Exhibit 1.2
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COMMUNITY HEALTH SYSTEMS, INC.
(a Delaware corporation)
$250,000,000 % Convertible Subordinated Notes due 2008
UNDERWRITING AGREEMENT
Dated: October ___, 2001
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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) OFFICER'S CERTIFICATES............................................15
SECTION 2. Sale and Delivery to Underwriters; Closing........................15
(a) INITIAL SECURITIES................................................15
(b) OPTION SECURITIES.................................................16
(c) PAYMENT...........................................................16
SECTION 3. Covenants of the Company..........................................17
(a) COMPLIANCE WITH SECURITIES REGULATIONS AND COMMISSION REQUESTS....17
(b) FILING OF AMENDMENTS..............................................17
(c) DELIVERY OF REGISTRATION STATEMENTS...............................17
(d) DELIVERY OF PROSPECTUSES..........................................18
(e) CONTINUED COMPLIANCE WITH SECURITIES LAWS.........................18
(f) BLUE SKY QUALIFICATIONS...........................................18
(g) RULE 158..........................................................19
(h) USE OF PROCEEDS...................................................19
(i) LISTING...........................................................19
(j) RESERVE CONVERSION SHARES.........................................19
(k) RESTRICTION ON SALE OF SECURITIES.................................19
(l) REPORTING REQUIREMENTS............................................20
SECTION 4. Payment of Expenses...............................................20
(a) EXPENSES..........................................................20
(b) TERMINATION OF AGREEMENT..........................................21
SECTION 5. Conditions of Underwriters' Obligations...........................21
(a) EFFECTIVENESS OF REGISTRATION STATEMENT...........................21
(b) OPINION OF COUNSEL FOR THE COMPANY................................21
(c) OPINION OF COUNSEL FOR THE UNDERWRITERS...........................22
(d) OFFICERS' CERTIFICATE.............................................22
(e) ACCOUNTANT'S COMFORT LETTER.......................................22
(f) BRING-DOWN COMFORT LETTER.........................................22
(g) APPROVAL OF LISTING...............................................22
(h) DEBT RATING.......................................................22
(i) NO OBJECTION......................................................23
(j) LOCK-UP AGREEMENTS................................................23
(k) INDENTURE AND SECURITIES..........................................23
(l) CONDITIONS TO PURCHASE OF OPTION SECURITIES.......................23
(m) ADDITIONAL DOCUMENTS..............................................24
(n) TERMINATION OF AGREEMENT..........................................24
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TABLE OF CONTENTS
(continued)
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SECTION 6. Indemnification...................................................24
(a) INDEMNIFICATION OF THE UNDERWRITERS BY THE COMPANY AND CHS........24
(b) INDEMNIFICATION OF COMPANY, DIRECTORS AND OFFICERS................26
(c) ACTIONS AGAINST PARTIES; NOTIFICATION.............................26
(d) SETTLEMENT WITHOUT CONSENT IF FAILURE TO REIMBURSE................27
SECTION 7. Contribution......................................................27
SECTION 8. Representations, Warranties and Agreements to Survive Delivery....28
SECTION 9. Termination of Agreement..........................................29
(a) TERMINATION; GENERAL..............................................29
(b) LIABILITIES.......................................................29
SECTION 10. Default by One or More of the Underwriters........................29
SECTION 11. Notices...........................................................30
SECTION 12. Parties...........................................................30
SECTION 13. GOVERNING LAW AND TIME............................................31
SECTION 14. Effect of Headings................................................31
FORM OF OPINION OF ▇▇▇▇▇, ▇▇▇▇▇,.....................................................1
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇...........................................................1
TO BE DELIVERED PURSUANT TO..........................................................1
SECTION 5(b)(ii) ....................................................................1
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TABLE OF CONTENTS
(continued)
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SCHEDULES
Schedule A - List of Underwriters
Schedule B - List of Persons Subject to Lock-Up
Exhibit A-1 - Form of Opinion of Company's General Counsel
Exhibit A-2 - Form of Opinion of Fried, Frank, Harris, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
Exhibit B - Form of Lock-Up Letter
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COMMUNITY HEALTH SYSTEMS, INC.
(a Delaware corporation)
$250,000,000 % Convertible Subordinated Notes due 2008
UNDERWRITING AGREEMENT
October __, 2001
▇▇▇▇▇▇▇, Sachs & Co.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated
Credit Suisse First Boston Corporation
Banc of America Securities LLC
▇.▇. ▇▇▇▇▇▇ Securities Inc.
UBS Warburg LLC
c/o Goldman, ▇▇▇▇▇ & Co.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Community Health Systems, Inc., a Delaware corporation (the "Company")
and CHS/Community Health Systems, Inc., a Delaware corporation ("CHS"), confirm
their respective agreements with ▇▇▇▇▇▇▇, Sachs & Co. ("▇▇▇▇▇▇▇ ▇▇▇▇▇"), and
each of the other Underwriters named in Schedule A hereto (collectively, the
"Underwriters", which term shall also include any underwriter substituted as
hereinafter provided in Section 10 hereof), with respect to the issue and sale
by the Company, and the purchase by the Underwriters, acting severally and not
jointly, of an aggregate of $250,000,000 principal amount of the convertible
subordinated notes of the Company due 2008 (the "Convertible Notes"),
convertible into shares of common stock, par value $.01 per share, of the
Company ("Common Stock"), set forth in said Schedules A hereto, and with respect
to the grant by the Company to the Underwriters, acting severally and not
jointly, of the option described in Section 2(b) hereof to purchase all or any
part of up to an aggregate of $37,500,000 principal amount of the Convertible
Notes for the sole purpose of covering sales of Convertible Notes in excess of
the aggregate principal amount of the Initial Securities (as hereinafter
defined). The aforesaid aggregate of $250,000,000 principal amount of the
Convertible Notes (the "Initial Securities") to be purchased by the Underwriters
and all or any part of the aggregate of $37,500,000 principal amount of the
Convertible Notes subject to the option described in Section 2(b) hereof (the
"Option Securities") are hereinafter called, collectively, the "Securities".
The Underwriters will concurrently enter into an Agreement Among
Underwriters dated the date hereof providing for the coordination of certain
transactions among the Underwriters under the direction of ▇▇▇▇▇▇▇ ▇▇▇▇▇.
The Company and CHS understand that the Underwriters propose to make a
public offering of the Securities as soon as the Underwriters deem advisable
after this Agreement has been executed and delivered. It is also understood and
agreed by all parties that the Company and CHS are concurrently entering into an
agreement (the "Common Stock Agreement") with the underwriters named in Schedule
A thereto, providing for the sale by the Company of up to a total of 13,800,000
shares of Common Stock (the "Shares"), including the over-allotment option
thereunder. The offering of the Securities and the offering of the Shares,
however, are independent offerings and are not conditioned on each other. Two
forms of prospectuses are to be used in connection with the offering and sale of
the Securities and the Shares contemplated by the foregoing, one relating to the
Securities hereunder and the other relating to the Shares. No requirement exists
that the Underwriters sell the Shares in order to sell the Securities.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-1 (No. 333-69064), as amended
by Amendment No. 1 filed on September 21, 2001, covering the registration of the
Securities and the Common Stock issuable upon conversion thereof (the
"Conversion Shares") under the Securities Act of 1933, as amended (the "1933
Act"), including the related preliminary prospectus or prospectuses related to
the Securities. Promptly after execution and delivery of this Agreement, the
Company will prepare and file a prospectus related to the Securities 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. 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 prospectus related to the Securities 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
Prospectus related to the Securities in the forms first furnished to the
Underwriters for use in connection with the offering of the Securities are
herein called the "Prospectus". For purposes of this Agreement, all references
to the Registration Statement, any preliminary prospectus, the Prospectus or
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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 Underwriter as of the date hereof, as of the
Closing Time referred to in Section 2(c) hereof, and if any Option Securities
are purchased, as of each Date of Delivery referred to in Section 2(b) hereof,
and agrees with each 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 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
the Trust Indenture Act of 1939, as amended (the "Trust Indenture
Act"), including the rules and regulations of the Commission under the
Trust Indenture Act (the "Trust Indenture 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 the Prospectus nor
any amendments or supplements thereto (including any prospectus
wrapper), at the time the Prospectus or any amendments or supplements
thereto were issued and at the Closing Time (and, if any 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 Prospectus made in reliance upon and in conformity
with information furnished to
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the Company in writing by any Underwriter expressly for use in the
Registration Statement or the Prospectus.
