EXHIBIT 1.2
____________________________________________________________________________
____________________________________________________________________________
WELLPOINT HEALTH NETWORKS INC.
(a Delaware corporation)
1,800,000 Shares of Common Stock
INTERNATIONAL UNDERWRITING AGREEMENT
Dated: June [ ], 1999
____________________________________________________________________________
____________________________________________________________________________
WELLPOINT HEALTH NETWORKS INC.
(a Delaware corporation)
1,800,000 Shares of Common Stock
(Par Value $.01 Per Share)
INTERNATIONAL UNDERWRITING AGREEMENT
June [ ], 1999
XXXXXX XXXXXXX & CO. INTERNATIONAL LIMITED
XXXXXXX XXXXX INTERNATIONAL
DEUTSCHE BANK AG LONDON
XXXXXXXXX, XXXXXX & XXXXXXXX INTERNATIONAL
SALOMON BROTHERS INTERNATIONAL LIMITED
WARBURG DILLON READ LLC
as International Representatives of the several International Underwriters
c/o Morgan Xxxxxxx & Co. International Limited
00 Xxxxx Xxxxxx
Xxxxxx Xxxxx
Xxxxxx X00 0XX
Xxxxxxx
Ladies and Gentlemen:
WellPoint Health Networks Inc., a Delaware corporation (the
"COMPANY"), and the California HealthCare Foundation, a California non-profit
corporation (the "SELLING STOCKHOLDER"), confirm their respective agreements
with Xxxxxx Xxxxxxx & Co. International Limited ("XXXXXX XXXXXXX") and each of
the other international underwriters named in Schedule A hereto (collectively,
the "INTERNATIONAL MANAGERS," which term shall also include any underwriter
substituted as hereinafter provided in Section 10 hereof), with respect to (i)
the sale by the Selling Stockholder, and the purchase by the International
Managers, acting severally and not jointly, of the respective numbers of shares
of Common Stock, par value $.01 per share, of the Company ("COMMON STOCK") set
forth in Schedule A hereto (the "INTERNATIONAL SECURITIES").
It is understood that the Company and the Selling Stockholder are
concurrently entering into an agreement dated the date hereof (the "U.S.
UNDERWRITING AGREEMENT") providing for the offering by the Selling Stockholder
of an aggregate of 7,200,000 shares of Common Stock (the "INITIAL U.S.
SECURITIES") in the United States and Canada for which Xxxxxx Xxxxxxx & Co.
Incorporated, Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated,
1
Deutsche Bank Securities, Inc., Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities
Corporation, Xxxxxxx Xxxxx Xxxxxx Inc. and Warburg Dillon Read LLC (the "U.S.
UNDERWRITERS") and the grant by the Selling Stockholder to the U.S.
Underwriters, acting severally and not jointly, of an option to purchase all
or any part of the U.S. Underwriters' pro rata portion of up to 1,350,000
additional shares of Common Stock solely to cover overallotments, if any (the
"U.S. OPTION SECURITIES"). The Initial U.S. Securities and the U.S. Option
Securities are hereinafter called the "U.S. SECURITIES." It is understood
that the Selling Stockholder is not obligated to sell and the International
Managers are not obligated to purchase, any International Securities unless
all of the Initial U.S. Securities are contemporaneously purchased by the
U.S. Underwriters.
The International Managers and the U.S. Underwriters are hereinafter
collectively called the "UNDERWRITERS," the International Securities and the
Initial U.S. Securities are hereinafter collectively called the "INITIAL
SECURITIES," and the International Securities and the U.S. Securities are
hereinafter collectively called the "SECURITIES."
The Underwriters will concurrently enter into an Intersyndicate
Agreement of even date herewith (the "INTERSYNDICATE AGREEMENT") providing for
the coordination of certain transactions among the Underwriters under the
direction of Xxxxxx Xxxxxxx (in such capacity, the "GLOBAL COORDINATOR").
The Company and the Selling Stockholder understand that the
International Managers propose to make an offering of the International
Securities as soon as Xxxxxx Xxxxxxx xxxxx advisable after this Agreement has
been executed and delivered.
The Company has filed with the Securities and Exchange Commission (the
"COMMISSION") a registration statement on Form S-3 (No. 333-80153) as amended by
pre-effective Amendment No. 1 thereto, covering the registration of the
Securities under the Securities Act of 1933, as amended (the "1933 ACT"),
including the related preliminary prospectus or prospectuses. Promptly after
execution and delivery of this Agreement, the Company will either (i) prepare
and file a prospectus in accordance with the provisions of Rule 430A ("RULE
430A") of the rules and regulations of the Commission under the 1933 Act (the
"1933 ACT REGULATIONS") and paragraph (b) of Rule 424 ("RULE 424(b)") of the
1933 Act Regulations or (ii) if the Company has elected to rely upon Rule 434
("RULE 434") of the 1933 Act Regulations, prepare and file a term sheet (a "TERM
SHEET") in accordance with the provisions of Rule 434 and Rule 424(b). Two
forms of prospectus are to be used in connection with the offering and sale of
the Securities: one relating to the International Securities (the "FORM OF
INTERNATIONAL PROSPECTUS") and one relating to the U.S. Securities (the "FORM OF
U.S. PROSPECTUS"). The Form of International Prospectus is identical to the
Form of U.S. Prospectus, except for the front cover page and the inclusion in
the Form of International Prospectus of a section under the caption "United
States Federal Tax Consequences to Non-United States Holders." The information
included in any such prospectus or in any such Term Sheet, as the case may be,
that was omitted from such registration statement at the time it became
effective but that is deemed to be part of such registration statement at the
time it became effective (a) pursuant to paragraph (b) of Rule 430A is referred
to as "Rule 430A Information" or (b) pursuant to paragraph (d) of Rule 434 is
referred to as "Rule 434 Information." Each Form of International Prospectus
and Form of U.S. Prospectus used before such registration statement
2
became effective, and any prospectus that omitted, as applicable, the Rule
430A Information or the Rule 434 Information, that was used after such
effectiveness and prior to the execution and delivery of this Agreement, is
herein called a "preliminary prospectus." Such registration statement,
including the exhibits thereto, schedules thereto, if any, and the documents
incorporated by reference therein (including the exhibits to any such
documents) pursuant to Item 12 of Form S-3 under the 1933 Act, at the time it
became effective and including the Rule 430A Information and the Rule 434
Information, as applicable, is herein called the "REGISTRATION STATEMENT."
Any registration statement filed pursuant to Rule 462(b) of the 1933 Act
Regulations is herein referred to as the "Rule 462(b) Registration
Statement," and after such filing the term "Registration Statement" shall
include the Rule 462(b) Registration Statement. The final Form of
International Prospectus and the final Form of U.S. Prospectus, including the
documents incorporated by reference therein pursuant to Item 12 of Form S-3
under the 1933 Act, in the forms first furnished to the Underwriters for use
in connection with the offering of the Securities are herein called the
"INTERNATIONAL PROSPECTUS" and the "U.S. PROSPECTUS," respectively, and
collectively, the "PROSPECTUSES." If Rule 434 is relied on, the terms
"International Prospectus" and "U.S. Prospectus" shall refer to the
preliminary International Prospectus dated June 14, 1999 and preliminary U.S.
Prospectus dated June 14, 1999, respectively, each together with the
applicable Term Sheet and all references in this Agreement to the date of
such Prospectuses shall mean the date of the applicable Term Sheet. For
purposes of this Agreement, all references to the Registration Statement, any
preliminary prospectus, the International Prospectus, the U.S. Prospectus or
any Term Sheet or any amendment or supplement to any of the foregoing shall
be deemed to include the copy filed with the Commission pursuant to its
Electronic Data Gathering, Analysis and Retrieval system ("XXXXX").
All references in this Agreement to financial statements and schedules
and other information which is "contained," "included" or "stated" in the
Registration Statement, any preliminary prospectus (including the Form of U.S.
Prospectus and Form of International Prospectus) or the Prospectuses (or other
references of like import) shall be deemed to mean and include all such
financial statements and schedules and other information which is incorporated
by reference in the Registration Statement, any preliminary prospectus
(including the Form of U.S. Prospectus and Form of International Prospectus) or
the Prospectuses, as the case may be; and all references in this Agreement to
amendments or supplements to the Registration Statement, any preliminary
prospectus or the Prospectuses shall be deemed to mean and include the filing of
any document under the Securities Exchange Act of 1934 (the "1934 Act") which is
incorporated by reference in the Registration Statement, such preliminary
prospectus or the Prospectuses, as the case may be.
The Underwriters acknowledge that concurrently with the offering of
the Securities, the Company is offering $285,000,000 aggregate principal amount
at maturity of its Zero Coupon Convertible Subordinated Debentures due 2019
($327,750,000 aggregate principal amount at maturity if the over-allotment
option to the underwriters is exercised in full) (the "DEBT OFFERING") The
consummation of the offerings of the Securities is not contingent upon the
consummation of the Debt Offering or vice versa.
3
SECTION 1. REPRESENTATIONS AND WARRANTIES.
(a) REPRESENTATIONS AND WARRANTIES BY THE COMPANY. The Company represents
and warrants to each International Manager as of the date hereof, as of the
Closing Time referred to in Section 2(c) hereof and agrees with each
International Manager, as follows:
(i) COMPLIANCE WITH REGISTRATION REQUIREMENTS. The Company meets
the requirements for use of Form S-3 under the 1933 Act. Each of the
Registration Statement and any Rule 462(b) Registration Statement has
become effective under the 1933 Act and no stop order suspending the
effectiveness of the Registration Statement or any Rule 462(b) Registration
Statement has been issued under the 1933 Act and no proceedings for that
purpose have been instituted or are pending or, to the knowledge of the
Company, are contemplated by the Commission, and any request on the part of
the Commission for additional information has been complied with.
At the respective times the Registration Statement, any Rule 462(b)
Registration Statement and any post-effective amendments thereto became
effective and at the Closing Time, the Registration Statement, the Rule
462(b) Registration Statement and any amendments and supplements thereto
complied and will comply in all material respects with the requirements of
the 1933 Act and the 1933 Act Regulations and did not and will not contain
an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading. Neither the Prospectuses nor any amendments or supplements
thereto, at the time the Prospectuses or any such amendment or supplement
was issued and at the Closing Time, included or will include an untrue
statement of a material fact or omitted or will omit to state a material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. If Rule 434 is
used, the Company will comply with the requirements of Rule 434. The
representations and warranties in this subsection shall not apply to
statements in or omissions from the Registration Statement or the
Prospectuses made in reliance upon and in conformity with information
furnished to the Company in writing by any International Manager relating
to such International Manager through Xxxxxx Xxxxxxx expressly for use in
the Registration Statement or the Prospectuses.
Each preliminary prospectus and the prospectuses filed as part of the
Registration Statement as originally filed or as part of any amendment
thereto, or filed pursuant to Rule 424 under the 1933 Act, complied when so
filed in all material respects with the 1933 Act Regulations and each
preliminary prospectus and the Prospectuses delivered to the Underwriters
for use in connection with this offering was identical to the
electronically transmitted copies thereof filed with the Commission
pursuant to XXXXX, except to the extent permitted by Regulation S-T.
(ii) INCORPORATED DOCUMENTS. The documents incorporated or deemed
to be incorporated by reference in the Registration Statement and the
Prospectuses, at the time they were or hereafter are filed with the
Commission, complied and will comply in all material respects with the
requirements of the 1934 Act and the rules and regulations of the
Commission thereunder (the "1934 Act Regulations") and, when read together
with the
4
other information in the Prospectuses, at the time the Registration
Statement became effective, at the time the Prospectuses were
issued and at the Closing Time, did not and will not contain an untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading.
(iii) INDEPENDENT ACCOUNTANTS. The accountants who certified the
financial statements and supporting schedules included in the Registration
Statement are independent public accountants as required by the 1933 Act
and the 1933 Act Regulations.
