EXECUTION COPY
COMPLETE MANAGEMENT, INC.
2,000,000 Common Shares
UNDERWRITING AGREEMENT
February 9, 1997
PRUDENTIAL SECURITIES INCORPORATED
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Dear Sirs:
Complete Management, Inc., a New York corporation (the
"Company"), hereby confirms its agreement with you (the "Underwriter") as set
forth below.
1. Securities. Subject to the terms and conditions herein contained,
the Company proposes to issue and sell to the Underwriter an aggregate of
2,000,000 shares, as specified in Schedule 1 hereto (the "Firm Securities"), of
the Company's common shares, par value $.001 per share (the "Common Shares").
The Company also proposes to issue and sell to the Underwriter not more than
300,000 additional Common Shares if requested by the Underwriter as provided in
Section 3 of this Agreement. Any and all Common Shares purchased by the
Underwriter pursuant to such options are referred to herein as the "Option
Securities" and the Firm Securities and the Option Securities are referred to
herein as the "Securities".
2. Representations and Warranties of the Company. The Company
represents and warrants to, and agrees with, the Underwriter that:
(a) The Company meets the requirements for use of Form S-3 under the
Securities Act of 1933, as amended (the "Act"). A registration statement on such
Form (File No. 333- 35003) with respect to the Securities, including a basic
prospectus subject to completion, has been filed by the Company with the
Securities and Exchange Commission (the "Commission") under the Act, and one or
more amendments to such registration statement may have been so filed. Such
registration statement, as so amended, has been declared by
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the Commission to be effective under the Act. Such registration statement meets
the requirements set forth in Rule 415(a)(1)(x) under the Act and complies in
all other material respects with said Rule. The Company will next file with the
Commission either (A) if the Company relies on Rule 434 under the Act, a Term
Sheet (as hereinafter defined) relating to the Securities, that shall identify
the Preliminary Prospectus (as hereinafter defined) that it supplements and, if
required to be filed pursuant to Rules 434(c)(2) and 424(b), an Integrated
Prospectus (as hereinafter defined), in either case, containing such information
as is required or permitted by Rule 434 and 424(b) under the Act or (B) if the
Company does not rely on Rule 434 under the Act, pursuant to Rule 424(b) under
the Act a final prospectus supplement to the basic prospectus included in such
registration statement, as so amended, describing the Securities and the
offering thereof, and in the case of clause (A) or (B) of this sentence as have
been provided to, or discussed with, and approved by the Underwriter as provided
in Section 4(a) of this Agreement. The Company may also file a related
registration statement with the Commission pursuant to Rule 462(b) under the Act
for the purpose of registering certain additional Securities, which registration
shall be effective upon filing with the Commission. As used in this Agreement,
the term "Original Registration Statement" means the registration statement
initially filed relating to the Securities, as amended at the time when it was
declared effective, including (A) all financial schedules and exhibits thereto,
(B) all documents incorporated by reference therein filed under the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and (C) any information
omitted therefrom and required to be filed pursuant to Rule 434(c)(2) and
424(b), in the Integrated Prospectus; the term "Rule 462(b) Registration
Statement" means any registration statement filed with the Commission pursuant
to Rule 462(b) under the Act (including the Registration Statement and any
Preliminary Prospectus or Prospectus incorporated therein at the time such
Registration Statement becomes effective); the term "Registration Statement"
includes both the Original Registration Statement and any Rule 462(b)
Registration Statement; the term "Basic Prospectus" means the prospectus
included in the Registration Statement; the term "Preliminary Prospectus" means
each preliminary prospectus supplement specifically relating to the Securities
and previously filed pursuant to Rule 424(b), including all documents
incorporated by reference therein filed under the Exchange Act; the term
"Prospectus" means:
(A) if the Company relies on Rule 434 under the Act, the Term
Sheet relating to the Securities that is first filed pursuant to Rule
424(b)(7) under the Act, together with the Preliminary Prospectus
identified therein that such Term Sheet supplements; or
(B) if the Company does not rely on Rule 434 under the Act,
the Basic Prospectus as supplemented by the final prospectus supplement
relating to the Securities as first filed with the Commission pursuant
to Rule 424(b) under the Act, including, in the case of clauses (A) or
(B) of this sentence, all documents incorporated by reference therein
filed under the Exchange Act;
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and the term "Prospectus Supplement" means such final prospectus supplement. The
Company and the Underwriter acknowledge that the preliminary prospectus
supplement of the Company dated November 28, 1997 does not relate to the
Securities. The term "Integrated Prospectus" means a prospectus first filed with
the Commission pursuant to Rules 434(c)(2) and 424(b) under the Act; and the
term "Term Sheet" means any abbreviated term sheet that satisfies the
requirements of Rule 434 under the Act. Any reference in this Agreement to an
"amendment" or "supplement" to any Preliminary Prospectus, the Prospectus or any
Integrated Prospectus or an "amendment" to any registration statement (including
the Registration Statement) shall be deemed to include any document incorporated
by reference therein that is filed with the Commission under the Exchange Act
after the date of such Preliminary Prospectus, Prospectus, Integrated Prospectus
or registration statement, as the case may be; any reference herein to the
"date" of a Prospectus that includes a Term Sheet shall mean the date of such
Term Sheet. For purposes of the preceding sentence, any reference to the
"effective date" of an amendment to a registration statement shall, if such
amendment is effected by means of the filing with the Commission under the
Exchange Act of a document incorporated by reference in such registration
statement, be deemed to refer to the date on which such document was so filed
with the Commission.
(b) The Commission has not issued any order preventing or suspending
the use of any Preliminary Prospectus. When any Preliminary Prospectus and any
amendment or supplement thereto was filed with the Commission, it (i) contained
all statements required to be stated therein in accordance with, and complied in
all material respects with the requirements of, the Act, the Exchange Act and
the respective rules and regulations of the Commission thereunder, and (ii) did
not include any 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, not misleading. When the
Registration Statement was declared effective or when any amendment was or is
made thereto, it (i) contained or will contain all statements required to be
stated therein in accordance with, and complied or will comply in all material
respects with the requirements of, the Act, the Exchange Act and the respective
rules and regulations of the Commission thereunder and (ii) did not or will not
include any untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein not misleading. When the
Prospectus or any Term Sheet that is a part thereof or any Integrated Prospectus
or any amendment or supplement to the Prospectus is filed with the Commission
pursuant to Rule 424(b), on the date when the Prospectus is otherwise amended or
supplemented and on the Firm Closing Date and any Option Closing Date (both as
hereinafter defined), each of the Prospectus, and, if required to be filed
pursuant to Rules 434(c)(2) and 424(b) under the Act, the Integrated Prospectus
as amended or supplemented at any such time, (i) contained or will contain all
statements required to be stated therein in accordance with, and complied or
will comply in all material respects with the requirements of, the Act, the
Exchange Act and the respective rules and regulations of the Commission
thereunder and (ii) did not or will not include any untrue statement of a
material fact or omit to state any material fact necessary in order to
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make the statements therein, in the light of the circumstances under which they
were made, not misleading. The foregoing provisions of this paragraph (b) do not
apply to statements or omissions made in any Preliminary Prospectus or any
amendment or supplement thereto, the Registration Statement or any amendment
thereto or the Prospectus or, if required to be filed pursuant to Rules
434(c)(2) and 424(b) under the Act, the Integrated Prospectus or any amendment
or supplement thereto in reliance upon and in conformity with written
information furnished to the Company by the Underwriter specifically for use
therein.
(c) If the Company has elected to rely on Rule 462(b) and the Rule
462(b) Registration Statement has not been declared effective, (i) the Company
has filed a Rule 462(b) Registration Statement in compliance with, and that is
effective upon filing pursuant to, Rule 462(b) and has received confirmation of
its receipt, and (ii) the Company has given irrevocable instructions for
transmission of the applicable filing fee in connection with the filing of the
Rule 462(b) Registration Statement, in compliance with Rule 111 promulgated
under the Act or the Commission has received payment of such filing fee.
(d) The Company and each of its subsidiaries have been duly organized
and are validly existing as corporations in good standing under the laws of
their respective jurisdictions of incorporation and are duly qualified to
transact business as foreign corporations and are in good standing under the
laws of all other jurisdictions where the ownership or leasing of their
respective properties or the conduct of their respective businesses requires
such qualification, except where the failure to be so qualified does not amount
to a material liability or disability to the Company and its subsidiaries, taken
as a whole.
(e) The Company and each of its subsidiaries have full power (corporate
and other) to own or lease their respective properties and conduct their
respective businesses as described in the Registration Statement and each of the
Prospectus and any Integrated Prospectus or, if the Prospectus and any required
Integrated Prospectus are not in existence, the most recent Preliminary
Prospectus; and the Company has full power (corporate and other) to enter into
this Agreement and to carry out all the terms and provisions hereof to be
carried out by it.
(f) The issued shares of capital stock of each of the Company's
subsidiaries have been duly authorized and validly issued, are fully paid and
nonassessable and, except for directors' qualifying shares and as otherwise set
forth in each of the Prospectus and any Integrated Prospectus (or, if the
Prospectus and any required Integrated Prospectus are not in existence, the most
recent Preliminary Prospectus) are owned beneficially by the Company free and
clear of any security interests, liens, encumbrances, equities or claims.
(g) The Company has an authorized, issued and outstanding
capitalization as set forth in each of the Prospectus and any Integrated
Prospectus (or, if the Prospectus and any
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required Integrated Prospectus are not in existence, the most recent Preliminary
Prospectus). All of the issued shares of capital stock of the Company have been
duly authorized and validly issued and are fully paid and nonassessable.
(h) The capital stock of the Company conforms to the description
thereof contained in the Prospectus, each of the Prospectus and any Integrated
Prospectus or, if the Prospectus and any required Integrated Prospectus are not
in existence, the most recent Preliminary Prospectus.
