EXHIBIT 1
ANTHEM, INC.
COMMON STOCK
(PAR VALUE $.01 PER SHARE)
UNDERWRITING AGREEMENT
----------------------
................., 2001
▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co.,
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
▇.▇. ▇▇▇▇▇▇ Securities Inc.
Banc of America Securities LLC
Credit Suisse First Boston Corporation
▇▇▇▇▇▇ Brothers Inc.
▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney Inc.
UBS Warburg LLC
ABN AMRO Rothschild LLC
Dresdner Kleinwort ▇▇▇▇▇▇▇▇▇▇▇ Securities LLC
▇.▇. ▇▇▇▇▇▇▇ & Sons, Inc.
McDonald Investments Inc.
▇▇▇▇▇▇▇▇ Capital Partners, L.P.
As representatives of the several Underwriters named in
Schedule I hereto (the "Representatives")
c/o Goldman, ▇▇▇▇▇ & Co.,
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Anthem, Inc., an Indiana corporation (the "Company"), proposes, subject to
the terms and conditions stated herein, to issue and sell to the Underwriters
named in Schedule I hereto (the "Underwriters") an aggregate of * shares (the
"Firm Shares") and, at the election of the Underwriters, up to * additional
shares (the "Optional Shares") of common stock, par value $.01 per share
("Stock"), of the Company (the Firm Shares
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and the Optional Shares that the Underwriters elect to purchase pursuant to
Section 2 hereof being collectively called the "Shares").
Concurrently with the initial public offering of the Shares, the Company is
offering an aggregate of ___% equity security units (the "Firm Units") and, at
the election of the underwriters of such offering, up to additional equity
security units (the "Optional Units" and, together with the Firm Units, the
"Units") by means of a separate prospectus and pursuant to a separate
underwriting agreement (the "Units Underwriting Agreement").
The Shares and the Units are being issued in connection with the conversion
(the "Demutualization") of Anthem Insurance Companies, Inc., an Indiana mutual
insurance company ("Anthem Insurance"), into an Indiana stock insurance company
pursuant to the Plan of Conversion, as adopted by the Board of Directors of
Anthem Insurance on June 18, 2001, in accordance with the requirements of
Section 27-15-1-1 et seq. of the Indiana Code. Upon effectiveness of the Plan,
Anthem Insurance will become a direct, wholly-owned subsidiary of the Company.
Pursuant to the Plan, the membership interests of the Statutory Members (as
defined in the Plan) of Anthem Insurance shall be extinguished and Eligible
Statutory Members (as defined in the Plan) shall be entitled to receive, in
exchange for their membership interests, shares of common stock of the Company
(the "Member Shares") or cash. Anthem Insurance shall surrender to the Company,
and the Company shall cancel, all of the remaining shares of common stock of the
Company previously issued by the Company to Anthem Insurance. The Member Shares
and the Shares are collectively referred to as the "Transaction Shares".
1. The Company and Anthem Insurance, jointly and severally, represent and
warrant to, and agree with, each of the Underwriters that:
(a) A registration statement on Form S-1 (File No. 333-67714) and
amendments thereto filed on or before the date hereof (collectively, the
"Initial Registration Statement") in respect of the Shares have been filed with
the Securities and Exchange Commission (the "Commission"); the Initial
Registration Statement and any post-effective amendment thereto, each in the
form heretofore delivered to you, and, excluding exhibits thereto, to you for
each of the other Underwriters, have been declared effective by the Commission
in such form; other than a registration statement, if any, increasing the size
of the offering (a "Rule 462(b) Registration Statement"), filed pursuant to Rule
462(b) under the Securities Act of 1933, as amended (the "Act"), which became
effective upon filing, no other document with respect to the Initial
Registration Statement has heretofore been filed with the Commission; and no
stop order suspending the effectiveness of the Initial Registration Statement,
any post-effective amendment thereto or the Rule 462(b) Registration Statement,
if any, has been issued and no proceeding for that purpose has been initiated or
threatened by the Commission (any preliminary prospectus included in the Initial
Registration Statement or filed with the Commission pursuant to Rule 424(a) of
the rules and regulations of the Commission under the Act is hereinafter called
a "Preliminary Prospectus"; the various parts of the Initial Registration
Statement and the Rule 462(b) Registration Statement, if any, including all
exhibits thereto and including the information contained in the form of final
prospectus filed with the Commission pursuant to Rule 424(b) under the Act in
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accordance with Section 5(a) hereof and deemed by virtue of Rule 430A under the
Act to be part of the Initial Registration Statement at the time it was declared
effective, each as amended at the time such part of the Initial Registration
Statement became effective or such part of the Rule 462(b) Registration
Statement, if any, became or hereafter becomes effective, are hereinafter
collectively called the "Registration Statement"; and such final prospectus, in
the form first filed pursuant to Rule 424(b) under the Act, is hereinafter
called the "Prospectus");
(b) No order preventing or suspending the use of any Preliminary
Prospectus has been issued by the Commission, and each Preliminary Prospectus,
at the time of filing thereof, conformed in all material respects to the
requirements of the Act and the rules and regulations of the Commission
thereunder, and did not contain an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, provided that this representation and warranty shall not
apply to any statements or omissions made in reliance upon and in conformity
with information furnished in writing to the Company by an Underwriter through
▇▇▇▇▇▇▇, Sachs & Co. expressly for use therein;
(c) The Registration Statement conforms, and the Prospectus and any
further amendments or supplements to the Registration Statement or the
Prospectus will conform, in all material respects to the requirements of the Act
and the rules and regulations of the Commission thereunder and do not and will
not, as of the applicable effective date as to the Registration Statement and
any amendment thereto and as of the applicable filing date as to the Prospectus
and any amendment or supplement thereto, contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, provided that this
representation and warranty shall not apply to any statements or omissions made
in reliance upon and in conformity with information furnished in writing to the
Company by an Underwriter through ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. expressly for use
therein;
(d) Neither the Company nor Anthem Insurance nor any of their
respective subsidiaries has sustained since the date of the latest audited
financial statements included in the Prospectus any loss or interference with
its business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or governmental action,
order or decree, otherwise than as set forth or contemplated in the Prospectus;
and, since the respective dates as of which information is given in the
Registration Statement and the Prospectus, there has not been any (i) material
addition, or development involving a prospective material addition, to Anthem
Insurance's liability for future policy benefits, policyholder account balances
and other claims, other than in the ordinary course of business, (ii) material
decrease in the surplus of Anthem Insurance or material change in the capital
stock or other ownership interest of the Company, Anthem Insurance or any of
their respective subsidiaries or any material increase in the long-term debt of
the Company, Anthem Insurance and their respective subsidiaries, considered as a
whole; or (iii) material adverse change, or development involving a prospective
material adverse change, in or affecting the
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general affairs, management, financial position, reserves, surplus, equity or
results of operations (in each case considered either on a statutory accounting
or U.S. generally accepted accounting principles ("GAAP") basis, as applicable)
of the Company, Anthem Insurance and their respective subsidiaries considered as
a whole ("Material Adverse Effect"), otherwise than as set forth or contemplated
in the Prospectus;
(e) Each of the Company, Anthem Insurance and their respective
Material Subsidiaries (as hereinafter defined) has good and marketable title in
fee simple to all real property and good and marketable title to all personal
property owned by it, in each case free and clear of all liens, encumbrances and
defects, except such as are described in the Prospectus or such as do not
materially affect the value of such property and do not interfere with the use
made and proposed to be made of such property by the Company, Anthem Insurance
or any of their respective Material Subsidiaries, and any real property and
buildings held under lease by the Company, Anthem Insurance or any of their
respective Material Subsidiaries are held under valid, subsisting and
enforceable leases with such exceptions as are not material and do not interfere
with the use made and proposed to be made of such property and buildings by the
Company, Anthem Insurance or any of their respective Material Subsidiaries (for
purposes of this Agreement, "Material Subsidiary" means, at any time, (i) each
of Anthem Midwest, Inc., Anthem East, Inc. and Anthem West, Inc. and (ii) any
subsidiary which, together with its subsidiaries, has either assets, revenues
from operations or income from continuing operations that exceed 5% of the
combined assets, combined revenues from operations or combined income from
continuing operations of the Company and Anthem Insurance and their subsidiaries
taken as a whole);
(f) The Company has been duly incorporated and is validly existing as
a corporation under the laws of the State of Indiana, with power and authority
(corporate and other) to own its properties and conduct its business as
described in the Prospectus; Anthem Insurance has been and, until immediately
prior to the Effective Date (as defined in the Plan), will continue to be duly
incorporated and validly existing as a mutual insurance company under the laws
of the State of Indiana, with power and authority (corporate and other) to own
its properties and conduct its business as described in the Prospectus;
immediately after the First Time of Delivery and at each subsequent Time of
Delivery (as defined in Section 4), Anthem Insurance will be duly incorporated
and validly existing as a stock insurance company under the laws of the State of
Indiana and will be a subsidiary of the Company; each of the Company and Anthem
Insurance has been duly qualified as a foreign corporation for the transaction
of business and is in good standing under the laws of each other jurisdiction in
which it owns or leases properties or conducts any business so as to require
such qualification, or is subject to no material liability or disability by
reason of the failure to be so qualified and in good standing in any such
jurisdiction; and each of their respective Material Subsidiaries has been duly
organized and is validly existing as a corporation, limited liability company or
partnership, as applicable, and, to the extent such concept is applicable, is in
good standing under the laws of its jurisdiction of organization, with power and
authority (corporate and other) to own its properties and conduct its business
as described in the Prospectus; and each of their respective Material
Subsidiaries is duly qualified to do business as a foreign corporation, limited
liability company or
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partnership, as applicable, for the transaction of business and, to the extent
such concept is applicable, is in good standing under the laws of each other
jurisdiction in which its ownership or lease of property or the conduct of its
business requires such qualification and good standing, or is subject to no
material liability or disability by reason of the failure to be so qualified and
in good standing in any such jurisdiction;
(g) The Company has an authorized capitalization as set forth and
described in the Prospectus; on the Effective Date (as defined in the Plan),
Anthem Insurance will have an authorized capitalization of 500,000,000 shares of
common stock, par value $1.00; and all of the issued shares of capital stock or
other ownership interests of each of their respective Material Subsidiaries have
been duly and validly authorized and issued, are fully paid and nonassessable
and (except as described in the Prospectus and except for directors' qualifying
shares) are owned directly or indirectly by the Company or Anthem Insurance, as
applicable, free and clear of all liens, encumbrances, equities or claims;
(h) The Shares to be issued and sold by the Company to the
Underwriters hereunder have been duly and validly authorized; when the Shares
are issued and delivered against payment therefor as provided herein and when
the Member Shares are issued pursuant to the Plan, the Shares and the Member
Shares will be duly and validly authorized and issued and fully paid and
nonassessable, and the Shares and the Member Shares will conform to the
description of the Stock contained in the Prospectus; the issuances of the
Shares and the Member Shares are not subject to any preemptive or other similar
rights; and there are no rights of any person, corporation or other entity to
require registration of any shares of the Stock or any other securities of the
Company in connection with the Demutualization or the filing of the Registration
Statement; and the Shares and the Member Shares have been approved for listing
on the New York Stock Exchange (the "Exchange"), subject to notice of issuance,
and at each Time of Delivery, the Shares issued at or prior to such Time of
Delivery will be listed thereon;
(i) The issuance of the Member Shares does not require registration
under the Act;
(j) Each of Anthem Insurance and each of its and the Company's
respective subsidiaries that is required to be organized or licensed as an
insurance, healthcare, HMO or health care management company 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 and is duly licensed or authorized as such in each
other jurisdiction where it is required to be so licensed or authorized to
conduct its business, except where the failure to be so licensed or authorized
could not reasonably be expected to have a Material Adverse Effect; except as
otherwise described in the Prospectus; each of Anthem Insurance and each
Insurance or Healthcare Subsidiary has all other approvals, orders, consents,
authorizations, licenses, certificates, permits, registrations and