Each preliminary prospectus and the 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 1933 Act,
complied when so filed in all material respects with the 1933 Act
Regulations, the Trust Indenture Act and the Trust Indenture Act
Regulations and each preliminary prospectus and the Prospectus
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.
(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 Prospectus,
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 Prospectus 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 Prospectus 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 Prospectus, except as otherwise stated therein, (A)
there has been no material
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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 operate its properties and to conduct its
business as described in the Prospectus and to enter into and perform
its obligations under this Agreement, the Securities and the Indenture
(as hereinafter defined) 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
Prospectus 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
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(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
Prospectus 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 Prospectus, 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 (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 Prospectus 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
Prospectus or pursuant to the exercise of convertible securities or
options referred to in the Prospectus). The shares of issued and
outstanding capital stock of the Company 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 Prospectus, 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 Prospectus 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 has been
duly authorized, executed and delivered by the Company.
(ix) AUTHORIZATION AND DESCRIPTION OF SECURITIES. The
Securities to be purchased by the Underwriters from the Company have
been duly authorized for
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issuance and sale to the Underwriters pursuant to this Agreement, and,
when issued and delivered by the Company pursuant to this Agreement and
the Indenture against payment of the consideration set forth herein,
will be validly executed, authenticated, issued and delivered and will
constitute valid and legally binding obligations of the Company,
entitled to the benefits provided by the Indenture, to be dated as of
October , 2001 (the "Indenture"), between the Company and First Union
National Bank as trustee (the "Trustee), under which the Securities are
to be issued which will be substantially in the form filed as an
exhibit to the Registration Statement; the Conversion Shares have been
duly authorized and reserved for issuance and, when issued and
delivered in accordance with the provisions of the Securities and the
Indenture, will be validly issued, fully paid and non-assessable and
will conform, in all material respects, to all statements relating to
Common Stock contained in the Prospectus and such description conforms
to the rights set forth in the Company's Restated Certificate of
Incorporation; the Indenture has been duly authorized and duly
qualified under the Trust Indenture Act and when executed by the
Company and the Trustee will constitute a valid and legally binding
instrument, enforceable in accordance with its terms, subject, as to
enforcement, to bankruptcy, insolvency, reorganization and other laws
of general applicability relating to or affecting creditors' rights and
to general equity principles; and the Securities and the Indenture
conform, in all material respects, to all statements relating thereto
contained in the Prospectus. No holder of the Securities or the
Conversion Shares will be subject to personal liability by reason of
being such a holder; and the issuance of neither the Securities nor the
Conversion Shares is 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; the execution, delivery and
performance of this Agreement, the Securities and the Indenture and the
consummation of the transactions contemplated in this Agreement, the
Securities, the Indenture and in the Registration Statement (including
the issuance and sale of the Securities and the Conversion Shares (when
issued and delivered in accordance with the terms of the Securities and
the Indenture) and the use of the proceeds from the sale of the
Securities as described in the Prospectus under the caption "Use of
Proceeds") and compliance by the Company and CHS with their obligations
under this
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Agreement, the Securities and the Indenture have been duly authorized
by all necessary corporate action and, after giving effect to the use
of proceeds as contemplated in the Prospectus 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 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, or the
performance by the Company or CHS of their obligations hereunder; 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
8
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 Prospectus 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.
(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 or the Conversion Shares (when
issued and delivered in accordance with the terms of the Securities and
the Indenture) under this Agreement, the consummation of the
transactions contemplated by this Agreement, the Securities or the
Indenture, except such as have been already obtained or as may be
required under the 1933 Act, the 1933 Act Regulations, the Trust
Indenture Act or the Trust Indenture 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")
9
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 and CHS's
knowledge with respect to the three hospitals acquired by the Company
since May 1, 2001).
(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
10
Federal Medicare and Medicaid statutes including, but not limited to,
42 U.S.C. ▇▇.▇▇. 1320a-7 (Program Exclusion), 1320a-7a (Civil Monetary
Penalties), 1320a-7b (the Anti-kickback Statute), 42 U.S.C. ss. 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 U.S.C. ▇▇.▇▇. 3729-32, Federal Criminal False Claims Act, 18 U.S.C.
ss. 287, False Statements Relating to Health Care Matters, 18 U.S.C.
ss. 1035, Health Care Fraud, 18 U.S.C. ss. 1347, or the federal Food,
Drug & Cosmetics Act, 21 U.S.C. ss. 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), 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.
11
(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 Prospectus, 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 Prospectus 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 Prospectus, 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 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
and the Conversion Shares (when issued and delivered in accordance with
the terms of the Securities and the Indenture) as herein contemplated
and the application of the net proceeds therefrom as described in the
Prospectus 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
12
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 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
Prospectus 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, 2000; and neither the Company nor CHS has any
13
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 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
14
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
Prospectus, 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 Prospectus 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 Prospectus 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.
(b) OFFICER'S CERTIFICATES. Any certificate signed by any officer of
the Company delivered to ▇▇▇▇▇▇▇ Sachs, the Underwriters 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.
SECTION 2. SALE AND DELIVERY TO 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 agrees to sell to each Underwriter, severally and not
jointly, and each Underwriter, severally and not jointly, agrees to purchase
from the Company, at a purchase price of __% of the principal amount thereof the
principal amount of Initial Securities set forth in Schedule A opposite the name
of such Underwriter, plus any additional number of Initial Securities which such
Underwriter may become obligated to purchase pursuant to the provisions of
Section 10 hereof.
15
(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 Company hereby grants an option to the Underwriters, severally
and not jointly, to purchase from the Company an additional principal amount of
Option Securities, at a purchase price of % of the principal amount thereof. 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 for the sole purpose of covering
sales of Securities in excess of the aggregate principal amount of the Initial
Securities which may be made in connection with the offering and distribution of
the Initial Securities upon notice by ▇▇▇▇▇▇▇ ▇▇▇▇▇ to the Company setting forth
the principal amount of Option Securities as to which the several Underwriters
are then exercising the option and the time and date of payment and delivery for
such Option Securities. Any such time and date of delivery for the Option
Securities (a "Date of Delivery") shall be determined by ▇▇▇▇▇▇▇ Sachs, 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 principal amount of the Option
Securities, each of the Underwriters, acting severally and not jointly, will
purchase that proportion of the total principal amount of Option Securities then
being purchased which the principal amount of Initial Securities set forth in
Schedule A opposite the name of such Underwriter bears to the total principal
amount of Initial Securities, subject in each case to such adjustments as
▇▇▇▇▇▇▇ ▇▇▇▇▇ 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 ▇▇▇▇▇▇▇ Sachs and the Company, 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 such date as shall be agreed upon by
▇▇▇▇▇▇▇ ▇▇▇▇▇ and the Company (such time and date of payment and delivery being
herein called "Closing Time").
In addition, in the event that any or all of the Option Securities are
purchased by the Underwriters, payment of the purchase price for, and delivery
of certificates for, such Option Securities shall be made at the above-mentioned
offices, or at such other place as shall be agreed upon by ▇▇▇▇▇▇▇ Sachs and the
Company, on each Date of Delivery as specified in the notice from ▇▇▇▇▇▇▇ ▇▇▇▇▇
to the Company.
