EXHIBIT 1.1
ODYSSEY HEALTHCARE, INC.
(a Delaware corporation)
[ ] Shares of Common Stock
FORM OF PURCHASE AGREEMENT
Dated: [ ], 2002
Table of Contents
Page
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PURCHASE AGREEMENT.......................................................................................1
SECTION 1. Representations and Warranties.........................................................2
(a) Representations and Warranties by the Company..........................................2
(i) Compliance with Registration Requirements.....................................3
(ii) Independent Accountants.......................................................3
(iii) Financial Statements..........................................................4
(iv) No Material Adverse Change in Business........................................4
(v) Good Standing of the Company..................................................4
(vi) Good Standing of Subsidiaries.................................................4
(vii) Capitalization................................................................5
(viii) Authorization of Agreement....................................................6
(ix) Authorization and Description of Securities...................................6
(x) Absence of Defaults and Conflicts.............................................6
(xi) Absence of Labor Dispute......................................................6
(xii) Absence of Proceedings........................................................7
(xiii) Accuracy of Contract Descriptions and Exhibits................................7
(xiv) Possession of Intellectual Property...........................................7
(xv) Absence of Further Requirements...............................................7
(xvi) Possession of Licenses and Permits............................................8
(xvii) Accounts Receivable...........................................................8
(xviii) Compliance with Social Security Act and Other Federal Enforcement
Initiatives...................................................................8
(xix) Regulatory Filings............................................................9
(xx) Title to Property.............................................................9
(xxi) Investment Company Act.......................................................10
(xxii) Environmental Laws...........................................................10
(xxiii) Registration Rights..........................................................11
(xxiv) Insurance....................................................................11
(xxv) Tax Returns and Payment of Taxes.............................................11
(xxvi) No Stabilization or Manipulation.............................................12
(xxvii) Certain Transactions.........................................................12
(xxviii) Statistical and Market Data..................................................12
(xxix) Accounting and Other Controls................................................12
(xxx) Stockholder Rights Plan......................................................12
(b) Representations and Warranties by the Selling Shareholders............................12
(i) Accurate Disclosure..........................................................12
(ii) Authorization of Agreements..................................................13
(iii) Record and Beneficial Ownership..............................................13
(iv) Due Execution of Power of Attorney and Custody Agreement.....................14
(v) Absence of Manipulation......................................................14
(vi) Absence of Further Requirements..............................................14
(vii) Restriction on Sale of Securities............................................15
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(viii) Certificates Suitable for Transfer...........................................15
(ix) No Association with NASD.....................................................15
(c) Additional Representations and Warranties by the Management Selling Shareholders......15
(d) Officer's Certificates................................................................16
SECTION 2. Sale and Delivery to Underwriters; Closing............................................16
(a) Initial Securities....................................................................16
(b) Option Securities.....................................................................16
(c) Payment...............................................................................17
(d) Denominations; Registration...........................................................18
SECTION 3. Covenants of the Company..............................................................18
(a) Compliance with Securities Regulations and Commission Requests........................18
(b) Filing of Amendments..................................................................18
(c) Delivery of Registration Statements...................................................19
(d) Delivery of Prospectus................................................................19
(e) Continued Compliance with Securities Laws.............................................19
(f) Blue Sky Qualifications...............................................................20
(g) Rule 158..............................................................................20
(h) Listing...............................................................................20
(i) Restriction on Sale of Securities.....................................................20
(j) Reporting Requirements................................................................21
SECTION 4. Payment of Expenses...................................................................21
(a) Expenses..............................................................................21
(b) Expenses of the Selling Shareholders..................................................22
(c) Termination of Agreement..............................................................22
(d) Allocation of Expenses................................................................22
SECTION 5. Conditions of Underwriters' Obligations...............................................22
(a) Effectiveness of Registration Statement...............................................22
(b) Opinion of Counsel for Company........................................................23
(c) Opinion of Counsel for the Selling Shareholders.......................................23
(d) Opinion of Counsel for Underwriters...................................................23
(e) Officers' Certificate.................................................................23
(f) Certificate of the Selling Shareholders...............................................24
(g) Accountant's Comfort Letter...........................................................24
(h) Bring-down Comfort Letter.............................................................24
(i) Approval of Listing...................................................................24
(j) No Objection..........................................................................24
(k) Lock-up Agreements....................................................................25
(l) Form W-8 or W-9.......................................................................25
(m) Conditions to Purchase of Option Securities...........................................25
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(i) Officers' Certificate........................................................25
(ii) Certificate of Selling Shareholders..........................................25
(iii) Opinion of Counsel for Company...............................................25
(iv) Opinion of Counsel for the Selling Shareholders..............................25
(v) Opinion of Counsel for Underwriters..........................................26
(vi) Bring-down Comfort Letter....................................................26
(n) Additional Documents..................................................................26
(o) Termination of Agreement..............................................................26
SECTION 6. Indemnification.......................................................................26
(a) Indemnification of Underwriters by the Company and the Management Selling
Shareholders..........................................................................26
(b) Indemnification of the Underwriters by the Non-Management Selling Shareholders........29
(c) Indemnification of Company, Directors and Officers and Selling Shareholders...........30
(d) Actions against Parties; Notification.................................................30
(e) Settlement without Consent if Failure to Reimburse....................................31
(f) Other Agreements with Respect to Indemnification......................................31
SECTION 7. Contribution..........................................................................31
SECTION 8. Representations, Warranties and Agreements to Survive Delivery........................32
SECTION 9. Termination of Agreement..............................................................33
(a) Termination; General..................................................................33
(b) Liabilities...........................................................................33
SECTION 10. Default by One or More of the Underwriters............................................33
SECTION 11. Default by One or More of the Selling Shareholders....................................35
SECTION 12. Notices...............................................................................35
SECTION 13. Parties...............................................................................35
SECTION 14. GOVERNING LAW AND TIME................................................................36
SECTION 15. Effect of Headings....................................................................36
SCHEDULES
Schedule A - List of Underwriters.............................................................Sch A-1
Schedule B - List of Selling Shareholders.....................................................Sch B-1
Schedule C Pricing Information..............................................................Sch C-1
Schedule D - List of Persons Subject to Lock-up...............................................Sch D-1
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EXHIBITS
Exhibit A - Form of Opinion of Company's Counsel.................................................A-1
Exhibit ▇-▇ - ▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ LLP....................................B-1
Exhibit B-2 - Form of Opinion of Venture Law Group.................................................B-2
Exhibit C - Form of Lock-up Letter...............................................................C-1
Exhibit D - Significant Subsidiaries.............................................................D-1
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ODYSSEY HEALTHCARE, INC.
(a Delaware corporation)
[ ] Shares of Common Stock
(Par Value $.001 Per Share)
PURCHASE AGREEMENT
[ ] , 2002
▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
Banc of America Securities LLC
as Representatives of the several Underwriters
▇/▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Ladies and Gentlemen:
Odyssey HealthCare, Inc., a Delaware corporation (the "Company"), and
the persons listed in Schedule B hereto (the "Selling Shareholders") confirm
their respective agreements with ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., ▇▇▇▇▇▇▇ Lynch, Pierce,
▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated ("▇▇▇▇▇▇▇ ▇▇▇▇▇") and each of the other Underwriters
named in Schedule A hereto (collectively, the "Underwriters", which term shall
also include any underwriter substituted as hereinafter provided in Section 10
hereof), for whom ▇▇▇▇▇▇▇ ▇▇▇▇▇, and Banc of America Securities LLC, are acting
as representatives (in such capacity, the "Representatives"), with respect to
(i) the sale by the Selling Shareholders other than the Option Securities
Selling Shareholders (as defined herein), acting severally and not jointly, and
the purchase by the Underwriters, acting severally and not jointly, of the
respective numbers of shares of Common Stock, par value $.001 per share, of the
Company ("Common Stock") set forth in Schedules A and B hereto and (ii) the
grant by the Management Selling Shareholders (as defined herein), ▇▇▇▇▇ ▇. ▇▇▇▇▇
and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ (the "Option Securities Selling Shareholders") to the
Underwriters, acting severally and not jointly, of the option described in
Section 2(b) hereof to purchase all or any part of additional shares of
Common Stock to cover over-allotments, if any. The aforesaid shares of
Common Stock (the "Initial Securities") to be purchased by the Underwriters
Exhibit D-1
and all or any part of the [ ] shares of Common Stock subject to the option
described in Section 2(b) hereof (the "Option Securities") are hereinafter
called, collectively, the "Securities."
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ are
hereinafter collectively called the "Management Selling Shareholders." The
Selling Shareholders other than the Management Selling Shareholders are
hereinafter called the "Non-Management Selling Shareholders."
The Company and the Selling Shareholders understand that the
Underwriters propose to make a public offering of the Securities as soon as the
Representatives deem advisable after this Agreement has been executed and
delivered.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-1 (No. 333-[ ]) covering the
registration of the Securities under the Securities Act of 1933, as amended (the
"1933 Act"), including the related preliminary prospectus or prospectuses.
Promptly after execution and delivery of this Agreement, the Company will
prepare and file a prospectus in accordance with the provisions of Rule 430A
("Rule 430A") of the rules and regulations of the Commission under the 1933 Act
(the "1933 Act Regulations") and paragraph (b) of Rule 424 ("Rule 424(b)") of
the 1933 Act Regulations. The information included in such prospectus that was
omitted from such registration statement at the time it became effective but
that is deemed to be part of such registration statement at the time it became
effective pursuant to paragraph (b) of Rule 430A is referred to as "Rule 430A
Information." Each prospectus used before such registration statement became
effective, and any prospectus that omitted the Rule 430A Information that was
used after such effectiveness and prior to the execution and delivery of this
Agreement, is herein called a "preliminary prospectus." Such registration
statement, including the exhibits thereto and schedules thereto at the time it
became effective and including the Rule 430A Information is herein called the
"Registration Statement." Any registration statement filed pursuant to Rule
462(b) of the 1933 Act Regulations is herein referred to as the "Rule 462(b)
Registration Statement," and after such filing the term "Registration Statement"
shall include the Rule 462(b) Registration Statement. The final prospectus in
the form first furnished to the Underwriters for use in connection with the
offering of the Securities is herein called the "Prospectus." For purposes of
this Agreement, all references to the Registration Statement, any preliminary
prospectus, the Prospectus or any amendment or supplement to any of the
foregoing shall be deemed to include the copy filed with the Commission pursuant
to its Electronic Data Gathering, Analysis and Retrieval system ("▇▇▇▇▇").
SECTION 1. Representations and Warranties.
(a) Representations and Warranties by the Company. The Company
represents and warrants to each Underwriter as of the date hereof, as of the
Closing Time referred to
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in Section 2(c) hereof, and as of each Date of Delivery (if any) referred to in
Section 2(b) hereof, and agrees with each Underwriter, as follows:
(i) Compliance with Registration Requirements. Each of the
Registration Statement and any Rule 462(b) Registration Statement has
become effective under the 1933 Act and no stop order suspending the
effectiveness of the Registration Statement or any Rule 462(b)
Registration Statement has been issued under the 1933 Act and no
proceedings for that purpose have been instituted or are pending or, to
the knowledge of the Company, are contemplated or threatened by the
Commission, and any request on the part of the Commission for
additional information has been complied with or resolved.