(i) The Common Shares have been duly authorized and, when issued and
paid for as provided herein will be validly issued, fully paid and
nonassessable. All corporate action required to be taken for the issuance,
delivery and sale of such Common Shares have been validly taken. No holders of
outstanding shares of capital stock of the Company are entitled as such to any
preemptive or other rights to subscribe for any Common Shares, and no holder of
securities of the Company has any right which has not been fully exercised or
waived to require the Company to register the offer or sale of any securities
owned by such holder under the Act in the public offering contemplated by this
agreement.
(j) Except as disclosed in each of the Prospectus and any Integrated
Prospectus (or, if the Prospectus and any required Integrated Prospectus are not
in existence, the most recent Preliminary Prospectus), there are not outstanding
(A) securities or obligations of the Company or any of its subsidiaries
convertible into or exchangeable for any capital stock of the Company or any
such subsidiary, (B) warrants, rights or options to subscribe for or purchase
from the Company or any such subsidiary any such capital stock or any such
convertible or exchangeable securities or obligations, or (C) obligations of the
Company or any such subsidiary to issue any shares of capital stock, any such
convertible or exchangeable securities or obligations, or any such warrants,
rights or options.
(k) The consolidated financial statements and schedules of the Company
and its consolidated subsidiaries included in the Registration Statement and
each of the Prospectus and any Integrated Prospectus (or, if the Prospectus and
any required Integrated Prospectus are not in existence, the most recent
Preliminary Prospectus) fairly present the financial position of the Company and
its consolidated subsidiaries and the results of operations and changes in
financial condition as of the dates and periods therein specified. Such
financial statements and schedules have been prepared in accordance with
generally accepted accounting principles consistently applied throughout the
periods involved (except as otherwise noted therein). The selected financial
data set forth under the caption "Selected Financial Data" included in each of
the Prospectus and any Integrated Prospectus (or, if the Prospectus and any
required Integrated Prospectus are not in existence, the most recent Preliminary
Prospectus) and in the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1996, fairly present, on the basis stated in each of the
Prospectus
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and any Integrated Prospectus (or such Preliminary Prospectus) and such Annual
Report, the information included therein.
(l) ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, who have certified certain financial
statements of the Company and its consolidated subsidiaries and delivered their
report with respect to the audited consolidated financial statements and
schedules included in the Registration Statement or each the Prospectus and
Integrated Prospectus (or, if the Prospectus and any required Integrated
Prospectus are not in existence, the most recent Preliminary Prospectus), are
independent public accountants as required by the Act and the Exchange Act and
the related published rules and regulations thereunder.
(m) The execution and delivery of this Agreement have been duly
authorized by the Company and this Agreement has been duly executed and
delivered by the Company and is the valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms.
(n) No legal or governmental proceedings are pending to which the
Company or any of its subsidiaries is a party or to which the property of the
Company or any of its subsidiaries is subject that are required to be described
in the Registration Statement or each of the Prospectus and any Integrated
Prospectus (or, if the Prospectus and any required Integrated Prospectus are not
in existence, the most recent Preliminary Prospectus) and that are not described
therein, and no such proceedings have been threatened against the Company or any
of its subsidiaries or with respect to any of their respective properties; and
no contract or other document is required to be described in the Registration
Statement or the Prospectus or any Integrated Prospectus or to be filed as an
exhibit to the Registration Statement that is not described therein (or, if the
Prospectus and any required Integrated Prospectus are not in existence, the most
recent Preliminary Prospectus) or filed as required.
(o) The issuance, offering and sale of the Securities to the
Underwriter by the Company pursuant to this Agreement, or the execution,
delivery or performance by the Company of its obligations under this Agreement,
and the consummation of the other transactions herein contemplated do not (i)
require the consent, approval, authorization, registration or qualification of
or with any governmental authority, except such as have been obtained, such as
may be required under state securities or blue sky laws or (ii) conflict with or
result in a breach or violation of any of the terms and provisions of, or
constitute a default under, any indenture, mortgage, deed of trust, lease or
other agreement or instrument to which the Company or any of its subsidiaries is
a party or by which the Company or any of its subsidiaries or any of their
respective properties are bound, or the charter documents or by-laws of the
Company or any of its subsidiaries, or any statute or any judgment, decree,
order, rule or regulation of any court or other governmental authority or any
arbitrator applicable to the Company or any of its subsidiaries.
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(p) Subsequent to the respective dates as of which information is given
in the Registration Statement or each of the Prospectus or any Integrated
Prospectus (or, if the Prospectus and any required Integrated Prospectus are not
in existence, the most recent Preliminary Prospectus), neither the Company nor
any of its subsidiaries has sustained any material loss or interference with
their respective businesses or properties from fire, flood, hurricane, accident
or other calamity, whether or not covered by insurance, or from any labor
dispute or any legal or governmental proceeding and there has not been any
material adverse change, or any development involving a prospective material
adverse change, in the condition (financial or otherwise), management, business
prospects, net worth, or results of operations of the Company or any of its
subsidiaries, except in each case as described in or contemplated by each of the
Prospectus and any Integrated Prospectus (or, if the Prospectus and any required
Integrated Prospectus are not in existence, the most recent Preliminary
Prospectus).
(q) The Company has not, directly or indirectly, (i) taken any action
designed to cause or to result in, or that has constituted or which might
reasonably be expected to constitute, the stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale of the
Securities or (ii) since the filing of the Registration Statement (A) sold, bid
for, purchased, or paid anyone any compensation for soliciting purchases of, the
Securities or (B) paid or agreed to pay to any person any compensation for
soliciting another to purchase any other securities of the Company.
(r) The Company has not distributed and, prior to the later of (i) the
Firm Closing Date or the Option Closing Date (as the case may be) and (ii) the
completion of the distribution of the Securities, will not distribute any
offering material in connection with the offering and sale of the Securities
other than the Registration Statement or any amendment thereto, any Preliminary
Prospectus or the Prospectus or any amendment or supplement thereto, or other
materials, if any permitted by the Act.
(s) Subsequent to the respective dates as of which information is given
in the Registration Statement or each of the Prospectus or any Integrated
Prospectus (or, if the Prospectus and any required Integrated Prospectus are not
in existence, the most recent Preliminary Prospectus), (1) the Company and its
subsidiaries have not incurred any material liability or obligation, direct or
contingent, nor entered into any material transaction not in the ordinary course
of business; (2) the Company has not purchased any of its outstanding capital
stock, nor declared, paid or otherwise made any dividend or distribution of any
kind on its capital stock; and (3) there has not been any material change in the
capital stock, short-term debt or long-term debt of the Company and its
consolidated subsidiaries, except in each case as described in or contemplated
by the Prospectus and any Integrated Prospectus (or, if the Prospectus and any
required Integrated Prospectus are not in existence, the most recent Preliminary
Prospectus).
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(t) The Company and each of its subsidiaries have good and marketable
title in fee simple to all items of real property and marketable title to all
personal property owned by each of them, in each case free and clear of any
security interests, liens, encumbrances, equities, claims and other defects,
except such as do not materially and adversely affect the value of such property
and do not interfere with the use made or proposed to be made of such property
by the Company or such subsidiary, and any real property and buildings held
under lease by the Company or any such subsidiary are held under valid,
subsisting and enforceable leases, with such exceptions as are not material and
do not interfere with the use made or proposed to be made of such property and
buildings by the Company or such subsidiary, in each case except as described in
or contemplated by the Prospectus and any Integrated Prospectus (or, if the
Prospectus and any required Integrated Prospectus are not in existence, the most
recent Preliminary Prospectus).
(u) No labor dispute with the employees of the Company or any of its
subsidiaries exists or is threatened or imminent that could result in a material
adverse change in the condition (financial or otherwise), business prospects,
net worth or results of operations of the Company and its subsidiaries, except
as described in or contemplated by the Prospectus and any Integrated Prospectus
(or, if the Prospectus and any required Integrated Prospectus are not in
existence, the most recent Preliminary Prospectus).
(v) The Company and its subsidiaries own or possess, or can acquire on
reasonable terms, all material patents, patent applications, trademarks, service
marks, trade names, licenses, copyrights and proprietary or other confidential
information currently employed by them in connection with their respective
businesses, and neither the Company nor any such subsidiary has received any
notice of infringement of or conflict with asserted rights of any third party
with respect to any of the foregoing which, singly or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would result in a
material adverse change in the condition (financial or otherwise), business
prospects, net worth or results of operations of the Company and its
subsidiaries, except as described in or contemplated by the Prospectus and any
Integrated Prospectus (or, if the Prospectus and any Integrated Prospectus are
not in existence, the most recent Preliminary Prospectus).
(w) The Company and each of its subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks and in such
amounts as are prudent and customary in the businesses in which they are
engaged; neither the Company nor any such subsidiary has been refused any
insurance coverage sought or applied for; and neither the Company nor any such
subsidiary has any reason to believe that it will not be able to renew its
existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue its
business at a cost that would not materially and adversely affect the condition
(financial or otherwise), business prospects, net worth or results of operations
of the Company and its subsidiaries, except as described in or contemplated by
the Prospectus and any Integrated Prospectus (or, if the
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Prospectus and any Integrated Prospectus are not in existence, the most recent
Preliminary Prospectus).
(x) No subsidiary of the Company is currently prohibited, directly or
indirectly, from paying any dividends to the Company, from making any other
distribution on such subsidiary's capital stock, from repaying to the Company
any loans or advances to such subsidiary from the Company or from transferring
any of such subsidiary's property or assets to the Company or any other
subsidiary of the Company, except as described in or contemplated by the
Prospectus and any Integrated Prospectus (or, if the Prospectus and any required
Integrated Prospectus are not in existence, the most recent Preliminary
Prospectus).
(y) The Company and its subsidiaries possess all certificates,
authorizations and permits issued by the appropriate federal, state or foreign
regulatory authorities necessary to conduct their respective businesses, and
neither the Company nor any such subsidiary has received any notice of
proceedings relating to the revocation or modification of any such certificate,
authorization or permit which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would result in a material adverse
change in the condition (financial or otherwise), business prospects, net worth
or results of operations of the Company and its subsidiaries, except as
described in or contemplated by the Prospectus and any Integrated Prospectus
(or, if the Prospectus and any Integrated Prospectus are not in existence, the
most recent Preliminary Prospectus).
