2,500,000 Shares
ADVANCED HEALTH CORPORATION
Common Stock
UNDERWRITING AGREEMENT
October __, 1997
▇▇▇▇▇ & COMPANY
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLC
SBC WARBURG DILLON READ INC.
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ & COMPANY, LLC
As Representatives of the several Underwriters
▇/▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
1. Introductory. Advanced Health Corporation, a Delaware corporation (the
"Company"), and certain of the selling stockholders named in Schedule B hereto
(the "Firm Selling Stockholders") propose to sell, pursuant to the terms of this
Agreement, to the several underwriters named in Schedule A hereto (the
"Underwriters" or, each, an "Underwriter"), an aggregate of 2,500,000 shares of
Common Stock, par value $.01 per share (the "Common Stock") of the Company. The
aggregate of 2,500,000 shares so proposed to be sold is hereinafter referred to
as the "Firm Stock". The Company, certain of the Firm Selling Stockholders named
in Schedule B hereto and certain selling stockholders of the Company designated
as management selling stockholders in Schedule B hereto (the "Management Selling
Stockholders" and, together with the Firm Selling Stockholders, the "Selling
Stockholders") may also sell to the Underwriters, upon the terms and conditions
set forth in Section 3 hereof, up to an additional 375,000 shares of Common
Stock (the "Optional Stock"). The Firm Stock and the Optional Stock are
hereinafter collectively referred to as the "Stock". ▇▇▇▇▇ & Company ("Cowen"),
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLC, SBC Warburg Dillon Read Inc. and ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ &
Company, LLC are acting as
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representatives of the several Underwriters and in such capacity are hereinafter
referred to as the "Representatives".
2. (a) Representations and Warranties of the Company and the Management
Selling Stockholders. The Company and the Management Selling Stockholders
represent and warrant to, and agree with, the several Underwriters that:
(i) A registration statement on Form S-1 (File No. 333-35115), as
amended, in the form in which it became or becomes effective and also in
such form as it may be when any post-effective amendment thereto shall
become effective with respect to the Stock, including preeffective
prospectuses included as part of the registration statement as originally
filed or as part of any amendment or supplement thereto, or filed pursuant
to Rule 424 under the Securities Act of 1933, as amended (the "Securities
Act"), and the rules and regulations (the "Rules and Regulations") of the
Securities and Exchange Commission (the "Commission") thereunder, copies of
which have heretofore been delivered to you, has been carefully prepared by
the Company in conformity with the requirements of the Securities Act and
has been filed with the Commission under the Securities Act; and one or
more amendments to such registration statement, including in each case an
amended preeffective prospectus, copies of which amendments have heretofore
been delivered to you, have been so prepared and filed (as so amended, the
"Registration Statement"). If it is contemplated, at the time this
Agreement is executed, that a post-effective amendment to the Registration
Statement will be filed and must be declared effective before the offering
of the Stock may commence, the term "Registration Statement" as used in
this Agreement means the Registration Statement as amended by said
post-effective amendment. The term "Registration Statement" as used in this
Agreement shall also include any registration statement relating to the
Stock that is filed and declared effective pursuant to Rule 462(b) under
the Securities Act. The term "Prospectus" as used in this Agreement means
the prospectus in the form included in the Registration Statement, or, (A)
if the prospectus included in the Registration Statement omits information
in reliance on Rule 430A under the Securities Act and such information is
included in a prospectus filed with the Commission pursuant to Rule 424(b)
under the Securities Act, the term "Prospectus" as used in this Agreement
means the prospectus in the form included in the Registration Statement as
supplemented by the addition of the Rule 430A information contained in the
prospectus filed with the Commission pursuant to Rule 424(b) and (B) if
prospectuses that meet the requirements of Section 10(a) of the Securities
Act are delivered pursuant to Rule 434 under the Securities Act, then (i)
the term "Prospectus" as used in this Agreement means the "prospectus
subject to completion" (as such term is defined in Rule 434(g) under the
Securities Act) as supplemented by (a) the addition of Rule 430A
information or other information contained in the form of prospectus
delivered pursuant to Rule 434(b)(2) under the Securities Act or (b) the
information contained in the term sheets described
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in Rule 434(b)(3) under the Securities Act, and (ii) the date of such
prospectuses shall be deemed to be the date of the term sheets. The term
"Preeffective Prospectus" as used in this Agreement means the prospectus
subject to completion in the form included in the Registration Statement at
the time of the initial filing of the Registration Statement with the
Commission, and as such prospectus shall have been amended from time to
time prior to the date of the Prospectus.
(ii) The Commission has not issued or threatened to issue any order
preventing or suspending the use of any Preeffective Prospectus, and, at
its date of issue, each Preeffective Prospectus conformed in all material
respects with the requirements of the Securities Act and did not include
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not
misleading; and, when the Registration Statement becomes effective and at
all times subsequent thereto up to and including the Closing Dates (as
hereinafter defined), the Registration Statement and the Prospectus and any
amendments or supplements thereto contained and will contain all material
statements and information required to be included therein by the
Securities Act and conformed and will conform in all material respects to
the requirements of the Securities Act and neither the Registration
Statement nor the Prospectus, nor any amendment or supplement thereto,
included or will include any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under which they
were made, not misleading; provided, however, that the foregoing
representations, warranties and agreements shall not apply to information
contained in or omitted from any Preeffective Prospectus or the
Registration Statement or the Prospectus or any such amendment or
supplement thereto in reliance upon, and in conformity with, written
information regarding any Underwriter furnished to the Company by or on
behalf of any Underwriter, directly or through you, specifically for use in
the preparation thereof; there is no lease, franchise, contract, agreement
or document required to be described in the Registration Statement or
Prospectus or to be filed as an exhibit to the Registration Statement which
is not described or filed therein as required; and all descriptions of any
such leases, franchises, contracts, agreements or documents contained in
the Registration Statement are accurate and complete descriptions of such
documents in all material respects.
(iii) Subsequent to the respective dates as of which information is
given in the Registration Statement and Prospectus, and except as set forth
or contemplated in the Prospectus, neither the Company nor any of its
subsidiaries has incurred any material liabilities or obligations, direct
or contingent, nor entered into any transactions not in the ordinary course
of business, and there has not been any material adverse change in the
condition (financial or otherwise), properties, business,
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management, prospects, net worth or results of operations of the Company
and its subsidiaries considered as a whole, or any change in the capital
stock, short-term or long-term debt of the Company and its subsidiaries
considered as a whole.
(iv) The financial statements, together with the related notes and
schedules, set forth in the Prospectus and elsewhere in the Registration
Statement fairly present, on the basis stated in the Registration
Statement, the financial position and the results of operations and changes
in financial position of the entities purported to be shown thereby at the
respective dates or for the respective periods therein specified and have
been prepared in accordance with generally accepted accounting principles
applied on a consistent basis except as may be set forth in the Prospectus.
The pro forma financial statements set forth in the Registration Statement
fairly presents, on the basis stated in the Registration Statement, the
information set forth therein, has been prepared in accordance with the
Rules and Regulations and the guidelines of the Commission with respect to
pro forma financial statements, has been properly compiled on the pro forma
bases set forth therein and the assumptions used in the preparation thereof
are reasonable and the adjustments used therein are appropriate to give
effect to the transactions or circumstances referred to therein. The
selected financial data set forth in the Prospectus under the caption
"Selected Consolidated Financial Data" fairly present, on the basis stated
in the Registration Statement, the information set forth therein.
(v) ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, LLP, who have expressed their opinions on the
audited financial statements and related schedules included in the
Registration Statement and the Prospectus, are independent public
accountants as required by the Securities Act and the Rules and
Regulations.
(vi) The Company has and each of its subsidiaries have been duly
organized and are validly existing and in good standing as corporations
under the laws of their respective jurisdictions of organization, with
power and authority (corporate and other) to own or lease their properties
and to conduct their businesses as described in the Prospectus; the Company
is and each of its subsidiaries are in possession of and operating in
compliance with all grants, authorizations, licenses, permits, consents,
certificates and orders required for the conduct of their respective
businesses, all of which are valid and in full force and effect; and the
Company is and each of such subsidiaries are duly qualified to do business
and in good standing as foreign corporations in all other jurisdictions
where their ownership or leasing of properties or the conduct of their
businesses requires such qualification, except where the failure to be so
qualified would not have a material adverse effect on the condition
(financial or otherwise), properties, business, management, prospects, net
worth or results of operations of the Company and its subsidiaries
considered as a whole. The Company has and each of its subsidiaries have
all requisite power and authority, and all
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necessary grants, authorizations, licenses, permits, consents,
certificates, orders, approvals, registrations and qualifications of and
from all public regulatory or governmental agencies and bodies to own,
lease and operate their respective properties and conduct their respective
businesses as now being conducted and as described in the Registration
Statement and the Prospectus, and no such consent, approval, authorization,
order, registration, qualification, license or permit contains a materially
burdensome restriction not adequately disclosed in the Registration
Statement and the Prospectus. The Company's only significant subsidiaries
(as defined in Rule 1-02(w) of Regulation S-X under the Securities Act) are
those set forth in Exhibit 21 to the Registration Statement.
(vii) The Company's authorized and outstanding capital stock is on the
date hereof, and will be on the Closing Dates (as hereinafter defined), as
set forth under the heading "Capitalization" in the Prospectus; the
outstanding shares of Common Stock of the Company conform to the
description thereof in the Prospectus and have been duly authorized and
validly issued and are fully paid and nonassessable; and have been issued
in compliance with all federal and state securities laws and were not
issued in violation of or subject to any preemptive rights or similar
rights to subscribe for or purchase securities. Except as disclosed in and
or contemplated by the Prospectus and the financial statements of the
Company and related notes thereto included in the Prospectus, the Company
does not have outstanding any 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 its capital stock or any such options, rights,
convertible securities or obligations, except for options granted
subsequent to the date of information provided in the Prospectus pursuant
to the Company's stock option plans disclosed in the Prospectus. The
description of the Company's stock option and other stock plans or
arrangements, and the options or other rights granted or exercised
thereunder, as set forth in the Prospectus, accurately and fairly presents
the information required to be shown with respect to such plans,
arrangements, options and rights. Except as set forth in the Prospectus,
all outstanding shares of capital stock of each subsidiary have been duly
authorized and validly issued, and are fully paid and nonassessable and
(except for directors' qualifying shares) are owned directly by the Company
or by another wholly owned subsidiary of the Company free and clear of any
liens, encumbrances, equities or claims.
(viii) The Stock to be issued and sold by the Company to the
Underwriters hereunder has been duly and validly authorized and, when
issued and delivered against payment therefor as provided herein, will be
duly and validly issued, fully paid and nonassessable and free of any
preemptive or similar rights and will conform to the description thereof in
the Prospectus.
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(ix) Except as set forth in the Prospectus, there are no legal or
governmental proceedings pending to which the Company or any of its
subsidiaries or affiliates is a party or of which any property of the
Company or any subsidiary or affiliate is subject, which, if determined
adversely to the Company or any such subsidiary or affiliate, might
individually or in the aggregate (i) prevent or adversely affect the
transactions contemplated by this Agreement, (ii) suspend the effectiveness
of the Registration Statement, (iii) prevent or suspend the use of the
Prospectus in any jurisdiction or (iv) result in a material adverse change
in the condition (financial or otherwise), properties, business,
management, prospects, net worth or results of operations of the Company
and its subsidiaries considered as a whole; and to the best of the
Company's knowledge no such proceedings are threatened or contemplated
against the Company or any subsidiary or affiliate by governmental
authorities or others. The Company is not a party to nor subject to the
provisions of any material injunction, judgment, decree or order of any
court, regulatory body or other governmental agency or body. The
description of the Company's litigation under the heading "Legal
Proceedings" in the Prospectus is true and correct and complies with the
Rules and Regulations.
(x) The execution, delivery and performance of this Agreement and the
consummation of the transactions herein contemplated will not result in a
breach or violation of any of the terms or provisions of or constitute a
default under any indenture, mortgage, deed of trust, note agreement or
other agreement or instrument to which the Company or any of its
subsidiaries is a party or by which it or any of its properties is or may
be bound, the Certificate of Incorporation, By-laws or other organizational
documents of the Company or any of its subsidiaries, or any law, order,
rule or regulation of any court or governmental agency or body having
jurisdiction over the Company or any of its subsidiaries or any of their
properties or result in the creation of a lien.
(xi) No consent, approval, authorization or order of any court or
governmental agency or body is required for the consummation by the Company
of the transactions contemplated by this Agreement, except such as may be
required by the National Association of Securities Dealers, Inc. (the
"NASD") or under the Securities Act or the securities or "Blue Sky" laws of
any jurisdiction in connection with the purchase and distribution of the
Stock by the Underwriters.
(xii) The statements set forth under the captions "Risk Factors
Government Regulation," "Risk Factors - FDA Regulation" and "Business
Government Regulation" in the Prospectus are accurate and fairly represent
the information disclosed therein.
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(xiii) The Company has the full corporate power and authority to enter
into this Agreement and to perform its obligations hereunder (including to
issue, sell and deliver the Stock), and this Agreement has been duly and
validly authorized, executed and delivered by the Company and is a valid
and binding obligation of the Company, enforceable against the Company in
accordance with its terms, except to the extent that rights to indemnity
and contribution hereunder may be limited by federal or state securities
laws or the public policy underlying such laws.
