Sun Healthcare Group, Inc. 10,000,000 Shares Common Stock ($0.01 par value per Share) Underwriting Agreement
EXHIBIT
1.1
EXECUTION
COPY
Sun
Healthcare Group, Inc.
10,000,000
Shares
Common
Stock
($0.01
par value per Share)
Underwriting
Agreement
December
14, 2006
EXECUTION
COPY
Underwriting
Agreement
December
14, 2006
UBS
Securities LLC
as
Managing Underwriter
000
Xxxx
Xxxxxx
Xxx
Xxxx,
Xxx Xxxx 00000-0000
Ladies
and Gentlemen:
Sun
Healthcare Group, Inc., a Delaware corporation (the “Company”),
proposes to issue and sell to the underwriters named in Schedule
A
annexed
hereto (the “Underwriters”),
for
whom you are acting as representative, an aggregate of 10,000,000 shares (the
“Firm
Shares”)
of
common stock, $0.01 par value per share (the “Common
Stock”),
of
the Company. In addition, solely for the purpose of covering over-allotments,
the Company proposes to grant to the Underwriters the option to purchase from
the Company up to an additional 1,500,000 shares of Common Stock (the
“Additional
Shares”).
The
Firm Shares and the Additional Shares are hereinafter collectively sometimes
referred to as the “Shares.”
The
Shares are described in the Prospectus which is referred to below.
The
Company has prepared and filed, in accordance with the provisions of the
Securities Act of 1933, as amended, and the rules and regulations thereunder
(collectively, the “Act”),
with
the Securities and Exchange Commission (the “Commission”)
a
registration statement on Form S-3 (File No. 333-135547) under the Act (the
“registration
statement”),
including a prospectus, which registration statement incorporates by reference
documents which the Company has filed, or will file, in accordance with the
provisions of the Securities Exchange Act of 1934, as amended, and the rules
and
regulations thereunder (collectively, the “Exchange
Act”).
Amendments to such registration statement, if necessary or appropriate, have
been similarly prepared and filed with the Commission in accordance with the
Act. Such registration statement, as so amended, has become effective under
the
Act.
Except
where the context otherwise requires, “Registration
Statement,”
as
used herein, means the registration statement, as amended at the time of such
registration statement’s effectiveness for purposes of Section 11 of the Act, as
such section applies to the respective Underwriters (the “Effective
Time”),
including (i) all documents filed as a part thereof or incorporated or deemed
to
be incorporated by reference therein, (ii) any information contained or
incorporated by reference in a prospectus filed with the Commission pursuant
to
Rule 424(b) under the Act, to the extent such information is deemed, pursuant
to
Rule 430B or Rule 430C under the Act, to be part of the registration statement
at the Effective Time, and (iii) any registration statement filed to register
the offer and sale of Shares pursuant to Rule 462(b) under the Act.
The
Company has furnished to you, for use by the Underwriters and by dealers in
connection with the offering of the Shares, copies of one or more preliminary
prospectus supplements, and the documents incorporated by reference therein,
relating to the Shares. Except where the context otherwise requires,
“Pre-Pricing
Prospectus,”
as
used herein, means
each
such
preliminary prospectus supplement, in the form so furnished, including
any
basic
prospectus (whether or not in preliminary form) furnished to you by the Company
and attached to or used with such preliminary prospectus supplement.
The
parties hereto agree that the only Pre-Pricing Prospectus is the preliminary
prospectus supplement relating to the Shares, dated December 6, 2006, together
with the basic prospectus attached thereto. Except where the context otherwise
requires, “Basic
Prospectus,”
as
used herein, means any such basic prospectus and any basic prospectus furnished
to you by the Company and attached to or used with the Prospectus Supplement
(as
defined below).
Except
where the context otherwise requires, “Prospectus
Supplement,”
as
used herein, means the final prospectus supplement, relating to the Shares,
filed by the Company with the Commission pursuant to Rule 424(b) under the
Act
on or before the second business day after the date hereof (or such earlier
time
as may be required under the Act), in the form furnished by the Company to
you
for use by the Underwriters and by dealers in connection with the offering
of
the Shares.
Except
where the context otherwise requires, “Prospectus,”
as
used herein, means the Prospectus Supplement together with the Basic Prospectus
attached to or used with the Prospectus Supplement.
“Permitted
Free Writing Prospectuses,”
as
used herein, means the documents listed on Schedule
B
attached
hereto and each “road show” (as defined in Rule 433 under the Act), if any,
related to the offering of the Shares contemplated hereby that is a “written
communication” (as defined in Rule 405 under the Act) (each such road show, a
“Road Show”) listed on Schedule
C
attached
hereto. The Underwriters have not offered or sold and will not offer or sell,
without the Company’s consent, any Shares by means of any “free writing
prospectus” (as defined in Rule 405 under the Act) that is required to be filed
by the Underwriters with the Commission pursuant to Rule 433 under the Act,
other than a Permitted Free Writing Prospectus.
“Disclosure
Package,”
as
used herein, means any Pre-Pricing Prospectus or Basic Prospectus, in either
case together with any combination of one or more of the Permitted Free Writing
Prospectuses, if any.
Any
reference herein to the registration statement, the Registration Statement,
any
Basic Prospectus, any Pre-Pricing Prospectus, the Prospectus Supplement, the
Prospectus or any Permitted Free Writing Prospectus shall be deemed to refer
to
and include the documents, if any, incorporated by reference, or deemed to
be
incorporated by reference, therein (the “Incorporated
Documents”),
including, unless the context otherwise requires, the documents, if any, filed
as exhibits to such Incorporated Documents. Any reference herein to the terms
“amend,”
“amendment”
or
“supplement”
with
respect to the Registration Statement, any Basic Prospectus, any Pre-Pricing
Prospectus, the Prospectus Supplement, the Prospectus or any Permitted Free
Writing Prospectus shall be deemed to refer to and include the filing of any
document under the Exchange Act on or after the initial effective date of the
Registration Statement, or the date of such Basic Prospectus, such Pre-Pricing
Prospectus, the Prospectus Supplement, the Prospectus or such Permitted Free
Writing Prospectus, as the case may be, and deemed to be incorporated
therein
by reference.
-2-
As
used
in this Agreement, “business
day”
shall
mean a day on which the New York Stock Exchange (the “NYSE”)
is
open for trading. The terms “herein,” “hereof,” “hereto,” “hereinafter” and
similar terms, as used in this Agreement, shall in each case refer to this
Agreement as a whole and not to any particular section, paragraph, sentence
or
other subdivision of this Agreement. The term “or,” as used herein, is not
exclusive.
The
Company and the Underwriters agree as follows:
1. Sale
and Purchase.
Upon
the basis of the representations and warranties and subject to the terms and
conditions herein set forth, the Company agrees to issue and sell to the
respective Underwriters and each of the Underwriters, severally and not jointly,
agrees to purchase from the Company the number of Firm Shares set forth opposite
the name of such Underwriter in Schedule
A
attached
hereto, subject to adjustment in accordance with Section 8
hereof,
in each case at a purchase price of $10.586 per Share. The Company is advised
by
you that the Underwriters intend (i) to make a public offering of their
respective portions of the Firm Shares as soon after the effectiveness of this
Agreement as in your judgment is advisable and (ii) initially to offer the
Firm
Shares upon the terms set forth in the Prospectus. You may from time to time
increase or decrease the public offering price after the initial public offering
to such extent as you may determine.
In
addition, the Company hereby grants to the several Underwriters the option
(the
“Over-Allotment
Option”)
to
purchase, and upon the basis of the representations and warranties and subject
to the terms and conditions herein set forth, the Underwriters shall have the
right to purchase, severally and not jointly, from the Company, ratably in
accordance with the number of Firm Shares to be purchased by each of them, all
or a portion of the Additional Shares as may be necessary to cover
over-allotments made in connection with the offering of the Firm Shares, at
the
same purchase price per share to be paid by the Underwriters to the Company
for
the Firm Shares. The Over-Allotment Option may be exercised by UBS Securities
LLC (“UBS”)”
on
behalf of the several Underwriters at any time and from time to time on or
before the thirtieth day following the date of the Prospectus Supplement, by
written notice to the Company. Such notice shall set forth the aggregate number
of Additional Shares as to which the Over-Allotment Option is being exercised
and the date and time when the Additional Shares are to be delivered (any such
date and time being herein referred to as an “additional
time of purchase”);
provided,
however,
that no
additional time of purchase shall be earlier than the “time of purchase” (as
defined below) nor earlier than the second business day after the date on which
the Over-Allotment Option shall have been exercised nor later than the tenth
business day after the date on which the Over-Allotment Option shall have been
exercised. The number of Additional Shares to be sold to each Underwriter shall
be the number which bears the same proportion to the aggregate number of
Additional Shares being purchased as the number of Firm Shares set forth
opposite the name of such Underwriter on Schedule
A
hereto
bears to the total number of Firm Shares (subject, in each case, to such
adjustment as UBS may determine to eliminate fractional shares), subject to
adjustment in accordance with Section 8
hereof.
2. Payment
and Delivery.
Payment
of the purchase price for the Firm Shares shall
be
made
to the Company by Federal Funds wire transfer against delivery of the
certificates for the Firm Shares to you through the facilities of The Depository
Trust Company (“DTC”)
for
the respective accounts of the Underwriters. Such payment and delivery
shall be
made at 10:00 A.M., New York City time, on December 20, 2006 (unless another
time shall be agreed to by you and the Company or unless postponed in accordance
with the provisions of Section 8
hereof).
The time at which such payment and delivery are to be made is hereinafter
sometimes called the “time
of purchase.”
Electronic transfer of the Firm Shares shall be made to you at the time
of
purchase in such names and in such denominations as you shall
specify.
-3-
Payment
of the purchase price for the Additional Shares shall be made at the additional
time of purchase in the same manner and at the same office as the payment for
the Firm Shares. Electronic transfer of the Additional Shares shall be made
to
you at the additional time of purchase in such names and in such denominations
as you shall specify.
Deliveries
of the documents described in Section 6
hereof
with respect to the purchase of the Shares shall be made at the offices of
Cravath, Swaine & Xxxxx LLP at 000 Xxxxxx Xxxxxx, Xxx Xxxx, XX 00000, at
9:00 A.M., New York City time, on the date of the closing of the purchase of
the
Firm Shares or the Additional Shares, as the case may be.
3. Representations
and Warranties of the Company.
The
Company represents and warrants to and agrees with each of the Underwriters
that:
(a) the
Registration Statement has heretofore become effective under the Act or, with
respect to any registration statement to be filed to register the offer and
sale
of Shares pursuant to Rule 462(b) under the Act, will be filed with the
Commission and become effective under the Act no later than 10:00 P.M., New
York
City time, on the date of determination of the public offering price for the
Shares; no stop order of the Commission preventing or suspending the use of
any
Basic Prospectus, any Pre-Pricing Prospectus, the Prospectus Supplement, the
Prospectus or any Permitted Free Writing Prospectus, or the effectiveness of
the
Registration Statement, has been issued, and no proceedings for such purpose
have been instituted or, to the Company’s knowledge, are contemplated by the
Commission;
(b) the
Registration Statement complied when it became effective, complies as of the
date hereof and, as amended or supplemented, at the time of purchase, each
additional time of purchase, if any, and at all times during which a prospectus
is required by the Act to be delivered (whether physically or through compliance
with Rule 172 under the Act or any similar rule) in connection with any sale
of
Shares, will comply, in all material respects, with the requirements of the
Act;
the conditions to the use of Form S-3 in connection with the offering and sale
of the Shares as contemplated hereby have been satisfied; the Registration
Statement meets, and the offering and sale of the Shares as contemplated hereby
complies with, the requirements of Rule 415 under the Act (including, without
limitation, Rule 415(a)(5) under the Act); the Registration Statement did not,
as of the Effective Time, contain an untrue statement of a material fact or
omit
to state a material fact required to be stated therein or necessary to make
the
statements therein not misleading; each Pre-Pricing Prospectus complied, at
the
time it was filed
with
the
Commission, and complies as of the date hereof, in all material respects
with
the requirements of the Act; at no time during the period that begins on
the
earlier of the date of such Pre-Pricing Prospectus and the date such Pre-Pricing
Prospectus was filed with the Commission and ends at the time of purchase
did or
will any Pre-Pricing Prospectus, as then amended or supplemented, include
an
untrue statement of a material fact or omit 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 at no time during such period
did or
will any Pre-Pricing Prospectus, as then amended or supplemented, together
with
any combination of one or more of the then issued Permitted Free Writing
Prospectuses, if any, include an untrue statement of a material fact or
omit 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;
each
Basic Prospectus complied or will comply, as of its date and the date it
was or
will be filed with the Commission, complies as of the date hereof (if filed
with
the Commission on or prior to the date hereof) and, at the time of purchase,
each additional time of purchase, if any, and at all times during which
a
prospectus is required by the Act to be delivered (whether physically or
through
compliance with Rule 172 under the Act or any similar rule) in connection
with
any sale of Shares, will comply, in all material respects, with the requirements
of the Act; at no time during the period that begins on the earlier of
the date
of such Basic Prospectus and the date such Basic Prospectus was filed with
the
Commission and ends at the time of purchase did or will any Basic Prospectus,
as
then amended or supplemented, include an untrue statement of a material
fact or
omit 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 at no time during such period did or will any Basic Prospectus, as
then
amended or supplemented, together with any combination of one or more of
the
then issued Permitted Free Writing Prospectuses, if any, include an untrue
statement of a material fact or omit 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; each of the Prospectus Supplement and the
Prospectus will comply, as of the date that it is filed with the Commission,
the
date of the Prospectus Supplement, the time of purchase, each additional
time of
purchase, if any, and at all times during which a prospectus is required
by the
Act to be delivered (whether physically or through compliance with Rule
172
under the Act or any similar rule) in connection with any sale of Shares,
in all
material respects, with the requirements of the Act (in the case of the
Prospectus, including, without limitation, Section 10(a) of the Act); at
no time
during the period that begins on the earlier of the date of the Prospectus
Supplement and the date the Prospectus Supplement is filed with the Commission
and ends at the later of the time of purchase, the latest additional time
of
purchase, if any, and the end of the period during which a prospectus is
required by the Act to be delivered (whether physically or through compliance
with Rule 172 under the Act or any similar rule) in connection with any
sale of
Shares did or will any Prospectus Supplement or the Prospectus, as then
amended
or supplemented, include an untrue statement of a material fact or omit
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; at no
time
during the period that begins on the date of such Permitted Free Writing
Prospectus and ends at the time of purchase did or will any Permitted Free
Writing Prospectus include an
untrue
statement of a material fact or omit 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;provided,
however,
that
the Company makes no representation or warranty in this Section 3(b)
with
respect to any statement contained in the Registration Statement, any
Pre-Pricing Prospectus, the Prospectus or any Permitted Free Writing Prospectus
in reliance upon and in conformity with information concerning an Underwriter
and furnished in writing by or on behalf of such Underwriter through you
to the
Company expressly for use in the Registration Statement, such Pre-Pricing
Prospectus, the Prospectus or such Permitted Free Writing Prospectus; each
Incorporated Document, at the time such document was filed with the Commission
or at the time such document became effective, as applicable, complied,
in all
material respects, with the requirements of the Exchange Act and did not
include
an untrue statement of a material fact or omit 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;
-4-
-5-
(c) prior
to
the execution of this Agreement, the Company has not, directly or indirectly,
offered or sold any Shares by means of any “prospectus” (within the meaning of
the Act) or used any “prospectus” (within the meaning of the Act) in connection
with the offer or sale of the Shares, in each case other than the Pre-Pricing
Prospectuses and the Permitted Free Writing Prospectuses, if any; the Company
has not, directly or indirectly, prepared, used or referred to any Permitted
Free Writing Prospectus except in compliance with Rules 164 and 433 under the
Act; assuming that such Permitted Free Writing Prospectus is so sent or given
after the Registration Statement was filed with the Commission (and after such
Permitted Free Writing Prospectus was, if required pursuant to Rule 433(d)
under
the Act, filed with the Commission), the sending or giving, by any Underwriter,
of any Permitted Free Writing Prospectus will satisfy the provisions of Rule
164
and Rule 433 (without reliance on subsections (b), (c) and (d) of Rule 164);
the
conditions set forth in one or more of subclauses (i) through (iv), inclusive,
of Rule 433(b)(1) under the Act are satisfied, and the registration statement
relating to the offering of the Shares contemplated hereby, as initially filed
with the Commission, includes a prospectus that, other than by reason of Rule
433 or Rule 431 under the Act, satisfies the requirements of Section 10 of
the
Act; neither the Company nor the Underwriters are disqualified, by reason of
subsection (f) or (g) of Rule 164 under the Act, from using, in connection
with
the offer and sale of the Shares, “free writing prospectuses” (as defined in
Rule 405 under the Act) pursuant to Rules 164 and 433 under the Act; the Company
is not an “ineligible issuer” (as defined in Rule 405 under the Act) as of the
eligibility determination date for purposes of Rules 164 and 433 under the
Act
with respect to the offering of the Shares contemplated by the Registration
Statement; the parties hereto agree and understand that the content of any
and
all “road shows” (as defined in Rule 433 under the Act) related to the offering
of the Shares contemplated hereby is solely the property of the
Company;
(d) in
accordance with Rule 2710(b)(7)(C)(i) of the National Association of Securities
Dealers, Inc. (the “NASD”),
the
Shares have been registered with the Commission on Form S-3 under the Act
pursuant to the standards for such Form S-3 in effect prior to October 21,
1992;
-6-
(e) as
of the
date of this Agreement, the Company has an authorized an outstanding
capitalization as set forth in the sections of the Registration Statement,
the
Pre-Pricing Prospectus and the Prospectus entitled “Capitalization” and
“Description of capital stock” (and any similar sections or information, if any,
contained in any Permitted Free Writing Prospectus), and, as of the time of
purchase and any additional time of purchase, as the case may be, the Company
shall have an authorized and outstanding capitalization as set forth in the
sections of the Registration Statement, the Pre-Pricing Prospectus and the
Prospectus entitled “Capitalization” and “Description of capital stock” (and any
similar sections or information, if any, contained in any Permitted Free Writing
Prospectus) (subject, in each case, to the issuance of shares of Common Stock
upon exercise of stock options and warrants disclosed as outstanding in the
Registration Statement (excluding the exhibits thereto), each Pre-Pricing
Prospectus and the Prospectus, the grant of options under existing stock option
plans described in the Registration Statement (excluding the exhibits thereto),
each Pre-Pricing Prospectus and the Prospectus and the issuance of shares of
Common Stock pursuant to the Company’s Plan of Reorganization); all of the
issued and outstanding shares of capital stock, including the Common Stock,
of
the Company have been duly authorized and validly issued and are fully paid
and
non-assessable, have been issued in compliance with all applicable securities
laws and were not issued in violation of any preemptive right, resale right,
right of first refusal or similar right; no further approval or authority of
the
stockholders or the Board of Directors of the Company are required for the
issuance and sale of the Shares; and the Shares are duly listed, and admitted
and authorized for trading, subject to official notice of issuance, on the
Nasdaq Global Market (the “NASDAQ”);
(f) the
statements set forth in the Registration Statement, Pre-Pricing Prospectus
and
Prospectus under the caption “Description of capital stock”, insofar as they
purport to constitute a summary of the terms of the Shares, are accurate
descriptions or summaries in all material respects;
(g) the
Company has been duly incorporated and is validly existing as a corporation
in
good standing under the laws of the State of Delaware, with full corporate
power
and authority to own, lease and operate its properties and conduct its business
as described in the Registration Statement, the Pre-Pricing Prospectuses, the
Prospectus and the Permitted Free Writing Prospectuses, if any, to execute
and
deliver this Agreement and to issue, sell and deliver the Shares as contemplated
herein;
(h) the
Company is duly qualified to do business as a foreign corporation and is in
good
standing in each jurisdiction where the ownership or leasing of its properties
or the conduct of its business requires such qualification, except where the
failure to be so qualified and in good standing would not, individually or
in
the aggregate, have a material adverse effect on the business, properties,
financial condition, results of operations or prospects of the Company and
its
subsidiaries taken as a whole (a “Material
Adverse Effect”);
-7-
(i) except
as
disclosed in Schedule
D
hereto,
the Company owns all of the issued and outstanding capital stock of each of
its
subsidiaries (as defined in the Act); except as disclosed in Schedule
D
hereto,
other than the capital stock of its subsidiaries, the Company does not own,
directly or indirectly, any shares of stock or any other equity interests or
long-term debt securities of any corporation, firm, partnership, joint venture,
association or other entity; complete and correct copies of the certificates
of
incorporation and the bylaws of the Company and its subsidiaries and all
amendments thereto have been made available to you, and no changes therein
will
be made on or after the date hereof through and including the time of purchase
or, if later, any additional time of purchase; each subsidiary of the Company
has been duly incorporated and is validly existing as a corporation in good
standing under the laws of the jurisdiction of its incorporation, with full
corporate power and authority to own, lease and operate its properties and
to
conduct its business as described in the Registration Statement, the Pre-Pricing
Prospectuses, the Prospectus and the Permitted Free Writing Prospectuses, if
any; each subsidiary of the Company is duly qualified to do business as a
foreign corporation and is in good standing in each jurisdiction where the
ownership or leasing of its properties or the conduct of its business requires
such qualification, except where the failure to be so qualified and in good
standing would not, individually or in the aggregate, have a Material Adverse
Effect; each subsidiary of the Company is in compliance in all respects with
the
laws, orders, rules, regulations and directives issued or administered by such
jurisdictions, except where the failure to be in compliance would not,
individually or in the aggregate, have a Material Adverse Effect; all of the
outstanding shares of capital stock of each of the subsidiaries of the Company
have been duly authorized and validly issued, are fully paid and non-assessable,
have been issued in compliance with all applicable securities laws, were not
issued in violation of any preemptive right, resale right, right of first
refusal or similar right and are owned by the Company subject to no security
interest, other encumbrance or adverse claims, except as set forth in the
Registration Statement (excluding the exhibits thereto), each Pre-Pricing
Prospectus, the Prospectus or any Permitted Free Writing Prospectuses; and
no
options, warrants or other rights to purchase, agreements or other obligations
to issue or other rights to convert any obligation into shares of capital stock
or ownership interests in any subsidiary of the Company are outstanding; the
Company has no “significant subsidiary,” as that term is defined in Rule 1-02(w)
of Regulation S-X under the Act, other than subsidiaries set forth on
Schedule
D;
(j) the
Shares have been duly and validly authorized and, when issued and delivered
against payment therefor as provided herein, will be duly and validly issued,
fully paid and non-assessable and free of statutory and contractual preemptive
rights, resale rights, rights of first refusal and similar rights; the Shares,
when issued and delivered against payment therefor as provided herein, will
be
free of any restriction upon the voting or transfer thereof pursuant to the
Company’s charter or bylaws or other governing documents or any agreement or
other instrument to which the Company or any of its subsidiaries is a party
or
by which any of them or any of their respective properties may be bound or
affected;
(k) the
capital stock of the Company, including the Shares, conforms in all
material
respects to each description thereof, if any, contained or incorporated
by
reference in the Registration Statement, the Pre-Pricing Prospectus, the
Prospectus and any Permitted Free Writing Prospectus; the certificates
for the
Shares are in due and proper form; and the holders of the Shares will not
be
subject to personal liability by reason of being such
holders;
-8-
(l) this
Agreement has been duly authorized, executed and delivered by the
Company;
(m) neither
the Company nor any of its subsidiaries is in breach or violation of or in
default under (nor has any event occurred which, with notice, lapse of time
or
both, would result in any breach or violation of, constitute a default under
or
give the holder of any indebtedness (or a person acting on such holder’s behalf)
the right to require the repurchase, redemption or repayment of all or a part
of
such indebtedness under) (A) its respective charter or bylaws, or (B) any
indenture, mortgage, deed of trust, bank loan or credit agreement or other
evidence of indebtedness, or any license, lease, contract or other agreement
or
instrument to which the Company or any of its subsidiaries is a party or by
which any of them or any of their respective properties may be bound or
affected, or (C) any federal, state, local or foreign law, regulation or rule,
including, without limitation, any such law, rule or regulation applicable
to
the health care industry (“Health Care laws”)or (D) any rule or regulation of
any self-regulatory organization or other non-governmental regulatory authority
(including, without limitation, the rules and regulations of the NASDAQ), or
(E)
any decree, judgment or order applicable to the Company or any of its
subsidiaries or any of their respective properties, other than in the case
of
clauses (B) and (C) such breaches, violations or defaults as would not,
individually or in the aggregate have a Material Adverse Effect;
(n) the
execution, delivery and performance of this Agreement, the issuance and sale
of
the Shares and the consummation of the transactions contemplated hereby will
not
conflict with, result in any breach or violation of or constitute a default
under (nor constitute any event which, with notice, lapse of time or both,
would
result in any breach or violation of, constitute a default under or give the
holder of any indebtedness (or a person acting on such holder’s behalf) the
right to require the repurchase, redemption or repayment of all or a part of
such indebtedness under) (or result in the creation or imposition of a lien,
charge or encumbrance on any property or assets of the Company or any subsidiary
of the Company pursuant to) (A) the charter or bylaws of the Company or any
of
its subsidiaries, or (B) any indenture, mortgage, deed of trust, bank loan
or
credit agreement or other evidence of indebtedness, or any license, lease,
contract or other agreement or instrument to which the Company or any of its
subsidiaries is a party or by which any of them or any of their respective
properties may be bound or affected, or (C) any federal, state, local or foreign
law, regulation or rule, including, without limitation, Health Care Laws, or
(D)
any rule or regulation of any self-regulatory organization or other
non-governmental regulatory authority (including, without limitation, the rules
and regulations of the NASDAQ), or (E) any decree, judgment or order applicable
to the Company or any of its subsidiaries or any of their respective properties,
other than in the case of clause (B) for such breaches, violations and defaults
that
would not, individually or in the aggregate, have a Material Adverse
Effect;
-9-
(o) no
approval, authorization, consent or order of or filing with any federal, state,
local or foreign governmental or regulatory commission, board, body, authority
or agency, or of or with any self-regulatory organization or other
non-governmental regulatory authority (including, without limitation, the
NASDAQ), or approval of the stockholders of the Company, is required in
connection with the issuance and sale of the Shares or the consummation by
the
Company of the transactions contemplated hereby, other than (i) registration
of
the Shares under the Act, which
has
been effected (or, with respect to any registration statement to be filed
hereunder pursuant to Rule 462(b) under the Act, will be effected in accordance
herewith), (ii) any necessary qualification under the securities or blue sky
laws of the various jurisdictions in which the Shares are being offered by
the
Underwriters or (iii) under the Conduct Rules of the National Association of
Securities Dealers, Inc. (the “NASD”);
(p) except
as
described in the Registration Statement (excluding the exhibits thereto), each
Pre-Pricing Prospectus and the Prospectus, (i) no person has the right,
contractual or otherwise, to cause the Company to issue or sell to it any shares
of Common Stock or shares of any other capital stock or other equity interests
of the Company, (ii) no person has any preemptive rights, resale rights, rights
of first refusal or other rights to purchase any shares of Common Stock or
shares of any other capital stock of or other equity interests in the Company
and (iii) no person, other than the Underwriters, has the right to act as an
underwriter or as a financial advisor to the Company in connection with the
offer and sale of the Shares, in the case of each of the foregoing clauses
(i),
(ii) and (iii), whether as a result of the filing or effectiveness of the
Registration Statement or the sale of the Shares as contemplated thereby or
otherwise; no person has the right, contractual or otherwise, to cause the
Company to register under the Act any shares of Common Stock or shares of any
other capital stock of or other equity interests in the Company, or to include
any such shares or interests in the Registration Statement or the offering
contemplated thereby, whether as a result of the filing or effectiveness of
the
Registration Statement or the sale of the Shares as contemplated thereby or
otherwise;
(q) each
of
the Company and its subsidiaries has all necessary licenses, permits,
authorizations, consents and approvals and has made all necessary filings
required under any applicable law, regulation or rule, and has obtained all
necessary licenses, permits, authorizations, consents and approvals from other
persons, (i) as are necessary for such party to acquire and own, lease or
operate its properties and (ii) in order to conduct its respective businesses,
except where the failure to have or obtain such licenses, permits,
authorizations, consents or approvals would not, individually or in the
aggregate, have a Material Adverse Effect; the Company and each of its
subsidiaries have fulfilled and performed all of their obligations with respect
to such licenses, permits, authorizations, consents and approvals, except where
the failure to fulfill or perform such obligations would not, individually
or in
the aggregate, have a Material Adverse Effect; neither the Company nor any
of
its subsidiaries is in violation of, or in default under, or has received notice
of any proceedings relating to revocation or modification of, any such
license,
permit, authorization, consent or approval or any federal, state, local
or
foreign law, regulation or rule or any decree, order or judgment applicable
to
the Company or any of its subsidiaries, except where such violation, default,
revocation or modification would not, individually or in the aggregate,
have a
Material Adverse Effect;
-10-
(r) all
legal
or governmental proceedings, affiliate or related party transactions,
off-balance sheet transactions (including, without limitation, transactions
related to, and the existence of, “variable interest entities” within the
meaning of Financial Accounting Standards Board Interpretation No. 46),
statutes, regulations, contracts, licenses, agreements, properties, leases
or
documents of a character required to be described in the Registration Statement,
the Pre-Pricing Prospectus or the Prospectus or to be filed as an exhibit to
the
Registration Statement or any Incorporated Document have been and will be so
described or filed as required;
(s) other
than as set forth in the Registration Statement (excluding the exhibits
thereto), each Pre-Pricing Prospectus and the Prospectus, there are no actions,
suits, claims, investigations or proceedings pending or, to the Company’s
knowledge, threatened or contemplated to which the Company or any of its
subsidiaries or, to the Company’s knowledge, any of their respective directors
or officers is or would be a party or of which any of their respective
properties is or would be subject at law or in equity, before or by any federal,
state, local or foreign governmental or regulatory commission, board, body,
authority or agency, or before or by any self-regulatory organization or other
non-governmental regulatory authority (including, without limitation, the
NASDAQ), except any such action, suit, claim, investigation or proceeding which,
if resolved adversely to the Company or any of its subsidiaries, would not,
individually or in the aggregate, have a Material Adverse Effect or prevent
or
materially interfere with consummation of the transactions contemplated
hereby;
(t) Ernst
& Young LLP, whose report on the consolidated financial statements of the
Company and its subsidiaries is included and incorporated by reference in the
Registration Statement, the Pre-Pricing Prospectuses and the Prospectus, are
independent registered public accountants as required by the Act and by the
rules of the Public Company Accounting Oversight Board;
(u) PricewaterhouseCoopers
LLP, whose report on the consolidated financial statements of Harborside
Healthcare Corporation and its subsidiaries is incorporated by reference in
the
Registration Statement, the Pre-Pricing Prospectuses and the Prospectus, are
independent registered public accountants as required by the Act and by the
rules of the Public Company Accounting Oversight Board;
(v) the
financial statements included or incorporated by reference in the Registration
Statement, the Pre-Pricing Prospectus, the Prospectus and any Permitted Free
Writing Prospectus, together with the related notes and schedules, present
fairly, in all material respects, the consolidated financial position of the
Company and its subsidiaries as of the dates indicated, of Peak Medical
Corporation and its subsidiaries as of the dates indicated and of Harborside
Healthcare Corporate and its subsidiaries as of
-11-
the
dates
indicated and the consolidated results of operations, cash flows and changes
in
stockholder’s equity of the Company and its subsidiaries for the periods
specified, of Peak Medical Corporation and its subsidiaries for the periods
specified and of Harborside Healthcare Corporation, and have been prepared
in
compliance with the requirements of the Act and the Exchange Act and in
conformity with U.S. generally accepted accounting principles applied on a
consistent basis during the periods involved, except as may be expressly stated
in the related notes thereto; all pro forma financial statements and other
pro
forma financial data included or incorporated by reference in the Registration
Statement, any Pre-Pricing Prospectus, the Prospectus or any Permitted Free
Writing Prospectus comply with the requirements of the Act and the Exchange
Act,
including, without limitation, Article 11 thereof, and the assumptions used
in
the preparation of such pro forma financial statements and data are reasonable,
the pro forma adjustments used therein are appropriate to give effect to the
transactions or circumstances described therein and the pro forma adjustments
have been properly applied to the historical amounts in the compilation of
those
statements and data; the other financial data relating to the Company, Peak
Medical Corporation or Harborside Healthcare Corporation that are contained
or
incorporated by reference in the Registration Statement, any Pre-Pricing
Prospectus, the Prospectus or any Permitted Free Writing Prospectus are
accurately and fairly presented and prepared on a basis consistent with the
financial statements and books and records of the Company; there are no
financial statements (historical or pro forma) that are required to be included
or incorporated by reference in the Registration Statement, any Pre-Pricing
Prospectus or the Prospectus (including, without limitation, as required by
Rules 3-12 or 3-05 or Article 11 of Regulation S-X under the Act) that are
not included or incorporated by reference as required; the Company and its
subsidiaries do not have any material liabilities or obligations, direct or
contingent (including any off-balance sheet obligations), not described in
the
Registration Statement (excluding the exhibits thereto), each Pre-Pricing
Prospectus and the Prospectus; except as disclosed in the Registration Statement
(excluding the exhibits thereto), each Pre-Pricing Prospectus and the
Prospectus, neither the Company nor any of its subsidiaries is, together with
its “related parties,” the “primary beneficiary” of any “variable interest
entity” (as such terms are used in Financial Accounting Standards Board
Interpretation No. 46); and all disclosures contained or incorporated by
reference in the Registration Statement, any Pre-Pricing Prospectus, the
Prospectus or any Permitted Free Writing Prospectus regarding “non-GAAP
financial measures” (as such term is defined by the rules and regulations of the
Commission) comply with Regulation G of the Exchange Act and Item 10 of
Regulation S-K under the Act, to the extent applicable;
(w)
subsequent
to the respective dates as
of which information is given in the Registration Statement, the Pre-Pricing
Prospectuses, the Prospectus and the Permitted Free Writing Prospectuses,
if
any, in each case excluding any amendments or supplements to the foregoing
made
after the execution of this Agreement, there has not been (i) any material
adverse change, or any development involving a prospective material adverse
change, in the business, properties, management, financial condition or results
of operations of the Company and its subsidiaries taken as a whole, (ii)
any
transaction which is material to the Company and its subsidiaries taken as
a
whole, (iii) any obligation or liability, direct or contingent (including
any
off-balance sheet
-12-
obligations),
incurred by the Company or its subsidiaries, which is material to the Company
and its subsidiaries taken as a whole, (iv) any change in the capital stock
or
outstanding indebtedness of the Company or its subsidiaries or (v) any dividend
or distribution of any kind declared, paid or made on the capital stock of
the
Company or any of its subsidiaries;
(x) neither
the Company nor any subsidiary of the Company is, and at no time during which
a
prospectus is required by the Act to be delivered (whether physically or through
compliance with Rule 172 under the Act or any similar rule) in connection with
any sale of Shares will either of them be, and, after giving effect to the
offering and sale of the Shares, neither of them will be, an “investment
company” or an entity “controlled” by an “investment company,” as such terms are
defined in the Investment Company Act of 1940, as amended (the “Investment
Company Act”);
(y) other
than as set forth in the Registration Statement (excluding the exhibits
thereto), each Pre-Pricing Prospectus and the Prospectus, each of the Company
and its subsidiaries has good and marketable title to all property (real and
personal) described in the Registration Statement, the Pre-Pricing Prospectus,
the Prospectus and any Permitted Free Writing Prospectus as being owned by
any
of them, free and clear of all liens, claims, security interests or other
encumbrances, except such as do not, individually or in the aggregate,
materially affect the value of such property and do not materially interfere
with the use currently made and proposed to be made of the property by the
Company and its subsidiaries; all the property and buildings described in the
Registration Statement, the Pre-Pricing Prospectus, the Prospectus and any
Permitted Free Writing Prospectus, as being held under lease by the Company
or
any of its subsidiaries is held thereby under valid, subsisting and enforceable
leases;
(z) the
Company and its subsidiaries own, or have obtained valid and enforceable
licenses for, or other rights to use, the inventions, patent applications,
patents, trademarks (both registered and unregistered), tradenames, service
names, copyrights, trade secrets and other proprietary information described
in
the Registration Statement, the Pre-Pricing Prospectus, the Prospectus and
any
Permitted Free Writing Prospectus as being owned or licensed by them or which
are necessary for the conduct of their respective businesses as currently
conducted or as proposed to be conducted, except where the failure to own,
license or have such rights would not, individually or in the aggregate, have
a
Material Adverse Effect (collectively, “Intellectual
Property”);
(i)
there are no third parties who have or, to the Company’s knowledge, will be able
to establish rights to any Intellectual Property, except for, and to the extent
of, the ownership rights of the owners of the Intellectual Property which is
licensed to the Company; (ii) to the Company’s knowledge, there is no
infringement by third parties of any Intellectual Property; (iii) there is
no
pending or, to the Company’s knowledge, threatened action, suit, proceeding or
claim by others challenging the Company’s rights in or to any Intellectual
Property, and the Company is unaware of any facts which could form a reasonable
basis for any such action, suit, proceeding or claim; (iv) there is no pending
or, to the Company’s knowledge, threatened action, suit, proceeding or claim by
others challenging the validity, enforceability or scope of any Intellectual
Property, and the
-13-
Company
is unaware of any facts which could form a reasonable basis for any such
action,
suit, proceeding or claim; (v) there is no pending or, to the Company’s
knowledge, threatened action, suit, proceeding or claim by others that
the
Company or any of its subsidiaries infringes or otherwise violates any
patent,
trademark, copyright, tradename, service name, trade secret or other proprietary
rights of others, and the Company is unaware of any facts which could form
a
reasonable basis for any such action, suit, proceeding or claim; (vi) to
the
Company’s knowledge, there is no patent or patent application that contains
claims that interfere with the issued or pending claims of any of the
Intellectual Property; and (vii) to the Company’s knowledge, there is no prior
art that may render any patent application owned by the Company within
the
Intellectual Property unpatentable that has not been disclosed to the U.S.
Patent and Trademark Office;
(aa) neither
the Company nor any of its subsidiaries is engaged in any unfair labor practice;
except for matters which would not, individually or in the aggregate, have
a
Material Adverse Effect, (i) there is (A) no unfair labor practice complaint
pending or, to the Company’s knowledge, threatened against the Company or any of
its subsidiaries before the National Labor Relations Board, and no grievance
or
arbitration proceeding arising out of or under collective bargaining agreements
is pending or, to the Company’s knowledge, threatened, (B) no strike, labor
dispute, slowdown or stoppage pending or, to the Company’s knowledge, threatened
against the Company or any of its subsidiaries and (C) no union representation
dispute currently existing concerning the employees of the Company or any of
its
subsidiaries, (ii) to the Company’s knowledge, no union organizing activities
are currently taking place concerning the employees of the Company or any of
its
subsidiaries and (iii) there has been no violation of any federal, state, local
or foreign law relating to discrimination in the hiring, promotion or pay of
employees, any applicable wage or hour laws or any provision of the Employee
Retirement Income Security Act of 1974 (“ERISA”)
or the
rules and regulations promulgated thereunder concerning the employees of the
Company or any of its subsidiaries;
(bb) the
Company and its subsidiaries and their respective properties, assets and
operations are in compliance with, and the Company and each of its subsidiaries
hold all permits, authorizations and approvals required under, Environmental
Laws (as defined below), except to the extent that failure to so comply or
to
hold such permits, authorizations or approvals would not, individually or in
the
aggregate, have a Material Adverse Effect; there are no past, present or, to
the
Company’s knowledge, reasonably anticipated future events, conditions,
circumstances, activities, practices, actions, omissions or plans that could
reasonably be expected to give rise to any material costs or liabilities to
the
Company or any of its subsidiaries under, or to interfere with or prevent
compliance by the Company or any of its subsidiaries with, Environmental Laws;
except as would not, individually or in the aggregate, have a Material Adverse
Effect, neither the Company nor any of its subsidiaries (i) to the Company’s
knowledge, is the subject of any investigation, (ii) has received any notice
or
claim, (iii) is a party to or affected by any pending or, to the Company’s
knowledge, threatened action, suit or proceeding, (iv) is bound by any judgment,
decree or order or (v) has entered into any agreement, in each case relating
to
any alleged violation of any Environmental Law or any actual or alleged
release
or threatened release or cleanup at any location of any Hazardous Materials
(as
defined below) (as used herein,“Environmental
Law”
means
any federal, state, local or foreign law, statute, ordinance, rule, regulation,
order, decree, judgment, injunction, permit, license, authorization or
other
binding requirement, or common law, relating to health, safety or the
protection, cleanup or restoration of the environment or natural resources,
including those relating to the distribution, processing, generation, treatment,
storage, disposal, transportation, other handling or release or threatened
release of Hazardous Materials, and “Hazardous
Materials”
means
any material (including, without limitation, pollutants, contaminants,
hazardous
or toxic substances or wastes) that is regulated by or may give rise to
liability under any Environmental Law);
-14-
(cc) all
tax
returns required to be filed by the Company or any of its subsidiaries have
been
filed, and all taxes and other assessments of a similar nature (whether imposed
directly or through withholding) including any interest, additions to tax or
penalties applicable thereto due or claimed to be due from such entities have
been paid, other than those being contested in good faith and for which adequate
reserves have been provided;
(dd) the
Company and each of its subsidiaries maintain insurance covering their
respective properties, operations, personnel and businesses as the Company
reasonably deems adequate (after giving effect to any self-insurance and
retention levels compatible with the following standards); such insurance
insures against such losses and risks to an extent which is adequate in
accordance with customary industry practice to protect the Company and its
subsidiaries and their respective businesses; all such insurance is fully in
force on the date hereof and will be fully in force at the time of purchase
and
each additional time of purchase, if any; neither the Company nor any of its
subsidiaries has reason to believe that it will not be able to renew any such
insurance as and when such insurance expires;
(ee) neither
the Company nor any of its subsidiaries has sustained since the date of the
last
audited consolidated financial statements included and incorporated by reference
in the Registration Statement, the Pre-Pricing Prospectus and the Prospectus
any
material loss or interference with its business from fire, explosion, flood
or
other calamity, whether or not covered by insurance, or from any labor dispute
or court or governmental action, order or decree;
(ff) neither
the Company nor any of its subsidiaries has sent or received any communication
regarding termination of, or intent not to renew, any of the contracts or
agreements referred to or described in any Pre-Pricing Prospectus, the
Prospectus or any Permitted Free Writing Prospectus, or referred to or described
in, or filed as an exhibit to, the Registration Statement or any Incorporated
Document, and no such termination or non-renewal has been threatened by the
Company or any of its subsidiaries or, to the Company’s knowledge, any other
party to any such contract or agreement;
(gg) the
Company and each of its subsidiaries maintain a system of internal accounting
controls sufficient to provide reasonable assurance that (i) transactions are
executed
in accordance with management’s general or specific authorization; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles
and to
maintain accountability for assets; (iii) access to assets is permitted
only in
accordance with management’s general or specific authorization; and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences;
-15-
(hh) the
Company has established and maintains and evaluates “disclosure controls and
procedures” (as such term is defined in Rule 13a-15 and 15d-15 under the
Exchange Act) and “internal control over financial reporting” (as such term is
defined in Rule 13a-15 and 15d-15 under the Exchange Act); such disclosure
controls and procedures are designed to ensure that material information
relating to the Company, including its consolidated subsidiaries, is made known
to the Company’s Chief Executive Officer and its Chief Financial Officer by
others within those entities, and such disclosure controls and procedures are
effective to perform the functions for which they were established; the
Company’s independent auditors and the Audit Committee of the Board of Directors
of the Company have been advised of: (i) all significant deficiencies, if any,
in the design or operation of internal controls which could adversely affect
the
Company’s ability to record, process, summarize and report financial data; and
(ii) all fraud, if any, whether or not material, that involves management or
other employees who have a role in the Company’s internal controls; all material
weaknesses, if any, in internal controls have been identified to the Company’s
independent auditors; since the date of the most recent evaluation of such
disclosure controls and procedures and internal controls, there have been no
changes in internal controls or in other factors that have materially affected
or are reasonably likely to materially affect internal controls, including
any
corrective actions with regard to significant deficiencies and material
weaknesses; the
principal executive officers (or their equivalents) and principal financial
officers (or their equivalents) of the Company have made all certifications
required by the Xxxxxxxx-Xxxxx Act of 2002 (the “Xxxxxxxx-Xxxxx
Act”)
and
any related rules and regulations promulgated by the Commission, and the
statements contained in each such certification were complete and correct when
made; the Company, its subsidiaries and the Company’s directors and officers are
each in compliance in all material respects with all applicable effective
provisions of the Xxxxxxxx-Xxxxx Act and the rules and regulations of the
Commission and the NASDAQ
promulgated
thereunder;
(ii) the
Company has not, directly or indirectly, including through any subsidiary:
(i) extended credit, arranged to extend credit, or renewed any extension of
credit, in the form of a personal loan, to or for any director or executive
officer of the Company, or to or for any family member or affiliate of any
director or executive officer of the Company; or (ii) made any material
modification, including any renewal thereof, to any term of any personal loan
to
any director or executive officer of the Company, or any family member or
affiliate of any director or executive officer, which loan was outstanding
on
July 30, 2002;
(jj) each
“forward-looking statement” (within the meaning of Section 27A of
the
Act
or Section 21E of the Exchange Act) contained or incorporated by reference
in
the Registration Statement, the Pre-Pricing Prospectus, the Prospectus
and any
Permitted Free Writing Prospectus has been made or reaffirmed with a reasonable
basis and in good faith;
-16-
(kk) all
statistical or market-related data included or incorporated by reference in
the
Registration Statement, the Pre-Pricing Prospectus, the Prospectus and any
Permitted Free Writing Prospectus are based on or derived from sources that
the
Company believes to be reliable and accurate, and the Company has obtained
the
written consent to the use of such data from such sources to the extent
required;
(ll) neither
the Company nor any of its subsidiaries nor, to the Company’s knowledge, any
employee or agent of the Company or any of its subsidiaries has made any payment
of funds of the Company or any of its subsidiaries or received or retained
any
funds in violation of any law, rule or regulation, which payment, receipt or
retention of funds is of a character required to be disclosed in the
Registration Statement, any Pre-Pricing Prospectus or the
Prospectus;
(mm) neither
the Company nor any of its subsidiaries nor any of their respective directors,
officers, affiliates or controlling persons has taken, directly or indirectly,
any action designed, or which has constituted or might reasonably be expected
to
cause or result in the stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the
Shares;
(nn) to
the
Company’s knowledge, there are no affiliations or associations between any
member of the NASD and (i) the Company or (ii) any of the Company’s
officers, directors or 5% or greater security holders or any beneficial owner
of
the Company’s unregistered equity securities that were acquired at any time on
or after the 180th day immediately preceding the date the Registration Statement
was initially filed with the Commission, except as disclosed in the Registration
Statement (excluding the exhibits thereto), the Pre-Pricing Prospectuses and
the
Prospectus;
(oo) to
the
extent required in connection with their respective businesses, each of the
Company and its subsidiaries has the requisite provider number or other
authorization to xxxx, and to participate in, the Medicare program and the
respective Medicaid program in the state or states in which such entity
operates, with the benefit of a current and valid provider contract, unless
failure to maintain such provider number, other authorization or contract would
not, individually or in the aggregate, have a Material Adverse Effect; neither
the Company nor any of its subsidiaries is subject to any pending, threatened
or
has received notice of or, to the Company’s knowledge, a contemplated action,
investigation, survey or audit which could reasonably be expected to result
in a
revocation of any provider number, authorization or contract or in the Company’s
or any of its subsidiaries’ exclusion from the Medicare or any state Medicaid
programs;
(pp) the
Company and its subsidiaries are in compliance with applicable
provisions
of federal or state laws governing Medicare or any state Medicaid programs
and
any statutes or any regulations promulgated pursuant to such laws, including,
without limitation, Sections 1320a-7a and 1320a-7b of Title 42 of the United
States Code, and related state or local statutes or regulations, corporate
compliance and settlement agreements or any rules of professional conduct,
except for such provisions the violation of which would not, individually
or in
the aggregate, have a Material Adverse Effect; no individual with an ownership
or control interest, as defined in 42 U.S.C. § 1320a-3(a)(3), in the Company or
any of its subsidiaries, or who is an officer, director or managing employee
as
defined in 42 U.S.C. § 1320a-5(b), of the Company or any of its subsidiaries is
a person who would be excluded from participation in any federal health
care
program as described in 42 U.S.C. § 1320a-7(b)(8)(B), except as would not,
individually or in the aggregate, have a Material Adverse Effect; the Company’s
and each of its subsidiaries’ business practices are in compliance with federal
or state laws regarding physician ownership of (or financial relationship
with)
and referral to entities providing healthcare related goods or services,
or laws
requiring disclosure of financial interests held by physicians in entities
to
which they may refer patients for the provisions of health care related
goods or
services, except for those laws, the violation of which would not, individually
or in the aggregate, have a Material Adverse Effect; and except as disclosed
in
the Registration Statement (excluding the exhibits thereto), each Pre-Pricing
Prospectus and the Prospectus, there are no Medicare, Medicaid or any other
recoupment or recoupments of any governmental or private health care payor
being
sought, requested or claimed or, to the Company’s knowledge, threatened against
the Company or any of its subsidiaries, which, individually or in the aggregate,
would result in a Material Adverse Effect;
-17-
(qq) the
Company has not received any notice from the NASDAQ regarding the delisting
of
the Common Stock from the NASDAQ;
(rr) neither
the Company, its subsidiaries nor, to the knowledge of the Company, any officer,
director, employee or other agent of the Company or any of its subsidiaries
has
engaged, directly or indirectly, in the following activities: (i) knowingly
and willfully offering, paying, soliciting or receiving any remuneration, 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 other
third party payor, 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 other third party payor; or (ii) knowingly and
willfully making or causing to be made a false statement or representation
of a
material fact in connection with the receipt of or claim for any benefit or
payment under the Medicare or Medicaid program or from any other third party
payor.
(ss) 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; any amounts
established as provisions for Medicare and Medicaid adjustments or overpayments
and adjustments or overpayments by any other third party payors on the
financial
statements of the Company are sufficient in all material respects to pay
any
amounts for which the Company and its subsidiaries may be liable for such
adjustments or overpayments;
-18-
(tt) no
written notice of any condemnation of or zoning change affecting the properties
or any part thereof of the Company or any of its subsidiaries has been received,
or, to the Company’s knowledge, threatened, that if consummated would,
individually or in the aggregate, have a Material Adverse Effect;
(uu) except
pursuant to this Agreement or as set forth in the Registration Statement, the
Pre-Pricing Prospectus and the Prospectus, neither the Company nor any of its
subsidiaries has incurred any liability for any finder’s or broker’s fee or
agent’s commission in connection with the execution and delivery of this
Agreement or the consummation of the transactions contemplated
hereby;
(vv) each
of
the Company and its subsidiaries or any other person acting on behalf of the
Company or its subsidiaries including, without limitation, any director,
officer, agent or employee of the Company or its subsidiaries, has not, directly
or indirectly, while acting on behalf of the Company or its subsidiaries
(i) used any corporate funds for unlawful contributions, gifts,
entertainment or other unlawful expenses relating to political activity;
(ii) made any unlawful payment to foreign or domestic government officials
or employees or to foreign or domestic political parties or campaigns from
corporate funds; (iii) violated any provision of the Foreign Corrupt
Practices Act of 1977, as amended; or (iv) made any other unlawful
payment.
In
addition, any certificate signed by any officer of the Company or any of its
subsidiaries and delivered to the Underwriters or counsel for the Underwriters
in connection with the offering of the Shares shall be deemed to be a
representation and warranty by the Company or its subsidiary, as the case may
be, as to matters covered thereby, to each Underwriter.
4. Certain
Covenants of the Company.
The
Company hereby agrees:
(a) to
furnish such information as may be required and otherwise to cooperate in
qualifying the Shares for offering and sale under the securities or blue sky
laws of such states or other jurisdictions as you may designate and to maintain
such qualifications in effect so long as you may request for the distribution
of
the Shares; provided,
however,
that
the Company shall not be required to qualify as a foreign corporation, consent
to the service of process under the laws of any such jurisdiction (except
service of process with respect to the offering and sale of the Shares) or
subject itself to taxation in respect of doing business in any such jurisdiction
in which it is not otherwise subject to such taxation; and to promptly advise
you of the receipt by the Company of any notification with respect to the
suspension of the qualification of the Shares for offer or sale in any
jurisdiction
or the initiation or threatening of any proceeding for such
purpose;
-19-
(b) to
make
available to the Underwriters in New York City, as soon as practicable after
this Agreement becomes effective, and thereafter from time to time to furnish
to
the Underwriters, as many copies of the Prospectus (or of the Prospectus as
amended or supplemented if the Company shall have made any amendments or
supplements thereto after the effective date of the Registration Statement)
as
the Underwriters may request for the purposes contemplated by the Act; in case
any Underwriter is required to deliver (whether physically or through compliance
with Rule 172 under the Act or any similar rule), in connection with the sale
of
the Shares, a prospectus after the nine-month period referred to in Section
10(a)(3) of the Act, or after the time a post-effective amendment to the
Registration Statement is required pursuant to Item 512(a) of Regulation S-K
under the Act, the Company will prepare, at its expense, promptly upon request
such amendment or amendments to the Registration Statement and the Prospectus
as
may be necessary to permit compliance with the requirements of Section 10(a)(3)
of the Act or Item 512(a) of Regulation S-K under the Act, as the case may
be;
(c) if,
at
the time this Agreement is executed and delivered, it is necessary or
appropriate for a post-effective amendment to the Registration Statement, or
a
Registration Statement under Rule 462(b) under the Act, to be filed with the
Commission and become effective before the Shares may be sold, the Company
will
use its best efforts to cause such post-effective amendment or such Registration
Statement to be filed and become effective, and will pay any applicable fees
in
accordance with the Act, as soon as possible; and the Company will advise you
promptly and, if requested by you, will confirm such advice in writing, (i)
when
such post-effective amendment or such Registration Statement has become
effective, and (ii) if Rule 430A under the Act is used, when the Prospectus
is
filed with the Commission pursuant to Rule 424(b) under the Act (which the
Company agrees to file in a timely manner in accordance with such
Rules);
(d) to
advise
you promptly, confirming such advice in writing, of any request by the
Commission for amendments or supplements to the Registration Statement, any
Pre-Pricing Prospectus, the Prospectus or any Permitted Free Writing Prospectus
or for additional information with respect thereto, or of notice of institution
of proceedings for, or the entry of a stop order, suspending the effectiveness
of the Registration Statement and, if the Commission should enter a stop order
suspending the effectiveness of the Registration Statement, to use its best
efforts to obtain the lifting or removal of such order as soon as possible;
to
advise you promptly of any proposal to amend or supplement the Registration
Statement, any Pre-Pricing Prospectus or the Prospectus, and to provide you
and
Underwriters’ counsel copies of any such documents for review and comment a
reasonable amount of time prior to any proposed filing and to file no such
amendment or supplement to which you shall object in writing;
(e) subject
to Section 4(d)
hereof,
to file promptly all reports and documents and any preliminary or definitive
proxy or information statement required to be filed by the Company with the
Commission in order to comply with the Exchange Act for so long
as
a
prospectus is required by the Act to be delivered (whether physically or
through
compliance with Rule 172 under the Act or any similar rule) in connection
with
any sale of Shares; and to provide you, for your review and comment, with
a copy
of such reports and statements and other documents to be filed by the Company
pursuant to Section 13, 14 or 15(d) of the Exchange Act during such period
a
reasonable amount of time prior to any proposed filing, and to promptly
notify
you of such filing;
-20-
(f) to
advise
the Underwriters promptly of the happening of any event within the period during
which a prospectus is required by the Act to be delivered (whether physically
or
through compliance with Rule 172 under the Act or any similar rule) in
connection with any sale of Shares, which event could require the making of
any
change in the Prospectus then being used so that the Prospectus would not
include an untrue statement of a material fact or omit to state a material
fact
necessary in order to make the statements therein, in the light of the
circumstances under which they are made, not misleading, and to advise the
Underwriters promptly if, during such period, it shall become necessary to
amend
or supplement the Prospectus to cause the Prospectus to comply with the
requirements of the Act, and, in each case, during such time, subject to Section
4(d)
hereof,
to prepare and furnish, at the Company’s expense, to the Underwriters promptly
such amendments or supplements to such Prospectus as may be necessary to reflect
any such change or to effect such compliance;
(g) to make generally available to its security holders an earnings statement of the Company (which will satisfy the provisions of Section 11(a) of the Act) covering a period of twelve months beginning after the effective date of the Registration Statement (as defined in Rule 158(c) under the Act) as soon as is reasonably practicable after the termination of such twelve-month period but in any case not later than May 10, 2007;
(g) to make generally available to its security holders an earnings statement of the Company (which will satisfy the provisions of Section 11(a) of the Act) covering a period of twelve months beginning after the effective date of the Registration Statement (as defined in Rule 158(c) under the Act) as soon as is reasonably practicable after the termination of such twelve-month period but in any case not later than May 10, 2007;
(h) to
furnish to you four copies of the Registration Statement, as initially filed
with the Commission, and of all amendments thereto (including all exhibits
thereto and documents incorporated by reference therein) and sufficient copies
of the foregoing (other than exhibits) for distribution of a copy to each of
the
other Underwriters;
(i) to
furnish to you promptly and, upon request, to each of the other Underwriters
for
a period of two years from the date of this Agreement (i) copies of any
reports, proxy statements, or other communications which the Company shall
send
to its stockholders or shall from time to time publish or publicly disseminate,
(ii) copies of all annual, quarterly, transition and current reports filed
with the Commission on Forms 10-K, 10-Q and 8-K, or such other similar
forms as may be designated by the Commission, (iii) copies of documents or
reports filed with any national securities exchange on which any class of
securities of the Company is listed, and (iv) such other information as you
may reasonably request regarding the Company or its subsidiaries; provided,
however,
that in
no case shall the Company be required to furnish materials pursuant to this
paragraph which are filed and publicly accessible via the Commission’s XXXXX
database;
(j) to
furnish to you as early as practicable prior to the time of purchase and
-21-
any
additional time of purchase, as the case may be, but not later than two business
days prior thereto, a copy of the latest available unaudited interim and monthly
consolidated financial statements, if any, of the Company and its subsidiaries
which have been read by the Company’s independent registered public accountants,
as stated in their letter to be furnished pursuant to Section 6(b)
hereof;
(k) to
apply
the net proceeds from the sale of the Shares in the manner set forth under
the
caption “Use of Proceeds” in the Prospectus Supplement;
(l) to
pay
all costs, expenses, fees and taxes in connection with (i) the preparation
and
filing of the Registration Statement, each Basic Prospectus, each Pre-Pricing
Prospectus, the Prospectus Supplement, the Prospectus, each Permitted Free
Writing Prospectus and any amendments or supplements thereto, and the printing
and furnishing of copies of each thereof to the Underwriters and to dealers
(including costs of mailing and shipment), (ii) the registration, issue, sale
and delivery of the Shares including any stock or transfer taxes and stamp
or
similar duties payable upon the sale, issuance or delivery of the Shares to
the
Underwriters, (iii) the producing, word processing and/or printing of this
Agreement, any Agreement Among Underwriters, any dealer agreements, any Powers
of Attorney and any closing documents (including compilations thereof) and
the
reproduction and/or printing and furnishing of copies of each thereof to the
Underwriters and (except closing documents) to dealers (including costs of
mailing and shipment), (iv) the qualification of the Shares for offering and
sale under state or foreign laws and the determination of their eligibility
for
investment under state or foreign law (including the reasonable legal fees
and
filing fees and other disbursements of counsel for the Underwriters) and the
printing and furnishing of copies of any blue sky surveys or legal investment
surveys to the Underwriters and to dealers, (v) any listing of the Shares on
any
securities exchange or qualification of the Shares for quotation on the NASDAQ
and any registration thereof under the Exchange Act, (vi) any filing for review
of the public offering of the Shares by the NASD, including the reasonable
legal
fees and filing fees and other disbursements of counsel to the Underwriters
relating to NASD matters, (vii) the fees and disbursements of any transfer
agent
or registrar for the Shares, (viii) the costs and expenses of the Company
relating to presentations or meetings undertaken in connection with the
marketing of the offering and sale of the Shares to prospective investors and
the Underwriters’ sales forces, including, without limitation, expenses
associated with the production of road show slides and graphics, fees and
expenses of any consultants engaged in connection with the road show
presentations, travel, lodging and other expenses incurred by the officers
of
the Company and any such consultants, and the cost of any aircraft chartered
in
connection with the road show, and
(ix)
the
performance of the Company’s other obligations hereunder;
(m) to
comply
with Rule 433(d) under the Act (without reliance on Rule 164(b) under the Act)
and with Rule 433(g) under the Act;
(n) beginning
on the date hereof and ending on, and including, the date that is 90 days after
the date hereof (the “Lock-Up
Period”),
without the prior written consent of
-22-
UBS,
not
to
(i)
sell, offer to sell, contract or agree to sell, hypothecate, pledge, grant
any
option to purchase or otherwise dispose of or agree to dispose of, directly
or
indirectly, or establish or increase a put equivalent position or liquidate
or
decrease a call equivalent position within the meaning of Section 16 of
the
Exchange Act and the rules and regulations of the Commission promulgated
thereunder, with respect to, any Common Stock or securities convertible
into or
exchangeable or exercisable for Common Stock or warrants or other rights
to
purchase Common Stock or any other securities of the Company that are
substantially similar to Common Stock, (ii) file or cause to become effective
a
registration statement under the Act relating to the offer and sale of
any
shares of Common Stock or securities convertible into or exercisable or
exchangeable for Common Stock or warrants or other rights to purchase Common
Stock or any other securities of the Company that are substantially similar
to
Common Stock, (iii)enter
into any swap or other arrangement that transfers to another, in whole
or in
part, any of the economic consequences of ownership of Common Stock or
any
securities convertible into or exercisable or exchangeable for Common Stock,
or
warrants or other rights to purchase Common Stock or any such securities,
whether any such transaction is to be settled by delivery of Common Stock
or
such other securities, in cash or otherwise or (iv) publicly announce an
intention to effect any transaction specified in clause (i), (ii) or (iii),
except, in each case, for (A) the registration of the offer and sale of the
Shares as contemplated by this Agreement, (B) issuances of Common Stock
upon the exercise of options or warrants disclosed as outstanding in the
Registration Statement (excluding the exhibits thereto), each Pre-Pricing
Prospectus and the Prospectus, (C) the issuance of employee stock options
not exercisable during the Lock-Up Period pursuant to stock option plans
described in the Registration Statement (excluding the exhibits thereto),
each
Pre-Pricing Prospectus and the Prospectus and (D) the issuance of Common
Stock pursuant to the Company’s Plan of Reorganization; provided,
however,
that if
(a) during the period that begins on the date that is fifteen
(15) calendar days plus three (3) business days before the last day of
the Lock-Up Period and ends on the last day of the Lock-Up Period, the
Company
issues an earnings release or material news or a material event relating
to the
Company occurs; or (b) prior to the expiration of the Lock-Up Period, the
Company announces that it will release earnings results during the sixteen
(16) day period beginning on the last day of the Lock-Up Period, then the
restrictions imposed by this Section 4(n) shall continue to apply until the
expiration of the date that is fifteen (15) calendar days plus three
(3) business days after the date on which the issuance of the earnings
release or the material news or material event occurs;
(o) not,
at
any time at or after the execution of this Agreement, to offer or sell any
Shares by means of any “prospectus” (within the meaning of the Act), or use any
“prospectus” (within the meaning of the Act) in connection with the offer or
sale of the Shares, in each case other than the Prospectus;
(p) the
Company will not, and will cause its subsidiaries not to take, directly or
indirectly, any action designed, or which will constitute, or has constituted,
or might reasonably be expected to cause or result in the stabilization or
manipulation of the price of any security of the Company to facilitate the
sale
or resale of the Shares; provided,
however,
that
this covenant does not relate to any action taken by the Underwriters;
-23-
(q) to
use
its best efforts to cause the Shares to be listed for quotation on the NASDAQ
and to maintain such listing for the Common Stock, including the Shares; and
(r) to
maintain a transfer agent and, if necessary under the jurisdiction of
incorporation of the Company, a registrar for the Common Stock.
5. Reimbursement
of Underwriters’ Expenses.
If the
Shares are not delivered for any reason other than the termination of this
Agreement pursuant to the fifth paragraph of Section 8
hereof
or the default by one or more of the Underwriters in its or their respective
obligations hereunder, the Company shall, in addition to paying the amounts
described in Section 4(l)
hereof,
reimburse the Underwriters for all of their out-of-pocket expenses, including
the reasonable fees and disbursements of their counsel.
6. Conditions
of Underwriters’ Obligations.
The
several obligations of the Underwriters hereunder are subject to the accuracy
of
the representations and warranties on the part of the Company on the date
hereof, at the time of purchase and, if applicable, at the additional time
of
purchase, the performance by the Company of its obligations hereunder and to
the
following additional conditions precedent:
(a) The
Company shall furnish to you at the time of purchase and, if applicable, at
the
additional time of purchase, opinions of O’Melveny & Xxxxx LLP, counsel for
the Company, and Xxxxxxx Xxxxxx, Executive Vice President and General Counsel
of
the Company, each addressed to the Underwriters and dated the time of purchase
or the additional time of purchase, as the case may be, with executed copies
for
each of the other Underwriters and in form and substance satisfactory to counsel
for the Underwriters, in substantially the form set forth in Exhibit
C
and
D
hereto,
respectively.
