Exhibit 1.1
3,246,900 Shares
KINDRED HEALTHCARE, INC.
Common Stock
UNDERWRITING AGREEMENT
----------------------
, 2001
Credit Suisse First Boston Corporation
Xxxxxxx, Xxxxx & Co.
UBS Warburg LLC
X.X. Xxxxxx Securities Inc.
Xxxxxx Brothers Inc.
As Representatives of the Several Underwriters,
c/o Credit Suisse First Boston Corporation,
Eleven Madison Avenue,
New York, N.Y. 10010-3629
Dear Sirs:
1. Introductory. Kindred Healthcare, Inc., a Delaware corporation
("Company"), proposes to issue and sell 1,750,000 shares of its common stock,
par value $0.25 per share ("Securities"), and the stockholders listed in
Schedule A hereto (the "Selling Stockholders") propose severally and not jointly
to sell an aggregate of 1,496,900 outstanding shares of the Securities (such
3,246,900 shares of Securities being hereinafter referred to as the "Firm
Securities"). The Company also proposes to sell to the Underwriters, at the
option of the Underwriters, an aggregate of not more than 487,035 additional
shares of its Securities (such 487,035 additional shares being hereinafter
referred to as the "Optional Securities"). The Firm Securities and the Optional
Securities are herein collectively called the "Offered Securities." As part of
the offering contemplated by this Agreement, Credit Suisse First Boston
Corporation ("CSFBC" or the "Designated Underwriter") has agreed to reserve out
of the Firm Securities purchased by it under this Agreement, up to [ ] shares,
for sale to the Company's directors, officers, employees and other parties
associated with the Company (collectively, "Participants"), as set forth in the
Prospectus (as defined herein) under the heading "Underwriting" (the "Directed
Share Program"). The Firm Securities to be sold by the Designated Underwriter
pursuant to the Directed Share Program (the "Directed Shares") will be sold by
the Designated Underwriter pursuant to this Agreement at the public offering
price. Any Directed Shares not subscribed for by the end of the business day on
which this Agreement is executed will be offered to the public by the
Underwriters as set forth in the Prospectus. The Company and the Selling
Stockholders hereby agree with the several Underwriters named in Schedule B
hereto ("Underwriters") as follows:
2. Representations and Warranties of the Company and the Selling
Stockholders. (a) The Company represents and warrants to, and agrees with, the
several Underwriters that:
(i) A registration statement (No. 333-68838) relating to the Offered
Securities, including a form of prospectus, has been filed with the
Securities and Exchange Commission ("Commission") and either (A) has been
declared effective under the Securities Act of 1933 ("Act") and is not
proposed to be amended or (B) is proposed to be amended by amendment or
post-effective amendment. If such registration statement (the "initial
registration statement") has been declared effective, either (A) an
additional registration statement (the "additional registration statement")
relating to the Offered Securities may have been filed with the
Commission pursuant to Rule 462(b) ("Rule 462(b)") under the Act and, if so
filed, has become effective upon filing pursuant to such Rule and the
Offered Securities all have been duly registered under the Act pursuant to
the initial registration statement and, if applicable, the additional
registration statement or (B) such an additional registration statement is
proposed to be filed with the Commission pursuant to Rule 462(b) and will
become effective upon filing pursuant to such Rule and upon such filing the
Offered Securities will all have been duly registered under the Act
pursuant to the initial registration statement and such additional
registration statement. If the Company does not propose to amend the
initial registration statement or if an additional registration statement
has been filed and the Company does not propose to amend it, and if any
post-effective amendment to either such registration statement has been
filed with the Commission prior to the execution and delivery of this
Agreement, the most recent amendment (if any) to each such registration
statement has been declared effective by the Commission or has become
effective upon filing pursuant to Rule 462(c) ("Rule 462(c)") under the Act
or, in the case of the additional registration statement, Rule 462(b). For
purposes of this Agreement, "Effective Time" with respect to the initial
registration statement or, if filed prior to the execution and delivery of
this Agreement, the additional registration statement means (A) if the
Company has advised the Representatives that it does not propose to amend
such registration statement, the date and time as of which such
registration statement, or the most recent post-effective amendment thereto
(if any) filed prior to the execution and delivery of this Agreement, was
declared effective by the Commission or has become effective upon filing
pursuant to Rule 462(c), or (B) if the Company has advised the
Representatives that it proposes to file an amendment or post-effective
amendment to such registration statement, the date and time as of which
such registration statement, as amended by such amendment or post-effective
amendment, as the case may be, is declared effective by the Commission. If
an additional registration statement has not been filed prior to the
execution and delivery of this Agreement but the Company has advised the
Representatives that it proposes to file one, "Effective Time" with respect
to such additional registration statement means the date and time as of
which such registration statement is filed and becomes effective pursuant
to Rule 462(b). "Effective Date" with respect to the initial registration
statement or the additional registration statement (if any) means the date
of the Effective Time thereof. The initial registration statement, as
amended at its Effective Time, including all material incorporated by
reference therein, including all information contained in the additional
registration statement (if any) and deemed to be a part of the initial
registration statement as of the Effective Time of the additional
registration statement pursuant to the General Instructions of the Form on
which it is filed and including all information (if any) deemed to be a
part of the initial registration statement as of its Effective Time
pursuant to Rule 430A(b) ("Rule 430A(b)") under the Act, is hereinafter
referred to as the "Initial Registration Statement." The additional
registration statement, as amended at its Effective Time, including the
contents of the initial registration statement incorporated by reference
therein and including all information (if any) deemed to be a part of the
additional registration statement as of its Effective Time pursuant to Rule
430A(b), is hereinafter referred to as the "Additional Registration
Statement." The Initial Registration Statement and the Additional
Registration Statement are hereinafter referred to collectively as the
"Registration Statements" and individually as a "Registration Statement."
The form of prospectus relating to the Offered Securities, as first filed
with the Commission pursuant to and in accordance with Rule 424(b) ("Rule
424(b)") under the Act or (if no such filing is required) as included in a
Registration Statement, including all material incorporated by reference in
such prospectus, is hereinafter referred to as the "Prospectus." No
document has been or will be prepared or distributed in reliance on Rule
434 under the Act.
(ii) If the Effective Time of the Initial Registration Statement is
prior to the execution and delivery of this Agreement: (A) on the Effective
Date of the Initial Registration Statement, the Initial Registration
Statement complied as to form in all respects to the requirements of the
Act and the rules and regulations of the Commission ("Rules and
Regulations") and did not include any untrue statement of a material fact
or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, (B) on the
Effective Date of the Additional Registration Statement (if any), each
Registration Statement complied, or will comply, as to form in all respects
to the requirements of
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the Act and the Rules and Regulations and did not include, or will not
include, any untrue statement of a material fact and did not omit, or will
not omit, to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, and (C) on the
date of this Agreement, the Initial Registration Statement and, if the
Effective Time of the Additional Registration Statement is prior to the
execution and delivery of this Agreement, the Additional Registration
Statement each complies as to form, and at the time of filing of the
Prospectus pursuant to Rule 424(b) or (if no such filing is required) at
the Effective Date of the Additional Registration Statement in which the
Prospectus is included, each Registration Statement and the Prospectus will
comply as to form, in all respects to the requirements of the Act and the
Rules and Regulations, and neither of such documents includes, or will
include, any untrue statement of a material fact or omits, or will omit, to
state any material fact required to be stated therein or necessary to make
the statements therein (in the case of the Prospectus, in the light of the
circumstances under which they were made) not misleading. If the Effective
Time of the Initial Registration Statement is subsequent to the execution
and delivery of this Agreement: on the Effective Date of the Initial
Registration Statement, the Initial Registration Statement and the
Prospectus will comply as to form in all respects to the requirements of
the Act and the Rules and Regulations, neither of such documents will
include any untrue statement of a material fact or will omit to state any
material fact required to be stated therein or necessary to make the
statements therein (in the case of the Prospectus, in the light of the
circumstances under which they were made) not misleading, and no Additional
Registration Statement has been or will be filed. The two preceding
sentences do not apply to statements in or omissions from a Registration
Statement or the Prospectus based upon written information furnished to the
Company by any Underwriter through the Representatives specifically for use
therein, it being understood and agreed that the only such information is
that described as such in Section 7(c) hereof.
(iii) The documents incorporated or deemed to be incorporated by
reference in the Registration Statements and the Prospectus, at the time
they were or hereafter are filed with the Commission, complied and will
comply as to form in all respects with the requirements of the Exchange Act
and the rules and regulations of the Commission thereunder.
(iv) The Company has been duly organized and is a validly existing
corporation in good standing under the laws of the State of Delaware, with
power and authority (corporate and other) to own, lease and operate its
properties and conduct its business as described in the Prospectus; and the
Company is duly qualified to transact business as a foreign corporation and
is in good standing in all other jurisdictions in which its ownership or
lease of property or the conduct of its business requires such
qualification, except where the failure to be so qualified or in good
standing would not, individually or in the aggregate, have a material
adverse effect on the condition (financial or other), business, business
prospects, properties or results of operations of the Company and its
subsidiaries taken as a whole ("Material Adverse Effect").
(v) Each subsidiary of the Company listed on Schedule C hereto (that
purports to identify each subsidiary of the Company that constitutes a
"significant subsidiary" as such term is defined in Rule 1-02 of Regulation
S-X) that is a corporation (a "Corporate Subsidiary") has been duly
organized and is a validly existing corporation in good standing under the
laws of the jurisdiction of its incorporation, with power and authority
(corporate and other) to own, lease and operate its properties and conduct
its business as described in the Prospectus, and each Corporate Subsidiary
is duly qualified to transact business as a foreign corporation and is in
good standing in all other jurisdictions in which its ownership or lease of
property or the conduct of its business requires such qualification, except
where the failure to be so qualified or in good standing would not,
individually or in the aggregate, have a Material Adverse Effect; all of
the issued and outstanding capital stock of each Corporate Subsidiary has
been duly authorized and validly issued, is fully paid and nonassessable,
was not issued in violation of or subject to any preemptive or similar
rights and is owned by the Company, directly or through subsidiaries, free
from liens, encumbrances and defects (other than liens pursuant to the
Credit Agreements (as defined below)) and no options, warrants or other
rights to purchase, agreements or other obligations to issue or other
rights to convert or exchange any obligations into shares of capital stock
or other ownership
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interests in any Corporate Subsidiary are outstanding. As used in the this
Agreement, "Credit Agreements" means (1) that certain $120,000,000 Credit
Agreement, dated as of April 20, 2001, among Kindred Healthcare Operating,
Inc., the Company, the lenders party thereto, the Swingline Bank party
thereto, the LC Issuing Banks party thereto, Xxxxxx Guaranty Trust Company
of New York, as Administrative Agent and Collateral Agent, and General
Electric Capital Corporation, as Documentation Agent and Collateral
Monitoring Agent, and (2) that certain Credit Agreement Providing for the
Issuance of $300,000,000 Senior Secured Notes due 2008, dated as of April
20, 2001, among Kindred Healthcare Operating, Inc., the Company, the
lenders party thereto and Xxxxxx Guaranty Trust Company of New York, as
Collateral Agent and Administrative Agent.
(vi) Each subsidiary of the Company listed on Schedule C hereto that
is a partnership (including, without limitation, general, limited or
limited liability partnerships) (a "Subsidiary Partnership") has been duly
organized and is a validly existing partnership in good standing under the
laws of the jurisdiction of its organization, with power and authority
(partnership and other) to own, lease and operate its properties and
conduct its business as described in the Prospectus, and each Subsidiary
Partnership is duly qualified to transact business as a foreign partnership
and is in good standing in all other jurisdictions in which its ownership
or lease of property or the conduct of its business requires such
qualification, except where the failure to be so qualified or in good
standing would not, individually or in the aggregate, have a Material
Adverse Effect; all of the issued and outstanding general and limited
partnership interests in each Subsidiary Partnership have been validly
issued and, except as set forth on Schedule D hereto (that purports to
identify each Subsidiary Partnership that is not wholly-owned by the
Company and the Company's percentage ownership thereof), are owned by the
Company, directly or through subsidiaries, free from liens, encumbrances
and defects (other than liens pursuant to the Credit Agreements); no
options, warrants or other rights to purchase, agreements or other
obligations to issue or rights to convert or exchange any obligations into
partnership or other ownership interests in any Subsidiary Partnership are
outstanding; each partnership agreement pursuant to which the Company or a
subsidiary holds a partnership interest in a Subsidiary Partnership is in
full force and effect and constitutes a valid and legally binding agreement
of the parties thereto, enforceable against such parties in accordance with
the terms thereof, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general equity
principles; and there has been no material breach of or default under, and
no event which with notice or lapse of time or both would constitute a
material breach of or default under, any such partnership agreement by the
Company or any subsidiary, or to the Company's knowledge, any other party
thereto.
(vii) Each subsidiary of the Company listed on Schedule C hereto that
is a limited liability company (a "Subsidiary LLC") has been duly organized
and is a validly existing limited liability company in good standing under
the laws of the jurisdiction of its organization, with power and authority
to own, lease and operate its properties and conduct its business as
described in the Prospectus, and each Subsidiary LLC is duly qualified to
transact business as a foreign limited liability company and is in good
standing in all other jurisdictions in which its ownership or lease of
property or the conduct of its business requires such qualification, except
where the failure to be so qualified or in good standing would not,
individually or in the aggregate, have a Material Adverse Effect; all of
the issued and outstanding membership interests in each Subsidiary LLC have
been validly issued and are owned by the Company, directly or through
subsidiaries, free from liens, encumbrances and defects (other than liens
pursuant to the Credit Agreements); no options, warrants or other rights to
purchase, agreements or other obligations to issue or rights to convert or
exchange any obligations into membership or other ownership interests in
any Subsidiary LLC are outstanding; each operating agreement pursuant to
which the Company or a subsidiary holds a membership interest in a
Subsidiary LLC is in full force and effect and constitutes a valid and
legally binding agreement of the parties thereto, enforceable against such
parties in accordance with the terms thereof, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar
laws of general applicability relating to or affecting creditors' rights
and to general equity principles; and there has been no material breach of
or default under, and no event which with notice or lapse of time or both
would constitute a material
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breach of or default under, any such operating agreement by the Company or
any subsidiary, or to the Company's knowledge, any other party thereto.
(viii) The only subsidiaries of the Company are (a) the subsidiaries
listed on Schedule C hereto and (b) certain other subsidiaries which,
considered in the aggregate as a single subsidiary, do not constitute a
"significant subsidiary" as defined in Rule 1-02 of Regulation S-X; each of
the long-term acute care hospitals, general acute care hospitals and
nursing centers described in the Prospectus as owned or leased by the
Company is owned or leased and operated by a subsidiary in which, except as
disclosed in Schedule D hereto, the Company directly or indirectly owns
100% of the outstanding ownership interests; and except as disclosed in the
Prospectus and as provided in the Credit Agreements, there are no material
encumbrances or restrictions on the ability of any subsidiary (1) to pay
any dividends or make any distributions on such Corporate Subsidiary's
capital stock, such Partnership Subsidiary's partnership interests or such
Subsidiary LLC's membership interests or to pay any indebtedness owed to
the Company or any other subsidiary, (2) to make any loans or advances to,
or investments in, the Company or any other subsidiary, or (3) to transfer
any of its property or assets to the Company or any other subsidiary.
(ix) The Company has the authorized, issued and outstanding
capitalization as set forth in the Prospectus as of the dates set forth
therein; all of the issued and outstanding shares of capital stock of the
Company have been duly authorized and validly issued, are fully paid and
nonassessable and conform to the description thereof contained in the
Prospectus; none of the outstanding shares of capital stock of the Company
was issued in violation of the preemptive or other similar rights of any
security holder of the Company; except as disclosed in the Prospectus,
there are no outstanding (a) securities or obligations of the Company or
any of its subsidiaries convertible into or exchangeable for any capital
stock of the Company, (b) warrants, rights or options to subscribe for or
purchase from the Company or any such subsidiary any such capital stock or
any such convertible or exchangeable securities or obligations, or (c)
obligations of the Company or any such subsidiary to issue any shares of
such capital stock, any such convertible or exchangeable securities or
obligations, or any such warrants, rights or options.
(x) The Offered Securities to be issued and sold by the Company
pursuant hereto have been duly authorized and at the applicable Closing
Date (as defined below), after payment therefor in accordance herewith,
will be validly issued, fully paid and nonassessable; and the issuance and
sale of such Offered Securities by the Company are not subject to the
preemptive or other similar rights of any security holder of the Company.
(xi) Except as disclosed in the Prospectus, there are no contracts,
agreements or understandings between the Company and any person that would
give rise to a valid claim against the Company or any Underwriter for a
brokerage commission, finder's fee or other like payment in connection with
this offering.
(xii) Except as disclosed in the Prospectus, there are no contracts,
agreements or understandings between the Company and any person granting
such person the right to require the Company to file a registration
statement under the Act with respect to any securities of the Company owned
or to be owned by such person or to require the Company to include such
securities in the securities registered pursuant to a Registration
Statement or in any securities being registered pursuant to any other
registration statement filed by the Company under the Act.
(xiii) No consent, approval, authorization or order of, or
registration, qualification or filing with, any governmental authority,
agency or body or any court is required to be obtained or made by the
Company for the consummation of the transactions contemplated by this
Agreement in connection with the sale of the Offered Securities, except
such as have been obtained and made under the Act and such as may be
required under state and foreign securities laws and the rules of the
National Association of Securities Dealers, Inc. ("NASD").
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(xiv) The execution, delivery and performance of this Agreement and
the consummation of the transactions herein contemplated will not result in
a breach or violation of any of the terms and provisions of, or constitute
a default under, (a) any statute, any rule, regulation or order of any
governmental authority, agency or body or any court, domestic or foreign,
having jurisdiction over the Company or any subsidiary of the Company or
any of their properties, or (b) any agreement or instrument to which the
Company or any such subsidiary is a party or by which the Company or any
such subsidiary is bound or to which any of the properties of the Company
or any such subsidiary is subject, or (c) the charter, by-laws or other
constitutive document of the Company or any such subsidiary, except, in the
case of clause (b) only, for such breaches, violations or defaults that
would not, individually or in the aggregate, have a Material Adverse
Effect.
(xv) This Agreement has been duly authorized, executed and delivered
by the Company.
(xvi) Except as disclosed in the Prospectus, the Company and its
subsidiaries have good and marketable title to all real properties and all
other properties and assets owned by them that, individually or in the
aggregate, are material to it or them, in each case free from liens,
encumbrances and defects (other than liens pursuant to the Credit
Agreements); that would materially affect the value thereof or materially
interfere with the use made or to be made thereof by them; and except as
disclosed in the Prospectus, the Company and its subsidiaries hold any
leased real or personal property under valid and enforceable leases with no
exceptions that would materially interfere with the use made or to be made
thereof by them.
(xvii) Neither the Company, nor to the knowledge of the Company, any
officers, directors or stockholders, employees or other agents of the
Company or any of its subsidiaries or the hospitals or nursing centers
operated by them, has engaged in any activities which are prohibited under
federal Medicare and Medicaid statutes (including, but not limited to, 42
U.S.C. (S) (S) 1320a-7 (Program Exclusion), 1320a-7a (Civil Monetary
Penalties), 1320a-7b (the Anti-kickback Statute), (S) 1395nn and 1396b (the
"Xxxxx" law, prohibiting certain self-referrals)), or any other federal
healthcare law (including, but not limited to, the federal TRICARE statute,
10 U.S.C. (S) 1071 et seq., the Federal Civil False Claims Act, 31 U.S.C.
(S) (S) 3729-32, Federal Criminal False Claims Act, 18 U.S.C. (S) 287,
False Statements Relating to Health Care Matters, 18 U.S.C. (S) 1035,
Health Care Fraud, 18 U.S.C. (S) 1347), or the federal Food, Drug &
Cosmetics Act, 21 U.S.C. (S) 360aaa, or any regulations promulgated
pursuant to such statutes, or related state or local statutes or
regulations or any rules of professional conduct, including, but not
limited to, the following: (i) knowingly and willfully making or causing to
be made a false statement or representation of a material fact in any
applications for any benefit or payment under the Medicare or Medicaid
program or from any third party (where applicable federal or state law
prohibits such payments to third parties); (ii) knowingly and willfully
making or causing to be made any false statement or representation of a
material fact for use in determining rights to any benefit or payment under
the Medicare or Medicaid program or from any third party (where applicable
federal or state law prohibits such payments to third parties); (iii)
failing to disclose knowledge by a claimant of the occurrence of any event
affecting the initial or continued right to any benefit or payment under
the Medicare or Medicaid program or from any third party (where applicable
federal or state law prohibits such payments to third parties) on its own
behalf or on behalf of another, with intent to secure such benefit or
payment fraudulently; (iv) knowingly and willfully offering, paying,
soliciting or receiving any remuneration (including any kickback, bribe or
rebate), directly or indirectly, overtly or covertly, in cash or in kind
(a) in return for referring an individual to a person for the furnishing or
arranging for the furnishing of any item or service for which payment may
be made in whole or in part by Medicare or Medicaid or any third party
(where applicable federal or state law prohibits such payments to third
parties), or (b) in return for purchasing, leasing or ordering or arranging
for or recommending the purchasing, leasing or ordering of any good,
facility, service, or item for which payment may be made in whole or in
part by Medicare or Medicaid or any third party (where applicable federal
or state law prohibits such payments to third parties); (v) knowingly and
willfully referring an individual to a person with which they have
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ownership or certain other financial arrangements (where applicable federal
law prohibits such referrals); and (vi) knowingly and willfully violating
any enforcement initiative instituted by any governmental agency
(including, without limitation, the Office of the Inspector General and the
Department of Justice), except in each case for any such activities which
are specifically described in the Prospectus or which would not,
individually or in the aggregate, have a Material Adverse Effect.
(xviii) None of the Company or any of its subsidiaries or any of the
facilities operated by any of them has failed to file with applicable
regulatory authorities any statement, report, information or form required
by any applicable law, regulation or order, except where the failure so to
file would not, individually or in the aggregate, have a Material Adverse
Effect. Except as disclosed in the Prospectus, all such filings or
submissions were in compliance with applicable laws when filed and no
deficiencies have been asserted by any regulatory commission, agency or
authority with respect to any such filings or submissions, except where
failure so to comply or the assertion of such a deficiency would not,
individually or in the aggregate, have a Material Adverse Effect.
(xix) The Company and its subsidiaries possess required permits,
licenses, provider numbers, certificates, approvals (including without
limitation, certificate of need approvals), consents, orders,
certifications (including, without limitation, certification under the
Medicare and Medicaid programs), accreditations (including, without
limitation, accreditation by the Joint Commission on Accreditation of
Healthcare Organizations) and other authorizations (collectively,
"Governmental Licenses") issued by, and have made all required declarations
and filings with, the appropriate federal, state, local or foreign
regulatory agencies or bodies necessary to conduct the business now
operated by them (including, without limitation, Government Licenses as are
required (i) under such federal and state healthcare laws as are applicable
to the Company and its subsidiaries and (ii) with respect to those
facilities operated by the Company or any of its subsidiaries that
participate in the Medicare and/or Medicaid programs, to receive
reimbursement thereunder), except where the failure to possess such
Government Licenses or to make such declarations and filings would not,
individually or in the aggregate, have a Material Adverse Effect; the
Company and its subsidiaries are in compliance with the terms and
conditions of all such Governmental Licenses, except where the failure so
to comply would not, individually or in the aggregate, have a Material
Adverse Effect; all of the Governmental Licenses are valid and in full
force and effect, except where the invalidity of such Governmental Licenses
or the failure of such Governmental Licenses to be in full force and effect
would not, individually or in the aggregate, have a Material Adverse
Effect; and neither the Company nor any of its subsidiaries has received
any notice of proceedings relating to the revocation, suspension or
modification of any such Governmental Licenses or the imposition of any
other sanction for violation of any laws referenced in paragraph (xvii)
above that, if the subject of an unfavorable decision, ruling or finding,
would individually or in the aggregate have a Material Adverse Effect.
(xx) The accounts receivable of the Company and its subsidiaries have
been adjusted to reflect material changes in the reimbursement policies of
third party payors such as Medicare, Medicaid, private insurance companies,
health maintenance organizations, preferred provider organizations, managed
care systems and other third party payors. The accounts receivable, after
giving effect to the allowance for doubtful accounts, relating to such
third party payors do not materially exceed amounts the Company and its
subsidiaries are entitled to receive.
(xxi) No labor dispute with the employees of the Company or any
subsidiary exists or, to the knowledge of the Company, is imminent that
might have a Material Adverse Effect.
(xxii) The Company and its subsidiaries own, possess or can acquire on
reasonable terms, adequate trademarks, trade names and other rights to
inventions, know-how, patents, copyrights, confidential information and
other intellectual property (collectively, "intellectual property rights")
necessary to conduct the business now operated by them, or presently
employed by them, and have not received any notice of infringement of or
conflict with asserted
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rights of others with respect to any intellectual property rights that, if
determined adversely to the Company or any of its subsidiaries, would
individually or in the aggregate have a Material Adverse Effect.
(xxiii) Except as disclosed in the Prospectus, neither the Company nor
any of its subsidiaries is in violation of any statute or any rule,
regulation, decision or order of any governmental authority, agency or body
or any court, domestic or foreign, relating to the use, disposal or release
of hazardous or toxic substances or relating to the protection or
restoration of the environment or human exposure to hazardous or toxic
substances (collectively, "environmental laws"), owns or operates any real
property contaminated with any substance that is subject to any
environmental laws, is liable for any off-site disposal or contamination
pursuant to any environmental laws, or is subject to any claim relating to
any environmental laws, which violation, contamination, liability or claim
would individually or in the aggregate have a Material Adverse Effect; and
the Company is not aware of any pending investigation which might lead to
such a claim.
(xxiv) Except as disclosed in the Prospectus, there are no pending
actions, suits, proceedings or investigations against or affecting the
Company (other than any sealed "qui tam" actions of which the Company has
no knowledge), any of its subsidiaries or any of their respective
properties that, if determined adversely to the Company or any of its
subsidiaries, would individually or in the aggregate have a Material
Adverse Effect, or would materially and adversely affect the ability of the
Company to perform its obligations under this Agreement, or which are
otherwise material in the context of the sale of the Offered Securities;
and no such actions, suits, proceedings or investigations are threatened
or, to the Company's knowledge, contemplated.
(xxv) The accountants who certified the financial statements and
supporting schedules included in each Registration Statement and the
Prospectus are independent public accountants as required by the Act and
the Rules and Regulations.
(xxvi) The financial statements included in each Registration
Statement and the Prospectus present fairly the financial position of the
Company and its consolidated subsidiaries as of the dates shown and their
results of operations and cash flows for the periods shown, and such
financial statements have been prepared in conformity with the generally
accepted accounting principles ("GAAP") in the United States applied on a
consistent basis; the schedules included in each Registration Statement
present fairly the information required to be stated therein; and the
assumptions used in preparing the pro forma financial statements included
in each Registration Statement and the Prospectus provide a reasonable
basis for presenting the significant effects directly attributable to the
transactions or events described therein, the related pro forma adjustments
give appropriate effect to those assumptions, and the pro forma columns
therein reflect the proper application of those adjustments to the
corresponding historical financial statement amounts.
(xxvii) Except as disclosed in the Prospectus, since the date of the
latest audited financial statements included in the Prospectus, there has
been no material adverse change, nor any development or event involving a
prospective material adverse change, in the condition (financial or other),
business, properties or results of operations of the Company and its
subsidiaries taken as a whole, and, except as disclosed in or contemplated
by the Prospectus, there has been no dividend or distribution of any kind
declared, paid or made by the Company on any class of its capital stock.
(xxviii) The Company is not, and upon the issuance and sale of the
Offered Securities by the Company as herein contemplated and the
application by the Company of the net proceeds therefrom as described in
the Prospectus will not be, an "investment company" as such term is defined
in the Investment Company Act of 1940, as amended (the "Investment Company
Act").
8
(xxix) There are no contracts or documents that are required to be
described in the Registration Statements or the Prospectus or to be filed
as exhibits thereto which have not been so described or filed as required.
(xxx) The Company and each of its subsidiaries and each of the
facilities owned, leased or operated by them are insured by Cornerstone
Insurance Company ("Cornerstone") and other insurers (each such other
insurer being an insurer of recognized financial responsibility) against
such losses and risks and in such amounts as are prudent and customary in
the healthcare industry; neither the Company nor any of its subsidiaries or
any of the facilities owned, leased or operated by them has been refused
any material insurance coverage sought or applied for since January 1,
1999; and the Company has no reason to believe that it, any of its
subsidiaries or any of the facilities owned, leased or operated by it or
any of its subsidiaries will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain coverage consistent
with such coverage in all material respects from insurers with comparable
financial strength and claims paying ability ratings as may be necessary to
continue its operations.
(xxxi) Since December 31, 2000, (a) Cornerstone has not sustained any
material loss or material interference with its business from any action,
notice, order or decree from an insurance regulatory authority and (b)
except as described in the Prospectus, there has been (1) no material
adverse change in case reserves or losses or loss expense of Cornerstone
and (2) no material adverse change, nor any development or event involving
a prospective material adverse change, in the condition (financial or
other), business, properties or results of operations of Cornerstone, in
either case whether or not arising in the ordinary course of business.
(xxxii) The Company and its subsidiaries have timely filed all
federal, state, local and foreign tax returns that are required to be filed
or has duly requested extensions thereof and all such tax returns are true,
correct and complete, except to the extent that any failure to file or
request for extension, or any incorrectness, would not, individually or in
the aggregate, have a Material Adverse Effect. The Company and its
subsidiaries have timely paid all taxes shown as due on such filed tax
returns (including any related assessments, fines or penalties), except to
the extent that any such taxes are being contested in good faith and by
appropriate proceedings, or to the extent that any failure to pay would
not, individually or in the aggregate, have a Material Adverse Effect; and
adequate charges, accruals and reserves have been provided for in the
financial statements in accordance with GAAP in respect of all federal,
state, local and foreign taxes for all periods as to which the tax
liability of the Company and its subsidiaries has not been fully determined
or remains open to examination by applicable taxing authorities except for
taxes incurred after the date of the financial statements.
(xxxiii) Neither the Company nor any of its subsidiaries or, to the
best of the Company's knowledge, any of their respective directors,
officers or affiliates has taken or will take, directly or indirectly, any
action designed to, or that could reasonably be expected to, cause or
result in stabilization or manipulation of the price of the Securities in
violation of Regulation M under the Securities Exchange Act of 1934, as
amended ("Exchange Act").
(xxxiv) All of the Participants to whom any Directed Shares will be
offered are domiciled in, and residents of, the United States.
(xxxv) The Company has not offered, or caused the Underwriters to
offer, any Offered Securities to any person pursuant to the Directed Share
Program with the specific intent to unlawfully influence (i) a customer or
supplier of the Company to alter the customer's or supplier's level or type
of business with the Company or (ii) a trade journalist or publication to
write or publish favorable information about the Company or its products.
(b) Each Selling Stockholder severally and not jointly represents and
warrants to, and agrees with, the several Underwriters and the QIU that:
9
(i) The Offered Securities to be sold by such Selling Stockholder
pursuant to this Agreement are certificated securities in registered form
and are not held in any securities account or by or through any securities
intermediary within the meaning of the Uniform Commercial Code as in effect
in the State of New York ("NYUCC"). Such Selling Stockholder has, and at
the relevant Closing Date will have, full right, power and authority to
enter into this Agreement and to hold, sell, transfer and deliver the
Offered Securities to be sold by such Selling Stockholder pursuant to this
Agreement; and upon the Underwriters' acquiring possession of such Offered
Securities (or an agent's acquiring possession of such Offered Securities
on the Underwriters' behalf) and paying the purchase price therefor as
herein contemplated, the Underwriters will acquire their respective
interests in such Offered Securities (including, without limitation, all
rights that such Selling Stockholder had or has the power to transfer in
such Offered Securities) free of any adverse claim. Certificates for all of
the Offered Securities to be sold by such Selling Stockholder pursuant to
this Agreement, in suitable form for transfer by delivery or accompanied by
duly executed instruments of transfer or assignment in blank, with
signatures guaranteed, have been placed in custody with the Custodian under
the Power of Attorney and the related Custody Agreement (each as defined
below) with irrevocable conditional instructions to deliver such Offered
Securities to the Underwriters pursuant to this Agreement.
(ii) If the Effective Time of the Initial Registration Statement is
prior to the execution and delivery of this Agreement: (A) on the Effective
Date of the Initial Registration Statement, the Initial Registration
Statement did not include any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to
make the statements therein not misleading, (B) on the Effective Date of
the Additional Registration Statement (if any), each Registration Statement
did not include, or will not include, any untrue statement of a material
fact and did not omit, or will not omit, to state any material fact
required to be stated therein or necessary to make the statements therein
not misleading, and (C) on the date of this Agreement, the Initial
Registration Statement and, if the Effective Time of the Additional
Registration Statement is prior to the execution and delivery of this
Agreement, the Additional Registration Statement does not include and at
the time of filing of the Prospectus pursuant to Rule 424(b) or (if no such
filing is required) at the Effective Date of the Additional Registration
Statement in which the Prospectus is included, each Registration Statement
and the Prospectus will not include, any untrue statement of a material
fact or omits, or will omit, to state any material fact required to be
stated therein or necessary to make the statements therein (in the case of
the Prospectus, in the light of the circumstances under which they were
made) not misleading. If the Effective Time of the Initial Registration
Statement is subsequent to the execution and delivery of this Agreement: on
the Effective Date of the Initial Registration Statement, neither the
Initial Registration Statement nor the Prospectus will include any untrue
statement of a material fact or will omit to state any material fact
required to be stated therein or necessary to make the statements therein
(in the case of the Prospectus, in the light of the circumstances under
which they were made) not misleading. In respect of each Selling
Stockholder, the first two sentences of this clause (ii) apply only to the
extent that any statements in or omissions from a Registration Statement or
the Prospectus are based on and in conformity with written information
furnished to the Company by such Selling Stockholder (in its capacity as a
Selling Stockholder) specifically for use therein, it being understood and
agreed that the only such information is that described in Section 7(b).
(iii) Except as disclosed in the Prospectus, there are no contracts,
agreements or understandings between such Selling Stockholder and any
person that would give rise to a valid claim against such Selling
Stockholder, the Company or any Underwriter for a brokerage commission,
finder's fee or other like payment in connection with this offering.
(iv) No consent, approval, authorization or order of, or registration,
qualification or filing with, any domestic governmental authority, agency
or body or any domestic court is required to be obtained or made by such
Selling Stockholder for the consummation of the transactions contemplated
by the Custody Agreement or this Agreement in connection with the sale of
the Offered Securities to be sold by such Selling Stockholder, except such
as have been
10
obtained and made under the Act and such as may be required under state and
foreign securities laws and the rules of the NASD.
(v) The execution, delivery and performance of the Custody Agreement
and this Agreement by such Selling Stockholder and the sale of the Offered
Securities to be sold by such Selling Stockholder pursuant hereto will not
result in a breach or violation of any of the terms or provisions of, or
constitute a default under, (a) any statute, any rule, regulation or order
of any domestic governmental authority, agency or body or any domestic
court having jurisdiction over such Selling Stockholder or any of its
properties, (b) any agreement or instrument to which such Selling
Stockholder is a party or by which such Selling Stockholder is bound or to
which any of the properties of such Selling Stockholder is subject or (c)
any charter, by-laws or other constitutive document of such Selling
Stockholder, except, in the case of clause (b) only, for such beaches,
violations or defaults that would not materially adversely affect the
ability of such Selling Stockholder to perform its obligations under this
Agreement or the Custody Agreement or to consummate the transactions
contemplated hereby or thereby.
(vi) The Power of Attorney and related Custody Agreement with respect
to such Selling Stockholder have been duly authorized, executed and
delivered by such Selling Stockholder and constitute valid and binding
obligations of such Selling Stockholder enforceable in accordance with
their terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general equity
principles.
(vii) This Agreement has been duly authorized, executed and delivered
by such Selling Stockholder.
(viii) Such Selling Stockholder has not taken and will not take,
directly or indirectly, any action designed to, or that could reasonably be
expected to, cause or result in stabilization or manipulation of the price
of the Securities in violation of Regulation M under the Exchange Act.
3. Purchase, Sale and Delivery of Offered Securities. On the basis of the
representations, warranties and agreements herein contained, but subject to the
terms and conditions herein set forth, the Company and each Selling Stockholder
agree, severally and not jointly, to sell to each Underwriter, and each
Underwriter agrees, severally and not jointly, to purchase from the Company and
each Selling Stockholder, at a purchase price of $_______ per share, that number
of Firm Securities (rounded up or down, as determined by CSFBC in its
discretion, in order to avoid fractions) obtained by multiplying 1,750,000 Firm
Securities in the case of the Company and the number of Firm Securities set
forth opposite the name of such Selling Stockholder in Schedule A hereto, in the
case of a Selling Stockholder, in each case by a fraction the numerator of which
is the number of Firm Securities set forth opposite the name of such Underwriter
in Schedule B hereto and the denominator of which is the total number of Firm
Securities.
Certificates in negotiable form for the Offered Securities to be sold by
the Selling Stockholders hereunder have been placed in custody, for delivery
under this Agreement, under Custody Agreements made with National City Bank, as
custodian ("Custodian"). Each Selling Stockholder agrees that the shares
represented by the certificates held in custody for the Selling Stockholders
under such Custody Agreements are subject to the interests of the Underwriters
hereunder, that the arrangements made by the Selling Stockholders for such
custody are to that extent irrevocable, and that the obligations of the Selling
Stockholders hereunder shall not be terminated by operation of law, whether by
the death of any individual Selling Stockholder or the occurrence of any other
event, or in the case of a trust, by the death of any trustee or trustees or the
termination of such trust. If any individual Selling Stockholder or any such
trustee or trustees should die, or if any other such event should occur, or if
any of such trusts should terminate, before the delivery of the Offered
Securities hereunder, certificates for such Offered Securities shall be
delivered by the Custodian in accordance with the terms and conditions of this
Agreement as if such death or other event or termination had not occurred,
regardless of whether or not the Custodian shall have received notice of such
death or other event or termination.
11
The Company and the Custodian will deliver the Firm Securities to CSFBC for
the accounts of the Underwriters, against payment of the purchase price in
Federal (same day) funds by wire transfer to an account at banks reasonably
acceptable to CSFBC drawn to the order of the Company in the case of [1,750,000]
shares of Firm Securities and [____________] in the case of [____] shares of
Firm Securities, at the office of Shearman & Sterling, 000 Xxxxxxxxx Xxxxxx, Xxx
Xxxx, X.X. 00000, at 9:00 A.M., New York time, on [Closing Date], or at such
other time not later than seven full business days thereafter as CSFBC and the
Company shall determine, such time being herein referred to as the "First
Closing Date." For purposes of Rule 15c6-1 under the Exchange Act, the First
Closing Date (if later than the otherwise applicable settlement date) shall be
the settlement date for payment of funds and delivery of securities for all the
Offered Securities sold pursuant to the offering. The certificates for the Firm
Securities so to be delivered will be in definitive form, in such denominations
and registered in such names as CSFBC requests and will be made available for
checking and packaging at the above office of Shearman & Sterling at least 24
hours prior to the First Closing Date.
In addition, upon written notice from CSFBC given to the Company and the
Selling Stockholders from time to time not more than 30 days subsequent to the
date of the Prospectus, the Underwriters may purchase all or less than all of
the Optional Securities at the purchase price per share to be paid for the Firm
Securities. The Company agrees to sell to the Underwriters the number of
Optional Securities specified in such notice and the Underwriters agree,
severally and not jointly, to purchase such Optional Securities. Such Optional
Securities shall be purchased from the Company for the account of each
Underwriter in the same proportion as the number of Firm Securities set forth
opposite such Underwriter's name bears to the total number of Firm Securities
(subject to adjustment by CSFBC to eliminate fractions) and may be purchased by
the Underwriters only for the purpose of covering over-allotments made in
connection with the sale of the Firm Securities. No Optional Securities shall be
sold or delivered unless the Firm Securities previously have been, or
simultaneously are, sold and delivered. The right to purchase the Optional
Securities or any portion thereof may be exercised from time to time and to the
extent not previously exercised may be surrendered and terminated at any time
upon notice by CSFBC to the Company and the Selling Stockholders.
Each time for the delivery of and payment for the Optional Securities,
being herein referred to as an "Optional Closing Date," which may be the First
Closing Date (the First Closing Date and each Optional Closing Date, if any,
being sometimes referred to as a "Closing Date"), shall be determined by CSFBC
but shall be not later than five full business days after written notice of
election to purchase Optional Securities is given. The Company will deliver the
Optional Securities being purchased on each Optional Closing Date to the
Representatives for the accounts of the several Underwriters, against payment of
the purchase price therefor in Federal (same day) funds by official bank check
or checks or wire transfer to an account at a bank acceptable to CSFBC drawn to
the order of the Company, at the above office of Shearman & Sterling. The
certificates for the Optional Securities being purchased on each Optional
Closing Date will be in definitive form, in such denominations and registered in
such names as CSFBC requests upon reasonable notice prior to such Optional
Closing Date and will be made available for checking and packaging at the above
office of Shearman & Sterling at a reasonable time in advance of such Optional
Closing Date.
4. Offering by Underwriters. It is understood that the several Underwriters
propose to offer the Offered Securities for sale to the public as set forth in
the Prospectus.
5. Certain Agreements of the Company and the Selling Stockholders. The
Company (with respect to paragraphs 5(a) through 5(l) below) and each Selling
Stockholder (with respect only to paragraph 5(i) below) agree with the several
Underwriters that:
(a) If the Effective Time of the Initial Registration Statement is
prior to the execution and delivery of this Agreement, the Company will file the
Prospectus with the Commission pursuant to and in accordance with subparagraph
(1) (or, if applicable and if consented to by CSFBC (which consent shall not be
unreasonably withheld), subparagraph 4)) of Rule 424(b) not later than the
earlier of (A) the second business day following the execution and delivery of
this Agreement or (B) the fifteenth business day after the Effective Date of the
Initial Registration Statement. The Company will advise CSFBC promptly of any
12
such filing pursuant to Rule 424(b). If the Effective Time of the Initial
Registration Statement is prior to the execution and delivery of this Agreement
and an additional registration statement is necessary to register a portion of
the Offered Securities under the Act but the Effective Time thereof has not
occurred as of such execution and delivery, the Company will file the additional
registration statement or, if filed, will file a post-effective amendment
thereto with the Commission pursuant to and in accordance with Rule 462(b) on or
prior to 10:00 P.M., New York time, on the date of this Agreement or, if
earlier, on or prior to the time the Prospectus is printed and distributed to
any Underwriter, or will make such filing at such later date as shall have been
consented to by CSFBC.
(b) The Company will advise CSFBC promptly of any proposal to amend or
supplement the initial or any additional registration statement as filed or the
related prospectus or the Initial Registration Statement, the Additional
Registration Statement (if any) or the Prospectus and will not effect such
amendment or supplementation without CSFBC's consent (which consent shall not be
unreasonably withheld); and the Company will also advise CSFBC promptly of the
effectiveness of each Registration Statement (if its Effective Time is
subsequent to the execution and delivery of this Agreement) and of any amendment
of or supplement to a Registration Statement or the Prospectus and of the
institution by the Commission of any stop order proceedings in respect of a
Registration Statement and will use its reasonable best efforts to prevent the
issuance of any such stop order and to obtain as soon as possible its lifting,
if issued.
(c) If, at any time when a prospectus relating to the Offered
Securities is required to be delivered under the Act in connection with sales by
any Underwriter or dealer, any event occurs as a result of which the Prospectus
as then amended or supplemented would include an untrue statement of a material
fact or omit to state any material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, or if it is necessary at any time to amend the Prospectus to comply
with the Act, the Company will promptly notify CSFBC of such event and will
promptly prepare and file with the Commission, at its own expense, an amendment
or supplement which will correct such statement or omission or an amendment
which will effect such compliance. Neither CSFBC's consent to, nor the
Underwriters' delivery of, any such amendment or supplement shall constitute a
waiver of any of the conditions set forth in Section 6.
(d) Not later than the Availability Date (as defined below), the
Company will make generally available to its security holders an earnings
statement covering a period of at least 12 months beginning after the Effective
Date of the Initial Registration Statement (or, if later, the Effective Date of
the Additional Registration Statement) which will satisfy the provisions of
Section 11(a) of the Act. For the purpose of the preceding sentence,
"Availability Date" means the 45th day after the end of the fourth fiscal
quarter following the fiscal quarter that includes such Effective Date, except
that, if such fourth fiscal quarter is the last quarter of the Company's fiscal
year, "Availability Date" means the 90th day after the end of such fourth fiscal
quarter.
(e) The Company will furnish to the Representatives copies of each
Registration Statement (one of which will be signed and will include all
exhibits), each related preliminary prospectus, and, so long as a prospectus
relating to the Offered Securities is required to be delivered under the Act in
connection with sales by any Underwriter or dealer, the Prospectus and all
amendments and supplements to such documents, in each case in such quantities as
CSFBC requests. The Prospectus shall be so furnished on or prior to 3:00 P.M.,
New York time, on the business day following the later of the execution and
delivery of this Agreement or the Effective Time of the Initial Registration
Statement. All other such documents shall be so furnished as soon as available.
The Company will pay the expenses of printing and distributing to the
Underwriters all such documents.
(f) The Company will arrange for the qualification of the Offered
Securities for sale under the laws of such jurisdictions as CSFBC designates and
will continue such qualifications in effect so long as required for the
distribution, provided that the Company shall not be required to (a) qualify
generally to do business in any jurisdiction where it is not then so qualified,
(b) take any action which would subject it to taxation or general service of
process in any such jurisdiction where it is not then so subject or (c) make
13
any change in its charter or by-laws that the board of directors of the Company
determines in good faith to be contrary to the best interests of the Company and
its stockholders.
(g) During the period of three years hereafter, the Company will
furnish to the Representatives and, upon request, to each of the other
Underwriters, as soon as practicable after the end of each fiscal year, a copy
of its annual report to stockholders for such year; and the Company will furnish
during such period to the Representatives (i) as soon as available, a copy of
each report and any definitive proxy statement of the Company filed with the
Commission under the Exchange Act or mailed to stockholders, and (ii) from time
to time, such other public information concerning the Company as CSFBC may
reasonably request.
(h) For a period of 90 days after the Effective Date, the Company will
not offer, sell, contract to sell, pledge or otherwise dispose of, directly or
indirectly, or file with the Commission a registration statement under the Act
(other than any amendment to the Registration Statement on Form S-3 (File No.
333-69646) of the Company which was filed with the Commission on September 19,
2001 or related prospectus or prospectus supplement) relating to, any additional
shares of its Securities or securities convertible into or exchangeable or
exercisable for any shares of its Securities, or publicly disclose the intention
to make any such offer, sale, pledge, disposition or filing, without the prior
written consent of CSFBC, except issuances of Securities pursuant to the
conversion or exchange of convertible or exchangeable securities or the exercise
of warrants or options, in each case outstanding on the date hereof, grants of
employee stock options pursuant to the terms of a plan in effect on the date
hereof, or issuances of Securities pursuant to the exercise of such options.
(i) The Company agrees with the several Underwriters that the Company
will pay all expenses incident to the performance of the obligations of the
Company under this Agreement, for the filing fees of the Commission relating to
the Offered Securities, for any filing fees and other expenses (including fees
and disbursements of counsel) in connection with qualification of the Offered
Securities for sale under the laws of such jurisdictions as CSFBC designates and
the printing of memoranda relating thereto, for the filing fee and other
expenses (including fees and disbursements of counsel) incident to the review by
the NASD of the underwriting terms and arrangements relating to the sale of the
Offered Securities, for any fees associated with the quotation of the Securities
on The Nasdaq National Market, for any travel expenses of the Company's officers
and employees and any other expenses of the Company in connection with attending
or hosting meetings with prospective purchasers of the Offered Securities for
expenses incurred in distributing preliminary prospectuses and the Prospectus
(including any amendments and supplements thereto) to the Underwriters. Each
Selling Stockholder agrees with the several Underwriters that such Selling
Stockholder will pay all expenses incident to the performance of the obligations
of such Selling Stockholder under the Agreement and for any transfer taxes on
the sale by such Selling Stockholder of Offered Securities to the Underwriters.
As between the Company and the Selling Stockholders that are party to the
Registration Rights Agreement (described below), the expenses set forth in this
paragraph (i) shall be paid according to the provisions of Section 7 of the
Registration Rights Agreement, dated as of April 20, 2001, as amended, by and
among the Company and the persons identified on Schedule 1 thereto.
(j) The Company will use its best efforts to cause the Custodian to
deliver to CSFBC, attention: Transactions Advisory Group, on the Closing Date a
letter stating that they will deliver to each Selling Stockholder a United
States Treasury Department Form 1099 (or other applicable form or statement
specified by the United States Treasury Department regulations in lieu thereof)
on or before January 31 of the year following the date of this Agreement.
(k) In connection with the Directed Share Program, the Company will
ensure that the Directed Shares will be restricted to the extent required by the
NASD or the NASD rules from sale, transfer, assignment, pledge or hypothecation
for a period of three months following the date of the effectiveness of the
Registration Statement. The Designated Underwriter will notify the Company as to
which Participants will need to be so restricted. The Company will direct the
transfer agent to place stop transfer restrictions upon such securities for such
period of time.
14
(l) The Company will pay all fees and disbursements of counsel
incurred by the Underwriters in connection with the Directed Share Program and
stamp duties, similar taxes or duties or other taxes, if any, incurred by the
Underwriters in connection with the Directed Share Program.
6. Conditions of the Obligations of the Underwriters. The obligations of
the several Underwriters to purchase and pay for the Firm Securities on the
First Closing Date and the Optional Securities to be purchased on each Optional
Closing Date will be subject to the accuracy of the representations and
warranties on the part of the Company and the Selling Stockholders herein, to
the accuracy of the written statements of Company officers made pursuant to the
provisions hereof, to the performance by the Company and the Selling
Stockholders of their respective obligations hereunder and to the following
additional conditions precedent:
(a) The Representatives shall have received a letter, dated the date
of delivery thereof (which, if the Effective Time of the Initial Registration
Statement is prior to the execution and delivery of this Agreement, shall be on
or prior to the date of this Agreement or, if the Effective Time of the Initial
Registration Statement is subsequent to the execution and delivery of this
Agreement, shall be at or prior to the time of filing of the amendment or post-
effective amendment to the registration statement to be filed shortly prior to
such Effective Time), of PricewaterhouseCoopers LLP confirming that they are
independent public accountants within the meaning of the Act and the applicable
published Rules and Regulations thereunder and stating to the effect that:
(i) in their opinion the financial statements and schedules and
summary of earnings examined by them and included in the Registration
Statements comply as to form in all material respects with the applicable
accounting requirements of the Act and the related published Rules and
Regulations;
(ii) they have performed the procedures specified by the American
Institute of Certified Public Accountants for a review of interim financial
information as described in Statement of Auditing Standards No. 71, Interim
Financial Information, on the unaudited financial statements included in
the Registration Statements;
(iii) on the basis of the review referred to in clause (ii) above, a
reading of the latest available interim financial statements of the
Company, inquiries of officials of the Company who have responsibility for
financial and accounting matters and other specified procedures, nothing
came to their attention that caused them to believe that:
(A) the unaudited financial statements included in the
Registration Statements do not comply as to form in all material
respects with the applicable accounting requirements of the Act and
the related published Rules and Regulations or any material
modifications should be made to such unaudited financial statements
for them to be in conformity with generally accepted accounting
principles;
(B) the unaudited consolidated revenues, operating income, net
income and net income per share amounts for the three-month period
ended September 30, 2001 included in the Prospectus do not agree with
the amounts set forth in the unaudited consolidated financial
statements for those same periods or were not determined on a basis
substantially consistent with that of the corresponding amounts in the
audited statements of income;
(C) at the date of the latest available balance sheet read by
such accountants, or at a subsequent specified date not more than
three business days prior to the date of this Agreement, there was any
change in the capital stock, any increase in current liabilities,
long-term debt or professional liability risks, or any decreases in
consolidated net assets or stockholders' equity of the Company and its
consolidated subsidiaries, as compared with amounts shown on the
latest balance sheet included in the Prospectus; or
15
(D) for the period from the closing date of the latest income
statement included in the Prospectus to the closing date of the latest
available income statement read by such accountants, or to a specified
date not more than three business days prior to the date of this
Agreement, there were any decreases, as compared with the
corresponding period of the previous year, in consolidated revenues or
in the total or per share amounts of consolidated income from
operations before extraordinary items or of net income;
except in all cases set forth in clauses (C) and (D) above for changes,
increases or decreases that the Prospectus discloses have occurred or may
occur or which are described in such letter;
(iv) they have read the unaudited pro forma condensed financial
statements included in the Registration Statements, inquired of officials
of the Company who have responsibility for financial and accounting matters
about the basis for their determination of the pro forma adjustments and
whether such unaudited pro forma condensed financial statements comply as
to form in all material respects with the applicable accounting
requirements of rule 11-02 of Regulation S-X and proved the arithmetic
accuracy of the application of the pro forma adjustments to the historical
amounts in such unaudited pro forma condensed consolidated financial
statements;
(v) nothing came to their attention as a result of the procedures
referred to in clause (iv) above that caused them to believe that the
unaudited pro forma condensed consolidated financial statements included in
the Registration Statements do not comply as to form in all material
respects with the applicable accounting requirements of rule 11-02 of
Regulation S-X and that the pro forma adjustments have not been properly
applied to the historical amounts in the compilation of those statements;
and
(vi) they have compared specified dollar amounts (or percentages
derived from such dollar amounts) and other financial information contained
in the Registration Statements (in each case to the extent that such dollar
amounts, percentages and other financial information are derived from the
general accounting records of the Company and its subsidiaries subject to
the internal controls of the Company's accounting system or are derived
directly from such records by analysis or computation) with the results
obtained from inquiries, a reading of such general accounting records and
other procedures specified in such letter and have found such dollar
amounts, percentages and other financial information to be in agreement
with such results, except as otherwise specified in such letter.
For purposes of this subsection, (i) if the Effective Time of the Initial
Registration Statements is subsequent to the execution and delivery of this
Agreement, "Registration Statements" shall mean the initial registration
statement as proposed to be amended by the amendment or post-effective
amendment to be filed shortly prior to its Effective Time, (ii) if the
Effective Time of the Initial Registration Statements is prior to the
execution and delivery of this Agreement but the Effective Time of the
Additional Registration Statement is subsequent to such execution and
delivery, "Registration Statements" shall mean the Initial Registration
Statement and the additional registration statement as proposed to be filed
or as proposed to be amended by the post-effective amendment to be filed
shortly prior to its Effective Time, and (iii) "Prospectus" shall mean the
prospectus included in the Registration Statements. All financial
statements and schedules included in material incorporated by reference
into the Prospectus shall be deemed included in the Registration Statements
for purposes of this subsection.
(b) The Representatives shall have received a letter, dated the date
of delivery thereof (which, if the Effective Time of the Initial Registration
Statement is prior to the execution and delivery of this Agreement, shall be on
or prior to the date of this Agreement or, if the Effective Time of the Initial
Registration Statement is subsequent to the execution and delivery of this
Agreement, shall be at or prior to the time of filing of the amendment or post-
effective amendment to the registration statement to be filed shortly prior to
such Effective Time), of Ernst & Young LLP confirming that they are independent
public
16
accountants within the meaning of the Act and the applicable published Rules and
Regulations thereunder and stating to the effect that:
(i) in their opinion the financial statements and schedules examined
by them and included in the Registration Statements comply as to form in
all material respects with the applicable accounting requirements of the
Act and the related published Rules and Regulations;
(ii) they have compared specified dollar amounts (or percentages
derived from such dollar amounts) and other financial information contained
in the Registration Statements (in each case to the extent that such dollar
amounts, percentages and other financial information are derived from the
general accounting records of the Company and its subsidiaries subject to
the internal controls of the Company's accounting system or are derived
directly from such records by analysis or computation) with the results
obtained from inquiries, a reading of such general accounting records and
other procedures specified in such letter and have found such dollar
amounts, percentages and other financial information to be in agreement
with such results, except as otherwise specified in such letter.
For purposes of this subsection, (i) if the Effective Time of the Initial
Registration Statements is subsequent to the execution and delivery of this
Agreement, "Registration Statements" shall mean the initial registration
statement as proposed to be amended by the amendment or post-effective
amendment to be filed shortly prior to its Effective Time, (ii) if the
Effective Time of the Initial Registration Statements is prior to the
execution and delivery of this Agreement but the Effective Time of the
Additional Registration Statement is subsequent to such execution and
delivery, "Registration Statements" shall mean the Initial Registration
Statement and the additional registration statement as proposed to be filed
or as proposed to be amended by the post-effective amendment to be filed
shortly prior to its Effective Time, and (iii) "Prospectus" shall mean the
prospectus included in the Registration Statements. All financial
statements and schedules included in material incorporated by reference
into the Prospectus shall be deemed included in the Registration Statements
for purposes of this subsection.
(c) If the Effective Time of the Initial Registration Statement is not
prior to the execution and delivery of this Agreement, such Effective Time shall
have occurred not later than 10:00 P.M., New York time, on the date of this
Agreement or such later date as shall have been consented to by CSFBC. If the
Effective Time of the Additional Registration Statement (if any) is not prior to
the execution and delivery of this Agreement, such Effective Time shall have
occurred not later than 10:00 P.M., New York time, on the date of this Agreement
or, if earlier, the time the Prospectus is printed and distributed to any
Underwriter, or shall have occurred at such later date as shall have been
consented to by CSFBC. If the Effective Time of the Initial Registration
Statement is prior to the execution and delivery of this Agreement, the
Prospectus shall have been filed with the Commission in accordance with the
Rules and Regulations and Section 5(a) of this Agreement. Prior to such Closing
Date, no stop order suspending the effectiveness of a Registration Statement
shall have been issued and no proceedings for that purpose shall have been
instituted or, to the knowledge of any Selling Stockholder, the Company or the
Representatives, shall be contemplated by the Commission.
(d) Subsequent to the execution and delivery of this Agreement, there shall
not have occurred (i) any change, or any development or event involving a
prospective change, in the condition (financial or other), business, properties
or results of operations of the Company and its subsidiaries taken as one
enterprise which, in the judgment of a majority in interest of the
Representatives, is material and adverse and makes it impractical or inadvisable
to proceed with completion of the public offering or the sale of and payment for
the Offered Securities; (ii) any downgrading in the rating of any debt
securities of the Company by any "nationally recognized statistical rating
organization" (as defined for purposes of Rule 436(g) under the Act), or any
public announcement that any such organization has under surveillance or review
its rating of any debt securities of the Company (other than an announcement
with positive implications of a possible upgrading, and no implication of a
possible downgrading, of such rating); (iii) any change in U.S. or international
financial, political or economic conditions as would, in the judgment of a
majority in interest of the Representatives, be likely to prejudice materially
the success of the proposed
17
issue, sale or distribution of the Offered Securities, whether in the primary
market or in respect of dealings in the secondary market; (iv) any material
suspension or material limitation of trading in securities generally on the New
York Stock Exchange, or any setting of minimum prices for trading on such
exchange, or any suspension of trading of any securities of the Company on any
exchange or in the over-the-counter market; (v) any material disruption in
securities settlement or clearance services in the United States; (vi) any
banking moratorium declared by U.S. Federal or New York authorities; or (vii)
any outbreak or escalation of hostilities which the United States, any
declaration of war by Congress or any other national or international calamity
or emergency if, in the judgment of a majority in interest of the
Representatives, the effect of any such outbreak, escalation, declaration,
calamity or emergency makes it impractical or inadvisable to proceed with
completion of the public offering or the sale of and payment for the Offered
Securities.
(e) The Representatives shall have received an opinion, dated such Closing
Date, of Cleary, Gottlieb, Xxxxx & Xxxxxxxx, counsel for the Company, in form
and substance satisfactory to counsel for the Underwriters, together with signed
or reproduced copies of such letter for each of the other Underwriters, to the
effect that:
(i) the Company is validly existing as a corporation in good standing
under the laws of the State of Delaware, with corporate power to own and
lease its properties and conduct its business as described in the
Prospectus;
(ii) the Company has the authorized, issued and outstanding
capitalization as set forth in the Prospectus as of the dates set forth
therein; all of the issued and outstanding shares of capital stock of the
Company have been duly authorized and validly issued, are fully paid and
nonassessable and conform to the description thereof contained in the
Prospectus (but we express no opinion with respect to any options or shares
issued with respect to the Company's stock option plans); none of the
outstanding shares of capital stock of the Company was issued in violation
of the preemptive rights of any security holder of the Company arising
under the amended and restated certificate of incorporation or amended and
restated by-laws of the Company or the laws of the State of Delaware;
(iii) the Offered Securities to be issued and sold by the Company
pursuant hereto have been duly authorized by all necessary corporate action
of the Company and at such Closing Date, after payment therefor in
accordance herewith, will be validly issued, fully paid and nonassessable;
and the holders of outstanding shares of capital stock of the Company are
not entitled to any preemptive rights to subscribe for the Offered
Securities under the amended and restated certificate of incorporation or
amended and restated by-laws of the Company or the laws of the State of
Delaware;
(iv) no consent, approval, authorization, or registration or
qualification of or with any governmental body, agency or court of the
United States, the State of Delaware or the State of New York is required
(other than under any Health Care Laws) to be obtained or made by the
Company for the issuance and sale of the Offered Securities to the
Underwriters pursuant to this Agreement or the performance by the Company
of its obligations under this Agreement, except such as have been obtained
or effected under the Act and the Exchange Act (but we express no opinion
as to any consent, approval, authorization, registration or qualification
that may be required under state securities or Blue Sky laws);
(v) the issuance and sale of the Offered Securities to the
Underwriters pursuant to this Agreement and the performance by the Company
of its obligations under this Agreement do not result in a breach or
violation of any of the terms and provisions of, or constitute a default
under, (a) any United States federal or New York state law, rule or
regulation (other than any Health Care Laws) or the Delaware General
Corporation Law, (b) any judgment, decree or order of any governmental
body, agency or court that is identified in an attached officer's
certificate of the Company as applicable to the Company or any subsidiary
of the Company or any of their properties, (c) any agreement or instrument
to which the Company or any such subsidiary is a
18
party or by which the Company or any such subsidiary is bound or to which
any of the properties of the Company or any such subsidiary is subject that
is filed as an exhibit to a Registration Statement, or (d) the amended and
restated certificate of incorporation or amended and restated by-laws of
the Company;
(vi) based solely on a telephonic confirmation from a representative
of the Commission, such counsel confirms that the Initial Registration
Statement is effective under the Act, and the Additional Registration
Statement (if any) is effective under the Act; the Prospectus either was
filed with the Commission pursuant to the subparagraph of Rule 424(b)
specified in such opinion on the date specified therein or was included in
the Initial Registration Statement or the Additional Registration Statement
(as the case may be), and, to the best of the knowledge of such counsel, no
stop order with respect to a Registration Statement has been issued and no
proceedings for that purpose have been instituted or are, to the best of
the knowledge of such counsel, threatened by the Commission; each
Registration Statement and the Prospectus, and each amendment or supplement
thereto, as of their respective effective or issue dates, appeared on their
face to be appropriately responsive in all material respects to the
requirements of the Act and the Rules and Regulations other than Regulation
S-T under the Act and the documents incorporated in each Registration
Statement and the Prospectus, as of the respective dates of their filing
with the Commission, appeared on their face to be appropriately responsive
in all material respects to the requirements of the Exchange Act and the
Rules and Regulations of the Commission thereunder; such counsel have no
reason to believe that (1) a Registration Statement or any amendment
thereto, as of its effective date, 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 (2)
the Prospectus or any amendment or supplement thereto, as of its issue date
or as of such Closing Date, contained an untrue statement of a material
fact or omitted to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; and such counsel do not know of any legal or
governmental proceedings or investigations to which the Company is a party
or the subject that are currently pending before any adjudicative tribunal
or that have been threatened by a written communication manifesting an
intention to initiate such proceedings or investigations received by the
management of the Company or by such counsel that are required to be
described in a Registration Statement or the Prospectus which are not
disclosed; it being understood that such counsel need express no opinion as
to the financial statements and schedules or other financial data contained
in the Registration Statements or the Prospectus (or the documents
incorporated by reference therein);
(vii) the execution and delivery of this Agreement have been duly
authorized by all necessary corporate action of the Company and this
Agreement has been duly executed and delivered by the Company;
(viii) the form of certificate used to evidence the Securities
complies in all material respects with all applicable statutory
requirements, with any applicable requirements of the amended and restated
certificate of incorporation and amended and restated by-laws of the
Company and with all applicable Nasdaq requirements, in each case as in
effect on such Closing Date;
(ix) the statements set forth (A) in the Prospectus under "Business--
Our Reorganization," "Business--Master Lease Agreements," "Business--
Corporate Integrity Agreement," "Description of Capital Stock" and "Shares
Eligible for Future Sale," insofar as such statements purport to summarize
certain legal matters, documents or proceedings referred to therein, or the
Company's charter or by-laws provide a fair summary of such matters,
documents or proceedings or the Company's charter or by-laws;
(x) the statements set forth in the Prospectus under the caption
"United States Federal Income Tax Considerations For Non-United States
Holders," insofar as such statements purport to summarize certain federal
income tax laws of the United States, constitute a fair summary of the
19
principal U.S. federal income tax consequences of an investment in the
Offered Securities by non-United States Holders as defined in the
Prospectus; and
(xi) the Company is not, and upon the issuance and sale of the Offered
Securities by the Company as contemplated herein and the application by the
Company of the net proceeds therefrom as described in the Prospectus will
not be, an "investment company," within the meaning of the Investment
Company Act;
(f) The Representatives shall have received an opinion, dated such Closing
Date, of M. Xxxxxxx Xxxxxxx, Esq., Senior Vice President and General Counsel of
the Company, in form and substance satisfactory to counsel for the Underwriters,
together with signed or reproduced copies of such letter for each of the other
Underwriters, to the effect that:
(i) the Company is duly qualified to transact business as a foreign
corporation and is in good standing in all jurisdictions in which its
ownership or lease of property or the conduct of its business requires such
qualification, except where the failure to be so qualified or in good
standing would not, individually or in the aggregate, have a Material
Adverse Effect;
(ii) each subsidiary identified on Schedule E hereto (that purports to
identify each subsidiary operating in any state where all of the Company's
subsidiaries so operating in such state, considered in the aggregate as a
single subsidiary, would constitute a "significant subsidiary" as defined
in Rule 1-02 of Regulation S-X) (each a "Material Subsidiary") has been
duly incorporated or organized and is validly existing as a corporation or
other entity in good standing under the laws of the jurisdiction of its
incorporation or organization, with power and authority (corporate or
other) to own, lease and operate its properties and conduct its business as
described in the Prospectus, and each Material Subsidiary is duly qualified
to transact business as a foreign corporation or other entity and is in
good standing in all other jurisdictions in which its ownership or lease of
property or the conduct of its business requires such qualification, except
where the failure to be so qualified or in good standing would not,
individually or in the aggregate, have a Material Adverse Effect; all of
the issued and outstanding capital stock of each Material Subsidiary that
is a corporation has been duly authorized and validly issued, is fully paid
and nonassessable, was not issued in violation of or subject to any
preemptive or similar rights and is owned by the Company, directly or
through subsidiaries, free from liens, encumbrances and defects (other than
liens pursuant to the Credit Agreements); and all of the partnership,
membership or other ownership interests of each Material Subsidiary that is
not a corporation have been validly issued and, except as set forth on
Schedule D hereto, are owned by the Company, directly or through
subsidiaries, free from liens, encumbrances and defects (other than liens
pursuant to the Credit Agreements);
(iii) except as disclosed in the Prospectus and as provided in the
Credit Agreements, there are no material encumbrances or restrictions on
the ability of any subsidiary of the Company (A) to pay any dividends or
make any distributions on such subsidiary's capital stock or partnership,
membership or other ownership interests or to pay any indebtedness owed to
the Company or any other subsidiary, (B) to make any loans or advances to,
or investments in, the Company or any other subsidiary, or (iii) to
transfer any of its property or assets to the Company or any other
subsidiary;
(iv) no consent, approval, authorization or order of, or registration,
qualification or filing with, any governmental agency or body or any court
is required under any Health Care Laws to be obtained or made by the
Company for the consummation of the transactions contemplated by this
Agreement in connection with the sale of the Offered Securities, except
such as have been obtained and made and such Medicare Filings and Notices
as are not yet required to be made;
(v) the execution, delivery and performance of this Agreement and the
consummation of the transactions herein contemplated will not result in a
breach or violation of any of the terms and provisions of, or constitute a
default under, (a) any Health Care Laws, (b) any
20
agreement or instrument to which the Company or any such subsidiary is a
party or by which the Company or any such subsidiary is bound or to which
any of the properties of the Company or any such subsidiary is subject, or
(c) the charter, by-laws or other constitutive document of the Company or
any such subsidiary, except, in the case of clause (b) only, for such
breaches, violations or defaults that would not, individually or in the
aggregate, have a Material Adverse Effect;
(vi) such counsel has no reason to believe that (1) any part of a
Registration Statement or any amendment thereto, as of its effective date,
contained any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading or (2) the Prospectus or any amendment or
supplement thereto, as of its issue date or as of such Closing Date,
contained any untrue statement of a material fact or omitted to state any
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading; the
descriptions in the Registration Statements and Prospectus of statutes and
regulations (including any Health Care Laws), legal and governmental
proceedings and investigations and contracts and other documents are
accurate and fairly present the information required to be shown; and such
counsel does not know of any legal or governmental proceedings or
investigations required to be described in a Registration Statement or the
Prospectus which are not described as required or of any contracts or
documents of a character required to be described in a Registration
Statement or the Prospectus or to be filed as exhibits to a Registration
Statement which are not described and filed as required; it being
understood that such counsel need express no opinion as to the financial
statements and schedules or other financial data contained in the
Registration Statements or the Prospectus;
(vii) the statements set forth in (A) the Prospectus under "Risk
Factors--Changes in the reimbursement rates or methods of payment from
third-party payors, including the Medicare and Medicaid programs, or the
implementation of other measures to reduce reimbursement for our services
could result in a substantial reduction in our revenues and operating
margins," "Risk Factors--Significant legal actions, particularly in the
State of Florida, could subject us to increased operating costs and
substantial uninsured liabilities, which could materially and adversely
affect our liquidity, financial condition and results of operations," "Risk
Factors--We conduct business in a heavily regulated industry, and changes
in regulations or violations of regulations may result in increased costs
or sanctions that reduce our revenues and profitability," "Management's
Discussion and Analysis of Financial Condition and Results of Operations--
Regulatory Changes," "Business--Government Regulation," "Business--Legal
Proceedings," and "Business--Environmental Matters," and (B) in the 2000
Form 10-K/A under "Business--Government Regulation," and "Legal
Proceedings," to the extent that it constitutes matters of law, summaries
of legal matters, documents or proceedings referred to therein or legal
conclusions, has been reviewed by such counsel and is correct in all
material respects;
(viii) neither the Company nor any of its subsidiaries is in violation
of its charter, by-laws or other constitutive document or of any Health
Care Laws, except for such violations of Health Care Laws that would not,
individually or in the aggregate, have a Material Adverse Effect; and no
default by the Company or any of its subsidiaries exists in the due
performance or observance of any obligation, agreement, covenant or
condition contained in any contract, indenture, mortgage, loan agreement,
note, lease or other agreement or instrument that is described or referred
to in a Registration Statement or the Prospectus or filed or incorporated
by reference as an exhibit to a Registration Statement, except for such
defaults that would not, individually or in the aggregate, have a Material
Adverse Effect;
(ix) the Company and its subsidiaries possess all required
Governmental Licenses issued by, and have made all required declarations
and filings with, the appropriate federal, state, local or foreign
regulatory agencies or bodies necessary to conduct the business now
operated by them (including, without limitation, Government Licenses as are
required (i) under such federal and state healthcare laws as are applicable
to the Company and its subsidiaries and (ii) with
21
respect to those facilities operated by the Company or any of its
subsidiaries that participate in the Medicare and/or Medicaid programs, to
receive reimbursement thereunder), except where the failure to possess such
Government Licenses or to make such declarations and filings would not,
individually or in the aggregate, have a Material Adverse Effect; the
Company and its subsidiaries are in compliance with the terms and
conditions of all such Governmental Licenses, except where the failure so
to comply would not, individually or in the aggregate, have a Material
Adverse Effect; all of the Governmental Licenses are valid and in full
force and effect, except when the invalidity of such Governmental Licenses
or the failure of such Governmental Licenses to be in full force and effect
would not, individually or in the aggregate, have a Material Adverse
Effect; and, to the best of such counsel's knowledge after due inquiry,
neither the Company nor any of its subsidiaries has received any notice of
proceedings relating to the revocation, suspension or modification of any
such Governmental Licenses or the imposition of any other sanction for
violation of any Health Care Law that, if the subject of an unfavorable
decision, ruling or finding, would individually or in the aggregate have a
Material Adverse Effect;
(x) the Company is in compliance with the terms and conditions of its
Corporate Integrity Agreement with the Office of the Inspector General of
the U.S. Department of Health and Human Services, except where the failure
so to comply would not, individually or in the aggregate, have a Material
Adverse Effect; and
(xi) except as disclosed in the Prospectus, there are no contracts,
agreements or understandings known to such counsel between the Company and
any person granting such person the right to require the Company to file a
registration statement under the Act with respect to any securities of the
Company owned or to be owned by such person or to require the Company to
include such securities in the securities registered pursuant to the
Registration Statement or in any securities being registered pursuant to
any other registration statement filed by the Company under the Act.
For purposes of this opinion, the term "Health Care Laws" shall mean
those statutes, rules and regulations, judgments, decrees or orders
specifically regulating health care providers, as such, of the type owned
and operated by the Company and its subsidiaries as described under the
headings "Risk Factors--Changes in the reimbursement rates or methods of
payment from third-party payors, including the Medicare and Medicaid
programs, or the implementation of other measures to reduce reimbursement
for our services could result in a substantial reduction in our revenues
and operating margins," "Risk Factors--Significant legal actions,
particularly in the State of Florida, could subject us to increased
operating costs and substantial uninsured liabilities, which could
materially and adversely affect our liquidity, financial condition and
results of operations," "Risk Factors--We conduct business in a heavily
regulated industry, and changes in regulations or violations of regulations
may result in increased costs or sanctions that reduce our revenues and
profitability," "Management's Discussion and Analysis of Financial
Condition and Results of Operations--Regulatory Changes," "Business--
Government Regulation," "Business--Legal Proceedings," and "Business--
Environmental Matters" in the Prospectus, including without limitation, (a)
health care licensure, permit and certificate of need requirements, (b)
Title XVIII, XIX and XXI of the Social Security Act, (c) the Anti-Kickback
Amendments (as defined in the Prospectus) and the regulations promulgated
thereunder, (d) the Xxxxx Laws (as defined in the Prospectus) and the
regulations promulgated thereunder, (e) the False Claims Act, (f) Title II
of the Health Insurance Portability and Accountability Act of 1996, (g)
Title IV of the Balanced Budget Act of 1997, (h) any initiatives under
Operation Restore Trust and (i) state statutes, rules and regulations
concerning matters similar to (b) through (h) above, but specifically
excluding statutes, ordinances, administrative decisions, rules and
regulations of counties, towns or municipalities.
(g) The Representatives shall have received an opinion, dated such Closing
Date, of each Selling Stockholder's counsel set forth opposite its name on
Schedule A hereto, in form and substance satisfactory to counsel for the
Underwriters, together with signed or reproduced copies of such letter for each
of the other Underwriters, to the effect that:
22
(i) such Selling Stockholder has full right, power and authority to
sell, transfer and deliver the Offered Securities to be sold by such
Selling Stockholder on such Closing Date pursuant to this Agreement.
Assuming that (i) the certificate or certificates representing such Offered
Securities have been effectively indorsed in blank in accordance with NYUCC
Article 8 and (ii) neither the Underwriters, nor the agents acquiring
possession of such Offered Securities on their behalf, have notice of any
adverse claim to such Offered Securities, then upon the Underwriters'
acquiring possession of such certificate or certificates for such Offered
Securities (or the agent's acquiring possession of such certificate or
certificates for such Offered Securities on the Underwriters' behalf) and
paying the purchase price therefor pursuant to this Agreement, each
Underwriter will be a "protected purchaser" of such Offered Securities to
be purchased by it (within the meaning of Section 8-303 of the NYUCC) and
will acquire its interest in such Offered Securities (including, without
limitation, all rights that such Selling Stockholder had or has the power
to transfer in such Offered Securities) free of any adverse claim.
(ii) no consent, approval, authorization or order of, or registration,
qualification or filing with, any United States federal or New York state
governmental authority, agency or body or any United States federal or New
York state court is required to be obtained or made by such Selling
Stockholder for the consummation of the transactions contemplated by the
Custody Agreement or this Agreement in connection with the sale of the
Offered Securities to be sold by such Selling Stockholder, except such as
have been obtained and made under the Act and such as may be required under
state or foreign securities laws and the rules of the NASD;
(iii) the execution, delivery and performance of the Custody Agreement
and this Agreement by such Selling Stockholder and the consummation by such
Selling Stockholder of the transactions therein and herein contemplated
will not result in a breach or violation of any of the terms and provisions
of, or constitute a default under, (a) any United States federal or New
York state law, rule or regulation, (b) any judgment, decree or order of
any governmental authority, agency or body or any court having jurisdiction
over such Selling Stockholder or any of its properties that is identified
in an attached officer's certificate of such Selling Stockholder as
applicable to such Selling Stockholder's investment in the Offered
Securities or consummation of the transactions contemplated in this
Agreement and the Custody Agreement, (c) any agreement or instrument to
which such Selling Stockholder is a party or by which such Selling
Stockholder is bound or to which any of its properties is subject that is
identified in an attached officer's certificate of such selling Stockholder
as applicable to such Selling Stockholder's investment in the Offered
Securities or consummation of the transactions contemplated in this
Agreement and the Custody Agreement or (d) the charter, by-laws or other
constitutive document of such Selling Stockholder, except, in the case of
clauses (b) and (c) only, for such breaches, violations or defaults that
would not materially adversely affect the ability of such Selling
Stockholder to perform its obligations under this Agreement or the Custody
Agreement or to consummate the transactions contemplated hereby or thereby;
(iv) the Power of Attorney and related Custody Agreement with respect
to such Selling Stockholder have been duly authorized, executed and
delivered by such Selling Stockholder and constitute valid and binding
obligations of such Selling Stockholder enforceable in accordance with
their terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general equity
principles; and
(v) this Agreement has been duly authorized, executed and delivered by
such Selling Stockholder.
(h) The Representatives shall have received from Shearman & Sterling,
counsel for the Underwriters, such opinion or opinions, dated such Closing Date,
with respect to the incorporation of the Company, the validity of the Offered
Securities delivered by the Company on such Closing Date, the Registration
Statements, the Prospectus and other related matters as the Representatives may
require, and
23
the Selling Stockholders and the Company shall have furnished to such counsel
such documents as they request for purposes of enabling them to pass upon such
matters.
(i) The Representatives shall have received an opinion, dated the Closing
Date, of XxXxxxxxx, Will & Xxxxx, special counsel to the Underwriters, in form
and substance satisfactory to the Representatives, to the effect that:
(i) the statements set forth in (A) the Prospectus under "Risk
Factors -- Changes in the reimbursement rates or methods of payment from
third-party payors, including the Medicare and Medicaid programs or, the
implementation of other measures to reduce reimbursement for our services
could result in a substantial reduction in our revenues and operating
margins," Risk Factors - We conduct business in a heavily regulated
industry, and changes in regulations or violations of regulations may
result in increased costs or sanctions that reduce our revenues and
profitability," and "Business - Government Regulation," to the extent that
such statements purport to summarize statutes, rules and regulations
constituting Health Care Laws have been reviewed by such counsel and those
statements provide an accurate and fair summary of such statutes, rules and
regulations; provided that with respect to the foregoing opinion, the
Company shall have furnished to XxXxxxxxx, Will & Xxxxx, such documents as
they request for purpose of enabling them to pass upon such matters; and
(ii) although such counsel has undertaken no investigation to verify
independently the accuracy, completeness or fairness or the statements
contained in the Prospectus (except as stated in paragraph (i) above), no
facts have come to such counsel's attention that lead them to believe that,
as of the Effective Date or on the date hereof, the statements contained in
the above referenced portions of the Prospectus summarizing the statutes,
rules and regulations constituting Health Care Laws contained or contain
any untrue statements of a material fact or omitted or omit to state a
material fact required to be stated therein or necessary to make such
statements, in the light of the circumstances under which they were made,
not misleading.
(j) The Representatives shall have received a certificate, dated such
Closing Date, of the President or any Vice President and a principal financial
or accounting officer of the Company in which such officers shall state that, to
the best of their knowledge after reasonable investigation: the representations
and warranties of the Company in this Agreement are true and correct; the
Company has complied with all agreements and satisfied all conditions on its
part to be performed or satisfied hereunder at or prior to such Closing Date; no
stop order suspending the effectiveness of any Registration Statement has been
issued and no proceedings for that purpose have been instituted or are
contemplated by the Commission; the Additional Registration Statement (if any)
satisfying the requirements of subparagraphs (1) and (3) of Rule 462(b) was
filed pursuant to Rule 462(b), including payment of the applicable filing fee in
accordance with Rule 111(a) or (b) under the Act, prior to the time the
Prospectus was printed and distributed to any Underwriter; and, subsequent to
the date of the most recent financial statements in the Prospectus, there has
been no material adverse change, nor any development or event involving a
prospective material adverse change, in the condition (financial or other),
business, properties or results of operations of the Company and its
subsidiaries taken as a whole except as set forth in or contemplated by the
Prospectus or as described in such certificate.
(k) The Representatives shall have received a letter, dated such Closing
Date, from PricewaterhouseCoopers LLP which meets the requirements of subsection
(a) of this Section, except that the specified date referred to in such
subsection will be a date not more than three days prior to such Closing Date
for the purposes of this subsection.
(l) The Representatives shall have received a letter, dated such Closing
Date, from Ernst & Young LLP which meets the requirements of subsection (b) of
this Section.
(m) On or prior to the date on which the Company first furnishes to the
Underwriters a preliminary prospectus for use in connection with the offering of
the Offered Securities, the Representatives shall have received a lockup letter,
in form and substance satisfactory to the
24
Representatives, from each Selling Stockholder and from each executive officer
and director of the Company who is not a Selling Stockholder.
(n) On or prior to the date of this Agreement, the NASD shall have
confirmed that it has not raised any objection with respect to the fairness and
reasonableness of the underwriting terms and arrangements.
(o) On or prior to the date of this Agreement, the Securities shall have
been approved for quotation on The Nasdaq National Market, subject only to
notice of issuance.
The Selling Stockholders and the Company will furnish the Representatives with
such conformed copies of such opinions, certificates, letters and documents as
the Representatives reasonably request. CSFBC may in its sole discretion waive
on behalf of the Underwriters compliance with any conditions to the obligations
of the Underwriters hereunder, whether in respect of an Optional Closing Date or
otherwise.
7. Indemnification and Contribution.
(a) The Company will indemnify and hold harmless each Underwriter, its
partners, directors and officers and each person, if any, who controls such
Underwriter within the meaning of Section 15 of the Act, against any losses,
claims, damages or liabilities, joint or several, to which such Underwriter may
become subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of any material fact
contained in any Registration Statement, the Prospectus, or any amendment or
supplement thereto, or any related preliminary prospectus, or arise out of or
are based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein (in
the case of the Prospectus, in the light of the circumstances under which they
were made) not misleading, and will reimburse each Underwriter for any legal or
other expenses reasonably incurred by such Underwriter in connection with
investigating or defending any such loss, claim, damage, liability or action as
such expenses are incurred; provided, however, the Company will not be liable in
any such case to the extent that any such loss, claim, damage or liability
arises out of or is based upon an untrue statement or alleged untrue statement
in or omission or alleged omission from any of such documents in reliance upon
and in conformity with written information furnished to the Company by any
Underwriter through the Representatives specifically for use therein, it being
understood and agreed that the only such information furnished by any
Underwriter consists of the information described as such in subsection (c)
below; and provided, further, that with respect to any untrue statement or
alleged untrue statement in or omission or alleged omission from any preliminary
prospectus, which statement or omission was corrected in the Prospectus, the
indemnity agreement contained in this Section 7(a) shall not inure to the
benefit of any Underwriter from whom the person asserting any such losses,
claims, damages or liabilities purchased the Offered Securities concerned, to
the extent that a prospectus relating to such Offered Securities was required to
be delivered by such Underwriter under the Act in connection with such purchase
and any such loss, claim, damage or liability of such Underwriter results from
the fact that there was not sent or given to such person, at or prior to the
written confirmation of the sale of such Offered Securities to such person, a
copy of the Prospectus if the Company had previously furnished copies thereof to
such Underwriter.
The Company agrees to indemnify and hold harmless the Designated
Underwriter and each person, if any, who controls the Designated Underwriter
within the meaning of either Section 15 of the Securities Act or Section 20 of
the Exchange Act (the "Designated Entities"), from and against any and all
losses, claims, damages and liabilities (including, without limitation, any
legal or other expenses reasonably incurred in connection with defending or
investigating any such action or claim) (i) caused by any untrue statement or
alleged untrue statement of a material fact contained in any material prepared
by or with the consent of the Company for distribution to Participants in
connection with the Directed Share Program or caused by any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading; (ii) caused by the
failure of any Participant to pay for and accept delivery of Directed Shares
that the participant agreed to purchase; or (iii) related to, arising out of, or
in connection with the Directed Share Program, other than losses, claims,
damages or liabilities
25
(or expenses relating thereto) that are finally judicially determined to have
resulted from the bad faith or gross negligence of the Designated Entities.
(b) Each Selling Stockholder will severally and not jointly indemnify and
hold harmless each Underwriter, its partners, directors and officers and each
person who controls such Underwriter within the meaning of Section 15 of the
Act, against any losses, claims, damages or liabilities, joint or several, to
which such Underwriter may become subject, under the Act or otherwise, insofar
as such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in any Registration Statement, the Prospectus, or
any amendment or supplement thereto, or any related preliminary prospectus, or
arise out of or are based upon the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading, in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or omission or
alleged omission was made in reliance upon and in conformity with written
information furnished to the Company by such Selling Stockholder (in its
capacity as a Selling Stockholder) specifically for use therein, and will
reimburse each Underwriter for any legal or other expenses reasonably incurred
by such Underwriter in connection with investigating or defending any such loss,
claim, damage, liability or action as such expenses are incurred, it being
understood and agreed that the only such information furnished by any Selling
Stockholder consists of the information pertaining to such Selling Stockholder
included in the Prospectus under the caption "Principal and Selling
Stockholders," and; provided, however, that with respect to any untrue statement
or alleged untrue statement in or omission or alleged omission from any
preliminary prospectus, which statement or omission was corrected in the
Prospectus, the indemnity agreement contained in this Section 7(b) shall not
inure to the benefit of any Underwriter from whom the person asserting any such
losses, claims, damages or liabilities purchased the Offered Securities
concerned, to the extent that a prospectus relating to such Offered Securities
was required to be delivered by such Underwriter under the Act in connection
with such purchase and any such loss, claim, damage or liability of such
Underwriter results from the fact that there was not sent or given to such
person, at or prior to the written confirmation of the sale of such Offered
Securities to such person, a copy of the Prospectus if the Company had
previously furnished copies thereof to such Underwriter. The liability under
this subsection of each Selling Stockholder shall be limited to an amount equal
to the aggregate gross proceeds (net of underwriting discounts and commissions
but before deducting expenses) to such Selling Stockholder from the sale of the
Offered Securities sold by such Selling Stockholder hereunder.
(c) Each Underwriter will severally and not jointly indemnify and hold
harmless the Company, its directors, each officer of the Company who signed a
Registration Statement and each person, if any, who controls the Company within
the meaning of Section 15 of the Act, and each Selling Stockholder, against any
losses, claims, damages or liabilities to which the Company or such Selling
Stockholder may become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of any
material fact contained in any Registration Statement, the Prospectus, or any
amendment or supplement thereto, or any related preliminary prospectus, or arise
out of or are based upon the omission or the alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein (in the case of the Prospectus, in the light of the circumstances under
which they were made) not misleading, in each case to the extent, but only to
the extent, that such untrue statement or alleged untrue statement or omission
or alleged omission was made in reliance upon and in conformity with written
information furnished to the Company by such Underwriter through the
Representatives specifically for use therein, and will reimburse any legal or
other expenses reasonably incurred by the Company and each Selling Stockholder
in connection with investigating or defending any such loss, claim, damage,
liability or action as such expenses are incurred, it being understood and
agreed that the only such information furnished by any Underwriter consists of
(i) the following information in the Prospectus furnished on behalf of each
Underwriter: the concession and reallowance figures appearing in the fourth
paragraph under the caption "Underwriting," and the information contained in the
fourteenth and fifteenth paragraphs under the caption "Underwriting;" and (ii)
the following information in the Prospectus furnished on behalf of Xxxxxxx,
Xxxxx & Co.: the third sentence appearing in the last paragraph under the
caption "Underwriting," and (iii) the following information in the Prospectus
furnished on behalf of J.P.
26
Xxxxxx Securities Inc.: the fourth, fifth and sixth sentences appearing in the
last paragraph under the caption "Underwriting."
(d) Promptly after receipt by an indemnified party under this Section or
Section 9 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against an indemnifying party
under subsection (a), (b) or (c) above or Section 9, notify the indemnifying
party of the commencement thereof; but the omission so to notify the
indemnifying party will not relieve it from any liability which it may have to
any indemnified party otherwise than under subsection (a), (b) or (c) above or
Section 9. In case any such action is brought against any indemnified party and
it notifies an indemnifying party of the commencement thereof, the indemnifying
party will be entitled to participate therein and, to the extent that it may
wish, jointly with any other indemnifying party similarly notified, to assume
the defense thereof, with counsel satisfactory to such indemnified party (who
shall not, except with the consent of the indemnified party, be counsel to the
indemnifying party), and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party under this
Section or Section 9, as the case may be, for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation. No indemnifying party
shall, without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened action 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 (i) includes
an unconditional release of such indemnified party from all liability on any
claims that are the subject matter of such action and (ii) does not include a
statement as to, or an admission of, fault, culpability or a failure to act by
or on behalf of an indemnified party.
(e) If the indemnification provided for in this Section is unavailable or
insufficient to hold harmless an indemnified party under subsection (a), (b) or
(c) above, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of the losses, claims, damages or
liabilities referred to in subsection (a), (b) or (c) above (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company and the Selling Stockholders on the one hand and the Underwriters on the
other from the offering of the Offered Securities 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 Stockholders on the one hand and the Underwriters on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities as well as any other relevant equitable
considerations. The relative benefits received by the Company and the Selling
Stockholders on the one hand and the Underwriters on the other shall be deemed
to be in the same proportion as the total net proceeds from the offering (before
deducting expenses) received by the Company and the Selling Stockholders bear to
the total underwriting discounts and commissions received by the Underwriters.
The relative fault shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company, the Selling Stockholders (in their capacity as Selling
Stockholders) or the Underwriters and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such untrue
statement or omission. The amount paid by an indemnified party as a result of
the losses, claims, damages or liabilities referred to in the first sentence of
this subsection (e) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any action or claim which is the subject of this subsection (e).
Notwithstanding the provisions of this subsection (e), no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Offered Securities underwritten by it and distributed to the
public were offered to the public exceeds the amount of any damages which such
Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations in this subsection
(e) to contribute are several in proportion to their respective underwriting
obligations and not joint. Notwithstanding anything in this subsection (e) to
the contrary, the liability under this subsection (e) of each Selling
Stockholder shall be limited to an amount equal to the aggregate gross proceeds
(net of underwriting discounts and commissions
27
but before deducting expenses) to such Selling Stockholder from the sale of the
Offered Securities sold by such Selling Stockholder hereunder.
(f) The obligations of the Company and any Selling Stockholder under this
Section or Section 9 shall be in addition to any liability which the Company and
such Selling Stockholders may otherwise have and shall extend, upon the same
terms and conditions, to each person, if any, who controls any Underwriter or
the QIU (as hereinafter defined) within the meaning of the Act; and the
obligations of the Underwriters under this Section shall be in addition to any
liability which the respective Underwriters may otherwise have and shall extend,
upon the same terms and conditions, to each director of the Company, to each
officer of the Company who has signed a Registration Statement and to each
person, if any, who controls the Company or such Selling Stockholder within the
meaning of the Act.
8. Default of Underwriters. If any Underwriter or Underwriters default in
their obligations to purchase Offered Securities hereunder on either the First
or any Optional Closing Date and the aggregate number of shares of Offered
Securities that such defaulting Underwriter or Underwriters agreed but failed to
purchase does not exceed 10% of the total number of shares of Offered Securities
that the Underwriters are obligated to purchase on such Closing Date, CSFBC may
make arrangements satisfactory to the Company and the Selling Stockholders for
the purchase of such Offered Securities by other persons, including any of the
Underwriters, but if no such arrangements are made by such Closing Date, the
non-defaulting Underwriters shall be obligated severally, in proportion to their
respective commitments hereunder, to purchase the Offered Securities that such
defaulting Underwriters agreed but failed to purchase on such Closing Date. If
any Underwriter or Underwriters so default and the aggregate number of shares of
Offered Securities with respect to which such default or defaults occur exceeds
10% of the total number of shares of Offered Securities that the Underwriters
are obligated to purchase on such Closing Date and arrangements satisfactory to
CSFBC, the Company and the Selling Stockholders for the purchase of such Offered
Securities by other persons are not made within 36 hours after such default,
this Agreement will terminate without liability on the part of any non-
defaulting Underwriter, the Company or the Selling Stockholders, except as
provided in Section 10 (provided that if such default occurs with respect to
Optional Securities after the First Closing Date, this Agreement will not
terminate as to the Firm Securities or any Optional Securities purchased prior
to such termination). As used in this Agreement, the term "Underwriter" includes
any person substituted for an Underwriter under this Section. Nothing herein
will relieve a defaulting Underwriter from liability for its default.
9. Qualified Independent Underwriter. The Company hereby confirms that at
its request CSFBC has without compensation acted as "qualified independent
underwriter" (in such capacity, the "QIU") within the meaning of Rule 2710 of
the Conduct Rules of the National Association of Securities Dealers, Inc. in
connection with the offering of the Offered Securities. The Company and the
Selling Stockholders will severally and not jointly indemnify and hold harmless
the QIU against any losses, claims, damages or liabilities, joint or several, to
which the QIU may become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon the QIU's acting (or alleged failure to act) as such
"qualified independent underwriter" and will reimburse the QIU for any legal or
other expenses reasonably incurred by the QIU in connection with investigating
or defending any such loss, claim, damage, liability or action as such expenses
are incurred; provided, however, that any Selling Stockholder shall only be
subject to liability under this Section to the extent such liability arises out
of or is based upon any untrue statement or alleged untrue statement of any
material fact contained in any Registration Statement, the Prospectus, or any
amendment or supplement thereto, or any related preliminary prospectus, or upon
an omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, made
in reliance upon and in conformity with written information furnished to the
Company by such Selling Stockholder (in its capacity as a Selling Stockholder)
specifically for use therein.
10. Survival of Certain Representations and Obligations. The respective
indemnities, agreements, representations, warranties and other statements of the
Selling Stockholders, of the Company or its officers and of the several
Underwriters set forth in or made pursuant to this Agreement will remain in full
force and effect, regardless of any investigation, or statement as to the
results thereof, made by or on behalf of any Underwriter, any Selling
Stockholder, the Company or any of their respective representatives,
28
officers or directors or any controlling person, and will survive delivery of
and payment for the Offered Securities. If this Agreement is terminated pursuant
to Section 8 or if for any reason the purchase of the Offered Securities by the
Underwriters is not consummated, the Company and the Selling Stockholders shall
remain responsible for the expenses to be paid or reimbursed by them
respectively pursuant to Section 5 and the respective obligations of the
Company, the Selling Stockholders, and the Underwriters pursuant to Section 7
and the obligations of the Company and the Selling Stockholders pursuant to
Section 9 shall remain in effect, and if any Offered Securities have been
purchased hereunder the representations and warranties in Section 2 and all
obligations under Section 5 shall also remain in effect. If the purchase of the
Offered Securities by the Underwriters is not consummated for any reason other
than solely because of the termination of this Agreement pursuant to Section 8
or the occurrence of any event specified in clause (iii), (iv), (v), (vi) or
(vii) of Section 6(d), the Company will reimburse the Underwriters for all out-
of-pocket expenses (including fees and disbursements of counsel) reasonably
incurred by them in connection with the offering of the Offered Securities.
29
11. Notices. All communications hereunder will be in writing and, if sent
to the Underwriters, will be mailed, delivered or telegraphed and confirmed to
the Representatives, c/o Credit Suisse First Boston Corporation, Eleven Madison
Avenue, New York, N.Y. 10010-3629, Attention: Transactions Advisory Group, or,
if sent to the Company, will be mailed, delivered or telegraphed and confirmed
to it at Kindred Healthcare, Inc., 000 Xxxxx Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx
00000-0000, Attention: General Counsel, or, if sent to any Selling Stockholder,
will be mailed, delivered or telegraphed and confirmed to such Selling
Stockholder at the address set forth below its name on the signature page to
hereto; provided, however, that any notice to an Underwriter pursuant to Section
7 will be mailed, delivered or telegraphed and confirmed to such Underwriter.
12. Successors. This Agreement will inure to the benefit of and be binding
upon the parties hereto and their respective personal representatives and
successors and the officers and directors and controlling persons referred to in
Section 7, and no other person will have any right or obligation hereunder.
13. Representation. The Representatives will act for the several
Underwriters in connection with the transactions contemplated by this Agreement,
and any action under this Agreement taken by the Representatives or by CSFBC
will be binding upon all the Underwriters. The Attorney-in-Fact appointed by
each Selling Stockholder will act for such Selling Stockholder in connection
with such transactions, and any action under or in respect of this Agreement
taken by such Attorney-in-Fact will be binding upon such Selling Stockholder.
14. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement.
15. Applicable Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York, without regard to principles
of conflicts of laws.
The Company and each Selling Stockholder hereby submit to the non-exclusive
jurisdiction of the Federal and state courts in the Borough of Manhattan in The
City of New York in any suit or proceeding arising out of or relating to this
Agreement or the transactions contemplated hereby.
[The remainder of this page is intentionally left blank]
30
If the foregoing is in accordance with the Representatives' understanding
of our agreement, kindly sign and return to the Company one of the counterparts
hereof, whereupon it will become a binding agreement among the Selling
Stockholders, the Company and the several Underwriters in accordance with its
terms.
Very truly yours,
Kindred Healthcare, Inc.
By....................................
Name..................................
Title.................................
Selling Stockholders
By....................................
Name..................................
Title.................................
For himself and as Authorized
Signatory for each of the Selling
Stockholders named herein.
The foregoing Underwriting Agreement is hereby
confirmed and accepted as of thedate first above
written.
Credit Suisse First Boston Corporation
Xxxxxxx, Xxxxx & Co.
UBS Warburg LLC
X.X. Xxxxxx Securities Inc.
Xxxxxx Brothers Inc.
31
Acting on behalf of themselves and as the
Representatives of the several
Underwriters.
By Credit Suisse First Boston Corporation
By........................................
(Title)
32
SCHEDULE A
Number of
Firm Securities
Counsel Selling Stockholder to be Sold
------------------------------ --------------------------------------- ---------------
Xxxxx, Tarrant & Xxxxx, LLP Xxxxxx X. Xxxxx
Xxxxx, Xxxxxxx & Xxxxx, LLP Xxxxxxx X. Xxxxxx
Xxxxx, Xxxxxxx & Xxxxx, LLP Xxxxx X. Xxxxxxxxxxx
Xxxxx, Xxxxxxx & Xxxxx, LLP Xxxxxxx X. Xxxxxxx
Xxxxx, Xxxxxxx & Xxxxx, LLP Xxxxxx X. Xxxxxx
Xxxxx, Xxxxxxx & Xxxxx, LLP Xxxxx X. Xxxxxxxxxxx, Xx.
Xxxxx, Xxxxxxx & Xxxxx, LLP Xxxxxxx X. Xxxxxxxxxx
Xxxxx, Xxxxxxx & Xxxxx, LLP Xxxxxxx X. Xxxxxxxxxxx
Xxx Xxxxxx Appaloosa Investment Limited
Partnership I
Xxx Xxxxxx Palomino Fund Ltd.
Xxxxxxx, Xxxx & Xxxxx, LLP Cerberus Institutional Partners, X.X.
Xxxxxxx, Xxxx & Xxxxx, LLP Cerberus International, Ltd.
Xxxx Xxxxxxxxx Franklin Mutual Advisers, LLC
Fried, Frank, Harris, Xxxxxxx Xxxxxxx, Xxxxx & Co.
& Xxxxxxxx
Xxxx Xxxxxxx LLP Xxx Xxxxxx Prime Rate Income Trust
Xxxxxxx Xxxx & Xxxxxxxxx Ventas Realty, Limited Partnership
Xxxxx, Tarrant & Xxxxx, LLP Xxxxxxx X. Xxxxxxx, Xx.
Xxxxx, Xxxxxxx & Xxxxx, LLP Xxxxxx X. Xxxxxx
Xxxxx, Xxxxxxx & Xxxxx, LLP Xxxx X. Xxxx
Xxxxx, Xxxxxxx & Xxxxx, LLP Xxxxxxxxx X. Xxxxxxx
Xxxxx, Xxxxxxx & Xxxxx, LLP Xxxx X. XxXxxxxxxx
Xxxxx, Xxxxxxx & Xxxxx, LLP Xxxxx X. Xxxx
Xxxxx, Xxxxxxx & Xxxxx, LLP Xxxx X. Xxxxxxx
Xxxxx, Xxxxxxx & Xxxxx, LLP Xxxxxx X. Xxxxxxx
Xxxxx, Xxxxxxx & Xxxxx, LLP T. Xxxxx Xxxxxxx
Xxxx Xxxxxxx LLP Xxx Xxxxxx Senior Income Trust
Xxxx Xxxxxxx LLP Xxx Xxxxxx Senior Floating Rate Fund
Xxxxxxx X. Xxxxx Xxxxxx Guaranty Trust Co. of New York
---------------
Total..................................
===============
33
SCHEDULE B
Number of Firm
Firm Securities
Underwriter Purchased
----------- ---------------
Credit Suisse First Boston Corporation.........................
Xxxxxxx, Xxxxx & Co............................................
UBS Warburg LLC................................................
X.X. Xxxxxx Securities Inc.....................................
Xxxxxx Brothers Inc............................................
---------
Total............................................... 3,246,900
=========
34
SCHEDULE C
List of Company's Significant Subsidiaries
------------------------------------------
35
SCHEDULE D
List of Partnerships Not Wholly-Owned
-------------------------------------
% of
Name Ownership
---- ---------
36
Schedule E
37