(z) The Company will conduct its operations in a manner that will not
subject it to registration as an investment company under the Investment Company
Act of 1940, as amended, and this transaction will not cause the Company to
become an investment company subject to registration under such Act.
(aa) The Company has filed all foreign, federal, state and local tax
returns that are required to be filed or has requested extensions thereof
(except in any case in which the failure so to file would not have a material
adverse effect on the Company and its subsidiaries) and has paid all taxes
required to be paid by it and any other assessment, fine or penalty levied
against it, to the extent that any of the foregoing is due and payable, except
for any such assessment, fine or penalty that is currently being contested in
good faith or as described in or contemplated by the Prospectus and any
Integrated Prospectus (or, if the Prospectus and any Integrated Prospectus are
not in existence, the most recent Preliminary Prospectus).
(bb) Neither the Company nor any of its subsidiaries is in violation of
any federal or state law or regulation relating to occupational safety and
health or to the storage, handling or transportation of hazardous or toxic
materials and the Company and its subsidiaries have received all permits,
licenses or other approvals required of them under applicable federal and state
occupational safety and health and environmental laws and
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regulations to conduct their respective businesses, and the Company and each
such subsidiary is in compliance with all terms and conditions of any such
permit, license or approval, except any such violation of law or regulation,
failure to receive required permits, licenses or other approvals or failure to
comply with the terms and conditions of such permits, licenses or approvals
which would not, singly or in the aggregate, result in a material adverse change
in the condition (financial or otherwise), business prospects, net worth or
results of operations of the Company and its subsidiaries, except as described
in or contemplated by the Prospectus and any Integrated Prospectus (or, if the
Prospectus and any Integrated Prospectus are not in existence, the most recent
Preliminary Prospectus).
(cc) Any certificate signed by any officer of the Company and delivered
to the Underwriter or to counsel for the Underwriter in connection with the
offering of the Securities shall be deemed to be a representation and warranty
by the Company to the Underwriter as to the matters covered thereby.
(dd) Except for the shares of capital stock of each of the subsidiaries
owned by the Company and such subsidiaries, neither the Company nor any such
subsidiary owns any shares of stock or any other equity securities of any
corporation or has any equity interest in any firm, partnership, association or
other entity, except as described in or contemplated by the Prospectus and any
Integrated Prospectus (or, if the Prospectus and any Integrated Prospectus are
not in existence, the most recent Preliminary Prospectus).
(ee) The Company and each of its subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or specific
authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability; (iii) access to
assets is permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(ff) No default exists, and no event has occurred which, with notice or
lapse of time or both, would constitute a default in the due performance and
observance of any term, covenant or condition of any indenture, mortgage, deed
of trust, lease or other agreement or instrument to which the Company or any of
its subsidiaries is a party or by which the Company or any of its subsidiaries
or any of their respective properties is bound or may be affected in any
material adverse respect with regard to property, business or operations of the
Company and its subsidiaries.
(gg) The Securities conform to the descriptions thereof contained in
each of the Prospectus, and any Integrated Prospectus (or, if the Prospectus and
any required Integrated Prospectus are not in existence, the most recent
Preliminary Prospectus).
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3. Purchase, Sale and Delivery of the Securities. (a) On the basis of
the representations, warranties, agreements and covenants herein contained and
subject to the terms and conditions herein set forth and therein set forth, the
Company agrees to issue and sell to the Underwriter, and the Underwriter agrees
to purchase from the Company, at a purchase price set forth in Schedule 1
hereto, the Firm Securities. One or more certificates in definitive form for the
Firm Securities that the Underwriter has agreed to purchase hereunder, and in
such denomination or denominations and registered in such name or names as the
Underwriter requests upon notice to the Company at least 48 hours prior to the
Firm Closing Date, shall be delivered by or on behalf of the Company to the
Underwriter for the Underwriter's account, against payment by the Underwriter or
on the Underwriter's behalf of the purchase price therefor by wire transfer in
same-day funds (the "Wired Funds") to the account of the Company. Such delivery
of and payment for the Firm Securities shall be made at the date, time and place
identified in Schedule 1 hereto or at such other place, time or date as the
Underwriter and the Company may agree upon or as the Underwriter may determine
pursuant to Section 8 hereof, such time and date of delivery against payment
being herein referred to as the "Firm Closing Date". The Company will make such
certificate or certificates for the Firm Securities available for checking and
packaging by the Underwriter at the offices in New York, New York of the
Company's transfer agent or registrar at such other place as the Underwriter and
the Company may agree at least 24 hours prior to the Firm Closing Date.
(b) For the purpose of covering any over-allotments in connection with
the distribution and sale of the Firm Securities as contemplated by the
Prospectus, the Company hereby grants to the Underwriter an option to purchase
the Option Securities. The purchase price to be paid for any Option Securities
shall be the same price per share as the price per share for the Firm Securities
set forth above in paragraph (a) of this Section 3, plus if the purchase and
sale of any Option Securities takes place after the Firm Closing Date and after
the Firm Securities are trading "ex-dividend", an amount equal to the dividend
payable on such Option Securities. The option granted hereby may be exercised as
to all or any part of the Option Securities from time to time within thirty days
after the date of the Prospectus (or, if such 30th day shall be a Saturday or
Sunday or a holiday, on the next business day thereafter when the New York Stock
Exchange is open for trading). The Underwriter shall not be under any obligation
to purchase any of the Option Securities prior to the exercise of such option.
The Underwriter may from time to time exercise the option granted hereby by
giving notice in writing or by telephone (confirmed in writing) to the Company
setting forth the aggregate principal amount of Option Securities as to which
the Underwriter is then exercising the option and the date and time for delivery
of and payment for such Option Securities. Any such date of delivery shall be
determined by the Underwriter but shall not be earlier than two business days or
later than five business days after such exercise of the option and, in any
event, shall not be earlier than the Firm Closing Date. The time and date set
forth in such notice, or such other time on such other date as the Underwriter
and the Company may agree upon or as the Underwriter may determine pursuant to
Section 9 hereof,
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is herein called the "Option Closing Date" with respect to such Option
Securities. Upon exercise of the option as provided herein, the Company shall
become obligated to sell to the Underwriter, and, subject to the terms and
conditions herein set forth, the Underwriter shall become obligated to purchase
from the Company, the Option Securities. If the option is exercised as to all or
any portion of the Option Securities, one or more certificates in definitive
form for such Option Securities, and payment therefor, shall be delivered on the
related Option Closing Date in the manner, and upon the terms and conditions,
set forth in paragraph (a) of this Section 3, except that reference therein to
the Firm Securities and the Firm Closing Date shall be deemed, for purposes of
this paragraph (b), to refer to such Option Securities and Option Closing Date,
respectively.
(c) The Company hereby acknowledges that the wire transfer by the
Underwriter or on the Underwriter's behalf of the purchase price for any Shares
does not constitute closing of a purchase and sale of the Shares. Only execution
and delivery of a receipt for Shares by the Underwriter indicates completion of
the closing of a purchase of the Shares from the Company. Furthermore, in the
event that the Underwriter wires funds to the Company prior to the completion of
the closing of a purchase of Shares, the Company hereby acknowledges that until
the Underwriter executes and delivers a receipt for the Shares, by facsimile or
otherwise, the Company will not be entitled to the wired funds and shall return
the wired funds to the Underwriter as soon as practicable (by wire transfer of
same-day funds) upon demand. In the event that the closing of a purchase of
Shares is not completed and the wire funds are not returned by the Company to
the Underwriter on the same day the wired funds were received by the Company,
the Company agrees to pay to the Underwriter in respect of each day the wire
funds are not returned by it, in same-day funds, interest on the amount of such
wire funds in an amount representing the Underwriter's cost of financing as
reasonably determined by the Underwriter.
4. Covenants of the Company. The Company covenants and agrees with the
Underwriter that:
(a) The Company will file the Prospectus, the Prospectus Supplement or
any Term Sheet that constitutes a part thereof and any amendment or supplement
thereto with the Commission in the manner and within the time period required by
Rule 434 and 424(b) under the Act. During any time when a prospectus relating to
the Securities is required to be delivered under the Act, the Company (i) will
comply with all requirements imposed upon it by the Act and the Exchange Act and
the respective rules and regulations of the Commission thereunder to the extent
necessary to permit the continuance of sales of or dealings in the Securities in
accordance with the provisions hereof and of each of the Prospectus and any
Integrated Prospectus, as then amended or supplemented, and (ii) will not file
with the Commission the prospectus or the amendment referred to in the fifth
sentence of Section 2(a) hereof, any amendment or supplement to such prospectus
or any amendment to the Registration Statement or any Rule 462(b) Registration
Statement of which the Underwriter
13
shall not previously have been advised and furnished with a copy for a
reasonable period of time prior to the proposed filing and as to which filing
the Underwriter shall not have given its consent. The Company will prepare and
file with the Commission, in accordance with the rules and regulations of the
Commission, promptly upon request by the Underwriter or by counsel for the
Underwriter, any amendments to the Registration Statement or amendments or
supplements to the Prospectus and any Integrated Prospectus that may be
necessary or advisable in connection with the distribution of the Securities by
the Underwriter, and will use its best efforts to cause any such amendment to
the Registration Statement to be declared effective by the Commission as
promptly as possible. The Company will advise the Underwriter, promptly after
receiving notice thereof, of the time when the Registration Statement or any
amendment thereto has been filed or declared effective or the Prospectus and any
Integrated Prospectus or any amendment or supplement thereto has been filed and
will provide evidence satisfactory to the Underwriter of each such filing.
(b) The Company will advise the Underwriter, promptly after receiving
notice or obtaining knowledge thereof, of (i) the issuance by the Commission of
any stop order suspending the effectiveness of the Original Registration
Statement or any Rule 462(b) Registration Statement or any post-effective
amendment thereto or any order directed at any document incorporated by
reference in the Registration Statement or the Prospectus and any required
Integrated Prospectus or any amendment or supplement thereto or any order
preventing or suspending the use of any Preliminary Prospectus or the Prospectus
and any Integrated Prospectus or any amendment or supplement thereto, (ii) the
suspension of the qualification of the Securities for offering or sale in any
jurisdiction, (iii) the institution, threatening or contemplation of any
proceeding for any such purpose or (iv) any request made by the Commission for
amending the Original Registration Statement or any Rule 462(b) Registration
Statement, for amending or supplementing any Preliminary Prospectus or the
Prospectus and any Integrated Prospectus or for additional information. The
Company will use its best efforts to prevent the issuance of any such stop order
and, if any such stop order is issued, to obtain the withdrawal thereof as
promptly as possible.
(c) The Company will arrange for the qualification of the Securities
for offering and sale under the securities or blue sky laws of such
jurisdictions as the Underwriter may designate and will continue such
qualifications in effect for as long as may be necessary to complete the
distribution of the Securities, provided, however, that in connection therewith
the Company shall not be required to qualify as a foreign corporation or to
execute a general consent to service of process in any jurisdiction.
(d) If, at any time prior to the later of (i) the final date when a
prospectus relating to the Securities is required to be delivered under the Act
or (ii) the Option Closing Date, any event occurs as a result of which the
Prospectus, as then amended or supplemented, would include any untrue statement
of a material fact or omit to state a material fact
14
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or if for any other
reason it is necessary at any time to amend or supplement each of the Prospectus
or any Integrated Prospectus to comply with the Act or the Exchange Act or the
respective rules or regulations of the Commission thereunder, the Company will
promptly notify the Underwriter thereof and, subject to Section 4(a) hereof,
will prepare and file with the Commission, at the Company's expense, an
amendment to the Registration Statement or an amendment or supplement to the
Prospectus or any Integrated Prospectus that corrects such statement or omission
or effects such compliance.
(e) The Company will, without charge, provide (i) to the Underwriter
and to counsel for the Underwriter a signed copy of the registration statement
originally filed with respect to the Securities and each amendment thereto (in
each case including exhibits thereto) or any Rule 462(b) Registration Statement,
certified by the Secretary or an Assistant Secretary of the Company to be true
and complete copies thereof as filed with the Commission by electronic
transmission and (ii) so long as a prospectus relating to the Securities is
required to be delivered under the Act, as many copies of each Preliminary
Prospectus, the Prospectus, or any Integrated Prospectus, or any amendment or
supplement thereto, as the Underwriter may reasonably request; without limiting
the application of clause (ii) of this sentence, the Company, not later than (A)
6:00 PM, New York City time, on the date of determination of the public offering
price, if such determination occurred at or prior to 10:00 AM, New York City
time on such date or (B) 2:00 PM, New York City time, on the business day
following the date of determination of the public offering price, if such
determination occurred after 10:00 AM, New York City time, on such date, will
deliver to the Underwriter, without charge, as many copies of the Prospectus or
any Integrated Prospectus and any amendment or supplement thereto the
Underwriter may reasonably request for purposes of confirming orders that are
expected to settle on the Firm Closing Date.
(f) During the period when the Prospectus or any Integrated Prospectus
is required by the Act to be delivered in connection with sales of the
Securities, the Company will file promptly all documents required to be filed
with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act.
(g) The Company, as soon as practicable, will make generally available
to its securityholders and to the Underwriter a consolidated earnings statement
of the Company and its subsidiaries that satisfies the provisions of Section
11(a) of the Act and Rule 158 thereunder.
(h) The Company will apply the net proceeds from the sale of the
Securities as set forth under "Use of Proceeds" in the Prospectus or any
Integrated Prospectus.
15
(i) The Company will not, directly or indirectly, without the
Underwriter's prior written consent, offer, sell, offer to sell, contract to
sell, pledge, grant any option to purchase or otherwise sell or dispose (or
announce any offer, sale, offer of sale, contract of sale, pledge, grant of any
option to purchase or other sale or disposition) of any Common Shares or other
capital stock of the Company or any other securities convertible into, or
exchangeable or exercisable for, any Common Shares or other capital stock of the
Company for a period of 120 days after the date hereof, except (i) pursuant to
this Agreement, (ii) for issuances (or announcements of issuances of) Common
Shares and other securities in connection with acquisitions, so long as such
Common Shares and other securities are issued in private placements without
registration under the Act, (iii) for issuances pursuant to the exercise of
employee stock options outstanding on the date hereof, (iv) pursuant to the
Company's dividend reinvestment plan or (v) pursuant to the terms of convertible
securities of the Company outstanding on the date hereof. Prudential Securities
Incorporated may, at any time and without notice, release all or any portion of
the shares subject to this lock-up provision.
(j) The Company will not, directly or indirectly, (i) take any action
designed to cause or to result in, or that has constituted or which might
reasonably be expected to constitute, the stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale of the
Securities or (ii) (A) sell, bid for, purchase, or pay anyone any compensation
for soliciting purchases of, the Securities or (B) pay or agree to pay to any
person any compensation for soliciting another to purchase any other securities
of the Company.
(k) The Company will obtain the agreements described in Section 6(g)
hereof prior to the Firm Closing Date.
(l) If at any time during the 25-day period after the Registration
Statement becomes effective or the period prior to any Option Closing Date, any
rumor, publication or event relating to or affecting the Company shall occur as
a result of which in the Underwriter's opinion the market price of the Common
Shares has been or is likely to be materially affected (regardless of whether
such rumor, publication or event necessitates a supplement to or amendment of
the Prospectus and any Integrated Prospectus), the Company will, after notice
from the Underwriter advising the Company to the effect set forth above,
forthwith prepare, consult with the Underwriter concerning the substance of, and
disseminate a press release or other public statement, reasonably satisfactory
to the Underwriter, responding to or commenting on such rumor, publication or
event.
(m) If the Company elects to rely on Rule 462(b), the Company shall
both file a Rule 462(b) Registration Statement with the Commission in compliance
with Rule 462(b) and pay the applicable fees in accordance with Rule 111
promulgated under the Act by the earlier
16
of (i) 10:00 P.M. Eastern time on the date of this Agreement and (ii) the time
confirmations are sent or given, as specified by Rule 462(b)(2).
(n) If and to the extent specified in Schedule 1, the Company will use
its best efforts to cause the Securities to be duly authorized for listing by
the stock exchange or exchanges specified in Schedule 1 and, if required, to be
registered under the Exchange Act, subject to the Underwriter's providing to the
relevant stock exchange or exchanges any required information as to the
distribution of the Securities meeting the standards of such stock exchange or
exchanges.
5. Expenses. The Company will pay all costs and expenses incident to
the performance of its obligations under this Agreement, whether or not the
transactions contemplated herein are consummated or this Agreement is terminated
pursuant to Section 10 hereof, including all costs and expenses incident to (a)
the printing or other production of documents with respect to the transactions,
including any costs of printing the registration statement originally filed with
respect to the Securities and any amendment thereto, any Rule 462(b)
Registration Statement, any Preliminary Prospectus, the Prospectus and any
Integrated Prospectus and any amendment or supplement thereto, this Agreement,
any Designated Deposit Agreement and any blue sky memoranda, (b) all
arrangements relating to the delivery to the Underwriter of copies of the
foregoing documents, (c) the fees and disbursements of the counsel, accountants
and any other experts or advisors retained by the Company, (d) preparation,
issuance and delivery to the Underwriter of any certificates evidencing the
Securities, including transfer agent's and registrar's fees, (e) the
qualification of the Securities under state securities and blue sky laws,
including filing fees and fees and disbursements of counsel for the Underwriter
relating thereto, (f) the filing fees of the Commission (and the National
Association of Securities Dealers, Inc.) relating to the Securities, (g) the
fees and expenses, if any, of the Depositary, including the fees and
disbursements of counsel for the Depositary, (h) the listing of the Securities
on any stock exchange, (i) meetings with prospective investors in the Securities
(other than as shall have been specifically approved by the Underwriter to be
paid for by the Underwriter) and (j) advertising relating to the offering of the
Securities (other than as shall have been specifically approved by the
Underwriter). If the sale of the Securities provided for herein is not
consummated because any condition to the Underwriter's obligations set forth in
Section 6 hereof is not satisfied, because this Agreement is terminated pursuant
to Section 10 hereof or because of any failure, refusal or inability on the part
of the Company to perform all obligations and satisfy all conditions on its part
to be performed or satisfied hereunder other than by reason of a default by the
Underwriter, the Company will reimburse the Underwriter upon demand for all
out-of-pocket expenses (including fees and disbursements of counsel) that shall
have been incurred by them in connection with the proposed purchase and sale of
the Securities. The Company shall not in any event be liable to the Underwriter
for the loss of anticipated profits from the transactions covered by this
Agreement.
17
6. Conditions of the Underwriter's Obligations. Except as otherwise
provided in Schedule 1, the Underwriter's obligations to purchase and pay for
the Firm Securities shall be subject, in the Underwriter's sole discretion, to
the accuracy of the representations and warranties of the Company contained
herein as of the date hereof and as of the Firm Closing Date, as if made on and
as of the Firm Closing Date, to the accuracy of the statements of the Company's
officers made pursuant to the provisions hereof, to the performance by the
Company of its covenants and agreements hereunder and to the following
additional conditions:
(a) If the Company has elected to rely upon Rule 462(b), the Rule
462(b) Registration Statement shall have been declared effective not later than
the earlier of (i) 11:00 A.M., New York time, on the date on which the amendment
to the registration statement originally filed with respect to the Securities or
to the Registration Statement, as the case may be, containing information
regarding the initial public offering price of the Securities has been filed
with the Commission and (ii) the time confirmations are sent or given as
specified by Rule 462(b)(2), or with respect to the Original Registration
Statement, or such later time and date as shall have been consented to by the
Underwriter; if required, the Prospectus or any Term Sheet that constitutes a
part thereof and any Integrated Prospectus and any amendment or supplement
thereto shall have been filed with the Commission in the manner and within the
time period required by Rule 434 and 424(b) under the Act; no stop order
suspending the effectiveness of the Registration Statement or any post-effective
amendment thereto and no order directed at any document incorporated by
reference in the Registration Statement, the Prospectus or any Integrated
Prospectus or any amendment or supplement thereto shall have been issued and no
proceedings for that purpose shall have been instituted or threatened or, to the
knowledge of the Company or the Underwriter, shall be contemplated by the
Commission; and the Company shall have complied with any request of the
Commission for additional information (to be included in the Registration
Statement, the Prospectus or any Integrated Prospectus or otherwise).
(b) The Underwriter shall have received an opinion, dated the Firm
Closing Date, of Morse, Zelnick, Rose & Lander, LLP, counsel for the Company, to
the effect that:
(i) the Company and each of its subsidiaries (the
"Subsidiaries") have been duly incorporated and are validly existing as
corporations in good standing under the laws of their respective
jurisdictions of incorporation and are duly qualified to transact
business as foreign corporations and are in good standing under the
laws of all other jurisdictions where the ownership or leasing of their
respective properties or the conduct of their respective businesses
requires such qualification, except where the failure to be so
qualified does not amount to a material liability or disability to the
Company and the Subsidiaries, taken as a whole;
18
(ii) the Company and each of the Subsidiaries have corporate
power to own or lease their respective properties and conduct their
respective businesses as described in the Registration Statement and
the Prospectus or any Integrated Prospectus, and the Company has
corporate power to enter into this Agreement and to carry out all the
terms and provisions hereof and thereof to be carried out by it;
(iii) the issued shares of capital stock of each of the
Subsidiaries have been duly authorized and validly issued, are fully
paid and nonassessable and, except for directors' qualifying shares and
as otherwise set forth in each of the Prospectus and any Integrated
Prospectus, are owned beneficially by the Company free and clear of any
perfected security interests or, to the best knowledge of such counsel,
any other security interests, liens, encumbrances, equities or claims;
(iv) the Company has an authorized, issued and outstanding
capitalization as set forth in each of the Prospectus and any
Integrated Prospectus; all of the issued shares of capital stock of the
Company have been duly authorized and validly issued and are fully paid
and nonassessable, have been issued in compliance with all applicable
federal and state securities laws and were not issued in violation of
or subject to any preemptive rights or other rights to subscribe for or
purchase securities; the Securities have been duly authorized for
listing, subject to official notice of issuance, on the New York Stock
Exchange;
(v) The Securities have been duly authorized and, when issued
and delivered to and paid for by the Underwriter, will be validly
issued, fully paid and nonassessable. All corporate action required to
be taken for the issuance, delivery and sale of such Securities have
been validly taken. No holders of outstanding shares of capital stock
of the Company are entitled as such to any preemptive or other rights
to subscribe for any Securities; and no holders of securities of the
Company are entitled to have such securities registered under the
Registration Statement;
(vi) the statements set forth under the heading "Description
of Outstanding Capital Stock" in each of the Prospectus and any
Integrated Prospectus, insofar as such statements purport to summarize
certain provisions of the capital stock of the Company, provide a fair
summary of such provisions; and the descriptions in each of the
Prospectus and any Integrated Prospectus, of such of the statutes,
regulations, legal or governmental proceedings, contracts and other
documents as have been included therein, insofar as such statements
constitute a summary of the legal matters, documents or proceedings
referred to therein, provide a fair summary of such legal matters,
documents and proceedings;
19
(vii) the execution and delivery of this Agreement have been
duly authorized by all necessary corporate action of the Company and
this Agreement has been duly executed and delivered by the Company;
(viii) the Securities conform in all material respects as to
legal matters to the descriptions thereof contained in the Prospectus
and any Integrated Prospectus;
(ix) (i) to the best knowledge of such counsel, no legal or
governmental proceedings are pending to which the Company or any of the
Subsidiaries is a party or to which the property of the Company or any
of the Subsidiaries is subject that are required to be described in the
Registration Statement or the Prospectus and any Integrated Prospectus
and are not described therein, and no such proceedings have been
threatened against the Company or any of the Subsidiaries or with
respect to any of their respective properties; and (ii) no contract or
other document is required to be described in the Registration
Statement, the Prospectus and any Integrated Prospectus or to be filed
as an exhibit to the Registration Statement that is not described
therein or filed as required;
(x) the issuance, offering and sale of the Securities to the
Underwriter by the Company pursuant to this Agreement, or the
execution, delivery or performance by the Company of its obligations
under this Agreement and the consummation of the other transactions
herein contemplated do not (A) require the consent, approval,
authorization, registration or qualification of or with any
governmental authority, except such as have been obtained and such as
may be required under state securities or blue sky laws, or (B)
conflict with or result in a breach or violation of any of the terms
and provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, lease or other agreement or instrument, known
to such counsel, to which the Company or any of the Subsidiaries is a
party or by which the Company or any of the Subsidiaries or any of
their respective properties are bound, or the charter documents or
by-laws of the Company or any of the Subsidiaries, or any statute or
any judgment, decree, order, rule or regulation of any court or other
governmental authority or any arbitrator known to such counsel and
applicable to the Company or any of the Subsidiaries;
(xi) the Registration Statement is effective under the Act;
any required filing of the Prospectus, or any Term Sheet that
constitutes a part thereof, and any Integrated Prospectus pursuant to
Rules 434 and 424(b) has been made in the manner and within the time
period required by Rules 434 and 424(b); and no stop order suspending
the effectiveness of the Registration Statement or any post-effective
amendment thereto and no order directed at any document incorporated by
reference in the Registration Statement or the Prospectus and any
Integrated Prospectus or any amendment or supplement thereto has been
issued, and no proceedings for that
20
purpose have been instituted or threatened or, to the best knowledge of
such counsel, are contemplated by the Commission;
(xii) the Registration Statement originally filed with respect
to the Securities and each amendment thereto and any Rule 462(b)
Registration Statement, the Prospectus and any Integrated Prospectus
(in each case, including the documents incorporated by reference
therein but not including the financial statements and other financial
information contained therein, as to which such counsel need express no
opinion), as of their respective effective or issue dates, comply as to
form in all material respects with the applicable requirements of the
Act, the Exchange Act and the respective rules and regulations of the
Commission thereunder;
(xiii) if the Company elects to rely on Rule 434, the
Prospectus is not "materially different", as such term is used in Rule
434, from the prospectus included in the Registration Statement at the
time of its effectiveness or any effective post-effective amendment
thereto (including such information that is permitted to be omitted
pursuant to Rule 430A); and
(xiv) the Company is not an "investment company" or "promoter"
or "principal underwriter" for, or to such counsel's knowledge, an
"affiliate person" of, an "investment company" as such terms are
defined in the Investment Company Act of 1940, as amended.
Such counsel shall also state that they have participated in the preparation of
the Registration Statement and the Prospectus and any Integrated Prospectus and
have no reason to believe that the Registration Statement, as of its effective
date, contained any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading or that the Prospectus and any Integrated Prospectus, as
of its date or the date of such opinion, included or includes any untrue
statement of a material fact or omitted or omits to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(c) The Underwriter shall have received an opinion, dated the Firm
Closing Date, of ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & Green P.C., special counsel for the Company,
to the effect that
(i) subject to the qualifications set forth in the Prospectus
and the Integrated Prospectus, the business and professional activities
described in the Prospectus and the Integrated Prospectus as being
engaged in or as proposed to be engaged in by the Company, its
subsidiaries and Greater Metropolitan Medical Services ("GMMS") (the
"Regulated Business") can be undertaken in compliance in all material
respects with all laws, rules and regulations applicable to healthcare
21
providers, as such, or to practice support activities undertaken on
behalf of healthcare providers with respect to areas and activities
described under "Business--Government Regulation" in the Prospectus and
the Integrated Prospectus; and
(ii) The statements under the captions "Risk Factors --
Government Regulation" and "Business -- Government Regulation" in the
Prospectus and the Integrated Prospectus, insofar as such statements
constitute matters of law, fairly summarize in all material respects
the information called for with respect to such matters.
In rendering any such opinion, such counsel may rely, as to matters of
fact, to the extent such counsel deem proper, on certificates of responsible
officers of the Company and public officials and, as to matters involving the
application of laws of any jurisdiction other than the State of New York or the
United States, to the extent satisfactory in form and scope to counsel for the
Underwriter, upon local counsel in such jurisdictions. The foregoing opinion
shall also state that the Underwriter is justified in relying upon such opinion
of local counsel, and copies of such opinion shall be delivered to the
Underwriter and counsel for the Underwriter.
(d) The Underwriter shall have received an opinion, dated the Firm
Closing Date, of Shearman & Sterling, counsel for the Underwriter, with respect
to the issuance and sale of the Firm Securities, the Registration Statement and
the Prospectus or any Integrated Prospectus, and such other related matters as
the Underwriter may reasonably require, and the Company shall have furnished to
such counsel such documents as they may reasonably request for the purpose of
enabling them to pass upon such matters. In rendering such opinion, such counsel
may rely as to all matters of law applicable to healthcare providers upon the
opinion of ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & Green P.C. referred to in paragraph (c) above.
(e) The Underwriter shall have received from ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP a
letter or letters dated, respectively, the date hereof and the Firm Closing
Date, in form and substance satisfactory to the Underwriter, to the effect that:
(i) they are independent accountants with respect to the
Company and its consolidated subsidiaries within the meaning of the
Act, the Exchange Act and the applicable rules and regulations
thereunder;
(ii) in their opinion, the audited consolidated financial
statements and schedules and pro forma financial statements examined by
them and included in the Registration Statement and the Prospectus and
any Integrated Prospectus comply as to form in all material respects
with the applicable accounting requirements of the Act, the Exchange
Act and the related published rules and regulations thereunder;
22
(iii) on the basis of their limited review in accordance with
standards established by the American Institute of Certified Public
Accountants of any interim unaudited consolidated financial statements
of the Company and its consolidated subsidiaries as indicated in their
reports incorporated in the Registration Statement and the Prospectus
and any Integrated Prospectus, a reading of the latest available
interim unaudited condensed consolidated financial statements of the
Company and its consolidated subsidiaries, a reading of the unaudited
amounts for net revenues, income before provision for taxes and total
and per share amounts of net income for the three- and nine-month
periods ended September 30, 1996 and 1997 and of the unaudited
consolidated financial statements of the Company and its consolidated
subsidiaries for the periods from which such amounts are derived,
carrying out certain specified procedures (which do not constitute an
examination made in accordance with generally accepted auditing
standards) that would not necessarily reveal matters of significance
with respect to the comments set forth in this paragraph (iii), a
reading of the minute books of the shareholders, the board of directors
and any committees thereof of the Company and each of its consolidated
subsidiaries, and inquiries of certain officials of the Company and its
consolidated subsidiaries who have responsibility for financial and
accounting matters, nothing came to their attention that caused them to
believe that:
(A) the unaudited condensed consolidated financial
statements of the Company and its consolidated subsidiaries
included in or incorporated by reference into the Registration
Statement and the Prospectus and any Integrated Prospectus do
not comply in form in all material respects with the
applicable accounting requirements of the Act, the Exchange
Act and the related published rules and regulations
thereunder, or are not in conformity with generally accepted
accounting principles applied on a basis substantially
consistent with that of the audited consolidated financial
statements included in or incorporated by reference into the
Registration Statement and the Prospectus and any Integrated
Prospectus;
(B) the unaudited amounts for net revenues, income
before provision for taxes and total and per share amounts of
net income included in the Registration Statement and the
Prospectus and any Integrated Prospectus do not agree with the
amounts set forth in any unaudited consolidated financial
statements for those same periods or are not in conformity
with generally accepted accounting principles applied on a
basis substantially consistent with that of the corresponding
amounts in the audited consolidated financial statements
included in the Registration Statement and the Prospectus and
any Integrated Prospectus; and
23
(C) at a specific date not more than five business
days prior to the date of such letter, there were any changes
in the capital stock or long-term debt of the Company and its
consolidated subsidiaries or any decreases in net current
assets or stockholders' equity of the Company and its
consolidated subsidiaries, in each case compared with amounts
shown on the September 30, 1997 unaudited condensed
consolidated balance sheet incorporated by reference in the
Registration Statement and the Prospectus and any Integrated
Prospectus, or for the period from October 1, 1997 to such
specified date there were any decreases, as compared with the
corresponding period in the preceding year, in net revenues,
income before provision for taxes or total or per share
amounts of net income of the Company and its consolidated
subsidiaries, except in all instances for changes, decreases
or increases set forth in such letter; and
(iv) they have carried out certain specified procedures, not
constituting an audit, with respect to certain amounts, percentages and
financial information that are derived from the general accounting
records of the Company and its consolidated subsidiaries and are
included in the Registration Statement and the Prospectus and any
Integrated Prospectus under the caption "Ratio of Earnings to Fixed
Charges" in Exhibit 12 of the Registration Statement and the
"Computation of Earnings per Share" in Exhibit 11 of the Company's
September 30, 1997 10-Q incorporated by reference into the Registration
Statement and the Prospectus and any Integrated Prospectus, and have
compared such amounts, percentages and financial information with such
records of the Company and its consolidated subsidiaries and with
information derived from such records and have found them to be in
agreement, excluding any questions of legal interpretation; and
(v) on the basis of a reading of the unaudited pro forma
consolidated financial statements included or incorporated by reference
in the Registration Statement, the Prospectus and any Integrated
Prospectus, carrying out certain specified procedures that would not
necessarily reveal matters of significance with respect to the comments
set forth in this paragraph (v), inquiries of certain officials of the
Company and its consolidated subsidiaries who have responsibility for
financial and accounting matters and proving the arithmetic accuracy of
the application of the pro forma adjustments to the historical amounts
in the unaudited pro forma consolidated financial statements, nothing
came to their attention that caused them to believe that the unaudited
pro forma consolidated financial statements do not comply in form in all
material respects with the applicable accounting requirements of Rule
11-02 of Regulation S-X or that the pro forma adjustments have not been
properly applied to the historical amounts in the compilation of such
statements.
24
In the event that the letters referred to above set forth any such
changes, decreases or increases, it shall be a further condition to the
Underwriter's obligations that (A) such letters shall be accompanied by a
written explanation of the Company as to the significance thereof, unless the
Underwriter deems such explanation unnecessary, and (B) such changes, decreases
or increases do not, in the Underwriter's sole judgment, make it impractical or
inadvisable to proceed with the purchase and delivery of the Securities as
contemplated by the Registration Statement, as amended as of the date hereof.
References to the Registration Statement, the Prospectus and any
Integrated Prospectus in this paragraph (e) with respect to either letter
referred to above shall include any amendment or supplement thereto at the date
of such letter.
(f) The Underwriter shall have received from ▇.▇. ▇▇▇▇ LLP a letter
dated the date hereof and the Firm Closing Date, in form and substance
satisfactory to the Underwriter, to the effect that:
(i) they are independent accountants with respect to CHN;
(ii) in their opinion, the audited financial statements and
schedules and pro forma financial statements examined by them and
included in the Registration Statement and the Prospectus and any
Integrated Prospectus comply as to form in all material respects with
the applicable accounting requirements of the Act, the Exchange Act and
the related published rules and regulations thereunder;
(iii) they have carried out certain specified procedures, not
constituting an audit, with respect to certain items identified from the
pro forma financial statements included in the 8-K/A of the Company
incorporated by reference into the Registration Statement and the
Prospectus and any Integrated Prospectus, including the following: (A)
agreed the historical amounts for CHN for the year ended December 31,
1996 in the Company's unaudited statement of income for the year ended
December 31, 1996 and found the amounts to be in agreement and (B)
proved the mathematical accuracy of such items and found them to be in
agreement.
References to the Registration Statement, the Prospectus and any
Integrated Prospectus in this paragraph (e) with respect to either letter
referred to above shall include any amendment or supplement thereto at the date
of such letter.
(g) The Underwriter shall have received a certificate, dated the Firm
Closing Date, of the chief executive officer and the chief financial officer of
the Company to the effect that:
(i) the representations and warranties of the Company in this
Agreement are true and correct as if made on and as of the Firm Closing
Date; the Registration
25
Statement, as amended as of the Firm Closing Date, does not include any
untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein not misleading, and the
Prospectus and any Integrated Prospectus, as amended or supplemented as
of the Firm Closing Date, does not include any 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, not misleading; and the Company has performed all
covenants and agreements and satisfied all conditions on its part to be
performed or satisfied at or prior to the Firm Closing Date;
(ii) no stop order suspending the effectiveness of the
Registration Statement or any post-effective amendment thereto and no
order directed at any document incorporated by reference in the
Registration Statement or the Prospectus or any amendment or supplement
thereto has been issued, and no proceedings for that purpose have been
instituted or threatened or, to the best of the Company's knowledge, are
contemplated by the Commission; and
(iii) subsequent to the respective dates as of which information
is given in the Registration Statement, the Prospectus and any
Integrated Prospectus, neither the Company nor any of its Subsidiaries
has sustained any material loss or interference with their respective
businesses or properties from fire, flood, hurricane, accident or other
calamity, whether or not covered by insurance, or from any labor dispute
or any legal or governmental proceeding, and there has not been any
material adverse change, or any development involving a prospective
material adverse change, in the condition (financial or otherwise),
management, business prospects, net worth or results of operations of
the Company or any of its subsidiaries, except in each case as described
in or contemplated by the Prospectus and any Integrated Prospectus.
(h) The Underwriter shall have received from each person who is a
director or officer of the Company and certain holders of Common Shares an
agreement as substantially set forth in Exhibit A hereto (except the agreement
as to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, which agreement is as substantially set forth in Exhibit
B hereto) to the effect that such person will not, directly or indirectly,
without the Underwriter's prior written consent, offer, sell, offer to sell,
contract to sell, pledge, grant any option to purchase or other sale or
disposition) of (i) any Common Shares or other capital stock of the Company or
any securities convertible into, or exchangeable or exercisable for, any Common
Shares or other capital stock of the Company for a period of 120 days after the
date hereof.
(i) Simultaneously with its receipt of the net proceeds of the Offering
on the Firm Closing Date, the Company shall use $6,760,000 of such net proceeds
to repay a portion of its $10 million revolving credit loan pursuant to that
certain First Amendment Agreement dated as of February 9, 1998 (the "Amendment")
to the Amended and Restated Line
26
Agreement dated as of January 12, 1998 (as further amended, restated, modified
and supplemented from time to time) among the Company and certain of its
Subsidiaries and European American Bank.
(j) The Company shall have complied with all other conditions precedent
to effectiveness of the Amendment on or prior to the Firm Closing Date.
(k) On or before the Firm Closing Date, the Underwriter and counsel for
the Underwriter shall have received such further certificates, documents or
other information as they may have reasonably requested from the Company.
All opinions, certificates, letters and documents delivered pursuant to
this Agreement will comply with the provisions hereof only if they are
reasonably satisfactory in all material respects to the Underwriter and counsel
for the Underwriter. The Company shall furnish to you such conformed copies of
such opinions, certificates, letters and documents in such quantities as the
Underwriter and counsel for the Underwriter shall reasonably request.
The Underwriter's obligation to purchase and pay for any Option
Securities shall be subject, in the Underwriter's discretion, to each of the
foregoing conditions to purchase the Firm Securities, except that all references
to the Firm Securities and the Firm Closing Date shall be deemed to refer to
such Option Securities and the related Option Closing Date, respectively.
7. Indemnification and Contribution.
(a) The Company agrees to indemnify the Underwriter and hold the
Underwriter harmless and each person, if any, who controls the Underwriter
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act
against any losses, claims, damages or liabilities, joint or several, to which
the Underwriter or such controlling person may become subject under the Act, the
Exchange Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon:
(i) any untrue statement or alleged untrue statement made by
the Company in Section 2 of this Agreement,
(ii) any untrue statement or alleged untrue statement of any
material fact contained in (A) the Registration Statement or any
amendment thereto, any Preliminary Prospectus or the Prospectus and any
Integrated Prospectus or any amendment or supplement thereto or (B) any
application or other document, or any amendment or supplement thereto,
executed by the Company or based upon written information furnished by
or on behalf of the Company filed in any jurisdiction in order to
qualify the Securities under the securities or blue sky laws thereof or
filed with the
27
Commission or any securities association or securities exchange (each an
"Application"),
(iii) the omission or alleged omission to state in the
Registration Statement or any amendment thereto, any Preliminary
Prospectus or the Prospectus and any Integrated Prospectus or any
amendment or supplement thereto, or any Application a material fact
required to be stated therein or necessary to make the statements
therein not misleading, or
(iv) any untrue statement or alleged untrue statement of any
material fact contained in any audio or visual materials used in
connection with the marketing of the Securities, including, without
limitation, slides, videos, films and tape recordings and will
reimburse, as incurred, the Underwriter and each such controlling person
for any legal or other expenses reasonably incurred by the Underwriter
or such controlling person in connection with investigating, defending
against or appearing as a third-party witness in connection with any
such loss, claim, damage, liability or action; provided, however, that
the Company will not be liable in any such case to the extent that any
such loss, claim, damage or liability arises out of or is based upon any
untrue statement or alleged untrue statement or omission or alleged
omission made in such registration statement or any amendment thereto,
any Preliminary Prospectus, the Prospectus and any Integrated Prospectus
or any amendment or supplement thereto, or any Application in reliance
upon and in conformity with written information furnished to the Company
by the Underwriter specifically for use therein; and provided, further,
that the Company will not be liable to any Underwriter or any person
controlling such Underwriter with respect to any such untrue statement
or omission made in any Preliminary Prospectus that is corrected in the
Prospectus (or any amendment or supplement thereto) if the person
asserting any such loss, claim, damage or liability purchased Securities
from such Underwriter but was not sent or given a copy of the Prospectus
(as amended or supplemented), other than the documents incorporated by
reference therein, at or prior to the written confirmation of the sale
of such Securities to such person in any case where such delivery of the
Prospectus (as amended or supplemented) is required by the Act, unless
such failure to deliver the Prospectus (as amended or supplemented) was
a result of noncompliance by the Company with Section 4(d) and (a) of
this Agreement. This indemnity agreement will be in addition to any
liability which the Company may otherwise have. The Company will not,
without the Underwriter's prior written consent, settle or compromise or
consent to the entry of any judgment in any pending or threatened claim,
action, suit or proceeding in respect of which indemnification may be
sought hereunder (whether or not the Underwriter or any person who
controls the Underwriter within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act is a party to such claim, action, suit or
proceeding), unless such settlement, compromise or consent includes an
unconditional release of the
28
Underwriter and such controlling persons from all liability arising out
of such claim, action, suit or proceeding.
(b) The Underwriter will indemnify and hold harmless the Company, each
of its directors, each of its officers who signed the Registration Statement and
each person, if any, who controls the Company within the meaning of Section 15
of the Act or Section 20 of the Exchange Act against any losses, claims, damages
or liabilities to which the Company or any such director, officer or controlling
person may become subject under the Act, the Exchange Act or otherwise, insofar
as such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon (i) any untrue statement or alleged untrue
statement of any material fact contained in the Registration Statement or any
amendment thereto, any Preliminary Prospectus, the Prospectus or any Integrated
Prospectus or any amendment or supplement thereto, or any Application or (ii)
the omission or the alleged omission to state therein a material fact required
to be stated in the Registration Statement or any amendment thereto, any
Preliminary Prospectus or the Prospectus or any amendment or supplement thereto,
or any Application, or necessary to make the statements therein not misleading,
in each case to the extent, but only to the extent, that such untrue statement
or alleged untrue statement or omission or alleged omission was made in reliance
upon and in conformity with written information furnished to the Company by the
Underwriter specifically for use therein; and, subject to the limitation set
forth immediately preceding this clause, will reimburse, as incurred, any legal
or other expenses reasonably incurred by the Company or any such director,
officer or controlling person in connection with investigating or defending any
such loss, claim, damage, liability or any action in respect thereof. This
indemnity agreement will be in addition to any liability which the Underwriter
may otherwise have.
(c) Promptly after receipt by an indemnified party under this Section 7
of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 7, notify the indemnifying party of the commencement thereof; but the
omission so to notify the indemnifying party will not relieve it from any
liability which it may have to any indemnified party otherwise than under this
Section 7. In case any such action is brought against any indemnified party, and
it notifies the indemnifying party of the commencement thereof, the indemnifying
party will be entitled to participate therein and, to the extent that it may
wish, jointly with any other indemnifying party similarly notified, to assume
the defense thereof, with counsel satisfactory to such indemnified party;
provided, however, that if the defendants in any such action include both the
indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that there may be one or more legal defenses available
to it and/or other indemnified parties which are different from or additional to
those available to the indemnifying party, the indemnifying party shall not have
the right to direct the defense of such action on behalf of such indemnified
party or parties and such indemnified party or parties shall have the right to
select separate counsel to defend such action on behalf of such indemnified
party or parties. After notice from the indemnifying party to such indemnified
29
party of its election so to assume the defense thereof and approval by such
indemnified party of counsel appointed to defend such action, the indemnifying
party will not be liable to such indemnified party under this Section 7 for any
legal or other expenses, other than reasonable costs of investigation,
subsequently incurred by such indemnified party in connection with the defense
thereof, unless (i) the indemnified party shall have employed separate counsel
in accordance with the proviso to the next preceding sentence (it being
understood, however, that in connection with such action the indemnifying party
shall not be liable for the expenses of more than one separate counsel (in
addition to local counsel) in any one action or separate but substantially
similar actions in the same jurisdiction arising out of the same general
allegations or circumstances, designated by the Underwriter in the case of
paragraph (a) of this Section 7, representing the indemnified parties under such
paragraph (a) who are parties to such action or actions) or (ii) the
indemnifying party does not promptly retain counsel satisfactory to the
indemnified party or (iii) the indemnifying party has authorized the employment
of counsel for the indemnified party at the expense of the indemnifying party.
After such notice from the indemnifying party to such indemnified party, the
indemnifying party will not be liable for the costs and expenses of any
settlement of such action effected by such indemnified party without the consent
of the indemnifying party.
(d) In circumstances in which the indemnity agreement provided for in
the preceding paragraphs of this Section 7 is unavailable or insufficient, for
any reason, to hold harmless an indemnified party in respect of any losses,
claims, damages or liabilities (or actions in respect thereof), each
indemnifying party, in order to provide for just and equitable contribution,
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 (i) the relative
benefits received by the indemnifying party or parties on the one hand and the
indemnified party on the other from the offering of the Securities or (ii) if
the allocation provided by the foregoing clause (i) is not permitted by
applicable law, not only such relative benefits but also the relative fault of
the indemnifying party or parties on the one hand and the indemnified party on
the other in connection with the statements or omissions or alleged statements
or omissions that 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 on the one hand
and the Underwriter on the other shall be deemed to be in the same proportion as
the total proceeds from the offering (before deducting expenses) received by the
Company bear to the total underwriting discounts and commissions received by the
Underwriter. The relative fault of the parties shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company or the Underwriter, the parties'
relative intents, knowledge, access to information and opportunity to correct or
prevent such statement or omission, and any other equitable considerations
appropriate in the circumstances. The Company and the Underwriter agree that it
would not be equitable if the amount of such contribution were determined by pro
rata or per capita allocation or by any
30
other method of allocation that does not take into account the equitable
considerations referred to above in this paragraph (d). Notwithstanding any
other provision of this paragraph (d), the Underwriter shall not be obligated to
make contributions hereunder that in the aggregate exceed the total public
offering price of the Securities purchased by the Underwriter under this
Agreement, less the aggregate amount of any damages that the Underwriter has
otherwise been required to pay in respect of the same or any substantially
similar claim, and 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. For purposes of
this paragraph (d), each person, if any, who controls the Underwriter within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act shall have
the same rights to contribution as the Underwriter, and each director of the
Company, each officer of the Company who signed the Registration Statement and
each person, if any, who controls the Company within the meaning of Section 15
of the Act or Section 20 of the Exchange Act, shall have the same rights to
contribution as the Company.
8. Survival. The respective representations, warranties, agreements,
covenants, indemnities and other statements of the Company, its officers and the
Underwriter 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 (i) any investigation made by or on behalf of the Company, any of
its officers or directors, the Underwriter or any controlling person referred to
in Section 7 hereof and (ii) delivery of and payment for the Securities. The
respective agreements, covenants, indemnities and other statements set forth in
Sections 5 and 7 hereof shall remain in full force and effect, regardless of any
termination or cancellation of this Agreement.
9. Termination. (a) This Agreement may be terminated with respect to the
Firm Securities or any Option Securities in the sole discretion of the
Underwriter by notice to the Company given prior to the Firm Closing Date or the
related Option Closing Date, respectively, in the event that the Company shall
have failed, refused or been unable to perform all obligations and satisfy all
conditions on its part to be performed or satisfied hereunder at or prior
thereto or, if at or prior to the Firm Closing Date or such Option Closing Date,
respectively,
(i) the Company or any of its subsidiaries shall have, in the
sole judgment of the Underwriter, sustained any material loss or
interference with their respective businesses or properties from fire,
flood, hurricane, accident or other calamity, whether or not covered by
insurance, or from any labor dispute or any legal or governmental
proceeding or there shall have been any material adverse change, or any
development involving a prospective material adverse change (including,
without limitation, a change in management or control of the Company),
in the condition (financial or otherwise), business prospects, net worth
or results of operations of the
31
Company and its subsidiaries, except in each case as described in or
contemplated by the Prospectus (exclusive of any amendment or supplement
thereto);
(ii) trading in the Common Shares shall have been suspended by
the Commission or trading in securities generally on the New York Stock
Exchange shall have been suspended or minimum or maximum prices shall
have been established on such exchange;
(iii) a banking moratorium shall have been declared by New York
or United States authorities; or
(iv) there shall have been (A) an outbreak or escalation of
hostilities between the United States and any foreign power, (B) an
outbreak or escalation of any other insurrection or armed conflict
involving the United States or (C) any other calamity or crisis or
material adverse change in general economic, political or financial
conditions having an effect on the U.S. financial markets that, in the
sole judgment of the Underwriter, makes it impractical or inadvisable to
proceed with the public offering or the delivery of the Securities as
contemplated by the Registration Statement, as amended as of the date
hereof.
(b) Termination of this Agreement pursuant to this Section 9 shall be
without liability of any party to any other party except as provided in Section
8 hereof.
10. Information Supplied by Underwriter. The statements set forth in the
last paragraph on the front cover page and under the heading "Underwriting" in
any Preliminary Prospectus or the Prospectus or any Integrated Prospectus (to
the extent such statements relate to the Underwriter) constitute the only
information furnished by the Underwriter to the Company for the purposes of
Sections 2(b) and 7 hereof. The Underwriter confirms that such statements (to
such extent) are correct.
11. Notices. All communications hereunder shall be in writing and, if
sent to the Underwriter, shall be delivered or sent by mail, telex or facsimile
transmission and confirmed in writing as set forth in Schedule 1; and if sent to
the Company, shall be delivered or sent by mail, telex or facsimile transmission
and confirmed in writing to the Company at ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇, Attention: Corporate Secretary.
12. Successors. This Agreement shall inure to the benefit of and shall
be binding upon the Underwriter, the Company and their respective successors and
legal representatives, and nothing expressed or mentioned in this Agreement is
intended or shall be construed to give any other person any legal or equitable
right, remedy or claim under or in respect of this Agreement, or any provisions
herein contained, this Agreement and all conditions and
32
provisions hereof being intended to be and being for the sole and exclusive
benefit of such persons and for the benefit of no other person except that (i)
the indemnities of the Company contained in Section 7 of this Agreement shall
also be for the benefit of any person or persons who control the Underwriter
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act
and (ii) the indemnities of the Underwriter contained in Section 7 of this
Agreement shall also be for the benefit of the directors of the Company, the
officers of the Company who have signed the Registration Statement and any
person or persons who control the Company within the meaning of Section 15 of
the Act or Section 20 of the Exchange Act. No purchaser of Securities from the
Underwriter shall be deemed a successor because of such purchase.
13. Applicable Law. The validity and interpretation of this Agreement,
and the terms and conditions set forth herein, shall be governed by and
construed in accordance with the laws of the State of New York, without giving
effect to any provisions relating to conflicts of laws.
14. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
If the foregoing correctly sets forth our understanding, please indicate
your acceptance thereof in the space provided below for that purpose, whereupon
this letter shall constitute an agreement binding the Company and you
Very truly yours,
COMPLETE MANAGEMENT, INC.
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: President and Chief Executive Officer
The foregoing Agreement is hereby confirmed and accepted as of the date first
above written.
PRUDENTIAL SECURITIES INCORPORATED
By /s/ ▇▇▇▇-▇▇▇▇▇▇ Canfin
-----------------------------------
Name: ▇▇▇▇-▇▇▇▇▇▇ Canfin
Title: Managing Director
SCHEDULE 1
COMPLETE MANAGEMENT, INC.
Common Shares
A. General
Registration Statement File No.: 333-35003
Date of Underwriting Agreement: February 9, 1998
Send Notices to the Underwriter to: Prudential Securities Incorporated
▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Closing date, time and location: February 13, 1998
9:00 a.m.
Shearman & Sterling
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
B. Terms of Securities
Number of Common Shares: 2,000,000
Purchase price per share: $10.05
Public offering price per share: $10.75
C. Exceptions to the conditions to the Underwriter's obligations provided
for in Section 6 (if any): None
D. Locations:
Packaging/Inspection: Shearman & Sterling
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Pre-Closing: (same)
Closing: (same)
Banks: $20,100,000
EXHIBIT A
[Form of Lock-up Letter for Directors, Officers and Certain Shareholders]
February __, 1998
Prudential Securities Incorporated
▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Re: Complete Management, Inc.
Ladies and Gentlemen:
The undersigned is the beneficial owner of ___________________ common shares
(the "Common Shares") of Complete Management, Inc. (the "Company"). The
undersigned understands that the Company has filed a Registration Statement on
Form S-3 (the "Registration Statement") with the Securities and Exchange
Commission (the "Commission") for the registration of $200 million of Common
Shares and other securities and the initial sale (the "Offering") of up to
approximately 2,300,000 Common Shares (including shares subject to an
underwriters' over-allotment option). The undersigned further understands that
the Underwriter is contemplating entering into an Underwriting Agreement with
the Company in connection with the Offering. All terms not otherwise defined
herein shall have the same meanings as in the Underwriting Agreement.
In order to induce the Company and the Underwriter to enter into the
Underwriting Agreement and to proceed with the Offering, the undersigned agrees,
for the benefit of the Company and the Underwriter, that should the Offering be
effected, the undersigned will not, without the prior written consent of the
Underwriter, directly or indirectly, offer, sell, offer to sell, contract to
sell, pledge, grant any option to purchase or otherwise sell or dispose (or
announce any offer, sale, offer of sale, contract of sale, pledge, grant of any
option to purchase or other sale or disposition) of (i) any Common Shares or
other capital stock of the Company or (ii) any other securities convertible
into, or exchangeable or exercisable for, any Common Shares or other capital
stock of the Company, beneficially owned (within the meaning of Rule 13d-3 under
the Securities Exchange Act of 1934, as amended) by the undersigned on the date
hereof or hereafter acquired, for a period of 120 days after the date of the
final Prospectus Supplement filed with the Securities and Exchange Commission
pursuant to Rule 424(b) under the Securities Act of 1933, as amended (the
"Act"), promulgated by the Commission or, if no filing under Rule 424(b) is
made, the date of the final Prospectus Supplement first furnished to the
Underwriter for use in the Offering.
The undersigned confirms that he, she or its understands that the Underwriter
and the Company will rely upon the representations set forth in this agreement
in proceeding with the Offering. This agreement shall be binding on the
undersigned and his, her or its respective successors, heirs, personal
representatives and assigns.
Very truly yours,
By: ___________________________ By: ________________________________
[Stockholder's name] [Stockholder's signature]
The foregoing is accepted and agreed to as of the date first above written:
PRUDENTIAL SECURITIES INCORPORATED
By: ___________________________
Name: ▇▇▇▇-▇▇▇▇▇▇ Canfin
Title: Managing Director
EXHIBIT B
[Form of Lock-up Letter for ▇▇▇▇▇▇ ▇. ▇▇▇▇▇]
February __, 1998
Prudential Securities Incorporated
▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Re: Complete Management, Inc.
Ladies and Gentlemen:
The undersigned is the beneficial owner of ___________________ common shares
(the "Common Shares") of Complete Management, Inc. (the "Company"). The
undersigned understands that the Company has filed a Registration Statement on
Form S-3 (the "Registration Statement") with the Securities and Exchange
Commission (the "Commission") for the registration of $200 million of Common
Shares and other securities and the initial sale (the "Offering") of up to
approximately 2,300,000 Common Shares (including shares subject to an
underwriters' over-allotment option). The undersigned further understands that
the Underwriter is contemplating entering into an Underwriting Agreement with
the Company in connection with the Offering. All terms not otherwise defined
herein shall have the same meanings as in the Underwriting Agreement.
In order to induce the Company and the Underwriter to enter into the
Underwriting Agreement and to proceed with the Offering, the undersigned agrees,
for the benefit of the Company and the Underwriter, that should the Offering be
effected, the undersigned will not, without the prior written consent of the
Underwriter, directly or indirectly, offer, sell, offer to sell, contract to
sell, pledge, grant any option to purchase or otherwise sell or dispose (or
announce any offer, sale, offer of sale, contract of sale, pledge, grant of any
option to purchase or other sale or disposition) of (i) any Common Shares or
other capital stock of the Company or (ii) any other securities convertible
into, or exchangeable or exercisable for, any Common Shares or other capital
stock of the Company, beneficially owned (within the meaning of Rule 13d-3 under
the Securities Exchange Act of 1934, as amended) by the undersigned on the date
hereof or hereafter acquired, for a period of 120 days after the date of the
final Prospectus Supplement filed with the Securities and Exchange Commission
pursuant to Rule 424(b) under the Securities Act of 1933, as amended (the
"Act"), promulgated by the Commission or, if no filing under Rule 424(b) is
made, the date of the final Prospectus Supplement first furnished to the
Underwriter for use in the Offering.
Notwithstanding the foregoing, (i) the __________ Common Shares and __________
Common Shares issuable upon the conversion of 8% Convertible Subordinated Notes
due _________ 2003 of the Company that are owned by a trust of which the
undersigned is the portfolio manager shall not be subject to this agreement;
provided, however, that the undersigned shall have issued a letter to the
Underwriter of even date herewith stating that he has no present intention to
dispose of such Common Shares and that he believes he lacks the authority to
bind such trust to the foregoing provisions of this letter and (ii) the ________
Common Shares and ____________ Common Shares issuable upon conversion of the 8%
Convertible Subordinated Notes due __________, 2003 of the Company that are
owned by Astro Communications, Inc., a company of which the undersigned is
President and Chief Executive Officer, shall be subject to this agreement only
upon approval of the Board of Directors of Astro Communications, Inc., which
approval the undersigned agrees to use his best efforts to obtain.
The undersigned confirms that he, she or its understands that the Underwriter
and the Company will rely upon the representations set forth in this agreement
in proceeding with the Offering. This agreement shall be binding on the
undersigned and his, her or its respective successors, heirs, personal
representatives and assigns.
Very truly yours,
By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ By:
-----------------------------
[Stockholder's signature]
The foregoing is accepted and agreed to as of the date first above written:
PRUDENTIAL SECURITIES INCORPORATED
By: _______________________________
Name: ▇▇▇▇-▇▇▇▇▇▇ Canfin
Title: Managing Director