EXHIBIT 1
COVENTRY HEALTH CARE, INC.
7,000,000 Shares(1)
Common Stock
($ .01 par value)
Underwriting Agreement
New York, New York
, 2002
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Xxxxxxx Xxxxx Xxxxxx Inc.
Xxxxxxx, Xxxxx & Co.
Xxxxxx Brothers Inc.
CIBC World Markets Corp.
As Representatives of the several Underwriters,
c/o Xxxxxxx Xxxxx Barney Inc.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Principal Health Care, Inc. (the "Selling Stockholder") proposes to
sell to the several underwriters named in Schedule I hereto (the
"Underwriters"), for whom you (the "Representatives") are acting as
representatives, an aggregate of 7,000,000 shares (the "Underwritten
Securities") of Common Stock, $.01 par value ("Common Stock"), of Coventry
Health Care, Inc. (the "Company"). The Selling Stockholder also proposes to
grant to the Underwriters an option to purchase up to 1,050,000 additional
shares of Common Stock to cover over-allotments (the "Option Securities"; the
Option Securities, together with the Underwritten Securities, being hereinafter
called the "Securities"). To the extent there are no additional Underwriters
listed on Schedule I other than you, the term Representatives as used herein
shall mean you, as Underwriters, and the terms Representatives and Underwriters
shall mean either the singular or plural as the context requires. The use of the
neuter in this Agreement shall include the feminine and masculine wherever
appropriate. Any reference herein to the Registration Statement, a Preliminary
Prospectus or the Prospectus shall be deemed to refer to and include the
documents incorporated by reference therein pursuant to Item 12 of Form S-3
which were filed under the Exchange Act on or before the Effective Date of the
Registration
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(1) Plus an option to purchase from the Selling Stockholder up to
an aggregate of 1,050,000 additional Securities to cover over-allotments.
Statement or the issue date of such Preliminary Prospectus or the Prospectus, as
the case may be; and any reference herein to the terms "amend", "amendment" or
"supplement" with respect to the Registration Statement, any Preliminary
Prospectus or the Prospectus shall be deemed to refer to and include the filing
of any document under the Exchange Act after the Effective Date of the
Registration Statement, or the issue date of any Preliminary Prospectus or the
Prospectus, as the case may be, deemed to be incorporated therein by reference.
Certain terms used herein are defined in Section 17 hereof.
1. Representations and Warranties.
(i) The Company represents and warrants to, and agrees
with, each Underwriter as set forth below in this Section 1.
(a) The Company meets the requirements for use of Form
S-3 under the Act and has prepared and filed with the Commission a
registration statement (file number 333-74280) on Form S-3, including a
related preliminary prospectus, for registration under the Act of the
offering and sale of the Securities. The Company may have filed one or
more amendments thereto, including a related preliminary prospectus,
each of which has previously been furnished to you. The Company will
next file with the Commission one of the following: either (1) prior to
the Effective Date of such registration statement, a further amendment
to such registration statement, (including the form of final
prospectus) or (2) after the Effective Date of such registration
statement, a final prospectus in accordance with Rules 430A and 424(b).
In the case of clause (2), the Company has included in such
registration statement, as amended at the Effective Date, all
information (other than Rule 430A Information) required by the Act and
the rules thereunder to be included in such registration statement and
the Prospectus. As filed, such amendment and form of final prospectus,
or such final prospectus, shall contain all Rule 430A Information,
together with all other such required information, and, except to the
extent the Representatives shall agree in writing to a modification,
shall be in all substantive respects in the form furnished to you prior
to the Execution Time or, to the extent not completed at the Execution
Time, shall contain only such specific additional information and other
changes (beyond that contained in the latest Preliminary Prospectus) as
the Company has advised you, prior to the Execution Time, will be
included or made therein.
(b) On the Effective Date, the Registration Statement did
or will, and when the Prospectus is first filed (if required) in
accordance with Rule 424(b) and on the Closing Date (as defined herein)
and on any date on which Option Securities are purchased, if such date
is not the Closing Date (a "settlement date"), the Prospectus (and any
supplements thereto) will, comply in all material respects with the
applicable requirements of the Act and the Exchange Act and the
respective rules thereunder; on the Effective Date and at the Execution
Time, the Registration Statement did not or will not contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the
statements therein not misleading; and, on the Effective Date, the
Prospectus, if not filed pursuant to Rule 424(b), will not, and on the
date of any filing pursuant to Rule 424(b) and on the Closing Date and
any settlement date, the Prospectus (together with any supplement
thereto) will not, include
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any 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 representations or warranties as to
the information contained in or omitted from the Registration Statement
or the Prospectus (or any supplement thereto) in reliance upon and in
conformity with information furnished in writing to the Company by or
on behalf of any Underwriter through the Representatives specifically
for inclusion in the Registration Statement or the Prospectus (or any
supplement thereto).
(c) Each of the Company and its subsidiaries has been
duly incorporated and is validly existing as a corporation in good
standing under the laws of the jurisdiction in which it is chartered or
organized with full corporate power and authority to own or lease, as
the case may be, and to operate its properties and conduct its business
as described in the Prospectus, and is duly qualified to do business as
a foreign corporation and is in good standing under the laws of each
jurisdiction which requires such qualification; except where the
failure to be so qualified or to be in good standing would not
reasonably be expected to have a material adverse effect on the
condition (financial or otherwise), prospects, earnings, business or
properties of the Company and its subsidiaries, taken as a whole.
(d) All the outstanding shares of capital stock of each
subsidiary have been duly and validly authorized and issued and are
fully paid and nonassessable, and, except as otherwise set forth in the
Prospectus, all outstanding shares of capital stock of the subsidiaries
are owned by the Company either directly or through wholly owned
subsidiaries free and clear of any perfected security interest or any
other security interests, claims, liens or encumbrances.
(e) The Company's authorized equity capitalization is as
set forth in the Prospectus; the capital stock of the Company conforms
in all material respects to the description thereof contained in the
Prospectus; the outstanding shares of Common Stock (including the
Securities being sold hereunder by the Selling Stockholder) have been
duly and validly authorized and issued and are fully paid and
nonassessable; the Securities being sold by the Selling Stockholder are
duly listed and admitted and authorized for trading on the New York
Stock Exchange; the certificates for the Securities are in valid and
sufficient form; the holders of outstanding shares of capital stock of
the Company are not entitled to preemptive or other rights to subscribe
for the Securities arising by operation of law, under the certificate
of incorporation or bylaws of the Company or under any agreement to
which the Company is a party; and, except as set forth in the
Prospectus, no options, warrants or other rights to purchase,
agreements or other obligations to issue, or rights to convert any
obligations into or exchange any securities for, shares of capital
stock of or ownership interests in the Company are outstanding, in each
case to the extent issued, granted or entered into by the Company.
(f) There is no franchise, contract or other document of
a character required to be described in the Registration Statement or
Prospectus, or to be filed as an exhibit thereto, which is not
described or filed as required; and the statements in the Prospectus
under the headings "Risk Factors - Compliance with privacy laws could
adversely affect our
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business and results of operations," "Risk Factors - We conduct
business in a heavily regulated industry and changes in regulations or
violations of regulations could adversely affect our business and
results of operations," "Risk Factors - We face periodic reviews,
audits and investigations under our contracts with federal and state
government agencies, and these audits could have adverse findings that
may negatively impact our business," "Business-Government Regulation,"
"Business-Service Marks and Trademarks" and "Business-Litigation"
insofar as such statements summarize legal matters, agreements,
documents or proceedings discussed therein, are accurate in all
material respects and fair summaries of such legal matters, agreements,
documents or proceedings.
(g) This Agreement has been duly authorized, executed and
delivered by the Company and constitutes a valid and binding obligation
of the Company enforceable in accordance with its terms, subject to
applicable bankruptcy, insolvency and similar laws affecting creditors'
rights and subject to general principles of equity.
(h) The Company is not and, after giving effect to the
offering and sale of the Securities as described in the Prospectus,
will not be an "investment company" as defined in the Investment
Company Act of 1940, as amended.
(i) The Company has all requisite corporate power and
authority, has taken all requisite corporate action, and has received
and is in compliance with all governmental, judicial and other
authorizations, approvals and orders necessary to enter into and
perform this Agreement, and no consent, approval, authorization, filing
with or order of any court or governmental agency or body is required
in connection with the consummation by the Company of the transactions
contemplated herein or the consummation by the Company of the offering
of its senior notes (the "Senior Notes Offering"), the net proceeds of
which will be used by the Company to repurchase from the Selling
Stockholder 7,053,487 shares of Common Stock and a warrant to purchase
up to 3,075,182 shares of Common Stock (the "Stock Repurchase"), except
(1) in the case of the transactions contemplated herein, such as have
been obtained under the Act and such as may be required under the blue
sky laws of any jurisdiction in connection with the purchase and
distribution of the Securities by the Underwriters in the manner
contemplated herein and in the Prospectus and (2) in the case of the
consummation of the Senior Notes Offering and Stock Repurchase, such as
may be required under the blue sky laws of any jurisdiction in
connection with the purchase and distribution of the debt securities by
the initial purchasers thereof in the manner contemplated in the
offering memorandum related thereto.
(j) Neither the sale of the Securities, nor the
consummation of any other of the transactions herein contemplated nor
the fulfillment of the terms hereof nor the consummation of the Senior
Notes Offering and Stock Repurchase will conflict with, result in a
breach or violation or imposition of any lien, charge or encumbrance
upon any property or asset of the Company or any of its subsidiaries
pursuant to, (i) the certificate of incorporation or by-laws of the
Company or any of its subsidiaries, (ii) the terms of any indenture,
contract, lease, mortgage, deed of trust, note agreement, loan
agreement or other agreement, obligation, condition, covenant or
instrument to which the Company or
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any of its subsidiaries is a party or bound or to which its or their
property is subject, or (iii) any statute, law, rule, regulation,
judgment, order or decree applicable to the Company or any of its
subsidiaries of any court, regulatory body, administrative agency,
governmental body, arbitrator or other authority having jurisdiction
over the Company or any of its subsidiaries or any of its or their
properties, except in the case of clauses (ii) and (iii) for such
breaches, violations, liens, charges or encumbrances that would not
reasonably be expected to have a material adverse effect on the
condition (financial or otherwise), prospects, earnings, business or
properties of the Company and its subsidiaries, taken as a whole.
(k) No holders of securities of the Company have rights
to the registration of such securities under the Registration Statement
except such rights as have been validly and irrevocably waived.
(l) The consolidated historical financial statements and
schedules of the Company and its consolidated subsidiaries included in
the Prospectus and the Registration Statement present fairly in all
material respects the financial condition, results of operations and
cash flows of the Company as of the dates and for the periods
indicated, comply as to form in all material respects with the
applicable accounting requirements of the Act and have been prepared in
conformity with generally accepted accounting principles applied on a
consistent basis throughout the periods involved (except as otherwise
noted therein). The selected financial data set forth under the caption
"Selected Consolidated Financial and Other Data" in the Prospectus and
Registration Statement fairly present in all material respects, on the
basis stated in the Prospectus and the Registration Statement, the
information included therein.
(m) No action, suit or proceeding by or before any court
or governmental agency, authority or body or any arbitrator involving
the Company or any of its subsidiaries or its or their officers or
property is pending or, to the best knowledge of the Company,
threatened that (i) would reasonably be expected to have a material
adverse effect on the performance of this Agreement or the consummation
of any of the transactions contemplated hereby or the consummation of
the Senior Notes Offering and Stock Repurchase or (ii) would reasonably
be expected to have a material adverse effect on the condition
(financial or otherwise), prospects, earnings, business or properties
of the Company and its subsidiaries, taken as a whole, whether or not
arising from transactions in the ordinary course of business, except in
the case of this clause (ii) as set forth in or contemplated in the
Prospectus (exclusive of any supplement thereto).
(n) Each of the Company and each of its subsidiaries owns
or leases all such properties as are necessary to the conduct of its
operations as presently conducted.
(o) Neither the Company nor any subsidiary is in
violation or default of (i) any provision of its certificate of
incorporation or bylaws, (ii) the terms of any indenture, contract,
lease, mortgage, deed of trust, note agreement, loan agreement or other
agreement, obligation, condition, covenant or instrument to which it is
a party or bound or to which its property is subject, or (iii) any
statute, law, rule, regulation, judgment,
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order or decree of any court, regulatory body, administrative agency,
governmental body, arbitrator or other authority having jurisdiction
over the Company or such subsidiary or any of its properties, as
applicable, except in the case of each of clauses (ii) and (iii) for
such violations or defaults that would not reasonably be expected to
have a material adverse effect on the condition (financial or
otherwise), prospects, earnings, business or properties of the Company
and its subsidiaries, taken as a whole.
(p) Xxxxxx Xxxxxxxx LLP, who have certified certain
financial statements of the Company and its consolidated subsidiaries
and delivered their report with respect to the audited consolidated
financial statements and schedules included in the Prospectus, are
independent public accountants with respect to the Company within the
meaning of the Act and the applicable published rules and regulations
thereunder.
(q) There are no transfer taxes or other similar fees or
charges under Federal law or the laws of any state, or any political
subdivision thereof, required to be paid in connection with the
execution, delivery and performance of this Agreement.
(r) The Company has filed all foreign, federal, state and
local tax returns that are required to be filed or has requested
extensions thereof (except in any case in which the failure so to file
would not reasonably be expected to have a material adverse effect on
the condition (financial or otherwise), prospects, earnings, business
or properties of the Company and its subsidiaries, taken as a whole,
whether or not arising from transactions in the ordinary course of
business), and has paid all taxes required to be paid by it and any
other assessment, fine or penalty levied against it, to the extent that
any of the foregoing is due and payable, except for any such
assessment, fine or penalty that is currently being contested in good
faith or as would not reasonably be expected to have a material adverse
effect on the condition (financial or otherwise), prospects, earnings,
business or properties of the Company and its subsidiaries, taken as a
whole, whether or not arising from transactions in the ordinary course
of business.
(s) No labor problem or dispute with the employees of the
Company or any of its subsidiaries exists or, to the knowledge of the
Company, is threatened or imminent, and the Company is not aware of any
existing or imminent labor disturbance by the employees of any of its
or its subsidiaries' principal suppliers, contractors or customers,
that in each case would reasonably be expected to have a material
adverse effect on the condition (financial or otherwise), prospects,
earnings, business or properties of the Company and its subsidiaries,
taken as a whole, whether or not arising from transactions in the
ordinary course of business.
(t) The Company and each of its subsidiaries are insured
by insurers of recognized financial responsibility against such losses
and risks and in such amounts as are prudent and customary in the
businesses in which they are engaged; all policies of insurance and
fidelity or surety bonds insuring the Company or any of its
subsidiaries or their respective businesses, assets, employees,
officers and directors are in full force and effect; the Company and
its subsidiaries are in compliance with the terms of such policies and
instruments in all material respects; and there are no claims by the
Company or any
6
of its subsidiaries under any such policy or instrument as to which any
insurance company has notified the Company that it intends to deny
liability or defend under a reservation of rights clause; neither the
Company nor any such subsidiary has been refused any material insurance
coverage sought or applied for; and neither the Company nor any such
subsidiary has any reason to believe that it will not be able to renew
its existing insurance coverage as and when such coverage expires or to
obtain similar coverage from similar insurers as may be necessary to
continue its business at a cost that would not reasonably be expected
to have a material adverse effect on the condition (financial or
otherwise), prospects, earnings, business or properties of the Company
and its subsidiaries, taken as a whole, whether or not arising from
transactions in the ordinary course of business.
(u) No subsidiary of the Company is currently prohibited,
directly or indirectly, from paying any dividends to the Company, from
making any other distribution on such subsidiary's capital stock, from
repaying to the Company any loans or advances to such subsidiary from
the Company or from transferring any of such subsidiary's property or
assets to the Company or any other subsidiary of the Company, except as
described in or contemplated by the Prospectus.
(v) The Company and its subsidiaries possess such
licenses, certificates, permits, consents, provider agreements and
other authorizations (collectively, "Governmental Licenses"), and have
made all necessary filings and disclosures, required by any federal,
state, local or foreign regulatory authorities necessary to conduct
their respective businesses, including to furnish services to persons
covered by Medicare, the Federal Employee Benefits Health Plan, and
Medicaid, in the states where the Company participates in Medicaid, and
the Company and its subsidiaries are in compliance with the terms and
conditions of all such Governmental Licenses, except where the failure
so to possess such Governmental Licenses or to comply would not, singly
or in the aggregate, reasonably be expected to have a material adverse
effect on the condition (financial or otherwise), prospects, earnings,
business or properties of the Company and its subsidiaries, taken as a
whole; all of the Governmental Licenses are valid and in full force and
effect, except when the invalidity of such Governmental Licenses or the
failure of such Governmental Licenses to be in full force and effect
would not reasonably be expected to have a material adverse effect on
the condition (financial or otherwise), prospects, earnings, business
or properties of the Company and its subsidiaries, taken as a whole;
and neither the Company nor any of its subsidiaries has received any
notice of proceedings relating to the revocation or modification of any
such Governmental Licenses which, singly or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would reasonably
be expected to result in a material adverse effect on the condition
(financial or otherwise), prospects, earnings, business or properties
of the Company and its subsidiaries, taken as a whole, whether or not
arising from transactions in the ordinary course of business.
(w) 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 authorizations;
7
(ii) transactions are recorded as necessary to permit preparation of
financial statements in conformity with generally accepted accounting
principles and to maintain asset accountability; (iii) access to assets
is permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
(x) The Company has not taken, directly or indirectly,
any action designed to or that would constitute or that would
reasonably be expected to cause or result in, under the Exchange Act or
otherwise, stabilization or manipulation of the price of any security
of the Company to facilitate the sale or resale of the Securities.
(y) The Company and its subsidiaries are (i) in
compliance with any and all applicable foreign, federal, state and
local laws and regulations relating to the protection of human health
and safety, the environment or hazardous or toxic substances or wastes,
pollutants or contaminants ("Environmental Laws"), (ii) have received
and are in compliance with all permits, licenses or other approvals
required of them under applicable Environmental Laws to conduct their
respective businesses and (iii) have not received notice of any actual
or potential liability for the investigation or remediation of any
disposal or release of hazardous or toxic substances or wastes,
pollutants or contaminants, except where such non-compliance with
Environmental Laws, failure to receive required permits, licenses or
other approvals, or liability would not, individually or in the
aggregate, reasonably be expected to have a material adverse effect on
the condition (financial or otherwise), prospects, earnings, business
or properties of the Company and its subsidiaries, taken as a whole,
whether or not arising from transactions in the ordinary course of
business. Neither the Company nor any of the subsidiaries has been
named as a "potentially responsible party" under the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as
amended.
(z) The costs and liabilities associated with the
compliance by the Company and its subsidiaries with Environmental Laws
are not, singly or in the aggregate, reasonably expected to have a
material adverse effect on the condition (financial or otherwise),
prospects, earnings, business or properties of the Company and its
subsidiaries, taken as a whole, whether or not arising from
transactions in the ordinary course of business.
(aa) Each of the Company and its subsidiaries has
fulfilled its obligations, if any, under the minimum funding standards
of Xxxxxxx 000 xx xxx Xxxxxx Xxxxxx Employee Retirement Income Security
Act of 1974, as amended ("ERISA") and the regulations and published
interpretations thereunder with respect to each "plan" (as defined in
Section 3(3) of ERISA and such regulations and published
interpretations) in which employees of the Company and its subsidiaries
are eligible to participate and each such plan is in compliance in all
material respects with the presently applicable provisions of ERISA and
such regulations and published interpretations. The Company and its
subsidiaries have not incurred any unpaid liability to the Pension
Benefit Guaranty Corporation (other than for the payment of premiums in
the ordinary course) or to any such plan under Title IV of ERISA.
8
(bb) The Company and its subsidiaries own, possess,
license or have other rights to use, on reasonable terms, all patents,
patent applications, trade and service marks, trade and service xxxx
registrations, trade names, copyrights, licenses, inventions, trade
secrets, technology, know-how and other intellectual property
(collectively, the "Intellectual Property") necessary for the conduct
of the Company's business as now conducted or as proposed in the
Prospectus to be conducted, except where the failure to own, possess,
license or have other rights to use such Intellectual Property would
not reasonably be expected to have a material adverse effect on the
condition (financial or otherwise), prospects, earnings, business or
properties of the Company and its subsidiaries, taken as a whole. (i)
There are no rights of third parties to any of the Intellectual
Property (other than the rights of licensors in Intellectual Property
that is licensed to the Company and its subsidiaries); (ii) there is no
material infringement by third parties of any of the 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 of the Intellectual Property, and the
Company is unaware of any facts which would form a reasonable basis for
such claim; (iv) there is no pending or, to the Company's knowledge,
threatened action, suit, proceeding or claim by others challenging the
validity or scope of any of the Intellectual Property, and the Company
is unaware of any facts which would form a reasonable basis for any
such claim; (v) there is no pending or, to the Company's knowledge,
threatened action, suit, proceeding or claim by others that the Company
infringes or otherwise violates any patent, trademark, copyright, trade
secret or other proprietary rights of others, and the Company is
unaware of any other fact which would form a reasonable basis for any
such claim; and (vi) neither the Company nor any of the subsidiaries
owns, possesses, licenses or has other rights to use any patent or
patent application.
(cc) Exhibit A hereto sets forth each direct or indirect
subsidiary (individually a "Subsidiary" and collectively the
"Subsidiaries") of the Company with revenues for the nine months ended
September 30, 2001, or assets at September 30, 2001, in excess of $20
million.
Any certificate signed by any officer of the Company and
delivered to the Representatives or counsel for the Underwriters in
connection with the offering of the Securities shall be deemed a
representation and warranty by the Company, as to matters covered
thereby, to each Underwriter.
(ii) The Selling Stockholder represents and warrants to,
and agrees with, each Underwriter that:
(a) The Selling Stockholder is the record and beneficial
owner of the Securities to be sold by it hereunder free and clear of
all liens, encumbrances, equities and claims and has duly endorsed such
Securities in blank, and, assuming that each Underwriter acquires its
interest in the Securities it has purchased from the Selling
Stockholder without notice of any adverse claim (within the meaning of
Section 8-105 of the New York Uniform Commercial Code ("UCC")), each
Underwriter that has purchased such Securities delivered on the Closing
Date to The Depository Trust Company or other securities intermediary
by making payment therefor as provided
9
herein, and that has had such Securities credited to the securities
account or accounts of such Underwriters maintained with The Depository
Trust Company or such other securities intermediary will have acquired
a security entitlement (within the meaning of Section 8-102(a)(17) of
the UCC) to such Securities purchased by such Underwriter, and no
action based on an adverse claim (within the meaning of Section 8-105
of the UCC) may be asserted against such Underwriter with respect to
such Securities.
(b) The Selling Stockholder has not taken, directly or
indirectly, any action designed to or that would constitute or that
might reasonably be expected to cause or result in, under the Exchange
Act or otherwise, stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the
Securities.
(c) The Selling Stockholder has all requisite corporate
power and authority, has taken all requisite corporate action, and has
received and is in compliance with all governmental, judicial and other
authorizations, approvals and orders necessary to enter into and
perform this Agreement, and no consent, approval, authorization or
order of any court or governmental agency or body is required for the
consummation by the Selling Stockholder of the transactions
contemplated herein or the consummation of the Stock Repurchase, except
in the case of the transactions contemplated herein, such as may have
been obtained under the Act and such as may be required under the blue
sky laws of any jurisdiction in connection with the purchase and
distribution of the Securities by the Underwriters.
(d) Neither the sale of the Securities being sold by the
Selling Stockholder nor the consummation of any other of the
transactions herein contemplated by the Selling Stockholder or the
fulfillment of the terms hereof by the Selling Stockholder will
conflict with, result in a breach or violation of, or constitute a
default under any law or the charter or by-laws of the Selling
Stockholder or the terms of any indenture or other agreement or
instrument to which the Selling Stockholder or any of its affiliates is
a party or bound, or any judgment, order or decree applicable to the
Selling Stockholder or any of its affiliates of any court, regulatory
body, administrative agency, governmental body or arbitrator having
jurisdiction over the Selling Stockholder or any of its affiliates.
(e) The sale of Securities by the Selling Stockholder
pursuant hereto is not prompted by any information concerning the
Company or any of its subsidiaries which is not set forth in the
Prospectus or any supplement thereto.
(f) In respect of any statements in or omissions from the
Registration Statement or the Prospectus or any supplements thereto
made in reliance upon and in conformity with information furnished in
writing to the Company by or on behalf of the Selling Stockholder
specifically for use in connection with the preparation thereof, such
Selling Stockholder hereby makes the same representations and
warranties to each Underwriter as the Company makes to such Underwriter
under paragraph (i)(b) of this Section. For purposes of this paragraph
(f), paragraph (c) of Section 5(ii) and paragraph (b) of Section 8, the
Underwriters acknowledge that the name, address, number of shares of
Common Stock beneficially owned before and after the offering, number
of Securities to be sold in the offering listed under the caption
"Principal and Selling Stockholders" in
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the Prospectus (as such information relates to the Selling Stockholder)
and the information with respect to Xxxxx X. Xxxxx, Xxxxxx X. Xxxx and
Xxxxxxxxx X. Xxxxxxx, constitute the only information furnished in
writing by or on behalf of the Selling Stockholder expressly for use in
the Registration Statement and the Prospectus.
Any certificate signed by any officer of the Selling
Stockholder and delivered to the Representatives or counsel for the Underwriters
in connection with the offering of the Securities shall be deemed a
representation and warranty by the Selling Stockholder, as to matters covered
thereby, to each Underwriter.
2. Purchase and Sale. (a) Subject to the terms and
conditions and in reliance upon the representations and warranties herein set
forth, the Selling Stockholder agrees to sell to each Underwriter, and each
Underwriter agrees, severally and not jointly, to purchase from the Selling
Stockholder, at a purchase price of $ per share, the amount of the Underwritten
Securities set forth opposite such Underwriter's name in Schedule I hereto.
(b) Subject to the terms and conditions and in reliance
upon the representations and warranties herein set forth, the Selling
Stockholder hereby grants an option to the several Underwriters to
purchase, severally and not jointly, up to 1,050,000 Option Securities
at the same purchase price per share as the Underwriters shall pay for
the Underwritten Securities. Said option may be exercised only to cover
over-allotments in the sale of the Underwritten Securities by the
Underwriters. Said option may be exercised in whole or in part at any
time (but not more than once) on or before the 30th day after the date
of the Prospectus upon written or telegraphic notice by the
Representatives to the Company and the Selling Stockholder setting
forth the number of shares of the Option Securities as to which the
several Underwriters are exercising the option and the settlement date.
The maximum number of Option Securities to be sold by the
Selling Stockholder is 1,050,000. In the event that the Underwriters exercise
less than their full over-allotment option, the number of Option Securities to
be purchased by each Underwriter shall be the same percentage of the total
number of shares of the Option Securities to be purchased by the several
Underwriters as such Underwriter is purchasing of the Underwritten Securities,
subject to such adjustments as you in your absolute discretion shall make to
eliminate any fractional shares.
3. Delivery and Payment. Delivery of and payment for the
Underwritten Securities and the Option Securities (if the option provided for in
Section 2(b) hereof shall have been exercised on or before the third Business
Day prior to the Closing Date) shall be made at 10:00 AM, New York City time,
on , 2002, or at such time on such later date not more than three Business
Days after the foregoing date as the Representatives shall designate, which date
and time may be postponed by agreement among the Representatives, the Company
and the Selling Stockholder or as provided in Section 9 hereof (such date and
time of delivery and payment for the Securities being herein called the "Closing
Date"). Delivery of the Securities shall be made to the Representatives for the
respective accounts of the several Underwriters against payment by the several
Underwriters through the Representatives of the
11
respective aggregate purchase prices of the Securities being sold by the Selling
Stockholder to or upon the order of the Selling Stockholder by wire transfer
payable in same-day funds to the accounts specified by the Selling Stockholder.
Delivery of the Underwritten Securities and the Option Securities shall be made
through the facilities of The Depository Trust Company unless the
Representatives shall otherwise instruct.
The Selling Stockholder will pay all applicable state transfer
taxes, if any, involved in the transfer to the several Underwriters of the
Securities to be purchased by them from the Selling Stockholder and the
respective Underwriters will pay any additional stock transfer taxes involved in
further transfers.
If the option provided for in Section 2(b) hereof is exercised
after the third Business Day prior to the Closing Date, the Selling Stockholder
will deliver the Option Securities (at the expense of the Selling Stockholder)
to the Representatives, at Xxxxxxx Xxxxx Xxxxxx Inc., 000 Xxxxxxxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx, xx the date specified by the Representatives (which shall be
within three Business Days after exercise of said option) for the respective
accounts of the several Underwriters, against payment by the several
Underwriters through the Representatives of the purchase price thereof to or
upon the order of the Selling Stockholder by wire transfer payable in same-day
funds to the accounts specified by the Selling Stockholder. If settlement for
the Option Securities occurs after the Closing Date, the Company and the Selling
Stockholder will deliver to the Representatives on the settlement date for the
Option Securities, and the obligation of the Underwriters to purchase the Option
Securities shall be conditioned upon receipt of, supplemental opinions,
certificates and letters confirming as of such date the opinions, certificates
and letters delivered on the Closing Date pursuant to Section 6 hereof.
4. Offering by Underwriters. It is understood that the
several Underwriters propose to offer the Securities for sale to the public as
set forth in the Prospectus.
5. Agreements.
(i) The Company agrees with the several Underwriters
that:
(a) The Company will use its best efforts to cause the
Registration Statement, if not effective at the Execution Time, and any
amendment thereof, to become effective. Prior to the termination of the
offering of the Securities, the Company will not file any amendment of
the Registration Statement or supplement to the Prospectus or any Rule
462(b) Registration Statement unless the Company has furnished you a
copy for your review prior to filing and will not file any such
proposed amendment or supplement to which you reasonably object.
