EXHIBIT 1.1
13,861,053
WELLCHOICE, INC.
Common Stock
FORM OF UNDERWRITING AGREEMENT
------------------------------
_________, 2002
CREDIT SUISSE FIRST BOSTON CORPORATION
UBS WARBURG LLC
BEAR, ▇▇▇▇▇▇▇ & CO. INC.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & CO. INCORPORATED
▇▇▇▇▇▇▇, SACHS & CO.
▇.▇. ▇▇▇▇▇▇ SECURITIES INC.
▇▇▇▇▇▇▇ ▇▇▇▇▇ BARNEY INC.
▇▇▇▇▇▇▇▇ & PARTNERS, L.P.
THE ▇▇▇▇▇▇▇▇ CAPITAL GROUP, L.P.,
As Representatives of the Several Underwriters,
c/o Credit Suisse First Boston Corporation,
Eleven Madison Avenue,
New York, N.Y. 10010-3629
Dear Sirs:
1. Introductory. The stockholders listed in Schedule A hereto ("Selling
Stockholders") propose to sell an aggregate of 13,861,053 outstanding shares of
Common Stock, par value $0.01 per share ("Securities"), of WellChoice, Inc., a
Delaware corporation ("Company") (such 13,861,053 shares of Securities being
hereinafter referred to as the "Firm Securities"). The Company also proposes to
issue and sell to the Underwriters (as defined herein), at the option of the
Underwriters, an aggregate of not more than 1,190,477 additional shares of its
Securities and the Selling Stockholders also propose to sell to the
Underwriters, at the option of the Underwriters, an aggregate of not more than
888,681 additional shares of the Company's Securities, as set forth below (such
2,079,158 additional shares being hereinafter referred to collectively as the
"Optional Securities"). The Firm Securities and the Optional Securities are
herein collectively called the "Offered Securities." The Company and the Selling
Stockholders hereby agree with the several Underwriters named in Schedule B
hereto ("Underwriters") as follows:
The initial public offering of the Offered Securities is being made in
connection with the conversion of Empire HealthChoice, Inc. (d/b/a Empire Blue
Cross and Blue Shield) ("HealthChoice"), a New York not-for-profit health
services corporation, to a for-profit accident and health insurance company
under the New York insurance laws pursuant to HealthChoice's Amended Plan of
Conversion, dated June 18, 2002, and, after public hearings held in New York
City and Albany on August 6 and 7, 2002, respectively, as subsequently amended
on September 26, 2002 (the "Plan of Conversion"), as approved by the
Superintendent ("Superintendent") of the New York State Department of Insurance
on October 8, 2002. Upon consummation of the Plan of Conversion, in a series of
substantially simultaneous transactions taking place on the date hereof
immediately prior to the execution and delivery of this Agreement (A)
HealthChoice converted to a for-profit insurance company licensed under Article
42 of the New York Insurance Law; (B) the newly converted HealthChoice issued
95% of the shares of its common stock to The New York Public Asset Fund" (the
"Fund") established by Chapter One of the New York Laws of 2002, specifically
Section 4301(j) and Section 7317 of the New York Insurance Law (the "Conversion
Legislation") and 5% of the shares of its common stock to The New York
Charitable Asset Foundation (the
"Foundation"), a New York not-for profit corporation established pursuant to the
Conversion Legislation for the charitable purpose of receiving the "charitable
asset;" (C) the Fund and the Foundation exchanged such shares of HealthChoice
for the Securities; and (D) HealthChoice merged with Empire HealthChoice
Assurance, Inc. (HealthChoice's indirect, wholly owned, New York-licensed
for-profit accident and health insurance subsidiary prior to the conversion),
which merged entity survived as a subsidiary of the Company under the name
"Empire HealthChoice Assurance, Inc." The series of transactions described above
are hereinafter referred to collectively as the "Conversion." As a result of the
Conversion, prior to the public offering contemplated hereby, the Fund and the
Foundation owned all of the Company's capital stock and the Company is the
parent holding company for HealthChoice and all of its subsidiaries.
2. Representations and Warranties of the Company and the Selling
Stockholders. (a) Each of the Company and HealthChoice, jointly and severally,
represents and warrants to, and agrees with, the several Underwriters that:
(i) A registration statement filed on Form S-1 (No. 333-99051)
relating to the Offered Securities, including a form of prospectus, was
initially filed with the Securities and Exchange Commission
("Commission") on August 30, 2002 and either (A) has been declared
effective under the Securities Act of 1933, as amended ("Act") and is
not proposed to be amended or (B) is proposed to be amended by
amendment or post-effective amendment. If such registration statement
(the "initial registration statement") has been declared effective,
either (A) an additional registration statement (the "additional
registration statement") relating to the Offered Securities may have
been filed with the Commission pursuant to Rule 462(b) ("Rule 462(b)")
under the Act and, if so filed, has become effective upon filing
pursuant to such Rule and the Offered Securities all have been duly
registered under the Act pursuant to the initial registration statement
and, if applicable, the additional registration statement or (B) such
an additional registration statement is proposed to be filed with the
Commission pursuant to Rule 462(b) and will become effective upon
filing pursuant to such Rule and upon such filing the Offered
Securities will all have been duly registered under the Act pursuant to
the initial registration statement and such additional registration
statement. If the Company does not propose to amend the initial
registration statement or if an additional registration statement has
been filed and the Company does not propose to amend it, and if any
post-effective amendment to either such registration statement has been
filed with the Commission prior to the execution and delivery of this
Agreement, the most recent amendment (if any) to each such registration
statement has been declared effective by the Commission or has become
effective upon filing pursuant to Rule 462(c) ("Rule 462(c)") under the
Act or, in the case of the additional registration statement, Rule
462(b). For purposes of this Agreement, "Effective Time" with respect
to the initial registration statement or, if filed prior to the
execution and delivery of this Agreement, the additional registration
statement means (A) if the Company has advised the Representatives that
it does not propose to amend such registration statement, the date and
time as of which such registration statement, or the most recent
post-effective amendment thereto (if any) filed prior to the execution
and delivery of this Agreement, was declared effective by the
Commission or has become effective upon filing pursuant to Rule 462(c),
or (B) if the Company has advised the Representatives that it proposes
to file an amendment or post-effective amendment to such registration
statement, the date and time as of which such registration statement,
as amended by such amendment or post-effective amendment, as the case
may be, is declared effective by the Commission. If an additional
registration statement has not been filed prior to the execution and
delivery of this Agreement but the Company has advised the
Representatives that it proposes to file one, "Effective Time" with
respect to such additional registration statement means the date and
time as of which such registration statement is filed and becomes
effective pursuant to Rule 462(b). "Effective Date" with respect to the
initial registration statement or the additional registration statement
(if any) means the date of the Effective Time thereof. The initial
registration statement, as amended at its Effective Time, including all
information contained in the additional registration statement (if any)
and deemed to be a part of the initial registration statement as of the
Effective Time of the additional registration statement pursuant to the
General Instructions of the Form on which it is filed and including all
information (if any) deemed to be a part of the initial registration
statement as of its Effective Time pursuant to Rule 430A(b) ("Rule
430A(b)") under the Act, is hereinafter referred to as the "Initial
Registration Statement." The additional registration statement, as
amended at its Effective Time, including the contents of the initial
registration statement incorporated by reference therein and including
all information (if any) deemed to be a part of the additional
registration statement as of its Effective Time pursuant to Rule
430A(b), is hereinafter referred
2
to as the "Additional Registration Statement." The Initial Registration
Statement and the Additional Registration are hereinafter referred to
collectively as the "Registration Statements" and individually as a
"Registration Statement." The form of prospectus relating to the
Offered Securities, as first filed with the Commission pursuant to and
in accordance with Rule 424(b) ("Rule 424(b)") under the Act or (if no
such filing is required) as included in a Registration Statement, is
hereinafter referred to as the "Prospectus." No document has been or
will be prepared or distributed in reliance on Rule 434 under the Act.
(ii) If the Effective Time of the Initial Registration
Statement is prior to the execution and delivery of this Agreement: (A)
on the Effective Date of the Initial Registration Statement, the
Initial Registration Statement conformed in all material respects to
the requirements of the Act and the rules and regulations of the
Commission ("Rules and Regulations") and did not include any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading, (B) on the Effective Date of the Additional
Registration Statement (if any), each Registration Statement conformed
or will conform, in all material respects to the requirements of the
Act and the Rules and Regulations and did not include, or will not
include, any untrue statement of a material fact and did not omit, or
will not omit, to state any material fact required to be stated therein
or necessary to make the statements therein not misleading, and (C) on
the date of this Agreement, the Initial Registration Statement and, if
the Effective Time of the Additional Registration Statement is prior to
the execution and delivery of this Agreement, the Additional
Registration Statement each conforms, and at the time of filing of the
Prospectus pursuant to Rule 424(b) or (if no such filing is required)
at the Effective Date of the Additional Registration Statement in which
the Prospectus is included, each Registration Statement and the
Prospectus will conform, in all material respects to the requirements
of the Act and the Rules and Regulations, and none of such documents
includes, or will include, any untrue statement of a material fact or
omits, or will omit, to state any material fact required to be stated
therein or necessary to make the statements therein not misleading. If
the Effective Time of the Initial Registration Statement is subsequent
to the execution and delivery of this Agreement: on the Effective Date
of the Initial Registration Statement, the Initial Registration
Statement and the Prospectus will conform in all material respects to
the requirements of the Act and the Rules and Regulations, none of such
documents will include any untrue statement of a material fact or will
omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, and no
Additional Registration Statement has been or will be filed. The two
preceding sentences do not apply to statements in or omissions from a
Registration Statement or the Prospectus based upon written information
furnished to the Company by any Underwriter through the Representatives
specifically for use therein, it being understood and agreed that the
only such information is that described as such in Section 7(c) hereof.
