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Exhibit 1.1
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CONFIDENTIAL
L&W DRAFT 11/12/96
WELLPOINT HEALTH NETWORKS INC.
(a California corporation)
10,400,000 Shares of Common Stock
U.S. PURCHASE AGREEMENT
Dated: ____________, 1996
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WELLPOINT HEALTH NETWORKS INC.
(a California corporation)
10,400,000 Shares of Common Stock
(Par Value $.01 Per Share)
U.S. PURCHASE AGREEMENT
___________, 1996
▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
SALOMON BROTHERS INC
BEAR, ▇▇▇▇▇▇▇ & CO. INC.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ INC.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & CO. INCORPORATED
as Representatives of the several Underwriters
▇/▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Ladies and Gentlemen:
WellPoint Health Networks Inc., a California corporation (the
"Company"), and the California HealthCare Foundation, a California non-profit
corporation (the "Selling Shareholder"), confirm their respective agreements
with ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated
("▇▇▇▇▇▇▇ ▇▇▇▇▇") and each of the other U.S. Underwriters named in Schedule A
hereto (collectively, the "U.S. Underwriters," which term shall also include
any underwriter substituted as hereinafter provided in Section 10 hereof), for
whom ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ Brothers Inc, Bear, ▇▇▇▇▇▇▇ & Co. Inc., ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ Inc. and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated are acting as
representatives (in such capacity, the "U.S. Representatives"), with respect to
(i) the sale by the Selling Shareholder, and the purchase by the U.S.
Underwriters, acting severally and not jointly, of the respective numbers of
shares of Common Stock, par value $.01 per share, of the Company ("Common
Stock") set forth in Schedule A hereto and (ii) the grant by the Selling
Shareholder to the U.S. Underwriters, acting severally and not jointly, of the
option described in Section 2(b) hereof to purchase all or any part of
1,560,000 additional shares of Common Stock to cover over-allotments, if any.
The aforesaid
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10,400,000 shares of Common Stock (the "Initial U.S. Securities") to be
purchased by the U.S. Underwriters and all or any part of the 1,560,000 shares
of Common Stock subject to the option described in Section 2(b) hereof (the
"U.S. Option Securities") are hereinafter called, collectively, the "U.S.
Securities."
It is understood that the Company and the Selling Shareholder
are concurrently entering into an agreement dated the date hereof (the
"International Purchase Agreement") providing for the offering by the Selling
Shareholder of an aggregate of 2,600,000 shares of Common Stock (the "Initial
International Securities") through arrangements with certain underwriters
outside the United States and Canada (the "International Managers") for which
▇▇▇▇▇▇▇ ▇▇▇▇▇ International, Salomon Brothers International Limited, Bear,
▇▇▇▇▇▇▇ International Limited, ▇▇▇▇ ▇▇▇▇▇▇ International Ltd. and ▇▇▇▇▇▇
▇▇▇▇▇▇▇ & Co. International Limited are acting as lead managers (the "Lead
Managers") and the grant by the Selling Shareholder to the International
Managers, acting severally and not jointly, of an option to purchase all or any
part of the International Managers' pro rata portion of up to 390,000
additional shares of Common Stock solely to cover overallotments, if any (the
"International Option Securities" and, together with the U.S. Option
Securities, the "Option Securities"). The Initial International Securities and
the International Option Securities are hereinafter called the "International
Securities." It is understood that the Selling Shareholder is not obligated to
sell and the U.S. Underwriters are not obligated to purchase, any Initial U.S.
Securities unless all of the Initial International Securities are
contemporaneously purchased by the International Managers.
The U.S. Underwriters and the International Managers are
hereinafter collectively called the "Underwriters," the Initial U.S.
Securities and the Initial International Securities are hereinafter
collectively called the "Initial Securities," and the U.S. Securities, and the
International Securities are hereinafter collectively called the "Securities."
The Underwriters will concurrently enter into an
Intersyndicate Agreement of even date herewith (the "Intersyndicate Agreement")
providing for the coordination of certain transactions among the Underwriters
under the direction of ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ &
▇▇▇▇▇ Incorporated (in such capacity, the "Global Coordinator").
The Company and the Selling Shareholder understand that the
U.S. Underwriters propose to make a public offering of the U.S. Securities as
soon as the U.S. Representatives deem advisable after this Agreement has been
executed and delivered.
The Company has filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-3 (No.
333-14885) covering the registration of the Securities under the Securities Act
of 1933, as amended (the "1933 Act"), including the related preliminary
prospectus or prospectuses. Promptly after execution and delivery of this
Agreement, the Company will either (i) prepare and file a prospectus in
accordance with the provisions of Rule 430A ("Rule 430A") of the rules and
regulations of the Commission under the 1933 Act (the "1933 Act Regulations")
and paragraph (b) of Rule 424 ("Rule 424(b)") of the 1933 Act Regulations or
(ii) if the Company has elected to rely upon Rule 434 ("Rule 434") of the 1933
Act Regulations, prepare and file a term sheet (a "Term Sheet") in accordance
with the
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provisions of Rule 434 and Rule 424(b). Two forms of prospectus are to be used
in connection with the offering and sale of the Securities: one relating to the
U.S. Securities (the "Form of U.S. Prospectus") and one relating to the
International Securities (the "Form of International Prospectus"). The Form of
International Prospectus is identical to the Form of U.S. Prospectus, except for
the front cover and back cover pages and the information under the caption
"Underwriting" and the inclusion in the Form of International Prospectus of a
section under the caption "Certain United States Tax Considerations for
Non-United States Holders." The information included in any such prospectus or
in any such Term Sheet, as the case may be, that was omitted from such
registration statement at the time it became effective but that is deemed to be
part of such registration statement at the time it became effective (a) pursuant
to paragraph (b) of Rule 430A is referred to as "Rule 430A Information" or (b)
pursuant to paragraph (d) of Rule 434 is referred to as "Rule 434 Information."
Each Form of U.S. Prospectus and Form of International Prospectus used before
such registration statement became effective, and any prospectus that omitted,
as applicable, the Rule 430A Information or the Rule 434 Information, that was
used after such effectiveness and prior to the execution and delivery of this
Agreement, is herein called a "preliminary prospectus." Such registration
statement, including the exhibits thereto, schedules thereto, if any, and the
documents incorporated by reference therein (including the exhibits to any such
documents) pursuant to Item 12 of Form S-3 under the 1933 Act, at the time it
became effective and including the Rule 430A Information and the Rule 434
Information, as applicable, is herein called the "Registration Statement." Any
registration statement filed pursuant to Rule 462(b) of the 1933 Act Regulations
is herein referred to as the "Rule 462(b) Registration Statement," and after
such filing the term "Registration Statement" shall include the Rule 462(b)
Registration Statement. The final Form of U.S. Prospectus and the final Form of
International Prospectus, including the documents incorporated by reference
therein pursuant to Item 12 of Form S-3 under the 1933 Act, in the forms first
furnished to the Underwriters for use in connection with the offering of the
Securities are herein called the "U.S. Prospectus" and the "International
Prospectus," respectively, and collectively, the "Prospectuses." If Rule 434 is
relied on, the terms "U.S. Prospectus" and "International Prospectus" shall
refer to the preliminary U.S. Prospectus dated October 30, 1996 and preliminary
International Prospectus dated October 30, 1996, respectively, each together
with the applicable Term Sheet and all references in this Agreement to the date
of such Prospectuses shall mean the date of the applicable Term Sheet. For
purposes of this Agreement, all references to the Registration Statement, any
preliminary prospectus, the U.S. Prospectus, the International Prospectus or any
Term Sheet or any amendment or supplement to any of the foregoing shall be
deemed to include the copy filed with the Commission pursuant to its Electronic
Data Gathering, Analysis and Retrieval system ("▇▇▇▇▇").
All references in this Agreement to financial statements and
schedules and other information which is "contained," "included" or "stated" in
the Registration Statement, any preliminary prospectus (including the Form of
U.S. Prospectus and Form of International Prospectus) or the Prospectuses (or
other references of like import) shall be deemed to mean and include all such
financial statements and schedules and other information which is incorporated
by reference in the Registration Statement, any preliminary prospectus
(including the Form of U.S. Prospectus and Form of International Prospectus) or
the Prospectuses, as the case may be; and all references in this Agreement to
amendments or supplements to the Registration
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Statement, any preliminary prospectus or the Prospectuses shall be deemed to
mean and include the filing of any document under the Securities Exchange Act
of 1934 (the "1934 Act") which is incorporated by reference in the Registration
Statement, such preliminary prospectus or the Prospectuses, as the case may be.
SECTION 1. Representations and Warranties.
(a) Representations and Warranties by the Company. The Company
represents and warrants to each U.S. Underwriter as of the date hereof, as of
the Closing Time referred to in Section 2(c) hereof, and as of each Date of
Delivery (if any) referred to in Section 2(b) hereof, and agrees with each U.S.
Underwriter, as follows:
(i) Compliance with Registration Requirements. The
Company meets the requirements for use of Form S-3 under the 1933 Act.
Each of the Registration Statement and any Rule 462(b) Registration
Statement has become effective under the 1933 Act and no stop order
suspending the effectiveness of the Registration Statement or any Rule
462(b) Registration Statement has been issued under the 1933 Act and
no proceedings for that purpose have been instituted or are pending
or, to the knowledge of the Company, are contemplated by the
Commission, and any request on the part of the Commission for
additional information has been complied with.
At the respective times the Registration Statement, any Rule
462(b) Registration Statement and any post-effective amendments
thereto became effective and at the Closing Time (and, if any U.S.
Option Securities are purchased, at the Date of Delivery), the
Registration Statement, the Rule 462(b) Registration Statement and any
amendments and supplements thereto complied and will comply in all
material respects with the requirements of the 1933 Act and the 1933
Act Regulations and did not and will not contain an untrue statement
of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading. Neither the Prospectuses nor any amendments or
supplements thereto, at the time the Prospectuses or any such
amendment or supplement was issued and at the Closing Time (and, if
any U.S. Option Securities are purchased, at the Date of Delivery),
included or will include an untrue statement of a material fact or
omitted or will omit to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under
which they were made, not misleading. If Rule 434 is used, the
Company will comply with the requirements of Rule 434. The
representations and warranties in this subsection shall not apply to
statements in or omissions from the Registration Statement or the
Prospectuses made in reliance upon and in conformity with information
furnished to the Company in writing by any U.S. Underwriter through
▇▇▇▇▇▇▇ ▇▇▇▇▇ expressly for use in the Registration Statement or the
Prospectuses.
Each preliminary prospectus and the prospectuses filed as part
of the Registration Statement as originally filed or as part of any
amendment thereto, or filed pursuant to Rule 424 under the 1933 Act,
complied when so filed in all material respects with the 1933 Act
Regulations and each preliminary prospectus and the Prospectuses
delivered to the
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Underwriters for use in connection with this offering was identical to
the electronically transmitted copies thereof filed with the
Commission pursuant to ▇▇▇▇▇, except to the extent permitted by
Regulation S-T.
(ii) Incorporated Documents. The documents incorporated
or deemed to be incorporated by reference in the Registration
Statement and the Prospectuses, at the time they were or hereafter are
filed with the Commission, complied and will comply in all material
respects with the requirements of the 1934 Act and the rules and
regulations of the Commission thereunder (the "1934 Act Regulations")
and, when read together with the other information in the
Prospectuses, at the time the Registration Statement became effective,
at the time the Prospectuses were issued and at the Closing Time (and,
if any U.S. Option Securities are purchased, at the Date of Delivery),
did not and will not contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading.
(iii) Independent Accountants. The accountants who
certified the financial statements and supporting schedules included
in the Registration Statement are independent public accountants as
required by the 1933 Act and the 1933 Act Regulations.
(iv) Financial Statements. The financial statements
included in the Registration Statement and the Prospectuses, together
with the related schedules and notes, present fairly the financial
position of the Company and its consolidated subsidiaries at the dates
indicated and the statement of operations, stockholders' equity and
cash flows of the Company and its consolidated subsidiaries for the
periods specified; said financial statements have been prepared in
conformity with generally accepted accounting principles ("GAAP")
applied on a consistent basis throughout the periods involved. The
supporting schedules, if any, included in the Registration Statement
present fairly in accordance with GAAP the information required to be
stated therein. The selected financial data and the summary financial
information included in the Prospectuses present fairly the
information shown therein and have been compiled on a basis consistent
with that of the audited financial statements included in the
Registration Statement. The pro forma financial statements and the
related notes thereto included in the Registration Statement and the
Prospectuses present fairly the information shown therein, have been
prepared in accordance with the Commission's rules and guidelines with
respect to pro forma financial statements and have been properly
compiled on the bases described therein, and the assumptions used in
the preparation thereof are reasonable and the adjustments used
therein are appropriate to give effect to the transactions and
circumstances referred to therein.