qualifications (collectively, the "Approvals") of and from all insurance or
healthcare related regulatory authorities and from the Blue Cross Blue Shield
Association ("BLBSA") to conduct its
5
business, except where the failure to have such Approvals could not reasonably
be expected to have a Material Adverse Effect; there is no pending or, to the
knowledge of the Company and Anthem Insurance, threatened action, suit,
proceeding or investigation that could reasonably be expected to lead to the
revocation, termination or suspension of any such Approval, the revocation,
termination or suspension of which would have, individually or in the aggregate,
a Material Adverse Effect; each of Anthem Insurance and each Insurance or
Healthcare Subsidiary is in compliance with all license agreements with BCBSA
currently in effect (each a "BCBS License") that it is a party to; and, to the
knowledge of the Company and Anthem Insurance, 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, except as described in the Prospectus;
(k) In connection with the Demutualization, the Company has made all
required filings under applicable insurance holding company statutes, and has
received Approvals of acquisition of control or affiliate transactions in each
jurisdiction in which such filings or Approvals are required; each of the
Company, Anthem Insurance and each of their respective subsidiaries has all
necessary Approvals of and from, and has made all filings, registrations and
declarations (collectively, the "Filings") with, all insurance regulatory
authorities, all Federal, state, local and other governmental authorities, all
self-regulatory organizations and all courts and other tribunals and the BCBSA,
necessary to own, lease, license and use its properties and assets and to
conduct its business in the manner described in the Prospectus, except where the
failure to do so could not reasonably be expected to have a Material Adverse
Effect; each of the Company and Anthem Insurance and each of their respective
subsidiaries is in compliance with all applicable laws, rules, regulations,
orders, by-laws and similar requirements, including in connection with
registrations or memberships in self-regulatory organizations and the BCBSA, and
all such Approvals and Filings are in full force and effect, except where the
failure to be so could not reasonably be expected to have a Material Adverse
Effect, and neither the Company nor Anthem Insurance 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 material limitation of any such Approval or otherwise impose any
material limitation on the conduct of the business of the Company, Anthem
Insurance or any of their respective subsidiaries, except as described in the
Prospectus;
(l) Each of Anthem Insurance and each Insurance or Healthcare
Subsidiary is in compliance with and conducts its businesses in conformity with
all applicable insurance or healthcare related laws and regulations of its
respective jurisdiction of incorporation and the insurance or healthcare related
laws and regulations of other jurisdictions which are applicable to it, except
where the failure to do so could not reasonably be expected to have a Material
Adverse Effect;
(m) The issuance and sale of the Shares by the Company to the
Underwriters hereunder, the consummation of the Demutualization and the issuance
of the Member Shares pursuant to the Plan, the issuance and sale of the Units
pursuant to the Units Underwriting Agreement, the compliance by the Company and
Anthem
6
Insurance with all of the provisions of this Agreement, the Units Underwriting
Agreement and the Plan and the consummation of the transactions herein and
therein contemplated will not conflict with or result in a breach or violation
of any of the terms or provisions of, or constitute a default under the BCBS
Licenses or under any indenture, mortgage, deed of trust, loan agreement or
other agreement or instrument to which the Company, Anthem Insurance or any of
their respective subsidiaries is a party or by which the Company, Anthem
Insurance or any of their respective subsidiaries is bound or to which any of
the property or assets of the Company, Anthem Insurance or any of their
respective subsidiaries is subject, or which affects the validity, performance
or consummation of the Plan, the Demutualization or the transactions
contemplated by this Agreement, the Units Underwriting Agreement or the Plan,
nor will such actions result in any violation of the provisions of the Articles
of Incorporation or By-Laws or similar organizational documents of the Company,
Anthem Insurance or any of their respective subsidiaries or any statute or any
order, rule or regulation of any court or insurance regulatory agency or other
governmental agency or body having jurisdiction over the Company, Anthem
Insurance or any of their respective subsidiaries or any of their properties, in
each case the effect of which (other than (x) a violation of the Articles of
Incorporation or By-Laws or similar organizational documents of the Company,
Anthem Insurance or any of their respective Material Subsidiaries or (y) the
BCBS Licenses), individually or in the aggregate, would be either to affect the
validity of the Transaction Shares, their respective issuance or to affect
adversely the consummation of the transactions contemplated hereby, by the Units
Underwriting Agreement or by the Plan, or to have a Material Adverse Effect;
(n) All Filings and Approvals of or with any court, insurance
regulatory agency or governmental agency or body of the United States or any
state thereof required in connection with the issuance and sale by the Company
of the Shares to the Underwriters hereunder, the issuance of the Member Shares
pursuant to the Plan, the issuance and sale of the Units pursuant to the Units
Underwriting Agreement, the entry into and the compliance by the Company and
Anthem Insurance with all of the provisions of this Agreement and the Units
Underwriting Agreement and the consummation of the transactions herein and
therein contemplated have been made or obtained, other than Filings to be made
and Approvals to be obtained on the Effective Date, and all such Filings and
Approvals are in full force and effect, provided that neither the Company nor
Anthem Insurance makes any representation or warranty as to state securities or
Blue Sky laws in connection with the purchase and distribution of the Shares by
the Underwriters and the purchase and distribution of the Units by the several
underwriters named in the Units Underwriting Agreement (the "Units
Underwriters"); all other Filings and Approvals of or with any court, insurance
regulatory agency or other governmental agency or body or the BCBSA required to
be obtained or made on or prior to the Effective Date in connection with the
Demutualization or for the consummation by the Company and Anthem Insurance of
the transactions contemplated by this Agreement, the Units Underwriting
Agreement and the Plan have been so obtained or made, other than Filings to be
made and Approvals to be obtained on the Effective Date, and are in full force
and effect, except as described in the Prospectus;
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(o) The Plan has been duly adopted by the required vote of the Board
of Directors of Anthem Insurance (which adoption complied with the applicable
requirements of the Indiana Code) and submitted to the Indiana Commissioner of
Insurance (the "Commissioner") in the manner and accompanied by all information
and certificates required by the Indiana Code and conforms in all material
respects to the requirements of the Indiana Code applicable to the conversion of
mutual insurance companies into stock insurance companies and any rules or
regulations of the Commissioner in respect thereof in each case as administered
or interpreted by the Commissioner (collectively, the "Indiana Conversion Laws
and Regulations"), and the requirements of all other applicable laws; on October
2, 2001, the Commissioner held a public hearing in accordance with the
requirements of the Indiana Code, with regard to which Anthem Insurance
published such notice as is required to be published by a converting insurer by
the Indiana Code, for the purpose of receiving comment on whether the
Commissioner should approve the Plan; the Plan was duly approved on October 29,
2001 by a vote (the "Member Vote") of more than two-thirds of the votes validly
cast by Statutory Members (which adoption complied in all material respects with
the applicable requirements of the Indiana Code) and such adoption has not been
rescinded or otherwise withdrawn; on _______ __, 2001 the Commissioner issued an
order (subject to appeal) approving the Plan in accordance with the requirements
of the Indiana Code (the "Commissioner's Order"), which remains unmodified and
in full force and effect; no other Approvals are required to be obtained under
the Indiana Code for the effectiveness of the Plan, other than Approvals to be
obtained on the Effective Date; on the Effective Date, the Plan will become
effective in accordance with its terms pursuant to the Indiana Code, and the
Demutualization will be completed in accordance with the Plan and the Indiana
Conversion Laws and Regulations and the requirements of all other applicable
laws; and prior to the First Time of Delivery (as defined in Section 4) each of
the actions required to occur and conditions required to be satisfied on or
prior to the Effective Date pursuant to the Commissioner's Order or the Plan
will have occurred or been satisfied;
(p) There is no legal or governmental proceeding pending or currently
being threatened challenging the Demutualization or the Plan or the approval
thereof, the Commissioner's Order or the consummation of the transactions
contemplated thereby, the offering of the Shares by the Underwriters or the
offering of the Units by the Units Underwriters;
(q) Other than as described or contemplated in the Prospectus, there
are no legal or governmental proceedings pending to which the Company, Anthem
Insurance or any of their respective subsidiaries is a party or to which any
property of the Company, Anthem Insurance or any of their respective
subsidiaries is subject which, if determined adversely to the Company, Anthem
Insurance or any of their respective subsidiaries, could reasonably be expected
to have, individually or in the aggregate, a Material Adverse Effect; and, to
the best knowledge of the Company and Anthem Insurance, no such proceedings are
threatened or contemplated by governmental authorities or threatened by others;
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(r) The member information statement mailed to members of Anthem
Insurance (the "MIS"), as of its date and as of the dates of the public hearing
on the Demutualization and the Member Vote, did not contain an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading;
(s) Neither the Company, Anthem Insurance nor any of their respective
subsidiaries is (i) in violation of any of its Articles of Incorporation or
By-Laws or other organizational instruments, or (ii) in default in the
performance or observance of any obligation, agreement, covenant or condition
contained in any indenture, mortgage, deed of trust, loan agreement, lease or
other agreement or instrument to which it is a party or by which it or any of
its properties may be bound, except, in the case of clause (ii), where such
default could not reasonably be expected to have a Material Adverse Effect;
(t) The statements set forth in the Prospectus under the caption
"Description of Capital Stock", insofar as they purport to constitute a summary
of the terms of the Stock, and under the captions "Risk Factors - We are using
the Blue Cross and Blue Shield names and marks as identifiers for our products
and services under licenses from the Blue Cross Blue Shield Association. The
termination of these license agreements could adversely affect our business,
financial condition and results of operations"; "The Plan of Conversion", "The
Business of Anthem - the Blue Cross Blue Shield License", "Legal and Regulatory
Matters", "Certain United States Tax Consequences to Non-U.S. Holders of Common
Stock" and "Underwriting", insofar as they purport to describe the provisions of
the laws and documents referred to therein, are accurate, complete and fair;
(u) (i) The pro forma consolidated statement of income and the pro
forma consolidated balance sheet and the related notes thereto set forth in
the Registration Statement and the Prospectus have been prepared in all
material respects in accordance with the applicable requirements of Rule
11-02 of Regulation S-X promulgated under the Securities Exchange Act of
1934, as amended, have been compiled on the pro forma basis described
therein, and, in the opinion of the Company and Anthem Insurance, the
assumptions used in the preparation thereof were reasonable at the time
made and the adjustments used therein are based upon good faith estimates
and assumptions believed by the Company and Anthem Insurance to be
reasonable at the time made;
(ii) The consolidated financial statements of Anthem Insurance
and its subsidiaries, together with the related notes and schedules, set
forth in the Registration Statement and the Prospectus comply in all
material respects with the requirements of the Act and present fairly in
all material respects the financial position, the results of operations and
the changes in cash flows of such entities in conformity with GAAP at the
respective dates or for the respective periods to which they apply; and
such statements and related notes and schedules, if any, have been prepared
in accordance with GAAP consistently
9
applied throughout the periods involved except for any normal year-end
adjustments and except as described therein;
(v) Neither the Company, Anthem Insurance nor any of their respective
subsidiaries is and, after giving effect to the offering and sale of the Shares,
the issuance and sale of the Units pursuant to the Units Underwriting Agreement,
the issuance of the Member Shares pursuant to the Plan, the consummation of the
Demutualization and the application of the proceeds of the sale of the Shares
and the Units as described in the Prospectus, will be an "investment company",
as such term is defined in the Investment Company Act of 1940, as amended (the
"Investment Company Act"), and the rules and regulations thereunder;
(w) Ernst & Young LLP, who have certified certain financial statements
of the Company and the consolidated financial statements of Anthem Insurance and
its subsidiaries, are independent public accountants as required by the Act and
the rules and regulations of the Commission thereunder;
(x) Each of this Agreement and the Units Underwriting Agreement has
been duly authorized, executed and delivered by the Company and Anthem
Insurance;
(y) There are no 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 of the Commission thereunder.