(iii) The Company has been duly incorporated and is an
existing corporation in good standing under the laws of the State of
Delaware, with power and authority (corporate and other) to own its
properties and conduct its business as described in the Prospectus; and
the Company is duly qualified to do business as a foreign corporation
in good standing in all other jurisdictions in which its ownership or
lease of property or the conduct of its business requires such
qualification, except to the extent that the failure to be so qualified
would not individually or in the aggregate have a material adverse
effect on the condition (financial or other), business, properties, or
results of operations of the Company and its subsidiaries taken as a
whole ("Material Adverse Effect").
(iv) Each subsidiary of the Company has been duly incorporated
and is an existing corporation or other business organization, as the
case may be, in good standing under the laws of the jurisdiction of its
incorporation, with power and authority (corporate and other) to own
its properties and conduct its business as described in the Prospectus;
and each subsidiary of the Company is duly qualified to do business as
a foreign corporation in good standing in all other jurisdictions in
which its ownership or lease of property or the conduct of its business
requires such qualification, except to the extent that the failure to
be so qualified would not individually or in the aggregate have a
Material Adverse Effect; all of the issued and outstanding capital
stock of each subsidiary owned by the Company has been duly authorized
and validly issued and is fully paid and nonassessable; and the capital
stock of each subsidiary owned by the Company, directly or through
subsidiaries, is owned free from liens, claims, encumbrances and other
charges.
3
(v) The Offered Securities and all other outstanding shares of
capital stock of the Company have been duly authorized and validly
issued, fully paid and nonassessable and conform to the description
thereof contained in the Prospectus; when the Optional Securities, if
any, have been delivered by the Company and paid for in accordance with
this Agreement on the Optional Closing Date hereinafter mentioned such
Optional Securities will have been validly issued, fully paid and
nonassessable and will conform to the description thereof contained in
the Prospectus; and the stockholders of the Company have no preemptive
rights with respect to the Securities.
(vi) The Company and each subsidiary that is required to be
organized or licensed as an insurance, HMO or holding company in
respect thereof in its jurisdiction of incorporation (an "Insurance or
Healthcare Subsidiary") is duly organized and licensed as such in its
respective jurisdiction of incorporation; the Company and each
Insurance or Healthcare Subsidiary is duly licensed as such in each
other jurisdiction where it is required to be so licensed or authorized
to conduct its business, except to the extent that the failure to be so
licensed or authorized would not individually or in the aggregate have
a Material Adverse Effect; except as otherwise described in the
Prospectus, the Company and each Insurance or Healthcare Subsidiary has
all other approvals, orders, consents, qualifications (collectively,
the "Approvals") of and from all insurance or healthcare related
regulatory authorities and from the Blue Cross Blue Shield Association
necessary to conduct its business in all material respects; there is no
pending or, to the knowledge of the Company, threatened action, suit,
proceeding or investigation that could reasonably be expected to lead
to the revocation, termination, suspension of any material Approval to
conduct its business except as otherwise described in the Prospectus;
the Company and each Insurance or Healthcare Subsidiary is in
compliance with all license agreements and other agreements with the
Blue Cross Blue Shield Association currently in effect (each a "BCBS
License") to which it is a party (all of which are set forth in
Schedule C hereto), except for any immaterial violations which would
not individually or in the aggregate cause the Blue Cross Blue Shield
Association to have the right to terminate any BCBS License, and,
except as described in the Prospectus, no insurance or healthcare
related regulatory agency or body has issued any order or decree
impairing, restricting or prohibiting the payment of dividends by any
Insurance or Healthcare Subsidiary to its parent.
(vii) The Company and each Insurance or Healthcare Subsidiary
is in compliance with and conducts its business in conformity with all
applicable insurance or healthcare related laws and regulations of its
respective jurisdiction of incorporation and the insurance and
healthcare related laws and regulations of other jurisdictions which
are applicable to it, except to the extent that the failure to so
comply or conduct its business in conformity with such laws and
regulations would not individually or in the aggregate have a Material
Adverse Effect.
(viii) There are no contracts, agreements or understandings
between the Company and any person granting such person the right to
require the Company to file a registration statement under the Act with
respect to any securities of the Company owned or to be owned by such
person or to require the Company to include such securities in the
securities registered pursuant to a Registration Statement or in any
securities being registered pursuant to any other registration
statement filed by the Company under the Act except as set forth in the
Registration Rights Agreement, dated as of _______, 2002 (the
"Registration Rights Agreement"), among the Company, the Fund and the
Foundation.
(ix) Except as disclosed in the Prospectus, there are no
contracts, agreements or understandings between the Company and any
person that would give rise to a valid claim against the Company or any
Underwriter for a brokerage commission, finder's fee or other like
payment in connection with this offering.
(x) The Securities have been approved for listing, subject to
notice of issuance, on The New York Stock Exchange, and at each Closing
Date hereinafter mentioned the Securities issued at or prior to such
Closing Date will be listed thereon.
(xi) Except at described in the Prospectus, all filings,
registrations and declarations ("Filings") and all Approvals of or with
any court, insurance or health regulatory agency or governmental agency
or body or with the Blue Cross Blue Shield Association required
(including without limitation all
4
filings under applicable insurance holding company statutes and
Approvals of acquisition of control or affiliate transactions in each
jurisdiction in which such Filings or Approvals are required) in
connection with the issuance and sale by the Company of the Offered
Securities to the Underwriters hereunder or the Conversion, the entry
into and the compliance by the Company and HealthChoice with all the
provisions of this Agreement and the Plan of Conversion and the
consummation of the transactions herein and therein contemplated have
been made or obtained, and all such Filings and Approvals are in full
force effect; and, except as described in the Prospectus, neither the
Company, HealthChoice nor any of their respective subsidiaries has
received any notice of any event, inquiry, investigation or proceeding
that would reasonably be expected to result in the suspension,
revocation or limitation of any such Filing or Approval or otherwise
impose any limitation on the Conversion.
(xii) The Plan of Conversion has been duly adopted by the
required vote of the Board of Directors of HealthChoice (which adoption
complied with New York law and any other applicable laws and
regulations) and submitted to the Superintendent in the manner and
accompanied by all information and certificates required by the New
York insurance laws and the Conversion Legislation and conforms with
the requirements of the Conversion Legislation and complies in all
material respects with the requirements of all other applicable laws;
HealthChoice published notice as required under the Conversion
Legislation with respect to the public hearings held by the
Superintendent on August 6 and 7, 2002 in New York City and Albany,
respectively, for the purpose of receiving comment on whether the
Superintendent should approve the Plan of Conversion; on October 8,
2002, the Superintendent issued an Opinion and Decision (subject to
challenge) approving the Plan of Conversion in accordance with the
Conversion Legislation (the "Opinion and Decision"), which remains
unmodified and in full force and effect; no other Approvals are
required to be obtained under the Conversion Legislation or other
applicable laws for the effectiveness of the Plan of Conversion and all
of the conditions in Items 106-116 of the Opinion and Decision have
been satisfied; the Plan of Conversion has become effective in
accordance with its terms pursuant to the Conversion Legislation and
the Conversion has been completed in accordance with the Conversion
Legislation and all other applicable laws.
(xiii) On ____, 2002, HealthChoice transferred the
Medicare+Choice business to Empire HealthChoice HMO, Inc. pursuant to a
Novation Agreement, dated _______, 2002, between the Centers for
Medicare and Medicaid Services and HealthChoice.
(xiv) Except as described in the Prospectus, there is no legal
or governmental proceeding pending or, to the Company's knowledge,
currently being threatened challenging the Plan of Conversion or the
approval thereof, the Opinion and Decision or the consummation of the
transactions contemplated thereby.
(xv) None of the Company, HealthChoice or any of their
respective subsidiaries is in violation of, nor has any event occurred
which with notice, lapse of time or both would result in any breach of,
or constitute a default under, (A) its respective certificate of
incorporation or bylaws, (B) the BCBS Licenses, except for immaterial
defaults that would not individually or in the aggregate cause the Blue
Cross Blue Shield Association to have the right to terminate any BCBS
License, or (C) under any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which the Company,
HealthChoice or any such subsidiary is a party, except for such
defaults that would not individually or in the aggregate have a
Material Adverse Effect; the Plan of Conversion, the consummation of
the Conversion and the execution, delivery and performance of this
Agreement, and the consummation of the transactions therein and herein
contemplated, will not result in a breach or violation of any of the
terms and provisions of, or constitute a default under, any statute,
any rule, regulation or order of any governmental agency or body or any
court, domestic or foreign, having jurisdiction over the Company,
HealthChoice or any of their respective subsidiaries or any of their
properties, and will not conflict with or constitute a breach or
violation of any of the terms or provisions of, or constitute a default
under, (D) the certificate of incorporation or bylaws of the Company,
the certificate of incorporation and bylaws of HealthChoice or similar
organizational documents of any such subsidiary, (E) the BCBS Licenses
except for immaterial breaches, violations or defaults that would not
individually or in the aggregate cause the Blue Cross Blue Shield
Association to have the right to terminate any BCBS License, or (F) any
indenture, mortgage, deed of trust, loan agreement or other agreement
or instrument to which the Company, HealthChoice or any such subsidiary
is a party or by
5
which the Company, HealthChoice or any such subsidiary is bound or to
which any of the properties of the Company, HealthChoice or any such
subsidiary is subject, except for such breaches, violations or defaults
that would not individually or in the aggregate have a Material Adverse
Effect.
(xvi) This Agreement has been duly authorized, executed and
delivered by each of the Company and HealthChoice.
(xvii) Each of the Registration Rights Agreement and the
Voting Trust and Divestiture Agreement, dated ___, 2002, among the
Company, the Fund and ____, as trustee (the "Trustee") (the "Voting
Agreement"), has been duly authorized, executed and delivered by the
Company and, assuming the due authorization, execution and delivery by
the Fund and, in the case of the Registration Rights Agreement, the
Foundation, constitutes a valid and legally binding agreement of the
Company, enforceable in accordance with its terms.
