EXHIBIT 1
________ Shares
TOTAL RENAL CARE HOLDINGS, INC.
Common Stock
UNDERWRITING AGREEMENT
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August , 1997
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
SECURITIES CORPORATION
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Dear Sirs:
The stockholders of Total Renal Care Holdings, Inc., a Delaware
corporation (the "Company"), named in Schedule I hereto (collectively, the
"Selling Stockholders"), severally propose to sell an aggregate of ________
shares (the "Shares") of Common Stock, par value $0.001 per share, of the
Company (the "Common Stock") to ▇▇▇▇▇▇▇▇▇, Lufkin & ▇▇▇▇▇▇▇▇ Securities
Corporation (the "Underwriter").
1. Registration Statement and Prospectus. The Company has prepared
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and filed with the Securities and Exchange Commission (the "Commission") in
accordance with the provisions of the Securities Act of 1933, as amended, and
the rules and regulations of the Commission thereunder (collectively called the
"Act"), a registration statement on Form S-3 (File no. 333-_____) including a
prospectus relating to the Shares, which may be amended. The registration
statement as amended at the time when it becomes effective, including a
registration statement (if any) filed pursuant to Rule 462(b) under the Act
increasing the size of the offering registered under the Act and information (if
any) deemed to be part of the registration statement at the time of
effectiveness pursuant to Rule 430A or Rule 434 under the Act, is hereinafter
referred to as the "Registration Statement"; and the prospectus (including any
prospectus subject to completion meeting the requirements of Rule 434(b), under
the Act provided by the Company with any term sheet meeting the requirements of
Rule 434(b) as the prospectus provided to meet the requirements of Section 10(a)
of the Act) in the form first used to confirm sales of Shares is hereinafter
referred to as the "Prospectus." As used herein, the terms Registration
Statement and Prospectus shall be deemed to include documents incorporated by
reference therein.
2. Agreements to Sell and Purchase. On the basis of the
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representations and warranties contained in this Agreement, and subject to its
terms and conditions, (i) each Selling Stockholder agrees, severally and not
jointly, to sell the number of Shares set forth opposite such Selling
Stockholder's name in Schedule I hereto and (ii) the Underwriter agrees to
purchase from each Selling Stockholder at a price per share of $_____ (the
"Purchase Price")
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such number of Shares.
The Company and the Selling Stockholders hereby agree, severally and
not jointly, and the Company shall, concurrently with the execution of this
Agreement, deliver an agreement executed by (i) each of the directors and
officers of the Company and (ii) each other person listed on Annex I hereto,
pursuant to which each such person agrees, not to offer, sell, contract to sell,
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grant any option to purchase, or otherwise dispose of any common stock of the
Company or any securities convertible into or exercisable or exchangeable for
such common stock or in any other manner transfer all or a portion of the
economic consequences associated with the ownership of any such common stock,
except to the Underwriter pursuant to this Agreement, for a period of 90 days
(which, to the extent applicable, shall also be the "lock-up" period for
purposes of Section 5.3 of the Shareholders Agreement (the "Shareholders
Agreement") dated as of August 11, 1994, as amended on June 30, 1994) after the
date of the Prospectus without the prior written consent of the Underwriter.
Notwithstanding the foregoing, during such period the Company may (i) grant
stock options or securities pursuant to equity incentive plans approved by the
Company's Board of Directors, (ii) issue options or stock as consideration in
connection with acquisitions and (iii) issue shares of its common stock upon the
exercise of an option or warrant or the conversion of a security outstanding on
the date hereof or issued in accordance with clause (i) or (ii) above.
3. Terms of Public Offering. The Company and the Selling
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Stockholders are advised by the Underwriter that it proposes (i) to make a
public offering of the Shares as soon after the effective date of the
Registration Statement as in your judgment is advisable and (ii) initially to
offer the Shares upon the terms set forth in the Prospectus.
4. Delivery and Payment. Delivery to the Underwriter of and payment
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for the Shares shall be made at 10:00 A.M., New York City time, on the third or
fourth business day (the "Closing Date") unless otherwise permitted by the
Commission pursuant to Rule 15c6-1 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act") following the date of the initial public offering,
at the offices of ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇. The Closing Date and the location of delivery of and the form of
payment for the Shares may be varied by agreement between you, the Company and
the Selling Stockholders.
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Certificates for the Shares shall be registered in such names and
issued in such denominations as you shall request in writing not later than two
full business days prior to the Closing Date. Such certificates shall be made
available to you for inspection not later than 9:30 A.M., New York City time, on
the business day next preceding the Closing Date. Certificates in definitive
form evidencing the Shares shall be delivered to you on the Closing Date with
any transfer taxes thereon duly paid by the Selling Stockholder, for your
account against payment of the Purchase Price therefor by wire transfer of
federal or other immediately available funds to the account of the Custodian (as
hereafter defined) as shall be specified in writing by the Custodian, no later
than the Business Day immediately preceding the Closing Date.
5. Agreements of the Company. The Company agrees with you:
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(a) To use its best efforts to cause the Registration Statement
to become effective at the earliest possible time.
(b) To advise you promptly and, if requested by you, to confirm
such advice in writing, (i) when the Registration Statement has become effective
and when any post-effective amendment to it becomes effective, (ii) of any
request by the Commission for amendments to the Registration Statement or
amendments or
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supplements to the Prospectus or for additional information, (iii) of the
issuance by the Commission of any stop order suspending the effectiveness of the
Registration Statement or of the suspension of qualification of the Shares for
offering or sale in any jurisdiction, or the initiation of any proceeding for
such purposes, and (iv) of the happening of any event during the period referred
to in paragraph (e) below which makes any statement of a material fact made in
the Registration Statement or the Prospectus untrue or which requires the making
of any additions to or changes in the Registration Statement or the Prospectus
in order to make the statements therein not misleading. If at any time the
Commission shall issue any stop order suspending the effectiveness of the
Registration Statement, the Company will make every reasonable effort to obtain
the withdrawal or lifting of such order at the earliest possible time.
(c) To furnish to you, without charge, four signed copies of the
Registration Statement as first filed with the Commission and of each amendment
to it, including all exhibits and documents incorporated by reference, and to
furnish to you and each Underwriter designated by you such number of conformed
copies of the Registration Statement as so filed and of each amendment to it,
without exhibits, as you may reasonably request. The terms "supplement" and
"amendment" or "amend" as used in this Agreement shall include all documents
subsequently filed by the Company with the Commission pursuant to the Exchange
Act that are deemed to be incorporated by reference in the Prospectus.
(d) Not to file any amendment or supplement to the Registration
Statement, whether before or after the time when it becomes effective, or to
make any amendment or supplement to the Prospectus (including the issuance or
filing of any term sheet within the meaning of Rule 434) of which you shall not
previously have been advised or to which you shall reasonably object; and to
prepare and file with the Commission, promptly upon your reasonable request, any
amendment to the Registration Statement or supplement to the Prospectus
(including the issuance or filing of any term sheet within the meaning of Rule
434) which may be necessary or advisable in connection with the distribution of
the Shares by you, and to use its best efforts to cause the same to become
promptly effective.