(xiv) The Company and its subsidiaries are in all material respects in
compliance with, and conduct their businesses in conformity with, all
applicable federal, state, local and foreign laws, rules and regulations of
any court or governmental agency or body; to the knowledge of the Company,
otherwise than as set forth in the Registration Statement and the
Prospectus, no prospective change in any of such federal or state laws,
rules or regulations has been adopted which, when made effective, would
have a material adverse effect on the operations of the Company and its
subsidiaries.
(xv) The Company's conduct of its business complies in all material
respects with the statutes relating to the corporate practice of medicine
in each jurisdiction in which the Company does business, including in New
York, New Jersey, Connecticut, Pennsylvania, Delaware, Georgia and
Tennessee.
(xvi) To the extent that the Company enters into risk-sharing or
capitation arrangements in the manner described in the Prospectus, the
Company is or will be exempt from regulation under any and all local, state
and federal laws, rules and regulations pertaining to the regulation of
insurance companies.
(xvii) The Company and its subsidiaries have filed all necessary
federal, state, local and foreign income, payroll, franchise and other tax
returns and have paid all taxes shown as due thereon or with respect to any
of their properties, and there is no tax deficiency that has been, or to
the knowledge of the Company is likely to be, asserted against the Company
or any of its subsidiaries or any of their respective properties or assets
that would adversely affect the financial position, business or operations
of the Company and its subsidiaries.
(xviii) No person or entity has the right to require registration of
shares of Common Stock or other securities of the Company because of the
filing or effectiveness of the Registration Statement, except for persons
and entities who have expressly waived such right in connection with the
Registration Statement or who have been given proper notice and have failed
to exercise such right within the time or times required under the terms
and conditions of such right.
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(xix) Neither the Company nor any of its officers, directors or
affiliates has taken or will take, directly or indirectly, any action
designed or intended to stabilize or manipulate the price of any security
of the Company, or which caused or resulted in, or which might in the
future reasonably be expected to cause or result in, stabilization or
manipulation of the price of any security of the Company.
(xx) The Company has provided you with all financial statements since
August 27, 1993 to the date hereof that are available to the officers of
the Company, including financial statements for the months of [July and
August] of 1997.
(xxi) The Company and its subsidiaries own or possess all trademarks,
trademark registrations, service marks, service ▇▇▇▇ registrations,
tradenames, copyrights, licenses, inventions, trade secrets and rights
described in the Prospectus as being owned by them or any of them or
necessary for the conduct of their respective businesses, and the Company
is not aware of any claim to the contrary or any challenge by any other
person to the rights of the Company and its subsidiaries with respect to
the foregoing. The Company's business as now conducted and as proposed to
be conducted does not and will not infringe or conflict with in any
material respect patents, trademarks, service marks, trade names,
copyrights, trade secrets, licenses or other intellectual property or
franchise right of any person. No claim has been made against the Company
alleging the infringement by the Company of any patent, trademark, service
▇▇▇▇, tradename, copyright, trade secret, license in or other intellectual
property right or franchise right of any person.
(xxii) The Company and its subsidiaries have performed all material
obligations required to be performed by them under all contracts required
by Item 601(b)(10) of Regulation S-K under the Securities Act to be filed
as exhibits to the Registration Statement, and neither the Company nor any
of its subsidiaries nor any other party to such contract is in default
under or in breach of any such obligations. Neither the Company nor any of
its subsidiaries has received any notice of such default or breach.
(xxiii) The Company is not aware that (A) any executive, key employee
or significant group of employees of the Company or any subsidiary plans to
terminate employment with the Company or any such subsidiary or (B) any
such executive or key employee is subject to any noncompete, nondisclosure,
confidentiality, employment, consulting or similar agreement that would be
violated by the present or proposed business activities of the Company and
its subsidiaries. Neither the Company nor any subsidiary has or expects to
have any liability for any prohibited transaction or funding deficiency or
any complete or partial withdrawal liability with respect to any pension,
profit sharing or other plan which is subject to the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), to which the
9
Company or any subsidiary makes or ever has made a contribution and in
which any employee of the Company or any subsidiary is or has ever been a
participant. With respect to such plans, the Company and each subsidiary
are in compliance in all material respects with all applicable provisions
of ERISA.
(xxiv) The Company has obtained the written agreement described in
Section 8(o) of this Agreement from each of its officers, directors and
holders of Common Stock listed on Schedule C hereto.
(xxv) The Company and its subsidiaries have, and the Company and its
subsidiaries as of the Closing Dates will have, good and marketable title
to all personal property owned or proposed to be owned by them which is
material to the business of the Company or of its subsidiaries, in each
case free and clear of all liens, encumbrances and defects except such as
are described in the Prospectus or such as would not have a material
adverse effect on the Company and its subsidiaries considered as a whole;
and any real property and buildings held under lease by the Company and its
subsidiaries are held by them under valid, subsisting and enforceable
leases (assuming the lessors under such leases have full right, power and
authority to perform their obligations under such leases) with such
exceptions as would not have a material adverse effect on the Company and
its subsidiaries considered as a whole, in each case except as described in
the Prospectus.
(xxvi) The Company and its subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks and in
such amounts as are customary in the businesses in which they are engaged;
and neither the Company nor any subsidiary of the Company has any reason to
believe that it will not be able to renew its existing insurance coverage
as and when such coverage expires, to obtain similar coverage from similar
insurers as may be necessary to continue their business or to obtain any
reinsurance in connection with risk-sharing or capitation arrangements
which the Company may enter into as described in the Prospectus at a cost
that would not materially and adversely affect the condition (financial or
otherwise), properties, business, management, prospects, net worth or
results of operations of the Company and its subsidiaries considered as a
whole, except as described in the Prospectus.
(xxvii) Other than as contemplated by this Agreement, there is no
broker, finder or other party that is entitled to receive from the Company
any brokerage or finder's fee or other fee or commission as a result of any
of the transactions contemplated by this Agreement.
(xxviii) The Company and each of its subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurances
that (i)
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transactions are executed in accordance with management's general or
specific authorization; (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain accountability for assets;
(iii) access to assets is permitted only in accordance with management's
general or specific authorization; and (iv) the recorded accountability for
assets is compared with existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
(xxix) To the Company's knowledge, neither the Company nor any of its
subsidiaries nor any employee or agent of the Company or any of its
subsidiaries has made any payment of funds of the Company or any of its
subsidiaries or received or retained any funds in violation of any law,
rule or regulation, which payment, receipt or retention of funds is of a
character required to be disclosed in the Prospectus.
(xxx) Neither the Company nor any of its subsidiaries is 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"), and the rules and regulations thereunder, and the Company
and its subsidiaries intend in the future to conduct their affairs in such
a manner as to ensure that they will not become an "investment company" or
a company "controlled" by an "investment company" within the meaning of the
1940 Act and such rules and regulations.
(xxxi) There has been no storage, disposal, generation, manufacture,
refinement, transportation, handling or treatment of medical wastes or
hazardous substances by the Company or any of its subsidiaries (or, to the
knowledge of the Company, any of its predecessors in interest) at, upon or
from any of the property now or previously owned or leased by the Company
or any of its subsidiaries in violation of any applicable law, ordinance,
rule, regulation, order, judgment, decree or permit or which would require
remedial action under any applicable law, ordinance, rule, regulation,
order, judgment, decree or permit, except for any violation or remedial
action which would not have, or could not be reasonably likely to have,
singularly or in the aggregate with all such violations and remedial
actions, a material adverse effect on the condition (financial or
otherwise), properties, business, management, prospects, net worth or
results of operations of the Company and its subsidiaries considered as a
whole; there has been no material spill, discharge, leak, emission,
injection, escape, dumping or release of any kind onto such property or of
any medical wastes or hazardous substances due to or caused by the Company
or any of its subsidiaries or with respect to which the Company or any of
its subsidiaries had knowledge, except for any such spill, discharge, leak,
emission, injection, escapes, dumpings and releases which would not have or
would not be reasonably likely to have, singularly or in the aggregate with
all such spills, discharges, leaks, emissions, injections, escapes,
dumpings and releases, such a material adverse effect; and the
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terms "hazardous substances" and "medical wastes" shall have the meanings
specified in any applicable local, state, federal and foreign laws or
regulations with respect to environmental protection.
(xxxii) Each certificate signed by any officer of the Company and
delivered to the Underwriters or counsel for the Underwriters shall be
deemed to be a representation and warranty by the Company as to the matters
covered thereby.
(b) Representations and Warranties and Agreements of the Selling
Stockholders. Each Selling Stockholder represents and warrants to, and agrees
with, the several Underwriters that:
(i) Such Selling Stockholder now has, and on the Closing Dates will
have, valid and marketable title to the Stock to be sold by such Selling
Stockholder, free and clear of any lien, claim, security interest or other
encumbrance, including, without limitation, any restriction on transfer,
and has full right, power and authority to enter into this Agreement, the
Power of Attorney and the Custody Agreement (each as hereinafter defined),
and, to the extent such Selling Stockholder is not a natural person, has
been duly organized and is validly existing and in good standing in its
corporate or other capacity under the laws of its jurisdiction of
organization.
(ii) Such Selling Stockholder now has, and on the Closing Dates will
have, upon delivery of and payment for each share of Stock hereunder, full
right, power and authority, and any approval required by law to sell,
transfer, assign and deliver the Stock being sold by such Selling
Stockholder hereunder, and each of the several Underwriters will acquire
valid and marketable title to all of the Stock being sold to the
Underwriters by such Selling Stockholder, free and clear of any liens,
encumbrances, equities claims, restrictions on transfer or other defects
whatsoever.
(iii) Such Selling Stockholder has duly executed and delivered a power
of attorney, in substantially the form heretofore delivered by the
Representatives (each, a "Power of Attorney"), appointing [▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, M.D.], [▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇] and [▇▇▇▇ ▇. ▇▇▇▇▇▇▇], or any of them, as
attorney-in-fact (the "Attorneys-in-fact") with authority to execute and
deliver this Agreement on behalf of such Selling Stockholder, to authorize
the delivery of the shares of Stock to be sold by such Selling Stockholder
hereunder and otherwise to act on behalf of such Selling Stockholder in
connection with the transactions contemplated by this Agreement.
(iv) Such Selling Stockholder has duly executed and delivered a
custody agreement, in substantially the form heretofore delivered by the
Representatives (each, a "Custody Agreement"), with [The Bank of New York]
as custodian (each, a "Custodian"), pursuant to which certificates in
negotiable form for the shares of Stock
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to be sold by such Selling Stockholder hereunder have been placed in
custody for delivery under this Agreement.
(v) Such Selling Stockholder has, by execution and delivery of each of
this Agreement, the Power of Attorney and the Custody Agreement, created
valid and binding obligations of such Selling Stockholder, enforceable
against such Selling Stockholder in accordance with its terms, except to
the extent that rights to indemnity hereunder may be limited by federal or
state securities laws or the public policy underlying such laws.
(vi) Such Selling Stockholder has not taken, and will not take,
directly or indirectly, any action designed to, 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 Stock pursuant to the distribution contemplated by this Agreement, and
other than as permitted by the Securities Act, has not distributed and will
not distribute any prospectus or other offering material in connection with
the offering and sale of the Stock.
(vii) The performance of this Agreement, the Custody Agreement and the
Power of Attorney, and the consummation of the transactions contemplated
hereby and thereby will not require any consent, approval, authorization or
other order of any court, regulatory body, administrative agency or other
governmental body (except as such may be required under the Securities Act,
state securities laws or Blue Sky laws) and will not result in a breach or
violation by such Selling Stockholder of any of the terms or provisions of,
or constitute a default by such Selling Stockholder under, any indenture,
mortgage, deed of trust, trust (constructive or other), loan agreement,
lease, franchise, license, or other agreement or instrument to which such
Selling Stockholder is a party or by which such Selling Stockholder or any
of its properties, or to such Selling Stockholder's knowledge, any statute,
decree, order, rule or regulation of any court or governmental agency or
body applicable to such Selling Stockholder or any of its properties.
(viii) Such parts of the Registration Statement under the caption
"Principal and Selling Stockholders" which specifically relate to such
Selling Stockholder do not, and will not on the Closing Dates, contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not
misleading.
(ix) At any time during the period described in paragraph 4(c) hereof,
if there is any change in the information referred to in paragraph 2(b)(ix)
above, the Selling Stockholders will immediately notify you of such change.
13
Each Selling Stockholder agrees that the shares of Stock represented by the
certificates held in custody under its respective Custody Agreement are for the
benefit of and coupled with and subject to the interests of the Underwriters,
the other Selling Stockholders and the Company hereunder, and that the
arrangement for such custody and the appointment of the Attorneys-in-fact are
irrevocable; that the obligations of such Selling Stockholder hereunder shall
not be terminated by operation of law, whether by death or incapacity,
liquidation or distribution of such Selling Stockholder, or any other event; and
that if such Selling Stockholder should die or become incapacitated or is
liquidated or dissolved or any other event occurs, before the delivery of the
Stock hereunder, certificates for the Stock to be sold by such Selling
Stockholder in accordance with the terms and conditions of this Agreement and
its applicable Custody Agreement, and action taken by the Attorneys-in-fact or
any of them under the Power of Attorney shall be valid as if such death,
incapacity, liquidation or dissolution or other event had not occurred, whether
or not the applicable Custodian, the Attorneys-in-fact or any of them shall have
notice of such death, incapacity, liquidation or dissolution or other event.