(iv) FINANCIAL STATEMENTS. The Company's consolidated financial
statements included in the Registration Statement and the Prospectuses,
together with the related schedules and notes, present fairly the financial
position of the Company and its consolidated subsidiaries at the dates
indicated and the statement of operations, stockholders' equity and cash
flows of the Company and its consolidated subsidiaries for the periods
specified; such financial statements have been prepared in conformity with
generally accepted accounting principles ("GAAP") applied on a consistent
basis throughout the periods involved. The supporting schedules, if any,
included in the Registration Statement present fairly in accordance with
GAAP the information required to be stated therein. The selected financial
data and the summary financial information included in the Prospectuses
present fairly the information shown therein and have been compiled on a
basis consistent with that of the audited financial statements included in
the Registration Statement. The pro forma financial statements and the
related notes thereto included in the Registration Statement and the
Prospectuses 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.
5
(v) NO MATERIAL ADVERSE CHANGE IN BUSINESS. Since the respective
dates as of which information is given in the Registration Statement and
the Prospectuses, except as otherwise stated therein, (A) there has been no
material adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise, whether or not arising in the
ordinary course of business (a "MATERIAL ADVERSE EFFECT"), (B) there have
been no transactions entered into by the Company or any of its
subsidiaries, other than those in the ordinary course of business, which
are material with respect to the Company and its subsidiaries considered as
one enterprise, and (C) there has been no dividend or distribution of any
kind declared, paid or made by the Company on any class of its capital
stock.
(vi) GOOD STANDING OF THE COMPANY. The Company has been duly
organized and is validly existing as a corporation in good standing under
the laws of the state of Delaware and has corporate power and authority to
own, lease and operate its properties and to conduct its business as
described in the Prospectuses and to enter into and perform its obligations
under this Agreement; and the Company is duly qualified as a foreign
corporation to transact business and is in good standing in each other
jurisdiction in which such qualification is required, whether by reason of
the ownership or leasing of property or the conduct of business, except
where the failure so to qualify or to be in good standing would not result
in a Material Adverse Effect.
(vii) GOOD STANDING OF SUBSIDIARIES. Each subsidiary of the Company
listed on Schedule C hereto (the "SUBSIDIARIES") has been duly organized
and is validly existing as a corporation in good standing under the laws of
the jurisdiction of its incorporation, has corporate power and authority to
own, lease and operate its properties and to conduct its business as
described in the Prospectuses and is duly qualified as a foreign
corporation to transact business and is in good standing in each
jurisdiction in which such qualification is required, whether by reason of
the ownership or leasing of property or the conduct of business, except
where the failure so to qualify or to be in good standing would not result
in a Material Adverse Effect; except as otherwise disclosed in the
Registration Statement, all of the issued and outstanding capital stock of
each such Subsidiary has been duly authorized and validly issued, is fully
paid and non-assessable and is owned by the Company, directly or through
subsidiaries, free and clear of any security interest, mortgage, pledge,
lien, encumbrance, claim or equity; none of the outstanding shares of
capital stock of any Subsidiary was issued in violation of the preemptive
or similar rights of any securityholder of such Subsidiary. Other than the
Subsidiaries, the Company has no subsidiaries which either (i) are
"SIGNIFICANT SUBSIDIARIES," as such term is defined under Regulation S-X
under the 1933 Act, or (ii) are material to the Company's financial
condition or results of operations.
(viii) CAPITALIZATION. The authorized, issued and outstanding
capital stock of the Company is as set forth in the Prospectuses under the
captions "Capitalization" and "Description of Capital Stock" (except for
subsequent issuances, if any, under the Company's 1999 Stock Incentive
Plan, 1994 Stock Option/Award Plan, Employee Stock Option Plan or Employee
Stock Purchase Plan. The shares of issued and outstanding capital stock,
including the Securities to be purchased by the Underwriters from the
Selling
6
Stockholder, have been duly authorized and validly issued and are
fully paid and non-assessable; none of the outstanding shares of capital
stock, including the Securities to be purchased by the Underwriters from
the Selling Stockholder, was issued in violation of the preemptive or other
similar rights of any securityholder of the Company.
(ix) AUTHORIZATION OF AGREEMENT. This Agreement and the U.S.
Underwriting Agreement have been duly authorized, executed and delivered by
the Company.
(x) ABSENCE OF MANIPULATION. None of the Company or its
subsidiaries or any of their respective officers and directors has taken,
or will take, directly or indirectly, any action which is designed to or
which has constituted or which might reasonably be expected to cause or
result in stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Securities. The parties
hereto acknowledge that, in connection with the proposed issuance of the
Company's Zero Coupon Convertible Subordinated Debentures Due 2019, the
Company intends to use a portion of the net proceeds to purchase additional
shares of Common Stock from the Selling Stockholder, and in connection
with the proposed acquisition of Cerulean Companies, Inc., the Company
intends to issue additional shares of Common Stock in exchange for the
shares of capital stock of Cerulean Companies, Inc.
(xi) AUTHORIZATION AND DESCRIPTION OF SECURITIES. The Common Stock
conforms to all statements relating thereto contained in the Prospectuses
and such description conforms to the rights set forth in the instruments
defining the same; no holder of the Securities will be subject to personal
liability by reason of being such a holder.
(xii) ABSENCE OF DEFAULTS AND CONFLICTS Neither the Company nor any
of its subsidiaries is in violation of its charter or bylaws or in default
in the performance or observance of any obligation, agreement, covenant or
condition contained in any contract, indenture, mortgage, deed of trust,
loan or credit agreement, note, lease or other agreement or instrument to
which the Company or any of its subsidiaries is a party or by which it or
any of them may be bound, or to which any of the property or assets of the
Company or any subsidiary is subject (collectively, "AGREEMENTS AND
INSTRUMENTS") except for such defaults that would not result in a Material
Adverse Effect; and the execution, delivery and performance of this
Agreement and the U.S. Underwriting Agreement and the consummation of the
transactions contemplated in this Agreement, the U.S. Underwriting
Agreement and the Registration Statement and compliance by the Company with
its obligations under this Agreement and the U.S. Underwriting Agreement
have been duly authorized by all necessary corporate action and do not and
will not, whether with or without the giving of notice or passage of time
or both, conflict with or constitute a breach of, or default or Repayment
Event (as defined below) under, or result in the creation or imposition of
any lien, charge or encumbrance upon any property or assets of the Company
or any subsidiary pursuant to, the Agreements and Instruments (except for
such conflicts, breaches, defaults or Repayment Events or liens, charges or
encumbrances that would not result in a Material Adverse Effect), nor will
such action result in any violation by the Company or any of its
subsidiaries of the provisions of the charter or by-laws of the Company or
any subsidiary or any applicable law, statute, rule, regulation, judgment,
order, writ or decree of any government, government instrumentality or
court, domestic or foreign, having jurisdiction over the Company or any
subsidiary or any of their assets, properties or operations. As used
herein, a "REPAYMENT EVENT" means any event or condition which gives the
holder of any note,
7
debenture or other evidence of indebtedness (or any person acting on such
holder's behalf) the right to require the repurchase, redemption or
repayment of all or a portion of such indebtedness by the Company or any
subsidiary.
(xiii) ABSENCE OF LABOR DISPUTE. No labor dispute with the employees
of the Company or any subsidiary exists or, to the knowledge of the
Company, is imminent, and the Company is not aware of any existing or
imminent labor disturbance by the employees of any of its or any
subsidiary's principal suppliers, manufacturers, customers or contractors,
which, in either case, may reasonably be expected to result in a Material
Adverse Effect.
(xiv) ABSENCE OF PROCEEDINGS. There is no action, suit, proceeding,
inquiry or investigation before or brought by any court or governmental
agency or body, domestic or foreign, now pending, or, to the knowledge of
the Company, threatened, against or affecting the Company or any
subsidiary, which is required to be disclosed in the Registration Statement
(other than as disclosed therein), or which might reasonably be expected to
result in a Material Adverse Effect, or which might reasonably be expected
to materially and adversely affect the consummation of the transactions
contemplated in this Agreement and the U.S. Underwriting Agreement or the
performance by the Company of its obligations hereunder or thereunder; the
aggregate of all pending legal or governmental proceedings to which the
Company or any subsidiary is a party or of which any of their respective
property or assets is the subject which are not described in the
Registration Statement, including ordinary routine litigation incidental to
the business, could not reasonably be expected to result in a Material
Adverse Effect.
(xv) ACCURACY OF EXHIBITS. There are no contracts or documents
which are required to be described in the Registration Statement, the
Prospectuses or the documents incorporated by reference therein or to be
filed as exhibits thereto which have not been so described and filed as
required.
(xvi) POSSESSION OF INTELLECTUAL PROPERTY. The Company and its
subsidiaries own, possess, or can acquire on reasonable terms, adequate
rights to use all patents, patent rights, licenses, inventions, copyrights,
know-how (including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures),
trademarks, service marks, trade names or other intellectual property
(collectively, "INTELLECTUAL PROPERTY") necessary for the conduct of the
business now operated or to be operated by the Company and its
subsidiaries, as described in the Prospectuses, and neither the Company nor
any of its subsidiaries has received any notice or is otherwise aware of
any infringement of or conflict with asserted rights of others with respect
to any Intellectual Property or of any facts or circumstances which would
render any Intellectual Property invalid or inadequate to protect the
interest of the Company or any of its subsidiaries therein, and which
infringement or conflict (if the subject of any unfavorable decision,
ruling or finding) or invalidity or inadequacy, singly or in the aggregate,
would result in a Material Adverse Effect.
8
(xvii) ABSENCE OF FURTHER REQUIREMENTS. No filing with, or
authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or agency
is necessary or required for the performance by the Company of its
obligations under this Agreement and the International Underwriting
Agreement, in connection with the offering or sale of the Securities by the
Selling Stockholder under this Agreement and the U.S. Underwriting
Agreement, or the consummation of the transactions contemplated by this
Agreement and the U.S. Underwriting Agreement, except such as have been
already obtained or made or as may be required under the 1933 Act or the
1933 Act Regulations or state or foreign securities laws.
(xviii) XXXX-XXXXX LICENSE. Blue Cross of California has been
licensed in the State of California as a health care service plan under
the Xxxx-Xxxxx Health Care Service Plan Act of 1975, as amended (the
"XXXX-XXXXX ACT"), and such license has not been modified since the
issuance thereof (other than modifications filed in the ordinary course
of business) in any respect that would materially and adversely affect
the ability of the Company to conduct its business in the manner
described in the Registration Statement. None of the Company's other
subsidiaries are required to be licensed under the Xxxx-Xxxxx Act.
(xix) BCBSA LICENSE. The Company is in full compliance with the
requirements of the Blue Cross License Agreement, dated as of August 4,
1997, between the Company and the Blue Cross and Blue Shield Association
(the "BCBSA") and the California Blue Cross License Addendum, dated as of
June 10, 1998, between the Company and the BCBSA, except in each case where
such noncompliance would not have a Material Adverse Effect. Each of the
Company's subsidiaries that is required by the BCBSA as of the date hereof,
or that will be required by the BCBSA as of the Closing Time, to be a party
to a Blue Cross Affiliate License Agreement is in full compliance with the
requirements of such agreement, except in each case where such
noncompliance would not have a Material Adverse Effect.
(xx) POSSESSION OF LICENSES AND PERMITS. The Company and its
subsidiaries possess such permits, licenses, approvals, consents and other
authorizations, including, without limitation, under the Xxxx-Xxxxx Act
(collectively, "GOVERNMENTAL LICENSES"), issued by the appropriate federal,
state, local or foreign regulatory agencies or bodies necessary to conduct
the business now operated by them and the Company and its subsidiaries are
in compliance with the terms and conditions of all such Governmental
Licenses, except where the failure so to possess such Governmental Licenses
or to comply would not, singly or in the aggregate, have a Material Adverse
Effect; all of the Governmental Licenses are valid and in full force and
effect, except when the invalidity of such Governmental Licenses or the
failure of such Governmental Licenses to be in full force and effect would
not have a Material Adverse Effect; and neither the Company nor any of its
subsidiaries has received any notice of proceedings relating to the
revocation or modification of any such Governmental Licenses which, singly
or in the aggregate, if the subject of an unfavorable decision, ruling or
finding, would result in a Material Adverse Effect.
9
(xxi) TITLE TO PROPERTY. The Company and its subsidiaries have good
and marketable title to all real property owned by the Company and its
subsidiaries and good title to all other properties owned by them, in each
case, free and clear of all mortgages, pledges, liens, security interests,
claims, restrictions or encumbrances of any kind except such as (a) are
described in the Prospectuses or (b) do not, singly or in the aggregate,
have a Material Adverse Effect and do not interfere in any material respect
with the use made and proposed to be made of such property by the Company
or any of its subsidiaries; and all of the leases and subleases material to
the business of the Company and its subsidiaries, considered as one
enterprise, and under which the Company or any of its subsidiaries holds
properties described in the Prospectuses, are in full force and effect, and
neither the Company nor any subsidiary has any notice of any material claim
of any sort that has been asserted by anyone adverse to the rights of the
Company or any subsidiary under any of the leases or subleases mentioned
above, or affecting or questioning the rights of the Company or such
subsidiary to the continued possession of the leased or subleased premises
under any such lease or sublease.
(xxii) MAINTENANCE OF INSURANCE. The Company and each of its
subsidiaries maintain insurance policies with respect to such insurable
properties, potential liabilities and occurrences that merit or require
catastrophic insurance in amounts deemed adequate in the reasonable opinion
of the management, or the Company and each of its subsidiaries maintain a
system or systems of self-insurance or assumption of risk which accords
with the practices of similar businesses; all such insurance policies are
in full force and effect; and, at the time that each of the physicians and
physician groups with which the Company or any of its subsidiaries has
contracted entered into such agreement, such physician or physician group
represented that they had professional liability and medical malpractice
insurance in minimum amounts which the Company believes to be adequate for
such physicians and physician groups generally.
(xxiii) COMPLIANCE WITH TAX LAWS. All material income, payroll and
sales tax returns required to be filed by the Company or any of its
subsidiaries, in any jurisdiction, have been so filed, and all material
taxes, including related withholding taxes, penalties and interest,
assessments and other charges due or claimed to be due from such entities
have been paid, other than those being contested in good faith and for
which adequate reserves have been provided or those currently payable
without penalty or interest.
(xxiv) COMPLIANCE WITH CUBA ACT. The Company has complied with, and
is and will be in compliance with, the provisions of that certain Florida
act relating to disclosure of doing business with Cuba, codified as Section
517.075 of the Florida statutes, and the rules and regulations thereunder
(collectively, the "CUBA ACT") or is exempt therefrom.
(xxv) INVESTMENT COMPANY ACT. The Company is not an "investment
company" or an entity "controlled" by an "investment company" as such terms
are defined in the Investment Company Act of 1940, as amended (the "1940
ACT").
(xxvi) REGISTRATION RIGHTS. Except as disclosed in the Prospectuses,
there are no holders of any security of the Company or any Subsidiary
(debt or equity) who have or will
10
have any right to require the registration of such security by virtue of
the filing of the Registration Statement or the execution by the Company
of this Agreement.
(xxvii) ENVIRONMENTAL LAWS. Except as described in the Registration
Statement or except as would not, singly or in the aggregate, result in a
Material Adverse Effect, (A) neither the Company nor any of its
subsidiaries is in violation of any federal, state, local or foreign
statute, law, rule, regulation, ordinance, code, policy or rule of common
law or any judicial or administrative interpretation thereof, including any
judicial or administrative order, consent, decree or judgment, relating to
pollution or protection of human health, the environment (including,
without limitation, ambient air, surface water, groundwater, land surface
or subsurface strata) or wildlife, including, without limitation, laws and
regulations relating to the release or threatened release of chemicals,
pollutants, contaminants, wastes, toxic substances, hazardous substances,
petroleum or petroleum products (collectively, "HAZARDOUS MATERIALS") or to
the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Materials (collectively,
"ENVIRONMENTAL LAWS"), (B) the Company and its subsidiaries have all
permits, authorizations and approvals required under any applicable
Environmental Laws and are each in compliance with their requirements,
(C) there are no pending or threatened administrative, regulatory or
judicial actions, suits, demands, demand letters, claims, liens, notices of
noncompliance or violation, investigation or proceedings relating to any
Environmental Law against the Company or any of its subsidiaries and
(D) there are no events or circumstances that might reasonably be expected
to form the basis of an order for clean-up or remediation, or an action,
suit or proceeding by any private party or governmental body or agency,
against or affecting the Company or any of its subsidiaries relating to
Hazardous Materials or any Environmental Laws.
(b) REPRESENTATIONS AND WARRANTIES BY THE SELLING STOCKHOLDER. The Selling
Stockholder represents and warrants to each International Manager as of the date
hereof, as of the Closing Time and agrees with each International Manager, as
follows:
(i) ACCURATE DISCLOSURE. To the extent that any statements or
omissions made in the Registration Statement or Prospectuses, or any
amendment or supplement thereto, are made in reliance on, and in conformity
with, written information furnished to the Company by or on behalf of the
Selling Stockholder specifically for use in the preparation thereof, each
such part of the Registration Statement, when it became effective, did not
contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statement
therein not misleading, and each such part of either of the Prospectuses,
or of any amendments or supplements thereto, at the time it was issued and
as of the Closing Time, did not include nor will it include an untrue
statement of a material fact or omitted or will omit to state a material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; the Selling
Stockholder is not prompted to sell the Securities to be sold by the
Selling Stockholder hereunder by any material nonpublic information
concerning the Company or any subsidiary of the Company which is not set
forth in the Prospectuses. The Company and the Underwriters acknowledge
that the statements relating to such Selling Stockholder under the heading
"Selling Stockholder" in any Prospectus, and under the
11
heading "Item 1. Business--May 1996 Recapitalization and August 1997
Reincorporation" in the Company's Form 10-K which is incorporated by
reference into the Prospectuses (but only insofar as such paragraphs
purport to describe agreements to which the Selling Stockholder is a
party), constitute the only information furnished in writing by or on
behalf of such Selling Stockholder for inclusion in the Registration
Statement or any Prospectus.
(ii) AUTHORIZATION OF AGREEMENTS. The Selling Stockholder has the
full right, power and authority to enter into this Agreement, the U.S.
Underwriting Agreement and to sell, transfer and deliver the Securities to
be sold by the Selling Stockholder hereunder. The execution and delivery
of this Agreement, the U.S. Underwriting Agreement and the sale and
delivery of the Securities to be sold by the Selling Stockholder and the
consummation of the transactions contemplated in this Agreement and the
U.S. Underwriting Agreement and compliance by the Selling Stockholder with
its obligations hereunder have been duly authorized by the Selling
Stockholder and do not and will not, whether with or without the giving of
notice or passage of time or both, conflict with or constitute a breach of,
or default under, or result in the creation or imposition of any tax, lien,
charge or encumbrance upon the Securities to be sold by the Selling
Stockholder pursuant to any contract, indenture, mortgage, deed of trust,
loan or credit agreement, note, license, lease or other agreement or
instrument to which the Selling Stockholder is a party or by which the
Selling Stockholder may be bound, or to which any of the property or assets
of the Selling Stockholder is subject, nor will such action result in any
violation of the provisions of the charter or by-laws or other
organizational instrument of the Selling Stockholder, if applicable, or any
applicable treaty, law, statute, rule, regulation, judgment, order, writ or
decree of any government, government instrumentality or court, domestic or
foreign, having jurisdiction over the Selling Stockholder or any of its
properties.
(iii) GOOD AND MARKETABLE TITLE. The Selling Stockholder has and
will at the Closing Time have good and marketable title to the Securities
to be sold by the Selling Stockholder hereunder, free and clear of any
security interest, mortgage, pledge, lien, charge, claim, equity or
encumbrance of any kind, other than pursuant to this Agreement, and the
U.S. Underwriting Agreement and the Voting Agreement and the Voting Trust
Agreement, each as defined in the Registration Statement; and upon delivery
of such Securities and payment of the purchase price therefor as herein
contemplated, assuming each such Underwriter has no notice of any adverse
claim, each of the Underwriters will receive good and marketable title to
the Securities purchased by it from the Selling Stockholder, free and clear
of any security interest, mortgage, pledge, lien, charge, claim, equity or
encumbrance of any kind.
(iv) ABSENCE OF MANIPULATION. The Selling Stockholder has not
taken, and will not take, directly or indirectly, any action which is
designed to or which has constituted or which might reasonably be expected
to cause or result in stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the Securities.
(v) ABSENCE OF FURTHER REQUIREMENTS. No filing with, or consent,
approval, authorization, order, registration, qualification or decree of,
any court or governmental authority or agency, domestic or foreign, is
necessary or required for the performance by the
12
Selling Stockholder of its obligations under this Agreement or the U.S.
Underwriting Agreement, or in connection with the sale and delivery of
the Securities under this Agreement or the U.S. Underwriting Agreement
or the consummation of the transactions contemplated by this Agreement
and the U.S. Underwriting Agreement, except such as may have previously
been made or obtained or as may be required under the 1933 Act or the
1933 Act Regulations or state securities laws.
(vi) NO ASSOCIATION WITH NASD. Except as disclosed in writing
to the Underwriters, neither the Selling Stockholder nor any of its
affiliates directly, or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with, or has
any other association with (within the meaning of Article I, Section
1(m) of the By-laws of the National Association of Securities Dealers,
Inc.), any member firm of the National Association of Securities
Dealers, Inc.
(c) OFFICER'S CERTIFICATES. Any certificate signed by any officer of the
Company or any of its subsidiaries delivered to the Global Coordinator, the
International Managers or to counsel for the International Managers shall be
deemed a representation and warranty by the Company to each International
Manager as to the matters covered thereby; and any certificate signed by or on
behalf of the Selling Stockholder as such and delivered to the Global
Coordinator, the International Managers or to counsel for the International
Managers pursuant to the terms of this Agreement shall be deemed a
representation and warranty by the Selling Stockholder as to the matters covered
thereby.
SECTION 2. SALE AND DELIVERY TO INTERNATIONAL MANAGERS; CLOSING.
(a) INTERNATIONAL SECURITIES. On the basis of the representations and
warranties herein contained and subject to the terms and conditions herein set
forth, the Selling Stockholder agrees to sell to each International Manager and
each International Manager, severally and not jointly, agrees to purchase from
the Selling Stockholder, at the price per share set forth in Schedule B, the
number of International Securities set forth in Schedule A, plus any additional
number of International Securities which such International Manager may become
obligated to purchase pursuant to the provisions of Section 10 hereof, subject,
in each case, to such adjustments among such International Managers as they in
their sole discretion shall make to eliminate any sales or purchases of
fractional securities.
(b) PAYMENT. The closing of the purchase and sale of the Initial
Securities, including acknowledgment of the payment of the purchase price
therefor and delivery of certificates therefor, shall be made at the offices of
Xxxxxx & Xxxxxxx, 000 Xxxx Xxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxxxxx, XX 00000, or
at such other place as shall be agreed upon by the U.S. Representatives and the
Company and the Selling Stockholder, at 7:00 A.M. (California time) on the third
business day (or the fourth business day, if the pricing occurs after 4:30 P.M.
(Eastern time) on any given business day) after the date hereof (unless
postponed in accordance with the provisions of Section 10), or such other time
not later than ten business days after such date as shall be agreed upon by the
U.S. Representatives and the Selling Stockholder (such time and date of payment
and delivery being herein called "Closing Time"). Delivery of certificates for
the Initial Securities shall be made at the Closing Time at the office of Xxxxxx
Xxxxxxx, 0000 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000.
13
Payment shall be made to the Selling Stockholder by wire transfer of
immediately available funds to a bank account designated by the Selling
Stockholder not later than two business days preceding the Closing Time against
delivery to the International Managers for their respective accounts of
certificates for the Securities to be purchased by them. Xxxxxx Xxxxxxx,
individually and not as representative of the International Managers, may (but
shall not be obligated to) make payment of the purchase price for the
International Securities to be purchased by any International Manager whose
funds have not been received by the Closing Time but such payment shall not
relieve such International Manager from its obligations hereunder.
(c) DENOMINATIONS; REGISTRATION. Certificates for the International
Securities, shall be in such denominations and registered in such names as the
International Managers may request in writing at least one full business day
before the Closing Time. The certificates for the International Securities,
will be made available for examination and packaging by the International
Managers in The City of New York not later than 10:00 A.M. (Eastern time) on the
business day prior to the Closing Time.
SECTION 3. COVENANTS .
(a) COVENANTS OF THE COMPANY. The Company covenants with each
International Manager as follows:
(i) COMPLIANCE WITH SECURITIES REGULATIONS AND COMMISSION REQUEST.
The Company, subject to Section 3(b), will comply with the requirements of
Rule 430A or Rule 434, as applicable, and will notify the U.S.
Representatives immediately, and confirm the notice in writing, (i) when
any post-effective amendment to the Registration Statement shall become
effective, or any supplement to the Prospectuses or any amended
Prospectuses shall have been filed, (ii) of the receipt of any comments
from the Commission, (iii) of any request by the Commission for any
amendment to the Registration Statement or any amendment or supplement to
the Prospectuses or for additional information, and (iv) of the issuance by
the Commission of any stop order suspending the effectiveness of the
Registration Statement or of any order preventing or suspending the use of
any preliminary prospectus, or of the suspension of the qualification of
the Securities for offering or sale in any jurisdiction, or of the
initiation or threatening of any proceedings for any of such purposes. The
Company will promptly effect the filings necessary pursuant to Rule 424(b)
and will take such steps as it deems necessary to ascertain promptly
whether the form of any prospectus transmitted for filing under Rule 424(b)
was received for filing by the Commission and, in the event that it was
not, it will promptly file such prospectus. The Company will make every
reasonable effort to prevent the issuance of any stop order and, if any
stop order is issued, to obtain the lifting thereof at the earliest
possible moment.
(ii) FILING OF AMENDMENTS. The Company will give the International
Managers notice of its intention to file or prepare any amendment to the
Registration Statement (including any filing under Rule 462(b)), any Term
Sheet or any amendment, supplement or revision to either the prospectuses
included in the Registration Statement at the time it became effective or
to the Prospectuses, whether pursuant to the 1933 Act, the 1934 Act or
otherwise, will furnish the International Managers with copies of any such
documents a
14
reasonable amount of time prior to such proposed filing or use, as the
case may be, and will not file or use any such document to which the
International Managers or counsel for the International Managers shall
object.
(iii) DELIVERY OF REGISTRATION STATEMENTS. The Company has
furnished or will deliver to the International Managers and counsel for the
International Managers, without charge, signed copies of the Registration
Statement as originally filed and of each amendment thereto (including
exhibits filed therewith or incorporated by reference therein and documents
incorporated or deemed to be incorporated by reference therein) and signed
copies of all consents and certificates of experts, and will also deliver
to the International Managers, without charge, a conformed copy of the
Registration Statement as originally filed and of each amendment thereto
(without exhibits) for each of the International Managers. The copies of
the Registration Statement and each amendment thereto furnished to the
International Managers will be identical to the electronically transmitted
copies thereof filed with the Commission pursuant to XXXXX, except to the
extent permitted by Regulation S-T.
(iv) DELIVERY OF PROSPECTUSES. The Company has delivered to each
International Manager, without charge, as many copies of each preliminary
prospectus as such International Manager reasonably requested, and the
Company hereby consents to the use of such copies for purposes permitted by
the 1933 Act. The Company will furnish to each International Manager,
without charge, during the period when the International Prospectus is
required to be delivered under the 1933 Act or the 1934 Act, such number of
copies of the International Prospectus (as amended or supplemented) as such
International Manager may reasonably request. The International Prospectus
and any amendments or supplements thereto furnished to the International
Managers will be identical to the electronically transmitted copies thereof
filed with the Commission pursuant to XXXXX, except to the extent permitted
by Regulation S-T.
(v) CONTINUED COMPLIANCE WITH SECURITIES LAWS. The Company will
comply with the 1933 Act and the 1933 Act Regulations and the 1934 Act and
the 1934 Act Regulations so as to permit the completion of the distribution
of the Securities as contemplated in this Agreement, the U.S. Underwriting
Agreement and the Prospectuses. If at any time when a prospectus is
required by the 1933 Act to be delivered in connection with sales of the
Securities, any event shall occur or condition shall exist as a result of
which it is necessary, in the reasonable opinion of counsel for the
International Managers or for the Company, to amend the Registration
Statement or amend or supplement the Prospectuses in order that the
Prospectuses will not include any untrue statements of a material fact or
omit to state a material fact necessary in order to make the statements
therein not misleading in the light of the circumstances existing at the
time it is delivered to a purchaser, or if it shall be necessary, in the
reasonable opinion of such counsel, at any such time to amend the
Registration Statement or amend or supplement the Prospectuses in order to
comply with the requirements of the 1933 Act or the 1933 Act Regulations,
the Company will promptly prepare and file with the Commission, subject to
Section 3(b) of the 1933 Act, such amendment or supplement as may be
necessary to correct such statement or omission or to make the Registration
Statement or the Prospectuses comply
15
with such requirements, and the Company will furnish to the Underwriters
such number of copies of such amendment or supplement as the
Underwriters may reasonably request.
(vi) BLUE SKY QUALIFICATIONS. The Company will use its best
efforts, in cooperation with the International Managers, to qualify the
Securities for offering and sale under the applicable securities laws of
such states and other jurisdictions (domestic or foreign) as the U.S.
Representatives may designate and to maintain such qualifications in effect
for a period of not less than one year from the later of the effective date
of the Registration Statement and any Rule 462(b) Registration Statement;
provided, however, that the Company shall not be obligated to file any
general consent to service of process or to qualify as a foreign
corporation or as a dealer in securities in any jurisdiction in which it is
not so qualified or to subject itself to taxation in respect of doing
business in any jurisdiction in which it is not otherwise so subject. In
each jurisdiction in which the Securities have been so qualified, the
Company will file such statements and reports as may be required by the
laws of such jurisdiction to continue such qualification in effect for a
period of not less than one year from the effective date of the
Registration Statement and any Rule 462(b) Registration Statement.
(vii) RULE 158. The Company will timely file such reports pursuant
to the 1934 Act as are necessary in order to make generally available to
its securityholders as soon as practicable an earnings statement for the
purposes of, and to provide the benefits contemplated by, the last
paragraph of Section 11(a) of the 1933 Act.
(viii) RESTRICTION ON SALE OF SECURITIES. During a period of 90 days
from the date of the Prospectuses, the Company will not, without the prior
written consent of Xxxxxx Xxxxxxx (i) offer, pledge, sell, contract to
sell, sell any option or contract to purchase, purchase any option or
contract to sell, grant any option, right, or warrant to purchase, lend or
otherwise transfer or dispose of, directly or indirectly, any shares of
Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock or (ii) enter into any swap or any other
arrangement that transfers, in whole or in part, directly or indirectly,
the economic consequence of ownership of the Common Stock, whether any such
swap or transaction described in clause (i) or (ii) above is to be settled
by delivery of Common Stock or such other securities, in cash or otherwise.
The foregoing sentence shall not apply to (A) the Securities to be sold
under this Agreement and the U.S. Underwriting Agreement, (B) the Zero
Coupon Convertible Subordinated Debentures to be sold under that certain
Underwriting Agreement, dated June [ ], 1999, between the Company, Xxxxxx
Xxxxxxx, and each of the underwriters named therein, (C) the issuance of
securities in connection with the acquisition of a business, including,
without limitation, upon consummation of that certain Agreement and Plan of
Merger, dated July 9, 1998, between the Company, Water Polo Acquisition
Corp. and Cerulean Companies, Inc., (D) any shares of Common Stock issued
by the Company upon the exercise of an option or warrant or the conversion
of a security outstanding on the date hereof and referred to in the
Prospectuses, (E) any shares of Common Stock issued or options to purchase
Common Stock granted pursuant to the Company's 1999 Stock Incentive Plan,
1994 Stock Option/Award Plan, Employee Stock Option Plan, Employee Stock
Purchase Plan or any other existing employee benefit plans of the Company
referred to in the Prospectuses (as well as the filing
16
of any registration statement on Form S-8 (or similar form) for the
purpose of registering under the 1933 Act shares of Common Stock issued
in connection with any such plan), (F) the issuance by the Company of up
to 50,000 shares of Common Stock pursuant to a restricted stock plan for
agents and brokers which market the products of the Company or any of
its Subsidiaries (as well as the filing of any registration statement on
Form S-3 (or similar form) for the purpose of registering under the 1933
Act shares of Common Stock issued in connection with any such plan) and
cash-settled stock appreciation rights that the Company may issue to
agents or brokers, or (G) the purchase of securities from the Selling
Stockholder.
(ix) REPORTING REQUIREMENTS. The Company, during the period when
the Prospectuses are required to be delivered under the 1933 Act or the
1934 Act, will file all documents required to be filed with the Commission
pursuant to the 1934 Act within the time periods required by the 1934 Act
and the 1934 Act Regulations.
(b) COVENANT OF THE SELLING STOCKHOLDER. The Selling Stockholder
covenants with each U.S. Underwriter as follows:
(i) RESTRICTION ON SALE OF SECURITIES. During a period of 120
days from the date of the Prospectuses, the Selling Stockholder will not,
without the prior written consent of Xxxxxx Xxxxxxx, (i) offer, pledge,
sell, contract to sell, sell any option or contract to purchase, purchase
any option or contract to sell, grant any option, right or warrant to
purchase or otherwise transfer or dispose of, directly or indirectly, any
share of Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock or file any registration statement under the
1933 Act with respect to any of the foregoing or (ii) enter into any swap
or any other agreement or any transaction that transfers, in whole or in
part, directly or indirectly, the economic consequence of ownership of the
Common Stock, whether any such swap or transaction described in clause (i)
or (ii) above is to be settled by delivery of Common Stock or such other
securities, in cash or otherwise, PROVIDED, HOWEVER, that beginning on the
91st day after the date of the Prospectuses, the Selling Stockholder may
sell shares of Common Stock, in one or more transactions, but only to the
extent that (i) as of the time of any such sale the Selling Stockholder
owns 10% or more of the total issued and outstanding Common Stock and (ii)
such sale reduces the shares of Common Stock owned by the Selling
Stockholder to an amount not less than 10,000 shares less than 10% of the
total issued and outstanding common stock; PROVIDED, FURTHER, that Xxxxxx
Xxxxxxx shall give the Selling Stockholder at least two business days'
notice of any waiver of the restriction on sales by the Company contained
in Section 3(viii) hereof and the Selling Stockholder shall be deemed to
have been granted a waiver of this subsection 3(b)(i) on the same terms as
any such waiver granted to the Company. The foregoing sentence shall not
apply (x) to the Securities to be sold hereunder, or under the
International Underwriting Agreement, or (y) to any deposit or withdrawal
of Common Stock in or from the trust established pursuant to the Voting
Trust Agreement, or (z) to the sale of any Common Stock by the Selling
Stockholder to the Company.
17
SECTION 4. PAYMENT OF EXPENSES.
(a) EXPENSES. The Company will pay or cause to be paid all expenses
incident to the performance of its or the Selling Stockholder's obligations
under this Agreement, including (i) the preparation, printing and filing of the
Registration Statement (including financial statements and exhibits) as
originally filed and of each amendment thereto, (ii) the preparation, printing
and delivery to the Underwriters of this Agreement, the U.S. Underwriting
Agreement, any Agreement among Underwriters, the Intersyndicate Agreement and
such other documents as may be required in connection with the offering,
purchase, sale, issuance or delivery of the Securities, (iii) the preparation,
issuance and delivery of the certificates for the Securities to the
Underwriters, including any stock or other transfer taxes and any stamp or other
duties payable upon the sale or delivery of the Securities to the Underwriters
and the transfer of the Securities between the U.S. Underwriters and the
International Managers, (iv) the fees and disbursements of the Company's
counsel, accountants and other advisors, (v) the qualification of the Securities
under securities laws in accordance with the provisions of Section 3(vi) hereof,
including filing fees and the reasonable fees and disbursements of counsel for
the Underwriters in connection therewith and in connection with the preparation
of the Preliminary Blue Sky Survey, the Final Blue Sky Survey and any
supplements thereto, (vi) the printing and delivery to the Underwriters of
copies of each preliminary prospectus, any Term Sheets and of the Prospectuses
and any amendments or supplements thereto, (vii) the preparation, printing and
delivery to the Underwriters of copies of the Preliminary Blue Sky Survey, the
Final Blue Sky Survey and any supplements thereto, (viii) the fees and expenses
of any transfer agent or registrar for the Securities, (ix) the filing fees
incident to the review by the National Association of Securities Dealers, Inc.