2. Subject to the terms and conditions herein set forth, (a) the Company
agrees to issue and sell to each of the Underwriters, and each of the
Underwriters agrees, severally and not jointly, to purchase from the Company, at
a purchase price per share of $, the number of Firm Shares set forth opposite
the name of such Underwriter in Schedule I hereto and (b) in the event and to
the extent that the Underwriters shall exercise the election to purchase
Optional Shares as provided below, the Company agrees to issue and sell to each
of the Underwriters, and each of the Underwriters agrees, severally and not
jointly, to purchase from the Company, at the purchase price per share set forth
in clause (a) of this Section 2, that portion of the number of Optional Shares
as to which such election shall have been exercised (to be adjusted by you so as
to eliminate fractional shares) determined by multiplying such number of
Optional Shares by a fraction, the numerator of which is the maximum number of
Optional Shares which such Underwriter is entitled to purchase as set forth
opposite the name of such Underwriter in Schedule I hereto and the denominator
of which is the maximum number of Optional Shares that all of the Underwriters
are entitled to purchase hereunder.
The Company hereby grants to the Underwriters the right to purchase at
their election up to Optional Shares, at the purchase price per share set forth
in the paragraph above, for the purpose of covering sales of shares in excess of
the number of Firm Shares. Any such election to purchase Optional Shares may be
exercised only by written notice from you to the Company given within a period
of 30 calendar days
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after the date of this Agreement, setting forth the aggregate number of Optional
Shares to be purchased and the date on which such Optional Shares are to be
delivered, as determined by you but in no event earlier than the First Time of
Delivery or, unless you and the Company otherwise agree in writing, earlier than
two or later than ten business days after the date of such notice.
3. Upon the authorization by you of the release of the Firm Shares, the
several Underwriters propose to offer the Firm Shares for sale upon the terms
and conditions set forth in the Prospectus.
4. (a) The Shares to be purchased by each Underwriter hereunder, in
definitive form, and in such authorized denominations and registered in such
names as ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. may request upon at least forty-eight hours' prior
notice to the Company, shall be delivered by or on behalf of the Company to
▇▇▇▇▇▇▇, Sachs & Co., through the facilities of the Depository Trust Company
("DTC"), for the account of such Underwriter, against payment by or on behalf of
such Underwriter of the purchase price therefor by wire transfer of Federal
(same-day) funds to the account specified by the Company to ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co.
at least forty-eight hours in advance. The Company will cause the certificates
representing the Shares to be made available for checking and packaging at least
twenty-four hours prior to the Time of Delivery (as defined below) with respect
thereto at the office of DTC or its designated custodian (the "Designated
Office"). The time and date of such delivery and payment shall be, with respect
to the Firm Shares, 9:30 a.m., New York City time, on _______ __, 2001 or such
other time and date as ▇▇▇▇▇▇▇, Sachs & Co. and the Company may agree upon in
writing, and, with respect to the Optional Shares, 9:30 a.m., New York time, on
the date specified by ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. in the written notice given by
▇▇▇▇▇▇▇, Sachs & Co. of the Underwriters' election to purchase such Optional
Shares, or such other time and date as ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. and the Company may
agree in writing. Such time and date for delivery of the Firm Shares is herein
called the "First Time of Delivery", such time and date for delivery of the
Optional Shares, if not the First Time of Delivery, is herein called the "Second
Time of Delivery", and each such time and date for delivery is herein called a
"Time of Delivery".
(b) The documents to be delivered at each Time of Delivery by or on
behalf of the parties hereto pursuant to Section 7 hereof, including the cross-
receipt for the Shares and any additional documents requested by the
Underwriters pursuant to Section 7(o) hereof, will be delivered at the offices
of ▇▇▇▇▇ & ▇▇▇▇▇▇▇, ▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ (the "Closing
Location"), and the Shares will be delivered at the Designated Office, all at
such Time of Delivery. A meeting will be held at the Closing Location at 1:00
p.m., New York City time, on the New York Business Day next preceding such Time
of Delivery, at which meeting the final drafts of the documents to be delivered
pursuant to the preceding sentence will be available for review by the parties
hereto. For the purposes of this Agreement, "New York Business Day" shall mean
each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which
banking institutions in New York are generally authorized or obligated by law or
executive order to close.
11
5. The Company and Anthem Insurance, jointly and severally, agree with
each of the Underwriters:
(a) To prepare the Prospectus in a form approved by you and to file
such Prospectus pursuant to Rule 424(b) under the Act not later than the
Commission's close of business on the second business day following the
execution and delivery of this Agreement, or, if applicable, such earlier time
as may be required by Rule 430A(a)(3) under the Act; to make no further
amendment or any supplement to the Registration Statement or Prospectus which
shall be disapproved by you promptly after reasonable notice thereof; to advise
you, promptly after it receives notice thereof, of the time when any amendment
to the Registration Statement has been filed or becomes effective or any
supplement to the Prospectus or any amended Prospectus has been filed and to
furnish you with copies thereof; to advise you, promptly after it receives
notice thereof, of the issuance by the Commission of any stop order or of any
order preventing or suspending the use of any Preliminary Prospectus or
Prospectus, of the suspension of the qualification of the Shares for offering or
sale in any jurisdiction, of the initiation or threatening of any proceeding for
any such purpose, or of any request by the Commission for the amending or
supplementing of the Registration Statement or Prospectus or for additional
information; and, in the event of the issuance of any stop order or of any order
preventing or suspending the use of any Preliminary Prospectus or the Prospectus
or suspending any such qualification, promptly to use its best efforts to obtain
the withdrawal of such order;
(b) Promptly from time to time to take such action as you may
reasonably request to qualify the Shares for offering and sale under the
securities laws of such jurisdictions as you may request and to comply with such
laws so as to permit the continuance of sales and dealings therein in such
jurisdictions for as long as may be necessary to complete the distribution of
the Shares, provided that in connection therewith the Company and Anthem
Insurance shall not be required to qualify as a foreign corporation or to file a
general consent to service of process in any jurisdiction;
(c) Prior to 10:00 a.m. New York City time, on the New York Business
Day next succeeding the date of this Agreement and from time to time, to furnish
the Underwriters with written and electronic copies of the Prospectus in New
York City in such quantities as you may reasonably request, and, if the delivery
of a prospectus is required at any time prior to the expiration of nine months
after the time of issue of the Prospectus in connection with the offering or
sale of the Shares and if at such time any event shall have occurred 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 in
order to make the statements therein, in the light of the circumstances under
which they were made when such Prospectus is delivered, not misleading, or, if
for any other reason it shall be necessary during such period to amend or
supplement the Prospectus in order to comply with the Act, to notify you and
upon your request to prepare and furnish without charge to each Underwriter and
to any dealer in securities as many written and electronic copies as you may
from time to time reasonably request of an amended Prospectus or a supplement to
the Prospectus which will correct such statement or omission or effect such
compliance, and in case
12
any Underwriter is required to deliver a prospectus in connection with sales of
any of the Shares at any time nine months or more after the time of issue of the
Prospectus, upon your request but at the expense of such Underwriter, to prepare
and deliver to such Underwriter as many written and electronic copies as you may
request of an amended or supplemented Prospectus complying with Section 10(a)(3)
of the Act;
(d) To make generally available to security holders of the Company as
soon as practicable, but in any event not later than eighteen months after the
effective date of the Registration Statement (as defined in Rule 158(c) under
the Act), an earning statement of the Company and its subsidiaries (which need
not be audited) complying with Section 11(a) of the Act and the rules and
regulations thereunder (including, at the option of the Company, Rule 158);
(e) During the period beginning from the date hereof and continuing
to and including the date 180 days after the date of the Prospectus, not to
offer, sell, contract to sell or otherwise dispose of, except as provided
hereunder and for the issuance of the Member Shares pursuant to the Plan, any
Stock or securities of the Company that are substantially similar to the Shares,
including but not limited to any securities that are convertible into or
exchangeable for, or that represent the right to receive, shares of the Stock or
any such substantially similar securities (other than (i) the Units and (ii)
pursuant to employee stock option and employee stock purchase plans existing on,
or upon the conversion or exchange of convertible or exchangeable securities
outstanding as of, the date of this Agreement), without the prior written
consent of ▇▇▇▇▇▇▇, Sachs & Co.;
(f) To furnish to stockholders of the Company as soon as practicable
after the end of the fiscal year in which the Registration Statement becomes
effective and each fiscal year thereafter an annual report (including a balance
sheet and statements of income, stockholders equity and cash flows of the
Company and its consolidated subsidiaries certified by independent public
accountants) and, as soon as practicable after the end of each of the first
three quarters of each fiscal year (beginning with the fiscal quarter ending
after the effective date of the Registration Statement), to make available to
stockholders of the Company consolidated summary financial information of the
Company and its subsidiaries for such quarter in reasonable detail;
(g) During a period of three years from the effective date of the
Registration Statement, to furnish to you copies of all reports or other
communications (financial or other) furnished to stockholders of the Company,
and to deliver to you (i) as soon as they are available, copies of any reports
and financial statements furnished to or filed with the Commission or any
national securities exchange on which any class of securities of the Company is
listed (such financial statements to be on a consolidated basis to the extent
the accounts of the Company and its subsidiaries are consolidated in reports
furnished to its stockholders generally or to the Commission); and (ii) such
additional information concerning the business and financial condition of the
Company as you may from time to time reasonably request; provided, that the
provision of such additional information shall either not be subject to, or
shall be made in reliance upon an exemption from, Regulation F-D under the Act;
13
(h) To use the net proceeds received by the Company from the sale of
the Shares pursuant to this Agreement and from the sale of the Units pursuant to
the Units Underwriting Agreement in the manner specified in the Prospectus under
the caption "Use of Proceeds";
(i) Prior to or contemporaneously with the First Time of Delivery, to
take all actions the Plan requires to have occurred on or prior to the Effective
Date;
(j) To use their best efforts to list, subject to notice of issuance,
the Transaction Shares on the Exchange;
(k) If the Company elects to rely upon Rule 462(b) to file a Rule
462(b) Registration Statement with the Commission in compliance with Rule 462(b)
by 10:00 p.m., Washington, D.C. time, on the date of this Agreement, and at the
time of filing to either pay to the Commission the filing fee for the Rule
462(b) Registration Statement or give irrevocable instructions for the payment
of such fee pursuant to Rule 111(b) under the Act;
(l) No action has been or, prior to the completion of the
distribution of the Shares, will be taken by the Company or Anthem Insurance in
any jurisdiction outside the United States that would permit a public offering
of the Shares, or possession or distribution of the Prospectus, or any amendment
or supplement thereto, or any related Preliminary Prospectus issued in
connection with the offering of the Shares, or any other offering material, in
any country or jurisdiction where action for that purpose is required; and
(m) Upon request of any Underwriter, to furnish, or cause to be
furnished, to such Underwriter an electronic version of the Company's
trademarks, servicemarks and corporate logo for use on the website, if any,
operated by such Underwriter for the purpose of facilitating the on-line
offering of the Shares (the "License"); provided, however, that the License
shall be used solely for the purpose described above, is granted without any fee
and may not be assigned or transferred.
6. The Company and Anthem Insurance, jointly and severally, covenant and
agree with the several Underwriters that the Company or Anthem Insurance will
pay or cause to be paid the following: (i) the fees, disbursements and expenses
of counsel and accountants to the Company and Anthem Insurance in connection
with the Demutualization and the registration of the Shares under the Act and
all other expenses in connection with the preparation, printing and filing of
the Registration Statement, any Preliminary Prospectus and the Prospectus and
amendments and supplements thereto and the mailing and delivering of copies
thereof to the Underwriters and dealers; (ii) the cost of printing or producing
any Agreement among Underwriters, this Agreement, the Selling Agreement, the
Blue Sky Memorandum, closing documents (including any compilations thereof) and
any other documents in connection with the offering, purchase, sale and delivery
of the Shares; (iii) all expenses in connection with the qualification of the
Shares for offering and sale under state securities laws and insurance
securities laws as provided in Section 5(b) hereof, including the fees and
14
disbursements of counsel for the Underwriters in connection with such
qualification and in connection with the Blue Sky Memorandum; (iv) all fees and
expenses in connection with listing the Transaction Shares on the New York Stock
Exchange; (v) the filing fees incident to, and the fees and disbursements of
counsel for the Underwriters in connection with, securing any required review by
the National Association of Securities Dealers, Inc. of the terms of the sale of
the Shares; (vi) the cost of preparing stock certificates; (vii) the cost and
charges of any transfer agent or registrar; and (viii) all other costs and
expenses incident to the performance of the obligations of the Company and
Anthem Insurance hereunder which are not otherwise specifically provided for in
this Section. Except as provided in this Section, and Sections 9 and 11 hereof,
the Underwriters will pay all of their own costs and expenses, including the
fees of their counsel, stock transfer taxes on resale of any of the Shares by
them and any advertising expenses connected with any offers they may make.
7. The obligations of the Underwriters hereunder, as to the Shares to be
delivered at each Time of Delivery, shall be subject, in their discretion, to
the condition that all representations and warranties and other statements of
the Company and Anthem Insurance herein are, at and as of such Time of Delivery,
true and correct, the condition that the Company and Anthem Insurance shall have
performed all of their obligations hereunder theretofore to be performed, and
the following additional conditions.
(a) The Prospectus shall have been filed with the Commission pursuant
to Rule 424(b) within the applicable time period prescribed for such filing by
the rules and regulations under the Act and in accordance with Section 5(a)
hereof; if the Company has elected to rely upon Rule 462(b), the Rule 462(b)
Registration Statement shall have become effective by 10:00 p.m., Washington,
D.C. time, on the date of this Agreement; no stop order suspending the
effectiveness of the Registration Statement or any part thereof shall have been
issued and no proceeding for that purpose shall have been initiated or
threatened by the Commission; and all requests for additional information on the
part of the Commission shall have been complied with to your reasonable
satisfaction;
(b) ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, counsel for the Underwriters, shall have
furnished to you such written opinion or opinions, dated such Time of Delivery,
with respect to such matters as you may reasonably request, and such counsel
shall have received such papers and information as they may reasonably request
to enable them to pass upon such matters;
(c) ▇▇▇▇▇ & ▇▇▇▇▇▇▇, counsel for the Company and Anthem Insurance,
shall have furnished to you their written opinion (a draft of such opinion is
attached as Annex 7(c) hereto), dated such Time of Delivery, in form and
substance satisfactory to you, to the effect that:
(i) The Company has been duly incorporated and is validly
existing as a corporation under the laws of the State of Indiana, with corporate
15
power and authority to own its properties and conduct its business as
described in the Prospectus;
(ii) Anthem Insurance is validly existing as a mutual insurance
company under the laws of the State of Indiana and upon the filing of the
amended Articles of Incorporation of Anthem Insurance with the Secretary of
State of the State of Indiana simultaneously with the First Time of
Delivery, Anthem Insurance will be duly incorporated and validly existing
as a stock insurance company under the laws of the State of Indiana, in
each case with corporate power and authority to own its property and
conduct its business as described in the Prospectus;
(iii) The Company has an authorized capitalization as set forth
in the Prospectus, and all of the issued shares of capital stock of the
Company (including the Shares being delivered at such Time of Delivery)
have been duly authorized and validly issued and are or (with respect to
the Shares being delivered at such Time of Delivery, when paid for in
accordance with the terms hereof) will be fully paid and nonassessable; the
Member Shares, when issued pursuant to the Plan, will be duly authorized
and validly issued and fully paid and nonassessable; stockholders of the
Company have no preemptive rights with respect to the Shares arising out of
the Articles of Incorporation or the By-Laws of the Company, the Plan or as
a matter of Indiana law; and the Shares and Member Shares conform in all
material respects to the description of the Stock contained in the
Prospectus;
(iv) Each of this Agreement and the Units Underwriting Agreement
has been duly authorized, executed and delivered by the Company and Anthem
Insurance;
(v) The Plan has been duly approved by the required vote of the
Board of Directors of Anthem Insurance (which approval complied with the
applicable requirements of the Indiana Code) and submitted to the Indiana
Commissioner in the manner and accompanied by all information and
certificates required by the Indiana Code; on ., 2001, the Indiana
Commissioner's Order was issued and such Order remains unmodified and is in
full force and effect; no other Approvals are required to be obtained under
the Indiana Code or, to such counsel's knowledge, otherwise under the
Conversion Laws and Regulations for the effectiveness of the Plan; upon the
filing of the amended Articles of Incorporation of Anthem Insurance with
the Secretary of State of the State of Indiana simultaneously with the
First Time of Delivery, the Plan will become effective in accordance with
its terms;
(vi) The issuance and sale of the Shares by the Company to the
Underwriters hereunder, the issuance of the Member Shares pursuant to the
Plan, the issuance and sale of the Units by the Company pursuant to the
Units Underwriting Agreement, the entry into and compliance by the Company
and Anthem Insurance and with all provisions of this Agreement, the Units
16
Underwriting Agreement and the Plan, and the consummation of the
transactions herein and therein contemplated will not result, in any
violation of the provisions of (A) the Articles of Incorporation or By-Laws
or similar organizational documents, as amended, of the Company or Anthem
Insurance, (B) the documents filed as exhibits nos. 10.1 through 10.[23],
inclusive, to the Registration Statement, (C) any material obligation,
agreement, covenant or condition contained in any BCBS License, indenture,
mortgage, deed of trust, loan agreement, lease or other agreement or
instrument known to such counsel to which the Company is a party or by
which the Company is bound or to which any of the properties of the Company
is subject, or (D) any Federal statute or the laws of the State of Indiana
or any rule or regulation known to such counsel of any Indiana or Federal
governmental agency or body having jurisdiction over the Company or Anthem
Insurance or any of their properties, except, in the case of clauses (B),
(C) and (D), as would not, individually or in the aggregate, adversely
affect the validity or performance of this Agreement, the Units
Underwriting Agreement, the Plan or the Transaction Shares, or have a
Material Adverse Effect;
(vii) Each of the Company, Anthem Insurance and each of their
respective Material Subsidiaries has made all Filings required to be made
pursuant to, and has obtained all Approvals required to be obtained under,
any law or regulation of the United States or the State of Indiana for the
issuance and sale by the Company of the Shares, the issuance of the Member
Shares pursuant to the Plan, the issuance and sale of the Units pursuant to
the Units Underwriting Agreement, the compliance by the Company and Anthem
Insurance with all provisions of this Agreement, the Units Underwriting
Agreement and the Plan, and the consummation of the transactions herein and
therein contemplated, except for such Filings and Approvals (A) as may be
required under state securities or Blue Sky laws in connection with the
purchase and distribution of the Shares by the Underwriters and the
purchase and distribution of the Units by the Units Underwriters, or (B)
individually or in the aggregate, as would not affect the validity,
performance of, or adversely affect the consummation of, the transactions
contemplated by this Agreement, the Units Underwriting Agreement or the
Plan, or would not have a Material Adverse Effect;
(viii) To such counsel's knowledge, no stop order suspending the
effectiveness of the Registration Statement or any part thereof has been
issued and no proceedings for that purpose have been instituted or are
pending or threatened by the Commission under the Act;
(ix) The statements set forth in the Prospectus under the caption
"Description of Capital Stock", insofar as they purport to constitute a
summary of the terms of the Stock, and under the captions "Risk Factors -
We are using the Blue Cross and Blue Shield names and marks as identifiers
for our products and services under licenses from the Blue Cross Blue
Shield Association. The termination of these license agreements could
adversely affect our business,
17
financial condition and results of operations"; "The Plan of Conversion",
"The Business of Anthem - The Blue Cross Blue Shield License", "Legal and
Regulatory Matters", "Certain United States Tax Consequences to Non-U.S.
Holders of Common Stock" and "Underwriting", insofar as they purport to
describe the provisions of the laws and documents referred to therein, are
accurate and complete in all material respect;
(x) The issuance of the Member Shares pursuant to the Plan does
not require registration under the Act;
(xi) Neither the Company nor Anthem Insurance is or, after
giving effect to the offering and sale of the Shares, the issuance and sale
of the Units pursuant to the Units Underwriting Agreement, the issuance of
the Member Shares pursuant to the Plan, the consummation of the
Demutualization and the application of the proceeds from the sale of the
Shares and the Units as described in the Prospectus, will be an "investment
company", as such term is defined in the Investment Company Act, and the
rules and regulations thereunder; and
(xii) To such counsel's knowledge, other than as described or
contemplated in the Prospectus, there are no legal or governmental
proceedings pending to which the Company, Anthem Insurance or any of their
respective subsidiaries is a party or of which any property of the Company,
Anthem Insurance or any of their respective subsidiaries is the subject
which, if determined adversely to the Company, Anthem Insurance or any of
their respective subsidiaries, could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect; and, to such
counsel's knowledge and other than as described or contemplated in the
Prospectus, no such proceedings are threatened or contemplated by
governmental authorities or threatened by others;
(xiii) The Registration Statement and the Prospectus and any
further amendments and supplements thereto made by the Company prior to
such Time of Delivery (other than the financial statements and related
schedules and other financial information contained therein, as to which
such counsel need express no opinion) comply as to form in all material
respects with the requirements of the Act and the rules and regulations
thereunder; although they do not assume any responsibility for the accuracy
and completeness of the statements contained in the Registration Statement
or the Prospectus, except for those referred to in the opinion in
subsection (ix) of this Section 7(c), such counsel shall also state that,
they have no reason to believe that the Registration Statement (other than
the financial statements and related schedules and other financial
information contained therein, as to which such counsel need express no
belief), at the time it became effective, contained an untrue statement of
a material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements contained therein not
misleading, or that the Prospectus or any further amendment or supplement
thereto made by the
18
Company prior to such Time of Delivery (other than the financial statements
and related schedules and other financial information contained therein, as
to which such counsel need express no belief) contained any untrue
statement of a material fact or omitted to state a material fact necessary
to make the statements therein, in light of the circumstances under which
they were made, not misleading or that, as of such Time of Delivery, either
the Registration Statement or the Prospectus or any further amendment or
supplement thereto made by the Company prior to such Time of Delivery
(other than the financial statements and related schedules and other
financial information contained therein, as to which such counsel need
express no opinion) contains an untrue statement of a material fact or
omits to state a material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading;
and they do not know of any amendment to the Registration Statement
required to be filed or of any contracts or other documents of a character
required to be filed as an exhibit to the Registration Statement or
required to be described in the Registration Statement or the Prospectus
which are not filed or described as required.
In rendering such opinion, such counsel may state that they express no
opinion as to the laws of any jurisdiction other than the United States and the
State of Indiana.
(d) ▇▇▇▇▇ ▇. ▇▇▇▇▇, Executive Vice-President and Chief Legal and
Administrative Officer of the Company and Anthem Insurance, shall have furnished
to you his written opinion (a draft of which is attached as Annex 7(d) hereto),
dated such Time of Delivery, in form and substance reasonably satisfactory to
you, to the effect that:
(i) The Company has been duly incorporated and is validly
existing as a corporation under the laws of the State of Indiana, with the
corporate power and authority to own its properties and conduct its
business as described in the Prospectus;
(ii) Anthem Insurance is validly existing as a mutual insurance
company under the laws of the State of Indiana and upon the filing of the
amended Articles of Incorporation of Anthem Insurance with the Secretary of
State of the State of Indiana simultaneously with the First Time of
Delivery, Anthem Insurance will be duly incorporated and validly existing
as a stock insurance company under the laws of the State of Indiana, in
each case with corporate power and authority to own its property and
conduct its business as described in the Prospectus;
(iii) The Company has an authorized capitalization as described
in the Prospectus, and all of the issued shares of the Stock (including the
Shares being delivered at such Time of Delivery) have been duly authorized
and validly issued and are or (with respect to the Shares being delivered
at such Time of Delivery, when paid for in accordance with the terms
hereof) will be fully paid and nonassessable; the Member Shares, when
issued pursuant to the Plan, will be
19
duly authorized and validly issued and fully paid and nonassessable;
stockholders of the Company have no preemptive rights with respect to the
Shares arising out of the Articles of Incorporation or the By-Laws of the
Company, the Plan, or as a matter of Indiana law; and the Transaction
Shares conform in all material respects to the description of the Stock
contained in the Prospectus;
(iv) Each Material Subsidiary of the Company and Anthem
Insurance has been duly organized and is validly existing as a corporation,
partnership or limited liability company, as applicable, and is in good
standing under the laws of its jurisdiction of organization; and all issued
shares of capital stock or other ownership interests of each such Material
Subsidiary have been duly authorized and validly issued, are fully paid and
nonassessable, and (except as described in the Prospectus and except for
directors' qualifying shares) are owned directly or indirectly by the
Company or Anthem Insurance, free and clear of all liens, encumbrances,
equities or claims (such counsel being entitled to rely in respect of the
opinion in this clause upon opinions of local counsel and in respect to
matters of facts upon certificates of officers of the Company, Anthem
Insurance or their respective subsidiaries; provided that such counsel
shall state that he believes that both you and he are justified in relying
upon such opinions and certificates);
(v) Each of the Company, Anthem Insurance and each of their
respective Material Subsidiaries has been duly qualified as a foreign
corporation, partnership or limited liability company, as applicable, for
the transaction of business and, to the extent such concept is applicable,
is in good standing under the laws of each other jurisdiction in which its
ownership or lease of property or the conduct of its business requires such
qualification, or is subject to no material liability or disability by
reason of the failure to be so qualified and in good standing in any such
jurisdiction;
(vi) Each of Anthem Insurance and each Insurance or Healthcare
Subsidiary is duly organized and licensed as an insurance, healthcare, HMO
or health care management company or holding company in respect thereof in
its jurisdiction of incorporation, and is duly licensed or authorized as
such in each other jurisdiction where it is required to be so licensed or
authorized to conduct its business as described in the Prospectus, except
where the failure to be so licensed or authorized could not reasonably be
expected to have a Material Adverse Effect; except as otherwise described
in the Prospectus, each of Anthem Insurance and each Insurance or
Healthcare Subsidiary has all other Approvals of and from all insurance or
healthcare related regulatory authorities to conduct its business, except
where the failure to have such Approvals could not reasonably be expected
to have a Material Adverse Effect; to such counsel's knowledge, there is no
pending or threatened action, suit, proceeding or investigation that could
reasonably be expected to lead to the revocation, termination or suspension
of any such Approval, the revocation, termination or suspension of which
would have, individually or in the aggregate, a
20
Material Adverse Effect; and, to such counsel's knowledge, 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) Each of the Company, Anthem Insurance and each of their
respective Material Subsidiaries has all necessary Approvals from, and has
made all Filings with, all insurance regulatory authorities, all Federal,
state, local and other governmental authorities, all self-regulatory
organizations and all courts and other tribunals, which are necessary to
own, lease, license and use its properties and assets and to conduct its
business in the manner described in the Prospectus, except where the
failure to do so could not reasonably be expected to have a Material
Adverse Effect; to such counsel's knowledge, all such Approvals and Filings
are in full force and effect and neither the Company, Anthem Insurance nor
any of their respective Material 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
Approval or otherwise impose any limitation on the conduct of the business
of the Company, Anthem Insurance or any such subsidiary, except as
described in the Prospectus;
(viii) To such counsel's knowledge, there is no legal or
governmental proceeding pending or, to such counsel's knowledge and as
disclosed to you, currently being threatened challenging the
Demutualization or the Plan or the approval thereof, the Indiana
Commissioner's Order or the consummation of the transactions contemplated
thereby or the offering of the Shares by the Underwriters;
(ix) To such counsel's knowledge, other than as described or
contemplated in the Prospectus, there are no legal or governmental
proceedings pending to which the Company, Anthem Insurance or any of their
respective subsidiaries is a party or of which any property of the Company,
Anthem Insurance or any of their respective subsidiaries is the subject
which, if determined adversely to the Company, Anthem Insurance or any of
their respective subsidiaries, could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect; and, to such
counsel's knowledge and other than as described or contemplated in the
Prospectus, no such proceedings are threatened or contemplated by
governmental authorities or threatened by others;
(x) Each of this Agreement and the Units Underwriting Agreement
has been duly authorized, executed and delivered by the Company and Anthem
Insurance;
(xi) None of the Company, Anthem Insurance and any of their
respective subsidiaries is or, after giving effect to the offering and sale
of the Shares, the issuance and sale of the Units pursuant to the Units
Underwriting
21
Agreement, the issuance of the Member Shares pursuant to the Plan, the
consummation of the Demutualization and the application of the proceeds of
the sale of the Shares and the Units as described in the Prospectus, will
be an "investment company", as such term is defined in the Investment
Company Act, and the rules and regulations thereunder;
(xii) The issuance and sale of the Shares by the Company to the
Underwriters hereunder, the issuance of the Member Shares pursuant to the
Plan, the issuance and sale of the Units pursuant to the Units Underwriting
Agreement, the entry into and compliance by the Company and Anthem
Insurance with all provisions of this Agreement, the Units Underwriting
Agreement and the Plan, and the consummation of the transactions herein and
therein contemplated will not conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute a default
under, any BCBS License, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument known to such counsel to which
the Company, Anthem Insurance or any of their respective subsidiaries is a
party or by which the Company, Anthem Insurance or any of their respective
subsidiaries is bound or to which any of the property or assets of the
Company, Anthem Insurance or any of their respective subsidiaries is
subject, or which affects the validity, performance or consummation of the
Plan, the Demutualization or the transactions contemplated by this
Agreement, the Units Underwriting Agreement or the Plan, nor will such
action result in any violation of the provisions of (x) the Articles of
Incorporation or the By-Laws or similar organizational documents, as
amended, of the Company, Anthem Insurance or any of their respective
subsidiaries or (y) to such counsel's knowledge, any statute or any order,
rule or regulation of any court or insurance regulatory agency or other
governmental agency or body having jurisdiction over the Company, Anthem
Insurance or any of their respective subsidiaries or any of their
properties, in each case the effect of which (other than a violation of the
Articles of Incorporation or the By-Laws or similar organizational
documents of the Company or Anthem Insurance), individually or in the
aggregate, would be either to adversely affect the validity or performance
of this Agreement, the Units Underwriting Agreement, the Plan or the
Transaction Shares, or to have a Material Adverse Effect;
(xiii) Each of the Company, Anthem Insurance and each of their
respective subsidiaries has made all Filings required to be made, and has
obtained all Approvals required to be obtained, under any law or regulation
of the United States or any state thereof for the issuance and sale by the
Company of the Shares, the issuance of the Member Shares pursuant to the
Plan, the issuance and sale of the Units pursuant to the Units Underwriting
Agreement, the compliance by the Company and Anthem Insurance with all
provisions of this Agreement and the Units Underwriting Agreement and the
consummation of the transactions herein and therein contemplated, except
for such Filings and Approvals as (i) may be required under state
securities or Blue Sky laws in connection with the purchase and
distribution of the Shares by the Underwriters and the purchase and
distribution of the Units by the Units Underwriters, or (ii)
22
individually or in the aggregate, would not adversely affect the validity
of the Shares, the Member Shares or the Units or have a Material Adverse
Effect; and all other Filings and Approvals required to be made or obtained
on or prior to the Plan Effective Date in connection with the
Demutualization or for the consummation by the Company and Anthem Insurance
of the transactions contemplated by this Agreement, the Units Underwriting
Agreement or the Plan have been so obtained and are in full force and
effect, except as described in the Prospectus or to the extent that the
failure to make any such Filings or to have any such Approvals would not
have, individually or in the aggregate, a Material Adverse Effect and would
not adversely affect the validity, performance of or consummation of the
transactions contemplated by this Agreement, the Units Underwriting
Agreement or the Plan;
(xiv) To such counsel's knowledge, no stop order suspending the
effectiveness of the 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;
(xv) The statements set forth in the Prospectus under the
captions "Description of Capital Stock", insofar as they purport to
constitute a summary of the terms of the stock, and under the captions
"Risk Factors - We are using the Blue Cross and Blue Shield names and marks
as identifiers for our products and services under licenses from the Blue
Cross Blue Shield Association. The termination of these license agreements
could adversely affect our business, financial condition and results of
operations"; "The Plan of Conversion", "The Business of Anthem - The Blue
Cross Blue Shield License", "Legal and Regulatory Matters", "Certain United
States Tax Consequences to Non-U.S. Holders of Common Stock" and
"Underwriting", insofar as they purport to describe the provisions of the
laws and documents referred to herein, are accurate and complete in all
material respect;
(xvi) Neither the Company, Anthem Insurance nor any of their
respective subsidiaries is (A) in violation of its articles of
incorporation or by-laws or similar organizational document or (B) in
default in the performance or observance of any material obligation,
agreement, covenant or condition contained in any BCBS License, indenture,
mortgage, deed of trust, loan agreement, lease or other agreement or
instrument to which it is a party or by which it or any of its properties
may be bound, except, in the case of clause (B), where such default could
not reasonably be expected to have a Material Adverse Effect;
(xvii) The Company, Anthem Insurance and their respective
Material Subsidiaries have good and marketable title in fee simple to all
material real property owned by them, in each case free and clear of all
liens, encumbrances and defects except such as are described in the
Prospectus or such as do not materially affect the value of such property
and do not interfere with the use made and proposed to be made of such
property, and any material
23
real property and buildings held under lease by the Company, Anthem
Insurance and their respective Material Subsidiaries are held by them under
valid, subsisting and enforceable leases with such exceptions as are not
material and do not interfere with the use made and proposed to be made of
such property and buildings (in giving the opinion in this clause, such
counsel may state that no examination of record titles for the purpose of
such opinion has been made, and that they are relying upon a general review
of the titles of the Company, Anthem Insurance and their respective
Material Subsidiaries, upon opinions of local counsel and abstracts,
reports and policies of title companies rendered or issued at or subsequent
to the time of acquisition of such property by the Company, Anthem
Insurance any their respective Material Subsidiaries, upon opinions of
counsel to the lessors of such property and, in respect to matters of fact,
upon certificates of officers of the Company, Anthem Insurance or their
respective subsidiaries, provided that such counsel shall state that they
believe that both you and they are justified in relying upon such opinions,
abstracts, reports, policies and certificates; and
(xviii) The Registration Statement and the Prospectus and any
further amendments and supplements thereto made by the Company prior to
such Time of Delivery (other than the financial statements and related
schedules and other financial information contained therein, as to which
such counsel need express no opinion) comply as to form in all material
respects with the requirements of the Act and the rules and regulations
thereunder; although he does not assume any responsibility for the accuracy
and completeness of the statements contained in the Registration Statement
or the Prospectus, except for those referred to in the opinion in
subsection (ix) of this Section 7(c), such counsel shall also state that he
has no reason to believe that the Registration Statement or any further
amendment thereto made by the Company prior to such Time of Delivery (other
than the financial statements and related schedules and other financial
information contained therein, as to which such counsel need express no
belief) contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make
the statements contained therein not misleading, or that, as of its date,
the Prospectus or any further amendment or supplement thereto made by the
Company prior to such Time of Delivery (other than the financial statements
and related schedules and other financial information contained therein, as
to which such counsel need express no opinion) contained any untrue
statement of a material fact or omitted to state a material fact necessary
to make the statements therein, in light of the circumstances under which
they were made, not misleading or that, as of such Time of Delivery, either
the Registration Statement or the Prospectus or any further amendment or
supplement thereto made by the Company prior to such Time of Delivery
(other than the financial statements and related schedules and other
financial information contained therein, as to which such counsel need
express no opinion) contains an untrue statement of a material fact or
omits to state a material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading;
and he does not know of any amendment to the Registration
24
Statement required to be filed or of any contracts or other documents of a
character required to be filed as an exhibit to the Registration Statement
or required to be described in the Registration Statement or the Prospectus
which are not filed or described as required.
In rendering such opinion, such counsel may state that he expresses no
opinion as to the laws of any jurisdiction other than the United States and the
State of Indiana.
(e) The Company and Anthem Insurance will furnish the
Representatives with such conformed copies of such opinions, certificates,
letters and documents as ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. reasonably request.
(f) On the date of the Prospectus at a time prior to the
execution of this Agreement, at 9:30 a.m., New York City time, on the effective
date of any post-effective amendment to the Registration Statement filed
subsequent to the date of this Agreement and also at each Time of Delivery,
Ernst & Young LLP, the independent auditors that have audited the consolidated
financial statements of Anthem Insurance, shall have furnished to you a letter
or letters, dated the respective dates of delivery thereof, in form and
substance satisfactory to you, to the effect set forth in Annex 7(f)(i) hereto
(the executed copy of the letter delivered prior to the execution of this
Agreement is attached as Annex 7(f)(ii) hereto);
(g) Neither the Company nor Anthem Insurance nor any of their
respective subsidiaries shall have sustained since the date of the latest
audited financial statements included in the Prospectus any loss or interference
with its business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or governmental action,
order or decree, otherwise than as set forth or contemplated in the Prospectus,
and (ii) since the respective dates as of which information is given in the
Prospectus, there shall not have been any change in the surplus of Anthem
Insurance or the capital stock of the Company or the long-term debt of the
Company, Anthem Insurance and their respective subsidiaries, considered as a
whole, or any change, or any development involving a prospective change, in or
affecting the general affairs, management, financial position, stockholders'
equity or results of operations of the Company, Anthem Insurance and any of
their respective subsidiaries, otherwise than as set forth or contemplated in
the Prospectus, the effect of which, in any such case described in clause (i) or
(ii), is in the judgment of ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. so material and adverse as to
make it impracticable or inadvisable to proceed with the public offering or the
delivery of the Shares being delivered at such Time of Delivery on the terms and
in the manner contemplated in the Prospectus;
(h) On or after the date hereof (i) no downgrading shall have
occurred in the rating accorded the debt securities or the financial strength or
claims paying ability of the Company, Anthem Insurance or any of their
respective subsidiaries by A.M. Best & Co. or any "nationally recognized
statistical rating organization", as that term is defined by the Commission for
purposes of Rule 436(g)(2) under the Act, and (ii) no such organization shall
have publicly announced that it has under surveillance or review, with possible
negative implications, its rating of any debt security or the financial
25
strength or the claims paying ability of the Company, Anthem Insurance or any of
their respective subsidiaries;
(i) On or after the date hereof there shall not have occurred any of
the following: (i) a change in U.S. or international financial, political or
economic conditions or currency exchange rates or exchange controls as would, in
the judgment of ▇▇▇▇▇▇▇, Sachs & Co., be likely to prejudice materially the
success of the proposed issue, sale or distribution of the Shares, whether in
the primary market or in respect of dealings in the secondary market; (ii) a
suspension or material limitation in trading in securities generally on the
Exchange; (iii) a suspension or material limitation in trading in the Company's
securities on the Exchange; (iv) a general moratorium on commercial banking
activities declared by either Federal or New York State authorities or a
material disruption in commercial banking or securities settlement or clearance
services in the United States; or (v) the outbreak or escalation of hostilities
involving the United States or the declaration by the United States of a
national emergency or war or the occurrence of any other calamity or crisis, if
the effect of any such event specified in this clause (v) in the judgment of
▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. makes it impracticable or inadvisable to proceed with the
public offering or the delivery of the Shares being delivered at such Time of
Delivery on the terms and in the manner contemplated in the Prospectus;
(j) The Transaction Shares shall have been duly listed, subject to
notice of issuance, on the Exchange;
(k) The Company and Anthem Insurance shall have complied with the
provisions of Section 5(c) hereof with respect to the furnishing of copies of
the Prospectus on the New York Business Day next succeeding the date of this
Agreement;
(l) The Company and Anthem Insurance shall have complied with all
conditions to the effectiveness of the Plan, as set forth in the Plan, including
but not limited to, receipt of and, where applicable, delivery to the Indiana
Commissioner of, favorable opinions from nationally recognized independent tax
counsel, a favorable "no-action" letter or exemptive relief from the Commission,
a Blue Sky Memorandum, opinions from the financial advisors to the Company and
Anthem Insurance and an opinion from a nationally recognized independent
actuary, each on matters as described in the Plan, and the transactions and
other actions described in Article I of the Plan shall have occurred;
(m) No appeal of the Indiana Commissioner's Order or other legal or
governmental action challenging the Demutualization or the Plan or the approval
thereof or the consummation of the transactions contemplated thereby, the
offering of the Shares by the Underwriters or the offering of the Units by the
Units Underwriters shall have been filed and remain outstanding the effect of
which, in the judgment of ▇▇▇▇▇▇▇, Sachs & Co, makes it impracticable or
inadvisable to proceed with the public offering or the delivery of the Shares
being delivered at such Time of Delivery on the terms and in the manner
contemplated in the Prospectus;
26
(n) The closing of the offering of the Shares hereunder shall have
occurred simultaneously with the effectiveness of the Demutualization; and
(o) The Company and Anthem Insurance shall have furnished or caused
to be furnished to you at such Time of Delivery certificates of officers of the
Company and Anthem Insurance satisfactory to you as to the accuracy of the
representations and warranties of the Company and Anthem Insurance herein at and
as of such Time of Delivery, as to the performance by the Company and Anthem
Insurance of all of their obligations hereunder to be performed at or prior to
such Time of Delivery, as to the matters set forth in subsections (a) and (g) of
this Section and as to such other matters as you may reasonably request.