3. Purchase by, and Sale and Delivery to, Underwriters--Closing Dates. The
Company and the Firm Selling Stockholders agree, severally and not jointly, to
sell to the Underwriters the Firm Stock, with the number of shares to be sold by
the Company being 2,000,000 shares, and the number of shares to be sold by each
Firm Selling Stockholder being that number set opposite its name in Schedule B;
and on the basis of the representations, warranties, covenants and agreements
herein contained, but subject to the terms and conditions herein set forth, the
Underwriters agree, severally and not jointly, to purchase the Firm Stock from
the Company and the Firm Selling Stockholders the number of shares of Firm Stock
to be purchased by each Underwriter being set opposite its name in Schedule A,
subject to adjustment in accordance with Section 12 hereof. The number of shares
of Stock to be purchased by each Underwriter from each Firm Selling Stockholder
hereunder shall bear the same proportion to the total number of shares of Stock
to be purchased by such Underwriter hereunder as the number of shares of Stock
being sold by each Firm Selling Stockholder bears to the total number of shares
of Stock being sold by both Firm Selling Stockholders, subject to adjustment by
the Representatives to eliminate fractions.
The purchase price per share, net of commissions, to be paid by the
Underwriters to the Company and the Firm Selling Stockholders will be $__.__ per
share (the "Purchase Price").
The Company and the Firm Selling Stockholders will deliver the Firm Stock
to the Representatives for the respective accounts of the several Underwriters
in the form of definitive certificates, issued in such names and in such
denominations as the Representatives may direct by notice in writing to the
Company and the Firm Selling Stockholders given at or prior to 12:00 Noon, New
York Time, on the second full business day preceding the First
14
Closing Date (as defined below) or, if no such direction is received, in the
names of the respective Underwriters or in such other names as Cowen may
designate (solely for the purpose of administrative convenience) and in such
denominations as Cowen may determine, against payment of the aggregate Purchase
Price therefor by wire transfer of immediately available funds, payable to the
order of the Company and [The Bank of New York] as Custodian for the Firm
Selling Stockholders, all at the offices of Shearman & Sterling, ▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇. The time and date of the delivery and closing
shall be at 10:00 A.M., New York Time, on October __, 1997, in accordance with
Rule 15c6-1 of the Exchange Act. The time and date of such payment and delivery
are herein referred to as the "Firm Closing Date". The Firm Closing Date and the
location of delivery of, and the form of payment for, the Firm Stock may be
varied by agreement between the Company, the Firm Selling Stockholders and
Cowen. The Firm Closing Date may be postponed pursuant to the provisions of
Section 12.
The Company and the Firm Selling Stockholders shall make the certificates
for the Stock available to the Representatives for examination on behalf of the
Underwriters not later than 10:00 A.M., New York Time, on the business day
preceding the Firm Closing Date at the offices of ▇▇▇▇▇ & Company, ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇.
It is understood that Cowen, individually and not as Representative of the
several Underwriters, may (but shall not be obligated to) make payment to the
Company or the Firm Selling Stockholders on behalf of any Underwriter or
Underwriters, for the Stock to be purchased by such Underwriter or Underwriters.
Any such payment by Cowen shall not relieve such Underwriter or Underwriters
from any of its or their other obligations hereunder.
The several Underwriters agree to make a public offering of the Firm Stock
at the public offering price as soon after the effectiveness of the Registration
Statement as in their judgment is advisable. The Representatives shall promptly
advise the Company and the Firm Selling Stockholders of the making of the public
offering.
For the purpose of covering any over-allotments in connection with the
distribution and sale of the Firm Stock as contemplated by the Prospectus, the
Company and certain of the Selling Stockholders hereby grant to the Underwriters
an option to purchase, severally and not jointly, up to the aggregate number of
shares of Optional Stock set forth opposite the Company's and each such Selling
Stockholder's respective name on Schedule B hereto, for an aggregate of up to
375,000 shares. The price per share to be paid for the Optional Stock shall be
the Purchase Price. The option granted hereby may be exercised as to all or any
part of the Optional Stock at any time, and from time to time, not more than
thirty (30) days subsequent to the effective date of this Agreement. No Optional
Stock shall be sold and delivered unless the Firm Stock previously has been, or
simultaneously is, sold and delivered. The right to purchase the Optional Stock
or any portion thereof may be
15
surrendered and terminated at any time upon notice by the Underwriters to the
Company and the Attorneys-in-fact, on behalf of the Selling Stockholders.
The option granted hereby may be exercised by the Underwriters by giving
written notice from Cowen to the Company and the Attorneys-in-fact, on behalf of
the Selling Stockholders, setting forth the number of shares of the Optional
Stock to be purchased by them and the date and time for delivery of and payment
for the Optional Stock. Each date and time for delivery of and payment for the
Optional Stock (which may be the Firm Closing Date, but not earlier) is herein
called the "Option Closing Date" and shall in no event be earlier than two (2)
business days nor later than ten (10) business days after written notice is
given. The Option Closing Date and the Firm Closing Date are herein called the
"Closing Dates". All purchases of Optional Stock from the Company and the
Selling Stockholders shall be made on a pro rata basis. Optional Stock shall be
purchased for the account of each Underwriter in the same proportion as the
number of shares of Firm Stock set forth opposite such Underwriter's name in
Schedule A hereto bears to the total number of shares of Firm Stock (subject to
adjustment by the Underwriters to eliminate odd lots). Upon exercise of the
option by the Underwriters, the Company and the Selling Stockholders agree to
sell to the Underwriters the number of shares of Optional Stock set forth in the
written notice of exercise and the Underwriters agree, severally and not jointly
and subject to the terms and conditions herein set forth, to purchase the number
of such shares determined as aforesaid.
The Company and the Selling Stockholders will deliver the Optional Stock to
the Underwriters (in the form of definitive certificates, issued in such names
and in such denominations as the Representatives may direct by notice in writing
to the Company and the Attorneys-in-fact, on behalf of the Selling Stockholders
given at or prior to 12:00 Noon, New York Time, on the second full business day
preceding the Option Closing Date or, if no such direction is received, in the
names of the respective Underwriters or in such other names as Cowen may
designate (solely for the purpose of administrative convenience) and in such
denominations as Cowen may determine), against payment of the aggregate Purchase
Price therefor by wire transfer of immediately available funds, payable to the
order of the Company and to [The Bank of New York] as Custodian for the Selling
Stockholders or payable as directed by such Custodian all at the offices of
Shearman & Sterling, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇. The Company
and the Selling Stockholders shall make the certificates for the Optional Stock
available to the Underwriters for examination not later than 10:00 A.M., New
York Time, on the business day preceding the Option Closing Date at the offices
of ▇▇▇▇▇ & Company, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇. The Option
Closing Date and the location of delivery of, and the form of payment for, the
Option Stock may be varied by agreement between the Company, the Selling
Stockholders and Cowen. The Option Closing Date may be postponed pursuant to the
provisions of Section 12.
16
4. Covenants and Agreements of the Company. The Company covenants and
agrees with the several Underwriters that:
(a) The Company will (i) if the Company and the Representatives have
determined not to proceed pursuant to Rule 430A, use its best efforts to
cause the Registration Statement to become effective, (ii) if the Company
and the Representatives have determined to proceed pursuant to Rule 430A,
use its best efforts to comply with the provisions of and make all
requisite filings with the Commission pursuant to Rule 430A and Rule 424 of
the Rules and Regulations and (iii) if the Company and the Representatives
have determined to deliver Prospectuses pursuant to Rule 434 of the Rules
and Regulations, to use its best efforts to comply with all the applicable
provisions thereof. The Company will advise the Representatives promptly as
to the time at which the Registration Statement becomes effective, will
advise the Representatives promptly of the issuance by the Commission of
any stop order suspending the effectiveness of the Registration Statement
or of the institution of any proceedings for that purpose, and will use its
best efforts to prevent the issuance of any such stop order and to obtain
as soon as possible the lifting thereof, if issued. The Company will advise
the Representatives promptly of the receipt of any comments of the
Commission or any request by the Commission for any amendment of or
supplement to the Registration Statement or the Prospectus or for
additional information and will not at any time file any amendment to the
Registration Statement or supplement to the Prospectus which shall not
previously have been submitted to the Representatives a reasonable time
prior to the proposed filing thereof or to which the Representatives shall
reasonably object in writing or which is not in compliance with the
Securities Act and the Rules and Regulations.
(b) The Company will prepare and file with the Commission, promptly
upon the request of the Representatives, any amendments or supplements to
the Registration Statement or the Prospectus which in the reasonable
opinion of the Representatives may be necessary to enable the several
Underwriters to continue the distribution of the Stock and will use its
best efforts to cause the same to become effective as promptly as possible.
(c) If at any time after the effective date of the Registration
Statement when a prospectus relating to the Stock is required to be
delivered under the Securities Act any event relating to or affecting the
Company or any of its subsidiaries occurs as a result of which the
Prospectus or any other prospectus as then in effect would include an
untrue statement of a material fact, or omit to state any material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, or if it is necessary at any
time to amend the Prospectus to comply with the Securities Act, the Company
will promptly notify the Representatives thereof and will prepare an
amended or
17
supplemented prospectus which will correct such statement or omission; and
in case any Underwriter is required to deliver a prospectus relating to the
Stock nine (9) months or more after the effective date of the Registration
Statement, the Company upon the request of the Representatives and at the
expense of such Underwriter will prepare promptly such prospectus or
prospectuses as may be necessary to permit compliance with the requirements
of Section 10(a)(3) of the Securities Act.
(d) The Company will deliver to the Representatives, at or before the
Closing Dates, conformed copies of the Registration Statement, as
originally filed with the Commission, and all amendments thereto including
all financial statements and exhibits thereto, and will deliver to the
Representatives such number of copies of the Registration Statement,
including such financial statements but without exhibits, and all
amendments thereto, as the Representatives may reasonably request. The
Company will deliver or mail to or upon the order of the Representatives,
from time to time until the effective date of the Registration Statement,
as many copies of the Preeffective Prospectus as the Representatives may
reasonably request. The Company will deliver or mail to or upon the order
of the Representatives on the date of the initial public offering, and
thereafter from time to time during the period when delivery of a
prospectus relating to the Stock is required under the Securities Act, as
many copies of the Prospectus, in final form or as thereafter amended or
supplemented as the Representatives may reasonably request; provided,
however, that the expense of the preparation and delivery of any prospectus
required for use nine (9) months or more after the effective date of the
Registration Statement shall be borne by the Underwriters required to
deliver such prospectus.
(e) The Company will make generally available to its stockholders as
soon as practicable, but not later than fifteen (15) months after the
effective date of the Registration Statement, an earnings statement which
will be in reasonable detail (but which need not be audited) and which will
comply with Section 11(a) of the Securities Act, covering a period of at
least twelve (12) months beginning after the "effective date" (as defined
in Rule 158 under the Securities Act) of the Registration Statement.
(f) The Company will cooperate with the Representatives to enable the
Stock to be registered or qualified for offering and sale by the
Underwriters and by dealers under the securities laws of such jurisdictions
as the Representatives may designate and at the request of the
Representatives will make such applications and furnish such consents to
service of process or other documents as may be required of it as the
issuer of the Stock for that purpose; provided, however, that the Company
shall not be required to qualify to do business or to file a general
consent (other than that arising out of the offering or sale of the Stock)
to service of process in any such jurisdiction where it is not now so
subject. The Company will, from time to time, prepare and file such
statements and reports as are or may be required of it as the
18
issuer of the Stock to continue such qualifications in effect for so long a
period as the Representatives may reasonably request for the distribution
of the Stock. The Company will advise the Representatives promptly after
the Company becomes aware of the suspension of the qualifications or
registration of (or any such exception relating to) the Common Stock of the
Company for offering, sale or trading in any jurisdiction or of any
initiation or threat of any proceeding for any such purpose, and in the
event of the issuance of any orders suspending such qualifications,
registration or exception, the Company will, with the cooperation of the
Representatives, use its best efforts to obtain the withdrawal thereof.
(g) The Company will furnish to its stockholders annual reports
containing financial statements certified by independent public accountants
and with quarterly summary financial information in reasonable detail which
may be unaudited. During the period of five (5) years from the date hereof,
the Company will deliver to the Representatives and, upon request, to each
of the other Underwriters, (i) as soon as is practicable after the end of
each fiscal year, copies of each Annual Report of the Company filed on Form
10-K containing the balance sheet of the Company as of the close of such
fiscal year and statements of income, stockholders' equity and cash flows
for the year then ended and the opinion thereon of the Company's
independent public accountants, (ii) as soon as they are available, copies
of any other reports or communications of the Company (financial or other)
which the Company shall publish or otherwise make available to any of its
stockholders as such, (iii) as soon as practicable after the filing
thereof, copies of each proxy statement, Quarterly Report on Form 10-Q,
Report on Form 8-K or any report filed by the Company with the Commission,
the NASD or any national securities exchange and (iv) from time to time
such other information concerning the Company as the Representatives may
reasonably request. So long as the Company has active subsidiaries, such
financial statements will be on a consolidated basis to the extent the
accounts of the Company and its subsidiaries are consolidated in reports
furnished to its stockholders generally. Separate financial statements
shall be furnished for all subsidiaries whose accounts are not consolidated
but which at the time are significant subsidiaries as defined in the Rules
and Regulations.
(h) The Company will use its best efforts to maintain the inclusion of
the Stock on the Nasdaq National Market (or on a national securities
exchange) for a period of five (5) years after the effective date of the
Registration Statement.
(i) The Company will maintain a transfer agent and registrar for its
Common Stock.
19
(j) Prior to filing its quarterly statements on Form 10-Q, the Company
will have its independent auditors perform a limited quarterly review of
its quarterly numbers.
(k) Without the prior written consent of Cowen, the Company will not
offer, sell, assign, transfer, encumber, contract or grant any option to
purchase or otherwise dispose of any shares of Common Stock, options,
rights or warrants to acquire shares of Common Stock, or securities
exchangeable for or convertible into shares of Common Stock during the 90
days commencing on the date hereof, other than the Company's sale of Common
Stock hereunder and the Company's issuance of Common Stock upon the
exercise of warrants and stock options which are presently outstanding and
described in the Prospectus, the Company's issuance of options under the
Company's presently authorized stock option and purchase plans described in
the Prospectus and the Company's issuance of Common Stock upon the exercise
of any such options.
(l) The Company will apply the net proceeds from the sale of the Stock
as set forth in the description under "Use of Proceeds" in the Prospectus,
which description complies in all respects with the requirements of Item
504 of Regulation S-K.
(m) The Company will supply the Representatives with copies of all
correspondence to and from, and all documents issued to and by, the
Commission in connection with the registration of the offer and sale of the
Stock under the Securities Act.
(n) Prior to each of the Firm Closing Date and the Option Closing
Date, the Company will furnish to the Representatives, as soon as they have
been prepared, copies of any unaudited interim consolidated financial
statements of the Company and its subsidiaries for any periods subsequent
to the periods covered by the financial statements appearing in the
Registration Statement and the Prospectus.
(o) Prior to the Firm Closing Date, the Company will issue no press
release or other communications directly or indirectly and hold no press
conference with respect to the Company or any of its subsidiaries, the
financial condition, results of operation, business, prospects, assets or
liabilities of any of them, or the offering of the Stock, without the prior
written consent of the Representatives. For a period of twelve (12) months
following the Firm Closing Date, the Company will use its best efforts to
provide to the Representatives copies of each press release or other public
communications with respect to the financial condition, results of
operations, business, prospects, assets or liabilities of the Company
contemporaneously with the public issuance thereof.
20
(p) The Company will use its best efforts to do and perform all things
required or necessary to be done and performed under this Agreement by the
Company prior to each of the Firm Closing Date and the Option Closing Date
and to satisfy all conditions precedent to the delivery of the Stock
pursuant to this Agreement.
5. Payment of Expenses. (a) The Company will pay (directly or by
reimbursement) all costs, fees and expenses incurred in connection with expenses
incident to the performance of the obligations of the Company and the Selling
Stockholders under this Agreement and in connection with the transactions
contemplated hereby, including but not limited to (i) all expenses and taxes
incident to the issuance and delivery of the Stock to the Representatives; (ii)
all expenses incident to the registration of the Stock under the Securities Act;
(iii) the costs of preparing stock certificates (including printing and
engraving costs) ; (iv) all fees and expenses of the registrar and transfer
agent of the Stock; (v) all necessary issue, transfer and other stamp taxes in
connection with the issuance and sale of the Stock to the Underwriters; (vi)
fees and expenses of the Company's counsel and the Company's independent
accountants; (vii) all costs and expenses incurred in connection with the
preparation, printing, filing, shipping and distribution of the Registration
Statement, each Preeffective Prospectus and the Prospectus (including all
exhibits and financial statements) and all amendments and supplements provided
for herein, the Selling Stockholders' Powers of Attorney, the Custody Agreement,
the Agreement Among Underwriters between the Representatives and the
Underwriters, the Master Selected Dealers' Agreement, the Underwriters'
Questionnaire and the Blue Sky memoranda and this Agreement; (viii) all filing
fees, attorneys' fees and expenses incurred by the Company or the Underwriters
in connection with exemptions from the qualifying or registering (or obtaining
qualification or registration of) all or any part of the Stock for offer and
sale and determination of its eligibility for investment under the Blue Sky or
other securities laws of such jurisdictions as the Representatives may
designate; (ix) all fees and expenses paid or incurred in connection with
filings made with the NASD; and (x) all other costs and expenses incident to the
performance of its obligations hereunder which are not otherwise specifically
provided for in this Section.
(b) Each Selling Stockholder will pay (directly or by reimbursement) all
fees and expenses incident to the performance of such Selling Stockholder's
obligations under this Agreement which are not otherwise specifically provided
for herein, including but not limited to any fees and expenses of counsel for
such Selling Stockholder, such Selling Stockholder's pro rata share of fees and
expenses of the Attorneys-in-fact and the Custodian and all expenses and taxes
incident to the sale and delivery of the Stock to be sold by such Selling
Stockholder to the Underwriters hereunder.
(c) In addition to its other obligations under Section 6(a) hereof, the
Company and each Selling Stockholder jointly and severally agrees that, as an
interim
21
measure during the pendency of any claim, action, investigation, inquiry or
other proceeding arising out of or based upon (i) any statement or omission or
any alleged statement or omission or (ii) any breach or inaccuracy in its
representations and warranties, they will reimburse each Underwriter on a
quarterly basis for all reasonable legal or other expenses incurred in
connection with investigating or defending any such claim, action,
investigation, inquiry or other proceeding, notwithstanding the absence of a
judicial determination as to the propriety and enforceability of the Company's
and each Selling Stockholder's obligation to reimburse each Underwriter for such
expenses and the possibility that such payments might later be held to have been
improper by a court of competent jurisdiction. To the extent that any such
interim reimbursement payment is so held to have been improper, each Underwriter
shall promptly return it to the Company and each Selling Stockholder, as the
case may be, together with interest, compounded daily, determined on the basis
of the prime rate (or other commercial lending rate for borrowers of the highest
credit standing) announced from time to time by The Chase Manhattan Bank, New
York, New York (the "Prime Rate"). Any such interim reimbursement payments which
are not made to an Underwriter in a timely manner as provided below shall bear
interest at the Prime Rate from the due date for such reimbursement. This
expense reimbursement agreement will be in addition to any other liability which
the Company or any Selling Stockholder may otherwise have. The request for
reimbursement will be sent to the Company with a copy to each Selling
Stockholder.
(d) In addition to its other obligations under Section 6(b) hereof, each
Underwriter severally agrees that, as an interim measure during the pendency of
any claim, action, investigation, inquiry or other proceeding arising out of or
based upon any statement or omission, or any alleged statement or omission,
described in Section 6(b) hereof which relates to written information regarding
any Underwriter furnished to the Company by or on behalf of any Underwriter,
directly or through you, specifically for use in the Registration Statement, it
will reimburse the Company (and, to the extent applicable, each officer,
director, or controlling person) or Selling Stockholder on a quarterly basis for
all reasonable legal or other expenses incurred in connection with investigating
or defending any such claim, action, investigation, inquiry or other proceeding,
notwithstanding the absence of a judicial determination as to the propriety and
enforceability of the Underwriters' obligation to reimburse the Company (and, to
the extent applicable, each officer, director, or controlling person) or Selling
Stockholder for such expenses and the possibility that such payments might later
be held to have been improper by a court of competent jurisdiction. To the
extent that any such interim reimbursement payment is so held to have been
improper, the Company (and, to the extent applicable, each officer, director, or
controlling person) or Selling Stockholder shall promptly return it to the
Underwriters together with interest, compounded daily, determined on the basis
of the Prime Rate. Any such interim reimbursement payments which are not made to
the Company within thirty (30) days of a request for reimbursement shall bear
interest at the Prime Rate from the date of such request. This indemnity
agreement will be in addition to any liability which such Underwriter may
otherwise have.
22
(e) It is agreed that any controversy arising out of the operation of the
interim reimbursement arrangements set forth in paragraphs (c) and/or (d) of
this Section 5, including the amounts of any requested reimbursement payments
and the method of determining such amounts, shall be settled by arbitration
conducted pursuant to the Code of Arbitration Procedure of the NASD. Any such
arbitration must be commenced by service of a written demand for arbitration or
written notice of intention to arbitrate, therein electing the arbitration
tribunal. In the event the party demanding arbitration does not make such
designation of an arbitration tribunal in such demand or notice, then the party
responding to said demand or notice is authorized to do so. Such an arbitration
would be limited to the operation of the interim reimbursement provisions
contained in paragraphs (c) and/or (d) of this Section 5 and would not resolve
the ultimate propriety or enforceability of the obligation to reimburse expenses
which is created by the provisions of this Section 5.
6. Indemnification and Contribution. (a) The Company and the Management
Selling Stockholders, jointly and severally, agree to indemnify and hold
harmless each Underwriter and each person, if any, who controls such Underwriter
within the meaning of the Securities Act and the respective officers, directors,
partners, employees, representatives and agents of each such Underwriter
(collectively, the "Underwriter Indemnified Parties" and, each, an "Underwriter
Indemnified Party"), against any losses, claims, damages, liabilities or
expenses (including the reasonable cost of investigating and defending against
any claims therefor and counsel fees incurred in connection therewith), joint or
several, which may be based upon the Securities Act, or any other statute or at
common law, on the ground or alleged ground that any Preeffective Prospectus,
the Registration Statement or the Prospectus (or any Preeffective Prospectus,
the Registration Statement or the Prospectus as from time to time amended or
supplemented) includes or allegedly includes an untrue statement of a material
fact or omits to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, unless such statement
or omission was made in reliance upon, and in conformity with, written
information regarding any Underwriter furnished to the Company by any
Underwriter, directly or through the Representatives, specifically for use in
the preparation thereof. The Company and the Management Selling Stockholders
will be entitled to participate at their own expense in the defense or, if they
so elect, to assume the defense of any suit brought to enforce any such
liability, but if the Company and the Management Selling Stockholders elect to
assume the defense, such defense shall be conducted by counsel chosen by them.
In the event the Company and the Management Selling Stockholders elect to assume
the defense of any such suit and retain such counsel, any Underwriter
Indemnified Parties, defendant or defendants in the suit, may retain additional
counsel but shall bear the fees and expenses of such counsel unless (i) the
Company and the Management Selling Stockholders shall have specifically
authorized the retaining of such counsel or (ii) the parties to such suit
include any such Underwriter Indemnified Parties, and the Company and the
Management Selling Stockholders and such Underwriter Indemnified Parties have
been advised by counsel to the Underwriters
23
that one or more legal defenses may be available to it or them which may not be
available to the Company and the Management Selling Stockholders, in which case
neither the Company nor either of the Management Selling Stockholders shall be
entitled to assume the defense of such suit notwithstanding their obligation to
bear the fees and expenses of such counsel. This indemnity agreement is not
exclusive and will be in addition to any liability which the Company and the
Management Selling Stockholders might otherwise have and shall not limit any
rights or remedies which may otherwise be available at law or in equity to each
Underwriter Indemnified Party.
In making a claim for indemnification under this Section 6(a), the
Underwriter Indemnified Parties may proceed against either (i) both the Company
and the Management Selling Stockholders jointly or (ii) the Company only, but
may not proceed solely against the Management Selling Stockholders. In the event
that the Underwriter Indemnified Parties are entitled to seek indemnity or
contribution hereunder against any loss, liability, claim, damage and expense
incurred with respect to a final judgment from a trial court, then, as a
precondition to any Underwriter Indemnified Party obtaining indemnification or
contribution from either of the Management Selling Stockholders, the Underwriter
Indemnified Parties shall first obtain a final judgment from a trial court that
such Underwriter 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
Stockholders and shall seek to satisfy such Final Judgment in full from the
Company by making a written demand upon the Company for such satisfaction. Only
in the event such Final Judgment shall remain unsatisfied in whole or in part 45
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 the Management Selling Stockholders (but only if
and to the extent the Company has not already satisfied such Final Judgment,
whether by settlement, release or otherwise). The Underwriter Indemnified
Parties may exercise this right to first seek to obtain payment from the Company
and thereafter obtain payment from the Management Selling Stockholders without
regard to the pursuit by any party of its rights to the appeal of such Final
Judgment. The Underwriter Indemnified Parties shall, however, be relieved of
their obligation to first obtain a Final Judgment, seek to obtain payment from
the Company with respect to such Final Judgment or, having sought such payment,
to wait such 45 days after failure by the Company to immediately satisfy any
such Final Judgment if (i) the Company files a petition for relief under the
United States Bankruptcy Code (the "Bankruptcy Code"), (ii) an order for relief
is entered against the Company in an involuntary case under the Bankruptcy Code,
(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. The foregoing provisions of this
paragraph are not intended to require any Underwriter Indemnified Party to
obtain a Final Judgment against the Company or the Selling Stockholders before
obtaining reimbursement of expenses (including the reasonable cost of
investigating and defending against any claims and counsel fees
24
incurred in connection therewith) pursuant to paragraph (a) of this Section 6.
However, the Underwriter Indemnified Parties shall first seek to obtain such
reimbursement in full from the Company 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 45 days following the date of receipt by the
Company of such demand shall any Underwriter Indemnified Party have the right to
receive reimbursement of such expenses from the Management Selling Stockholders
by making written demand directly on the Management Selling Stockholders (but
only if and to the extent the Company has not already satisfied the demand for
reimbursement, whether by settlement, release or otherwise). The Underwriter
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 45 days after failure by the Company to
immediately reimburse 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, (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.
(b) Each Firm Selling Stockholder agrees, severally and not jointly, to
indemnify and hold harmless each Underwriter Indemnified Party against any
losses, claims, damages, liabilities or expenses (including, unless such Firm
Selling Stockholder elects to assume the defense, the reasonable cost of
investigating and defending against any claims therefor and counsel fees
incurred in connection therewith), joint or several, which may be based upon the
Securities Act, or any other statute or at common law, on the ground or alleged
ground that such parts of any Preeffective Prospectus, the Registration
Statement or the Prospectus (or any Preeffective Prospectus, the Registration
Statement or the Prospectus as from time to time amended or supplemented) under
the caption "Principal and Selling Stockholders" that specifically relate to
such Firm Selling Stockholder includes or allegedly includes an untrue statement
of a material fact or omits to state a material fact required to be stated
therein or necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading, unless such
statement or omission was made in reliance upon, and in conformity with, written
information regarding any Underwriter furnished to the Company by any
Underwriter, directly or through the Representatives, specifically for use in
the preparation thereof. Such Firm Selling Stockholder will be entitled to
participate at its own expense in the defense or, if it so elects, to assume the
defense of any suit brought to enforce any such liability, but if such Firm
Selling Stockholder elects to assume the defense, such defense shall be
conducted by counsel chosen by such Firm Selling Stockholder. In the event that
any Firm Selling Stockholder elects to assume the defense of any such suit and
retain such counsel, any Underwriter Indemnified Parties, defendant or
defendants in the suit, may retain additional counsel but shall bear the fees
and expenses of such counsel unless (i) such Firm Selling Stockholder shall have
specifically authorized the retaining of such counsel or (ii) the parties to
such suit
25
include any such Underwriter Indemnified Parties, and such Firm Selling
Stockholder and such Underwriter Indemnified Parties have been advised by
counsel to the Underwriters that one or more legal defenses may be available to
it or them which may not be available to such Firm Selling Stockholder, in which
case such Firm Selling Stockholder shall not be entitled to assume the defense
of such suit notwithstanding its obligation to bear the fees and expenses of
such counsel. This indemnity agreement is not exclusive and will be in addition
to any liability which such Firm Selling Stockholder might otherwise have and
shall not limit any rights or remedies which may otherwise be available at law
or in equity to each Underwriter Indemnified Party. The Company, the Management
Selling Stockholders and the Firm Selling Stockholders may agree, as among
themselves and without limiting the rights of the Underwriters under this
Agreement, as to their respective amounts of such liability for which they each
shall be responsible. Notwithstanding any other provision of this Section 6, the
aggregate liability of any Firm Selling Stockholder pursuant to the provisions
of this Section 6(b) shall be limited to an amount equal to the aggregate
purchase price received by such Firm Selling Stockholder from the sale of such
Firm Selling Stockholder's Stock hereunder.
(c) Each Underwriter severally agrees to indemnify and hold harmless the
Company, each of its directors, each of its officers who have signed the
Registration Statement and each person, if any, who controls the Company within
the meaning of the Securities Act (collectively, the "Company Indemnified
Parties") and each Selling Stockholder and each person, if any, who controls a
Selling Stockholder within the meaning of the Securities Act (collectively, the
"Stockholder Indemnified Parties") against any losses, claims, damages,
liabilities or expenses (including, unless the Underwriter or Underwriters elect
to assume the defense, the reasonable cost of investigating and defending
against any claims therefor and counsel fees incurred in connection therewith),
joint or several, which arise out of or are based in whole or in part upon the
Securities Act, the Exchange Act or any other federal, state, local or foreign
statute or regulation, or at common law, on the ground or alleged ground that
any Preeffective Prospectus, the Registration Statement or the Prospectus (or
any Preeffective Prospectus, the Registration Statement or the Prospectus, as
from time to time amended and supplemented) includes an untrue statement of a
material fact or omits to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, but only insofar as
any such statement or omission was made in reliance upon, and in conformity
with, written information regarding any Underwriter furnished to the Company by
such Underwriter, directly or through the Representatives, specifically for use
in the preparation thereof; provided, however, that in no case is such
Underwriter to be liable with respect to any claims made against any Company
Indemnified Party or Stockholder Indemnified Party against whom the action is
brought unless such Company Indemnified Party or Stockholder Indemnified Party
shall have notified such Underwriter in writing within a reasonable time after
the summons or other first legal process giving information of the nature of the
claim shall have been served upon the Company Indemnified
26
Party or Stockholder Indemnified Party, but failure to notify such Underwriter
of such claim shall not relieve it from any liability which it may have to any
Company Indemnified Party or Stockholder Indemnified Party otherwise than on
account of its indemnity agreement contained in this paragraph. Such Underwriter
shall be entitled to participate at its own expense in the defense, or, if it so
elects, to assume the defense of any suit brought to enforce any such liability,
but, if such Underwriter elects to assume the defense, such defense shall be
conducted by counsel chosen by it. In the event that any Underwriter elects to
assume the defense of any such suit and retain such counsel, the Company
Indemnified Parties or Stockholder Indemnified Parties and any other Underwriter
or Underwriters or controlling person or persons, defendant or defendants in the
suit, shall bear the fees and expenses of any additional counsel retained by
them, respectively. The Underwriter against whom indemnity may be sought shall
not be liable to indemnify any person for any settlement of any such claim
effected without such Underwriter's consent. This indemnity agreement is not
exclusive and will be in addition to any liability which such Underwriter might
otherwise have and shall not limit any rights or remedies which may otherwise be
available at law or in equity to any Company Indemnified Party or Stockholder
Indemnified Party.
(d) If the indemnification provided for in this Section 6 is unavailable or
insufficient to hold harmless an indemnified party under subsection (a), (b) or
(c) above in respect of any losses, claims, damages, liabilities or expenses (or
actions in respect thereof) referred to herein, then each indemnifying party
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages, liabilities or expenses (or actions in
respect thereof) in such proportion as is appropriate to reflect the relative
benefits received by the Company and the Selling Stockholders on the one hand
and the Underwriters on the other from the offering of the Stock. If, however,
the allocation provided by the immediately preceding sentence is not permitted
by applicable law, then each indemnifying party shall contribute to such amount
paid or payable by such indemnified party in such proportion as is appropriate
to reflect not only such relative benefits but also the relative fault of the
Company and the Selling Stockholders on the one hand and the Underwriters on the
other in connection with the statements or omissions which resulted in such
losses, claims, damages, liabilities or expenses (or actions in respect
thereof), as well as any other relevant equitable considerations. The relative
benefits received by the Company and the Selling Stockholders on the one hand
and the Underwriters on the other shall be deemed to be in the same proportion
as the total net proceeds from the offering (before deducting expenses) received
by the Company and the Selling Stockholders bear to the total underwriting
discounts and commissions received by the Underwriters, in each case as set
forth in the table on the cover page of the Prospectus. The relative fault shall
be determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company, the Selling
Stockholders or the Underwriters and the parties' relative intent, knowledge,
access to information and opportunity to correct or
27
prevent such statement or omission. The Company, the Selling Stockholders and
the Underwriters agree that it would not be just and equitable if contribution
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. The amount paid
or payable by an indemnified party as a result of the losses, claims, damages,
liabilities or expenses (or actions in respect thereof) referred to above shall
be deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating, defending, settling or
compromising any such claim. Notwithstanding the provisions of this subsection
(d), no Underwriter shall be required to contribute any amount in excess of the
amount by which the total price at which the shares of the Stock underwritten by
it and distributed to the public were offered to the public exceeds the amount
of any damages which such Underwriter has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. The Underwriters' obligations to contribute are several in proportion
to their respective underwriting obligations and not joint. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
7. Survival of Indemnities, Representations, Warranties, etc. The
respective indemnities, covenants, agreements, representations, warranties and
other statements of the Company, the Selling Stockholders and the several
Underwriters, as set forth in this Agreement or made by them respectively,
pursuant to this Agreement, shall remain in full force and effect, regardless of
any investigation made by or on behalf of any Underwriter, the Selling
Stockholders, the Company or any of its officers or directors or any controlling
person, and shall survive delivery of and payment for the Stock.
8. Conditions of Underwriters' Obligations. The respective obligations of
the several Underwriters hereunder shall be subject to the accuracy, at and
(except as otherwise stated herein) as of the date hereof and at and as of each
of the Firm Closing Date and the Option Closing Date, of the representations and
warranties made herein by the Company and the Selling Stockholders, to
compliance at and as of such Closing Date by the Company and the Selling
Stockholders with their covenants and agreements herein contained and other
provisions hereof to be satisfied at or prior to such Closing Date, and to the
following additional conditions:
(a) The Registration Statement shall have become effective and no stop
order suspending the effectiveness thereof shall have been issued and no
proceedings for that purpose shall have been initiated or, to the knowledge
of the Company or the Representatives, shall be threatened by the
Commission, and any request for additional information on the part of the
Commission (to be included in the Registration Statement or the Prospectus
or otherwise) shall have been complied with to the reasonable satisfaction
of the Representatives. Any filings of the Prospectus, or
28
any supplement thereto, required pursuant to Rule 424(b) or Rule 434 of the
Rules and Regulations, shall have been made in the manner and within the
time period required by Rule 424(b) and Rule 434 of the Rules and
Regulations, as the case may be.
(b) The Representatives shall have been satisfied that there shall not
have occurred any change, on a consolidated basis, prior to such Closing
Date in the condition (financial or otherwise), properties, business,
management, prospects, net worth or results of operations of the Company
and its subsidiaries considered as a whole, or any change in the capital
stock, short-term or long-term debt of the Company and its subsidiaries
considered as a whole, such that (i) the Registration Statement or the
Prospectus, or any amendment or supplement thereto, contains an untrue
statement of fact which, in the opinion of the Representatives, is
material, or omits to state a fact which, in the opinion of the
Representatives, is required to be stated therein or is necessary to make
the statements therein not misleading, or (ii) it is unpracticable in the
reasonable judgment of the Representatives to proceed with the public
offering or purchase the Stock as contemplated hereby.
(c) The Representatives shall be satisfied that no legal or
governmental action, suit or proceeding affecting the Company which is
material and adverse to the Company or which affects or may affect the
Company's or any Selling Stockholder's ability to perform its respective
obligations under this Agreement shall have been instituted or threatened
and there shall have occurred no material adverse development in any
existing such action, suit or proceeding.
(d) At the time of execution of this Agreement, the Representatives
shall have received from ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, independent certified public
accountants, a letter, dated the date hereof, in form and substance
satisfactory to the Underwriters.
(e) The Representatives shall have received from ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, LLP,
independent certified public accountants, a letter, dated such Closing
Date, to the effect that such accountants reaffirm, as of such Closing
Date, and as though made on such Closing Date, the statements made in the
letter furnished by such accountants pursuant to paragraph (d) of this
Section 8.
(f) The Representatives shall have received from ▇'▇▇▇▇▇▇▇▇ Graev &
Karabell, LLP, counsel for the Company, an opinion, dated such Closing
Date, to the effect set forth in Exhibit I hereto.
(g) The Representatives shall have received from ▇'▇▇▇▇▇▇▇▇ Graev &
Karabell, LLP, special counsel for the Selling Stockholders, an opinion,
dated such Closing Date, to the effect set forth in Exhibit II hereto.
29
(h) The Representatives shall have received from Proskauer ▇▇▇▇ ▇▇▇▇▇
& ▇▇▇▇▇▇▇▇▇▇ LLP, special regulatory counsel for the Company, an opinion,
dated such Closing Date, to the effect set forth in Exhibit III(a) hereto
and a side letter, dated such Closing Date, to the effect set forth in
Exhibit III(b) hereto.
(i) The Representatives shall have received from King & Spalding,
special regulatory counsel for the Company, an opinion, dated such Closing
Date, to the effect set forth in Exhibit IV hereto.
(j) The Representatives shall have received from ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇,
patent counsel for the Company, an opinion, dated such Closing Date, to the
effect set forth in Exhibit V hereto.
(k) The Representatives shall have received from Shearman & Sterling,
counsel for the Underwriters, their opinion or opinions dated such Closing
Date with respect to the incorporation of the Company, the validity of the
Stock, the Registration Statement and the Prospectus and such other related
matters as it may reasonably request, and the Company shall have furnished
to such counsel such documents as they may request for the purpose of
enabling them to pass upon such matters.
(l) The Representatives shall have received a certificate, dated such
Closing Date, of the chief executive officer and the chief financial or
accounting officer of the Company to the effect that:
(i) No stop order suspending the effectiveness of the
Registration Statement has been issued, and, to the best of the
knowledge of the signers, no proceedings for that purpose have been
instituted or are pending or contemplated under the Securities Act.
(ii) Neither any Preeffective Prospectus, as of its date, nor the
Registration Statement nor the Prospectus, nor any amendment or
supplement thereto, as of the time when the Registration Statement
became effective and at all times subsequent thereto up to the
delivery of such certificate, included any untrue statement of a
material fact or omitted to state any material fact required to be
stated therein or necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading.
(iii) The representations and warranties of the Company in this
Agreement are true and correct at and as of such Closing Date, and the
Company has complied with all the agreements and performed or
satisfied all
30
the conditions on its part to be performed or satisfied at or prior to
such Closing Date.
(iv) Since the respective dates as of which information is given
in the Registration Statement and the Prospectus, and except as
disclosed in or contemplated by the Prospectus, (i) there has not been
any material adverse change or a development involving a material
adverse change in the condition (financial or otherwise), properties,
business, management, prospects, net worth or results of operations of
the Company and its subsidiaries considered as a whole; (ii) the
business and operations conducted by the Company and its subsidiaries
have not sustained a loss by strike, fire, flood, accident or other
calamity (whether or not insured) of such a character as to interfere
materially with the conduct of the business and operations of the
Company and its subsidiaries considered as a whole; (iii) no legal or
governmental action, suit or proceeding is pending or threatened
against the Company or its subsidiaries which is material to the
Company or its subsidiaries, whether or not arising from transactions
in the ordinary course of business, or which may materially and
adversely affect the transactions contemplated by this Agreement; (iv)
since such dates and except as so disclosed, the Company and its
subsidiaries have not incurred any material liability or obligation,
direct, contingent or indirect, made any change in their capital stock
(except pursuant to their stock plans), made any material change in
their short-term or funded debt or repurchased or otherwise acquired
any of the Company's or its subsidiaries capital stock; and (v) the
Company and its subsidiaries have not declared or paid any dividend,
or made any other distribution, upon their outstanding capital stock
payable to stockholders of record on a date prior to such Closing
Date.
(m) The Representatives shall have received a certificate or
certificates, dated such Closing Date, of each Attorney-in-fact, on behalf
of the Selling Stockholders, to the effect that as of such Closing Date its
representations and warranties in this Agreement are true and correct as if
made on and as of such Closing Date, and that it has performed all its
obligations and satisfied all the conditions on its part to be performed or
satisfied at or prior to such Closing Date.
(n) The Company and each of the Selling Stockholders shall have
furnished to the Representatives such additional certificates as the
Representatives may have reasonably requested as to the accuracy, at and as
of such Closing Date, of the representations and warranties made herein by
them and as to compliance at and as of such Closing Date by them with their
covenants and agreements herein contained and other provisions hereof to be
satisfied at or prior to such Closing Date, and as to satisfactions of the
other conditions to the obligations of the Underwriters hereunder.
31
(o) Cowen shall have received the written agreements of the officers,
directors and holders of Common Stock or holders of options or warrants in
respect of Common Stock listed in Schedule C that each will not offer,
sell, assign, transfer, encumber, contract or grant any option to purchase
or otherwise dispose of any shares of Common Stock, options, rights or
warrants to acquire shares of Common Stock, or securities exchangeable for
or convertible into shares of Common Stock owned by them (including,
without limitation, Common Stock of the Company which may be deemed to be
beneficially owned by the Company in accordance with the Rules and
Regulations) during the 90 days commencing on the Effective Date and such
written agreements remain in full force and effect as of the date hereof.
(p) The Stock shall have been approved for quotation on the Nasdaq
National Market.
All opinions, certificates, letters and other documents will be in
compliance with the provisions hereunder only if they are satisfactory in form
and substance to the Representatives. The Company will furnish to the
Representatives conformed copies of such opinions, certificates, letters and
other documents as the Representatives shall reasonably request. If any of the
conditions hereinabove provided for in this Section shall not have been
satisfied when and as required by this Agreement, this Agreement may be
terminated by the Representatives by notifying the Company of such termination
in writing or by telegram at or prior to each of the Closing Dates, but Cowen
shall be entitled to waive any of such conditions.
9. Effective Date. This Agreement shall become effective immediately as to
Sections 5, 6, 7, 9, 10, 11, 14, 15, 16, 17 and 18 and, as to all other
provisions, at 11:00 a.m. New York City time on the first full business day
following the effectiveness of the Registration Statement or at such earlier
time after the Registration Statement becomes effective as the Representatives
may determine on and by notice to the Company or by release of any of the Stock
for sale to the public. For the purposes of this Section 9, the Stock shall be
deemed to have been so released upon the release for publication of any
newspaper advertisement relating to the Stock or upon the release by you of
telegrams (i) advising Underwriters that the shares of Stock are released for
public offering or (ii) offering the Stock for sale to securities dealers,
whichever may occur first.
10. Termination. This Agreement (except for the provisions of Section 5)
may be terminated by the Company at any time before it becomes effective in
accordance with Section 9 by notice to the Representatives and may be terminated
by the Representatives at any time before it becomes effective in accordance
with Section 9 by notice to the Company. In the event of any termination of this
Agreement under this or any other provision of this Agreement, there shall be no
liability of any party to this Agreement to any
32
other party, other than as provided in Sections 5, 6 and 11 and other than as
provided in Section 12 as to the liability of defaulting Underwriters.
This Agreement may be terminated after it becomes effective by the
Representatives by notice to the Company (i) if at or prior to the Firm Closing
Date or the Option Closing Date trading in securities on any of the New York
Stock Exchange, American Stock Exchange or Nasdaq National Market System shall
have been suspended or minimum or maximum prices shall have been established on
any such exchange or market, or a banking moratorium shall have been declared by
New York or United States authorities; (ii) trading of any securities of the
Company shall have been suspended on any exchange or in any over-the-counter
market; (iii) if at or prior to the Firm Closing Date or the Option Closing Date
there shall have been (A) an outbreak or escalation of hostilities between the
United States and any foreign power or of any other insurrection or armed
conflict involving the United States or (B) any change in financial markets or
any calamity or crisis which, in the judgment of the Representatives, makes it
impractical or inadvisable to offer or sell the Firm Stock or Optional Stock, as
applicable, on the terms contemplated by the Prospectus; (iv) if there shall
have been any development or prospective development involving particularly the
business or properties or securities of the Company or any of its subsidiaries
or the transactions contemplated by this Agreement, which, in the judgment of
the Representatives, makes it impracticable or inadvisable to offer or deliver
the Firm Stock or the Optional Stock, as applicable, on the terms contemplated
by the Prospectus; (v) if there shall be any litigation or proceeding, pending
or threatened, which, in the judgment of the Representatives, makes it
impracticable or inadvisable to offer or deliver the Firm Stock or Optional
Stock, as applicable, on the terms contemplated by the Prospectus; or (vi) if
there shall have occurred any of the events specified in the immediately
preceding clauses (i) - (v) together with any other such event that makes it, in
the judgment of the Representatives, impractical or inadvisable to offer or
deliver the Firm Stock or Optional Stock, as applicable, on the terms
contemplated by the Prospectus.
11. Reimbursement of Underwriters. Notwithstanding any other provisions
hereof, if this Agreement shall not become effective by reason of any election
of the Company or the Selling Stockholders pursuant to the first paragraph of
Section 10 or shall be terminated by the Representatives under Section 8 or
Section 10, the Company will bear and pay the expenses specified in Section 5
hereof and, in addition to their obligations pursuant to Section 6 hereof, the
Company will reimburse the reasonable out-of-pocket expenses of the several
Underwriters (including reasonable fees and disbursements of counsel for the
Underwriters) incurred in connection with this Agreement and the proposed
purchase of the Stock, and promptly upon demand the Company will pay such
amounts to the Representatives.
12. Substitution of Underwriters. If any Underwriter or Underwriters shall
default in its or their obligations to purchase shares of Stock hereunder and
the aggregate
33
number of shares which such defaulting Underwriter or Underwriters agreed but
failed to purchase does not exceed ten percent (10%) of the total number of
shares underwritten, the other Underwriters shall be obligated severally, in
proportion to their respective commitments hereunder, to purchase the shares
which such defaulting Underwriter or Underwriters agreed but failed to purchase.
If any Underwriter or Underwriters shall so default and the aggregate number of
shares with respect to which such default or defaults occur is more than ten
percent (10%) of the total number of shares underwritten and arrangements
satisfactory to the Representatives and the Company for the purchase of such
shares by other persons are not made within forty-eight (48) hours after such
default, this Agreement shall terminate.
If the remaining Underwriters or substituted Underwriters are required
hereby or agree to take up all or part of the shares of Stock of a defaulting
Underwriter or Underwriters as provided in this Section 12, (i) the Company and
the Selling Stockholders shall have the right to postpone the Closing Dates for
a period of not more than five (5) full business days in order that the Company
and the Selling Stockholders may effect whatever changes may thereby be made
necessary in the Registration Statement or the Prospectus, or in any other
documents or arrangements, and the Company agrees promptly to file any
amendments to the Registration Statement or supplements to the Prospectus which
may thereby be made necessary, and (ii) the respective numbers of shares to be
purchased by the remaining Underwriters or substituted Underwriters shall be
taken as the basis of their underwriting obligation for all purposes of this
Agreement. Nothing herein contained shall relieve any defaulting Underwriter of
its liability to the Company, the Selling Stockholders or the other Underwriters
for damages occasioned by its default hereunder. Any termination of this
Agreement pursuant to this Section 12 shall be without liability on the part of
any non-defaulting Underwriter, the Selling Stockholders or the Company, except
for expenses to be paid or reimbursed pursuant to Section 5 and except for the
provisions of Section 6.
13. Covenants and Agreements of the Selling Stockholders. Each Selling
Stockholder covenants and agrees with the several Underwriters and the Company
that:
(a) For a period of 90 days after the date of this Agreement, without
the consent of Cowen, such Selling Stockholder will not offer to sell,
sell, contract to sell or otherwise dispose of any Stock or securities
convertible into or exchangeable for Stock, including without limitation,
Stock which may be deemed to be beneficially owned by such Selling
Stockholder in accordance with the Rules and Regulations, except for the
Stock being sold hereunder.
(b) Each Selling Stockholder will pay or cause to be paid all transfer
taxes with respect to the Stock to be sold by such Selling Stockholder.
34
(c) Each Selling Stockholder will take all reasonable actions in
cooperation with the Company and the several Underwriters to do and perform
all things to be done and performed under this Agreement prior to each of
the Firm Closing Date and the Option Closing Date and to satisfy all
conditions precedent to the delivery of the Stock pursuant to this
Agreement.
14. Notices. All communications hereunder shall be in writing and, if sent
to the Underwriters shall be mailed, delivered or telegraphed and confirmed to
you, as their Representatives, c/o Cowen & Company at ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ except that notices given to an Underwriter pursuant to
Section 6 hereof shall be sent to such Underwriter at the address furnished by
the Representatives or, if sent to the Company, shall be mailed, delivered or
telegraphed and confirmed to Advanced Health Corporation, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or if sent to the Selling Stockholders, shall be
mailed, delivered or telegraphed and confirmed to the [▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, M.D.],
[▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇] and [▇▇▇▇ ▇. ▇▇▇▇▇▇▇], c/o [Advanced Health Corporation, ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇].
15. Successors. This Agreement shall inure to the benefit of and be binding
upon the several Underwriters, the Company, and the Selling Stockholders and
their respective successors and legal representatives. Nothing expressed or
mentioned in this Agreement is intended or shall be construed to give any person
other than the persons mentioned in the preceding sentence any legal or
equitable right, remedy or claim under or in respect of this Agreement, or any
provisions herein contained, this Agreement and all conditions and provisions
hereof being intended to be and being for the sole and exclusive benefit of such
persons and for the benefit of no other person; except that the representations,
warranties, covenants, agreements and indemnities of the Company and the Selling
Stockholders contained in this Agreement shall also be for the benefit of the
person or persons, if any, who control any Underwriter or Underwriters within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act, and the indemnities of the several Underwriters shall also be for the
benefit of each director of the Company, each of its officers who has signed the
Registration Statement and the person or persons, if any, who control the
Company or any Selling Stockholder within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act.
16. Applicable Law. This Agreement shall be governed by and construed in
accordance with the laws of the state of New York.
17. Authority of the Representatives. In connection with this Agreement,
Cowen will act for and on behalf of the several Underwriters, and any action
taken under this Agreement by Cowen, as Representative will be binding on all
the Underwriters.
35
18. Partial Unenforceability. The invalidity or unenforceability of any
Section, paragraph or provision of this Agreement shall not affect the validity
or enforceability of any other Section, paragraph or provision hereof. If any
Section, paragraph or provision of this Agreement is for any reason determined
to be invalid or unenforceable, there shall be deemed to be made such minor
changes (and only such minor changes) as are necessary to make it valid and
enforceable.
19. General. This Agreement constitutes the entire agreement of the parties
to this Agreement and supersedes all prior written or oral and all
contemporaneous oral agreements, understandings and negotiations with respect to
the subject matter hereof.
In this Agreement, the masculine, feminine and neuter genders and the
singular and the plural include one another. The section headings in this
Agreement are for the convenience of the parties only and will not affect the
construction or interpretation of this Agreement. This Agreement may be amended
or modified, and the observance of any term of this Agreement may be waived,
only by a writing signed by the Company and the Representatives.
20. Counterparts. This Agreement may be signed in two (2) or more
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
36
If the foregoing correctly sets forth our understanding, please indicate
your acceptance thereof in the space provided below for that purpose, whereupon
this letter and your acceptance shall constitute a binding agreement between us.
Very truly yours,
ADVANCED HEALTH CORPORATION
By:_____________________________________
Title:
SELLING STOCKHOLDERS LISTED
IN SCHEDULE B
By:_____________________________________
Attorney-in-fact
Acting [on his own behalf
and] on behalf of the Selling
Stockholders listed in Schedule B.
Accepted and delivered in
New York, New York as of
the date first above written.
▇▇▇▇▇ & COMPANY
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLC
SBC WARBURG DILLON READ INC.
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ & COMPANY, LLC
Acting on their own behalf
and as Representatives of the several
Underwriters referred to in the
foregoing Agreement.
By: ▇▇▇▇▇ & Company
By: __________________________
Title: Managing Director
SCHEDULE A
Number Number of
of Firm Optional
Shares Shares
to be to be
Name Purchased Purchased
▇▇▇▇▇ & Company....................................
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLC..............................
SBC Warburg Dillon Read Inc........................
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ & Company, LLC..................
Total.......................................... 2,500,000 375,000
========= =======
SCHEDULE B
Number Number of
of Firm Optional
Shares Shares
to be Sold to be Sold
Name
Advanced Health Corporation.......................... 2,000,000 250,000
Firm Selling Stockholders
INVESCO Trust Company................................ 300,000 0
21st Century Partnerships............................ 200,000 50,000
Management Selling Stockholders
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, M.D................................ 0 10,000
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇. .................................... 0 65,000
Total............................................ 2,500,000 375,000
========= =======
SCHEDULE C
Number of
Shares Subject to
Stockholders "Lock-Up" Letters
EXHIBIT I
[Letterhead of ▇'▇▇▇▇▇▇▇▇ Graev & Karabell, LLP]
▇▇▇▇▇ & Company
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLC
SBC Warburg Dillon Read Inc.
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ & Company, LLC
As Representatives of the several
Underwriters
▇/▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Advanced Health Corporation
Ladies and Gentlemen:
We have acted as counsel to Advanced Health Corporation, a Delaware
corporation (the "Company"), in connection with the issuance and sale by the
Company of an aggregate of 2,000,000 shares of the Company's Common Stock, par
value $.01 per share (the "Shares"), to the Underwriters named in Schedule A of
the Underwriting Agreement dated October __, 1997 (the "Underwriting Agreement")
among the Company, the Selling Stockholders named in Schedule B to the
Underwriting Agreement and ▇▇▇▇▇ & Company, ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLC, SBC Warburg
Dillon Read Inc. and ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ & Company, LLC, as representatives of
the several Underwriters. This opinion is being delivered to you pursuant to
Section 8(f) of the Underwriting Agreement. Capitalized terms used but not
defined herein shall have the meanings ascribed thereto in the Underwriting
Agreement.
In this capacity, we have examined signed copies of the registration
statement on Form S-1 (Registration No. 333-35115) (the "Registration
Statement") filed by the Company under the Securities Act of 1933, as amended
(the "Securities Act"), with the Securities and Exchange Commission (the
"Commission") on September 8, 1997, Amendment No. 1 to the Registration
Statement filed with the Commission on September 10, 1997 and Amendment No. 2 to
the Registration Statement filed with the Commission on __________ __, 1997. The
Registration Statement, as amended at the time it became effective, including
the information deemed to be a part thereof at the time of effectiveness
pursuant to Rule 430A under the Securities Act, the exhibits and the schedules
thereto, is hereinafter referred to as the "Registration Statement," and the
final prospectus dated October __, 1997, in the form filed by the Company
pursuant to Rule 424(b)(4) under the Securities Act, is hereinafter referred to
as the "Prospectus."
We have also examined the Underwriting Agreement and the originals, or
copies identified to our satisfaction, of such corporate records of the Company,
certificates of public officials, officers of the Company and other persons, and
such other documents, agreements and instruments as we have deemed necessary as
a basis for the opinions hereinafter expressed. In such examination, we have
assumed the genuineness of all signatures, the authenticity of all documents
submitted to us as originals and the conformity with the originals of all
documents submitted to us as copies. In rendering the opinions expressed below,
we have relied as to certain factual matters, to the extent we deem proper, upon
the representations and warranties contained in or made pursuant to the
Underwriting Agreement and upon certificates of officers of the Company and
certificates of public officials.
With respect to our opinion set forth in Paragraph (ii) below, we have
relied upon and assumed the accuracy of telephonic confirmation from the Staff
of the Division of Corporation Finance of the Commission that the Registration
Statement has become and remains effective under the Securities Act.
As used in the opinions contained herein, the expressions "known to us,"
"to our knowledge" and "to the best of our knowledge" with reference to matters
of fact mean that after an examination of documents in our files and considering
the actual knowledge of those attorneys in our firm who have given substantive
attention to this matter, but not including any constructive or imputed notice
of any information, we have no reason to believe that the opinions expressed
herein are factually incorrect. Without limiting the generality of the
foregoing, with respect to our opinion in paragraph (xii) below, we have not
conducted any docket or similar search and have relied upon certificates of
officers of the Company. Beyond the foregoing, we have made no independent
factual investigation for the purpose of rendering the opinions set forth
herein.
Our opinions expressed below are limited to the law of the State of New
York, the General Corporation Law of the State of Delaware and the Federal
securities law of the United States, and we do not express any opinion herein
concerning any other law.
Based upon and subject to the foregoing, we are of the opinion that:
(i) Each of the Company and its subsidiaries has been duly organized
and is validly existing and in good standing as a corporation under the law
of its respective jurisdiction of organization, with full corporate power
and authority to own or lease its properties and to conduct its business as
described in the Prospectus;
(ii) The Registration Statement has been declared effective under the
Securities Act and no stop order suspending the effectiveness of the
Registration Statement
2
has been issued, and to the best of our knowledge, no proceedings for that
purpose have been instituted or are pending or contemplated under the
Securities Act;
(iii) The description of all contracts and other documents referred to
in the Registration Statement and the Prospectus, and the summaries of, and
other disclosures regarding, such contracts and other documents included in
the Registration Statement and the Prospectus fairly present the
information required to be disclosed with respect thereto; and, to our
knowledge, there are no other contracts or other documents of a character
required to be filed as an exhibit to the Registration Statement or
required to be described in the Registration Statement or the Prospectus
which are not filed or described as required;
(iv) The Underwriting Agreement has been duly authorized, executed and
delivered by the Company;
(v) The authorized capital stock of the Company conforms in all
material respects as to legal matters to the description thereof contained
in the Prospectus;
(vi) The Shares have been duly authorized, and when delivered to and
paid for by the Underwriters in accordance with the terms of the
Underwriting Agreement, will be validly issued, fully paid and
non-assessable and the issuance of the Shares is not subject to any
preemptive or to our knowledge similar rights;
(vii) To our knowledge, all registration rights attached to any of the
Company's shares have been duly waived with respect to the offering
contemplated by the Prospectus;
(viii) The issue and sale of the Shares and the performance by the
Company of its obligations under the Underwriting Agreement will not result
in any violation of the certificate of incorporation or by-laws of the
Company or the provisions of the General Corporation Law of the State of
Delaware or any applicable New York or Federal securities law or statute or
any order known to us, rule or regulation of any New York or Federal court
or governmental agency or body having jurisdiction over the Company or any
of its properties (except that we render no opinion herein with respect to
the compliance of the indemnification or contribution provisions of the
Underwriting Agreement with the Federal securities laws);
(ix) To the best of our knowledge, the execution, delivery and
performance of the Underwriting Agreement and the consummation of the
transactions therein contemplated will not result in a breach or violation
of any of the terms or provisions of any material agreement or instrument
to which the Company or any of its subsidiaries is a
3
party or by which it or any of its properties is bound or result in the
creation of a lien under any of such agreement;
(x) No consent, approval, authorization, order, registration or
qualification of or with any New York or Federal court or governmental
agency or body is required for the sale and issuance of the Shares or the
performance of the Company of its obligations under the Underwriting
Agreement, except such consents, approvals, authorizations, registrations
or qualifications as have been obtained under the Securities Act, as may be
required under state securities or Blue Sky laws or under the rules of the
National Association of Securities Dealers, Inc. in connection with the
purchase and distribution of the Shares by the Underwriters.
(xi) To our knowledge, based solely on an officer's certificate
(without independent verification), the Company and its subsidiaries have
performed all material obligations required to be performed by them under
all contracts filed as exhibits to the Registration Statement.
(xii) To the best of our knowledge, except as set forth in the
Prospectus, there are no legal or governmental proceedings pending to which
the Company or any of its subsidiaries or affiliates is a party or of which
any property of the Company or any subsidiary or affiliate is subject,
which, if determined adversely to the Company or any such subsidiary or
affiliate, might individually or in the aggregate (i) prevent or adversely
affect the transactions contemplated by the Underwriting Agreement, (ii)
suspend the effectiveness of the Registration Statement, (iii) prevent or
suspend the use of the Prospectus in any jurisdiction or (iv) result in a
material adverse change in the condition (financial or otherwise),
properties, business, management, prospects, net worth or results of
operations of the Company and its subsidiaries considered as a whole; and
to the best of our knowledge, no such proceedings are threatened or
contemplated against the Company or any subsidiary or affiliate by
governmental authorities or others.
(xiii) Neither the Company nor its subsidiaries is 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;
(xiv) The statements in the Prospectus under the caption "Description
of Capital Stock" and "Shares Eligible for Future Sale", insofar as such
statements constitute a summary of documents referred to therein or matters
of law, are accurate summaries and fairly and correctly present, in all
material respects, the information called for with respect to such
documents and matters; and
(xv) The Registration Statement and the Prospectus (except for the
financial statements, notes thereto and other financial information and
schedules included therein or
4
omitted therefrom as to which we have not been requested to express any
opinion) appear on their face to have been appropriately responsive in all
material respects to the requirements of the Securities Act.
We have not verified, and are not passing upon and do not assume any
responsibility for, the accuracy, completeness or fairness of the statements
contained in the Registration Statement or Prospectus, other than those
mentioned in subparagraph (xiv) above. We have, however, generally reviewed and
discussed such statements with certain officers of the Company, its auditors and
with your representatives and their counsel. In the course of this review and
discussion, no facts have come to our attention that lead us to believe that (i)
the Registration Statement (except for the financial statements, notes thereto
and other financial information and schedules included therein or omitted
therefrom as to which we have not been requested to express any opinion or
statement of belief), at the time the Registration Statement became effective,
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading, or (ii) the Prospectus (except for the financial statements,
notes thereto and other financial information and schedules included therein or
omitted therefrom as to which we have not been requested to express any opinion
or statement of belief), at the time the Prospectus was issued or on the date
hereof, contained any untrue statement of a material fact or omitted 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.
5
EXHIBIT II
[Letterhead of ▇'▇▇▇▇▇▇▇▇ Graev & Karabell, LLP]
▇▇▇▇▇ & Company
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLC
SBC Warburg Dillon Read Inc.
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ & Company, LLC
As Representatives of the several
Underwriters
▇/▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Advanced Health Corporation
Ladies and Gentlemen:
We have acted as special counsel to the selling stockholders named in
Schedule B to the Underwriting Agreement (as defined herein) (the "Selling
Stockholders"), in connection with the issuance and sale by the Selling
Stockholders of an aggregate of 500,000 shares of the Company's Common Stock,
par value $.01 per share (the "Shares"), to the Underwriters named in Schedule A
of the Underwriting Agreement dated October __, 1997 (the "Underwriting
Agreement") among the Company, the Selling Stockholders and ▇▇▇▇▇ & Company,
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLC, SBC Warburg Dillon Read Inc. and ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ &
Company, LLC, as representatives of the several Underwriters. This opinion is
being delivered to you pursuant to Section 8(g) of the Underwriting Agreement.
Capitalized terms used but not defined herein shall have the meanings ascribed
thereto in the Underwriting Agreement.
In this capacity, we have examined signed copies of the registration
statement on Form S-1 (Registration No. 333-35115) (the "Registration
Statement") filed by the Company under the Securities Act of 1933, as amended
(the "Securities Act"), with the Securities and Exchange Commission (the
"Commission") on September 8, 1997, Amendment No. 1 to the Registration
Statement filed with the Commission on September 10, 1997 and Amendment No. 2 to
the Registration Statement filed with the Commission on __________ __, 1997. The
Registration Statement, as amended at the time it became effective, including
the information deemed to be a part thereof at the time of effectiveness
pursuant to Rule 430A under the Securities Act, the exhibits and the schedules
thereto, is hereinafter referred to as the "Registration Statement," and the
final prospectus dated October __, 1997, in the form filed by the Company
pursuant to Rule 424(b)(4) under the Securities Act, is hereinafter referred to
as the "Prospectus."
We have also examined the Underwriting Agreement and the originals, or
copies identified to our satisfaction, of such corporate records of the Company,
certificates of public officials, officers of the Company and other persons, and
such other documents, agreements and instruments as we have deemed necessary as
a basis for the opinions hereinafter expressed. In such examination, we have
assumed the genuineness of all signatures, the authenticity of all documents
submitted to us as originals and the conformity with the originals of all
documents submitted to us as copies. In rendering the opinions expressed below,
we have relied as to certain factual matters, to the extent we deem proper, upon
the representations and warranties contained in or made pursuant to the
Underwriting Agreement and upon certificates of each Attorney-in-fact, on behalf
of the Selling Stockholders, and certificates of public officials.
As used in the opinions contained herein, the expressions "to our
knowledge" and "to the best of our knowledge" with reference to matters of fact
mean that after an examination of documents in our files and considering the
actual knowledge of those attorneys in our firm who have given substantive
attention to this matter, but not including any constructive or imputed notice
of any information, we have no reason to believe that the opinions expressed
herein are factually incorrect. Without limiting the generality of the
foregoing, with respect to our opinion in paragraph (iv) below, we have not
conducted any docket or similar search and have relied upon certificates each
Attorney-in-fact, on behalf of the Selling Stockholders. Beyond the foregoing,
we have made no independent factual investigation for the purpose of rendering
the opinions set forth herein.
Our opinions expressed below are limited to the law of the State of New
York, the General Corporation Law of the State of Delaware and the Federal
securities law of the United States, and we do not express any opinion herein
concerning any other law.
