3,198,062 Shares
SPECIALTY CARE NETWORK, INC.
Common Stock, par value $.001 per share
UNDERWRITING AGREEMENT
----------------------
February 6, 1997
CREDIT SUISSE FIRST BOSTON CORPORATION
EQUITABLE SECURITIES CORPORATION
XXXXXX BROTHERS INC.
As Representatives of the Several Underwriters,
c/o Credit Suisse First Boston Corporation,
Eleven Madison Avenue,
New York, N.Y. 10010
Dear Sirs:
1. Introductory. Specialty Care Network, Inc., a Delaware corporation
("Company"), proposes to issue and sell 3,000,000 shares of its Common Stock,
par value $.001 per share ("Securities") and the stockholders listed in Schedule
A hereto ("Selling Stockholders") propose severally to sell an aggregate of
198,062 outstanding shares of the Securities (such 3,198,062 shares of
Securities being hereinafter referred to as the "Firm Securities"). The Company
also proposes to issue and sell to the Underwriters, at the option of the
Underwriters, an aggregate of not more than 450,000 additional shares ("Optional
Securities") of its Securities as set forth below. The Firm Securities and the
Optional Securities are herein collectively called the "Offered Securities". The
Company and the Selling Stockholders hereby agree with the several Underwriters
named in Schedule B hereto ("Underwriters") as follows:
2. Representations and Warranties of the Company and the Selling
Stockholders. (a) The Company represents and warrants to, and agrees with, the
several Underwriters that:
(i) A registration statement (No. 333-17627) relating to the Offered
Securities, including a form of prospectus, has been filed with the
Securities and Exchange Commission ("Commission") and either (A) has been
declared effective under the Securities Act of 1933 ("Act") and is not
proposed to be amended or (B) is proposed to be amended by amendment or
post-effective amendment. If such registration statement ("initial
registration statement") has been declared effective, either (A) an
additional registration statement ("additional registration statement")
relating to the Offered Securities may have been filed with the Commission
pursuant to Rule 462(b) ("Rule 462(b)") under the Act and,
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if so filed, has become effective upon filing pursuant to such Rule and the
Offered Securities all have been duly registered under the Act pursuant to
the initial registration statement and, if applicable, the additional
registration statement or (B) such an additional registration statement is
proposed to be filed with the Commission pursuant to Rule 462(b) and will
become effective upon filing pursuant to such Rule and upon such filing the
Offered Securities will all have been duly registered under the Act
pursuant to the initial registration statement and such additional
registration statement. If the Company does not propose to amend the
initial registration statement or if an additional registration statement
has been filed and the Company does not propose to amend it, and if any
post-effective amendment to either such registration statement has been
filed with the Commission prior to the execution and delivery of this
Agreement, the most recent amendment (if any) to each such registration
statement has been declared effective by the Commission or has become
effective upon filing pursuant to Rule 462(c) ("Rule 462(c)") under the Act
or, in the case of the additional registration statement, Rule 462(b). For
purposes of this Agreement, "Effective Time" with respect to the initial
registration statement or, if filed prior to the execution and delivery of
this Agreement, the additional registration statement means (A) if the
Company has advised the Representatives that it does not propose to amend
such registration statement, the date and time as of which such
registration statement, or the most recent post-effective amendment thereto
(if any) filed prior to the execution and delivery of this Agreement, was
declared effective by the Commission or has become effective upon filing
pursuant to Rule 462(c), or (B) if the Company has advised the
Representatives that it proposes to file an amendment or post-effective
amendment to such registration statement, the date and time as of which
such registration statement, as amended by such amendment or post-effective
amendment, as the case may be, is declared effective by the Commission. If
an additional registration statement has not been filed prior to the
execution and delivery of this Agreement but the Company has advised the
Representatives that it proposes to file one, "Effective Time" with respect
to such additional registration statement means the date and time as of
which such registration statement is filed and becomes effective pursuant
to Rule 462(b). "Effective Date" with respect to the initial registration
statement or the additional registration statement (if any) means the date
of the Effective Time thereof. The initial registration statement, as
amended at its Effective Time, including all information contained in the
additional registration statement (if any) and deemed to be a part of the
initial registration statement as of the Effective Time of the additional
registration statement pursuant to the General Instructions of the Form on
which it is filed and including all
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information (if any) deemed to be a part of the initial registration
statement as of its Effective Time pursuant to Rule 430A(b) ("Rule
430A(b)") under the Act, is hereinafter referred to as the "Initial
Registration Statement". The additional registration statement, as amended
at its Effective Time, including the contents of the initial registration
statement incorporated by reference therein and including all information
(if any) deemed to be a part of the additional registration statement as of
its Effective Time pursuant to Rule 430A(b), is hereinafter referred to as
the "Additional Registration Statement". The Initial Registration Statement
and the Additional Registration Statement are herein referred to
collectively as the "Registration Statements" and individually as a
"Registration Statement". The form of prospectus relating to the Offered
Securities, as first filed with the Commission pursuant to and in
accordance with Rule 424(b) ("Rule 424(b)") under the Act or (if no such
filing is required) as included in a Registration Statement, is hereinafter
referred to as the "Prospectus". No document has been or will be prepared
or distributed in reliance on Rule 434 under the Act.
(ii) If the Effective Time of the Initial Registration Statement is
prior to the execution and delivery of this Agreement: (A) on the Effective
Date of the Initial Registration Statement, the Initial Registration
Statement conformed in all material respects to the requirements of the Act
and the rules and regulations of the Commission ("Rules and Regulations")
and did not include any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make
the statements therein not misleading, (B) on the Effective Date of the
Additional Registration Statement (if any), each Registration Statement
conformed, or will conform, in all material respects to the requirements of
the Act and the Rules and Regulations and did not include, or will not
include, any untrue statement of a material fact and did not omit, or will
not omit, to state any material fact required to be stated therein or
necessary to make the statements therein not misleading and (C) on the date
of this Agreement, the Initial Registration Statement and, if the Effective
Time of the Additional Registration Statement is prior to the execution and
delivery of this Agreement, the Additional Registration Statement each
conforms, and at the time of filing of the Prospectus pursuant to Rule
424(b) or (if no such filing is required) at the Effective Date of the
Additional Registration Statement in which the Prospectus is included, each
Registration Statement and the Prospectus will conform, in all material
respects to the requirements of the Act and the Rules and Regulations, and
neither of such documents includes, or will include, any untrue statement
of a material fact or omits, or will omit, to state any material fact
required to be stated therein or
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necessary to make the statements therein not misleading. If the Effective
Time of the Initial Registration Statement is subsequent to the execution
and delivery of this Agreement: on the Effective Date of the Initial
Registration Statement, the Initial Registration Statement and the
Prospectus will conform in all material respects to the requirements of the
Act and the Rules and Regulations, neither of such documents will include
any untrue statement of a material fact or will omit to state any material
fact required to be stated therein or necessary to make the statements
therein not misleading, and no Additional Registration Statement has been
or will be filed. The two preceding sentences do not apply to statements in
or omissions from a Registration Statement or the Prospectus based upon
written information furnished to the Company by any Underwriter through the
Representatives specifically for use therein, it being understood and
agreed that the only such information is that described as such in Section
7(c).
(iii) The Company has been duly incorporated and is an existing
corporation in good standing under the laws of the State of Delaware, with
power and authority (corporate and other) to own its properties and conduct
its business as described in the Prospectus; and the Company is duly
qualified to do business as a foreign corporation in good standing in all
other jurisdictions in which its ownership or lease of property or the
conduct of its business requires such qualification, except where the
failure to so qualify would not have a material adverse effect upon the
Company and its subsidiaries taken as a whole.
(iv) Each subsidiary of the Company has been duly incorporated and is
an existing corporation in good standing under the laws of the jurisdiction
of its incorporation, with power and authority (corporate and other) to own
its properties and conduct its business as described in the Prospectus;
each subsidiary of the Company is duly qualified to do business as a
foreign corporation in good standing in all other jurisdictions in which
its ownership or lease of property or the conduct of its business requires
such qualification, except where the failure to so qualify would not have a
material adverse effect upon the Company and its subsidiaries taken as a
whole; all of the issued and outstanding capital stock of each subsidiary
of the Company has been duly authorized and validly issued and is fully
paid and nonassessable; and the capital stock of each subsidiary owned by
the Company, directly or through subsidiaries, is owned free from liens,
encumbrances and defects, other than liens under the Credit Facility (as
defined in the Prospectus).
(v) Each physician practice with which the Company is affiliated
through a service agreement is listed on Schedule C hereto. Such physician
practices are referred to herein
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individually as an "Affiliated Practice" and collectively as the
"Affiliated Practices", and such service agreements are referred to herein
individually as a "Service Agreement". To the knowledge of the Company,
each of the Affiliated Practices has been duly incorporated or formed, as
the case may be, and is existing in good standing, with power and authority
(corporate (if applicable) and other) to own its properties and conduct its
business as presently conducted. Subject to such qualifications as are set
forth in the Registration Statements and the Prospectus, each Service
Agreement has been duly authorized, executed and delivered by the Company
and constitutes a valid and legally binding agreement of the Company,
enforceable against the Company in accordance with its terms, subject to
the effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or affecting
creditors' rights generally, general equitable principles (whether
considered in a proceeding in equity or at law) and an implied covenant of
good faith and fair dealing. Each Service Agreement has been duly
authorized, executed and delivered by the parties thereto, other than the
Company, and, subject to such qualifications as are set forth in the
Registration Statements and the Prospectus, constitutes a valid and legally
binding agreement of such other parties thereto, enforceable against such
parties in accordance with its terms, subject to the effects of bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other
similar laws relating to or affecting creditors' rights generally, general
equitable principles (whether considered in a proceeding in equity or at
law) and an implied covenant of good faith and fair dealing.
(vi) The Offered Securities and all other outstanding shares of capital
stock of the Company have been duly authorized; all outstanding shares of
capital stock of the Company are, and, when the Offered Securities to be
issued and sold by the Company hereunder have been delivered and paid for
in accordance with this Agreement on each Closing Date (as defined below),
such Offered Securities will have been, validly issued, fully paid and
nonassessable, and the Offered Securities conform or will conform to the
description thereof contained in the Prospectus; and the stockholders of
the Company have no preemptive rights with respect to the Securities.