(xviii) Except as disclosed in the Prospectus, the Company and
its subsidiaries have good and marketable title to all real properties
and all other properties and assets owned by them, in each case free
from liens, claims, encumbrances and other charges that would
materially affect the value thereof or materially interfere with the
use made or to be made thereof by them; and except as disclosed in the
Prospectus, the Company and its subsidiaries hold any leased real or
personal property under valid, subsisting and enforceable leases with
no exceptions that would materially interfere with the use made or to
be made thereof by them.
(xix) The Company and its subsidiaries possess adequate
certificates, authorities or permits issued by appropriate governmental
agencies or bodies necessary to conduct the business now operated by
them and have not received any notice of proceedings relating to the
revocation or modification of any such certificate, authority or permit
that, if determined adversely to the Company or any of its
subsidiaries, would individually or in the aggregate have a Material
Adverse Effect.
(xx) No labor dispute with the employees of the Company or any
subsidiary exists or, to the knowledge of the Company, is imminent that
could reasonably be expected to have a Material Adverse Effect.
(xxi) The Company and its subsidiaries own, possess or can
acquire on reasonable terms, or have the right to use, adequate
trademarks, trade names and other rights to inventions, know-how,
patents, copyrights, confidential information and other intellectual
property (collectively, "intellectual property rights") necessary to
conduct the business now operated by them, or presently employed by
them, and have not received any notice of infringement of or conflict
with asserted rights of others with respect to any intellectual
property rights that, if determined adversely to the Company or any of
its subsidiaries, would individually or in the aggregate have a
Material Adverse Effect.
(xxii) Except as disclosed in the Prospectus, there are no
pending actions, suits or proceedings against or affecting
HealthChoice, the Company, any of the Company's subsidiaries or any of
their respective properties that, individually or in the aggregate are
reasonably likely to have a Material Adverse Effect, or that, if
determined adversely to the Company or any of its subsidiaries, would
materially and adversely affect the ability of the Company to perform
its obligations under this Agreement or any of the transactions
contemplated hereby; and no such actions, suits or proceedings are, to
the Company's knowledge, threatened.
(xxiii) The financial statements included in each Registration
Statement and the Prospectus present fairly the financial position of
HealthChoice and its consolidated subsidiaries as of the dates shown
and their results of operations and cash flows for the periods shown,
and such financial statements have been prepared in conformity with
generally accepted accounting principles in the United States applied
on a consistent basis; and the schedules included in each Registration
Statement present fairly the information required to be stated therein
and the assumptions used in preparing the pro forma financial
statements included in each Registration Statement and the Prospectus
provide a reasonable basis for presenting the significant effects
directly attributable to the transactions or events described therein,
the related pro forma
6
adjustments give appropriate effect to those assumptions, and the pro
forma columns therein reflect the proper application of those
adjustments to the corresponding historical financial statement
amounts.
(xxiv) Except as disclosed in the Prospectus, since the date
of the latest audited financial statements included in the Prospectus
there has been no material adverse change, nor any development or event
involving a prospective material adverse change, in the condition
(financial or other), business, properties or results of operations of
the Company and its subsidiaries taken as a whole, and, except as
disclosed in or contemplated by the Prospectus, there has been no
dividend or distribution of any kind declared, paid or made by the
Company on any class of its capital stock.
(xxv) The statutory financial statements of HealthChoice and
its subsidiaries, from which certain ratios and statistical data
contained in the Prospectus have been derived, have for each relevant
period been prepared in accordance with accounting practices prescribed
or permitted by the National Association of Insurance Commissioners,
the New York State Department of Insurance and the New Jersey
Department of Banking and Insurance, and such accounting practices have
been applied on a consistent basis throughout the periods involved,
except as disclosed therein.
(xxvi) Ernst & Young LLP, whose report on the consolidated
financial statements of HealthChoice and its subsidiaries is filed with
the Commission as part of the Registration and Prospectus, are
independent public accountants as required by the Act and the Rules and
Regulations.
(xxvii) All statistical and market-related data included in
the Prospectus are based on or derived from sources that the Company
believes to be reliable and accurate, and the Company has received the
written consent to the use of such data from such sources to the extent
required.
(xxviii) There are no legal or governmental proceedings,
contracts or documents of a character required to be described in the
Registration Statement or the Prospectus or to be filed as an exhibit
to the Registration Statement which are not described or filed as
required by the Act and the Rules and Regulations.
(xxix) The Company, HealthChoice and each of their respective
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 of the Company or 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.
(xxx) Immediately following the offering and sale of the
Offered Securities, the Company will be subject to the reporting
requirements of either Section 13 or Section 15(d) of the Securities
Exchange Act of 1934.
(xxxi) None of the Company or any of its subsidiaries is and,
after giving effect to the Conversion and to the offering and sale of
the Offered Securities and the application of the proceeds thereof as
described in the Prospectus, will be an "investment company" or a
company "controlled" by an "investment company" as defined in the
Investment Company Act of 1940.
(xxxii) Any certificate signed by an officer of the Company or
any subsidiary delivered to you or to counsel for the Underwriters
pursuant to this Agreement or in connection with the Closing
contemplated hereby shall be deemed to be a representation and warranty
by the Company to each Underwriter as to the matters covered thereby.
(b) The Fund represents and warrants to, and agrees with, the
several Underwriters that:
(i) The Fund now is, and on each Closing Date hereinafter
mentioned will be, the lawful beneficial owner of the Offered
Securities to be delivered by the Fund pursuant to this Agreement on
such
7
Closing Date; the Trustee is, and at the time of delivery thereof will
be, the registered holder of such Offered Securities; the Fund is the
sole beneficiary of such Offered Securities held by the Trustee.
(ii) On each Closing Date hereunder the Fund will have caused
the Trustee to duly endorse the Offered Securities to be delivered by
the Fund under this Agreement in blank, and upon delivery of payment
for such Offered Securities on such Closing Date as contemplated
herein, assuming each Underwriter has no notice of any adverse claim
(within the meaning of Section 8-105 of the New York Uniform Commercial
Code (the "UCC")), the delivery of certificates representing such
Offered Securities either registered in the name of the Underwriters or
effectively endorsed to the Underwriters or in blank will pass to the
Underwriters all rights that the Trustee has in such Offered
Securities, free of any adverse claim.
(iii) The Fund has the requisite power under the Conversion
Legislation and its bylaws to enter into this Agreement, the Transfer
and Exchange Agreement, dated as of ________, 2002 (the "Transfer and
Exchange Agreement"), among ______________, and any closing certificate
required by this Agreement and to cause to be prepared the applications
for determination of non-control filed with the New York State
Department of Insurance and the New York State Department of Health],
and to sell, assign, transfer and deliver the Offered Securities to be
delivered by the Fund on each Closing Date hereunder.
(iv) The Fund has the requisite power under the Conversion
Legislation and its bylaws to enter into the Registration Rights
Agreement and the Voting Agreement and such agreements and this
Agreement have been duly authorized, executed and delivered by the Fund
and, assuming the due authorization, execution and delivery by the
other parties thereto, the Registration Rights Agreement and the Voting
Agreement each constitutes a valid and legally binding agreement of the
Fund, enforceable in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, liquidation,
rehabilitation, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general equity
principles, regardless of whether such principles are considered in a
proceeding at law or in equity.
(v) Neither the execution, delivery and performance of this
Agreement, the sale of the Offered Securities being sold by the Fund
nor the consummation of any other of the transactions contemplated
herein or the fulfillment of the terms hereof, will conflict with,
result in a breach or violation of, or constitute a default under (nor
constitute any event which with notice, lapse of time, or both would
result in any breach of, or constitute a default under), any provisions
of the by-laws or any other organizational documents of the Fund, nor
will it conflict with, result in a material breach or violation of, or
constitute a material default under the terms of any material agreement
or instrument to which the Fund is a party or bound (or to which any of
its property or assets is subject) or any material law, or any
judgment, order or decree applicable to the Fund.
(c) The Foundation represents and warrants to, and agrees
with, the several Underwriters that:
(i) the Foundation now is, and on each Closing Date
hereinafter mentioned will be, the registered and beneficial holder of
the Offered Securities to be delivered by the Foundation pursuant to
this Agreement on such Closing Date; and upon the delivery of payment
for the Offered Securities on each Closing Date hereunder assuming each
Underwriter has no notice of any adverse claim (within the meaning of
Section 8-105 of the New York UCC), the delivery of certificates
representing such Offered Securities either registered in the name of
the Underwriters or effectively endorsed to the Underwriters or in
blank will pass to the Underwriters all rights that the Foundation has
in such Offered Securities, free of any adverse claim.
(ii) The Foundation has the requisite power under its
certificate of incorporation, its bylaws and the New York
Not-For-Profit Corporation Law to enter into this Agreement, the
Transfer and Exchange Agreement, among and any closing certificate
required by this Agreement and to sell, assign,
8
transfer and deliver the Offered Securities to be delivered by the
Foundation on each Closing Date hereunder.
(iii) The Foundation has the requisite power under its
certificate of incorporation, its bylaws and the New York
Not-For-Profit Corporation Law to enter into the Registration Rights
Agreement and such agreement and this Agreement have been duly
authorized, executed and delivered by the Foundation and, assuming the
due authorization, execution and delivery by the other parties thereto,
the Registration Rights Agreement constitutes a valid and legally
binding agreement of the Foundation, enforceable in accordance with its
terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, liquidation, rehabilitation, moratorium and similar
laws of general applicability relating to or affecting creditors'
rights and to general equity principles, regardless of whether such
principles are considered in a proceeding at law or in equity.
(iv) Neither the execution, delivery and performance of this
Agreement, the sale of the Offered Securities being sold by the
Foundation nor the consummation of any other of the transactions
contemplated herein or the fulfillment of the terms hereof, will
conflict with, result in a breach or violation of, or constitute a
default under (nor constitute any event which with notice, lapse of
time, or both would result in any breach of, or constitute a default
under), any provisions of the certificate of incorporation or by-laws
or any other organizational documents of the Foundation, nor will it
conflict with, result in a material breach or violation of, or
constitute a material default under the terms of any material agreement
or instrument to which the Foundation is a party or bound (or to which
any of its property or assets is subject) or any material law, or any
judgment, order or decree applicable to the Foundation.