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(e) Promptly after the Registration Statement becomes effective,
and from time to time thereafter for such period as in the opinion of counsel
for the Underwriter a prospectus is required by law to be delivered in
connection with sales by an Underwriter or a dealer, to furnish to each
Underwriter and dealer as many copies of the Prospectus (and of any amendment or
supplement to the Prospectus) as such Underwriter or dealer may reasonably
request.
(f) If during the period specified in paragraph (e) any event
shall occur as a result of which, in the opinion of counsel for the Underwriter
it becomes necessary to amend or supplement the Prospectus in order to make the
statements therein, in the light of the circumstances when the Prospectus is
delivered to a purchaser, not misleading, or if it is necessary to amend or
supplement the Prospectus to comply with any law, forthwith to prepare and file
with the Commission an appropriate amendment or supplement to the Prospectus so
that the statements in the Prospectus, as so amended or supplemented, will not
in the light of the circumstances when it is so delivered, be misleading, or so
that the Prospectus will comply with law, and to furnish to each Underwriter and
to such dealers as you shall specify, such number of copies thereof as such
Underwriter or dealers may reasonably request.
(g) Prior to any public offering of the Shares, to cooperate
with you and counsel for the Underwriter in connection with the registration or
qualification of the Shares for offer and sale by the Underwriter and by dealers
under the state securities or Blue Sky laws of such jurisdictions as you may
request, to continue such qualification in effect so long as required for
distribution of the Shares and to file such consents to service of process or
other documents as may be necessary in order to effect such registration or
qualification; provided, however, that the Company shall not be obligated
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to file any general consent to service of process or to qualify as a foreign
corporation in any jurisdiction in which it is not already subject generally to
service of process or so qualified.
(h) To mail and make generally available to its stockholders as
soon as reasonably practicable an
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earnings statement covering a period of at least twelve months after the
effective date of the Registration Statement (but in no event commencing later
than 90 days after such date) which shall satisfy the provisions of Section
11(a) of the Act, and to advise you in writing when such statement has been so
made available.
(i) During the period of five years after the date of this
Agreement, (i) to mail as soon as reasonably practicable after the end of each
fiscal year to the record holders of its Common Stock a financial report of the
Company and its subsidiaries on a consolidated basis (and a similar financial
report of all unconsolidated subsidiaries, if any), all such financial reports
to include a consolidated balance sheet, a consolidated statement of operations,
a consolidated statement of cash flows and a consolidated statement of
shareholders' equity as of the end of and for such fiscal year, together with
comparable information as of the end of and for the preceding year, certified by
independent certified public accountants, and (ii) to mail and make generally
available as soon as practicable after the end of each quarterly period (except
for the last quarterly period of each fiscal year) to such holders, a
consolidated balance sheet, a consolidated statement of operations and a
consolidated statement of cash flows (and similar financial reports of all
unconsolidated subsidiaries, if any) as of the end of and for such period, and
for the period from the beginning of such year to the close of such quarterly
period, together with comparable information for the corresponding periods of
the preceding year.
(j) During the period referred to in paragraph (i), to furnish
to you as soon as available a copy of each report or other publicly available
information of the Company mailed to the holders of Common Stock or filed with
the Commission and such other publicly available information concerning the
Company and its subsidiaries as you may reasonably request.
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(k) To use its best efforts to maintain the listing of the Common
Stock on the New York Stock Exchange (or on another national securities exchange
or included in the Nasdaq National Market) for a period of five years after
the effective date of the Registration Statement.
(l) To use its best efforts to do and perform all things
required or necessary to be done and performed under this Agreement by the
Company prior to the Closing Date and to satisfy all conditions precedent to the
delivery of the Shares.
6. Representations and Warranties of the Company. The Company
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represents and warrants to the Underwriter that:
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(a) The Registration Statement has become effective; no stop
order suspending the effectiveness of the Registration Statement is in effect,
and no proceedings for such purpose are pending before or threatened by the
Commission.
(b) (i) Each document, if any, filed or to be filed pursuant to
the Exchange Act and incorporated by reference in the Prospectus complied or
will comply when so filed in all material respects with the Exchange Act and the
applicable rules and regulations of the Commission thereunder, (ii) each part of
the Registration Statement, when such part became effective, did not contain and
each such part, as amended or supplemented, if applicable, will not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading,
(iii) the Registration Statement and the Prospectus comply and, as amended or
supplemented, if applicable, will comply in all material respects with the Act
and (iv) the Prospectus does not contain and, as amended or supplemented, if
applicable, will not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading, except that the
representations and warranties set forth in this paragraph (b) do not apply to
statements or omissions in the Registration Statement or the Prospectus based
upon information relating to the Underwriter furnished to the Company in writing
by the Underwriter expressly for use therein.
(c) Any term sheet and prospectus subject to completion provided
by the Company to the Underwriter for use in connection with the offering and
sale of the Shares pursuant to Rule 434 under the Act together are not
materially different from the prospectus included in the Registration Statement
(exclusive of any information deemed a part thereof pursuant to Rule 434(d)).
(d) Each preliminary prospectus 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 Act, and each registration statement filed
pursuant to Rule 462(b) under the Act, if any,
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complied when so filed in all material respects with the Act; and did not
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading.
(e) Each of the Company and its subsidiaries as defined in Rule 405
of Regulation C under the Act (each a "Subsidiary") has been duly incorporated
or formed, is validly existing as a corporation in good standing under the laws
of its jurisdiction of incorporation or as a partnership duly formed and has the
corporate or partnership power and authority, as the case may be, to carry on
its business as it is currently being conducted and to own, lease and operate
its properties as described in the Registration Statement and Prospectus, and
each corporate Subsidiary is duly qualified and is in good standing as a foreign
corporation and each Subsidiary is authorized to do business in each
jurisdiction in which the nature of its business or its ownership or leasing of
property requires such qualification or authorization, except here the failure
to be so qualified and be in good standing could not, in the aggregate,
reasonably be expected to have a material adverse effect on the business,
operations, properties, or financial or other condition of the Company and its
Subsidiaries, considered as a whole.
(f) Except as disclosed in the Prospectus, (i) all of the outstanding
shares of capital stock of each the Company's corporate Subsidiaries have been
duly authorized and validly issued and are fully paid and non-assessable and, in
the case of Total Renal Care, Inc., a California corporation ("TRC"), are wholly
owned by the Company or are otherwise owned directly indirectly by the Company,
free and clear of any security interest, claim, lien, encumbrance or adverse
interest of any nature ("Liens") and (ii) all of the outstanding partnership
interests in each of the Company's partnership Subsidiaries have been duly
authorized by its respective partnership agreement and validly issued and the
partnership interests in such partnerships that are not owned by unaffiliated
third parties are owned directly or indirectly by the Company, free and clear of
any Liens, and any partnership capital contribution obligations of
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the Company in each partnership Subsidiary have been satisfied.