Subject to the foregoing sentence, if the Registration Statement has
become or becomes effective pursuant to Rule 430A, or filing of the
Prospectus is otherwise required under Rule 424(b), the Company will
cause the Prospectus, properly completed, and any supplement thereto to
be filed with the Commission pursuant to the applicable paragraph of
Rule 424(b) within the time period prescribed and will provide evidence
satisfactory to the Representatives of such timely filing. The Company
will promptly advise the Representatives (1) when the Registration
Statement, if not effective at the Execution Time, shall have become
12
effective, (2) when the Prospectus, and any supplement thereto, shall
have been filed (if required) with the Commission pursuant to Rule
424(b) or when any Rule 462(b) Registration Statement shall have been
filed with the Commission, (3) when, prior to termination of the
offering of the Securities, any amendment to the Registration Statement
shall have been filed or become effective, (4) of any request by the
Commission or its staff for any amendment of the Registration
Statement, or any Rule 462(b) Registration Statement, or for any
supplement to the Prospectus or for any additional information, (5) of
the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or the institution or
threatening of any proceeding for that purpose and (6) of the receipt
by the Company of any notification with respect to the suspension of
the qualification of the Securities for sale in any jurisdiction or the
institution or threatening of any proceeding for such purpose. The
Company will use its best efforts to prevent the issuance of any such
stop order or the suspension of any such qualification and, if issued,
to obtain as soon as possible the withdrawal thereof.
(b) If, at any time when a prospectus relating
to the Securities is required to be delivered under the Act, any event
occurs as a result of which the Prospectus as then supplemented would
include any untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein in the light of
the circumstances under which they were made not misleading, or if it
shall be necessary to amend the Registration Statement or supplement
the Prospectus to comply with the Act or the Exchange Act or the
respective rules thereunder, the Company promptly will (1) notify the
Representatives of such event, (2) prepare and file with the
Commission, subject to the second sentence of paragraph (i)(a) of this
Section 5, an amendment or supplement which will correct such statement
or omission or effect such compliance and (3) supply any supplemented
Prospectus to you in such quantities as you may reasonably request.
(c) As soon as practicable, the Company will
make generally available to its security holders and to the
Representatives an earnings statement or statements of the Company and
its subsidiaries which will satisfy the provisions of Section 11(a) of
the Act and Rule 158 under the Act.
(d) The Company will furnish to the Representatives and
counsel for the Underwriters, without charge, signed copies of the
Registration Statement (including exhibits thereto) and to each other
Underwriter a copy of the Registration Statement (without exhibits
thereto) and, so long as delivery of a prospectus by an Underwriter or
dealer may be required by the Act, as many copies of each Preliminary
Prospectus and the Prospectus and any supplement thereto as the
Representatives may reasonably request. The Company will pay the
expenses of printing or other production of all documents relating to
the offering.
(e) The Company will arrange, if necessary, for
the qualification of the Securities for sale under the laws of such
jurisdictions as the Representatives may designate, will maintain such
qualifications in effect so long as required for the distribution of
the Securities and will pay any fee of the National Association of
Securities Dealers, Inc., in connection with its review of the
offering; provided that in no event shall the Company
13
be obligated to qualify to do business in any jurisdiction where it is
not now so qualified or to take any action that would subject it to
service of process in suits, other than those arising out of the
offering or sale of the Securities, in any jurisdiction where it is not
now so subject.
(f) The Company will not, without the prior
written consent of Xxxxxxx Xxxxx Barney Inc., offer, sell, contract to
sell, pledge, or otherwise dispose of (or enter into any transaction
which is designed to, or would reasonably be expected to, result in the
disposition (whether by actual disposition or effective economic
disposition due to cash settlement or otherwise) by the Company or any
affiliate of the Company or any person in privity with the Company or
any affiliate of the Company) directly or indirectly, including the
filing (or participation in the filing) of a registration statement
(other than a registration statement on Form S-8), with 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 Exchange Act, any other shares of Common Stock or any
securities convertible into, or exercisable, or exchangeable for,
shares of Common Stock; or publicly announce an intention to effect any
such transaction, for a period of 90 days after the date of the
Underwriting Agreement; provided, however, that the Company may issue
and sell Common Stock pursuant to any employee stock option plan, stock
ownership plan or dividend reinvestment plan of the Company in effect
at the Execution Time and the Company may issue Common Stock issuable
upon the conversion of securities or the exercise of warrants
outstanding at the Execution Time and the Company may issue shares of
Common Stock in connection with acquisitions provided that the
recipients of shares of Common Stock agree to be bound by transfer
restrictions no less restrictive than those set forth in this Section
5(i)(f).
(g) The Company will not take, directly or
indirectly, any action designed to or that would constitute or that
would reasonably be expected to cause or result in, under the Exchange
Act or otherwise, stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the
Securities.
(h) The Company agrees to pay the costs and
expenses relating to the following matters: (i) the preparation,
printing or reproduction and filing with the Commission of the
Registration Statement (including financial statements and exhibits
thereto), each Preliminary Prospectus, the Prospectus, and each
amendment or supplement to any of them; (ii) the printing (or
reproduction) and delivery (including postage, air freight charges and
charges for counting and packaging) of such copies of the Registration
Statement, each Preliminary Prospectus, the Prospectus, and all
amendments or supplements to any of them, as may, in each case, be
reasonably requested for use in connection with the offering and sale
of the Securities; (iii) the preparation, printing, authentication,
issuance and delivery of certificates for the Securities; (iv) the
printing (or reproduction) and delivery of this Agreement, any blue sky
memorandum and all other agreements or documents printed (or
reproduced) and delivered in connection with the offering of the
Securities; (v) any registration or qualification of the Securities for
offer and sale under the securities or blue sky laws of the several
states (including filing fees and the reasonable fees and expenses of
counsel for the Underwriters relating to such registration and
qualification); (vi) any filings
14
required to be made with the National Association of Securities
Dealers, Inc. (including filing fees and the reasonable fees and
expenses of counsel for the Underwriters relating to such filings);
(vii) the transportation and other expenses incurred by or on behalf of
Company representatives in connection with presentations to prospective
purchasers of the Securities; (viii) the fees and expenses of the
Company's accountants and the fees and expenses of counsel (including
local and special counsel) for the Company; and (ix) all other costs
and expenses incident to the performance by the Company of its
obligations hereunder.
(i) The Company shall close the Stock Repurchase
immediately following the closing of the purchase and sale of the
Underwritten Securities hereunder.
(ii) The Selling Stockholder agrees with the several
Underwriters that:
(a) The Selling Stockholder will not, without the prior
written consent of Xxxxxxx Xxxxx Xxxxxx Inc., offer, sell, contract to
sell, pledge or otherwise dispose of, (or enter into any transaction
which is designed to, or might be expected to, result in the
disposition (whether by actual disposition or effective economic
disposition due to cash settlement or otherwise) by the Selling
Stockholder or any affiliate of the Selling Stockholder or any person
in privity with the Selling Stockholder or any affiliate of the Selling
Stockholder) directly or indirectly, or file (or participate in the
filing of) a registration statement with 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 Exchange Act with respect to, any shares of capital stock of the
Company or any securities convertible into or exercisable or
exchangeable for such capital stock, or publicly announce an intention
to effect any such transaction, for a period of 90 days after the date
of this Agreement, other than shares of Common Stock disposed of as
bona fide gifts approved by Xxxxxxx Xxxxx Barney Inc. or securities
sold to the Company in connection with the Stock Repurchase.
(b) The Selling Stockholder will not take, directly or
indirectly, any action designed to or that would constitute or that
might reasonably be expected to cause or result in, under the Exchange
Act or otherwise, stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the
Securities.
(c) The Selling Stockholder will advise you promptly, and
if requested by you, will confirm such advice in writing, so long as
delivery of a prospectus relating to the Securities by an underwriter
or dealer may be required under the Act, of any change in information
in the Registration Statement or the Prospectus relating to or provided
by or on behalf of the Selling Stockholder.
6. Conditions to the Obligations of the Underwriters.
The obligations of the Underwriters to purchase the Underwritten Securities and
the Option Securities, as the case may be, shall be subject to the accuracy of
the representations and warranties on the part of the Company and the Selling
Stockholder contained herein as of the Execution Time, the Closing Date and any
settlement date pursuant to Section 3 hereof, to the accuracy of the statements
of the Company and the Selling Stockholder made in any certificates pursuant to
the provisions
15
hereof, to the performance by the Company and the Selling Stockholder of their
respective obligations hereunder and to the following additional conditions:
(a) If the Registration Statement has not become
effective prior to the Execution Time, unless the Representatives agree
in writing to a later time, the Registration Statement will become
effective not later than (i) 6:00 PM New York City time on the date of
determination of the public offering price, if such determination
occurred at or prior to 3:00 PM New York City time on such date or (ii)
9:30 AM on the Business Day following the day on which the public
offering price was determined, if such determination occurred after
3:00 PM New York City time on such date; if filing of the Prospectus,
or any supplement thereto, is required pursuant to Rule 424(b), the
Prospectus, and any such supplement, will be filed in the manner and
within the time period required by Rule 424(b); and no stop order
suspending the effectiveness of the Registration Statement shall have
been issued and no proceedings for that purpose shall have been
instituted or threatened.
(b) The Company shall have requested and caused Bass,
Xxxxx & Xxxx PLC, counsel for the Company, to have furnished to the
Representatives their opinion, dated the Closing Date and addressed to
the Representatives, to the effect that:
(i) each of the Company and each of the
Subsidiaries has been duly incorporated and is validly
existing as a corporation in good standing under the laws of
the jurisdiction in which it is chartered or organized, with
full corporate power and authority to own or lease, as the
case may be, and to operate its properties and conduct its
business as described in the Prospectus, and is duly qualified
to do business as a foreign corporation and is in good
standing under the laws of each jurisdiction which requires
such qualification, except where the failure to be in good
standing or so qualified would not reasonably be expected to
have a material adverse effect of the condition (financial or
otherwise) prospects, earnings, business or properties of the
Company and its subsidiaries, taken as a whole.
