
Underwriters, such transfer taxes, counsel fees and disbursements to be paid by
the Underwriters) in connection with (i) the preparation and filing of the
Registration Statement, each Preliminary Prospectus, the Prospectus, and any
amendments or supplements thereto, and the printing and furnishing of copies of
each thereof to the Underwriters and to dealers (including costs of mailing and
shipment), (ii) the issuance, sale and delivery of the Shares by the Company and
the Selling Stockholder (subject, in the case of the Selling Stockholder, to the
next sentence), (iii) the word processing and/or printing of this Agreement, any
Agreement Among Underwriters, any dealer agreements, any Statements of
Information, the Custody Agreement and the Powers of Attorney and the
reproduction and/or printing and furnishing of copies of each thereof to the
Underwriters and to dealers (including costs of mailing and shipment), (iv) the
qualification of the Shares for offering and sale under state laws and the
determination of their eligibility for investment under state law as aforesaid
(including the reasonable legal fees and filing fees and other disbursements of
counsel to the Underwriters) and the printing and furnishing of copies of any
blue sky surveys or legal investment surveys to the Underwriters and to dealers,
(v) any listing of the Shares on any securities exchange or qualification of the
Shares for quotation on NYSE and any registration thereof under the Exchange
Act, (vi) the filing for review of the public offering of the Shares by the NASD
(including the reasonable legal fees and filing fees and other disbursements of
counsel to the Underwriters), and (vii) the performance of the Company's and the
Selling Stockholder's other obligations hereunder (subject, in the case of the
Selling Stockholder, to the next sentence). The Selling Stockholder will pay or
cause to be paid the fees and expenses of its counsel, agents or advisors and
other costs and expenses for which it is responsible under the terms of the
Registration Rights Agreement, dated November 30, 2000, between the Selling
Stockholder and the Company (the "Registration Rights Agreement").
7. Reimbursement of Underwriters' Expenses.
(a) If the Company Shares are not delivered for any reason other than
the termination of this Agreement pursuant to the last paragraph of Section
10 hereof, the default by the Selling Stockholder of its obligations
hereunder or the default by one or more of the Underwriters in its or their
respective obligations hereunder, the Company shall, in addition to paying
the amounts described in
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Section 6 hereof, reimburse the Selling Stockholder and the Underwriters
for all of their reasonable out-of-pocket expenses, including the fees and
disbursements of their respective counsel.
(b) If the Selling Stockholder Shares are not delivered for any reason
other than the termination of this Agreement pursuant to the last paragraph
of Section 10 hereof, the default by the Company of its obligations
hereunder or the default by one or more of the Underwriters in its or their
respective obligations hereunder, the Selling Stockholder shall, in
addition to paying the amounts described in Section 6 hereof, reimburse the
Company and the Underwriters for all of their reasonable out-of-pocket
expenses, including the fees and disbursements of their respective counsel.
8. Conditions of Underwriters' Obligations. The several obligations of
the Underwriters hereunder are subject to (i) the accuracy of the
representations and warranties on the part of the Company and the Selling
Stockholder contained in Sections 3 and 4 hereof respectively, on the date
hereof and at the Time of Purchase (and the several obligations of the
Underwriters at the Additional Time of Purchase are subject to the accuracy of
the representations and warranties on the part of the Company and the Selling
Stockholder contained in Sections 3 and 4 hereof respectively on the date hereof
and at the Time of Purchase (unless previously waived) and at the Additional
Time of Purchase, as the case may be), (ii) the performance by the Sellers of
their obligations hereunder and (iii) to the following additional conditions
precedent:
(a) The Company shall furnish to you at the Time of Purchase and at
the Additional Time of Purchase, as the case may be, an opinion of ▇▇▇▇▇,
▇▇▇▇ & ▇▇▇▇▇▇▇▇, ▇▇, counsel for the Company, addressed to the
Underwriters, and dated the Time of Purchase or the Additional Time of
Purchase, as the case may be, with reproduced copies for each of the other
Underwriters and in form reasonably satisfactory to ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ LLP,
counsel for the Underwriters, stating that:
(i) the Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Delaware, with full corporate power and authority to own, lease and
operate its properties and conduct its business as described in the
Registration Statement and Prospectus, to execute and deliver this
Agreement and to issue, sell and deliver the Shares as herein
contemplated;
(ii) each of the Subsidiaries has been duly incorporated and is
validly existing as a corporation in good standing under the laws of
its respective jurisdiction of incorporation with full corporate power
and authority
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to own, lease and operate its respective properties and to conduct its
respective business;
(iii) the Company and its Subsidiaries are duly qualified or
licensed by each jurisdiction in which they conduct their respective
businesses except where the failure to be so licensed or qualified
would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect and the Company and its Subsidiaries
are duly qualified, and are in good standing, in each jurisdiction in
which they own or lease real property or maintain an office and in
which such qualification is necessary, except where the failure to so
qualify would not reasonably be expected to have a Material Adverse
Effect;
(iv) this Agreement has been duly authorized, executed and
delivered by the Company;
(v) the Shares to be issued and sold by the Company have been
duly authorized and, when issued and delivered to and paid for by the
Underwriters, will be duly and validly and issued and will be fully
paid and non-assessable;
(vi) the Company has authorized and outstanding shares of capital
stock as set forth in the Registration Statement and Prospectus; the
outstanding shares of capital stock of the Company have been duly and
validly authorized and issued and are fully paid, non-assessable and,
except as described in the Registration Statement and Prospectus, are
free of any preemptive rights, resale rights, rights of first refusal
and similar rights under the Delaware General Corporation Law ("DGCL")
or under any contract, agreement or instrument known to such counsel;
the Shares to be issued and sold by the Company will be, and the
Shares to be sold by the Selling Stockholder are, free of any
preemptive rights, resale rights, rights of first refusal and similar
rights under the DGCL or under any contract, agreement or instrument
known to such counsel, other than, in the case of the Shares to be
sold by the Selling Stockholder, those rights described in the
Registration Statement and Prospectus arising under the Registration
Rights Agreement; the certificates for the Shares are in due and
proper form and conform in all material respects to the requirements
of the DGCL, and the holders of the Shares will not be subject to
personal liability by reason of being such holders;
(vii) to the knowledge of such counsel, other than the
Subsidiaries and except as disclosed in the Registration Statement,
the Company does not own or control, directly or indirectly, any
corporation, association or other entity; all of the outstanding
shares of capital stock of each of the Subsidiaries
26
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have been duly authorized and validly issued, are fully paid and,
except with respect to any obligations of the members of Epoch set
forth in the Epoch Operating Agreement, are non-assessable and, except
as otherwise stated in the Registration Statement, are owned by the
Company, in each case subject to no perfected security interest or, to
such counsel's knowledge, other encumbrance or adverse claims, except
as stated in the Registration Statement and Prospectus with respect to
the pledge of the shares of the Company's direct Subsidiaries to
secure the obligations of the Company under its credit agreement; to
such counsel's knowledge, no options, warrants or other rights to
purchase, agreements or other obligations to issue or other rights to
convert any obligation into shares of capital stock or ownership
interests in the Subsidiaries are outstanding, except for those
buy-sell arrangements with respect to Epoch set forth in Section 7.8
of the Epoch Operating Agreement;
(viii) the capital stock of the Company, including the Shares,
conforms to the description thereof contained in the Registration
Statement and Prospectus;
(ix) the Registration Statement and Prospectus (except as to the
financial statements and schedules and other financial and statistical
data contained therein, as to which such counsel need express no
opinion) comply as to form in all material respects with the
applicable requirements of the Act;
(x) the Registration Statement has become effective under the Act
and, to such counsel's knowledge, no stop order proceedings with
respect thereto are pending or threatened under the Act and any
required filing of the Prospectus and any supplement thereto pursuant
to Rule 424 under the Act has been made in the manner and within the
time period required by such Rule 424;
(xi) no approval, authorization, consent or order of or filing
with any national, state or local governmental or regulatory
commission, board, body, authority or agency is required on the part
of the Company in connection with the issuance and sale of the Shares
and consummation by the Company of the transaction as contemplated
hereby other than registration of the Shares under the Act and except
for such other approvals, authorizations, consents, orders and filings
as have been obtained or made (except such counsel need express no
opinion as to any necessary qualification under the state securities
or blue sky laws of the various jurisdictions in which the Shares are
being offered by the Underwriters or under the rules and regulations
of the NASD);
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(xii) the execution, delivery and performance of this Agreement
by the Company and the consummation by the Company of the transactions
contemplated hereby do not and will not conflict with, or result in
any breach of, or constitute a default under (nor constitute any event
which with notice, lapse of time, or both, would result in any breach
of or constitute a default under), (a) any provisions of the charter
or by-laws of the Company or any of its Subsidiaries, (b) any
provision of any license, indenture, mortgage, deed of trust, bank
loan, credit agreement or other evidence of indebtedness, or any
lease, contract or other agreement or instrument known to such counsel
and to which the Company or any of its Subsidiaries is a party or by
which any of them or their respective properties may be bound or
affected, or (c) any federal, state, local or foreign law, regulation
or rule or any decree, judgment or order applicable to the Company or
any of its Subsidiaries, except for, in the case of clauses (b) and
(c), those conflicts, breaches or defaults that would not,
individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect ;
(xiii) to such counsel's knowledge, neither the Company nor any
of its Subsidiaries is (a) in violation of its charter or by-laws or
(b) is in breach of, or in default under (nor has any event occurred
which with notice, lapse of time, or both would result in any breach
of, or constitute a default under), any license, indenture, mortgage,
deed of trust, bank loan or any other agreement or instrument known to
such counsel and to which the Company or any of its Subsidiaries is a
party or by which any of them or their respective properties may be
bound or affected or (c) is in breach of, or in default under, any
federal, state, local or foreign law, regulation or rule or any
decree, judgment or order applicable to the Company or any of its
Subsidiaries except for, in the case of clauses (b) and (c), those
breaches or defaults that would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect;
(xiv) to such counsel's knowledge, there are no contracts,
licenses, agreements, leases or documents of a character which are
required to be filed as exhibits to the Registration Statement or to
be summarized or described in the Prospectus which have not been so
filed, summarized or described as required;
(xv) to such counsel's knowledge, there are no private or
governmental actions, suits, claims, investigations or proceedings
pending, threatened or contemplated to which the Company or any of its
Subsidiaries is subject or of which any of their respective properties
is subject at law or in equity or before or by any federal, state,
local or foreign governmental or
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regulatory commission, board, body, authority or agency which are
required to be described in the Prospectus but are not so described as
required;
(xvi) the Company is not, and after the offering and sale of the
Shares, will not be, an "investment company" or an entity controlled
by an "investment company," as such terms are defined in the
Investment Company Act;
(xvii) such counsel has read the statements in the Prospectus
under the captions listed in Exhibit B attached hereto and, insofar as
such statements are descriptions of contracts, agreements or other
legal documents or of legal proceedings, or refer to statements of law
or legal conclusions, are accurate in all material respects; and
(xviii) except as described in the Registration Statement and
Prospectus, no person has the right, pursuant to the terms of any
contract, agreement or other instrument known to such counsel, to
cause the Company to register under the Act any shares of capital
stock or other equity interests as a result of the filing or
effectiveness of the Registration Statement or the sale of the Shares
as contemplated hereby; and to such counsel's knowledge, except as
described in the Registration Statement and Prospectus, no person is
entitled to registration rights with respect to shares of capital
stock or other securities of the Company.
In addition, such counsel shall state that it has participated in
conferences with officers and other representatives of the Company,
representatives of the independent public accountants of the Company and
representatives of the Underwriters at which the contents of the Registration
Statement and Prospectus were discussed and, although such counsel is not
passing upon and does not assume responsibility for the accuracy, completeness
or fairness of the statements contained in the Registration Statement or
Prospectus (except as and to the extent stated in subparagraphs (viii), (ix) and
(xviii) above), on the basis of the foregoing nothing has come to the attention
of such counsel that causes such counsel to believe that the Registration
Statement or any amendment thereto at the time such Registration Statement or
amendment became effective contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein not misleading, or that the Prospectus or any
supplement thereto at the date of such Prospectus or such supplement, and at all
times up to and including the Time of Purchase or Additional Time of Purchase,
as the case may be, contained an untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading (it being understood that such counsel need express no belief
with respect to the financial
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statements and schedules and other financial and statistical data included in
the Registration Statement or Prospectus).
(b) The Selling Stockholder shall furnish to you at the Time of
Purchase and at the Additional Time of Purchase, as the case may be, an
opinion of ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ LLP, counsel for the Selling
Stockholder, addressed to the Underwriters, and dated the Time of Purchase
or the Additional Time of Purchase, as the case may be, with reproduced
copies for each of the other Underwriters, and in form and substance
reasonably satisfactory to ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ LLP, counsel for the
Underwriters, stating that:
(i) this Agreement and the Custody Agreement have been duly
executed and delivered by or on behalf of the Selling Stockholder;
(ii) Selling Stockholder has full legal right and power, and has
obtained any authorization or approval required by law (other than
those imposed by the Act and the securities or blue sky laws of
certain jurisdictions), to sell, assign, transfer and cause to deliver
the Shares to be sold by the Selling Stockholder in the manner
provided in this Agreement;
(iii) delivery of certificates for the Selling Stockholder Shares
pursuant hereto will pass valid and marketable title thereto to the
Underwriters (assuming each such Underwriter has no notice of any
adverse claim), free and clear of any claim, lien, encumbrance,
security interest, community property right, or other defect in title
or restriction on transfer, except for such restrictions as are
generally applicable to holders of Common Stock and as are described
in the Registration Statement and the Prospectus;
(iv) assuming each Underwriter has no notice of any adverse claim
(within the meaning of Section 8-105 of the UCC), (i) each Underwriter
has acquired valid and marketable title to the Selling Stockholder
Shares free and clear of any claim, lien, encumbrance, security
interest, community property right, equities, claims or other defect
in title, or other restriction on transfer, except for such
restrictions as are generally applicable to holders of Common Stock
described in the Registration Statement and Prospectus and (ii) each
Underwriter that has purchased Selling Stockholder Shares delivered at
the Time of Purchase or at the Additional Time of Purchase, as the
case may be, to DTC by making payment therefor as provided herein, and
that has had such Selling Stockholder Shares credited to the
securities account or accounts of such Underwriters maintained with
DTC, has acquired a security entitlement (within the meaning of
Section 8-102(a)(17) of the UCC), and no action based on an adverse
claim (within the meaning of Section 8-102(a)(1) of the UCC)
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may be asserted against such Underwriter with respect to the Selling
Stockholder Shares;
(v) the proper officers of the Selling Stockholder have been duly
authorized to execute and deliver this Agreement and any other
document necessary or desirable in connection with the transactions
contemplated hereby for and on behalf of the Selling Stockholder and
to deliver the Shares to be sold by the Selling Stockholder; and
(vi) to such counsel's knowledge, the statements in the
Prospectus relating to the Selling Stockholder in the last sentence of
the first paragraph on the outside front cover page of the Prospectus
and the first sentence under the caption "Risk factors - The
Foundation may have interests in our company..." are accurate in all
material respects.
(c) You shall have received at the Time of Purchase and at the
Additional Time of Purchase, as the case may be, the favorable opinion of
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ LLP, counsel for the Underwriters, dated the Time of
Purchase or the Additional Time of Purchase, as the case may be, with
respect to the issuance and sale of the Shares by the Company, the
Registration Statement, the Prospectus (together with any supplement
thereto) and such other related matters as the Underwriters may require.
(d) You shall have received from PricewaterhouseCoopers LLP, letters
dated, respectively, the date of this Agreement and the Time of Purchase
and Additional Time of Purchase, as the case may be, and addressed to the
Underwriters (with reproduced copies for each of the Underwriters) in the
forms heretofore approved by ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ LLP, counsel for the
Underwriters.
(e) No amendment or supplement to the Registration Statement or
Prospectus shall be filed prior to the time the Registration Statement
becomes effective to which you reasonably object in writing.
(f) The Registration Statement shall become effective, or if Rule 430A
under the Act is used, the Prospectus shall have been filed with the
Commission pursuant to Rule 424(b) under the Act, at or before 5:00 P.M.,
New York City time, on the date of this Agreement, unless a later time (but
not later than 5:00 P.M., New York City time, on the second full business
day after the date of this Agreement) shall be agreed to by the Company,
the Selling Stockholder and you in writing or by telephone, confirmed in
writing; provided, however, that the Company, the Selling Stockholder and
you and any group of Underwriters,
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including you, who have agreed hereunder to purchase in the aggregate at
least 50% of the Firm Shares may from time to time agree on a later date.
(g) Prior to the Time of Purchase or the Additional Time of Purchase,
as the case may be, (i) no stop order with respect to the effectiveness of
the Registration Statement shall have been issued under the Act or
proceedings initiated under Section 8(d) or 8(e) of the Act; (ii) the
Registration Statement and all amendments thereto, or modifications
thereof, if any, shall not contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading; and (iii) the Prospectus and
all amendments or supplements thereto, or modifications thereof, if any,
shall not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they are
made, not misleading.
(h) Between the time of execution of this Agreement and the Time of
Purchase or the Additional Time of Purchase, as the case may be, (i) no
material and unfavorable change, financial or otherwise (other than as
referred to in the Registration Statement and Prospectus), in the business,
prospects, properties, condition of the Company and its Subsidiaries taken
as a whole shall occur or become known and (ii) no transaction which is
material and unfavorable to the Company (other than as referred to in the
Registration Statement and Prospectus) shall have been entered into by the
Company or any of its Subsidiaries.
(i) Each of the Company and the Selling Stockholder will, at the Time
of Purchase or Additional Time of Purchase, as the case may be, as to
itself and not as to the other, deliver to you a certificate of the Company
or the Selling Stockholder, as the case may be, signed by two of its
executive officers to the effect that the representations and warranties of
the Company and the Selling Stockholder, as the case may be, as set forth
in this Agreement are true and correct as of such date, that the Company
and the Selling Stockholder, as the case may be, shall perform such of its
obligations under this Agreement as are to be performed at or before the
Time of Purchase and at or before the Additional Time of Purchase, as the
case may be, and the conditions set forth in paragraphs (f) and (g) of this
Section 8 have been met.
(j) You shall have received Lock-Up Letter Agreements, dated the date
of this Agreement, from the Selling Stockholder, each of the Company's
directors and the Company's five "named executive officers" to the effect
specified in Section 3(s) hereof;
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(k) Between the time of execution of this Agreement and the Time of
Purchase or Additional Time of Purchase, as the case may be, there shall
not have occurred any downgrading, nor shall any notice or announcement
have been given or made of (i) any intended or potential downgrading or
(ii) any review or possible change that does not indicate an improvement,
in the rating accorded any securities of or guaranteed by the Company or
any Subsidiary by any "nationally recognized statistical rating
organization", as that term is defined in Rule 436(g)(2) under the Act.
The Company and the Selling Stockholder shall have furnished to you
such other documents and certificates as to the accuracy and completeness of any
statement in the Registration Statement and Prospectus as of the Time of
Purchase and the Additional Time of Purchase, as the case may be, as you may
reasonably request.
9. Effective Date of Agreement; Termination. This Agreement shall
become effective (i) if Rule 430A under the Act is not used, when you shall have
received notification of the effectiveness of the Registration Statement, or
(ii) if Rule 430A under the Act is used, when the parties hereto have executed
and delivered this Agreement.
The obligations of the several Underwriters hereunder shall be subject
to termination in the absolute discretion of you (i) if, since the time of
execution of this Agreement or the respective dates as of which information is
given in the Registration Statement and Prospectus, (y) there has been any
material adverse and unfavorable change, financial or otherwise (other than as
referred to in the Registration Statement and Prospectus), in the business,
prospects, properties, condition (financial or otherwise) or results of
operations of the Company and its Subsidiaries taken as a whole, which would in
your judgment make it impracticable to market the Shares, or (z) there shall
have occurred any downgrading, or any notice shall have been given of (a) any
intended or potential downgrading or (b) any review or possible change that does
not indicate an improvement, in the rating accorded any securities of or
guaranteed by the Company or any Subsidiary by any "nationally recognized
statistical rating organization", as that term is defined in Rule 436(g)(2)
under the Act or (ii) if, at any time prior to the Time of Purchase or, with
respect to the purchase of any Additional Shares, the Additional Time of
Purchase, as the case may be, trading in securities on the New York Stock
Exchange, the American Stock Exchange or the Nasdaq National Market shall have
been suspended or limitations or minimum prices shall have been established on
the New York Stock Exchange, the American Stock Exchange or the Nasdaq National
Market or (iii) if a banking moratorium shall have been declared either by the
United States or New York State authorities, or (iv) if the United States shall
have declared war in accordance with its constitutional processes or there shall
have occurred any material outbreak or escalation of hostilities or other
national or international calamity or crisis of such magnitude in its effect on
the financial markets of the United States as, in your judgment, to make it
impracticable to market the Shares.
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If you or any group of Underwriters elects to terminate this Agreement
as provided in this Section 9, the Company, the Selling Stockholder and each
other Underwriter shall be notified promptly by letter or telegram from such
terminating Underwriter.
If the sale to the Underwriters of the Shares, as contemplated by this
Agreement, is not carried out by the Underwriters for any reason permitted under
this Agreement or if such sale is not carried out because the Company or the
Selling Stockholder, as the case may be, shall be unable to comply with any of
the terms of this Agreement, the Company or the Selling Stockholder, as the case
may be, shall not be under any obligation or liability under this Agreement
(except to the extent provided in Sections 6, 7 and 11 hereof), and the
Underwriters shall be under no obligation or liability to the Company and the
Selling Stockholder under this Agreement (except to the extent provided in
Section 11 hereof) or to one another hereunder.
10. Increase in Underwriters' Commitments. Subject to Sections 8 and
9, if any Underwriter shall default in its obligation to take up and pay for the
Firm Shares to be purchased by it hereunder (otherwise than for reasons
sufficient to justify the termination of this Agreement under the provisions of
Section 9 hereof) and if the number of Firm Shares which all Underwriters so
defaulting shall have agreed but failed to take up and pay for does not exceed
10% of the total number of Firm Shares, the non-defaulting Underwriters shall
take up and pay for (in addition to the number of Firm Shares they are obligated
to purchase pursuant to Section 1 hereof) the number of Firm Shares agreed to be
purchased by all such defaulting Underwriters, as hereinafter provided. Such
Shares shall be taken up and paid for by such non-defaulting Underwriter or
Underwriters in such amount or amounts as you may designate with the consent of
each Underwriter so designated or, in the event no such designation is made,
such Shares shall be taken up and paid for by all non-defaulting Underwriters
pro rata in proportion to the aggregate number of Firm Shares set opposite the
names of such non-defaulting Underwriters in Schedule A.
Without relieving any defaulting Underwriter from its obligations
hereunder, the Company and the Selling Stockholder agree with the non-defaulting
Underwriters that they will not sell any Firm Shares hereunder unless all of the
Firm Shares are purchased by the Underwriters (or by substituted Underwriters
selected by you with the approval of the Company or selected by the Company with
your approval).
If a new Underwriter or Underwriters are substituted by the
Underwriters or by the Company for a defaulting Underwriter or Underwriters in
accordance with the foregoing provision, the Company or you shall have the right
to postpone the Time of Purchase for a period not exceeding five business days
in order that any necessary changes in the Registration Statement and Prospectus
and other documents may be effected.
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The term Underwriter as used in this agreement shall refer to and
include any Underwriter substituted under this Section 10 with like effect as if
such substituted Underwriter had originally been named in Schedule A.
If the aggregate number of Shares which the defaulting Underwriter or
Underwriters agreed to purchase exceeds 10% of the total number of Shares which
all Underwriters agreed to purchase hereunder, and if neither the non-defaulting
Underwriters nor the Company shall make arrangements within the five business
day period stated above for the purchase of all the Shares which the defaulting
Underwriter or Underwriters agreed to purchase hereunder, this Agreement shall
be terminated without further act or deed and without any liability on the part
of the Company or the Selling Stockholder to any non-defaulting Underwriter and
without any liability on the part of any non-defaulting Underwriter to the
Company or the Selling Stockholder. Nothing in this paragraph, and no action
taken hereunder, shall relieve any defaulting Underwriter from liability in
respect of any default of such Underwriter under this Agreement.
11. Indemnity and Contribution.
(a) The Company and the Selling Stockholder jointly and severally
agree to indemnify, defend and hold harmless each Underwriter, its partners,
directors and officers, and any person who controls any Underwriter within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act, and the
successors and assigns of all of the foregoing persons from and against any
loss, damage, expense, liability or claim (including the reasonable cost of
investigation) which, jointly or severally, any such Underwriter or any such
person may incur under the Act, the Exchange Act, the common law or otherwise,
insofar as such loss, damage, expense, liability or claim arises out of or is
based upon any untrue statement or alleged untrue statement of a material fact
(i) contained in the Registration Statement (or in the Registration Statement as
amended by any post-effective amendment thereof by the Company) or arises out of
or is based upon any omission or alleged omission to state a material fact
required to be stated in the Registration Statement or necessary to make the
statements therein not misleading, or (ii) contained in the Prospectus (the term
Prospectus for the purpose of this Section 11 being deemed to include any
Preliminary Prospectus, the Prospectus and the Prospectus as amended or
supplemented by the Company), or arises out of or is based upon any omission or
alleged omission to state a material fact required to be stated in the
Prospectus or necessary to make the statements made therein, in light of the
circumstances under which they were made, not misleading, except in the case of
clause (i) or (ii) above, insofar as any such loss, damage, expense, liability
or claim arises out of or is based upon any untrue statement or alleged untrue
statement of a material fact contained in and in conformity with the Underwriter
Information or arises out of or is based upon any omission or alleged omission
to state a material fact in connection with the Underwriter Information that is
required to be stated in the Registration Statement or
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Prospectus or necessary to make the Underwriter Information (with respect to the
Prospectus, in light of the circumstances under which it was made) not
misleading; provided, further that with respect to any untrue statement or
omission of material fact made in any Preliminary Prospectus, the indemnity
agreement contained in this Section 11(a) shall not inure to the benefit of any
Underwriter from whom the person asserting any such loss, claim, damage or
liability purchased the Shares, to the extent that any such loss, claim, damage
or liability of such Underwriter occurs under the circumstance where it shall
have been determined by a court of competent jurisdiction by final and
nonappealable judgment that (w) the Company had previously furnished copies of
the Prospectus to you, (x) delivery of the Prospectus was required by the Act to
be made to such person, (y) the untrue statement or omission of a material fact
contained in the Preliminary Prospectus was corrected in the Prospectus and (z)
there was not sent or given to such person, at or prior to the written
confirmation of the sale of such Shares to such person, a copy of the
Prospectus, unless the failure to send or give a copy of the Prospectus to such
person was the result of noncompliance by the Company with Section 5(b) hereof.
In making a claim for indemnification or contribution under this
Section 11 by any indemnified party against the Company or the Selling
Stockholder, and subject to the further provisions of this paragraph, any such
indemnified party: (i) may proceed, with respect to a claim for indemnification
or contribution based on or arising out of the Selling Stockholder Information,
against either the Company or the Selling Stockholder and (ii) may proceed, with
respect to a claim for indemnification or contribution not based on or arising
out of the Selling Stockholder Information, against the Company only, or against
both the Company and the Selling Stockholder jointly, but may not proceed solely
against the Selling Stockholder. Except with respect to a claim for
indemnification or contribution based on or arising out of the Selling
Stockholder Information (as to which the following restrictions shall not
apply), in the event that an indemnified party is entitled to seek indemnity or
contribution hereunder against any loss, liability, claim, damage and expense
incurred as contemplated by this Section 11(a), as a precondition to any
indemnified party obtaining indemnification or contribution from the Selling
Stockholder, any such indemnified party shall first: (a) (i) obtain a final
judgment from a trial court of competent jurisdiction that such indemnified
party is entitled to indemnity or contribution under this Agreement with respect
to such loss, liability, claim, damage or expense (the "Final Judgment") from
the Company and the Selling Stockholder and (ii) seek to satisfy such Final
Judgment in full from the Company by making a written demand upon the Company
for such satisfaction and pursuing appropriate legal actions to satisfy the
Final Judgment, or (b) obtain a final determination from a trial court of
competent jurisdiction that such indemnity or contribution is unenforceable
against the Company (a "Final Determination"). If such Final Determination has
been obtained, or such Final Judgment shall remain unsatisfied in whole or in
part 30 days following the date of receipt by the Company of such demand, such
indemnified party shall have the right to make
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demand directly on the Selling Stockholder (but, in the case of a Final
Judgment, only if and to the extent the Company has not already satisfied such
Final Judgment). Such indemnified party shall, however, be relieved of its
obligation to first obtain a Final Determination or, in the case of a Final
Judgment, to first seek to obtain payment from the Company with respect to such
Final Judgment as required by this Section 11, if (w) the Company files a
petition for relief under the United States Bankruptcy Code (the "Bankruptcy
Code") and such order remains unstayed and in effect for 60 days, (x) an order
for relief is entered against the Company in an involuntary case under the
Bankruptcy Code and such order remains unstayed and in effect for 60 days, (y)
the Company makes an assignment for the benefit of its creditors, or (z) any
court orders or approves the appointment of a receiver or custodian for the
Company or a substantial portion of its assets and such order remains unstayed
and in effect for 60 days.
If any action, suit or proceeding (together, a "Proceeding") is
brought against an Underwriter or any such person in respect of which indemnity
may be sought against the Company or the Selling Stockholder pursuant to the
first paragraph of this Section 11(a), such Underwriter or such person shall
promptly notify the Company and the Selling Stockholder in writing of the
institution of such Proceeding and the Company or the Selling Stockholder, as
the case may be, shall assume the defense of such Proceeding, including the
employment of counsel reasonably satisfactory to such indemnified party and
payment of all fees and expenses; provided, however, that the omission to so
notify the Company or the Selling Stockholder shall not relieve the Company or
the Selling Stockholder from any liability which the Company may have to any
Underwriter or any such person or otherwise. Such Underwriter or such
controlling person shall have the right to employ its or their own counsel in
any such case, but the fees and expenses of such counsel shall be at the expense
of such Underwriter or of such person unless the employment of such counsel
shall have been authorized in writing by the Company in connection with the
defense of such Proceeding or the Company shall not have, within a reasonable
period of time in light of the circumstances, employed counsel to have charge of
the defense of such Proceeding or such indemnified party or parties shall have
reasonably concluded that there may be defenses available to it or them which
are different from, additional to or in conflict with those available to the
Company or the Selling Stockholder (in which case the Company shall not have the
right to direct the defense of such Proceeding on behalf of the indemnified
party or parties), in any of which events such fees and expenses shall be borne
by the Company or the Selling Stockholder, as the case may be, and paid as
incurred (it being understood, however, that the Company or the Selling
Stockholder shall not be liable for the expenses of more than one separate
counsel (in addition to any local counsel) in any one Proceeding or series of
related Proceedings in the same jurisdiction representing the indemnified
parties who are parties to such Proceeding). The Company or the Selling
Stockholder shall not be liable for any settlement of any such Proceeding
effected without its written consent but if settled with the written consent of
the Company or the Selling Stockholder, the Company or the Selling Stockholder
agrees (only to
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the extent that the relevant party has provided such written consent) to
indemnify and hold harmless any Underwriter and any such person from and against
any loss or liability by reason of such settlement. 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 sentence of this paragraph, then 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 60 business days after receipt by such indemnifying party
of the aforesaid request, (ii) such indemnifying party shall not have reimbursed
the indemnified party in accordance with such request prior to the date of such
settlement and (iii) such indemnified party shall have given the indemnifying
party at least 30 days' prior notice of its intention to settle. 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 and does not include an admission
of fault, culpability or a failure to act, by or on behalf of such indemnified
party.
(b) Each Underwriter severally agrees to indemnify, defend and hold
harmless the Company, its directors and officers, the Selling Stockholder and
any person who controls the Company or the Selling Stockholder within the
meaning of Section 15 of the Act, or Section 20 of the Exchange Act from and
against any loss, damage, expense, liability or claim (including the reasonable
cost of investigation) which, jointly or severally, the Company, the Selling
Stockholder or any such person may incur under the Act, the Exchange Act, or
common law or otherwise, insofar as such loss, damage, expense, liability or
claim arises out of or is based upon any untrue statement or alleged untrue
statement of a material fact contained in and in conformity with information
furnished in writing by or on behalf of such Underwriter through you to the
Company expressly for use with reference to such Underwriter in the Registration
Statement (or in the Registration Statement as amended by any post-effective
amendment thereof by the Company) or in a Prospectus, or arises out of or is
based upon any omission or alleged omission to state a material fact in
connection with such information required to be stated in such Registration
Statement or Prospectus or necessary to make such information (with respect to
the Prospectus, in light of the circumstances under which it was made) not
misleading. Each of the Company and the Selling Stockholder acknowledge and
agree that the that the only information defined as "Underwriter Information" in
this Agreement shall be the statements set forth in the fifth, seventh, eighth
and ninth paragraphs under the caption "Underwriting" in the Prospectus.
If any Proceeding is brought against the Company, the Selling
Stockholder or any such person in respect of which indemnity may be sought
against any Underwriter
38
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pursuant to the foregoing paragraph, the Company, the Selling Stockholder or
such person shall promptly notify such Underwriter in writing of the institution
of such Proceeding and such Underwriter shall assume the defense of such
Proceeding, including the employment of counsel reasonably satisfactory to such
indemnified party and payment of all fees and expenses, provided, however, that
the omission to so notify such Underwriter shall not relieve such Underwriter
from any liability which such Underwriter may have to the Company, the Selling
Stockholder or any such person or otherwise. The Company, the Selling
Stockholder or such person shall have the right to employ its own counsel in any
such case, but the fees and expenses of such counsel shall be at the expense of
the Company, the Selling Stockholder or such person unless the employment of
such counsel shall have been authorized in writing by such Underwriter in
connection with the defense of such Proceeding or such Underwriter shall not
have employed counsel to have charge of the defense of such Proceeding or such
indemnified party or parties shall have reasonably concluded that there may be
defenses available to it or them which are different from or additional to or in
conflict with those available to such Underwriter (in which case such
Underwriter shall not have the right to direct the defense of such Proceeding on
behalf of the indemnified party or parties, but such Underwriter may employ
counsel and participate in the defense thereof but the fees and expenses of such
counsel shall be at the expense of such Underwriter), in any of which events
such fees and expenses shall be borne by such Underwriter and paid as incurred
(it being understood, however, that such Underwriter shall not be liable for the
expenses of more than one separate counsel (in addition to any local counsel) in
any one Proceeding or series of related Proceedings in the same jurisdiction
representing the indemnified parties who are parties to such Proceeding). No
Underwriter shall be liable for any settlement of any such Proceeding effected
without the written consent of such Underwriter but if settled with the written
consent of such Underwriter, such Underwriter agrees to indemnify and hold
harmless the Company, the Selling Stockholder and any such person from and
against any loss or liability by reason of such settlement. 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 sentence of this paragraph, then 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 60 business days after receipt by such indemnifying party
of the aforesaid request, (ii) such indemnifying party shall not have reimbursed
the indemnified party in accordance with such request prior to the date of such
settlement and (iii) such indemnified party shall have given the indemnifying
party at least 30 days' prior notice of its intention to settle. 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.
39
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(c) If the indemnification provided for in this Section 11 is
unavailable to an indemnified party under subsections (a) and (b) of this
Section 11 in respect of any losses, damage, expenses, liabilities or claims
referred to therein, then each applicable indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, damages, expenses,
liabilities or claims (i) in such proportion as is appropriate to reflect the
relative benefits received by the Company and the Selling Stockholder on the one
hand and the Underwriters on the other hand from the offering of the Shares or
(ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the Company and the Selling Stockholder on the one hand and of the Underwriters
on the other in connection with the statements or omissions which resulted in
such losses, damages, expenses, liabilities or claims, as well as any other
relevant equitable considerations. The relative benefits received by the Company
and the Selling Stockholder on the one hand and the Underwriters on the other
shall be deemed to be in the same respective proportion as the total proceeds
from the offering (net of underwriting discounts and commissions but before
deducting expenses) received by the Company and the Selling Stockholder and the
total underwriting discounts and commissions received by the Underwriters, bear
to the aggregate public offering price of the Shares. The relative fault of the
Company and the Selling Stockholder on the one hand and of the Underwriters on
the other shall be determined by reference to, among other things, whether the
untrue statement or alleged untrue statement of a material fact or omission or
alleged omission relates to information supplied by the Company, by the Selling
Stockholder or by the Underwriters and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission. The amount paid or payable by a party as a result of the losses,
damages, expenses, liabilities and claims referred to in this subsection shall
be deemed to include any legal or other fees or expenses reasonably incurred by
such party in connection with investigating, preparing to defend or defending
any claim or Proceeding.
(d) The Company, the Selling Stockholder and the Underwriters agree
that it would not be just and equitable if contribution pursuant to this Section
11 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 subsection (c)
above. Notwithstanding the provisions of this Section 11, 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 such Underwriter and distributed to
the public were offered to the public exceeds the amount of any damage which
such Underwriter has otherwise been required to pay by reason of such untrue
statement or alleged untrue statement or omission or alleged omission. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the
40
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Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. The Underwriters' obligations to contribute
pursuant to this Section 11 are several in proportion to their respective
underwriting commitments and not joint.
(e) The indemnity and contribution agreements contained in this
Section 11 and the covenants, warranties and representations of the Company and
the Selling Stockholder contained in this Agreement shall remain in full force
and effect regardless of any investigation made by or on behalf of any
Underwriter, its directors and officers or any person (including each partner,
officer or director of such person) who controls any Underwriter within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act, or by or on
behalf of the Company, its directors or officers, the Selling Stockholder or any
person who controls the Company within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act, and shall survive any termination of this
Agreement or the issuance and delivery of the Shares. The Company, the Selling
Stockholder and each Underwriter agree promptly to notify each other of the
commencement of any Proceeding against it and, in the case of the Company,
against any of the Company's officers or directors in connection with the
issuance and sale of the Shares, or in connection with the Registration
Statement or Prospectus.
(f) Anything to the contrary hereunder notwithstanding (but without
affecting the indemnification and contribution obligations of the Company and
the Selling Stockholders to the Underwriters and other indemnified parties
described in Section 11(a) hereof), the Registration Rights Agreement shall
govern the indemnification and contribution obligations between the Company and
the Selling Stockholder with respect to the sale of Shares hereunder.
12. Notices. Except as otherwise herein provided, all statements,
requests, notices and agreements shall be in writing or by telegram and, if to
the Underwriters, shall be sufficient in all respects if delivered or sent to
UBS Warburg LLC, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇.▇. ▇▇▇▇▇-▇▇▇▇, Attention:
Syndicate Department and ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc., ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇.▇. ▇▇▇▇▇, Attention: General Counsel; if to the Company, shall be
sufficient in all respects if delivered or sent to the Company at the offices of
the Company at RightCHOICE Managed Care, Inc., ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇,
▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: President, and, if to the Selling Stockholder, shall
be sufficient in all respects if delivered or sent to the Selling Stockholder at
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention:
Chairperson.
13. Governing Law; Construction. This Agreement and any claim,
counterclaim or dispute of any kind or nature whatsoever arising out of or in
any way relating to this Agreement ("Claim"), directly or indirectly, shall be
governed by, and construed in accordance with, the laws of the State of New
York. The section headings in this Agreement
41
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have been inserted as a matter of convenience of reference and are not a part of
this Agreement.
14. Submission to Jurisdiction. Except as set forth below, no Claim
may be commenced, prosecuted or continued in any court other than the courts of
the State of New York located in the City and County of New York or in the
United States District Court for the Southern District of New York, which courts
shall have jurisdiction over the adjudication of such matters, and the Company
and the Selling Stockholder consent to the jurisdiction of such courts and
personal service with respect thereto. The Company and the Selling Stockholder
hereby consent to personal jurisdiction, service and venue in any court in which
any Claim arising out of or in any way relating to this Agreement is brought by
any third party against UBS Warburg or any indemnified party. Each of UBS
Warburg, the Company (on its behalf and, to the extent permitted by applicable
law, on behalf of its stockholders and affiliates) and the Selling Stockholder
waives all right to trial by jury in any action, proceeding or counterclaim
(whether based upon contract, tort or otherwise) in any way arising out of or
relating to this Agreement. The Company and the Selling Stockholder agree that a
Final Determination or Final Judgment in any such action, proceeding or
counterclaim brought in any such court shall be conclusive and binding upon the
Company or the Selling Stockholder, as the case may be, subject to the
limitations set forth in Section 11(a) of this Agreement with respect to
actions, proceedings or claims brought against the Selling Stockholder, and may
be enforced in any other courts in the jurisdiction of which the Company or the
Selling Stockholder, as the case may be, is or may be subject, by suit upon such
judgment.
15. Parties at Interest. The Agreement herein set forth has been and
is made solely for the benefit of the Underwriters, the Company, the Selling
Stockholder and to the extent provided in Section 11 hereof the controlling
persons, directors and officers referred to in such section, and their
respective successors, assigns, heirs, personal representatives and executors
and administrators. No other person, partnership, association or corporation
(including a purchaser, as such purchaser, from any of the Underwriters) shall
acquire or have any right under or by virtue of this Agreement.
16. Counterparts. This Agreement may be signed by the parties in one
or more counterparts which together shall constitute one and the same agreement
among the parties.
17. Successors and Assigns. This Agreement shall be binding upon the
Underwriters, the Company and the Selling Stockholder and their respective
successors and assigns and any successor or assign of any substantial portion of
the Company's, the Selling Stockholder's and any of the Underwriters' respective
businesses and/or assets.
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18. Miscellaneous. UBS Warburg, an indirect, wholly owned subsidiary
of UBS AG, is not a bank and is separate from any affiliated bank, including any
U.S. branch or agency of UBS Warburg. Because UBS Warburg is a separately
incorporated entity, it is solely responsible for its own contractual
obligations and commitments, including obligations with respect to sales and
purchases of securities. Securities sold, offered or recommended by UBS Warburg
are not deposits, are not insured by the Federal Deposit Insurance Corporation,
are not guaranteed by a branch or agency, and are not otherwise an obligation or
responsibility of a branch or agency.
A lending affiliate of UBS Warburg may have lending relationships with
issuers of securities underwritten or privately placed by UBS Warburg. To the
extent required under the securities laws, prospectuses and other disclosure
documents for securities underwritten or privately placed by UBS Warburg will
disclose the existence of any such lending relationships and whether the
proceeds of the issue will be used to repay debts owed to affiliates of UBS
Warburg.
If the foregoing correctly sets forth the understanding among the
Company, the Selling Stockholder and the Underwriters, please so indicate in the
space provided below for the purpose, whereupon this letter and your acceptance
shall constitute a binding agreement among the Company, the Selling Stockholder
and the Underwriters, severally.
Very truly yours,
RIGHTCHOICE MANAGED CARE, INC.
By: ______________________________
Title:____________________________
THE MISSOURI FOUNDATION FOR HEALTH
By: ______________________________
Title:____________________________
Accepted and agreed to as of the date first
above written, on behalf of themselves
and the other several Underwriters named
in Schedule A
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UBS WARBURG LLC
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ INC.
▇▇▇-▇▇▇▇, ▇▇▇▇▇▇ INC.
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & COMPANY INCORPORATED
By: UBS WARBURG LLC
By: _________________________
Title:________________________
By: _________________________
Title:________________________
By: ▇▇▇▇▇▇▇ ▇▇▇▇▇ BARNEY INC.
By:__________________________
Title:_________________________
44
SCHEDULE A
Number of
Underwriter Firm Shares
----------- -----------
UBS WARBURG LLC
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ INC.
▇▇▇-▇▇▇▇, ▇▇▇▇▇▇ INC.
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & COMPANY INCORPORATED
---------
Total............................... 3,500,000
=========
45
SCHEDULE B
Number of
Stock Seller Firm Shares
------------ -----------
RightCHOICE Managed Care, Inc. 750,000
The Missouri Foundation For Health 2,750,000
---------
Total......................... 3,500,000
=========
46
EXHIBIT A
List of Subsidiaries
Percentages Owned
Subsidiary Jurisdiction of Incorporation by the Company
---------- ----------------------------- -----------------
47
EXHIBIT B
"Prospectus summary - Reorganization"; the second paragraph under "Risk factors
- Trading volume for our common stock has been limited..."; "Risk factors - Our
Blue Cross and Blue Shield license agreements could terminate..."; "Risk factors
- We will not be able to sell or merge without the approval of the
Foundation..."; "Risk factors - Our directors will be able to control the
outcome of all matters..."; "Risk factors - The Foundation's registration rights
and obligations to sell..."; "Risk factors - Provisions in our charter
documents..."; "Risk factors - We are now a defendant in a class action
lawsuit..."; "Risk factors - If the court finds in a pending appeal that Blue
Cross and Blue Shield of Missouri..."; the second paragraph under "Use of
Proceeds"; the fifth paragraph under "Management's discussion and analysis of
financial condition and results of operations - Liquidity and Capital
Resources"; "Management's discussion and analysis of financial condition and
results of operations - Quantitative and Qualitative Disclosure About Market
Risk - Long Term Debt"; "Management's discussion and analysis of financial
condition and results of operations - Health Insurance Portability and
Accountability Act of 1996"; the first sentence of the fourth paragraph under
"Business - Information Technology"; "Business - Blue Cross and Blue Shield
Licenses"; "Business - Regulation"; "Business - Legal Proceedings"; "Management
- CEO Employment Agreement"; "Management - Severance Agreements"; "Management -
Benefit Plans"; "Reorganization"; "Related party transactions"; and Description
of capital stock".