(b) You
shall
have received from Ernst & Young LLP letters dated, respectively, the date
of this Agreement, the time of purchase and, if applicable, the additional
time
of purchase, and addressed to the Underwriters (with executed copies for each
of
the Underwriters) in the forms heretofore approved by UBS, which letters shall
cover, without limitation, the various financial disclosures, if any, contained
in the Permitted Free Writing Prospectuses, if any.
(c) You
shall
have received from KPMG LLP letters dated, respectively, the date of this
Agreement, the time of purchase and, if applicable, the additional time of
purchase, and addressed to the Underwriters (with executed copies for each
of
the Underwriters) in the forms heretofore approved by UBS, which letters shall
cover, without limitation, the various financial disclosures, if any, contained
in the Permitted Free Writing Prospectuses, if any.
(d) You
shall
have received from PricewaterhouseCoopers LLP letters dated, respectively,
the
date of this Agreement, the time of purchase and, if applicable, the additional
time of purchase, and addressed to the Underwriters (with executed copies for
each of the Underwriters) in the forms heretofore approved by UBS, which letters
shall
cover,
without limitation, the various financial disclosures, if any, contained
in the
Permitted Free Writing Prospectuses, if any.
-24-
(e) You
shall
have received at the time of purchase and, if applicable, at the additional
time
of purchase, the favorable opinion of Cravath, Swaine & Xxxxx LLP, counsel
for the Underwriters, dated the time of purchase or the additional time of
purchase, as the case may be, in form and substance reasonably satisfactory
to
UBS.
(f) No
Prospectus or amendment or supplement to the Registration Statement or the
Prospectus, including documents deemed to be incorporated by reference therein,
shall have been filed to which you shall have objected in writing..
(g) The
Registration Statement and any registration statement required to be filed,
prior to the sale of the Shares, under the Act pursuant to Rule 462(b) shall
have been filed and shall have become effective under the Act. The Prospectus
Supplement shall have been filed with the Commission pursuant to Rule 424(b)
under the Act at or before 5:30 P.M., New York City time, on the second full
business day after the date of this Agreement (or such earlier time as may
be
required under the Act).
(h) Prior
to
and at the time
of
purchase, and, if applicable, the additional time of purchase, (i) no stop
order with respect to the effectiveness of the Registration Statement shall
have
been issued under the Act or proceedings initiated under Section 8(d) or
8(e) of the Act; (ii) the Registration Statement and all amendments thereto
shall not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading; (iii) none of the Pre-Pricing Prospectuses or the
Prospectus, and no amendment or supplement thereto, shall include an untrue
statement of a material fact or omit to state a material fact necessary in
order
to make the statements therein, in the light of the circumstances under which
they are made, not misleading; (iv) the Disclosure Package and all
amendments or supplements thereto, shall not include an untrue statement of
a
material fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they are
made,
not misleading; and (v) none of the Permitted Free Writing Prospectuses, if
any, shall contain any information that conflicts with the information contained
in the Registration Statement, any Pre-Pricing Prospectus or the Prospectus,
including any document incorporated by reference therein or, when taken together
with each Pre-Pricing Prospectus, shall include an untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they are
made,
not misleading.
(i) Between
the time of execution of this Agreement and the time of purchase or the
additional time of purchase, as the case may be, (i) no material adverse
change or any development involving a prospective material adverse change in
the
business, properties, management, financial condition or results of operations
of the Company and its subsidiaries taken as a whole shall occur or become
known
and (ii) no transaction which is material and adverse to the Company has
been entered into by the Company or
any
of
its subsidiaries.
-25-
(j) The
Company will, at the time of purchase and, if applicable, at the additional
time
of purchase, deliver to you a certificate of its Chief Executive Officer and
its
Chief Financial Officer, dated the time of purchase or the additional time
of
purchase, as the case may be, in the form attached as Exhibit
E
hereto.
(k) You
shall
have received the agreement (each, a “Lock-Up
Agreement”),
in
the form set forth as Exhibit
A
hereto
of each of the persons named in Exhibit
A-1
hereto
and in the form set forth as Exhibit
B
of each
of the persons named in Exhibit
B-1,
and
each such Lock-Up Agreement shall be in full force and effect at the time of
purchase and the additional time of purchase, as the case may be.
(l) The
Company shall have furnished to you such other documents and certificates as
to
the accuracy and completeness of any statement in the Registration Statement,
any Pre-Pricing Prospectus, the Prospectus or any Permitted Free Writing
Prospectus as of the time of purchase and, if applicable, the additional time
of
purchase, as you may reasonably request.
(m) The
Shares shall have been approved for quotation on the NASDAQ, subject only to
notice of issuance at or prior to the time of purchase or the additional time
of
purchase, as the case may be.
(n) The
NASD
shall not have raised any objection with respect to the fairness or
reasonableness of the underwriting, or other arrangements of the transactions,
contemplated hereby that has not been satisfied.
(o) The
Company will, at the time of purchase and, if applicable, at the additional
time
of purchase, deliver to you a certificate of its Chief Financial Officer, dated
the time of purchase or the additional time of purchase, as the case may be,
in
the form attached as Exhibit
F
hereto.
7. Effective
Date of Agreement; Termination.
This
Agreement shall become effective when the parties hereto have executed and
delivered this Agreement.
The
obligations of the several Underwriters hereunder shall be subject to
termination in the absolute discretion of UBS, if (1) since the time of
execution of this Agreement or the earlier respective dates as of which
information is given in the Registration Statement, the Pre-Pricing
Prospectuses, the Prospectus and the Permitted Free Writing Prospectuses, if
any, there has been any material adverse change or any development involving
a
prospective material adverse change in the business, properties, management,
financial condition or results of operations of the Company and its subsidiaries
taken as a whole, which would, in the sole judgment of UBS, make it
impracticable or inadvisable to proceed with the public offering or the delivery
of the Shares on the terms and in the manner contemplated in the Registration
Statement, the Pre-Pricing Prospectuses, the Prospectus and the Permitted Free
Writing Prospectuses, if any, or (2) since the time of execution of this
Agreement, there shall
-26-
have
occurred: (A) a suspension or material limitation in trading in securities
generally on the NYSE, the American Stock Exchange or the NASDAQ; (B) a
suspension or material limitation in trading in the Company’s securities on the
NASDAQ; (C) a general moratorium on commercial banking activities declared
by either federal or New York State authorities or a material disruption in
commercial banking or securities settlement or clearance services in the
United
States; (D) an outbreak or escalation of hostilities or acts of terrorism
involving the United States or a declaration by the United States of a
national
emergency or war; or (E) any other calamity or crisis or any change in
financial, political or economic conditions in the United States or elsewhere,
if the effect of any such event specified in clause (D) or (E), in the
sole
judgment of UBS, makes it impractical or inadvisable to proceed with the
public
offering or the delivery of the Shares on the terms and in the manner
contemplated in the Registration Statement, the Pre-Pricing Prospectuses,
the
Prospectus and the Permitted Free Writing Prospectuses, if
any.
If
UBS
elects to terminate this Agreement as provided in this Section 7,
the
Company and each other Underwriter shall be notified promptly in
writing.
If
the
sale to the Underwriters of the Shares, as contemplated by this Agreement,
is
not carried out by the Underwriters for any reason permitted under this
Agreement, or if such sale is not carried out because the Company shall be
unable to comply with any of the terms of this Agreement, the Company shall
not
be under any obligation or liability under this Agreement (except to the extent
provided in Sections 4(l), 5
and
9
hereof),
and the Underwriters shall be under no obligation or liability to the Company
under this Agreement (except to the extent provided in Section 9
hereof)
or to one another hereunder.
8. Increase
in Underwriters’ Commitments.
Subject
to Sections 6
and
7
hereof,
if any Underwriter shall default in its obligation to take up and pay for the
Firm Shares to be purchased by it hereunder (otherwise than for a failure of
a
condition set forth in Section 6
hereof
or a reason sufficient to justify the termination of this Agreement under the
provisions of Section 7
hereof)
and if the number of Firm Shares which all Underwriters so defaulting shall
have
agreed but failed to take up and pay for does not exceed 10% of the total number
of Firm Shares, the non-defaulting Underwriters (including the Underwriters,
if
any, substituted in the manner set forth below) shall take up and pay for (in
addition to the aggregate number of Firm Shares they are obligated to purchase
pursuant to Section 1
hereof)
the number of Firm Shares agreed to be purchased by all such defaulting
Underwriters, as hereinafter provided. Such Shares shall be taken up and paid
for by such non-defaulting Underwriters in such amount or amounts as you may
designate with the consent of each Underwriter so designated or, in the event
no
such designation is made, such Shares shall be taken up and paid for by all
non-defaulting Underwriters pro rata in proportion to the aggregate number
of
Firm Shares set forth opposite the names of such non-defaulting Underwriters
in
Schedule
A.
Without
relieving any defaulting Underwriter from its obligations hereunder, the Company
agrees with the non-defaulting Underwriters that it will not sell any Firm
Shares hereunder unless all of the Firm Shares are purchased by the Underwriters
(or by substituted Underwriters selected by you with the approval of the Company
or selected by the Company with your approval).
-27-
If
a new
Underwriter or Underwriters are substituted by the Underwriters or by the
Company for a defaulting Underwriter or Underwriters in accordance with the
foregoing provision, the Company or you shall have the right to postpone the
time of purchase for a period not exceeding five business days in order that
any
necessary changes in the Registration Statement and the Prospectus and other
documents may be effected.
The
term
“Underwriter” as used in this Agreement shall refer to and include any
Underwriter substituted under this Section 8
with
like effect as if such substituted Underwriter had originally been named in
Schedule
A
hereto.
If
the
aggregate number of Firm Shares which the defaulting Underwriter or Underwriters
agreed to purchase exceeds 10% of the total number of Firm Shares which all
Underwriters agreed to purchase hereunder, and if neither the non-defaulting
Underwriters nor the Company shall make arrangements within the five business
day period stated above for the purchase of all the Firm Shares which the
defaulting Underwriter or Underwriters agreed to purchase hereunder, this
Agreement shall terminate without further act or deed and without any liability
on the part of the Company to any Underwriter and without any liability on
the
part of any non-defaulting Underwriter to the Company. Nothing in this
paragraph, and no action taken hereunder, shall relieve any defaulting
Underwriter from liability in respect of any default of such Underwriter under
this Agreement.
9. Indemnity
and Contribution.
(a) The
Company agrees to indemnify, defend and hold harmless each Underwriter, its
partners, directors and officers, and any person who controls any Underwriter
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act,
and the successors and assigns of all of the foregoing persons, from and against
any loss, damage, expense, liability or claim (including the reasonable cost
of
investigation) which, jointly or severally, any such Underwriter or any such
person may incur under the Act, the Exchange Act, the common law or otherwise,
insofar as such loss, damage, expense, liability or claim arises out of or
is
based upon (i) any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement (or in the Registration Statement
as amended by any post-effective amendment thereof by the Company) or arises
out
of or is based upon any omission or alleged omission to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading, except insofar as any such loss, damage, expense, liability or
claim
arises out of or is based upon any untrue statement or alleged untrue statement
of a material fact contained in, and in conformity with information concerning
such Underwriter furnished in writing by or on behalf of such Underwriter
through you to the Company expressly for use in, the Registration Statement
or
arises out of or is based upon any omission or alleged omission to state a
material fact in the Registration Statement in connection with such information,
which material fact was not contained in such information and which material
fact was required to be stated in such Registration Statement or was necessary
to make such information not misleading or (ii) any untrue statement or alleged
untrue statement of a material fact included in any Prospectus (the term
Prospectus for the
purpose
of
this
Section 9
being
deemed to include any Basic Prospectus, any Pre-Pricing Prospectus, the
Prospectus Supplement, the Prospectus and any amendments or supplements
to the
foregoing), in any Permitted Free Writing Prospectus, in any “issuer
information” (as defined in Rule 433 under the Act) of the Company, which
“issuer information” is required to be, or is, filed with the Commission, or in
any Prospectus together with any combination of one or more of the Permitted
Free Writing Prospectuses, if any, or arises out of or is based upon any
omission or alleged omission 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, except, with respect to such Prospectus or Permitted
Free
Writing Prospectus, insofar as any such loss, damage, expense, liability
or
claim arises out of or is based upon any untrue statement or alleged untrue
statement of a material fact contained in, and in conformity with information
concerning such Underwriter furnished in writing by or on behalf of such
Underwriter through you to the Company expressly for use in, such Prospectus
or
Permitted Free Writing Prospectus or arises
out of or is based upon any omission or alleged omission to state a material
fact in such Prospectus or Permitted Free Writing Prospectus in connection
with
such information, which material fact was not contained in such information
and
which material fact was necessary in order to make the statements in such
information, in the light of the circumstances under which they were made,
not
misleading.