(d) Each Selling Stockholder severally represents and warrants
to, and agrees with, the several underwriters that:
(i) Such Selling Stockholder does not have any preemptive
right, co-sale right or right of first refusal or other similar right
to purchase any of the Offered Securities; and such Selling Stockholder
does not own any warrants, options or similar rights to acquire, and
does not have any right or arrangement to acquire, any capital stock,
rights, warrants, options or other securities from the Company, other
than those described in the Prospectus.
(ii) Except as disclosed in the Prospectus, there are no
contracts, agreements or understandings between such Selling
Stockholder and any person that would give rise to a valid claim
against such Selling Stockholder or any Underwriter for a brokerage
commission, finder's fee or other like payment in connection with this
offering.
(iii) Except as described in the Prospectus, all Filings and
Approvals of or with any court, insurance or health regulatory agency
or governmental agency or body required to be made or obtained by such
Selling Stockholder (including without limitation, exemptions from
acquisition of control requirements from the Superintendent and the New
York State Commissioner of Health) in connection with the Conversion,
the Conversion Legislation, the Plan of Conversion, the Opinion and
Decision and the consummation of the transactions contemplated therein,
the entry into, and the compliance with all the provisions of, this
Agreement by such Selling Stockholder and the compliance by such
Selling Stockholder with all the provisions of the Plan of Conversion
and the Opinion and Decision applicable to it and the consummation of
the transactions herein and therein contemplated have been made or
obtained, and all such Filings and Approvals are in full force and
effect.
(iv) The consent of the New York State Comptroller to the
execution, delivery or performance of this Agreement is not required to
be obtained by such Selling Stockholder.
(v) Such Selling Stockholder has not taken, directly or
indirectly, any action designed to or which has constituted or which
might reasonably be expected to cause or result, under the Securities
Exchange Act of 1934, as amended, or otherwise, in stabilization or
manipulation of the price of any security of the Company to facilitate
the sale or resale of the Offered Securities.
9
(vi) No approval, authorization, consent or order of or filing
with any national, state or local governmental or regulatory
commission, board, body, authority or agency is required to be made or
obtained by such Selling Stockholder in connection with the sale of the
Offered Securities or the consummation by such Selling Stockholder of
the transaction as contemplated hereby, other than [exemptions from
acquisition of control requirements from the Superintendent and the New
York Commissioner of Health and from the [New Jersey] . . ., all of
which have been made and obtained] and registration of the offer and
sale of the Offered Securities under the Act and any necessary
qualification under the securities or blue sky laws of the various
jurisdictions in which the Offered Securities are being offered by the
Underwriters or under the rules and regulations of the NASD.
(vii) Except as described in the Prospectus, there are no
private or governmental actions, suits, claims, investigations or
proceedings pending or, to the knowledge of such Selling Stockholder,
threatened to which such Selling Stockholder or any of its respective
officers is a party or of which any of its properties is subject at law
or in equity, or before or by any federal, state, local or foreign
governmental or regulatory commission, board, body, authority or agency
which would reasonably be expected to prevent consummation of the
transactions contemplated hereby or by the Plan of Conversion in the
manner contemplated hereby or thereby, including the offer and sale of
the Offered Securities at each Closing Date hereunder.
(viii) Such Selling Stockholder is not and, after giving
effect to the Conversion and to the offering and sale of the Offered
Securities, will not be an "investment company" or a company
"controlled" by an "investment company" as defined in the Investment
Company Act of 1940.
(ix) Any certificate signed by or on behalf of such Selling
Stockholder delivered to you or to counsel for the Underwriters
pursuant to this Agreement or in connection with the Closing
contemplated hereby shall be deemed to be a representation and warranty
by such Selling Stockholder to each Underwriter as to the matters
covered thereby.
3. Purchase, Sale and Delivery of Offered Securities. On the basis of
the representations, warranties and agreements herein contained, but subject to
the terms and conditions herein set forth, each Selling Stockholder agrees,
severally and not jointly, to sell to each Underwriter, and each Underwriter
agrees, severally and not jointly, to purchase from each Selling Stockholder, at
a purchase price of $ per share, that number of Firm Securities (rounded up or
down, as determined by Credit Suisse First Boston Corporation ("CSFBC") in its
discretion, in order to avoid fractions) obtained by multiplying the number of
Firm Securities set forth opposite the name of such Selling Stockholder in
Schedule A hereto, in each case by a fraction the numerator of which is the
number of Firm Securities set forth opposite the name of such Underwriter in
Schedule B hereto and the denominator of which is the total number of Firm
Securities.
The Selling Stockholders will deliver the Firm Securities to the
Representatives for the accounts of the Underwriters against payment of the
purchase price in Federal (same day) funds by official bank check or checks or
wire transfer to an account at a bank acceptable to CSFBC drawn to the order of
in the case of shares of Firm Securities and in the case of
shares of Firm Securities, at the office of , at A.M.,
New York time, on or at such other time not later than seven full
business days thereafter as CSFBC and the Company determine, such time being
herein referred to as the "First Closing Date". For purposes of Rule 15c6-1
under the Securities Exchange Act of 1934, the First Closing Date (if later than
the otherwise applicable settlement date) shall be the settlement date for
payment of funds and delivery of securities for all the Offered Securities sold
pursuant to the offering. The certificates for the Firm Securities so to be
delivered will be in definitive form, in such denominations and registered in
such names as CSFBC requests and will be made available for checking and
packaging at the above office of at least 24 hours prior to
the First Closing Date.
In addition, upon written notice from CSFBC given to the Company and
the Selling Stockholders from time to time not more than 30 days subsequent to
the date of the Prospectus, the Underwriters may purchase all or less than all
of the Optional Securities at the purchase price per Security to be paid for the
Firm Securities. The Company and the Selling Stockholders agree to sell to the
Underwriters the number of Optional Securities specified in such notice and the
Underwriters agree, severally and not jointly, to purchase such Optional
Securities. The first 1,190,477 of such Optional Securities shall be purchased
for the account of each Underwriter from the Company and
10
the remaining 888,681 shall be purchased for the account of each Underwriter
from the Selling Stockholders (95% from the Fund and 5% from the Foundation) in
each case in the same proportion as the number of Firm Securities set forth
opposite such Underwriter's name bears to the total number of Firm Securities
(subject to adjustment by CSFBC to eliminate fractions) and may be purchased by
the Underwriters only for the purpose of covering over-allotments made in
connection with the sale of the Firm Securities. No Optional Securities shall be
sold or delivered unless the Firm Securities previously have been, or
simultaneously are, sold and delivered. The right to purchase the Optional
Securities or any portion thereof may be exercised from time to time and to the
extent not previously exercised may be surrendered and terminated at any time
upon notice by CSFBC to the Company and the Selling Stockholders.
Each time for the delivery of and payment for the Optional Securities,
being herein referred to as an "Optional Closing Date", which may be the First
Closing Date (the First Closing Date and each Optional Closing Date, if any,
being sometimes referred to as a "Closing Date"), shall be determined by CSFBC
but shall be not later than five full business days after written notice of
election to purchase Optional Securities is given. The Company and the Selling
Stockholders respectively will deliver the Optional Securities being purchased
on each Optional Closing Date to the Representatives for the accounts of the
several Underwriters, against payment of the purchase price therefor in Federal
(same day) funds by official bank check or checks or wire transfer to an account
at a bank acceptable to CSFBC drawn to the order of the Company at the [above]
office of . The certificates for the Optional Securities
being purchased on each Optional Closing Date will be in definitive form, in
such denominations and registered in such names as CSFBC requests upon
reasonable notice prior to such Optional Closing Date and will be made available
for checking and packaging at the [above] office of
at a reasonable time in advance of such Optional Closing Date.
4. Offering by Underwriters. It is understood that the several
Underwriters propose to offer the Offered Securities for sale to the public as
set forth in the Prospectus.
5. Certain Agreements of the Company and the Selling Stockholders. The
Company agrees with the several Underwriters and the Selling Stockholders that:
(a) If the Effective Time of the Initial Registration
Statement is prior to the execution and delivery of this Agreement, the
Company will file the Prospectus with the Commission pursuant to and in
accordance with subparagraph (1) (or, if applicable and if consented to
by CSFBC, subparagraph (4)) of Rule 424(b) not later than the earlier
of (A) the second business day following the execution and delivery of
this Agreement or (B) the fifteenth business day after the Effective
Date of the Initial Registration Statement.
The Company will advise CSFBC promptly of any such filing pursuant to
Rule 424(b). If the Effective Time of the Initial Registration
Statement is prior to the execution and delivery of this Agreement and
an additional registration statement is necessary to register a portion
of the Offered Securities under the Act but the Effective Time thereof
has not occurred as of such execution and delivery, the Company will
file the additional registration statement or, if filed, will file a
post-effective amendment thereto with the Commission pursuant to and in
accordance with Rule 462(b) on or prior to 10:00 P.M., New York time,
on the date of this Agreement or, if earlier, on or prior to the time
the Prospectus is printed and distributed to any Underwriter, or will
make such filing at such later date as shall have been consented to by
CSFBC.
(b) The Company will advise CSFBC promptly of any proposal to
amend or supplement the initial or any additional registration
statement as filed or the related prospectus or the Initial
Registration Statement, the Additional Registration Statement (if any)
or the Prospectus and will not effect such amendment or supplementation
without CSFBC's consent; and the Company will also advise CSFBC
promptly of the effectiveness of each Registration Statement (if its
Effective Time is subsequent to the execution and delivery of this
Agreement) and of any amendment or supplementation of a Registration
Statement or the Prospectus and of the institution by the Commission of
any stop order proceedings in respect of a Registration Statement and
will use its best efforts to prevent the issuance of any such stop
order and to obtain as soon as possible its lifting, if issued.