(g) All the outstanding shares of capital stock of the Company
(including the Shares) have been duly authorized and validly issued and are
fully paid, non-assessable and not subject to any preemptive or similar rights.
(h) The authorized capital stock of the Company, including the Common
Stock, conforms as to legal matters to the description thereof contained in the
Prospectus.
(i) Neither the Company nor any of its Subsidiaries is in violation of
its respective charter, by-laws or partnership agreement, as the case may be, or
in default in any material respect, and no condition exists that with notice or
lapse of time or both would constitute a material default in the performance of
any material obligation, agreement or condition contained in any bond,
debenture, note or any other evidence of indebtedness or in any other material
agreement, indenture or instrument to which the Company or any of its
Subsidiaries is a party or by which it or any of is Subsidiaries or their
respective property is bound except to the extent such violation or default, if
any, could not reasonably be expected to have a material adverse effect on the
business, operations, properties or financial or other condition of the Company
and its Subsidiaries, considered as a whole.
(j) The execution, delivery and performance of this Agreement,
compliance by the Company with all the provisions hereof and the consummation of
the transactions contemplated hereby will not require any consent, approval,
authorization or other order of any court, regulatory body, administrative
agency or other governmental body (except as such may be required under the
securities or Blue Sky laws of the various states) and will not conflict with or
constitute a breach of any
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of the terms or provisions of, or a default under, the charter or by-laws of the
Company or any of its subsidiaries or any agreement, indenture or other
instrument to which it or any of its subsidiaries is party or by which it or any
of its subsidiaries or their respective property is bound, or violate or
conflict with any laws, administrative regulations or rulings or court decrees
applicable to the Company, any of its subsidiaries or their respective property.
(k) Except as otherwise set forth in the Prospectus, there are no
material legal or governmental proceedings pending to which the Company or any
of its subsidiaries is a party or of which any of their respective property is
the subject, and, to the best of the Company's knowledge, no such proceedings
are threatened or contemplated. No contract or document of a character required
to be described in the Registration Statement or the Prospectus or to be filed
as an exhibit to the Registration Statement is not so described or filed as
required.
(l) Neither the Company nor any of its subsidiaries has violated any
foreign, federal, state or local law or regulation relating to the protection
of human health and safety, the environment or hazardous or toxic substances or
wastes, pollutants or contaminants ("Environmental Laws"), nor any federal or
state law relating to discrimination in the hiring, promotion or pay of
employees nor any applicable federal or state wages and hours laws, nor any
provisions of the Employee Retirement Income Security Act or the rules and
regulations promulgated thereunder, which in each case might result in any
material adverse change in the business, prospects, financial condition or
results of operation of the Company and its subsidiaries, taken as a whole.
(m) The Company and each of its subsidiaries has such permits,
licenses, franchises and authorizations of governmental or regulatory
authorities ("permits") including, without limitation, under any applicable
Environmental Laws, as are necessary to own, lease and operate its respective
properties and to conduct its business; the Company and each of its subsidiaries
has fulfilled and performed all of its material obligations with respect to such
permits and no event has occurred which allows, or after notice or lapse of time
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would allow, revocation or termination thereof or results in any other material
impairment of the rights of the holder of any such permit; and, except as
described in the Prospectus, such permits contain no restrictions that are
materially burdensome to the Company or any of its subsidiaries.
(n) In the ordinary course of its business, the Company conducts a
periodic review of the effect of Environmental Laws on the business, operations
and properties of the Company and its subsidiaries, in the course of which it
identifies and evaluates associated costs and liabilities (including, without
limitation, any capital or operating expenditures required for clean-up, closure
of properties or compliance with Environmental Laws or any permit, license or
approval, any related constraints on operating activities and any potential
liabilities to third parties). On the basis of such review, the Company has
reasonably concluded that such associated costs and liabilities would not,
singly or in the aggregate, have a material adverse effect on the Company and
its subsidiaries, taken as a whole.
(o) Except as otherwise set forth in the prospectus or such as are not
material to the business, prospectus, financial condition or results of
operation of the Company and its Subsidiaries, taken as a whole, the Company
and each of its Subsidiaries has good and marketable title, free and clear of
all Liens, claims, encumbrances and restrictions except Liens for taxes not yet
due and payable, to all property and assets described in the Registration
Statement as being owned by it. All leases to which the Company or any of its
subsidiaries is a party are valid and binding and no default has occurred or is
continuing thereunder, which might result in any material adverse change in the
business, prospects, financial condition or results of operation of the Company
and its Subsidiaries taken as a whole, and the Company and its Subsidiaries
enjoy a peaceful and undisturbed possession under all such leases to which any
of them is a party as lessee with such exceptions as do not materially interfere
with the use made by the Company or such Subsidiary.
(p) The Company and each of its Subsidiaries maintains reasonably
adequate insurance.
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(q) Price Waterhouse LLP is, and during the fiscal years ended May 31,
1994 and 1993, KPMG Peat Marwick, LLP was, an independent public accountant with
respect to the Company as required by the Act.
(r) The financial statements, together with related schedules and
notes forming part of the Registration Statement and the Prospectus (and any
amendment or supplement thereto), present fairly the consolidated financial
position, results of operations and changes in financial position of the
Company and its subsidiaries on the basis stated in the Registration Statement
at the respective dates or for the respective periods to which they apply; such
statements and related schedules and notes have been prepared in accordance with
generally accepted accounting principles consistently applied throughout the
periods involved, except as disclosed therein; and the other financial and
statistical information and data set forth in the Registration Statement and the
Prospectus (and any amendment or supplement thereto) is, in all material
respects, accurately presented and prepared on a basis consistent with such
financial statements and the books and records of the Company.
(s) The Company and each of its Subsidiaries has such permits,
licenses, franchises and authorizations of governmental or regulatory
authorities ("permits") as are necessary to own, lease and operate its
respective properties and to conduct its business in the manner described in the
Prospectus, subject to such qualifications as may be set forth in the
Prospectus; the Company and each of its Subsidiaries has fulfilled and performed
all of its material obligations with respect to such permits and no event has
occurred which allows, or after notice or lapse of time would allow, revocation
or termination thereof or results in any other material impairment of the rights
of the holder of any such permit, subject in each case to such qualification as
may be set forth in the Prospectus; and, except as described in the Prospectus,
such permits contain no restrictions that are materially burdensome to the
Company or any of its Subsidiaries.
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(t) The Company is not an "investment company" or a company
"controlled" by an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
(u) Except as disclosed in the Prospectus or the Shareholders
Agreement, no holder of any security of the Company has any right to require
registration of shares of Common Stock or any other security of the Company and
with respect to the offer of the Shares all such rights have been satisfied or
waived.
7. Representations and Warranties of the Selling Stockholders. Each
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Selling Stockholder severally represents and warrants to each Underwriter that:
(a) Such Selling Stockholder is the lawful owner of the Shares to be
sold by such Selling Stockholder pursuant to this Agreement and has, and on the
Closing Date will have, good and clear title to such Shares, free of all
restrictions on transfer, Liens, encumbrances, security interests and claims
whatsoever.
(b) Upon delivery of and payment for such Shares pursuant to this
Agreement, good and clear title to such Shares will pass to the Underwriter,
free of all restrictions on transfer, Liens, encumbrances, security interests
and claims whatsoever.
(c) Such Selling Stockholder has, and on the Closing Date will have,
full legal right, power and authority to enter into this Agreement and the
Custody Agreement, if any, between such Selling Stockholder and The Bank of New
York, as Custodian (the "Custody Agree-
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ment") and to sell, assign, transfer and deliver which Shares in the manner
provided herein and therein, and this Agreement and the Custody Agreement, if
any, have been duly authorized, executed and delivered by such Selling
Stockholder and each of this Agreement and the Custody Agreement is a valid and
binding agreement such Selling Stockholder enforceable in accordance with its
terms, except as rights to indemnity and contribution hereunder may be limited
by applicable law.
(d) The power of attorney signed by such Selling Stockholder
appointing ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇ ▇. ▇▇▇▇, or any one of
them, as his attorney-in-fact to the extent set forth therein with regard to the
transactions contemplated hereby and by the Registration Statement and the
Custody Agreement, if any, has been duly authorized, executed and delivered by
or on behalf of such Selling Stockholder and is a valid and binding instrument
of such Selling Stockholder enforceable in accordance with its terms, and,
pursuant to such power of attorney, such Selling Stockholder has authorized
▇▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇. ▇. ▇▇▇▇, or any one of them, to
execute and deliver on his behalf this Agreement and any other document
necessary or desirable in connection with transactions contemplated hereby and
to deliver the Shares to be sold by such Selling Stockholder pursuant to this
Agreement.
(e) Such Selling Stockholder has not taken, and will not take,
directly or indirectly, any action designed to, or which might reasonably be
expected to, cause or result in stabilization or manipulation of the price of
any security of the Company to facilitate the sale or resale of the Shares
pursuant to the distribution contemplated by this Agreement, and other than as
permitted by the Act, such Selling Stockholder has not distributed and will not
distribute any prospectus or other offering material in connection with the
offering and sale of the Shares.
(f) The execution, delivery and performance of this Agreement by such
Selling Stockholder, compliance by such Selling Stockholder with all the
provisions thereof and the consummation of the transactions contemplated hereby
will not require any consent, approval, authorization or other order of any
court, regulatory body, administrative agency or other govern-
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mental body (except as such may be required under the Act, state securities laws
or Blue Sky laws) and will not conflict with or constitute a breach of any of
the terms or provisions of, or a default under, organizational documents of such
Selling Stockholder, if not an individual, or any agreement, indenture or other
instrument to which such Selling Stockholder is a party or by which such Selling
Stockholder or property of such Selling Stockholder is bound, or violate or
conflict with any laws, administrative regulation or ruling or court decree
applicable to such Selling Stockholder or property of such Selling Stockholder.
(g) Such parts of the Registration Statement under the caption
"Principal and Selling Stockholders" which specifically relate to such Selling
Stockholder do not, and will not on the Closing Date, 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 in light of
circumstances under which they were made, not misleading.
(h) At any time during the period described in paragraph 5(e) hereof,
if there is any change in the information referred to in paragraph 7(g) above,
the Selling Stockholders will promptly notify you of such change.
8. Indemnification. (a) The Company hereby agrees to indemnify and hold
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harmless the Underwriter and each person, if any, who controls the Underwriter
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act,
from and against any and all losses, claims, damages, liabilities and judgments
caused by any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement or the Prospectus (as amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto) or any preliminary prospectus, or caused by any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as such
losses, claims, damages, liabilities or judgments are caused by any such untrue
statement or omission or alleged untrue statement or omission based upon
information relating to the Under-
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writer furnished in writing to the Company by the Underwriter expressly for use
therein.
(b) The Selling Stockholders hereby severally and not jointly agree
to indemnify and hold harmless the Underwriter and each person, if any, who
controls the Underwriter within the meaning of Section 15 of the Act or Section
20 of the Exchange Act, from and against any and all losses, claims, damages,
liabilities and judgments caused by any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement or the
Prospectus (as amended or supplemented if the Company shall have furnished any
amendments or supplements thereto) or any preliminary prospectus, or caused by
any omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading;
provided, however, that such agreement of each Selling Stockholder to indemnify
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and hold harmless shall be limited to losses, claims, damages, liabilities or
judgments caused by any untrue statement or omission or alleged untrue statement
or omission based upon information furnished in writing to the Company by or on
behalf of such Selling Stockholder expressly for use in the Registration
Statement; provided, further, that the aggregate liability of any Selling
-------- -------
Stockholder pursuant to the provisions of this paragraph shall be limited to an
amount equal to the aggregate purchase price received by such Selling
Stockholder from the sale of such Selling Stockholder's Shares hereunder.
(c) In case any action shall be brought against the Underwriter or any
person controlling the Underwriter, based upon any preliminary prospectus, the
Registration Statement or the Prospectus or any amendment or supplement thereto
and with respect to which indemnity may be sought against the Company or the
Selling Stockholders, the Underwriter shall promptly notify the Company and the
Selling Stockholders in writing and the Company and/or the Selling Stockholders
shall assume the defense thereof, including the employment of counsel reasonably
satisfactory to such indemnified party and payment of all fees and expenses.
The Underwriter or any such controlling person shall have the right to employ
separate counsel in any such action and partici-
19
▇▇▇▇ in the defense thereof, but the fees and expenses of such counsel shall be
at the expense of the Underwriter or such controlling person unless (i) the
employment of such counsel shall have been specifically authorized in writing by
the Company, (ii) the Company and/or the Selling Stockholders shall have failed
to assume the defense and employ counsel or (iii) the named parties to any such
action (including any impleaded parties) include both the Underwriter or such
controlling person and the Company or any Selling Stockholder, as the case may
be, and the Underwriter or such controlling person shall have been advised by
such counsel that there may be one or more legal defenses available to it which
are different from or additional to those available to the Company or the
Selling Stockholders, as the case may be (in which case the Company and the
Selling Stockholders shall not have the right to assume the defense of such
action on behalf of the Underwriter or such controlling person, it being
understood, however, that the Company and the Selling Stockholders shall not, in
connection with any one such action or separate but substantially similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the fees and expenses of more than
one separate firm of attorneys (in addition to any local counsel) for the
Underwriter and its controlling persons, which firm shall be designated in
writing by the Underwriter and that all such fees and expenses shall be
reimbursed as they are incurred). Neither the Company nor a Selling Stockholder
shall be liable for any settlement of any such action effected without its
written consent, but if settled with its written consent, the Company and/or
such Selling Stockholder agrees to indemnify and hold harmless the Underwriter
and any such controlling person from and against any loss or liability by reason
of such settlement, subject in the case of the Selling Stockholders to the
limits set forth in subsection (b) above. Notwithstanding the immediately
preceding sentence, if in any case where the fees and expenses of counsel are at
the expense of the indemnifying party and an indemnified party shall have
requested the indemnifying party to reimburse the indemnified party for such
fees and expenses of counsel as incurred, such indemnifying party agrees that it
shall be liable for any settle-
20
ment of any action effected without a written consent if (i) such settlement is
entered into more than ten business days after the receipt by such indemnifying
party of the aforesaid request and (ii) such indemnifying party shall have
failed to reimburse the indemnified party in accordance with such request for
reimbursement prior to the date of such settlement. No indemnifying party shall,
without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened proceeding in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability on claims
that are the subject matter of such proceeding.
(d) The Underwriter agrees to indemnify and hold harmless the Company,
its directors, its officers who sign the Registration Statement, any person
controlling the Company within the meaning of Section 15 of the Act or Section
20 of the Exchange Act, each Selling Stockholder and each person, if any,
controlling such Selling Stockholder within the meaning of Section 15 of the Act
or Section 20 of the Exchange Act to the same extent as the foregoing indemnity
to the Underwriter but only with reference to information relating to the
Underwriter furnished in writing by Underwriter expressly for use in the
Registration Statement, the Prospectus or any preliminary prospectus. In case
any action shall be brought against the Company, any of its directors, any such
officer or and person controlling the Company or any Selling Stockholder or any
person controlling such Selling Stockholder based on the Registration Statement,
the Prospectus or any preliminary prospectus and in respect of which indemnity
may be sought against the Underwriter, the Underwriter shall have the rights and
duties given to the Company and/or the Selling Stockholders (except that if the
Company or any Selling Stockholder shall have assumed the defense thereof, the
Underwriter shall not be required to do so, but may employ separate counsel
therein and participate in the defense thereof but the fees and expenses of such
counsel shall be at the expense of the Underwriter), and the Company, its
directors, any such officers and any person controlling the Company and the
Selling Stockhold-
21
ers and any person controlling such Selling Stockholders shall have the rights
and duties given to the Underwriter, by Section 8(c) hereof.
(e) If the indemnification provided for in this Section 8 is
unavailable to an indemnified party in respect of any losses, claims, damages,
liabilities or judgments referred to therein, then each indemnifying party, in
lieu of indemnifying such indemnified party, shall contribute to the amount paid
or payable by such indemnified party as a result of such losses, claims,
damages, liabilities and judgments (i) in such proportion as is appropriate to
reflect the relative benefits received by the Company and the Selling
Stockholders on the one hand and the Underwriter on the other hand from the
offering of the Shares or (ii) if the allocation provided by clause (i) above is
not permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) above but also the
relative fault of the Company, the Selling Stockholders and the Underwriter in
connection with the statements or omissions which resulted in such losses,
claims, damages, liabilities or judgments, as well as any other relevant
equitable considerations. The relative benefits received by the Company and the
Selling Stockholders and the Underwriter shall be deemed to be in the same
proportion as the total net proceeds from the offering (before deducting
expenses) received by the Selling Stockholders, and the total underwriting
discounts and commissions received by the Underwriter, bear to the total price
to the public of the Shares, in each case as set forth in the table on the cover
page of the Prospectus. The relative fault of the Company and the Selling
Stockholders and the Underwriter shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission to state a material fact relates to information supplied by the
Company, the Selling Stockholders or the Underwriter and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
The Company, the Selling Stockholders and the Underwriter agree that
it would not be just and equitable if contribution pursuant
22
to this Section 8(e) were determined by pro rata allocation or by any other
method of allocation which does not take account of the equitable considerations
referred to in the immediately preceding paragraph. The amount paid or payable
by an indemnified party as a result of the losses, claims, damages, liabilities
or judgments referred to in the immediately preceding paragraph shall be deemed
to include, subject to the limitations set forth above any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 8, (a) the Underwriter shall not be required to
contribute any amount in excess of the amount by which the total price at which
the Shares were offered to the public exceeds the amount of any damages which
the Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission and (b) no Selling
Stockholder shall be required to contribute any amount in excess of the amount
of the aggregate purchase price received by such Selling Stockholder for the
sale of such Selling Stockholder's Shares hereunder. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Selling Stockholders' obligations to
contribute pursuant to this Section 8(e) are several in proportion to the
respective number of such Selling Stockholder's Shares sold hereunder.
(f) Each Selling Stockholder hereby designates the Company as its
authorized agent, upon which process may be served in any action, suit or
proceeding which may be instituted in any state or federal court in the State of
New York by the Underwriter or person controlling the Underwriter asserting a
claim for indemnification or contribution under or pursuant to this Section 8,
and each Selling Stockholder will accept the jurisdiction of such court in such
action, and waives, to the fullest extent permitted by applicable law, any
defense based upon lack of personal
23
jurisdiction or venue. A copy of any such process shall be sent or given to such
Selling Stockholder, at the address for notices specified in Section 13 hereof.
9. Conditions of Underwriter's Obligations. The obligations of the
---------------------------------------
Underwriter to purchase the Shares under this Agreement are subject to the
satisfaction of each of the following conditions:
(a) All the representations and warranties of the Company
contained in this Agreement shall be true and correct on the Closing Date with
the same force and effect as if made on and as of the Closing Date.
(b) The Registration Statement shall have become effective not
later than 5:00 P.M. (and in the case of any registration statement filed
pursuant to Rule 462(b) of the Act, not later than 10 P.M.), New York City time,
on August, 1997 or at such later date and time as you may approve in writing,
and at the Closing Date no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall have been commenced or shall be pending before or contemplated by
the Commission.
(c)(i) Since the date of the latest balance sheet included in the
Registration Statement and the Prospectus, there shall not have been any
material adverse change, or any development involving a prospective material
adverse change, in the condition, financial or otherwise, or in the earnings,
affairs or business prospects, whether or not arising in the ordinary course of
business, of the Company, (ii) since the date of the latest balance sheet
included in the Registration Statement and the Prospectus there shall not have
been any change, or any development involving a prospective material adverse
change, in the capital stock or in the long-term debt of the Company from that
set forth in the Registration Statement and Prospectus, (iii) the Company and
its subsidiaries shall have no liability or obligation, direct or contingent,
which is material to the Company and its subsidiaries, taken as a whole, other
than those reflected in the Registration Statement and the Prospectus and (iv)
on the Closing Date you shall have received a certificate dated the Closing
Date,
24
signed by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇ ▇. ▇▇▇▇, in their capacities as the Chief
Executive Officer and Chief Financial Officer of the Company, confirming the
matters set forth in paragraphs (a), (b), and (c) of this Section 8.
(d) All the representations and warranties of the Selling Stockholders
contained in this Agreement shall be true and correct on the Closing Date (and
any Option Closing Date) with the same force and effect as if made on and as of
the Closing Date (or any Option Closing Date).
(e) You shall have received on the Closing Data an opinion
(satisfactory to you and counsel for the Underwriter), dated the Closing Date,
of ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, outside counsel for the Company, to the effect that:
i) this Agreement has been duly authorized, executed and
delivered by the Company;
ii) the authorized capital stock of the Company, including the
Common Stock, conforms as to legal matters to the description thereof contained
in the Prospectus;
iii) such counsel has been advised by the Commission by telephone
that the Registration Statement has become effective under the Act, and to such
counsel's knowledge after due inquiry no stop order suspending its effectiveness
has been issued and no proceedings for that purpose are pending before or
contemplated by the Commission;
iv) the statements under the caption "Description of Capital
Stock" in the Prospectus and Item 15 of Part II of the Registration Statement
25
insofar as such statements constitute a summary of legal matters, documents or
proceedings referred to therein, fairly present the information called for with
respect to such legal matters, documents and proceedings;
v) the execution, delivery and performance of this Agreement by
the Company, compliance by the Company with all the provisions hereof and the
consummation of the transactions contemplated hereby will not require any
consent, approval, authorization or other order of any California or Federal
court, regulatory body, administrative agency or other governmental body (except
as such may be required under the Act or other securities or Blue Sky laws) and
will not conflict with or constitute a breach of any of the terms or provisions
of, or a default under, the charter or by-laws, as the case may be, of the
Company or TRC;
vi) the Company is not an "investment company" or a company
"controlled" by an "investment company" within the meaning of the Investment
Company Act of 1940, as amended; and
vii)(1) The Company's Annual Report on Form 10-K for its fiscal year
ended December 31, 1996 (the "1996 Form 10-K") and its Quarterly Reports on Form
10-Q for the periods ended March 31, 1997 and June 30, 1997, which were filed
pursuant to the Exchange Act and are incorporated by reference in the Prospectus
(except for financial statements, schedules and other financial data as to which
no opinion need be expressed), complied when so filed as to form in all material
respects with the Exchange Act and the applicable rules and regulations of the
Commission thereunder, (2) the Registration Statement and the Prospectus and any
supplement or amendment thereto (except for financial data, as aforesaid) comply
as to form in all material respects with the Act, and (3) such counsel believes
that (except for financial data, as aforesaid) the Registration Statement
(including the documents incorporated by reference therein) and the prospectus
included therein at the time the Registration Statement became effective did not
contain any 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, and that the Prospectus (including the documents incorpo-
26
rated by reference therein), as amended or supplemented, if applicable (except
for financial statements, as aforesaid) does not contain any untrue statement of
a material fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
In giving the opinion specified in (v) above, such counsel may rely
upon an opinion or opinions of ▇▇▇▇▇▇▇▇▇, Will & ▇▇▇▇▇, regulatory counsel for
the Company rendered pursuant to paragraph (h) below. In giving such opinion
with respect to the matters covered by clause (vii) such counsel may state that
their opinion and belief are based upon their participation in the preparation
of the Registration Statement and Prospectus and any amendments or supplements
thereto and documents incorporated therein by reference and review and
discussion of the contents thereof, but are without independent check or
verification except as specified.
(f) You shall have received on the Closing Date an opinion
(satisfactory to you and counsel for the Underwriter), dated the Closing Date,
of counsels to each of the Selling Stockholders named in Schedule I hereto, to
the effect that:
i) this Agreement has been duly authorized, executed and
delivered by such Selling Stockholder;
ii) the execution, delivery and performance of this Agreement
by such Selling Stockholder, compliance by such Selling Stockholder with all the
provisions hereof and the consummation of the transactions contemplated hereby
will not require any consent, approval, authorization or other order of any
California or Federal court, regulatory body, administrative agency or other
governmental body (except as such may be required under the Act or other
securities or Blue Sky laws) and will not conflict with or constitute a breach
of any of the terms or provisions of, or a default under, the charter, by-laws
or partnership agreement, as the case may be, of such Selling Stockholder;
iii) except as disclosed in the Prospectus or the Shareholders
Agreement, no such Selling Stockholder has any right to require registration of
27
shares of Common Stock or any other security of the Company and with respect to
the offer of the Shares all such rights have been satisfied or waived;
iv) the Custody Agreement has been duly authorized, executed
and delivered by such Selling Stockholder and is a valid and binding agreement
of such Selling Stockholder;
v) such Selling Stockholder has full legal right, power and
authority, and any approval required by law (other than any approval imposed by
the applicable state securities and Blue Sky laws) to sell, assign, transfer and
deliver the Shares to be sold by him in the manner provided in this Agreement
and the Custody Agreement;
vi) such Selling Stockholder will be, immediately prior to
the closing on the Closing Date, the sole registered owner of the Shares to be
sold by such Selling Stockholder at such time pursuant to this Agreement; upon
delivery and payment for such Shares, and assuming the Underwriter acquired such
Shares in good faith and without notice of any adverse claim, the Underwriter
will acquire all rights and interests in such Shares free of any adverse claim;
and
vii) the power of attorney signed by such Selling Stockholder
appointing ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇ ▇. ▇▇▇▇, or any one of
them, as his attorney-in-fact to the extent set forth therein with regard to the
transactions contemplated hereby and by the Registration Statement has been duly
authorized, executed and delivered by or on behalf of such Selling Stockholder
and is a valid and binding instrument of such Selling Stockholder, and pursuant
to such power of attorney, such Selling Stockholder has authorized ▇▇▇▇▇▇▇ ▇.
▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇ ▇. ▇▇▇▇, or any one of them, to execute and
deliver on his behalf this Agreement and any other document necessary or
desirable in connection with the transactions contemplated hereby and to deliver
the Shares to be sold by such Selling Stockholder pursuant to this Agreement.
In giving the opinion specified in (ii) above, such counsel may rely
upon an opinion or opinions of
28
▇▇▇▇▇▇▇▇▇, Will & ▇▇▇▇▇, regulatory counsel for the Company rendered pursuant to
paragraph (h) below.
(g) You shall have received on the Closing Date an opinion
(satisfactory to you and counsel for the Underwriter), dated the Closing Date,
of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, General Counsel of the Company, to the effect that:
i) the Company is duly incorporated, validly existing and in
good standing as a corporation under the laws of the State of Delaware and has
the corporate power and authority required to carry on its business as it is
currently being conducted and to own, lease and operate its properties;
ii) each Subsidiary of the Company has been duly incorporated or
formed, is validly existing as a corporation in good standing under the laws of
its jurisdiction of incorporation or as a partnership duly formed and has the
corporate or partnership power and authority, as the case may be, to carry on
its business as it is currently being conducted and to own, lease and operate
its properties, and, to such counsel's knowledge after due inquiry, each
corporate Subsidiary is duly qualified and is in good standing as a foreign
corporation and each Subsidiary is authorized to do business in each
jurisdiction in which the nature of its business or its ownership or leasing of
property requires such qualification or authorization, except where the failure
to be so qualified or authorized and be in good standing could not, in the
aggregate, reasonably be expected to have a material adverse effect on the
business, operations, properties, or financial or other condition of the Company
and its Subsidiaries, considered as a whole;
iii) except as disclosed in the Prospectus,(i) all of the
outstanding shares of capital stock of each of the Company's corporate
Subsidiaries have been duly authorized and validly issued and are fully paid and
non-assessable and to such counsel's knowledge after due inquiry, in the case of
TRC, are wholly owned by the Company or are otherwise, owned directly or
indirectly by the Company, free and clear of any Liens and (ii) all of the
outstanding partnership interests in each of the Company's partnership
Subsidiaries have been duly authorized by its respective partner-
29
ship agreement and validly issued and to such counsel's knowledge after due
inquiry the partnership interests in such partnerships that are not owned by
unaffiliated third parties are owned directly or indirectly by the Company, free
and clear of any Liens and, to such counsel's knowledge, any partnership capital
contribution obligations of the Company in each partnership Subsidiary have been
satisfied;
iv) all the outstanding shares of Common Stock have been duly
authorized and validly issued and are fully paid, non-assessable and not subject
to any preemptive or similar rights;
v) neither the Company nor any of its Subsidiaries is in
violation of its respective charter, by-laws or partnership agreement, as the
case may be, and, to the best of such counsel's knowledge after due inquiry,
neither the Company nor any of its Subsidiaries is in default in any material
respect, and no condition exists that with notice or lapse of time or both would
constitute a material default, in the performance of any material obligation,
agreement or condition contained in any bond, debenture, note or any other
evidence of indebtedness or in any other agreement, indenture or instrument to
which the Company or any of its Subsidiaries is a party or by which it or any of
its Subsidiaries or their respective property is bound except to the extent such
violation or default, if any, could not reasonably be expected to have a
material adverse effect on the business, operations, properties or financial or
other condition of the Company and its Subsidiaries, considered as a whole;
vi) the execution, delivery and performance of this Agreement,
compliance by the Company with all the provisions hereof and the consummation of
the transactions contemplated hereby will not conflict with or constitute a
breach of any of the terms or provisions of, or a default under any agreement,
indenture or other instrument to which the Company or any of its subsidiaries is
a party or by which the Company or any of its subsidiaries or their respective
properties are bound, or violate or conflict with any laws, administrative
regulations or rulings or court decrees applicable to the Company or any of its
subsidiaries or their respective properties, except to the extent such
violation,
30
conflict, breach or default, if any, could not reasonably be expected to have a
material adverse effect on the business, operations, properties or financial or
other condition of the Company and its Subsidiaries, considered as a whole;
vii) after due inquiry, such counsel does not know of any legal or
governmental proceeding pending or threatened to which the Company or any of its
Subsidiaries is a party or to which any of their respective property is subject
which is required to be described in the Registration Statement or the
Prospectus and is not so described, or of any contract or other document which
is required to be described in the Registration Statement or the Prospectus or
is required to be filed as an exhibit to the Registration Statement which is not
described or filed as required;
viii) other than as set forth in the Shareholders Agreement or
otherwise described in the Prospectus, to the best of such counsel's knowledge,
after due inquiry, no holder of any security of the Company has any right to
require registration of shares of Common Stock or any other security of the
Company;
ix) to the best of such counsel's knowledge, after due inquiry,
all leases to which the Company or any of its subsidiaries is a party are valid
and binding and no default has occurred or is continuing thereunder, which might
result in any material adverse change in the business, prospects, financial
condition or results of operation of the Company and its subsidiaries taken as a
whole, and the Company and its subsidiaries enjoy peaceful and undisturbed
possession under all such leases to which any of them is a party as lessee with
such exceptions as do not materially interfere with the use made by the Company
or such subsidiary;
x) each of the Facilities has such licenses, certifications and
authorizations of governmental or regulatory authorities which are required in
connection with the provision by the Facilities of dialysis services under
applicable licensure, Medicare or Medicaid laws in the manner described in the
Prospectus and which are required to be held by the Facilities as providers of
dialysis services under the Medicare or Medicaid programs; and
31
xi)(1) each document filed pursuant to the Exchange Act and
incorporated by reference in the Registration Statement and the Prospectus
(except for financial statements, schedules and other financial data as to which
no opinion need be expressed) complied when so filed as to form in all material
respects with the Exchange Act and the applicable rules and regulations of the
Commission thereunder, (2) the Registration Statement and the Prospectus and any
supplement or amendment thereto (except for financial statements, schedules and
other financial data as to which no opinion need be expressed) comply as to form
in all material respects with the Act, and (3) such counsel believes that
(except for financial data, as aforesaid) the Registration Statement (including
the documents incorporated by reference therein) and the prospectus included
therein at the time the Registration Statement became effective did not contain
any 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, and that the Prospectus (including the documents incorporated by
reference therein), as amended or supplemented, if applicable (except for
financial statements, as aforesaid) does not contain any untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
In giving the opinions specified in (vi), (vii) and (x) above, such
counsel may rely upon an opinion or opinions of ▇▇▇▇▇▇▇▇▇, Will & ▇▇▇▇▇,
regulatory counsel for the Company rendered pursuant to paragraph (h) below. In
giving such opinion with respect to the matters covered by clause (xi) such
counsel may state that such counsel's opinion and belief are based upon their
participation in the preparation of the Registration Statement and Prospectus
and any amendments or supplements thereto and documents incorporated therein by
reference and review and discussion of the contents thereof, but are without
independent check or verification except as specified.
(h) You shall have received on the Closing Date an opinion
(satisfactory to you and to our counsel), dated the Closing Date, of ▇▇▇▇▇▇▇▇▇,
Will & ▇▇▇▇▇, regulatory counsel for the Company, to the effect that:
32
i) the statements under the captions "Risk Factors--Dependence
on Medicare, Medicaid and Other Sources of Reimbursement" and "--Operations
Subject to Government Regulation" in the Prospectus and "Business--
Operations--Medicare Reimbursement" and "Business--Governmental Regulation"
in the 1996 Form 10-K, insofar as such statements constitute a summary of
legal matters, documents or proceedings referred to therein, are fair
summaries in all material respects of the information called for with
respect to such legal matters, documents and proceedings; and
ii) the execution, delivery and performance of this Agreement
by the Company will not require any consent, approval, authorization or
order of any court, regulatory body, administrative agency or other
governmental body in connection with the provision by the dialysis
facilities owned by the Company or its Subsidiaries (the "Facilities") of
dialysis services under applicable licensure, Medicare and Medicaid laws in
the manner described in the Prospectus and the 1996 Form 10-K or which
could affect the status of the Facilities as providers of dialysis services
under the Medicare or Medicaid programs other than presently effective
actions, consents disclosures or filings that have already been made on or
prior to the date hereof.