The Securities to be purchased by each Underwriter hereunder will be
represented by one or more definitive global securities in book-entry form which
will be deposited by or on behalf of the Company with The Depository Trust
Company ("DTC") or its designated custodian. The Company will deliver the
Securities to ▇▇▇▇▇▇▇ Sachs, for the account of each Underwriter, against
payment by or on behalf of such Underwriter of
16
the purchase price therefore by wire transfer of Federal (same-day) funds to the
account specified by the Company to ▇▇▇▇▇▇▇ ▇▇▇▇▇ at least forty-eight hours in
advance, by causing DTC to credit the Securities to the account of ▇▇▇▇▇▇▇ Sachs
at DTC. The Company will cause the certificates representing the Securities to
be made available to ▇▇▇▇▇▇▇ ▇▇▇▇▇ for checking at least twenty-four hours prior
to the Date of Delivery at the office of DTC or its designated custodian (the
"Designated Office").
SECTION 3. COVENANTS OF THE COMPANY.
The Company covenants with each. 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 ▇▇▇▇▇▇▇ Sachs immediately, and confirm the notice in writing,
(i) when any post-effective amendment to the Registration Statement shall become
effective, or any supplement to the Prospectus or any amended Prospectus 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 Prospectus 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 or the Conversion Shares 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 or suspension of the
qualification of the Securities and the Conversion Shares and, if any stop order
or suspension is issued, to obtain the lifting thereof at the earliest possible
moment.
(b) FILING OF AMENDMENTS. The Company will give ▇▇▇▇▇▇▇ ▇▇▇▇▇ 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 Prospectus, will furnish ▇▇▇▇▇▇▇ Sachs 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 ▇▇▇▇▇▇▇ ▇▇▇▇▇ or counsel for ▇▇▇▇▇▇▇ Sachs shall reasonably object.
(c) DELIVERY OF REGISTRATION STATEMENTS. The Company has furnished or
will deliver to the Underwriters and counsel for the Underwriters, without
charge, signed
17
copies of the Registration Statement as originally filed and of each amendment
thereto (including exhibits filed therewith or incorporated by reference
therein) and copies of all signed consents and certificates of experts, and will
also deliver to the Underwriters, without charge, a conformed copy of the
Registration Statement as originally filed and of each amendment thereto
(without exhibits) for each of the Underwriters. The copies of the Registration
Statement and each amendment thereto furnished to the 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
Underwriter, without charge, as many copies of each preliminary prospectus as
such 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 Underwriter, without charge, during the period when the
Prospectus is required to be delivered under the 1933 Act or the 1934 Act, such
number of copies of the Prospectus (as amended or supplemented) as such
Underwriter may reasonably request. The Prospectus and any amendments or
supplements thereto furnished to the 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, the 1933 Act Regulations, the Trust Indenture Act and the
Trust Indenture Act Regulations so as to permit the completion of the
distribution of the Securities as contemplated in this Agreement and in the
Prospectus. 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 Underwriters or for the Company, to amend the Registration
Statement or amend or supplement any Prospectus in order that the Prospectus
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, the 1933
Act Regulations, the Trust Indenture Act or the Trust Indenture 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 Prospectus
comply with such requirements, and the Company will furnish to the Underwriters
such number of copies of such amendment or supplement as the Underwriters may
reasonably request.
(f) BLUE SKY QUALIFICATIONS. The Company will use its best efforts, in
cooperation with the Underwriters, to qualify the Securities for offering and
sale under
18
the applicable securities laws of such states and other jurisdictions (domestic
or foreign) as ▇▇▇▇▇▇▇ ▇▇▇▇▇ 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 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 Prospectus
under "Use of Proceeds".
(i) LISTING. The Company will use its best efforts to maintain the
quotation of the Common Stock on the
New York Stock Exchange.
(j) RESERVE CONVERSION SHARES. The Company will reserve and keep
available at all times, free of preemptive rights, shares of Common Stock for
the purpose of enabling the Company to satisfy any obligations to issue
Conversion Shares.
(k) 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 ▇▇▇▇▇▇▇ Sachs, (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 securities that are
substantially similar to the Common Stock, including, but not limited to, 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, (B) any
shares of Common Stock issued by the Company upon the exercise of an option or
19
warrant or the conversion of a security outstanding on the date hereof and
referred to in the Prospectus, (C) any shares of Common Stock issued or options
to purchase Common Stock granted pursuant to existing employee benefit plans of
the Company referred to in the Prospectus, (D) any shares of Common Stock issued
pursuant to any non-employee director stock plan or dividend reinvestment plan,
(E) any Conversion Shares, or (F) any Common Stock to be sold pursuant to the
Common Stock Agreement.
(l) REPORTING REQUIREMENTS. The Company, during the period when the
Prospectus 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 and the Indenture, (ii) the preparation, printing 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 Securities to the Underwriters, including any transfer taxes and
any stamp or other duties payable upon the sale, issuance or delivery of the
Securities to the Underwriters, (iv) the fees and disbursements of the Company's
counsel, accountants and other advisors, (v) the qualification of the Securities
and the Conversion Shares 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 Prospectus 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 the Trustee and any agent of the Trustee and the fees and
disbursements of counsel for the Trustee in connection with the Indenture and
the Securities; (ix) the fees and expenses of any transfer agent or registrar
for the Securities, (x) the filing fees incident to, and the reasonable fees and
disbursements of counsel to the Underwriters in connection with, the review by
the National Association of Securities Dealers, Inc. (the "NASD") of the terms
of the sale of the Securities, and (xi) the fees and expenses incurred in
connection with the listing of the Securities on the
New York Stock Exchange. In
addition, each of the Company and the Underwriters will pay 50% of the fees and
expenses related to the use of chartered aircraft by the Company in connection
with the offering of the Securities.
20
(b) TERMINATION OF AGREEMENT. If this Agreement is terminated by the
Underwriters in accordance with the provisions of Section 5 or Section 9(a)(i)
hereof, the Company and CHS shall reimburse the Underwriters for all of their
out-of-pocket expenses, including the reasonable fees and disbursements of
counsel for the Underwriters.
SECTION 5. CONDITIONS OF UNDERWRITERS' OBLIGATIONS.
The obligations of the several Underwriters hereunder are subject to
the accuracy of the representations and warranties of the Company and CHS
contained in Section 1 hereof or in certificates of any officer of the Company,
CHS or any of their subsidiaries the Company delivered pursuant to the
provisions hereof, to the performance by the Company of its 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 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
Underwriters shall have received the favorable opinion, dated as of Closing
Time, of:
(i) ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Senior Vice President, Secretary and
General Counsel of the Company, in form and substance reasonably
satisfactory to counsel for the Underwriters, together with signed or
reproduced copies of such letter for each of the other Underwriters to
the effect set forth in Exhibit A-1 hereto and to such further effect
as counsel to the Underwriters may reasonably request; and
(ii) Fried, Frank, Harris, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, special counsel
for the Company, in form and substance reasonably satisfactory to
counsel for the Underwriters, together with signed or reproduced copies
of such letter for each of the other Underwriters to the effect set
forth in Exhibit A-2 hereto and to such further effect as counsel to
the Underwriters may reasonably request.
21
(c) OPINION OF COUNSEL FOR THE UNDERWRITERS. At Closing Time, the
Underwriters shall have received the favorable opinion, dated as of Closing
Time, of Debevoise & ▇▇▇▇▇▇▇▇, counsel for the Underwriters, together with
signed or reproduced copies of such letter for each of the other Underwriters in
form and substance reasonably satisfactory to the Underwriters.
(d) 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 Prospectus, 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 Underwriters 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.