11
(c) If, at any time when a prospectus relating to the Offered
Securities is required to be delivered under the Act in connection with
sales by any Underwriter or dealer, any event occurs as a result of
which the Prospectus as then amended or supplemented would include an
untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or if it is
necessary at any time to amend the Prospectus to comply with the Act,
the Company will promptly notify CSFBC of such event and will promptly
prepare and file with the Commission, at its own expense, an amendment
or supplement which will correct such statement or omission or an
amendment which will effect such compliance. Neither CSFBC's consent
to, nor the Underwriters' delivery of, any such amendment or supplement
shall constitute a waiver of any of the conditions set forth in Section
6.
(d) As soon as practicable, but not later than the
Availability Date (as defined below), the Company will make generally
available to its securityholders an earnings statement covering a
period of at least 12 months beginning after the Effective Date of the
Initial Registration Statement (or, if later, the Effective Date of the
Additional Registration Statement) which will satisfy the provisions of
Section 11(a) of the Act. For the purpose of the preceding sentence,
"Availability Date" means the 45th day after the end of the fourth
fiscal quarter following the fiscal quarter that includes such
Effective Date, except that, if such fourth fiscal quarter is the last
quarter of the Company's fiscal year, "Availability Date" means the
90th day after the end of such fourth fiscal quarter.
(e) The Company will furnish to the Representatives copies of
each Registration Statement (10 of which will be signed and will
include all exhibits), each related preliminary prospectus, and, so
long as a prospectus relating to the Offered Securities is required to
be delivered under the Act in connection with sales by any Underwriter
or dealer, the Prospectus and all amendments and supplements to such
documents, in each case in such quantities as CSFBC requests. The
Prospectus shall be so furnished on or prior to 3:00 P.M., New York
time, on the business day following the later of the execution and
delivery of this Agreement or the Effective Time of the Initial
Registration Statement. All other such documents shall be so furnished
as soon as available. The Company will pay the expenses of printing and
distributing to the Underwriters all such documents.
(f) The Company will arrange for the qualification of the
Offered Securities for sale under the laws of such jurisdictions as
CSFBC designates and will continue such qualifications in effect so
long as required for the distribution; provided, however, that the
Company shall not be required to qualify as a foreign corporation or to
file a general consent to service of process in any jurisdiction where
it is not now so qualified or required to file such a consent.
(g) For a period of 180 days after the date of the initial
public offering of the Offered Securities, the Company will not offer,
sell, contract to sell, pledge or otherwise dispose of, directly or
indirectly, or file with the Commission a registration statement under
the Act relating to, any additional shares of its Securities or
securities convertible into or exchangeable or exercisable for any
shares of its Securities, or publicly disclose the intention to make
any such offer, sale, pledge, disposition or filing, without the prior
written consent of CSFBC.
(h) The Company and each Selling Stockholder agree with the
several Underwriters that the Company will pay all expenses incident to
the performance of the obligations of the Company and such Selling
Stockholders, as the case may be, under this Agreement, for any filing
fees and other expenses in connection with qualification of the Offered
Securities for sale under the laws of such jurisdictions as CSFBC
designates and the printing of memoranda relating thereto, for the
filing fee incident to the review by the National Association of
Securities Dealers, Inc. of the Offered Securities, for any travel
expenses of the Company's officers and employees and any other expenses
of the Company in connection with attending or hosting meetings with
prospective purchasers of the Offered Securities, for any transfer
taxes on the sale by the Selling Stockholders of the Offered Securities
to the Underwriters and for expenses incurred in distributing
preliminary prospectuses and the Prospectus (including any amendments
and supplements thereto) to the Underwriters. Notwithstanding the
foregoing, the Company and the Underwriters agree to split, on a 50/50
basis, the cost of any private aviation used in connection with
attending or hosting meetings with prospective purchasers of the
Offered Securities.
12
(i) Each Selling Stockholder agrees, for a period of 180 days
after the date of the initial public offering of the Offered
Securities, not to offer, sell, contract to sell, pledge or otherwise
dispose of, directly or indirectly, any additional shares of the
Securities of the Company or securities convertible into or
exchangeable or exercisable for any shares of Securities, enter into a
transaction which would have the same effect, or enter into any swap,
hedge or other arrangement that transfers, in whole or in part, any of
the economic consequences of ownership of the Securities, whether any
such aforementioned transaction is to be settled by delivery of the
Securities or such other securities, in cash or otherwise, or publicly
disclose the intention to make any such offer, sale, pledge or
disposition, or enter into any such transaction, swap, hedge or other
arrangement, without, in each case, the prior written consent of CSFBC.
6. Conditions of the Obligations of the Underwriters. The obligations
of the several Underwriters to purchase and pay for the Firm Securities on the
First Closing Date and the Optional Securities to be purchased on each Optional
Closing Date will be subject to the accuracy of the representations and
warranties on the part of the Company and the Selling Stockholders herein, to
the accuracy of the statements of Company officers made pursuant to the
provisions hereof, to the performance by the Company and the Selling
Stockholders of their obligations hereunder and to the following additional
conditions precedent:
(a) The Representatives shall have received a letter, dated
the date of delivery thereof (which, if the Effective Time of the
Initial Registration Statement is prior to the execution and delivery
of this Agreement, shall be on or prior to the date of this Agreement
or, if the Effective Time of the Initial Registration Statement is
subsequent to the execution and delivery of this Agreement, shall be
prior to the filing of the amendment or post-effective amendment to the
registration statement to be filed shortly prior to such Effective
Time), of Ernst & Young LLP confirming that they are independent public
accountants within the meaning of the Act and the applicable published
Rules and Regulations thereunder and stating to the effect that:
(i) in their opinion the financial statements and schedules
examined by them and included or incorporated by reference in the
Registration Statements comply as to form in all material respects with
the applicable accounting requirements of the Act and the related
published Rules and Regulations;
(ii) they have performed the procedures specified by the
American Institute of Certified Public Accountants for a review of
interim financial information as described in Statement of Auditing
Standards No. 71, Interim Financial Information, on the unaudited
financial statements included in the Registration Statements;
(iii) on the basis of the review referred to in clause (ii)
above, a reading of the latest available interim financial statements
of the Company, inquiries of officials of the Company who have
responsibility for financial and accounting matters and other specified
procedures, nothing came to their attention that caused them to believe
that:
(A) the unaudited financial statements included in the
Registration Statements do not comply as to form in all material
respects with the applicable accounting requirements of the Act and the
related published Rules and Regulations or any material modifications
should be made to such unaudited financial statements for them to be in
conformity with generally accepted accounting principles in the United
States applied on a consistent basis;
(B) the unaudited consolidated premiums earned and total
revenues for the sixth-month period ended June 30, 2001 and the
nine-month periods ended September 30, 2001 and 2002 included in the
Prospectus do not agree with the amounts set forth in the unaudited
consolidated financial statements for the same period or were not
determined on a basis substantially consistent with that of the
corresponding amounts in the June 30, 2002 statements of income;
(C) at the date of the latest available balance sheet read by
such accountants, or at a subsequent specified date not more than three
business days prior to the date of this Agreement, there was any
increase in long-term debt of the Company and its consolidated
subsidiaries or, at the date of the latest
13
available balance sheet read by such accountants, there was any
decrease in consolidated net assets, as compared with amounts shown on
the latest balance sheet included in the Prospectus; or
(D) for the period from the closing date of the latest income
statement included in the Prospectus to the closing date of the latest
available income statement read by such accountants there were any
decreases, as compared with the corresponding period of the previous
year and with the period of corresponding length ended the date of the
latest income statement included in the Prospectus, in consolidated
premiums earned or net income;
except in all cases set forth in clauses(C) and (D) above for changes,
increases or decreases which the Prospectus discloses have occurred or
may occur or which are described in such letter; and
(iv) they have compared specified dollar amounts (or
percentages derived from such dollar amounts) and other financial
information contained in the Registration Statements (in each case to
the extent that such dollar amounts, percentages and other financial
information are derived from the general accounting records of the
Company and its subsidiaries subject to the internal controls of the
Company's accounting system or are derived directly from such records
by analysis or computation) with the results obtained from inquiries, a
reading of such general accounting records and other procedures
specified in such letter and have found such dollar amounts,
percentages and other financial information to be in agreement with
such results, except as otherwise specified in such letter.
For purposes of this subsection, (i) if the Effective Time of
the Initial Registration Statements is subsequent to the execution and
delivery of this Agreement, "Registration Statements" shall mean the
initial registration statement as proposed to be amended by the
amendment or post-effective amendment to be filed shortly prior to its
Effective Time, (ii) if the Effective Time of the Initial Registration
Statements is prior to the execution and delivery of this Agreement but
the Effective Time of the Additional Registration Statement is
subsequent to such execution and delivery, "Registration Statements"
shall mean the Initial Registration Statement and the additional
registration statement as proposed to be filed or as proposed to be
amended by the post-effective amendment to be filed shortly prior to
its Effective Time, and (iii) "Prospectus" shall mean the prospectus
included in the Registration Statements.
(b) If the Effective Time of the Initial Registration
Statement is not prior to the execution and delivery of this Agreement,
such Effective Time shall have occurred not later than 10:00 P.M., New
York time, on the date of this Agreement or such later date as shall
have been consented to by CSFBC. If the Effective Time of the
Additional Registration Statement (if any) is not prior to the
execution and delivery of this Agreement, such Effective Time shall
have occurred not later than 10:00 P.M., New York time, on the date of
this Agreement or, if earlier, the time the Prospectus is printed and
distributed to any Underwriter, or shall have occurred at such later
date as shall have been consented to by CSFBC. If the Effective Time of
the Initial Registration Statement is prior to the execution and
delivery of this Agreement, the Prospectus shall have been filed with
the Commission in accordance with the Rules and Regulations and Section
5(a) of this Agreement. Prior to such Closing Date, no stop order
suspending the effectiveness of a Registration Statement shall have
been issued and no proceedings for that purpose shall have been
instituted or, to the knowledge of any Selling Stockholder, the Company
or the Representatives, shall be contemplated by the Commission.