8. (a) The Company and Anthem Insurance will, jointly and severally,
indemnify and hold harmless each Underwriter 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 an
untrue statement or alleged untrue statement of a material fact contained in any
Preliminary Prospectus, the Registration Statement or the Prospectus, or any
amendment or supplement thereto, 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
action or claim as such expenses are incurred; provided, however, that the
Company and Anthem Insurance shall 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 or omission or alleged omission
made in any Preliminary Prospectus, the Registration Statement or the Prospectus
or any such amendment or supplement(s) in reliance upon and in conformity with
written information furnished to the Company by any Underwriter through ▇▇▇▇▇▇▇,
▇▇▇▇▇ & Co. expressly for use therein.
(b) Each Underwriter will, severally and not jointly, indemnify and
hold harmless the Company or Anthem Insurance, as applicable, against any
losses, claims, damages or liabilities to which the Company or Anthem Insurance
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 an untrue statement or alleged untrue statement of a material fact
contained in any Preliminary Prospectus, the Registration Statement or the
Prospectus, or any amendment or supplement thereto, 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,
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 any
Preliminary Prospectus, the Registration Statement or the Prospectus or any such
amendment or supplement in reliance upon and in conformity with written
information furnished to the Company or Anthem Insurance by such Underwriter
through ▇▇▇▇▇▇▇, Sachs & Co. expressly for use therein; and will reimburse the
Company or Anthem Insurance, as applicable, for any legal or other expenses
reasonably incurred by the
27
Company or Anthem Insurance in connection with investigating or defending any
such action or claim as such expenses are incurred.
(c) Promptly after receipt by an indemnified party under subsection
(a) or (b) above of notice of the commencement of any action, such indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify the indemnifying party in
writing of the commencement thereof; but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may have to
any indemnified party otherwise than under such subsection. In case any such
action shall be brought against any indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it shall wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof with counsel satisfactory to such indemnified party (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 shall
not be liable to such indemnified party under such subsection for any legal
expenses of other counsel or any other expenses, in each case subsequently
incurred by such indemnified party, in connection with the defense thereof other
than reasonable costs of investigation. No indemnifying party shall, without the
written consent of the indemnified party, effect the settlement or compromise
of, or consent to the entry of any judgment with respect to, any pending or
threatened action or claim in respect of which indemnification or contribution
may be sought hereunder (whether or not the indemnified party is an actual or
potential party to such action or claim) unless such settlement, compromise or
judgment (i) includes an unconditional release of the indemnified party from all
liability arising out of such action or claim and (ii) does not include a
statement as to or an admission of fault, culpability or a failure to act, by or
on behalf of any indemnified party.
(d) If the indemnification provided for in this Section 8 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities (or
actions in respect thereof) in such proportion as is appropriate to reflect the
relative benefits received by the Company and Anthem Insurance on the one hand
and the Underwriters on the other from the offering of the Shares. If, however,
the allocation provided by the immediately preceding sentence is not permitted
by applicable law or if the indemnified party failed to give the notice required
under subsection (c) above, then each indemnifying party shall contribute to
such amount paid or payable by such indemnified party in such proportion as is
appropriate to reflect not only such relative benefits but also the relative
fault of the Company and Anthem Insurance on the one hand and the Underwriters
on the other in connection with the statements or omissions which resulted in
such losses, claims, damages or liabilities (or actions in respect thereof), as
well as any other relevant equitable considerations. The relative benefits
received by the Company and Anthem Insurance on the one hand and the
Underwriters on the other shall be deemed to be in the same proportion as the
total net proceeds
28
from the offering (before deducting expenses) received by the Company bear to
the total underwriting discounts and commissions received by the Underwriters,
in each case as set forth in the table on the cover page of the Prospectus. The
relative fault shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by the
Company or Anthem Insurance on the one hand or the Underwriters on the other and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission. The Company, Anthem Insurance
and the Underwriters agree that it would not be just and equitable if
contributions pursuant to this subsection (d) were determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to above in this subsection (d). The amount
paid or payable by an indemnified party as a result of the losses, claims,
damages or liabilities (or actions in respect thereof) referred to above in 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 such action or claim. Notwithstanding the provisions of this subsection (d),
no Underwriter shall be required to contribute any amount in excess of the
amount by which the total price at which the Shares 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 and Anthem Insurance under this
Section 8 shall be in addition to any liability which the Company and Anthem
Insurance 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. The obligations of the Underwriters under this Section 8
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
officer and director of the Company or Anthem Insurance and to each person, if
any, who controls the Company or Anthem Insurance within the meaning of the Act.
9. (a) If any Underwriter shall default in its obligation to purchase
the Shares which it has agreed to purchase hereunder at a Time of Delivery, you
may in your discretion arrange for you or another party or other parties to
purchase such Shares on the terms contained herein. If within thirty-six hours
after such default by any Underwriter you do not arrange for the purchase of
such Shares, then the Company shall be entitled to a further period of thirty-
six hours within which to procure another party or other parties satisfactory to
you to purchase such Shares on such terms. In the event that, within the
respective prescribed periods, you notify the Company that you have so arranged
for the purchase of such Shares, or the Company notifies you that it
29
has so arranged for the purchase of such Shares, you or the Company shall have
the right to postpone such Time of Delivery for a period of not more than seven
days, in order to effect whatever changes may thereby be made necessary in the
Registration Statement or the Prospectus, or in any other documents or
arrangements, and the Company agrees to file promptly any amendments to the
Registration Statement or the Prospectus which in your opinion may thereby be
made necessary. The term "Underwriter" as used in this Agreement shall include
any person substituted under this Section with like effect as if such person had
originally been a party to this Agreement with respect to such Shares.
(b) If, after giving effect to any arrangements for the purchase of
the Shares of a defaulting Underwriter or Underwriters by you and the Company as
provided in subsection (a) above, the aggregate number of such Shares which
remains unpurchased does not exceed one-eleventh of the aggregate number of all
the Shares to be purchased at such Time of Delivery, then the Company shall have
the right to require each non-defaulting Underwriter to purchase the number of
Shares which such Underwriter agreed to purchase hereunder at such Time of
Delivery and, in addition, to require each non-defaulting Underwriter to
purchase its pro rata share (based on the number of Shares which such
Underwriter agreed to purchase hereunder) of the Shares of such defaulting
Underwriter or Underwriters for which such arrangements have not been made; but
nothing herein shall relieve a defaulting Underwriter from liability for its
default.
(c) If, after giving effect to any arrangements for the purchase of
the Shares of a defaulting Underwriter or Underwriters by you and the Company as
provided in subsection (a) above, the aggregate number of such Shares which
remains unpurchased exceeds one-eleventh of the aggregate number of all the
Shares to be purchased at such Time of Delivery, or if the Company shall not
exercise the right described in subsection (b) above to require non-defaulting
Underwriters to purchase Shares of a defaulting Underwriter or Underwriters,
then this Agreement (or, with respect to the Second Time of Delivery, the
obligations of the Underwriters to purchase and of the Company to sell the
Optional Shares) shall thereupon terminate, without liability on the part of any
non-defaulting Underwriter or the Company, except for the expenses to be borne
by the Company or Anthem Insurance and the Underwriters, as provided in Section
6 hereof and the indemnity and contribution agreements in Section 8 hereof; but
nothing herein shall relieve a defaulting Underwriter from liability for its
default.
10. The respective indemnities, agreements, representations, warranties
and other statements of the Company and Anthem Insurance or their respective
officers and of the several Underwriters, as set forth in this Agreement or made
by or on behalf of them, respectively, pursuant to this Agreement, shall remain
in full force and effect, regardless of any investigation (or any statement as
to the results thereof) made by or on behalf of any Underwriter or any
controlling person of any Underwriter, the Company, Anthem Insurance or any
officer or director or controlling person of the Company or Anthem Insurance,
and shall survive delivery of and payment for the Shares.
30
11. If this Agreement shall be terminated pursuant to Section 9 hereof,
neither the Company nor Anthem Insurance shall then be under any liability to
any Underwriter except as provided in Sections 6 and 8 hereof; but, if for any
other reason, any Shares are not delivered by or on behalf of the Company as
provided herein, the Company and Anthem Insurance, jointly and severally, will
reimburse the Underwriters through you for all out-of-pocket expenses approved
in writing by you, including fees and disbursements of counsel, reasonably
incurred by the Underwriters in making preparations for the purchase, sale and
delivery of the Shares not so delivered, but the Company and Anthem Insurance
shall then be under no further liability to any Underwriter except as provided
in Sections 6 and 8 hereof.
12. In all dealings hereunder, you shall act on behalf of each of the
Underwriters, and the parties hereto shall be entitled to act and rely upon any
statement, request, notice or agreement on behalf of any Underwriter made or
given by you jointly or by ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. on behalf of you as the
Representatives.
All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Underwriters shall be delivered or sent by mail or
facsimile transmission to you as the Representatives in care of ▇▇▇▇▇▇▇, Sachs &
Co., ▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇. ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Registration
Department; and if to the Company or Anthem Insurance shall be delivered or sent
by mail, telex or facsimile transmission to the address of the Company set forth
in the Registration Statement, Attention: Chief Legal and Administrative
Officer; provided, however, that any notice to an Underwriter pursuant to
Section 8(c) hereof shall be delivered or sent by mail or facsimile transmission
to such Underwriter at its address set forth in its Underwriters Questionnaire,
or telex constituting such Questionnaire, which address will be supplied to the
Company by you upon request. Any such statements, requests, notices or
agreements shall take effect at the time of receipt thereof.
13. This Agreement shall be binding upon, and inure solely to the benefit
of, the Underwriters, the Company and Anthem Insurance and, to the extent
provided in Sections 8 and 10 hereof, the officers and directors of the Company
and Anthem Insurance and each person who controls the Company or any
Underwriter, and their respective heirs, executors, administrators, successors
and assigns, and no other person shall acquire or have any right under or by
virtue of this Agreement. No purchaser of any of the Shares from any Underwriter
shall be deemed a successor or assign by reason merely of such purchase.
14. Time shall be of the essence of this Agreement. As used herein, the
term "business day" shall mean any day when the Commission's office in
Washington, D.C. is open for business.
15. 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
LAW.
31
The Company and Anthem Insurance hereby submit to the nonexclusive
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.
16. This Agreement may be executed by any one or more of the parties hereto
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 instrument.
32
If the foregoing is in accordance with your understanding. please sign and
return to the Company and Anthem Insurance * (*) counterparts hereof, and upon
the acceptance hereof by you, on behalf of each of the Underwriters, this letter
and such acceptance hereof shall constitute a binding agreement among each of
the Underwriters, the Company and Anthem Insurance. It is understood that your
acceptance of this letter on behalf of each of the Underwriters is pursuant to
the authority set forth in a form of Agreement among Underwriters, the form of
which shall be submitted to the Company and Anthem Insurance for examination
upon request, but without warranty on your part as to the authority of the
signers thereof
Very truly yours,
ANTHEM, INC.
By:
-------------------------------------
Name:
Title:
ANTHEM INSURANCE COMPANIES, INC.
By:
-------------------------------------
Name:
Title:
33
Accepted and Agreed to as of the date hereof:
▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
▇.▇. ▇▇▇▇▇▇ Securities Inc.
Banc of America Securities LLC
Credit Suisse First Boston Corporation
▇▇▇▇▇▇ Brothers Inc.
▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney Inc.
UBS Warburg LLC
ABN AMRO Rothschild LLC
Dresdner Kleinwort ▇▇▇▇▇▇▇▇▇▇▇ Securities LLC
▇.▇. ▇▇▇▇▇▇▇ & Sons, Inc.
McDonald Investments Inc.
▇▇▇▇▇▇▇▇ Capital Partners, L.P.
By:
-------------------------------
(▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co.)
On behalf of each of the Underwriters
34
SCHEDULE I
Number of
Optional Shares
to be Purchased
Total Number of if Maximum
Firm Shares Option
Underwriter to be Purchased Exercised
----------- --------------- --------------
▇▇▇▇▇▇▇, Sachs & Co.................................................
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated.....................................
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated...................................
▇.▇. ▇▇▇▇▇▇ Securities Inc..........................................
Banc of America Securities LLC......................................
Credit Suisse First Boston Corporation..............................
▇▇▇▇▇▇ Brothers Inc.................................................
▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney Inc............................................
UBS Warburg LLC.....................................................
ABN AMRO Rothschild LLC.............................................
Dresdner Kleinwort ▇▇▇▇▇▇▇▇▇▇▇ Securities LLC.......................
▇.▇. ▇▇▇▇▇▇▇ & Sons, Inc............................................
McDonald Investments Inc............................................
▇▇▇▇▇▇▇▇ Capital Partners, L.P......................................
Total..........................................
=============== ==============
35
ANNEX 7(c)
[B&D Opinion]
36
ANNEX 7(d)
[▇▇▇▇▇ ▇▇▇▇▇ Opinion]
37
ANNEX 7(f)(i)
Pursuant to Section 7(f) of the Underwriting Agreement, Ernst & Young LLP
shall furnish letters to the Underwriters to the effect that:
(i) They are independent certified public accountants with
respect to the Company, Anthem Insurance and their subsidiaries within the
meaning of the Act and the applicable published rules and regulations
thereunder;
(ii) In their opinion, the financial statements and any
supplementary financial information and schedules (and pro forma financial
information) examined by them and included in the Prospectus or the
Registration Statement comply as to form in all material respects with the
applicable accounting requirements of the Act and the related published
rules and regulations thereunder; and, if applicable, they have made a
review in accordance with standards established by the American Institute
of Certified Public Accountants of the unaudited consolidated interim
financial statements, selected financial data, pro forma financial
information, financial forecasts and/or condensed financial statements
derived from audited financial statements of the Company for the periods
specified in such letter, as indicated in their reports thereon, copies of
which have been furnished separately to the Representatives of the
Underwriters and are attached hereto;
(iii) They have made a review in accordance with standards
established by the American Institute of Certified Public Accountants of
the unaudited condensed consolidated statements of income, consolidated
balance sheets and consolidated statements of cash flows included in the
Prospectus as indicated in their reports thereon copies of which have been
separately furnished to the Representatives and are attached hereto and on
the basis of specified procedures including inquiries of officials of the
Company who have responsibility for financial and accounting matters
regarding whether the unaudited condensed consolidated financial statements
referred to in paragraph (vi)(A)(i) below comply as to form in all material
respects with the applicable accounting requirements of the Act and the
related published rules and regulations, nothing came to their attention
that caused them to believe that the unaudited condensed consolidated
financial 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;
(iv) The unaudited selected financial information with respect to
the consolidated results of operations and financial position of the
Company for the five most recent fiscal years included in the Prospectus
agrees with the corresponding amounts (after restatements where applicable)
in the audited consolidated financial statements of the Company for such
five fiscal years;
38
(v) They have compared the information in the Prospectus under
selected captions with the disclosure requirements of Regulation S-K and on
the basis of limited procedures specified in such letter nothing came to
their attention as a result of the foregoing procedures that caused them to
believe that this information does not conform in all material respects
with the disclosure requirements of Items 301, 302, 402 and 503(d),
respectively, of Regulation S-K;
(vi) On the basis of limited procedures, not constituting an
examination in accordance with generally accepted auditing standards,
consisting of a reading of the unaudited financial statements and other
information referred to below, a reading of the latest available interim
financial statements of the Company and its subsidiaries, inspection of the
minute books of the Company and its subsidiaries since the date of the
latest audited financial statements included in the Prospectus, inquiries
of officials of the Company and its subsidiaries responsible for financial
and accounting matters and such other inquiries and procedures as may be
specified in such letter, nothing came to their attention that caused them
to believe that:
(A)(i) the unaudited consolidated statements of income,
consolidated balance sheets and consolidated statements of cash flows
included in the Prospectus 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 (ii) any material
modifications should be made to the unaudited condensed consolidated
statements of income, consolidated balance sheets and consolidated
statements of cash flows included in the Prospectus for them to be in
conformity with generally accepted accounting principles;
(B) any other unaudited income statement data and balance
sheet items included in the Prospectus do not agree with the
corresponding items in the unaudited consolidated financial statements
from which such data and items were derived, and any such unaudited
data and items were not determined on a basis substantially consistent
with the basis for the corresponding amounts in the audited
consolidated financial statements included in the Prospectus;
(C) the unaudited financial statements which were not
included in the Prospectus but from which were derived any unaudited
condensed financial statements referred to in clause (A) and any
unaudited income statement data and balance sheet items included in
the Prospectus and referred to in clause (B) were not determined on a
basis substantially consistent with the basis for the audited
consolidated financial statements included in the Prospectus;
39
(D) any unaudited pro forma consolidated condensed
financial statements included in the Prospectus do not comply as to
form in all material respects with the applicable accounting
requirements of the Act and the published rules and regulations
thereunder or the pro forma adjustments have not been properly applied
to the historical amounts in the compilation of those statements;
(E) as of a specified date not more than three days prior
to the date of such letter, there have been any increase in the
consolidated short-term or long-term debt of, or guaranteed by, or
liability for life, accident and health claims, future policyholder
benefits or other policy liabilities of, the Company and its
subsidiaries, or investment or asset valuation reserves, or any
decreases in consolidated total policyholders' surplus, any changes in
the consolidated capital stock or other items specified by the
Representatives, or any increases in any items specified by the
Representatives, in each case as compared with amounts shown in the
latest balance sheet included in the Prospectus, except in each case
for changes, increases or decreases which the Prospectus discloses
have occurred or may occur or which are described in such letter; and
(F) for the period from the date of the latest financial
statements included in the Prospectus to the specified date referred
to in Clause (E) there were any decreases in consolidated total
premiums, administrative fees, income from continuing operations, net
income or other items specified by the Representatives, or any
increases in benefit or administrative expenses, or any other items
specified by the Representatives, in each case as compared with the
comparable period of the preceding year and with any other period of
corresponding length specified by the Representatives, except in each
case for decreases or increases which the Prospectus discloses have
occurred or may occur or which are described in such letter; and
(vii) In addition to the examination referred to in their
report(s) included in the Prospectus and the limited procedures, inspection
of minute books, inquiries and other procedures referred to in paragraphs
(iii) and (vi) above, they have carried out certain specified procedures,
not constituting an examination in accordance with generally accepted
auditing standards, with respect to certain amounts, percentages and
financial information specified by the Representatives, which are derived
from the general accounting records of the Company and its subsidiaries,
which appear in the Prospectus, or in Part II of, or in exhibits and
schedules to, the Registration Statement specified by the Representatives,
and have compared certain of such amounts, percentages and financial
information with the accounting records of the Company and its subsidiaries
and have found them to be in agreement.
40
ANNEX 7(f)(ii)
[E&Y Comfort Letter]
41