(vii) Except for this Agreement, there are no contracts, agreements or
understandings between the Company and any person that would give rise to a
valid claim against the Company or any Underwriter for a brokerage
commission, finder's fee or other like payment in connection with the
transactions contemplated hereby.
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(viii) Except as disclosed in the Prospectus, there are no contracts,
agreements or understandings between the Company and any person granting
such person the right to require the Company to file a registration
statement under the Act with respect to any securities of the Company owned
or to be owned by such person or to require the Company to include such
securities in the securities registered pursuant to a Registration
Statement or in any securities being registered pursuant to any other
registration statement filed by the Company under the Act.
(ix) The Offered Securities have been approved for listing on the
Nasdaq Stock Market's National Market, subject to notice of issuance.
(x) No consent, approval, authorization or order of, or filing with,
any governmental agency or body or any court is required for the
consummation by the Company of the transactions contemplated by this
Agreement in connection with the issuance and sale of the Offered
Securities, except such as have been obtained and made under the Act and
such as may be required under state or foreign securities laws.
(xi) The execution, delivery and performance of this Agreement, and the
consummation of the transactions contemplated hereby, will not result in a
breach or violation of any of the terms or provisions of, or constitute a
default under, any statute, any rule, regulation or order of any
governmental agency or body or any court, domestic or foreign, having
jurisdiction over the Company or any subsidiary of the Company or any of
their properties, or any agreement or instrument to which the Company or
any such subsidiary is a party or by which the Company or any such
subsidiary is bound or to which any of the properties of the Company or any
such subsidiary is subject, except for such breaches or violations that
would not, individually or in the aggregate, have a material adverse effect
upon the Company and its subsidiaries taken as a whole, or the charter or
by-laws of the Company or any such subsidiary.
(xii) This Agreement has been duly authorized, executed and delivered
by the Company.
(xiii) Except as disclosed in the Prospectus, the Company, its
subsidiaries and, to the knowledge of the Company, the Affiliated Practices
have good and marketable title to all real properties and all other
properties and assets owned by them, in each case free from liens,
encumbrances and defects that would, individually or in the aggregate, have
a material adverse effect upon the Company and its subsidiaries taken as a
whole; and except as disclosed in the Prospectus, the Company, its
subsidiaries and, to the knowledge of the Company, the Affiliated
7
Practices hold any leased real or personal property under valid and
enforceable leases with no exceptions that would, individually or in the
aggregate, have a material adverse effect upon the Company and its
subsidiaries taken as a whole.
(xiv) The Company, its subsidiaries and, to the knowledge of the
Company, the Affiliated Practices possess adequate certificates (including
certificates of need), authorities, licenses or permits issued by
appropriate governmental agencies or bodies necessary to conduct the
businesses now operated by them (including, without limitation, such as are
required (x) under such federal and state healthcare laws, statutes and
regulations as are applicable to the Company, its subsidiaries and the
Affiliated Practices, (y) in the case of the Affiliated Practices, to
receive reimbursement under Medicare/Medicaid and (z) under such insurance
laws and regulations as are applicable to the Company, its subsidiaries and
the Affiliated Practices) and have not received any notice of proceedings
relating to the revocation or modification of any such certificate,
authority, license or permit that, if determined adversely to the Company,
any of its subsidiaries or any of the Affiliated Practices, as the case may
be, would individually or in the aggregate have a material adverse effect
on the Company and its subsidiaries taken as a whole.
(xv) No labor dispute with the employees of the Company or any
subsidiary exists or, to the knowledge of the Company, is imminent that is
reasonably likely to have a material adverse effect on the Company and its
subsidiaries taken as a whole.
(xvi) The Company and its subsidiaries own, possess or can acquire on
reasonable terms, adequate trademarks, trade names and other rights to
inventions, know-how, patents, copyrights, confidential information and
other intellectual property (collectively, "intellectual property rights")
necessary to conduct the business now operated by them, or presently
employed by them, and have not received any notice of infringement of or
conflict with asserted rights of others with respect to any intellectual
property rights that, if determined adversely to the Company or any of its
subsidiaries, would individually or in the aggregate have a material
adverse effect on the Company and its subsidiaries taken as a whole.
(xvii) To the knowledge of the Company, neither the Company, any of its
subsidiaries nor any of the Affiliated Practices (a) is in violation of any
statute, any rule, regulation, decision or order of any governmental agency
or body or any court, domestic or foreign, relating to the use, disposal or
release of hazardous or toxic substances or
8
relating to the protection or restoration of the environment or human
exposure to hazardous or toxic substances (collectively, "environmental
laws"), (b) owns or operates any real property contaminated with any
substance that is subject to any environmental laws, (c) is liable for any
off-site disposal or contamination pursuant to any environmental laws, or
(d) is subject to any claim relating to any environmental laws, which
violation, contamination, liability or claim would individually or in the
aggregate have a material adverse effect on the Company and its
subsidiaries taken as a whole; and the Company is not aware of any pending
investigation which might lead to such a claim.
(xviii) Except as disclosed in the Prospectus, there are no pending
actions, suits or proceedings against or affecting the Company, any of its
subsidiaries, or, to the Company's knowledge, any of the Affiliated
Practices or any of their respective properties that, if determined
adversely to the Company, any of its subsidiaries or any of the Affiliated
Practices, as the case may be, would individually or in the aggregate have
a material adverse effect on the condition (financial or other), business,
properties or results of operations of the Company and its subsidiaries
taken as a whole, or would materially and adversely affect the ability of
the Company to perform its obligations under this Agreement, or which are
otherwise material in the context of the sale of the Offered Securities;
and no such actions, suits or proceedings against the Company, any of its
subsidiaries or, to the Company's knowledge, any of the Affiliated
Practices, are threatened or, to the Company's knowledge, contemplated.
(xix) The historical financial statements of the Company included in
each Registration Statement and the Prospectus present fairly the financial
position of the Company and its results of operations and cash flows for
the periods shown, and such financial statements have been prepared in
conformity with the generally accepted accounting principles in the United
States applied on a consistent basis; to the knowledge of the Company, the
historical financial statements of the predecessors to the Affiliated
Practices included in each Registration Statement and the Prospectus
present fairly the financial position of such predecessors and their
results of operations and cash flows for the periods shown, and such
financial statements have been prepared in conformity with the generally
accepted accounting principles in the United States applied on a consistent
basis; the assumptions used in preparing the pro forma financial statements
included in each Registration Statement and the Prospectus provide a
reasonable basis for presenting the significant effects directly
attributable to the transactions or events reflected therein, the pro forma
financial statements included in each Registration Statement
9
and the Prospectus comply as to form in all material respects with the
applicable accounting requirements of Rule 11-02 of Regulation S-X of the
Rules and Regulations, and the pro forma adjustments have been properly
applied to the historical amounts in the compilation of those statements.
(xx) Except as disclosed in the Prospectus, since the date of the
latest audited financial statements of the Company included in the
Prospectus there has been no material adverse change, nor any development
or event involving a prospective material adverse change, in the condition
(financial or other), business, properties or results of operations of the
Company and its subsidiaries, taken as a whole, and, except as disclosed in
or contemplated by the Prospectus, there has been no dividend or
distribution of any kind declared, paid or made by the Company on any class
of its capital stock; and, except as disclosed in the Prospectus, there has
been no material adverse change, nor any development or event involving a
prospective material adverse change, in the condition (financial or other),
business, properties or results of operations of the Affiliated Practices,
taken as a whole, since the date of the latest audited financial statements
of such Affiliated Practices or the predecessor to such Affiliated
Practices, as the case may be, included in the Prospectus.
(xxi) There are no pending material actions by any governmental agency
or authority or any third party payor to recoup any amount reimbursed under
Medicare, Medicaid, any managed care or other third party payor program
being sought, threatened, requested or claimed against the Company, any of
its subsidiaries, or, to the knowledge of the Company, any of the
Affiliated Practices or any physician-owner or physician-employee of any of
the Affiliated Practices.
(xxii) Subject to such qualifications as are set forth in the
Registration Statements and the Prospectus, neither the Company, any of its
subsidiaries nor any of the Affiliated Practices, is in, or operates in a
manner that would constitute a violation, in any material respect, of any
healthcare law, ordinance, administrative or governmental rule or
regulation including, without limitation, those relating to reimbursement
by government agencies, fraudulent or wrongful xxxxxxxx, and legislation
commonly referred to as the "Xxxxx" legislation, and those prohibiting
fee-splitting or fees for the referral of patients.
(xxiii) Neither the Company nor any of its subsidiaries (x) employs any
of the physician-owners or physician-employees of any of the Affiliated
Practices, (y) exercises any influence or control over the practice of
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medicine by any such physicians or (z) represents to the public that it
offers medical services.
(xxiv) The Company and each of the Affiliated Practices maintains
medical professional liability insurance. Such insurance maintained by the
Company is outstanding and duly in force, and such insurance maintained by
the Affiliated Practices is, to the knowledge of the Company, outstanding
and duly in force and maintained in amounts as required by the Service
Agreements.
(xxv) Neither the payment of the acquisition price for all operating
assets of the predecessors to each Affiliated Practice nor any loan made by
the Company in connection with the Initial Affiliation Transactions (as
defined in the Prospectus) to a physician affiliated with any Affiliated
Practice was in any way intended to induce the referral of patients from
any Affiliated Practice to the Company or any other Affiliated Practice.
(xxvi) The Company does not provide any service to any person,
including any Affiliated Practice, other than as set forth in the Service
Agreement. The Company has no right to participate in or exercise any
independent medical judgment with respect to, nor does it in fact
participate in or exercise any judgment with respect to, the provision of
health care services (including ancillary healthcare services) to the
patients of any medical practice, except that certain employees of the
Company may from time to time assist a physician or other employee of an
Affiliated Practice in the care of a patient, provided that at all times
such assistance is under the supervision of, and subject to, the final
judgment of the physician employed by the Affiliated Practice.
(xxvii) The Initial Affiliation Transactions and the terms of the
Service Agreements, including the percentage portion of the service fee,
were negotiated (a) in good faith by the Company and, to the Company's
knowledge, the other parties thereto and (b) on an arms' length basis. The
percentage portion of the service fee set forth in each Service Agreement
represents fair compensation for the management and administrative services
to be rendered by the Company pursuant thereto.
(xxviii) The Common Stock of the Company issued in connection with the
Initial Affiliation Transactions was not required to be registered under
the Act in connection with such transactions, and each of the persons
receiving Common Stock of the Company in connection with the Initial
Affiliation Transactions was an "accredited investor" within the meaning
Regulation D under the Act.
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(xxix) The Company is not and, after giving effect to the offering and
sale of the Offered Securities and the application of the proceeds thereof
as described in the Prospectus, will not be an "investment company" as
defined in the Investment Company Act of 1940.
(b) Each Selling Stockholder severally represents and warrants to, and
agrees with, the several Underwriters that:
(i) Such Selling Stockholder has and on the First Closing Date (as
defined herein) will have valid and unencumbered title to the Offered
Securities to be delivered by such Selling Stockholder on such Closing Date
and full right, power and authority to enter into this Agreement and to
sell, assign, transfer and deliver the Offered Securities to be delivered
by such Selling Stockholder on such Closing Date hereunder; and upon the
delivery of and payment for the Offered Securities on such Closing Date
hereunder the several Underwriters will acquire valid and unencumbered
title to the Offered Securities to be delivered by such Selling Stockholder
on such Closing Date.
(ii) If the Effective Time of the Initial Registration Statement is
prior to the execution and delivery of this Agreement: (A) on the Effective
Date of the Initial Registration Statement, the Initial Registration
Statement conformed in all material respects to the requirements of the Act
and the Rules and Regulations and did not include any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading, (B) on
the Effective Date of the Additional Registration Statement (if any), each
Registration Statement conformed, or will conform, in all material respects
to the requirements of the Act and the Rules and Regulations and did not
include, or will not include, any untrue statement of a material fact and
did not omit, or will not omit, to state any material fact required to be
stated therein or necessary to make the statements therein not misleading,
and (C) on the date of this Agreement, the Initial Registration Statement
and, if the Effective Time of the Additional Registration Statement is
prior to the execution and delivery of this Agreement, the Additional
Registration Statement each conforms, and at the time of filing of the
Prospectus pursuant to Rule 424(b) or (if no such filing is required) at
the Effective Date of the Additional Registration Statement in which the
Prospectus is included, each Registration Statement and the Prospectus will
conform, in all material respects to the requirements of the Act and the
Rules and Regulations, and neither of such documents includes, or will
include, any untrue statement of a material fact or omits, or will omit, to
state any material fact required to be stated therein or necessary to make
the statements therein not misleading. If the Effective Time of the Initial
Registration Statement is
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subsequent to the execution and delivery of this Agreement: on the
Effective Date of the Initial Registration Statement, the Initial
Registration Statement and the Prospectus will conform in all material
respects to the requirements of the Act and the Rules and Regulations,
neither of such documents will include any untrue statement of a material
fact or will omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading. The two
preceding sentences apply only to the extent that any statements in or
omissions from a Registration Statement or the Prospectus are based upon
written information furnished to the Company by such Selling Stockholder
specifically for use therein, it being agreed and understood that the only
such information is that described as such in Section 7(b).
3. Purchase, Sale and Delivery of Offered Securities. On the basis of
the representations, warranties and agreements herein contained, but subject to
the terms and conditions herein set forth, the Company and each Selling
Stockholder agree, severally and not jointly, to sell to each Underwriter, and
each Underwriter agrees, severally and not jointly, to purchase from the Company
and each Selling Stockholder, at a purchase price of $ per share, that
number of Firm Securities (rounded up or down, as determined by Credit Suisse
First Boston Corporation ("Credit Suisse First Boston") in its discretion, in
order to avoid fractions) obtained by multiplying 3,000,000 Firm Securities in
the case of the Company and the number of Firm Securities set forth opposite the
name of such Selling Stockholder in Schedule A hereto, in the case of a Selling
Stockholder, in each case by a fraction the numerator of which is the number of
Firm Securities set forth opposite the name of such Underwriter in Schedule B
hereto and the denominator of which is the total number of Firm Securities.
Certificates in negotiable form for the Offered Securities to be sold
by the Selling Stockholders hereunder have been placed in custody, for delivery
under this Agreement, under custody agreements (each, a "Custody Agreement" and
collectively, the "Custody Agreements") made with Cozen and X'Xxxxxx, as
custodian ("Custodian"). Each Selling Stockholder agrees that the shares
represented by the certificates held in custody for the Selling Stockholders
under such Custody Agreements are subject to the interests of the Underwriters
hereunder, that the arrangements made by the Selling Stockholders for such
custody are to that extent irrevocable, and that the obligations of the Selling
Stockholders shall not be terminated by operation of law, whether by the death
of any individual Selling Stockholder or the occurrence of any other event, or
in the case of a trust, by the death of any trustee or trustees or the
termination of such trust. If any individual Selling Stockholder or any such
trustee or trustees should die, or if any other such event should occur, or if
any of such trusts should terminate, before the delivery of the Offered
Securities hereunder, certificates for such Offered
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Securities shall be delivered by the Custodian in accordance with the terms and
conditions of this Agreement as if such death or other event or termination had
not occurred, regardless of whether or not the Custodian shall have received
notice of such death or other event or termination.
The Company and the Custodian will deliver the Firm Securities to the
Representatives for the accounts of the Underwriters, against payment of the
purchase price in immediately available funds by wire transfer to the account of
the Company in the case of 3,000,000 shares of Firm Securities and Cozen and
X'Xxxxxx in the case of 198,062 shares of Firm Securities, in each case at a
bank acceptable to Credit Suisse First Boston located in the United States and
designated by the Company, with respect to the payment to be made to the
Company, and by the Custodian, with respect to the payment to be made to the
Selling Stockholders, or by official Federal Reserve Bank check or checks drawn
to the order of the Company in the case of 3,000,000 shares of Firm Securities
and Cozen and X'Xxxxxx in the case of 198,062 shares of Firm Securities at the
office of Xxxxxxx Xxxxxxx & Xxxxxxxx, 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
at 9:00 A.M., New York time, on , or at such other time not
later than seven full business days thereafter as Credit Suisse First Boston and
the Company determine, such time being herein referred to as the "First Closing
Date". The certificates for the Firm Securities so to be delivered will be in
such form, in such denominations and registered in such names as Credit Suisse
First Boston requests and will be made available for checking and packaging at
the above office of Xxxxxxx Xxxxxxx & Xxxxxxxx at least 24 hours prior to the
First Closing Date.
In addition, upon written notice from Credit Suisse First Boston given
to the Company from time to time not more than 30 days subsequent to the date of
the Prospectus, the Underwriters may purchase all or less than all of the
Optional Securities at the purchase price per Security to be paid for the Firm
Securities. The Company agrees to sell to the Underwriters the number of shares
of Optional Securities specified in such notice and the Underwriters agree,
severally and not jointly, to purchase such Optional Securities. Such Optional
Securities shall be purchased for the account of each Underwriter in the same
proportion as the number of shares of Firm Securities set forth opposite such
Underwriter's name bears to the total number of shares of Firm Securities
(subject to adjustment by Credit Suisse First Boston to eliminate fractions) and
may be purchased by the Underwriters only for the purpose of covering
over-allotments made in connection with the sale of the Firm Securities. No
Optional Securities shall be sold or delivered unless the Firm Securities
previously have been, or simultaneously are, sold and delivered. The right to
purchase the Optional Securities or any portion thereof may be exercised from
time to time and to the extent not previously exercised may be surrendered and
terminated
14
at any time upon notice by Credit Suisse First Boston to the Company.
Each time for the delivery of and payment for the Optional Securities,
being herein referred to as an "Optional Closing Date", which may be the First
Closing Date (the First Closing Date and each Optional Closing Date, if any,
being sometimes referred to as a "Closing Date"), shall be determined by Credit
Suisse First Boston but shall be a reasonable time following, but not earlier
than three nor later than five full business days after, written notice of
election to purchase Optional Securities is given. The Company will deliver the
Optional Securities being purchased on each Optional Closing Date to the
Representatives for the accounts of the several Underwriters, against payment of
the purchase price in immediately available funds by wire transfer to the
account of the Company at a bank acceptable to Credit Suisse First Boston
located in the United States and designated by the Company or by official
Federal Reserve Bank check or checks drawn to the order of the Company, at the
above office of Xxxxxxx Xxxxxxx & Xxxxxxxx. The certificates for the Optional
Securities being purchased on each Optional Closing Date will be in such form,
in such denominations and registered in such names as Credit Suisse First Boston
requests upon reasonable notice prior to such Optional Closing Date and will be
made available for checking and packaging at the above office of Xxxxxxx Xxxxxxx
& Xxxxxxxx at a reasonable time in advance of such Optional Closing Date.
4. Offering by Underwriters. It is understood that the several
Underwriters propose to offer the Offered Securities for sale to the public as
set forth in the Prospectus.
5. Certain Agreements of the Company and the Selling Stockholders. The
Company agrees with the several Underwriters and the Selling Stockholders that:
(a) If the Effective Time of the Initial Registration Statement is
prior to the execution and delivery of this Agreement, the Company will
file the Prospectus with the Commission pursuant to and in accordance with
subparagraph (1) (or, if applicable and if consented to by Credit Suisse
First Boston, subparagraph (4)) of Rule 424(b) not later than the earlier
of (A) the second business day following the execution and delivery of this
Agreement or (B) the fifteenth business day after the Effective Date of the
Initial Registration Statement. The Company will advise Credit Suisse First
Boston promptly of any such filing pursuant to Rule 424(b). If the
Effective Time of the Initial Registration Statement is prior to the
execution and delivery of this Agreement and an additional registration
statement is necessary to register a portion of the Offered Securities
under the Act but the Effective Time thereof has not occurred as of such
execution and delivery, the Company will file the additional registration
statement or, if
15
filed, will file a post-effective amendment thereto with the Commission
pursuant to and in accordance with Rule 462(b) on or prior to 10:00 P.M.,
New York time, on the date of this Agreement or, if earlier, on or prior to
the time the Prospectus is printed and distributed to any Underwriter, or
will make such filing at such later date as shall have been consented to by
Credit Suisse First Boston.
(b) The Company will advise Credit Suisse First Boston promptly of any
proposal to amend or supplement the initial or any additional registration
statement as filed or the related prospectus or the Initial Registration
Statement, the Additional Registration Statement (if any) or the Prospectus
and will not effect such amendment or supplementation without Credit Suisse
First Boston's consent; and the Company will also advise Credit Suisse
First Boston promptly of the effectiveness of each Registration Statement
(if its Effective Time is subsequent to the execution and delivery of this
Agreement) and of any amendment or supplementation of a Registration
Statement or the Prospectus and of the institution by the Commission of any
stop order proceedings in respect of a Registration Statement and will use
its best efforts to prevent the issuance of any such stop order and to
obtain as soon as possible its lifting, if issued.
(c) If, at any time when a prospectus relating to the Offered
Securities is required to be delivered under the Act in connection with
sales by any Underwriter or dealer, any event occurs as a result of which
the Prospectus as then amended or supplemented would include an untrue
statement of a material fact or omit to state any material fact necessary
to make the statements therein, in the light of the circumstances under
which they were made, not misleading, or if it is necessary at any time to
amend the Prospectus to comply with the Act, the Company will promptly
notify Credit Suisse First Boston of such event and will promptly prepare
and file with the Commission, at its own expense, an amendment or
supplement which will correct such statement or omission or an amendment
which will effect such compliance. Neither Credit Suisse First Boston's
consent to, nor the Underwriters' delivery of, any such amendment or
supplement shall constitute a waiver of any of the conditions set forth in
Section 6.
(d) As soon as practicable, but not later than the Availability Date
(as defined below), the Company will make generally available to its
security holders an earnings statement covering a period of at least 12
months beginning after the Effective Date of the Initial Registration
Statement (or, if later, the Effective Date of the Additional Registration
Statement) which will satisfy the provisions of Section 11(a) of the Act.
For the purpose of the preceding sentence, "Availability Date" means the
45th
16
day after the end of the fourth fiscal quarter following the fiscal quarter
that includes such Effective Date, except that, if such fourth fiscal
quarter is the last quarter of the Company's fiscal year, "Availability
Date" means the 90th day after the end of such fourth fiscal quarter.
(e) The Company will furnish to the Representatives copies of each
Registration Statement (four of which will be signed and will include all
exhibits), each related preliminary prospectus, and, so long as delivery of
a prospectus relating to the Offered Securities is required to be delivered
under the Act in connection with sales by any Underwriter or dealer, the
Prospectus and all amendments and supplements to such documents, in each
case in such quantities as Credit Suisse First Boston reasonably requests.
The Prospectus shall be so furnished on or prior to 3:00 P.M., New York
time, on the business day following the later of the execution and delivery
of this Agreement or the Effective Time of the Initial Registration
Statement. All other documents shall be so furnished as soon as available.
The Company will pay the expenses of printing and distributing to the
Underwriters all such documents.
(f) The Company will arrange for the qualification of the Offered
Securities for sale under the laws of such jurisdictions as Credit Suisse
First Boston designates and will continue such qualifications in effect so
long as required for the distribution.
(g) During the period of five years hereafter, the Company will furnish
to the Representatives and, upon request, to each of the other
Underwriters, as soon as practicable after the end of each fiscal year, a
copy of its annual report to stockholders for such year; and the Company
will furnish to the Representatives (i) as soon as available, a copy of
each report and any definitive proxy statement of the Company filed with
the Commission under the Securities Exchange Act of 1934 or mailed to
stockholders, and (ii) from time to time, such other information concerning
the Company as Credit Suisse First Boston may reasonably request.
(h) The Company agrees with the several Underwriters that the Company
will pay all expenses incident to the performance of the obligations of the
Company and the Selling Stockholders under this Agreement (other than the
fees and expenses of counsel for the Selling Stockholders and transfer
taxes on the sale by the Selling Stockholders of the Selling Stockholders'
Offered Securities to the Underwriters) and will reimburse the Underwriters
(if and to the extent incurred by them) for any filing fees and other
expenses (including fees and disbursements of counsel) incurred by them in
connection with qualification of the Offered Securities for sale and
determination of the
17
eligibility of the Offered Securities for investment under the laws of such
jurisdictions as Credit Suisse First Boston designates and the printing of
memoranda relating thereto, for the filing fee of the National Association
of Securities Dealers, Inc. relating to the Offered Securities, for
expenses incurred in distributing preliminary prospectuses and the
Prospectus (including any amendments and supplements thereto) to the
Underwriters, and for any travel expenses of the Company's officers and
employees and any other expenses of the Company in connection with
attending or hosting meetings with prospective purchasers of the Offered
Securities. The Selling Stockholders agree that they shall be responsible
for the fees and expenses of counsel for the Selling Stockholders, and each
Selling Stockholder agrees to pay for any transfer taxes on the sale by
such Selling Stockholder of such Selling Stockholder's Offered Securities
to the Underwriters.
(i) For a period of 180 days after the date of the initial public
offering of the Offered Securities (the "Lock-Up Period"), the Company will
not offer, sell, contract to sell, pledge or otherwise dispose of, directly
or indirectly, or file with the Commission a registration statement under
the Act relating to, any additional shares of its Securities or securities
convertible into or exchangeable or exercisable for any shares of its
Securities, or publicly disclose the intention to make any such offer,
sale, pledge, disposal or filing, without the prior written consent of
Credit Suisse First Boston, except (i) issuances of unregistered Securities
(including options exercisable into unregistered Securities) by the Company
in connection with affiliations with physicians and physician practices,
(ii) issuances of Securities by the Company pursuant to the exercise of
employee stock options outstanding on the date of the initial public
offering of the Offered Securities and (iii) issuances of stock options
under benefit plans existing on the date hereof, provided that options
issued pursuant to this clause (iii) do not become exercisable prior to the
end of such 180-day period. Prior to the execution of this Agreement, the
Company will obtain written agreements substantially in the form of Exhibit
B hereto from the directors and officers of the Company and from those
persons identified in Schedule D hereto.
(j) Each Selling Stockholder agrees, during the LockUp Period, not to
offer, sell, contract to sell, pledge or otherwise dispose of, directly or
indirectly, any additional shares of the Securities or securities
convertible into or exchangeable or exercisable for any shares of
Securities, or publicly disclose the intention to make any such offer,
sale, pledge or disposal, without the prior written consent
18
of Credit Suisse First Boston; provided, however, that the Selling
Stockholders may transfer shares of the Securities or securities
convertible into or exchangeable or exercisable for any shares of
Securities, without the consent of Credit Suisse First Boston, to (i)
trusts primarily for the benefit of such Selling Stockholder or members of
the such Selling Stockholder's immediate family or (ii) pursuant to a bona
fide gift to any other person, so long as in each case, any such transferee
executes and delivers an agreement to Credit Suisse First Boston to the
effect that such transferee will be bound by the provisions of this clause
(i) during the Lock-Up Period.
(k) Each Selling Stockholder agrees to deliver to Credit
Suisse First Boston, attention: Transactions Advisory Group on or prior
to the First Closing Date a properly completed and executed United
States Treasury Department Form W-9 (or other applicable form or
statement specified by Treasury Department regulations in lieu
thereof).
6. Conditions of the Obligations of the Underwriters. The obligations
of the several Underwriters to purchase and pay for the Firm Securities on the
First Closing Date and the Optional Securities to be purchased on each Optional
Closing Date will be subject to the accuracy of the representations and
warranties on the part of the Company and the Selling Stockholders herein, to
the accuracy of the statements of Company officers made pursuant to the
provisions hereof, to the performance in all material respects by the Company
and the Selling Stockholders of their obligations hereunder and to the following
additional conditions precedent:
(a) The Representatives shall have received a letter, dated the date of
delivery thereof (which, if the Effective Time of the Initial Registration
Statement is prior to the execution and delivery of this Agreement, shall
be on or prior to the date of this Agreement or, if the Effective Time of
the Initial Registration Statement is subsequent to the execution and
delivery of this Agreement, shall be prior to the filing of the amendment
or post-effective amendment to the registration statement to be filed
shortly prior to such Effective Time), of Ernst & Young LLP confirming that
they are independent public accountants within the meaning of the Act and
the applicable published Rules and Regulations thereunder and stating to
the effect that:
(i) in their opinion the financial statements examined by them and
included in the Registration Statements comply as to form in all
material respects with the applicable accounting requirements of the
Act and the related published Rules and Regulations;
19
(ii) they have performed the procedures specified by the American
Institute of Certified Public Accountants for a review of interim
financial information as described in Statement of Auditing Standards
No. 71, Interim Financial Information, on the unaudited financial
statements included in the Registration Statements;
(iii) on the basis of the review referred to in clause (ii) above,
a reading of the latest available interim financial statements of the
Company and the Predecessor Practices, inquiries of officials of the
Company and the Affiliated Practices who have responsibility for
financial and accounting matters and other specified procedures,
nothing came to their attention that caused them to believe that:
(A) the unaudited financial statements included in the Registration
Statements do not comply as to form in all material respects with the
applicable accounting requirements of the Act and the related published
Rules and Regulations or any material modifications should be made to
such unaudited financial statements for them to be in conformity with
generally accepted accounting principles;
(B) at the date of the latest available balance sheet of the
Company read by such accountants, and at a subsequent specified date
not more than five days prior to the date of this Agreement, there was
any change in the capital stock of the Company, increase in short-term
indebtedness or long-term debt of the Company and its consolidated
subsidiaries or decrease in consolidated net current assets or net
assets of the Company, as compared with amounts shown on the latest
balance sheet of the Company included in the Prospectus; or
(C) for the period from the closing date of the latest statement of
operations or income, as the case may be, of the Predecessor Practices
included in the Prospectus to the closing date of the latest available
statement of operations of the Affiliated Practices read by such
accountants, and for the period from the closing date of the latest
statement of operations or income, as the case may be, of the
Predecessor Practices included in the Prospectus to a specified date
not more than three business days prior to the date of this Agreement,
there were any decreases in the net practice revenue or income from
continuing operations of the combined Affiliated Practices as compared
with the net practice revenue and income from continuing operations of
the combined Predecessor
20
Practices in the corresponding period of the previous year.
Except in all cases set forth in clauses (B) and (C) above for changes,
increases or decreases which the Prospectus discloses have occurred or may
occur or which are described in such letter;
(iv) they have reviewed the unaudited pro forma financial data
included in the Registration Statements, and on the basis of such
review, inquiries of officials of the Company who have responsibility
for financial and accounting matters and other specified procedures,
nothing came to their attention that caused them to believe that the
unaudited pro forma financial data included in the Registration
Statements do not comply as to form in all material respects with the
applicable accounting requirements of Rule 11-02 of Regulation S-X
under the Act (including Commission Staff Accounting Bulletin No. 48)
and that the pro forma adjustments have not been properly applied to
the historical amounts; and
(v) they have compared specified dollar amounts (or percentages
derived from such dollar amounts) and other financial information
contained in the Registration Statements (in each case to the extent
that such dollar amounts, percentages and other financial information
are derived from the general accounting records of the Company and its
subsidiaries or the Predecessor Practices subject to the internal
controls of the Company's or the Predecessor Practices' accounting
system, as the case may be, or are derived directly from such records
by analysis or computation) with the results obtained from inquiries, a
reading of such general accounting records and other procedures
specified in such letter and have found such dollar amounts,
percentages and other financial information to be in agreement with
such results, except as otherwise specified in such letter.
For purposes of this subsection, (i) if the Effective Time of the Initial
Registration Statement is subsequent to the execution and delivery of this
Agreement, "Registration Statements" shall mean the initial registration
statement as proposed to be amended by the amendment or post-effective
amendment to be filed shortly prior to its Effective Time, (ii) if the
Effective Time of the Initial Registration Statement is prior to the
execution and delivery of this Agreement but the Effective Time of the
Additional Registration is subsequent to such execution and delivery,
"Registration Statements" shall mean the Initial Registration Statement and
the additional registration statement as proposed to be filed or as
proposed to be
21
amended by the post-effective amendment to be filed shortly prior to its
Effective Time, and (iii) "Prospectus" shall mean the prospectus included
in the Registration Statements.
(b) If the Effective Time of the Initial Registration Statement is not
prior to the execution and delivery of this Agreement, such Effective Time
shall have occurred not later than 10:00 P.M., New York time, on the date
of this Agreement or such later date as shall have been consented to by
Credit Suisse First Boston. If the Effective Time of the Additional
Registration Statement (if any) is not prior to the execution and delivery
of this Agreement, such Effective Time shall have occurred not later than
10:00 P.M., New York time, on the date of this Agreement or, if earlier,
the time the Prospectus is printed and distributed to any Underwriter, or
shall have occurred at such later date as shall have been consented to by
Credit Suisse First Boston. If the Effective Time of the Initial
Registration Statement is prior to the execution and delivery of this
Agreement, the Prospectus shall have been filed with the Commission in
accordance with the Rules and Regulations and Section 5(a) of this
Agreement. Prior to such Closing Date, no stop order suspending the
effectiveness of a Registration Statement shall have been issued and no
proceedings for that purpose shall have been instituted or, to the
knowledge of the Company or the Representatives, shall be contemplated by
the Commission.
(c) Subsequent to the execution and delivery of this Agreement, there
shall not have occurred (i) any change, or any development or event
involving a prospective change, in the condition (financial or other),
business, properties or results of operations of the Company or its
subsidiaries which, in the judgment of a majority in interest of the
Underwriters including the Representatives, is material and adverse and
makes it impractical or inadvisable to proceed with completion of the
public offering or the sale of and payment for the Offered Securities; (ii)
any downgrading in the rating of any debt securities of the Company by any
"nationally recognized statistical rating organization" (as defined for
purposes of Rule 436(g) under the Act), or any public announcement that any
such organization has under surveillance or review its rating of any debt
securities of the Company (other than an announcement with positive
implications of a possible upgrading, and no implication of a possible
downgrading, of such rating); (iii) any suspension or limitation of trading
in securities generally on the New York Stock Exchange, or any setting of
minimum prices for trading on such exchange, or any suspension of trading
of any securities of the Company on any exchange or in the over-the-counter
market; (iv) any banking moratorium declared by U.S. Federal or New York
authorities; or (v) any outbreak or escalation of major hostilities in
which the United States is involved, any declaration of war by
22
Congress or any other substantial national or international calamity or
emergency if, in the judgment of a majority in interest of the Underwriters
including the Representatives, the effect of any such outbreak, escalation,
declaration, calamity or emergency makes it impractical or inadvisable to
proceed with completion of the public offering or the sale of and payment
for the Offered Securities.
(d) The Representatives shall have received an opinion, dated such
Closing Date, of Xxxxxx, Xxxxx & Xxxxxxx LLP, counsel for the Company, to
the effect that:
(i) the Company has been duly incorporated and is an existing
corporation in good standing under the laws of the State of Delaware,
with corporate power and authority to own its properties and conduct
its business as described in the Prospectus; and the Company is duly
qualified to do business as a foreign corporation in good standing in
Colorado, Florida, Georgia, Maryland, New Jersey and Pennsylvania;
(ii) the Offered Securities delivered on such Closing Date and all
other outstanding shares of capital stock of the Company have been duly
authorized and validly issued, are fully paid and nonassessable and
conform to the description thereof contained in the Prospectus; and the
stockholders of the Company have no statutory or, to the knowledge of
such counsel, other preemptive rights with respect to the Securities;
(iii) except as disclosed in the Prospectus, there are no
contracts, agreements or understandings known to such counsel between
the Company and any person granting such person the right to require
the Company to file a registration statement under the Act with respect
to any securities of the Company owned or to be owned by such person or
to require the Company to include such securities in the securities
registered pursuant to a Registration Statement or in any securities
being registered pursuant to any other registration statement filed by
the Company under the Act;
(iv) the Company is not and, after giving effect to the offering
and sale of the Offered Securities and the application of the proceeds
thereof as described in the Prospectus, will not be an "investment
company" as defined in the Investment Company Act of 1940.
(v) no consent, approval, authorization or order of, or filing
with, any governmental agency or body or any court is required for the
consummation by the Company of the transactions contemplated by this
Agreement in connection with the issuance or sale of
23
the Offered Securities, except such as have been obtained and made
under the Act and such as may be required under state securities laws
(it being understood that such counsel need express no opinion with
respect to health care or insurance law or regulation);
(vi) the execution, delivery and performance of this Agreement by
the Company, and the issuance and sale of the Offered Securities, will
not result in a breach or violation of any of the terms and provisions
of, or constitute a default under, any statute, any rule, regulation
or, to such counsel's knowledge, order of any governmental agency or
body or any court having jurisdiction over the Company or any
subsidiary of the Company or any of their properties, or any material
agreement or instrument known to such counsel to which the Company or
any such subsidiary is a party or by which the Company or any such
subsidiary is bound or to which any of the properties of the Company or
any such subsidiary is subject, or the charter or by-laws of the
Company or any such subsidiary (it being understood that such counsel
need express no opinion with respect to health care or insurance law or
regulation);
(vii) the Initial Registration Statement was declared effective
under the Act as of the date and time specified in such opinion, the
Additional Registration Statement (if any) was filed and became
effective under the Act as of the date and time (if determinable)
specified in such opinion, the Prospectus either was filed with the
Commission pursuant to the subparagraph of Rule 424(b) specified in
such opinion on the date specified therein or was included in the
Initial Registration Statement or the Additional Registration Statement
(as the case may be), and, to the knowledge of such counsel, no stop
order suspending the effectiveness of a Registration Statement or any
part thereof has been issued and no proceedings for that purpose have
been instituted or are pending or contemplated under the Act, and each
Registration Statement and the Prospectus, and each amendment or
supplement thereto, as of their respective effective or issue dates,
complied as to form in all material respects with the requirements of
the Act and the Rules and Regulations; the descriptions in the
Registration Statements and Prospectus of contracts and other documents
are accurate in all material respects and fairly present the
information required to be shown; and such counsel do not know of any
legal or governmental proceedings required to be described in a
Registration Statement or the Prospectus which are not described as
required or of any contracts or documents of a character required to be
described in a
24
Registration Statement or the Prospectus or to be filed as exhibits to
a Registration Statement which are not described and filed as required;
it being understood that such counsel need express no opinion as to the
financial statements or other financial and statistical data contained
in the Registration Statements or the Prospectus and matters relating
to health care and insurance law and regulation;
(viii) This Agreement has been duly authorized, executed and
delivered by the Company; and
(ix) The information set forth in the Prospectus under the captions
"Risk Factors - Shares Eligible for Future Sale" and "Shares Eligible
for Future Sale," to the extent they constitute descriptions of
statutes and regulations, are accurate in all material respects and
fairly present the information required to be shown.
In addition, such counsel shall state that such counsel has
participated in conferences with representatives of the Underwriters,
officers and other representatives of the Company and representatives
of the independent public accountants of the Company, at which
conferences the contents of the Registration Statements and the
Prospectus and related matters were discussed, and although such
counsel does not pass upon and does not assume any responsibility for
the accuracy, completeness or fairness of the statements contained in
the Registration Statements and the Prospectus, on the basis of the
foregoing, no facts have come to the attention of such counsel that
causes such counsel to believe that a Registration Statement or any
amendment thereto, as of its effective date or as of such Closing Date,
contained any untrue statement of a material fact or omitted to state
any material fact required to be stated therein or necessary to make
the statements therein not misleading or that the Prospectus or any
amendment or supplement thereto, as of its issue date or as of such
Closing Date, contained any untrue statement of a material fact or
omitted to state any material fact necessary in order to make the
statements therein, in light of the circumstances under which they were
made, not misleading (it being understood that such counsel need
express no comment with respect to the financial statements and other
financial and statistical data contained in the Registration Statements
and the Prospectus and matters relating to health care and insurance
law and regulation). In addition, counsel may state that it has made no
special inquiry or investigation in respect of opinions that are
rendered to the knowledge of such counsel.
25
The foregoing opinion may be limited to the federal laws of the
United States of America, the laws of the Commonwealth of Pennsylvania
and the General Corporation Law of the State of Delaware, and counsel
rendering the foregoing opinion may rely as to questions of fact upon
the representations of the Company set forth in this Agreement and upon
certificates of officers of the Company and of government officials.
(e) The Representatives shall have received the opinion
contemplated in the Power of Attorney executed and delivered by each
Selling Stockholder and an opinion, dated such Closing Date, of Cozen
and X'Xxxxxx, to the effect that:
(i) each Selling Stockholder had valid title to the Offered
Securities delivered by such Selling Stockholder on such Closing
Date free and clear of any perfected security interests and, to
such counsel's knowledge, free and clear of any claims, liens or
other encumbrances; and each Selling Stockholder had full right,
power and authority to sell, assign, transfer and deliver the
Offered Securities delivered by such Selling Stockholder on such
Closing Date hereunder; and good and valid title to the Offered
Securities delivered by such Selling Stockholder on the Closing
Date, free and clear of all claims, liens and other encumbrances,
has been transferred to the several Underwriters who have purchased
such shares in good faith and without notice of any such claims,
liens or encumbrances or any other adverse claims within the
meaning of the New York Uniform Commercial Code (it being
understood by such counsel that the Underwriters have no knowledge
of any security interests, claims, liens, or other encumbrances on
such Offered Securities);
(ii) no consent, approval, authorization or order of, or filing
with, any governmental agency or body or any court is required to
be obtained or made by any Selling Stockholder for the consummation
of the transactions by the Selling Stockholders contemplated by the
Custody Agreement or this Agreement in connection with the sale of
the Offered Securities sold by the Selling Stockholders, except
such as have been obtained and made under the Act and such as may
be required under state securities laws (it being understood that
such counsel need express no opinion with respect to health care or
insurance law or regulation);
(iii) the execution, delivery and performance of the Custody
Agreement and this Agreement by the Selling
26
Stockholders and the consummation of the transactions therein and
herein contemplated will not result in a breach or violation of any
of the terms and provisions of, or constitute a default under, any
statute, any rule, regulation or, to such counsel's knowledge,
order of any governmental agency or body or any court having
jurisdiction over any Selling Stockholder or any of their
properties or any material agreement or instrument known to such
counsel to which any Selling Stockholder is a party or by which any
Selling Stockholder is bound or to which any of the properties of
any Selling Stockholder is subject (it being understood that such
counsel need express no opinion with respect to health care or
insurance law or regulation);
(iv) the Power of Attorney and related Custody Agreement with
respect to each Selling Stockholder has been duly authorized,
executed and delivered by such Selling Stockholder and constitute
valid and legally binding obligations of each Selling Stockholder
enforceable in accordance with their terms, subject to the effects
of bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting
creditors' rights generally, general equitable principles (whether
considered in a proceeding in equity or at law) and an implied
covenant of good faith and fair dealing; and
(v) this Agreement has been duly executed and delivered by each
Selling Stockholder.
The foregoing opinion may be limited to the federal laws of
the United States of America and the Commonwealth of Pennsylvania,
and counsel rendering the foregoing opinion may rely as to
questions of fact upon the representations of the Selling
Stockholders set forth in this Agreement and in the Custody
Agreement. In addition, counsel may state that it has made no
special inquiry or investigation in respect of opinions that are
rendered to the knowledge of such counsel.
(f) The Representatives shall have received an opinion, dated such
Closing Date, of Baker, Donelson, Bearman & Xxxxxxxx, special healthcare
counsel for the Company, to the effect set forth in Exhibit A hereto.
(g) The Representatives shall have received from Xxxxxxx Xxxxxxx &
Xxxxxxxx, counsel for the Underwriters, such opinion or opinions, dated
such Closing Date, with respect to the incorporation of the Company, the
validity of the Offered Securities delivered on such Closing Date, the
Registration Statements, the Prospectus and other related matters as the
Representatives may require, and the
27
Company shall have furnished to such counsel such documents as they request
for the purpose of enabling them to pass upon such matters.
(h) The Representatives shall have received a certificate, dated such
Closing Date, of the Company, signed by the President or any Vice President
and a principal financial or accounting officer of the Company in which
such officers, to the best of their knowledge after reasonable
investigation, shall state that: the representations and warranties of the
Company in this Agreement are true and correct; the Company has in all
material respects complied with all agreements and satisfied all conditions
on its part to be performed or satisfied hereunder at or prior to such
Closing Date; no stop order suspending the effectiveness of any
Registration Statement has been issued and no proceedings for that purpose
have been instituted or are contemplated by the Commission; the Additional
Registration Statement (if any) satisfying the requirements of
subparagraphs (1) and (3) of Rule 462(b) was filed pursuant to Rule 462(b),
including payment of the applicable filing fee in accordance with Rule
111(a) or (b) under the Act, prior to the time the Prospectus was printed
and distributed to any Underwriter; and, subsequent to the date of the most
recent financial statements of the Company in the Prospectus, there has
been no material adverse change, nor any development or event involving a
prospective material adverse change, in the condition (financial or other),
business, properties or results of operations of the Company and its
subsidiaries taken as a whole except as set forth in or contemplated by the
Prospectus or as described in such certificate.
(i) The Representatives shall have received a letter, dated such
Closing Date, of Ernst & Young LLP which meets the requirements of
subsection (a) of this Section, except that the specified date referred to
in such subsection will be a date not more than three business days prior
to such Closing Date for the purposes of this subsection.
The Company and the Selling Stockholders will furnish the Representatives with
such conformed copies of such opinions, certificates, letters and documents as
the Representatives reasonably request. Credit Suisse First Boston may in its
sole discretion waive on behalf of the Underwriters compliance with any
conditions to the obligations of the Underwriters hereunder, whether in respect
of an Optional Closing Date or otherwise.
7. Indemnification and Contribution. (a) The Company will indemnify and
hold harmless each Underwriter against any losses, claims, damages or
liabilities, joint or several, to which such Underwriter may become subject,
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon
28
any untrue statement or alleged untrue statement of any material fact contained
in any Registration Statement, the Prospectus, or any amendment or supplement
thereto, or any related preliminary prospectus, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
and will reimburse each Underwriter for any legal or other expenses reasonably
incurred by such Underwriter in connection with investigating or defending any
such loss, claim, damage, liability or action as such expenses are incurred;
provided, however, that the Company will not be liable in any such case to the
extent that any such loss, claim, damage or liability arises out of or is based
upon an untrue statement or alleged untrue statement in or omission or alleged
omission from any of such documents in reliance upon and in conformity with
written information furnished to the Company by any Underwriter through the
Representatives specifically for use therein, it being understood and agreed
that the only such information furnished by any Underwriter consists of the
information described as such in subsection (c) below; and provided further,
that with respect to any untrue statement or alleged untrue statement in or
omission or alleged omission from any preliminary prospectus the indemnity
agreement contained in this subsection (a) shall not inure to the benefit of any
Underwriter from whom the person asserting any such losses, claims, damages or
liabilities purchased the Offered Securities concerned, to the extent that a
prospectus relating to such Offered Securities was required to be delivered by
such Underwriter under the Act in connection with such purchase, and any such
loss, claim, damage or liability of such Underwriter results from the fact that
there was not sent or given to such person, at or prior to the written
confirmation of the sale of such Offered Securities to such person, a copy of
the Prospectus if the Company had previously furnished copies thereof to the
Underwriter.
(b) Each Selling Stockholder, severally and not jointly, will indemnify
and hold harmless each Underwriter against any losses, claims, damages or
liabilities, joint or several, to which such Underwriter may become subject,
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
any Registration Statement, the Prospectus, or any amendment or supplement
thereto, or any related preliminary prospectus, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading
and will reimburse each Underwriter for any legal or other expenses reasonably
incurred by such Underwriter in connection with investigating or defending any
such loss, claim, damage, liability or action as such expenses are incurred;
provided, however, that each Selling Stockholder will indemnify or otherwise be
liable in any such case to the extent, but only to the extent, that any such
loss, claim,
29
damage, liability, or action arises out of or is based upon an untrue statement
or alleged untrue statement in or omission or alleged omission from any
Registration Statement or the Prospectus in reliance upon and in conformity with
written information furnished to the Company by such Selling Stockholder
specifically for use therein, and only to the extent of the total net proceeds
of the Offered Securities sold to the Underwriters by such Selling Stockholder,
it being understood and agreed that the only such information furnished by each
Selling Stockholder consists of the following information in the Prospectus
furnished on behalf of such Selling Stockholder: the information under the
caption "Principal and Selling Stockholders", but only to the extent the
information relates to such Selling Stockholders; and provided further, that
with respect to any untrue statement or alleged untrue statement in or omission
or alleged omission from any preliminary prospectus the indemnity agreement
contained in this subsection (b) shall not inure to the benefit of any
Underwriter from whom the person asserting any such losses, claims, damages or
liabilities purchased the Offered Securities concerned, to the extent that a
prospectus relating to such Offered Securities was required to be delivered by
such Underwriter under the Act in connection with such purchase, and any such
loss, claim, damage or liability of such Underwriter results from the fact that
there was not sent or given to such person, at or prior to the written
confirmation of the sale of such Offered Securities to such person, a copy of
the Prospectus if the Company had previously furnished copies thereof to the
Underwriter.
(c) Each Underwriter will severally and not jointly indemnify and hold
harmless the Company and each Selling Stockholder against any losses, claims,
damages or liabilities to which the Company or such Selling Stockholder may
become subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of any material fact
contained in any Registration Statement, the Prospectus, or any amendment or
supplement thereto, or any related preliminary prospectus, or arise out of or
are based upon the omission or the alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, in each case to the extent, but only to the extent, that such
untrue statement or alleged untrue statement or omission or alleged omission was
made in reliance upon and in conformity with written information furnished to
the Company by such Underwriter through the Representatives specifically for use
therein, and will reimburse any legal or other expenses reasonably incurred by
the Company and each Selling Stockholder in connection with investigating or
defending any such loss, claim, damage, liability or action as such expenses are
incurred, it being understood and agreed that the only such information
furnished by any Underwriter consists of the following information in the
Prospectus furnished on behalf of each Underwriter: the last
30
paragraph at the bottom of the cover page concerning the terms of the
offering by the Underwriters, the legend concerning over-allotments, stabilizing
and possible transactions pursuant to exemptions from Rules 10b-6 and 10b-7
under the Securities and Exchange Act of 1934 on the inside front cover page,
the concession and reallowance figures appearing in the fifth paragraph under
the caption "Underwriting" and the information contained in the sixth paragraph
under the caption "Underwriting".
(d) Promptly after receipt by an indemnified party under this Section
of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under
subsection (a), (b) or (c) above, notify the indemnifying party of the
commencement thereof; but the omission so to notify the indemnifying party will
not relieve it from any liability which it may have to any indemnified party
otherwise than under subsection (a), (b) or (c) above. In case any such action
is brought against any indemnified party and it notifies the indemnifying party
of the commencement thereof, the indemnifying party will be entitled to
participate therein and, to the extent that it may wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel satisfactory to such indemnified party (who shall not, except with the
consent of the indemnified party, be counsel to the indemnifying party; it being
understood, however, that the indemnifying party shall not be liable for the
expenses of more than one separate counsel, excluding local counsel,
representing all indemnified parties in connection with one action or separate
but similar and related actions), and after notice from the indemnifying party
to such indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party under this
Section for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened action in respect of which any indemnified party is or could have
been a party and indemnity could have been sought hereunder by such indemnified
party unless such settlement includes an unconditional release of such
indemnified party from all liability on any claims that are the subject matter
of such action.
(e) If the indemnification provided for in this Section is unavailable
or insufficient to hold harmless an indemnified party under subsection (a), (b)
or (c) above, then each indemnifying party shall contribute to the amount paid
or payable by such indemnified party as a result of the losses, claims, damages
or liabilities referred to in subsection (a), (b) or (c) above (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company and the Selling Stockholders on the one hand and the Underwriters on the
other
31
from the offering of the Securities or (ii) if the allocation provided by clause
(i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company and the Selling Stockholders on
the one hand and the Underwriters on the other in connection with the statements
or omissions which resulted in such losses, claims, damages or liabilities as
well as any other relevant equitable considerations. The relative benefits
received by the Company and the Selling Stockholders on the one hand and the
Underwriters on the other shall be deemed to be in the same proportion as the
total net proceeds from the offering (before deducting expenses) received by the
Company and the Selling Stockholders bear to the total underwriting discounts
and commissions received by the Underwriters. The relative fault shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company, the Selling
Stockholders or the Underwriters and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such untrue
statement or omission. The amount paid by an indemnified party as a result of
the losses, claims, damages or liabilities referred to in the first sentence of
this subsection (d) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any action or claim which is the subject of this subsection (d).
Notwithstanding the provisions of this subsection (d), no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Securities underwritten by it and distributed to the public
were offered to the public exceeds the amount of any damages which such
Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission, and no Selling
Stockholder shall be required to contribute any amount in excess of the total
net proceeds of the Offered Securities sold by such Selling Stockholder. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Underwriters' obligations in
this subsection (d) to contribute are several in proportion to their respective
underwriting obligations and not joint.
(f) The obligations of the Company and the Selling
Stockholders under this Section shall be in addition to any liability which the
Company and the Selling Stockholders may otherwise have and shall extend, upon
the same terms and conditions, to each person, if any, who controls any
Underwriter within the meaning of the Act; and the obligations of the
Underwriters under this Section shall be in addition to any liability which the
respective Underwriters may otherwise have and shall extend, upon the same terms
and conditions, to each director of the Company, to each officer of
32
the Company who has signed a Registration Statement and to each person, if any,
who controls the Company or any Selling Stockholder within the meaning of the
Act.
8. Default of Underwriters. If any Underwriter or Underwriters default
in their obligations to purchase Offered Securities hereunder on either the
First or any Optional Closing Date and the aggregate number of shares of Offered
Securities that such defaulting Underwriter or Underwriters agreed but failed to
purchase does not exceed 10% of the total number of shares of Offered Securities
that the Underwriters are obligated to purchase on such Closing Date, Credit
Suisse First Boston may make arrangements satisfactory to the Company and the
Selling Stockholders for the purchase of such Offered Securities by other
persons, including any of the Underwriters, but if no such arrangements are made
by such Closing Date, the non-defaulting Underwriters shall be obligated
severally, in proportion to their respective commitments hereunder, to purchase
the Offered Securities that such defaulting Underwriters agreed but failed to
purchase on such Closing Date. If any Underwriter or Underwriters so default and
the aggregate number of shares of Offered Securities with respect to which such
default or defaults occur exceeds 10% of the total number of shares of Offered
Securities that the Underwriters are obligated to purchase on such Closing Date
and arrangements satisfactory to Credit Suisse First Boston, the Company and the
Selling Stockholders for the purchase of such Offered Securities by other
persons are not made within 36 hours after such default, this Agreement will
terminate without liability on the part of any non-defaulting Underwriter, the
Company or the Selling Stockholders, except as provided in Section 9 (provided
that if such default occurs with respect to Optional Securities after the First
Closing Date, this Agreement will not terminate as to the Firm Securities or any
Optional Securities purchased prior to such termination). As used in this
Agreement, the term "Underwriter" includes any person substituted for an
Underwriter under this Section. Nothing herein will relieve a defaulting
Underwriter from liability for its default.
9. Survival of Certain Representations and Obligations. The respective
indemnities, agreements, representations, warranties and other statements of the
Selling Stockholders, of the Company or its officers and of the several
Underwriters set forth in or made pursuant to this Agreement will remain in full
force and effect, regardless of any investigation, or statement as to the
results thereof, made by or on behalf of any Underwriter, any Selling
Stockholder, the Company or any of their respective representatives, officers or
directors or any controlling person, and will survive delivery of and payment
for the Offered Securities. If this Agreement is terminated pursuant to Section
8 or if for any reason the purchase of the Offered Securities by the
Underwriters is not consummated, the Company and the Selling Stockholders shall
remain responsible for the expenses to be paid or reimbursed by them pursuant to
Section 5 and the respective obligations of the Company, the Selling
33
Stockholders and the Underwriters pursuant to Section 7 shall remain in effect,
and if any Offered Securities have been purchased hereunder the representations
and warranties in Section 2 and all obligations under Section 5 shall also
remain in effect. If the purchase of the Offered Securities by the Underwriters
is not consummated for any reason other than solely because of the termination
of this Agreement pursuant to Section 8 or the occurrence of any event specified
in clause (iii), (iv) or (v) of Section 6(c), the Company will reimburse the
Underwriters for all out-of-pocket expenses (including fees and disbursements of
counsel) reasonably incurred by them in connection with the offering of the
Offered Securities.
10. Notices. All communications hereunder will be in writing and, if
sent to the Underwriters, will be mailed, delivered or telegraphed and confirmed
to the Representatives, c/o Credit Suisse First Boston Corporation, Eleven
Madison Avenue, New York, N.Y. 10010, Attention: Investment Banking Department
-- Transactions Advisory Group, or, if sent to the Company, will be mailed,
delivered or telegraphed and confirmed to it at 00 Xxxxx Xxxx., Xxxxx 000,
Xxxxxxxx, XX 00000, Attention: Xxxxx X. Xxxxx, or, if sent to the Selling
Stockholders or any of them, will be mailed, delivered or telegraphed and
confirmed to the Selling Stockholders' attorneys-in-fact as follows: (i) Xxxxxxx
X. Xxxxxx, Xx. at Princeton Orthopedic Associates, 000 Xxxxxxxxx Xxxxxx,
Xxxxxxxxx, XX 00000, (ii) Xxxxx Xxxxxx at Tallahassee Orthopedic Clinic, 0000
Xxxxxxx Xxxxxxx Xxxxxxxxx, Xxxxxxxxxxx, XX 00000 and (iii) Xxxx Xxxxxxx at The
Xxxxxxx Institute, 000 Xxxxxx Xxxxxx, Xxxxxxxxxxxx, XX 00000; provided, however,
that any notice to an Underwriter pursuant to Section 7 will be mailed,
delivered or telegraphed and confirmed to such Underwriter.
11. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective personal representatives
and successors and the officers and directors and controlling persons referred
to in Section 7, and no other person will have any right or obligation
hereunder.
12. Representation of Underwriters. The Representatives will act for
the several Underwriters in connection with this financing, and any action under
this Agreement taken by the Representatives jointly or by Credit Suisse First
Boston will be binding upon all the Underwriters. _______________ will act for
the Selling Stockholders in connection with such transactions, and any action
under or in respect of this Agreement taken by _______________ will be binding
upon all the Selling Stockholders.
13. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement.
34
14. Applicable Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of New York, without regard to
principles of conflicts of laws.
The Company hereby submits to the non-exclusive jurisdiction of the
Federal and state courts in the Borough of Manhattan in The City of New York in
any suit or proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby.
35
If the foregoing is in accordance with the Representatives'
understanding of our agreement, kindly sign and return to the Company one of the
counterparts hereof, whereupon it will become a binding agreement between the
Company and the several Underwriters in accordance with its terms.
Very truly yours,
SPECIALTY CARE NETWORK, INC.
By.........................
Title:
XXXXXX FAMILY HOLDING COMPANY,
L.L.C.
XXXX X. XXXXXX and XXXXXX
XXXXXX, JTWROS
XXXXXXX X. and XXXXXXXX X.
XXXXXXXX, JTWROS
GECHA FAMILY HOLDING COMPANY,
L.L.C.
W. XXXXXX XXXXXXXX
XXXXXXX X. XXXXXX and XXX X.
XXXXXX, JTWROS
XXXXXXX X. XXXXXX
XXXXX X. XXXXXXX and XXXXX
XXXXXXX, JTWROS
XXXXXXXXX X. XXXXXXX and
XXXXXXXX X. XXXXXXX, JTWROS
By.........................
Title: Attorney-in-Fact
The foregoing Underwriting Agreement is hereby confirmed and accepted as of the
date first above written.
CREDIT SUISSE FIRST BOSTON
CORPORATION
EQUITABLE SECURITIES
CORPORATION
XXXXXX BROTHERS INC.
By CREDIT SUISSE FIRST
BOSTON CORPORATION
By..........................
Title:
SCHEDULE A
Number of
Firm Securities
Selling Stockholder to be Sold
------------------- ---------------
Xxxxxx Family Holding Company, L.L.C. 20,518
Xxxx X. Xxxxxx and Xxxxxx Xxxxxx, JTWROS 22,000
Xxxxxxx X. and Xxxxxxxx X. Xxxxxxxx, JTWROS 22,964
Gecha Family Holding Company, L.L.C. 20,518
W. Xxxxxx Xxxxxxxx 20,518
Xxxxxxx X. Xxxxxx and Xxx X. Xxxxxx, JTWROS 24,062
Xxxxxxx X. Xxxxxx 20,518
Xxxxx X. Xxxxxxx and Xxxxx Xxxxxxx, JTWROS 22,964
Xxxxxxxxx X. Xxxxxxx and Xxxxxxxx X. Xxxxxxx, JTWROS 24,000
SCHEDULE B
Number of
Underwriter Firm Securities
----------- ---------------
CREDIT SUISSE FIRST BOSTON CORPORATION .......................
EQUITABLE SECURITIES CORPORATION...............................
XXXXXX BROTHERS INC............................................
----------------
Total............................... ================
SCHEDULE C
Greater Chesapeake Orthopaedic Associates, L.L.C.
Princeton Orthopaedic Associates II, P.A.
Reconstructive Orthopaedic Associates II, P.C.
TOC Specialists, P.L.
Vero Orthopaedics II, P.A.
SCHEDULE D
Xxxxxxx X. and Xxxxxxx X. Xxxxxxxxxx, JTWROS
Xxxxxx Xxxxx
Xxxxxx Xxxxxx
Xxxxxxx X. Xxxx
Xxxxxxx and Xxxxxx Xxxxx, JTWROS
Xxxxxx X. Xxxxxx, M.D.
EXHIBIT A
Credit Suisse First Boston Corporation, et al.
February ___, 1997
Page 1
February ___, 1997
Credit Suisse First Boston Corporation
Equitable Securities Corporation
Xxxxxx Brothers Inc.
As Representatives of the Several Underwriters
c/o Credit Suisse First Boston Corporation
Eleven Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Re: Sale of 3,198,062 shares of Common Stock, $.001 par value,
of Specialty Care Network, Inc.
Ladies and Gentlemen:
We have acted as counsel to Specialty Care Network, Inc. (the "Company") in
connection with the public offering on February ___, 1997 (the "Offering") of
3,198,062 shares (the "Securities") of the Company's Common Stock, $.001 par
value (the "Common Stock"). We have been requested pursuant to Section 6(f) of
that certain Underwriting Agreement dated February ___, 1997 (the "Agreement")
among the Company and certain selling stockholders, on the one hand, and Credit
Suisse First Boston Corporation, Equitable Securities Corporation and Xxxxxx
Brothers Inc., as representatives of the several underwriters, on the other hand
(the "Underwriters") to render our opinion with respect to certain legal matters
affecting the Offering and the Agreement. For purposes of this letter, all
capitalized terms not otherwise defined herein shall have the meanings ascribed
to such terms in the Agreement.
Factual Matters; Documents Relied Upon
In rendering our opinion, we have relied, with respect to factual matters, upon
written statements by executive officers of the Company, including the Officers'
Certificate referred to below. In addition thereto, with respect to factual
matters, we have reviewed and relied upon such documents and instruments
identified to our satisfaction as we have deemed necessary for purposes of
rendering our opinions, including, without limitation, the following:
1. Registration Statement on Form S-1 filed on December 11, 1996 with the
Securities and Exchange Commission (the "Commission") under the Securities Act
of 1933 (the
Credit Suisse First Boston Corporation, et al.
February ___, 1997
Page 2
"1933 Act") under file number 333-17627, as amended by Amendment No. 1
filed with the Commission on December 13, 1996, Amendment No. 2 filed with the
Commission on January 21, 1997, and Amendment No. 3 filed with the Commission on
February ___, 1997 (collectively, the "Registration Statement");
2. The Company's Preliminary Prospectus dated January 21, 1997, as filed
with the Commission as part of Amendment No. 2 to the Registration Statement;
3. The Prospectus filed with the Commission on February ___, 1997 pursuant
to Rule 424(b) and Rule 430A under the Securities Act of 1933, as amended;
4. Certificate of the Company dated February ___, 1997 signed by the
President and Chief Financial Officer with respect to the accuracy of
representations and warranties in the Agreement (the "Officers' Certificate");
and
5. The Agreement.
We have assumed that the foregoing documents and all other documents we have
reviewed are authentic, if submitted to us as originals, or in absolute
conformity with originals, if submitted to us as copies, and that all signatures
thereupon are genuine in all respects.
Opinion
Subject to the assumptions, exceptions and limitations hereinabove and
hereinafter stated, it is our opinion that:
(i) The business of the Company as disclosed in the Prospectus (including
the consummation of the Initial Affiliation Transactions) and the terms of each
Service Agreement and the transactions contemplated thereby do not violate in
any material respect any federal health care statute, administrative or
governmental rule or regulation applicable to the Company, any of its
subsidiaries or any of the Affiliated Practices, including, but not limited to,
42 U.S.C. (section)1395nn, 42 U.S.C. (section)1396b(s) or 42 U.S.C.
(section)1320a-7b(b).
(ii) Based solely on our review of generally published compilations of
state health care statutes and regulations for the states in which the
Affiliated Practices are located (the "Affiliated Practice States"), we have no
reason to believe that the business of the Company as disclosed in the
Prospectus (including consummation of the Initial Affiliation Transactions) and
the terms of each Service Agreement and the transactions contemplated thereby
violate in any material respect any health care statute, administrative or
governmental rule or regulation applicable to the Company in the Affiliated
Practice States. Moreover, we are not aware of any reported judicial decision in
any Affiliated Practice State whose holding when applied to the
Credit Suisse First Boston Corporation, et al.
February ___, 1997
Page 3
specific facts (of which we have knowledge) of the Company's relationship
between the Company and the Affiliated Practices would be reasonably likely to
result in a holding that such relationship is illegal or otherwise void as a
matter of public policy; provided, however, that we have not conducted an
independent legal inquiry into the foregoing matter.
(iii) We have no reason to believe that the disclosure in the Registration
Statement under the captions "Risk Factors - Government Regulation" or "Business
- Government Regulation and Supervision" as of the effective date of the
Registration Statement or as of the Closing Date contained any untrue statement
of a material fact or omitted to state any material fact required to be stated
therein or necessary to make the statements therein not misleading, or that the
disclosure in the Prospectus under the captions "Risk Factors - Government
Regulation" or "Business - Government Regulation and Supervision" as of its
issue date or as of the Closing Date contained any untrue statement of a
material fact or omitted to state any material fact necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading.
(iv) The statements made in the Registration Statement and Prospectus under
the captions "Risk Factors - Government Regulation" and "Business - Government
Regulation and Supervision," insofar as they purport to constitute summaries of
the terms of statutes, rules and regulations and legal and governmental
proceedings and other documents, constitute accurate summaries of the terms of
such statutes, rules and regulations and legal and governmental proceedings and
other documents in all material respects.
Assumptions and Qualifications
The foregoing opinions are based upon and subject to the assumptions,
qualifications, limitations and exceptions set forth below.
1. We have made no independent investigation or inquiry as to the accuracy
or completeness of any representation, warranty, data, certificate or other
information, written or oral, including, without limitation, those made or
furnished to us in connection with the transaction contemplated by the Agreement
and those contained in the Officers' Certificate.
2. Any reference herein to our "knowledge" or words of similar import
refers only to the actual knowledge of those shareholders and associates of our
firm who have performed legal services in the course of our representation of
the Company in connection with the Offering, the Agreement, any material
litigation affecting the Company and its successors or the Initial Affiliation
Transactions. Any reference herein to our knowledge shall not imply that we have
or assume any obligation to exercise, or have in fact exercised, any inquiry
into the matters with respect to which we have provided an opinion based on such
knowledge or lack thereof.
Credit Suisse First Boston Corporation, et al.
February ___, 1997
Page 4
3. The subject of health care regulation is rapidly changing, both at the
legislative and regulatory levels, and there is little, if any, interpretative
guidance in respect of most health care statutes and rules and regulations.
Accordingly, the opinions stated above are based upon statutes, rules,
regulations and other authorities existing and effective as of the date of this
letter and are reliable only to the extent such authorities remain materially
the same, and we undertake no responsibility to update or supplement any such
opinion in the event of or in response to any subsequent changes in or other
development of the law or said authorities, or upon the occurrence after the
date hereof of events or circumstances that, if occurring prior to the date
hereof, might have resulted in different opinions from those stated above.
4. We are licensed to practice law only in the State of Tennessee, and,
without limiting our statements in paragraph (ii) above, we express no opinion
with respect to the effect of any laws other than the laws of Tennessee and the
United States of America.
5. This opinion letter has been delivered solely for the benefit of the
Underwriters, and no other person or entity shall be entitled to rely hereon
without the express written consent of this firm.
6. The opinions expressed above are limited to the legal matters
specifically addressed, and no opinion is to be implied or inferred beyond the
legal matters expressly so addressed.
Yours very truly,
BAKER, DONELSON, BEARMAN &
XXXXXXXX, a professional corporation
By:
----------------------------------
Xxxx X. Good, a member of the firm
EXHIBIT B
As of February 1, 1997
SPECIALTY CARE NETWORK, INC.
00 Xxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxx, Xxxxxxxx 00000
CREDIT SUISSE FIRST BOSTON CORPORATION
EQUITABLE SECURITIES CORPORATION
XXXXXX BROTHERS INC.
As Representatives of the Several Underwriters,
c/o Credit Suisse First Boston Corporation,
Eleven Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
As an inducement to the Underwriters to execute the Underwriting
Agreement, relating to an offering of the Common Stock (the "Securities") of
Specialty Care Network, Inc. (the "Company") pursuant to a Registration
Statement on Form S-1 (File No. 333-17627), the undersigned hereby agrees that,
for a period of 180 days after the initial public offering of the Securities
pursuant to the Underwriting Agreement to which you are or expect to become
parties, neither the undersigned nor any trusts holding Securities over which
the undersigned has sole or shared investment power will offer, sell, contract
to sell, pledge or otherwise dispose of, directly or indirectly, any shares of
the Securities or securities convertible into or exchangeable or exercisable for
any shares of Securities, or publicly disclose the intention to make any such
offer, sale, pledge or disposal without the prior written consent of Credit
Suisse First Boston Corporation, except subsequent sales of the Securities
purchased in the initial public offering of the Securities or otherwise
purchased in the public market following the initial public offering of the
Securities; provided, however, that the undersigned may transfer Securities or
options to purchase Securities, without the consent of Credit Suisse First
Boston Corporation, to (i) trusts primarily for the benefit of the undersigned
or members of the undersigned's immediate family or (ii) pursuant to a bona fide
gift to any other person, so long as in each case any such transferee executes
and delivers an agreement in substantially the same form and content as this
agreement.
In furtherance of the foregoing, the Company and its transfer agent and
registrar are hereby authorized to decline to
make any transfer of shares of Securities if such transfer would constitute a
violation or breach of this Agreement.
This Agreement shall be binding on the undersigned and the respective
successors, heirs, personal representatives and assigns of the undersigned. This
agreement shall lapse and become null and void if the public offering
contemplated by the Underwriting Agreement is terminated prior to the First
Closing Date (as defined in said agreement) or if the initial public offering of
the Securities shall not have occurred on or before March 31, 1997.
Very truly yours,
.............................................
Name:
