1
[Form of Underwriting Agreement]
6,000,000 Shares
MedCath Corporation
Common Stock
($.01 Par Value)
EQUITY UNDERWRITING AGREEMENT
__________, 2001
Deutsche Banc Alex. ▇▇▇▇▇ Inc.
Banc of America Securities LLC
▇▇ ▇▇▇▇▇▇ Securities Inc.
First Union Securities, Inc.
As Representatives of the
Several Underwriters
c/o Deutsche Banc Alex. ▇▇▇▇▇ Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
MedCath Corporation, a Delaware corporation (the "Company"),
proposes to sell to the several underwriters (the "Underwriters") named in
Schedule I hereto for whom you are acting as representatives (the
"Representatives") an aggregate of 6,000,000 shares (the "Firm Shares") of the
Company's Common Stock, $.01 par value ("Common Stock"). The respective amounts
of the Firm Shares to be so purchased by the several Underwriters are set forth
opposite their names in Schedule I hereto. The Company also proposes to sell at
the Underwriters' option an aggregate of up to 900,000 additional shares of
Common Stock (the "Option Shares") as set forth below.
As the Representatives, you have advised the Company and
MedCath Holdings, Inc., a Delaware corporation ("Holdings"), (a) that you are
authorized to enter into this Agreement on behalf of the several Underwriters,
and (b) that the several Underwriters are willing, acting severally and not
jointly, to purchase the numbers of Firm Shares set forth opposite their
respective names in Schedule I, plus their pro rata portion of the Option Shares
if you elect to exercise the over-allotment option in whole or in part for the
accounts of the several
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Underwriters. The Firm Shares and the Option Shares (to the extent the
aforementioned option is exercised) are herein collectively called the "Shares."
The Company has offered to (i) all stockholders of Holdings
the right to exchange all of their shares of common stock of Holdings in
exchange for shares of Common Stock (the "Holdings Exchange") and (ii) investors
in six hospital ventures in which Holdings owns indirect equity interests the
right to exchange a portion of such investors' equity interests for shares of
Common Stock (the "Hospital Exchange"). The Company has also entered into a
separate agreement to purchase of additional ownership interests in its Arkansas
Heart Hospital for cash (the "AHH Exchange" and, together with the Holdings
Exchange and the Hospital Exchange, the "Exchange"). As a result of the
Exchange, which will be completed on the Closing Date (as defined below)
immediately prior to the payment and delivery of the Firm Shares hereunder,
Holdings will become a wholly owned subsidiary of the Company.
Concurrent with the issuance of the Firm Shares described
herein, a wholly owned subsidiary of the Company will become party to a $220.0
million credit facility that is intended to be a source of capital for
refinancing the indebtedness of some of the Company's existing hospitals and
financing its hospital development program (the "New Credit Facility").
Deutsche Banc Alex. ▇▇▇▇▇ Inc. ("Deutsche Banc Alex. ▇▇▇▇▇")
has agreed to reserve up to 300,000 of the Firm Shares to be purchased by it
under this Agreement for sale to the Company's directors, officers, employees
and business associates and other parties related to the Company (collectively,
"Participants"), as set forth in the Prospectus (as defined below) under the
heading "Underwriting" (the "Directed Share Program"). The Shares to be sold by
Deutsche Banc Alex. ▇▇▇▇▇ and its affiliates pursuant to the Directed Share
Program are referred to hereinafter as the "Directed Shares." Any Directed
Shares not orally confirmed for purchase by any of the Participants by the end
of the business day on which this Agreement is executed will be offered to the
public by the Underwriters as set forth in the Prospectus.
In consideration of the mutual agreements contained herein and
of the interests of the parties in the transactions contemplated hereby, the
parties hereto agree as follows:
1. Representations and Warranties of the Company and HOLDINGS.
(a) The Company and Holdings jointly and severally represent
and warrant to each of the Underwriters as follows:
(i) A registration statement on Form S-1 (File No.
333-60278) with respect to the Shares has been prepared by the Company
and Holdings in conformity with the requirements of the Securities Act
of 1933, as amended (the "Act"), and the rules and regulations (the
"Rules and Regulations") of the Securities and Exchange Commission (the
"Commission") thereunder and has been filed with the Commission. Copies
of such registration statement, including any amendments thereto, the
preliminary prospectuses (meeting the requirements of the Rules and
Regulations) contained therein and the exhibits, financial statements
and schedules, as finally amended and revised, have heretofore been
delivered by the Company to you. Such registration statement, together
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with any registration statement filed by the Company pursuant to Rule
462 (b) of the Act, is herein referred to as the "Registration
Statement," which shall be deemed to include all information omitted
therefrom in reliance upon Rule 430A and contained in the Prospectus
referred to below, has become effective under the Act and no
post-effective amendment to the Registration Statement has been filed
as of the date of this Agreement. "Prospectus" means the form of
prospectus first filed with the Commission pursuant to Rule 424(b).
Each preliminary prospectus included in the Registration Statement
prior to the time it becomes effective is herein referred to as a
"Preliminary Prospectus." Any reference herein to the Registration
Statement, any Preliminary Prospectus or to the Prospectus or any
amendment or supplement to any of the foregoing shall be deemed to
include any supplements or amendments thereto filed with the Commission
after the date of filing of the Prospectus under Rules 424 (b) or 430A,
and prior to the termination of the offering by the Underwriters.
(ii) Each of the Company and Holdings has been duly
organized and is validly existing as a corporation in good standing
under the laws of the State of Delaware, with corporate power and
authority to own or lease its properties and conduct its business as
described in the Registration Statement. Each of the entities of
Holdings in which Holdings has an equity interest, whether directly or
indirectly, including without limitation any entity in which Holdings
has an equity interest that owns, develops or operates a hospital or
diagnostic or therapeutic facility (collectively, the "Subsidiaries"),
has been duly organized and is validly existing in good standing under
the laws of the jurisdiction of its organization, with power and
authority to own or lease its properties and conduct its business as
described in the Registration Statement. Exhibit 21.1 to the
Registration Statement sets forth a true and correct list of the
Subsidiaries. The Subsidiaries are the only entities in which Holdings
has a direct or indirect equity interest. The Company has, and
immediately prior to the consummation of the Exchange, will have no
subsidiaries. On the Closing Date (as defined below) following the
consummation of the Exchange and on the Option Closing Date (as defined
below), the Company will have a direct or indirect equity interest in
the Subsidiaries to the extent Holdings has such interest on the date
hereof and Holdings and the Subsidiaries will be the only entities in
which the Company has an equity interest as of such date. The Company,
Holdings and each of the Subsidiaries are duly qualified to transact
business in all jurisdictions in which the conduct of their business
requires such qualification except where the failure to be so qualified
would not have a material adverse effect on such entity. The
outstanding shares of capital stock, partnership interests and
membership units or other equity interest of each of the Subsidiaries
have been duly authorized and validly issued, are fully paid and
non-assessable and are owned either directly or indirectly by Holdings
free and clear of all liens, encumbrances and equities and claims other
than pledges thereof to lenders financing the hospitals of Holdings or
to Bank of America under the Company's $100 million credit facility
(the "Existing Credit Facility"). After the Exchange, the Company will
own all outstanding shares of capital stock of Holdings free and clear
of all liens, encumbrances and equities and claims other than pledges
thereof to lenders financing the hospitals of Holdings or Bank of
America under the Existing Credit Facility; no options, warrants or
other rights to purchase, agreements or other obligations to issue or
other rights to convert any obligations into shares of capital stock or
ownership interests in the Subsidiaries are outstanding except as
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provided in the Operating or Partnership Agreement of each of the
entities in which Holdings directly or indirectly owns an equity
interests that owns, develops or operates a hospital (such entities,
the "Hospital Ventures"); and no options, warrants or other rights to
purchase, agreements or other obligations to issue or other rights to
convert any obligations into shares of capital stock or ownership
interests in the Subsidiaries will be outstanding following the
consummation of the Exchange except as provided in the Operating or
Partnership Agreement of each of the Hospital Ventures.
(iii) The outstanding shares of Common Stock of each
of the Company and Holdings have been duly authorized and validly
issued and are fully paid and non-assessable; the Shares to be issued
and sold by the Company have been duly authorized and when issued and
paid for as contemplated herein will be validly issued, fully paid and
non-assessable; and no preemptive rights of stockholders exist with
respect to any of the Shares or the issue and sale thereof. The shares
of Common Stock (the "Exchange Shares") to be issued by the Company in
the Exchange have been duly authorized and, when issued as contemplated
in the exchange agreements and other agreements relating thereto (the
"Exchange Agreements"), will be validly issued, fully paid and
non-assessable; and no preemptive rights of stockholders exist with
respect to any of the Exchange Shares or the issue and sale thereof.
Neither the filing of the Registration Statement, the consummation of
the Exchange nor the offering or sale of the Shares as contemplated by
this Agreement or the Exchange Shares as contemplated by the Exchange
Agreements gives rise to any rights, other than those which have been
waived or satisfied, for or relating to the registration of any shares
of Common Stock; and, except as disclosed in the Registration
Statement, there are no persons with registration rights or other
similar rights to have any securities registered by the Company,
Holdings or any Subsidiary under the Act.
(iv) The information set forth under the caption
"Capitalization" in the Prospectus is true and correct. All of the
Shares conform to the description thereof contained in the Registration
Statement. The form of certificate for the Shares conforms to the
corporate law of the jurisdiction of the Company's incorporation.
(v) The Commission has not issued an order preventing
or suspending the use of any Prospectus relating to the proposed
offering of the Shares nor instituted proceedings for that purpose. The
Registration Statement contains, and the Prospectus and any amendments
or supplements thereto will contain, all statements which are required
to be stated therein by, and will conform to, the requirements of the
Act and the Rules and Regulations. The Registration Statement and any
amendment thereto do not contain, and will not contain, any untrue
statement of a material fact and do not omit, and will not omit, to
state any material fact required to be stated therein or necessary to
make the statements therein not misleading. The Prospectus and any
amendments and supplements thereto do not contain, and will not
contain, any untrue statement of material fact; and do not omit, and
will not 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 neither the Company nor Holdings makes any
representations or warranties as to information contained in or omitted
from the Registration Statement or the Prospectus, or any such
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amendment or supplement, in reliance upon, and in conformity with,
written information furnished to the Company by or on behalf of any
Underwriter through the Representatives, specifically for use in the
preparation thereof.
(vi) The consolidated financial statements of
Holdings and the Subsidiaries, together with related notes and
schedules as set forth in the Registration Statement and Prospectus,
present fairly in all material respects the financial position and the
results of operations and cash flows of Holdings and the consolidated
Subsidiaries, at the indicated dates and for the indicated periods.
Such financial statements and related schedules have been prepared in
accordance with generally accepted accounting principles ("GAAP"),
consistently applied throughout the periods involved, except as
disclosed therein, and all adjustments necessary for a fair
presentation in all material respects of results for such periods have
been made. The summary financial and statistical data included in the
Registration Statement presents fairly in all material respects the
information shown therein and such data has been compiled on a basis
consistent with the financial statements presented therein and the
books and records of Holdings. The pro forma financial statements and
other pro forma financial information included in the Registration
Statement and the Prospectus present fairly the information shown
therein, have been prepared in accordance with the Commission's rules
and guidelines with respect to pro forma financial statements in all
material respects, have been properly compiled on the pro forma bases
described therein, and, in the opinion of the Company, 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.
(vii) Ernst & Young LLP and Deloitte & Touche LLP,
each of whom have certified certain of the financial statements filed
with the Commission as part of the Registration Statement, are
independent public accountants as required by the Act and the Rules and
Regulations.
(viii) There is no action, suit, claim or proceeding
pending or, to the knowledge of the Company, threatened against the
Company, Holdings or any of the Subsidiaries before any court or
administrative agency or otherwise which if determined adversely to the
Company, Holdings or any of its Subsidiaries might result in any
material adverse change or development in the earnings, business,
management, properties, net worth, assets, rights, operations,
condition (financial or otherwise) or prospects of the Company,
Holdings and the Subsidiaries, taken as a whole (in the case of the
Subsidiaries, to the extent of the Company's direct or indirect equity
interest therein) or prevent the consummation of the Exchange or the
transactions contemplated hereby (a "Material Adverse Change"), except
as set forth in the Registration Statement.
(ix) The Company, Holdings and the Subsidiaries have
good and marketable title to all of the properties and assets reflected
in the consolidated financial statements hereinabove described or
described in the Registration Statement, subject to no lien, mortgage,
pledge, charge or encumbrance of any kind except those reflected in
such financial statements or described in the Registration Statement or
which are not material in amount. The Company, Holdings and the
Subsidiaries occupy their leased
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properties under valid and binding leases conforming in all material
respects to the description thereof set forth in the Registration
Statement.
(x) The Company, Holdings and the Subsidiaries have
filed all Federal, State, local and foreign tax returns which have been
required to be filed and have paid all taxes indicated by such returns
and all assessments received by them or any of them to the extent that
such taxes have become due. All tax liabilities have been adequately
provided for in the financial statements of each of the Company and
Holdings, and neither the Company nor Holdings knows of any actual or
proposed additional material tax assessments.
(xi) Since the respective dates as of which
information is given in the Registration Statement, as it may be
amended or supplemented, there has not been any Material Adverse Change
or any development involving a prospective Material Adverse Change
whether or not occurring in the ordinary course of business, and there
has not been any material transaction entered into or any material
transaction that is probable of being entered into by the Company,
Holdings or the Subsidiaries, other than transactions in the ordinary
course of business and changes and transactions described in the
Registration Statement, as it may be amended or supplemented. None of
the Company, Holdings or the Subsidiaries have any material contingent
obligation that is not disclosed in the financial statements which are
included in the Registration Statement.
(xii) None of the Company, Holdings or any of the
Subsidiaries is or, with the giving of notice or lapse of time or both,
will be, in violation of or in default under (i) its organizational
documents or (ii) under any agreement, lease, contract, indenture or
other instrument or obligation to which it is a party or by which it,
or any of its properties, is bound and, solely with respect to this
clause (ii), which violation or default would have a Material Adverse
Change. Neither the execution and delivery of this Agreement, the
execution and delivery of Exchange Agreements, the consummation of the
transactions herein or therein contemplated nor the fulfillment of the
terms hereof or thereof will conflict with or result in a breach of any
of the terms or provisions of, or constitute a default under, any
indenture, mortgage, deed of trust or other agreement or instrument to
which the Company, Holdings or any Subsidiary is a party or by which
the Company, Holdings or any Subsidiary or any of their respective
properties is bound, or of the organizational documents of the Company,
Holdings or any Subsidiary or any law, order, rule or regulation
judgement, order, writ or decree applicable to the Company, Holdings or
any Subsidiary of any court or of any government, regulatory body or
administrative agency or other governmental body having jurisdiction.
(xiii) The execution and delivery of, and the
performance by the Company of its obligations under this Agreement and
the Exchange Agreements have been duly and validly authorized by all
necessary corporate action on the part of the Company, this Agreement
has been duly executed by the Company and Holdings and the Exchange
Agreements have been duly executed and delivered by the Company.
(xiv) Each approval, consent, order, authorization,
designation, declaration or filing by or with any regulatory,
administrative or other governmental body
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necessary in connection with the execution and delivery by the Company
and Holdings of this Agreement or the Exchange Agreements and the
consummation of the transactions herein or therein contemplated (except
such additional steps as may be required by the Commission, the
National Association of Securities Dealers, Inc. (the "NASD") or such
additional steps as may be necessary to qualify the Shares for public
offering by the Underwriters under state securities or Blue Sky laws)
has been obtained or made and is in full force and effect.
(xv) The Company, Holdings and the Subsidiaries each
own or possess the right to use all patents, patent rights, trademarks,
trade names, service marks, service names, copyrights, license rights,
know-how (including trade secrets and other unpatented and unpatentable
proprietary or confidential information, systems or procedures) and
other intellectual property rights ("Intellectual Property") necessary
to carry on their business, the failure of which to retain would,
singly or in the aggregate, be reasonably expected to result in a
Material Adverse Change; neither the Company, Holdings nor any of the
Subsidiaries has infringed, and none of the Company, Holdings or the
Subsidiaries have received notice of conflict with, any Intellectual
Property of any other person or entity. There are no outstanding
options, licenses or agreements of any kind relating to the
Intellectual Property of the Company, Holdings or the Subsidiaries that
are required to be described in the Registration Statement or
Prospectus and are not described in all material respects. Neither the
Company nor Holdings is a party to or bound by any options, licenses or
agreements with respect to the Intellectual Property of any other
person or entity that are required to be set forth in the Registration
Statement or Prospectus and are not described in all material respects.
None of the technology employed by the Company, Holdings or the
Subsidiaries has been obtained or is being used by either the Company,
Holdings or the Subsidiaries in violation of any contractual obligation
binding on the Company, Holdings or the Subsidiaries or any of their
officers, directors or employees or otherwise in violation of the
rights of any persons; neither the Company, Holdings nor the
Subsidiaries has received any written or oral communications alleging
that either the Company, Holdings or any of the Subsidiaries has
violated, infringe or conflicted with, or, by conducting its business
as set forth in the Registration Statement or Prospectus, would
violate, infringe or conflict with, any of the Intellectual Property of
any other person or entity. Neither the Company nor Holdings knows of
any infringement by others of Intellectual Property owned by or
licensed to the Company, Holdings or the Subsidiaries.
(xvi) The Company, Holdings and the Subsidiaries
possess such permits, licenses, provider numbers, certificates,
approvals (including, without limitation, certificate of need
approvals), consents, orders, certifications (including, without
limitation, certification under the Medicare and Medicaid programs),
accreditations (including, without limitation, accreditation by the
Joint Commission on Accreditation of Healthcare Organizations) and
other authorizations (collectively, "Licenses") issued by, and have
made all declarations and filings with, the appropriate federal, state,
local or foreign regulatory agencies or bodies necessary to conduct its
business as now being conducted and as described in the Registration
Statement and Prospectuses (including, without limitation, Licenses as
are required (i) under such federal and state healthcare laws as are
applicable to the Company, Holdings and the Subsidiaries and (ii) with
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respect to those facilities operated by the Company, Holdings and the
Subsidiaries that participate in the Medicare and/or Medicaid programs,
to receive reimbursement thereunder), except where the failure to
possess such Government Licenses or to make such declarations and
filings could not, singly or in the aggregate, reasonably be expected
to result in a Material Adverse Change; the Company, Holdings and the
Subsidiaries are in compliance with the terms and conditions of all
such Licenses, except where the failure so to comply could not, singly
or in the aggregate, reasonably be expected to result in a Material
Adverse Change; all of the Licenses are valid and in full force and
effect, except when the invalidity of such Licenses or the failure of
such Licenses to be in full force and effect would not reasonably be
expected to result in a Material Adverse Change; and none of the
Company, Holdings or the Subsidiaries has received any notice of
proceedings relating to the revocation or modification of any such
Licenses which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, could reasonably be expected
to result in a Material Adverse Change. All of the hospitals operated
by the Company, Holdings and the Subsidiaries are "providers of
services" as defined in the Social Security Act and the regulations
promulgated thereunder and are eligible to participate in the Medicare
and Medicaid programs.
(xvii) None of the Company, Holdings or the
Subsidiaries has engaged in, nor, to the knowledge of the Company,
Holdings or the Subsidiaries, have any officers, directors,
stockholders or employees of the Company, Holdings or the Subsidiaries
(during the course of their employment or agency) or the hospitals or
other facilities operated by the Company, Holding or the Subsidiaries
engaged in, any activities that are prohibited by (1) any federal,
state or local statute, rule, or regulation applicable to individuals
or entities operating in the healthcare industry, including, but not
limited to, 18 U.S.C.ss.669 (theft or embezzlement in connection with
health care), 18 U.S.C.ss.1035 (false statements relating to health
care matters), 18 U.S.C. 1347 health care fraud), 18 U.S.C.ss.1518
(obstruction of criminal investigation of health care offense), 42
U.S.C.ss.1320a-7a (civil monetary penalties), 42 U.S.C.ss.1320a-7b
(criminal penalties for acts involving federal health care programs),
42 U.S.C.ss.1395nn (limitation on certain physician referrals), 42
C.F.R. Chapter IV, Part 400 Subpart J, or 42 C.F.R Chapter V, parts
1000-1008, (2) other statutes, rules, or regulations governing federal
or state government health care programs including, but not limited to,
the Medicare, Medicaid, Tricare, or Federal Employee Health Benefit
programs, and (3) 18 U.S.C.ss.287 (criminal false claims), 18
U.S.C.ss.666 (theft or bribery concerning programs receiving Federal
funds), 18 U.S.C. 1001 (false statements), 18 U.S.C.ss.1341 (mail
fraud), 18 U.S.C.ss.1343 (wire fraud), 18 U.S.C.ss.1956 (money
laundering), 18 U.S.C. 1957 (money laundering), or 31 ▇.▇.▇.▇▇. 3929 et
seq. (civil false claims), except for any such activities which are
specifically described in the Prospectus or which could not, singly or
in the aggregate, reasonably be expected to result in a Material
Adverse Change. Further, none of the Company, Holdings or the
Subsidiaries nor, to their knowledge, any of their officers, directors,
stockholders or employees, or the hospitals or other facilities
operated by them, is excluded, suspended, debarred or otherwise
prohibited from participating in any federal, state or other government
health care, procurement, or non-procurement program or activity,
whether pursuant to 42 U.S.C. ss. 1320a-7 or otherwise.
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(xviii) To the knowledge of the Company, Holdings or
the Subsidiaries, none of the hospitals or other facilities operated by
either the Company, Holdings or the Subsidiaries has failed to file
with applicable regulatory authorities any statement, report,
information or form required by any applicable law, regulation or
order, except where the failure to file could not, singly or in the
aggregate, reasonably be expected to result in a Material Adverse
Change. All such filings or submissions were in compliance with
applicable laws when filed and no deficiencies have been asserted by
any regulatory commission, agency or authority with respect to any such
filings or submissions, except for any such failures to be in
compliance or deficiencies which would not, singly or in the aggregate,
reasonably be expected to result in a Material Adverse Change.
(xix) Environmental Laws. Except as described in the
Registration Statement and except as could not, singly or in the
aggregate, reasonably be expected to result in a Material Adverse
Change, (A) none of the Company, Holdings or any Subsidiary is in
violation of any federal, state, or local law, rule, regulation,
ordinance, code, policy or rule of common law or any judicial or
administrative interpretation thereof, including any judicial or
administrative order, consent, decree or judgment, relating to
pollution or protection of human health, the environment (including,
without limitation, ambient air, surface water, groundwater, land
surface or subsurface strata) or wildlife, including, without
limitation, laws and regulations relating to the release or threatened
release of chemicals, pollutants, contaminants, wastes, toxic
substances, hazardous substances, petroleum or petroleum products
(collectively, "Hazardous Materials") or to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport
or handling of Hazardous Materials (collectively, "Environmental
Laws"), (B) the Company, Holdings and the Subsidiaries have all
permits, authorizations and approvals required under any applicable
Environmental Laws and are each in compliance with their requirements,
(C) to the knowledge of the Company or Holdings, there are no pending
or threatened administrative, regulatory or judicial actions, suits,
demands, demand letters, claims, liens, notices of noncompliance or
violation, investigation or proceedings relating to any Environmental
Law against the Company, Holdings or any Subsidiary and (D) there are
no events or circumstances that would reasonably be expected to form
the basis of an order for clean-up or remediation, or an action, suit
or proceeding by any private party or governmental body or agency,
against or affecting the Company, Holdings or any Subsidiary relating
to Hazardous Materials or any Environmental Laws.
(xx) Neither the Company, Holdings nor to the
Company's knowledge, any of its affiliates (including the
Subsidiaries), has taken or may take, directly or indirectly, any
action designed to cause or result in, or which has constituted or
which might reasonably be expected to constitute, the stabilization or
manipulation of the price of the shares of Common Stock to facilitate
the sale or resale of the Shares. The Company and Holdings acknowledge
that the Underwriters may engage in passive market making transactions
in the Shares on the Nasdaq National Market in accordance with
Regulation M under the Securities Exchange Act of ▇▇▇▇ (▇▇▇ "▇▇▇▇▇▇▇▇
▇▇▇").
(xxi) None of the Company, Holdings or any Subsidiary
is or, after giving effect to the offering and sale of the Shares
contemplated hereunder and the
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application of the net proceeds from such sale as described in the use
of proceeds, will be an "investment company" within the meaning of such
term under the Investment Company Act of 1940, (as amended, the "1940
Act") and the rules and regulations of the Commission thereunder.
(xxii) The Company, Holdings and each of the
Subsidiaries maintain a system of internal accounting controls
sufficient to provide reasonable assurances that (i) transactions are
executed in accordance with management's general or specific
authorization; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with GAAP 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.
(xxiii) The Company, Holdings and each Subsidiary
carry, or are covered by, insurance in such amounts and covering such
risks as is adequate for the conduct of their respective businesses and
the value of their respective properties and as is customary for
companies engaged in similar businesses.
(xxiv) The Company, Holdings and each Subsidiary are
in compliance with all presently applicable provisions of the Employee
Retirement Income Security Act of 1974, as amended, including the
regulations and published interpretations thereunder ("ERISA"); neither
the Company, Holdings nor any Subsidiary maintains or sponsors any
"pension plan" (as defined in Section 3(2) of ERISA) for which the
Company, Holdings or any Subsidiary would have any liability or which
is subject to (a) Title IV of ERISA or (b) Section 302 of ERISA and
Section 412 of the Internal Revenue Code of 1986, as amended, including
the regulations and published interpretations thereunder (the "Code");
and each "pension plan" for which the Company, Holdings and the
Subsidiaries would have any liability that is intended to be qualified
under Section 401(a) of the Code has received a favorable determination
letter from the Internal Revenue Service as to its qualified status,
upon which letter the Company, Holdings or each subsidiary, as
applicable, may currently rely.
(xxv) To the Company's or Holdings' knowledge, there
are no affiliations or associations between any member of the NASD and
any of the Company's, Holdings' or the Subsidiaries officers, directors
or 5% or greater securityholders, except as set forth in the
Registration Statement.
(xxvi) No labor dispute with the employees of the
Company, Holdings or any of the Subsidiaries exists or to the knowledge
of the Company and Holdings, is imminent exclusive of employment
related claims made by individual employees which if decided adversely
to the Company, Holdings or any of the Subsidiaries would not, singly
or in the aggregate, reasonably be expected to result in a Material
Adverse Change.
(xxvii) There are no contracts or documents which are
required to be filed as exhibits to the Registration Statement which
have not been filed as required.
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(xxviii) The statistical and market-related data
included in the Prospectuses are derived from sources which the Company
reasonably and in good faith believes to be accurate, reasonable and
reliable in all material respects and the statistical and
market-related data included in the Prospectuses agrees with the
sources from which it was derived in all material respects.
(xxix) No consent, approval, authorization or order
of, or qualification with, any governmental body or agency, other than
those obtained, is required in connection with the offering of the
Directed Shares in any jurisdiction where the Directed Shares are being
offered.
(xxx) The Company has not offered, or caused Deutsche
Banc Alex. ▇▇▇▇▇ or its affiliates to offer, Shares to any person
pursuant to the Directed Share Program with the specific intent to
unlawfully influence (i) a customer or supplier of the Company to alter
the customer's or supplier's level or type of business with the
Company, or (ii) a trade journalist or publication to write or publish
favorable information about the Company or its products.
2. PURCHASE, SALE AND DELIVERY OF THE FIRM SHARES.
(a) On the basis of the representations, warranties and
covenants herein contained, and subject to the conditions herein set forth, the
Company agrees to sell to the Underwriters and each Underwriter agrees,
severally and not jointly, to purchase, at a price of $_____ per share, the
number of Firm Shares set forth opposite the name of each Underwriter in
Schedule I hereof, subject to adjustments in accordance with Section 9 hereof.
(b) Payment for the Firm Shares to be sold hereunder is to be
made in federal (same day) funds against delivery of certificates therefor to
the Representatives for the several accounts of the Underwriters. Such payment
and delivery are to be made through the facilities of The Depository Trust
Company, New York, New York at 10:00 a.m., New York time, on the third business
day after the date of this Agreement (or the fourth business day if the parties
hereto enter into this Agreement after 4:00 p.m., New York City time) or at such
other time and date not later than five business days thereafter as you and the
Company shall agree upon, such time and date being herein referred to as the
"Closing Date." (As used herein, "business day" means a day on which the New
York Stock Exchange is open for trading and on which banks in New York are open
for business and are not permitted by law or executive order to be closed.)
(c) In addition, on the basis of the representations and
warranties herein contained and subject to the terms and conditions herein set
forth, the Company hereby grants an option to the several Underwriters to
purchase the Option Shares at the price per share as set forth in the first
paragraph of this Section 2. The option granted hereby may be exercised in whole
or in part by giving written notice (i) at any time before the Closing Date and
(ii) only once thereafter within 30 days after the date of this Agreement, by
you, as Representatives of the several Underwriters, to the Company setting
forth the number of Option Shares as to which the several Underwriters are
exercising the option and the time and date at which such certificates are to be
delivered. The time and date at which certificates for Option Shares are to be
delivered shall be determined by the Representatives but shall not be earlier
than three nor later than 10
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full business days after the exercise of such option, nor in any event prior to
the Closing Date (such time and date being herein referred to as the "Option
Closing Date"). If the date of exercise of the option is three or more days
before the Closing Date, the notice of exercise shall set the Closing Date as
the Option Closing Date. The number of Option Shares to be purchased by each
Underwriter shall be in the same proportion to the total number of Option Shares
being purchased as the number of Firm Shares being purchased by such Underwriter
bears to the total number of Firm Shares, adjusted by you in such manner as to
avoid fractional shares. The option with respect to the Option Shares granted
hereunder may be exercised only to cover over-allotments in the sale of the Firm
Shares by the Underwriters. You, as Representatives of the several Underwriters,
may cancel such option at any time prior to its expiration by giving written
notice of such cancellation to the Company. To the extent, if any, that the
option is exercised, payment for the Option Shares shall be made on the Option
Closing Date in federal (same day) funds through the facilities of The
Depository Trust Company in New York, New York drawn to the order of the
Company.
3. OFFERING BY THE UNDERWRITERS.
It is understood that the several Underwriters are to make a
public offering of the Firm Shares as soon as the Representatives deem it
advisable to do so. The Firm Shares are to be initially offered to the public at
the initial public offering price set forth in the Prospectus. The
Representatives may from time to time thereafter change the public offering
price and other selling terms. To the extent, if at all, that any Option Shares
are purchased pursuant to Section 2 hereof, the Underwriters will offer them to
the public on the foregoing terms.
It is further understood that you will act as the
Representatives for the Underwriters in the offering and sale of the Shares in
accordance with a Master Agreement among the Underwriters entered into by you
and the several other Underwriters.
4. COVENANTS OF THE COMPANY.
(a) Each of the Company and Holdings covenants and agrees with
the several Underwriters that:
(i) Each of the Company and Holdings will (A) use its
best efforts to cause the Registration Statement to become effective
or, if the procedure in Rule 430A of the Rules and Regulations is
followed, to prepare and timely file with the Commission under Rule
424(b) of the Rules and Regulations a Prospectus in a form approved by
the Representatives containing information previously omitted at the
time of effectiveness of the Registration Statement in reliance on Rule
430A of the Rules and Regulations and (B) not file any amendment to the
Registration Statement or supplement to the Prospectus of which the
Representatives shall not previously have been advised and furnished
with a copy or to which the Representatives shall have reasonably
objected in writing or which is not in compliance with the Rules and
Regulations.
(ii) Each of the Company and Holdings will advise the
Representatives promptly (A) when the Registration Statement or any
post-effective amendment thereto shall have become effective, (B) of
receipt of any comments from the Commission, (C)
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of any request of the Commission for amendment of the Registration
Statement or for supplement to the Prospectus or for any additional
information, and (D) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or the
use of the Prospectus or of the institution of any proceedings for that
purpose. Each of the Company and Holdings will use its best efforts to
prevent the issuance of any such stop order preventing or suspending
the use of the Prospectus and to obtain as soon as possible the lifting
thereof, if issued.
(iii) Each of the Company and Holdings will cooperate
with the Representatives in endeavoring to qualify the Shares for sale
under the securities laws of such jurisdictions as the Representatives
may reasonably have designated in writing and will make such
applications, file such documents, and furnish such information as may
be reasonably required for that purpose, provided that neither the
Company nor Holdings shall be required to qualify as a foreign
corporation or to file a general consent to service of process in any
jurisdiction where it is not now so qualified or required to file such
a consent. Each of the Company and Holdings will, from time to time,
prepare and file such statements, reports, and other documents, as are
or may be required to continue such qualifications in effect for so
long a period as the Representatives may reasonably request for
distribution of the Shares.
(iv) Each of the Company and Holdings will deliver
to, or upon the order of, the Representatives, from time to time, as
many copies of any Preliminary Prospectus as the Representatives may
reasonably request. Each of the Company and Holdings will deliver to,
or upon the order of, the Representatives during the period when
delivery of a Prospectus is required under the Act, as many copies of
the Prospectus in final form, or as thereafter amended or supplemented,
as the Representatives may reasonably request. Each of the Company and
Holdings will deliver to the Representatives at or before the Closing
Date, four signed copies of the Registration Statement and all
amendments thereto including all exhibits filed therewith, and will
deliver to the Representatives such number of copies of the
Registration Statement (including such number of copies of the exhibits
filed therewith that may reasonably be requested), and of all
amendments thereto, as the Representatives may reasonably request.
(v) The Company will comply with the Act and the
Rules and Regulations, and the Exchange Act, and the rules and
regulations of the Commission thereunder, so as to permit the
completion of the distribution of the Shares as contemplated in this
Agreement and the Prospectus. If during the period in which a
prospectus is required by law to be delivered by an Underwriter or
dealer, any event shall occur as a result of which, in the judgment of
the Company or in the reasonable opinion of the Underwriters, it
becomes necessary to amend or supplement the Prospectus in order to
make the statements therein, in the light of the circumstances existing
at the time the Prospectus is delivered to a purchaser, not misleading,
or, if it is necessary at any time to amend or supplement the
Prospectus to comply with any law, the Company promptly will prepare
and file with the Commission an appropriate amendment to the
Registration Statement or supplement to the Prospectus so that the
Prospectus as so amended or
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supplemented will not, in the light of the circumstances when it is so
delivered, be misleading, or so that the Prospectus will comply with
the law.
(vi) The Company will make generally available to its
security holders, as soon as it is practicable to do so, but in any
event not later than 15 months after the effective date of the
Registration Statement, an earning statement (which need not be
audited) in reasonable detail, covering a period of at least 12
consecutive months beginning after the effective date of the
Registration Statement, which earnings statement shall satisfy the
requirements of Section 11(a) of the Act and Rule 158 of the Rules and
Regulations.
(vii) Prior to the Closing Date, each of the Company
and Holdings will furnish to the Underwriters, as soon as they have
been prepared by or are available to the Company, a copy of any
unaudited interim financial statements of the Company or Holdings, as
the case may be, for any period subsequent to the period covered by the
most recent financial statements appearing in the Registration
Statement and the Prospectus.
(viii) No offering, sale, contract to sell or
otherwise dispose of, or any transaction that is designed to or could
be expected to, result in the disposition of any shares of Common Stock
of the Company or other securities convertible into or exchangeable or
exercisable for shares of Common Stock or derivatives of Common Stock
(or agreement for such) will be made for a period of 180 days after the
effective date of the Registration Statement, directly or indirectly,
by the Company except for (i) the grant of stock options, or the
issuance of shares upon the exercise of stock options, granted pursuant
to the Company's employee option plan in effect on the date of this
Agreement or (ii) with the prior written consent of Deutsche Banc Alex.
▇▇▇▇▇.
(ix) The Company will use its best efforts to list,
subject to notice of issuance, the Shares on the Nasdaq National
Market.
(x) The Company has caused each officer, director and
stockholder of the Company to furnish to you, on or prior to the date
of this agreement, a letter or letters, in form and substance
satisfactory to the Underwriters, pursuant to which each such person
shall agree not to offer, sell, contract to sell or otherwise dispose
of, or any transaction that is designed to or could be expected to,
result in the disposition of any shares of Common Stock of the Company
or other securities convertible into or exchangeable or exercisable for
shares of Common Stock or derivatives of Common Stock owned prior to
the consummation of the transactions contemplated hereby or Common
Stock issuable upon the exercise of options or warrants held by such
persons until 180 days after the effective date of the Registration
Statement, directly or indirectly, except with the prior written
consent of Deutsche Banc Alex. ▇▇▇▇▇ ("Lockup Agreements").
(xi) The Company shall apply the net proceeds of its
sale of the Shares as set forth in the Prospectus and shall file such
reports with the Commission with respect
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to the sale of the Shares and the application of the proceeds therefrom
as may be required in accordance with Rule 463 under the Act.
(xii) The Company shall not invest, or otherwise use
the proceeds received by the Company from its sale of the Shares in
such a manner as would require the Company, Holdings or any of the
Subsidiaries to register as an investment company under the 1940 Act.
(xiii) The Company will maintain a transfer agent
and, if necessary under the jurisdiction of incorporation of the
Company, a registrar for the Common Stock.
(xiv) The Company will not take, directly or
indirectly, any action designed to cause or result in, or that has
constituted or might reasonably be expected to constitute, the
stabilization or manipulation of the price of any securities of the
Company.
(xv) The Company will comply with all applicable
securities and other applicable laws, rules and regulations in each
jurisdiction in which the Directed Shares are offered in connection
with the Directed Share Program.
5. COSTS AND EXPENSES.
The Company and Holdings will pay all costs, expenses and fees
incident to the performance of the obligations of the Company and Holdings under
this Agreement, including, without limiting the generality of the foregoing, the
following: accounting fees of the Company; the fees and disbursements of counsel
for the Company; the cost of printing and delivering to, or as requested by, the
Underwriters copies of the Registration Statement, Preliminary Prospectuses, the
Prospectus, this Agreement, the Underwriters' Selling Memorandum, the
Underwriters' Invitation Letter, the Listing Application, the Blue Sky Survey
and any supplements or amendments thereto; the filing fees of the Commission;
the filing fees and expenses (including legal fees and disbursements) incident
to securing any required review by the NASD of the terms of the sale of the
Shares; the Listing Fee of the Nasdaq National Market; and the expenses,
including the fees and disbursements of counsel for the Underwriters, incurred
in connection with the qualification of the Shares under State securities or
Blue Sky laws. The Company agrees to pay all out of pocket costs and expenses of
the Underwriters, including the fees and disbursements of counsel for the
Underwriters, incident to the offer and sale of Directed Shares by the
Underwriters to employees and persons having business relationships with the
Company and its Subsidiaries. Neither the Company nor Holdings shall, however,
be required to pay for any of the Underwriters expenses (other than those
related to qualification under NASD regulation and State securities or Blue Sky
laws) except that, if this Agreement shall not be consummated because the
conditions in Section 6 hereof are not satisfied, or because this Agreement is
terminated by the Representatives pursuant to Section 11 hereof, or by reason of
any failure, refusal or inability on the part of the Company or Holdings to
perform any undertaking or satisfy any condition of this Agreement or to comply
with any of the terms hereof on their part to be performed, unless such failure,
refusal or inability is due to the default or omission of any Underwriter, the
Company and Holdings shall reimburse the several Underwriters for reasonable
out-of-pocket expenses, including fees and disbursements of
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counsel, reasonably incurred in connection with investigating, marketing and
proposing to market the Shares or in contemplation of performing their
obligations hereunder; but neither the Company nor Holdings shall in any event
be liable to any of the several Underwriters for damages on account of loss of
anticipated profits from the sale by them of the Shares.
6. CONDITIONS OF OBLIGATIONS OF THE UNDERWRITERS.
The several obligations of the Underwriters to purchase the
Firm Shares on the Closing Date and the Option Shares, if any, on the Option
Closing Date are subject to the accuracy, as of the Closing Date or the Option
Closing Date, as the case may be, of the representations and warranties of the
Company and Holdings contained herein, and to the performance by the Company of
its covenants and obligations hereunder and to the following additional
conditions:
(a) The Registration Statement and all post-effective
amendments thereto shall have become effective and any and all filings required
by Rule 424 and Rule 430A of the Act shall have been made within the applicable
time period prescribed by, and in compliance with, the Rules and Regulations,
and any request of the Commission for additional information (to be included in
the Registration Statement or otherwise) shall have been disclosed to the
Representatives and complied with to their reasonable satisfaction. No stop
order suspending the effectiveness of the Registration Statement, as amended
from time to time, shall have been issued and no proceedings for that purpose
shall have been taken or, to the knowledge of the Company, shall be contemplated
or threatened by the Commission and no injunction, restraining order or order of
any nature by a federal or state court of competent jurisdiction shall have been
issued as of the Closing Date which would prevent the issuance of the Shares.
(b) The Representatives shall have received on the Closing
Date or the Option Closing Date, as the case may be, the opinion of ▇▇▇▇▇ & ▇▇▇
▇▇▇▇▇ PLLC, counsel for the Company, dated the Closing Date or the Option
Closing Date, as the case may be, addressed to the Underwriters (and stating
that it may be relied upon by counsel to the Underwriters) to the effect that:
(i) Each of the Company and Holdings has been duly
organized under the laws of the State of Delaware and is validly
existing as a corporation in good standing under the laws of the State
of Delaware, with corporate power and authority to own or lease its
properties and conduct its business as described in the Registration
Statement; each of the Subsidiaries other than subsidiaries which have
only been formed but hold no assets and conduct no operations (the
"Designated Subsidiaries") is validly existing in good standing under
the laws of the jurisdiction of its organization, with power and
authority to own or lease its properties and conduct its business as
described in the Registration Statement; the Subsidiaries are the only
subsidiaries of Holdings and the Company, prior to the exchange, has no
subsidiaries; the Company, Holdings and each of the Designated
Subsidiaries are duly qualified to transact business in the
jurisdictions listed on the annex attached to such opinion; and the
outstanding shares of capital stock, partnership, membership or other
ownership interests of each of the Designated Subsidiaries have been
duly authorized and validly issued and are fully paid and
non-assessable except for the obligations under the operating or
partnership agreements to
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which the Company, Holdings or the Designated Subsidiaries are a party
to make mandatory capital calls and are owned by the Company or a
Subsidiary; and, to the best of such counsel's knowledge, the
outstanding shares of capital stock, partnership, membership and other
ownership interests of each of the Subsidiaries is owned free and clear
of all liens, encumbrances and equities and claims, except for pledges
to lenders financing the hospitals of Holdings or the Bank of America
under the Existing Credit Facility; and no options, warrants or other
rights to purchase, agreements or other obligations to issue or other
rights to convert any obligations into any shares of capital stock or
of ownership interests in the Subsidiaries are outstanding, except for
the sale of interests in Hospital Ventures which have not been fully
subscribed for by investors and may hereafter be sold.
(ii) The Company has authorized and outstanding
capital stock as set forth under the caption "Capitalization" in the
Prospectus; the authorized shares of the Company's Common Stock have
been duly authorized; the outstanding shares of the Company's Common
Stock have been duly authorized and validly issued and are fully paid
and non-assessable; all of the Shares conform to the description
thereof contained in the Prospectus; the certificates for the Shares,
assuming they are in the form filed with the Commission, are in due and
proper form; the shares of Common Stock, including the Option Shares,
if any, to be sold by the Company pursuant to this Agreement have been
duly authorized and will be validly issued, fully paid and
non-assessable when issued and paid for as contemplated by this
Agreement; and no preemptive rights of stockholders exist with respect
to any of the Shares or the issue or sale thereof; the shares of Common
Stock to be issued by the Company pursuant to the Exchange have been
duly authorized and will be validly issued, fully paid and
non-assessable when issued as contemplated by the Exchange Agreements;
and no preemptive rights of stockholders exist with respect to any of
the Exchange Shares or the issue or sale thereof.
(iii) The offer, sale and issuance of the Exchange
Shares by the Company is exempt from the registration requirements of
the Securities Act of 1933 and comply with the Securities Exchange Act
of 1934.
(iv) Except as described in or contemplated by the
Prospectus, to the knowledge of such counsel with respect to all of the
following matters, there are no outstanding securities of the Company
convertible or exchangeable into or evidencing the right to purchase or
subscribe for any shares of capital stock of the Company and there are
no outstanding or authorized options, warrants or rights of any
character obligating the Company to issue any shares of its capital
stock or any securities convertible or exchangeable into or evidencing
the right to purchase or subscribe for any shares of such stock; and
except as described in the Prospectus, to the knowledge of such counsel
with respect to all of the following matters, no holder of any
securities of the Company or any other person has the right,
contractual or otherwise, which has not been satisfied or effectively
waived, to cause the Company to sell or otherwise issue to them, or to
permit them to underwrite the sale of, any of the Shares or the right
to have any Common Shares or other securities of the Company included
in the Registration Statement or the right, as a result of the filing
of the Registration Statement, to require registration under the Act of
any shares of Common Stock or other securities of the Company.
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(v) The Registration Statement has become effective
under the Act and, to the best of the knowledge of such counsel, no
stop order proceedings with respect thereto have been instituted or are
pending or threatened under the Act.
(vi) The Registration Statement, the Prospectus and
each amendment or supplement thereto comply as to form in all material
respects with the requirements of the Act and the applicable rules and
regulations thereunder (except that such counsel need express no
opinion as to the financial statements and related schedules therein).
(vii) The statements under the captions "Certain
Relationships and Related Party Transactions," "Description of Capital
Stock" and "Shares Eligible for Future Sale" in the Prospectus, insofar
as such statements constitute a summary of documents referred to
therein or matters of law, fairly summarize in all material respects
the information called for with respect to such documents and matters.
(viii) The statements under the captions "Risk
Factors--We may have a special legal responsibility to our partners in
our heart hospitals that may prevent us from acting solely in our best
interests," "Risk factors--Material decisions regarding the operations
of our hospitals require consent of our physician and community
hospital partners, and we may be unable as a result to take actions
that we believe are in our best interest," "Business--Our
Approach--Physician partnerships," "Business--Our Strategy--Partnering
with highly regarded physicians," and "Business--Our Heart Hospitals"
in the Prospectus, insofar as such statements constitute a summary of
all or a specified portion of the organizational and operating
agreements and governance and decision making authority regarding the
hospitals owned by the Company, Holdings or the Subsidiaries, fairly
summarize in all material respects the information called for with
respect to all or such portion of such documents and matters.
(ix) Such counsel does not know of any contracts or
documents required to be filed as exhibits to the Registration
Statement or described in the Registration Statement or the Prospectus
which are not so filed or described as required, and such contracts and
documents to the extent described or summarized in the Registration
Statement or the Prospectus are fairly described or summarized in all
material respects.
(x) Such counsel knows of no legal or governmental
proceedings pending or threatened against the Company, Holdings or any
of the Subsidiaries that are reasonably likely, if decided adversely,
to result in a Material Adverse Change or are required to be disclosed
in the Prospects by the rules and regulations promulgated under the
Securities Act of 1933, as amended, except, in each case, as set forth
in the Prospectus.
(xi) The execution and delivery of this Agreement and
the Exchange Agreements, and the consummation of the transactions
herein and therein contemplated do not and will not conflict with or
result in a breach of any of the terms or provisions of, or constitute
a default under, the organizational documents of the Company, Holdings
or any Subsidiary, or any material indenture, mortgage, deed of trust
or other agreement or
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instrument known to such counsel to which the Company, Holdings or any
Subsidiary is a party or by which the Company, Holdings or any
Subsidiary may be bound.
(xii) This Agreement has been duly authorized,
executed and delivered by each of the Company and Holdings.
(xiii) No approval, consent, order, authorization,
designation, declaration or filing by or with any regulatory,
administrative or other governmental body is necessary in connection
with the execution and delivery of this Agreement and the consummation
of the transactions herein contemplated (other than as may be required
by the NASD or as required by state securities and Blue Sky laws as to
which such counsel need express no opinion) or the execution and
delivery of the Exchange Agreements and the consummation of the
Exchange except, in each case, such as have been obtained or made,
specifying the same; provided that such counsel may exclude such
matters as are opined to by other counsel pursuant to Section 6(c)
hereof.
(xiv) The Company is not, and will not become, as a
result of the consummation of the transactions contemplated by this
Agreement, and application of the net proceeds therefrom as described
in the Prospectus, required to register as an investment company under
the 1940 Act.
(xv) To the best of our knowledge, each of the
hospitals described in the Prospectus as owned or operated by the
Company and the entities which own such hospitals and in which the
Company owns an equity interest possess such permits, licenses,
provider numbers and certificates (including without limitation,
certification under the Medicare and Medicaid programs) and holds
accreditation by the Joint Commission on Accreditation of Health Care
Organizations (collectively "Hospital Licenses") issued by, the
appropriate federal and state regulatory agencies or bodies or
accrediting organizations necessary to conduct each such hospital's
business as now being conducted and as described in the Registration
Statement and the Prospectus (including without limitation, with
respect to those facilities operated by the Company that participate in
the Medicare and/or Medicaid programs, to receive reimbursement
thereunder), except where the failure to possess such Hospital Licenses
could not, singly or in the aggregate, reasonably be expected to result
in a Material Adverse Change.
In rendering such opinion ▇▇▇▇▇ & ▇▇▇ ▇▇▇▇▇ PLLC may
rely as to matters governed by the laws of states other than North Carolina, the
Delaware General Corporation Law, the Delaware Limited Liability Company Act,
the Delaware Revised Uniform Partnership Act or federal laws on local counsel in
such jurisdictions. In addition to the matters set forth above, such opinion
shall also include a statement to the effect that nothing has come to the
attention of such counsel which leads them to believe that (i) the Registration
Statement, at the time it became effective under the Act (including the
information deemed to be a part of the Registration Statement at the time it
became effective pursuant to Rule 430A under the Act) and as of the Closing Date
or the Option Closing Date, as the case may be, contained or contains an untrue
statement of a material fact or omitted or omits to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading, and (ii) the Prospectus, or any supplement thereto, on the date it
was filed pursuant to the Rules and Regulations and as
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of the Closing Date or the Option Closing Date, as the case may be, contained or
contains an untrue statement of a material fact or omitted or omits to state a
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading (except that such
counsel need express no view as to financial statements, schedules and financial
data included therein or omitted therefrom). With respect to such statement,
▇▇▇▇▇ & ▇▇▇ ▇▇▇▇▇ PLLC may state that their belief is based upon the procedures
set forth therein, but is without independent check and verification.
(c) The Representatives shall have received on the Closing
Date or the Option Closing Date, as the case may be, the opinion of ▇▇▇▇ ▇▇▇▇▇
LLP, special regulatory counsel to the Company, in the form attached hereto as
Exhibit A, dated as of the Closing Date or the Option Closing Date, as the case
may be, addressed to the Underwriters (and stating that it may be relied on by
the Underwriters).
(d) The Representatives shall have received from ▇▇▇▇▇▇▇ ▇▇▇▇
& ▇▇▇▇▇▇▇▇▇, counsel for the Underwriters, an opinion dated the Closing Date or
the Option Closing Date, as the case may be, as to matters requested by the
Underwriters.
(e) The Representatives shall have received at or prior to the
Closing Date from ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ a memorandum or summary, in form and
substance satisfactory to the Representatives, with respect to the qualification
for offering and sale by the Underwriters of the Shares under the state
securities or Blue Sky laws of such jurisdictions as the Representatives may
reasonably have designated to the Company.
(f) You shall have received, on each of the date hereof, the
Closing Date and, if applicable, the Option Closing Date, a letter dated the
date hereof, the Closing Date or the Option Closing Date, as the case may be, in
form and substance satisfactory to you, of each of Deloitte & Touche and Ernst &
Young confirming that they are independent public accountants within the meaning
of the Act and the applicable published Rules and Regulations thereunder and
stating that in their opinion the financial statements and schedules examined by
them and included in the Registration Statement comply in form in all material
respects with the applicable accounting requirements of the Act and the related
published Rules and Regulations; and containing such other statements and
information as is ordinarily included in accountants' "comfort letters" to
Underwriters with respect to the financial statements and certain financial and
statistical information contained in the Registration Statement and Prospectus.
(g) The Representatives shall have received on the Closing
Date and, if applicable, the Option Closing Date, as the case may be, a
certificate or certificates of the Chief Executive Officer and the Chief
Financial Officer of the Company to the effect that, as of the Closing Date or
the Option Closing Date, as the case may be, each of them severally represents
as follows:
(i) The Registration Statement has become effective
under the Act and no stop order suspending the effectiveness of the
Registration Statement has been issued, and no proceedings for such
purpose have been taken or are, to his knowledge, contemplated or
threatened by the Commission;
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(ii) The representations and warranties of the
Company contained in Section 1 hereof are true and correct as of the
Closing Date or the Option Closing Date, as the case may be;
(iii) All filings required to have been made pursuant
to Rules 424 or 430A under the Act have been made as and when required
by such rules;
(iv) He or she has carefully examined the
Registration Statement and the Prospectus and, in his or her opinion,
as of the effective date of the Registration Statement, the statements
contained in the Registration Statement were true and correct in all
material respects, and such Registration Statement and Prospectus did
not omit to state a material fact required to be stated therein or
necessary in order to make the statements therein not misleading, and
since the effective date of the Registration Statement, no event has
occurred which should have been set forth in a supplement to or an
amendment of the Prospectus which has not been so set forth in such
supplement or amendment; and
(v) Since the respective dates as of which
information is given in the Registration Statement and Prospectus,
there has not been any material adverse change or any development
involving a prospective material adverse change in or affecting the
earnings, business, management, properties, net worth, assets, rights,
operations, condition (financial or otherwise) or prospects of the
Company, Holdings and the Subsidiaries taken as a whole, whether or not
arising in the ordinary course of business.
(h) The Company and Holdings shall have furnished or caused to
be furnished to the Representatives such further certificates and documents
confirming the representations and warranties, covenants and conditions
contained herein and related matters as the Representatives may reasonably have
requested.
(i) The Exchange shall have been consummated on the terms
described in the Registration Statement.
(j) The Company shall have entered into the New Credit
Facility on substantially the terms described in the Registration Statement.
(k) The Firm Shares and Option Shares, if any, have been
approved for designation upon notice of issuance on the Nasdaq National Market.
(l) The Lockup Agreements described in Section 4(x) shall be
in full force and effect.
The opinions and certificates mentioned in this Agreement
shall be deemed to be in compliance with the provisions hereof only if they are
in all material respects satisfactory to the Representatives and to ▇▇▇▇▇▇▇ ▇▇▇▇
& ▇▇▇▇▇▇▇▇▇, counsel for the Underwriters.
If any of the conditions hereinabove provided for in this
Section 6 shall not have been fulfilled when and as required by this Agreement
to be fulfilled, the obligations of the Underwriters hereunder may be terminated
by the Representatives by notifying the Company of
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such termination in writing at or prior to the Closing Date or the Option
Closing Date, as the case may be.
In such event, the Company and the Underwriters shall not be
under any obligation to each other (except to the extent provided in Sections 5
and 8 hereof).
7. CONDITIONS OF THE OBLIGATIONS OF THE COMPANY.
The obligations of the Company to sell and deliver the portion
of the Shares required to be delivered as and when specified in this Agreement
are subject to the conditions that at the Closing Date or the Option Closing
Date, as the case may be, no stop order suspending the effectiveness of the
Registration Statement shall have been issued and in effect or proceedings
therefor initiated or threatened.
8. INDEMNIFICATION.
(a) The Company and Holdings jointly and severally agree:
(1) to indemnify and hold harmless each Underwriter
and each person, if any, who controls any Underwriter within the
meaning of either Section 15 of the Act or Section 20 of the Exchange
Act, against any losses, claims, damages or liabilities to which such
Underwriter or any such controlling person may become subject under the
Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) arise out of
or are based upon (i) any untrue statement or alleged untrue statement
of any material fact contained in the Registration Statement, any
Preliminary Prospectus, the Prospectus or any amendment or supplement
thereto, (ii) the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading or (iii) any act or failure to act,
or any alleged act or failure to act by any Underwriter in connection
with, or relating in any manner to, the Shares or the offering
contemplated hereby, and which is included as part of or referred to in
any loss, claim, damage, liability or action arising out of or based
upon matters covered by clause (i) or (ii) above (provided, that
neither the Company nor Holdings shall be liable under this clause
(iii) to the extent that it is determined in a final judgment by a
court of competent jurisdiction that such loss, claim, damage,
liability or action resulted directly from any such acts or failures to
act undertaken or omitted to be taken by such Underwriter through such
Underwriter's gross negligence or willful misconduct); provided,
however, that neither the Company nor Holdings will be liable in any
such case to the extent that any such loss, claim, damage or liability
arises out of or is based upon an untrue statement or alleged untrue
statement, or omission or alleged omission made in the Registration
Statement, any Preliminary Prospectus, the Prospectus, or such
amendment or supplement, in reliance upon and in conformity with
written information furnished to the Company by or through the
Representatives specifically for use in the preparation thereof;
provided further, that with respect to any untrue statement or omission
of material fact made in the Registration Statement or any Preliminary
Prospectus, the indemnity agreement contained in this Section 8(a)
shall not inure to the benefit of any Underwriter from whom the person
asserting any such loss, claim, damage or liability purchased the
securities concerned, to
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the extent that any such loss, claim, damage or liability of such
Underwriter occurs under the circumstance in which it shall have been
determined by a court of competent jurisdiction by final and
nonappealable judgment that such loss, claim, damage or liability
results from the fact that (i) the Company had previously furnished
copies of the Prospectus to the Underwriters, (ii) delivery of the
Prospectus was required by the Act to be made to such person, (iii) the
untrue statement or omission of a material fact contained in the
Registration Statement or the Preliminary Prospectus was corrected in
the Prospectus, (iv) there was not sent or given to such person, at or
prior to the written confirmation of the sale of such securities to
such person, a copy of the Prospectus and (v) such correction would
have cured the defect giving rise to such loss, claim, damage or
liability; and
(2) to reimburse each Underwriter and each such
controlling person upon demand for any legal or other out-of-pocket
expenses reasonably incurred by such Underwriter or such controlling
person in connection with investigating or defending any such loss,
claim, damage or liability, action or proceeding or in responding to a
subpoena or governmental inquiry related to the offering of the Shares,
whether or not such Underwriter or controlling person is a party to any
action or proceeding. In the event that it is finally judicially
determined that the Underwriters were not entitled to receive payments
for legal and other expenses pursuant to this subparagraph, the
Underwriters will promptly return all sums that had been advanced
pursuant hereto.
(b) Each Underwriter severally and not jointly will indemnify
and hold harmless the Company, each of its directors, each of its officers who
have signed the Registration Statement, against any losses, claims, damages or
liabilities to which the Company or any such director or officer may become
subject under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) arise out of or are
based upon (i) any untrue statement or alleged untrue statement of any material
fact contained in the Registration Statement, any Preliminary Prospectus, the
Prospectus or any amendment or supplement thereto, or (ii) the omission or the
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading in the light of the
circumstances under which they were made; and will reimburse any legal or other
expenses reasonably incurred by the Company or any such director or officer in
connection with investigating or defending any such loss, claim, damage,
liability, action or proceeding; provided, however, that each Underwriter will
be liable in each case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission has been
made in the Registration Statement, any Preliminary Prospectus, the Prospectus
or such amendment or supplement, in reliance upon and in conformity with written
information furnished to the Company by or through the Representatives
specifically for use in the preparation thereof. This indemnity agreement will
be in addition to any liability which such Underwriter may otherwise have.
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of which
indemnity may be sought pursuant to this Section 8, such person (the
"indemnified party") shall promptly notify the person against whom such
indemnity may be sought (the "indemnifying party") in writing. No
indemnification provided for in Section 8(a) or (b) or (d) shall be available to
any party who shall fail to give
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notice as provided in this Section 8(c) if the party to whom notice was not
given was unaware of the proceeding to which such notice would have related and
was materially prejudiced by the failure to give such notice, but the failure to
give such notice shall not relieve the indemnifying party or parties from any
liability which it or they may have to the indemnified party for contribution or
otherwise than on account of the provisions of Section 8(a) or (b) or (d). In
case any such proceeding shall be brought against any indemnified party and it
shall notify the indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to participate therein and, to the extent
that it shall wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel satisfactory to such
indemnified party and shall pay as incurred the fees and disbursements of such
counsel related to such proceeding. In any such proceeding, any indemnified
party shall have the right to retain its own counsel at its own expense.
Notwithstanding the foregoing, the indemnifying party shall pay as incurred (or
within 30 days of presentation) the fees and expenses of the counsel retained by
the indemnified party in the event (i) the indemnifying party and the
indemnified party shall have mutually agreed to the retention of such counsel,
(ii) the named parties to any such proceeding (including any impleaded parties)
include both the indemnifying party and the indemnified party and representation
of both parties by the same counsel would be inappropriate due to actual or
potential differing interests between them or (iii) the indemnifying party shall
have failed to assume the defense and employ counsel acceptable to the
indemnified party within a reasonable period of time after notice of
commencement of the action. It is understood that the indemnifying party shall
not, in connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the reasonable fees and expenses of more than one
separate firm for all such indemnified parties. Such firm shall be designated in
writing by you in the case of parties indemnified pursuant to Section 8(a) or
(d) and by the Company in the case of parties indemnified pursuant to Section
8(b). The indemnifying party shall not be liable for any settlement of any
proceeding effected without its written consent but if settled with such consent
or if there be a final judgment for the plaintiff, the indemnifying party agrees
to indemnify the indemnified party from and against any loss or liability by
reason of such settlement or judgment. In addition, the indemnifying party will
not, without the prior written consent of the indemnified party, settle or
compromise or consent to the entry of any judgment in any pending or threatened
claim, action or proceeding of which indemnification may be sought hereunder
(whether or not any indemnified party is an actual or potential party to such
claim, action or proceeding) unless such settlement, compromise or consent
includes an unconditional release of each indemnified party from all liability
arising out of such claim, action or proceeding.
(d) The Company and each subsidiary of the Company, whether
direct or indirect, jointly and severally, agree to indemnify and hold harmless
Deutsche Banc Alex. ▇▇▇▇▇ and its affiliates and each person, if any, who
controls Deutsche Banc Alex. ▇▇▇▇▇ or its affiliates within the meaning of
either Section 15 of the Act or Section 20 of the Exchange Act, from and against
any and all losses, claims, damages and liabilities (including, without
limitation, any legal or other expenses reasonably incurred in connection with
defending or investigating any such action or claim) (i) caused by any untrue
statement or alleged untrue statement of a material fact contained in any
material prepared by or with the consent of the Company for distribution to
Participants in connection with the Directed Share Program, or caused by any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading; (ii)
caused by the failure of any Participant to pay for and accept delivery of
Directed Shares that the Participant has agreed
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to purchase; or (iii) related to, arising out of, or in connection with the
Directed Share Program other than losses, claims, damages or liabilities (or
expenses relating thereto) that are finally judicially determined to have
resulted from the willful misconduct or gross negligence of Deutsche Banc Alex.
▇▇▇▇▇.
(e) To the extent the indemnification provided for in this
Section 8 is unavailable to or insufficient to hold harmless an indemnified
party under Section 8(a), (b) or (d) above in respect of any losses, claims,
damages or liabilities (or actions or proceedings in respect thereof) referred
to therein, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) in such proportion as
is appropriate to reflect the relative benefits received by the Company on the
one hand and the Underwriters on the other from the offering of the Shares. 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 on the one hand and the Underwriters on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities (or actions or proceedings in respect thereof),
as well as any other relevant equitable considerations. The relative benefits
received by the Company 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 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
on the one hand or the Underwriters on the other and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
The Company and the Underwriters agree that it would not be
just and equitable if contributions pursuant to this Section 8(e) were
determined by pro rata allocation (even if the Underwriters were treated as one
entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to above in this Section
8(e). The amount paid or payable by an indemnified party as a result of the
losses, claims, damages or liabilities (or actions or proceedings in respect
thereof) referred to above in this Section 8(e) shall be deemed to include any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this subsection (e), (i) no Underwriter shall
be required to contribute any amount in excess of the underwriting discounts and
commissions applicable to the Shares purchased by such Underwriter and (ii) no
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Underwriters' obligations in
this Section 8(e) to contribute are several in proportion to their respective
underwriting obligations and not joint.
(f) In any proceeding relating to the Registration Statement,
any Preliminary Prospectus, the Prospectus or any supplement or amendment
thereto, each party against whom contribution may be sought under this Section 8
hereby consents to the jurisdiction of any court
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having jurisdiction over any other contributing party, agrees that process
issuing from such court may be served upon it by any other contributing party
and consents to the service of such process and agrees that any other
contributing party may join it as an additional defendant in any such proceeding
in which such other contributing party is a party.
(g) Any losses, claims, damages, liabilities or expenses for
which an indemnified party is entitled to indemnification or contribution under
this Section 8 shall be paid by the indemnifying party to the indemnified party
as such losses, claims, damages, liabilities or expenses are incurred. The
indemnity and contribution agreements contained in this Section 8 and the
representations and warranties of the Company and Holdings set forth in this
Agreement shall remain operative and in full force and effect, regardless of (i)
any investigation made by or on behalf of any Underwriter or any person
controlling any Underwriter, or by or on behalf of the Company, its directors or
officers, (ii) acceptance of any Shares and payment therefor hereunder, and
(iii) any termination of this Agreement. A successor to any Underwriter, or any
person controlling any Underwriter, or to the Company, its directors or
officers, shall be entitled to the benefits of the indemnity, contribution and
reimbursement agreements contained in this Section 8.
9. DEFAULT BY UNDERWRITERS.
If on the Closing Date or the Option Closing Date, as the case
may be, any Underwriter shall fail to purchase and pay for the portion of the
Shares which such Underwriter has agreed to purchase and pay for on such date
(otherwise than by reason of any default on the part of the Company), you, as
Representatives of the Underwriters, shall use your reasonable efforts to
procure within 36 hours thereafter one or more of the other Underwriters, or any
others, to purchase from the Company such amounts as may be agreed upon and upon
the terms set forth herein, the Shares which the defaulting Underwriter or
Underwriters failed to purchase. If during such 36 hours you, as such
Representatives, shall not have procured such other Underwriters, or any others,
to purchase the Shares agreed to be purchased by the defaulting Underwriter or
Underwriters, then (a) if the aggregate number of shares with respect to which
such default shall occur does not exceed 10% of the Shares to be purchased on
the Closing Date or the Option Closing date, as the case may be, the other
Underwriters shall be obligated, severally, in proportion to the respective
numbers of Shares which they are obligated to purchase hereunder, to purchase
the Shares which such defaulting Underwriter or Underwriters failed to purchase,
or (b) if the aggregate number of shares of Shares with respect to which such
default shall occur exceeds 10% of the Shares to be purchased on the Closing
Date or the Option Closing Date, as the case may be, the Company or you as the
Representatives of the Underwriters will have the right, by written notice given
within the next 36-hour period to the parties to this Agreement, to terminate
this Agreement without liability on the part of the non-defaulting Underwriters
or of the Company except to the extent provided in Sections 5 and 8 hereof. In
the event of a default by any Underwriter or Underwriters, as set forth in this
Section 9, the Closing Date or Option Closing Date, as the case may be, may be
postponed for such period, not exceeding seven days, as you, as Representatives,
may determine in order that the required changes in the Registration Statement
or in the Prospectus or in any other documents or arrangements may be effected.
The term "Underwriter" includes any person substituted for a defaulting
Underwriter. Any action taken under this Section 9 shall not relieve any
defaulting Underwriter from liability in respect of any default of such
Underwriter under this Agreement.
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10. NOTICES.
All communications hereunder shall be in writing and, except
as otherwise provided herein, will be mailed, delivered, telecopied or
telegraphed and confirmed as follows: if to the Underwriters, to Deutsche Banc
Alex. ▇▇▇▇▇ Inc., ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇; Attention: ▇▇▇▇▇
▇▇▇▇▇▇, with a copy to Deutsche Banc Alex. ▇▇▇▇▇ Inc., ▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: General Counsel; if to the Company, to MedCath
Corporation, ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
Attention: General Counsel, with a copy to ▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇ ▇▇▇▇▇,
▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇; and if to Holdings, to
MedCath Holdings, Inc., ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇, Attention: General Counsel, with a copy to ▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇
▇▇▇▇▇, ▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
11. TERMINATION.
This Agreement may be terminated by you (a) by notice to the
Company at any time prior to the Closing Date or any Option Closing Date (if
different from the Closing Date and then only as to Option Shares) if any of the
following has occurred: (i) since the respective dates as of which information
is given in the Registration Statement and the Prospectus, any Material Adverse
Change or any development involving a prospective Material Adverse Change, (ii)
any outbreak or escalation of hostilities or declaration of war or national
emergency or other national or international calamity or crisis or change in
economic or political conditions if the effect of such outbreak, escalation,
declaration, emergency, calamity, crisis or change on the financial markets of
the United States would, in your reasonable judgment, make it impracticable or
inadvisable to market the Shares or to enforce contracts for the sale of the
Shares, or (iii) suspension of trading in securities generally on the New York
Stock Exchange, the American Stock Exchange or the Nasdaq National Market or
limitation on prices (other than limitations on hours or numbers of days of
trading) for securities on either such exchange or market, (iv) the enactment,
publication, decree or other promulgation of any statute, regulation, rule or
order of any court or other governmental authority which in your opinion
materially and adversely affects or would be reasonably likely to materially and
adversely affect the business or operations of the Company, (v) the declaration
of a banking moratorium by United States or New York State authorities, (vi) any
downgrading, or placement on any watch list for possible downgrading, in the
rating of any of the Company's debt securities by any "nationally recognized
statistical rating organization" (as defined for purposes of Rule 436(g) under
the Exchange Act); (vii) the suspension of trading of the Company's common stock
by the Nasdaq National Market, the Commission, or any other governmental
authority or, (viii) the taking of any action by any governmental body or agency
in respect of its monetary or fiscal affairs which in your reasonable opinion
has a material adverse effect on the securities markets in the United States; or
(b) as provided in Sections 6 and 9 of this Agreement.
12. SUCCESSORS.
This Agreement has been and is made solely for the benefit of
the Underwriters and the Company and their respective successors, executors,
administrators, heirs and assigns, and the officers, directors and controlling
persons referred to herein, and no other person will
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have any right or obligation hereunder. No purchaser of any of the Shares from
any Underwriter shall be deemed a successor or assign merely because of such
purchase.
13. INFORMATION PROVIDED BY UNDERWRITERS.
The Company, the Selling Shareholders and the Underwriters
acknowledge and agree that the only information furnished or to be furnished by
any Underwriter to the Company for inclusion in any Prospectus or the
Registration Statement consists of the information set forth in the last
paragraph on the front cover page (insofar as such information relates to the
Underwriters), legends required by Item 502(d) of Regulation S-K under the Act
and the information under the caption "Underwriting" in the Prospectus.
14. MISCELLANEOUS.
The reimbursement, indemnification and contribution agreements
contained in this Agreement and the representations, warranties and covenants in
this Agreement shall remain in full force and effect regardless of (a) any
termination of this Agreement, (b) any investigation made by or on behalf of any
Underwriter or controlling person thereof, or by or on behalf of the Company or
its directors or officers and (c) delivery of and payment for the Shares under
this Agreement.
This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Maryland.
If the foregoing letter is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicates hereof,
whereupon it will become a binding agreement among the Company, Holdings and the
several Underwriters in accordance with its terms.
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Any person executing and delivering this Agreement as
Attorney-in-Fact for a Selling Shareholder represents by so doing that he has
been duly appointed as Attorney-in-Fact by such Selling Shareholder pursuant to
a validly existing and binding Power of Attorney which authorizes such
Attorney-in-Fact to take such action.
Very truly yours,
MedCath Corporation
By:
------------------------------
President
MedCath Holdings, Inc.
By:
------------------------------
President
The foregoing Underwriting Agreement
is hereby confirmed and accepted as
of the date first above written.
DEUTSCHE BANC ALEX. ▇▇▇▇▇ INC.
BANC OF AMERICA SECURITIES LLC
▇▇ ▇▇▇▇▇▇ SECURITIES INC.
FIRST UNION SECURITIES, INC.
As Representatives of the several
Underwriters listed on Schedule I
By: Deutsche Banc Alex. ▇▇▇▇▇ Inc.
By:
-----------------------------------------------
Authorized Officer
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SCHEDULE I
SCHEDULE OF UNDERWRITERS
Number of Firm Shares
Underwriter to be Purchased
----------- ---------------------
Deutsche Banc Alex. ▇▇▇▇▇ Inc.
Banc of America Securities LLC
▇.▇. ▇▇▇▇▇▇ Securities Inc.
First Union Securities, Inc.
Total 6,000,000
---------
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31
EXHIBIT A
FORM OF OPINION OF COMPANY'S SPECIAL REGULATORY COUNSEL
TO BE DELIVERED PURSUANT TO
SECTION 6(c)
1. The information in the Registration Statement under "Risk
Factors - Reductions or changes in reimbursement from government or third party
payors could adversely impact our operating results", "Risk Factors - We may be
required to acquire and implement costly new information systems to comply with
new federal and state legislative efforts and regulatory initiatives relating to
patient privacy ", "Risk Factors - If we fail to comply with the extensive laws
and government regulations applicable to us, we could suffer penalties or be
required to make significant changes to our operations", "Risk Factors - If the
anti-kickback, physician self-referral or other fraud and abuse laws are
modified, interpreted differently or if other regulatory restrictions are
issued, we could incur significant sanctions and loss of reimbursement", "Risk
Factors - Other companies within the healthcare industry continue to be the
subject of federal and state investigations, which increases the risk that we
may become subject to investigations in the future", "Risk Factors - If laws
governing the corporate practice of medicine change, we may be required to
restructure some of our relationships", "Risk Factors - If governing regulations
change or the enforcement or interpretation of them changes, we may be obligated
to purchase some or all of the ownership interests of the physicians associated
with us", and "Business -- Government Regulation" (collectively, the "Covered
Sections"), to the extent that it describes federal and state Health Care Laws
has been reviewed by such counsel and the information set forth therein is
accurate in all material respects.
2. Except as disclosed in the Registration Statement, in the
course of our representation of the Company as special regulatory counsel, we
have not become aware of any pending or threatened action, suit, proceeding,
inquiry or investigation, relating to any Health Care Law, to which the Company
or any of its subsidiaries is a party, brought by any court or governmental
agency or body or other person or individual, which would be required to be
disclosed in the Prospectus.
3. No filing with, or authorization, approval, consent,
license, order, registration, qualification (collectively, "Approvals") of or
with any governmental authority or agency, is required under any Health Care
Law, other than such Approvals as have been obtained or made, in connection with
the due authorization, execution and delivery of the Underwriting Agreement or
for the offering, issuance, sale or delivery of the securities or the execution
and delivery of the Exchange Agreements and the consummation of the transactions
contemplated thereby.
32
4. The execution and delivery of the Underwriting Agreement
and the Exchange Agreements, and the consummation of the transactions herein and
therein contemplated do not and will not violate any Health Care Law.
In the course of our representation of the Company as special
regulatory counsel, nothing has come to our attention that caused us to believe
that the information contained in the Registration Statement under Covered
Sections (A) at the time such Registration Statement or any such amendment
thereto became effective, contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein not misleading and (B) at the time the Prospectuses
were issued, at the time any such amended or supplemented prospectus was issued
or at the Closing Time, contained or contains an untrue statement of a material
fact or omitted or omits to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading (it being understood that counsel expresses no belief with
respect to the financial statements or other financial data included in, or
omitted from, the Registration Statement).
For purposes of this opinion, the term "Health Care Laws"
shall mean (1) statutes, regulations, judicial rulings and decrees of the United
States and of the States in which the Company and the Subsidiaries operate
governing general acute care hospitals and diagnostic testing facilities
including, but not limited to, 18 U.S.C. ss. 669 (theft or embezzlement in
connection with health care), 18 U.S.C. ss. 1035 (false statements relating to
health care matters) 18 U.S.C. ss. 1347 (health care fraud), 18 U.S.C. ss. 1518
(obstruction of criminal investigation of health care offense), 42 U.S.C. ss.
1320a-7a (civil monetary penalties), 42 U.S.C. ss. 1320a-7b (criminal penalties
for acts involving federal health care programs), 42 U.S.C. ss. 1395nn
(limitation on certain physician referrals), 42 C.F.R. Chapter IV, Part 400,
Subpart J, or 42 C.F.R Chapter V, Parts 1000-1008, and (2) other statutes,
rules, or regulations governing federal or state government health care programs
including, but not limited to, the Medicare, Medicaid, Tricare, or Federal
Employee Health Benefit programs, but specifically excluding statutes,
ordinances, administrative decisions, rules or regulations of counties, towns,
municipalities or special political subdivisions to the extent that they deal
with any of the foregoing.
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