(c) Subsequent to the execution and delivery of this
Agreement, there shall not have occurred: (i) any change, or any
development or event involving a prospective change, in the condition
(financial or other), business, properties or results of operations of
the Company and its subsidiaries taken as one enterprise which, in the
judgment of a majority in interest of the Underwriters including the
Representatives, is material and adverse and makes it impractical or
inadvisable to proceed with completion of the public offering or the
sale of and payment for the Offered Securities; (ii) any downgrading in
the rating of any debt securities of the Company by any "nationally
recognized statistical rating organization" (as defined for purposes of
Rule 436(g) under the Act), or any public announcement that any such
organization has under surveillance or review its rating of any debt
securities of the Company (other than an announcement with positive
implications of a possible upgrading, and no implication of a possible
downgrading, of such rating); (iii) any change in U.S. or international
financial, political or
14
economic conditions or currency exchange rates or exchange controls as
would, in the judgment of a majority in interest of the Underwriters
including the Representatives, be likely to prejudice materially the
success of the proposed issue, sale or distribution of the Offered
Securities, whether in the primary market or in respect of dealings in
the secondary market; (iv) any material suspension or material
limitation of trading in securities generally on the New York Stock
Exchange, or any setting of minimum prices for trading on such
exchange, or any suspension of trading of any securities of the Company
on any exchange or in the over-the-counter market; (v) any banking
moratorium declared by U.S. Federal or New York authorities; (vi) any
major disruption of settlements of securities or clearance services in
the United States or (vii) any attack on, outbreak or escalation of
hostilities or act of terrorism involving the United States, any
declaration of war by Congress or any other national or international
calamity or emergency if, in the judgment of a majority in interest of
the Underwriters including the Representatives, the effect of any such
attack, outbreak, escalation, act, declaration, calamity or emergency
makes it impractical or inadvisable to proceed with completion of the
public offering or the sale of and payment for the Offered Securities.
(d) The Representatives shall have received an opinion, dated
such Closing Date, of ▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, LLP, counsel for the
Company and its subsidiaries, to the effect that:
(i) The Company has been duly incorporated and is an existing
corporation in good standing under the laws of the State of Delaware,
with corporate power and authority to own its properties and conduct
its business as described in the Prospectus; and the Company is duly
qualified to do business as a foreign corporation in good standing in
the State of New York;
(ii) Each subsidiary of the Company that is a "significant
subsidiary" (as defined in Rule 1-02 of Regulation S-X under the Act)
is a validly existing corporation in good standing under the laws of
the State of New York, with corporate power and authority to own its
properties and conduct its business as described in the Prospectus; all
of the issued and outstanding capital stock of each such subsidiary has
been duly authorized and validly issued and is fully paid and
nonassessable; and the capital stock of each such subsidiary owned by
the Company, directly or through subsidiaries, is owned free from
liens, claims, encumbrances and other charges;
(iii) The Offered Securities delivered on such Closing Date
and all other outstanding shares of the Common Stock of the Company
have been duly authorized and validly issued, are fully paid and
nonassessable and conform to the description thereof contained in the
Prospectus in all material respects; and the stockholders of the
Company have no preemptive rights with respect to the Securities;
(iv) Except for the Registration Rights Agreement, there are
no contracts or agreements known to such counsel between the Company
and any person granting such person the right to require the Company to
file a registration statement under the Act with respect to any
securities of the Company owned or to be owned by such person or to
require the Company to include such securities in the securities
registered pursuant to the Registration Statement or in any securities
being registered pursuant to any other registration statement filed by
the Company under the Act;
(v) The Company is not and, after giving effect to the
Conversion and to the offering and sale of the Offered Securities and
the application of the proceeds thereof as described in the Prospectus,
will not be an "investment company" or a company "controlled" by an
"investment company" as defined in the Investment Company Act of 1940;
(vi) No consent, approval, authorization or order of, or
filing with, any federal, New York or Delaware governmental agency or
body (other than an insurance or regulatory agency) or court or with
the Blue Cross Blue Shield Association is required to be obtained or
made by the Company for the consummation of the transactions
contemplated by this Agreement in connection with the sale of the
Offered Securities, except such as have been obtained and made and such
as may be required under federal and state securities or blue sky laws;
(vii) The execution, delivery and performance of this
Agreement, the consummation of the transactions herein or therein
contemplated and the consummation of the Conversion pursuant to the
Plan
15
of Conversion will not result in a breach or violation of any of the
terms and provisions of, or constitute a default under, any federal,
New York or Delaware statute, any rule, regulation or order of any
federal, New York or Delaware governmental agency or body (other than
an insurance or regulatory agency) or any court having jurisdiction
over the Company or any significant subsidiary of the Company or any of
their properties, or any material agreement or instrument to which the
Company or any such subsidiary is a party or by which the Company or
any such subsidiary is bound or to which any of the properties of the
Company or any such subsidiary is subject or any BCBS License or the
charter or by-laws of the Company or any significant subsidiary;
(viii) This Agreement has been duly authorized, executed and
delivered by the Company and HealthChoice;
(ix) The Voting Agreement has been duly authorized, executed
and delivered by the Company and, assuming the due authorization,
execution and delivery by the Fund constitutes a valid and legally
binding agreement of the Company, enforceable in accordance with its
terms;
(x) Except as described in the Prospectus, there is no legal
or governmental proceeding pending or to such counsel's knowledge
currently being threatened challenging the Plan of Conversion or the
approval thereof, the Opinion and Decision or the consummation of the
transactions contemplated thereby;
(xi) The information in the Prospectus under "Regulation and
Legal Proceedings -- Litigation;" "Description of Capital Stock;"
"Material U.S. Federal Income Tax Consequences of the Conversion to
WellChoice;" and Certain U.S. Federal Income Tax Considerations for
Non-United States Holders" and in the Registration Statement under Item
14, to the extent that such information constitutes matters of law,
summaries of legal matters, the certificate of incorporation and bylaws
of the Company or legal proceedings, or legal conclusions, has been
reviewed by us and is accurate in all material respects;
(xii) The Plan of Conversion has been duly adopted by the
required vote of the Board of Directors of HealthChoice;
(xiii) To such counsel's knowledge, there are no legal or
governmental proceedings, contracts or documents of a character
required to be described in the Registration Statement or the
Prospectus or to be filed as an exhibit to the Registration Statement
which are not described or filed as required by the Act and the Rules
and Regulations; and
(xiv) The Initial Registration Statement was declared
effective under the Act as of the date and time specified in such
opinion, the Additional Registration Statement (if any) was filed and
became effective under the Act as of the date and time (if
determinable) specified in such opinion, the Prospectus either was
filed with the Commission pursuant to the subparagraph of Rule 424(b)
specified in such opinion on the date specified therein or was included
in the Initial Registration Statement or the Additional Registration
Statement (as the case may be), and, to the best of the knowledge of
such counsel, no stop order suspending the effectiveness of a
Registration Statement or any part thereof has been issued and no
proceedings for that purpose have been instituted or are pending or
contemplated under the Act, and each Registration Statement and the
Prospectus, and each amendment or supplement thereto, as of their
respective effective or issue dates, complied as to form in all
material respects with the requirements of the Act and the Rules and
Regulations;
Such counsel shall also state that it has no reason to believe
that any part of a Registration Statement or any amendment thereto, as
of its effective date or as of such Closing Date, contained any untrue
statement of a material fact or omitted to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading; or that the Prospectus or any amendment or
supplement thereto, as of its issue date or as of such Closing Date,
contained any untrue statement of a material fact or omitted to state
any material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not
misleading; it being understood that such
16
counsel need express no opinion as to the financial statements or other
financial or accounting data contained in the Registration Statements
or the Prospectus.
(e) The Representatives shall have received an opinion, dated
such Closing Date, of ▇▇▇▇▇▇ ▇▇▇▇▇▇ PC, regulatory counsel for the
Company and its subsidiaries, to the effect that:
(i) The Plan of Conversion conforms with the requirements of
the Conversion Legislation and complies in all material respects with
the requirements of all other applicable laws; the Opinion and Decision
remains unmodified and in full force and effect; the Plan of Conversion
has become effective in accordance with its terms pursuant to the
Conversion Legislation and the Conversion has been completed in
accordance with the Conversion Legislation and all other applicable
laws; and each of the actions required to occur and conditions required
o be satisfied pursuant to the Conversion Legislation, Plan of
Conversion or the Opinion and Decision, including without limitation,
all of the conditions in Items 106-116 of the Opinion and Decision,
have been satisfied have occurred or were satisfied;
(ii) The execution, delivery and performance of this
Agreement, the consummation of the transactions herein contemplated and
the consummation of the Conversion pursuant to the Plan of Conversion
will not result in a breach or violation of any of the terms and
provisions of, or constitute a default under, any rule, regulation or
order of any federal, New York or New Jersey insurance or health
regulatory agency or body;
(iii) All Filings and Approvals of or with any court or any
federal, New York or New Jersey insurance or health regulatory agency
required (including without limitation all Filings under applicable
insurance holding company statutes and Approvals of acquisition of
control or affiliate transactions in each jurisdiction in which such
Filings or Approvals are required) in connection with the Conversion or
the issuance and sale by the Company of the Offered Securities to the
Underwriters hereunder, the entry into and the compliance by the
Company and HealthChoice with all the provisions of this Agreement and
the Plan of Conversion and the consummation of the transactions herein
and therein contemplated have been made or obtained, and are in full
force and effect, except as described in the Prospectus; and
(iv) The information in the Prospectus under "Prospectus
Summary -- Plan of Conversion;" "The Plan of Conversion" and
"Regulation and Legal Proceedings," to the extent that such information
constitutes matters of law, summaries of legal matters, the certificate
of incorporation and bylaws of the Company or legal proceedings, or
legal conclusions, has been reviewed by us and is accurate in all
material respects.