(v) No Material Adverse Change in Business. Since the
respective dates as of which information is given in the Registration
Statement and the Prospectuses, except as otherwise stated therein,
(A) there has been no material adverse change in the condition,
financial or otherwise, or in the earnings, business affairs or
business prospects of the Company and its subsidiaries considered as
one enterprise, whether or not arising in the ordinary course of
business (a "Material Adverse Effect"), (B) there have been no
transactions entered into by the Company or any of its subsidiaries,
other than those in the
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ordinary course of business, which are material with respect to the
Company and its subsidiaries considered as one enterprise, and (C)
there has been no dividend or distribution of any kind declared, paid
or made by the Company on any class of its capital stock.
(vi) Good Standing of the Company. The Company has been
duly organized and is validly existing as a corporation in good
standing under the laws of the state of California and has corporate
power and authority to own, lease and operate its properties and to
conduct its business as described in the Prospectuses and to enter
into and perform its obligations under this Agreement; and the Company
is duly qualified as a foreign corporation to transact business and is
in good standing in each other jurisdiction in which such
qualification is required, whether by reason of the ownership or
leasing of property or the conduct of business, except where the
failure so to qualify or to be in good standing would not result in a
Material Adverse Effect.
(vii) Good Standing of Subsidiaries. Each subsidiary of
the Company listed on Schedule C hereto (the "Subsidiaries") has been
duly organized and is validly existing as a corporation in good
standing under the laws of the jurisdiction of its incorporation, has
corporate power and authority to own, lease and operate its properties
and to conduct its business as described in the Prospectuses and is
duly qualified as a foreign corporation to transact business and is in
good standing in each jurisdiction in which such qualification is
required, whether by reason of the ownership or leasing of property or
the conduct of business, except where the failure so to qualify or to
be in good standing would not result in a Material Adverse Effect;
except as otherwise disclosed in the Registration Statement, all of
the issued and outstanding capital stock of each such subsidiary has
been duly authorized and validly issued, is fully paid and
non-assessable and is owned by the Company, directly or through
subsidiaries, free and clear of any security interest, mortgage,
pledge, lien, encumbrance, claim or equity; none of the outstanding
shares of capital stock of any such subsidiary was issued in violation
of the preemptive or similar rights of any securityholder of such
subsidiary. Other than the Subsidiaries, the Company has no
subsidiaries which either (i) are "Significant Subsidiaries," as such
term is defined under Regulation S-X under the 1933 Act, or (ii) are
material to the Company's financial condition or results of
operations.
(viii) Capitalization. The authorized, issued and
outstanding capital stock of the Company is as set forth in the
Prospectuses under the caption "Capitalization" (except for subsequent
issuances, if any, under the Company's 1994 Stock Option/Award Plan,
Employee Stock Option Plan or Employee Stock Purchase Plan). The
shares of issued and outstanding capital stock, including the
Securities to be purchased by the Underwriters from the Selling
Shareholder, have been duly authorized and validly issued and are
fully paid and non-assessable; none of the outstanding shares of
capital stock, including the Securities to be purchased by the
Underwriters from the Selling Shareholder, was issued in violation of
the preemptive or other similar rights of any securityholder of the
Company.
(ix) Authorization of Agreement. This Agreement and the
International Purchase Agreement have been duly authorized, executed
and delivered by the Company.
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(x) Absence of Manipulation. None of the Company or its
subsidiaries or any of their respective officers and directors has
taken, or will take, directly or indirectly, any action which is
designed to or which has constituted or which might reasonably be
expected to cause or result in stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale
of the Securities.
(xi) Authorization and Description of Securities. The
Common Stock conforms to all statements relating thereto contained in
the Prospectuses and such description conforms to the rights set forth
in the instruments defining the same; no holder of the Securities will
be subject to personal liability by reason of being such a holder.
(xii) Absence of Defaults and Conflicts. Neither the
Company nor any of its subsidiaries is in violation of its charter or
bylaws or in default in the performance or observance of any
obligation, agreement, covenant or condition contained in any
contract, indenture, mortgage, deed of trust, loan or credit
agreement, note, lease or other agreement or instrument to which the
Company or any of its subsidiaries is a party or by which it or any of
them may be bound, or to which any of the property or assets of the
Company or any subsidiary is subject (collectively, "Agreements and
Instruments") except for such defaults that would not result in a
Material Adverse Effect; and the execution, delivery and performance
of this Agreement and the International Purchase Agreement and the
consummation of the transactions contemplated in this Agreement, the
International Purchase Agreement and the Registration Statement and
compliance by the Company with its obligations under this Agreement
and the International Purchase Agreement have been duly authorized by
all necessary corporate action and do not and will not, whether with
or without the giving of notice or passage of time or both, conflict
with or constitute a breach of, or default or Repayment Event (as
defined below) under, or result in the creation or imposition of any
lien, charge or encumbrance upon any property or assets of the Company
or any subsidiary pursuant to, the Agreements and Instruments (except
for such conflicts, breaches, defaults or Repayment Events or liens,
charges or encumbrances that would not result in a Material Adverse
Effect), nor will such action result in any violation of the
provisions of the charter or by-laws of the Company or any subsidiary
or any applicable law, statute, rule, regulation, judgment, order,
writ or decree of any government, government instrumentality or court,
domestic or foreign, having jurisdiction over the Company or any
subsidiary or any of their assets, properties or operations. As used
herein, a "Repayment Event" means any event or condition which gives
the holder of any note, debenture or other evidence of indebtedness
(or any person acting on such holder's behalf) the right to require
the repurchase, redemption or repayment of all or a portion of such
indebtedness by the Company or any subsidiary.
(xiii) Absence of Labor Dispute. No labor dispute with the
employees of the Company or any subsidiary exists or, to the knowledge
of the Company, is imminent, and the Company is not aware of any
existing or imminent labor disturbance by the employees of any of its
or any subsidiary's principal suppliers, manufacturers, customers or
contractors, which, in either case, may reasonably be expected to
result in a Material Adverse Effect.
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(xiv) Absence of Proceedings. There is no action, suit,
proceeding, inquiry or investigation before or brought by any court or
governmental agency or body, domestic or foreign, now pending, or, to
the knowledge of the Company, threatened, against or affecting the
Company or any subsidiary, which is required to be disclosed in the
Registration Statement (other than as disclosed therein), or which
might reasonably be expected to result in a Material Adverse Effect,
or which might reasonably be expected to materially and adversely
affect the consummation of the transactions contemplated in this
Agreement and the International Purchase Agreement or the performance
by the Company of its obligations hereunder or thereunder; the
aggregate of all pending legal or governmental proceedings to which
the Company or any subsidiary is a party or of which any of their
respective property or assets is the subject which are not described
in the Registration Statement, including ordinary routine litigation
incidental to the business, could not reasonably be expected to result
in a Material Adverse Effect.
(xv) Accuracy of Exhibits. There are no contracts or
documents which are required to be described in the Registration
Statement, the Prospectuses or the documents incorporated by reference
therein or to be filed as exhibits thereto which have not been so
described and filed as required.
(xvi) Possession of Intellectual Property. The Company and
its subsidiaries own, possess, or can acquire on reasonable terms,
adequate rights to use all patents, patent rights, licenses,
inventions, copyrights, know-how (including trade secrets and other
unpatented and/or unpatentable proprietary or confidential
information, systems or procedures), trademarks, service marks, trade
names or other intellectual property (collectively, "Intellectual
Property") necessary for the conduct of the business now operated or
to be operated by the Company and its subsidiaries, as described in
the Prospectuses, and neither the Company nor any of its subsidiaries
has received any notice or is otherwise aware of any infringement of
or conflict with asserted rights of others with respect to any
Intellectual Property or of any facts or circumstances which would
render any Intellectual Property invalid or inadequate to protect the
interest of the Company or any of its subsidiaries therein, and which
infringement or conflict (if the subject of any unfavorable decision,
ruling or finding) or invalidity or inadequacy, singly or in the
aggregate, would result in a Material Adverse Effect.
(xvii) Absence of Further Requirements. No filing with, or
authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or
agency is necessary or required for the performance by the Company of
its obligations under this Agreement and the International Purchase
Agreement, in connection with the offering or sale of the Securities
by the Selling Shareholder under this Agreement and the International
Purchase Agreement, or the consummation of the transactions
contemplated by this Agreement and the International Purchase
Agreement, except such as have been already obtained or as may be
required under the 1933 Act or the 1933 Act Regulations or state
securities laws.
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(xviii) ▇▇▇▇-▇▇▇▇▇ License. Each of the Company,
CaliforniaCare Health Plans, WellPoint Pharmacy Plan and WellPoint
Dental Plan has been licensed in the State of California as a health
care service plan under the ▇▇▇▇-▇▇▇▇▇ Health Care Service Plan Act of
1975, as amended (the "▇▇▇▇-▇▇▇▇▇ Act"), and such licenses have not
been modified since the issuance thereof (other than modifications
filed in the ordinary course of business in any respect that would
materially and adversely affect the ability of the Company to conduct
its business in the manner described in the Registration Statement).
None of the Company's other subsidiaries are required to be licensed
under the ▇▇▇▇-▇▇▇▇▇ Act.
(xix) BCBSA License. The Company is in full compliance
with the requirements of the Blue Cross License Agreement, dated as of
May 20, 1996, between the Company and the Blue Cross and Blue Shield
Association (the "BCBSA") and the California Blue Cross License
Addendum, dated as of May 17, 1996, between the Company and the BCBSA,
except in each case where such noncompliance would not have a Material
Adverse Effect. Each of the Company's subsidiaries that is required
by the BCBSA as of the date hereof, or that will be required by the
BCBSA as of the Closing Time, to be a party to a Blue Cross Affiliate
License Agreement is in full compliance with the requirements of such
agreement, except in each case where such noncompliance would not have
a Material Adverse Effect.
(xx) Possession of Licenses and Permits. The Company and
its subsidiaries possess such permits, licenses, approvals, consents
and other authorizations, including, without limitation, under the
▇▇▇▇-▇▇▇▇▇ Act (collectively, "Governmental Licenses"), issued by the
appropriate federal, state, local or foreign regulatory agencies or
bodies necessary to conduct the business now operated by them; the
Company and its subsidiaries are in compliance with the terms and
conditions of all such Governmental Licenses, except where the failure
so to comply would not, singly or in the aggregate, have a Material
Adverse Effect; all of the Governmental Licenses are valid and in full
force and effect, except when the invalidity of such Governmental
Licenses or the failure of such Governmental Licenses to be in full
force and effect would not have a Material Adverse Effect; and neither
the Company nor any of its subsidiaries has received any notice of
proceedings relating to the revocation or modification of any such
Governmental Licenses which, singly or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would result in
a Material Adverse Effect.
(xxi) Title to Property. The Company and its subsidiaries
have good and marketable title to all real property owned by the
Company and its subsidiaries and good title to all other properties
owned by them, in each case, free and clear of all mortgages, pledges,
liens, security interests, claims, restrictions or encumbrances of any
kind except such as (a) are described in the Prospectuses or (b) do
not, singly or in the aggregate, have a Material Adverse Effect and do
not interfere in any material respect with the use made and proposed
to be made of such property by the Company or any of its subsidiaries;
and all of the leases and subleases material to the business of the
Company and its subsidiaries, considered as one enterprise, and under
which the Company or any of its subsidiaries holds properties
described in the Prospectuses, are in full force and effect, and
neither the Company nor any subsidiary has any notice of any material
claim of any sort that has been
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asserted by anyone adverse to the rights of the Company or any
subsidiary under any of the leases or subleases mentioned above, or
affecting or questioning the rights of the Company or such subsidiary
to the continued possession of the leased or subleased premises under
any such lease or sublease.
(xxii) Maintenance of Insurance. The Company and each of
its subsidiaries maintain insurance policies with respect to such
insurable properties, potential liabilities and occurrences that merit
or require catastrophic insurance in amounts deemed adequate in the
reasonable opinion of the management for the Company or each of its
subsidiaries maintain a system or systems of self-insurance or
assumption of risk which accords with the practices of similar
businesses; all such insurance policies are in full force and effect;
and, at the time that each of the physicians and physicians groups
with which the Company or any of its subsidiaries has contracted
entered into such agreement, such physician or physician group
represented that they had professional liability and medical
malpractice insurance in minimum amounts which the Company believes to
be adequate for such physicians and physician groups generally.
(xxiii) Compliance with Tax Laws. All material income,
payroll and sales tax returns required to be filed by the Company or
any of its subsidiaries, in any jurisdiction, have been so filed, and
all material taxes, including related withholding taxes, penalties and
interest, assessments and other charges due or claimed to be due from
such entities have been paid, other than those being contested in good
faith and for which adequate reserves have been provided or those
currently payable without penalty or interest.
(xxiv) Compliance with Cuba Act. The Company has complied
with, and is and will be in compliance with, the provisions of that
certain Florida act relating to disclosure of doing business with
Cuba, codified as Section 517.075 of the Florida statutes, and the
rules and regulations thereunder (collectively, the "Cuba Act") or is
exempt therefrom.
(xxv) Investment Company Act. The Company is not an
"investment company" or an entity "controlled" by an "investment
company" as such terms are defined in the Investment Company Act of
1940, as amended (the "1940 Act").
(xxvi) Environmental Laws. Except as described in the
Registration Statement and except as would not, singly or in the
aggregate, result in a Material Adverse Effect, (A) neither the
Company nor any of its subsidiaries is in violation of any federal,
state, local or foreign statute, law, rule, regulation, ordinance,
code, policy or rule of common law or any judicial or administrative
interpretation thereof, including any judicial or administrative
order, consent, decree or judgment, relating to pollution or
protection of human health, the environment (including, without
limitation, ambient air, surface water, groundwater, land surface or
subsurface strata) or wildlife, including, without limitation, laws
and regulations relating to the release or threatened release of
chemicals, pollutants, contaminants, wastes, toxic substances,
hazardous substances, petroleum or petroleum products (collectively,
"Hazardous Materials") or to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling
of Hazardous Materials (collectively,
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"Environmental Laws"), (B) the Company and its subsidiaries have all
permits, authorizations and approvals required under any applicable
Environmental Laws and are each in compliance with their requirements,
(C) there are no pending or threatened administrative, regulatory or
judicial actions, suits, demands, demand letters, claims, liens,
notices of noncompliance or violation, investigation or proceedings
relating to any Environmental Law against the Company or any of its
subsidiaries and (D) there are no events or circumstances that might
reasonably be expected to form the basis of an order for clean-up or
remediation, or an action, suit or proceeding by any private party or
governmental body or agency, against or affecting the Company or any
of its subsidiaries relating to Hazardous Materials or any
Environmental Laws.
(b) Representations and Warranties by the Selling Shareholder. The
Selling Shareholder represents and warrants to each U.S. Underwriter as of the
date hereof, as of the Closing Time and, if the Selling Shareholder is selling
U.S. Option Securities on a Date of Delivery, as of each such Date of Delivery,
and agrees with each U.S. Underwriter, as follows:
(i) Accurate Disclosure. To the extent that any
statements or omissions made in the Registration Statement or
Prospectuses, or any amendment or supplement thereto, are made in
reliance on, and in conformity with, written information furnished to
the Company by or on behalf of the Selling Shareholder specifically
for use in the preparation thereof, each such part of the Registration
Statement, when it became effective, did not contain an untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statement therein not
misleading, and each such part of either of the Prospectuses, or of
any amendments or supplements thereto, at the time it was issued and
as of the Closing Time, did not include nor will it include an untrue
statement of a material fact or omitted or will omit to state a
material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not
misleading; the Selling Shareholder is not prompted to sell the
Securities to be sold by the Selling Shareholder hereunder by any
material nonpublic information concerning the Company or any
subsidiary of the Company which is not set forth in the Prospectuses.
The Company and the Underwriters acknowledge that the statements
relating to such Selling Shareholder under the heading "Relationship
with the Foundation" (but only insofar as it purports to describe
agreements to which the Selling Shareholder is a party) and "Selling
Shareholder" in any Prospectus constitute the only information
furnished in writing by or on behalf of such Selling Shareholder for
inclusion in the Registration Statement or any Prospectus.
(ii) Authorization of Agreements. The Selling Shareholder
has the full right, power and authority to enter into this Agreement,
the International Purchase Agreement and to sell, transfer and deliver
the Securities to be sold by the Selling Shareholder hereunder. The
execution and delivery of this Agreement, the International Purchase
Agreement and the sale and delivery of the Securities to be sold by
the Selling Shareholder and the consummation of the transactions
contemplated in this Agreement and the International Purchase
Agreement and compliance by the Selling Shareholder with its
obligations hereunder have been duly authorized by the Selling
Shareholder and do not and will not,
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whether with or without the giving of notice or passage of time or
both, conflict with or constitute a breach of, or default under, or
result in the creation or imposition of any tax, lien, charge or
encumbrance upon the Securities to be sold by the Selling Shareholder
pursuant to any contract, indenture, mortgage, deed of trust, loan or
credit agreement, note, license, lease or other agreement or
instrument to which the Selling Shareholder is a party or by which the
Selling Shareholder may be bound, or to which any of the property or
assets of the Selling Shareholder is subject, nor will such action
result in any violation of the provisions of the charter or by-laws or
other organizational instrument of the Selling Shareholder, if
applicable, or any applicable treaty, law, statute, rule, regulation,
judgment, order, writ or decree of any government, government
instrumentality or court, domestic or foreign, having jurisdiction
over the Selling Shareholder or any of its properties.
(iii) Good and Marketable Title. The Selling Shareholder
has and will at the Closing Time and, if any Option Securities are
purchased, on the Date of Delivery have good and marketable title to
the Securities to be sold by the Selling Shareholder hereunder, free
and clear of any security interest, mortgage, pledge, lien, charge,
claim, equity or encumbrance of any kind, other than pursuant to this
Agreement, the International Purchase Agreement and the Voting
Agreement and the Voting Trust Agreement, each as defined in the
Registration Statement; and upon delivery of such Securities and
payment of the purchase price therefor as herein contemplated,
assuming each such Underwriter has no notice of any adverse claim,
each of the Underwriters will receive good and marketable title to the
Securities purchased by it from the Selling Shareholder, free and
clear of any security interest, mortgage, pledge, lien, charge, claim,
equity or encumbrance of any kind.
(iv) Absence of Manipulation. The Selling Shareholder has
not taken, and will not take, directly or indirectly, any action which
is designed to or which has constituted or which might reasonably be
expected to cause or result in stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale
of the Securities.
(v) Absence of Further Requirements. No filing with, or
consent, approval, authorization, order, registration, qualification
or decree of, any court or governmental authority or agency, domestic
or foreign, is necessary or required for the performance by the
Selling Shareholder of its obligations under this Agreement or the
International Purchase Agreement, or in connection with the sale and
delivery of the Securities under this Agreement or the International
Purchase Agreement or the consummation of the transactions
contemplated by this Agreement and the International Purchase
Agreement, except such as may have previously been made or obtained or
as may be required under the 1933 Act or the 1933 Act Regulations or
state securities laws.
(vi) Restriction on Sale of Securities. During a period
of 180 days from the date of the Prospectuses, the Selling Shareholder
will not, without the prior written consent of ▇▇▇▇▇▇▇ ▇▇▇▇▇, (i)
offer, pledge, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option,
right or warrant to purchase or otherwise transfer or dispose of,
directly or indirectly, any share of Common Stock or any securities
convertible into or exercisable or exchangeable for Common Stock or
file any
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registration statement under the 1933 Act with respect to any of the
foregoing or (ii) enter into any swap or any other agreement or any
transaction that transfers, in whole or in part, directly or
indirectly, the economic consequence of ownership of the Common Stock,
whether any such swap or transaction described in clause (i) or (ii)
above is to be settled by delivery of Common Stock or such other
securities, in cash or otherwise, provided, that ▇▇▇▇▇▇▇ ▇▇▇▇▇ shall
give the Selling Shareholder at least two business days' notice of any
waiver of the restriction on sales by the Company contained in Section
3(h) hereof and the Selling Shareholder shall be deemed to have been
granted a waiver of this subsection 3(b)(vi) on the same terms as any
such waiver granted to the Company. The foregoing sentence shall not
apply to the Securities to be sold hereunder or under the
International Purchase Agreement, or to any deposit or withdrawal of
Common Stock in or from the trust established pursuant to the Voting
Trust Agreement.
(vii) No Association with NASD. Neither the Selling
Shareholder nor any of its affiliates directly, or indirectly through
one or more intermediaries, controls, or is controlled by, or is under
common control with, or has any other association with (within the
meaning of Article I, Section 1(m) of the By-laws of the National
Association of Securities Dealers, Inc.), any member firm of the
National Association of Securities Dealers, Inc.
(c) Officer's Certificates. Any certificate signed by any officer
of the Company or any of its subsidiaries delivered to the Global Coordinator,
the U.S. Representatives or to counsel for the U.S. Underwriters shall be
deemed a representation and warranty by the Company to each U.S. Underwriter as
to the matters covered thereby; and any certificate signed by or on behalf of
the Selling Shareholder as such and delivered to the Global Coordinator, the
U.S. Representatives or to counsel for the U.S. Underwriters pursuant to the
terms of this Agreement shall be deemed a representation and warranty by the
Selling Shareholder as to the matters covered thereby.
SECTION 2. Sale and Delivery to U.S. Underwriters; Closing.
(a) Initial U.S. Securities. On the basis of the representations
and warranties herein contained and subject to the terms and conditions herein
set forth, the Selling Shareholder agrees to sell to each U.S. Underwriter and
each U.S. Underwriter, severally and not jointly, agrees to purchase from the
Selling Shareholder, at the price per share set forth in Schedule B, the number
of Initial U.S. Securities set forth in Schedule A, plus any additional number
of Initial U.S. Securities which such U.S. Underwriter may become obligated to
purchase pursuant to the provisions of Section 10 hereof, subject, in each case,
to such adjustments among such U.S. Underwriters as the U.S. Representatives in
their sole discretion shall make to eliminate any sales or purchases of
fractional securities.
(b) U.S. Option Securities. In addition, on the basis of the
representations and warranties herein contained and subject to the terms and
conditions herein set forth, the Selling Shareholder hereby grants an option to
the U.S. Underwriters, severally and not jointly, to purchase up to an
additional 1,560,000 shares of Common Stock at the price per share set forth in
Schedule B, less an amount per share equal to any dividends or distributions
declared by the Company and payable on the Initial U.S. Securities but not
payable on the U.S. Option Securities. The option
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hereby granted will expire 30 days after the date hereof and may be exercised
in whole or in part from time to time only for the purpose of covering
over-allotments which may be made in connection with the offering and
distribution of the Initial U.S. Securities upon notice by the Global
Coordinator to the Selling Shareholder setting forth the number of U.S. Option
Securities as to which the several U.S. Underwriters are then exercising the
option and the time and date of payment and delivery for such U.S. Option
Securities. Any such time and date of delivery (a "Date of Delivery") shall be
determined by the Global Coordinator, but shall not be later than seven full
business days after the exercise of said option, nor in any event prior to the
Closing Time, as hereinafter defined. If the option is exercised as to all or
any portion of the U.S. Option Securities, each of the U.S. Underwriters,
acting severally and not jointly, will purchase that proportion of the total
number of U.S. Option Securities then being purchased which the number of
Initial U.S. Securities set forth in Schedule A opposite the name of such U.S.
Underwriter bears to the total number of Initial U.S. Securities, subject in
each case to such adjustments as the U.S. Representatives in their discretion
shall make to eliminate any sales or purchases of fractional shares.
(c) Payment. The closing of the purchase and sale of the Initial
Securities, including acknowledgement of the payment of the purchase price
therefor and delivery of certificates therefor the Initial Securities, shall
be at the offices of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, or at such other place as shall be agreed upon by the U.S.
Representatives and the Company and the Selling Shareholder, at 7:00 A.M.
(California time) on the third business day (or the fourth business day, if the
pricing occurs after 4:30 P.M. (Eastern time) on any given business day) after
the date hereof (unless postponed in accordance with the provisions of Section
10), or such other time not later than ten business days after such date as
shall be agreed upon by the U.S. Representatives and the Selling Shareholder
(such time and date of payment and delivery being herein called "Closing
Time"). Delivery of certificates for the Initial Securities shall be made at
the Closing Time at the offices of ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇.
In addition, in the event that any or all of the U.S. Option
Securities are purchased by the U.S. Underwriters, payment of the purchase
price for, and delivery of certificates for, such U.S. Option Securities shall
be made at the above-mentioned offices, or at such other place as shall be
agreed upon by the U.S. Representatives and the Company and the Selling
Shareholder, on each Date of Delivery as specified in the notice from the U.S.
Representatives to the Company and the Selling Shareholder.
Payment shall be made to the Selling Shareholder by wire
transfer of immediately available funds to a bank account designated by the
Selling Shareholder not later than two business days preceding the Closing Time
against delivery to the U.S. Representatives for the respective accounts of the
U.S. Underwriters of certificates for the Securities to be purchased by them.
It is understood that each U.S. Underwriter has authorized the U.S.
Representatives, for its account, to accept delivery of, receipt for, and make
payment of the purchase price for, the Initial U.S. Securities and the U.S.
Option Securities, if any, which it has agreed to purchase. ▇▇▇▇▇▇▇ ▇▇▇▇▇,
individually and not as representative of the U.S. Underwriters, may (but shall
not be obligated to) make payment of the purchase price for the Initial U.S.