(the "NASD") of the terms of the sale of the Securities and (x) the fees and
expenses incurred in connection with the listing of the Securities on the New
York Stock Exchange. The Selling Stockholder will pay or cause to be paid the
fees and expenses of its counsel, agents and advisors for which it is
responsible under the terms of the Registration Rights Agreement between the
Selling Stockholder and the Company.
(b) TERMINATION OF AGREEMENT. If this Agreement is terminated by the
International Managers in accordance with the provisions of Section 5 or
Section 9(a)(i) hereof, the Company shall reimburse the International Managers
for all of their out-of-pocket expenses, including the reasonable fees and
disbursements of counsel for the International Managers. If this Agreement is
terminated by the International Managers in accordance with the provisions of
Section 11 hereof, the Selling Stockholder shall reimburse the International
Managers for all of their out-of-pocket expenses, including the reasonable fees
and disbursements of counsel for the International Managers.
(c) ALLOCATION OF EXPENSES. The provisions of this Section shall not
affect any agreement that the Company and the Selling Stockholder may make for
the sharing of such costs and expenses.
SECTION 5. CONDITIONS OF INTERNATIONAL MANAGERS' OBLIGATIONS. The
obligations of the several International Managers hereunder are subject to the
accuracy of the representations and warranties of the Company and the Selling
Stockholder contained in Section 1 hereof or in certificates of any officer of
the Company or any subsidiary of the Company or on behalf of the
18
Selling Stockholder delivered pursuant to the provisions hereof, to the
performance by the Company of its covenants and other obligations hereunder,
and to the following further conditions:
(a) EFFECTIVENESS OF REGISTRATION STATEMENT. The Registration Statement,
including any Rule 462(b) Registration Statement, has become effective and at
Closing Time no stop order suspending the effectiveness of the Registration
Statement shall have been issued under the 1933 Act or proceedings therefor
initiated or threatened by the Commission, and any request on the part of the
Commission for additional information shall have been complied with to the
reasonable satisfaction of counsel to the International Managers. A prospectus
containing the Rule 430A Information shall have been filed with the Commission
in accordance with Rule 424(b) (or a post-effective amendment providing such
information shall have been filed and declared effective in accordance with the
requirements of Rule 430A) or, if the Company has elected to rely upon Rule 434,
a Term Sheet shall have been filed with the Commission in accordance with Rule
424(b).
(b) OPINION OF COUNSEL FOR COMPANY. At Closing Time, the International
Managers shall have received the favorable opinion, dated as of Closing Time, of
Xxxxxx, Xxxx & Xxxxxxxx, LLP counsel for the Company, in form and substance
satisfactory to counsel for the International Managers, together with signed or
reproduced copies of such letter for each of the other International Managers to
the effect set forth in Exhibit A hereto and to such further effect as counsel
to the International Managers may reasonably request.
(c) OPINION OF GENERAL COUNSEL FOR THE COMPANY. At Closing Time, the
International Managers shall have received the favorable opinion, dated as of
Closing Time, of Xxxxxx X. Xxxxxx, Esq., general counsel for the Company, in
form and substance satisfactory to counsel for the International Managers,
together with signed or reproduced copies of such letter for each of the other
International Managers to the effect set forth in Exhibit B hereto and to such
further effect as counsel to the International Managers may reasonably request.
(d) OPINION OF COUNSEL FOR THE SELLING STOCKHOLDER. At Closing Time, the
International Managers shall have received the favorable opinion, dated as of
Closing Time, of Xxxxxx, Xxxxxx & Xxxxx LLP, counsel for the Selling
Stockholder, in form and substance satisfactory to counsel for the International
Managers, together with signed or reproduced copies of such letter for each of
the other International Managers to the effect set forth in Exhibit C hereto and
to such further effect as counsel to the International Managers may reasonably
request.
(e) OPINION OF COUNSEL FOR INTERNATIONAL MANAGERS. At Closing Time, the
International Managers shall have received the favorable opinion, dated as of
Closing Time, of Xxxxxx & Xxxxxxx, counsel for the International Managers,
together with signed or reproduced copies of such letter for each of the other
International Managers with respect to the matters set forth in clauses
(i) (solely with respect to the Company), (ii) (solely with respect to the
Company), (v) through (vii), inclusive, (ix) (solely as to the information in
the Prospectus under "Description of Capital Stock--Common Stock") and the
penultimate paragraph of Exhibit A hereto. In giving such opinion such counsel
may rely, as to all matters governed by the laws of jurisdictions other than the
laws of the States of New York and California and the federal securities laws of
the United States, upon the opinions of counsel satisfactory to the
International Managers. Such counsel may also state that,
19
insofar as such opinion involves factual matters, they have relied, to the
extent they deem proper, upon certificates of officers of the Company and its
subsidiaries and certificates of public officials.
(f) OFFICERS' CERTIFICATE. At Closing Time, there shall not have been,
since the date hereof or since the respective dates as of which information is
given in the Prospectuses, any material adverse change in the condition,
financial or otherwise, or in the earnings, business affairs or business
prospects of the Company and its subsidiaries considered as one enterprise,
whether or not arising in the ordinary course of business, and the International
Managers shall have received a certificate of the Chief Executive Officer or a
Vice President of the Company and of the chief financial or chief accounting
officer of the Company, dated as of Closing Time, to the effect that (i) there
has been no such material adverse change, (ii) the representations and
warranties in Section 1(a) hereof are true and correct with the same force and
effect as though expressly made at and as of Closing Time, (iii) the Company has
complied in all material respects with all agreements and satisfied all
conditions on its part to be performed or satisfied at or prior to Closing Time,
and (iv) 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, to such person's knowledge, are contemplated by
the Commission.
(g) CERTIFICATE OF SELLING STOCKHOLDER. At Closing Time, the
International Managers shall have received a certificate of an officer of the
Selling Stockholder, dated as of Closing Time, to the effect that (i) the
representations and warranties of the Selling Stockholder contained in Section
1(b) hereof are true and correct in all respects with the same force and effect
as though expressly made at and as of Closing Time and (ii) the Selling
Stockholder has complied in all material respects with all agreements and all
conditions on its part to be performed under this Agreement at or prior to
Closing Time.
(h) ACCOUNTANT'S COMFORT LETTER.
(i) PRICEWATERHOUSECOOPERS LLP. At the time of the execution of
this Agreement, the International Managers shall have received from
PricewaterhouseCoopers LLP a letter dated such date, in form and substance
satisfactory to the International Managers, containing statements and
information of the type ordinarily included in accountants' "comfort
letters" to underwriters with respect to the Company's consolidated
financial statements and certain financial information contained in the
Registration Statement and the Prospectuses.
(ii) ERNST & YOUNG LLP. At the time of the execution of this
Agreement, the Representatives shall have received from Ernst & Young LLP a
letter dated such date, in form and substance satisfactory to the
International Managers, containing statements and information of the type
ordinarily included in accountants' "comfort letters" to underwriters with
respect to the Cerulean Companies, Inc. financial statements and certain
financial information of the Cerulean Companies, Inc. contained in the
Registration Statement and the Prospectus.
20
(i) BRING-DOWN COMFORT LETTER.
(i) PRICEWATERHOUSECOOPERS LLP. At Closing Time, the
International Managers shall have received from PricewaterhouseCoopers LLP
a letter, dated as of Closing Time, to the effect that they reaffirm the
statements made in the letter furnished pursuant to subsection (h)(i) of
this Section, except that the specified date referred to shall be a date
not more than three business days prior to Closing Time.
(ii) ERNST & YOUNG LLP. At Closing Time, the International Managers
shall have received from Ernst & Young LLP a letter, dated as of Closing
Time, to the effect that they reaffirm the statements made in the letter
furnished pursuant to subsection (h)(ii) of this Section, except that the
specified date referred to shall be a date not more than three business
days prior to Closing Time.
(j) LOCK-UP AGREEMENTS. At the date of this Agreement, the International
Managers shall have received an agreement substantially in the form of Exhibit D
hereto signed by each of the persons listed on Schedule D hereto.
(k) ADDITIONAL DOCUMENTS. At Closing Time counsel for the International
Managers shall have been furnished with such documents and opinions as they may
reasonably require for the purpose of enabling them to pass upon the issuance
and sale of the Securities as herein contemplated, or in order to evidence the
accuracy of any of the representations or warranties, or the fulfillment of any
of the conditions, herein contained; and all proceedings taken by the Company
and the Selling Stockholder in connection with the sale of the Securities as
herein contemplated shall be satisfactory in form and substance to the
International Managers and counsel for the International Managers.
(l) TERMINATION OF AGREEMENT. If any condition specified in this Section
shall not have been fulfilled when and as required to be fulfilled, this
Agreement may be terminated by the International Managers by notice to the
Company at any time at or prior to Closing Time and such termination shall be
without liability of any party to any other party except as provided in Section
4 and except that Sections 1, 6, 7 and 8 shall survive any such termination and
remain in full force and effect.
SECTION 6. Indemnification.
(a) INDEMNIFICATION OF UNDERWRITERS. The Company and the Selling
Stockholder, jointly and severally, agree to indemnify and hold harmless each
International Manager and each person, if any, who controls any International
Manager within the meaning of Section 15 of the 1933 Act or Section 20 of the
1934 Act as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement
(or any amendment thereto), including the Rule 430A Information and the
Rule 434 Information, if applicable, or the omission or alleged omission
therefrom of a material fact required to be stated therein or necessary to
make the
21
statements therein not misleading or arising out of any untrue statement
or alleged untrue statement of a material fact included in any
preliminary prospectus or the Prospectuses (or any amendment or
supplement thereto), or the omission or alleged omission therefrom of a
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission; provided that (subject to Section
6(d) below) any such settlement is effected with the written consent of the
Company and the Selling Stockholder; and
(iii) against any and all expense whatsoever, as incurred (including
the fees and disbursements of counsel chosen by Xxxxxx Xxxxxxx), reasonably
incurred in investigating, preparing or defending against any litigation,
or any investigation or proceeding by any governmental agency or body,
commenced or threatened, or any claim whatsoever based upon any such untrue
statement or omission, or any such alleged untrue statement or omission to
the extent that any such expense is not paid under (i) or (ii) above;
PROVIDED, HOWEVER, that (A) this indemnity agreement shall not apply to any
loss, liability, claim, damage or expense to the extent arising out of any
untrue statement or omission or alleged untrue statement or omission made in
reliance upon and in conformity with written information relating to such
International Manager furnished to the Company by any International Manager
through Xxxxxx Xxxxxxx expressly for use in the Registration Statement (or any
amendment thereto), including the Rule 430A Information and the Rule 434
Information, if applicable, or any preliminary prospectus or the Prospectuses
(or any amendment or supplement thereto) and (B) the foregoing indemnity
agreement with respect to any untrue statement contained in or omission from a
preliminary prospectus shall not inure to the benefit of the International
Manager from whom the person asserting any such losses, liabilities, claims,
damages or expenses purchased International Securities, or any person
controlling such International Manager, if (i) the Company and the Selling
Stockholder shall sustain the burden of proving that a copy of the International
Prospectus (as then amended or supplemented, if the Company shall have furnished
any amendments or supplements thereto) was not sent or given by or on behalf of
the International Managers to such person at or prior to the written
confirmation of the sale of such International Securities to such person, (ii)
the Company shall have delivered the International Prospectus (as then
supplemented or amended) to the International Managers on a timely basis and in
the requisite quantity to permit the International Managers to send or deliver
such International Prospectus to such person at or prior to such written
confirmation of the sale of such International Securities and (iii) the untrue
statement contained in or omission from such preliminary prospectus was
corrected in the International Prospectus (or the International Prospectus as
amended or supplemented).
In making a claim for indemnification under this Section 6 or for
contribution under Section 7 hereof by the Company or the Selling Stockholder,
and subject to the further provisions of this
22
paragraph, the indemnified parties may proceed against either (i) both the
Company and the Selling Stockholder jointly or (ii) the Company only, but may
not proceed solely against the Selling Stockholder. In the event that the
indemnified parties are entitled to seek indemnity or contribution hereunder
against any loss, liability, claim, damage and expense incurred as
contemplated by clauses (a)(i), (a)(ii) or (a)(iii) of this Section 6,
including, without limitation, a final judgment from a trial court then, as a
precondition to any indemnified party obtaining indemnification or
contribution from the Selling Stockholder, the indemnified parties shall
first obtain a final judgment from a trial court that such indemnified
parties are entitled to indemnity or contribution under this Agreement with
respect to such loss, liability, claim, damage or expense (the "Final
Judgment") from the Company and the Selling Stockholder and shall seek to
satisfy such Final Judgment in full from the Company by making a written
demand upon the Company for such satisfaction. Only in the event such Final
Judgment shall remain unsatisfied in whole or in part 30 days following the
date of receipt by the Company of such demand shall any party entitled to
indemnification hereunder have the right to take action to satisfy such Final
Judgment by making demand directly on the Selling Stockholder (but only if
and to the extent the Company has not already satisfied such Final Judgment,
whether by settlement, release or otherwise). The indemnified parties shall,
however, be relieved of their obligation to first obtain a Final Judgment, to
seek to obtain payment from the Company with respect to such Final Judgment
or, having sought such payment, to wait such 30 days after failure by the
Company to immediately satisfy any such Final Judgment if (i) the Company
files a petition for relief under the United States Bankruptcy Code (the
"Bankruptcy Code") and such order remains unstayed and in effect for 60 days,
(ii) an order for relief is entered against the Company in an involuntary
case under the Bankruptcy Code and such order remains unstayed and in effect
for 60 days, (iii) the Company makes an assignment for the benefit of its
creditors, or (iv) any court orders or approves the appointment of a receiver
or custodian for the Company or a substantial portion of its assets and such
order remains unstayed and in effect for 60 days.
(b) INDEMNIFICATION OF COMPANY, DIRECTORS AND OFFICERS AND SELLING
STOCKHOLDER. Each International Manager severally agrees to indemnify and hold
harmless the Company, its directors, each of its officers who signed the
Registration Statement, and each person, if any, who controls the Company within
the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act, and the
Selling Stockholder and each person, if any, who controls the Selling
Stockholder within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act against any and all loss, liability, claim, damage and expense
described in the indemnity contained in subsection (a) of this Section, as
incurred, but only with respect to untrue statements or omissions, or alleged
untrue statements or omissions, made in the Registration Statement (or any
amendment thereto), including the Rule 430A Information and the Rule 434
Information, if applicable, or any preliminary prospectus or the International
Prospectus (or any amendment or supplement thereto) in reliance upon and in
conformity with written information relating to such International Underwriters
furnished to the Company by such International Manager through Xxxxxx Xxxxxxx
expressly for use in the Registration Statement (or any amendment thereto) or
such preliminary prospectus or the International Prospectus (or any amendment or
supplement thereto).
(c) ACTIONS AGAINST PARTIES; NOTIFICATION. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party of
any action commenced against it
23
in respect of which indemnity may be sought hereunder, but failure to so
notify an indemnifying party shall not relieve such indemnifying party from
any liability hereunder to the extent it is not materially prejudiced as a
result thereof and in any event shall not relieve it from any liability which
it may have otherwise than on account of this indemnity agreement. An
indemnifying party may participate at its own expense in the defense of any
such action; provided, however, that counsel to the indemnifying party shall
not (except with the consent of the indemnified party) also be counsel to the
indemnified party. In no event shall the indemnifying parties be liable for
fees and expenses of more than one counsel (in addition to any local counsel)
separate from their own counsel for all indemnified parties in connection
with any one action or separate but similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances. No
indemnifying party shall, without the prior written consent of the
indemnified parties, settle or compromise or consent to the entry of any
judgment with respect to any litigation, or any investigation or proceeding
by any governmental agency or body, commenced or threatened, or any claim
whatsoever in respect of which indemnification or contribution could be
sought under this Section 6 or Section 7 hereof (whether or not the
indemnified parties are actual or potential parties thereto), unless such
settlement, compromise or consent (i) includes an unconditional release of
each indemnified party from all liability arising out of such litigation,
investigation, proceeding or claim, (ii) is accompanied or preceded by
reimbursement of expenses of each such indemnified party pursuant to clause
(a)(iii) of this Section 6 and (iii) does not include a statement as to or an
admission of fault, culpability or a failure to act by or on behalf of any
indemnified party.
(d) SETTLEMENT WITHOUT CONSENT IF FAILURE TO REIMBURSE. If at any time an
indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, such indemnifying party
agrees that it shall be liable for any settlement of the nature contemplated by
Section 6(a)(ii) effected without its written consent if (i) such settlement is
entered into more than 45 days after receipt by such indemnifying party of the
aforesaid request, (ii) such indemnifying party shall have received notice of
the terms of such settlement at least 30 days prior to such settlement being
entered into and (iii) such indemnifying party shall not have reimbursed such
indemnified party in accordance with such request prior to the date of such
settlement.
(e) OTHER AGREEMENTS WITH RESPECT TO INDEMNIFICATION. The provisions of
this Section shall not affect any agreement among the Company and the Selling
Stockholder with respect to indemnification.
SECTION 7. CONTRIBUTION. Subject to the last paragraph of Section 6(a)
hereof, if the indemnification provided for in Section 6 hereof is for any
reason unavailable to or insufficient to hold harmless an indemnified party in
respect of any losses, liabilities, claims, damages or expenses referred to
therein, then each indemnifying party shall contribute to the aggregate amount
of such losses, liabilities, claims, damages and expenses incurred by such
indemnified party, as incurred, (i) in such proportion as is appropriate to
reflect the relative benefits received by the Company and the Selling
Stockholder on the one hand and the International Managers on the other hand
from the offering of the Securities pursuant to this Agreement or (ii) if the
allocation provided by clause (i) is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the Company and the
Selling Stockholder on the one hand and of the International Managers on the
other hand in connection
24
with the statements or omissions which resulted in such losses, liabilities,
claims, damages or expenses, as well as any other relevant equitable
considerations.
The relative benefits received by the Company and the Selling
Stockholder on the one hand and the International Managers on the other hand in
connection with the offering of the Securities pursuant to this Agreement shall
be deemed to be in the same respective proportions as the total net proceeds
from the offering of the Securities pursuant to this Agreement (before deducting
expenses) received by the Company and the Selling Stockholder and the total
underwriting discount received by the International Managers, in each case as
set forth on the cover of the International Prospectus, or, if Rule 434 is used,
the corresponding location on the Term Sheet bear to the aggregate public
offering price of the International Securities as set forth on such cover.
The relative fault of the Company and the Selling Stockholder on the
one hand and the International Managers on the other hand shall be determined by
reference to, among other things, whether any such untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a material
fact relates to information supplied by the Company or the Selling Stockholder
or by the International Managers and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission.
The Company, the Selling Stockholder and the International Managers
agree that it would not be just and equitable if contribution pursuant to this
Section 7 were determined by pro rata allocation (even if the International
Managers were treated as one entity for such purpose) or by any other method of
allocation which does not take account of the equitable considerations referred
to above in this Section 7. The aggregate amount of losses, liabilities,
claims, damages and expenses incurred by an indemnified party and referred to
above in this Section 7 shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in investigating, preparing or
defending against any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim whatsoever
based upon any such untrue or alleged untrue statement or omission or alleged
omission.
Notwithstanding the provisions of this Section 7, no International
Manager shall be required to contribute any amount in excess of the amount by
which the total price at which the International Securities underwritten by it
and distributed to the public were offered to the public exceeds the amount of
any damages which such International Manager has otherwise been required to pay
by reason of any such untrue or alleged untrue statement or omission or alleged
omission.
No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the 1933 Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who controls an
International Manager within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act shall have the same rights to contribution as such
International Manager, and each director of the
25
Company, each officer of the Company who signed the Registration Statement,
and each person, if any, who controls the Company or the Selling Stockholder
within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934
Act shall have the same rights to contribution as the Company or the Selling
Stockholder, as the case may be. The International Managers' respective
obligations to contribute pursuant to this Section 7 are several in
proportion to the number of International Securities set forth opposite their
respective names in Schedule A hereto and not joint.
The provisions of this Section shall not affect any agreement among
the Company and the Selling Stockholder with respect to contribution.
SECTION 8. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE
DELIVERY. All representations, warranties and agreements contained in this
Agreement or in certificates of officers of the Company or any of its
subsidiaries or the Selling Stockholder submitted pursuant hereto, shall remain
operative and in full force and effect, regardless of any investigation made by
or on behalf of any International Manager or controlling person, or by or on
behalf of the Company or the Selling Stockholder, and shall survive delivery of
the International Securities to the International Managers.
SECTION 9. TERMINATION OF AGREEMENT.
(a) TERMINATION; GENERAL. The International Managers may terminate this
Agreement, by notice to the Company and the Selling Stockholder, at any time at
or prior to Closing Time (i) if there has been, since the time of execution of
this Agreement or since the respective dates as of which information is given in
the Prospectus, any material adverse change in the condition, financial or
otherwise, or in the earnings, business affairs or business prospects of the
Company and its subsidiaries considered as one enterprise, whether or not
arising in the ordinary course of business, or (ii) if there has occurred any
material adverse change in the financial markets in the United States or the
international financial markets, any outbreak of hostilities or escalation
thereof or other calamity or crisis or any change or development involving a
prospective change in national or international political, financial or economic
conditions, in each case the effect of which is such as to make it, in the
judgment of the International Managers, impracticable to market the
International Securities or to enforce contracts for the sale of the
International Securities, or (iii) if trading in any securities of the Company
has been suspended or materially limited by the Commission or the New York Stock
Exchange, or if trading generally on the American Stock Exchange or the New York
Stock Exchange or in the Nasdaq National Market has been suspended or materially
limited, or minimum or maximum prices for trading have been fixed, or maximum
ranges for prices have been required, by any of said exchanges or by such system
or by order of the Commission, the National Association of Securities Dealers,
Inc. or any other governmental authority, or (iv) if a banking moratorium has
been declared by either Federal or New York authorities.
(b) LIABILITIES. If this Agreement is terminated pursuant to this
Section, such termination shall be without liability of any party to any other
party except as provided in Section 4 hereof, and provided further that Sections
1, 6, 7 and 8 shall survive such termination and remain in full force and
effect.
26
SECTION 10. DEFAULT BY ONE OR MORE OF THE INTERNATIONAL MANAGERS. If one
or more of the International Managers fail at Closing Time to purchase the
Securities which it or they are obligated to purchase under this Agreement (the
"DEFAULTED SECURITIES"), the International Managers shall have the right, within
24 hours thereafter, to make arrangements for one or more of the non-defaulting
International Managers, or any other underwriters, to purchase all, but not less
than all, of the Defaulted Securities in such amounts as may be agreed upon and
upon the terms herein set forth; if, however, the International Managers shall
not have completed such arrangements within such 24-hour period, then:
(a) if the number of Defaulted Securities does not exceed 10% of the
number of International Securities to be purchased on such date, each of the
non-defaulting International Managers shall be obligated, severally and not
jointly, to purchase the full amount thereof in the proportions that their
respective underwriting obligations hereunder bear to the underwriting
obligations of all non-defaulting International Managers, or
(b) if the number of Defaulted Securities exceeds 10% of the number of
International Securities to be purchased on such date, this Agreement shall
terminate without liability on the part of any non-defaulting International
Manager.
No action taken pursuant to this Section shall relieve any defaulting
International Managers from liability in respect of its default.
In the event of any such default which does not result in a
termination of this Agreement either (i) the International Managers or (ii) the
Company and the Selling Stockholder shall have the right to postpone Closing
Time for a period not exceeding seven days in order to effect any required
changes in the Registration Statement or Prospectuses or in any other documents
or arrangements. As used herein, the term "International Manager" includes any
person substituted for an International Manager under this Section 10.
SECTION 11. DEFAULT BY THE SELLING STOCKHOLDER. If the Selling Stockholder
shall fail at Closing Time to sell and deliver the number of International
Securities which the Selling Stockholder is obligated to sell hereunder, then
the International Managers may, at their option, by notice from the
International Managers to the Company and the Selling Stockholder terminate this
Agreement without any liability on the fault of any non-defaulting party except
that the provisions of Sections 1, 4, 6, 7 and 8 shall remain in full force and
effect. No action taken pursuant to this Section 11 shall relieve the Selling
Stockholder so defaulting from liability, if any, in respect of such default.
In the event of a default by the Selling Stockholder as referred to in
this Section 11, each of the International Managers and the Company shall have
the right to postpone Closing Time for a period not exceeding seven days in
order to effect any required change in the Registration Statement or Prospectus
or in any other documents or arrangements.
SECTION 12. NOTICES. All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the
International Managers shall be directed to the International
27
Managers, c/o the Global Coordinator at 0000 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx
00000, attention of Syndicate Operations (with a copy, which shall not
constitute notice, to Xxxxxx & Xxxxxxx, 000 X. Xxxxx Xxxxxx, Xxxxx 0000, Xxx
Xxxxxxx, Xxxxxxxxxx 00000-0000, attention of Xxxx Xxxxx, Esq.); notices to
the Company shall be directed to it at 0 XxxxXxxxx Xxx, Xxxxxxxx Xxxx,
Xxxxxxxxxx 00000, attention of Xxxxxx X. Xxxxxx, Esq., General Counsel (with
a copy, which shall not constitute notice, to Xxxxxx, Xxxx & Xxxxxxxx LLP,
Xxx Xxxxxxxxxx Xxxxxx, Xxxxxxx Xxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000,
attention of Xxxxxxx X. Xxxxxx, Esq.); and notices to the Selling Stockholder
shall be directed to California HealthCare Foundation, c/o Munger, Xxxxxx &
Xxxxx, 000 X. Xxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxxxxx, Xxxxxxxxxx 00000,
attention of Xxxx X. Xxxxxx, Esq.
SECTION 13. PARTIES. This Agreement shall each inure to the benefit of
and be binding upon the International Managers, the Company and the Selling
Stockholder and their respective successors. Nothing expressed or mentioned in
this Agreement is intended or shall be construed to give any person, firm or
corporation, other than the International Managers, the Company and the Selling
Stockholder and their respective successors and the controlling persons and
officers and directors referred to in Sections 6 and 7 and their heirs and legal
representatives, any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provision herein contained. This Agreement and
all conditions and provisions hereof are intended to be for the sole and
exclusive benefit of the International Managers, the Company and the Selling
Stockholder and their respective successors, and said controlling persons and
officers and directors and their heirs and legal representatives, and for the
benefit of no other person, firm or corporation. No purchaser of Securities
from any International Manager shall be deemed to be a successor by reason
merely of such purchase.
SECTION 14. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. SPECIFIED
TIMES OF DAY REFER TO NEW YORK CITY TIME EXCEPT AS EXPRESSLY NOTED OTHERWISE.
SECTION 15. EFFECT OF HEADINGS. The Article and Section headings herein
and the Table of Contents are for convenience only and shall not affect the
construction hereof.
28
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company and to the Selling Stockholder
a counterpart hereof, whereupon this instrument, along with all counterparts,
will become a binding agreement among the International Managers, the Company
and the Selling Stockholder in accordance with its terms.
Very truly yours,
WELLPOINT HEALTH NETWORKS INC.
By
---------------------------------------
Name:
Title:
CALIFORNIA HEALTHCARE FOUNDATION
By
---------------------------------------
Name:
Title:
CONFIRMED AND ACCEPTED,
as of the date first above written:
XXXXXX XXXXXXX & CO. INTERNATIONAL LIMITED
XXXXXXX XXXXX INTERNATIONAL
DEUTSCHE BANK AG LONDON
XXXXXXXXX, XXXXXX & XXXXXXXX INTERNATIONAL
SALOMON BROTHERS INTERNATIONAL LIMITED
WARBURG DILLON READ LLC
By: Xxxxxx Xxxxxxx & Co. International Limited
By
--------------------------------------------
Name:
Title:
For themselves and as International Representatives of the other International
Underwriters named in Schedule A hereto.
29
SCHEDULE A
Number of
International
Name of International Manager Securities
----------------------------- -------------
Xxxxxx Xxxxxxx & Co. Incorporated..............................
Xxxxxxx Xxxxx International....................................
Deutsche Bank AG London........................................
Xxxxxxxxx, Xxxxxx & Xxxxxxxx International.....................
Salomon Brothers International Limited.........................
Warburg Dillon Read LLC........................................
---------
Total..................................................... 1,800,000
---------
---------
Sch A-1
SCHEDULE B
WELLPOINT HEALTH NETWORKS INC.
1,800,000 Shares of Common Stock
(Par Value $.01 Per Share)
1. The public offering price per share for the International
Securities, determined as provided in said Section 2, shall be $[ ].
2. The purchase price per share for the International Securities
to be paid by the several International Managers shall be $[ ], being an
amount equal to the public offering price set forth above less $[ ] per
share.
Sch B-1
SCHEDULE C
List of subsidiaries
1. Blue Cross of California
2. BC Life & Health Insurance Company
3. UNICARE Life & Health Insurance Company
4. UNICARE of Texas Health Plans, Inc.
5. WellPoint California Services, Inc.
[6. UNICARE Specialty Services, Inc.]
7. UNICARE National Services, Inc.
Sch C-1
SCHEDULE D
List of persons and entities subject to lock-up
Xxxxxxx X. Xxxxxxxxx
X. Xxxx Xxxxxxxx
Xxxxxx X. Xxxxxxxx
Xxxx X. Xxxxxx
Xxxxxxx X. Xxxx
Xxxxx X. Xxxxx
Xxxxxx X. Xxxxxx, Esq.
X. Xxxxxx XxXxxxx
Sch D-1
Exhibit A
FORM OF OPINION OF COMPANY'S COUNSEL
TO BE DELIVERED PURSUANT TO
SECTION 5(b)
(i) The Company and each of its Subsidiaries (a) has been duly
organized and (b) is validly existing as a corporation in good standing under
the laws of its jurisdiction of incorporation.
(ii) The Company and each of its Subsidiaries has corporate power
and authority to own, lease and operate its properties and to conduct its
business as described in the Registration Statement.
(iii) The Company and each of its Subsidiaries, other than UNICARE
Life & Health Insurance Company ("UL&H"), is duly qualified as a foreign
corporation to transact business and is in good standing in each jurisdiction in
which such qualification is required, except where the failure to so qualify
would not have a Material Adverse Effect (such jurisdictions to be listed
opposite the name of each of the Company and the Subsidiaries other than UL&H on
Exhibit 1 hereto). UL&H is duly qualified as a foreign corporation to transact
business and is in good standing in such jurisdictions as are listed opposite
its name on Exhibit 1 hereto.
(iv) The authorized, issued and outstanding capital stock of the
Company is as set forth in the Prospectuses under the captions "Description
of Capital Stock" (except for subsequent issuances, if any, under the
Company's 1999 Stock Incentive Plan, 1994 Stock Option/Award Plan, Employee
Stock Option Plan or Employee Stock Purchase Plan); all of the shares of
issued and outstanding capital stock of the Company, including the Securities
to be purchased by the Underwriters from the Selling Stockholder, have been
duly authorized and validly issued and are fully paid and nonassessable and
the shares of issued and outstanding capital stock of each Subsidiary of the
Company are owned, directly or through subsidiaries, by the Company and have
been duly authorized and validly issued, are fully paid and nonassessable and
are owned free and clear of any security interest, mortgage, pledge, lien,
encumbrance, claim or equity.
(v) The U.S. Underwriting Agreement and the International
Underwriting Agreement have been duly authorized, executed and delivered by the
Company.
(vi) The Registration Statement, including any Rule 462(b)
Registration Statement, has been declared effective under the 1933 Act; any
required filing of the Prospectuses pursuant to Rule 424(b) has been made in the
manner and within the time period required by Rule 424(b); and, to the best of
our knowledge, no stop order suspending the effectiveness of the Registration
Statement or any Rule 462(b) Registration Statement has been
A-1
issued under the 1933 Act and no proceedings for that purpose have been
instituted or are pending or threatened by the Commission.
(vii) The Registration Statement, including any Rule 462(b)
Registration Statement, the Rule 430A Information and the Rule 434 Information,
as applicable, the Prospectuses, excluding the documents incorporated by
reference therein, and each amendment or supplement to the Registration
Statement and Prospectuses, excluding the documents incorporated by reference
therein, as of their respective effective or issue dates (other than the
financial statements and supporting schedules included therein or omitted
therefrom, as to which such counsel need express no opinion) complied as to form
in all material respects with the requirements of the 1933 Act and the 1933 Act
Regulations.
(viii) The documents incorporated by reference in the Prospectuses
(other than the financial statements and supporting schedules included therein
or omitted therefrom, as to which we need express no opinion), when they were
filed with the Commission, complied as to form in all material respects with the
requirements of the 1934 Act and the rules and regulations of the Commission
thereunder.
(ix) The capital stock of the Company conforms in all material
respects to the description thereof contained in the Prospectuses under the
caption "Description of Capital Stock," and the form of certificate used to
evidence the Common Stock is in due and proper form and complies in all material
respects with all applicable statutory requirements and the requirements of the
New York Stock Exchange.
(x) There are no legal or governmental proceedings pending or, to
the knowledge of such counsel, threatened to which the Company or any of its
Subsidiaries is or may become a party or to which any of the properties of the
Company or any of its Subsidiaries is or may become subject that are required to
be described in the Registration Statement or the Prospectuses and are not so
disclosed therein and described as required, or any statute or regulation that
is required to be described in the Registration Statement or the Prospectuses
and is not so disclosed therein and described as required; all pending legal or
governmental proceedings to which the Company or any of its Subsidiaries is a
party or to which any of their property is subject which are not described in
the Registration Statement, including ordinary routine litigation incidental to
the businesses, are, considered in the aggregate, not material.
(xi) To the knowledge of such counsel, there are no contracts,
indentures, mortgages, loan agreements, notes, leases or other instruments
required to be filed as exhibits to the Registration Statement which have not
been so filed.
(xii) The information in the Prospectuses under the captions
"Selling Stockholder" and "United States Federal Tax Considerations to
Non-United States Holders" and the information under the caption "Item 1.
Business--May 1996 Recapitalization and August 1997 Reincorporation" in the
Company's Form 10-K which is incorporated by reference into the Prospectuses
to the extent that it constitutes matters of law, summaries of legal matters,
documents or proceedings or legal conclusions, has been reviewed by such
counsel and is correct in all material respects.
A-2
(xiii) No authorization, approval, consent or order of any court or
governmental authority or agency is required in connection with the sale to the
Underwriters of the Securities, except such as may be required under the 1933
Act, the 1934 Act or the respective rules and regulations of the Commission
thereunder or state or foreign securities laws (on which such counsel expresses
no opinion) and the filing of an amendment to Blue Cross of California's Health
Care Service Plan application with the California Department of Corporations
(which filing has been made); and the execution, delivery and performance of the
U.S. Underwriting Agreement and the International Underwriting Agreement, and
the consummation of the transactions contemplated thereby by the Company, will
not conflict with or constitute a material breach of or material default, or
cause an acceleration of any obligation under, or result in the creation or
imposition of any lien, charge or encumbrance upon any property or assets of the
Company or any of its Subsidiaries pursuant to, any instrument included as an
exhibit to the Registration Statement (and, including, without limitation, as an
exhibit to the documents incorporated by reference therein) to which the Company
or any of its Subsidiaries is a party or by which any of them may be bound, or
to which any of the property or assets of the Company or any of its Subsidiaries
is subject, nor will such action result in any violation of the provisions of
the charter or bylaws of the Company or any of its Subsidiaries, or any
applicable law, administrative regulation or administrative or court decree.
(xiv) Neither the Company nor any of its Subsidiaries is (a) in
violation of its articles or certificate of incorporation or bylaws; or (b) to
the knowledge of such counsel, in violation of or in default in the performance
or observance of any obligation, agreement, covenant or condition contained in
any instrument included as an exhibit to the Registration Statement (and,
including, without limitation, as an exhibit to the documents incorporated by
reference therein) to which the Company or any of its Subsidiaries is a party or
(xv) by which any of them may be bound, or to which any of the
property or assets of the Company or any of its Subsidiaries is subject, or any
applicable law, administrative regulation or administrative or court order or
decree, which violation or default would have a Material Adverse Effect on the
Company and its subsidiaries considered as one enterprise, as the case may be.
The applicable law, administrative regulations and administrative and court
orders and decrees referred to in clause (b) above are those that a lawyer
exercising customary professional diligence would reasonably recognize as being
directly applicable to the Company, the Subsidiaries or the transaction
contemplated by the U.S. Underwriting Agreement and the International
Underwriting Agreement.
(xvi) To the knowledge of such counsel, the Company and its
Subsidiaries possess such certificates necessary to conduct the business now
operated by them. The opinion of such counsel for purposes of this paragraph is
limited to certificates the failure of which to possess would have a Material
Adverse Effect on the Company and its Subsidiaries considered as one enterprise.
(xvii) The Company is not an "investment company" or an entity
"controlled" by an "investment company," as such terms are defined in the 1940
Act.
Nothing has come to the attention of such counsel that would lead such
counsel to believe that the Registration Statement or any amendment thereto,
including the Rule 430A
A-3
Information and Rule 434 Information (if applicable), (except for financial
statements and schedules and other financial data included or incorporated by
reference therein or omitted therefrom, as to which such counsel need make no
statement), at the time such Registration Statement or any such amendment
became effective, contained an untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary to make
the statements therein not misleading or that the Prospectuses or any
amendment or supplement thereto (except for financial statements and
schedules and other financial data included or incorporated by reference
therein or omitted therefrom, as to which such counsel need make no
statement), at the time the Prospectuses were issued, at the time any such
amended or supplemented prospectuses were issued or at the Closing Time,
included or include an untrue statement of a material fact or omitted or omit
to state a material fact necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not misleading.
In rendering such opinion, such counsel may rely, as to matters of fact (but not
as to legal conclusions), to the extent they deem proper, on certificates of
responsible officers of the Company and public officials. Such opinion shall
not state that it is to be governed or qualified by, or that it is otherwise
subject to, any treatise, written policy or other document relating to legal
opinions, including, without limitation, the Legal Opinion Accord of the ABA
Section of Business Law (1991).
A-4
EXHIBIT 1
State of Foreign
Name of Entity Incorporation Qualifications
-------------- ------------- --------------
WellPoint Health Networks Inc. Delaware Arizona, California,
Nevada, New York
SUBSIDIARIES
------------
(1) Blue Cross of California California Massachusetts,
Michigan, Ohio,
Texas
(2) UNICARE Life & Health Insurance Delaware California, Florida,
Company Georgia, Illinois,
Massachusetts,
New Jersey,
New York, Ohio,
Texas and Virginia
(3) UNICARE of Texas Health Plans, Inc. Texas None
(4) WellPoint California Services, Inc. Delaware None
[(5) UNICARE Specialty Services, Inc. Delaware None]
(6) UNICARE National Services, Inc. Delaware None
(7) BC Life & Health Insurance Company California None
1
Exhibit B
FORM OF OPINION OF GENERAL COUNSEL TO THE COMPANY TO BE
DELIVERED PURSUANT TO SECTION 5(c)
(i) The statements under the captions "Item 1. Business--Government
Regulation" and "Item 3. Legal Proceedings" of the Company's Annual Report on
Form 10-K, which is incorporated by reference into the Prospectus, insofar as
such statements constitute summaries of the legal matters, documents or
proceedings referred to therein, fairly present the information called for with
respect to such legal matters, documents and proceedings and fairly summarize,
in all material respects, the matters referred to therein.
(ii) Blue Cross of California has been duly qualified and licensed
in the State of California as a health care service plan under the Xxxx-Xxxxx
Act, and none of the Company's other subsidiaries are required to be licensed
under the Xxxx-Xxxxx Act.
(iii) The Company is in full compliance with the requirements
of the Blue Cross License Agreement, dated as of August 4, 1997, between the
Company and the Blue Cross and Blue Shield Association (the "BCBSA") and the
California Blue Cross License Addendum, dated as of June 10, 1998, between
the Company, Blue Cross of California and the BCBSA, except in each case
where such noncompliance would not have a Material Adverse Effect. Each of
the Company's subsidiaries that is required by the BCBSA as of the date of
such opinion to be a party to a Blue Cross Affiliate License Agreement is in
full compliance with the requirements of such agreement, except in each case
where such noncompliance would not have a Material Adverse Effect.
(iv) To such counsel's knowledge, none of the Company and its
subsidiaries have received any notice or correspondence (i) relating to the loss
or threatened loss by the Company or any of its subsidiaries of any material
permit, license, franchise or authorization by any applicable managed health
care or insurance regulatory agency or body or (ii) asserting that the Company
or any of its subsidiaries is not in substantial compliance with any applicable
regulation relating to the operation or conduct of managed health care or
insurance businesses (the "HMO Regulations") or threatening the taking of any
action against the Company or any of its subsidiaries under any HMO Regulation,
except where such noncompliance or the taking of such action, if adversely
determined, would not have a material adverse effect on the business, operations
or financial condition of the Company and its subsidiaries, taken as a whole.
B-1
Exhibit C
FORM OF OPINION OF COUNSEL FOR THE SELLING STOCKHOLDER
TO BE DELIVERED PURSUANT TO SECTION 5(d)
(i) No filing with, or consent, approval, authorization, license,
order, registration, qualification or decree of, any court or governmental
authority or agency (other than the issuance of the order of the Commission
declaring the Registration Statement effective and such authorizations,
approvals or consents as may be necessary under state securities laws, as to
which we need express no opinion), is necessary or required to be obtained by
the Selling Stockholder for the performance by the Selling Stockholder of its
obligations under the U.S. Underwriting Agreement, the International
Underwriting Agreement or in connection with the offer, sale or delivery of the
Securities.
(ii) The U.S. Underwriting Agreement and the International
Underwriting Agreement have been duly authorized, executed and delivered by or
on behalf of the Selling Stockholder.
(iii) The execution, delivery and performance of the U.S.
Underwriting Agreement, the International Underwriting Agreement and the sale
and delivery of the Securities and the consummation of the transactions
contemplated in the U.S. Underwriting Agreement and the International
Underwriting Agreement and compliance by the Selling Stockholder with its
obligations under the U.S. Underwriting Agreement and the International
Underwriting Agreement have been duly authorized by all necessary action on the
part of the Selling Stockholder and do not and will not, whether with or without
the giving of notice or passage of time or both, conflict with, constitute a
breach of, or default under or result in the creation or imposition of any tax,
lien, charge or encumbrance upon the Securities pursuant to, the terms of any
contract, indenture, mortgage, deed of trust, loan or credit agreement, note,
license, lease or other instrument or agreement known to such counsel and to
which the Selling Stockholder is a party or by which it may be bound, or to
which any of the property or assets of the Selling Stockholder may be subject
nor will such action result in any violation of the provisions of the charter or
by-laws of the Selling Stockholder, if applicable, or any law, administrative
regulation, judgment, order or decree known to us to be applicable to the
Selling Stockholder of any court, regulatory body, administrative agency or
governmental body or arbitrator having jurisdiction over the Selling Stockholder
or any of its properties.
(iv) To the best of such counsel's knowledge, the Selling
Stockholder has valid and marketable title to the Securities to be sold by the
Selling Stockholder pursuant to the U.S. Underwriting Agreement and the
International Underwriting Agreement, free and clear of any pledge, lien,
security interest, charge, claim, equity or encumbrance of any kind, other than
as disclosed in the Registration Statement, and has full right, power and
authority to sell, transfer and deliver such Securities pursuant to the U.S.
Underwriting Agreement and the International Underwriting Agreement. By
delivery of a certificate or certificates therefor the Selling Stockholder will
transfer to the Underwriters who have purchased such Securities pursuant to the
C-1
U.S. Underwriting Agreement and the International Underwriting Agreement
(without notice of any defect in the title of the Selling Stockholder and who
are otherwise bona fide purchasers for purposes of the Uniform Commercial Code)
valid and marketable title to such Securities, free and clear of any pledge,
lien, security interest, charge, claim, equity or encumbrance of any kind.
C-2
[FORM OF LOCK-UP FROM DIRECTORS, OFFICERS OR OTHER STOCKHOLDERS PURSUANT TO
SECTION 5(j)]
Exhibit D
June [ ], 1999
XXXXXX XXXXXXX & CO. INTERNATIONAL LIMITED
XXXXXXX XXXXX INTERNATIONAL
DEUTSCHE BANK AG LONDON
XXXXXXXXX, XXXXXX & XXXXXXXX INTERNATIONAL
SALOMON BROTHERS INTERNATIONAL LIMITED
WARBURG DILLON READ LLC
c/o MORGAN XXXXXXX & CO., INTERNATIONAL LIMITED
00 Xxxxx Xxxxxx
Xxxxxx Xxxxx
Xxxxxx X00 0XX
Xxxxxxx
Re: Proposed Public Offering by Wellpoint Health Networks Inc.
----------------------------------------------------------
Dear Sirs:
The undersigned, a shareholder and an officer and/or director of
WellPoint Health Networks Inc., a Delaware corporation (the "Company"),
understands that Xxxxxx Xxxxxxx & Co. International Limited ("Xxxxxx Xxxxxxx"),
Xxxxxxx Xxxxx International, Deutsche Bank AG London, Xxxxxxxxx, Xxxxxx &
Xxxxxxxx International, Salomon Brothers International Limited and Warburg
Dillon Read LLC propose(s) to enter into an Underwriting Agreement (the
"Underwriting Agreement") with the Company and the Selling Stockholder providing
for the public offering of shares (the "Securities") of the Company's common
stock, par value $.01 per share (the "Common Stock"). Capitalized terms used
but not defined herein shall have the meaning given to them in the Underwriting
Agreement.
In recognition of the benefit that such an offering will confer upon
the undersigned as a shareholder and an officer and/or director of the Company,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the undersigned agrees with each underwriter to
be named in the Underwriting Agreement that, during a period of 90 days from the
date of the Underwriting Agreement, provided that such person continues to be an
officer of the Company during such period, the undersigned will not, without the
prior written consent of Xxxxxx Xxxxxxx (i) offer, pledge, sell, contract to
sell, sell any option or contract to purchase, purchase any option or contract
to sell, grant any option, right, or warrant to purchase, and or otherwise
transfer or dispose of any shares of the Common Stock or any securities
convertible into or exchangeable or exercisable for Common Stock, whether now
owned or hereafter acquired by the undersigned or with respect to which the
undersigned has or hereafter acquires the power of disposition, or file any
registration statement under the Securities Act of 1933, as amended, with
respect to any of the foregoing or (ii) enter into any swap or any other
arrangement that transfers, in whole or in part, directly or indirectly,
D-1
the economic consequence of ownership of the Common Stock, whether any such
swap or transaction described in clause (i) or (ii) above is to be settled by
delivery of Common Stock or other securities, in cash or otherwise.
Notwithstanding the provisions of the preceding sentence, the
undersigned shall be permitted to (a) sell shares of Common Stock to the Company
in connection with a "stock-for-stock" exercise of stock options granted under
the Company's existing stock option plans (providing that any resulting shares
received by the undersigned upon such exercise shall be subject to the terms of
this letter), and (b) sell, transfer or otherwise dispose of shares of Common
Stock to (1) the undersigned's spouse, children, spouses of children, siblings
and spouses of siblings, provided that any such transferee shall have agreed in
writing to be subject to the terms of this letter; and (2) any trust or
charitable foundation established by the undersigned and/or one or more of the
persons listed in the foregoing clause (1), provided that any such trust or
charitable foundation and their respective beneficiaries shall have agreed in
writing to be subject to the terms of this letter.
Very truly yours,
Signature:
------------------------
Print Name:
------------------------
D-2