At the respective times the Registration Statement, any Rule
462(b) Registration Statement and any post-effective amendments thereto
became effective and at Closing Time (and, if any Option Securities are
purchased, at the Date of Delivery), the Registration Statement, the
Rule 462(b) Registration Statement and any amendments and supplements
thereto complied and will comply in all material respects with the
requirements of the 1933 Act and the 1933 Act Regulations and did not
and will not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to
make the statements therein not misleading. Neither the Prospectus nor
any amendment or supplement thereto, at the time the Prospectus or any
amendment or supplement thereto was issued and at Closing Time (and, if
any Option Securities are purchased, at the Date of Delivery), included
or will include an untrue statement of a material fact or omitted or
will omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading. The representations and warranties in this
subsection shall not apply to statements in or omissions from the
Registration Statement or the Prospectus made in reliance upon and in
conformity with information furnished to the Company in writing by any
Underwriter through the Representatives expressly for use in the
Registration Statement or the Prospectus.
Each preliminary prospectus and the prospectus filed as part
of the Registration Statement as originally filed or as part of any
amendment thereto, or filed pursuant to Rule 424 under the 1933 Act,
complied when so filed in all material respects with the 1933 Act
Regulations and each preliminary prospectus and the Prospectus
delivered to the Underwriters for use in connection with this offering
was identical to the electronically transmitted copies thereof filed
with the Commission pursuant to ▇▇▇▇▇, except to the extent permitted
by Regulation S-T.
(ii) Independent Accountants. Ernst & Young LLP are
independent public accountants as required by the 1933 Act and the 1933
Act Regulations.
3
(iii) Financial Statements. The financial statements included
in the Registration Statement and the Prospectus, together with the
related schedules and notes, present fairly the financial position of
the Company and its consolidated subsidiaries at the dates indicated
and the statement of operations, stockholders' equity and cash flows of
the Company and its consolidated subsidiaries for the periods
specified; said financial statements have been prepared in conformity
with generally accepted accounting principles ("GAAP") applied on a
consistent basis throughout the periods involved. The supporting
schedules included in the Registration Statement present fairly in
accordance with GAAP the information required to be stated therein. The
selected consolidated financial and operating data and the summary
consolidated financial and operating data included in the Prospectus
present fairly the information shown therein and, in the cases of the
selected consolidated financial data and the summary consolidated
financial data, has been compiled on a basis consistent with that of
the audited financial statements included in the Registration
Statement.
(iv) No Material Adverse Change in Business. Since the
respective dates as of which information is given in the Registration
Statement and the Prospectus, except as otherwise stated therein, (A)
there has been no material adverse change in the condition, financial
or otherwise, or in the earnings, business affairs or business
prospects of the Company and its subsidiaries considered as one
enterprise, whether or not arising in the ordinary course of business
(a "Material Adverse Effect"), (B) there have been no transactions
entered into by the Company or any of its subsidiaries, other than
those in the ordinary course of business, which are material with
respect to the Company and its subsidiaries considered as one
enterprise, and (C) there has been no dividend or distribution of any
kind declared, paid or made by the Company on any class of its capital
stock.
(v) Good Standing of the Company. The Company has been duly
organized and is validly existing as a corporation in good standing
under the laws of the State of Delaware and has corporate power and
authority to own, lease and operate its properties and to conduct its
business as described in the Prospectus and to enter into and perform
its obligations under this Agreement; and the Company is duly qualified
as a foreign corporation to transact business and is in good standing
in each other jurisdiction in which such qualification is required,
whether by reason of the ownership or leasing of property or the
conduct of business, except where the failure so to qualify or to be in
good standing would not result in a Material Adverse Effect.
(vi) Good Standing of Subsidiaries. Each significant
subsidiary of the Company set forth on Exhibit D attached hereto (each,
a "Significant Subsidiary") has been duly organized and is validly
existing as a corporation, limited liability company or limited
partnership in good standing under the laws of the jurisdiction of its
incorporation or organization, has corporate, partnership or other
4
organization power and authority to own, lease and operate its
properties and to conduct its business as described in the Prospectus
and is duly qualified as a foreign corporation, limited liability
company or limited partnership to transact business and is in good
standing in each jurisdiction in which such qualification is required,
whether by reason of the ownership or leasing of property or the
conduct of business, except where the failure so to qualify or to be in
good standing would not result in a Material Adverse Effect; all of the
issued and outstanding capital stock or other ownership interests of
each subsidiary of the Company has been duly authorized and validly
issued, is fully paid and non-assessable and is owned by the Company,
directly or through subsidiaries, free and clear of any security
interest, mortgage, pledge, lien, encumbrance, claim, equity or charge
of any kind (collectively, "Liens"), except that the Company has a 66%
limited partnership interest and a 1% general partnership interest in
Hospice of Houston, L.P.; none of the outstanding shares of capital
stock or other ownership interests of any subsidiary of the Company was
issued in violation of the preemptive or similar rights of any
securityholder of such subsidiary. The only subsidiaries of the Company
are the subsidiaries listed on Exhibit 21.1 to the Registration
Statement.
(vii) Capitalization. The authorized, issued and outstanding
capital stock of the Company is as set forth in the Prospectus under
the caption "Capitalization" (except for subsequent issuances, if any,
pursuant to reservations, agreements or employee benefit plans referred
to in the Prospectus or pursuant to the exercise of convertible
securities, options or warrants referred to in the Prospectus). The
shares of issued and outstanding capital stock of the Company,
including the Securities to be purchased by the Underwriters from the
Selling Shareholders, have been duly authorized and validly issued and
are fully paid and non-assessable; none of the outstanding shares of
capital stock of the Company, including the Securities to be purchased
by the Underwriters from the Selling Shareholders, was issued in
violation of the preemptive or other similar rights of any
securityholder of the Company. The shares of issued and outstanding
capital stock of the Company, including the Securities to be purchased
by the Underwriters from the Selling Shareholders, have been issued in
compliance in all material respects with all federal and state
securities laws. Except as disclosed in the Prospectus, there are no
outstanding options or warrants to purchase, or any preemptive rights
or other rights to subscribe for or to purchase, any securities or
obligations convertible into, or any contracts or commitments to issue
or sell, shares of the Company's capital stock or any such options,
warrants, rights, convertible securities or obligations. The
description of the Company's stock option, equity-based compensation
and stock purchase plans and the options or other rights granted and
exercised thereunder as set forth in the Prospectus accurately and
fairly describe in all material respects the information required to be
shown with respect to such plans, arrangements, options and rights.
5
(viii) Authorization of Agreement. This Agreement has been
duly authorized, executed and delivered by the Company.
(ix) Authorization and Description of Securities. The
Securities to be purchased by the Underwriters from the Selling
Shareholders have been validly issued and are fully paid and
non-assessable; the Common Stock conforms to all statements relating
thereto contained in the Prospectus and such description conforms to
the rights set forth in the instruments defining the same; no holder of
the Securities will be subject to personal liability by reason of being
such a holder; and the issuance of the Securities is not subject to the
preemptive or other similar rights of any securityholder of the
Company.
(x) Absence of Defaults and Conflicts. Neither the Company nor
any of its subsidiaries is in violation of its charter or bylaws or
other organizational documents or in default in the performance or
observance of any obligation, agreement, covenant or condition
contained in any contract, indenture, mortgage, deed of trust, loan or
credit agreement, note, lease or other agreement or instrument to which
the Company or any of its subsidiaries is a party or by which it or any
of them may be bound, or to which any of the property or assets of the
Company or any subsidiary is subject (collectively, "Agreements and
Instruments") except for such defaults that would not result in a
Material Adverse Effect; and the execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated
herein and in the Registration Statement (including the sale of the
Securities). Compliance by the Company with its obligations hereunder
has been duly authorized by all necessary corporate action and does not
or will not violate any provision of the charter and bylaws or other
organizational document of the Company or any subsidiary and (except
for such conflicts, breaches, defaults, Liens or violations that would
not result in a Material Adverse Effect) does not and will not, whether
with or without the giving of notice or passage of time or both,
conflict with or constitute a breach of, or default or Repayment Event
(as defined below) under, or result in the creation or imposition of
any Lien upon any property or assets of the Company or any subsidiary
pursuant to, the Agreements and Instruments or violate any applicable
law, statute, rule, regulation, judgment, order, writ or decree of any
government, government instrumentality or court, domestic or foreign,
having jurisdiction over the Company or any subsidiary or any of their
assets, properties or operations. As used herein, a "Repayment Event"
means any event or condition which gives the holder of any note,
debenture or other evidence of indebtedness (or any person acting on
such holder's behalf) the right to require the repurchase, redemption
or repayment of all or a portion of such indebtedness by the Company or
any subsidiary.
(xi) Absence of Labor Dispute. No labor dispute with the
employees of the Company or any subsidiary exists or, to the knowledge
of the Company, is
6
imminent, and the Company is not aware of any existing or imminent
labor disturbance by the employees of any of its or any of its
subsidiary's principal suppliers, which, in either case, would result
in a Material Adverse Effect.
(xii) Absence of Proceedings. There is no action, suit,
proceeding, inquiry or investigation before or brought by any court or
governmental agency or body now pending (other than actions, suits or
proceedings under seal, or, to the knowledge of the Company, threatened
or under seal, against or affecting the Company or any subsidiary,
which is required to be disclosed in the Registration Statement (other
than as disclosed therein), or which would result in a Material Adverse
Effect, or which would materially and adversely affect the properties
or assets thereof or the consummation of the transactions contemplated
in this Agreement or the performance by the Company of its obligations
hereunder; the aggregate of all pending legal or governmental
proceedings to which the Company or any subsidiary is a party or of
which any of their respective property or assets is the subject which
are not described in the Registration Statement, including ordinary
routine litigation incidental to the business, would not result in a
Material Adverse Effect.
(xiii) Accuracy of Contract Descriptions and Exhibits. All of
the descriptions of contracts or other documents contained in the
Registration Statement and the Prospectus are accurate descriptions of
such contracts or other documents in all material respects. There are
no contracts or documents which are required to be described in the
Registration Statement or the Prospectus or to be filed as exhibits
thereto which have not been so described or filed.
(xiv) Possession of Intellectual Property. The Company and its
subsidiaries own or possess, or can acquire on reasonable terms,
adequate patents, patent rights, licenses, inventions, copyrights,
know-how (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or
procedures), trademarks, service marks, trade names or other
intellectual property (collectively, "Intellectual Property") necessary
to carry on the business now operated by them, and neither the Company
nor any of its subsidiaries has received any notice or is otherwise
aware of any infringement of or conflict with asserted rights of others
with respect to any Intellectual Property or of any facts or
circumstances which would render any Intellectual Property invalid or
inadequate to protect the interest of the Company or any of its
subsidiaries therein, and which infringement or conflict (if the
subject of any unfavorable decision, ruling or finding) or invalidity
or inadequacy, singly or in the aggregate, would result in a Material
Adverse Effect.
(xv) Absence of Further Requirements. No filing with, or
authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or
agency is necessary or required for the performance
7
by the Company of its obligations hereunder, in connection with the
offering, issuance or sale of the Securities hereunder or the
consummation of the transactions contemplated by this Agreement, except
such as have been already obtained or as may be required under the 1933
Act or the 1933 Act Regulations or state securities or blue sky laws.
(xvi) Possession of Licenses and Permits. The Company and its
subsidiaries possess such permits, licenses, provider numbers,
certificates, approvals (including certificate of need approvals),
consents, orders, certifications (including certification under the
Medicare and Medicaid programs), accreditations (including,
accreditation by the Joint Commission on Accreditation of Healthcare
Organizations) and other authorizations (collectively, "Governmental
Licenses") issued by, and have made all declarations and filings with,
the appropriate federal, state or local regulatory agencies or bodies
necessary to conduct the businesses now operated by them, except where
the failure to so declare or file would not, singly and in the
aggregate, have a Material Adverse Effect; the Company and its
subsidiaries are in compliance with the terms and conditions of all
such Governmental Licenses, except where the failure so to comply would
not, singly and in the aggregate, have a Material Adverse Effect; all
of the Governmental Licenses are valid and in full force and effect,
except when the invalidity of such Governmental Licenses or the failure
of such Governmental Licenses to be in full force and effect would not
have a Material Adverse Effect; and neither the Company nor any of its
subsidiaries has received any notice of proceedings relating to the
revocation or modification of any such Governmental Licenses which,
singly or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, would result in a Material Adverse Effect. Except
for any hospice agencies or inpatient facilities under development as
of the date hereof, all of the hospice agencies and inpatient
facilities (collectively, the "Facilities") operated by the Company and
its subsidiaries are eligible to participate in the Medicare and
Medicaid programs.
(xvii) Accounts Receivable. The accounts receivable of the
Company and its subsidiaries have been adjusted to reflect material
changes in the reimbursement policies of third party payors such as
Medicare, Medicaid, private insurance companies, health maintenance
organizations, preferred provider organizations, managed care systems
and other third party payors. The Company's accounts receivable, after
giving effect to the allowance for doubtful accounts, relating to such
third party payors do not exceed amounts the Company and its
subsidiaries are entitled to receive in any material respect.
(xviii) Compliance with Social Security Act and Other Federal
Enforcement Initiatives. Neither the Company nor, to the knowledge of
the Company, any officer, director, stockholder, employee or other
agent of the Company or any of its subsidiaries or the Facilities
operated by the Company or
8
any of its subsidiaries, has engaged, directly or indirectly, in any
activities which are prohibited under (A) Medicare and Medicaid
statutes or any regulations promulgated pursuant to such statutes, or
(B) related state or local statutes or regulations or any rules of
professional conduct, including the following: (i) knowingly and
willfully making or causing to be made a false statement or
representation of a material fact in connection with the receipt of or
claim for any benefit or payment under the Medicare or Medicaid program
or from any other third party payor; (ii) failing to disclose knowledge
by a claimant of the occurrence of any event affecting the initial or
continued right to any benefit or payment under the Medicare or
Medicaid program or from any other third party payor on its own behalf
or on behalf of another, with intent to secure such benefit or payment
fraudulently; (iii) knowingly and willfully offering, paying,
soliciting or receiving any remuneration, in cash or in kind (a) in
return for referring an individual to a person for the furnishing or
arranging for the furnishing of any item or service for which payment
may be made in whole or in part by Medicare or Medicaid or any other
third party payor, or (b) in return for purchasing, leasing or ordering
or arranging for, or recommending the purchasing, leasing or ordering
of, any good, facility, service, or item for which payment may be made
in whole or in part by Medicare or Medicaid or any other third party
payor; (iv) knowingly and willfully referring an individual to a person
or entity with which it has ownership or other financial arrangements
(where applicable federal or state law prohibits such referrals); and
(v) knowingly and willfully violating any enforcement initiative
instituted by any governmental agency (including the Office of the
Inspector General and the Department of Justice), except for any such
activities which would not, singly and in the aggregate, result in a
Material Adverse Effect.
(xix) Regulatory Filings. Neither the Company nor any of its
subsidiaries or any of the Facilities operated by the Company or any of
its subsidiaries has failed to file with applicable regulatory
authorities any statement, report, information or form required by any
applicable law, regulation or order, except where the failure to so
file would not, singly and in the aggregate, have a Material Adverse
Effect. Except as described in the Prospectus and except for any
failures to be in compliance or deficiencies which would not, singly
and in the aggregate, have a Material Adverse Effect, all such filings
or submissions were in compliance with applicable laws when filed and
no deficiencies have been asserted by any regulatory commission, agency
or authority with respect to any such filings or submissions.
(xx) Title to Property. The Company and its subsidiaries have
good and marketable title to all real property owned by them and good
title to all other properties owned by them, in each case, free and
clear of all Liens except such as (a) are described in the Prospectus
or (b) do not, singly and in the aggregate,
9
materially affect the value of such property and do not interfere with
the use made and proposed to be made of such property by the Company or
any of its subsidiaries; and all of the leases and subleases material
to the business of the Company and its subsidiaries, considered as one
enterprise, and under which the Company or any of its subsidiaries
holds properties described in the Prospectus, are in full force and
effect, and neither the Company nor any of its subsidiaries has any
notice of any material claim of any sort that has been asserted by
anyone adverse to the rights of the Company or any of its subsidiaries
under any of the leases or subleases mentioned above, or affecting or
questioning the rights of the Company or such subsidiary to the
continued possession of the leased or subleased premises under any such
lease or sublease.
(xxi) Investment Company Act. The Company is not, and upon the
issuance and sale of the Securities as herein contemplated and the
application of the net proceeds therefrom as described in the
Prospectus, will not be, an "investment company" or an entity
"controlled" by an "investment company" as such terms are defined in
the Investment Company Act of 1940, as amended (the "1940 Act").
(xxii) Environmental Laws. Except as described in the
Registration Statement and except as would not, singly and in the
aggregate, result in a Material Adverse Effect, (A) neither the Company
nor any of its subsidiaries (nor any of the Facilities owned, leased or
operated by the Company or any of its subsidiaries), is in violation of
any federal, state, local or foreign law, statute, rule, regulation,
standard, guide, ordinance, code, policy or rule of common law or any
judicial or administrative interpretation thereof, including any
judicial or administrative order, consent, decree or judgment, relating
to pollution or protection of human health or safety, the environment
(including, without limitation, ambient air, surface water,
groundwater, land surface or subsurface strata), natural resources or
wildlife, including, without limitation, laws and regulations relating
to the release or threatened release of chemicals, pollutants,
contaminants, wastes, toxic substances, hazardous substances, petroleum
or petroleum products (collectively, "Hazardous Materials") or to the
manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling, release or threatened release of
Hazardous Materials (collectively, "Environmental Laws"), (B) the
Company and its subsidiaries and each of the Facilities owned, leased
or operated by the Company and its subsidiaries have all permits,
authorizations and approvals required under any applicable
Environmental Laws and are each in compliance with their requirements,
(C) there are no pending or threatened administrative, regulatory or
judicial actions, suits, demands, demand letters, claims, liens,
notices of noncompliance or violation, investigation or proceedings
relating to any Environmental Law against the Company or any of its
subsidiaries or any of the Facilities owned, leased or
10
operated by the Company or any of its subsidiaries, and (D) there are
no events or circumstances that might reasonably be expected to form
the basis of an order for clean-up or remediation, or an action, suit
or proceeding by any private party or governmental body or agency,
against or affecting the Company or any of its subsidiaries or any of
the Facilities operated by the Company or any of its subsidiaries
relating to Hazardous Materials or any Environmental Laws.
(xxiii) Registration Rights. Except as described in the
Registration Statement or the Prospectus, there are no persons with
registration rights or other similar rights to have any securities
registered pursuant to the Registration Statement or, except as
described in the Registration Statement or the Prospectus, otherwise
registered by the Company under the 1933 Act.
(xxiv) Insurance. The Company and each of its subsidiaries and
each of the Facilities owned, leased or operated by the Company or any
of its subsidiaries are insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as are
prudent and customary in the businesses in which they are engaged; and
the Company does not have any reason to believe that it or any of its
subsidiaries or any of the Facilities owned, leased or operated by the
Company or any of its subsidiaries will not be able to renew their
existing insurance coverage as and when such coverage expires or to
obtain similar coverage from similar insurers as may be necessary to
continue their operations, except where the failure to renew or
maintain such coverage would not result in a Material Adverse Effect.
(xxv) Tax Returns and Payment of Taxes. The Company and its
subsidiaries have timely filed all federal, state, local and foreign
tax returns that are required to be filed or have duly requested
extensions thereof and all such tax returns are true, correct and
complete, except to the extent that any failure to file or request an
extension, or any incorrectness, would not result in a Material Adverse
Effect. The Company and its subsidiaries have timely paid all taxes
shown as due on such filed tax returns (including any related
assessments, fines or penalties), except to the extent that any such
taxes are being contested in good faith and by appropriate proceedings,
or to the extent that any failure to pay would not result in a Material
Adverse Effect; and adequate charges, accruals and reserves have been
provided for in the financial statements referred to in Section
1(a)(iii) above in accordance with GAAP in respect of all federal,
state, local and foreign taxes for all periods as to which the tax
liability of the Company or any subsidiary has not been finally
determined or remains open to examination by applicable taxing
authorities. Neither the Company nor any of its subsidiaries is a
"United States real property holding corporation" within the meaning of
Section 897(c)(2) of the Internal Revenue Code of 1986, as amended (the
"Code").
11
(xxvi) No Stabilization or Manipulation. Neither the Company
nor any of any of its subsidiaries nor, to the best of its knowledge,
any of its directors, officers or affiliates has taken or will take,
directly or indirectly, any action designed to, or that might be
reasonably expected to, cause or result in stabilization or
manipulation of the price of the Securities in violation of Regulation
M under the Securities Exchange Act of 1934, as amended (the "1934
Act").
(xxvii) Certain Transactions. Except as disclosed in the
Prospectus, there are no outstanding loans, advances, or guarantees of
indebtedness by the Company to or for the benefit of any of the
executive officers or directors of the Company or any of the members of
the families of any of them that would be required to be so disclosed
under the 1933 Act, the 1933 Act Regulations or Form S-1.
(xxviii) Statistical and Market Data. The statistical and
market-related data included in the Prospectus are derived from sources
which the Company reasonably and in good faith believes to be accurate,
reasonable and reliable.
(xxix) Accounting and Other Controls. The Company has
established a system of internal accounting controls sufficient to
provide reasonable assurances that (i) transactions were, are and will
be executed in accordance with management's general or specific
authorization; (ii) transactions were, are and will be recorded as
necessary to permit preparation of financial statements in conformity
with GAAP and to maintain accountability for assets; (iii) access to
assets was, is and will be permitted only in accordance with a
management's general or specific authorizations; and (iv) the recorded
accountability for assets was, is and will be compared with existing
assets at reasonable intervals and appropriate action was, is and will
be taken with respect to any differences.
(xxx) Stockholder Rights Plan. The Rights under the Company's
Stockholder Rights Plan to which holders of the Securities will be
entitled have been duly authorized.
(b) Representations and Warranties by the Selling Shareholders. Each
Selling Shareholder severally represents and warrants as to itself only to each
Underwriter as of the date hereof, as of the Closing Time, and, if the Selling
Shareholder is selling Option Securities on a Date of Delivery, as of each such
Date of Delivery, and agrees with each Underwriter, as follows:
(i) Accurate Disclosure. With respect to any statements or
omissions from the Registration Statement, any preliminary prospectus,
the Prospectus or any amendment or supplement thereto made in reliance
upon and in conformity with written information furnished to the
Company by or on behalf of such
12
Selling Shareholder expressly for use therein, such Selling Shareholder
hereby makes the same representations and warranties as the Company
makes to the Underwriters under the second paragraph of paragraph
(a)(i) of this Section 1. The Underwriters acknowledge and agree that,
for purposes of this clause (i) and Sections 6(b) and 7 hereof, the
only information furnished to the Company by or on behalf of any
Selling Shareholder specifically for use in the Registration Statement,
any preliminary prospectus, the Prospectus or any amendment or
supplement thereto are the statements pertaining to the number of
shares owned as of record and beneficially by and the number of shares
proposed to be sold by such Selling Shareholder under the caption
"Security Ownership of Principal and Selling Stockholders and
Management."
(ii) Authorization of Agreements. Such Selling Shareholder has
the full right, power and authority to enter into this Agreement and a
Power of Attorney and Custody Agreement (the "Power of Attorney and
Custody Agreement") and to sell, transfer and deliver the Securities to
be sold by such Selling Shareholder hereunder. The execution, delivery
and performance of this Agreement and the Power of Attorney and Custody
Agreement and the sale and delivery of the Securities to be sold by
such Selling Shareholder and the consummation of the transactions
contemplated herein and compliance by such Selling Shareholder with its
obligations hereunder have been duly authorized by such Selling
Shareholder and do not and will not, whether with or without the giving
of notice or passage of time or both, conflict with or constitute a
breach of, or default under, or result in the creation or imposition of
any tax or Lien upon the Securities to be sold by such Selling
Shareholder or any property or assets of such Selling Shareholder
pursuant to any contract, indenture, mortgage, deed of trust, loan or
credit agreement, note, license, lease or other agreement or instrument
to which such Selling Shareholder is a party or by which such Selling
Shareholder may be bound, or to which any of the property or assets of
such Selling Shareholder is subject, nor will such action result in any
violation of the provisions of the charter or by-laws or other
organizational instrument of such Selling Shareholder, if applicable,
or any applicable treaty, law, statute, rule, regulation, judgment,
order, writ or decree of any government, government instrumentality or
court, domestic or foreign, having jurisdiction over such Selling
Shareholder or any of its properties.
(iii) Record and Beneficial Ownership. Such Selling
Shareholder (i) is at the date hereof the record and beneficial owner
of the Securities to be sold by such Selling Shareholder under this
Agreement, in each case free and clear of any Lien, other than pursuant
to this Agreement, and (ii) will be at the Closing Time and, if any
Option Securities are purchased from such Selling Shareholder, on the
Date of Delivery, the record and beneficial owner of the Securities to
be sold by such Selling Shareholder under this Agreement, in each case
free and clear of any
13
Lien, other than pursuant to this Agreement. Upon payment for the
Securities to be sold by such Selling Shareholder to the Underwriters
as provided herein, the delivery of such Securities to such nominee as
may be designated by The Depository Trust Company ("DTC"), the
registration by the Company of such Securities in the name of such
nominee and the crediting by book entry of such Securities on the
records of DTC to one or more "securities accounts" (as defined in
Section 8-501 of the
New York Uniform Commercial Code (the "UCC")), in
the name of each of the Underwriters (assuming that neither the
Underwriters nor DTC have notice of any adverse claim (within the
meaning of Section 8-105 of the UCC) to such Securities or any security
entitlement (as defined in Section 8-102 of the UCC) in respect
thereof), (A) DTC shall be a protected purchaser of such Securities
within the meaning of Section 8-303 of the UCC, (B) under Section 8-501
of the UCC, each of the Underwriters will acquire a security
entitlement in respect of such Securities and (C) no action based on an
adverse claim (as defined in Section 8-102 of the UCC) to such
Securities may be asserted against any of the Underwriters.
(iv) Due Execution of Power of Attorney and Custody Agreement.
Such Selling Shareholder has duly executed and delivered, in the form
heretofore furnished to the Representatives, the Power of Attorney and
Custody Agreement with ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇, or any of them, as attorneys-in-fact (the
"Attorneys-in-Fact") and U.S. Stock Transfer Corporation, as custodian
(the "Custodian"); the Custodian is authorized to deliver the
Securities to be sold by such Selling Shareholder hereunder and to
accept payment therefor; and each Attorney-in-Fact is authorized to
execute and deliver this Agreement and the certificate referred to in
Section 5(f) hereof or that may be required pursuant to Sections 5(m)
and 5(n) hereof on behalf of such Selling Shareholder, to sell, assign
and transfer to the Underwriters the Securities to be sold by such
Selling Shareholder hereunder, to determine the purchase price to be
paid by the Underwriters to such Selling Shareholder, as provided in
Section 2(a) hereof, to authorize the delivery of the Securities to be
sold by such Selling Shareholder hereunder, to accept payment therefor,
and otherwise to act on behalf of such Selling Shareholder in
connection with this Agreement.
(v) Absence of Manipulation. Such Selling Shareholder has not
taken, and will not take, directly or indirectly, any action which is
designed to or which has constituted or which might reasonably be
expected to cause or result in stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale
of the Securities in violation of Regulation M under the 1934 Act.
(vi) Absence of Further Requirements. No filing with, or
consent, approval, authorization, license, order, registration,
qualification or decree of, any court or governmental authority or
agency, domestic or foreign, is necessary or
14
required for the performance by such Selling Shareholder of its
obligations hereunder or in the Power of Attorney and Custody
Agreement, or in connection with the offer, sale or delivery of the
Securities hereunder or the consummation of the transactions
contemplated by this Agreement, except such as may have previously been
made or obtained or as may be required under the 1933 Act or the 1933
Act Regulations or state securities laws.
(vii) Restriction on Sale of Securities. During a period of 90
days from the date of the Prospectus, such Selling Shareholder will
not, without the prior written consent of ▇▇▇▇▇▇▇ ▇▇▇▇▇, directly or
indirectly, (i) except for the exercise of warrants or options to
purchase Common Stock, offer, pledge, sell, contract to sell, sell any
option or contract to purchase, purchase any option or contract to
sell, grant any option, right or warrant for the sale of, or otherwise
dispose of or transfer, any shares of Common Stock or any securities
convertible into or exercisable or exchangeable for or repayable with
Common Stock, whether now owned or hereafter acquired by such Selling
Stockholder or with respect to which such Selling Stockholder has or
hereafter acquires the power of disposition, or file any registration
statement under the 1933 Act with respect to any of the foregoing or
(ii) enter into any swap or any other agreement or any transaction that
transfers, in whole or in part, directly or indirectly, the economic
consequence of ownership of the Common Stock, whether any such swap or
transaction described in clause (i) or (ii) above is to be settled by
delivery of Common Stock or such other securities, in cash or
otherwise, other than the Securities to be sold hereunder or as may
otherwise be agreed by ▇▇▇▇▇▇▇ ▇▇▇▇▇.
(viii) Certificates Suitable for Transfer. Certificates for
all of the Securities to be sold by such Selling Shareholder pursuant
to this Agreement, in suitable form for transfer by delivery or
accompanied by duly executed instruments of transfer or assignment in
blank with signatures guaranteed, have been placed in custody with the
Custodian with irrevocable conditional instructions to deliver such
Securities to the Underwriters pursuant to this Agreement.
(ix) No Association with NASD. Neither such Selling
Shareholder nor any of its affiliates directly, or indirectly through
one or more intermediaries, controls, or is controlled by, or is under
common control with, or has any other association with (within the
meaning paragraph (dd) of Article I of the By-Laws of the National
Association of Securities Dealers, Inc. (the "NASD")), any member firm
of the NASD, except that ▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇ Venture Associates III,
L.L.C. and WPG Enterprise Fund II, L.L.C., each a Selling Shareholder,
are affiliates of ▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇, L.L.C., an NASD member.
(c) Additional Representations and Warranties by the Management Selling
Shareholders. Each Management Selling Shareholder further severally represents
and
15
warrants to each Underwriter as of the date hereof and as of the Closing Time,
and agrees with each Underwriter that to the knowledge of such Management
Selling Shareholder, the representations and warranties of the Company contained
in Section 1(a) hereof are true and correct; such Management Selling Shareholder
has reviewed and is familiar with the Registration Statement, the preliminary
prospectus and the Prospectus and neither the preliminary prospectus or the
Prospectus nor any amendment or supplement thereto includes any untrue statement
of material fact or omits to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they were
made, not misleading.
(d) Officer's Certificates. Any certificate signed by any officer of
the Company or any of its subsidiaries delivered to the Representatives or to
counsel for the Underwriters shall be deemed a representation and warranty by
the Company to each Underwriter as to the matters covered thereby; and any
certificate signed by or on behalf of the Selling Shareholders and delivered to
the Representatives or to counsel for the Underwriters pursuant to the terms of
this Agreement shall be deemed a representation and warranty by such Selling
Shareholder to the Underwriters as to the matters covered thereby.
SECTION 2. Sale and Delivery to Underwriters; Closing.
(a) Initial Securities. On the basis of the representations and
warranties herein contained and subject to the terms and conditions herein set
forth, each Selling Shareholder, agrees to sell to each Underwriter, severally
and not jointly, and each Underwriter, severally and not jointly, agrees to
purchase from each Selling Shareholder, at the price per share set forth in
Schedule C, that proportion of the number of Initial Securities set forth in
Schedule B opposite the name of such Selling Shareholder, which the number of
Initial Securities set forth in Schedule A opposite the name of such
Underwriter, plus any additional number of Initial Securities which such
Underwriter may become obligated to purchase pursuant to the provisions of
Section 10 hereof, bears to the total number of Initial Securities, subject, in
each case, to such adjustments among the Underwriters as the Representatives in
their sole discretion shall make to eliminate any sales or purchases of
fractional securities.
(b) Option Securities. In addition, on the basis of the representations
and warranties herein contained and subject to the terms and conditions herein
set forth, the Option Securities Selling Shareholders, hereby grant an option to
the Underwriters, severally and not jointly, to purchase up to an additional
shares of Common Stock, as set forth in Schedule B, at the price per
share set forth in Schedule C, less an amount per share equal to any dividends
or distributions declared by the Company and payable on the Initial Securities
but not payable on the Option Securities. The option hereby granted will expire
30 days after the date hereof and may be exercised in whole or in part from
time to time only for the purpose of covering over-allotments which may be made
in connection with the offering and distribution of the Initial Securities upon
notice
16
by the Representatives to the Option Securities Selling Shareholders setting
forth the number of Option Securities as to which the several Underwriters are
then exercising the option and the time and date of payment and delivery for
such Option Securities. Any such time and date of delivery (a "Date of
Delivery") shall be determined by the Representatives, but shall not be later
than seven full business days after the exercise of said option, nor in any
event prior to the Closing Time, as hereinafter defined. If the option is
exercised as to all or any portion of the Option Securities, each of the
Underwriters, acting severally and not jointly, will purchase that proportion of
the total number of Option Securities then being purchased which the number of
Initial Securities set forth in Schedule A opposite the name of such Underwriter
bears to the total number of Initial Securities, subject in each case to such
adjustments as the Representatives in their discretion shall make to eliminate
any sales or purchases of fractional shares. If the option is exercised for a
portion, but not all, of the Option Securities, each Option Securities Selling
Shareholder will sell that proportion of the total number of Option Securities
then being purchased which the number of Securities set forth in Schedule B in
the column titled "Maximum Number of Option Securities" opposite the name of
such Option Securities Selling Shareholder bears to the total number of Option
Securities.
(c) Payment. Payment of the purchase price for, and delivery of
certificates for, the Initial Securities shall be made at the offices of
Debevoise & ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, or at such other
place as shall be agreed upon by the Representatives, the Company and the
Selling Shareholders, at 9:00 A.M. (
New York City time) on the third (fourth, if
the pricing occurs after 4:30 P.M. (
New York City time) on any given day)
business day after the date hereof (unless postponed in accordance with the
provisions of Section 10), or such other time not later than ten business days
after such date as shall be agreed upon by the Representatives, the Company and
the Selling Shareholders (such time and date of payment and delivery being
herein called "Closing Time").
In addition, in the event that any or all of the Option Securities are
purchased by the Underwriters, payment of the purchase price for, and delivery
of certificates for, such Option Securities shall be made at the above-mentioned
offices, or at such other place as shall be agreed upon by the Representatives,
the Company and the Option Securities Selling Shareholders on each Date of
Delivery as specified in the notice from the Representatives to the Company and
the Option Securities Selling Shareholders.
Payment shall be made to the Selling Shareholders by wire transfer of
immediately available funds to the bank account designated by the Custodian
pursuant to each Selling Shareholder's Power of Attorney and Custody Agreement,
against delivery to the Representatives for the respective accounts of the
Underwriters of certificates for the Securities to be purchased by them. It is
understood that each Underwriter has authorized the Representatives, for its
account, to accept delivery of, receipt for, and make payment of the purchase
price for, the Initial Securities and the Option Securities, if any, which it
has agreed to purchase. ▇▇▇▇▇▇▇ ▇▇▇▇▇, individually and not as
17
representative of the Underwriters, may (but shall not be obligated to) make
payment of the purchase price for the Initial Securities or the Option
Securities, if any, to be purchased by any Underwriter whose funds have not been
received by the Closing Time or the relevant Date of Delivery, as the case may
be, but such payment shall not relieve such Underwriter from its obligations
hereunder.
(d) Denominations; Registration. Certificates for the Initial
Securities and the Option Securities, if any, shall be in such denominations and
registered in such names as the Representatives may request in writing at least
one full business day before the Closing Time or the relevant Date of Delivery,
as the case may be. The certificates for the Initial Securities and the Option
Securities, if any, will be made available for examination and packaging by the
Representatives in The City of
New York not later than 10:00 A.M. (Eastern time)
on the business day prior to Closing Time or the relevant Date of Delivery, as
the case may be.
SECTION 3. Covenants of the Company. The Company covenants with each
Underwriter as follows:
(a) Compliance with Securities Regulations and Commission Requests. The
Company, subject to Section 3(b), will comply with the requirements of Rule
430A, and will notify the Representatives immediately, and confirm the notice in
writing, (i) when any post-effective amendment to the Registration Statement
shall become effective, or any supplement to the Prospectus or any amended
Prospectus shall have been filed, (ii) of the receipt of any comments from the
Commission, (iii) of any request by the Commission for any amendment to the
Registration Statement or any amendment or supplement to the Prospectus or for
additional information, and (iv) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or of any order
preventing or suspending the use of any preliminary prospectus, or of the
suspension of the qualification of the Securities for offering or sale in any
jurisdiction, or of the initiation or threatening of any proceedings for any of
such purposes. The Company will promptly effect the filings necessary pursuant
to Rule 424(b) and will take such steps as it deems necessary to ascertain
promptly whether the form of prospectus transmitted for filing under Rule 424(b)
was received for filing by the Commission and, in the event that it was not, it
will promptly file such prospectus. The Company will make every reasonable
effort to prevent the issuance of any stop order and, if any stop order is
issued, to obtain the lifting thereof at the earliest possible moment.
(b) Filing of Amendments. The Company will give the Representatives
notice of its intention to file or prepare any amendment to the Registration
Statement (including any filing under Rule 462(b)), or any amendment, supplement
or revision to either the prospectus included in the Registration Statement at
the time it became effective or to the Prospectus, will furnish the
Representatives with copies of any such documents a reasonable amount of time
prior to such proposed filing or use, as the case may be, and
18
will not file or use any such document to which the Representatives or counsel
for the Underwriters shall object.
(c) Delivery of Registration Statements. The Company has furnished or
will deliver to the Representatives and counsel for the Underwriters, without
charge, signed copies of the Registration Statement as originally filed and of
each amendment thereto (including exhibits filed therewith or incorporated by
reference therein) and signed copies of all consents and certificates of
experts, and will also deliver to the Representatives, without charge, a
conformed copy of the Registration Statement as originally filed and of each
amendment thereto (without exhibits) for each of the Underwriters. The copies of
the Registration Statement and each amendment thereto furnished to the
Underwriters will be identical to the electronically transmitted copies thereof
filed with the Commission pursuant to ▇▇▇▇▇, except to the extent permitted by
Regulation S-T.
(d) Delivery of Prospectus. The Company has delivered to each
Underwriter, without charge, as many copies of each preliminary prospectus as
such Underwriter reasonably requested, and the Company hereby consents to the
use of such copies for purposes permitted by the 1933 Act. The Company will
furnish to each Underwriter, without charge, during the period when the
Prospectus is required to be delivered under the 1933 Act or the 1934 Act, such
number of copies of the Prospectus (as amended or supplemented) as such
Underwriter may reasonably request. The Prospectus and any amendments or
supplements thereto furnished to the Underwriters will be identical to the
electronically transmitted copies thereof filed with the Commission pursuant to
▇▇▇▇▇, except to the extent permitted by Regulation S-T.
(e) Continued Compliance with Securities Laws. The Company will comply
with the 1933 Act, the 1933 Act Regulations and the rules and regulations of the
Commission under the 1934 Act (the "1934 Act Regulations") so as to permit the
completion of the distribution of the Securities as contemplated in this
Agreement and in the Prospectus. If at any time when a prospectus is required by
the 1933 Act or the 1934 Act to be delivered in connection with sales of the
Securities, any event shall occur or condition shall exist as a result of which
it is necessary, in the opinion of counsel for the Underwriters or for the
Company, to amend the Registration Statement or amend or supplement the
Prospectus in order that the Prospectus will not include any untrue statement of
a material fact or omit to state a material fact necessary in order to make the
statements therein not misleading in the light of the circumstances existing at
the time it is delivered to a purchaser, or if it shall be necessary, in the
opinion of such counsel, at any such time to amend the Registration Statement or
amend or supplement the Prospectus in order to comply with the requirements of
the 1933 Act, the 1933 Act Regulations, the 1934 Act or the 1934 Act
Regulations, the Company will promptly prepare and file with the Commission,
subject to Section 3(b), such amendment or supplement as may be necessary to
correct such statement or omission or to make the Registration Statement or the
Prospectus comply with such requirements, and the Company will furnish to the
Underwriters such
19
number of copies of such amendment or supplement as the Underwriters may
reasonably request.
(f) Blue Sky Qualifications. The Company will use its best efforts, in
cooperation with the Underwriters, to qualify the Securities for offering and
sale under the applicable securities laws of such states and other domestic
jurisdictions as the Representatives may designate and to maintain such
qualifications in effect for a period of not less than one year from the later
of the effective date of the Registration Statement and any Rule 462(b)
Registration Statement; provided, however, that the Company shall not be
obligated to file any general consent to service of process or to qualify as a
foreign corporation or as a dealer in securities in any jurisdiction in which it
is not so qualified or to subject itself to taxation in respect of doing
business in any jurisdiction in which it is not otherwise so subject. In each
jurisdiction in which the Securities have been so qualified, the Company will
file such statements and reports as may be required by the laws of such
jurisdiction to continue such qualification in effect for a period of not less
than one year from the effective date of the Registration Statement and any Rule
462(b) Registration Statement.
(g) Rule 158. The Company will timely file such reports pursuant to the
1934 Act as are necessary in order to make generally available to its
securityholders as soon as practicable an earnings statement for the purposes
of, and to provide the benefits contemplated by, the last paragraph of Section
11(a) of the 1933 Act.
(h) Listing. The Company will use its best efforts to effect and
maintain the quotation of the Securities on the Nasdaq National Market and will
file with the Nasdaq National Market all documents and notices required by the
Nasdaq National Market of companies that have securities that are traded in the
over-the-counter market and quotations for which are reported by the Nasdaq
National Market.
(i) Restriction on Sale of Securities. During a period of 90 days from
the date of the Prospectus, the Company will not, without the prior written
consent of ▇▇▇▇▇▇▇ ▇▇▇▇▇, directly or indirectly, (i) offer, pledge, sell,
contract to sell, sell any option or contract to purchase, purchase any option
or contract to sell, grant any option, right or warrant to purchase or otherwise
transfer or dispose of any share of Common Stock or any securities convertible
into or exercisable or exchangeable for or repayable with Common Stock or file
any registration statement under the 1933 Act with respect to any of the
foregoing or (ii) enter into any swap or any other agreement or any transaction
that transfers, in whole or in part, directly or indirectly, the economic
consequence of ownership of the Common Stock, whether any such swap or the
transaction described in clause (i) or (ii) above is to be settled by delivery
of Common Stock or such other securities, in cash or otherwise. The foregoing
sentence shall not apply to (A) the Securities to be sold hereunder, (B) any
shares of Common Stock issued by the Company upon the exercise of an option or
warrant or the conversion of a security outstanding on the date hereof and
referred to in the Prospectus; (C) any shares of Common Stock, options to
purchase shares of Common
20
Stock or other equity-based awards issued or granted pursuant to existing
employee benefit plans of the Company or other employee or non-employee director
compensation arrangements or agreements referred to in the Prospectus; (D) any
shares of Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock issued by the Company in connection with any
acquisition by the Company; (E) any shares of Common Stock or any securities
convertible into or exercisable or exchangeable for Common Stock issued by the
Company in connection with any business arrangement or agreement in furtherance
of the Company's business; and (F) the sale and issuance of shares of Common
Stock to new directors of the Company in connection with their election or
appointment to the board of directors of the Company; provided that, in the case
of clauses (D), (E) and (F), each recipient of such securities, prior to such
issuance by the Company, signs an agreement substantially in the form of Exhibit
C hereto.
(j) Reporting Requirements. The Company, during the period when the
Prospectus is required to be delivered under the 1933 Act or the 1934 Act, will
file all documents required to be filed with the Commission pursuant to the 1934
Act within the time periods required by the 1934 Act and the rules and
regulations of the Commission thereunder.
SECTION 4. Payment of Expenses.
(a) Expenses. The Company will pay or cause to be paid all expenses
incident to the performance of its obligations under this Agreement, including
expenses for (i) the preparation, printing and filing of the Registration
Statement (including financial statements and exhibits) as originally filed and
of each amendment thereto, (ii) the preparation, printing and delivery to the
Underwriters of this Agreement, any Agreement among Underwriters and such other
documents as may be required in connection with the offering, purchase, sale,
issuance or delivery of the Securities, (iii) the preparation, issuance and
delivery of the certificates for the Securities to the Underwriters, including
any stock or other transfer taxes and any stamp or other duties payable upon the
sale, issuance or delivery of the Securities to the Underwriters, (iv) the fees
and disbursements of the Company's counsel, accountants and other advisors, (v)
the qualification of the Securities under securities laws in accordance with the
provisions of Section 3(f) hereof, including filing fees and the reasonable fees
and disbursements of counsel for the Underwriters in connection therewith and in
connection with the preparation of the Blue Sky Survey and any supplement
thereto, (vi) the printing and delivery to the Underwriters of copies of each
preliminary prospectus, and of the Prospectus and any amendments or supplements
thereto, (vii) the preparation, printing and delivery to the Underwriters of
copies of the Blue Sky Survey and any supplement thereto, (viii) the fees and
expenses of any transfer agent or registrar for the Securities, (ix) the filing
fees incident to, and the reasonable fees and disbursements of counsel to the
Underwriters in connection with, the review by the NASD of the terms of the sale
of the Securities, (x) the fees and expenses incurred in connection with the
inclusion of the Securities in the Nasdaq National Market
21
and (xi) the fees and disbursements of one counsel for the Selling Shareholders
incurred in connection with the execution and delivery of this Agreement and the
sale of the Securities hereunder. Except as provided in this Section 4 and as
otherwise provided in this Agreement, the Company shall not be required to pay
for any of the Underwriters' expenses.
(b) Expenses of the Selling Shareholders. The Selling Shareholders,
jointly and severally, will pay all expenses incident to the performance of
their respective obligations under, and the consummation of the transactions
contemplated by, this Agreement, including (i) any stamp duties, capital duties
and stock transfer taxes, if any, payable upon the sale of the Securities to the
Underwriters, and their transfer between the Underwriters pursuant to an
agreement between such Underwriters and (ii) except as expressly provided in
clause (a)(xi) of this Section 4, the fees and disbursements of their respective
counsel, accountants and other advisors.
(c) Termination of Agreement. If this Agreement is terminated by the
Representatives in accordance with the provisions of Section 5 or Section
9(a)(i) or Section 11 hereof, the Company shall reimburse the Underwriters for
all of their out-of-pocket expenses, including the reasonable fees and
disbursements of counsel for the Underwriters.
(d) Allocation of Expenses. The provisions of this Section shall not
affect any agreement that the Company and the Selling Shareholders shall have
made or may make for the sharing of such costs and expenses.
SECTION 5. Conditions of Underwriters' Obligations. The obligations of
the several Underwriters hereunder are subject to the accuracy of the
representations and warranties of the Company and the Selling Shareholders
contained in Section 1 hereof or in certificates of any officer of the Company
or any subsidiary of the Company or by or on behalf of any Selling Shareholder
delivered pursuant to the provisions hereof, to the performance by the Company
of its covenants and other obligations hereunder, and to the following further
conditions:
(a) Effectiveness of Registration Statement. The Registration
Statement, including any Rule 462(b) Registration Statement, has become
effective and at Closing Time no stop order suspending the effectiveness of the
Registration Statement shall have been issued under the 1933 Act or proceedings
therefor initiated or threatened by the Commission, and any request on the part
of the Commission for additional information shall have been complied with to
the reasonable satisfaction of counsel to the Underwriters. A prospectus
containing the Rule 430A Information shall have been filed with the Commission
in accordance with Rule 424(b) (or a post-effective amendment providing such
information shall have been filed and declared effective in accordance with the
requirements of Rule 430A).
22
(b) Opinion of Counsel for Company. At Closing Time, the
Representatives shall have received the favorable opinion, dated as of Closing
Time, of ▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P., counsel for the Company, in form and substance
reasonably satisfactory to counsel for the Underwriters, together with signed or
reproduced copies of such letter for each of the other Underwriters to the
effect set forth in Exhibit A hereto and to such further effect as counsel to
the Underwriters may reasonably request. In giving such opinion, such counsel
may rely, as to all matters governed by the laws of jurisdictions other than the
laws of the States of Texas and
New York and the federal law of the United
States and the General Corporation Law, the Limited Liability Company Act and
the Revised Uniform Limited Partnership Act of the State of Delaware, upon the
opinions of counsel reasonably satisfactory to the Representatives. In giving
such opinion, such counsel may also state that, insofar as such opinion involves
factual matters, they have relied, to the extent they deem proper, upon
certificates of officers of the Company and its subsidiaries and certificates of
public officials.
(c) Opinion of Counsel for the Selling Shareholders. At Closing Time,
the Representatives shall have received the favorable opinion, dated as of
Closing Time, of (i) ▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, LLP, counsel for Capital
Resource Lenders III, L.P., CRP Investment Partners III, L.L.C., Highland
Capital Partners III Limited Partnership and Highland Entrepreneur's Fund III
Limited Partnership, in form and substance satisfactory to counsel for the
Underwriters, together with signed or reproduced copies of such letters for each
of the other Underwriters to the effect set forth in Exhibit B-1 hereto and to
such further effect as counsel to the Underwriters may reasonably request and
(ii) Venture Law Group, counsel for the Selling Shareholders other than those
referred to in (i) above, in form and substance satisfactory to counsel for the
Underwriters, together with signed or reproduced copies of such letters for each
of the other Underwriters to the effect set forth in Exhibit B-2 hereto and to
such further effect as counsel to the Underwriters may reasonably request.
(d) Opinion of Counsel for Underwriters. At Closing Time, the
Representatives shall have received the favorable opinion, dated as of Closing
Time, of Debevoise & ▇▇▇▇▇▇▇▇, counsel for the Underwriters, together with
signed or reproduced copies of such letter for each of the other Underwriters
with respect to the matters set forth in numbered paragraphs 1, 2, 7 (solely as
to preemptive or other similar rights arising by operation of law or under the
charter or by-laws of the Company), 9 through 12, inclusive, and 15 (solely as
to the information in the Prospectus under "Description of Capital Stock-Common
Stock") of the opinion letter attached as Exhibit A hereto and the second
paragraph of the letter accompanying such opinion letter. In giving such
opinion, such counsel may state that, insofar as such opinion involves factual
matters, they have relied, to the extent they deem proper, upon certificates of
officers of the Company and its subsidiaries and certificates of public
officials.
(e) Officers' Certificate. At Closing Time, there shall not have been,
since the date hereof or since the respective dates as of which information is
given in the
23
Prospectus, any material adverse change in the condition, financial or
otherwise, or in the earnings, business affairs or business prospects of the
Company and its subsidiaries considered as one enterprise, whether or not
arising in the ordinary course of business, and the Representatives shall have
received a certificate of the Chief Executive Officer and Chief Financial
Officer of the Company, dated as of Closing Time, to the effect that (i) there
has been no such material adverse change, (ii) the representations and
warranties in Section 1(a) hereof are true and correct with the same force and
effect as though expressly made at and as of Closing Time, (iii) the Company has
complied with all agreements and satisfied all conditions on its part to be
performed or satisfied under this Agreement at or prior to Closing Time, and
(iv) no stop order suspending the effectiveness of the Registration Statement
has been issued and no proceedings for that purpose have been instituted or are
pending or are contemplated by the Commission.
(f) Certificate of the Selling Shareholders. At Closing Time, the
Representatives shall have received a certificate by or on behalf of each
Selling Shareholder, dated as of the Closing Time, to the effect that (i) the
representations and warranties of such Selling Shareholder contained in Section
1(b) and Section 1(c), if applicable, hereof are true and correct in all
respects with the same force and effect as though expressly made at and as of
Closing Time and (ii) such Selling Shareholder has complied in all material
respects with all agreements and all conditions on its part to be performed
under this Agreement at or prior to Closing Time.
(g) Accountant's Comfort Letter. At the time of the execution of this
Agreement, the Representatives shall have received from Ernst & Young LLP a
letter dated such date, in form and substance reasonably satisfactory to the
Representatives, together with signed or reproduced copies of such letter for
each of the other Underwriters containing statements and information of the type
ordinarily included in accountants' "comfort letters" to underwriters with
respect to the financial statements and certain financial information contained
in the Registration Statement and the Prospectus.
(h) Bring-down Comfort Letter. At Closing Time, the Representatives
shall have received from Ernst & Young LLP a letter, dated as of Closing Time,
to the effect that they reaffirm the statements made in the letter furnished
pursuant to subsection (g) of this Section, except that the specified date
referred to shall be a date not more than three business days prior to Closing
Time.
(i) Approval of Listing. At Closing Time, the Securities shall have
been approved for inclusion in the Nasdaq National Market, subject only to
official notice of issuance.
(j) No Objection. The NASD has confirmed that it has not raised any
objection with respect to the fairness and reasonableness of the underwriting
terms and arrangements with respect to the Securities.
24
(k) Lock-up Agreements. At the date of this Agreement, the
Representatives shall have received an agreement substantially in the form of
Exhibit C hereto signed by the persons listed on Schedule D hereto.
(l) Form W-8 or W-9. At the date of this Agreement, the Representatives
shall have received Forms W-8 or W-9, as required, signed by each Selling
Shareholder.
(m) Conditions to Purchase of Option Securities. In the event that the
Underwriters exercise their option provided in Section 2(b) hereof to purchase
all or any portion of the Option Securities, the representations and warranties
of the Company and the Option Securities Selling Shareholders contained herein
and the statements in any certificates furnished by the Company and any
subsidiary of the Company and the Option Securities Selling Shareholders shall
be true and correct as of each Date of Delivery and, at the relevant Date of
Delivery, the Representatives shall have received:
(i) Officers' Certificate. A certificate, dated such Date of
Delivery, of the Chief Executive Officer and Chief Financial Officer of
the Company confirming that the certificate delivered at Closing Time
pursuant to Section 5(d) hereof remains true and correct as of such
Date of Delivery.
(ii) Certificate of Selling Shareholders. A certificate, dated
such Date of Delivery, by or on behalf of each Selling Shareholder
selling Option Securities confirming that the certificate delivered at
Closing Time pursuant to Section 5(f) remains true and correct as of
such Date of Delivery.
(iii) Opinion of Counsel for Company. The favorable opinion of
▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P., counsel for the Company, in form and substance
reasonably satisfactory to counsel for the Underwriters, dated such
Date of Delivery, relating to the Option Securities to be purchased on
such Date of Delivery and otherwise to the same effect as the opinion
required by Section 5(b) hereof.
(iv) Opinion of Counsel for the Selling Shareholders. With
respect to Selling Shareholders selling Option Securities, the
favorable opinion of such Selling Shareholder's counsel referenced in
Section 5(c), in form and substance satisfactory to the counsel for the
Underwriters, each dated such Date of Delivery, relating to the Option
Securities to be purchased on such Date of Delivery and otherwise to
the same effect as the opinion required by Section 5(c)(ii) hereof.
25
(v) Opinion of Counsel for Underwriters. The favorable opinion
of Debevoise & ▇▇▇▇▇▇▇▇, counsel for the Underwriters, dated such Date
of Delivery, relating to the Option Securities to be purchased on such
Date of Delivery and otherwise to the same effect as the opinion
required by Section 5(d) hereof.
(vi) Bring-down Comfort Letter. A letter from Ernst & Young
LLP, in form and substance reasonably satisfactory to the
Representatives and dated such Date of Delivery, substantially in the
same form and substance as the letter furnished to the Representatives
pursuant to Section 5(g) hereof, except that the "specified date" in
the letter furnished pursuant to this paragraph shall be a date not
more than two days prior to such Date of Delivery.
(n) Additional Documents. At Closing Time and at each Date of Delivery,
counsel for the Underwriters shall have been furnished with such documents,
certificates and opinions as they may reasonably require for the purpose of
enabling them to pass upon the issuance and sale of the Securities as herein
contemplated, or in order to evidence the accuracy of any of the representations
or warranties, or the fulfillment of any of the conditions, herein contained;
and all proceedings taken by the Company and the Selling Shareholders in
connection with the issuance and sale of the Securities as herein contemplated
shall be reasonably satisfactory in form and substance to the Representatives
and counsel for the Underwriters.