Securities or the U.S.
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Option Securities, if any, to be purchased by any U.S. Underwriter whose funds
have not been received by the Closing Time or the relevant Date of Delivery, as
the case may be, but such payment shall not relieve such U.S. Underwriter from
its obligations hereunder.
(d) Denominations; Registration. Certificates for the Initial
U.S. Securities and the U.S. Option Securities, if any, shall be in such
denominations and registered in such names as the U.S. Representatives may
request in writing at least one full business day before the Closing Time or
the relevant Date of Delivery, as the case may be. The certificates for the
Initial U.S. Securities and the U.S. Option Securities, if any, will be made
available for examination and packaging by the U.S. Representatives in The City
of New York not later than 10:00 A.M. (Eastern time) on the business day prior
to the Closing Time or the relevant Date of Delivery, as the case may be.
SECTION 3. Covenants of the Company. The Company covenants with each
U.S. Underwriter as follows:
(a) Compliance with Securities Regulations and Commission Request.
The Company, subject to Section 3(b), will comply with the requirements of Rule
430A or Rule 434, as applicable, and will notify the U.S. Representatives
immediately, and confirm the notice in writing, (i) when any post-effective
amendment to the Registration Statement shall become effective, or any
supplement to the Prospectuses or any amended Prospectuses shall have been
filed, (ii) of the receipt of any comments from the Commission, (iii) of any
request by the Commission for any amendment to the Registration Statement or
any amendment or supplement to the Prospectuses or for additional information,
and (iv) of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or of any order preventing or
suspending the use of any preliminary prospectus, or of the suspension of the
qualification of the Securities for offering or sale in any jurisdiction, or of
the initiation or threatening of any proceedings for any of such purposes. The
Company will promptly effect the filings necessary pursuant to Rule 424(b) and
will take such steps as it deems necessary to ascertain promptly whether the
form of any prospectus transmitted for filing under Rule 424(b) was received
for filing by the Commission and, in the event that it was not, it will
promptly file such prospectus. The Company will make every reasonable effort
to prevent the issuance of any stop order and, if any stop order is issued, to
obtain the lifting thereof at the earliest possible moment.
(b) Filing of Amendments. The Company will give the U.S.
Representatives notice of its intention to file or prepare any amendment to the
Registration Statement (including any filing under Rule 462(b)), any Term Sheet
or any amendment, supplement or revision to either the prospectuses included in
the Registration Statement at the time it became effective or to the
Prospectuses, whether pursuant to the 1933 Act, the 1934 Act or otherwise, will
furnish the U.S. Representatives with copies of any such documents a reasonable
amount of time prior to such proposed filing or use, as the case may be, and
will not file or use any such document to which the U.S. Representatives or
counsel for the U.S. Underwriters shall object.
(c) Delivery of Registration Statements. The Company has
furnished or will deliver to the U.S. Representatives and counsel for the U.S.
Underwriters, without charge, signed copies of the Registration Statement as
originally filed and of each amendment thereto (including exhibits
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filed therewith or incorporated by reference therein and documents incorporated
or deemed to be incorporated by reference therein) and signed copies of all
consents and certificates of experts, and will also deliver to the U.S.
Representatives, without charge, a conformed copy of the Registration Statement
as originally filed and of each amendment thereto (without exhibits) for each
of the U.S. Underwriters. The copies of the Registration Statement and each
amendment thereto furnished to the U.S. Underwriters will be identical to the
electronically transmitted copies thereof filed with the Commission pursuant to
▇▇▇▇▇, except to the extent permitted by Regulation S-T.
(d) Delivery of Prospectuses. The Company has delivered to each
U.S. Underwriter, without charge, as many copies of each preliminary prospectus
as such U.S. Underwriter reasonably requested, and the Company hereby consents
to the use of such copies for purposes permitted by the 1933 Act. The Company
will furnish to each U.S. Underwriter, without charge, during the period when
the U.S. Prospectus is required to be delivered under the 1933 Act or the 1934
Act, such number of copies of the U.S. Prospectus (as amended or supplemented)
as such U.S. Underwriter may reasonably request. The U.S. Prospectus and any
amendments or supplements thereto furnished to the U.S. Underwriters will be
identical to the electronically transmitted copies thereof filed with the
Commission pursuant to ▇▇▇▇▇, except to the extent permitted by Regulation S-T.
(e) Continued Compliance with Securities Laws. The Company will
comply with the 1933 Act and the 1933 Act Regulations and the 1934 Act and the
1934 Act Regulations so as to permit the completion of the distribution of the
Securities as contemplated in this Agreement, the International Purchase
Agreement and the Prospectuses. If at any time when a prospectus is required
by the 1933 Act to be delivered in connection with sales of the Securities, any
event shall occur or condition shall exist as a result of which it is
necessary, in the reasonable opinion of counsel for the U.S. Underwriters or
for the Company, to amend the Registration Statement or amend or supplement the
Prospectuses in order that the Prospectuses will not include any untrue
statements of a material fact or omit to state a material fact necessary in
order to make the statements therein not misleading in the light of the
circumstances existing at the time it is delivered to a purchaser, or if it
shall be necessary, in the reasonable opinion of such counsel, at any such time
to amend the Registration Statement or amend or supplement the Prospectuses in
order to comply with the requirements of the 1933 Act or the 1933 Act
Regulations, the Company will promptly prepare and file with the Commission,
subject to Section 3(b) of the 1933 Act, such amendment or supplement as may be
necessary to correct such statement or omission or to make the Registration
Statement or the Prospectuses comply with such requirements, and the Company
will furnish to the Underwriters such number of copies of such amendment or
supplement as the Underwriters may reasonably request.
(f) Blue Sky Qualifications. The Company will use its best
efforts, in cooperation with the U.S. Underwriters, to qualify the Securities
for offering and sale under the applicable securities laws of such states and
other jurisdictions (domestic or foreign) as the U.S. Representatives may
designate and to maintain such qualifications in effect for a period of not
less than one year from the later of the effective date of the Registration
Statement and any Rule 462(b) Registration Statement; provided, however, that
the Company shall not be obligated to file any general consent to service of
process or to qualify as a foreign corporation or as a dealer in securities in
any
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jurisdiction in which it is not so qualified or to subject itself to taxation
in respect of doing business in any jurisdiction in which it is not otherwise
so subject. In each jurisdiction in which the Securities have been so
qualified, the Company will file such statements and reports as may be required
by the laws of such jurisdiction to continue such qualification in effect for a
period of not less than one year from the effective date of the Registration
Statement and any Rule 462(b) Registration Statement.
(g) Rule 158. The Company will timely file such reports pursuant
to the 1934 Act as are necessary in order to make generally available to its
securityholders as soon as practicable an earnings statement for the purposes
of, and to provide the benefits contemplated by, the last paragraph of Section
11(a) of the 1933 Act.
(h) Restriction on Sale of Securities. During a period of 180
days from the date of the Prospectuses, the Company will not, without the prior
written consent of ▇▇▇▇▇▇▇ ▇▇▇▇▇, (i) directly or indirectly, offer, pledge,
sell, contract to sell, sell any option or contract to purchase, purchase any
option or contract to sell, grant any option, right or warrant to purchase or
otherwise transfer or dispose of any share of Common Stock or any securities
convertible into or exercisable or exchangeable for Common Stock or file any
registration statement under the 1933 Act with respect to any of the foregoing
or (ii) enter into any swap or any other agreement or any transaction that
transfers, in whole or in part, directly or indirectly, the economic
consequence of ownership of the Common Stock, whether any such swap or
transaction described in clause (i) or (ii) above is to be settled by delivery
of Common Stock or such other securities, in cash or otherwise. The foregoing
sentence shall not apply to (A) the Securities to be sold under this Agreement
and the International Purchase Agreement, (B) any shares of Common Stock issued
by the Company upon the exercise of an option or warrant or the conversion of a
security outstanding on the date hereof and referred to in the Prospectuses,
(C) any shares of Common Stock issued or options to purchase Common Stock
granted pursuant to the Company's 1994 Stock Option/Award Plan, Employee Stock
Option Plan, Employee Stock Purchase Plan or any other existing employee
benefit plans of the Company referred to in the Prospectuses (as well as the
filing of any registration statement on Form S-8 (or similar form) for the
purpose of registering under the 1933 Act shares of Common Stock issued in
connection with any such plan) or (D) any shares of Common Stock issued
pursuant to any dividend reinvestment plan.
(i) Reporting Requirements. The Company, during the period when
the Prospectuses are required to be delivered under the 1933 Act or the 1934
Act, will file all documents required to be filed with the Commission pursuant
to the 1934 Act within the time periods required by the 1934 Act and the 1934
Act Regulations.
SECTION 4. Payment of Expenses.
(a) Expenses. The Company will pay or cause to be paid all
expenses incident to the performance of its or the Selling Shareholder's
obligations under this Agreement, including (i) the preparation, printing and
filing of the Registration Statement (including financial statements and
exhibits) as originally filed and of each amendment thereto, (ii) the
preparation, printing and delivery to the Underwriters of this Agreement, the
International Purchase Agreement, any
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Agreement among Underwriters, the Intersyndicate Agreement and such other
documents as may be required in connection with the offering, purchase, sale,
issuance or delivery of the Securities, (iii) the preparation, issuance and
delivery of the certificates for the Securities to the Underwriters, including
any stock or other transfer taxes and any stamp or other duties payable upon
the sale or delivery of the Securities to the Underwriters and the transfer of
the Securities between the U.S. Underwriters and the International Managers,
(iv) the fees and disbursements of the Company's counsel, accountants and other
advisors, (v) the qualification of the Securities under securities laws in
accordance with the provisions of Section 3(f) hereof, including filing fees
and the reasonable fees and disbursements of counsel for the Underwriters in
connection therewith and in connection with the preparation of the Preliminary
Blue Sky Survey, the Final Blue Sky Survey and any supplements thereto, (vi)
the printing and delivery to the Underwriters of copies of each preliminary
prospectus, any Term Sheets and of the Prospectuses and any amendments or
supplements thereto, (vii) the preparation, printing and delivery to the
Underwriters of copies of the Preliminary Blue Sky Survey, the Final Blue Sky
Survey and any supplements thereto, (viii) the fees and expenses of any
transfer agent or registrar for the Securities, (ix) the filing fees incident
to the review by the National Association of Securities Dealers, Inc. (the
"NASD") of the terms of the sale of the Securities and (x) the fees and
expenses incurred in connection with the listing of the Securities on the New
York Stock Exchange. The Selling Shareholder will pay or cause to be paid the
fees and expenses of its counsel, agents and advisors for which it is
responsible under the terms of the Registration Rights Agreement between the
Selling Shareholder and the Company.
(b) Termination of Agreement. If this Agreement is terminated by
the U.S. Representatives in accordance with the provisions of Section 5 or
Section 9(a)(i) hereof, the Company shall reimburse the U.S. Underwriters for
all of their out-of-pocket expenses, including the reasonable fees and
disbursements of counsel for the U.S. Underwriters. If this Agreement is
terminated by the U.S. Representatives in accordance with the provisions of
Section 11 hereof, the Selling Shareholder shall reimburse the U.S.
Underwriters for all of their out-of-pocket expenses, including the reasonable
fees and disbursements of counsel for the U.S. Underwriters.
(c) Allocation of Expenses. The provisions of this Section shall
not affect any agreement that the Company and the Selling Shareholder may make
for the sharing of such costs and expenses.
SECTION 5. Conditions of U.S. Underwriters' Obligations. The
obligations of the several U.S. Underwriters hereunder are subject to the
accuracy of the representations and warranties of the Company and the Selling
Shareholder contained in Section 1 hereof or in certificates of any officer of
the Company or any subsidiary of the Company or on behalf of the Selling
Shareholder delivered pursuant to the provisions hereof, to the performance by
the Company of its covenants and other obligations hereunder, and to the
following further conditions:
(a) Effectiveness of Registration Statement. The Registration
Statement, including any Rule 462(b) Registration Statement, has become
effective and at Closing Time no stop order suspending the effectiveness of the
Registration Statement shall have been issued under the 1933 Act or proceedings
therefor initiated or threatened by the Commission, and any request on the part
of the Commission for additional information shall have been complied with to
the reasonable
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satisfaction of counsel to the U.S. Underwriters. A prospectus containing the
Rule 430A Information shall have been filed with the Commission in accordance
with Rule 424(b) (or a post-effective amendment providing such information
shall have been filed and declared effective in accordance with the
requirements of Rule 430A) or, if the Company has elected to rely upon Rule
434, a Term Sheet shall have been filed with the Commission in accordance with
Rule 424(b).
(b) Opinion of Counsel for Company. At Closing Time, the U.S.
Representatives shall have received the favorable opinion, dated as of Closing
Time, of ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, counsel for the Company, in form and
substance satisfactory to counsel for the U.S. Underwriters, together with
signed or reproduced copies of such letter for each of the other U.S.
Underwriters to the effect set forth in Exhibit A hereto and to such further
effect as counsel to the U.S. Underwriters may reasonably request.
(c) Opinion of General Counsel for the Company. At Closing Time,
the U.S. Representatives shall have received the favorable opinion, dated as of
Closing Time, of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq., general counsel for the Company, in
form and substance satisfactory to counsel for the U.S. Underwriters, together
with signed or reproduced copies of such letter for each of the other U.S.
Underwriters to the effect set forth in Exhibit B hereto and to such further
effect as counsel to the U.S. Underwriters may reasonably request.
(d) Opinion of Counsel for the Selling Shareholder. At Closing
Time, the U.S. Representatives shall have received the favorable opinion, dated
as of Closing Time, of ▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇, counsel for the Selling
Shareholder, in form and substance satisfactory to counsel for the U.S.
Underwriters, together with signed or reproduced copies of such letter for each
of the other U.S. Underwriters to the effect set forth in Exhibit C hereto and
to such further effect as counsel to the U.S. Underwriters may reasonably
request.
(e) Opinion of Counsel for U.S. Underwriters. At Closing Time,
the Representatives shall have received the favorable opinion, dated as of
Closing Time, of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, counsel for the U.S. Underwriters, together
with signed or reproduced copies of such letter for each of the other U.S.
Underwriters with respect to the matters set forth in clauses (i) (solely with
respect to the Company), (ii) (solely with respect to the Company), (v) through
(vii), inclusive, (ix) (solely as to the information in the Prospectus under
"Description of Capital Stock--Common Stock") and the penultimate paragraph of
Exhibit A hereto. In giving such opinion such counsel may rely, as to all
matters governed by the laws of jurisdictions other than the laws of the States
of New York and California and the federal securities laws of the United
States, upon the opinions of counsel satisfactory to the U.S. Representatives.
Such counsel may also state that, insofar as such opinion involves factual
matters, they have relied, to the extent they deem proper, upon certificates of
officers of the Company and its subsidiaries and certificates of public
officials.
(f) Officers' Certificate. At Closing Time, there shall not have
been, since the date hereof or since the respective dates as of which
information is given in the Prospectuses, any material adverse change in the
condition, financial or otherwise, or in the earnings, business affairs or
business prospects of the Company and its subsidiaries considered as one
enterprise, whether or not arising in the ordinary course of business, and the
U.S. Representatives shall have received a
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certificate of the President or a Vice President of the Company and of the
chief financial or chief accounting officer of the Company, dated as of Closing
Time, to the effect that (i) there has been no such material adverse change,
(ii) the representations and warranties in Section 1(a) hereof are true and
correct with the same force and effect as though expressly made at and as of
Closing Time, (iii) the Company has complied in all material respects with all
agreements and satisfied all conditions on its part to be performed or
satisfied at or prior to Closing Time, and (iv) no stop order suspending the
effectiveness of the Registration Statement has been issued and no proceedings
for that purpose have been instituted or are pending or, to such persons'
knowledge, are contemplated by the Commission.
(g) Certificate of Selling Shareholder. At Closing Time, the U.S.
Representatives shall have received a certificate of an officer of the Selling
Shareholder, dated as of Closing Time, to the effect that (i) the
representations and warranties of the Selling Shareholder contained in Section
1(b) hereof are true and correct in all respects with the same force and effect
as though expressly made at and as of Closing Time and (ii) the Selling
Shareholder has complied in all material respects with all agreements and all
conditions on its part to be performed under this Agreement at or prior to
Closing Time.
(h) Accountant's Comfort Letter. At the time of the execution of
this Agreement, the U.S. Representatives shall have received from Coopers &
▇▇▇▇▇▇▇ L.L.P. a letter dated such date, in form and substance satisfactory to
the U.S. Representatives, together with signed or reproduced copies of such
letter for each of the other U.S. Underwriters containing statements and
information of the type ordinarily included in accountants' "comfort letters"
to underwriters with respect to the financial statements and certain financial
information (other than relating to the group benefits operations of ▇▇▇▇
▇▇▇▇▇▇▇ Mutual Life Insurance Company) contained in the Registration Statement
and the Prospectuses.
(i) Accountant's Comfort Letter. At the time of the execution of
this Agreement, the U.S. Representatives shall have received from Ernst & Young
L.L.P. a letter dated such date, in form and substance satisfactory to the U.S.
Representatives, together with signed or reproduced copies of such letter for
each of the other U.S. Underwriters containing statements and information of
the type ordinarily included in accountants' "comfort letters" to underwriters
with respect to the interim unaudited financial information contained in the
Registration Statement and the Prospectuses relating to the group benefits
operations of ▇▇▇▇ ▇▇▇▇▇▇▇ Mutual Life Insurance Company.
(j) Bring-down Comfort Letter. At Closing Time, the U.S.
Representatives shall have received from Coopers & ▇▇▇▇▇▇▇ L.L.P. a letter,
dated as of Closing Time, to the effect that they reaffirm the statements made
in the letter furnished pursuant to subsection (h) of this Section, except that
the specified date referred to shall be a date not more than three business
days prior to Closing Time.
(k) Bring-down Comfort Letter. At Closing Time, the U.S.
Representatives shall have received from Ernst & Young L.L.P. a letter, dated
as of Closing Time, to the effect that they reaffirm the statements made in the
letter furnished pursuant to subsection (i) of this Section, except
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that the specified date referred to shall be a date not more than three
business days prior to Closing Time.
(l) Lock-up Agreements. At the date of this Agreement, the U.S.
Representatives shall have received an agreement substantially in the form of
Exhibit D-1 hereto signed by the Company's Chief Executive Officer, and in the
form of Exhibit D-2 hereto from each of the persons listed on Schedule D
hereto.
(m) Conditions to Purchase of U.S. Option Securities. In the
event that the U.S. Underwriters exercise their option provided in Section 2(b)
hereof to purchase all or any portion of the U.S. Option Securities, the
representations and warranties of the Company and the Selling Shareholder
contained herein and the statements in any certificates furnished by the
Company, any subsidiary of the Company and the Selling Shareholder hereunder
shall be true and correct as of each Date of Delivery and, at the relevant Date
of Delivery, the U.S. Representatives shall have received:
(i) Officers' Certificate. A certificate, dated
such Date of Delivery, of the President or a Vice President of
the Company and of the chief financial or chief accounting
officer of the Company confirming that the certificate
delivered at the Closing Time pursuant to Section 5(f) hereof
remains true and correct as of such Date of Delivery.
(ii) Certificate of Selling Shareholder. A
certificate, dated such Date of Delivery, of an officer of the
Selling Shareholder confirming that the certificate delivered
at Closing Time pursuant to Section 5(g) remains true and
correct as of such Date of Delivery.
(iii) Opinion of Counsel for Company. The
favorable opinion of ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, counsel
for the Company, in form and substance satisfactory to counsel
for the U.S. Underwriters, dated such Date of Delivery,
relating to the U.S. Option Securities to be purchased on such
Date of Delivery and otherwise to the same effect as the
opinion required by Section 5(b) hereof.
(iv) Opinion of General Counsel for Company. The
favorable opinion of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq., general counsel
for the Company, in form and substance satisfactory to counsel
for the U.S. Underwriters, dated such Date of Delivery,
relating to the Option Securities to be purchased on such Date
of Delivery and otherwise to the same effect as the opinion
required by Section 5(c) hereof.
(v) Opinion of Counsel for the Selling
Shareholder. The favorable opinion of ▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇,
counsel for the Selling Shareholder, in form and substance
satisfactory to counsel for the U.S. Underwriters, dated such
Date of Delivery, relating to the U.S. Option Securities to be
purchased on such Date of Delivery and otherwise to the same
effect as the opinion required by Section 5(d) hereof.
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(vi) Opinion of Counsel for U.S. Underwriters.
The favorable opinion of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, counsel for the
U.S. Underwriters, dated such Date of Delivery, relating to
the Option Securities to be purchased on such Date of Delivery
and otherwise to the same effect as the opinion required by
Section 5(e) hereof.
(vii) Bring-down Comfort Letter. A letter from
Coopers & ▇▇▇▇▇▇▇ L.L.P., in form and substance satisfactory
to the U.S. Representatives and dated such Date of Delivery,
substantially in the same form and substance as the letter
furnished to the U.S. Representatives pursuant to Section 5(h)
hereof, except that the "specified date" in the letter
furnished pursuant to this paragraph shall be a date not more
than five days prior to such Date of Delivery.
(viii) Bring-down Comfort Letter. A letter from
Ernst & Young L.L.P., in form and substance satisfactory to
the U.S. Representatives and dated such Date of Delivery,
substantially in the same form and substance as the letter
furnished to the U.S. Representatives pursuant to Section 5(i)
hereof, except that the "specified date" in the letter
furnished pursuant to this paragraph shall be a date not more
than five days prior to such Date of Delivery.
(n) Additional Documents. At Closing Time and at each Date of
Delivery counsel for the U.S. Underwriters shall have been furnished with such
documents and opinions as they may reasonably require for the purpose of
enabling them to pass upon the issuance and sale of the Securities as herein
contemplated, or in order to evidence the accuracy of any of the
representations or warranties, or the fulfillment of any of the conditions,
herein contained; and all proceedings taken by the Company and the Selling
Shareholder in connection with the sale of the Securities as herein
contemplated shall be satisfactory in form and substance to the U.S.
Representatives and counsel for the U.S. Underwriters.
(o) Termination of Agreement. If any condition specified in this
Section shall not have been fulfilled when and as required to be fulfilled,
this Agreement, or, in the case of any condition to the purchase of U.S. Option
Securities on a Date of Delivery which is after the Closing Time, the
obligations of the several U.S. Underwriters to purchase the relevant U.S.
Option Securities, may be terminated by the U.S. Representatives by notice to
the Company at any time at or prior to Closing Time or such Date of Delivery,
as the case may be, and such termination shall be without liability of any
party to any other party except as provided in Section 4 and except that
Sections 1, 6, 7 and 8 shall survive any such termination and remain in full
force and effect.
SECTION 6. Indemnification.
(a) Indemnification of Underwriters. The Company and the Selling
Shareholder, jointly and severally, agree to indemnify and hold harmless each
U.S. Underwriter and each person, if any, who controls any U.S. Underwriter
within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act
as follows:
(i) against any and all loss, liability, claim, damage
and expense whatsoever, as incurred, arising out of any untrue
statement or alleged untrue statement of a material fact
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contained in the Registration Statement (or any amendment thereto),
including the Rule 430A Information and the Rule 434 Information, if
applicable, or the omission or alleged omission therefrom of a
material fact required to be stated therein or necessary to make the
statements therein not misleading or arising out of any untrue
statement or alleged untrue statement of a material fact included in
any preliminary prospectus or the Prospectuses (or any amendment or
supplement thereto), or the omission or alleged omission therefrom of
a material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not
misleading;
(ii) against any and all loss, liability, claim, damage
and expense whatsoever, as incurred, to the extent of the aggregate
amount paid in settlement of any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or
threatened, or of any claim whatsoever based upon any such untrue
statement or omission, or any such alleged untrue statement or
omission; provided that (subject to Section 6(d) below) any such
settlement is effected with the written consent of the Company and the
Selling Shareholder; and
(iii) against any and all expense whatsoever, as incurred
(including the fees and disbursements of counsel chosen by ▇▇▇▇▇▇▇
▇▇▇▇▇), reasonably incurred in investigating, preparing or defending
against any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim
whatsoever based upon any such untrue statement or omission, or any
such alleged untrue statement or omission to the extent that any such
expense is not paid under (i) or (ii) above;
provided, however, that (A) this indemnity agreement shall not apply to any
loss, liability, claim, damage or expense to the extent arising out of any
untrue statement or omission or alleged untrue statement or omission made in
reliance upon and in conformity with written information furnished to the
Company by any U.S. Underwriter through ▇▇▇▇▇▇▇ ▇▇▇▇▇ expressly for use in the
Registration Statement (or any amendment thereto), including the Rule 430A
Information and the Rule 434 Information, if applicable, or any preliminary
prospectus or the Prospectuses (or any amendment or supplement thereto) and (B)
the foregoing indemnity agreement with respect to any untrue statement
contained in or omission from a preliminary prospectus shall not inure to the
benefit of the U.S. Underwriter from whom the person asserting any such losses,
liabilities, claims, damages or expenses purchased U.S. Securities, or any
person controlling such U.S. Underwriter, if (i) the Company and the Selling
Shareholder shall sustain the burden of proving that a copy of the U.S.
