Exhibit 1.1
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COMMUNITY HEALTH SYSTEMS, INC.
(a Delaware corporation)
o Shares of Common Stock
U.S. PURCHASE AGREEMENT
Dated: , 2000
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TABLE OF CONTENTS
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SECTION 1. Representations and Warranties....................................................3
(a) REPRESENTATIONS AND WARRANTIES BY THE COMPANY.....................................3
(b) REPRESENTATIONS AND WARRANTIES BY THE SELLING SHAREHOLDERS.......................16
(c) OFFICER'S CERTIFICATES, SELLING SHAREHOLDER CERTIFICATES.........................19
SECTION 2. Sale and Delivery to U.S. Underwriters; Closing..................................19
(a) INITIAL SECURITIES...............................................................19
(b) OPTION SECURITIES................................................................20
(c) PAYMENT..........................................................................20
(d) DENOMINATIONS; REGISTRATION......................................................21
SECTION 3. Covenants of the Company.........................................................21
(a) COMPLIANCE WITH SECURITIES REGULATIONS AND COMMISSION REQUESTS...................21
(b) FILING OF AMENDMENTS.............................................................22
(c) DELIVERY OF REGISTRATION STATEMENTS..............................................22
(d) DELIVERY OF PROSPECTUSES.........................................................22
(e) CONTINUED COMPLIANCE WITH SECURITIES LAWS........................................23
(f) BLUE SKY QUALIFICATIONS..........................................................23
(g) RULE 158.........................................................................23
(h) USE OF PROCEEDS..................................................................24
(i) LISTING..........................................................................24
(j) RESTRICTION ON SALE OF SECURITIES................................................24
(k) REPORTING REQUIREMENTS...........................................................24
SECTION 4. Payment of Expenses..............................................................24
(a) EXPENSES.........................................................................24
(b) EXPENSES OF THE SELLING SHAREHOLDERS.............................................25
(c) TERMINATION OF AGREEMENT.........................................................25
(d) ALLOCATION OF EXPENSES...........................................................25
SECTION 5. Conditions of U.S. Underwriters'Obligations......................................26
(a) EFFECTIVENESS OF REGISTRATION STATEMENT..........................................26
(b) OPINION OF COUNSEL FOR THE COMPANY...............................................26
(c) OPINION OF COUNSEL FOR THE SELLING SHAREHOLDERS..................................26
(d) OPINION OF COUNSEL FOR THE U.S. UNDERWRITERS.....................................27
(e) OFFICERS'CERTIFICATE.............................................................27
(f) CERTIFICATE OF THE SELLING SHAREHOLDER...........................................27
(g) ACCOUNTANT'S COMFORT LETTER......................................................27
(h) BRING-DOWN COMFORT LETTER........................................................27
(i) APPROVAL OF LISTING..............................................................28
(j) NO OBJECTION.....................................................................28
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TABLE OF CONTENTS
(continued)
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(k) LOCK-UP AGREEMENTS...............................................................28
(l) PURCHASE OF INITIAL INTERNATIONAL SECURITIES.....................................28
(m) FORM W-8 OR W-9..................................................................28
(n) CONDITIONS TO PURCHASE OF U.S. OPTION SECURITIES.................................28
(o) ADDITIONAL DOCUMENTS.............................................................29
(p) TERMINATION OF AGREEMENT.........................................................29
SECTION 6. Indemnification..................................................................30
(a) INDEMNIFICATION OF THE U.S. UNDERWRITERS BY THE COMPANY AND CHS..................30
(b) INDEMNIFICATION OF THE U.S. UNDERWRITERS BY THE SELLING SHAREHOLDERS.............31
(c) INDEMNIFICATION OF COMPANY, DIRECTORS AND OFFICERS AND SELLING SHAREHOLDERS......32
(d) ACTIONS AGAINST PARTIES; NOTIFICATION............................................33
(e) SETTLEMENT WITHOUT CONSENT IF FAILURE TO REIMBURSE...............................34
(f) OTHER AGREEMENTS WITH RESPECT TO INDEMNIFICATION.................................34
SECTION 7. Contribution.....................................................................34
SECTION 8. Representations, Warranties and Agreements to Survive Delivery...................36
SECTION 9. Termination of Agreement.........................................................36
(a) TERMINATION; GENERAL.............................................................36
(b) LIABILITIES......................................................................37
SECTION 10. Default by One or More of the U.S. Underwriters..................................37
SECTION 11. Default by One or More of the Selling Shareholders or the Company................38
SECTION 12. Notices..........................................................................38
SECTION 13. Parties..........................................................................39
SECTION 14. GOVERNING LAW AND TIME...........................................................39
SECTION 15. Effect of Headings...............................................................39
SCHEDULES
Schedule A - List of Underwriters
Schedule B - List of Selling Shareholders
Schedule C - Pricing Information
Schedule D - List of Persons Subject to Lock-Up
Schedule E - Forstmann Little & Co. Selling Shareholders
Exhibit A-1 - Form of Opinion of Company's General Counsel
Exhibit A-2 - Form of Opinion of Fried, Frank, Harris, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
Exhibit A-3 - Form of Opinion of Selling Shareholders' Counsel
Exhibit B - Form of Lock-Up Letter
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COMMUNITY HEALTH SYSTEMS, INC.
(a Delaware corporation)
o Shares of Common Stock
(Par Value $.01 Per Share)
U.S. PURCHASE AGREEMENT
o, 2000
▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated
Credit Suisse First Boston Corporation
Banc of America Securities LLC
Chase Securities Inc.
▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
as U.S. Representatives of the several U.S. Underwriters
▇/▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Ladies and Gentlemen:
Community Health Systems, Inc., a Delaware corporation (the "Company"),
CHS/Community Health Systems, Inc., a Delaware corporation ("CHS"), and the
persons listed in Schedule B hereto under the heading "Selling Shareholders"
(the "Selling Shareholders") confirm their respective agreements with ▇▇▇▇▇▇▇
▇▇▇▇▇ & Co., ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated ("▇▇▇▇▇▇▇
▇▇▇▇▇"), Credit Suisse First Boston Corporation and each of the other U.S.
Underwriters named in Schedule A hereto (collectively, the "U.S. Underwriters",
which term shall also include any underwriter substituted as hereinafter
provided in Section 10 hereof), for whom ▇▇▇▇▇▇▇ ▇▇▇▇▇, Credit Suisse First
Boston Corporation, Banc of America Securities LLC, Chase Securities Inc.,
▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated are acting as
representatives (in such capacity, the "U.S. Representatives"), with respect to
the issue and sale by the Company and the sale by the Selling Shareholders,
acting severally and
not jointly, and the purchase by the U.S. Underwriters, acting severally and not
jointly, of the respective numbers of shares of Common Stock, par value $.01 per
share, of the Company ("Common Stock") set forth in said Schedules A and B
hereto, and with respect to the grant by certain Selling Shareholders to the
U.S. Underwriters, acting severally and not jointly, of the option described in
Section 2(b) hereof to purchase all or any part of up to o additional shares of
Common Stock to cover over-allotments, if any. The aforesaid o shares of Common
Stock (the "Initial U.S. Securities") to be purchased by the U.S. Underwriters
and all or any part of the o shares of Common Stock subject to the option
described in Section 2(b) hereof (the "U.S. Option Securities") are hereinafter
called, collectively, the "U.S. Securities".
It is understood that the Company, CHS and the Selling Shareholders are
concurrently entering into an agreement dated the date hereof (the
"International Purchase Agreement") providing for the offering by the Company of
an aggregate of o shares of Common Stock (the "Initial International
Securities") through arrangements with certain underwriters outside the United
States and Canada (the "International Managers") for which ▇▇▇▇▇▇▇ ▇▇▇▇▇
International, Credit Suisse First Boston (Europe) Limited, Banc of America
International Limited, Chase Securities Inc., ▇▇▇▇▇▇▇ ▇▇▇▇▇ International and
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. International Limited are acting as lead managers (the
"Lead Managers") and the grant by certain Selling Shareholders to the
International Managers, acting severally and not jointly, of an option to
purchase all or any part of the International Managers' pro rata portion of up
to o additional shares of Common Stock solely to cover overallotments, if any
(the "International Option Securities" and, together with the U.S. Option
Securities, the "Option Securities"). The Initial International Securities and
the International Option Securities are hereinafter called the "International
Securities". It is understood that the Company and the Selling Shareholders are
not obligated to sell, and the U.S. Underwriters are not obligated to purchase,
any Initial U.S. Securities unless all of the Initial International Securities
are contemporaneously purchased by the International Managers.
The U.S. Underwriters and the International Managers are hereinafter
collectively called the "Underwriters", the Initial U.S. Securities and the
Initial International Securities are hereinafter collectively called the
"Initial Securities", and the U.S. Securities and the International Securities
are hereinafter collectively called the "Securities".
The Underwriters will concurrently enter into an Intersyndicate
Agreement dated the date hereof (the "Intersyndicate Agreement") providing for
the coordination of certain transactions among the Underwriters under the
direction of ▇▇▇▇▇▇▇ ▇▇▇▇▇ (in such capacity, the "Global Coordinator").
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The Company, CHS and the Selling Shareholders understand that the U.S.
Underwriters propose to make a public offering of the U.S. Securities as soon as
the U.S. Representatives deem advisable after this Agreement has been executed
and delivered.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-1 (No. 333-47354) covering the
registration of the Securities under the Securities Act of 1933, as amended (the
"1933 Act"), including the related preliminary prospectus or prospectuses.
Promptly after execution and delivery of this Agreement, the Company will
prepare and file a prospectus in accordance with the provisions of Rule 430A
("Rule 430A") of the rules and regulations of the Commission under the 1933 Act
(the "1933 Act Regulations") and paragraph (b) of Rule 424 ("Rule 424(b)") of
the 1933 Act Regulations. Two forms of prospectus are to be used in connection
with the offering and sale of the Securities: one relating to the U.S.
Securities (the "Form of U.S. Prospectus") and one relating to the International
Securities (the "Form of International Prospectus"). The Form of International
Prospectus is identical to the Form of U.S. Prospectus, except for the front
cover and back cover pages and the information under the caption "Underwriting."
The information included in any such prospectus that was omitted from such
registration statement at the time it became effective but that is deemed to be
part of such registration statement at the time it became effective pursuant to
paragraph (b) of Rule 430A is referred to as "Rule 430A Information." Each Form
of U.S. Prospectus and Form of International Prospectus used before such
registration statement became effective, and any prospectus that omitted the
Rule 430A Information that was used after such effectiveness and prior to the
execution and delivery of this Agreement, is herein called a "preliminary
prospectus." Such registration statement, including the exhibits thereto and
schedules thereto at the time it became effective and including the Rule 430A
Information, is herein called the "Registration Statement." Any registration
statement filed pursuant to Rule 462(b) of the 1933 Act Regulations is herein
referred to as the "Rule 462(b) Registration Statement," and after such filing
the term "Registration Statement" shall include the Rule 462(b) Registration
Statement. The final Form of U.S. Prospectus and the final Form of International
Prospectus in the forms first furnished to the Underwriters for use in
connection with the offering of the Securities are herein called the "U.S.
Prospectus" and the "International Prospectus," respectively, and collectively,
the "Prospectuses." For purposes of this Agreement, all references to the
Registration Statement, any preliminary prospectus, the U.S. Prospectus, the
International Prospectus or any amendment or supplement to any of the foregoing
shall be deemed to include the copy filed with the Commission pursuant to its
Electronic Data Gathering, Analysis and Retrieval system ("▇▇▇▇▇").
SECTION 1. REPRESENTATIONS AND WARRANTIES.
(a) REPRESENTATIONS AND WARRANTIES BY THE COMPANY. The Company and CHS
represent and warrant to each U.S. Underwriter as of the date hereof, as of the
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Closing Time referred to in Section 2(c) hereof, and if any U.S. Option
Securities are purchased, as of each Date of Delivery referred to in Section
2(b) hereof, and agrees with each U.S. Underwriter, as follows:
(i) COMPLIANCE WITH REGISTRATION REQUIREMENTS. Each of the
Registration Statement and any Rule 462(b) Registration Statement has
become effective under the 1933 Act and no stop order suspending the
effectiveness of the Registration Statement or any Rule 462(b)
Registration Statement has been issued under the 1933 Act and no
proceedings for that purpose have been instituted or are pending or, to
the knowledge of the Company, are contemplated by the Commission, and
any request on the part of the Commission for additional information
has been complied with in all material respects.
At the respective times the Registration Statement, any Rule
462(b) Registration Statement and any post-effective amendments thereto
became effective and at the Closing Time (and, if any U.S. Option
Securities are purchased, at the Date of Delivery), the Registration
Statement, the Rule 462(b) Registration Statement and any amendments
and supplements thereto complied and will comply in all material
respects with the requirements of the 1933 Act and the 1933 Act
Regulations and did not and will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading.
Neither of the Prospectuses nor any amendments or supplements thereto
(including any prospectus wrapper), at the time the Prospectuses or any
amendments or supplements thereto were issued and at the Closing Time
(and, if any U.S. Option Securities are purchased, at each Date of
Delivery), included or will include an untrue statement of a material
fact or omitted or will omit to state a material fact necessary in
order to make the statements therein, in the light of the circumstances
under which they were made, not misleading. The representations and
warranties in this subsection shall not apply to statements in or
omissions from the Registration Statement or the U.S. Prospectus made
in reliance upon and in conformity with information furnished to the
Company in writing by any U.S. Underwriter through the U.S.
Representative expressly for use in the Registration Statement or the
U.S. Prospectus.
Each preliminary prospectus and the prospectuses filed as part
of the Registration Statement as originally filed or as part of any
amendment thereto, or filed pursuant to Rule 424 under the 1933 Act,
complied when so filed in all material respects with the 1933 Act
Regulations and each preliminary prospectus and the Prospectuses
delivered to the Underwriters for use in connection with this offering
was identical to the electronically transmitted copies thereof filed
with the Commission pursuant to ▇▇▇▇▇, except to the extent permitted
by Regulation S-T.
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(ii) INDEPENDENT ACCOUNTANTS. The accountants who certified
the financial statements and supporting schedules included in the
Registration Statement are independent public accountants as required
by the 1933 Act and the 1933 Act Regulations.
(iii) FINANCIAL STATEMENTS. The consolidated financial
statements included in the Registration Statement and the Prospectuses,
together with the related schedules and notes, present fairly, in all
material respects, the financial position of the Company and its
consolidated subsidiaries at the dates indicated and the statement of
operations, stockholders' equity and cash flows of the Company and its
consolidated subsidiaries for the periods specified; said financial
statements have been prepared in conformity with generally accepted
accounting principles ("GAAP") applied, except as set forth in the
notes to the financial statements, on a consistent basis throughout the
periods involved. The supporting schedules included in the Registration
Statement present fairly, in all material respects, in accordance with
GAAP the information required to be stated therein. The selected
consolidated financial and other data and the summary consolidated
financial and other data included in the Prospectuses present fairly,
in all material respects, the information shown therein and have been
compiled on a basis consistent with that of the audited consolidated
financial statements included in the Registration Statement. The pro
forma financial information included in the Registration Statement and
the Prospectuses present fairly, in all material respects, the
information shown therein, and have been properly compiled on the bases
described therein, and the assumptions used in the preparation thereof
are reasonable and the adjustments used therein are appropriate to give
effect to the transactions and circumstances referred to therein.
(iv) NO MATERIAL ADVERSE CHANGE IN BUSINESS. Since the
respective dates as of which information is given in the Registration
Statement and the Prospectuses, except as otherwise stated therein, (A)
there has been no material adverse change in the condition, financial
or otherwise, or in the earnings, business affairs or business
prospects of the Company and its subsidiaries considered as one
enterprise, whether or not arising in the ordinary course of business
(a "Material Adverse Effect"), (B) there have been no transactions
entered into by the Company or any of its subsidiaries, other than
those in the ordinary course of business, which are material with
respect to the Company and its subsidiaries considered as one
enterprise, and (C) there has been no dividend or distribution of any
kind declared, paid or made by the Company on any class of its capital
stock.
(v) GOOD STANDING OF THE COMPANY. The Company has been duly
organized and is validly existing as a corporation in good standing
under the laws of the State of Delaware and has corporate power and
authority to own, lease and
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operate its properties and to conduct its business as described in the
Prospectuses and to enter into and perform its obligations under this
Agreement; and the Company is duly qualified as a foreign corporation
to transact business and is in good standing in each other jurisdiction
in which such qualification is required, whether by reason of the
ownership or leasing of property or the conduct of business, except
where the failure so to qualify or to be in good standing could not
result in a Material Adverse Effect.
(vi) GOOD STANDING OF SUBSIDIARIES. (A) Each "significant
subsidiary" of the Company (as such term is defined in Rule 1-02 of
Regulation S-X) and CHS, Community Health Investment Corporation, CHS
Professional Service Corporation and Hallmark Healthcare Corporation
and each other subsidiary which is a hospital holding company or an
operating hospital (each a "Subsidiary" and, collectively, the
"Subsidiaries") has been duly organized and is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation, has corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the
Prospectuses and is duly qualified as a foreign corporation to transact
business and is in good standing in each jurisdiction in which such
qualification is required, whether by reason of the ownership or
leasing of property or the conduct of business, except where the
failure so to qualify or to be in good standing would not reasonably be
expected to result in a Material Adverse Effect. Except as otherwise
disclosed in Exhibit 21 to the Registration Statement, all of the
issued and outstanding capital stock of each such Subsidiary has been
duly authorized and validly issued, is fully paid and non-assessable
and is owned by the Company, directly or through subsidiaries, free and
clear of any security interest, mortgage, pledge, lien, encumbrance,
claim or equity and none of the outstanding shares of capital stock of
any Subsidiary was issued in violation of the preemptive or similar
rights of any securityholder of such Subsidiary. The only subsidiaries
of the Company are (a) the subsidiaries listed on Exhibit 21 to the
Registration Statement and (b) certain other subsidiaries which,
considered in the aggregate as a single Subsidiary, do not constitute a
"significant subsidiary" as defined in Rule 1-02 of Regulation S-X.
(B) Except to the extent disclosed in Exhibit 21 to the
Registration Statement, each of the hospitals described in the
Prospectuses as owned or leased by the Company is owned or leased and
operated by a Subsidiary of which the Company directly or indirectly
owns 100% of the outstanding ownership interests. Except as disclosed
in the Prospectuses, there are no encumbrances or restrictions on the
ability of any Subsidiary (i) to pay any dividends or make any
distributions on such Subsidiary's capital stock, (ii) to make any
loans or advances to, or investments in, the Company, CHS or any other
Subsidiary, or
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(iii) to transfer any of its property or assets to the Company, CHS or
any other Subsidiary.
(vii) CAPITALIZATION. The authorized, issued and outstanding
capital stock of the Company is as set forth in the Prospectuses in the
column entitled "Actual" under the caption "Capitalization" (except for
subsequent issuances, if any, pursuant to this Agreement, pursuant to
reservations, agreements or employee benefit plans referred to in the
Prospectuses or pursuant to the exercise of convertible securities or
options referred to in the Prospectuses). The shares of issued and
outstanding capital stock of the Company including, without limitation,
the Securities to be sold by the Selling Shareholders have been duly
authorized and validly issued and are fully paid and non-assessable;
none of the outstanding shares of capital stock of the Company was
issued in violation of the preemptive or other similar rights of any
securityholder of the Company. The shares of issued and outstanding
capital stock of the Company have been issued in compliance, in all
material respects, with all federal and state securities laws. Except
as disclosed in the Prospectuses, there are no outstanding options or
warrants to purchase, or any preemptive rights or other rights to
subscribe for or to purchase, any securities or obligations convertible
into, or any contracts or commitments to issue or sell, shares of the
Company's capital stock or any such options, warrants, rights,
convertible securities or obligations. The description of the Company's
stock option and purchase plans and the options or other rights granted
and exercised thereunder set forth in the Prospectuses accurately and
fairly describe, in all material respects, the information required to
be shown with respect to such plans, arrangements, options and rights.
(viii) AUTHORIZATION OF AGREEMENT. This Agreement and the
International Purchase Agreement have been duly authorized, executed
and delivered by the Company.
(ix) AUTHORIZATION AND DESCRIPTION OF SECURITIES. The
Securities to be purchased by the U.S. Underwriters and the
International Managers from the Company and the Selling Shareholders
have been duly authorized for issuance and sale to the U.S.
Underwriters pursuant to this Agreement and the International Managers
pursuant to the International Purchase Agreement, respectively, and,
when issued and delivered by the Company pursuant to this Agreement and
the International Purchase Agreement, respectively, against payment of
the consideration set forth herein and the International Purchase
Agreement, respectively, will be validly issued, fully paid and
non-assessable; the Common Stock conforms, in all material respects, to
all statements relating thereto contained in the Prospectuses and such
description conforms to the rights set forth in the Company's Restated
Certificate of Incorporation to be in effect following this offering,
no holder of the Securities will be subject to personal liability by
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reason of being such a holder; and the issuance of the Securities is
not subject to the preemptive or other similar rights of any
securityholder of the Company.
(x) ABSENCE OF DEFAULTS AND CONFLICTS. Neither the Company nor
any of its subsidiaries is in violation of its charter or by-laws or in
default in the performance or observance of any obligation, agreement,
covenant or condition contained in any contract, indenture, mortgage,
deed of trust, loan or credit agreement, note, lease or other agreement
or instrument to which the Company or any of its subsidiaries is a
party or by which it or any of them may be bound, or to which any of
the property or assets of the Company or any subsidiary is subject
(collectively, "Agreements and Instruments"), except for such defaults
under Agreements and Instruments that would not reasonably be expected
to result in a Material Adverse Effect; and the execution, delivery and
performance of this Agreement and the International Purchase Agreement
and the consummation of the transactions contemplated in this
Agreement, the International Purchase Agreement and in the Registration
Statement (including the issuance and sale of the Securities and the
use of the proceeds from the sale of the Securities as described in the
Prospectuses under the caption "Use of Proceeds") and compliance by the
Company and CHS with their obligations under this Agreement and the
International Purchase Agreement have been duly authorized by all
necessary corporate action and, after giving effect to the use of
proceeds as contemplated in the Prospectuses under the caption "Use of
Proceeds," do not and will not, whether with or without the giving of
notice or passage of time or both, conflict with or constitute a breach
of, or default or Repayment Event (as defined below) under, or result
in the creation or imposition of any lien, charge or encumbrance upon
any property or assets of the Company, CHS or any of their subsidiaries
pursuant to, the Agreements and Instruments (except for such conflicts,
breaches or defaults or liens, charges or encumbrances that would not
reasonably be expected to result in a Material Adverse Effect), nor
will such action result in any violation of the provisions of the
charter or by-laws of the Company, CHS or any of their subsidiaries or,
any applicable law, statute, rule, regulation, judgment, order, writ or
decree of any government, government instrumentality or court, domestic
or foreign, having jurisdiction over the Company, CHS or any of their
subsidiaries or any of their assets, properties or operations. As used
herein, a "Repayment Event" means any event or condition which gives
the holder of any note, debenture or other evidence of indebtedness (or
any person acting on such holder's behalf) the right to require the
repurchase, redemption or repayment of all or a portion of such
indebtedness by the Company, CHS or any of their subsidiaries.
(xi) ABSENCE OF LABOR DISPUTE. No material labor dispute with
the employees of the Company, CHS or any of their subsidiaries exists
or, to the knowledge of the Company or CHS, is imminent, and neither
the Company nor
8
CHS is aware of any existing or imminent labor disturbance by the
employees of any of their or any of their subsidiaries' principal
suppliers or contractors, which would reasonably be expected to result
in a Material Adverse Effect.
(xii) ABSENCE OF PROCEEDINGS. There is no action, suit,
proceeding, inquiry or investigation before or brought by any court or
governmental agency or body, domestic or foreign, now pending (other
than any sealed "qui tam" actions of which neither the Company nor CHS
has any knowledge), or, to the knowledge of the Company or CHS,
threatened, against or affecting the Company, CHS or any of their
subsidiaries, which is required to be disclosed in the Registration
Statement (other than as disclosed therein), or which would reasonably
be expected to result in a Material Adverse Effect, or which could
materially and adversely affect the properties or assets thereof or the
consummation of the transactions contemplated in this Agreement and the
International Purchase Agreement, or the performance by the Company or
CHS of their obligations hereunder or thereunder; the aggregate of all
pending legal or governmental proceedings to which the Company, CHS or
any of their subsidiaries is a party or of which any of their
respective property or assets is the subject which are not described in
the Registration Statement, including ordinary routine litigation
incidental to the business, would not reasonably be expected to result
in a Material Adverse Effect.
(xiii) ACCURACY OF EXHIBITS. There are no contracts or
documents which are required to be described in the Registration
Statement or the Prospectuses or to be filed as exhibits to the
Registration Statement which have not been so described and/or filed as
required.
(xiv) POSSESSION OF INTELLECTUAL PROPERTY. The Company, CHS
and their subsidiaries own or possess, or can acquire on reasonable
terms, adequate patents, patent rights, licenses, inventions,
copyrights, know-how (including trade secrets and other unpatented
and/or unpatentable proprietary or confidential information, systems or
procedures), trademarks, service marks, trade names or other
intellectual property (collectively, "Intellectual Property") necessary
to carry on in all material respects the business now operated by them,
and none of the Company, CHS or any of their subsidiaries has received
any notice or is otherwise aware of any infringement of or conflict
with asserted rights of others with respect to any Intellectual
Property or of any facts or circumstances which could render any
Intellectual Property invalid or inadequate to protect the interest of
the Company, CHS or any of their subsidiaries therein, except for such
infringements or conflicts (if the subject of any unfavorable decision,
ruling or finding) or invalidities or inadequacies which would not,
singly or in the aggregate, reasonably be expected to result in a
Material Adverse Effect.
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(xv) ABSENCE OF FURTHER REQUIREMENTS. No filing with, or
authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or
agency is necessary or required for the performance by the Company or
CHS of their obligations hereunder, in connection with the offering,
issuance or sale of the Securities under this Agreement and the
International Purchase Agreement, the consummation of the transactions
contemplated by this Agreement and the International Purchase
Agreement, except such as have been already obtained or as may be
required under the 1933 Act or the 1933 Act Regulations and foreign or
state securities or blue sky laws.
(xvi) POSSESSION OF LICENSES AND PERMITS. The Company, CHS and
their subsidiaries possess such permits, licenses, provider numbers,
certificates, approvals (including, without limitation, certificate of
need approvals), consents, orders, certifications (including, without
limitation, certification under the Medicare and Medicaid programs),
accreditations (including, without limitation, accreditation by the
Joint Commission on Accreditation of Healthcare Organizations) and
other authorizations (collectively, "Governmental Licenses") issued by,
and have made all declarations and filings with, the appropriate
federal, state, local or foreign regulatory agencies or bodies
necessary to conduct the business now operated by them (including,
without limitation, Governmental Licenses as are required (i) under
such federal and state healthcare laws as are applicable to the
Company, CHS and their subsidiaries and (ii) with respect to those
facilities operated by the Company, CHS or any of their subsidiaries
that participate in the Medicare and/or Medicaid programs, to receive
reimbursement thereunder), except where the failure to poses such
Government Licenses or to make such declarations and filings would not
reasonably be expected to result in a Material Adverse Effect; the
Company, CHS and their subsidiaries are in compliance with the terms
and conditions of all such Governmental Licenses, except where the
failure so to comply would not, singly or in the aggregate, reasonably
be expected to result in a Material Adverse Effect; all of the
Governmental Licenses are valid and in full force and effect, except
when the invalidity of such Governmental Licenses or the failure of
such Governmental Licenses to be in full force and effect would not
reasonably be expected to result in a Material Adverse Effect; and none
of the Company, CHS or any of their subsidiaries has received any
notice of proceedings relating to the revocation or modification of any
such Governmental Licenses which, singly or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would reasonably
be expected to result in a Material Adverse Effect. All of the
hospitals operated by the Company, CHS and their subsidiaries are
"providers of services" as defined in the Social Security Act and the
regulations promulgated thereunder and are eligible to participate in
the Medicare and Medicaid programs (it being understood that this
representation and warranty is to the best of the Company's
10
and CHS's knowledge with respect to the three hospitals acquired by the
Company since June 1, 2000).
(xvii) ACCOUNTS RECEIVABLE. The accounts receivable of the
Company, CHS and their subsidiaries have been and will continue to be
adjusted to reflect material changes in the reimbursement policies of
third party payors such as Medicare, Medicaid, private insurance
companies, health maintenance organizations, preferred provider
organizations, managed care systems and other third party payors
(including, without limitation, Blue Cross plans). The accounts
receivable, after giving effect to the allowance for doubtful accounts,
relating to such third party payors do not and shall not materially
exceed amounts the Company, CHS and their subsidiaries are entitled to
receive.
(xviii) COMPLIANCE WITH SOCIAL SECURITY ACT AND OTHER FEDERAL
ENFORCEMENT INITIATIVES. Neither the Company and CHS nor, to the
knowledge of the Company and CHS, any officers, directors or
stockholders, employees or other agents of the Company, CHS or any of
their subsidiaries or the hospitals operated by them, has engaged in
any activities which are prohibited under Federal Medicare and Medicaid
statutes including, but not limited to, 42 ▇.▇.▇.▇▇.▇▇. 1320a-7
(Program Exclusion), 1320a-7a (Civil Monetary Penalties), 1320a-7b (the
Anti-kickback Statute), 42 ▇.▇.▇.▇▇. 1395nn and 1396b (the "▇▇▇▇▇" law,
prohibiting certain self-referrals), or any other federal law,
including, but not limited to, the federal TRICARE statute, 10
U.S.C.ss.1071 ET SEq., the Federal Civil False Claims Act, 31
▇.▇.▇.▇▇.▇▇. 3729-32, Federal Criminal False Claims Act, 18 ▇.▇.▇.▇▇.
287, False Statements Relating to Health Care Matters, 18 ▇.▇.▇.▇▇.
1035, Health Care Fraud, 18 ▇.▇.▇.▇▇. 1347, or the federal Food, Drug &
Cosmetics Act, 21 ▇.▇.▇.▇▇. 360aaa, or any regulations promulgated
pursuant to such statutes, or related state or local statutes or
regulations or any rules of professional conduct, including but not
limited to the following: (i) knowingly and willfully making or causing
to be made a false statement or representation of a material fact in
any applications for any benefit or payment under the Medicare or
Medicaid program or from any third party (where applicable federal or
state law prohibits such payments to third parties); (ii) knowingly and
willfully making or causing to be made any false statement or
representation of a material fact for use in determining rights to any
benefit or payment under the Medicare or Medicaid program or from any
third party (where applicable federal or state law prohibits such
payments to third parties); (iii) failing to disclose knowledge by a
claimant of the occurrence of any event affecting the initial or
continued right to any benefit or payment under the Medicare or
Medicaid program or from any third party (where applicable federal or
state law prohibits such payments to third parties) on its own behalf
or on behalf of another, with intent to secure such benefit or payment
fraudulently; (iv) knowingly and willfully offering, paying, soliciting
or receiving any remuneration (including any kickback, bribe or
rebate),
11
directly or indirectly, overtly or covertly, in cash or in kind (a) in
return for referring an individual to a Person for the furnishing or
arranging for the furnishing of any item or service for which payment
may be made in whole or in part by Medicare or Medicaid or any third
party (where applicable federal or state law prohibits such payments to
third parties), or (b) in return for purchasing, leasing or ordering or
arranging for or recommending the purchasing, leasing or ordering of
any good, facility, service, or item for which payment may be made in
whole or in part by Medicare or Medicaid or any third party (where
applicable federal or state law prohibits such payments to third
parties); (v) knowingly and willfully referring an individual to a
person with which they have ownership or certain other financial
arrangements (where applicable federal law prohibits such referrals);
and (vi) knowingly and willfully violating any enforcement initiative
instituted by any governmental agency (including, without limitation,
the Office of the Inspector General and the Department of Justice),
except for any such activities which are specifically described in the
Prospectus or which would not, singly or in the aggregate, reasonably
be expected to result in a Material Adverse Effect. (xix) REGULATORY
FILINGS. None of the Company, CHS or any of their subsidiaries or any
of the hospitals operated by any of them has failed to file with
applicable regulatory authorities any statement, report, information or
form required by any applicable law, regulation or order, except where
the failure to be so in compliance could not, individually or in the
aggregate, have a Material Adverse Effect. Except as described in the
Prospectuses, all such filings or submissions were in compliance with
applicable laws when filed and no deficiencies have been asserted by
any regulatory commission, agency or authority with respect to any such
filings or submissions, except for any such failures to be in
compliance or deficiencies which would not, singly or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
(xx) TITLE TO PROPERTY. The Company, CHS and their
subsidiaries have good and marketable title to all real property owned
by them and good title to all other properties owned by them, in each
case, free and clear of all mortgages, pledges, liens, security
interests, claims, restrictions or encumbrances of any kind except such
as (a) are described in the Prospectuses or (b) do not, singly or in
the aggregate, in a manner that would reasonably be expected to result
in a Material Adverse Effect, affect the value of such property or
interfere with the use made or proposed to be made of such property by
the Company, CHS or any of their subsidiaries; and all of the leases
and subleases of the Company and their subsidiaries, considered as one
enterprise, and under which the Company, CHS or any of their
subsidiaries holds properties described in the Prospectuses, are in
full force and effect, and none of the Company, CHS or any of their
subsidiaries has any notice of any claim of any sort that has been
asserted by anyone adverse to
12
the rights of the Company, CHS or any of their subsidiaries under any
of the leases or subleases mentioned above, or affecting or questioning
the rights of the Company, CHS or such subsidiary to the continued
possession of the leased or subleased premises under any such lease or
sublease, except where the failure to be in full force and effect or
such claim would not reasonably be expected to have a Material Adverse
Effect.
(xxi) INVESTMENT COMPANY ACT. None of the Company, CHS or
their subsidiaries is, and upon the issuance and sale of the Securities
as herein contemplated and the application of the net proceeds
therefrom as described in the Prospectuses none of them will be, an
"investment company" or an entity "controlled" by an "investment
company" as such terms are defined in the Investment Company Act of
1940, as amended (the "1940 Act").
(xxii) ENVIRONMENTAL LAWS. Except as described in the
Registration Statement and except as would not, singly or in the
aggregate, reasonably be expected to result in a Material Adverse
Effect, (A) none of the Company, CHS, their subsidiaries or any of the
hospitals owned, leased or operated by them is in violation of any
federal, state, local or foreign statute, law, rule, regulation,
standard, guide, ordinance, code, policy or rule of common law or any
judicial or administrative interpretation thereof, including any
judicial or administrative order, consent, decree or judgment, relating
to pollution or protection of human health or safety, the environment
(including, without limitation, ambient air, surface water,
groundwater, land surface or subsurface strata) or wildlife, including,
without limitation, laws and regulations relating to the release or
threatened release of chemicals, pollutants, contaminants, wastes,
toxic substances, hazardous substances (including, without limitation,
asbestos, polychlorinated biphenyls, urea-formaldehyde insulation,
petroleum or petroleum products) (collectively, "Hazardous Materials")
or to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling, release or threatened release
of Hazardous Materials (collectively, "Environmental Laws"), (B) the
Company, CHS, their subsidiaries and each of the hospitals owned,
leased or operated by them have all permits, authorizations and
approvals required under any applicable Environmental Laws and are each
in compliance with their requirements, (C) there are no pending or
threatened administrative, regulatory or judicial actions, suits,
demands, demand letters, claims, liens, notices of noncompliance or
violation, investigation or proceedings relating to any Environmental
Law against the Company, CHS, their subsidiaries or any of the
hospitals owned, leased or operated by them and (D) there are no events
or circumstances that might reasonably be expected to form the basis of
an order for clean-up or remediation, or an action, suit or proceeding
by any private party or governmental body or agency, against or
affecting the Company, CHS, any of
13
their subsidiaries or any of the hospitals owned, leased or operated by
them relating to Hazardous Materials or any Environmental Laws.
(xxiii) REGISTRATION RIGHTS. Except as disclosed in the
Prospectuses under the caption "Shares Eligible for Future
Sale-Registration Rights," there are no persons with registration
rights or other similar rights to have any securities of the Company,
CHS or any of their subsidiaries registered pursuant to the
Registration Statement or otherwise registered by the Company or any
other person under the 1933 Act.
(xxiv) INSURANCE. The Company, CHS and each of their
subsidiaries and each of the hospitals owned, leased or operated by
them are insured by insurers of recognized financial responsibility
against such loses and risks and in such amounts as are prudent and
customary in the healthcare industry; none of the Company, CHS, their
subsidiaries or any of the hospitals owned, leased or operated by them
has been refused any material insurance coverage sought or applied for
since January 1, 1999; and neither the Company nor CHS has any reason
to believe that it or any of the hospitals owned, leased or operated by
them, 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 operations except where
the failure to renew or maintain such coverage would not reasonably be
expected to result in a Material Adverse Effect. The officers and
directors of the Company are insured by insurers of recognized
financial responsibility against such losses and risks and in such
amounts as the Company believes are prudent and customary for officers'
and directors' liability insurance of a public company and as the
Company believes would cover claims which would reasonably be expected
to be made in connection with the issuance of the Securities; and the
Company has no reason to believe that it will not be able to renew its
existing directors' and officers' liability insurance coverage as and
when such coverage expires or to obtain similar coverage from similar
insurers as may be necessary to cover its officers and directors.
(xxv) TAX RETURNS AND PAYMENT OF TAXES. The Company, CHS and
their subsidiaries have timely filed all federal, state, local and
foreign tax returns that are required to be filed or has duly requested
extensions thereof and all such tax returns are true, correct and
complete, except to the extent that any failure to file or request an
extension, or any incorrectness would not reasonably be expected to
result in a Material Adverse Effect. The Company, CHS and their
subsidiaries have timely paid all taxes shown as due on such filed tax
returns (including any related assessments, fines or penalties), except
to the extent that any such taxes are being contested in good faith and
by appropriate proceedings, or to the extent that any failure to pay
would not reasonably be expected to result in a Material
14
Adverse Effect; and adequate charges, accruals and reserves have been
provided for in the financial statements referred to in Section
1(a)(iii) above in accordance with GAAP in respect of all Federal,
state, local and foreign taxes for all periods as to which the tax
liability of the Company, CHS and their subsidiaries has not been
finally determined or remains open to examination by applicable taxing
authorities except (A) for taxes incurred after the date of the
financial statements referred to in Section 1(a)(iii) or (B) where the
failure to provide for such charges, accruals and reserves would not
reasonably be expected to result in a Material Adverse Effect. None of
the Company, CHS or their subsidiaries is a "United States real
property holding corporation" within the meaning of Section 897(c)(2)
of the Internal Revenue Code of 1986, as amended (the "Code").
(xxvi) NO STABILIZATION OR MANIPULATION. None of the Company,
CHS or their subsidiaries or, to the best of their knowledge, any of
their directors, officers or affiliates has taken or will take,
directly or indirectly, any action designed to, or that could be
reasonably expected to, cause or result in stabilization or
manipulation of the price of the Securities in violation of Regulation
M under the Securities Exchange Act of 1934, as amended (the "1934
Act").
(xxvii) CERTAIN TRANSACTIONS. Except as disclosed in the
Prospectuses, there are no outstanding loans, advances, or guarantees
of indebtedness by the Company, CHS or any of their subsidiaries to or
for the benefit of any of the executive officers or directors of the
Company or any of the members of the families of any of them that would
be required to be so disclosed under the 1933 Act, the 1933 Act
Regulations or Form S-1.
(xxviii) STATISTICAL AND MARKET DATA. The statistical and
market-related data included in the Prospectuses are derived from
sources which the Company and CHS reasonably and in good faith believe
to be accurate, reasonable and reliable in all material respects and
the statistical and market-related data included in the Prospectuses
agrees with the sources from which it was derived in all material
respects.
(xxix) ACCOUNTING AND OTHER CONTROLS. The Company has
established a system of internal accounting controls sufficient to
provide reasonable assurances that (i) transactions were, are and will
be executed in accordance with management's general or specific
authorization; (ii) transactions were, are and will be recorded as
necessary to permit preparation of financial statements in conformity
with GAAP and to maintain accountability for assets; (iii) access to
assets was, is and will be permitted only in accordance with a
management's general or specific authorizations; and (iv) the recorded
accountability for assets was, is and will be compared with existing
assets at reasonable intervals and appropriate action was, is and will
be taken with respect to any differences.
15
(b) REPRESENTATIONS AND WARRANTIES BY THE SELLING SHAREHOLDERS. Each
Selling Shareholder severally represents and warrants to each U.S. Underwriter
as of the date hereof, as of the Closing Time, and, if the Selling Shareholder
is selling Option Securities on a Date of Delivery, as of each such Date of
Delivery, and agrees with each U.S. Underwriter, as follows:
(i) ACCURATE DISCLOSURE. With respect to each Selling
Shareholder, to the extent that any statements or omissions made in the
Registration Statement, any preliminary prospectus, the Prospectuses or
any amendment or supplement thereto are made in reliance upon and in
conformity with written information furnished to the Company by such
Selling Shareholder expressly for use therein, such preliminary
prospectus and the Registration Statement did, and the Prospectuses and
any further amendments or supplements to the Registration Statement and
the Prospectuses, when they become effective or are filed with the
Commission, as the case may be, will conform in all material respects
to the requirements of the 1933 Act and the rules and regulations of
the Commission thereunder and will not contain any untrue statement of
a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not
misleading.
(ii) AUTHORIZATION OF AGREEMENTS. Such Selling Shareholder has
the full right, power and authority to enter into this Agreement, the
International Purchase Agreement, the Power of Attorney (the "Power of
Attorney") and the Custody Agreement (the "Custody Agreement"), and to
sell, transfer and deliver the Securities to be sold by such Selling
Shareholder under this Agreement and the International Purchase
Agreement. The execution and delivery of this Agreement, the
International Purchase Agreement, the Power of Attorney and the Custody
Agreement, the sale and delivery of the Securities to be sold by such
Selling Shareholder, the consummation by such Selling Shareholder of
the transactions contemplated under this Agreement and the
International Purchase Agreement and compliance by such Selling
Shareholder with its obligations under this Agreement and the
International Purchase Agreement have been duly authorized by such
Selling Shareholder and do not and will not, whether with or without
the giving of notice or passage of time or both, conflict with or
constitute a breach of, or default under, or result in the creation or
imposition of any tax, lien, charge or encumbrance upon the Securities
to be sold by such Selling Shareholder or any property or assets of
such Selling Shareholder pursuant to any contract, indenture, mortgage,
deed of trust, loan or credit agreement, note, license, lease or other
agreement or instrument to which such Selling Shareholder is a party or
by which such Selling Shareholder may be bound, or to which any of the
property or assets of such Selling Shareholder is subject, nor will
such action result in any violation of the provisions of the charter or
by-laws or other organizational instrument of such Selling Shareholder,
if applicable, or any
16
applicable treaty, law, statute, rule, regulation, judgment, order,
writ or decree of any government, government instrumentality or court,
domestic or foreign, having jurisdiction over such Selling Shareholder
or any of its properties.
(iii) VALID AND MARKETABLE TITLE. Such Selling Shareholder (i)
has at the date hereof valid and marketable title to the Securities to
be sold by such Selling Shareholder under this Agreement and the
International Purchase Agreement or to the options that will be
exercised for such Securities prior to the Closing Time, in each case
free and clear of any security interest, mortgage, pledge, lien,
charge, claim, equity or encumbrance of any kind (collectively,
"Liens"), other than pursuant to this Agreement and the International
Purchase Agreement, and (ii) will at the Closing Time and, if any
Option Securities are purchased from such Selling Shareholder, on the
Date of Delivery, have valid and marketable title to the Securities to
be sold by such Selling Shareholder under this Agreement and the
International Purchase Agreement, including any Securities received as
a result of exercises of options, in each case free and clear of any
Lien, other than pursuant to this Agreement and the International
Purchase Agreement; and upon delivery of such Securities and payment of
the purchase price therefor as contemplated in this Agreement and the
International Purchase Agreement (assuming each such Underwriter has no
notice of any adverse claim, as defined in Uniform Commercial Code as
adopted in the State of New York (the "UCC")), each of the Underwriters
will receive valid and marketable title to the Securities purchased by
it from such Selling Shareholder, free and clear of any Lien.
(iv) DUE EXECUTION OF POWER OF ATTORNEY AND CUSTODY AGREEMENT.
Such Selling Shareholder has duly executed and delivered, in the form
heretofore furnished to the Representatives, the Power of Attorney with
▇▇▇▇▇ ▇. ▇▇▇▇▇, W. ▇▇▇▇▇ ▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, as attorneys-in-fact
(the "Attorneys-in-Fact") and the Custody Agreement with the Company,
as custodian (the "Custodian"); the Custodian is authorized to deliver
the Securities to be sold by such Selling Shareholder under this
Agreement and the International Purchase Agreement and to accept
payment therefore; and each Attorney-in-Fact is authorized to execute
and deliver this Agreement and the International Purchase Agreement and
the certificate referred to in Section 5(f) of this Agreement or
Section 5(f) of the International Purchase Agreement or that may be
required pursuant to Sections 5(n) and 5(o) of this Agreement or
Sections 5(n) and 5(o) of the International Purchase Agreement on
behalf of such Selling Shareholder, to sell, assign and transfer to the
Underwriters the Securities to be sold by such Selling Shareholder
under this Agreement and the International Purchase Agreement, to
determine the purchase price to be paid by the Underwriters and to such
Selling Shareholder, as provided in Section 2(a) of this Agreement and
Section 2(a) of the International Purchase Agreement, to authorize the
delivery of the Securities to be sold by such Selling Shareholder under
this Agreement and the International Purchase
17
Agreement, to accept payment therefor, and otherwise to act on behalf
of such Selling Shareholder in connection with this Agreement and the
International Purchase Agreement.
(v) ABSENCE OF MANIPULATION. Such Selling Shareholder has not
taken, and will not take, directly or indirectly, any action designed
to, or that might reasonably be expected to cause or result in
stabilization or manipulation of the price of the Securities in
violation of Regulation M under the 1934 Act.
(vi) ABSENCE OF FURTHER REQUIREMENTS. No filing with, or
authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or
agency is necessary or required for the performance by such Selling
Shareholder of its obligations under this Agreement and the
International Purchase Agreement or in the Power of Attorney or the
Custody Agreement, or in connection with the offer, sale and delivery
by such Selling Shareholder of the Securities under this Agreement and
the International Purchase Agreement or the consummation by such
Selling Shareholder of the transactions contemplated by this Agreement
and the International Purchase Agreement, except such as have been
already obtained or as may be required under the 1933 Act or the 1933
Act Regulations and state securities laws.
(vii) RESTRICTION ON SALE OF SECURITIES. During a period of 90
days from the date of the Prospectus, such Selling Shareholder (except
as otherwise set forth in Schedule B hereto) will not, without the
prior written consent of ▇▇▇▇▇▇▇ ▇▇▇▇▇, (i) offer, pledge, sell,
contract to sell, sell any option or contract to purchase, purchase any
option or contract to sell, grant any option, right or warrant to
purchase or otherwise lend, transfer or dispose of, directly or
indirectly, any share of Common Stock whether now owned or hereafter
acquired by such Selling Shareholder or with respect to which such
Selling Shareholder has or hereafter acquires the power of disposition,
or file, or request or demand that the Company file, any registration
statement under the 1933 Act with respect to any of the foregoing or
(ii) enter into any swap or any other agreement or any transaction that
transfers, in whole or in part, directly or indirectly, the economic
consequence of ownership of the Common Stock, whether any such swap or
transaction described in clause (i) or (ii) above is to be settled by
delivery of Common Stock, in cash or otherwise. The foregoing sentence
shall not apply to the Securities to be sold under this Agreement and
the International Purchase Agreement. Notwithstanding the foregoing,
such Selling Shareholders may transfer shares of Common Stock (i) as a
bona fide gift or gifts, provided that prior to such transfer the donee
or donees thereof agree in writing to be bound by the restrictions set
forth in this Section 1(b)(vii), (ii) to any trust for the direct or
indirect benefit of such Selling Shareholder or the immediate family of
the such
18
Selling Shareholder, provided that prior to such transfer the trustee
of the trust agrees in writing to be bound by the restrictions set
forth in this Section 1(b)(vii), and provided further that any such
transfer shall not involve a disposition for value or (iii) if such
transfer occurs by operation of law, such as rules of descent and
distribution, statutes governing the effects of a merger or a qualified
domestic order, provided that prior to such transfer the transferee
executes an agreement stating that the transferee is receiving and
holding the shares subject to this Section 1(b)(vii).
(viii) CERTIFICATES SUITABLE FOR TRANSFER. Except as
provided in the immediately following sentence, certificates for
all of the Securities to be sold by such Selling Shareholder pursuant
to this Agreement and the International Purchase Agreement, in suitable
form for transfer by delivery or accompanied by duly executed
instruments of transfer or assignment in blank with signatures
guaranteed, have been placed in custody with the Custodian with
irrevocable conditional instructions to deliver such Securities to the
Underwriters pursuant to this Agreement and the International Purchase
Agreement. With respect to any Securities to be sold by any such
Selling Shareholder as a result of exercise of options, such Selling
Shareholder has placed in custody with the Custodian an irrevocable
Notice of Exercise with respect to the Securities to be sold, and
certificates representing such shares in suitable form for transfer
by delivery or accompanied by duly executed instruments of transfer
or assignment in blank with signature pages guaranteed, shall be
placed in custody with the Custodian with irrevocable conditional
instructions to deliver such Securities to the Underwriters
pursuant to this Agreement and the International Purchase Agreement
immediately prior to Closing Time.
(ix) NO ASSOCIATION WITH NASD. Except as specifically set
forth in the Prospectus with regard to ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, the Chairman
of the Board of the Company, under the caption "Underwriting - Other
Relationships", neither such Selling Shareholder, nor any of its
affiliates directly, or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with, or has
any other association with (within the meaning of Article I, Section
(ee) of the By-laws of the National Association of Securities Dealers,
Inc. (the "NASD") any member firm of the NASD.
(c) OFFICER'S CERTIFICATES, SELLING SHAREHOLDER CERTIFICATES. Any
certificate signed by any officer of the Company delivered to ▇▇▇▇▇▇▇ ▇▇▇▇▇, the
Representatives or to counsel for the Underwriters shall be deemed a
representation and warranty by the Company to each Underwriter as to the matters
covered thereby; and any certificate signed by or on behalf of the Selling
Shareholders as such and delivered to ▇▇▇▇▇▇▇ ▇▇▇▇▇, the Representatives or to
counsel for the Underwriters shall be deemed a representation and warranty by
such Selling Shareholder to the Underwriters as to the matters covered thereby.
SECTION 2. SALE AND DELIVERY TO U.S. UNDERWRITERS; CLOSING.
(a) INITIAL SECURITIES. On the basis of the representations and
warranties herein contained and subject to the terms and conditions herein set
forth, the Company and each Selling Shareholder, severally and not jointly,
agrees to sell to each U.S. Underwriter, severally and not jointly, and each
U.S. Underwriter, severally and not jointly, agrees to purchase from the Company
and each Selling Shareholder, at the price per share set forth in Schedule C,
the number of Initial U.S. Securities set forth in
19
Schedule A or B opposite the name of such U.S. Underwriter, Selling Shareholder
or the Company, as the case may be, plus any additional number of Initial U.S.
Securities which such U.S. Underwriter may become obligated to purchase pursuant
to the provisions of Section 10 hereof.
(b) OPTION SECURITIES. In addition, on the basis of the representations
and warranties herein contained and subject to the terms and conditions herein
set forth, the Selling Shareholders that will be selling U.S. Option Securities,
as indicated by a corresponding amount opposite such Selling Shareholders' names
in the column titled "Maximum Number of Option Securities" in Schedule B, acting
severally and not jointly, hereby grant an option to the U.S. Underwriters,
severally and not jointly, to purchase up to an additional o shares of Common
Stock, as set forth in Schedule A or Schedule B, as the case may be, at the
price per share set forth in Schedule C, less an amount per share equal to any
dividends or distributions declared by the Company and payable on the Initial
U.S. Securities but not payable on the U.S. Option Securities. The option hereby
granted will expire 30 days after the date hereof and may be exercised in whole
or in part from time to time only for the purpose of covering over-allotments
which may be made in connection with the offering and distribution of the
Initial U.S. Securities upon notice by the Global Coordinator to the certain
Selling Shareholders setting forth the number of U.S. Option Securities as to
which the several U.S. Underwriters are then exercising the option and the time
and date of payment and delivery for such U.S. Option Securities. Any such time
and date of delivery for the U.S. Option Securities (a "Date of Delivery") shall
be determined by the Global Coordinator, but shall not be later than seven full
business days after the exercise of said option, nor in any event prior to the
Closing Time, as hereinafter defined. If the option is exercised as to all or
any portion of the U.S. Option Securities, each of the U.S. Underwriters, acting
severally and not jointly, will purchase that proportion of the total number of
U.S. Option Securities then being purchased which the number of Initial U.S.
Securities set forth in Schedule A opposite the name of such U.S. Underwriter
bears to the total number of Initial U.S. Securities, and, as to each Selling
Shareholder, that proportion which the total number of Securities in Schedule B
in the column titled "Maximum Number of Option Securities" opposite the name of
such Selling Shareholder bears to the total number of U.S. Option Securities to
be sold by Selling Shareholders, subject in each case to such adjustments as the
Global Coordinator in its discretion shall make to eliminate any sales or
purchases of fractional shares.
(c) PAYMENT. Payment of the purchase price for, and delivery of
certificates for, the Initial Securities shall be made at the offices of
Debevoise & ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or at such
other place as shall be agreed upon by the Global Coordinator and the Company
and the Selling Shareholders, at 9:00 A.M. (Eastern time) on the third (fourth,
if the pricing occurs after 4:30 P.M. (Eastern time) on any given day) business
day after the date hereof (unless postponed in accordance with the provisions of
Section 10), or such other time not later than ten business days after
20
such date as shall be agreed upon by the Global Coordinator and the Company and
the Selling Shareholders (such time and date of payment and delivery being
herein called "Closing Time").
In addition, in the event that any or all of the U.S. Option Securities
are purchased by the U.S. Underwriters, payment of the purchase price for, and
delivery of certificates for, such U.S. Option Securities shall be made at the
above-mentioned offices, or at such other place as shall be agreed upon by the
Global Coordinator and the Selling Shareholders, on each Date of Delivery as
specified in the notice from the Global Coordinator to the Selling Shareholders.
Payment shall be made to the Company and the Selling Shareholders by
wire transfer of immediately available funds to bank accounts designated by the
Company and the Custodian pursuant to each Selling Shareholder's Power of
Attorney and Custody Agreement, as the case may be, against delivery to the U.S.
Representatives for the respective accounts of the U.S. Underwriters of
certificates for the U.S. Securities to be purchased by them. It is understood
that each U.S. Underwriter has authorized the U.S. Representatives, for its
account, to accept delivery of, receipt for, and make payment of the purchase
price for, the Initial U.S. Securities and the U.S. Option Securities, if any,
which it has agreed to purchase. ▇▇▇▇▇▇▇ ▇▇▇▇▇, individually and not as
representative of the U.S. Underwriters, may (but shall not be obligated to)
make payment of the purchase price for the Initial U.S. Securities or the U.S.
Option Securities, if any, to be purchased by any U.S. Underwriter whose funds
have not been received by the Closing Time or the relevant Date of Delivery, as
the case may be, but such payment shall not relieve such U.S. Underwriter from
its obligations hereunder.
(d) DENOMINATIONS; REGISTRATION. Certificates for the Initial U.S.
Securities and the U.S. Option Securities, if any, shall be in such
denominations and registered in such names as the U.S. Representatives may
request in writing at least one full business day before the Closing Time or the
relevant Date of Delivery, as the case may be. The certificates for the Initial
U.S. Securities and the U.S. Option Securities, if any, will be made available
for examination and packaging by the U.S. Representatives in The City of New
York not later than 10:00 A.M. (Eastern time) on the business day prior to the
Closing Time or the relevant Date of Delivery, as the case may be.
SECTION 3. COVENANTS OF THE COMPANY.
The Company covenants with each U.S. Underwriter as follows:
(a) COMPLIANCE WITH SECURITIES REGULATIONS AND COMMISSION REQUESTS. The
Company, subject to Section 3(b), will comply with the requirements of Rule 430A
and will notify the Global Coordinator immediately, and confirm the notice in
writing, (i) when any post-effective amendment to the Registration Statement
shall become
21
effective, or any supplement to the Prospectuses or any amended Prospectuses
shall have been filed, (ii) of the receipt of any comments from the Commission,
(iii) of any request by the Commission for any amendment to the Registration
Statement or any amendment or supplement to the Prospectuses or for additional
information, and (iv) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or of any order
preventing or suspending the use of any preliminary prospectus, or of the
suspension of the qualification of the Securities for offering or sale in any
jurisdiction, or of the initiation or threatening of any proceedings for any of
such purposes. The Company will promptly effect the filings necessary pursuant
to Rule 424(b) and will take such steps as it deems necessary to ascertain
promptly whether the form of prospectus transmitted for filing under Rule 424(b)
was received for filing by the Commission and, in the event that it was not, it
will promptly file such prospectus. The Company will make every reasonable
effort to prevent the issuance of any stop order and, if any stop order is
issued, to obtain the lifting thereof at the earliest possible moment.
(b) FILING OF AMENDMENTS. The Company will give the Global Coordinator
notice of its intention to file or prepare any amendment to the Registration
Statement (including any filing under Rule 462(b)), or any amendment, supplement
or revision to either the prospectus included in the Registration Statement at
the time it became effective or to the Prospectuses, will furnish the Global
Coordinator with copies of any such documents a reasonable amount of time prior
to such proposed filing or use, as the case may be, and will not file or use any
such document to which the Global Coordinator or counsel for the U.S.
Underwriters shall reasonably object.
(c) DELIVERY OF REGISTRATION STATEMENTS. The Company has furnished or
will deliver to the U.S. Representatives and counsel for the U.S. Underwriters,
without charge, signed copies of the Registration Statement as originally filed
and of each amendment thereto (including exhibits filed therewith or
incorporated by reference therein) and signed copies of all consents and
certificates of experts, and will also deliver to the U.S. Representatives,
without charge, a conformed copy of the Registration Statement as originally
filed and of each amendment thereto (without exhibits) for each of the U.S.
Underwriters. The copies of the Registration Statement and each amendment
thereto furnished to the U.S. Underwriters will be identical to the
electronically transmitted copies thereof filed with the Commission pursuant to
▇▇▇▇▇, except to the extent permitted by Regulation S-T.
(d) DELIVERY OF PROSPECTUSES. The Company has delivered to each U.S.
Underwriter, without charge, as many copies of each preliminary prospectus as
such U.S. Underwriter reasonably requested, and the Company hereby consents to
the use of such copies for purposes permitted by the 1933 Act. The Company will
furnish to each U.S. Underwriter, without charge, during the period when the
U.S. Prospectus is required to be delivered under the 1933 Act or the 1934 Act,
such number of copies of the U.S. Prospectus (as amended or supplemented) as
such U.S. Underwriter may reasonably
22
request. The U.S. Prospectus and any amendments or supplements thereto furnished
to the U.S. Underwriters will be identical to the electronically transmitted
copies thereof filed with the Commission pursuant to ▇▇▇▇▇, except to the extent
permitted by Regulation S-T.
(e) CONTINUED COMPLIANCE WITH SECURITIES LAWS. The Company will comply
with the 1933 Act and the 1933 Act Regulations so as to permit the completion of
the distribution of the Securities as contemplated in this Agreement, the
International Purchase Agreement and in the Prospectuses. If at any time when a
prospectus is required by the 1933 Act to be delivered in connection with sales
of the Securities, any event shall occur or condition shall exist as a result of
which it is necessary, in the opinion of counsel for the U.S. Underwriters or
for the Company, to amend the Registration Statement or amend or supplement any
Prospectus in order that the Prospectuses will not include any untrue statement
of a material fact or omit to state a material fact necessary in order to make
the statements therein not misleading in the light of the circumstances existing
at the time it is delivered to a purchaser, or if it shall be necessary, in the
opinion of such counsel, at any such time to amend the Registration Statement or
amend or supplement any Prospectus in order to comply with the requirements of
the 1933 Act or the 1933 Act Regulations, the Company will promptly prepare and
file with the Commission, subject to Section 3(b), such amendment or supplement
as may be necessary to correct such statement or omission or to make the
Registration Statement or the Prospectuses comply with such requirements, and
the Company will furnish to the U.S. Underwriters such number of copies of such
amendment or supplement as the U.S. Underwriters may reasonably request.
(f) BLUE SKY QUALIFICATIONS. The Company will use its best efforts, in
cooperation with the U.S. Underwriters, to qualify the Securities for offering
and sale under the applicable securities laws of such states and other
jurisdictions (domestic or foreign) as the Global Coordinator may designate and
to maintain such qualifications in effect for a period of not less than one year
from the later of the effective date of the Registration Statement and any Rule
462(b) Registration Statement; provided, however, that the Company shall not be
obligated to file any general consent to service of process or to qualify as a
foreign corporation or as a dealer in securities in any jurisdiction in which it
is not so qualified or to subject itself to taxation in respect of doing
business in any jurisdiction in which it is not otherwise so subject. In each
jurisdiction in which the Securities have been so qualified, the Company will
file such statements and reports as may be required by the laws of such
jurisdiction to continue such qualification of the Securities in effect for a
period of not less than one year from the effective date of the Registration
Statement and any Rule 462(b) Registration Statement.
(g) RULE 158. The Company will timely file such reports pursuant to the
1934 Act as are necessary in order to make generally available to its
securityholders as soon as
23
practicable an earnings statement for the purposes of, and to provide the
benefits contemplated by, the last paragraph of Section 11(a) of the 1933 Act.
(h) USE OF PROCEEDS. The Company will use the net proceeds received by
it from the sale of the Securities in the manner specified in the Prospectuses
under "Use of Proceeds".
(i) LISTING. The Company will use its best efforts to effect and
maintain the quotation of the Common Stock (including the Securities) on the New
York Stock Exchange.
(j) RESTRICTION ON SALE OF SECURITIES. During a period of 90 days from
the date of the Prospectuses, the Company will not, without the prior written
consent of the Global Coordinator, (i) directly or indirectly, offer, pledge,
sell, contract to sell, sell any option or contract to purchase, purchase any
option or contract to sell, grant any option, right or warrant to purchase or
otherwise transfer or dispose of any share of Common Stock or any securities
convertible into or exercisable or exchangeable for Common Stock or file any
registration statement under the 1933 Act with respect to any of the foregoing
or (ii) enter into any swap or any other agreement or any transaction that
transfers, in whole or in part, directly or indirectly, the economic consequence
of ownership of the Common Stock, whether any such swap or transaction described
in clause (i) or (ii) above is to be settled by delivery of Common Stock or such
other securities, in cash or otherwise. The foregoing sentence shall not apply
to (A) the Securities to be sold hereunder or under the International Purchase
Agreement, (B) any shares of Common Stock issued by the Company upon the
exercise of an option or warrant or the conversion of a security outstanding on
the date hereof and referred to in the Prospectuses, (C) any shares of Common
Stock issued or options to purchase Common Stock granted pursuant to employee
benefit plans of the Company referred to in the Prospectuses, or (D) any shares
of Common Stock issued pursuant to any non-employee director stock plan or
dividend reinvestment plan.
(k) REPORTING REQUIREMENTS. The Company, during the period when the
Prospectuses are required to be delivered under the 1933 Act or the 1934 Act,
will file all documents required to be filed with the Commission pursuant to the
1934 Act within the time periods required by the 1934 Act and the rules and
regulations of the Commission thereunder.
SECTION 4. PAYMENT OF EXPENSES.
(a) EXPENSES. The Company and CHS will pay all expenses incident to the
performance of their obligations under this Agreement, including (i) the
preparation, printing and filing of the Registration Statement (including
financial statements and exhibits) as originally filed and of each amendment
thereto, (ii) the preparation, printing
24
and delivery to the Underwriters of this Agreement, any Agreement among
Underwriters and such other documents as may be required in connection with the
offering, purchase, sale, issuance or delivery of the Securities, (iii) the
preparation, issuance and delivery of the certificates for the Securities to the
Underwriters, including any stock or other transfer taxes and any stamp or other
duties payable upon the sale, issuance or delivery of the Securities to the
Underwriters and the transfer of the Securities between the U.S. Underwriters
and the International Managers, (iv) the fees and disbursements of the Company's
counsel, accountants and other advisors, (v) the qualification of the Securities
under securities laws in accordance with the provisions of Section 3(f) hereof,
including filing fees and the reasonable fees and disbursements of counsel for
the Underwriters in connection therewith and in connection with the preparation
of the Blue Sky Survey and any supplement thereto, (vi) the printing and
delivery to the Underwriters of copies of each preliminary prospectus and of the
Prospectuses and any amendments or supplements thereto, (vii) the preparation,
printing and delivery to the Underwriters of copies of the Blue Sky Survey and
any supplement thereto, (viii) the fees and expenses of any transfer agent or
registrar for the Securities, (ix) the filing fees incident to, and the
reasonable fees and disbursements of counsel to the Underwriters in connection
with, the review by the NASD of the terms of the sale of the Securities, (x) the
fees and expenses incurred in connection with the listing of the Securities on
the New York Stock Exchange, (xi) all costs and expenses of the Underwriters,
including the fees and disbursements of counsel for the Underwriters, in
connection with matters related to the Reserved Securities which are designated
by the Company for sale to Eligible Persons who have expressed an interest in
purchasing the Reserved Securities and (xii) the expenses of the Independent
Underwriter.
(b) EXPENSES OF THE SELLING SHAREHOLDERS. The Selling Shareholders,
jointly and severally, will pay all expenses incident to the performance of
their respective obligations under, and the consummation of the transactions
contemplated by this Agreement and the International Purchase Agreement,
including (i) any stamp duties, capital duties and stock transfer taxes, if any,
payable upon the sale of the Securities to the Underwriters, and their transfer
between the Underwriters pursuant to an agreement between such Underwriters and
(ii) the fees and disbursements of their respective counsel and accountants.
(c) TERMINATION OF AGREEMENT. If this Agreement is terminated by the
U.S. Representatives in accordance with the provisions of Section 5 or Section
9(a)(i) hereof, the Company, CHS and the Selling Shareholders shall reimburse
the U.S. Underwriters for all of their out-of-pocket expenses, including the
reasonable fees and disbursements of counsel for the U.S. Underwriters.
(d) ALLOCATION OF EXPENSES. The provisions of this Section shall not
affect any agreement that the Company and the Selling Shareholders may make for
the sharing of such costs and expenses.
25
SECTION 5. CONDITIONS OF U.S. UNDERWRITERS' OBLIGATIONS.
The obligations of the several U.S. Underwriters hereunder are subject
to the accuracy of the representations and warranties of the Company, CHS and
the Selling Shareholders contained in Section 1 hereof or in certificates of any
officer of the Company, CHS or any of their subsidiaries or on behalf of any
Selling Shareholder delivered pursuant to the provisions hereof, to the
performance by the Company of their covenants and other obligations hereunder,
and to the following further conditions:
(a) EFFECTIVENESS OF REGISTRATION STATEMENT. The Registration
Statement, including any Rule 462(b) Registration Statement, has become
effective and at Closing Time no stop order suspending the effectiveness of the
Registration Statement shall have been issued under the 1933 Act or proceedings
therefor initiated or threatened by the Commission, and any request on the part
of the Commission for additional information shall have been complied with to
the reasonable satisfaction of counsel to the U.S. Underwriters. A prospectus
containing the Rule 430A Information shall have been filed with the Commission
in accordance with Rule 424(b) (or a post-effective amendment providing such
information shall have been filed and declared effective in accordance with the
requirements of Rule 430A).
(b) OPINION OF COUNSEL FOR THE COMPANY. At Closing Time, the U.S.
Representatives shall have received the favorable opinion, dated as of Closing
Time, of:
(i) ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Vice President, Secretary and General
Counsel of the Company, in form and substance reasonably satisfactory
to counsel for the U.S. Underwriters, together with signed or
reproduced copies of such letter for each of the other U.S.
Underwriters to the effect set forth in Exhibit A-1 hereto and to such
further effect as counsel to the U.S. Underwriters may reasonably
request; and
(ii) Fried, Frank, Harris, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, special counsel
for the Company, in form and substance reasonably satisfactory to
counsel for the U.S. Underwriters, together with signed or reproduced
copies of such letter for each of the other U.S. Underwriters to the
effect set forth in Exhibit A-2 hereto and to such further effect as
counsel to the U.S. Underwriters may reasonably request.
(c) OPINION OF COUNSEL FOR THE SELLING SHAREHOLDERS. At Closing Time,
the U.S. Representatives shall have received the favorable opinion, dated as of
Closing Time, of each counsel for the other Selling Shareholders (which counsel
shall be satisfactory to the U.S. Representatives), each in form and substance
satisfactory to counsel for the U.S. Underwriters, together with signed or
reproduced copies of such letters for each of the other U.S. Underwriters to the
effect set forth in Exhibit A-3 hereto and to such other effect as counsel for
the U.S. Underwriters may reasonably request.
26
(d) OPINION OF COUNSEL FOR THE U.S. UNDERWRITERS. At Closing Time, the
U.S. Representatives shall have received the favorable opinion, dated as of
Closing Time, of Debevoise & ▇▇▇▇▇▇▇▇, counsel for the U.S. Underwriters,
together with signed or reproduced copies of such letter for each of the other
U.S. Underwriters in form and substance reasonably satisfactory to the U.S.
Underwriters.
(e) OFFICERS' CERTIFICATE. At Closing Time, there shall not have been,
since the date hereof or since the respective dates as of which information is
given in the Prospectuses, any material adverse change in the condition,
financial or otherwise, or in the earnings, business affairs or business
prospects of the Company, CHS and their subsidiaries considered as one
enterprise, whether or not arising in the ordinary course of business, and the
U.S. Representatives shall have received a certificate of the President and
Chief Executive Officer and the Executive Vice President and Chief Financial
Officer of the Company, dated as of Closing Time, to the effect that (i) there
has been no such material adverse change, (ii) the representations and
warranties in Section 1(a) hereof are true and correct with the same force and
effect as though expressly made at and as of Closing Time, (iii) the Company and
CHS have complied with all agreements and satisfied all conditions on their part
to be performed or satisfied at or prior to Closing Time, and (iv) no stop order
suspending the effectiveness of the Registration Statement has been issued and,
to such person's knowledge after due inquiry, no proceedings for that purpose
have been instituted or are pending or are contemplated by the Commission.
(f) CERTIFICATE OF THE SELLING SHAREHOLDER. At Closing Time, the U.S.
Representatives shall have received a certificate of each Selling Shareholder,
dated as of the Closing Time, to the effect that (i) the representations and
warranties of each Selling Shareholder contained in Section 1(b) hereof are true
and correct in all respects with the same force and effect as though expressly
made at and as of Closing Time and (ii) each Selling Shareholder has complied in
all material respects with all agreements and all conditions on its part to be
performed under this Agreement at or prior to Closing Time.
(g) ACCOUNTANT'S COMFORT LETTER. At the time of the execution of this
Agreement, the U.S. Representatives shall have received from Deloitte & Touche
LLP a letter, dated such date, in form and substance reasonably satisfactory to
the U.S. Representatives, together with signed or reproduced copies of such
letter for each of the other U.S. Underwriters, containing statements and
information of the type ordinarily included in accountants' "comfort letters" to
underwriters with respect to the financial statements and certain financial
information contained in the Registration Statement and the Prospectuses.
(h) BRING-DOWN COMFORT LETTER. At Closing Time, the Representatives
shall have received from Deloitte & Touche LLP a letter, dated as of Closing
Time, to the effect that they reaffirm the statements made in the letter
furnished pursuant to
27
subsection (e) of this Section, except that the specified date referred to shall
be a date not more than three business days prior to Closing Time.
(i) APPROVAL OF LISTING. At Closing Time, the Securities shall have
been approved for listing on the New York Stock Exchange, subject only to
official notice of issuance.
(j) NO OBJECTION. The NASD has confirmed that it has not raised any
objection with respect to the fairness and reasonableness of the underwriting
terms and arrangements with respect to the Securities.
(k) LOCK-UP AGREEMENTS. At the date of this Agreement, the U.S.
Representatives shall have received an agreement substantially in the form of
Exhibit B hereto signed by the persons listed on Schedule D hereto.
(l) PURCHASE OF INITIAL INTERNATIONAL SECURITIES. Contemporaneously
with the purchase by the U.S. Underwriters of the Initial U.S. Securities under
this Agreement, the International Managers shall have purchased the Initial
International Securities under the International Purchase Agreement.
(m) FORM W-8 OR W-9. At the date of this Agreement, the Representatives
shall have received form W-8 or W-9, as required, signed by each Selling
Shareholder.
(n) CONDITIONS TO PURCHASE OF U.S. OPTION SECURITIES. In the event that
the U.S. Underwriters exercise their option provided in Section 2(b) hereof to
purchase all or any portion of the U.S. Option Securities, the representations
and warranties of the Company and the Selling Shareholders contained herein and
the statements in any certificates furnished by the Company or any subsidiary of
the Company and the Selling Shareholders hereunder shall be true and correct as
of each Date of Delivery and, at the relevant Date of Delivery, the U.S.
Representatives shall have received:
(i) OFFICERS' CERTIFICATE. A certificate, dated such Date of
Delivery, of the President and Chief Executive Officer, and of the
Executive Vice President and Chief Financial Officer of the Company,
confirming that the certificate delivered at the Closing Time pursuant
to Section 5(e) hereof remains true and correct as of such Date of
Delivery.
(ii) CERTIFICATE OF SELLING SHAREHOLDERS. A certificate, dated
such Date of Delivery, of each Selling Shareholder selling U.S. Option
Securities confirming that the certificate delivered at Closing Time
pursuant to Section 5(f) remains true and correct as of such Date of
Delivery.
(iii) OPINION OF COUNSEL FOR COMPANY. The favorable opinion of
Fried, Frank, Harris, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, special counsel for the
Company, together
28
with the favorable opinion of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Vice President,
Secretary and General Counsel of the Company, each in form and
substance reasonably satisfactory to counsel for the U.S. Underwriters,
dated such Date of Delivery, relating to the U.S. Option Securities to
be purchased on such Date of Delivery and otherwise to the same effect
as the opinions required by Section 5(b) hereof.
(iv) OPINION OF COUNSEL FOR THE SELLING SHAREHOLDERS. The
favorable opinion of each counsel for the Selling Shareholders selling
U.S. Option Securities (which counsel shall be satisfactory to the
Representatives), each in form and substance satisfactory to counsel
for the Underwriters, dated such Date of Delivery, relating to the
Option Securities to be purchased on such Date of Delivery and
otherwise to the same effect as the opinion required by Section 5(c)
hereof.
(v) OPINION OF COUNSEL FOR U.S. UNDERWRITERS. The favorable
opinion of Debevoise & ▇▇▇▇▇▇▇▇, counsel for the U.S. Underwriters,
dated such Date of Delivery, relating to the U.S. Option Securities to
be purchased on such Date of Delivery and otherwise to the same effect
as the opinion required by Section 5(c) hereof.
(vi) BRING-DOWN COMFORT LETTER. A letter from Deloitte &
Touche LLP, in form and substance reasonably satisfactory to the U.S.
Representatives and dated such Date of Delivery, substantially in the
same form and substance as the letter furnished to the U.S.
Representatives pursuant to Section 5(f) hereof, except that the
"specified date" in the letter furnished pursuant to this paragraph
shall be a date not more than five days prior to such Date of Delivery.
(o) ADDITIONAL DOCUMENTS. At Closing Time and at each Date of Delivery,
counsel for the U.S. Underwriters shall have been furnished with such documents
and opinions as they may reasonably require for the purpose of enabling them to
pass upon the issuance and sale of the Securities as herein contemplated, or in
order to evidence the accuracy of any of the representations or warranties, or
the fulfillment of any of the conditions, herein contained; and all proceedings
taken by the Company and the Selling Shareholders in connection with the
issuance and sale of the Securities as herein contemplated shall be reasonably
satisfactory in form and substance to the U.S. Representatives and counsel for
the U.S. Underwriters.
(p) TERMINATION OF AGREEMENT. If any condition specified in this
Section shall not have been fulfilled when and as required to be fulfilled, this
Agreement, or, in the case of any condition to the purchase of U.S. Option
Securities on a Date of Delivery which is after the Closing Time, the
obligations of the several U.S. Underwriters to purchase the relevant Option
Securities, may be terminated by the U.S. Representatives by notice to the
Company at any time at or prior to Closing Time or such Date of
29
Delivery, as the case may be, and such termination shall be without liability of
any party to any other party except as provided in SECTION 4 and except that
Sections 1, 6, 7 and 8 shall survive any such termination and remain in full
force and effect.
SECTION 6. INDEMNIFICATION.
(a) INDEMNIFICATION OF THE U.S. UNDERWRITERS BY THE COMPANY AND CHS.
(1) The Company and CHS jointly and severally agree to indemnify and hold
harmless each U.S. Underwriter and each person, if any, who controls any U.S.
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act as follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue statement or
alleged untrue statement of a material fact contained in the
Registration Statement (or any amendment thereto), including the Rule
430A Information, or the omission or alleged omission therefrom of a
material fact required to be stated therein or necessary to make the
statements therein not misleading or arising out of any untrue
statement or alleged untrue statement of a material fact included in
any preliminary prospectus or the Prospectuses (or any amendment or
supplement thereto), or the omission or alleged omission therefrom of a
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount
paid in settlement of any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or threatened,
or of any claim whatsoever based upon any such untrue statement or
omission; provided that (subject to Section 6(e) below) any such
settlement is effected with the written consent of the Company; and
(iii) against any and all expense whatsoever, as incurred
(including the fees and disbursements of counsel chosen by ▇▇▇▇▇▇▇
▇▇▇▇▇), reasonably incurred in investigating, preparing or defending
against any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim
whatsoever based upon any such untrue statement or omission, or any
such alleged untrue statement or omission, to the extent that any such
expense is not paid under (i) or (ii) above;
PROVIDED, HOWEVER, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent (A) arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by any
U.S. Underwriter through the U.S. Representatives expressly for use in the
Registration Statement (or any
30
amendment thereto), including the Rule 430A Information, or any preliminary
prospectus or the U.S. Prospectus (or any amendment or supplement thereto) or
(B) resulting from the fact that a court of competent jurisdiction shall have
made a final, non-appealable determination that (1) the untrue statement or
omission was corrected in the U.S. Prospectus, (2) that at a time sufficiently
prior to the Closing Time, the Company furnished copies of the U.S. Prospectus
in sufficient quantities to such Underwriter, (3) that such Underwriter failed
to send or give a copy of the U.S. Prospectus to the person asserting such loss,
liability, claim, damage or expense prior to the written confirmation or the
sale of Securities to such person by such Underwriter as required by the 1933
Act or the 1933 Act Regulations, and (4) that the sending of the U.S. Prospectus
to the person asserting such loss, liability, claim, damage or expense would
have constituted a defense to the claim asserted by such person or persons.
(2) Insofar as this indemnity agreement may permit indemnification for
liabilities under the 1933 Act of any person who is a partner of a U.S.
Underwriter or who controls an underwriter within the meaning of Section 15 of
the 1933 Act or Section 20 of the 1934 Act and who, at the date of this
Agreement, is a director or officer of the Company or controls the Company
within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act,
such indemnity agreement is subject to the undertaking of the Company in the
Registration Statement under Item 14.
(b) INDEMNIFICATION OF THE U.S. UNDERWRITERS BY THE FORSTMANN LITTLE &
CO. SELLING SHAREHOLDERS. The Selling Shareholders listed on Schedule E hereto
severally in proportion to the number of Shares to be sold by such Selling
Shareholders hereunder, agree to indemnify and hold harmless each U.S.
Underwriter and each person, if any, who controls any U.S. Underwriter within
the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act, against
any and all loss, liability, claim, damage and expense described in the
indemnity contained in subsection (a)(1) of this Section, as incurred; PROVIDED,
HOWEVER, that, notwithstanding any provisions in Section 6(a), the aggregate
liability of any such Selling Shareholder pursuant to this Section 6(b) shall be
limited to the net proceeds received by such Selling Shareholder from the
Securities purchased by the U.S. Underwriters from such Selling Shareholder
pursuant to this Agreement; PROVIDED, HOWEVER, that this indemnity agreement
shall not apply to any loss, liability, claim, damage or expense to the extent
(A) arising out of any untrue statement or omission or alleged untrue statement
or omission made in reliance upon and in conformity with written information
furnished to the Company by any U.S. Underwriter through the U.S.
Representatives expressly for use in the Registration Statement (or any
amendment thereto), including the Rule 430A Information, or any preliminary
prospectus or the U.S. Prospectus (or any amendment or supplement thereto) or
(B) resulting from the fact that a court of competent jurisdiction shall have
made a final, non-appealable determination that (1) the untrue statement or
omission was corrected in the U.S. Prospectus, (2) that at a time sufficiently
prior to the Closing Time, the Company furnished copies of the U.S. Prospectus
in sufficient quantities to such Underwriter, (3)
31
that such Underwriter failed to send or give a copy of the U.S. Prospectus to
the person asserting such loss, liability, claim, damage or expense prior to the
written confirmation or the sale of Securities to such person by such
Underwriter as required by the 1933 Act or the 1933 Act Regulations, and (4)
that the sending of the U.S. Prospectus to the person asserting such loss,
liability, claim, damage or expense would have constituted a defense to the
claim asserted by such person or persons.
(c) INDEMNIFICATION OF THE U.S. UNDERWRITERS BY THE OTHER SELLING
SHAREHOLDERS. The Selling Shareholders not listed on Schedule E hereto severally
in proportion to the number of Shares to be sold by such Selling Shareholders
hereunder, agree to indemnify and hold harmless each U.S. Underwriter and each
person, if any, who controls any U.S. Underwriter within the meaning of Section
15 of the 1933 Act or Section 20 of the 1934 Act, against any and all loss,
liability, claim, damage and expense described in the indemnity contained in
subsection (a)(1) of this Section, as incurred, but only with reference to
information furnished in writing by or on behalf of such Selling Shareholder
expressly for use in the Registration Statement (or any amendment thereto), any
preliminary prospectuses or the Prospectuses (or any amendment or supplement
thereto) or any preliminary prospectus. Notwithstanding the foregoing and any
provisions in Section 6(a), the aggregate liability of any such Selling
Shareholder pursuant to this Section 6(c) shall be limited to the net proceeds
received by such Selling Shareholder from the Securities purchased by the U.S.
Underwriters from such Selling Shareholder pursuant to this Agreement; PROVIDED,
HOWEVER, that this indemnity agreement shall not apply to any loss, liability,
claim, damage or expense to the extent (A) arising out of any untrue statement
or omission or alleged untrue statement or omission made in reliance upon and in
conformity with written information furnished to the Company by any U.S.
Underwriter through the U.S. Representatives expressly for use in the
Registration Statement (or any amendment thereto), including the Rule 430A
Information, or any preliminary prospectus or the U.S. Prospectus (or any
amendment or supplement thereto) or (B) resulting from the fact that a court of
competent jurisdiction shall have made a final, non-appealable determination
that (1) the untrue statement or omission was corrected in the U.S. Prospectus,
(2) that at a time sufficiently prior to the Closing Time, the Company furnished
copies of the U.S. Prospectus in sufficient quantities to such Underwriter, (3)
that such Underwriter failed to send or give a copy of the U.S. Prospectus to
the person asserting such loss, liability, claim, damage or expense prior to the
written confirmation or the sale of Securities to such person by such
Underwriter as required by the 1933 Act or the 1933 Act Regulations, and (4)
that the sending of the U.S. Prospectus to the person asserting such loss,
liability, claim, damage or expense would have constituted a defense to the
claim asserted by such person or persons.
(d) INDEMNIFICATION OF COMPANY, DIRECTORS AND OFFICERS AND SELLING
SHAREHOLDERS. Each U.S. Underwriter severally agrees to indemnify and hold
harmless the Company, CHS and their respective directors, each of the officers
of the Company
32
who signed the Registration Statement, and each person, if any, who controls the
Company within the meaning of Section 15 of the 1933 Act or Section 20 of the
1934 Act and each Selling Shareholder and each person, if any, who controls each
Selling Shareholder within the meaning of Section 15 of the 1933 Act or Section
20 of the 1934 Act, against any and all loss, liability, claim, damage and
expense described in the indemnity contained in subsection (a)(1) of this
SECTION, as incurred, but only with respect to untrue statements or omissions,
or alleged untrue statements or omissions, made in the Registration Statement
(or any amendment thereto), including the Rule 430A Information, or any
preliminary U.S. prospectus or the U.S. Prospectus (or any amendment or
supplement thereto) in reliance upon and in conformity with written information
furnished to the Company by such U.S. Underwriter through the U.S.
Representatives expressly for use in the Registration Statement (or any
amendment thereto) or such preliminary prospectus or the U.S. Prospectus (or any
amendment or supplement thereto).
(e) ACTIONS AGAINST PARTIES; NOTIFICATION. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party of
any action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve it
from any liability which it may have otherwise than on account of this indemnity
agreement. In the case of parties indemnified pursuant to Section 6(a)(1), 6(b)
and 6(c) above, counsel to the indemnified parties shall be selected by ▇▇▇▇▇▇▇
▇▇▇▇▇, and, in the case of parties indemnified pursuant to Section 6(d) above,
counsel to the indemnified parties shall be selected by the Company. An
indemnifying party may participate at its own expense in the defense of any such
action; provided, however, that counsel to the indemnifying party shall not
(except with the consent of the indemnified party) also be counsel to the
indemnified party. In no event shall the indemnifying parties be liable for fees
and expenses of more than one counsel (in addition to any local counsel)
separate from their own counsel for all indemnified parties in connection with
any one action or separate but similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances. No
indemnifying party shall, without the prior written consent of the indemnified
parties, settle or compromise or consent to the entry of any judgment with
respect to any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim whatsoever in
respect of which indemnification or contribution could be sought under this
SECTION 6 or Section 7 hereof (whether or not the indemnified parties are actual
or potential parties thereto), unless such settlement, compromise or consent (i)
includes an unconditional release of each indemnified party from all liability
arising out of such litigation, investigation, proceeding or claim and (ii) does
not include a statement as to or an admission of fault, culpability or a failure
to act by or on behalf of any indemnified party.
33
(f) SETTLEMENT WITHOUT CONSENT IF FAILURE TO REIMBURSE. If at any time
an indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, such indemnifying party
agrees that it shall be liable for any settlement of the nature contemplated by
SECTION 6(a)(1)(ii), 6(b) and 6(c) effected without its written consent if (i)
such settlement is entered into more than 45 days after receipt by such
indemnifying party of the aforesaid request, (ii) such indemnifying party shall
have received notice of the terms of such settlement at least 30 days prior to
such settlement being entered into and (iii) such indemnifying party shall not
have reimbursed such indemnified party in accordance with such request prior to
the date of such settlement.
(g) OTHER AGREEMENTS WITH RESPECT TO INDEMNIFICATION. The provisions of
this SECTION shall not affect any agreement among the Company and the Selling
Shareholders with respect to indemnification.
SECTION 7. CONTRIBUTION.
If the indemnification provided for in Section 6 hereof is for any
reason unavailable to or insufficient to hold harmless an indemnified party in
respect of any losses, liabilities, claims, damages or expenses referred to
therein, then each indemnifying party shall contribute to the aggregate amount
of such losses, liabilities, claims, damages and expenses incurred by such
indemnified party, as incurred, (i) in such proportion as is appropriate to
reflect the relative benefits received by the Company, CHS and the Selling
Shareholders on the one hand and the U.S. Underwriters on the other hand from
the offering of the Securities pursuant to this Agreement or (ii) if the
allocation provided by clause (i) is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the Company, CHS and the
Selling Shareholders on the one hand and of the U.S. Underwriters on the other
hand in connection with the statements or omissions, which resulted in such
losses, liabilities, claims, damages or expenses, as well as any other relevant
equitable considerations.
The relative benefits received by the Company, CHS and the Selling
Shareholders on the one hand and the U.S. Underwriters on the other hand in
connection with the offering of the U.S. Securities pursuant to this Agreement
shall be deemed to be in the same respective proportions as the total net
proceeds from the offering of the U.S. Securities pursuant to this Agreement
(before deducting expenses) received by the Company and the Selling Shareholders
and the total underwriting discount received by the U.S. Underwriters, in each
case as set forth on the cover of the U.S. Prospectus bear to the aggregate
initial public offering price of the U.S. Securities as set forth on such cover.
34
The relative fault of the Company, CHS and the Selling Shareholders on
the one hand and the U.S. Underwriters on the other hand shall be determined by
reference to, among other things, whether any such untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a material
fact relates to information supplied by the Company, the Selling Shareholders or
by the U.S. Underwriters and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company, CHS, the Selling Shareholders and the U.S. Underwriters
agree that it would not be just and equitable if contribution pursuant to this
SECTION 7 were determined by pro rata allocation (even if the U.S. Underwriters
were treated as one entity for such purpose) or by any other method of
allocation which does not take account of the equitable considerations referred
to above in this Section 7. The aggregate amount of losses, liabilities, claims,
damages and expenses incurred by an indemnified party and referred to above in
this Section 7 shall be deemed to include any legal or other expenses reasonably
incurred by such indemnified party in investigating, preparing or defending
against any litigation, or any investigation or proceeding by any governmental
agency or body, commenced or threatened, or any claim whatsoever based upon any
such untrue or alleged untrue statement or omission or alleged omission.
Notwithstanding the provisions of this Section 7, (i) no U.S.
Underwriter shall be required to contribute any amount in excess of the amount
by which the total price at which the U.S. Securities underwritten by it and
distributed to the public were offered to the public exceeds the amount of any
damages which such U.S. Underwriter has otherwise been required to pay by reason
of any such untrue or alleged untrue statement or omission or alleged omission
and (ii) no Selling Shareholder shall be required to contribute any amount in
excess of the amount of the total net proceeds received by such Selling
Shareholder from the sale of Securities pursuant to this Agreement or on a basis
other than as specified in Section 6(b) or 6(c) as the case may be.
No person guilty of fraudulent misrepresentation (within the meaning of
SECTION 11(f) of the ▇▇▇▇ ▇▇▇) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who controls a
U.S. Underwriter within the meaning of Section 15 of the 1933 Act or Section 20
of the 1934 Act shall have the same rights to contribution as such U.S.
Underwriter, and each director of the Company or CHS, each officer of the
Company who signed the Registration Statement, and each person, if any, who
controls the Company or any Selling Shareholder within the meaning of Section 15
of the 1933 Act or Section 20 of the 1934 Act shall have the same rights to
contribution as the Company and CHS or such Selling Shareholder, as the case may
be. The U.S. Underwriters' respective obligations to contribute pursuant to this
SECTION 7 are several in proportion to the number of Initial
35
U.S. Securities set forth opposite their respective names in Schedule A hereto
and not joint. The Selling Shareholders' respective obligations to contribute
pursuant to this SECTION 7 are several in proportion to the number of Initial
U.S. Securities set forth opposite their respective names in Schedule B hereto
and not joint.
The provisions of this Section shall not affect any agreement among the
Company and the Selling Shareholders with respect to contribution.
SECTION 8. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE
DELIVERY.
All representations, warranties and agreements contained in this
Agreement or in certificates of officers of the Company, CHS or any of their
subsidiaries submitted pursuant hereto, shall remain operative and in full force
and effect, regardless of any investigation made by or on behalf of any U.S.
Underwriter or controlling person, or by or on behalf of the Company, and shall
survive delivery of the Securities to the U.S. Underwriters.
SECTION 9. TERMINATION OF AGREEMENT.
(a) TERMINATION; GENERAL. The U.S. Representatives may terminate this
Agreement, by notice to the Company and the Selling Shareholders, at any time at
or prior to Closing Time (i) if there has been, since the time of execution of
this Agreement or since the respective dates as of which information is given in
the U.S. Prospectus, any material adverse change in the condition, financial or
otherwise, or in the earnings, business affairs or business prospects of the
Company and its subsidiaries considered as one enterprise, whether or not
arising in the ordinary course of business, or (ii) if there has occurred any
material adverse change in the financial markets in the United States or the
international financial markets, any outbreak of hostilities or escalation
thereof or other calamity or crisis or any change or development involving a
prospective change in national or international political, financial or economic
conditions, in each case the effect of which is such as to make it, in the
judgment of the U.S. Representatives, impracticable to market the Securities or
to enforce contracts for the sale of the Securities, or (iii) if trading in any
securities of the Company has been suspended or materially limited by the
Commission or the New York Stock Exchange, or if trading generally on the
American Stock Exchange or the New York Stock Exchange or in the Nasdaq National
Market has been suspended or materially limited, or minimum or maximum prices
for trading have been fixed, or maximum ranges for prices have been required, by
any of said exchanges or by such system or by order of the Commission, the
National Association of Securities Dealers, Inc. or any other governmental
authority, or (iv) if a banking moratorium has been declared by either Federal
or New York authorities.
36
(b) LIABILITIES. If this Agreement is terminated pursuant to this
Section, such termination shall be without liability of any party to any other
party except as provided in Section 4 hereof, and provided further that Sections
1, 6, 7 and 8 shall survive such termination and remain in full force and
effect.
SECTION 10. DEFAULT BY ONE OR MORE OF THE U.S. UNDERWRITERS.
If one or more of the U.S. Underwriters shall fail at Closing Time or a
Date of Delivery to purchase the Securities which it or they are obligated to
purchase under this Agreement (the "Defaulted Securities"), the U.S.
Representatives shall have the right, within 24 hours thereafter, to make
arrangements for one or more of the non-defaulting U.S. Underwriters, or any
other underwriters, to purchase all, but not less than all, of the Defaulted
Securities in such amounts as may be agreed upon and upon the terms herein set
forth; if, however, the U.S. Representatives shall not have completed such
arrangements within such 24-hour period, then:
(a) if the number of Defaulted Securities does not exceed 10% of the
number of U.S. Securities to be purchased on such date, each of the
non-defaulting U.S. Underwriters shall be obligated, severally and not jointly,
to purchase the full amount thereof in the proportions that their respective
underwriting obligations hereunder bear to the underwriting obligations of all
non-defaulting U.S. Underwriters, or
(b) if the number of Defaulted Securities exceeds 10% of the number of
U.S. Securities to be purchased on such date, this Agreement or, with respect to
any Date of Delivery which occurs after Closing Time, the obligation of the U.S.
Underwriters to purchase and of the Selling Shareholders to sell the U.S. Option
Securities to be purchased and sold on such Date of Delivery, shall terminate
without liability on the part of any non-defaulting U.S. Underwriter.
No action taken pursuant to this Section shall relieve any defaulting
U.S. Underwriter from liability in respect of its default.
In the event of any such default which does not result in a termination
of this Agreement or, in the case of a Date of Delivery which occurs after
Closing Time, which does not result in a termination of the obligation of the
U.S. Underwriters to purchase and the Selling Shareholders to sell the relevant
U.S. Option Securities, as the case may be, either the U.S. Representatives or
the Company and the Selling Shareholders shall have the right to postpone
Closing Time or the relevant Date of Delivery, as the case may be, for a period
not exceeding seven days in order to effect any required changes in the
Registration Statement or Prospectus or in any other documents or arrangements.
As used herein, the term "U.S. Underwriter" includes any person substituted for
a U.S. Underwriter under this Section 10.
37
SECTION 11. DEFAULT BY ONE OR MORE OF THE SELLING SHAREHOLDERS OR THE
COMPANY.
(a) If a Selling Shareholder shall fail at Closing Time or at a Date of
Delivery to sell and deliver the number of Securities which such Selling
Shareholder or Selling Shareholders are obligated to sell hereunder, and the
remaining Selling Shareholders do not exercise the right hereby granted to
increase, pro rata or otherwise (including, without limitation, solely by the
Forstmann Little & Co. Selling Shareholders listed on Schedule E hereto), the
number of Securities to be sold by them hereunder to the total number to be sold
by all Selling Shareholders as set forth in Schedule B hereto, then the U.S.
Underwriters may, at option of the Representatives, by notice from the
Representatives to the Company and the non-defaulting Selling Shareholders,
either (a) terminate this Agreement without any liability on the fault of any
non-defaulting party except that the provisions of Sections 1, 4, 6, 7 and 8
shall remain in full force and effect or (b) elect to purchase the Securities
which the non-defaulting Selling Shareholders and the Company have agreed to
sell hereunder. No action taken pursuant to this Section 11 shall relieve any
Selling Shareholder so defaulting from liability, if any, in respect of such
default.
In the event of a default by any Selling Shareholder as referred to in
this Section 11, each of the Representatives, the Company and the non-defaulting
Selling Shareholders shall have the right to postpone Closing Time or Date of
Delivery for a period not exceeding seven days in order to effect any required
change in the Registration Statement or Prospectus or in any other documents or
arrangements.
(b) If the Company shall fail at Closing Time or at the Date of
Delivery to sell the number of Securities that it is obligated to sell
hereunder, then this Agreement shall terminate without any liability on the part
of any nondefaulting party; provided, however, that the provisions of Sections
1, 4, 6, 7 and 8 shall remain in full force and effect. No action taken pursuant
to this Section shall relieve the Company form liability, if any, in respect of
such default.
SECTION 12. NOTICES.
All notices and other communications hereunder shall be in writing and
shall be deemed to have been duly given if mailed or transmitted by any standard
form of telecommunication. Notices to the U.S. Underwriters shall be directed to
the U.S. Representatives at North Tower, World Financial Center, New York, New
York 10281-1201, attention of Syndicate Operations, with a copy to Debevoise &
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, attention of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇;
and notices to the Company, CHS or the Selling Shareholders shall be directed to
them at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, attention of
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Vice President, Secretary and General Counsel, with a copy to
Fried, Frank, Harris, ▇▇▇▇▇▇▇ &
38
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, attention of ▇▇▇▇▇▇▇
▇▇▇▇▇▇.
SECTION 13. PARTIES.
This Agreement shall inure to the benefit of and be binding upon the
U.S. Underwriters and the Company and the Selling Shareholders and their
respective successors. Nothing expressed or mentioned in this Agreement is
intended or shall be construed to give any person, firm or corporation, other
than the U.S. Underwriters and the Company and CHS and the Selling Shareholders
and their respective successors and the controlling persons and officers and
directors referred to in Sections 6 and 7 and their heirs and legal
representatives, any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provision herein contained. This Agreement and
all conditions and provisions hereof are intended to be for the sole and
exclusive benefit of the U.S. Underwriters and the Company and the Selling
Shareholders and their respective successors, and said controlling persons and
officers and directors and their heirs and legal representatives, and for the
benefit of no other person, firm or corporation. No purchaser of Securities from
any U.S. Underwriter shall be deemed to be a successor by reason merely of such
purchase.
SECTION 14. GOVERNING LAW AND TIME.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO CONFLICTS OF LAW
PRINCIPLES THEREOF. EXCEPT AS OTHERWISE SET FORTH HEREIN, SPECIFIED TIMES OF DAY
REFER TO NEW YORK CITY TIME.
SECTION 15. EFFECT OF HEADINGS.
The Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction hereof.
39
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company and the Selling Shareholders a
counterpart hereof, whereupon this instrument, along with all counterparts, will
become a binding agreement between the U.S. Underwriters, the Company and CHS
and the Selling Shareholders in accordance with its terms.
Very truly yours,
COMMUNITY HEALTH SYSTEMS, INC.
By__________________________________________
Name:
Title:
CHS/COMMUNITY HEALTH SYSTEMS, INC.
By:_________________________________________
Name:
Title:
40
SELLING SHAREHOLDERS
[Names To Come]
By:_________________________________________
Name:
As Attorney-in-Fact acting on behalf of the
Selling Shareholders named in Schedule B
hereto.
CONFIRMED AND ACCEPTED,
as of the date first above written:
▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO.
▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇
& ▇▇▇▇▇ INCORPORATED
CREDIT SUISSE FIRST BOSTON CORPORATION
BANC OF AMERICA SECURITIES LLC
CHASE SECURITIES INC.
▇▇▇▇▇▇▇, ▇▇▇▇▇ & CO.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & CO. INCORPORATED
BY: ▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇
& ▇▇▇▇▇ INCORPORATED
By
---------------------------
Authorized Signatory
For themselves and as U.S. Representatives of the
other U.S. Underwriters named in Schedule A hereto
41
SCHEDULE A
Name of U.S. Underwriter Number of
------------------------ Initial U.S
Securities
----------
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated.......................................... o
Credit Suisse First Boston Corporation......................... o
Chase Securities Inc........................................... o
Banc of America Securities LLC................................. o
Goldman, ▇▇▇▇▇ & Co............................................ o
Morgan ▇▇▇▇▇▇▇ & Co. Incorporated.............................. o
Total.......................................................... o
SCHEDULE B
Number of Maximum Number of
Initial U.S. Option
Securities Securities
---------- ----------
Community Health Systems, Inc. o *
SELLING SHAREHOLDERS
[Name] o
[Name] o
[Name] o
o
o
o
Total.......................................... o
* No Option Securities
SCHEDULE C
COMMUNITY HEALTH SYSTEMS, INC.
o Shares of Common Stock
(Par Value $.01 Per Share)
1. The public offering price per share for the Securities, determined
as provided in said Section 2, shall be $o.
2. The purchase price per share for the U.S. Securities to be paid by
the several U.S. Underwriters shall be $o, being an amount equal to the initial
public offering price set forth above less $.o per share; provided that the
purchase price per share for any U.S. Option Securities purchased upon the
exercise of the over-allotment option described in Section 2(b) shall be reduced
by an amount per share equal to any dividends or distributions declared by the
Company and payable on the Initial U.S. Securities but not payable on the U.S.
Option Securities.
SCHEDULE D
FORSTMANN LITTLE & CO. SELLING SHAREHOLDERS
[To come]
Exhibit A-1
FORM OF OPINION OF COMPANY'S GENERAL COUNSEL
TO BE DELIVERED PURSUANT TO
SECTION 5(b)(i)
[OPINION OF GENERAL COUNSEL OF COMMUNITY HEALTH SYSTEMS, INC.]
[TO COME]
FORM OF OPINION OF FRIED, FRANK,
HARRIS, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
TO BE DELIVERED PURSUANT TO
SECTION 5(b)(ii)
[TO COME]
Exhibit A-3
FORM OF OPINION OF COUNSEL FOR THE
SELLING SHAREHOLDER(S)
TO BE DELIVERED PURSUANT TO SECTION 5(c)
[TO COME]
[FORM OF LOCK-UP FROM DIRECTORS, OFFICERS OR OTHER STOCKHOLDERS PURSUANT TO
SECTION 5(K)]
Exhibit B
▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
Credit Suisse First Boston Corporation
Banc of America Securities LLC
Chase Securities Inc.
▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
as U.S. Representatives of the several
U.S. Underwriters to be named in the
within-mentioned U.S. Purchase Agreement
▇▇▇▇▇▇▇ ▇▇▇▇▇ International
Credit Suisse First Boston (Europe) Limited
Bank of America International Limited
Chase Manhattan International Limited
▇▇▇▇▇▇▇ ▇▇▇▇▇ International
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. International Limited
▇/▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Re: Proposed Public Offering by Community Health Systems
Dear Sirs:
The undersigned, a stockholder and/or an officer and/or a director of Community
Health Systems, Inc. a Delaware corporation (the "Company"), understands that
(i) ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated
("▇▇▇▇▇▇▇ ▇▇▇▇▇"), Credit Suisse First Boston Corporation and Banc of America
Securities LLC, Chase Securities Inc., ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ &
Co. Incorporated propose to enter into a U.S. Purchase Agreement (the "U.S.
Purchase Agreement") with the Company and the selling shareholders listed in
Schedule B to the U.S. Purchase Agreement (the "Selling Shareholders") providing
for the public offering of shares (the "Securities") of the Company's common
stock, par value $.01 per share (the "Common Stock") and (ii) ▇▇▇▇▇▇▇ ▇▇▇▇▇
International, Credit Suisse First Boston (Europe) Limited, Bank of America
International Limited, Chase Manhattan International Limited, ▇▇▇▇▇▇▇ ▇▇▇▇▇
International and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. International Limited propose to
enter into an International Purchase Agreement with the Company providing for
the public offering of the Common Stock of the Company (together with the U.S.
Purchase Agreement, the "Purchase Agreements"). In recognition of the benefit
that such an offering will confer upon the undersigned as a stockholder and/or
an officer and/or a director of the Company, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
undersigned agrees with each underwriter to be named in the Purchase Agreements
that, during a period of 90 days from the date of the Purchase Agreements, the
undersigned will not, without the prior written consent of ▇▇▇▇▇▇▇ ▇▇▇▇▇,
directly or indirectly, (i) offer, pledge, sell, contract to sell, sell any
option or contract to purchase, purchase any option or contract to sell, grant
any option, right or warrant for the sale of, or otherwise dispose of or
transfer any shares of the Company's Common Stock or any securities convertible
into or exchangeable or exercisable for Common Stock, whether now owned or
hereafter acquired by the undersigned or with respect to which the undersigned
has or hereafter acquires the power of disposition, or file any registration
statement under the Securities Act of 1933, as amended, with respect to any of
the foregoing or (ii) enter into any swap or any other agreement or any
transaction that transfers, in whole or in part, directly or indirectly, the
economic consequence of ownership of the Common Stock, whether any such swap or
transaction is to be settled by delivery of Common Stock or other securities, in
cash or otherwise. [The foregoing restriction will not apply to Securities to be
sold by the Selling Shareholders under the Purchase Agreements.](1)
Notwithstanding the foregoing, the undersigned may transfer shares of Common
Stock (i) as a bona fide gift or gifts, provided that prior to such transfer the
donee or donees thereof agree in writing to be bound by the restrictions set
forth herein, (ii) to any trust for the direct or indirect benefit of the
undersigned or the immediate family of the undersigned, provided that prior to
such transfer the trustee of the trust agrees in writing to be bound by the
restrictions set forth herein, and provided further that any such transfer shall
not involve a disposition for value or (iii) if such transfer occurs by
operation of law, such as rules of descent and distribution, statutes governing
the effects of a merger or a qualified domestic order, provided that prior to
such transfer the transferee executes an agreement stating that the transferee
is receiving and holding the shares subject to the provisions of this agreement.
For purposes of this Lock-Up Agreement, "immediate family" shall mean any
relationship by blood, marriage or adoption, not more remote than first cousin.
Very truly yours,
Signature:
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Print Name:
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(1) To be included in the lock-up agreements to be signed by the Selling
Shareholders.
2