(o) Termination of Agreement. If any condition specified in this
Section shall not have been fulfilled when and as required to be fulfilled, this
Agreement, or, in the case of any condition to the purchase of Option Securities
on a Date of Delivery which is after the Closing Time, the obligations of the
several Underwriters to purchase the relevant Option Securities, may be
terminated by the Representatives by notice to the Company at any time at or
prior to Closing Time or such Date of Delivery, as the case may be, and such
termination shall be without liability of any party to any other party except as
provided in Section 4 and except that Sections 1, 6, 7 and 8 shall survive any
such termination and remain in full force and effect.
SECTION 6. Indemnification.
(a) Indemnification of Underwriters by the Company and the Management
Selling Shareholders. Subject to the limitations applicable to the Management
Selling Shareholders in this Section 6(a), the Company and each of the
Management Selling Shareholders, jointly and severally, agree to indemnify and
hold harmless each Underwriter and each person, if any, who controls any
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act as follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue statement or
alleged untrue
26
statement of a material fact contained in the Registration Statement
(or any amendment thereto), including the Rule 430A Information, or the
omission or alleged omission therefrom of a material fact required to
be stated therein or necessary to make the statements therein not
misleading or arising out of any untrue statement or alleged untrue
statement of a material fact included in any preliminary prospectus or
the Prospectus (or any amendment or supplement thereto), or the
omission or alleged omission therefrom of a material fact necessary in
order to make the statements therein, in the light of the circumstances
under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount
paid in settlement of any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or threatened,
or of any claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission; provided
that (subject to Section 6(d) below) any such settlement is effected
with the prior written consent of the Company; and
(iii) against any and all expense whatsoever, as incurred
(including the fees and disbursements of counsel chosen by ▇▇▇▇▇▇▇
▇▇▇▇▇), reasonably incurred in investigating, preparing or defending
against any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim
whatsoever based upon any such untrue statement or omission, or any
such alleged untrue statement or omission, to the extent that any such
expense is not paid under (i) or (ii) above;
provided, however, that (x) this indemnity agreement shall not apply to any
loss, liability, claim, damage or expense (a) to the extent arising out of any
untrue statement or omission or alleged untrue statement or omission made in
reliance upon and in conformity with written information furnished to the
Company by any Underwriter through the Representatives expressly for use in the
Registration Statement (or any amendment thereto), including the Rule 430A
Information, or any preliminary prospectus or the Prospectus (or any amendment
or supplement thereto); and (b) with respect to any preliminary prospectus to
the extent that it shall be proved that any such loss, liability, claim, damage
or expense of such Underwriter resulted solely from the fact that such
Underwriter, in contravention of a requirement of this Agreement or applicable
law, sold Securities to a person to whom such Underwriter failed to send or
give, at or prior to Closing Time, a copy of the Prospectus (if applicable, as
amended or supplemented) if the Company has previously furnished copies thereof
(sufficiently in advance of Closing Time to allow for distribution by Closing
Time) to such Underwriter and the loss, liability, claim, damage or expense of
such Underwriter resulted from an untrue statement or alleged untrue statement
or omission or alleged omission of a material fact contained in or omitted (or
allegedly omitted) from the preliminary prospectus that was corrected or
included in the Prospectus (if applicable, as amended or supplemented) prior to
Closing
27
Time, and (y) with respect to each Management Selling Shareholder, that the
liability of such Management Selling Shareholder pursuant to this Section 6(a)
shall be limited to the net proceeds (after deducting the underwriting discount,
but before expenses) received by such Management Selling Shareholder from the
Securities purchased by the Underwriters from such Management Selling
Shareholder pursuant to this Agreement.
Subject to the limitations applicable to the Management Selling
Shareholders in this Section 6(a), in making a claim for indemnification under
this Section 6 (other than pursuant to clause (a)(iii) of this Section 6, as
further provided below), or contribution under Section 7, by the Company or the
Management Selling Shareholders, the indemnified parties may proceed against
either (i) the Company and the Management Selling Shareholders or (ii) the
Company only, but may not proceed solely against the Management Selling
Shareholders. If the indemnified parties are entitled to seek indemnity or
contribution hereunder against any loss, liability, claim, damage or expense,
then, as a precondition to any indemnified party obtaining indemnification or
contribution from any Management Selling Shareholder (other than pursuant to
clause (a)(iii) of this Section 6, as further provided below), the indemnified
parties shall first obtain a final non-appealable judgment of a court of
competent jurisdiction that such indemnified parties are entitled to indemnity
or contribution under this Agreement with respect to such loss, liability,
claim, damage or expense (the "Final Judgment") from the Company and the
Management Selling Shareholders and shall first seek to satisfy such Final
Judgment in full from the Company by making a written demand upon the Company
for such satisfaction. Only in the event that such Final Judgment shall remain
unsatisfied in whole or in part 30 days following the date of receipt by the
Company of such demand shall any indemnified party have the right to take action
to satisfy such Final Judgment by making demand directly on any Management
Selling Shareholder (but only if and to the extent the Company has not already
satisfied such Final Judgment, whether by settlement, release or otherwise). The
indemnified parties shall, however, be relieved of their obligation to first
obtain a Final Judgment, to first seek to obtain payment from the Company with
respect to such Final Judgment or, having sought such payment, to wait such 30
days after failure by the Company to satisfy immediately any such Final Judgment
if (i) the Company files a petition for relief under the United States
Bankruptcy Code (the "Bankruptcy Code"), (ii) an order for relief is entered
against the Company in an involuntary case under the Bankruptcy Code and is not
dismissed within 60 days after the filing thereof, (iii) the Company makes an
assignment for the benefit of its creditors, or (iv) any court orders or
approves the appointment of a receiver or custodian for the Company or a
substantial portion of either of their assets, either in a proceeding brought by
the Company or in a proceeding brought against the Company and such appointment
is not discharged or such possession is not terminated within 60 days after the
effective date thereof or the Company consents or acquiesces in such appointment
or possession.
The foregoing provisions of the preceding paragraph are not intended to
require any indemnified party to obtain a Final Judgment against the Company or
any
28
Management Selling Shareholder before obtaining reimbursement of expenses
pursuant to clause (a)(iii) of this Section 6. However, the indemnified parties
shall first seek to obtain such reimbursement in full from the Company (and not
the Management Selling Shareholders) by making a written demand upon the Company
for such reimbursement. Only in the event such expenses shall remain
unreimbursed in whole or in part 30 days following the date of receipt by the
Company of such demand shall any indemnified party have the right to receive
reimbursement of such expenses from any Management Selling Shareholder by making
written demand directly on such Management Selling Shareholder (but only if and
to the extent the Company has not already satisfied the demand for
reimbursement, whether by settlement, release or otherwise). The indemnified
parties shall, however, be relieved of their obligation to first seek to obtain
such reimbursement in full from the Company or, having made written demand
therefor, to wait such 30 days after failure by the Company to reimburse
immediately such expenses if (i) the Company files a petition for relief under
the Bankruptcy Code, (ii) an order for relief is entered against the Company in
an involuntary case under the Bankruptcy Code and is not dismissed within 60
days after the filing thereof, (iii) the Company makes an assignment for the
benefit of its creditors, or (iv) any court orders or approves the appointment
of a receiver or custodian for the Company or a substantial portion of its
assets, either in a proceeding brought by the Company or in a proceeding brought
against the Company and such appointment is not discharged or such possession is
not terminated within 60 days after the effective date thereof or the Company
consents or acquiesces in such appointment or possession.
(b) Indemnification of the Underwriters by the Non-Management Selling
Shareholders. Each of the Non-Management Selling Shareholders severally agrees
to indemnify and hold harmless each Underwriter and each person, if any, who
controls any Underwriter within the meaning of Section 15 of the 1993 Act or
Section 20 of the 1934 Act against any and all loss, liability, claim, damage
and expense described in the indemnity contained in subsection (a) of this
Section, as incurred, but only with respect to untrue statements or omissions,
or alleged untrue statements or omissions, made in the Registration Statement
(or any amendment thereto), including the Rule 430A Information, or any
preliminary prospectus or the Prospectus (or any amendment or supplement
thereto) in reliance upon and in conformity with written information furnished
to the Company by or on behalf of such Non-Management Selling Shareholder
expressly for use in the Registration Statement (or any amendment thereto) or
such preliminary prospectus or the Prospectus (or any amendment or supplement
thereto); provided, however, that the liability of any Non-Management Selling
Shareholder pursuant to this Section 6(b) shall be limited to the net proceeds
(after deducting the underwriting discount, but before expenses) received by
such Non-Management Selling Shareholder from the Securities purchased by the
Underwriters from such Non-Management Selling Shareholder pursuant to this
Agreement.
29
(c) Indemnification of Company, Directors and Officers and Selling
Shareholders. Each Underwriter severally agrees to indemnify and hold harmless
the Company, its directors, each of its officers who signed the Registration
Statement, and each person, if any, who controls the Company within the meaning
of Section 15 of the 1933 Act or Section 20 of the 1934 Act and each Selling
Shareholder and each person, if any, who controls such Selling Shareholder
within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act
against any and all loss, liability, claim, damage and expense described in the
indemnity contained in subsection (a) of this Section, as incurred, but only
with respect to untrue statements or omissions, or alleged untrue statements or
omissions, made in the Registration Statement (or any amendment thereto),
including the Rule 430A Information, or any preliminary prospectus or the
Prospectus (or any amendment or supplement thereto) in reliance upon and in
conformity with written information furnished to the Company by such Underwriter
through the Representatives expressly for use in the Registration Statement (or
any amendment thereto) or such preliminary prospectus or the Prospectus (or any
amendment or supplement thereto).
(d) Actions against Parties; Notification. Each indemnified party shall
give notice promptly to each indemnifying party of any action commenced against
it in respect of which indemnity may be sought hereunder, but failure to so
notify an indemnifying party, and any delay in such notification, shall not
relieve such indemnifying party from any liability hereunder to the extent it is
not materially prejudiced as a result thereof and in any event shall not relieve
it from any liability which it may have otherwise than on account of this
indemnity agreement. In the case of parties indemnified pursuant to Section 6(a)
or 6(b) above, counsel to the indemnified parties shall be selected by ▇▇▇▇▇▇▇
▇▇▇▇▇, and, in the case of parties indemnified pursuant to Section 6(c) above,
counsel to the indemnified parties shall be selected by the Company. An
indemnifying party may participate at its own expense in the defense of any such
action; provided, however, that counsel to the indemnifying party shall not
(except with the consent of the indemnified party) also be counsel to the
indemnified party. In no event shall the indemnifying parties be liable for fees
and expenses of more than one counsel (in addition to any local counsel)
separate from their own counsel for all indemnified parties in connection with
any one action or separate but similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances. No
indemnifying party shall, without the prior written consent of the indemnified
parties, settle or compromise or consent to the entry of any judgment with
respect to any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim whatsoever in
respect of which indemnification or contribution could be sought under this
Section 6 or Section 7 hereof (whether or not the indemnified parties are actual
or potential parties thereto), unless such settlement, compromise or consent (i)
includes an unconditional release of each indemnified party from all liability
arising out of such litigation, investigation, proceeding or claim and (ii) does
not include a statement as to or an admission of fault, culpability or a failure
to act by or on behalf of any indemnified party.
30
(e) Settlement without Consent if Failure to Reimburse. If at any time
an indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, such indemnifying party
agrees that it shall be liable for any settlement of the nature contemplated by
Section 6(a)(ii) effected without its written consent if (i) such settlement is
entered into more than 45 days after receipt by such indemnifying party of the
aforesaid request, (ii) such indemnifying party shall have received notice of
the terms of such settlement at least 30 days prior to such settlement being
entered into and (iii) such indemnifying party shall not have reimbursed such
indemnified party in accordance with such request prior to the date of such
settlement.
(f) Other Agreements with Respect to Indemnification. The provisions of
this Section shall not affect any agreement among the Company and the Selling
Shareholders with respect to indemnification.
SECTION 7. Contribution. If the indemnification provided for in Section
6 hereof is for any reason unavailable to or insufficient to hold harmless an
indemnified party in respect of any losses, liabilities, claims, damages or
expenses referred to therein, then each indemnifying party shall contribute to
the aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred, (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company and the
Selling Shareholders on the one hand and the Underwriters on the other hand from
the offering of the Securities pursuant to this Agreement or (ii) if the
allocation provided by clause (i) is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the Company and the
Selling Shareholders on the one hand and of the Underwriters on the other hand
in connection with the statements or omissions, which resulted in such losses,
liabilities, claims, damages or expenses, as well as any other relevant
equitable considerations.
The relative benefits received by the Company and the Selling
Shareholders on the one hand and the Underwriters on the other hand in
connection with the offering of the Securities pursuant to this Agreement shall
be deemed to be in the same respective proportions as the total net proceeds
from the offering of the Securities pursuant to this Agreement (before deducting
expenses) received by the Company and the Selling Shareholders and the total
underwriting discount received by the Underwriters, in each case as set forth on
the cover of the Prospectus, bear to the aggregate initial public offering price
of the Securities as set forth on such cover.
The relative fault of the Company and the Selling Shareholders on the
one hand and the Underwriters on the other hand shall be determined by reference
to, among other things, whether any such untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact relates
to information supplied by the Company or the Selling Shareholders or by the
Underwriters and the parties' relative
31
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
The Company, the Selling Shareholders and the Underwriters agree that
it would not be just and equitable if contribution pursuant to this Section 7
were determined by pro rata allocation (even if the Underwriters were treated as
one entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to above in this Section
7. The aggregate amount of losses, liabilities, claims, damages and expenses
incurred by an indemnified party and referred to above in this Section 7 shall
be deemed to include any legal or other expenses reasonably incurred by such
indemnified party in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever based upon any such
untrue or alleged untrue statement or omission or alleged omission.
Notwithstanding the provisions of this Section 7, (x) 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 any such untrue or
alleged untrue statement or omission or alleged omission and (y) no Selling
Shareholder shall be required to contribute any amount in excess of such Selling
Shareholder's net proceeds (after deducting the underwriting discount, but
before expenses) from the sale of the Securities pursuant to this Agreement.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the ▇▇▇▇ ▇▇▇) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who controls an
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act shall have the same rights to contribution as such Underwriter, and
each director of the Company, each officer of the Company who signed the
Registration Statement, and each person, if any, who controls the Company or any
Selling Shareholder shall have the same rights to contribution as the Company or
such Selling Shareholder, as the case may be. The Underwriters' respective
obligations to contribute pursuant to this Section 7 are several in proportion
to the number of Initial Securities set forth opposite their respective names in
Schedule A hereto and not joint.
The provisions of this Section shall not affect any agreement among the
Company and the Selling Shareholders with respect to contribution.
SECTION 8. Representations, Warranties and Agreements to Survive
Delivery. All representations, warranties and agreements contained in this
Agreement or in
32
certificates of officers of the Company or any of its subsidiaries or of the
Selling Shareholders submitted pursuant hereto, shall remain operative and in
full force and effect, regardless of any investigation made by or on behalf of
any Underwriter or controlling person, or by or on behalf of the Company or the
Selling Shareholders, and shall survive delivery of the Securities to the
Underwriters.
SECTION 9. Termination of Agreement.
(a) Termination; General. The Representatives may terminate this
Agreement, by notice to the Company and the Selling Shareholders, at any time at
or prior to Closing Time (i) if there has been, since the time of execution of
this Agreement or since the respective dates as of which information is given in
the Prospectus (exclusive of any amendment thereto), any material adverse change
in the condition, financial or otherwise, or in the earnings, business affairs
or business prospects of the Company and its subsidiaries considered as one
enterprise, whether or not arising in the ordinary course of business, or (ii)
if there has occurred any material adverse change in the financial markets in
the United States or the international financial markets, any outbreak of
hostilities or escalation thereof or other calamity or crisis or any change or
development involving a prospective change in national or international
political, financial or economic conditions, in each case the effect of which is
such as to make it, in the judgment of the Representatives, impracticable or
inadvisable to market the Securities or to enforce contracts for the sale of the
Securities, or (iii) if trading in any securities of the Company has been
suspended or materially limited by the Commission or the Nasdaq National Market,
or if trading generally on the American Stock Exchange or the
New York Stock
Exchange or in the Nasdaq National Market has been suspended or materially
limited, or minimum or maximum prices for trading have been fixed, or maximum
ranges for prices have been required, by any of said exchanges or by such system
or by order of the Commission, the NASD or any other governmental authority, or
if a material disruption has occurred in commercial banking or securities
settlement or clearance services in the United States, or (iv) if a banking
moratorium has been declared by either federal or
New York authorities.
(b) Liabilities. If this Agreement is terminated pursuant to this
Section, such termination shall be without liability of any party to any other
party except as provided in Section 4 hereof, and provided further that Sections
1, 6, 7 and 8 shall survive such termination and remain in full force and
effect.
SECTION 10. Default by One or More of the Underwriters. If one or more
of the Underwriters shall fail at Closing Time or a Date of Delivery to purchase
the Securities which it or they are obligated to purchase under this Agreement
(the "Defaulted Securities"), the Representatives shall have the right, within
24 hours thereafter, to make arrangements for one or more of the non-defaulting
Underwriters, or any other underwriters, to purchase all, but not less than all,
of the Defaulted Securities in such amounts as may be agreed upon and upon the
terms herein set forth; if, however, the
33
Representatives shall not have completed such arrangements within such 24-hour
period, then:
(a) if the number of Defaulted Securities does not exceed 10% of the
number of Securities to be purchased on such date, each of the non-defaulting
Underwriters shall be obligated, severally and not jointly, to purchase the full
amount thereof in the proportions that their respective underwriting obligations
hereunder bear to the underwriting obligations of all non-defaulting
Underwriters, or
(b) if the number of Defaulted Securities exceeds 10% of the number of
Securities to be purchased on such date, this Agreement or, with respect to any
Date of Delivery which occurs after Closing Time, the obligation of the
Underwriters to purchase and of the Option Securities Selling Shareholders to
sell the Option Securities to be purchased and sold on such Date of Delivery,
shall terminate without liability on the part of any non-defaulting Underwriter.
No action taken pursuant to this Section shall relieve any defaulting
Underwriter from liability in respect of its default.
In the event of any such default which does not result in a termination
of this Agreement or, in the case of a Date of Delivery which is after the
Closing Time, which does not result in a termination of the obligation of the
Underwriters to purchase and the Option Securities Selling Shareholders to sell
the relevant Option Securities, as the case may be, either (i) the
Representatives or (ii) the Company and any Selling Shareholder shall have the
right to postpone Closing Time or the relevant Date of Delivery, as the case may
be, for a period not exceeding seven days in order to effect any required
changes in the Registration Statement or Prospectus or in any other documents or
arrangements. As used herein, the term "Underwriter" includes any person
substituted for an Underwriter under this Section 10.
34
SECTION 11. Default by One or More of the Selling Shareholders. If a
Selling Shareholder shall fail at the Closing Time or at a Date of Delivery to
sell and deliver the number of Securities which such Selling Shareholder or
Selling Shareholders are obligated to sell hereunder, and the remaining Selling
Shareholders do not exercise the right hereby granted to increase, pro rata or
otherwise, the number of Securities to be sold by them hereunder to the total
number to be sold by all Selling Shareholders as set forth in Schedule B hereto,
then the Underwriters may, at option of the Representatives, by notice from the
Representatives to the Company and the non-defaulting Selling Shareholders and
the Company, either (a) terminate this Agreement without any liability on the
fault of any non-defaulting party except that the provisions of Sections 1, 4,
6, 7 and 8 shall remain in full force and effect or (b) elect to purchase the
Securities which the non-defaulting Selling Shareholders have agreed to sell
hereunder. No action taken pursuant to this Section 11 shall relieve any Selling
Shareholder so defaulting from liability, if any, in respect of such default.
In the event of a default by any Selling Shareholder as referred to in
this Section 11, each of the Representatives, the Company and the non-defaulting
Selling Shareholders shall have the right to postpone the Closing Time or Date
of Delivery for a period not exceeding seven days in order to effect any
required change in the Registration Statement or Prospectus or in any other
documents or arrangements.
SECTION 12. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the
Underwriters shall be directed to the Representatives at North Tower, World
Financial Center,
New York,
New York 10281-1201, attention of Syndicate
Operations, with a copy to Debevoise & ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇, attention of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇; notices to the Company shall be directed
to it at ▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇, attention of ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇, Chief Financial Officer, with a copy to ▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P., 3700
▇▇▇▇▇▇▇ ▇▇▇▇ Center, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇, attention of
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇; and notices to the Selling Shareholders shall be directed to
the Selling Shareholders c/o ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Odyssey HealthCare, Inc., ▇▇▇ ▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇, with a copy to Venture Law Group,
▇▇▇▇ ▇, ▇▇▇ ▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇, attention of
▇▇▇ ▇▇▇.
SECTION 13. Parties. This Agreement shall inure to the benefit of and
be binding upon the each of the Underwriters, the Company and the Selling
Shareholders and their respective successors. Nothing expressed or mentioned in
this Agreement is intended or shall be construed to give any person, firm or
corporation, other than the Underwriters, the Company and the Selling
Shareholders and their respective successors and the controlling persons and
officers and directors referred to in Sections 6 and 7 and their heirs and legal
representatives, any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provision herein contained. This Agreement and
all conditions and provisions hereof are intended to be for the sole and
exclusive benefit
35
of the Underwriters, the Company and the Selling Shareholders and their
respective successors, and said controlling persons and officers and directors
and their heirs and legal representatives, and for the benefit of no other
person, firm or corporation. No purchaser of Securities from any Underwriter
shall be deemed to be a successor by reason merely of such purchase.
SECTION 14. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK. SPECIFIED
TIMES OF DAY REFER TO NEW YORK CITY TIME.
SECTION 15. Effect of Headings. The Article and Section headings herein
and the Table of Contents are for convenience only and shall not affect the
construction hereof.
36
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company and the Attorney-in-Fact for
the Selling Shareholders a counterpart hereof, whereupon this instrument, along
with all counterparts, will become a binding agreement among the Underwriters,
the Company and the Selling Shareholders in accordance with its terms.
Very truly yours,
ODYSSEY HEALTHCARE, INC.
By:
----------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Chief Executive
Officer and Chairman of the Board
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------------
For himself and as Attorney-in-Fact
acting on behalf of the Selling
Shareholders named in Schedule B hereto
CONFIRMED AND ACCEPTED,
as of the date first above written:
▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO.
▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ & ▇▇▇▇▇
INCORPORATED
BANC OF AMERICA SECURITIES LLC
By: ▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ & ▇▇▇▇▇
INCORPORATED
By:
---------------------------------------
Authorized Signatory
For themselves and as Representatives of the other Underwriters named in
Schedule A hereto.