-28-
(b) Each
Underwriter severally agrees to indemnify, defend and hold harmless the Company,
its directors and officers, and any person who controls the Company within
the
meaning of Section 15 of the Act or Section 20 of the Exchange Act, and the
successors and assigns of all of the foregoing persons, from and against any
loss, damage, expense, liability or claim (including the reasonable cost of
investigation) which, jointly or severally, the Company or any such person
may
incur under the Act, the Exchange Act, the common law or otherwise, insofar
as
such loss, damage, expense, liability or claim arises out of or is based upon
(i) any untrue statement or alleged untrue statement of a material fact
contained in, and in conformity with information concerning such Underwriter
furnished in writing by or on behalf of such Underwriter through you to the
Company expressly for use in, the Registration Statement (or in the Registration
Statement as amended by any post-effective amendment thereof by the Company),
or
arises out of or is based upon any omission or alleged omission to state a
material fact in such Registration Statement in connection with such
information, which material fact was not contained in such information and
which
material fact was required to be stated in such Registration Statement or was
necessary to make such information not misleading or (ii) any untrue statement
or alleged untrue statement of a material fact contained in, and in conformity
with information concerning such Underwriter furnished in writing by or on
behalf of such Underwriter through you to the Company expressly for use in,
a
Prospectus or a Permitted Free Writing Prospectus, or arises out of or is based
upon any omission or alleged omission to state a material fact in such
Prospectus or Permitted Free Writing Prospectus in connection with such
information, which material fact was not contained in such information and
which
material fact was necessary in order to make the statements in such information,
in the light of the circumstances under which they were made, not
misleading.
-29-
(c) If
any
action, suit or proceeding (each, a “Proceeding”)
is
brought against a person (an “indemnified
party”)
in
respect of which indemnity may be sought against the Company or an Underwriter
(as applicable, the “indemnifying
party”)
pursuant to subsection (a)
or (b),
respectively, of this Section 9,
such
indemnified party shall promptly notify such indemnifying party in writing
of
the institution of such Proceeding and such indemnifying party shall assume
the
defense of such Proceeding, including the employment of counsel reasonably
satisfactory to such indemnified party and payment of all fees and expenses;
provided,
however,
that
the omission to so notify such indemnifying party shall not relieve such
indemnifying party from any liability which such indemnifying party may have
to
any indemnified party or otherwise. The indemnified party or parties shall
have
the right to employ its or their own counsel in any such case, but the fees
and
expenses of such counsel shall be at the expense of such indemnified party
or
parties unless the employment of such counsel shall have been authorized in
writing by the indemnifying party in connection with the defense of such
Proceeding or the indemnifying party shall not have, within a reasonable period
of time in light of the circumstances, employed counsel to defend such
Proceeding or such indemnified party or parties shall have reasonably concluded
that there may be defenses available to it or them which are different from,
additional to or in conflict with those available to such indemnifying party
(in
which case such indemnifying party shall not have the right to direct the
defense of such Proceeding on behalf of the indemnified party or parties),
in
any of which events such fees and expenses shall be borne by such indemnifying
party and paid as incurred (it being understood, however, that such indemnifying
party shall not be liable for the expenses of more than one separate counsel
(in
addition to any local counsel) in any one Proceeding or series of related
Proceedings in the same jurisdiction representing the indemnified parties who
are parties to such Proceeding). The indemnifying party shall not be liable
for
any settlement of any Proceeding effected without its written consent but,
if
settled with its written consent, such indemnifying party agrees to indemnify
and hold harmless the indemnified party or parties from and against any loss
or
liability by reason of such settlement. Notwithstanding the foregoing sentence,
if at any time an indemnified party shall have requested an indemnifying party
to reimburse the indemnified party for fees and expenses of counsel as
contemplated by the second sentence of this Section 9(c), then the indemnifying
party agrees that it shall be liable for any settlement of any Proceeding
effected without its written consent if (i) such settlement is entered into
more
than 60 business days after receipt by such indemnifying party of the aforesaid
request, (ii) such indemnifying party shall not have fully reimbursed the
indemnified party in accordance with such request prior to the date of such
settlement and (iii) such indemnified party shall have given the indemnifying
party at least 30 days’ prior notice of its intention to settle. No indemnifying
party shall, without the prior written consent of the indemnified party, effect
any settlement of any pending or threatened Proceeding in respect of which
any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party, unless such settlement includes
an
unconditional release of such indemnified party from all liability on claims
that are the subject matter of such Proceeding and does not include an admission
of fault or culpability or a failure to act by or on behalf of such indemnified
party.
-30-
(d) If
the
indemnification provided for in this Section 9
is
unavailable to an indemnified party under subsections (a)
and (b)
of this Section 9
or
insufficient to hold an indemnified party harmless in respect of any losses,
damages, expenses, liabilities or claims referred to therein, then each
applicable indemnifying party shall contribute to the amount paid or payable
by
such indemnified party as a result of such losses, damages, expenses,
liabilities or claims (i) in such proportion as is appropriate to reflect the
relative benefits received by the Company on the one hand and the Underwriters
on the other hand from the offering of the Shares or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the Company on the one
hand and of the Underwriters on the other in connection with the statements
or
omissions which resulted in such losses, damages, expenses, liabilities or
claims, as well as any other relevant equitable considerations. The relative
benefits received by the Company on the one hand and the Underwriters on the
other shall be deemed to be in the same respective proportions as the total
proceeds from the offering (net of underwriting discounts and commissions but
before deducting expenses) received by the Company, and the total underwriting
discounts and commissions received by the Underwriters, bear to the aggregate
public offering price of the Shares. The relative fault of the Company on the
one hand and of the Underwriters on the other shall be determined by reference
to, among other things, whether the untrue statement or alleged untrue statement
of a material fact or omission or alleged omission relates to information
supplied by the Company or by the Underwriters and the parties’ relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The amount paid or payable by a party as a result of
the
losses, damages, expenses, liabilities and claims referred to in this subsection
shall be deemed to include any legal or other fees or expenses reasonably
incurred by such party in connection with investigating, preparing to defend
or
defending any Proceeding.
(e) The
Company and the Underwriters agree that it would not be just and equitable
if
contribution pursuant to this Section 9
were
determined by pro rata allocation (even if the Underwriters were treated as
one
entity for such purpose) or by any other method of allocation that does not
take
account of the equitable considerations referred to in subsection (d)
above.
Notwithstanding the provisions of this Section 9,
no
Underwriter shall be required to contribute any amount in excess of the amount
by which the total price at which the Shares underwritten by such Underwriter
and distributed to the public were offered to the public exceeds the amount
of
any damage which such Underwriter has otherwise been required to pay by reason
of such untrue statement or alleged untrue statement or omission or alleged
omission.
No
person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f)
of
the Act) shall be entitled to contribution from any person who was not guilty
of
such fraudulent misrepresentation. The Underwriters’ obligations to contribute
pursuant to this Section 9
are
several in proportion to their respective underwriting commitments and not
joint.
(f) The
indemnity and contribution agreements contained in this Section 9
and the
covenants, warranties and representations of the Company contained in this
Agreement
shall remain in full force and effect regardless of any investigation made
by or
on behalf of any Underwriter, its partners, directors or officers or any
person
(including each partner, officer or director of such person) who controls
any
Underwriter within the meaning of Section 15 of the Act or Section 20 of
the
Exchange Act, or by or on behalf of the Company, its directors or officers
or
any person who controls the Company within the meaning of Section 15 of
the Act
or Section 20 of the Exchange Act, and shall survive any termination of
this
Agreement or the issuance and delivery of the Shares. The Company and each
Underwriter agree promptly to notify each other of the commencement of
any
Proceeding against it and, in the case of the Company, against any of the
Company’s officers or directors in connection with the issuance and sale of the
Shares, or in connection with the Registration Statement, any Basic Prospectus,
any Pre-Pricing Prospectus, the Prospectus or any Permitted Free Writing
Prospectus.
-31-
10. Information
Furnished by the Underwriters.
The
statements set forth in the last paragraph on the cover page of the Prospectus
and the statements set forth in the fourth paragraph under the caption
“Underwriting” and under the captions “Underwriting - Commissions and Discounts”
and “Underwriting - Price Stabilization, Short Positions, Passive Market Making”
in the Prospectus, only insofar as such statements relate to the amount of
selling concession and reallowance or to over-allotment and stabilization
activities that may be undertaken by the Underwriters, constitute the only
information furnished by or on behalf of the Underwriters, as such information
is referred to in Sections 3
and
9
hereof.
11. Notices.
Except
as otherwise herein provided, all statements, requests, notices and agreements
shall be in writing or by telegram or facsimile and, if to the Underwriters,
shall be sufficient in all respects if delivered or sent to UBS Securities
LLC,
000 Xxxx Xxxxxx, Xxx Xxxx, XX 00000-0000, Attention: Syndicate Department
and, if to the Company, shall be sufficient in all respects if delivered or
sent
to the Company at the offices of the Company at 00000 Xxx Xxxxxx, Xxxxx 000,
Xxxxxx, Xxxxxxxxxx, Attention: Xxxxxxx Xxxxxx, Esq., General
Counsel.
12. Governing
Law; Construction.
This
Agreement and any claim, counterclaim or dispute of any kind or nature
whatsoever arising out of or in any way relating to this Agreement
(“Claim”),
directly or indirectly, shall be governed by, and construed in accordance with,
the laws of the State of New York. The section headings in this Agreement have
been inserted as a matter of convenience of reference and are not a part of
this
Agreement.
13. Submission
to Jurisdiction.
Except
as set forth below, no Claim may be commenced, prosecuted or continued in any
court other than the courts of the State of New York located in the City and
County of New York or in the United States District Court for the Southern
District of New York, which courts shall have jurisdiction over the adjudication
of such matters, and the Company consents to the jurisdiction of such courts
and
personal service with respect thereto. The Company hereby consents to personal
jurisdiction, service and venue in any court in which any Claim arising out
of
or in any way relating to this Agreement is brought by any third party against
any Underwriter or any indemnified party. Each Underwriter and the Company
(on
its behalf and, to the extent permitted by applicable law, on behalf of its
stockholders and affiliates) waives all right to trial by jury in any action,
proceeding or
-32-
counterclaim
(whether based upon contract, tort or otherwise) in any way arising out
of or
relating to this Agreement. The Company agrees that a final judgment in
any such
action, proceeding or counterclaim brought in any such court shall be conclusive
and binding upon the Company and may be enforced in any other courts to
the
jurisdiction of which the Company is or may be subject, by suit upon such
judgment.
14. No
Fiduciary Relationship.
The
Company hereby acknowledges that the Underwriters are acting solely as
underwriters in connection with the purchase and sale of the Company’s
securities. The Company further acknowledges that the Underwriters are acting
pursuant to a contractual relationship created solely by this Agreement entered
into on an arm’s length basis, and in no event do the parties intend that the
Underwriters act or be responsible as a fiduciary to the Company, its
management, stockholders or creditors or any other person in connection with
any
activity that the Underwriters may undertake or have undertaken in furtherance
of the purchase and sale of the Company’s securities, either before or after the
date hereof. The Underwriters hereby expressly disclaim any fiduciary or similar
obligations to the Company, either in connection with the transactions
contemplated by this Agreement or any matters leading up to such transactions,
and the Company hereby confirms its understanding and agreement to that effect.
The Company and the Underwriters agree that they are each responsible for making
their own independent judgments with respect to any such transactions and that
any opinions or views expressed by the Underwriters to the Company regarding
such transactions, including, but not limited to, any opinions or views with
respect to the price or market for the Company’s securities, do not constitute
advice or recommendations to the Company. The Company hereby waives and
releases, to the fullest extent permitted by law, any claims that the Company
may have against the Underwriters with respect to any breach or alleged breach
of any fiduciary or similar duty to the Company in connection with the
transactions contemplated by this Agreement or any matters leading up to such
transactions.
15. Parties
at Interest.
The
Agreement herein set forth has been and is made solely for the benefit of the
Underwriters and the Company and to the extent provided in Section 9
hereof
the controlling persons, partners, directors and officers referred to in such
Section, and their respective successors, assigns, heirs, personal
representatives and executors and administrators. No other person, partnership,
association or corporation (including a purchaser, as such purchaser, from
any
of the Underwriters) shall acquire or have any right under or by virtue of
this
Agreement.
16. Counterparts.
This
Agreement may be signed by the parties in one or more counterparts which
together shall constitute one and the same agreement among the
parties.
17. Successors
and Assigns.
This
Agreement shall be binding upon the Underwriters and the Company and their
successors and assigns and any successor or assign of any substantial portion
of
the Company’s and any of the Underwriters’ respective businesses and/or
assets.
18. Miscellaneous.
UBS, an
indirect, wholly owned subsidiary of UBS AG, is not a bank and is separate
from
any affiliated bank, including any U.S. branch or agency of UBS AG. Because
UBS
is a separately incorporated entity, it is solely responsible for its own
contractual
obligations
and commitments, including obligations with respect to sales and purchases
of
securities. Securities sold, offered or recommended by UBS are not deposits,
are
not insured by the Federal Deposit Insurance Corporation, are not guaranteed
by
a branch or agency, and are not otherwise an obligation or responsibility
of a
branch or agency.
-33-
[The
Remainder of This Page Intentionally Left Blank; Signature Page
Follows]
-34-
If
the
foregoing correctly sets forth the understanding between the Company and the
several Underwriters, please so indicate in the space provided below for that
purpose, whereupon this Agreement and your acceptance shall constitute a binding
agreement between the Company and the Underwriters, severally.
|
Very
truly yours,
|
|
SUN
HEALTHCARE GROUP, INC.
|
|
By:
/s/
Xxxxxxx
Xxxxxx
|
|
Name:
Xxxxxxx Xxxxxx
|
|
Title:
General Counsel
|
|
Accepted
and agreed to as of the date first above written, on behalf of
themselves
and the other several Underwriters named in Schedule A
|
|
UBS
SECURITIES LLC
|
|
By: /s/
Xxxxx
Xxxxxxxx
|
|
Name:
Xxxxx Xxxxxxxx
|
|
Title:
Director
|
|
By: /s/
Xxx
Xxxxxxxx
|
|
Name:
Xxx Xxxxxxxx
|
|
Title:
Managing Director
|
SCHEDULE
A
|
Underwriter
|
Number of
Firm Shares |
|
UBS
SECURITIES LLC
|
5,500,000
|
|
CIBC
WORLD MARKETS CORP.
|
2,000,000
|
|
CREDIT
SUISSE SECURITIES (USA) LLC
|
1,500,000
|
|
XXXXXXXXX
& COMPANY, INC.
|
1,000,000
|
|
Total
|
10,000,000
|
SCHEDULE
B
Preliminary
Prospectus Supplement filed on December 6, 2006
Summary
of final terms dated December 14, 2006 and filed pursuant to Rule
433
SCHEDULE
C
ROADSHOW
SCHEDULE
D
SIGNIFICANT
SUBSIDIARIES
SunBridge
Healthcare Corporation
Peak
Medical Corporation
SunBridge
Retirement Care Associates, Inc.
Regency
Health Services, Inc.
SHG
Services, Inc.
SunDance
Rehabilitation Corporation
CareerStaff
Unlimited, Inc.
SunBridge
Care Enterprises, Inc.
D-1
EXHIBIT
A
Lock-Up
Agreement
December
, 2006
UBS
Securities LLC
Together
with the other Underwriters
named
in
Schedule A to the Underwriting Agreement
referred
to herein
c/o
UBS
Securities LLC
000
Xxxx
Xxxxxx
Xxx
Xxxx,
Xxx Xxxx 00000-0000
Ladies
and Gentlemen:
This
Lock-Up Agreement is being delivered to you in connection with the proposed
Underwriting Agreement (the “Underwriting
Agreement”)
to be
entered into by Sun Healthcare Group, Inc., a Delaware corporation (the
“Company”),
and
you and the other underwriters named in Schedule
A
to the
Underwriting Agreement, with respect to the public offering (the “Offering”)
of
common stock, par value $0.01 per share, of the Company (the “Common
Stock”).
In
order
to induce you to enter into the Underwriting Agreement, the undersigned agrees
that, for a period (the “Lock-Up
Period”)
beginning on the date hereof and ending on, and including, the date that is
90
days after the date of the final prospectus supplement relating to the Offering,
the undersigned will not, without the prior written consent of UBS Securities
LLC, (i) sell, offer to sell, contract or agree to sell, hypothecate, pledge,
grant any option to purchase or otherwise dispose of or agree to dispose of,
directly or indirectly, or file (or participate in the filing of) a registration
statement with the Securities and Exchange Commission (the “Commission”)
in
respect of, or establish or increase a put equivalent position or liquidate
or
decrease a call equivalent position within the meaning of Section 16 of the
Securities Exchange Act of 1934, as amended, and the rules and regulations
of
the Commission promulgated thereunder (the “Exchange
Act”)
with
respect to, any Common Stock or any securities convertible into or exchangeable
or exercisable for Common Stock, or warrants or other rights to purchase Common
Stock or any such securities, (ii) enter into any swap or other arrangement
that
transfers to another, in whole or in part, any of the economic consequences
of
ownership of Common Stock or any securities convertible into or exchangeable
or
exercisable for Common Stock, or warrants or other rights to purchase Common
Stock or any such securities, whether any such transaction is to be settled
by
delivery of Common Stock or such other securities, in cash or otherwise or
(iii)
publicly announce an intention to effect any transaction specified in clause
(i)
or (ii). The foregoing sentence shall not apply to (a) the registration of
the
offer and sale of Common Stock as contemplated by the Underwriting Agreement
and
the sale of the Common Stock to the Underwriters (as defined in the Underwriting
Agreement) in the Offering, (b) bona
A-1
fide
gifts, provided the recipient thereof agrees in writing with the Underwriters
to
be bound by the terms of this Lock-Up Agreement, (c) dispositions to any trust
for the direct or indirect benefit of the undersigned and/or the immediate
family of the undersigned, provided that such trust agrees in writing with
the
Underwriters to be bound by the terms of this Lock-Up Agreement or (d) any
transfer of Common Stock by the undersigned to the Company (i) deemed to occur
upon the cashless exercise of options granted pursuant to the Company’s employee
benefit plans existing as of the date of this Lock-Up Agreement or (ii) for
the
primary purpose of paying the exercise price of options to purchase shares
of
the Company’s Common Stock. For purposes of this paragraph, “immediate family”
shall mean the undersigned and the spouse, any lineal descendent, father,
mother, brother or sister of the undersigned.
In
addition, the undersigned hereby waives any rights the undersigned may have
to
require registration of Common Stock in connection with the filing of a
registration statement relating to the Offering. The undersigned further agrees
that, for the Lock-Up Period, the undersigned will not, without the prior
written consent of UBS Securities LLC, make any demand for, or exercise any
right with respect to, the registration of Common Stock or any securities
convertible into or exercisable or exchangeable for Common Stock, or warrants
or
other rights to purchase Common Stock or any such securities.
Notwithstanding
the above, if (a) during the period that begins on the date that is fifteen
(15)
calendar days plus three (3) business days before the last day of the Lock-Up
Period and ends on the last day of the Lock-Up Period, the Company issues an
earnings release or material news or a material event relating to the Company
occurs; or (b) prior to the expiration of the Lock-Up Period, the Company
announces that it will release earnings results during the sixteen (16) day
period beginning on the last day of the Lock-Up Period, then the restrictions
imposed by this Lock-Up Agreement shall continue to apply until the expiration
of the date that is fifteen (15) calendar days plus three (3) business days
after the date on which the issuance of the earnings release or the material
news or material event occurs.
The
undersigned hereby confirms that the undersigned has not, directly or
indirectly, taken, and hereby covenants that the undersigned will not, directly
or indirectly, take, any action designed, or which has constituted or will
constitute or might reasonably be expected to cause or result in the
stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of shares of Common Stock.
*
*
*
A-2
If
(i)
the Company notifies you in writing that it does not intend to proceed with
the
Offering, (ii) the registration statement filed with the Commission with respect
to the Offering is withdrawn or (iii) for any reason the Underwriting Agreement
shall be terminated prior to the “time of purchase” (as defined in the
Underwriting Agreement), this Lock-Up Agreement shall be terminated and the
undersigned shall be released from its obligations hereunder.
Yours
very truly,
_______________________________
Name:
X-0
XXXXXXX
X-0
LIST
OF
PARTIES TO EXECUTE LOCK-UP AGREEMENTS
Xxxxxxx
X. Xxxxxx
L.
Xxxxx
Xxxxx
Xxxxxxx
Xxxxxx
Xxxxxxx
X. Xxxxxxx
Xxxxxxx
X. Xxxxxxxx
Xxxx
X.
Xxxxxxx
Xxxxxxxxx
X. Xxxxxx
Xxxxxxx
X. Xxxxxxxx
Xxxxxx
X.
Xxxxxx
Xxxxxx
X.
Xxxxxxx
A-1-1
EXHIBIT
B
Lock-Up
Agreement
December
, 2006
UBS
Securities LLC
Together
with the other Underwriters
named
in
Schedule A to the Underwriting Agreement
referred
to herein
c/o
UBS
Securities LLC
000
Xxxx
Xxxxxx
Xxx
Xxxx,
Xxx Xxxx 00000-0000
Ladies
and Gentlemen:
This
Lock-Up Agreement is being delivered to you in connection with the proposed
Underwriting Agreement (the “Underwriting
Agreement”)
to be
entered into by Sun Healthcare Group, Inc., a Delaware corporation (the
“Company”),
and
you and the other underwriters named in Schedule
A
to the
Underwriting Agreement, with respect to the public offering (the “Offering”)
of
common stock, par value $0.01 per share, of the Company (the “Common
Stock”).
In
order
to induce you to enter into the Underwriting Agreement, the undersigned agrees
that, for a period (the “Lock-Up
Period”)
beginning on the date hereof and ending on, and including, the date that is
30
days after the date of the final prospectus supplement relating to the Offering,
the undersigned will not, without the prior written consent of UBS Securities
LLC, (i) except for the adoption of a Rule 10b5-1 Plan proposed to be between
the undersigned and Xxxxxxxxx & Company, Inc., which plan shall contain
provisions to prohibit sales thereunder during the Lock-Up Period (the “10b5-1
Plan”), sell, offer to sell, contract or agree to sell, hypothecate, pledge,
grant any option to purchase or otherwise dispose of or agree to dispose of,
directly or indirectly, or file (or participate in the filing of) a registration
statement with the Securities and Exchange Commission (the “Commission”)
in
respect of, or establish or increase a put equivalent position or liquidate
or
decrease a call equivalent position within the meaning of Section 16 of the
Securities Exchange Act of 1934, as amended, and the rules and regulations
of
the Commission promulgated thereunder (the “Exchange
Act”)
with
respect to, any Common Stock or any securities convertible into or exchangeable
or exercisable for Common Stock, or warrants or other rights to purchase Common
Stock or any such securities, (ii) enter into any swap or other arrangement
that
transfers to another, in whole or in part, any of the economic consequences
of
ownership of Common Stock or any securities convertible into or exchangeable
or
exercisable for Common Stock, or warrants or other rights to purchase Common
Stock or any such securities, whether any such transaction is to be settled
by
delivery of Common Stock or such other securities, in cash or otherwise or
(iii)
publicly announce an intention to effect any transaction specified in clause
(i)
or (ii) (except for the filing of a Schedule 13D amendment
and/or
Section 16 filings disclosing the adoption of the 10b5-1 Plan). The foregoing
sentence shall not apply to (a) the registration of the offer and sale
of Common
Stock as contemplated by the Underwriting Agreement and the sale of the
Common
Stock to the Underwriters (as defined in the Underwriting Agreement) in
the
Offering, (b) bona fide gifts, provided the recipient thereof agrees in
writing
with the Underwriters to be bound by the terms of this Lock-Up Agreement,
(c)
dispositions to any trust for the direct or indirect benefit of the undersigned
and/or the immediate family of the undersigned, provided that such trust
agrees
in writing with the Underwriters to be bound by the terms of this Lock-Up
Agreement or (d) any transfer of Common Stock by the undersigned to the
Company
(i) deemed to occur upon the cashless exercise of options granted pursuant
to
the Company’s employee benefit plans existing as of the date of this Lock-Up
Agreement or (ii) for the primary purpose of paying the exercise price
of
options to purchase shares of the Company’s Common Stock. For purposes of this
paragraph, “immediate family” shall mean the undersigned and the spouse, any
lineal descendent, father, mother, brother or sister of the
undersigned.
B-1
In
addition, the undersigned hereby waives any rights the undersigned may have
to
require registration of Common Stock in connection with the filing of a
registration statement relating to the Offering. The undersigned further agrees
that, for the Lock-Up Period, the undersigned will not, without the prior
written consent of UBS Securities LLC, make any demand for, or exercise any
right with respect to, the registration of Common Stock or any securities
convertible into or exercisable or exchangeable for Common Stock, or warrants
or
other rights to purchase Common Stock or any such securities.
Notwithstanding
the above, if (a) during the period that begins on the date that is fifteen
(15)
calendar days plus three (3) business days before the last day of the Lock-Up
Period and ends on the last day of the Lock-Up Period, the Company issues an
earnings release or material news or a material event relating to the Company
occurs; or (b) prior to the expiration of the Lock-Up Period, the Company
announces that it will release earnings results during the sixteen (16) day
period beginning on the last day of the Lock-Up Period, then the restrictions
imposed by this Lock-Up Agreement shall continue to apply until the expiration
of the date that is fifteen (15) calendar days plus three (3) business days
after the date on which the issuance of the earnings release or the material
news or material event occurs.
The
undersigned hereby confirms that the undersigned has not, directly or
indirectly, taken, and hereby covenants that the undersigned, for the Lock-Up
Period, will not, directly or indirectly, take, any action designed, or which
has constituted or will constitute or might reasonably be expected to cause
or
result in the stabilization or manipulation of the price of any security of
the
Company to facilitate the sale or resale of shares of Common Stock.
*
*
*
B-2
If
(i)
the Company notifies you in writing that it does not intend to proceed with
the
Offering, (ii) the registration statement filed with the Commission with respect
to the Offering is withdrawn or (iii) for any reason the Underwriting Agreement
shall be terminated prior to the “time of purchase” (as defined in the
Underwriting Agreement), or (iv) the Offering is not consummated on or before
December 31, 2006, this Lock-Up Agreement shall be terminated and the
undersigned shall be released from its obligations hereunder.
Yours
very truly,
_______________________________
Name:
_______________________________
Name:
B-3
EXHIBIT
B-1
LIST
OF
PARTIES TO EXECUTE LOCK-UP AGREEMENTS
RFE
Investment Partners V, L.P.
DFW
Capital Partners, L.P.
EXHIBIT
C
OPINION
OF O’MELVENY & XXXXX LLP
EXHIBIT
D
OPINION
OF GENERAL COUNSEL OF SUN HEALTHCARE GROUP, INC.
EXHIBIT
E
OFFICERS’
CERTIFICATE
EXHIBIT
F
CHIEF
FINANCIAL OFFICER’S CERTIFICATE
SUN
HEALTHCARE GROUP, INC.