(e) ACCOUNTANT'S COMFORT LETTER. At the time of the execution of this
Agreement, the Underwriters shall have received from Deloitte & Touche LLP a
letter, dated such date, in form and substance reasonably satisfactory to the
Underwriters, together with signed or reproduced copies of such letter for each
of the other. 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 Prospectus.
(f) BRING-DOWN COMFORT LETTER. At Closing Time, the Underwriters 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 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.
(g) APPROVAL OF LISTING. At Closing Time, the Conversion Shares shall
have been approved for listing upon conversion of the Securities on the
New York
Stock Exchange, subject only to official notice of issuance.
(h) DEBT RATING. On or after the date hereof (i) no downgrading shall
have occurred in the rating accorded the Company's debt securities by any
"nationally recognized statistical rating organization", as that term is defined
by the Commission for
22
purposes of Rule 436(g)(2) under the 1933 Act, and (ii) no such organization
shall have publicly announced that it has under surveillance or review, with
possible negative implications, its rating of any of the Company's debt
securities.
(i) NO OBJECTION. The NASD shall have 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.
(j) LOCK-UP AGREEMENTS. At the date of this Agreement, the Underwriters
shall have received an agreement substantially in the form of Exhibit B hereto
signed by the persons listed on Schedule B hereto.
(k) INDENTURE AND SECURITIES. The Indenture shall have been duly
executed and delivered by the Company and the Trustee and the Securities shall
have been duly executed and delivered by the Company and authenticated by the
Trustee.
(l) CONDITIONS TO PURCHASE OF OPTION SECURITIES. In the event that the
Underwriters exercise their option provided in Section 2(b) hereof to purchase
all or any portion of the Option Securities, the representations and warranties
of the Company contained herein and the statements in any certificates furnished
by the Company or any subsidiary of the Company hereunder shall be true and
correct as of each Date of Delivery and, at the relevant Date of Delivery, the
Underwriters 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(d) hereof remains true and correct as of such Date of
Delivery.
(ii) OPINION OF COUNSEL FOR COMPANY. The favorable opinion of
Fried, Frank, Harris, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, special counsel for the
Company, together with the favorable opinion of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
Senior Vice President, Secretary and General Counsel of the Company,
each in form and substance reasonably 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 opinions required by Section 5(b) hereof.
(iii) OPINION OF COUNSEL FOR UNDERWRITERS. The favorable
opinion of Debevoise & ▇▇▇▇▇▇▇▇, 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.
23
(iv) BRING-DOWN COMFORT LETTER. A letter from Deloitte &
Touche LLP, in form and substance reasonably satisfactory to the
Underwriters and dated such Date of Delivery, substantially in the same
form and substance as the letter furnished to the Underwriters 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.
(m) ADDITIONAL DOCUMENTS. At Closing Time and at each Date of Delivery,
counsel for the 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 in connection with the issuance and sale of the Securities
as herein contemplated shall be reasonably satisfactory in form and substance to
the Underwriters and counsel for the Underwriters.
(n) 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 Option Securities
on a Date of Delivery which is after the Closing Time, the obligations of the
several Underwriters to purchase the relevant Option Securities, may be
terminated by the Underwriters by notice to the Company at any time at or prior
to Closing Time or such Date of 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 UNDERWRITERS BY THE COMPANY AND CHS. (1) The
Company and CHS jointly and severally agree to indemnify and hold harmless each
Underwriter and each person, if any, who controls any 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 Prospectus (or any amendment or
supplement thereto), or the omission or alleged omission therefrom of a
material fact
24
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(c) 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 ▇▇▇▇▇▇▇
Sachs), 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
Underwriter through ▇▇▇▇▇▇▇ ▇▇▇▇▇ expressly for use in the Registration
Statement (or any amendment thereto), including the Rule 430A Information, or
any preliminary prospectus or the 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 Prospectus, (2) that at a time
sufficiently prior to the Closing Time, the Company furnished copies of the
Prospectus in sufficient quantities to such Underwriter, (3) that such
Underwriter failed to send or give a copy of the 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 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 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.
25
(b) INDEMNIFICATION OF COMPANY, DIRECTORS AND OFFICERS. Each
Underwriter severally agrees to indemnify and hold harmless the Company, CHS and
their respective directors, each of the officers of the Company who signed the
Registration Statement, and each person, if any, who controls the Company within
the meaning of Section 15 of the 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 prospectus or the
Prospectus (or any amendment or supplement thereto) in reliance upon and in
conformity with written information furnished to the Company by such Underwriter
through ▇▇▇▇▇▇▇ Sachs expressly for use in the Registration Statement (or any
amendment thereto) or such preliminary prospectus or the Prospectus (or any
amendment or supplement thereto).
(c) 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) above,
counsel to the indemnified parties shall be selected by ▇▇▇▇▇▇▇ ▇▇▇▇▇, and, in
the case of parties indemnified pursuant to Section 6(b) 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.
26
(d) 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) 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.
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 and CHS on the one hand
and the 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 and CHS on the one hand and of the 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 and CHS on the one hand
and the Underwriters on the other hand in connection with the offering of the
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
Securities pursuant to this Agreement (before deducting expenses) received by
the Company and the total underwriting discount received by the Underwriters, in
each case as set forth on the cover of the Prospectus bear to the aggregate
initial public offering price of the Securities as set forth on such cover.
The relative fault of the Company and CHS on the one hand and the
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 or by the Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
27
The Company, CHS and the 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 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, no Underwriter shall
be required to contribute any amount in excess of the amount by which the total
price at which the Securities underwritten by it and distributed to the public
were offered to the public exceeds the amount of any damages which such
Underwriter has otherwise been required to pay by reason of any such untrue or
alleged untrue statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the ▇▇▇▇ ▇▇▇) 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
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 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 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. The Underwriters'
respective obligations to contribute pursuant to this Section 7 are several in
proportion to the number of Initial Securities set forth opposite their
respective names in Schedule A hereto and not joint.
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
Underwriter or controlling person, or by or on behalf of the Company, and shall
survive delivery of the Securities to the Underwriters.
28
SECTION 9. TERMINATION OF AGREEMENT.
(a) TERMINATION; GENERAL. The Underwriters may terminate this
Agreement, by notice to the Company, 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 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 ▇▇▇▇▇▇▇
▇▇▇▇▇, 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 NASD or any other governmental authority, or
(iv) if a banking moratorium has been declared by either Federal or
New York
authorities.
(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 UNDERWRITERS.
If one or more of the 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 Underwriters
shall have the right, within 24 hours thereafter, to make arrangements for one
or more of the non-defaulting 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
Underwriters shall not have completed such arrangements within such 24-hour
period, then:
(a) if the principal amount of Defaulted Securities does not exceed 10%
of the principal amount of Securities to be purchased on such date, each of the
non-defaulting Underwriters shall be obligated, severally and not jointly, to
purchase the full amount
29
thereof in the proportions that their respective underwriting obligations
hereunder bear to the underwriting obligations of all non-defaulting
Underwriters, or
(b) if the principal amount of Defaulted Securities exceeds 10% of the
principal amount of 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 Underwriters to purchase and of the Company to sell the Option
Securities to be purchased and sold on such Date of Delivery, shall terminate
without liability on the part of any non-defaulting Underwriter.
No action taken pursuant to this Section shall relieve any defaulting
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
Underwriters to purchase and the Company to sell the relevant Option Securities,
as the case may be, either the Underwriters or the Company 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 "Underwriter" includes any person
substituted for an Underwriter under this Section 10.
SECTION 11. 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 Underwriters shall be directed to the
Underwriters at ▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention:
Registration Department, with a copy to Debevoise & ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇; and
notices to the Company or CHS shall be directed to them at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Senior Vice
President, Secretary and General Counsel, with a copy to Fried, Frank, Harris,
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇.
SECTION 12. PARTIES.
This Agreement shall inure to the benefit of and be binding upon the
Underwriters and the Company 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 Underwriters and the Company and CHS
and their respective successors and the controlling persons and officers and
directors referred to in Sections 6 and 7 and
30
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 Underwriters and the Company 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 Underwriter
shall be deemed to be a successor by reason merely of such purchase.
SECTION 13. 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 14. 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.
31
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof, whereupon
this instrument, along with all counterparts, will become a binding agreement
between the Underwriters, the Company and CHS in accordance with its terms.
Very truly yours,
COMMUNITY HEALTH SYSTEMS, INC.
By: ______________________________________
Name:
Title:
CHS/COMMUNITY HEALTH SYSTEMS, INC.
By: ______________________________________
Name:
Title:
32
CONFIRMED AND ACCEPTED,
as of the date first above written:
▇▇▇▇▇▇▇, ▇▇▇▇▇ & CO.
▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇
& ▇▇▇▇▇ INCORPORATED
CREDIT SUISSE FIRST BOSTON CORPORATION
BANC OF AMERICA SECURITIES LLC
▇.▇. ▇▇▇▇▇▇ SECURITIES INC.
UBS WARBURG LLC
BY: ▇▇▇▇▇▇▇, ▇▇▇▇▇ & CO.
By:
----------------------------------------
Authorized Signatory
33
SCHEDULE A
Principal Amount of
Initial
Securities
Name of Underwriter to Be Purchased
------------------- ---------------
▇▇▇▇▇▇▇, Sachs & Co........................................ $
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated.........
Credit Suisse First Boston Corporation.....................
Banc of America Securities LLC.............................
▇.▇. ▇▇▇▇▇▇ Securities Inc.................................
UBS Warburg LLC............................................
------------
Total...................................................... $250,000,000
============
SCHEDULE B
LIST OF PERSONS SUBJECT TO LOCK-UP
Forstmann Little & Co. Equity Partnership - V, ▇.▇.
▇▇▇▇▇▇▇▇▇ Little & Co. Subordinated Debt and
Equity Management Buyout Partnership - V-I, L.P.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇
J. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, M.D.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇
W. ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
T. ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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.]
October ___, 2001
▇▇▇▇▇▇▇, Sachs & Co.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
Credit Suisse First Boston Corporation
Banc of America Securities LLC
▇.▇. ▇▇▇▇▇▇ Securities Inc.
UBS Warburg LLC
c/o Goldman, ▇▇▇▇▇ & Co.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
I am Senior Vice President, Secretary and General Counsel of Community
Health Systems, Inc., a Delaware corporation (the "Company"), and CHS/Community
Health Systems, Inc., a Delaware corporation and a wholly owned subsidiary of
the Company ("CHS"). I am delivering this opinion pursuant to Section 5(b)(i) of
the
Underwriting Agreement, dated October , 2001 (the "
Underwriting Agreement"),
among the Company, CHS and ▇▇▇▇▇▇▇, Sachs & Co., ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ &
▇▇▇▇▇ Incorporated, Credit Suisse First Boston Corporation, Banc of America
Securities LLC, ▇.▇. ▇▇▇▇▇▇ Securities Inc., and UBS Warburg LLC. All
capitalized terms used herein that are defined in, or by reference in, the
Underwriting Agreement have the meanings assigned to such terms therein, or by
reference therein, unless otherwise defined herein. With your permission, all
assumptions and statements of reliance expressly set forth herein have been made
without any independent investigation or verification on my part except to the
extent otherwise expressly stated, and, except to the extent otherwise expressly
stated, I express no opinion with respect to the subject matter or accuracy of
such assumptions or items relied upon.
In connection with this opinion, I have (i) investigated such questions
of law, (ii) examined originals or certified, conformed or reproduction copies
of such agreements, instruments, documents and records of the Company and CHS,
such certificates of public officials and such other documents and (iii)
received such information from officers and representatives of the Company, CHS
and others, in each case as I have deemed necessary or appropriate for the
purposes of this opinion.
In all such examinations, I have assumed the legal capacity of all
natural persons, the genuineness of all signatures, the authenticity of original
and certified documents and the conformity to original or certified copies of
all copies submitted to me as conformed or reproduction copies. As to various
questions of fact relevant to the opinions expressed herein, I have relied upon,
and assume the accuracy of, the representations and warranties contained in the
Underwriting Agreement and certificates and oral or written statements and other
information of or from public officials, officers or representatives of the
Company, CHS and others and assume compliance on the part of all parties to the
Underwriting Agreement with the covenants and agreements contained therein.
Based upon the foregoing, and subject to the limitations,
qualifications and assumptions set forth herein, I am of the opinion that:
1. The Company 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 result in a Material Adverse Effect.
2. Each subsidiary of the Company has been duly incorporated 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 Prospectus 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 result in a Material Adverse Effect.
3. Except as otherwise disclosed in the Registration Statement, all of
the issued and outstanding capital stock of each Subsidiary has been duly
authorized and validly issued, is fully paid and non-assessable and, to the best
of my knowledge, is owned by the Company, directly or through subsidiaries, free
and clear of any security interest, mortgage, pledge, lien, encumbrance, claim
or equity; 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.
4. All descriptions in the Prospectus of contracts and other documents
to which the Company, CHS or their subsidiaries are a party, are accurate
A-1-2
in all material respects; to the best of my knowledge, there are no franchises,
contracts, indentures, mortgages, loan agreements, notes, leases or other
instruments required to be described or referred to in the Registration
Statement or to be filed as exhibits thereto other than those described or
referred to therein or filed as exhibits thereto, and the descriptions thereof
or references thereto are correct in all material respects.
5. None of the Company or CHS is in violation of its charter or
by-laws.
6. The Company, CHS and each of their subsidiaries and each of the
hospitals owned, leased or operated by any of them have all necessary permits,
licenses, certificates, approvals (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 ("Governmental Licenses") (except where
the failure to have such Governmental Licenses, individually or in the
aggregate, would not reasonably be expected to have a material adverse effect on
the business, operations or financial condition of the Company, CHS and their
subsidiaries taken as a whole), to own their respective properties and to
conduct their respective businesses as now being conducted.
7. No filing, consent, approval, authorization, order, registration or
qualification of or with any Tennessee court or governmental agency or body is
required by or on behalf of the Company for the sale of the Securities or the
Conversion Shares (when issued and delivered in accordance with the terms of the
Securities and Indenture) or the consummation by the Company and CHS of the
transactions contemplated by the
Underwriting Agreement, the Securities or the
Indenture, expect for such consents, approvals, authorizations, orders,
registrations or qualifications as may be required under state or foreign
securities or Blue Sky laws, rules and regulations in connection with the
purchase and distribution of the Securities by the Underwriters.
8. There is not pending or, to my knowledge, threatened any action,
suit, proceeding, inquiry or investigation to which the Company or any
subsidiary is a party, or to which the property of the Company or any subsidiary
is subject, before or brought by any court or governmental agency or body,
domestic or foreign, which would reasonably result in a Material Adverse Effect,
or which might reasonably be expected to materially and adversely affect the
transactions contemplated in the
Underwriting Agreement, the Securities or the
Indenture or the performance by the Company of its obligations thereunder; it
being understood that I express no opinion with respect to any "qui tam" action
as to which I have no knowledge of its pendency.
A-1-3
9. The statements in the Prospectus under "Business of Community Health
Systems - Legal Proceedings," "Business of Community Health Systems - Government
Regulations," "Business of Community Health Systems - Payment" and "Business of
Community Health Systems - Compliance Program," in so far as they constitute
summaries of legal matters or documents referred to therein, fairly summarize in
all material respects the matters referred to therein.
In the course of the preparation by the Company of the Registration
Statement and the Prospectus, I attended conferences with certain of the
officers and representatives of the Company and CHS, representatives of the
independent public accountants for the Company and CHS and representatives of
the Underwriter, at which the contents of the Registration Statement and the
Prospectus were discussed. Between the date of effectiveness of the Registration
Statement and the time of delivery of this opinion, I attended additional
conferences with certain of the officers and representatives of, and the
independent public accountants for, the Company and CHS, at which the contents
of the Prospectus were discussed to a limited extent. Given the limitations
inherent in the independent verification of factual matters and the character of
determinations involved in the registration process, I am not passing upon and
do not assume any responsibility for the accuracy, completeness or fairness of
the statements contained in the Registration Statement and the Prospectus, other
than as set forth in paragraph 4 above. Subject to the foregoing and on the
basis of the information I gained in the performance of the services referred to
above, including information obtained from officers and other representatives
of, and the independent accountants for, the Company and CHS, nothing has come
to my attention that causes me to believe that, as of the time it became
effective, the Registration Statement contained an untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading, or that the
Prospectus as of their dates contained any untrue statement of a material fact
or omitted to state a material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading. Also, subject to the foregoing, nothing
has come to my attention in the course of proceedings described in the second
sentence of this paragraph that causes me to believe that the Prospectus on the
date and time of delivery of this letter contain an untrue statement of a
material fact or omit to state a material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading. I express no view or belief, however, with respect to the financial
statements, related notes and schedules thereto and other financial data
included in or omitted from the Registration Statement or the Prospectus.
The opinions expressed herein are limited to the federal laws of the
United States of America, the laws of the State of Tennessee and, to the extent
relevant to the opinions expressed herein, the General Corporation Law of the
State of Delaware, each as currently in effect. The opinions expressed herein
are given as of the date hereof, and I undertake no obligation to supplement
this letter if any applicable laws change after the
A-1-4
date hereof or if I become aware of any facts that might change the opinions
expressed herein after the date hereof or for any other reason.
The opinions expressed herein are solely for your benefit in connection
with the
Underwriting Agreement and may not be relied on in any manner or for
any purpose by any other person or entity and may not be quoted in whole or in
part without my prior written consent.
Very truly yours,
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Senior Vice President,
Secretary and General
Counsel
▇-▇-▇
▇▇▇▇▇▇▇ ▇-▇
FORM OF OPINION OF FRIED, FRANK,
HARRIS, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
TO BE DELIVERED PURSUANT TO
SECTION 5(b)(ii)
October __, 2001
▇▇▇▇▇▇▇, Sachs & Co.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
Credit Suisse First Boston Corporation
Banc of America Securities LLC
▇.▇. ▇▇▇▇▇▇ Securities Inc.
UBS Warburg LLC
c/o Goldman, ▇▇▇▇▇ & Co.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
We are acting as special counsel to Community Health Systems, Inc.,
a Delaware corporation (the "Company"), and CHS/Community Health Systems,
Inc., a Delaware corporation and a wholly owned subsidiary of the Company
("CHS"), in connection with the underwritten public offering of $250,000,000
or ______% convertible subordinated notes due ______, 2008 of the Company
(the "Securities") convertible into shares of common stock, par value $.01
per share (the "Common Stock"), of the Company. This opinion is delivered to
you at the Company's request pursuant to Section 5(b)(ii) of the Underwriting
Agreement, dated October __, 2001 (the "Underwriting Agreement"), among the
Company, CHS and ▇▇▇▇▇▇▇ Sachs & Co., ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated, Credit Suisse First Boston Corporation, Banc of America
Securities LLC, ▇.▇. ▇▇▇▇▇▇ Securities Inc., and UBS Warburg LLC. All
capitalized terms used herein that are defined in, or by reference in, the
Underwriting Agreement have the meanings assigned to such terms therein, or
by reference therein, unless otherwise defined herein. With your permission,
all assumptions and statements of reliance expressly set forth herein have
been made without any independent investigation or verification on our part
except to the extent otherwise expressly stated, and we express no opinion
with respect to the subject matter or accuracy of such assumptions or items
relied upon.
A-1-6
In connection with this opinion, we have (i) investigated such
questions of law, (ii) examined originals or certified, conformed or
reproduction copies of such agreements, instruments, documents and records of
the Company and CHS, such certificates of public officials and such other
documents and (iii) received such information from officers and representatives
of the Company, CHS and others, in each case as we have deemed necessary or
appropriate for the purposes of this opinion.
In all such examinations, we have assumed the legal capacity of all
natural persons, the genuineness of all signatures, the authenticity of
original and certified documents and the conformity to original or certified
copies of all copies submitted to us as conformed or reproduction copies. As
to various questions of fact relevant to the opinions expressed herein, we
have relied upon, and assume the accuracy of, the representations and
warranties contained in the Underwriting Agreement and certificates and oral
or written statements and other information of or from public officials,
officers or representatives of the Company, CHS and others, and assume
compliance on the part of all parties to the Underwriting Agreement with the
covenants and agreements contained therein. Insofar as statements herein are
based upon our knowledge, such phrase means and is limited to the conscious
awareness of facts or other information by lawyers in this Firm who gave
substantive attention to the representation of the Company and CHS in
connection with the Underwriting Agreement.
With respect to the opinion expressed in the second sentence of
paragraph 3 below, we have relied solely on the stock transfer records of the
Company. With respect to the opinions expressed in paragraphs 11 and 12
below, our opinions are limited to our review of only those laws and
regulations that, in our experience, are normally applicable to transactions
of the type contemplated in the Underwriting Agreements. With respect to the
opinion expressed in paragraph 8, we have relied solely on the oral advice of
the Staff of the Securities and Exchange Commission (the "Commission") that
the Commission has issued an order declaring the registration under the 1933
Act of the Securities effective and as to the absence of any stop order or
any proceeding relating thereto.
To the extent it may be relevant to the opinions expressed herein,
we have assumed that the Trustee has the power and authority to enter into
and perform its obligations under the Indenture and to consummate the
transactions contemplated thereby and that the Indenture has been duly
authorized, executed and delivered by, and constitutes the legal, valid and
binding obligations of, the Trustee and is enforceable against the Trustee in
accordance with its terms.
Based upon the foregoing, and subject to the limitations,
qualifications and assumptions set forth herein, we are of the opinion that:
1. The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware. CHS has
been incorporated and is validly existing as a corporation in good standing
under the laws of the State of Delaware.
2. Each of the Company and CHS has the corporate power and authority
to own, lease and operate its properties and to conduct its business as
described in the Prospectus and to enter into and perform its obligations
under the Underwriting Agreement, and, in the case of the Company, the
Securities and the Indenture.
A-2-2
3. The Company has an authorized capitalization as set forth in the
Prospectus under the caption "Capitalization". The outstanding shares of Common
Stock have been duly authorized and validly issued and are fully paid and
non-assessable.
4. The Securities to be purchased by the Underwriters from the
Company pursuant to the Underwriting Agreement have been duly authorized and
when executed by the Company and authenticated by the Trustee in accordance
with the terms of the Indenture and delivered to and paid for by the
Underwriters in accordance with the terms of the Underwriting Agreement will
be valid and binding obligations of the Company enforceable against the
Company in accordance with their terms and entitled to the benefits provided
by the Indenture. The shares of capital stock of the Company initially
issuable upon conversion of the Securities have been duly authorized and
reserved for issuance and, when issued and delivered in accordance with the
terms of the Securities and the Indenture, will be validly issued, fully paid
and non-assessable. No holder of the Securities or the Conversion Shares will
be subject to personal liability under the Delaware General Corporation Law
by reason of being such a holder.
5. The outstanding shares of Common Stock were not issued in
violation of, and the issuance and sale of the Securities by the Company and
the issuance of the Conversion Shares upon conversion of the Securities is
not subject to preemptive or other similar rights arising under (i) the
Delaware General Corporation Law, (ii) the Restated Certificate of
Incorporation or the Amended and Restated By-laws of the Company, or (iii)
any indenture, mortgage, deed of trust, loan agreement, other agreement or
instrument, or court decree or order (including, without limitation, any
settlement agreement) which has been filed as an exhibit to the Registration
Statement or otherwise identified to us in a certificate provided by the
Chief Financial Officer and the General Counsel of the Company as material to
the Company and its subsidiaries taken as a whole (collectively, the
"Identified Documents").
6. The Underwriting Agreement has been duly authorized, executed and
delivered by the Company and CHS.
7. The Indenture has been duly authorized, executed and delivered by
the Company and constitutes a valid and binding instrument of the Company,
enforceable against the Company in accordance with its terms.
A-2-3
8. The Registration Statement, [including any Rule 462(b)
Registration Statement,] has been declared effective under the 1933 Act. No
stop order suspending the effectiveness of the Registration Statement has
been issued under the 1933 Act and no proceedings for that purpose have been
instituted or are pending or, to our knowledge, threatened by the Commission.
The Indenture has been qualified under the Trust Indenture Act. Any required
filing of the Prospectus pursuant to Rule 424(b) has been made in the manner
and within the time period required by Rule 424(b).
9. The Registration Statement, [including any Rule 462(b) Registration
Statement,] the Prospectus, [and each amendment or supplement to the
Registration Statement and the Prospectus,] as of their respective effective
or issue dates (other than the financial statements, related notes,
supporting schedules and other financial data included therein or omitted
therefrom, as to which we express no opinion) appeared on their face to be
responsive as to form in all material respects with the requirements of the
1933 Act and the 1933 Act Regulations and the Trust Indenture Act and the
Trust Indenture Act Regulations.
10. The statements in the Prospectus under "Description of Notes,"
"Description of Capital Stock," "Description of Indebtedness," "Shares
Eligible for Future Sale" and "Certain United States Federal Tax
Consequences--Non-U.S. Holders" and the statements in the Registration
Statement under Item 14, in so far as they constitute summaries of legal
matters or documents referred to therein, fairly summarize in all material
respects the matters referred to therein.
11. No filing, consent, approval, authorization, order, registration
or qualification of or with any United States,
New York or, with respect to
matters arising under the Delaware General Corporation Law, Delaware court or
governmental agency or body is required by or on behalf of the Company for
the issue or sale of the Securities or the Conversion Shares (when issued and
delivered in accordance with the terms of the Securities and the Indenture)
or the consummation by the Company and CHS of the transactions contemplated
by the Underwriting Agreement or the Indenture, except the registration under
the 1933 Act of the Securities and such consents, approvals, authorizations,
orders, registrations or qualifications as (i) have been obtained under the
Trust Indenture Act, (ii) may be required under the 1933 Act in connection
with the shares of common stock of the Company issuable upon conversion of
the Securities and (iii) may be required under state or foreign securities or
Blue Sky laws, rules and regulations in connection with the purchase and
distribution of the Securities by the Underwriters.
12. The execution, delivery and performance by the Company and CHS
of the Underwriting Agreement, the Securities and the Indenture, the
consummation of the transactions contemplated by the Underwriting Agreement,
the Securities and the Indenture and the issuance of the Conversion Shares
(when issued and delivered in accordance with the terms of the Securities and
the Indenture) do not and will not conflict with, or result in a breach or
violation of, any of the terms or provisions of, or
A-2-4
constitute a default or a Repayment Event 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 (i) any indenture,
mortgage, deed of trust, loan agreement or other agreement or instrument to
which the Company or any of its subsidiaries is a party or by which the
Company or any of its subsidiaries is bound or to which any of the property
or assets of the Company or any of its subsidiaries is subject, (ii) the
provisions of the Restated Certificate of Incorporation or the Amended and
Restated By-laws of the Company, (iii) the Delaware General Corporation Law
or any present law, or present regulation of any government agency or
authority, of the State of
New York or the United States of America known by
us to be applicable to the Company or any of its subsidiaries or their
respective properties (except that we express no opinion in this paragraph 12
with regard to the anti-fraud provisions of any federal or state Securities
laws or rules or regulations promulgated thereunder) or (iv) any court decree
or order binding upon the Company or any of its subsidiaries or their
respective properties (it being understood that with respect to the opinions
in clauses (i) and (iv) of this paragraph, such opinions are limited to the
Identified Documents).
13. Other than as disclosed in the Prospectus, to our knowledge, there
are no persons with registration rights or other similar rights to have any
securities of the Company registered pursuant to the Registration Statement or
otherwise registered by the Company under the 1933 Act.
14. The Company is not an "investment company," as such term is defined
in the Investment Company Act of 1940, as amended.
In the course of our engagement to represent or to advise the Company,
we have not become aware of any pending legal proceeding before, or pending
investigation by, any court or administrative agency or authority or any
arbitration tribunal of the United States or the State of New York against or
directly affecting the Company, CHS or any of their respective subsidiaries or
properties which seeks to enjoin or otherwise prevent the consummation of, or to
recover any damages or obtain relief in connection with or which would
materially adversely affect the legality, validity or enforceability of, the
Underwriting Agreement or the transactions contemplated thereby. In making the
foregoing statement, we have endeavored, to the extent we have believed
necessary, to determine from lawyers currently in our Firm who have performed
substantive legal services for the Company, whether such services involved
substantive attention in the form of legal representation concerning pending
legal proceedings or pending investigations of the nature referred to above.
Beyond that, we have not made any review, search or investigation of public
files or records or files or records of the Company, CHS or any of their
respective subsidiaries or of their transactions, or any other investigation or
inquiry with respect to the foregoing statement.
In the course of the preparation by the Company of the Registration
Statement and the Prospectus, we attended conferences with certain of the
officers and other representatives of the Company and CHS, representatives of
the independent public
A-2-5
accountants for the Company and CHS and representatives of the Underwriters,
at which the contents of the Registration Statement and the Prospectus were
discussed. Between the date of effectiveness of the Registration Statement
and the time of delivery of this opinion, we attended additional conferences
with certain of the officers and representatives of, and the independent
public accountants for, the Company and CHS, at which the contents of the
Prospectus were discussed to a limited extent. Given the limitations inherent
in the independent verification of factual matters and the character of
determinations involved in the registration process, we are not passing upon
and do not assume any responsibility for the accuracy, completeness or
fairness of the statements contained in the Registration Statement and the
Prospectus, other than as set forth in paragraph 10 above. Subject to the
foregoing and on the basis of the information we gained in the performance of
the services referred to above, including information obtained from officers
and other representatives of, and the independent accountants for, the
Company and CHS, nothing has come to our attention that causes us to believe
that, as of the time it became effective, the Registration Statement
contained an untrue statement of a material fact or omitted to state a
material fact necessary to make the statements therein not misleading, or
that the Prospectus as of its dates contained any untrue statement of a
material fact or omitted to state a material fact necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading. Also, subject to the foregoing, nothing has come to our
attention in the course of proceedings described in the second sentence of
this paragraph that causes us to believe that the Prospectus on the date and
at the time of delivery of this letter contains an untrue statement of a
material fact or omits to state a material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. We express no view or belief, however, with respect to the
financial statements, related notes and schedules thereto and other financial
data included in or omitted from the Registration Statement or the Prospectus.
The opinions set forth above are subject to the following
qualifications:
A. With respect to the opinion expressed in paragraph 12 above: (i)
we have made no independent investigation as to whether the Identified
Documents, which are governed by the laws of any jurisdiction other than the
State of New York, will be enforced as written under the laws of such
jurisdiction; and (ii) we express no opinion with respect to any conflict
with or any breach or violation of, or default under, any Identified Document
(x) not readily ascertainable from the face of such document, (y) arising
under or based upon any cross-default provisions insofar as such conflict,
breach, violation or default relates to a default under a document which is
not an Identified Document, or (z) arising under or based upon any covenant
of a financial or numerical nature or which requires arithmetic computation.
A-2-6
B. We express no opinion as to the validity, binding effect or
enforceability of any provision of any agreement containing any purported
waiver, release, variation of rights, or other agreement of similar effect
(all of the foregoing, collectively, a "Waiver") by the Company under any of
such agreements to the extent limited by provisions of applicable law
(including judicial decisions), or to the extent that such a Waiver applies
to a right, claim, duty, defense or ground for discharge otherwise existing
or occurring as a matter of law (including judicial decisions), except to the
extent that such a Waiver is effective under, and is not prohibited by or
void or invalid under provisions of applicable law (including judicial
decisions).
C. We express no opinion as to the indemnity, contribution or
exculpation law provisions of any agreement.
D. The opinions expressed above are subject to the effect of, and we
express no opinions herein as to, the application of state or foreign securities
or Blue Sky laws or any rules and regulations thereunder.
E. We express no opinion as to the enforceability of any provision
of any agreement specifying that provisions thereof may be waived only in
writing, to the extent that an oral agreement or an implied agreement by
trade practice or course of conduct has been created that modifies any
provision of such agreement.
F. We express no opion as to the validity, binding effect or
enforceability of any provision of any agreement relating to (i) forum
selection or submission to jurisdiction (including any waiver of any
objection to venue in any court or that a court is an inconvenient forum) to
the extent the forum is a federal court or such provision is to be considered
by any court other than a court of the State of New York, or (ii) choice of
governing law to the extent that such provision is to be considered by any
court other than a court of the State of New York or a federal district court
sitting in the State of New York, in each case, applying the choice of law
principles of the State of New York, or (iii) waivers of any rights to trial
by jury.
G. The opinions expressed herein are subject to (i) applicable
bankruptcy, insolvency, moratorium, reorganization, fraudulent conveyance and
other similar laws affecting creditors' rights and remedies generally and
(ii) general principles of equity including, without limitation, standards of
materiality, good faith, fair dealing and reasonableness, equitable defenses
and limits as to the availability of equitable remedies, whether such
principles are considered in a proceeding at law or in equity.
The opinions expressed herein are limited to the federal laws of the
United States of America, the laws of the State of New York and, to the extent
relevant to the opinions expressed herein, the General Corporation Law of the
State of Delaware, each as currently in effect. The opinions expressed herein
are given as of the date hereof, and we undertake no obligation to supplement
this letter if any applicable laws change after the date hereof or if we become
aware of any facts that might change the opinions expressed herein after the
date hereof or for any other reason.
The opinions expressed herein are solely for your benefit in connection
with the Underwriting Agreement and may not be relied on in any manner or for
any purpose by any other person or entity and may not be quoted in whole or in
part without our prior written consent.
Very truly yours,
FRIED, FRANK, HARRIS, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
By: _____________________________________
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
A-2-7
[FORM OF LOCK-UP FROM DIRECTORS, OFFICERS OR OTHER STOCKHOLDERS PURSUANT TO
SECTION 5(J)]
Exhibit B
COMMUNITY HEALTH SYSTEMS, INC.
LOCK-UP AGREEMENT
SEPTEMBER __, 2001
▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co.
and to each of the Underwriters
named in the Underwriting Agreements
c/o Goldman, Sachs & Co.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Re: Community Health Systems, Inc.- Lock-Up Agreement
-------------------------------------------------
Ladies and Gentlemen:
The undersigned understands that ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co., ▇▇▇▇▇▇▇ Lynch,
Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated, Credit Suisse First Boston Corporation,
Banc of America Securities, LLC, ▇.▇. ▇▇▇▇▇▇ Securities, Inc., and UBS Warburg
LLC as the representatives (the "Representatives"), propose to enter into an
Underwriting Agreement on behalf of the several Underwriters named in Schedule I
to such agreement (collectively, the "Syndicate Members"), with Community Health
Systems, Inc., a Delaware corporation (the "Company"), providing for a public
offering of the Common Stock of the Company (the "Shares"). The undersigned
further understands that ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co., ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ &
▇▇▇▇▇ Incorporated, Credit Suisse First Boston Corporation, Banc of America
Securities, LLC, ▇.▇. ▇▇▇▇▇▇ Securities, Inc., and UBS Warburg LLC (together
with the Syndicate Members, the "Underwriters"), propose to enter into an
Underwriting Agreement with the Company, providing for a public offering of
convertible subordinated notes of the Company (the "Convertible Notes"). Each
such offering will be made pursuant to a Registration Statement on Form S-1
filed on September 7, 2001 with the Securities and Exchange Commission (the
"SEC"), as amended by Amendment No. 1 on September 21, 2001.
In consideration of the agreement by the Underwriters to offer and sell
the Shares and the Convertible Notes, and of other good and valuable
consideration the receipt and sufficiency of which is hereby acknowledged, the
undersigned agrees that, during the period beginning from the date of the final
Prospectus covering the public offering of the Shares and the date of the final
Prospectus covering the public offering of the Convertible
Notes and continuing to and including the date 90 days after the date of each
such final Prospectus, the undersigned will not, directly or indirectly, offer,
sell, contract to sell, pledge, grant any option to purchase, make any short
sale or otherwise dispose of any shares of Common Stock of the Company, or any
options or warrants to purchase any shares of Common Stock of the Company, or
any securities convertible into, exchangeable for or that represent the right to
receive shares of Common Stock of the Company, whether now owned or hereinafter
acquired by the undersigned or with respect to which the undersigned has or
hereafter acquires the power of disposition (collectively the "Undersigned's
Shares"), or file any registration statement under the Securities Act of 1933,
as amended, with respect to any of the foregoing.
The foregoing restriction is expressly agreed to preclude the
undersigned from engaging in any hedging or other transaction which is designed
to or which reasonably could be expected to lead to or result in a sale or
disposition of the Undersigned's Shares even if such Shares would be disposed of
by someone other than the undersigned. Such prohibited hedging or other
transactions would include without limitation any short sale or any purchase,
sale or grant of any right (including without limitation any put or call option)
with respect to any of the Undersigned's Shares or with respect to any security
that includes, relates to, or derives any significant part of its value from
such Shares.
Notwithstanding the foregoing, the undersigned may transfer the
Undersigned's Shares (i) as a BONA FIDE gift or gifts, provided that the donee
or donees thereof agree to be bound in writing 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 the trustee of the
trust agrees to be bound in writing by the restrictions set forth herein, and
provided further that any such transfer shall not involve a disposition for
value, (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 the transferee agrees to be bound in
writing by the restrictions set forth herein or (iv) with the prior written
consent of ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. on behalf of the Underwriters. For purposes of
this Lock-Up Agreement, "immediate family" shall mean any relationship by blood,
marriage or adoption, not more remote than first cousin. In addition,
notwithstanding the foregoing, if the undersigned is a corporation, the
corporation may transfer the capital stock of the Company to any wholly-owned
subsidiary of such corporation; PROVIDED, HOWEVER, that in any such case, it
shall be a condition to the transfer that the transferee execute an agreement
stating that the transferee is receiving and holding such capital stock subject
to the provisions of this Agreement and there shall be no further transfer of
such capital stock except in accordance with this Agreement, and provided
further that any such transfer shall not involve a disposition for value. The
undersigned also agrees and consents to the entry of stop transfer instructions
with the Company's transfer agent and registrar against the transfer of the
Undersigned's Shares except in compliance with the foregoing restrictions.
The undersigned understands that the Company and the Underwriters are
relying upon this Lock-Up Agreement in proceeding toward consummation of the
offerings. The
B-2
undersigned further understands that this Lock-Up Agreement is irrevocable and
shall be binding upon the undersigned's heirs, legal representatives,
successors, and assigns.
Very truly yours,
---------------------------
Exact Name of Shareholder
---------------------------
Authorized Signature
---------------------------
Title
B-3