(f) The Representatives shall have received an opinion, dated
such Closing Date, of LeBoeuf, Lamb, ▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.P, counsel
for the Selling Stockholders, to the effect that:
(i) Upon delivery of payment by the Underwriters for the
Offered Securities to be delivered at the Closing Date as contemplated
herein and without notice of any adverse claim as such term is used in
Section 8-105 of the Uniform Commercial Code as currently in effect in
the State of New York, the delivery of certificates representing any
Offered Securities either registered in the name of the Underwriters or
effectively endorsed to the Underwriters or in blank will pass to the
Underwriters all rights that the Foundation (in the case of Offered
Securities beneficially owned by the Foundation) or the Trustee (in the
case of Offered Securities beneficially owned by the Fund) has in such
Offered Securities, free of any adverse claim;
(ii) To the knowledge of such counsel, neither Seller
Stockholder has created any consensual lien or restrictions on transfer
on any of the Offered Securities to be delivered by such Selling
Stockholder;
(iii) The Fund has the requisite power pursuant to the
Conversion Legislation and its bylaws, and the Foundation has the
requisite power pursuant to its certificate of incorporation, its
bylaws and the New York Not-For-Profit Corporation Law to enter into
this Agreement and to sell, assign, transfer and
17
deliver the Offered Securities delivered by the Fund and the
Foundation, as the case may be, on such Closing Date hereunder;
(iv) This Agreement has been duly authorized, executed and
delivered by each Selling Stockholder;
(v) No consent, approval, authorization or order of, or filing
with, any New York court, insurance or health regulatory agency or
governmental agency or body is required to be obtained or made by any
Selling Stockholder for the consummation of the transactions
contemplated by this Agreement, except such as have been obtained and
made on or prior to such Closing Date and such as may be required under
state securities laws;
(vi) All consents, approvals, authorizations or orders of, or
filings with, any New York or New Jersey court, insurance or health
regulatory agency or governmental agency or body required to be
obtained or made by any Selling Stockholder (including without
limitation, exemptions from acquisition of control requirements from
the Superintendent and the New York State Commissioner of Health) in
connection with the Conversion, the Conversion Legislation, the Plan of
Conversion and the Opinion and Decision and the consummation of the
transactions therein contemplated have been made or obtained and are in
full force and effect, except as described in the Prospectus;
(vii) The execution, delivery and performance of this
Agreement by each Selling Stockholder and the consummation of the
transactions herein contemplated will not conflict with or result in a
breach or violation of any of the terms and provisions of, or
constitute a default under, any statute, any rule, regulation or order
of any governmental agency or body or any court having jurisdiction
over such Selling Stockholder or any of its properties, the
Registration Rights Agreement or, in the case of the Fund, the Voting
Agreement, or any material agreement or instrument known to such
counsel to which any Selling Stockholder is a party or by which any
Selling Stockholder is bound or to which any of the properties of any
Selling Stockholder is subject or the certificate of incorporation (in
the case of the Foundation only) or by-laws of either Selling
Stockholder;
(viii) The Registration Rights Agreement, and in the case of
the Fund, the Voting Agreement have been duly authorized, executed and
delivered by each Selling Stockholder, and, assuming the due
authorization, execution and delivery of the Registration Rights
Agreement by the other parties thereto, the Registration Rights
Agreement constitutes a valid and legally binding agreement of each
Selling Stockholder, enforceable in accordance with its terms, subject
to bankruptcy, insolvency, fraudulent transfer, reorganization,
liquidation, rehabilitation, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and to general
equity principles, regardless of whether such principles are considered
in a proceeding at law or in equity; provided, however, that such
counsel need not opine as to the availability of any remedy set forth
in Section 10.07 of the Voting Agreement or Section 15 of the
Registration Rights Agreement; and
(ix) Except as described in the Prospectus, there are no
private or governmental actions, suits, claims, investigations or
proceedings pending or known to such counsel that are threatened to
which any Selling Stockholder or any of its respective officers is a
party or of which any of its properties is subject at law or in equity,
or before or by any federal, state, local or foreign governmental or
regulatory commission, board, body, authority or agency which would
prevent consummation of the transactions contemplated by this Agreement
or by the Plan of Conversion in the manner contemplated hereby or
thereby, including the offer and sale of the Offered Securities at such
Closing Date.
To the extent the opinions in paragraphs (i), (v), (vi), (vii)
or (viii) involve the applicability of Section 112 of the New York
State Finance Law to the documents or transactions described or named
therein, such counsel may rely on the opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇ PC
furnished pursuant to clause (g) of this Section 6 subject to the same
qualifications, assumptions and limitations set forth therein. To the
extent paragraph (viii) involves matters of Delaware law, such counsel
may rely on the opinion of ▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇ dated such Closing
Date subject to the same qualifications, assumptions and limitations
set forth therein.
18
(g) The Representatives shall have received an opinion, dated
such Closing Date, of ▇▇▇▇▇▇ ▇▇▇▇▇▇ PC, substantially in the form of
Exhibit I attached hereto.
(h) The Representatives shall have received from ▇▇▇▇▇▇▇ ▇▇▇▇
& ▇▇▇▇▇▇▇▇▇, counsel for the Underwriters, such opinion or opinions,
dated such Closing Date, with respect to the incorporation of the
Company, the validity of the Offered Securities delivered on such
Closing Date, the Registration Statements, the Prospectus and other
related matters as the Representatives may require, and the Selling
Stockholders and the Company shall have furnished to such counsel such
documents as they request for the purpose of enabling them to pass upon
such matters.
(i) The Representatives shall have received a certificate,
dated such Closing Date, of the President or any Vice President and a
principal financial or accounting officer of the Company in which such
officers, to the best of their knowledge after reasonable
investigation, shall state that: the representations and warranties of
the Company and HealthChoice in this Agreement are true and correct;
the Company and HealthChoice have complied with all agreements and
satisfied all conditions on its part to be performed or satisfied
hereunder at or prior to such Closing Date; no stop order suspending
the effectiveness of any Registration Statement has been issued and no
proceedings for that purpose have been instituted or are contemplated
by the Commission; the Additional Registration Statement (if any)
satisfying the requirements of subparagraphs (1) and (3) of Rule 462(b)
was filed pursuant to Rule 462(b), including payment of the applicable
filing fee in accordance with Rule 111(a) or (b) under the Act, prior
to the time the Prospectus was printed and distributed to any
Underwriter; and, subsequent to the date of the most recent financial
statements in the Prospectus, there has been no material adverse
change, nor any development or event involving a prospective material
adverse change, in the condition (financial or other), business,
properties or results of operations of the Company and its subsidiaries
taken as a whole except as set forth in or contemplated by the
Prospectus or as described in such certificate.
(j) The Representatives shall have received a letter, dated
such Closing Date, of Ernst & Young LLP which meets the requirements of
subsection (a) of this Section, except that the specified date referred
to in such subsection will be a date not more than three days prior to
such Closing Date for the purposes of this subsection.
(k) No Underwriter shall have notice of an adverse claim on
the Offered Securities within the meaning of Section 8-105 of the UCC.
(l) On or prior to the date of this Agreement, the
Representatives shall have received lockup letters from each executive
officer and each director of the Company.
(m) Each Selling Stockholder will deliver to CSFBC a properly
completed and executed United States Treasury Department Form W-9 (or
other applicable form or statement specified by the United States
Treasury Department regulations in lieu thereof).
The Selling Stockholders and the Company will furnish the
Representatives with such conformed copies of such opinions,
certificates, letters and documents as the Representatives reasonably
request. CSFBC may in its sole discretion waive on behalf of the
Underwriters compliance with any conditions to the obligations of the
Underwriters hereunder, whether in respect of an Optional Closing Date
or otherwise.
7. Indemnification and Contribution. (a) The Company will indemnify and
hold harmless each Underwriter, its partners, directors and officers and each
person, if any who controls such Underwriter within the meaning of Section 15 of
the Act, against any losses, claims, damages or liabilities, joint or several,
to which such Underwriter may become subject, under the Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in any Registration Statement, the
Prospectus, or any amendment or supplement thereto, or any related preliminary
prospectus, or arise out of or are based upon the omission or alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, and will reimburse each Underwriter
for any legal or other expenses reasonably incurred by such Underwriter in
connection with investigating or defending any such loss, claim, damage,
liability or action as such expenses are
19
incurred; provided, however, that the Company will not be liable in any such
case to the extent that any such loss, claim, damage or liability arises out of
or is based upon an untrue statement or alleged untrue statement in or omission
or alleged omission from any of such documents in reliance upon and in
conformity with written information furnished to the Company by any Underwriter
through the Representatives specifically for use therein, it being understood
and agreed that the only such information furnished by any Underwriter consists
of the information described as such in subsection (b) below.
(b) Each Underwriter will severally and not jointly indemnify
and hold harmless the Company, its directors and officers and each
person, if any, who controls the Company within the meaning of Section
15 of the Act, and each Selling Stockholder against any losses, claims,
damages or liabilities to which the Company or such Selling Stockholder
may become subject, under the Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise
out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in any Registration Statement,
the Prospectus, or any amendment or supplement thereto, or any related
preliminary prospectus, or arise out of or are based upon the omission
or the alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading, in each case to the extent, but only to the extent, that
such untrue statement or alleged untrue statement or omission or
alleged omission was made in reliance upon and in conformity with
written information furnished to the Company by such Underwriter
through the Representatives specifically for use therein, and will
reimburse any legal or other expenses reasonably incurred by the
Company and each Selling Stockholder in connection with investigating
or defending any such loss, claim, damage, liability or action as such
expenses are incurred, it being understood and agreed that the only
such information furnished by any Underwriter consists of (i) the
following information in the Prospectus furnished on behalf of each
Underwriter: the concession and reallowance figures appearing in the
4th paragraph under the caption "Underwriting" and the information
contained in the 5th paragraph under the caption "Underwriting"
(c) Promptly after receipt by an indemnified party under this
Section of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against an
indemnifying party under subsection (a) or (b) above, notify the
indemnifying party of the commencement thereof; but the omission so to
notify the indemnifying party will not relieve it from any liability
which it may have to any indemnified party otherwise than under
subsection (a) or (b) above, except to the extent the indemnifying
party shall have been materially prejudiced as a result of such
omission. In case any such action is brought against any indemnified
party and it notifies an indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate therein
and, to the extent that it may wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof,
with counsel reasonably satisfactory to such indemnified party (who
shall not, except with the consent of the indemnified party, be counsel
to the indemnifying party), and after notice from the indemnifying
party to such indemnified party of its election so to assume the
defense thereof, the indemnifying party will not be liable to such
indemnified party under this Section for any legal or other expenses
subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation. No
indemnifying party shall, without the prior written consent of the
indemnified party, such consent not to be unreasonably withheld, effect
any settlement of any pending or threatened action in respect of which
any indemnified party is or could have been a party and indemnity could
have been sought hereunder by such indemnified party unless such (i)
settlement includes an unconditional release of such indemnified party
from all liability on any claims that are the subject matter of such
action 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 an
indemnified party.
(d) If the indemnification provided for in this Section is
unavailable or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above, then each indemnifying party shall
contribute to the amount paid or payable by such indemnified party as a
result of the losses, claims, damages or liabilities referred to in
subsection (a) or (b) above (i) in such proportion as is appropriate to
reflect the relative benefits received by the Company on the one hand
and the Underwriters on the other from the offering of the Securities
or (ii) if the allocation provided by clause (i) above is not permitted
by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the
relative fault of the Company on the one hand and the Underwriters on
the
20
other in connection with the statements or omissions which resulted in
such losses, claims, damages or liabilities as well as any other
relevant equitable considerations. The relative benefits received by
the Company on the one hand and the Underwriters on the other shall be
deemed to be in the same proportion as the total net proceeds from the
offering (before deducting expenses) received by the Company bear to
the total underwriting discounts and commissions received by the
Underwriters. The relative fault shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material
fact relates to information supplied by the Company or the Underwriters
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such untrue statement or omission.
The amount paid by an indemnified party as a result of the losses,
claims, damages or liabilities referred to in the first sentence of
this subsection (d) shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection
with investigating or defending any action or claim which is the
subject of this subsection (d). Notwithstanding the provisions of this
subsection (d), no Underwriter shall be required to contribute any
amount in excess of the amount by which the total price at which the
Securities underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages which such
Underwriter has otherwise been required to pay by reason of such untrue
or alleged untrue statement or omission or alleged omission. No person
guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who
was not guilty of such fraudulent misrepresentation. The Underwriters'
obligations in this subsection (d) to contribute are several in
proportion to their respective underwriting obligations and not joint.
(e) The obligations of the Company under this Section shall be
in addition to any liability which the Company may otherwise have and
shall extend, upon the same terms and conditions, to each person, if
any, who controls any Underwriter within the meaning of the Act; and
the obligations of the Underwriters under this Section shall be in
addition to any liability which the respective Underwriters may
otherwise have and shall extend, upon the same terms and conditions, to
each director of the Company, to each officer of the Company who has
signed a Registration Statement and to each person, if any, who
controls the Company within the meaning of the Act.
8. Default of Underwriters. If any Underwriter or Underwriters default
in their obligations to purchase Offered Securities hereunder on either the
First or any Optional Closing Date and the aggregate number of shares of Offered
Securities that such defaulting Underwriter or Underwriters agreed but failed to
purchase does not exceed 10% of the total number of shares of Offered Securities
that the Underwriters are obligated to purchase on such Closing Date, CSFBC may
make arrangements satisfactory to the Company and the Selling Stockholders for
the purchase of such Offered Securities by other persons, including any of the
Underwriters, but if no such arrangements are made by such Closing Date, the
non-defaulting Underwriters shall be obligated severally, in proportion to their
respective commitments hereunder, to purchase the Offered Securities that such
defaulting Underwriters agreed but failed to purchase on such Closing Date. If
any Underwriter or Underwriters so default and the aggregate number of shares of
Offered Securities with respect to which such default or defaults occur exceeds
10% of the total number of shares of Offered Securities that the Underwriters
are obligated to purchase on such Closing Date and arrangements satisfactory to
CSFBC, the Company and the Selling Stockholders for the purchase of such Offered
Securities by other persons are not made within 36 hours after such default,
this Agreement will terminate without liability on the part of any
non-defaulting Underwriter, the Company or the Selling Stockholders, except as
provided in Section 9 (provided that if such default occurs with respect to
Optional Securities after the First Closing Date, this Agreement will not
terminate as to the Firm Securities or any Optional Securities purchased prior
to such termination). As used in this Agreement, the term "Underwriter" includes
any person substituted for an Underwriter under this Section. Nothing herein
will relieve a defaulting Underwriter from liability for its default.
9. Survival of Certain Representations and Obligations. The respective
indemnities, agreements, representations, warranties and other statements of the
Selling Stockholders, of the Company or its officers and of the several
Underwriters set forth in or made pursuant to this Agreement will remain in full
force and effect, regardless of any investigation, or statement as to the
results thereof, made by or on behalf of any Underwriter, any Selling
Stockholder, the Company or any of their respective representatives, officers or
directors or any controlling person, and will survive delivery of and payment
for the Offered Securities. If this Agreement is terminated pursuant to Section
8 or if for any reason the purchase of the Offered Securities by the
Underwriters is not consummated, the Company shall remain responsible for the
expenses to be paid or reimbursed by it pursuant to Section 5 and the
21
respective obligations of the Company and the Underwriters pursuant to Section 7
shall remain in effect, and if any Offered Securities have been purchased
hereunder the representations and warranties in Section 2 and all obligations
under Section 5 shall also remain in effect. If the purchase of the Offered
Securities by the Underwriters is not consummated for any reason other than
solely because of the termination of this Agreement pursuant to Section 8 or the
occurrence of any event specified in clause (iii), (iv), (v), (vi) or (vii) of
Section 6(c), the Company will reimburse the Underwriters for all out-of-pocket
expenses (including fees and disbursements of counsel) reasonably incurred by
them in connection with the offering of the Offered Securities.
10. Notices. All communications hereunder will be in writing and, if
sent to the Underwriters, will be mailed, delivered or faxed and confirmed to
the Representatives c/o Credit Suisse First Boston Corporation, Eleven Madison
Avenue, New York, N.Y. 10010-3629, Attention: Transactions Advisory Group (Fax:
▇▇▇-▇▇▇-▇▇▇▇), or, if sent to the Company, will be mailed, delivered or faxed
and confirmed to it at ▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇
▇▇▇▇▇, Esq. (Fax: ▇▇▇-▇▇▇-▇▇▇▇), or, if sent to the Selling Stockholders or any
of them, will be mailed, delivered or faxed and confirmed to LeBoeuf, Lamb,
▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.P at ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ , Attention:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ (Fax: ▇▇▇-▇▇▇-▇▇▇▇); provided, however, that any notice to
an Underwriter pursuant to Section 7 will be mailed, delivered or faxed and
confirmed to such Underwriter.
11. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and the officers
and directors and controlling persons referred to in Section 7, and no other
person will have any right or obligation hereunder.
12. Representation. The Representatives will act for the several
Underwriters in connection with the transactions contemplated by this Agreement,
and any action under this Agreement taken by the jointly or by CSFBC will be
binding upon all the Underwriters.
13. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement.
14. Applicable Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of New York, without regard to
principles of conflicts of laws.
The Company hereby submits to the non-exclusive jurisdiction of the
Federal and state courts in the Borough of Manhattan in The City of New York in
any suit or proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby.
22
If the foregoing is in accordance with the Representatives'
understanding of our agreement, kindly sign and return to the Company one of the
counterparts hereof, whereupon it will become a binding agreement among the
Selling Stockholders, the Company and the several Underwriters in accordance
with its terms.
Very truly yours,
THE MEMBERS OF THE BOARD OF THE NEW YORK
PUBLIC ASSET FUND
-----------------------------------
Name
-----------------------------------
Name
-----------------------------------
Name
-----------------------------------
Name
-----------------------------------
Name
THE VOTING MEMBERS OF THE BOARD OF THE
NEW YORK CHARITABLE ASSET FOUNDATION
-----------------------------------
Name
-----------------------------------
Name
-----------------------------------
Name
WELLCHOICE, INC.
By
-----------------------------------
[Insert title]
EMPIRE HEALTHCHOICE, INC.
(to be renamed Empire HealthChoice
Assurance, Inc.)
By
-----------------------------------
[Insert title]
23
The foregoing Underwriting Agreement is
hereby confirmed and accepted as of the date
first above written.
CREDIT SUISSE FIRST BOSTON CORPORATION
UBS WARBURG LLC
BEAR, ▇▇▇▇▇▇▇ & CO. INC.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & CO. INCORPORATED
▇▇▇▇▇▇▇, SACHS & CO.
▇.▇. ▇▇▇▇▇▇ SECURITIES INC.
▇▇▇▇▇▇▇ ▇▇▇▇▇ BARNEY INC.
▇▇▇▇▇▇▇▇ & PARTNERS, L.P.
THE ▇▇▇▇▇▇▇▇ CAPITAL GROUP, L.P.
Acting on behalf of themselves and as the
Representatives of the several Underwriters.
By CREDIT SUISSE FIRST BOSTON CORPORATION
By
-----------------------------------
[Insert title]
24
SCHEDULE A
Number of
Firm Securities
Selling Stockholder to be Sold
------------------- ----------
Fund
Foundation
Total .............................................
==========
25
SCHEDULE B
Number of
Optional Securities
Underwriter to be Purchased
----------- ---------------
Credit Suisse First Boston Corporation
UBS Warburg LLC
Bear, ▇▇▇▇▇▇▇ & Co. Inc.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
▇▇▇▇▇▇▇, Sachs & Co.
▇.▇. ▇▇▇▇▇▇ Securities Inc.
▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney Inc.
▇▇▇▇▇▇▇▇ & Partners, L.P.
The ▇▇▇▇▇▇▇▇ Capital Group, L.P.,
Total
==========
26
SCHEDULE C
Blue Cross Blue Shield Association Agreements
27