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Exhibit 1.1
S & S DRAFT
01/13/98
7,000,000 SHARES(1)
BALANCED CARE CORPORATION
COMMON STOCK
UNDERWRITING AGREEMENT
January__, 1998
BANCAMERICA XXXXXXXXX XXXXXXXX
XXXXX XXXXXX INC.
BT ALEX. XXXXX INCORPORATED
As Representatives of the several Underwriters
c/o BancAmerica Xxxxxxxxx Xxxxxxxx
000 Xxxxxxxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Ladies/Gentlemen:
Balanced Care Corporation, a Delaware corporation (the
"Company"), addresses you as the Representatives of each of the persons, firms
and corporations listed in Schedule A hereto (herein collectively called the
"Underwriters") and hereby confirms its agreement with the several Underwriters
as follows:
1. Description of Shares. The Company proposes to issue
and sell 7,000,000 shares of its authorized and unissued common stock, par
value $0.001 per share (the "Firm Shares") to the several Underwriters. The
Company also proposes to grant to the Underwriters an option to purchase up to
1,050,000 additional shares of the Company's common stock, par value $0.001
per share (the "Option Shares"), as provided in Section 7 hereof. As used in
this Agreement, the term "Shares" shall include the Firm Shares and the Option
Shares. All shares of common stock, par value $0.001 per share, of the Company
to be outstanding after giving effect to the sales of the Shares contemplated
hereby, are hereinafter referred to as "Common Stock."
2. Representations, Warranties and Agreements of the
Company. The Company represents and warrants to and agrees with each
Underwriter that:
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(1) Plus an option to purchase up to 1,050,000 additional shares from the
Company to cover over-allotments.
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(a) A registration statement on Form S-1 (File No.
333-37833) with respect to the Shares, including a prospectus subject
to completion, has been prepared by the Company in conformity with the
requirements of the Securities Act of 1933, as amended (the "Act"),
and the applicable rules and regulations (the "Rules and Regulations")
of the Securities and Exchange Commission (the "Commission") under the
Act and has been filed with the Commission; amendments to such
registration statement, amended prospectuses subject to completion and
abbreviated registration statements pursuant to Rule 462(b) of the
Rules and Regulations as may have been required prior to the date
hereof have been similarly prepared and filed with the Commission; and
the Company will file additional amendments to such registration
statement, such amended prospectuses subject to completion and such
abbreviated registration statements as may hereafter be required.
Copies of such registration statement and amendments, of each related
prospectus subject to completion (the "Preliminary Prospectuses") and
of any abbreviated registration statement pursuant to Rule 462(b) of
the Rules and Regulations have been delivered to you.
If the registration statement relating to the Shares
has been declared effective under the Act by the Commission, the
Company will prepare and promptly file with the Commission the
information omitted from the registration statement pursuant to Rule
430A(a) or, if BancAmerica Xxxxxxxxx Xxxxxxxx, on behalf of the
several Underwriters, shall agree to the utilization of Rule 434 of
the Rules and Regulations, the information required to be included in
any term sheet filed pursuant to Rule 434(b) or (c), as applicable, of
the Rules and Regulations pursuant to subparagraph (1), (4) or (7) of
Rule 424(b) of the Rules and Regulations or as part of a
post-effective amendment to the registration statement (including a
final form of prospectus). If the registration statement relating to
the Shares has not been declared effective under the Act by the
Commission, the Company will prepare and promptly file an amendment to
the registration statement, including a final form of prospectus, or,
if BancAmerica Xxxxxxxxx Xxxxxxxx, on behalf of the several
Underwriters, shall agree to the utilization of Rule 434 of the Rules
and Regulations, the information required to be included in any term
sheet filed pursuant to Rule 434(b) or (c), as applicable, of the
Rules and Regulations. The term "Registration Statement" as used in
this Agreement shall mean such registration statement, including
financial statements, schedules and exhibits, in the form in which it
became or becomes, as the case may be, effective (including, if the
Company omitted information from the registration statement pursuant
to Rule 430A(a) or files a term sheet pursuant to Rule 434 of the
Rules and Regulations, the information deemed to be a part of the
registration statement at the time it became effective pursuant to
Rule 430A(b) or Rule 434(d) of the Rules and Regulations) and, in the
event of any amendment thereto or the filing of any abbreviated
registration statement pursuant to Rule 462(b) of the Rules and
Regulations relating thereto after the effective date of such
registration statement, shall also mean (from and after the
effectiveness of such amendment or the filing of such abbreviated
registration statement) such registration
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statement as so amended, together with any such abbreviated
registration statement. The term "Prospectus" as used in this
Agreement shall mean the prospectus relating to the Shares as included
in such Registration Statement at the time it becomes effective
(including, if the Company omitted information from the Registration
Statement pursuant to Rule 430A(a) of the Rules and Regulations, the
information deemed to be a part of the Registration Statement at the
time it became effective pursuant to Rule 430A(b) of the Rules and
Regulations); provided, however, that if in reliance on Rule 434 of
the Rules and Regulations and with the consent of BancAmerica
Xxxxxxxxx Xxxxxxxx, on behalf of the several Underwriters, the Company
shall have provided to the Underwriters a term sheet pursuant to Rule
434(b) or (c), as applicable, prior to the time that a confirmation is
sent or given for purposes of Section 2(10)(a) of the Act, the term
"Prospectus" shall mean the "prospectus subject to completion" (as
defined in Rule 434(g) of the Rules and Regulations) last provided to
the Underwriters by the Company and circulated by the Underwriters to
all prospective purchasers of the Shares (including the information
deemed to be a part of the Registration Statement at the time it
became effective pursuant to Rule 434(d) of the Rules and
Regulations). Notwithstanding the foregoing, if any revised
prospectus shall be provided to the Underwriters by the Company for
use in connection with the offering of the Shares that differs from
the prospectus referred to in the immediately preceding sentence
(whether or not such revised prospectus is required to be filed with
the Commission pursuant to Rule 424(b) of the Rules and Regulations),
the term "Prospectus" shall refer to such revised prospectus from and
after the time it is first provided to the Underwriters for such use.
If in reliance on Rule 434 of the Rules and Regulations and with the
consent of BancAmerica Xxxxxxxxx Xxxxxxxx, on behalf of the several
Underwriters, the Company shall have provided to the Underwriters a
term sheet pursuant to Rule 434(b) or (c), as applicable, prior to the
time that a confirmation is sent or given for purposes of Section
2(10)(a) of the Act, the Prospectus and the term sheet, together, will
not be materially different from the prospectus in the Registration
Statement.
(b) The Commission has not issued any order preventing or
suspending the use of any Preliminary Prospectus or instituted
proceedings for that purpose, and each such Preliminary Prospectus
has, as of its date, conformed in all material respects to the
requirements of the Act and the Rules and Regulations and, as of its
date, has not included any untrue statement of a material fact or
omitted to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made,
not misleading; and at the time the Registration Statement became or
becomes, as the case may be, effective and at all times subsequent
thereto up to and on the Closing Date (hereinafter defined) and on any
later date on which Option Shares are to be purchased, (i) the
Registration Statement and Prospectus, and any amendments or
supplements thereto, contained and will contain all material
information required to be included therein by the Act and the Rules
and Regulations and will in all material respects conform to the
requirements of the Act and the Rules and Regulations, (ii) the
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Registration Statement, and any amendments or supplements thereto, did
not and will not include any untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, and (iii) the
Prospectus, and any amendments or supplements thereto, did not and
will not include any untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
provided, however, that none of the representations and warranties
contained in this subparagraph (b) shall apply to information
contained in or omitted from the Registration Statement or the
Prospectus, or any amendment or supplement thereto, in reliance upon,
and in conformity with, written information relating to any
Underwriter furnished to the Company by such Underwriter specifically
for use in the preparation thereof.
(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 of its incorporation with
full corporate power and authority to own, lease and operate its
properties and conduct its business as described in the Prospectus;
except as set forth on Annex I attached hereto, the Company owns all
of the outstanding capital stock of its subsidiaries free and clear of
any pledge, lien, security interest, encumbrance, claim or equitable
interest; each of the Company and its subsidiaries is duly qualified
to do business as a foreign corporation and is in good standing in
each jurisdiction in which the ownership or leasing of its properties
or the conduct of its business requires such qualification, except
where the failure to be so qualified or be in good standing would not
have a material adverse effect on the condition (financial or
otherwise), earnings, operations, business or business prospects of
the Company and its subsidiaries considered as one enterprise; no
proceeding has been instituted in any such jurisdiction, revoking,
limiting or curtailing, or seeking to revoke, limit or curtail, such
power and authority or qualification; each of the Company and its
subsidiaries is in possession of and operating in compliance with all
authorizations, licenses, certificates, consents, orders and permits
from state, federal and other regulatory authorities which are
material to the conduct of its business, all of which are valid and in
full force and effect; neither the Company nor any of its subsidiaries
is in violation of its respective charter or bylaws or in default in
the performance or observance of any material obligation, agreement,
covenant or condition contained in any material bond, debenture, note
or other evidence of indebtedness, or in any material lease, contract,
indenture, mortgage, deed of trust, loan agreement, joint venture or
other agreement or instrument to which the Company or any of its
subsidiaries is a party or by which it or any of its subsidiaries or
their respective properties may be bound; and neither the Company nor
any of its subsidiaries is in material violation of any law, order,
rule, regulation, writ, injunction, judgment or decree of any court,
government or governmental agency or body, domestic or foreign, having
jurisdiction over the Company or any of its subsidiaries or over their
respective properties of which it has knowledge. The Company does not
own or control, directly
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or indirectly, any corporation, association or other entity other than
as set forth on Annex II attached hereto.
(d) The Company has full legal right, power and authority
to enter into this Agreement and perform the transactions contemplated
hereby. This Agreement has been duly authorized, executed and
delivered by the Company and is a valid and binding agreement on the
part of the Company, enforceable in accordance with its terms, except
as rights to indemnification hereunder may be limited by applicable
law and except as the enforcement hereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar
laws relating to or affecting creditors' rights generally or by
general equitable principles; the performance of this Agreement and
the consummation of the transactions herein contemplated will not
result in a material breach or violation of any of the terms and
provisions of, or constitute a default under, (i) any bond, debenture,
note or other evidence of indebtedness, or under any lease, contract,
indenture, mortgage, deed of trust, loan agreement, joint venture or
other agreement or instrument to which the Company or any of its
subsidiaries is a party or by which it or any of its subsidiaries or
their respective properties may be bound, (ii) the charter or bylaws
of the Company or any of its subsidiaries, or (iii) any law, order,
rule, regulation, writ, injunction, judgment or decree of any court,
government or governmental agency or body, domestic or foreign, having
jurisdiction over the Company or any of its subsidiaries or over their
respective properties. No consent, approval, authorization or order
of or qualification with any court, government or governmental agency
or body, domestic or foreign, having jurisdiction over the Company or
any of its subsidiaries or over their respective properties is
required for the execution and delivery of this Agreement and the
consummation by the Company or any of its subsidiaries of the
transactions herein contemplated, except such as may be required under
the Act or under state or other securities or Blue Sky laws, all of
which requirements have been satisfied in all material respects.
(e) There is no pending or, to the best of the Company's
knowledge, threatened action, suit, claim or proceeding against the
Company, any of its subsidiaries or any of their respective officers
or any of their respective properties, assets or rights before any
court, government or governmental agency or body, domestic or foreign,
having jurisdiction over the Company or any of its subsidiaries or
over their respective officers or properties or otherwise which, if
determined adversely to the Company, such subsidiary or such officer,
(i) would likely result in any material adverse change in the
condition (financial or otherwise), earnings, operations, business or
business prospects of the Company and its subsidiaries considered as
one enterprise or would likely materially and adversely affect their
properties, assets or rights, (ii) would likely prevent consummation
of the transactions contemplated hereby or (iii) is required to be
disclosed in the Registration Statement or Prospectus and is not so
disclosed; and there are no agreements, contracts, leases or documents
of the Company or any of its subsidiaries of
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a character required to be described or referred to in the
Registration Statement or Prospectus or to be filed as an exhibit to
the Registration Statement by the Act or the Rules and Regulations
which have not been accurately described in all material respects in
the Registration Statement or Prospectus or filed as exhibits to the
Registration Statement.
(f) All outstanding shares of capital stock of the
Company have been duly authorized and validly issued and are fully
paid and nonassessable, have been issued in compliance with all
federal and state securities laws, were not issued in violation of or
subject to any preemptive rights or other rights to subscribe for or
purchase securities, and the authorized and outstanding capital stock
of the Company is as set forth in the Prospectus under the caption
"Capitalization" and conforms in all material respects to the
statements relating thereto contained in the Registration Statement
and the Prospectus (and such statements correctly state the substance
of the instruments defining the capitalization of the Company); the
Firm Shares and the Option Shares have been duly authorized for
issuance and sale to the Underwriters pursuant to this Agreement and,
when issued and delivered by the Company against payment therefor in
accordance with the terms of this Agreement, will be duly and validly
issued and fully paid and nonassessable, and will be sold free and
clear of any pledge, lien, security interest, encumbrance, claim or
equitable interest; and no preemptive right, co-sale right,
registration right, right of first refusal or other similar right of
shareholders exists with respect to any of the Firm Shares or Option
Shares or the issuance and sale thereof other than those that have
been expressly waived prior to the date hereof and those that will
automatically expire upon and will not apply to the consummation of
the transactions contemplated on the Closing Date. No further
approval or authorization of any shareholder, the Board of Directors
of the Company or others is required for the issuance and sale or
transfer of the Shares except as may be required under the Act or
under state or other securities or Blue Sky laws. All issued and
outstanding shares of capital stock of each subsidiary of the Company
have been duly authorized and validly issued and are fully paid and
nonassessable, and were not issued in violation of or subject to any
preemptive right, or other rights to subscribe for or purchase shares
and are owned by the Company free and clear of any pledge, lien,
security interest, encumbrance, claim or equitable interest. Except
as disclosed in the Prospectus, neither the Company nor any subsidiary
has outstanding any options to purchase, or any preemptive rights or
other rights to subscribe for or to purchase, any securities or
obligations convertible into, or any contracts or commitments to issue
or sell, shares of its capital stock or any such options, rights,
convertible securities or obligations. The description of the
Company's stock option, stock bonus and other stock plans or
arrangements, and the options or other rights granted and exercised
thereunder, set forth in the Prospectus accurately and fairly presents
the information required to be shown with respect to such plans,
arrangements, options and rights.
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(g) KPMG Peat Marwick LLP, which has examined the
consolidated financial statements of the Company, together with the
related schedule and notes, as of June 30, 1997 and 1996 and for each
of the years then ended and for the period April 17, 1995 (date of
inception) to June 30, 1995 filed with the Commission as a part of the
Registration Statement, which are included in the Prospectus, are
independent accountants within the meaning of the Act and the Rules
and Regulations; the audited consolidated financial statements of the
Company, together with the related schedule and notes, and the
unaudited consolidated financial information, forming part of the
Registration Statement and the Prospectus, fairly present the
financial position and the results of operations of the Company and
its subsidiaries at the respective dates and for the respective
periods to which they apply; and all audited consolidated financial
statements of the Company, together with the related schedule and
notes, and the unaudited consolidated financial information, filed
with the Commission as part of the Registration Statement, have been
prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods involved except as may be
otherwise stated therein. The selected and summary financial data
included in the Registration Statement present fairly the information
shown therein and have been compiled on a basis consistent with the
audited consolidated financial statements presented therein. Except
as set forth in paragraphs (h), (i), (j) and (k) below, no other
financial statements or schedules are required to be included in the
Registration Statement. The pro forma financial statements and the
related notes thereto included in the Registration Statement and
Prospectus present fairly the information shown therein, have been
prepared in accordance with the Commission's rules and guidelines with
respect to pro forma financial statements and have been properly
compiled on the bases described therein, and the assumptions used in
the preparation thereof are reasonable and the adjustments used
therein are appropriate to give effect to the transactions and
circumstances referred to therein.
(h) Xxxxx, Xxxxx & Xxxxxx, which has examined (i) the
combined financial statements of Xxxxxx Healthcare Affiliates ("Xxxxxx
Healthcare"), together with the related notes, as of June 30, 1996 and
1995 and for each of the two (2) years ended June 30, 1996 and (ii)
the combined financial statements of Heavenly Health Care, Inc. d/b/a
Xxx Xxxxx Residential Homes ("Xxx Xxxxx"), together with the related
notes as of December 31, 1996 for the year ended December 31, 1996,
filed with the Commission as a part of the Registration Statement,
which are included in the Prospectus, are independent accountants
within the meaning of the Act and the Rules and Regulations; the
audited combined financial statements of Xxxxxx Healthcare and of Xxx
Xxxxx, together with the respective related notes, forming part of the
Registration Statement and Prospectus fairly present the respective
financial positions and the results of operations of Xxxxxx Healthcare
and its affiliates and Xxx Xxxxx and its subsidiaries at the
respective dates and for the respective periods to which they apply;
and all audited combined financial statements of Xxxxxx Healthcare and
of Xxx Xxxxx, together with the respective related
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schedules and notes, and the unaudited combined financial information,
filed with the Commission as part of the Registration Statement, have
been prepared in accordance with generally accepted accounting
principles consistently applied throughout the periods involved except
as may be otherwise stated therein.
(i) Xxxxxx & Clemente, which has examined the combined
financial statements of Keystone Affiliates, together with the related
notes, as of December 31, 1996 and 1995 and for the three (3) years
ended December 31, 1996 filed with the Commission as a part of the
Registration Statement, which are included in the Prospectus, are
independent accountants within the meaning of the Act and the Rules
and Regulations; the audited combined financial statements of Keystone
Affiliates, together with the related notes, forming part of the
Registration Statement and Prospectus, fairly present the financial
position and the results of operations of Keystone Affiliates and its
affiliates at the respective dates and for the respective periods to
which they apply; and all audited combined financial statements of
Keystone Affiliates, together with the related notes, filed with the
Commission as part of the Registration Statement, have been prepared
in accordance with generally accepted accounting principles
consistently applied throughout the periods involved except as may be
otherwise stated therein.
(j) Coopers & Xxxxxxx, L.L.P., which has examined (i) the
combined financial statements of Gethsemane Affiliates, together with
the related notes, as of June 30, 1997 and 1996 and for the three (3)
years ended June 30, 1997, (ii) the financial statements of Xxxxxx
Senior Care, Inc. ("Xxxxxx"), together with the related notes, as of
June 30, 1997 and 1996 and for each of the three (3) years ended June
30, 1997 and (iii) the financial statements of Xxxxxxx'x Personal Care
Home ("Xxxxxxx"), together with the related notes, as of June 30, 1997
and 1996 and for the three (3) years ended June 30, 1997, filed with
the Commission as a part of the Registration Statement, which are
included in the Prospectus, are independent accountants within the
meaning of the Act and the Rules and Regulations; the respective
combined financial statements of Gethsemane Affiliates, Xxxxxx and
Xxxxxxx, together with the related notes, forming part of the
Registration Statement and Prospectus, fairly present the respective
financial positions and the results of operations of Gethsemane
Affiliates, Xxxxxx and Xxxxxxx and their respective subsidiaries at
the respective dates and for the respective periods to which they
apply; and all financial statements of Gethsemane Affiliates, Xxxxxx
and Xxxxxxx together with the related notes, filed with the Commission
as part of the Registration Statement, have been prepared in
accordance with generally accepted accounting principles consistently
applied throughout the periods involved except as may be otherwise
stated therein.
(k) Xxxxx, Xxxxxxx & Company, P.A., which has examined
the financial statements of Triangle Retirement Services, together
with the related notes, as of December 31, 1997 and 1996 and for the
two (2) years ended December 31, 1997, filed
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with the Commission as a part of the Registration Statement, which are
included in the Prospectus, are independent accountants within the
meaning of the Act and the Rules and Regulations; the financial
statements of Triangle Retirement Services, together with the related
notes, forming part of the Registration Statement and Prospectus,
fairly present the financial position and the results of operations of
Triangle Retirement Services and its subsidiaries at the respective
dates and for the respective periods to which they apply; and all
financial statements of Triangle Retirement Services together with the
related notes, filed with the Commission as part of the Registration
Statement, have been prepared in accordance with generally accepted
accounting principles consistently applied throughout the periods
involved except as may be otherwise stated therein.
(l) Subsequent to the respective dates as of which
information is given in the Registration Statement and Prospectus,
there has not been (i) any material adverse change in the condition
(financial or otherwise), earnings, operations, business or business
prospects of the Company and its subsidiaries considered as one
enterprise, (ii) any transaction that is material to the Company and
its subsidiaries considered as one enterprise, except transactions
entered into in the ordinary course of business, (iii) any obligation,
direct or contingent, that is material to the Company and its
subsidiaries considered as one enterprise, incurred by the Company or
its subsidiaries, except obligations incurred in the ordinary course
of business, (iv) any change in the capital stock or outstanding
indebtedness of the Company or any of its subsidiaries that is
material to the Company and its subsidiaries considered as one
enterprise, (v) any dividend or distribution of any kind declared,
paid or made on the capital stock of the Company or any of its
subsidiaries, or (vi) any loss or damage (whether or not insured) to
the property of the Company or any of its subsidiaries which has been
sustained or will have been sustained which has a material adverse
effect on the condition (financial or otherwise), earnings,
operations, business or business prospects of the Company and its
subsidiaries considered as one enterprise.
(m) Except as set forth in the Registration Statement and
Prospectus, (i) each of the Company and its subsidiaries has good and
marketable title to all properties and assets described in the
Registration Statement and Prospectus as owned by it free and clear of
any pledge, lien, security interest, encumbrance, claim or equitable
interest, other than such as would not have a material adverse effect
on the condition (financial or otherwise), earnings, operations,
business or business prospects of the Company and its subsidiaries
considered as one enterprise, (ii) the agreements to which the Company
or any of its subsidiaries is a party described in the Registration
Statement and Prospectus are valid agreements, enforceable by the
Company and its subsidiaries (as applicable), except as the
enforcement thereof may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating
to or affecting creditors' rights generally or by general equitable
principles and, to the best of the Company's knowledge, the other
contracting party or parties thereto are not in material
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breach or material default under any of such agreements, and (iii)
each of the Company and its subsidiaries has valid and enforceable
leases for all properties described in the Registration Statement and
Prospectus as leased by it, except as the enforcement thereof may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting creditors'
rights generally or by general equitable principles. Except as set
forth in the Registration Statement and Prospectus, the Company owns
or leases all such properties as are necessary to its operations as
now conducted or as proposed to be conducted.
(n) The Company and its subsidiaries have timely filed
all necessary federal, state and foreign income and franchise tax
returns and have paid all taxes shown thereon as due, and there is no
tax deficiency that has been or, to the best of the Company's
knowledge, might be asserted against the Company or any of its
subsidiaries that might have a material adverse effect on the
condition (financial or otherwise), earnings, operations, business or
business prospects of the Company and its subsidiaries considered as
one enterprise; and all tax liabilities are adequately provided for on
the books of the Company and its subsidiaries.
(o) The Company and its subsidiaries maintain insurance
with insurers of recognized financial responsibility of the types and
in the amounts generally deemed adequate for their respective
businesses and consistent with insurance coverage maintained by
similar companies in similar businesses, including, but not limited
to, insurance covering real and personal property owned or leased by
the Company or its subsidiaries against theft, damage, destruction,
acts of vandalism and all other risks customarily insured against, all
of which insurance is in full force and effect; neither the Company
nor any such subsidiary has been refused any 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 materially and adversely affect
the condition (financial or otherwise), earnings, operations, business
or business prospects of the Company and its subsidiaries considered
as one enterprise.
(p) To the best of Company's knowledge, no labor
disturbance by the employees of the Company or any of its subsidiaries
exists or is imminent. No collective bargaining agreement exists with
any employees of the Company or any of its subsidiaries and, to the
best of the Company's knowledge, no such agreement is imminent.
(q) The Common Stock has been approved for quotation on
The American Stock Exchange, Inc. subject to official notice of
issuance.
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(r) The Company has been advised concerning the
Investment Company Act of 1940, as amended (the "1940 Act"), and the
rules and regulations thereunder, and conducts, and has in the past
conducted, and intends in the future to conduct, its affairs in such a
manner as to ensure that it will not become an "investment company" or
a company "controlled" by an "investment company" within the meaning
of the 1940 Act and such rules and regulations.
(s) The Company has not distributed and will not
distribute prior to the later of (i) the Closing Date, or any date on
which Option Shares are to be purchased, as the case may be, and (ii)
completion of the distribution of the Shares, any offering material in
connection with the offering and sale of the Shares other than any
Preliminary Prospectuses, the Prospectus, the Registration Statement
and other materials, if any, permitted by the Act.
(t) Neither the Company nor any of its subsidiaries has
at any time during the last five (5) years (i) made any unlawful
contribution to any candidate for foreign office or failed to disclose
fully any contribution in violation of law, or (ii) made any payment
to any federal or state governmental officer or official, or other
person charged with similar public or quasi-public duties, other than
payments required or permitted by the laws of the United States or any
jurisdiction thereof.
(u) The Company has not taken and will not take, directly
or indirectly, any action designed to or that might reasonably be
expected to cause or result in stabilization or manipulation of the
price of the Common Stock to facilitate the sale or resale of the
Shares.
(v) Each officer and director of the Company and each
beneficial owner of shares of Common Stock or warrants or options to
purchase Common Stock set forth on Annex III attached hereto has agreed
in writing that such person will not, for a period of 180 days from
the date that the Registration Statement is declared effective by the
Commission (the "Lock-up Period"), offer to sell, contract to sell, or
otherwise sell, dispose of, loan, pledge or grant any rights with
respect to (collectively, a "Disposition") any shares of Common Stock,
any options or warrants to purchase any shares of Common Stock or any
securities convertible into or exchangeable for shares of Common Stock
(collectively, "Securities") now owned or hereafter acquired directly
by such person or with respect to which such person has or hereafter
acquires the power of disposition, otherwise than (i) as a bona fide
gift or gifts, provided the donee or donees thereof agree in writing
to be bound by this restriction, (ii) as a distribution to partners or
shareholders of such person, provided that the distributees thereof
agree in writing to be bound by the terms of this restriction, or
(iii) with the prior written consent of BancAmerica Xxxxxxxxx
Xxxxxxxx. The foregoing restriction has been expressly agreed to
preclude the holder of the Securities from engaging in any hedging or
other transaction
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which is designed to or reasonably expected to lead to or result in a
Disposition of Securities during the Lock-up Period, even if such
Securities would be disposed of by someone other than such holder.
Such prohibited hedging or other transactions would include, without
limitation, any short sale (whether or not against the box) or any
purchase, sale or grant of any right (including, without limitation,
any put or call option) with respect to any Securities or with respect
to any security (other than a broad-based market basket or index) that
includes, relates to or derives any significant part of its value
from, Securities. Furthermore, such person has also agreed and
consented to the entry of stop transfer instructions with the
Company's transfer agent against the transfer of Securities held by
such person except in compliance with this restriction. The Company
has provided to counsel for the Underwriters a complete and accurate
list of all security holders of the Company and the number and type of
securities held by each security holder. The Company has provided to
counsel for the Underwriters true, accurate and complete copies of all
of the agreements pursuant to which its officers, directors and
shareholders have agreed to such or similar restrictions (the "Lock-up
Agreements") presently in effect or effected hereby.
(w) Except as set forth in the Registration Statement and
Prospectus, (i) the Company is in compliance in all material respects
with all rules, laws and regulations relating to the use, treatment,
storage and disposal of toxic substances and protection of health or
the environment ("Environmental Laws") which are applicable to its
business, (ii) the Company has received no notice from any
governmental authority or third party of an asserted claim under
Environmental Laws, which claim is required to be disclosed in the
Registration Statement and Prospectus, (iii) the Company will not be
required to make future material capital expenditures to comply with
Environmental Laws and (iv) no property which is owned, leased or
occupied by the Company has been designated as a Superfund site
pursuant to the Comprehensive Response, Compensation, and Liability
Act of 1980, as amended (42 U.S.C. Section 9601, et seq.), or
otherwise designated as a contaminated site under applicable state or
local law.
(aa) The Company and each of its subsidiaries maintain a
system of internal accounting controls sufficient to provide
reasonable assurances that (i) transactions are executed in accordance
with management's general or specific authorizations, (ii)
transactions are recorded as necessary to permit preparation of
financial statements in conformity with generally accepted accounting
principles and to maintain accountability for assets, (iii) access to
assets is permitted only in accordance with management's general or
specific authorization, and (iv) the recorded accountability for
assets is compared with existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
(bb) There are no outstanding loans, advances (except
normal advances for business expenses in the ordinary course of
business) or guarantees of indebtedness by
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the Company to or for the benefit of any of the officers or directors
of the Company or any of the members of the families of any of them,
except as disclosed in the Registration Statement and the Prospectus
and with respect to a loan to Xxxxx Xxxxx of less than $60,000.
(cc) The Company has complied with all provisions of
Section 517.075, Florida Statutes applicable to it relating to doing
business with the Government of Cuba or with any person or affiliate
located in Cuba.
3. Purchase, Sale and Delivery of Shares. On the basis
of the representations, warranties and agreements herein contained, but subject
to the terms and conditions herein set forth, the Company agrees to sell to the
Underwriters, and each Underwriter agrees, severally and not jointly, to
purchase from the Company, at a purchase price of $_____ per share, the
respective number of Firm Shares as hereinafter set forth. The obligation of
each Underwriter to the Company shall be to purchase from the Company that
number of Firm Shares which is set forth opposite the name of such Underwriter
in Schedule A hereto (subject to adjustment as provided in Section 10).
Delivery of definitive certificates for the Firm Shares to be
purchased by the Underwriters pursuant to this Section 3 shall be made against
payment of the purchase price therefor by the several Underwriters by certified
or official bank check or checks drawn in next-day funds, payable to the order
of the Company (and the Company agrees not to deposit any such check in the
bank on which it is drawn, and not to take any other action with the purpose or
effect of receiving immediately available funds, until the business day
following the date of its delivery to the Company, and, in the event of any
breach of the foregoing, the Company shall reimburse the Underwriters for the
interest lost and any other expenses borne by them by reason of such breach),
at the offices of Shearman & Sterling, 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000 (or at such other place as may be agreed upon among the Representatives
and the Company), at 7:00 A.M., San Francisco time (a) on the third (3rd) full
business day following the first day that Shares are traded, (b) if this
Agreement is executed and delivered after 1:30 P.M., San Francisco time, the
fourth (4th) full business day following the day that this Agreement is
executed and delivered or (c) at such other time and date not later than seven
(7) full business days following the first day that Shares are traded as the
Representatives and the Company may determine (or at such time and date to
which payment and delivery shall have been postponed pursuant to Section 10
hereof), such time and date of payment and delivery being herein called the
"Closing Date"; provided, however, that if the Company has not made available
to the Representatives copies of the Prospectus within the time provided in
Section 4(d) hereof, the Representatives may, in their sole discretion,
postpone the Closing Date until no later than two (2) full business days
following delivery of copies of the Prospectus to the Representatives. The
certificates for the Firm Shares to be so delivered will be made available to
you at such office or such other location including, without limitation, in New
York City, as you may reasonably request for checking at least one (1) full
business day prior to the Closing
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Date and will be in such names and denominations as you may request, such
request to be made at least two (2) full business days prior to the Closing
Date. If the Representatives so elect, delivery of the Firm Shares may be made
by credit through full fast transfer to the accounts at The Depository Trust
Company designated by the Representatives.
It is understood that you, individually, and not as the
Representatives of the several Underwriters, may (but shall not be obligated
to) make payment of the purchase price on behalf of any Underwriter or
Underwriters whose check or checks shall not have been received by you prior to
the Closing Date for the Firm Shares to be purchased by such Underwriter or
Underwriters. Any such payment by you shall not relieve any such Underwriter
or Underwriters of any of its or their obligations hereunder.
After the Registration Statement becomes effective, the
several Underwriters intend to make an initial public offering (as such term is
described in Section 11 hereof) of the Firm Shares at an initial public
offering price of $_____ per share. After the initial public offering, the
several Underwriters may, in their discretion, vary the public offering price.
The information set forth in the last paragraph on the front
cover page (insofar as such information relates to the Underwriters), on the
inside front cover concerning stabilization and over-allotment by the
Underwriters, and under the _____ and _____ paragraphs under the caption
"Underwriting" in any Preliminary Prospectus and in the Prospectus constitutes
the only information furnished by the Underwriters to the Company for inclusion
in any Preliminary Prospectus, the Prospectus or the Registration Statement,
and you, on behalf of the respective Underwriters, represent and warrant to the
Company that the statements made therein do not include any untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
4. Further Agreements of the Company. The Company
agrees with the several Underwriters that:
(a) The Company will use its best efforts to cause the
Registration Statement and any amendment thereof, if not effective at
the time and date that this Agreement is executed and delivered by the
parties hereto, to become effective as promptly as possible; the
Company will use its best efforts to cause any abbreviated
registration statement pursuant to Rule 462(b) of the Rules and
Regulations as may be required subsequent to the date the Registration
Statement is declared effective to become effective as promptly as
possible; the Company will notify you, promptly after it shall receive
notice thereof, of the time when the Registration Statement, any
subsequent amendment to the Registration Statement or any abbreviated
registration statement has become effective or any supplement to the
Prospectus has been filed; if the Company omitted information from the
Registration Statement at the time it was originally declared
effective in reliance
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upon Rule 430A(a) of the Rules and Regulations, the Company will
provide evidence satisfactory to you that the Prospectus contains such
information and has been filed, within the time period prescribed,
with the Commission pursuant to subparagraph (1) or (4) of Rule 424(b)
of the Rules and Regulations or as part of a post-effective amendment
to such Registration Statement as originally declared effective which
is declared effective by the Commission; if the Company files a term
sheet pursuant to Rule 434 of the Rules and Regulations, the Company
will provide evidence satisfactory to you that the Prospectus and term
sheet meeting the requirements of Rule 434(b) or (c), as applicable,
of the Rules and Regulations, have been filed, within the time period
prescribed, with the Commission pursuant to subparagraph (7) of Rule
424(b) of the Rules and Regulations; if for any reason the filing of
the final form of Prospectus is required under Rule 424(b)(3) of the
Rules and Regulations, it will provide evidence satisfactory to you
that the Prospectus contains such information and has been filed with
the Commission within the time period prescribed; it will notify you
promptly of any request by the Commission for the amending or
supplementing of the Registration Statement or the Prospectus or for
additional information; promptly upon your request, it will prepare
and file with the Commission any amendments or supplements to the
Registration Statement or Prospectus which, in the opinion of counsel
for the several Underwriters ("Underwriters' Counsel"), may be
necessary or advisable in connection with the distribution of the
Shares by the Underwriters; it will promptly prepare and file with the
Commission, and promptly notify you of the filing of, any amendments
or supplements to the Registration Statement or Prospectus which may
be necessary to correct any statements or omissions, if, at any time
when a prospectus relating to the Shares is required to be delivered
under the Act, any event shall have occurred as a result of which the
Prospectus or any other prospectus relating to the Shares as then in
effect would include any untrue statement of a material fact or omit
to state a material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not
misleading; in case any Underwriter is required to deliver a
prospectus nine (9) months or more after the effective date of the
Registration Statement in connection with the sale of the Shares, it
will prepare promptly upon request, but at the expense of such
Underwriter, such amendment or amendments to the Registration
Statement and such prospectus or prospectuses as may be necessary to
permit compliance with the requirements of Section 10(a)(3) of the
Act; and it will file no amendment or supplement to the Registration
Statement or Prospectus which shall not previously have been submitted
to you a reasonable time prior to the proposed filing thereof or to
which you shall reasonably object in writing, subject, however, to
compliance with the Act and the Rules and Regulations and the
provisions of this Agreement.
(b) The Company will advise you, promptly after it shall
receive notice or obtain knowledge, of the issuance of any stop order
by the Commission suspending the effectiveness of the Registration
Statement or of the initiation or threat of any proceeding for that
purpose; and it will promptly use its best efforts to prevent the
issuance of any
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stop order or to obtain its withdrawal at the earliest possible moment
if such stop order should be issued.
(c) The Company will use its best efforts to qualify the
Shares for offering and sale under the securities laws of such
jurisdictions as you may designate and to continue such qualifications
in effect for so long as may be required for purposes of the
distribution of the Shares, except that the Company shall not be
required in connection therewith or as a condition thereof to qualify
as a foreign corporation or to execute a general consent to service of
process in any jurisdiction in which it is not otherwise required to
be so qualified or to so execute a general consent to service of
process. In each jurisdiction in which the Shares shall have been
qualified as above provided, the Company will make and file such
statements and reports in each year as are or may be required by the
laws of such jurisdiction.
(d) The Company will furnish to you, as soon as
available, and, in the case of the Prospectus and any term sheet or
abbreviated term sheet under Rule 434, in no event later than the
first (1st) full business day following the first day that Shares are
traded, copies of the Registration Statement (three of which will be
signed and which will include all exhibits), each Preliminary
Prospectus, the Prospectus and any amendments or supplements to such
documents, including any prospectus prepared to permit compliance with
Section 10(a)(3) of the Act, all in such quantities as you may from
time to time reasonably request. Notwithstanding the foregoing, if
BancAmerica Xxxxxxxxx Xxxxxxxx, on behalf of the several Underwriters,
shall agree to the utilization of Rule 434 of the Rules and
Regulations, the Company shall provide to you copies of a Preliminary
Prospectus updated in all respects through the date specified by you
in such quantities as you may from time to time reasonably request.
(e) The Company will make generally available to its
security holders as soon as practicable, but in any event not later
than the forty-fifth (45th) day following the end of the fiscal
quarter first occurring after the first anniversary of the effective
date of the Registration Statement, an earnings statement (which will
be in reasonable detail but need not be audited) complying with the
provisions of Section 11(a) of the Act and covering a twelve (12)
month period beginning after the effective date of the Registration
Statement.
(f) During a period of five (5) years after the date
hereof, the Company will furnish to its shareholders as soon as
practicable after the end of each respective period, annual reports
(including financial statements audited by independent certified
public accountants) and unaudited quarterly reports of operations for
each of the first three quarters of the fiscal year, and will furnish
to you and the other several Underwriters hereunder, upon request (i)
concurrently with furnishing such reports to its shareholders,
statements of operations of the Company for each of the first three
(3) quarters in the
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form furnished to the Company's shareholders, (ii) concurrently with
furnishing to its shareholders, a balance sheet of the Company as of
the end of such fiscal year, together with statements of operations,
of shareholders' equity, and of cash flows of the Company for such
fiscal year, accompanied by a copy of the certificate or report
thereon of independent certified public accountants, (iii) as soon as
they are available, copies of all reports (financial or other) mailed
to shareholders, (iv) as soon as they are available, copies of all
reports and financial statements furnished to or filed with the
Commission, any securities exchange or the National Association of
Securities Dealers, Inc. ("NASD"), (v) every material press release
and every material news item or article in respect of the Company or
its affairs which was generally released to shareholders or prepared
by the Company or any of its subsidiaries, and (vi) any additional
information of a public nature concerning the Company or its
subsidiaries, or its business which you may reasonably request.
During such five (5) year period, if the Company shall have active
subsidiaries, the foregoing financial statements shall be on a
consolidated basis to the extent that the accounts of the Company and
its subsidiaries are consolidated, and shall be accompanied by similar
financial statements for any significant subsidiary which is not so
consolidated.
(g) The Company will apply the net proceeds from the sale
of the Shares being sold by it in the manner set forth under the
caption "Use of Proceeds" in the Prospectus.
(h) The Company will maintain a transfer agent and, if
necessary under the jurisdiction of incorporation of the Company, a
registrar (which may be the same entity as the transfer agent) for its
Common Stock.
(i) If the transactions contemplated hereby are not
consummated by reason of any failure, refusal or inability on the part
of the Company to perform any agreement on its parts to be performed
hereunder or to fulfill any condition of the Underwriters' obligations
hereunder, or if the Company shall terminate this Agreement pursuant
to Section 11(a) hereof, or if the Underwriters shall terminate this
Agreement pursuant to Section 11(b)(i), the Company will reimburse the
several Underwriters for all out-of-pocket expenses (including fees
and disbursements of Underwriters' Counsel) incurred by the
Underwriters in investigating or preparing to market or marketing the
Shares.
(j) If at any time during the ninety (90) day period
after the Registration Statement becomes effective, any rumor,
publication or event relating to or affecting the Company shall occur
as a result of which in your opinion the market price of the Common
Stock has been or is likely to be materially affected (regardless of
whether such rumor, publication or event necessitates a supplement to
or amendment of the Prospectus), the Company will, after written
notice from you advising the Company to the effect set forth above,
forthwith prepare, consult with you concerning the substance
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of and disseminate a press release or other public statement,
reasonably satisfactory to you, responding to or commenting on such
rumor, publication or event.
(k) During the Lock-up Period, the Company will not,
without the prior written consent of BancAmerica Xxxxxxxxx Xxxxxxxx,
effect the Disposition of, directly or indirectly, any Securities
other than the sale of the Firm Shares and the Option Shares hereunder
and the Company's issuance of options or Common Stock under the
Company's presently authorized 1996 Stock Option Plan (the "Option
Plan").
(l) During a period of ninety (90) days from the
effective date of the Registration Statement, the Company will not
file a registration statement registering shares under the Option Plan
or other employee benefit plan.
5. Expenses. The Company agrees with each Underwriter
that:
(a) The Company will pay and bear all costs and expenses
in connection with the preparation, printing and filing of the
Registration Statement (including financial statements, schedules and
exhibits), Preliminary Prospectuses and the Prospectus and any
amendments or supplements thereto; the printing of this Agreement, the
Agreement Among Underwriters, the Selected Dealer Agreement, the
Preliminary Blue Sky Survey and any Supplemental Blue Sky Survey, the
Underwriters' Questionnaire and Power of Attorney, and any instruments
related to any of the foregoing; the issuance and delivery of the
Shares hereunder to the several Underwriters, including transfer
taxes, if any, the cost of all certificates representing the Shares
and transfer agents' and registrars' fees; the fees and disbursements
of counsel for the Company; all fees and other charges of the
Company's independent certified public accountants; the cost of
furnishing to the several Underwriters copies of the Registration
Statement (including appropriate exhibits), Preliminary Prospectus and
the Prospectus, and any amendments or supplements to any of the
foregoing; NASD filing fees and the cost of qualifying the Shares
under the laws of such jurisdictions as you may designate (including
filing fees and fees and disbursements of Underwriters' Counsel in
connection with such NASD filings and Blue Sky qualifications); and
all other expenses directly incurred by the Company in connection with
the performance of their obligations hereunder.
(b) In addition to its other obligations under Section
8(a) hereof, the Company agrees that, as an interim measure during the
pendency of any claim, action, investigation, inquiry or other
proceeding described in Section 8(a) hereof, it will reimburse the
Underwriters on a monthly basis for all reasonable legal or other
expenses incurred in connection with investigating or defending any
such claim, action, investigation, inquiry or other proceeding,
notwithstanding the absence of a judicial determination as to the
propriety and enforceability of the Company's obligation to reimburse
the Underwriters for such expenses and the possibility that such
payments
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might later be held to have been improper by a court of competent
jurisdiction. To the extent that any such interim reimbursement
payment is so held to have been improper, the Underwriters shall
promptly return such payment to the Company together with interest,
compounded daily, determined on the basis of the prime rate (or other
commercial lending rate for borrowers of the highest credit standing)
listed from time to time in The Wall Street Journal which represents
the base rate on corporate loans posted by a substantial majority of
the nation's thirty (30) largest banks (the "Prime Rate"). Any such
interim reimbursement payments which are not made to the Underwriters
within thirty (30) days of a request for reimbursement shall bear
interest at the Prime Rate from the date of such request.
(c) In addition to their other obligations under Section
8(c) hereof, the Underwriters severally and not jointly agree that, as
an interim measure during the pendency of any claim, action,
investigation, inquiry or other proceeding described in Section 8(c)
hereof, they will reimburse the Company on a monthly basis for all
reasonable legal or other expenses incurred in connection with
investigating or defending any such claim, action, investigation,
inquiry or other proceeding, notwithstanding the absence of a judicial
determination as to the propriety and enforceability of the
Underwriters' obligation to reimburse the Company for such expenses
and the possibility that such payments might later be held to have
been improper by a court of competent jurisdiction. To the extent
that any such interim reimbursement payment is so held to have been
improper, the Company shall promptly return such payment to the
Underwriters together with interest, compounded daily, determined on
the basis of the Prime Rate. Any such interim reimbursement payments
which are not made to the Company within thirty (30) days of a request
for reimbursement shall bear interest at the Prime Rate from the date
of such request.
(d) It is agreed that any controversy arising out of the
operation of the interim reimbursement arrangements set forth in
Sections 5(a) and 5(b) hereof, including the amounts of any requested
reimbursement payments, the method of determining such amounts and the
basis on which such amounts shall be apportioned among the reimbursing
parties, shall be settled by arbitration conducted under the
provisions of the Constitution and Rules of the Board of Governors of
the New York Stock Exchange, Inc. or pursuant to the Code of
Arbitration Procedure of the NASD. Any such arbitration must be
commenced by service of a written demand for arbitration or a written
notice of intention to arbitrate, therein electing the arbitration
tribunal. In the event the party demanding arbitration does not make
such designation of an arbitration tribunal in such demand or notice,
then the party responding to said demand or notice is authorized to do
so. Any such arbitration will be limited to the operation of the
interim reimbursement provisions contained in Sections 5(a) and 5(b)
hereof and will not resolve the ultimate propriety or enforceability
of the obligation to indemnify for expenses which is created
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by the provisions of Sections 8(a) and 8(c) hereof or the obligation
to contribute to expenses which is created by the provisions of
Section 8(e) hereof.
6. Conditions of Underwriters' Obligations. The
obligations of the several Underwriters to purchase and pay for the Shares as
provided herein shall be subject to the accuracy, as of the date hereof and the
Closing Date and any later date on which Option Shares are to be purchased, as
the case may be, of the representations and warranties of the Company herein,
to the performance by the Company of its obligations hereunder and to the
following additional conditions:
(a) The Registration Statement shall have become
effective not later than 2:00 P.M., San Francisco time, on the date
following the date of this Agreement, or such later date as shall be
consented to in writing by you; and no stop order suspending the
effectiveness thereof shall have been issued and no proceedings for
that purpose shall have been initiated or threatened by the
Commission, and any request of the Commission for additional
information (to be included in the Registration Statement or the
Prospectus or otherwise) shall have been complied with to the
satisfaction of Underwriters' Counsel.
(b) All corporate proceedings and other legal matters in
connection with this Agreement, the form of Registration Statement and
the Prospectus, and the registration, authorization, issue, sale and
delivery of the Shares, shall have been reasonably satisfactory to
Underwriters' Counsel, and such counsel shall have been furnished with
such papers and information as they may reasonably have requested to
enable them to pass upon the matters referred to in this Section.
(c) Subsequent to the execution and delivery of this
Agreement and prior to the Closing Date, or any later date on which
Option Shares are to be purchased, as the case may be, there shall not
have been any change in the condition (financial or otherwise),
earnings, operations, business or business prospects of the Company
and its subsidiaries considered as one enterprise from that set forth
in the Registration Statement or Prospectus, which, in your sole
judgment, is material and adverse and that makes it, in your sole
judgment, impracticable or inadvisable to proceed with the public
offering of the Shares as contemplated by the Prospectus.
(d) You shall have received on the Closing Date and on
any later date on which Option Shares are to be purchased, as the case
may be, the following opinion of counsel for the Company, dated the
Closing Date or such later date on which Option Shares are to be
purchased addressed to the Underwriters and with reproduced copies or
signed counterparts thereof for each of the Underwriters, to the
effect that:
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(i) The Company and each subsidiary listed on
Annex IV attached hereto (each a "Significant Subsidiary")
has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the
jurisdiction of its incorporation;
(ii) The Company and each Significant Subsidiary
has the corporate power and authority to own, lease and
operate its properties and to conduct its business as
described in the Prospectus;
(iii) The Company and each Significant Subsidiary
is duly qualified to do business as a foreign corporation and
is in good standing in each jurisdiction, if any, in which it
owns or leases real property or in which its employees report
to work on a regular basis, except where the failure to be so
qualified or be in good standing, individually or in the
aggregate, would not have a material adverse effect on the
condition (financial or otherwise), earnings, operations or
business of the Company and its subsidiaries considered as one
enterprise. To such counsel's knowledge, the Company does not
own a majority of the voting power of or directly or
indirectly possess majority voting control over, any
corporation, association or other entity other than those
identified in Section 2(b) of this Agreement (collectively,
the "Subsidiaries");
(iv) The authorized, issued and outstanding
capital stock of the Company is as set forth in the Prospectus
under the caption "Capitalization" as of the dates stated
therein. All of the issued and outstanding shares of capital
stock of the Company (a) have been authorized and are duly and
validly issued, fully paid and nonassessable, and (b) to such
counsel's knowledge, have not have been issued in violation of
or subject to any preemptive right, co-sale right,
registration right, right of first refusal or other similar
right existing under statute, the Company's charter or
by-laws, or the terms of any agreement or informant to which
the Company is a party;
(v) (a) The Company is the record holder of all
issued and outstanding shares of capital stock of each
Significant Subsidiary of the Company, (b) all the issued and
outstanding stock of each Significant Subsidiary has been
authorized and are duly and validly issued, fully paid and
nonassessable, and (c) to such counsel's knowledge, such
shares have not been issued in violation of or subject to any
preemptive right, co-sale right, registration right, right of
first refusal or other similar right, existing under statute,
such subsidiary's charter or by-laws or any agreement or
instrument to which the Company or any such subsidiary is a
party, and, except as set forth in Schedule B to this
Agreement, are owned by the Company free and clear of any
pledge, lien, security interest, encumbrance, claim or
equitable interest;
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(vi) The Firm Shares or the Option Shares, as the
case may be, to be issued by the Company pursuant to the terms
of this Agreement have been duly authorized and, upon issuance
and delivery against payment therefor in accordance with the
terms hereof, will be duly and validly issued and fully paid
and nonassessable, and will not have been issued in violation
of or subject to any preemptive right, co-sale right,
registration right, right of first refusal or other similar
right, existing under statute, the Company's charter or
by-laws or any agreement or instrument to which the Company is
a party; the capital stock of the Company conforms as to legal
matters to the descriptions thereof contained in the
Prospectus under the caption "Description of Capital Stock";
and the forms of certificates evidencing the Common Stock and
filed as exhibits to the Registration Statement comply with
Delaware law;
(vii) The Company has the corporate power and
authority to enter into this Agreement and to issue, sell and
deliver to the Underwriters the Shares to be issued and sold
by it hereunder;
(viii) This Agreement has been duly authorized by
all necessary corporate action on the part of the Company and
has been duly executed and delivered by the Company and,
assuming due authorization, execution and delivery by you, is
a valid and binding agreement of the Company, enforceable in
accordance with its terms, except insofar as indemnification
provisions may be limited by applicable law and except as
enforceability may be limited by bankruptcy, insolvency,
fraudulent transfer, reorganization, receivership, moratorium
and similar laws relating to or affecting creditors' rights or
remedies generally or by general equitable principles;
(ix) The Registration Statement and all
post-effective amendments (if any) have become effective under
the Act. To such counsel's knowledge, no stop order
suspending the effectiveness of the Registration Statement has
been issued and no proceedings for that purpose have been
instituted or are pending or threatened under the Act. Any
required filings of the Prospectus pursuant to Rule 424(b)
have been made in accordance with Rule 424(b);
(x) The Registration Statement and the Prospectus
and any further amendment or supplement thereto (other than
the financial statements (including supporting schedules) and
financial data derived therefrom as to which such counsel need
express no opinion), as of the effective date of the
Registration Statement, complied as to form in all material
respects with the requirements of the Act and the applicable
Rules and Regulations;
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(xi) The description in the Registration Statement
and the Prospectus of the charter and bylaws of the Company
and of statutes, legal and governmental proceedings, contracts
and other documents are accurate and fairly present the
information required to be disclosed with respect thereto
pursuant to the Act and the applicable Rules and Regulations;
and such counsel does not know of any statutes or legal or
governmental proceedings required to be described in the
Prospectus that are not described as required, or of any
contracts or documents of a character required to be described
or referred to or be filed as an exhibit to the Registration
Statement or the Prospectus that has not been described or
referred to therein or filed as required;
(xii) The statements under the captions "Risk
Factors--Government Regulation," "Risk Factors--Health Care
Reform," "Risk Factors--Shares Eligible for Future Sale,"
"Management--Certain Relationships and Related Transactions,"
"Description of Capital Stock" and "Shares Eligible for Future
Sale" in the Prospectus and in items 14 and 15 of the
Registration Statement, insofar as such statements constitute
a summary of documents referred to therein or of matters of
law, are accurate summaries and fairly and correctly present
the information called for with respect to such documents and
matters;
(xiii) The performance of this Agreement and the
consummation of the transactions herein contemplated (other
than performance of the Company's indemnification obligations
hereunder concerning which no opinion need be expressed) do
not (a) violate the Company's charter or bylaws or (b)
constitute a material breach or violation of any existing
obligation of the Company, or constitute a default under, any
bond, debenture, note or other evidence of indebtedness, or
any lease, contract, indenture, mortgage, deed of trust, loan
agreement, joint venture or other agreement or instrument
known to such counsel to which the Company is a party or by
which its properties are bound, or any applicable statute,
rule or regulation known to such counsel or, to such counsel's
knowledge, any order, writ or decree of any court, government
or governmental agency or body having jurisdiction over the
Company or any of its subsidiaries, or over any of their
properties or operations;
(xiv) No consent, approval, authorization or order
of or qualification with any court, government or governmental
agency or body having jurisdiction over the Company or any of
its Subsidiaries, or over any of their properties or
operations is necessary as a condition to the performance by
the Company of its obligations under this Agreement, except
such as have been obtained under the Act such as may be
required under state or other securities or Blue Sky laws in
connection with the purchase and the distribution of the
Shares by the Underwriters;
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(xv) To such counsel's knowledge, no legal or
governmental proceedings are pending or threatened against the
Company or any of its Subsidiaries, of a character required to
be described in the Registration Statement or the Prospectus
by the Act or the Rules and Regulations, other than those
described therein;
(xvi) To such counsel's knowledge, none of the
Company or any of its subsidiaries is presently (a) in
violation of its respective charter or bylaws or (b) in breach
of any applicable statute, rule or regulation known to such
counsel or, to such counsel's knowledge, any order, writ or
decree of any court or governmental agency or body having
jurisdiction over the Company or any of its respective
subsidiaries, or over any of their properties or operations,
in each case except as would not likely result in any material
adverse change in the condition (financial or otherwise),
earnings, operations or business of the Company and its
subsidiaries considered as one enterprise (this opinion may be
give by in-house counsel);
(xvii) The Company is not an "investment company"
within the meaning of the Investment Company Act of 1940, as
amended, and the rules and regulations thereunder; and
(xviii) To such counsel's knowledge, except as set
forth in the Registration Statement and Prospectus, no holders
of Common Stock or other securities of the Company have
registration rights with respect to securities of the Company
pursuant to the terms of any agreement or instrument to which
the Company is a party and, except as set forth in the
Registration Statement and Prospectus, all holders of
securities of the Company having rights known to such counsel
to registration of such shares of Common Stock or other
securities, because of the filing of the Registration
Statement by the Company have, with respect to the offering
contemplated thereby, waived such rights or such rights have
expired by reason of lapse of time following notification of
the Company's intent to file the Registration Statement or
have included securities in the Registration Statement
pursuant to the exercise of and in full satisfaction of such
rights.
In addition, such counsel shall state that such counsel has
participated in conferences with officials and other representatives
of the Company, the Representatives, Underwriters' Counsel and the
independent certified public accountants of the Company, at which such
conferences the contents of the Registration Statement and Prospectus
and related matters were discussed, and although they have not
verified the accuracy or completeness of the statements contained in
the Registration Statement or the Prospectus, nothing has come to the
attention of such counsel which leads them to believe that, at the
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time the Registration Statement became effective and at all times
subsequent thereto up to and on the Closing Date and on any later date
on which Option Shares are to be purchased, as the case may be, the
Registration Statement and any amendment or supplement thereto (other
than the financial statements, including supporting schedules and
other financial and statistical data or information derived therefrom,
as to which such counsel need express no comment) contained any untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading, or at the Closing Date or any later date on
which the Option Shares are to be purchased, as the case may be, the
Registration Statement, the Prospectus and any amendment or supplement
thereto (except as aforesaid) contained any untrue statement of a
material fact or omitted to state a material fact necessary to make
the statements therein, in the light of the circumstances under which
they were made, not misleading.
Counsel rendering the foregoing opinion may rely as to
questions of fact upon representations or certificates of officers of
the Company and of government officials, in which case their opinion
is to state that they are so relying and that they have no knowledge
of any material misstatement or inaccuracy in any such representation
or certificate. Copies of any representation or certificate so relied
upon shall be delivered to you, as Representatives of the
Underwriters, and to Underwriters' Counsel.
(e) You shall have received on the Closing Date and on
any later date on which Option Shares are to be purchased, as the case
may be, an opinion of Shearman & Sterling, in form and substance
satisfactory to you, with respect to the sufficiency of all such
corporate proceedings and other legal matters relating to this
Agreement and the transactions contemplated hereby as you may
reasonably require, and the Company shall have furnished to such
counsel such documents as they may have requested for the purpose of
enabling them to pass upon such matters.
(f) You shall have received on the Closing Date and on
any later date on which Option Shares are to be purchased, as the case
may be, a letter from KPMG Peat Marwick LLP addressed to the
Underwriters, dated the Closing Date or such later date on which
Option Shares are to be purchased, as the case may be, confirming that
they are independent certified public accountants with respect to the
Company within the meaning of the Act and the applicable published
Rules and Regulations and based upon the procedures described in such
letter delivered to you concurrently with the execution of this
Agreement (herein called the "KPMG Original Letter"), but carried out
to a date not more than five (5) business days prior to the Closing
Date or such later date on which Option Shares are to be purchased, as
the case may be, (i) confirming, to the extent true, that the
statements and conclusions set forth in the KPMG Original Letter are
accurate as of the Closing Date or such later date on which Option
Shares are to be purchased, as the case may be, and (ii) setting forth
any revisions and additions to the
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statements and conclusions set forth in the KPMG Original Letter which
are necessary to reflect any changes in the facts described in the
KPMG Original Letter since the date of such letter, or to reflect the
availability of more recent financial statements, data or information.
The letter shall not disclose any change in the condition (financial
or otherwise), earnings, operations, business or business prospects of
the Company and its subsidiaries considered as one enterprise from
that set forth in the Registration Statement or Prospectus, which, in
your sole judgment, is material and adverse and that makes it, in your
sole judgment, impracticable or inadvisable to proceed with the public
offering of the Shares as contemplated by the Prospectus. The KPMG
Original Letter shall be addressed to or for the use of the
Underwriters in form and substance satisfactory to the Underwriters
and shall (i) represent, to the extent true, that they are independent
certified public accountants with respect to the Company within the
meaning of the Act and the applicable published Rules and Regulations,
(ii) set forth their opinion with respect to their examination of the
consolidated balance sheet of the Company as of June 30, 1997 and 1996
and related consolidated statements of operations, shareholders'
equity, and cash flows for the years then ended and for the period
from April 17, 1995 (date of inception) to June 30, 1995 and (iii)
address other matters agreed upon by KPMG Peat Marwick LLP and you.
In addition, you shall have received from KPMG Peat Marwick LLP a
letter addressed to the Company and made available to you for the use
of the Underwriters stating that their review of the Company's system
of internal accounting controls, to the extent they deemed necessary
in establishing the scope of their audit of the Company's consolidated
financial statements as of June 30, 1997, did not disclose any
weaknesses in internal controls that they considered to be material
weaknesses.
(g) You shall have received on the Closing Date and on
any later date on which Option Shares are to be purchased, as the case
may be, a letter from Xxxxx, Xxxxx & Xxxxxx addressed to the
Underwriters, dated the Closing Date or such later date on which
Option Shares are to be purchased, as the case may be, confirming that
they are independent certified public accountants with respect to
Xxxxxx Healthcare and Xxx Xxxxx within the meaning of the Act and the
applicable published Rules and Regulations and based upon the
procedures described in such letter delivered to you concurrently with
the execution of this Agreement (herein called the "Xxxxx Original
Letter"), but carried out to a date not more than five (5) business
days prior to the Closing Date or such later date on which Option
Shares are to be purchased, as the case may be, (i) confirming, to the
extent true, that the statements and conclusions set forth in the
Xxxxx Original Letter are accurate as of the Closing Date or such
later date on which Option Shares are to be purchased, as the case may
be, and (ii) setting forth any revisions and additions to the
statements and conclusions set forth in the Xxxxx Original Letter
which are necessary to reflect any changes in the facts described in
the Xxxxx Original Letter since the date of such letter, or to reflect
the availability of more recent financial statements, data or
information. The letter shall not disclose any change in the
condition (financial or otherwise), earnings, operations, business or
business prospects of the Company and its
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subsidiaries considered as one enterprise from that set forth in the
Registration Statement or Prospectus, which, in your sole judgment, is
material and adverse and that makes it, in your sole judgment,
impracticable or inadvisable to proceed with the public offering of
the Shares as contemplated by the Prospectus. The Xxxxx Original
Letter shall be addressed to or for the use of the Underwriters in
form and substance satisfactory to the Underwriters and shall (i)
represent, to the extent true, that they are independent certified
public accountants with respect to Xxxxxx Healthcare and Xxx Xxxxx
within the meaning of the Act and the applicable published Rules and
Regulations, (ii) set forth their opinion with respect to their audits
of: (A) the combined balance sheets of Xxxxxx Healthcare as of June
30, 1996 and 1995 and related combined statements of operations,
shareholders' equity, and cash flows for the two (2) years ended June
30, 1996 and (B) the balance sheet of Xxx Xxxxx as of December 31,
1996 and related statements of income, shareholders' equity and cash
flows for the year ended December 31, 1996, and (iii) address other
matters agreed upon by Xxxxx, Xxxxx & Xxxxxx and you.
(h) You shall have received on the Closing Date and on
any later date on which Option Shares are to be purchased, as the case
may be, a letter from Xxxxxx & Clemente addressed to the Underwriters,
dated the Closing Date or such later date on which Option Shares are
to be purchased, as the case may be, confirming that they are
independent certified public accountants with respect to Keystone
Affiliates within the meaning of the Act and the applicable published
Rules and Regulations and based upon the procedures described in such
letter delivered to you concurrently with the execution of this
Agreement (herein called the "Xxxxxx Original Letter"), but carried
out to a date not more than five (5) business days prior to the
Closing Date or such later date on which Option Shares are to be
purchased, as the case may be, (i) confirming, to the extent true,
that the statements and conclusions set forth in the Xxxxxx Original
Letter are accurate as of the Closing Date or such later date on which
Option Shares are to be purchased, as the case may be, and (ii)
setting forth any revisions and additions to the statements and
conclusions set forth in the Xxxxxx Original Letter which are
necessary to reflect any changes in the facts described in the Xxxxxx
Original Letter since the date of such letter, or to reflect the
availability of more recent financial statements, data or information.
The letter shall not disclose any change in the condition (financial
or otherwise), earnings, operations, business or business prospects of
the Company and its subsidiaries considered as one enterprise from
that set forth in the Registration Statement or Prospectus, which, in
your sole judgment, is material and adverse and that makes it, in your
sole judgment, impracticable or inadvisable to proceed with the public
offering of the Shares as contemplated by the Prospectus. The Xxxxxx
Original Letter shall be addressed to or for the use of the
Underwriters in form and substance satisfactory to the Underwriters
and shall (i) represent, to the extent true, that they are independent
certified public accountants with respect to Keystone Affiliates
within the meaning of the Act and the applicable published Rules and
Regulations, (ii) set forth their opinion with respect to their audit
of the combined financial statements of Keystone Affiliates, together
with
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the related notes, as of December 31, 1996 and 1995 and for the three
(3) years ended December 31, 1996 and (iii) address other matters
agreed upon by Xxxxxx & Clemente and you.
(i) You shall have received on the Closing Date and on
any later date on which Option Shares are to be purchased, as the case
may be, a letter from Xxxxx, Xxxxxxx & Company, P.A. addressed to the
Underwriters, dated the Closing Date or such later date on which
Option Shares are to be purchased, as the case may be, confirming that
they are independent certified public accountants with respect to
Triangle Retirement Services within the meaning of the Act and the
applicable published Rules and Regulations and based upon the
procedures described in such letter delivered to you concurrently with
the execution of this Agreement (herein called the "Xxxxx Original
Letter"), but carried out to a date not more than five (5) business
days prior to the Closing Date or such later date on which Option
Shares are to be purchased, as the case may be, (i) confirming, to the
extent true, that the statements and conclusions set forth in the
Xxxxx Original Letter are accurate as of the Closing Date or such
later date on which Option Shares are to be purchased, as the case may
be, and (ii) setting forth any revisions and additions to the
statements and conclusions set forth in the Xxxxx Original Letter
which are necessary to reflect any changes in the facts described in
the Xxxxx Original Letter since the date of such letter, or to reflect
the availability of more recent financial statements, data or
information. The letter shall not disclose any change in the
condition (financial or otherwise), earnings, operations, business or
business prospects of the Company and its subsidiaries considered as
one enterprise from that set forth in the Registration Statement or
Prospectus, which, in your sole judgment, is material and adverse and
that makes it, in your sole judgment, impracticable or inadvisable to
proceed with the public offering of the Shares as contemplated by the
Prospectus. The Xxxxx Original Letter shall be addressed to or for
the use of the Underwriters in form and substance satisfactory to the
Underwriters and shall (i) represent, to the extent true, that they
are independent certified public accountants with respect to Triangle
Retirement Services within the meaning of the Act and the applicable
published Rules and Regulations, (ii) set forth their opinion with
respect to their audit of the combined balance sheet of Triangle
Retirement Services as of December 31, 1996 and 1995 and related
combined statements of operations, shareholders' equity, and cash
flows for the two (2) years ended December 31, 1996 and (iii) address
other matters agreed upon by Xxxxx, Xxxxxxx & Company, P.A, and you.
(j) You shall have received on the Closing Date and on
any later date on which Option Shares are to be purchased, as the case
may be, letters from Coopers & Xxxxxxx, L.L.P. addressed to the
Underwriters, dated the Closing Date or such later date on which
Option Shares are to be purchased, as the case may be, confirming that
they are independent certified public accountants with respect to
Gethsemane Affiliates, Xxxxxx and Xxxxxxx within the meaning of the
Act and the applicable published Rules and
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Regulations and based upon the procedures described in such letter
delivered to you concurrently with the execution of this Agreement
(herein called the "Coopers Original Letters"), but carried out to a
date not more than five (5) business days prior to the Closing Date or
such later date on which Option Shares are to be purchased, as the
case may be, (i) confirming, to the extent true, that the statements
and conclusions set forth in the Coopers Original Letters are accurate
as of the Closing Date or such later date on which Option Shares are
to be purchased, as the case may be, and (ii) setting forth any
revisions and additions to the statements and conclusions set forth in
the Coopers Original Letters which are necessary to reflect any
changes in the facts described in the Coopers Original Letters since
the date of such letter, or to reflect the availability of more recent
financial statements, data or information. The letters shall not
disclose any change in the condition (financial or otherwise),
earnings, operations, business or business prospects of the Company
and its subsidiaries considered as one enterprise from that set forth
in the Registration Statement or Prospectus, which, in your sole
judgment, is material and adverse and that makes it, in your sole
judgment, impracticable or inadvisable to proceed with the public
offering of the Shares as contemplated by the Prospectus. The Coopers
Original Letters shall be addressed to or for the use of the
Underwriters in form and substance satisfactory to the Underwriters
and shall (i) represent, to the extent true, that they are independent
certified public accountants with respect to Gethsemane Affiliates,
Xxxxxx and Xxxxxxx within the meaning of the Act and the applicable
published Rules and Regulations, (ii) set forth their opinion with
respect to their audits of: (A) the combined financial statements of
Gethsemane Affiliates, together with the related notes, as of June 30,
1997 and 1996 and for the three (3) years ended June 30, 1997, (B) the
financial statements of Xxxxxx, together with the related notes, as of
June 30, 1997 and for each of the three (3) years ended June 30, 1997
and (C) the financial statements of Xxxxxxx, together with the related
notes, as of June 30, 1997 and for the three (3) years ended June 30,
1997 and (iii) address other matters agreed upon by Coopers & Xxxxxxx,
L.L.P. and you.
(k) You shall have received on the Closing Date and on
any later date on which Option Shares are to be purchased, as the case
may be, a certificate of the Company, dated the Closing Date or such
later date on which Option Shares are to be purchased, as the case may
be, signed by the Chief Executive Officer and Chief Financial Officer
of the Company, to the effect that, and you shall be satisfied that:
(i) The representations and warranties of the
Company in this Agreement are true and correct, as if made on
and as of the Closing Date or any later date on which Option
Shares are to be purchased, as the case may be, 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 or any later date on which Option
Shares are to be purchased, as the case may be:
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(ii) No stop order suspending the effectiveness of
the Registration Statement has been issued and no proceedings
for that purpose have been instituted or are pending or
threatened under the Act;
(iii) When the Registration Statement became
effective and at all times subsequent thereto up to the
delivery of such certificate, the Registration Statement and
the Prospectus, and any amendments or supplements thereto,
contained all material information required to be included
therein by the Act and the Rules and Regulations and in all
material respects conformed to the requirements of the Act and
the Rules and Regulations, the Registration Statement, and any
amendment or supplement thereto, did not and does not include
any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to
make the statements therein not misleading, the Prospectus,
and any amendment or supplement thereto, did not and does not
include any untrue statement of a material fact or omit to
state a material fact necessary to make the statements
therein, in the light of the circumstances under which they
were made, not misleading, and, since the effective date of
the Registration Statement, there has occurred no event
required to be set forth in an amended or supplemented
Prospectus which has not been so set forth; and
(iv) Subsequent to the respective dates as of
which information is given in the Registration Statement and
Prospectus, there has not been (a) any material adverse change
in the condition (financial or otherwise), earnings,
operations, business or business prospects of the Company and
its subsidiaries considered as one enterprise, (b) any
transaction that is material to the Company and its
subsidiaries considered as one enterprise, except transactions
entered into in the ordinary course of business, (c) any
obligation, direct or contingent, that is material to the
Company and its subsidiaries considered as one enterprise,
incurred by the Company or its subsidiaries, except
obligations incurred in the ordinary course of business, (d)
any change in the capital stock or outstanding indebtedness of
the Company or any of its subsidiaries that is material to the
Company and its subsidiaries considered as one enterprise, (e)
any dividend or distribution of any kind declared, paid or
made on the capital stock of the Company or any of its
subsidiaries, or (f) any loss or damage (whether or not
insured) to the property of the Company or any of its
subsidiaries which has been sustained or will have been
sustained which has a material adverse effect on the condition
(financial or otherwise), earnings, operations, business or
business prospects of the Company and its subsidiaries
considered as one enterprise.
(l) The Company shall have obtained and delivered to you
an agreement from each officer and director of the Company and each
beneficial owner shares of Common
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Stock or warrants or options to acquire shares of Common Stock (set
forth on Annex III attached hereto) in writing prior to the date hereof
that such person will not, during the Lock-up Period, effect the
Disposition of any Securities now owned or hereafter acquired directly
by such person or with respect to which such person has or hereafter
acquires the power of disposition, otherwise than (i) as a bona fide
gift or gifts, provided the donee or donees thereof agree in writing
to be bound by this restriction, (ii) as a distribution to partners or
shareholders of such person, provided that the distributees thereof
agree in writing to be bound by the terms of this restriction, or
(iii) with the prior written consent of BancAmerica Xxxxxxxxx
Xxxxxxxx. The foregoing restriction shall have been expressly agreed
to preclude the holder of the Securities from engaging in any hedging
or other transaction which is designed to or reasonably expected to
lead to or result in a Disposition of Securities during the Lock-up
Period, even if such Securities would be disposed of by someone other
than the such holder. Such prohibited hedging or other transactions
would including, without limitation, any short sale (whether or not
against the box) or any purchase, sale or grant of any right
(including, without limitation, any put or call option) with respect
to any Securities or with respect to any security (other than a
broad-based market basket or index) that includes, relates to or
derives any significant part of its value from Securities.
Furthermore, such person will have also agreed and consented to the
entry of stop transfer instructions with the Company's transfer agent
against the transfer of the Securities held by such person except in
compliance with this restriction.
(m) The Company shall have furnished to you such further
certificates and documents as you shall reasonably request (including
certificates of officers of the Company), as to the accuracy of the
representations and warranties of the Company herein, as to the
performance by the Company of its obligations hereunder and as to the
other conditions concurrent and precedent to the obligations of the
Underwriters hereunder.
All such opinions, certificates, letters and documents will be
in compliance with the provisions hereof only if they are reasonably
satisfactory to Underwriters' Counsel. The Company will furnish you
with such number of conformed copies of such opinions, certificates,
letters and documents as you shall reasonably request.
7. Option Shares.
(a) On the basis of the representations, warranties and
agreements herein contained, but subject to the terms and conditions
herein set forth, the Company hereby grants to the several
Underwriters, for the purpose of covering over-allotments in
connection with the distribution and sale of the Firm Shares only, a
nontransferable option to purchase up to an aggregate of 1,050,000
Option Shares at the purchase price per share for the Firm Shares set
forth in Section 3 hereof. Such option may be
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exercised by the Representatives on behalf of the several Underwriters
on one (1) or more occasions in whole or in part during the period of
thirty (30) days after the date on which the Firm Shares are initially
offered to the public, by giving written notice to the Company. The
number of Option Shares to be purchased by each Underwriter upon the
exercise of such option shall be the same proportion of the total
number of Option Shares to be purchased by the several Underwriters
pursuant to the exercise of such option as the number of Firm Shares
purchased by such Underwriter (set forth in Schedule A hereto) bears
to the total number of Firm Shares purchased by the several
Underwriters (set forth in Schedule A hereto), adjusted by the
Representatives in such manner as to avoid fractional shares.
Delivery of definitive certificates for the Option Shares to
be purchased by the several Underwriters pursuant to the exercise of
the option granted by this Section 7 shall be made against payment of
the purchase price therefor by the several Underwriters by certified
or official bank check or checks drawn in next-day funds, payable to
the order of the Company (and the Company agrees not to deposit any
such check in the bank on which it is drawn, and not to take any other
action with the purpose or effect of receiving immediately available
funds, until the business day following the date of its delivery to
the Company). In the event of any breach of the foregoing, the
Company shall reimburse the Underwriters for the interest lost and any
other expenses borne by them by reason of such breach. Such delivery
and payment shall take place at the offices of Shearman & Sterling,
000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 or at such other place
as may be agreed upon among the Representatives and the Company (i) on
the Closing Date, if written notice of the exercise of such option is
received by the Company at least two (2) full business days prior to
the Closing Date, or (ii) on a date which shall not be later than the
third (3rd) full business day following the date the Company receives
written notice of the exercise of such option, if such notice is
received by the Company less than two (2) full business days prior to
the Closing Date.
The certificates for the Option Shares to be so delivered will
be made available to you at such office or such other location
including, without limitation, in New York City, as you may reasonably
request for checking at least one (1) full business day prior to the
date of payment and delivery and will be in such names and
denominations as you may request, such request to be made at least two
(2) full business days prior to such date of payment and delivery. If
the Representatives so elect, delivery of the Option Shares may be
made by credit through full fast transfer to the accounts at The
Depository Trust Company designated by the Representatives.
It is understood that you, individually, and not as the
Representatives of the several Underwriters, may (but shall not be
obligated to) make payment of the purchase price on behalf of any
Underwriter or Underwriters whose check or checks shall not have been
received by you prior to the date of payment and delivery for the
Option Shares to
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be purchased by such Underwriter or Underwriters. Any such payment by
you shall not relieve any such Underwriter or Underwriters of any of
its or their obligations hereunder.
(b) Upon exercise of any option provided for in Section
7(a) hereof, the obligations of the several Underwriters to purchase
such Option Shares will be subject (as of the date hereof and as of
the date of payment and delivery for such Option Shares) to the
accuracy of and compliance with the representations, warranties and
agreements of the Company herein, to the accuracy of the statements of
the Company and officers of the Company made pursuant to the
provisions hereof, to the performance by the Company of its
obligations hereunder, to the conditions set forth in Section 6
hereof, and to the condition that all proceedings taken at or prior to
the payment date in connection with the sale and transfer of such
Option Shares shall be satisfactory in form and substance to you and
to Underwriters' Counsel, and you shall have been furnished with all
such documents, certificates and opinions as you may request in order
to evidence the accuracy and completeness of any of the
representations, warranties or statements, the performance of any of
the covenants or agreements of the Company or the satisfaction of any
of the conditions herein contained.
8. Indemnification and Contribution.
(a) The Company agrees to indemnify and hold harmless
each Underwriter against any losses, claims, damages or liabilities,
joint or several, to which such Underwriter may become subject
(including, without limitation, in its capacity as an Underwriter or
as a "qualified independent underwriter" within the meaning of
Schedule E of the Bylaws of the NASD), under the Act, the Exchange Act
or otherwise, specifically including, but not limited to, losses,
claims, damages or liabilities (or actions in respect thereof) arising
out of or based upon (i) any breach of any representation, warranty,
agreement or covenant of the Company herein contained, (ii) any untrue
statement or alleged untrue statement of any material fact contained
in the Registration Statement or any amendment or supplement thereto,
or 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, or (iii) any untrue statement or alleged
untrue statement of any material fact contained in any Preliminary
Prospectus or the Prospectus or any amendment or supplement thereto,
or the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made,
not misleading, and agrees to reimburse each Underwriter for any legal
or other expenses reasonably incurred by it in connection with
investigating or defending any such loss, claim, damage, liability or
action; provided, however, that the Company shall not be liable in any
such case to the extent that any such loss, claim, damage, liability
or action arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in the
Registration Statement, such Preliminary Prospectus or the
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Prospectus, or any such amendment or supplement thereto, in reliance
upon, and in conformity with, written information relating to any
Underwriter furnished to the Company by such Underwriter, directly or
through you, specifically for use in the preparation thereof and,
provided further , that the indemnity agreement provided in this
Section 8(a) with respect to any Preliminary Prospectus shall not
inure to the benefit of any Underwriter from whom the person asserting
any losses, claims, damages, liabilities or actions based upon any
untrue statement or alleged untrue statement of material fact or
omission or alleged omission to state therein a material fact
purchased Shares, if a copy of the Prospectus in which such untrue
statement or alleged untrue statement or omission or alleged omission
was corrected had not been sent or given to such person within the
time required by the Act and the Rules and Regulations, unless such
failure is the result of noncompliance by the Company with Section
4(d) hereof.
(b) Each Underwriter, severally and not jointly, agrees
to indemnify and hold harmless the Company against any losses, claims,
damages or liabilities, joint or several, to which the Company may
become subject under the Act or otherwise, specifically including, but
not limited to, losses, claims, damages or liabilities (or actions in
respect thereof) arising out of or based upon (i) any breach of any
representation, warranty, agreement or covenant of such Underwriter
herein contained, (ii) any untrue statement or alleged untrue
statement of any material fact contained in the Registration Statement
or any amendment or supplement thereto, or 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, or
(iii) any untrue statement or alleged untrue statement of any material
fact contained in any Preliminary Prospectus or the Prospectus or any
amendment or supplement thereto, or the omission or alleged omission
to state therein a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made,
not misleading, in the case of subparagraphs (ii) and (iii) of this
Section 8(b) to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission
was made in reliance upon and in conformity with written information
furnished to the Company by such Underwriter, directly or through you,
specifically for use in the preparation thereof, and agrees to
reimburse the Company for any legal or other expenses reasonably
incurred by the Company in connection with investigating or defending
any such loss, claim, damage, liability or action.
The indemnity agreement in this Section 8(b) shall extend upon
the same terms and conditions to, and shall inure to the benefit of,
each officer of the Company who signed the Registration Statement and
each director of the Company, and each person, if any, who controls
the Company within the meaning of the Act or the Exchange Act. This
indemnity agreement shall be in addition to any liabilities which each
Underwriter may otherwise have.
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(c) Promptly after receipt by an indemnified party under
this Section 8 of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made
against any indemnifying party under this Section 8, notify the
indemnifying party in writing of the commencement thereof but the
omission so to notify the indemnifying party will not relieve it from
any liability which it may have to any indemnified party otherwise
than under this Section 8. In case any such action is brought against
any indemnified party, and it notified the indemnifying party of the
commencement thereof, the indemnifying party will be entitled to
participate therein and, to the extent that it shall elect by written
notice delivered to the indemnified party promptly after receiving the
aforesaid notice from such indemnified party, to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified
party; provided, however, that if the defendants in 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, the indemnified party or parties shall have the
right to select separate counsel to assume such legal defenses and to
otherwise participate in the defense of such action on behalf of such
indemnified party or parties. Upon receipt of notice from the
indemnifying party to such indemnified party of the indemnifying
party's election so to assume the defense of such action and approval
by the indemnified party of counsel, the indemnifying party will not
be liable to such indemnified party under this Section 8 for any legal
or other expenses subsequently incurred by such indemnified party in
connection with the defense thereof unless (i) the indemnified party
shall have employed separate counsel in accordance with the proviso to
the next preceding sentence (it being understood, however, that the
indemnifying party shall not be liable for the expenses of more than
one separate counsel (together with appropriate local counsel)
approved by the indemnifying party representing all the indemnified
parties under Section 8(a), 8(b) or 8(c) hereof who are parties to
such action), (ii) the indemnifying party shall not have employed
counsel satisfactory to the indemnified party to represent the
indemnified party within a reasonable time after notice of
commencement of the action or (iii) the indemnifying party has
authorized the employment of counsel for the indemnified party at the
expense of the indemnifying party. In no event shall any indemnifying
party be liable in respect of any amounts paid in settlement of any
action unless the indemnifying party shall have approved the terms of
such settlement; provided that such consent shall not be unreasonably
withheld. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending
or threatened proceeding in respect of which any indemnified party is
or could have been a party and indemnification could have been sought
hereunder by such indemnified party, unless such settlement includes
an unconditional release of such indemnified party from all liability
on all claims that are the subject matter of such proceeding.
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(d) In order to provide for just and equitable
contribution in any action in which a claim for indemnification is
made pursuant to this Section 8 but it is judicially determined (by
the entry of a final judgment or decree by a court of competent
jurisdiction and the expiration of time to appeal or the denial of the
last right of appeal) that such indemnification may not be enforced in
such case notwithstanding the fact that this Section 8 provides for
indemnification in such case, all the parties hereto shall contribute
to the aggregate losses, claims, damages or liabilities to which they
may be subject (after contribution from others) in such proportion so
that the Underwriters severally and not jointly are responsible pro
rata for the portion represented by the percentage that the
underwriting discount bears to the initial public offering price, and
the Company is responsible for the remaining portion, provided,
however, that (i) no Underwriter shall be required to contribute any
amount in excess of the amount by which the underwriting discount
applicable to the Shares purchased by such Underwriter exceeds the
amount of damages which such Underwriter has otherwise required to pay
and (ii) no person guilty of a fraudulent misrepresentation (within
the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who is not guilty of such fraudulent
misrepresentation. The contribution agreement in this Section 8(d)
shall extend upon the same terms and conditions to, and shall inure to
the benefit of, each person, if any, who controls any Underwriter or
the Company within the meaning of the Act or the Exchange Act and each
officer of the Company who signed the Registration Statement and each
director of the Company.
(e) The parties to this Agreement hereby acknowledge that
they are sophisticated business persons who were represented by
counsel during the negotiations regarding the provisions hereof
including, without limitation, the provisions of this Section 8, and
are fully informed regarding said provisions. They further
acknowledge that the provisions of this Section 8 fairly allocate the
risks in light of the ability of the parties to investigate the
Company and its business in order to assure that adequate disclosure
is made in the Registration Statement and Prospectus as required by
the Act and the Exchange Act.
9. Representations, Warranties, Covenants and Agreements
to Survive Delivery. All representations, warranties, covenants and agreements
of the Company and the Underwriters herein or in certificates delivered
pursuant hereto, and the indemnity and contribution agreements contained in
Section 8 hereof shall remain operative and in full force and effect regardless
of any investigation made by or on behalf of any Underwriter or any person
controlling any Underwriter within the meaning of the Act or the Exchange Act,
or by or on behalf of the Company or any of its officers, directors or
controlling persons within the meaning of the Act or the Exchange Act, and
shall survive the delivery of the Shares to the several Underwriters hereunder
or termination of this Agreement.
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37
10. Substitution of Underwriters. If any Underwriter or
Underwriters shall fail to take up and pay for the number of Firm Shares agreed
by such Underwriter or Underwriters to be purchased hereunder upon tender of
such Firm Shares in accordance with the terms hereof, and if the aggregate
number of Firm Shares which such defaulting Underwriter or Underwriters so
agreed but failed to purchase does not exceed 10% of the Firm Shares, the
remaining Underwriters shall be obligated, severally in proportion to their
respective commitments hereunder, to take up and pay for the Firm Shares of
such defaulting Underwriter or Underwriters.
If any Underwriter or Underwriters so defaults and the
aggregate number of Firm Shares which such defaulting Underwriter or
Underwriters agreed but failed to take up and pay for exceeds 10% of the Firm
Shares, the remaining Underwriters shall have the right, but shall not be
obligated, to take up and pay for (in such proportions as may be agreed upon
among them) the Firm Shares which the defaulting Underwriter or Underwriters so
agreed but failed to purchase. If such remaining Underwriters do not, at the
Closing Date, take up and pay for the Firm Shares which the defaulting
Underwriter or Underwriters so agreed but failed to purchase, the Closing Date
shall be postponed for twenty- four (24) hours to allow the several
Underwriters the privilege of substituting within twenty-four (24) hours
(including non-business hours) another underwriter or underwriters (which may
include any nondefaulting Underwriter) satisfactory to the Company. If no such
underwriter or underwriters shall have been substituted as aforesaid by such
postponed Closing Date, the Closing Date may, at the option of the Company, be
postponed for a further twenty-four (24) hours, if necessary, to allow the
Company the privilege of finding another underwriter or underwriters,
satisfactory to you, to purchase the Firm Shares which the defaulting
Underwriter or Underwriters so agreed but failed to purchase. If it shall be
arranged for the remaining Underwriters or substituted underwriter or
underwriters to take up the Firm Shares of the defaulting Underwriter or
Underwriters as provided in this Section 10, (i) the Company shall have the
right to postpone the time of delivery for a period of not more than seven (7)
full business days, in order to effect whatever changes may thereby be made
necessary in the Registration Statement or the Prospectus, or in any other
documents or arrangements, and the Company agrees promptly to file any
amendments to the Registration Statement, supplements to the Prospectus or
other such documents which may thereby be made necessary, and (ii) the
respective number of Firm Shares to be purchased by the remaining Underwriters
and substituted underwriter or underwriters shall be taken as the basis of
their underwriting obligation. If the remaining Underwriters shall not take up
and pay for all such Firm Shares so agreed to be purchased by the defaulting
Underwriter or Underwriters or substitute another underwriter or underwriters
as aforesaid and the Company shall not find or shall not elect to seek another
underwriter or underwriters for such Firm Shares as aforesaid, then this
Agreement shall terminate.
In the event of any termination of this Agreement pursuant to
the preceding paragraph of this Section 10, neither the Company shall be liable
to any Underwriter (except as provided in Sections 5 and 8 hereof) nor shall
any Underwriter (other than an Underwriter who
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38
shall have failed, otherwise than for some reason permitted under this
Agreement, to purchase the number of Firm Shares agreed by such Underwriter to
be purchased hereunder, which Underwriter shall remain liable to the Company,
and the other Underwriters for damages, if any, resulting from such default) be
liable to the Company (except to the extent provided in Sections 5 and 8
hereof).
The term "Underwriter" in this Agreement shall include any
person substituted for an Underwriter under this Section 10.
11. Effective Date of this Agreement and Termination.
(a) This Agreement shall become effective at the earlier
of (i) 6:30 A.M., San Francisco time, on the first full business day
following the effective date of the Registration Statement, or (ii)
the time of the initial public offering of any of the Shares by the
Underwriters after the Registration Statement becomes effective. The
time of the initial public offering shall mean the time of the release
by you, for publication, of the first newspaper advertisement relating
to the Shares, or the time at which the Shares are first generally
offered by the Underwriters to the public by letter, telephone,
telegram or telecopy, whichever shall first occur. By giving notice
as set forth in Section 12 before the time this Agreement becomes
effective, you, as Representatives of the several Underwriters, or the
Company, may prevent this Agreement from becoming effective without
liability of any party to any other party, except as provided in
Sections 4(j), 5 and 8 hereof.
(b) You, as Representatives of the several Underwriters,
shall have the right to terminate this Agreement by giving notice as
hereinafter specified at any time on or prior to the Closing Date or
on or prior to any later date on which Option Shares are to be
purchased, as the case may be, (i) if the Company shall have failed,
refused or been unable to perform any agreement on its part to be
performed, or because any other condition of the Underwriters'
obligations hereunder required to be fulfilled is not fulfilled,
including, without limitation, any change in the condition (financial
or otherwise), earnings, operations, business or business prospects of
the Company and its subsidiaries considered as one enterprise from
that set forth in the Registration Statement or Prospectus, which, in
your sole judgment, is material and adverse, or (ii) if additional
material governmental restrictions, not in force and effect on the
date hereof, shall have been imposed upon trading in securities
generally or minimum or maximum prices shall have been generally
established on the New York Stock Exchange or on the American Stock
Exchange or in the over the counter market by the NASD, or trading in
securities generally shall have been suspended on either such exchange
or in the over the counter market by the NASD, or if a banking
moratorium shall have been declared by federal, New York or California
authorities, or (iii) if the Company shall have sustained a loss by
strike, fire, flood, earthquake, accident or other calamity of such
character as to
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39
interfere materially with the conduct of the business and operations
of the Company regardless of whether or not such loss shall have been
insured, or (iv) if there shall have been a material adverse change in
the general political or economic conditions or financial markets as
in your reasonable judgment makes it inadvisable or impracticable to
proceed with the offering, sale and delivery of the Shares, or (v) if
there shall have been an outbreak or escalation of hostilities or of
any other insurrection or armed conflict or the declaration by the
United States of a national emergency which, in the reasonable opinion
of the Representatives, makes it impracticable or inadvisable to
proceed with the public offering of the Shares as contemplated by the
Prospectus. In the event of termination pursuant to subparagraph (i)
above, the Company shall remain obligated to pay costs and expenses
pursuant to Sections 4(j), 5 and 8 hereof. Any termination pursuant
to any of subparagraphs (ii) through (v) above shall be without
liability of any party to any other party except as provided in
Sections 5 and 8 hereof.
If you elect to prevent this Agreement from becoming effective
or to terminate this Agreement as provided in this Section 11, you
shall promptly notify the Company by telephone, telecopy or telegram,
in each case confirmed by letter. If the Company shall elect to
prevent this Agreement from becoming effective, the Company shall
promptly notify you by telephone, telecopy or telegram, in each case,
confirmed by letter.
12. Notices. All notices or communications hereunder,
except as herein otherwise specifically provided, shall be in writing and if
sent to you shall be mailed, delivered, telegraphed (and confirmed by letter)
or telecopied (and confirmed by letter) to you c/o BancAmerica Xxxxxxxxx
Xxxxxxxx, 000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000,
telecopier number (000) 000-0000, Attention: General Counsel; if sent to the
Company, such notice shall be mailed, delivered, telegraphed (and confirmed by
letter) or telecopied (and confirmed by letter) to Balanced Care Corporation,
0000 Xxxxxx Xxxxx, Xxxxx 000, Xxxxxxxxxxxxx, Xxxxxxxxxxxx 00000, telecopier
number (000) 000-0000, Attention: Xxxx X. Xxxxxxxxx, Chief Executive Officer.
13. Parties. This Agreement shall inure to the benefit
of and be binding upon the several Underwriters and the Company and their
respective executors, administrators, successors and assigns. Nothing
expressed or mentioned in this Agreement is intended or shall be construed to
give any person or entity, other than the parties hereto and their respective
executors, administrators, successors and assigns, and the controlling persons
within the meaning of the Act or the Exchange Act, officers and directors
referred to in Section 8 hereof, any legal or equitable right, remedy or claim
in respect of this Agreement or any provisions herein contained, this Agreement
and all conditions and provisions hereof being intended to be and being for the
sole and exclusive benefit of the parties hereto and their respective
executors, administrators, successors and assigns and said controlling persons
and said officers and directors, and for the benefit of no other person or
entity. No purchaser of any of the Shares
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from any Underwriter shall be construed a successor or assign by reason merely
of such purchase.
In all dealings with the Company under this Agreement, you
shall act on behalf of each of the several Underwriters, and the Company shall
be entitled to act and rely upon any statement, request, notice or agreement
made or given by you jointly or by BancAmerica Xxxxxxxxx Xxxxxxxx on behalf of
you.
14. Applicable Law. This Agreement shall be governed by,
and construed in accordance with, the internal laws of the State of New York.
15. Counterparts. This Agreement may be signed in
several counterparts, each of which will constitute an original.
41
If the foregoing correctly sets forth the understanding among
the Company and the several Underwriters, please so indicate in the space
provided below for that purpose, whereupon this letter shall constitute a
binding agreement among the Company and the several Underwriters.
Very truly yours,
BALANCED CARE CORPORATION
By
-------------------------------------
Accepted as of the date first above written:
BANCAMERICA XXXXXXXXX XXXXXXXX
XXXXX XXXXXX INC.
BT ALEX. XXXXX INCORPORATED
On their behalf and on behalf of each of the
several Underwriters named in Schedule A hereto.
By BANCAMERICA XXXXXXXXX XXXXXXXX
By
------------------------------------
Authorized Signatory
42
SCHEDULE A
Number of Firm Shares
Underwriters To Be Purchased
------------ ---------------------
BancAmerica Xxxxxxxxx Xxxxxxx
Xxxxx Xxxxxx Inc.
BT Alex. Xxxxx Incorporated
43
ANNEX I
SUBSIDIARIES OF BALANCED CARE CORPORATION
BCC of Wisconsin, Inc.
BCC at Mt. Royal Pines, Inc.
BCC at Altoona, Inc.
BCC at State College, Inc.
BCC Development and Management Co.
BCC at Missouri, Inc.
BCC Therapies, Inc.
Balanced Care Therapies of PA, Inc.
Balanced Care Therapies of AR, Inc.
BCC at Hermitage Park Center, Inc.
BCC at Lebanon Care Center, Inc.
BCC at Lebanon Park Manor, Inc.
BCC at Mt. Xxxxxx Xxxx Care Center, Inc.
BCC at Mt. Xxxxxx Xxxx Care Center West, Inc.
BCC at Nevada Park Care Center, Inc.
BCC at Nixa Park Center, Inc.
BCC at Republic Park Center, Inc.
BCC at Springfield Care Center, Inc.
BCC Investment Corp., Inc.
BCC at Reading, Inc.
BCC at Greensboro, Inc.
BCC at Cherokee Residential Care Center, Inc.
BCC at Nevada Park Terrace Apartments, Inc.
BCC at Xxxxxxx, Inc.
BCC at Kingston II, Inc.
BCC at Bloomsburg, Inc.
BCC at Kingston I, Inc.
BCC at Mid-Valley, Inc.
BCC at Old Forge, Inc.
BCC at West View, Inc.
BCC at Richmond, Inc.
BCC at Scranton, Inc.
BCC at Harrisburg, Inc.
BCC at Ravenna, Inc.
BCC at Danville, Inc.
BCC at Camdenton, Inc.
BCC at Roanoke, Inc.
BCC at Harrisonburg, Inc.
BCC at Pennswood, Inc.
BCC at Xxxxx, Inc.
44
ANNEX I (CONT.)
BCC Management Company at Missouri, Inc.
BCC at Lima, Inc.
BCC at Chippewa, Inc.
BCC at Darlington, Inc.
Balanced Care at Blytheville, Inc.
Balanced Care at Maumelle, Inc.
Balanced Care at Mountain Home, Inc.
Balanced Care at Pocohontas, Inc.
Balanced Care at Sherwood, Inc.
Xxxxx Management, Inc.
Long Term Pharmaceutical Care, Inc.
Balanced Care at Xxxxxx, Inc.
Balanced Care at Xxxxxx, Inc.
Balanced Care at Saxonburg, Inc.
Balanced Care at Eyers Grove, Inc.
Balanced Care at Bloomsburg II, Inc.
Balanced Care at North Ridge, Inc.
Balanced Care at Xenia, Inc.
Balanced Care at Westerville, Inc.
Balanced Care at Dillsburg, Inc.
Balanced Care at Mechanicsburg, Inc.
Balanced Care at Mansfield, Inc.
Balanced Care at Bowling Green, Inc.
Balanced Care at Danville, Inc.
Balanced Care at Xxxxxxxx, Inc.
Balanced Care at Frankfort, Inc.
Balanced Care at Xxxxxxxxx, Inc.
Balanced Care at Berwick, Inc.
Balanced Care at Lewisburg, Inc.
Balanced Care at Peckville, Inc.
Balanced Care at Martinsburg, Inc.
Balanced Care at Xxxxxxx, Inc.
Balanced Care at York, Inc.
Balanced Care at Lakemont, Inc.
Balanced Care at Xxxxxx, Inc.
Balanced Care at Lewistown, Inc.
Balanced Care at Evansville, Inc.
Balanced Care at Shippensburg, Inc.
Balanced Care at Centerville, Inc.
Balanced Care at Xxxxxxx, Inc.
Balanced Care at Xxxxxxxx, Inc.
Balanced Care at Murfreesboro, Inc.
45
ANNEX II
PLEDGED STOCK
Subsidiary Total No. of Shares Shares Pledged(1)
---------- ------------------- -----------------
BCC at Hermitage Park Center, Inc. 1,000 1,000
BCC at Lebanon Care Center 1,000 1,000
BCC at Lebanon Park Manor, Inc. 1,000 1,000
BCC at Mt. Xxxxxx Xxxx Care Center, Inc. 1,000 1,000
BCC at Nevada Park Care Center, Inc. 1,000 1,000
BCC at Nixa Park Center, Inc. 1,000 1,000
BCC at Republic Park Center, Inc. 1,000 1,000
BCC at Springfield Care Center, Inc. 1,000 1,000
Balanced Care at Blytheville, Inc. 1,000 1,000
Balanced Care at Maumelle, Inc. 1,000 1,000
Balanced Care at Mountain Home, Inc. 1,000 1,000
Balanced Care at Pocahontas, Inc. 1,000 1,000
Balanced Care at Sherwood, Inc. 1,000 1,000
BCC at State College, Inc. 1,000 1,000
BCC at Altoona, Inc. 1,000 1,000
BCC at Reading, Inc. 1,000 1,000
BCC of Wisconsin 1,000 1,000
Xxxxx Management, Inc. 1,000 1,000
BCC Development and Management Co., Inc. 1,000 1,000
----------------------------------
(1) All shares have been pledged to Meditrust
46
ANNEX III
LOCKUP AGREEMENTS
47
ANNEX IV
SIGNIFICANT SUBSIDIARIES
Subsidiary Jurisdiction of Incorporation
---------- -----------------------------