Prospectus (as then amended or supplemented, if the Company shall have
furnished any amendments or supplements thereto) was not sent or given by or on
behalf of the U.S. Underwriters to such person at or prior to the written
confirmation of the sale of such U.S. Securities to such person, (ii) the
Company shall have delivered the U.S. Prospectus (as then supplemented or
amended) to the U.S. Underwriters on a timely basis and in the requisite
quantity to permit the U.S. Underwriters to send or deliver such U.S.
Prospectus to such person at or prior to such written confirmation of the sale
of such U.S. Securities and (iii) the untrue statement contained in or omission
from such preliminary prospectus was corrected in the U.S. Prospectus (or the
U.S. Prospectus as amended or supplemented).
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In making a claim for indemnification under this Section 6 or
contribution under Section 7 hereof by the Company or the Selling Shareholder,
the indemnified parties may proceed against either (i) both the Company and the
Selling Shareholder jointly or (ii) the Company only, but may not proceed
solely against the Selling Shareholder. In the event that the indemnified
parties are entitled to seek indemnity or contribution hereunder against any
loss, liability, claim, damage and expense incurred with respect to a final
judgment from a trial court then, as a precondition to any indemnified party
obtaining indemnification or contribution from the Selling Shareholder, the
indemnified parties shall first obtain a final judgment from a trial court that
such indemnified parties are entitled to indemnify or contribution under this
Agreement with respect to such loss, liability, claim, damage or expense (the
"Final Judgment") from the Company and the Selling Shareholder and shall seek
to satisfy such Final Judgment in full from the Company by making a written
demand upon the Company for such satisfaction. Only in the event such Final
Judgment shall remain unsatisfied in whole or in part 30 days following the
date of receipt by the Company of such demand shall any party entitled to
indemnification hereunder have the right to take action to satisfy such Final
Judgment by making demand directly on the Selling Shareholder (but only if and
to the extent the Company has not already satisfied such Final Judgment,
whether by settlement, release or otherwise). The indemnified parties shall,
however, be relieved of their obligation to first obtain a Final Judgment, to
seek to obtain payment from the Company with respect to such Final Judgment or,
having sought such payment, to wait such 30 days after failure by the Company
to immediately satisfy any such Final Judgment if (i) the Company files a
petition for relief under the United States Bankruptcy Code (the "Bankruptcy
Code"), (ii) an order for relief is entered against the Company in an
involuntary case under the Bankruptcy Code, (iii) the Company makes an
assignment for the benefit of its creditors, or (iv) any court orders or
approves the appointment of a receiver or custodian for the Company or a
substantial portion of its assets. The foregoing provisions of this paragraph
are not intended to require any indemnified party to obtain a Final Judgment
against the Company or the Selling Shareholder before obtaining reimbursement
of expenses pursuant to clause (a)(iii) of this Section 6. However, the
indemnified parties shall first seek to obtain such reimbursement in full from
the Company by making a written demand upon the Company for such reimbursement.
Only in the event such expenses shall remain unreimbursed in whole or in part
30 days following the date of receipt by the Company of such demand shall any
indemnified party have the right to receive reimbursement of such expenses from
the Selling Shareholder by making written demand directly on the Selling
Shareholder (but only if and to the extent the Company has not already
satisfied the demand for reimbursement, whether by settlement, release or
otherwise). The indemnified parties shall, however, be relieved of their
obligation to first seek to obtain such reimbursement in full from the Company
or, having made written demand therefor, to wait such 30 days after failure by
the Company to immediately reimburse such expenses if (i) the Company files a
petition for relief under the Bankruptcy Code, (ii) an order for relief is
entered against the Company in an involuntary case under the Bankruptcy Code,
(iii) the Company makes an assignment for the benefit of its creditors, or (iv)
any court orders or approves the appointment of a receiver or custodian for the
Company or a substantial portion of its assets.
(b) Indemnification of Company, Directors and Officers and Selling
Shareholder. Each U.S. Underwriter severally agrees to indemnify and hold
harmless the Company, its directors, each of its officers who signed the
Registration Statement, and each person, if any, who controls the
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Company within the meaning of Section 15 of the 1933 Act or Section 20 of the
1934 Act, and the Selling Shareholder and each person, if any, who controls the
Selling Shareholder within the meaning of Section 15 of the 1933 Act or Section
20 of the 1934 Act against any and all loss, liability, claim, damage and
expense described in the indemnity contained in subsection (a) of this Section,
as incurred, but only with respect to untrue statements or omissions, or
alleged untrue statements or omissions, made in the Registration Statement (or
any amendment thereto), including the Rule 430A Information and the Rule 434
Information, if applicable, or any preliminary prospectus or the U.S.
Prospectus (or any amendment or supplement thereto) in reliance upon and in
conformity with written information furnished to the Company by such U.S.
Underwriter through ▇▇▇▇▇▇▇ ▇▇▇▇▇ expressly for use in the Registration
Statement (or any amendment thereto) or such preliminary prospectus or the U.S.
Prospectus (or any amendment or supplement thereto).
(c) Actions against Parties; Notification. Each indemnified party
shall give notice as promptly as reasonably practicable to each indemnifying
party of any action commenced against it in respect of which indemnity may be
sought hereunder, but failure to so notify an indemnifying party shall not
relieve such indemnifying party from any liability hereunder to the extent it
is not materially prejudiced as a result thereof and in any event shall not
relieve it from any liability which it may have otherwise than on account of
this indemnity agreement. An indemnifying party may participate at its own
expense in the defense of any such action; provided, however, that counsel to
the indemnifying party shall not (except with the consent of the indemnified
party) also be counsel to the indemnified party. In no event shall the
indemnifying parties be liable for fees and expenses of more than one counsel
(in addition to any local counsel) separate from their own counsel for all
indemnified parties in connection with any one action or separate but similar
or related actions in the same jurisdiction arising out of the same general
allegations or circumstances. No indemnifying party shall, without the prior
written consent of the indemnified parties, settle or compromise or consent to
the entry of any judgment with respect to any litigation, or any investigation
or proceeding by any governmental agency or body, commenced or threatened, or
any claim whatsoever in respect of which indemnification or contribution could
be sought under this Section 6 or Section 7 hereof (whether or not the
indemnified parties are actual or potential parties thereto), unless such
settlement, compromise or consent (i) includes an unconditional release of each
indemnified party from all liability arising out of such litigation,
investigation, proceeding or claim and (ii) does not include a statement as to
or an admission of fault, culpability or a failure to act by or on behalf of
any indemnified party.
(d) Settlement without Consent if Failure to Reimburse. If at any
time an indemnified party shall have requested an indemnifying party to
reimburse the indemnified party for fees and expenses of counsel, such
indemnifying party agrees that it shall be liable for any settlement of the
nature contemplated by Section 6(a)(ii) effected without its written consent if
(i) such settlement is entered into more than 45 days after receipt by such
indemnifying party of the aforesaid request, (ii) such indemnifying party shall
have received notice of the terms of such settlement at least 30 days prior to
such settlement being entered into and (iii) such indemnifying party shall not
have reimbursed such indemnified party in accordance with such request prior to
the date of such settlement.
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(e) Other Agreements with Respect to Indemnification. The
provisions of this Section shall not affect any agreement among the Company and
the Selling Shareholder with respect to indemnification.
SECTION 7. Contribution. If the indemnification provided for in
Section 6 hereof is for any reason unavailable to or insufficient to hold
harmless an indemnified party in respect of any losses, liabilities, claims,
damages or expenses referred to therein, then each indemnifying party shall
contribute to the aggregate amount of such losses, liabilities, claims, damages
and expenses incurred by such indemnified party, as incurred, (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company and the Selling Shareholder on the one hand and the U.S. Underwriters
on the other hand from the offering of the Securities pursuant to this
Agreement or (ii) if the allocation provided by clause (i) is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault
of the Company and the Selling Shareholder on the one hand and of the U.S.
Underwriters on the other hand in connection with the statements or omissions
which resulted in such losses, liabilities, claims, damages or expenses, as
well as any other relevant equitable considerations.
The relative benefits received by the Company and the Selling
Shareholder on the one hand and the U.S. Underwriters on the other hand in
connection with the offering of the Securities pursuant to this Agreement shall
be deemed to be in the same respective proportions as the total net proceeds
from the offering of the Securities pursuant to this Agreement (before
deducting expenses) received by the Company and the Selling Shareholder and the
total underwriting discount received by the U.S. Underwriters, in each case as
set forth on the cover of the U.S. Prospectus, or, if Rule 434 is used, the
corresponding location on the Term Sheet bear to the aggregate initial public
offering price of the U.S. Securities as set forth on such cover.
The relative fault of the Company and the Selling Shareholder
on the one hand and the U.S. Underwriters on the other hand shall be determined
by reference to, among other things, whether any such untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a
material fact relates to information supplied by the Company or the Selling
Shareholder or by the U.S. Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
The Company, the Selling Shareholder and the Underwriters
agree that it would not be just and equitable if contribution pursuant to this
Section 7 were determined by pro rata allocation (even if the U.S. Underwriters
were treated as one entity for such purpose) or by any other method of
allocation which does not take account of the equitable considerations referred
to above in this Section 7. The aggregate amount of losses, liabilities,
claims, damages and expenses incurred by an indemnified party and referred to
above in this Section 7 shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in investigating, preparing or
defending against any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim whatsoever
based upon any such untrue or alleged untrue statement or omission or alleged
omission.
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Notwithstanding the provisions of this Section 7, no U.S.
Underwriter shall be required to contribute any amount in excess of the amount
by which the total price at which the U.S. Securities underwritten by it and
distributed to the public were offered to the public exceeds the amount of any
damages which such U.S. Underwriter has otherwise been required to pay by
reason of any such untrue or alleged untrue statement or omission or alleged
omission.
No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the ▇▇▇▇ ▇▇▇) shall be entitled to contribution
from any person who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who
controls a U.S. Underwriter within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act shall have the same rights to contribution as such
U.S. Underwriter, and each director of the Company, each officer of the Company
who signed the Registration Statement, and each person, if any, who controls
the Company or the Selling Shareholder within the meaning of Section 15 of the
1933 Act or Section 20 of the 1934 Act shall have the same rights to
contribution as the Company or the Selling Shareholder, as the case may be.
The U.S. Underwriters' respective obligations to contribute pursuant to this
Section 7 are several in proportion to the number of Initial U.S. Securities
set forth opposite their respective names in Schedule A hereto and not joint.
The provisions of this Section shall not affect any agreement
among the Company and the Selling Shareholder with respect to contribution.
SECTION 8. Representations, Warranties and Agreements to Survive
Delivery. All representations, warranties and agreements contained in this
Agreement or in certificates of officers of the Company or any of its
subsidiaries or the Selling Shareholder submitted pursuant hereto, shall remain
operative and in full force and effect, regardless of any investigation made by
or on behalf of any U.S. Underwriter or controlling person, or by or on behalf
of the Company or the Selling Shareholder, and shall survive delivery of the
U.S. Securities to the U.S. Underwriters.
SECTION 9. Termination of Agreement.
(a) Termination; General. The U.S. Representatives may terminate
this Agreement, by notice to the Company and the Selling Shareholder, at any
time at or prior to Closing Time (i) if there has been, since the time of
execution of this Agreement or since the respective dates as of which
information is given in the Prospectus, any material adverse change in the
condition, financial or otherwise, or in the earnings, business affairs or
business prospects of the Company and its subsidiaries considered as one
enterprise, whether or not arising in the ordinary course of business, or (ii)
if there has occurred any material adverse change in the financial markets in
the United States or the international financial markets, any outbreak of
hostilities or escalation thereof or other calamity or crisis or any change or
development involving a prospective change in national or international
political, financial or economic conditions, in each case the effect of which
is such as to make it, in the judgment of the U.S. Representatives,
impracticable to market the U.S. Securities or to enforce contracts for the
sale of the U.S. Securities, or (iii) if trading in any securities of the
Company has been suspended or materially limited by the Commission or the New
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York Stock Exchange, or if trading generally on the American Stock Exchange or
the New York Stock Exchange or in the Nasdaq National Market has been suspended
or materially limited, or minimum or maximum prices for trading have been
fixed, or maximum ranges for prices have been required, by any of said
exchanges or by such system or by order of the Commission, the National
Association of Securities Dealers, Inc. or any other governmental authority, or
(iv) if a banking moratorium has been declared by either Federal or New York
authorities.
(b) Liabilities. If this Agreement is terminated pursuant to this
Section, such termination shall be without liability of any party to any other
party except as provided in Section 4 hereof, and provided further that
Sections 1, 6, 7 and 8 shall survive such termination and remain in full force
and effect.
SECTION 10. Default by One or More of the U.S. Underwriters. If
one or more of the U.S. Underwriters fail at Closing Time or a Date of Delivery
to purchase the Securities which it or they are obligated to purchase under
this Agreement (the "Defaulted Securities"), the U.S. Representatives shall
have the right, within 24 hours thereafter, to make arrangements for one or
more of the non-defaulting U.S. Underwriters, or any other underwriters, to
purchase all, but not less than all, of the Defaulted Securities in such
amounts as may be agreed upon and upon the terms herein set forth; if, however,
the U.S. Representatives shall not have completed such arrangements within such
24-hour period, then:
(a) if the number of Defaulted Securities does not exceed 10% of
the number of U.S. Securities to be purchased on such date, each of the
non-defaulting U.S. Underwriters shall be obligated, severally and not jointly,
to purchase the full amount thereof in the proportions that their respective
underwriting obligations hereunder bear to the underwriting obligations of all
non-defaulting U.S. Underwriters, or
(b) if the number of Defaulted Securities exceeds 10% of the
number of U.S. Securities to be purchased on such date, this Agreement or, with
respect to any Date of Delivery which occurs after the Closing Time, the
obligation of the U.S. Underwriters to purchase and of the Company to sell the
U.S. Option Securities to be purchased and sold on such Date of Delivery shall
terminate without liability on the part of any non-defaulting U.S. Underwriter.
No action taken pursuant to this Section shall relieve any
defaulting U.S. Underwriter from liability in respect of its default.
In the event of any such default which does not result in a
termination of this Agreement or, in the case of a Date of Delivery which is
after the Closing Time, which does not result in a termination of the
obligation of the U.S. Underwriters to purchase and the Company to sell the
relevant U.S. Option Securities, as the case may be, either (i) the U.S.
Representatives or (ii) the Company and the Selling Shareholder shall have the
right to postpone Closing Time or the relevant Date of Delivery, as the case
may be, for a period not exceeding seven days in order to effect any required
changes in the Registration Statement or Prospectuses or in any other documents
or arrangements. As used herein, the term "U.S. Underwriter" includes any
person substituted for a U.S. Underwriter under this Section 10.
28
30
SECTION 11. Default by the Selling Shareholder. If the Selling
Shareholder shall fail at Closing Time or at a Date of Delivery to sell and
deliver the number of U.S. Securities which the Selling Shareholder is
obligated to sell hereunder, then the U.S. Underwriters may, at option of the
U.S. Representatives, by notice from the U.S. Representatives to the Company
and the Selling Shareholder, terminate this Agreement without any liability on
the fault of any non-defaulting party except that the provisions of Sections 1,
4, 6, 7 and 8 shall remain in full force and effect. No action taken pursuant
to this Section 11 shall relieve the Selling Shareholder so defaulting from
liability, if any, in respect of such default.
In the event of a default by the Selling Shareholder as
referred to in this Section 11, each of the U.S. Representatives and the
Company shall have the right to postpone Closing Time or Date of Delivery for a
period not exceeding seven days in order to effect any required change in the
Registration Statement or Prospectus or in any other documents or arrangements.
SECTION 12. Notices. All notices and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
mailed or transmitted by any standard form of telecommunication. Notices to
the U.S. Underwriters shall be directed to the U.S. Representatives at ▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ / ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, attention of ____________
(with a copy, which shall not constitute notice, to ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, ▇▇▇ ▇.
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, attention of ▇▇▇▇
▇▇▇▇▇, Esq.); notices to the Company shall be directed to it at ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, attention of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.,
General Counsel (with a copy, which shall not constitute notice, to ▇▇▇▇▇▇▇,
Phleger & ▇▇▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, attention of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.); and notices to the
Selling Shareholder shall be directed to California HealthCare Foundation, c/o
Munger, ▇▇▇▇▇▇ & ▇▇▇▇▇, ▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, attention of ▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
SECTION 13. Parties. This Agreement shall each inure to the
benefit of and be binding upon the U.S. Underwriters, the Company and the
Selling Shareholder and their respective successors. Nothing expressed or
mentioned in this Agreement is intended or shall be construed to give any
person, firm or corporation, other than the U.S. Underwriters, the Company and
the Selling Shareholder and their respective successors and the controlling
persons and officers and directors referred to in Sections 6 and 7 and their
heirs and legal representatives, any legal or equitable right, remedy or claim
under or in respect of this Agreement or any provision herein contained. This
Agreement and all conditions and provisions hereof are intended to be for the
sole and exclusive benefit of the U.S. Underwriters, the Company and the
Selling Shareholder and their respective successors, and said controlling
persons and officers and directors and their heirs and legal representatives,
and for the benefit of no other person, firm or corporation. No purchaser of
Securities from any U.S. Underwriter shall be deemed to be a successor by
reason merely of such purchase.
SECTION 14. Governing Law and Time. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
29
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STATE OF NEW YORK. SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME, EXCEPT
AS EXPRESSLY NOTED OTHERWISE.
SECTION 15. Effect of Headings. The Article and Section
headings herein and the Table of Contents are for convenience only and shall
not affect the construction hereof.
30
32
If the foregoing is in accordance with your understanding of
our agreement, please sign and return to the Company and to the Selling
Shareholder a counterpart hereof, whereupon this instrument, along with all
counterparts, will become a binding agreement among the U.S. Underwriters, the
Company and the Selling Shareholder in accordance with its terms.
Very truly yours,
WELLPOINT HEALTH NETWORKS INC.
By ___________________________________
Title:
CALIFORNIA HEALTHCARE FOUNDATION
By ___________________________________
Acting Chief Executive Officer
CONFIRMED AND ACCEPTED,
as of the date first above written:
▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO.
▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ & ▇▇▇▇▇
INCORPORATED
SALOMON BROTHERS INC
BEAR, ▇▇▇▇▇▇▇ & CO. INC.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ INC.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & CO. INCORPORATED
By: ▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ & ▇▇▇▇▇
INCORPORATED
By _________________________________________
Authorized Signatory
For themselves and as U.S. Representatives of the other U.S. Underwriters named
in Schedule A hereto.
31
33
SCHEDULE A
Name of Underwriter Number of
------------------- Initial
U.S. Securities
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ ---------------
Incorporated
Salomon Brothers Inc
Bear, ▇▇▇▇▇▇▇ & Co. Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Inc.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
__________
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,400,000
==========
Sch A-1
34
SCHEDULE B
WELLPOINT HEALTH NETWORKS INC.
10,400,000 Shares of Common Stock
(Par Value $.01 Per Share)
1. The public offering price per share for the U.S. Securities,
determined as provided in said Section 2, shall be $_______.
2. The purchase price per share for the U.S. Securities to be paid by
the several U.S. Underwriters shall be $______, being an amount equal to the
public offering price set forth above less $______ per share; provided that the
purchase price per share for any U.S. Option Securities purchased upon the
exercise of the over-allotment option described in Section 2(b) shall be reduced
by an amount per share equal to any dividends or distributions declared by the
Company and payable on the Initial U.S. Securities but not payable on the U.S.
Option Securities.
Sch B-1
35
SCHEDULE C
List of subsidiaries
1. CaliforniaCare Health Plans
2. WellPoint Life Insurance Company
3. WellPoint Pharmacy Plan
4. WellPoint Dental Plan
5. UNICARE Insurance Company
6. UNICARE Life & Health Insurance Company
7. AHI Corporation
8. Affiliated Healthcare
9. UNICARE Health Plans of Texas
Sch C-1
36
SCHEDULE D
List of persons and entities
subject to lock-up
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
D. ▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. Phansteil
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Sch D-1
37
Exhibit A
FORM OF OPINION OF COMPANY'S COUNSEL
TO BE DELIVERED PURSUANT TO
SECTION 5(b)
(i) The Company and each of its Subsidiaries (a) has been
duly organized and (b) is validly existing as a corporation in good standing
under the laws of its jurisdiction of incorporation.
(ii) The Company and each of its Subsidiaries has
corporate power and authority to own, lease and operate its properties and to
conduct its business as described in the Registration Statement.
(iii) The Company and each of its Subsidiaries, other than
UNICARE Insurance Company and UNICARE Life & Health Insurance Company, is duly
qualified as a foreign corporation to transact business and is in good standing
in each jurisdiction in which such qualification is required, except where the
failure to so qualify would not have a Material Adverse Effect, and each of
UNICARE Insurance Company and UNICARE Life & Health Insurance Company is duly
qualified as a foreign corporation to transact business and is in good standing
in California, Delaware, Florida, Georgia, Illinois, Massachusetts, New Jersey,
New York, Ohio, Texas and Virginia.
(iv) The authorized, issued and outstanding capital stock
of the Company is as set forth in the Prospectuses under the caption
"Capitalization"; all of the shares of issued and outstanding capital stock of
the Company, including the Securities to be purchased by the Underwriters from
the Selling Shareholder, have been duly authorized and validly issued and are
fully paid and nonassessable and the shares of issued and outstanding capital
stock of each subsidiary of the Company are owned, directly or through
subsidiaries, by the Company and have been duly authorized and validly issued,
are fully paid and nonassessable and are owned free and clear of any security
interest, mortgage, pledge, lien, encumbrance, claim or equity.
(v) The U.S. Purchase Agreement and the International
Purchase Agreement have been duly authorized, executed and delivered by the
Company.
(vi) The Registration Statement, including any Rule 462(b)
Registration Statement, has been declared effective under the 1933 Act; any
required filing of the Prospectuses pursuant to Rule 424(b) has been made in
the manner and within the time period required by Rule 424(b); and, to the best
of our knowledge, no stop order suspending the effectiveness of the
Registration Statement or any Rule 462(b) Registration Statement has been
issued under the 1933 Act and no proceedings for that purpose have been
instituted or are pending or threatened by the Commission.
A-1
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(vii) The Registration Statement, including any Rule 462(b)
Registration Statement, the Rule 430A Information and the Rule 434 Information,
as applicable, the Prospectuses, excluding the documents incorporated by
reference therein, and each amendment or supplement to the Registration
Statement and Prospectuses, excluding the documents incorporated by reference
therein, as of their respective effective or issue dates (other than the
financial statements and supporting schedules included therein or omitted
therefrom, as to which we need express no opinion) complied as to form in all
material respects with the requirements of the 1933 Act and the 1933 Act
Regulations.
(viii) The documents incorporated by reference in the
Prospectuses (other than the financial statements and supporting schedules
included therein or omitted therefrom, as to which we need express no opinion),
when they were filed with the Commission, complied as to form in all material
respects with the requirements of the 1934 Act and the rules and regulations of
the Commission thereunder.
(ix) The capital stock of the Company conforms in all
material respects to the description thereof contained in the Prospectuses
under the caption "Description of Capital Stock," and the form of certificate
used to evidence the Common Stock is in due and proper form and complies in all
material respects with all applicable statutory requirements and the
requirements of the New York Stock Exchange.
(x) There are no statutes or regulations and there are no
legal or governmental proceedings pending or, to the knowledge of such counsel,
threatened that are required to be disclosed in the Registration Statement,
other than those disclosed therein and described as required, and all pending
legal or governmental proceedings to which the Company or any of its
subsidiaries is a party or to which any of their property is subject which are
not described in the Registration Statement, including ordinary routine
litigation incidental to the business, are, considered in the aggregate, not
material.
(xi) To the knowledge of such counsel, there are no
contracts, indentures, mortgages, loan agreements, notes, leases or other
instruments required to be filed as exhibits to the Registration Statement
which have not been so filed.
(xii) The information in the Prospectuses under the
captions "Business Government Regulation," "BusinessRelationship with the
Foundation," "Shares Eligible for Future Sale" and "Certain United States Tax
Consequences to Non-United States Holders," to the extent that it constitutes
matters of law, summaries of legal matters, documents or proceedings or legal
conclusions, has been reviewed by such counsel and is correct in all material
respects.
(xiii) No authorization, approval, consent or order of any
court or governmental authority or agency is required in connection with the
sale to the Underwriters of the Securities, except such as may be required
under the 1933 Act, the 1934 Act or the respective rules and regulations of the
Commission thereunder or state or foreign securities laws; and the execution,
delivery and performance of the U.S. Purchase Agreement and the International
Purchase Agreement, and the consummation of the transactions contemplated
thereby by the Company,
A-2
39
will not conflict with or constitute a material breach of or material default,
or cause an acceleration of any obligation under, or result in the creation or
imposition of any lien, charge or encumbrance upon any property or assets of
the Company or any of its subsidiaries pursuant to, any instrument included as
an exhibit to the Registration Statement to which the Company or any of its
subsidiaries is a party or by which any of them may be bound, or to which any
of the property or assets of the Company or any of its subsidiaries is subject,
nor will such action result in any violation of the provisions of the charter
or by-laws of the Company or any of its subsidiaries, or any applicable law,
administrative regulation or administrative or court decree.
(xiv) Neither the Company nor any of its Subsidiaries is
(a) in violation of its charter or bylaws; or (b) in violation of or in default
in the performance or observance of any obligation, agreement, covenant or
condition contained in any material contract, indenture, mortgage, loan
agreement, note, lease or other instrument included as an exhibit to the
Registration Statement to which the Company or any of its Subsidiaries is a
party or by which any of them may be bound, or to which any of the property or
assets of the Company or any of its Subsidiaries is subject, or any applicable
law, administrative regulation or administrative or court order or decree,
which violation or default would have a Material Adverse Effect on the Company
and its subsidiaries considered as one enterprise, as the case may be. The
applicable law, administrative regulations and administrative and court orders
and decrees referred to in clause (b) above are those that a lawyer exercising
customary professional diligence would reasonably recognize as being directly
applicable to the Company, the Subsidiaries or the transaction contemplated by
the U.S. Purchase Agreement and the International Purchase Agreement.
(xv) To the best of such counsel's knowledge, the Company
and its Subsidiaries possess such certificates necessary to conduct the
business now operated by them.
(xvi) The Company is not an "investment company" or an
entity "controlled" by an "investment company," as such terms are defined in
the 1940 Act.
Nothing has come to our attention that would lead us to
believe that the Registration Statement or any amendment thereto, including the
Rule 430A Information and Rule 434 Information (if applicable), (except for
financial statements and schedules and other financial data included or
incorporated by reference therein or omitted therefrom, as to which we need
make no statement), at the time such Registration Statement or any such
amendment became effective, contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein not misleading or that the Prospectuses or any
amendment or supplement thereto (except for financial statements and schedules
and other financial data included or incorporated by reference therein or
omitted therefrom, as to which we need make no statement), at the time the
Prospectuses were issued, at the time any such amended or supplemented
prospectuses were issued or at the Closing Time, included or include an untrue
statement of a material fact or omitted or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
A-3
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In rendering such opinion, such counsel may rely, as to
matters of fact (but not as to legal conclusions), to the extent they deem
proper, on certificates of responsible officers of the Company and public
officials. Such opinion shall not state that it is to be governed or qualified
by, or that it is otherwise subject to, any treatise, written policy or other
document relating to legal opinions, including, without limitation, the Legal
Opinion Accord of the ABA Section of Business Law (1991).
A-4
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Exhibit B
FORM OF OPINION OF GENERAL COUNSEL TO THE COMPANY TO BE
DELIVERED PURSUANT TO SECTION 5(c)
(i) The statements in "Business - Government Regulation" and in
"Business - Legal Proceedings" of the Prospectuses insofar as such statements
constitute summaries of the legal matters, documents or proceedings referred to
therein, fairly present the information called for with respect to such legal
matters, documents and proceedings and fairly summarize, in all material
respects, the matters referred to therein.
(ii) The Company, CaliforniaCare Health Plans, WellPoint
Dental Plan and WellPoint Pharmacy Plan each has been duly qualified and
licensed in the State of California as health care service plans under the
▇▇▇▇-▇▇▇▇▇ Act, and none of the Company's other subsidiaries are required to be
licensed under the ▇▇▇▇-▇▇▇▇▇ Act.
(iii) The Company is in full compliance with the requirements
of the Blue Cross License Agreement, dated as of May 20, 1996, between the
Company and the Blue Cross and Blue Shield Association (the "BCBSA") and the
California Blue Cross License Addendum, dated as of May 17, 1996, between the
Company and the BCBSA, except in each case where such noncompliance would not
have a Material Adverse Effect. Each of the Company's subsidiaries that is
required by the BCBSA as of the date of such opinion to be a party to a Blue
Cross Affiliate License Agreement is in full compliance with the requirements
of such agreement, except in each case where such noncompliance would not have
a Material Adverse Effect.
(iv) To such counsel's knowledge, none of the Company and its
subsidiaries have received any notice or correspondence (i) relating to the
loss or threatened loss by the Company or any of its subsidiaries of any
material permit, license, franchise or authorization by any applicable managed
health care or insurance regulatory agency or body or (ii) asserting that the
Company or any of its subsidiaries is not in substantial compliance with any
applicable regulation relating to the operation or conduct of managed health
care or insurance businesses (the "HMO Regulations") or threatening the taking
of any action against the Company or any of its subsidiaries under any HMO
Regulation, except where such noncompliance or the taking of such action, if
adversely determined, would not have a material adverse effect on the business,
operations or financial condition of the Company and its subsidiaries, taken as
a whole.
B-1
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Exhibit C
FORM OF OPINION OF COUNSEL FOR THE SELLING SHAREHOLDER
TO BE DELIVERED PURSUANT TO SECTION 5(d)
(i) No filing with, or consent, approval, authorization, license, order,
registration, qualification or decree of, any court or governmental authority
or agency, domestic or foreign (other than the issuance of the order of the
Commission declaring the Registration Statement effective and such
authorizations, approvals or consents as may be necessary under state
securities laws, as to which we need express no opinion), is necessary or
required to be obtained by the Selling Shareholder for the performance by the
Selling Shareholder of its obligations under the U.S. Purchase Agreement, the
International Purchase Agreement or in connection with the offer, sale or
delivery of the Securities.
(ii) The U.S. Purchase Agreement and the International Purchase Agreement
have been duly authorized, executed and delivered by or on behalf of the
Selling Shareholder.
(iii) The execution, delivery and performance of the U.S. Purchase
Agreement, the International Purchase Agreement and the sale and delivery of
the Securities and the consummation of the transactions contemplated in the
U.S. Purchase Agreement and the International Purchase Agreement and compliance
by the Selling Shareholder with its obligations under the U.S. Purchase
Agreement and the International Purchase Agreement have been duly authorized by
all necessary action on the part of the Selling Shareholder and do not and will
not, whether with or without the giving of notice or passage of time or both,
conflict with or constitute a breach of, or default under or result in the
creation or imposition of any tax, lien, charge or encumbrance upon the
Securities pursuant to, any contract, indenture, mortgage, deed of trust, loan
or credit agreement, note, license, lease or other instrument or agreement
known to us to which the Selling Shareholder is a party or by which it may be
bound, or to which any of the property or assets of the Selling Shareholder may
be subject nor will such action result in any violation of the provisions of the
charter or by-laws of the Selling Shareholder, if applicable, or any law,
administrative regulation, judgment or order of any governmental agency or body
or any administrative or court decree having jurisdiction over the Selling
Shareholder or any of its properties.
(iv) To the best of our knowledge, the Selling Shareholder has valid
and marketable title to the Securities to be sold by the Selling
Shareholder pursuant to the U.S. Purchase Agreement and the International
Purchase Agreement, free and clear of any pledge, lien, security interest,
charge, claim, equity or encumbrance of any kind, other than as disclosed
in the Registration Statement, and has full right, power and authority to
sell, transfer and deliver such Securities pursuant to the U.S. Purchase
Agreement and the International Purchase Agreement. By delivery of a
certificate or certificates therefor the Selling Shareholder will transfer
to the Underwriters who have purchased such Securities pursuant to the
U.S. Purchase Agreement and the International Purchase Agreement (without
notice of any defect in the title of the Selling Shareholder and who are
otherwise bona fide purchasers for purposes of the Uniform Commercial
Code) valid and marketable title to such Securities, free and clear of any
pledge, lien, security interest, charge, claim, equity or encumbrance of
any kind.
C-1
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[FORM OF LOCK-UP FROM DIRECTORS, OFFICERS OR OTHER STOCKHOLDERS PURSUANT TO
SECTION 5(l)]
Exhibit D-1
_______________, 1996
▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
SALOMON BROTHERS INC
BEAR, ▇▇▇▇▇▇▇ & CO. INC.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ INC.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & CO. INCORPORATED
as Representatives of the several Underwriters
▇/▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Re: Proposed Public Offering by WellPoint Health Networks Inc.
----------------------------------------------------------
Dear Sirs:
The undersigned, a shareholder and an officer and/or director of WellPoint
Health Networks Inc., a California corporation (the "Company"), understands
that ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated
("▇▇▇▇▇▇▇ ▇▇▇▇▇"), ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Inc, Bear, ▇▇▇▇▇▇▇ & Co. Inc., ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ Inc. and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated propose(s) to enter into a
U.S. Purchase Agreement (the "U.S. Purchase Agreement") with the Company and
the Selling Shareholder providing for the public offering of shares (the
"Securities") of the Company's common stock, par value $.01 per share (the
"Common Stock"). In recognition of the benefit that such an offering will
confer upon the undersigned as a shareholder and an officer and/or director of
the Company, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the undersigned agrees with each
underwriter to be named in the U.S. Purchase Agreement that, during a period of
180 days from the date of the Purchase Agreement provided that such person
continues to be an officer of the Company during such period, the undersigned
will not, without the prior written consent of ▇▇▇▇▇▇▇ ▇▇▇▇▇, directly or
indirectly, (i) offer, pledge, sell, contract to sell, sell any option or
contract to purchase, purchase any option or contract to sell, grant any
option, right or warrant for the sale of, or otherwise dispose of or transfer
any shares of the Company's Common Stock or any securities convertible into or
exchangeable or exercisable for Common Stock, whether now owned or hereafter
acquired by the undersigned or with respect to which the undersigned has or
hereafter acquires the power of disposition, or file any registration statement
under the Securities Act of 1933, as amended, with respect to any of the
foregoing or (ii) enter into any swap or any other agreement or any transaction
D-1-1
44
that transfers, in whole or in part, directly or indirectly, the economic
consequence of ownership of the Common Stock, whether any such swap or
transaction is to be settled by delivery of Common Stock or other securities, in
cash or otherwise.
Notwithstanding the provisions of the preceding sentence, the undersigned
shall be permitted to sell, transfer or otherwise dispose of shares of Common
Stock to: (1) the undersigned's spouse, children, spouses of children, siblings
and spouses of siblings, provided that any such transferee shall have agreed in
writing to be subject to the terms of this letter; and (2) any trust or
charitable foundation established by the undersigned and/or one or more of the
persons listed in the foregoing clause (1), provided that any such trust or
charitable foundation and their respective beneficiaries shall have agreed in
writing to be subject to the terms of this letter.
Very truly yours,
Signature:___________________________________
Print Name:__________________________________
D-1-2
45
[FORM OF LOCK-UP FROM DIRECTORS, OFFICERS OR OTHER STOCKHOLDERS PURSUANT TO
SECTION 5(l)]
Exhibit D-2
_______________, 1996
▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
SALOMON BROTHERS INC
BEAR, ▇▇▇▇▇▇▇ & CO. INC.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ INC.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & CO. INCORPORATED
as Representatives of the several Underwriters
▇/▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Re: Proposed Public Offering by WellPoint Health Networks Inc.
----------------------------------------------------------
Dear Sirs:
The undersigned, a shareholder and an officer and/or director of WellPoint
Health Networks Inc., a California corporation (the "Company"), understands
that ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated
("▇▇▇▇▇▇▇ ▇▇▇▇▇"), ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Inc, Bear, ▇▇▇▇▇▇▇ & Co. Inc., ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ Inc. and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated propose(s) to enter into a
U.S. Purchase Agreement (the "U.S. Purchase Agreement") with the Company and
the Selling Shareholder providing for the public offering of shares (the
"Securities") of the Company's common stock, par value $.01 per share (the
"Common Stock"). In recognition of the benefit that such an offering will
confer upon the undersigned as a shareholder and an officer and/or director of
the Company, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the undersigned agrees with each
underwriter to be named in the Purchase Agreement that, during a period of 90
days from the date of the Purchase Agreement provided that such person
continues to be an officer of the Company during such period, the undersigned
will not, without the prior written consent of ▇▇▇▇▇▇▇ ▇▇▇▇▇, directly or
indirectly, (i) offer, pledge, sell, contract to sell, sell any option or
contract to purchase, purchase any option or contract to sell, grant any
option, right or warrant for the sale of, or otherwise dispose of or transfer
any shares of the Company's Common Stock or any securities convertible into or
exchangeable or exercisable for Common Stock, whether now owned or hereafter
acquired by the undersigned or with respect to which the undersigned has or
hereafter acquires the power of disposition, or file any registration statement
under the Securities Act of 1933, as amended, with respect to any of the
foregoing or (ii) enter into any swap or any other agreement or any transaction
that transfers, in
D-2-1
46
whole or in part, directly or indirectly, the economic consequence of ownership
of the Common Stock, whether any such swap or transaction is to be settled by
delivery of Common Stock or other securities, in cash or otherwise.
Notwithstanding the provisions of the preceding sentence, the undersigned
shall be permitted to sell, transfer or otherwise dispose of shares of Common
Stock to: (1) the undersigned's spouse, children, spouses of children, siblings
and spouses of siblings, provided that any such transferee shall have agreed in
writing to be subject to the terms of this letter; and (2) any trust or
charitable foundation established by the undersigned and/or one or more of the
persons listed in the foregoing clause (1), provided that any such trust or
charitable foundation and their respective beneficiaries shall have agreed in
writing to be subject to the terms of this letter.
Very truly yours,
Signature:__________________________________
Print Name:_________________________________
D-2-2