(ii) all outstanding shares of capital stock of
the Subsidiaries are owned by the Company either directly or
through wholly owned subsidiaries free and clear of any
perfected security interest and, to the knowledge of such
counsel, after due inquiry, any other security interest,
claim, lien or encumbrance;
(iii) the Company's authorized equity
capitalization is as set forth in the Prospectus; the capital
stock of the Company conforms in all material respects to the
description thereof contained in the Prospectus; the
outstanding shares of Common Stock (including the Securities
being sold hereunder by the Selling Stockholder) have been
duly and validly authorized and issued and are fully paid and
nonassessable; the Securities being sold by the Selling
Stockholder are duly listed, and admitted and authorized for
trading, on the New York Stock Exchange; the holders of
outstanding shares of capital stock of the Company are not
entitled to preemptive or other rights to subscribe for the
Securities arising by operation of law, under the certificate
of incorporation or bylaws of the Company or, to the
16
knowledge of such counsel, under any agreement to which the
Company is a party; and, except as set forth in the
Prospectus, to such counsel's knowledge, no options, warrants
or other rights to purchase, agreements or other obligations
to issue, or rights to convert any obligations into or
exchange any securities for, shares of capital stock of or
ownership interests in the Company are outstanding;
(iv) to the knowledge of such counsel, there is
no pending or threatened action, suit or proceeding by or
before any court or governmental agency, authority or body or
any arbitrator involving the Company or any of its
subsidiaries or its or their officers or property of a
character required to be disclosed in the Registration
Statement which is not adequately disclosed in the Prospectus,
and there is no franchise, contract or other document of a
character required to be described in the Registration
Statement or Prospectus, or to be filed as an exhibit thereto,
which is not described or filed as required; and the
statements included or incorporated by reference in the
Prospectus under the headings "Risk Factors - Compliance with
privacy laws could adversely affect our business and results
of operations," "Risk Factors - We conduct business in a
heavily regulated industry and changes in regulations or
violations of regulations could adversely affect our business
and results of operations," "Risk Factors - We face periodic
reviews, audits and investigations under our contracts with
federal and state government agencies, and these audits could
have adverse findings that may negatively impact our
business," "Business-Industry Regulation," "Business-Service
Marks and Trademarks" and "Business-Litigation" insofar as
such statements summarize legal matters, agreements, documents
or proceedings discussed therein, are accurate in all material
respects and fair summaries of such legal matters, agreements,
documents or proceedings;
(v) the Registration Statement has become
effective under the Act; any required filing of the
Prospectus, and any supplements thereto, pursuant to Rule
424(b) has been made in the manner and within the time period
required by Rule 424(b); to the knowledge of such counsel, no
stop order suspending the effectiveness of the Registration
Statement has been issued, no proceedings for that purpose
have been instituted or threatened and the Registration
Statement and the Prospectus (other than the financial
statements and other financial information contained therein,
as to which such counsel need express no opinion) comply as to
form in all material respects with the applicable requirements
of the Act and the Exchange Act and the respective rules
thereunder; and such counsel has no reason to believe that on
the Effective Date or the date the Registration Statement was
last deemed amended the Registration Statement contained any
untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary to
make the statements therein not misleading or that the
Prospectus as of its date and on the Closing Date included or
includes any untrue statement of a material fact or omitted or
omits to state a material fact necessary to make the
statements therein, in the light of the circumstances under
which they were made, not misleading (in each case, other than
the financial statements and other financial information
contained therein, as to which such counsel need express no
opinion);
17
(vi) this Agreement has been duly authorized,
executed and delivered by the Company;
(vii) the Company is not and, after giving effect
to the offering and sale of the Securities and the application
of the proceeds thereof as described in the Prospectus, will
not be, an "investment company" as defined in the Investment
Company Act of 1940, as amended;
(viii) the Company has all requisite corporate
power and authority, has taken all requisite corporate action,
and has received and is in compliance with all governmental,
judicial and other authorizations, approvals and orders
necessary to enter into and perform this Agreement, and no
consent, approval, authorization, filing with or order of any
court or governmental agency or body is required in connection
with the transactions contemplated herein or the consummation
of the Senior Notes Offering and Stock Repurchase, except (1)
in the case of the transactions contemplated herein, such as
have been obtained under the Act and such as may be required
under the blue sky laws of any jurisdiction in connection with
the purchase and distribution of the Securities by the
Underwriters in the manner contemplated in this Agreement and
in the Prospectus and (2) in the case of the consummation of
the Senior Notes Offering and Stock Repurchase, such as may be
specified under the blue sky laws of any jurisdiction in
connection with the purchase and distribution of the debt
securities by the initial purchasers thereof in the manner
contemplated in the offering memorandum related thereto;
(ix) neither the sale of the Securities nor the
consummation of any other of the transactions herein
contemplated nor the consummation of the Senior Notes Offering
and Stock Repurchase, nor the fulfillment of the terms hereof
will conflict with, result in a breach or violation of or
imposition of any lien, charge or encumbrance upon any
property or asset of the Company or its Subsidiaries pursuant
to, (i) the charter or by-laws of the Company or its
Subsidiaries, (ii) the terms of any indenture, contract,
lease, mortgage, deed of trust, note agreement, loan agreement
or other agreement, obligation, condition, covenant or
instrument to which the Company or its Subsidiaries is a party
or bound or to which its or their property is subject, or
(iii) any statute, law, rule, regulation, judgment, order or
decree applicable to the Company or its Subsidiaries of any
court, regulatory body, administrative agency, governmental
body, arbitrator or other authority having jurisdiction over
the Company or its Subsidiaries or any of its or their
properties, except in the case of clauses (ii) and (iii) for
such conflicts, breaches, violations, impositions of liens,
charges or encumbrances that would not reasonably be expected
to have a material adverse effect on the condition (financial
or otherwise), prospects, earnings, business or properties of
the Company and its subsidiaries, taken as a whole;
(x) to the knowledge of such counsel, no holders
of securities of the Company have rights to the registration
of such securities under the Registration Statement except
such rights as have been validly and irrevocably waived; and
18
(xi) the Company and its subsidiaries possess
such licenses, certificates, permits, consents, provider
agreements and other authorizations (collectively,
"Governmental Licenses"), and has made all necessary filings
and disclosures, required by any federal, state, local or
foreign regulatory authorities necessary to conduct their
respective businesses, including to furnish services to
persons covered by Medicare, the Federal Employee Benefits
Health Plan, and Medicaid, in the states where the Company
participates in Medicaid, and the Company and its subsidiaries
are in compliance with the terms and conditions of all such
Governmental Licenses, except where the failure so to possess
such Governmental Licenses or to comply would not, singly or
in the aggregate, reasonably be expected to have a material
adverse effect on the condition (financial or otherwise),
prospects, earnings, business or properties of the Company and
its subsidiaries, taken as a whole; all of the Governmental
Licenses are valid and in full force and effect, except when
the invalidity of such Governmental Licenses or the failure of
such Governmental Licenses to be in full force and effect
would not reasonably be expected to have a material adverse
effect on the condition (financial or otherwise), prospects,
earnings, business or properties of the Company and its
subsidiaries, taken as a whole; and neither the Company nor
any of its subsidiaries has received any notice of proceedings
relating to the revocation or modification of any such
Governmental Licenses which, singly or in the aggregate, if
the subject of an unfavorable decision, ruling or finding,
would reasonably be expected to result in a material adverse
effect on the condition (financial or otherwise), prospects,
earnings, business or properties of the Company and its
subsidiaries, taken as a whole, whether or not arising from
transactions in the ordinary course of business.
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws of any jurisdiction other than the
corporate laws of the State of Delaware or the Federal laws of the
United States, to the extent they deem proper and specified in such
opinion, upon the opinion of other counsel of good standing whom they
believe to be reliable, who are satisfactory to counsel for the
Underwriters and upon whom the Underwriters can rely, (B) as to matters
of fact, to the extent they deem proper, on certificates of responsible
officers of the Company and public officials and (C) as to matters
involving certain healthcare issues to be specified, upon the opinion
of Xxxxxxx Xxxxxx & Green, P.C., special regulatory counsel, provided
that the Underwriters also are expressly permitted to rely on such
opinion. References to the Prospectus in this paragraph (b) include any
supplements thereto at the Closing Date.
(c) The Selling Stockholder shall have requested and
caused Xxxxx X. Xxxxx, general counsel for the Selling Stockholder, to
have furnished to the Representatives her opinion dated the Closing
Date and addressed to the Representatives, to the effect that:
(i) this Agreement has been duly authorized,
executed and delivered by the Selling Stockholder and the Selling
Stockholder has full legal right and authority to sell, transfer and
deliver in the manner provided in this Agreement the Securities being
sold by the Selling Stockholder hereunder;
19
(ii) assuming that each Underwriter acquires its
interest in the Securities it has purchased from the Selling
Stockholder without notice of any adverse claim (within the meaning of
Section 8-105 of the UCC), each Underwriter that has purchased the
Securities delivered on the Closing Date to The Depository Trust
Company or other securities intermediary by making payment therefor as
provided herein, and that has had such Securities credited to the
securities account or accounts of such Underwriters maintained with The
Depository Trust Company or such other securities intermediary, will
have acquired a security entitlement (within the meaning of Section
8-102(a)(17) of the UCC) to such Securities purchased by such
Underwriter, and no action based on an adverse claim (within the
meaning of Section 8-105 of the UCC) may be asserted against such
Underwriter with respect to such Securities;
(iii) the Selling Stockholder has all requisite
corporate power and authority, has taken all requisite corporate
action, and has received and is in compliance with all governmental,
judicial and other authorizations, approvals and orders necessary to
enter into and perform this Agreement, and no consent, approval,
authorization or order of any court or governmental agency or body is
required for the consummation by the Selling Stockholder of the
transactions contemplated herein or the consummation of the Stock
Repurchase, except in the case of the transactions contemplated herein,
such as may have been obtained under the Act and such as may be
required under the blue sky laws of any jurisdiction in connection with
the purchase and distribution of the Securities by the Underwriters and
such other approvals (specified in such opinion) as have been obtained.
(iv) neither the sale of the Securities being
sold by the Selling Stockholder nor the consummation of any other of
the transactions herein contemplated by the Selling Stockholder or the
fulfillment of the terms hereof by the Selling Stockholder will
conflict with, result in a breach or violation of, or constitute a
default under any law or the charter or By-laws of the Selling
Stockholder or the terms of any indenture or other agreement or
instrument known to such counsel and to which the Selling Stockholder
or any of its affiliates is a party or bound, or any judgment, order or
decree known to such counsel to be applicable to the Selling
Stockholder or any of its affiliates of any court, regulatory body,
administrative agency, governmental body or arbitrator having
jurisdiction over the Selling Stockholder or any of its affiliates.
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws of any jurisdiction other than the
State of Iowa or the Federal laws of the United States, to the extent
they deem proper and specified in such opinion, upon the opinion of
other counsel of good standing whom they believe to be reliable and who
are satisfactory to counsel for the Underwriters and upon whom the
Underwriters can rely, and (B) as to matters of fact, to the extent
they deem proper, on certificates of responsible officers of the
Selling Stockholder and public officials.
(d) The Representatives shall have received from
Weil, Gotshal & Xxxxxx LLP, counsel for the Underwriters, such opinion
or opinions, dated the Closing Date and addressed to the
Representatives, with respect to the issuance and sale of the
Securities, the Registration Statement, the Prospectus (together with
any supplement thereto) and
20
other related matters as the Representatives may reasonably require,
and the Company and the Selling Stockholder shall have furnished to
such counsel such documents as they request for the purpose of enabling
them to pass upon such matters.
(e) The Company shall have furnished to the
Representatives a certificate of the Company, signed by the Chairman of
the Board or the President and the principal financial or accounting
officer of the Company, dated the Closing Date, to the effect that the
signers of such certificate have carefully examined the Registration
Statement, the Prospectus, any supplements to the Prospectus and this
Agreement and that:
(i) the representations and warranties of the
Company in this Agreement are true and correct on and as of
the Closing Date with the same effect as if made on the
Closing Date and the Company has complied with all the
agreements and satisfied all the conditions on its part to be
performed or satisfied at or prior to the Closing Date;
(ii) no stop order suspending the effectiveness
of the Registration Statement has been issued and no
proceedings for that purpose have been instituted or, to the
Company's knowledge, threatened; and
(iii) since the date of the most recent financial
statements included or incorporated by reference in the
Prospectus (exclusive of any amendment or supplement thereto),
there has been no material adverse effect on the condition
(financial or otherwise), prospects, earnings, business or
properties of the Company and its subsidiaries, taken as a
whole, whether or not arising from transactions in the
ordinary course of business, except as set forth in or
contemplated in the Prospectus (exclusive of any amendment or
supplement thereto).
(f) The Selling Stockholder shall have furnished to the
Representatives a certificate, signed by the Chairman of the Board or
the President and the principal financial or accounting officer of the
Selling Stockholder, dated the Closing Date, to the effect that the
signers of such certificate have carefully examined the representations
and warranties of the Selling Stockholder in this Agreement and such
representations and warranties are true and correct on and as of the
Closing Date to the same effect as if made on the Closing Date.
(g) The Company shall have requested and caused Xxxxxx
Xxxxxxxx LLP to have furnished to the Representatives, at the Execution
Time and at the Closing Date, letters, dated respectively as of the
Execution Time and as of the Closing Date, in form and substance
satisfactory to the Representatives, confirming that they are
independent accountants within the meaning of the Act and the Exchange
Act and the respective applicable rules and regulations adopted by the
Commission thereunder and that they have performed a review of the
unaudited interim financial information of the Company for the
nine-month period ended September 30, 2001 and as of September 30, 2001
in accordance with Statement on Auditing Standards No. 71, and stating
in effect that:
21
(i) in their opinion the audited financial
statements and financial statement schedules included or
incorporated by reference in the Registration Statement and
the Prospectus and reported on by them comply as to form in
all material respects with the applicable accounting
requirements of the Act and the Exchange Act and the related
rules and regulations adopted by the Commission;
(ii) on the basis of a reading of the latest
unaudited financial statements made available by the Company
and its subsidiaries; their limited review, in accordance with
standards established under Statement on Auditing Standards
No. 71, of the unaudited interim financial information for the
nine-month period ended September 30, 2001, and as at
September 30, 2001 incorporated by reference in the
Registration Statement and the Prospectus; carrying out
certain specified procedures (but not an examination in
accordance with generally accepted auditing standards) which
would not necessarily reveal matters of significance with
respect to the comments set forth in such letter; a reading of
the minutes of the meetings of the stockholders, directors and
the audit, compensation and benefits, and nominating
committees of the Company and its subsidiaries; and inquiries
of certain officials of the Company who have responsibility
for financial and accounting matters of the Company and its
subsidiaries as to transactions and events subsequent to
December 31, 2000, nothing came to their attention which
caused them to believe that:
(1) any unaudited financial statements
included or incorporated by reference in the
Registration Statement and the Prospectus do not
comply as to form in all material respects with
applicable accounting requirements of the Act and
with the related rules and regulations adopted by the
Commission with respect to financial statements
included or incorporated by reference in quarterly
reports on Form 10-Q under the Exchange Act; and said
unaudited financial statements are not in conformity
with generally accepted accounting principles applied
on a basis substantially consistent with that of the
audited financial statements included or incorporated
by reference in the Registration Statement and the
Prospectus;
(2) with respect to the period
subsequent to September 30, 2001, there were any
changes, at a specified date not more than five days
prior to the date of the letter, in the long-term
debt of the Company and its subsidiaries or capital
stock of the Company or decreases in the total
stockholders' equity of the Company as compared with
the amounts shown on the September 30, 2001,
consolidated balance sheet included or incorporated
by reference in the Registration Statement and the
Prospectus, or for the period from October 1, 2001 to
such specified date there were any decreases, as
compared with the corresponding period in the
preceding quarter, in operating revenues or earnings
before income taxes or in total or per share amounts
of net earnings of the Company and its subsidiaries,
except in all instances for changes or decreases set
forth in such letter, in which case the letter shall
be accompanied by an
22
explanation by the Company as to the significance
thereof unless said explanation is not deemed
necessary by the Representatives; and
(3) the information included or
incorporated by reference in the Registration
Statement and Prospectus in response to Regulation
S-K, Item 301 (Selected Financial Data), Item 302
(Supplementary Financial Information), Item 402
(Executive Compensation) and Item 503(d) (Ratio of
Earnings to Fixed Charges) is not in conformity with
the applicable disclosure requirements of Regulation
S-K; and
(iii) they have performed certain other specified
procedures as a result of which they determined that certain
information of an accounting, financial or statistical nature
(which is limited to accounting, financial or statistical
information derived from the general accounting records of the
Company and its subsidiaries) set forth in the Registration
Statement and the Prospectus and in Exhibit 12 to the
Registration Statement, and the information included or
incorporated by reference in the Company's Annual Report on
Form 10-K, incorporated by reference in the Registration
Statement and the Prospectus, and the information included or
incorporated by reference in the Company's Quarterly Reports
on Form 10-Q, incorporated by reference in the Registration
Statement and the Prospectus, agrees with the accounting
records of the Company and its subsidiaries, excluding any
questions of legal interpretation.
References to the Prospectus in this paragraph (g) include any
amendment or supplement thereto at the date of the applicable
letter.
(h) Subsequent to the Execution Time or, if earlier, the
dates as of which information is given in the Registration Statement
(exclusive of any amendment thereof) and the Prospectus (exclusive of
any supplement thereto), there shall not have been (i) any change or
decrease specified in the letter or letters referred to in paragraph
(i) of this Section 6 or (ii) any change, or any development involving
a prospective change, in or affecting the condition (financial or
otherwise), earnings, business or properties of the Company and its
subsidiaries, taken as a whole, whether or not arising from
transactions in the ordinary course of business, except as set forth in
or contemplated in the Prospectus (exclusive of any supplement thereto)
the effect of which, in any case referred to in clause (i) or (ii)
above, is, in the sole judgment of the Representatives, so material and
adverse as to make it impractical or inadvisable to proceed with the
offering or delivery of the Securities as contemplated by the
Registration Statement (exclusive of any amendment thereof) and the
Prospectus (exclusive of any supplement thereto).
(i) Prior to the Closing Date, the Company and the
Selling Stockholder shall have furnished to the Representatives such
further information, certificates and documents as the Representatives
may reasonably request.
(j) On or prior to the Execution Time, the New York Stock
Exchange shall have approved the Underwriters' participation in the
distribution of the Securities to be sold by the Selling Stockholder in
accordance with Rule 393 of the New York Stock Exchange.
23
(k) At the Execution Time, the Company shall have
furnished to the Representatives a letter substantially in the form of
Exhibit A hereto from each officer and director of the Company and from
Warburg, Xxxxxx & Co., Warburg, Xxxxxx Ventures, L.P., X.X. Xxxxxxx,
Xxxxxx & Co., LLC, Warburg, Xxxxxx Equity Partners, L.P., Warburg,
Xxxxxx Netherlands Equity Partners I, C.V., Warburg, Xxxxxx Netherlands
Equity Partners II, C.V., Warburg, Xxxxxx Netherlands Equity Partners
III, C.V., and Xxxxxxx X. Xxxxxxx, Xxxx Xxxxxxxx and Xxxxxxxx X. Xxxx
as trustees of certain voting trusts addressed to the Representatives.
(l) The Senior Notes Offering shall close concurrently
with the purchase and sale of the Underwritten Securities hereunder.
If any of the conditions specified in this Section 6 shall not
have been fulfilled in all material respects when and as provided in this
Agreement, or if any of the opinions and certificates mentioned above or
elsewhere in this Agreement shall not be in all material respects reasonably
satisfactory in form and substance to the Representatives and counsel for the
Underwriters, this Agreement and all obligations of the Underwriters hereunder
may be cancelled at, or at any time prior to, the Closing Date by the
Representatives. Notice of such cancellation shall be given to the Company and
the Selling Stockholder in writing or by telephone or facsimile confirmed in
writing.
The documents required to be delivered by this Section 6 shall
be delivered at the office of Weil, Gotshal & Xxxxxx LLP, counsel for the
Underwriters, at 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, on the Closing
Date.
7. Reimbursement of Underwriters' Expenses. If the sale
of the Securities provided for herein is not consummated because any condition
to the obligations of the Underwriters set forth in Section 6 hereof is not
satisfied, because of any termination pursuant to Section 10 hereof or because
of any refusal, inability or failure on the part of the Company or the Selling
Stockholder to perform any agreement herein or comply with any provision hereof
other than by reason of a default by any of the Underwriters, the Company will
reimburse the Underwriters severally through Xxxxxxx Xxxxx Barney Inc. on demand
for all reasonable out-of-pocket expenses (including reasonable fees and
disbursements of counsel) that shall have been incurred by them in connection
with the proposed purchase and sale of the Securities. If the Company is
required to make any payments to the Underwriters under this Section 7 because
of the Selling Stockholder's refusal, inability or failure to satisfy any
condition to the obligations of the Underwriters set forth in Section 6, the
Selling Stockholder shall reimburse the Company on demand for all amounts so
paid.
8. Indemnification and Contribution. (a) The Company
agrees to indemnify and hold harmless each Underwriter, the directors, officers,
employees and agents of each Underwriter and each person who controls any
Underwriter within the meaning of either the Act or the Exchange Act against any
and all losses, claims, damages or liabilities, joint or several, to which they
or any of them may become subject under the Act, the Exchange Act or other
Federal or state statutory law or regulation, at common law or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in the registration statement for
24
the registration of the Securities as originally filed or in any amendment
thereof or in any Preliminary Prospectus or the Prospectus, or in any amendment
thereof or supplement thereto, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, and agrees to
reimburse each such indemnified party, as incurred, for any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that the Company will not be liable in any such case to the extent that any such
loss, claim, damage or liability arises out of or is based upon any such untrue
statement or alleged untrue statement or omission or alleged omission made
therein in reliance upon and in conformity with written information furnished to
the Company by or on behalf of any Underwriter through the Representatives
specifically for inclusion therein; provided, further, that with respect to any
untrue statement or omission of material fact made in any Preliminary
Prospectus, the indemnity provided in this Section 8(a) shall not inure to the
benefit of any Underwriter from whom the person asserting any such loss, claim,
damage or liability purchased the Securities concerned, to the extent that any
such loss, claim, damage or liability of such Underwriter occurs where it shall
be determined by a court of competent jurisdiction by final and non-appealable
judgment that (i) delivery of the Prospectus was required under the Act, (ii)
the Company had previously furnished copies of the Prospectus to the
Representatives in sufficient quantity and in sufficient time to enable the
Representatives to satisfy their delivery obligations under the Act, (iii) the
untrue statement or omission of a material fact contained in the Preliminary
Prospectus was corrected in the Prospectus and (iv) such loss, claim, damage or
liability results solely from the fact that there was not sent or given to such
person at or prior to the written confirmation of the sale of such Securities to
such person, a copy of the Prospectus. This indemnity agreement will be in
addition to any liability which the Company may otherwise have.
(b) The Selling Stockholder agrees to indemnify and hold
harmless the Company, each of its directors, each of its officers who signs the
Registration Statement, each Underwriter, the directors, officers, employees and
agents of each Underwriter and each person who controls the Company or any
Underwriter within the meaning of either the Act or the Exchange Act, to the
same extent as the foregoing indemnity from the Company to each Underwriter, but
only with reference to written information furnished to the Company by or on
behalf of the Selling Stockholder specifically for inclusion in the documents
referred to in the foregoing indemnity. This indemnity agreement will be in
addition to any liability which the Selling Stockholder may otherwise have.
(c) Each Underwriter severally and not jointly agrees to
indemnify and hold harmless the Company, each of its directors, each of its
officers who signs the Registration Statement, and each person who controls the
Company within the meaning of either the Act or the Exchange Act and the Selling
Stockholder, to the same extent as the foregoing indemnity to each Underwriter,
but only with reference to written information relating to such Underwriter
furnished to the Company by or on behalf of such Underwriter through the
Representatives specifically for inclusion in the documents referred to in the
foregoing indemnity. This indemnity agreement will be in addition to any
liability which any Underwriter may otherwise have. The Company and the Selling
Stockholder acknowledge that the statements set forth in the last paragraph of
the cover page regarding delivery of the Securities and, under the heading
"Underwriting", (i) the list of Underwriters and their respective participation
in the sale of the
25
Securities, (ii) the sentences related to concessions and reallowances and (iii)
the paragraph related to stabilization, syndicate covering transactions and
penalty bids in any Preliminary Prospectus and the Prospectus constitute the
only information furnished in writing by or on behalf of the several
Underwriters for inclusion in any Preliminary Prospectus or the Prospectus.
(d) Promptly after receipt by an indemnified party under
this Section 8 of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against the indemnifying
party under this Section 8, notify the indemnifying party in writing of the
commencement thereof; but the failure so to notify the indemnifying party (i)
will not relieve it from liability under paragraph (a), (b) or (c) above unless
and to the extent it did not otherwise learn of such action and such failure
results in the forfeiture by the indemnifying party of substantial rights and
defenses and (ii) will not, in any event, relieve the indemnifying party from
any obligations to any indemnified party other than the indemnification
obligation provided in paragraph (a), (b) or (c) above. The indemnifying party
shall be entitled to appoint counsel of the indemnifying party's choice at the
indemnifying party's expense to represent the indemnified party in any action
for which indemnification is sought (in which case the indemnifying party shall
not thereafter be responsible for the fees and expenses of any separate counsel
retained by the indemnified party or parties except as set forth below);
provided, however, that such counsel shall be reasonably satisfactory to the
indemnified party. Notwithstanding the indemnifying party's election to appoint
counsel to represent the indemnified party in an action, the indemnified party
shall have the right to employ separate counsel (including local counsel), and
the indemnifying party shall bear the reasonable fees, costs and expenses of
such separate counsel if (i) the use of counsel chosen by the indemnifying party
to represent the indemnified party would present such counsel with a conflict of
interest, (ii) the actual or potential defendants in, or targets of, any such
action include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be legal
defenses available to it and/or other indemnified parties which are different
from or additional to those available to the indemnifying party, (iii) the
indemnifying party shall not have employed counsel reasonably satisfactory to
the indemnified party to represent the indemnified party within a reasonable
time after notice of the institution of such action or (iv) the indemnifying
party shall authorize in writing the indemnified party to employ separate
counsel at the expense of the indemnifying party. An indemnifying party will
not, without the prior written consent of the indemnified parties, settle or
compromise or consent to the entry of any judgment with respect to any pending
or threatened claim, action, suit or proceeding in respect of which
indemnification or contribution may be sought hereunder (whether or not the
indemnified parties are actual or potential parties to such claim or action)
unless such settlement, compromise or consent includes an unconditional release
of each indemnified party from all liability arising out of such claim, action,
suit or proceeding.
(e) In the event that the indemnity provided in paragraph
(a), (b) or (c) of this Section 8 is unavailable to or insufficient to hold
harmless an indemnified party for any reason, the Company, the Selling
Stockholder and the Underwriters agree to contribute to the aggregate losses,
claims, damages and liabilities (including legal or other expenses reasonably
incurred in connection with investigating or defending same) (collectively
"Losses") to which the Company, the Selling Stockholder and one or more of the
Underwriters may be subject in such proportion as is appropriate to reflect the
relative benefits received by the Company, by the Selling Stockholder and by the
Underwriters from the offering of the Securities; provided, however, that
26
in no case shall any Underwriter (except as may be provided in any agreement
among underwriters relating to the offering of the Securities) be responsible
for any amount in excess of the underwriting discount or commission applicable
to the Securities purchased by such Underwriter hereunder. If the allocation
provided by the immediately preceding sentence is unavailable for any reason,
the Company, the Selling Stockholder and the Underwriters severally shall
contribute in such proportion as is appropriate to reflect not only such
relative benefits but also the relative fault of the Company of the Selling
Stockholder and of the Underwriters in connection with the statements or
omissions which resulted in such Losses as well as any other relevant equitable
considerations. Benefits received by the Company and the Selling Stockholder
shall be deemed to be equal to the total net proceeds from the offering (before
deducting expenses) received by each of them, and benefits received by the
Underwriters shall be deemed to be equal to the total underwriting discounts and
commissions, in each case as set forth on the cover page of the Prospectus.
Relative fault shall be determined by reference to, among other things, whether
any untrue or any alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information provided by the
Company or the Selling Stockholder on the one hand or the Underwriters on the
other, the intent of the parties and their relative knowledge, access to
information and opportunity to correct or prevent such untrue statement or
omission. The Company, the Selling Stockholder and the Underwriters agree that
it would not be just and equitable if contribution were determined by pro rata
allocation or any other method of allocation which does not take account of the
equitable considerations referred to above. Notwithstanding the provisions of
this paragraph (e), 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. For purposes of
this Section 8, each person who controls an Underwriter within the meaning of
either the Act or the Exchange Act and each director, officer, employee and
agent of an Underwriter shall have the same rights to contribution as such
Underwriter, and each person who controls the Company within the meaning of
either the Act or the Exchange Act, each officer of the Company who shall have
signed the Registration Statement and each director of the Company shall have
the same rights to contribution as the Company, subject in each case to the
applicable terms and conditions of this paragraph (e).
(f) The liability of the Selling Stockholder under the
Selling Stockholder's representations and warranties contained in Section 1
hereof and under the indemnity and contribution agreements contained in this
Section 8 shall be limited to an amount equal to the initial public offering
price of the Securities sold by the Selling Stockholder to the Underwriters. The
Company and the Selling Stockholder may agree, as among themselves and without
limiting the rights of the Underwriters under this Agreement, as to the
respective amounts of such liability for which they each shall be responsible.
9. Default by an Underwriter. If any one or more
Underwriters shall fail to purchase and pay for any of the Securities agreed to
be purchased by such Underwriter or Underwriters hereunder and such failure to
purchase shall constitute a default in the performance of its or their
obligations under this Agreement, the remaining Underwriters shall be obligated
severally to take up and pay for (in the respective proportions which the amount
of Securities set forth opposite their names in Schedule I hereto bears to the
aggregate amount of Securities set forth opposite the names of all the remaining
Underwriters) the Securities which the defaulting Underwriter or Underwriters
agreed but failed to purchase; provided, however, that in the event
27
that the aggregate amount of Securities which the defaulting Underwriter or
Underwriters agreed but failed to purchase shall exceed 10% of the aggregate
amount of Securities set forth in Schedule I hereto, the remaining Underwriters
shall have the right to purchase all, but shall not be under any obligation to
purchase any, of the Securities, and if such nondefaulting Underwriters do not
purchase all the Securities, this Agreement will terminate without liability to
any nondefaulting Underwriter, the Selling Stockholder or the Company. In the
event of a default by any Underwriter as set forth in this Section 9, the
Closing Date shall be postponed for such period, not exceeding five Business
Days, as the Representatives shall determine in order that the required changes
in the Registration Statement and the Prospectus or in any other documents or
arrangements may be effected. Nothing contained in this Agreement shall relieve
any defaulting Underwriter of its liability, if any, to the Company, the Selling
Stockholder and any nondefaulting Underwriter for damages occasioned by its
default hereunder.
10. Termination. This Agreement shall be subject to
termination in the absolute discretion of the Representatives, by written notice
given to the Company prior to delivery of and payment for the Securities, if at
any time prior to such time (i) trading in the Company's Common Stock shall have
been suspended by the Commission or the New York Stock Exchange or trading in
securities generally on the New York Stock Exchange shall have been suspended or
limited or minimum prices shall have been established on such Exchange, (ii) a
banking moratorium shall have been declared either by Federal or New York State
authorities or (iii) there shall have occurred any outbreak or escalation of
hostilities, declaration by the United States of a national emergency or war, or
other calamity or crisis the effect of which on financial markets is such as to
make it, in the sole judgment of the Representatives, impracticable or
inadvisable to proceed with the offering or delivery of the Securities as
contemplated by the Prospectus (exclusive of any supplement thereto).
11. Representations and Indemnities to Survive. The
respective agreements, representations, warranties, indemnities and other
statements of the Company or its officers, of the Selling Stockholder and of the
Underwriters set forth in or made pursuant to this Agreement will remain in full
force and effect, regardless of any investigation made by or on behalf of any
Underwriter, the Selling Stockholder or the Company or any of the officers,
directors, employees, agents or controlling persons referred to in Section 8
hereof, and will survive delivery of and payment for the Securities. The
provisions of Sections 7 and 8 hereof shall survive the termination or
cancellation of this Agreement.
12. Notices. All communications hereunder will be in
writing and effective only on receipt, and, if sent to the Representatives, will
be mailed, delivered or telefaxed to the Xxxxxxx Xxxxx Xxxxxx Inc. General
Counsel (fax no.: (000) 000-0000) and confirmed to the General Counsel, Xxxxxxx
Xxxxx Barney Inc., at 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, 00000,
Attention: General Counsel; or, if sent to the Company, will be mailed,
delivered or telefaxed to (301-493-0743) and confirmed to it at 0000 Xxxxxxxxx
Xxxxx, Xxxxx 000, Xxxxxxxx, Xxxxxxxx 00000, Attention: Chief Financial Officer;
or if sent to the Selling Stockholder, will be mailed, delivered or telefaxed
and confirmed to it at the address set forth in Schedule II hereto.
13. Successors. This Agreement will inure to the benefit
of and be binding upon the parties hereto and their respective successors and
the officers, directors, employees, agents and controlling persons referred to
in Section 8 hereof, and no other person will have any right or
28
obligation hereunder.
14. Applicable Law. This Agreement will be governed by
and construed in accordance with the laws of the State of New York applicable to
contracts made and to be performed within the State of New York.
15. Counterparts. This Agreement may be executed in one
or more counterparts, each of which shall constitute an original and all of
which together shall constitute one and the same instrument.
16. Headings. The section headings used herein are for
convenience only and shall not affect the construction hereof.
17. Definitions. The terms which follow, when used in
this Agreement, shall have the meanings indicated.
"Act" shall mean the Securities Act of 1933, as amended, and
the rules and regulations of the Commission promulgated thereunder.
"Business Day" shall mean any day other than a Saturday, a
Sunday or a legal holiday or a day on which banking institutions or
trust companies are authorized or obligated by law to close in New York
City.
"Commission" shall mean the Securities and Exchange
Commission.
"Effective Date" shall mean each date and time that the
Registration Statement, any post-effective amendment or amendments
thereto and any Rule 462(b) Registration Statement became or become
effective.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended, and the rules and regulations of the Commission promulgated
thereunder.
"Execution Time" shall mean the date and time that this
Agreement is executed and delivered by the parties hereto.
"Preliminary Prospectus" shall mean any preliminary prospectus
referred to in paragraph 1(i)(a) above and any preliminary prospectus
included in the Registration Statement at the Effective Date that omits
Rule 430A Information.
"Prospectus" shall mean the prospectus relating to the
Securities that is first filed pursuant to Rule 424(b) after the
Execution Time or, if no filing pursuant to Rule 424(b) is required,
shall mean the form of final prospectus relating to the Securities
included in the Registration Statement at the Effective Date.
"Registration Statement" shall mean the registration statement
referred to in paragraph 1(i)(a) above, including exhibits and
financial statements, as amended at the
29
Execution Time (or, if not effective at the Execution Time, in the form
in which it shall become effective) and, in the event any
post-effective amendment thereto or any Rule 462(b) Registration
Statement becomes effective prior to the Closing Date, shall also mean
such registration statement as so amended or such Rule 462(b)
Registration Statement, as the case may be. Such term shall include any
Rule 430A Information deemed to be included therein at the Effective
Date as provided by Rule 430A.
"Rule 424", "Rule 430A" and "Rule 462" refer to such rules
under the Act.
"Rule 430A Information" shall mean information with respect to
the Securities and the offering thereof permitted to be omitted from
the Registration Statement when it becomes effective pursuant to Rule
430A.
"Rule 462(b) Registration Statement" shall mean a registration
statement and any amendments thereto filed pursuant to Rule 462(b)
relating to the offering covered by the registration statement referred
to in Section 1(a) hereof.
If the foregoing is in accordance with your understanding of
our agreement, please sign and return to us the enclosed duplicate hereof,
whereupon this letter and your acceptance shall represent a binding agreement
among the Company, the Selling Stockholder and the several Underwriters.
Very truly yours,
COVENTRY HEALTH CARE, INC.
By:
---------------------------------
Name:
Title:
PRINCIPAL HEALTH CARE, INC.
By:
---------------------------------
Name:
Title:
The undersigned hereby guarantees, as a primary obligor and not merely as
surety, the due and punctual payment and performance by the Selling Stockholder
of its obligations under or arising from this Agreement (the "Obligations").
This Guarantee constitutes a guarantee of payment when due and not of
collection. The undersigned agrees to be bound by, and to cause the Selling
Stockholder to comply with, all provisions of this Agreement which by their
express terms are applicable to the Selling Stockholder, as if it were a party
thereto.
The undersigned guarantees that the Obligations will be paid when due strictly
in accordance with their terms, regardless of any law, regulation or order now
or hereafter in effect in any
30
jurisdiction affecting any of such terms or the rights of the Underwriters with
respect thereto and regardless of any other circumstance which might otherwise
constitute a defense available to, or a discharge of, the undersigned. The
undersigned waives promptness, diligence, notice of acceptance and any other
notice with respect to any of the Obligations and this Guarantee and any
requirement that the Underwriters exercise any right or take any action against
the Selling Stockholder.
PRINCIPAL FINANCIAL SERVICES, INC.
By:
---------------------------------
Name:
Title:
31
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
Xxxxxxx Xxxxx Xxxxxx Inc.
Xxxxxxx, Xxxxx & Co.
Xxxxxx Brothers Inc.
CIBC World Markets Corp.
By: Xxxxxxx Xxxxx Barney Inc.
By:
---------------------------------
Name:
Title:
For themselves and the other
several Underwriters named in
Schedule I to the foregoing
Agreement.
32
SCHEDULE I
NUMBER OF
UNDERWRITERS UNDERWRITTEN SECURITIES
TO BE PURCHASED
Xxxxxxx Xxxxx Xxxxxx Inc.
Xxxxxxx, Sachs & Co.
Xxxxxx Brothers Inc.
CIBC World Markets Corp.
Total
=========
SCHEDULE II
NUMBER OF UNDERWRITTEN MAXIMUM NUMBER OF
SECURITIES TO BE SOLD OPTION SECURITIES
SELLING STOCKHOLDER: TO BE SOLD
Principal Health Care, Inc.
[INSERT ADDRESS, FAX NO.]
----------- ---------
Total ................
=========== =========
i
Exhibit A
Coventry Health and Life Insurance Company
Group Health Plan, Inc.
HealthAmerica Pennsylvania, Inc.
Southern Health Services, Inc.
Coventry Health Care of Delaware, Inc.
Coventry Health Care of Kansas, Inc.
Coventry Health Care of Iowa, Inc.
Carelink Health Plans, Inc.
HealthCare USA, Inc.
Coventry Health Care of Nebraska, Inc.
Coventry Health Care of Louisiana, Inc.
Coventry Health Care of Georgia, Inc.
Coventry Health Care of the Carolinas, Inc.
Coventry Health Care Investment Corporation
HealthAssurance Pennsylvania, Inc.
HealthCare USA of Missouri, LLC
WellPath Select, Inc.
Coventry Management Services, Inc.
ii
[LETTERHEAD]
Coventry Health Care, Inc.
Public Offering of Common Stock
, 2002
------- --
Xxxxxxx Xxxxx Barney Inc.
Xxxxxxx, Xxxxx & Co.
Xxxxxx Brothers Inc.
CIBC World Markets Corp.
As Representatives of the several Underwriters,
c/o Xxxxxxx Xxxxx Barney Inc.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
This letter is being delivered to you in connection with the
proposed Underwriting Agreement (the "Underwriting Agreement"), between Coventry
Health Care, Inc., a Delaware corporation (the "Company"), Principal Health
Care, Inc., an Iowa corporation as Selling Stockholder, and each of you as
representatives of a group of Underwriters named therein, relating to an
underwritten public offering of Common Stock, $.01 par value (the "Common
Stock"), of the Company.
In order to induce you and the other Underwriters to enter
into the Underwriting Agreement, the undersigned will not, without the prior
written consent of Xxxxxxx Xxxxx Xxxxxx Inc., offer, sell, contract to sell,
pledge or otherwise dispose of (or enter into any transaction which is designed
to, or might reasonably be expected to, result in the disposition (whether by
actual disposition or effective economic disposition due to cash settlement or
otherwise) by the undersigned or any affiliate of the undersigned or any person
in privity with the undersigned or any affiliate of the undersigned), directly
or indirectly, including the filing (or participation in the filing) of a
registration statement with the Securities and Exchange 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
Securities and Exchange Commission promulgated thereunder with respect to, any
shares of capital stock of the Company or any securities convertible into, or
exercisable or exchangeable for such capital stock, or publicly announce an
intention to effect any such transaction, for a period of 90 days after the date
of this Agreement, other than shares of Common Stock disposed of as bona fide
gifts or shares of Common Stock transferred to affiliates of the undersigned or
to members of his or her immediate family or to a trust for their benefit,
provided that such affiliates, persons or trusts agree in writing with the
Representatives of the several Underwriters to be bound by the terms hereof.
iii
If for any reason the Underwriting Agreement shall be
terminated prior to the Closing Date (as defined in the Underwriting Agreement),
the agreement set forth above shall likewise be terminated.
Yours very truly,
[SIGNATURE]
[NAME AND ADDRESS]
iv