Based upon and subject to the foregoing, we are of the opinion that:
(i) Each Selling Stockholder, to the extent such Selling Stockholder
is not a natural person, has been duly organized and is validly existing
and in good standing in its corporate or other capacity under the laws of
its jurisdiction of organization;
(ii) The Underwriting Agreement has been duly authorized, executed and
delivered by or on behalf of each of the Selling Stockholders;
(iii) The Shares to be sold by the Selling Stockholders have been duly
authorized, and when delivered to and paid for by the Underwriters in
accordance with the terms of the Underwriting Agreement, will be validly
issued, fully paid and non-assessable;
2
(iv) The execution and delivery by each Selling Stockholder of, and
the performance by such Selling Stockholder of its obligations under, the
Underwriting Agreement and the Custody Agreement and Power of Attorney of
such Selling Stockholder will not contravene any provision of applicable
law, or, to the best of our knowledge, any agreement or other instrument
binding upon such Selling Stockholder, or to the best of our knowledge, any
judgment, order or decree of any governmental body, agency or court having
jurisdiction over such Selling Stockholder, and no consent, approval,
authorization or order of, or qualification with, any governmental body or
agency is required for the performance by such Selling Stockholder of its
obligations under the Underwriting Agreement, or the Custody Agreement or
Power of Attorney of such Selling Stockholder, except such as may be
required by the securities or Blue Sky laws of the various states in
connection with the offer and sale of the Shares;
(v) The Custody Agreement of each Selling Stockholder has been duly
authorized, executed and delivered by each Selling Stockholder and is a
valid and binding agreement of such Selling Stockholder enforceable in
accordance with its terms;
(vi) Each Selling Stockholder has full legal right, power and
authority, and any approval required by law (other than approval imposed by
the applicable state securities and Blue Sky laws) to sell, assign,
transfer and deliver the Shares to be sold by such Selling Stockholder in
the manner provided in the Underwriting Agreement and the Custody
Agreement;
(vii) To our knowledge after due inquiry, each Selling Stockholder has
good and clear title to the Shares to be sold by such Selling Stockholder
and upon delivery thereof, pursuant hereto and payment therefor, assuming
the Underwriters purchase in good faith without notice of adverse claim
under Section 8-302 of the Uniform Commercial Code, good and clear title
will pass to the Underwriters, severally, free of all restrictions on
transfer, liens, encumbrances, security interests and claims whatsoever;
and
(viii) The Power of Attorney signed by each Selling Stockholder
appointing [▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, M.D.], [▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇] and [▇▇▇▇ ▇.
▇▇▇▇▇▇▇], or any of them, as its Attorney-in-fact to the extent set forth
in the Underwriting Agreement with regard to the transactions contemplated
hereby and by the Registration Statement has been duly authorized, executed
and delivered by or on behalf of each Selling Stockholder and is a valid
and binding instrument of such Selling Stockholder enforceable in
accordance with its terms, and, pursuant to such Powers of Attorney, each
of the Selling Stockholders has authorized [▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, M.D.],
[▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇] and [▇▇▇▇ ▇. ▇▇▇▇▇▇▇], or any of them, to execute and
deliver on their
3
behalf the Underwriting Agreement and any other document necessary or
desirable in connection with the transactions contemplated hereby and to
deliver the Shares to be sold by them pursuant to the Underwriting
Agreement.
We have not verified, and are not passing upon and do not assume any
responsibility for, the accuracy, completeness or fairness of the statements
contained in the Registration Statement or Prospectus. We have, however,
generally reviewed and discussed such statements with certain officers of the
Company, its auditors and with your representatives and their counsel. In the
course of this review and discussion, no facts have come to our attention that
lead us to believe that (i) the Registration Statement (except for the financial
statements, notes thereto and other financial information and schedules included
therein or omitted therefrom as to which we have not been requested to express
any opinion or statement of belief), at the time the Registration Statement
became effective, contained any untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading, or (ii) the Prospectus (except for the
financial statements, notes thereto and other financial information and
schedules included therein or omitted therefrom as to which we have not been
requested to express any opinion or statement of belief), at the time the
Prospectus was issued or on the date hereof, contained any untrue statement of a
material fact or omitted 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.
4
EXHIBIT III(a)
[Letterhead of Proskauer ▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇ LLP]
▇▇▇▇▇ & Company
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLC
SBC Warburg Dillon Read Inc.
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ & Company, LLC
As Representatives of the several
Underwriters
▇/▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Advanced Health Corporation
Ladies and Gentlemen:
We have acted as special health care regulatory counsel to Advanced Health
Corporation, a Delaware corporation (the "Company"), in connection with the
issuance and sale by the Company of an aggregate of 2,000,000 shares of the
Company's Common Stock, par value $.01 per share (the "Shares"), to the
Underwriters named in Schedule A of the Underwriting Agreement dated October __,
1997 (the "Underwriting Agreement") among the Company, the Selling Stockholders
named in Schedule B of the Underwriting Agreement and ▇▇▇▇▇ & Company, ▇▇▇▇▇▇▇▇▇
& ▇▇▇▇▇ LLC, SBC Warburg Dillon Read Inc. and ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ & Company, LLC,
as representatives of the several Underwriters. This opinion is being delivered
to you pursuant to Section 8(h) of the Underwriting Agreement. Capitalized terms
used but not defined herein shall have the meanings ascribed thereto in the
Underwriting Agreement.
Our opinion expressed below is limited to the law of the State of New York
and the Federal Law of the United States, and we do not express any opinion
herein concerning any other law.
Based upon and subject to the foregoing, we are of the opinion that:
(i) The statements set forth under the captions "Risk Factors
Government Regulation" and "Business - Government Regulation" (other than
the statements under the caption "- FDA Regulation" in such section, as to
which we have not been requested to, and do not, express an opinion) in the
Prospectus insofar as such
statements constitute a summary of documents referred to therein or matters
of law, are accurate summaries and fairly and correctly present, in all
material respects, the information called for with respect to such
documents and matters.
This opinion is given to you solely for your benefit and the benefit
of the Underwriters represented by you in connection with the issuance of
the Prospectus. This opinion may not be relied upon by you or such
Underwriters for any other purpose or furnished to, quoted or relied upon
by any other person, firm or corporation for any purpose without our
express written consent.
2
EXHIBIT III(b)
[Letterhead of Proskauer ▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇ LLP]
▇▇▇▇▇ & Company
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLC
SBC Warburg Dillon Read Inc.
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ & Company, LLC
As Representatives of the several
Underwriters
▇/▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Advanced Health Corporation
Ladies and Gentlemen:
We have served only as special health care regulatory counsel to Advanced
Health Corporation, a Delaware corporation (the "Company"), and have advised the
Company in that capacity in regard to health care regulatory requirements
related to certain of its New York State transactions in connection with the
issuance and sale by the Company of an aggregate of 2,000,000 shares of the
Company's Common Stock, par value $.01 per share (the "Shares"), to the
Underwriters named in Schedule A of the Underwriting Agreement dated October __,
1997 (the "Underwriting Agreement") among the Company, the Selling Stockholders
named in Schedule B of the Underwriting Agreement and ▇▇▇▇▇ & Company, ▇▇▇▇▇▇▇▇▇
& ▇▇▇▇▇ LLC, SBC Warburg Dillon Read Inc. and ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ & Company, LLC,
as representatives of the several Underwriters. This opinion is being delivered
to you pursuant to Section 8(h) of the Underwriting Agreement. Capitalized terms
used but not defined herein shall have the meanings ascribed thereto in the
Underwriting Agreement.
In our capacity as special health care regulatory counsel, we participated
in conferences with certain officers of the Company concerning the preparation
of those portions of the Registration Statement and the Prospectus referred to
in the next paragraph.
Although we have not independently verified the accuracy or completeness of
the statements contained in the Registration Statement or the Prospectus, and in
view of the limitations inherent in our limited engagement we cannot and do not
assume responsibility or pass on the accuracy of such statements except to the
extent set forth in our opinion letter to you dated October __, 1997, no facts
have come to our attention that lead us to believe that the statements set forth
in the Registration Statement under the captions "Risk Factors -
Government Regulation" and "Business - Government Regulation" (excluding the
statements under the caption "FDA Regulation" which for the purposes of this
letter, are outside the scope of the statements contained herein), at the time
the Registration Statement was declared effective, contained any untrue
statement of a material fact or omitted to state any material fact required to
be stated therein or necessary in order to make the statements therein not
misleading, or that the Prospectus, with respect to the above-specified text
captions, at the time the Registration Statement was declared effective, or on
the date hereof, contained or contains any untrue statement of a material fact
or omitted or omits to state any fact necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
2
EXHIBIT IV
[Letterhead of King & Spalding]
▇▇▇▇▇ & Company
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLC
SBC Warburg Dillon Read Inc.
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ & Company, LLC
As Representatives of the several
Underwriters
▇/▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Advanced Health Corporation
Ladies and Gentlemen:
We have acted as special regulatory counsel to Advanced Health Corporation,
a Delaware corporation (the "Company"), in connection with the issuance and sale
by the Company of an aggregate of 2,000,000 shares of the Company's Common
Stock, par value $.01 per share (the "Shares"), to the Underwriters named in
Schedule A of the Underwriting Agreement dated October __, 1997 (the
"Underwriting Agreement") among the Company, the Selling Stockholders named in
Schedule B of the Underwriting Agreement and ▇▇▇▇▇ & Company, ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
LLC, SBC Warburg Dillon Read Inc. and ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ & Company, LLC, as
representatives of the several Underwriters. This opinion is being delivered to
you pursuant to Section 8(i) of the Underwriting Agreement. Capitalized terms
used but not defined herein shall have the meanings ascribed thereto in the
Underwriting Agreement.
Our opinion expressed below is limited to the Federal Law of the United
States, and we do not express any opinion herein concerning any other law.
Based upon and subject to the foregoing, we are of the opinion that:
(i) The statements set forth under the caption "Risk Factors - FDA
Regulation" and under the caption "Business - Government Regulation -- FDA
Regulation" in the Prospectus insofar as such statements constitute a
summary of documents referred to therein or matters of law, are accurate
summaries and fairly and
correctly present, in all material respects, the information called for
with respect to such documents and matters.
Although we have not independently verified the accuracy or completeness of
the statements contained in the Registration Statement or the Prospectus, no
facts have come to our attention that lead us to believe that the above-listed
portions of the Registration Statement, at the time the Registration Statement
was declared effective, contained any untrue statement of a material fact or
omitted to state any material fact required to be stated therein or necessary in
order to make the statements therein not misleading, or that the Prospectus, at
the time the Registration Statement was declared effective, or on the date
hereof, contained or contains any untrue statement of a material fact or omitted
or omits to state any fact necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading.
2
EXHIBIT V
[Letterhead of ▇▇▇▇▇▇ & Morofsky ]
▇▇▇▇▇ & Company
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLC
SBC Warburg Dillon Read Inc.
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ & Company, LLC
As Representatives of the several
Underwriters
▇/▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Advanced Health Corporation
Ladies and Gentlemen:
We have acted as special patent counsel to Advanced Health Corporation, a
Delaware corporation (the "Company"), in connection with the issuance and sale
by the Company of an aggregate of 2,000,000 shares of the Company's Common
Stock, par value $.01 per share (the "Shares"), to the Underwriters named in
Schedule A of the Underwriting Agreement dated October __, 1997 (the
"Underwriting Agreement") among the Company, the Selling Stockholders named in
Schedule B of the Underwriting Agreement and ▇▇▇▇▇ & Company, ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
LLC, SBC Warburg Dillon Read Inc. and ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ & Company, LLC, as
representatives of the several Underwriters. This opinion is being delivered to
you pursuant to Section 8(j) of the Underwriting Agreement. Capitalized terms
used but not defined herein shall have the meanings ascribed thereto in the
Underwriting Agreement.
Our opinions expressed below are limited to the law of the State of New
York, and the Federal Law of the United States, and we do not express any
opinion herein concerning any other law.
Based upon and subject to the foregoing, we are of the opinion that:
(i) We have no knowledge of any fact which would preclude the Company
from having clear title to any patent applications referenced in the
Prospectus;
(ii) To the best of our knowledge, the Company does not lack and will
not be unable to obtain any rights or licenses to use any patent or
know-how necessary to conduct the business now conducted by the Company as
described in the Prospectus. However, no search has been made to ascertain
the existence of proprietary positions of others;
(iii) To the best of our knowledge, except as disclosed in the
Prospectus, the Company has not received any notice of infringement or of
conflict with rights or claims of others with respect to any patents,
trademarks, service marks, trade names, copyrights or know-how which could
result in any material adverse effect upon the Company.
(iv) We are not aware of any patents of others which are infringed by
specific products or processes referred to in the Prospectus in such manner
as to materially and adversely affect the Company; however, we note that no
search for such patents has been made;
(v) To the best of our knowledge, except for the application
procedures instituted by the Company to obtain patents and trademarks, and
except as disclosed in the Prospectus, there are no legal or governmental
proceedings pending relating to patent rights, trade secrets, trademarks,
service marks or other proprietary information or materials of the Company,
and to the best of our knowledge, no such proceedings are threatened or
contemplated by governmental authorities or others;
(vi) To the best of our knowledge, there are no material contracts or
other material documents relating to the Company's patents or proprietary
information; and
(vii) The statements under the captions "Risk Factors - Dependence on
Proprietary Assets" and "Business - Proprietary Rights" in the Prospectus,
insofar as such statements constitute a summary of documents referred to
therein or matters of law, are accurate summaries and fairly and correctly
present, in all material respects, the information called for with respect
to such documents and matters.
Although we have not independently verified the accuracy or completeness of
the statements contained in the Registration Statement or the Prospectus, no
facts have come to our attention that lead us to believe that the above-listed
portions of the Registration Statement, at the time the Registration Statement
was declared effective, contained any untrue statement of a material fact or
omitted to state any material fact required to be stated therein or necessary in
order to make the statements therein not misleading, or that the Prospectus, at
the time the Registration Statement was declared effective, or on the date
hereof, contained or contains any untrue statement of a material fact or omitted
or omits to state any fact necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading.
2