The opinions of ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, counsels for the Selling
Stockholders, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇, Will & ▇▇▇▇▇, described in
paragraphs (e), (f), (g) and (h) above shall be rendered to you at the
request of the Company and shall so state therein.
(i) You shall have received on the Closing Date an opinion, dated
the Closing Date, of Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP counsel for
the Underwriter, as to the matters referred to in clauses (i), (iii), (iv)
(but only with respect to the statements under the captions "Description of
Capital Stock") and (vii)(3) of the foregoing paragraph (e). In giving
such opinion with respect to the matters covered by clause (vii)(3) such
counsel may state that their opinion and belief are
33
based upon their participation in the preparation of the Registration
Statement and Prospectus and any amendments or supplements thereto (other
than the documents incorporated by reference) and review and discussion of
the contents thereof (including documents incorporated by reference), but
are without independent check or verification except as specified.
(j) You shall have received letters on and as of the Closing Date, in
form and substance satisfactory to you, from Price Waterhouse, LLP and KPMG Peat
Marwick, LLP, independent public accountants, with respect to the financial
statements and certain financial information contained in the Registration
Statement and the Prospectus and substantially in the form and substance of the
letter delivered to you by such accountants on the date of this Agreement.
(k) The Company shall not have failed at or prior to the Closing Date
to perform or comply with any of the agreements herein contained and required to
be performed or complied with by the Company at or priority the Closing Date.
10. Effective Date of Agreement and Termination. This Agreement shall
-------------------------------------------
become effective upon the later of (i) execution of this Agreement and (ii) when
notification of the effectiveness of the Registration Statement has been
released by the Commission.
This Agreement may be terminated at any time prior to the Closing Date
by you by written notice to the Company if any of the following has occurred:
(i) since the respective dates as of which information is given in the
Registration Statement and the Prospectus, any material adverse change or
development involving a prospective material adverse change in the condition,
financial or otherwise, of the Company and its Subsidiaries, taken
34
as a whole, or the earnings, affairs, or business prospects of the Company and
its Subsidiaries, taken as a whole, whether or not arising in the ordinary
course of business, which would, in your judgment, make it impracticable to
market the Shares on the terms and in the manner contemplated in the Prospectus,
(ii) any outbreak or escalation of hostilities or other national or
international calamity or crisis or change in economic conditions the effect of
which on the financial markets of the United States or elsewhere, in your
judgment, is material and adverse and would, in your judgment, make it
impracticable to market the Shares on the terms.and in the manner contemplated
in the Prospectus, (iii) the suspension or material limitation of trading in
securities on the New York Stock Exchange, the American Stock Exchange or the
Nasdaq Stock Market or limitation on prices for securities on any such exchange
or the National Market System, (iv) the enactment, publication, decree or other
promulgation of any federal or state statute, regulation, rule or order of any
court or other governmental authority that in your opinion materially and
adversely affects, or will materially and adversely affect, the business or
operations of the Company and its Subsidiaries, taken as a whole, (v) the
declaration of a banking moratorium by either federal or New York State
authorities or (vi) the taking of any action by any federal, state or local
government or agency in respect of its monetary or fiscal affairs which in your
opinion has a material adverse effect on the financial markets in the United
States.
35
11. Agreements of the Selling Stockholders. Each Selling Stockholder
--------------------------------------
severally agrees with you and the Company:
(a) To pay or to cause to be paid all transfer taxes with respect to the
Shares to be sold by such Selling Stockholder; and
(b) To take all reasonable actions in cooperation with the Company and the
Underwriter to cause the Registration Statement to become effective at the
earliest possible time, to do and perform all things to be done and performed
under this Agreement prior to
36
the Closing Date and to satisfy all conditions precedent to the delivery of the
Shares pursuant to this Agreement.
12. Miscellaneous. Notices given pursuant to any provision of this
-------------
Agreement shall be addressed as follows: (a) if; to the Company, to TOTAL
RENAL CARE HOLDINGS, INC., ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇. ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, and (b) if to the Underwriter, to ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇ Securities Corporation, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
Attention: Syndicate Department, or in any case to such other address as the
person to be notified may have requested in writing.
The respective indemnities, contribution agreements, representations,
warranties and other statements of the Selling Stockholders, the Company, its
officers and directors and of the Underwriter set forth in or made pursuant to
this Agreement shall remain operative and in full force and effect, and will
survive delivery of and payment for the Shares, regardless of (i) any
investigation, or statement as to the results thereof, made by or on behalf of
the Underwriter or by or on behalf of the Selling Stockholders, the officers or
directors of the Company or any controlling person of the Company or the Selling
Stockholders, (ii) acceptance of the Shares and payment for them hereunder and
(iii) termination of this Agreement.
If this Agreement shall be terminated by the Underwriter because of
any failure or refusal on the part of the Company or the Selling Stockholders to
comply with the terms or to fulfill any of the conditions of this Agreement, the
Company agrees to reimburse the Underwriter for all out-of-pocket expenses
(including the fees and disbursements of counsel) reasonably incurred by them.
Except as otherwise provided, this Agreement has been and is made
solely for the benefit of and shall be binding upon the Company, the Selling
Stockholders, the Underwriter, any controlling persons referred to herein and
their respective successors and assigns, all as and to the extent provided
37
in this Agreement, and no other person shall acquire or have any rights under or
by virtue of this Agreement. The term "successors and assigns" shall not include
a purchaser of any of the Shares from the Underwriter merely because of such
purchase.
This Agreement shall be governed and construed in accordance with the
laws of the State of New York.
This Agreement may be signed in various counterparts which together
shall constitute one and the same instrument.
38
Please confirm that the foregoing correctly sets forth the agreement
among the Company, the Selling Stockholders and the Underwriter.
Very truly yours,
TOTAL RENAL CARE
HOLDINGS, INC.
By:
---------------------------
Title:
THE SELLING STOCKHOLDERS NAMED
IN SCHEDULE I HERETO
By:
---------------------------
[Attorney-in-fact]
▇▇▇▇▇▇▇▇▇, LUFKIN & ▇▇▇▇▇▇▇▇
SECURITIES CORPORATION
By:
---------------------------
Title:
SCHEDULE I
----------
Selling Stockholders
--------------------
ANNEX I
-------
Required Lock-ups
-----------------
▇▇▇▇▇▇ M.G. Chaltiel
▇▇▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇ Healthcare Corporation