Draft -- January 9, 1997
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TRIGON HEALTHCARE, INC.
(a Virginia corporation)
________ Shares of Common Stock
U.S. PURCHASE AGREEMENT
Dated: __________, 1997
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Table of Contents
U.S. PURCHASE AGREEMENT...........................................................................................1
SECTION 1. Representations and Warranties................................................................4
(a) Representations and Warranties by the Company...........................................4
(i) Compliance with Registration Requirements..........................................4
(ii) Independent Accountants...........................................................5
(iii) Financial Statements.............................................................5
(iv) Statutory Financial Statements....................................................6
(v) No Material Adverse Change in Business.............................................6
(vi) Good Standing of the Company, Virginia BCBS and TMSI..............................6
(vii) Good Standing of Subsidiaries....................................................7
(viii) Capitalization..................................................................7
(ix) Demutualization and Merger........................................................7
(x) Authorization of Agreement.........................................................8
(xi) Authorization and Description of Securities.......................................8
(xii) Authorization of Capital Stock of TMSI and Trigon Insurance. ....................8
(xiii) Authorization and Description of Member Shares..................................8
(xiv) Exemption from 1933 Act..........................................................9
(xv) Absence of Defaults and Conflicts.................................................9
(xvi) Absence of Labor Dispute........................................................10
(xvii) Absence of Proceedings.........................................................10
(xviii) Accuracy of Exhibits..........................................................10
(xix) Possession of Intellectual Property.............................................10
(xx) Absence of Further Requirements..................................................11
(xxi) BCBSA License...................................................................11
(xxii) Possession of Licenses and Permits.............................................11
(xxiii) Insurance Licenses............................................................12
(xxiv) Title to Property..............................................................13
(xxv) Maintenance of Insurance........................................................13
(xxvi) Due Adoption of the Plan.......................................................13
(xxvii) Compliance with Tax Laws......................................................14
(xxviii) Investment Company Act.......................................................14
(xxix) Environmental Laws.............................................................14
(xxx) Registration Rights.............................................................15
(b) Officer's Certificates.................................................................15
SECTION 2. Sale and Delivery to U.S. Underwriters; Closing..............................................15
(a) Initial U.S. Securities................................................................15
(b) U.S. Option Securities.................................................................15
(c) Payment................................................................................16
(d) Denominations; Registration............................................................16
SECTION 3. Covenants of the Company and Virginia BCBS...................................................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) Restriction on Sale of Securities......................................................19
(k) Reporting Requirements.................................................................20
(l) Compliance with Rule 463...............................................................20
(m) Consummation of the Plan...............................................................20
SECTION 4. Payment of Expenses..........................................................................20
(a) Expenses................................................................................20
(b) Termination of Agreement................................................................20
SECTION 5. Conditions of U.S. Underwriters' Obligations.................................................21
(a) Effectiveness of Registration Statement................................................21
(b) Opinion of Counsel for Company and Virginia BCBS.......................................21
(c) Opinion of Counsel for U.S. Underwriters...............................................21
(d) Officers' Certificates.................................................................22
(e) Accountant's Comfort Letter............................................................22
(f) Bring-down Comfort Letter..............................................................22
(g) Approval of Listing....................................................................22
(h) No Objection...........................................................................22
(i) License Agreement......................................................................22
(j) Opinion of Special Tax Counsel for Virginia BCBS.......................................22
(k) Effectiveness of the Plan..............................................................23
(l) Purchase of Initial International Securities...........................................23
(m) Conditions to Purchase of U.S. Option Securities.......................................23
(n) Additional Documents...................................................................24
(o) Termination of Agreement...............................................................24
SECTION 6. Indemnification..............................................................................24
(a) Indemnification of U.S. Underwriters...................................................24
(b) Indemnification of Company, Virginia BCBS, Directors and Officers......................25
(c) Actions against Parties; Notification..................................................26
(d) Settlement without Consent if Failure to Reimburse.....................................26
SECTION 7. Contribution.................................................................................27
SECTION 8. Representations, Warranties and Agreements to Survive Delivery...............................28
SECTION 9. Termination of Agreement.....................................................................28
(a) Termination; General...................................................................28
(b) Liabilities............................................................................29
SECTION 10. Default by One or More of the U.S. Underwriters...............................................29
SECTION 11. Notices.......................................................................................30
SECTION 12. Parties.......................................................................................30
SECTION 13. GOVERNING LAW AND TIME........................................................................30
SECTION 14. Effect of Headings............................................................................30
SCHEDULES
Schedule A - List of Underwriters.......................................................Sch A-1
Schedule B - Pricing Information........................................................Sch B-1
EXHIBITS
Exhibit A- Form of Opinion of Company's Counsel.......................................... A-1
Draft -- January 9, 1997
TRIGON HEALTHCARE, INC.
(a Virginia corporation)
________ Shares of Class A Common Stock
(Par Value $.01 Per Share)
U.S. PURCHASE AGREEMENT
__________, 1997
▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
Alex. ▇▇▇▇▇ & Sons Incorporated
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Inc.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
Wheat, First Securities, Inc.
as U.S. Representatives of the several U.S. Underwriters
▇/▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Ladies and Gentlemen:
Trigon Healthcare, Inc., a Virginia corporation (the "Company"),
proposes to issue shares of its Class A Common Stock, par value $.01 per share
(shares of which class of stock of the Company are hereinafter referred to as
"Common Stock"), in connection with the conversion (the "Demutualization") of
Blue Cross and Blue Shield of Virginia (doing business as Trigon Blue Cross Blue
Shield), a mutual insurance company organized under the laws of the Commonwealth
of Virginia ("Virginia BCBS"), into a Virginia stock corporation pursuant to
Virginia BCBS's Amended and Restated Plan of Demutualization dated October 31,
1996 (the "Plan"), as approved by the members of the Virginia BCBS on September
6, 1996 and approved after a public hearing by the Virginia State Corporation
Commission on November 5, 1996. Upon consummation of the Plan, Virginia BCBS
will convert into a stock insurance corporation, Trigon Merger Sub, Inc., a
Virginia corporation and a wholly-owned subsidiary of the Company ("TMSI"), will
merge with
and into Virginia BCBS, in a merger in which Virginia BCBS will be the surviving
company (the "Merger") and Virginia BCBS will become a wholly owned subsidiary
of the Company and will be renamed Trigon Insurance Company ("Trigon
Insurance"). Pursuant to the Plan, the Company proposes to (i) issue to Eligible
Members (as defined in the Plan) shares of Common Stock (such shares allocated
to Eligible Members, exclusive of shares allocated to Eligible Members in
respect of which cash is paid in lieu of such shares, being referred to herein
as "Member Shares") in exchange for their Membership Interest (as defined in the
Plan) and (ii) subject to the terms and conditions stated herein, to issue and
sell to ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated
("▇▇▇▇▇▇▇ ▇▇▇▇▇") and each of the other U.S. Underwriters named in Schedule A
hereto (collectively, the "U.S. Underwriters", which term shall also include any
underwriter substituted as hereinafter provided in Section 10 hereof), for whom
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇. ▇▇▇▇▇ & Sons Incorporated, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Inc.,
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated and Wheat, First Securities, Inc. are acting
as representatives (in such capacity, the "U.S. Representatives"), with respect
to the issue and sale by the Company and the purchase by the U.S. Underwriters,
acting severally and not jointly, of the respective numbers of shares of Common
Stock of the Company set forth in said Schedule A, and with respect to the grant
by the Company to the U.S. Underwriters, acting severally and not jointly, of
the option described in Section 2(b) hereof to purchase all or any part of
________ additional shares of Common Stock to cover over-allotments, if any. The
aforesaid ________ shares of Common Stock (the "Initial U.S. Securities") to be
purchased by the U.S. Underwriters and all or any part of the ________ shares of
Common Stock subject to the option described in Section 2(b) hereof (the "U.S.
Option Securities") are hereinafter called, collectively, the "U.S. Securities".
On the Effective Date (as defined in the Plan), the Membership Interests of all
Members (as defined in the Plan) will be canceled and, as soon as reasonably
practicable thereafter, the Member Shares and cash will be issued to Eligible
Members. In addition, as required by the Plan, the Company will make a payment
in cash or a combination of cash and shares of its Class C redeemable voting
Common Stock, par value $.01 per share ("Class C Stock"), to the Treasurer of
the Commonwealth of Virginia, in addition to any shares of Common Stock that the
Commonwealth may be entitled to receive as an Eligible Member, in an amount
equal to the amount required to be paid by Virginia Code ss.38.2-1005.1B.4 (the
"Commonwealth Payment").
It is understood that the Company and Virginia BCBS are concurrently
entering into an agreement dated the date hereof (the "International Purchase
Agreement") providing for the offering by the Company of an aggregate of
________ shares of Common Stock (the "Initial International Securities") through
arrangements with certain underwriters outside the United States and Canada (the
"International Managers") for which ▇▇▇▇▇▇▇ ▇▇▇▇▇ International, Alex. ▇▇▇▇▇ &
Sons Incorporated, ▇▇▇▇ ▇▇▇▇▇▇ International Ltd., ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co.
International Limited and Wheat, First Securities, Inc. are acting as lead
managers (the "Lead Managers") and the grant by the Company to the International
Managers, acting severally and not jointly, of an option to purchase all or any
part of the International Managers' pro rata portion of up to ________
additional shares of Common Stock solely to cover over allotments, if any (the
"International Option Securities" and, together with the U.S. Option Securities,
the "Option Securities"). The Initial International Securities and the
International Option Securities are hereinafter called the
"International Securities". It is understood that the Company is not obligated
to sell and the U.S. Underwriters are not obligated to purchase, any Initial
U.S. Securities unless all of the Initial International Securities are
contemporaneously purchased by the International Managers.
The U.S. Underwriters and the International Managers are hereinafter
collectively called the "Underwriters", the Initial U.S. Securities and the
Initial International Securities are hereinafter collectively called the
"Initial Securities", and the U.S. Securities and the International Securities
are hereinafter collectively called the "Securities".
The Underwriters will concurrently enter into an Intersyndicate
Agreement of even date herewith (the "Intersyndicate Agreement") providing for
the coordination of certain transactions among the Underwriters under the
direction of ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated (in such capacity, the "Global Coordinator").
The Company understands that the U.S. Underwriters propose to make a
public offering of the U.S. Securities as soon as the U.S. Representatives deem
advisable after this Agreement has been executed and delivered.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-1 (No. 333-09773) covering the
registration of the Securities under the Securities Act of 1933, as amended (the
"1933 Act"), including the related preliminary prospectus or prospectuses.
Promptly after execution and delivery of this Agreement, the Company will either
(i) prepare and file a prospectus in accordance with the provisions of Rule 430A
("Rule 430A") of the rules and regulations of the Commission under the 1933 Act
(the "1933 Act Regulations") and paragraph (b) of Rule 424 ("Rule 424(b)") of
the 1933 Act Regulations or (ii) if the Company has elected to rely upon Rule
434 ("Rule 434") of the 1933 Act Regulations, prepare and file a term sheet (a
"Term Sheet") in accordance with the provisions of Rule 434 and Rule 424(b). Two
forms of prospectus are to be used in connection with the offering and sale of
the Securities: one relating to the U.S. Securities (the "Form of U.S.
Prospectus") and one relating to the International Securities (the "Form of
International Prospectus"). The Form of International Prospectus is identical to
the Form of U.S. Prospectus, except for the front cover and back cover pages and
the information under the caption "Underwriting" and the inclusion in the Form
of International Prospectus of a section under the caption "Certain United
States Tax Considerations to Non-U.S. Holders." The information included in any
such prospectus or in any such Term Sheet, as the case may be, 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
(a) pursuant to paragraph (b) of Rule 430A is referred to as "Rule 430A
Information" or (b) pursuant to paragraph (d) of Rule 434 is referred to as
"Rule 434 Information." Each Form of U.S. Prospectus and Form of International
Prospectus used before such registration statement became effective, and any
prospectus that omitted, as applicable, the Rule 430A Information or the Rule
434 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 and the Rule 434 Information, as applicable, is herein called the
"Registration Statement." Any registration statement filed pursuant to Rule
462(b) of the 1933 Act Regulations is herein referred to as the "Rule 462(b)
Registration Statement," and after such filing the term "Registration Statement"
shall include the Rule 462(b) Registration Statement. The final Form of U.S.
Prospectus and the final Form of International Prospectus in the forms first
furnished to the Underwriters for use in connection with the offering of the
Securities are herein called the "U.S. Prospectus" and the "International
Prospectus," respectively, and collectively, the "Prospectuses." If Rule 434 is
relied on, the terms "U.S. Prospectus" and "International Prospectus" shall
refer to the preliminary U.S. Prospectus dated _____, 1997 and preliminary
International Prospectus dated ____, 1997, respectively, each together with the
applicable Term Sheet and all references in this Agreement to the date of such
Prospectuses shall mean the date of the applicable Term Sheet. For purposes of
this Agreement, all references to the Registration Statement, any preliminary
prospectus, the U.S. Prospectus, the International Prospectus or any Term Sheet
or any amendment or supplement to any of the foregoing shall be deemed to
include the copy filed with the Commission pursuant to its Electronic Data
Gathering, Analysis and Retrieval system ("▇▇▇▇▇").
SECTION 1. Representations and Warranties.
(a) Representations and Warranties by the Company. Each of the Company
and Virginia BCBS, jointly and severally, represents and warrants to each U.S.
Underwriter as of the date hereof, as of the Closing Time referred to in Section
2(c) hereof, and as of each Date of Delivery (if any) referred to in Section
2(b), hereof and agrees with each U.S. Underwriter, as follows:
(i) Compliance with Registration Requirements. Each of the
Registration Statement and any Rule 462(b) Registration Statement has
become effective under the 1933 Act and no stop order suspending the
effectiveness of the Registration Statement or any Rule 462(b)
Registration Statement has been issued under the 1933 Act and no
proceedings for that purpose have been instituted or are pending or, to
the knowledge of the Company or Virginia BCBS, are contemplated by the
Commission, and any request on the part of the Commission for
additional information has been complied with.
At the respective times the Registration Statement, any Rule
462(b) Registration Statement and any post-effective amendments thereto
became effective and at the Closing Time (and, if any U.S. Option
Securities are purchased, at the Date of Delivery), the Registration
Statement, the Rule 462(b) Registration Statement and any amendments
and supplements thereto complied and will comply in all material
respects with the requirements of the 1933 Act and the 1933 Act
Regulations and did not and will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading.
Neither of the Prospectuses nor any amendments or supplements thereto,
at the time the Prospectuses or
any amendments or supplements thereto were issued and at the Closing
Time (and, if any U.S. Option Securities are purchased, at the 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. If Rule 434 is used, the
Company will comply with the requirements of Rule 434 and the
Prospectuses shall not be "materially different", as such term is used
in Rule 434, from the prospectuses included in the Registration
Statement at the time it became effective. The representations and
warranties in this subsection shall not apply to statements in or
omissions from the Registration Statement or the U.S. Prospectus made
in reliance upon and in conformity with information furnished to the
Company in writing by any U.S. Underwriter through the U.S.
Representatives or any International Manager through the Lead Managers
expressly for use in the Registration Statement or the U.S. Prospectus.
Each preliminary prospectus and the prospectuses filed as part
of the Registration Statement as originally filed or as part of any
amendment thereto, or filed pursuant to Rule 424 under the 1933 Act,
complied when so filed in all material respects with the 1933 Act
Regulations and each preliminary prospectus and the Prospectuses
delivered to the Underwriters for use in connection with this offering
was identical to the electronically transmitted copies thereof filed
with the Commission pursuant to ▇▇▇▇▇, except to the extent permitted
by Regulation S-T.
(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 financial statements included
in the Registration Statement and the Prospectuses, together with the
related schedules and notes, present fairly the financial position of
Virginia BCBS and its consolidated subsidiaries at the dates indicated
and the results of operations and cash flows of Virginia BCBS and its
consolidated subsidiaries for the periods specified; said financial
statements have been prepared in conformity with generally accepted
accounting principles ("GAAP") applied on a consistent basis throughout
the periods involved. The supporting schedules included in the
Registration Statement present fairly in accordance with GAAP the
information required to be stated therein. The selected financial data
and the summary financial information included in the Prospectuses
present fairly the information shown therein and have been compiled on
a basis consistent with that of the audited financial statements
included in the Registration Statement. The pro forma financial
statements and the related notes thereto included in the Registration
Statement and the Prospectuses present fairly the information shown
therein, have been prepared in accordance with the Commission's rules
and guidelines with respect to pro forma financial statements 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) Statutory Financial Statements. The statutory financial
statements of Virginia BCBS and its subsidiaries, from which certain
ratios and other statistical data contained in the Registration
Statement have been derived, have for each relevant period been
prepared in accordance with accounting practices prescribed or
permitted by the National Association of Insurance Commissioners and
the insurance department of the Common wealth of Virginia, and such
accounting practices have been applied on a consistent basis throughout
the periods involved, except as disclosed therein.
(v) No Material Adverse Change in Business. Since the
respective dates as of which information is given in the Registration
Statement and the Prospectuses, except as otherwise stated therein, (A)
there has been no material adverse change in the condition, financial
or otherwise, or in the earnings, business affairs or business
prospects of Trigon considered as one enterprise, whether or not
arising in the ordinary course of business, (B) there have been no
transactions entered into by Trigon, other than those in the ordinary
course of business, which are material with respect to Trigon
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. For purposes of this Agreement, "Trigon"
shall mean Virginia BCBS as a mutual insurance company and its
subsidiaries, including the Company, at all times prior to the
effectiveness of the Plan and the Company and its subsidiaries,
including Trigon Insurance as a stock corporation, at all times on and
after the effectiveness of the Plan.
(vi) Good Standing of the Company, Virginia BCBS and TMSI. The
Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the Commonwealth of
Virginia; Virginia BCBS has been duly organized and, since its
conversion to a mutual insurance company in 1991 until immediately
prior to the effectiveness of the Plan, has and will continue to be
validly existing as a mutual insurance company in good standing under
the laws of the Commonwealth of Virginia; upon the effectiveness of the
Plan, Trigon Insurance will be validly existing as a stock corporation
in good standing under the laws of the Commonwealth of Virginia; each
of the Company and Virginia BCBS has corporate power and authority to
own, lease and operate its properties and to conduct its business as
described in the Prospectuses and to enter into and perform its
obligations under this Agreement; and each of the Company and Virginia
BCBS 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 reasonably be
expected to result in a material adverse effect on the condition,
financial or otherwise, or in the earnings, business affairs or
business prospects of Trigon considered as one enterprise (a "Material
Adverse Effect"). TMSI has been duly incorporated and, until
immediately prior to the
effectiveness of the Plan, will continue to be duly incorporated and
validly existing as a stock corporation in good standing under the laws
of the Commonwealth of Virginia.
(vii) Good Standing of Subsidiaries. Each of the subsidiaries
listed on Exhibit 21 to the Registration Statement, which are the only
subsidiaries of Virginia BCBS, 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 Prospectuses and is duly qualified as a
foreign corporation to transact business and is in good standing in
each jurisdiction in which such qualification is required, whether by
reason of the ownership or leasing of property or the conduct of
business, except where the failure so to qualify or to be in good
standing could not reasonably be expected to result in a Material
Adverse Effect; except as otherwise disclosed in 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 such subsidiary was issued in violation
of the preemptive or similar rights of any securityholder of such
subsidiary. Prior to the effectiveness of the Plan, the Company will
have no subsidiaries other than TMSI and, upon the effectiveness of the
Plan, will have no subsidiaries other than Trigon Insurance and
subsidiaries of Trigon Insurance.
(viii) Capitalization. Prior to the effectiveness of the Plan,
upon the filing with the State Corporation Commission of the
Commonwealth of Virginia ("the State Corporation Commission") of the
Articles of Incorporation of the Company in the form filed as an
Exhibit to the Registration Statement, the Company will have an
authorized capitalization as set forth in the Prospectus.
(ix) Demutualization and Merger. Upon the effectiveness of the
Plan and pursuant to the Merger: (a) TMSI will be merged with and into
Virginia BCBS, the separate existence of TMSI will cease, and Virginia
BCBS will become a wholly owned subsidiary of the Company; (b) Trigon
Insurance will become a stock corporation incorporated under and
governed by the Virginia Stock Corporation Act, ss.13.1-601 et seq.;
(c) each issued and outstanding share of common stock of TMSI owned by
the Company immediately prior to the effectiveness of the Plan shall,
as a result of the Merger and without any action on the part of the
Company, be canceled and converted into one share of stock of Trigon
Insurance; (d) all Membership Interests of all Members in Virginia BCBS
shall be canceled, and in consideration for their Membership Interests,
including their interests in the surplus of Virginia BCBS, Eligible
Members shall be entitled to receive Common Stock from the Company
and/or cash from Trigon Insurance pursuant to and in accordance with
the Plan; and (e) all issued and outstanding shares of capital stock in
the Company owned by Virginia BCBS shall be canceled. The Company shall
make the Commonwealth Payment in accordance with the Plan.
(x) Authorization of Agreement. This Agreement and the
International Purchase Agreement have been duly authorized, executed
and delivered by the Company and Virginia BCBS.
(xi) Authorization and Description of Securities. The
Securities to be purchased by the U.S. Underwriters and the
International Managers from the Company have been duly authorized for
issuance and sale to the U.S. Underwriters pursuant to this Agreement
and the International Managers pursuant to the International Purchase
Agreement, respectively, and, when issued and delivered by the Company
pursuant to this Agreement and the International Purchase Agreement,
respectively, against payment of the consideration set forth herein and
the International Purchase Agreement, respectively, will be validly
issued, fully paid and non-assessable; the Common Stock conforms to all
statements relating thereto contained in the Prospectuses and such
description conforms to the rights set forth in the instruments
defining the same; no holder of the Securities will be personally
liable for any debts, obligations, liabilities or losses of the Company
by reason of being such a holder; and the issuance of the Securities is
not subject to the preemptive or other similar rights of any
securityholder of the Company.
(xii) Authorization of Capital Stock of TMSI and Trigon
Insurance. As of the date hereof and at all times subsequent hereto up
to the effectiveness of the Plan, all of the issued and outstanding
shares of capital stock of TMSI shall have been duly authorized and
validly issued and shall be fully paid and non-assessable and shall be
owned by the Company, free and clear of any security interest,
mortgage, pledge, lien, encumbrance, claim or equity. Upon
effectiveness of the Plan, all of the outstanding shares of capital
stock of Trigon Insurance will have been duly authorized and, when
issued and delivered to the Company pursuant to the Plan, will be
validly issued, fully paid and non-assessable and will be owned by the
Company, free and clear of any security interest, mortgage, pledge,
lien, encumbrance claim or equity.
(xiii) Authorization and Description of Member Shares. The
Member Shares have been duly authorized, and when issued and delivered
to Eligible Members in exchange for their Membership Interests pursuant
to the Plan, will be validly issued, fully paid and non-assessable; no
holder thereof will be personally liable for any debts, obligations,
liabilities or losses of the Company by reason of being such a holder;
such Member Shares are not subject to the preemptive or other similar
rights of any securityholder of the Company and all corporate action
required to be taken for the authorization and issuance of the Member
Shares has been validly and sufficiently taken.
(xiv) Exemption from 1933 Act. The issuance and delivery of
the Member Shares to Eligible Members in exchange for their Membership
Interests pursuant to the Plan is exempt from the registration
requirements of the 1933 Act.
(xv) Absence of Defaults and Conflicts. Neither the Company,
Virginia BCBS or 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, Virginia
BCBS 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, Virginia BCBS or any subsidiary is subject (collectively,
"Agreements and Instruments"), except for such defaults that could not
reasonably be expected to result in a Material Adverse Effect; and the
execution, delivery and performance of this Agreement, the
International Purchase Agreement and the Plan and the consummation of
the transactions contemplated in this Agreement, the Inter national
Purchase Agreement, the Plan and the Registration Statement (including
the issuance of the Member Shares to Eligible Members in exchange for
their Membership Interests pursuant to the Plan, the issuance of cash
and Class C Stock to the Treasurer of the Commonwealth of Virginia in
satisfaction of the Commonwealth payment pursuant to the Plan, and the
issuance and sale of the Securities and the use of the proceeds from
the sale of the Securities as described in the Prospectuses under the
caption "Use of Proceeds") and compliance by the Company and Virginia
BCBS with their obligations under this Agreement, the International
Purchase Agreement and the Plan have been duly authorized by all
necessary corporate action and do not and will not, whether with or
without the giving of notice or passage of time or both, conflict with
or constitute a breach of, or default 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,
Virginia BCBS or any subsidiary pursuant to, the Agreements and
Instruments (except for such conflicts, breaches or defaults or liens,
charges or encumbrances that could 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,
Virginia BCBS or any subsidiary 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, Virginia BCBS or any subsidiary or any
of their assets, properties or operations (other than foreign or state
securities, insurance securities or blue sky laws in connection with
the offering, issuance or sale of the Securities under this Agreement
and the International Purchase Agreement), except for such violations
resulting from the failure to make or obtain or comply with such
filings, authorizations, approvals, consents, licenses, orders,
registrations, qualifications or decrees in connection with the Plan
that could not reasonably be expected to have a Material Adverse Effect
or have a material adverse effect on the ability of the Company or
Virginia BCBS to perform their respective obligations under the Plan or
to consummate the transactions contemplated therein. 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, Virginia BCBS or any subsidiary.
(xvi) Absence of Labor Dispute. No labor dispute with the
employees of the Company, Virginia BCBS or any of its subsidiaries
exists or, to the knowledge of the Company or Virginia BCBS, is
imminent, and the Company and Virginia BCBS are not aware of any
existing or imminent labor disturbance by the employees of any of its
or any subsidiary's principal suppliers, customers or contractors,
which, in either case, may reasonably be expected to result in a
Material Adverse Effect.
(xvii) Absence of Proceedings. Except for matters disclosed in
the Registration Statement, 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, or, to the knowledge
of the Company or Virginia BCBS, threatened, against or affecting the
Company, Virginia BCBS or any of its subsidiaries, which is required to
be disclosed in the Registration Statement, or which might reasonably
be expected to result in a Material Adverse Effect, or which might
reasonably be expected to materially and adversely affect the
properties or assets thereof or the consummation of the transactions
contemplated in this Agreement, the International Purchase Agreement
and the Plan or the performance by the Company or Virginia BCBS of its
obligations hereunder or thereunder; and the aggregate of all pending
legal or governmental proceedings to which the Company, Virginia BCBS
or any subsidiary is a party or of which any of their respective
property or assets is the subject which are not described in the
Registration Statement, including ordinary routine litigation
incidental to the business, could not reasonably be expected to result
in a Material Adverse Effect.
(xviii) Accuracy of Exhibits. There are no contracts or
documents which are required to be described in the Registration
Statement or the Prospectuses or to be filed as exhibits thereto which
have not been so described and filed as required.
(xix) Possession of Intellectual Property. The Company,
Virginia BCBS and its 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 the business now operated by them, and neither the Company,
Virginia BCBS nor any of its 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 would render any Intellectual Property invalid or
inadequate to protect the interest of the Company, Virginia BCBS or any
of its subsidiaries therein, and which infringement or conflict (if the
subject of any unfavorable decision, ruling or finding) or invalidity
or inadequacy, singly or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect.
(xx) 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
Virginia BCBS of their respective obligations hereunder or under the
Plan, in connection with the offering, issuance or sale of the
Securities under this Agreement and the International Purchase
Agreement, in connection with the issuance of the Member Shares to
Eligible Members in exchange for their Membership Interests and of cash
and Class C Stock to the Treasurer of the Commonwealth of Virginia in
satisfaction of the Common wealth Payment pursuant to the Plan, or the
consummation of the transactions contemplated by this Agreement, the
International Purchase Agreement and the Plan, except (a) such as have
been already obtained or as may be required under the 1933 Act or the
1933 Act Regulations and foreign or state securities, insurance
securities or blue sky laws in connection with the offering, issuance
or sale of the Securities under this Agreement and the International
Purchase Agreement and (b) such filings, authorizations, approvals,
consents, licenses, orders, registrations, qualifications or decrees in
connection with the Plan that, if not made or obtained or complied
with, could not reasonably be expected to have a Material Adverse
Effect or have a material adverse effect on the ability of the Company
or Virginia BCBS to perform their respective obligations under the Plan
or to consummate the transactions contemplated therein.
(xxi) BCBSA License. Virginia BCBS is in full compliance with
the requirements of the Blue Cross License Agreement, dated as of
November 16, 1995, between Virginia BCBS and the Blue Cross and Blue
Shield Association (the "BCBSA"), and the Virginia Blue Shield License
Agreement, dated as of November 16, 1995, between Virginia BCBS and the
BCBSA, except in each case where noncompliance could not reasonably be
expected to have a Material Adverse Effect. Upon execution thereof by
the Company on or prior to the Effective Date, the License Agreement
attached as Exhibit 10.1 to the Registration Statement (the "New
License Agreement") shall become effective and enforceable against the
Company and, to the best of the Company's and Virginia BCBS' knowledge,
the BCBSA in accordance with its terms. Each of Virginia BCBS's
subsidiaries that is required by the BCBSA as of the date hereof, or
that will be required by the BCBSA as of the Closing Time, to be a
party to a Blue Cross Affiliate License Agreement is in full compliance
with the requirements of such agreement, except in each case where
noncompliance could not reasonably be expected to have a Material
Adverse Effect.
(xxii) Possession of Licenses and Permits. The Company,
Virginia BCBS and its subsidiaries each possess such permits, licenses,
approvals, consents and other authorizations (collectively,
"Governmental Licenses") issued by the appropriate federal, state,
local or foreign regulatory agencies or bodies necessary to conduct the
business now operated by them, except where the failure to possess such
Government Licenses could not reasonably be expected to have a Material
Adverse Effect; the Company, Virginia BCBS and its subsidiaries each
are in compliance with the terms and conditions of all such
Governmental Licenses, except where the failure so to comply could not
reasonably be expected, singly or in the aggregate, to have 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 could not reasonably be expected to have a Material
Adverse Effect; and neither the Company, Virginia BCBS nor any of its
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, might reasonably be expected to result in a Material
Adverse Effect.
(xxiii) Insurance Licenses. The Company has made all required
filings under insurance holding statutes applicable to it, and is duly
licensed or authorized as an insurance holding company in each
jurisdiction in which it is or will immediately after the effectiveness
of the Plan be required to be so licensed or authorized, except where
the failure to have made such filings or to be so licensed or
authorized in any such jurisdiction could not reasonably be expected to
have a Material Adverse Effect. Each of Virginia BCBS and its
subsidiaries which is engaged in the insurance business (the "Insurance
Subsidiaries") is duly licensed or authorized to conduct its insurance
business under the insurance laws of each jurisdiction in which it
conducts such business so as to require such licensing or
authorization, except where the failure to be so licensed or authorized
could not reasonably be expected to have a Material Adverse Effect; all
such licenses or authorizations are in full force and effect and
neither the Company, Virginia BCBS nor any Insurance Subsidiary has
received any notice of any event, inquiry, investigation or proceeding
that would reasonably be expected to result in the suspension,
revocation or limitation of any such licenses or authorizations or
otherwise impose any limitation on the conduct of the business of the
Company, Virginia BCBS or any Insurance Subsidiary, except any such
suspension, revocation or limitation which could not reasonably be
expected to have a Material Adverse Effect, and to the Company's,
Virginia BCBS's and the Insurance Subsidiaries' knowledge, there is no
sustainable basis under current law, regulation or judicial
interpretation for any such suspension, revocation or limitation; each
of Virginia BCBS and the Insurance Subsidiaries is in compliance with,
and conducts its businesses in conformity with, all applicable
insurance laws and regulations, except where the failure to comply or
conform could not reasonably be expected to have a Material Adverse
Effect; and Virginia BCBS has disclosed in writing to the U.S.
Representatives all pending significant examinations, and all
significant examinations which have been completed and filed since the
fiscal year ending December 31, 1990, by any governmental authority
having jurisdiction to regulate the insurance operations of Virginia
BCBS or any Insurance Subsidiary. Each of the subsidiaries of Virginia
BCBS operating as a health maintenance organization (the "HMO
Subsidiaries") is duly licensed as a health maintenance organization
under the laws of each jurisdiction in which it conducts such business
so as to require such licensing, except where the failure to be so
licensed could not reasonably be expected to have a Material Adverse
Effect. Each of ____________, ____________ and _______________ is duly
qualified as a health maintenance
organization under The Health Maintenance Organization Act of 1973, as
amended, and the rules and regulations of the Department of Health and
Human Services thereunder.
(xxiv) Title to Property. The Company, Virginia BCBS and its
subsidiaries have good and marketable title to all real property owned
by the Company, Virginia BCBS and its subsidiaries and good title to
all other properties owned by them, in each case, free and clear of all
mortgages, pledges, liens, security interests, claims, restrictions or
encumbrances of any kind except such as (a) are described in the
Prospectuses or (b) do not, singly or in the aggregate, materially
affect the value of such property and do not interfere with the use
made and proposed to be made of such property by the Company, Virginia
BCBS or any of its subsidiaries; and all of the leases and subleases
material to the business of Trigon and its subsidiaries, considered as
one enterprise, and under which the Company, Virginia BCBS or any of
its subsidiaries holds properties described in the Prospectuses, are in
full force and effect, and neither the Company, Virginia BCBS nor any
subsidiary has any notice of any claim of any sort that has been
asserted by anyone adverse to the rights of the Company, Virginia BCBS
or any subsidiary under any of the leases or subleases mentioned above,
or affecting or questioning the rights of the Company, Virginia BCBS or
such subsidiary to the continued possession of the leased or subleased
premises under any such lease or sublease, and which if adversely
decided could reasonably be expected to have a Material Adverse Effect.
(xxv) Maintenance of Insurance. The Company, Virginia BCBS and
each of its subsidiaries maintain insurance policies with respect to
such insurable properties, potential liabilities and occurrences that
merit or require catastrophic insurance in amounts deemed adequate in
the reasonable opinion of the management for the Company and Virginia
BCBS or maintain a system or systems of self-insurance or assumption of
risk which accords with the practices of similar businesses; all such
insurance policies are in full force and effect.
(xxvi) Due Adoption of the Plan. The Plan was duly adopted on
September 6, 1996 by a vote (the "Policyholder Vote") of more than
two-thirds of the votes validly cast by Voting Members (as defined in
the Plan) (which adoption complied with the applicable requirements of
Virginia Code ss.38.2-1005.1) and such adoption has not been rescinded
or otherwise withdrawn; on November 5, 1996 the State Corporation
Commission issued a final order approving the Plan in accordance with
the requirements of Virginia Code ss.38.2-1005.1 (the "Commission
Order"); the time period within which an appeal to the Commission Order
must be noted for an appeal to be validly made has expired and, to the
Company's and Virginia BCBS's knowledge, no appeals were so noted;
prior to the Effective Date, Virginia BCBS will have filed with the
State Corporation Commission in accordance with Virginia law the
Articles of Merger (as defined in the Plan) together with a copy of the
Plan so approved; no other approvals are required to be obtained under
Virginia law for the effectiveness of the Plan; on the Effective Date,
the Plan will become effective in accordance with its terms pursuant to
Virginia Code ss.38.2-1005.1 and the
Demutualization will be completed in accordance with the Plan and the
laws of the Commonwealth of Virginia applicable to the reorganization
of mutual insurance companies into stock corporations effected through
a merger and any rules and regulations of the State Corporation
Commission in respect thereof, in each case as administered or
interpreted by the State Corporation Commission in respect thereof; and
prior to or contemporaneously with the Closing Time each of the actions
required to occur and conditions required to be satisfied on or prior
to the effectiveness of the Plan pursuant to the Commission's Order or
the Plan will have occurred or been satisfied.
(xxvii) Compliance with Tax Laws. All material income, payroll
and sales tax returns required to have been filed prior to the date
hereof or the Closing Time by the Company, Virginia BCBS or any of its
subsidiaries, in any jurisdiction, shall have been so filed, and all
material taxes, including related withholding taxes, penalties and
interest, assessments and other charges due or claimed to be due from
such entities have been paid, other than those being contested in good
faith and for which adequate reserves have been provided or those
currently payable without penalty or interest.
(xxviii) Investment Company Act. The Company is not, and upon
the issuance of the Member Shares to Eligible Members in exchange for
their Membership Interests pursuant to the Plan and the issuance and
sale of the Securities as herein contemplated and the application of
the net proceeds therefrom as described in the Prospectuses will not
be, nor is Virginia BCBS or any of its subsidiaries, 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").
(xxix) Environmental Laws. Except as described in the
Registration Statement and except as could not reasonably be expected,
singly or in the aggregate, to result in a Material Adverse Effect, (A)
neither the Company, Virginia BCBS nor any of its subsidiaries is in
violation of any federal, state, local or foreign statute, law, rule,
regulation, 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, 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, petroleum or petroleum products
(collectively, "Hazardous Materials") or to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport
or handling of Hazardous Materials (collectively, "Environmental
Laws"), (B) the Company, Virginia BCBS and its subsidiaries 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, Virginia BCBS or any of its
subsidiaries 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, Virginia
BCBS or any of its subsidiaries relating to Hazardous Materials or any
Environmental Laws.
(xxx) Registration Rights. There are no persons with
registration rights or other similar rights to have any securities
registered pursuant to the Registration Statement or otherwise
registered by the Company under the 1933 Act.
(b) Officer's Certificates. Any certificate signed by any officer
of the Company, Virginia BCBS or any of its subsidiaries delivered to the Global
Coordinator, the U.S. Representatives or to counsel for the U.S. Underwriters
shall be deemed a representation and warranty by the Company, Virginia BCBS to
each U.S. Underwriter as to the matters covered thereby.
SECTION 2. Sale and Delivery to U.S. Underwriters; Closing.
(a) Initial U.S. 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 U.S. Underwriter, severally and not
jointly, and each U.S. Underwriter, severally and not jointly, agrees to
purchase from the Company, at the price per share set forth in Schedule B, the
number of Initial U.S. Securities set forth in Schedule A opposite the name of
such U.S. Underwriter, plus any additional number of Initial U.S. Securities
which such Underwriter may become obligated to purchase pursuant to the
provisions of Section 10 hereof.
(b) U.S. 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 U.S.
Underwriters, severally and not jointly, to purchase up to an additional
________ shares of Common Stock at the price per share set forth in Schedule B,
less an amount per share equal to any dividends or distributions declared by the
Company and payable on the Initial U.S. Securities but not payable on the U.S.
Option Securities. The option hereby granted will expire 30 days after the date
hereof and may be exercised in whole or in part from time to time only for the
purpose of covering over-allotments which may be made in connection with the
offering and distribution of the Initial U.S. Securities upon notice by the
Global Coordinator to the Company setting forth the number of U.S. Option
Securities as to which the several U.S. Underwriters are then exercising the
option and the time and date of payment and delivery for such U.S. Option
Securities. Any such time and date of delivery for the U.S. Option Securities (a
"Date of Delivery") shall be determined by the Global Coordinator, but shall not
be later than seven full business days after the exercise of said option, nor in
any event prior to the Closing Time, as hereinafter defined. If the option is
exercised as to all or any portion of the U.S. Option Securities, each of the
U.S. Underwriters, acting severally and not jointly, will
purchase that proportion of the total number of U.S. Option Securities then
being purchased which the number of Initial U.S. Securities set forth in
Schedule A opposite the name of such U.S. Underwriter bears to the total number
of Initial U.S. Securities, subject in each case to such adjustments as the
Global Coordinator in its discretion shall make to eliminate any sales or
purchases of fractional shares.
(c) Payment. Payment of the purchase price for, and delivery of
certificates for, the Initial Securities shall be made at the offices of
Debevoise & ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or at such
other place as shall be agreed upon by the Global Coordinator and the Company,
at 10:00 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 the Global Coordinator 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 U.S. Option Securities
are purchased by the U.S. Underwriters, payment of the purchase price for, and
delivery of certificates for, such U.S. Option Securities shall be made at the
above-mentioned offices, or at such other place as shall be agreed upon by the
Global Coordinator and the Company, on each Date of Delivery as specified in the
notice from the Global Coordinator to the Company.
Payment shall be made to the Company by wire transfer of immediately
available funds to a bank account designated by the Company, against delivery to
the U.S. Representatives for the respective accounts of the U.S. Underwriters of
certificates for the U.S. Securities to be purchased by them. It is understood
that each U.S. Underwriter has authorized the U.S. Representatives, for its
account, to accept delivery of, receipt for, and make payment of the purchase
price for, the Initial U.S. Securities and the U.S. Option Securities, if any,
which it has agreed to purchase. ▇▇▇▇▇▇▇ ▇▇▇▇▇, individually and not as
representative of the U.S. Underwriters, may (but shall not be obligated to)
make payment of the purchase price for the Initial U.S. Securities or the U.S.
Option Securities, if any, to be purchased by any U.S. Underwriter whose funds
have not been received by the Closing Time or the relevant Date of Delivery, as
the case may be, but such payment shall not relieve such U.S. Underwriter from
its obligations hereunder.
(d) Denominations; Registration. Certificates for the Initial U.S.
Securities and the U.S. Option Securities, if any, shall be in such
denominations and registered in such names as the U.S. Representatives may
request in writing at least one full business day before the Closing Time or the
relevant Date of Delivery, as the case may be. The certificates for the Initial
U.S. Securities and the U.S. Option Securities, if any, will be made available
for examination and packaging by the U.S. Representatives in The City of New
York not later than 10:00 A.M. (Eastern time) on the business day prior to the
Closing Time or the relevant Date of Delivery, as the case may be.
SECTION 3. Covenants of the Company and Virginia BCBS. The Company, and
Virginia BCBS with respect to subsection (m) below, covenants with each U.S.
Underwriter as follows:
(a) Compliance with Securities Regulations and Commission
Requests. The Company, subject to Section 3(b), will comply with the
requirements of Rule 430A or Rule 434, as applicable, and will notify
the Global Coordinator immediately, and confirm the notice in writing,
(i) when any post-effective amendment to the Registration Statement,
shall become effective, or any supplement to the Prospectuses or any
amended Prospectuses shall have been filed, (ii) of the receipt of any
comments from the Commission, (iii) of any request by the Commission
for any amendment to the Registration Statement or any amendment or
supplement to the Prospectuses or for additional information, and (iv)
of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or of any order preventing
or suspending the use of any preliminary prospectus, or of the
suspension of the qualification of the Securities for offering or sale
in any jurisdiction, or of the initiation or threatening of any
proceedings for any of such purposes. The Company will promptly effect
the filings necessary pursuant to Rule 424(b) and will take such steps
as it deems necessary to ascertain promptly whether the form of
prospectus transmitted for filing under Rule 424(b) was received for
filing by the Commission and, in the event that it was not, it will
promptly file such prospectus. The Company will make every reasonable
effort to prevent the issuance of any stop order and, if any stop order
is issued, to obtain the lifting thereof at the earliest possible
moment.
(b) Filing of Amendments. The Company will give the Global
Coordinator notice of its intention to file or prepare any amendment to
the Registration Statement (including any filing under Rule 462(b)),
any Term Sheet or any amendment, supplement or revision to either the
prospectus included in the Registration Statement at the time it became
effective or to the Prospectuses, will furnish the Global Coordinator
with copies of any such documents a reasonable amount of time prior to
such proposed filing or use, as the case may be, and will not file or
use any such document to which the Global Coordinator or counsel for
the U.S. Underwriters shall object.
(c) Delivery of Registration Statements. The Company has
furnished or will deliver to the U.S. Representatives and counsel for
the U.S. Underwriters, without charge, signed copies of the
Registration Statement as originally filed and of each amendment
thereto (including exhibits filed therewith or incorporated by
reference therein) and signed copies of all consents and certificates
of experts, and will also deliver to the U.S. Representatives, without
charge, a conformed copy of the Registration Statement as originally
filed and of each amendment thereto (without exhibits) for each of the
U.S. Underwriters. The copies of the Registration Statement and each
amendment thereto furnished to the U.S. Underwriters will be identical
to the electronically transmitted copies
thereof filed with the Commission pursuant to ▇▇▇▇▇, except to the
extent permitted by Regulation S-T.
(d) Delivery of Prospectuses. The Company has delivered to
each U.S. Underwriter, without charge, as many copies of each
preliminary prospectus as such U.S. Underwriter reasonably requested,
and the Company hereby consents to the use of such copies for purposes
permitted by the 1933 Act. The Company will furnish to each U.S.
Underwriter, without charge, during the period when the U.S. Prospectus
is required to be delivered under the 1933 Act or the Securities
Exchange Act of 1934 (the "1934 Act"), such number of copies of the
U.S. Prospectus (as amended or supplemented) as such U.S. Underwriter
may reasonably request. The U.S. Prospectus and any amendments or
supplements thereto furnished to the U.S. Underwriters will be
identical to the electronically transmitted copies thereof filed with
the Commission pursuant to ▇▇▇▇▇, except to the extent permitted by
Regulation S-T.
(e) Continued Compliance with Securities Laws. The Company
will comply with the 1933 Act and the 1933 Act Regulations so as to
permit the completion of the distribution of the Securities as
contemplated in this Agreement, the International Purchase Agreement
and in the Prospectuses. If at any time when a prospectus is required
by the 1933 Act to be delivered in connection with sales of the
Securities, any event shall occur or condition shall exist as a result
of which it is necessary, in the opinion of counsel for the U.S.
Underwriters or for the Company, to amend the Registration Statement or
amend or supplement any Prospectus in order that the Prospectuses will
not include any untrue statements of a material fact or omit to state a
material fact necessary in order to make the statements therein not
misleading in the light of the circumstances existing at the time it is
delivered to a purchaser, or if it shall be necessary, in the opinion
of such counsel, at any such time to amend the Registration Statement
or amend or supplement any Prospectus in order to comply with the
requirements of the 1933 Act or the 1933 Act Regulations, the Company
will promptly prepare and file with the Commission, subject to Section
3(b), such amendment or supplement as may be necessary to correct such
statement or omission or to make the Registration Statement or the
Prospectuses comply with such requirements, and the Company will
furnish to the U.S. Underwriters such number of copies of such
amendment or supplement as the U.S. Underwriters may reasonably
request.
(f) Blue Sky Qualifications. The Company will use its best
efforts, in cooperation with the U.S. Underwriters, to qualify the
Securities for offering and sale under the applicable securities laws
of such states and other jurisdictions (domestic or foreign) as the
Global Coordinator may designate and to maintain such qualifications in
effect for a period of not less than one year from the later of the
effective date of the Registration Statement and any Rule 462(b)
Registration Statement; provided, however, that the Company shall not
be obligated to file any general consent to service of process or to
qualify as a foreign corporation or as a dealer in securities in any
jurisdiction in which it is not so qualified or to subject itself to
taxation in respect of doing business in
any jurisdiction in which it is not otherwise so subject. In each
jurisdiction in which the Securities have been so qualified, the
Company will file such statements and reports as may be required by the
laws of such jurisdiction to continue such qualification 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 Prospectuses under "Use of Proceeds".
(i) Listing. The Company will use its best efforts to effect
the listing of the Common Stock (including the Member Shares and the
Securities) on the New York Stock Exchange.
(j) Restriction on Sale of Securities. During a period of 180
days from the date of the Prospectuses, the Company will not, without
the prior written consent of the Global Coordinator, (i) directly or
indirectly, offer, pledge, sell, contract to sell, sell any option or
contract to purchase, purchase any option or contract to sell, grant
any option, right or warrant to purchase or otherwise transfer or
dispose of any share of Common Stock or any securities convertible into
or exercisable or exchangeable for Common Stock or file any
registration statement under the 1933 Act with respect to any of the
foregoing or (ii) enter into any swap or any other agreement or any
transaction that transfers, in whole or in part, directly or
indirectly, the economic consequence of ownership of the Common Stock,
whether any such swap or transaction described in clause (i) or (ii)
above is to be settled by delivery of Common Stock or such other
securities, in cash or otherwise. The foregoing sentence shall not
apply to (A) the Securities to be sold hereunder or under the
International Purchase Agreement, (B) the Member Shares to Eligible
Members in connection with the consummation of the Demutualization
pursuant to the Plan, (C) shares of Common Stock issued pursuant to
Articles VI, VII or VIII of the Articles of Incorporation of the
Company, (D) options for shares of Common Stock granted to employees,
officers and directors of the Company or its subsidiaries pursuant to a
stock option plan adopted by the Company and (E) shares of Common Stock
issued in a private placement as consideration for any acquisition by
the Company, provided, that, with respect to clause (E) above, the U.S.
Underwriters shall have first obtained from any recipient of shares of
Common Stock an agreement in writing to be bound to the same
restrictions set forth in this Section 3(j).
(k) Reporting Requirements. The Company, during the period
when the Prospectuses are required to be delivered under the 1933 Act
or the 1934 Act, will file all documents required to be filed with the
Commission pursuant to the 1934 Act within the time periods required by
the 1934 Act and the rules and regulations of the Commission
thereunder.
(l) Compliance with Rule 463. The Company will file with the
Commission such reports on Form SR as may be required pursuant to Rule
463 of the 1933 Act Regulations.
(m) Consummation of the Plan. Prior to or contemporaneously
with the Closing Time, the Company and Virginia BCBS will take all
actions necessary in order to consummate the Plan and the transactions
contemplated thereby to have occurred at or prior to such date.
SECTION 4. Payment of Expenses. (a) Expenses. The Company will pay all
expenses incident to the performance of its obligations under this Agreement,
including (i) the preparation, printing and filing of the Registration Statement
(including financial statements and exhibits) as originally filed and of each
amendment thereto, (ii) the preparation, printing and delivery to the
Underwriters of this Agreement, any Agreement among Underwriters and such other
documents as may be required in connection with the offering, purchase, sale,
issuance or delivery of the Securities, (iii) the preparation, issuance and
delivery of the certificates for the Securities to the Underwriters, including
any stock or other transfer taxes and any stamp or other duties payable upon the
sale, issuance or delivery of the Securities to the Underwriters and the
transfer of the Securities between the U.S. Underwriters and the International
Managers, (iv) the fees and disbursements of the Company's counsel, accountants
and other advisors, (v) the qualification of the Securities under securities
laws in accordance with the provisions of Section 3(f) hereof, including filing
fees and the reasonable fees and disbursements of counsel for the Underwriters
in connection therewith and in connection with the preparation of the Blue Sky
Survey and any supplement thereto, (vi) the printing and delivery to the
Underwriters of copies of each preliminary prospectus, any Term Sheets and of
the Prospectuses and any amendments or supplements thereto, (vii) the
preparation, printing and delivery to the Underwriters of copies of the Blue Sky
Survey and any supplement thereto, (viii) the fees and expenses of any transfer
agent or registrar for the Securities, (ix) the filing fees incident to, and the
reasonable fees and disbursements of counsel to the Underwriters in connection
with, the review by the National Association of Securities Dealers, Inc. (the
"NASD") of the terms of the sale of the Securities and (x) the fees and expenses
incurred in connection with the listing of the Securities on the New York Stock
Exchange.
(b) Termination of Agreement. If this Agreement is terminated by the
U.S. Representatives in accordance with the provisions of Section 5 or Section
9(a)(i) hereof, the Company
shall reimburse the U.S. Underwriters for all of their out-of-pocket expenses,
including the reasonable fees and disbursements of counsel for the U.S.
Underwriters.
SECTION 5. Conditions of U.S. Underwriters' Obligations. The
obligations of the several U.S. Underwriters hereunder are subject to the
accuracy of the representations and warranties of the Company and Virginia BCBS
contained in Section 1 hereof or in certificates of any officer of the Company
or Virginia BCBS or any subsidiary of the Company or Virginia BCBS delivered
pursuant to the provisions hereof, to the performance by the Company and
Virginia BCBS of their respective covenants and other obligations hereunder, and
to the following further conditions:
(a) Effectiveness of Registration Statement. The Registration
Statement, including any Rule 462(b) Registration Statement, has become
effective and at Closing Time no stop order suspending the
effectiveness of the Registration Statement shall have been issued
under the 1933 Act or proceedings therefor initiated or threatened by
the Commission, and any request on the part of the Commission for
additional information shall have been complied with to the reasonable
satisfaction of counsel to the U.S. Underwriters. A prospectus
containing the Rule 430A Information shall have been filed with the
Commission in accordance with Rule 424(b) (or a post-effective
amendment providing such information shall have been filed and declared
effective in accordance with the requirements of Rule 430A) or, if the
Company has elected to rely upon Rule 434, a Term Sheet shall have been
filed with the Commission in accordance with Rule 424(b).
(b) Opinion of Counsel for Company and Virginia BCBS. At
Closing Time, the U.S. Representatives shall have received the
favorable opinion, dated as of Closing Time, of McGuire, Woods, Battle
& ▇▇▇▇▇▇, L.L.P., counsel for the Company and Virginia BCBS, in form
and substance satisfactory to counsel for the U.S. Underwriters,
together with signed or reproduced copies of such letter for each of
the other U.S. Underwriters to the effect set forth in Exhibit A hereto
and to such further effect as counsel to the U.S.
Underwriters may reasonably request.
(c) Opinion of Counsel for U.S. Underwriters. At Closing Time,
the U.S. Representatives shall have received the favorable opinion,
dated as of Closing Time, of Debevoise & ▇▇▇▇▇▇▇▇, counsel for the U.S.
Underwriters, together with signed or reproduced copies of such letter
for each of the other U.S. Underwriters with respect to the matters set
forth in clauses (vii), (viii), (ix), (xi) (solely as to the
information in the Prospectus under "Description of Capital
Stock--Description of Common Stock") and the penultimate paragraph of
Exhibit A hereto. In giving such opinion such counsel may rely, as to
all matters governed by Virginia law, upon the opinions of McGuire,
Woods, Battle & ▇▇▇▇▇▇, L.L.P., counsel for the Company and Virginia
BCBS. Such counsel may also state that, insofar as such opinion
involves factual matters, they have relied, to the extent they deem
proper, upon certificates of officers of the Company, Virginia BCBS and
its subsidiaries and certificates of public officials.
(d) Officers' Certificates. At Closing Time, there shall not
have been, since the date hereof or since the respective dates as of
which information is given in the Prospectuses, any material adverse
change in the condition, financial or otherwise, or in the earnings,
business affairs or business prospects of Trigon considered as one
enterprise, whether or not arising in the ordinary course of business,
and the U.S. Representatives shall have received certificates of the
President or a Vice President of each of the Company and Virginia BCBS
and of the chief financial or chief accounting officer of each of the
Company and Virginia BCBS, 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 Virginia BCBS 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 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 U.S. Representatives shall have received from
KPMG Peat Marwick LLP a letter dated such date, in form and substance
satisfactory to the U.S. Representatives, together with signed or
reproduced copies of such letter for each of the other U.S.
Underwriters containing statements and information of the type
ordinarily included in accountants' "comfort letters" to underwriters
with respect to the financial statements and certain financial
information contained in the Registration Statement and the
Prospectuses.
(f) Bring-down Comfort Letter. At Closing Time, the
Representative(s) shall have received from KPMG Peat Marwick 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 Securities and
the Member Shares shall have been approved for listing on the New York
Stock Exchange, subject only to official notice of issuance.
(h) No Objection. The NASD shall not have raised any
objection with respect to the fairness and reasonableness of the
underwriting terms and arrangements.
(i) License Agreement. At Closing Time, the New License
Agreement shall have been entered into by and between the BCBSA and the
Company.
(j) Opinion of Special Tax Counsel for Virginia BCBS.
Virginia BCBS shall have received an opinion of McGuire, Woods, Battle
& ▇▇▇▇▇▇, L.L.P., special tax
counsel for Virginia BCBS, in form and substance satisfactory to
counsel for the U.S. Underwriters, to the effect that the summary of
federal income tax consequences provided to Eligible Members in the
Member Information Statement dated August 2, 1996 remains accurate
under the applicable federal income tax law and other authorities in
effect on the Effective Date, except for any developments between the
mailing date thereof and the Effective Date that are specifically
identified in such opinion, provided that (i) in the opinion of such
counsel, the principal federal income tax consequences to Eligible
Members and to Virginia BCBS of such developments were anticipated and
accurately described in all material respects in such Member
Information Statement, (ii) Virginia BCBS has determined that the
principal federal income tax consequences of such developments are not
materially adverse to the interests of the Eligible Members or Virginia
BCBS, or (iii) such developments are not described in (i) or (ii) but
have been described in a subsequent communication approved by the
Virginia Bureau of Insurance and distributed to the Eligible Members
and, in the opinion of counsel, any further Member vote that is
required has been obtained.
(k) Effectiveness of the Plan. All actions and transactions
required by the Plan to be taken or to have occurred at or prior to the
effectiveness of the Plan (other than the offering of Securities as
herein contemplated) shall have been taken or shall have occurred; and
the Commission shall have issued the certificate of merger with respect
to the Merger and the Plan shall have thereupon become effective.
(l) Purchase of Initial International Securities.
Contemporaneously with the purchase by the U.S. Underwriters of the
Initial U.S. Securities under this Agreement, the International
Managers shall have purchased the Initial International Securities
under the International Purchase Agreement.
(m) Conditions to Purchase of U.S. Option Securities. In the
event that the U.S. Underwriters exercise their option provided in
Section 2(b) hereof to purchase all or any portion of the U.S. Option
Securities, the representations and warranties of the Company and
Virginia BCBS contained herein and the statements in any certificates
furnished by the Company, Virginia BCBS 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 U.S. Representatives shall
have received:
(i) Officers' Certificates. Certificates, dated such Date of
Delivery, of the President or a Vice President of each of the
Company and Virginia BCBS and of the chief financial or chief
accounting officer of each of the Company and Virginia BCBS
confirming that the certificates delivered at the Closing Time
pursuant to Section 5(d) hereof remain true and correct as of
such Date of Delivery.
(ii) Opinion of Counsel for Company and Virginia BCBS. The
favorable opinion of McGuire, Woods, Battle & ▇▇▇▇▇▇, L.L.P.,
counsel for the Company and
Virginia BCBS, in form and substance satisfactory to counsel
for the U.S. Underwriters, dated such Date of Delivery,
relating to the U.S. Option Securities to be purchased on such
Date of Delivery and otherwise to the same effect as the
opinion required by Section 5(b) hereof.
(iii) Opinion of Counsel for U.S. Underwriters. The
favorable opinion of Debevoise & ▇▇▇▇▇▇▇▇, counsel for the
U.S. Underwriters, dated such Date of Delivery, relating to
the U.S. Option Securities to be purchased on such Date of
Delivery and otherwise to the same effect as the opinion
required by Section 5(c) hereof.
(iv) Bring-down Comfort Letter. A letter from KPMG Peat
Marwick LLP, in form and substance satisfactory to the U.S.
Representatives and dated such Date of Delivery, substantially
in the same form and substance as the letter furnished to the
U.S. Representatives pursuant to Section 5(f) hereof, except
that the "specified date" in the letter furnished pursuant to
this paragraph shall be a date not more than five days prior
to such Date of Delivery.
(n) Additional Documents. At Closing Time and at each Date of Delivery,
counsel for the U.S. Underwriters shall have been furnished with such documents
and opinions as they may 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 satisfactory in form and substance to the U.S.
Representatives and counsel for the U.S.
Underwriters.
(o) Termination of Agreement. If any condition specified in this
Section shall not have been fulfilled when and as required to be fulfilled, this
Agreement, or, in the case of any condition to the purchase of U.S. Option
Securities on a Date of Delivery which is after the Closing Time, the
obligations of the several U.S. Underwriters to purchase the relevant Option
Securities, may be terminated by the U.S. Representatives by notice to the
Company at any time at or prior to Closing Time or such Date of 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 U.S. Underwriters. Each of the Company and
Virginia BCBS agrees, jointly and severally, to indemnify and hold harmless each
U.S. Underwriter and each person, if any, who controls any U.S. Underwriter
within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act
as follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue statement or
alleged untrue statement of a material fact contained in the
Registration Statement (or any amendment thereto), including the Rule
430A Information and the Rule 434 Information, if applicable, 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 contained in any preliminary prospectus or
the Prospectuses (or any amendment or supplement thereto), or the
omission or alleged omission therefrom of a material fact necessary in
order to make the statements therein, in the light of the circumstances
under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount
paid in settlement of any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or threatened,
or of any claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission; provided
that (subject to Section 6(d) below) any such settlement is effected
with the written consent of the Company or Virginia BCBS; and
(iii) against any and all expense whatsoever, as incurred
(including the fees and disbursements of counsel chosen by ▇▇▇▇▇▇▇
▇▇▇▇▇), reasonably incurred in investigating, preparing or defending
against any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim
whatsoever based upon any such untrue statement or omission, or any
such alleged untrue statement or omission, to the extent that any such
expense is not paid under (i) or (ii) above;
provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by any
U.S. Underwriter through the U.S. Representatives or any International Manager
through the Lead Managers expressly for use in the Registration Statement (or
any amendment thereto), including the Rule 430A Information and the Rule 434
Information, if applicable, or any preliminary prospectus or the U.S. Prospectus
(or any amendment or supplement thereto).
(b) Indemnification of Company, Virginia BCBS, Directors and Officers.
Each U.S. Underwriter severally agrees to indemnify and hold harmless the
Company, Virginia BCBS, their respective directors, each of the Company's
officers who signed the Registration Statement, and each person, if any, who
controls the Company or Virginia BCBS 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)
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 and the Rule 434 Information, if applicable, or any preliminary U.S.
prospectus or the U.S. Prospectus (or any amendment or supplement thereto) in
reliance upon and in conformity with written information furnished to the
Company by such U.S. Underwriter through the U.S. Representatives expressly for
use in the Registration Statement (or any amendment thereto) or such preliminary
prospectus or the U.S. Prospectus (or any amendment or supplement thereto).
(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) 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.
(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 in accordance with this
Section 6, such indemnifying party agrees that it shall be liable for any
settlement of the nature contemplated by Section 6(a)(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) prior to the
date of such settlement neither of the following shall have occurred: (A) such
indemnifying party shall have reimbursed such indemnified party in accordance
with such request or (B) if such indemnifying party reasonably believes that the
indemnified party is not entitled under this Section 6 to any or all of the
requested amount, such indemnifying party shall have reimbursed such indemnified
party of such lesser portion, if any, of the requested amount and
provided to such indemnified party a statement substantiating the reasonableness
of the amount, if any, so reimbursed.
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
Virginia BCBS on the one hand and the U.S. Underwriters on the other hand from
the offering of the Securities pursuant to this Agreement or (ii) if the
allocation provided by clause (i) is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the Company and Virginia
BCBS on the one hand and of the U.S. Underwriters on the other hand in
connection with the statements or omissions which resulted in such losses,
liabilities, claims, damages or expenses, as well as any other relevant
equitable considerations.
The relative benefits received by the Company and Virginia BCBS on the
one hand and the U.S. Underwriters on the other hand in connection with the
offering of the U.S. Securities pursuant to this Agreement shall be deemed to be
in the same respective proportions as the total net proceeds from the offering
of the U.S. Securities pursuant to this Agreement (before deducting expenses)
received by the Company and Virginia BCBS and the total underwriting discount
received by the U.S. Underwriters, in each case as set forth on the cover of the
U.S. Prospectus, or, if Rule 434 is used, the corresponding location on the Term
Sheet, bear to the aggregate initial public offering price of the U.S.
Securities as set forth on such cover.
The relative fault of the Company and Virginia BCBS on the one hand and
the U.S. Underwriters on the other hand shall be determined by reference to,
among other things, whether any such untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact relates
to information supplied by the Company or Virginia BCBS on the one hand or by
the U.S. Underwriters on the other hand and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
The Company, Virginia BCBS and the U.S. Underwriters agree that it
would not be just and equitable if contribution pursuant to this Section 7 were
determined by pro rata allocation (even if the U.S. Underwriters were treated as
one entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to above in this Section
7. The aggregate amount of losses, liabilities, claims, damages and expenses
incurred by an indemnified party and referred to above in this Section 7 shall
be deemed to include any legal or other expenses reasonably incurred by such
indemnified party in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever based upon any such
untrue or alleged untrue statement or omission or alleged omission.
Notwithstanding the provisions of this Section 7, no U.S. Underwriter
shall be required to contribute any amount in excess of the amount by which the
total price at which the U.S. Securities underwritten by it and distributed to
the public were offered to the public exceeds the amount of any damages which
such U.S. Underwriter has otherwise been required to pay by reason of any such
untrue or alleged untrue statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the ▇▇▇▇ ▇▇▇) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who controls a
U.S. Underwriter within the meaning of Section 15 of the 1933 Act or Section 20
of the 1934 Act shall have the same rights to contribution as such U.S.
Underwriter, and each director of the Company or Virginia BCBS, each officer of
the Company who signed the Registration Statement, and each person, if any, who
controls the Company or Virginia BCBS 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 Virginia BCBS. The U.S. Underwriters' respective
obligations to contribute pursuant to this Section 7 are several in proportion
to the number of Initial U.S. Securities set forth opposite their respective
names in Schedule 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, Virginia BCBS or any of
its subsidiaries submitted pursuant hereto, shall remain operative and in full
force and effect, regardless of any investigation made by or on behalf of any
U.S. Underwriter or controlling person, or by or on behalf of the Company or
Virginia BCBS, and shall survive delivery of the Securities to the U.S.
Underwriters.
SECTION 9. Termination of Agreement.
(a) Termination; General. The U.S. Representatives may terminate this
Agreement, by notice to the Company, at any time at or prior to Closing Time (i)
if there has been, since the time of execution of this Agreement or since the
respective dates as of which information is given in the U.S. Prospectus, any
material adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of Trigon, considered as one
enterprise, whether or not arising in the ordinary course of business, or (ii)
if there has occurred any material adverse change in the financial markets in
the United States or the international financial markets, any outbreak of
hostilities or escalation thereof or other calamity or crisis or any change or
development involving a prospective change in national or international
political, financial or economic conditions, in each case the effect of which is
such as to make it, in the judgment of the U.S. Representatives, impracticable
to market the Securities or to enforce contracts for the sale of the Securities,
or (iii) if trading in any securities of the Company has been suspended or
materially limited by the Commission or the New York Stock Exchange, or if
trading generally on the American Stock Exchange or the New York Stock Exchange
or in the Nasdaq National
Market has been suspended or materially limited, or minimum or maximum prices
for trading have been fixed, or maximum ranges for prices have been required, by
any of said exchanges or by such system or by order of the Commission, the
National Association of Securities Dealers, Inc. or any other governmental
authority, or (iv) if a banking moratorium has been declared by either Federal
or New York authorities.
(b) Liabilities. If this Agreement is terminated pursuant to this
Section, such termination shall be without liability of any party to any other
party except as provided in Section 4 hereof, and provided further that Sections
1, 6, 7 and 8 shall survive such termination and remain in full force and
effect.
SECTION 10. Default by One or More of the U.S. Underwriters. If one or
more of the U.S. Underwriters shall fail at Closing Time or a Date of Delivery
to purchase the Securities which it or they are obligated to purchase under this
Agreement (the "Defaulted Securities"), the U.S. Representatives shall have the
right, within 24 hours thereafter, to make arrangements for one or more of the
non-defaulting U.S. Underwriters, or any other underwriters, to purchase all,
but not less than all, of the Defaulted Securities in such amounts as may be
agreed upon and upon the terms herein set forth; if, however, the U.S.
Representatives shall not have completed such arrangements within such 24-hour
period, then:
(a) if the number of Defaulted Securities does not exceed 10%
of the number of U.S. Securities to be purchased on such date, each of
the non-defaulting U.S. Underwriters shall be obligated, severally and
not jointly, to purchase the full amount thereof in the proportions
that their respective underwriting obligations hereunder bear to the
underwriting obligations of all non-defaulting U.S. Underwriters, or
(b) if the number of Defaulted Securities exceeds 10% of the
number of U.S. Securities to be purchased on such date, this Agreement
or, with respect to any Date of Delivery which occurs after the Closing
Time, the obligation of the U.S. 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 U.S. Underwriter.
No action taken pursuant to this Section shall relieve any defaulting
U.S. Underwriter from liability in respect of its default.
In the event of any such default which does not result in a termination
of this Agreement or, in the case of a Date of Delivery which is after the
Closing Time, which does not result in a termination of the obligation of the
U.S. Underwriters to purchase and the Company to sell the relevant U.S. Option
Securities, as the case may be, either the U.S. Representatives 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 "U.S. Underwriter" includes any person substituted for a U.S.
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 U.S.
Underwriters shall be directed to the U.S. Representatives at North Tower, World
Financial Center, New York, New York 10281-1201, attention of Syndicate
Operations (with a copy, which shall not constitute notice, to Debevoise &
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, attention of ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇, Esq.); and notices to the Company shall be directed to it at ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, attention of J. ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, Esq. (with a copy, which shall not constitute notice, to McGuire,
Woods, Battle & ▇▇▇▇▇▇, L.L.P., One ▇▇▇▇▇ Center, ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, attention of R. ▇▇▇▇▇▇ ▇▇▇▇▇, Esq.).
SECTION 12. Parties. This Agreement shall inure to the benefit of and
be binding upon each of the U.S. Underwriters, the Company and Virginia BCBS and
their respective successors. Nothing expressed or mentioned in this Agreement is
intended or shall be construed to give any person, firm or corporation, other
than the U.S. Underwriters, the Company and Virginia BCBS and their respective
successors and the controlling persons and officers and directors referred to in
Sections 6 and 7 and their heirs and legal representatives, any legal or
equitable right, remedy or claim under or in respect of this Agreement or any
provision herein contained. This Agreement and all conditions and provisions
hereof are intended to be for the sole and exclusive benefit of the U.S.
Underwriters, the Company and Virginia BCBS and their respective successors, and
said controlling persons and officers and directors and their heirs and legal
representatives, and for the benefit of no other person, firm or corporation. No
purchaser of Securities from any U.S. Underwriter shall be deemed to be a
successor by reason merely of such purchase.
SECTION 13. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF NEW YORK. 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.
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company and Virginia BCBS a counterpart
hereof, whereupon this instrument, along with all counterparts, will become a
binding agreement between the U.S. Underwriters, the Company and Virginia BCBS
in accordance with its terms.
Very truly yours,
TRIGON HEALTHCARE, INC.
By
Title:
VIRGINIA BLUE CROSS BLUE SHIELD
(to be renamed Trigon Insurance Company)
By
Title:
CONFIRMED AND ACCEPTED, as of the date first above written:
▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO.
▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ & ▇▇▇▇▇
INCORPORATED
ALEX. ▇▇▇▇▇ & SONS INCORPORATED
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ INC.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & CO. INCORPORATED
WHEAT, FIRST SECURITIES, INC.
By: ▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ & ▇▇▇▇▇
INCORPORATED
By
Authorized Signatory
For themselves and as U.S. Representatives of the
other U.S. Underwriters named in Schedule A hereto.
SCHEDULE A
Number of
Initial U.S.
Name of U.S. Underwriter Securities
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated...............................................................
Alex. ▇▇▇▇▇ & Sons Incorporated............................................................
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Inc...................................................................
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated..........................................................
Wheat, First Securities, Inc...............................................................
Total...................................................................................... ________
=============
SCHEDULE B
TRIGON HEALTHCARE, INC.
________ Shares of Common Stock
(Par Value $.01 Per Share)
1. The initial public offering price per share for the
Securities, determined as provided in said Section 2, shall be
$_______.
2. The purchase price per share for the U.S. Securities to be
paid by the several U.S. Underwriters shall be $_______, being an
amount equal to the initial public offering price set forth above less
$_______ per share; provided that the purchase price per share for any
U.S. Option Securities purchased upon the exercise of the
over-allotment option described in Section 2(b) shall be reduced by an
amount per share equal to any dividends or distributions declared by
the Company and payable on the Initial U.S. Securities but not payable
on the U.S. Option Securities.
Exhibit A
FORM OF OPINION OF COMPANY'S COUNSEL
TO BE DELIVERED PURSUANT TO
SECTION 5(b)
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the
Commonwealth of Virginia. Until immediately prior to the effectiveness
of the Plan, Virginia BCBS was, since its conversion to a mutual
insurance company in 1991, validly existing as a mutual insurance
company in good standing under the laws of the Commonwealth of
Virginia. Trigon Insurance is validly existing as a stock corporation
in good standing under the laws of the Commonwealth of Virginia. Until
immediately prior to the effectiveness of the Plan, TMSI was duly
incorporated and validly existing as a stock corporation in good
standing under the laws of the Commonwealth of Virginia.
(ii) Each of the Company and Virginia BCBS (now renamed Trigon
Insurance) has corporate power and authority to own, lease and operate
its properties and to conduct its business as described in the
Prospectuses and to enter into and perform its obligations under the
U.S. Purchase Agreement and the International Purchase Agreement. Each
of the Company and Trigon Insurance 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 could
not reasonably be expected to result in a Material Adverse Effect.
(iii) The Company has an authorized capitalization as set
forth in the Prospectus.
(iv) The Securities to be purchased by the U.S. Underwriters
and the International Managers from the Company have been duly
authorized for issuance and sale to the Underwriters pursuant to the
U.S. Purchase Agreement and the International Purchase Agreement,
respectively, and, when issued and delivered by the Company pursuant to
the U.S. Purchase Agreement and the International Purchase Agreement,
respectively, against payment of the consideration set forth in the
U.S. Purchase Agreement and the International Purchase Agreement, will
be validly issued and fully paid and non-assessable; the Common Stock
conforms in all material respects to all statements relating thereto
contained in the Prospectuses and such description conforms in all
material respects to the rights set forth in the instruments defining
the same; and no holder of the Securities is or will be personally
liable for any debts, obligations, liabilities or losses of the Company
by reason of being such a holder.
(v) The issuance of the Securities is not subject to the
preemptive or other similar rights of any securityholder of the
Company, except as may be provided in Articles VI, VII and VIII of the
Articles of Incorporation of the Company in the form filed as an
Exhibit to the Registration Statement.
(vi) Each of the subsidiaries listed on Exhibit 21 to the
Registration Statement, which to the best of our knowledge are the only
subsidiaries of Trigon Insurance, 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 Prospectuses and is duly qualified as a
foreign corporation to transact business and is in good standing in
each jurisdiction in which such qualification is required, whether by
reason of the ownership or leasing of property or the conduct of
business, except where the failure so to qualify or to be in good
standing could not reasonably be expected to result in a Material
Adverse Effect; except as otherwise disclosed in 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, to the best of our knowledge, is owned by the
Company, directly or through subsidiaries, free and clear of any
security interest, mortgage, pledge, lien, encumbrance, claim or
equity; and, to the best of our knowledge, none of the outstanding
shares of capital stock of any such subsidiary was issued in violation
of the preemptive or similar rights of any securityholder of such
subsidiary.
(vii) The U.S. Purchase Agreement and the International
Purchase Agreement have been duly authorized, executed and delivered by
the Company and Virginia BCBS.
(viii) The Registration Statement, including any Rule 462(b)
Registration Statement, has been declared effective under the 1933 Act;
any required filing of the Prospectuses pursuant to Rule 424(b) has
been made in the manner and within the time period required by Rule
424(b); and, to the best of our knowledge, 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
threatened by the Commission.
(ix) The Registration Statement, including any Rule 462(b)
Registration Statement, the Rule 430A Information and the Rule 434
Information, as applicable, the Prospectuses and each amendment or
supplement to the Registration Statement and the Prospectuses as of
their respective effective or issue dates (other than the financial
statements and supporting schedules and other financial information
included therein or omitted therefrom, as to which we express no
opinion) complied as to form in all material respects with the
requirements of the 1933 Act and the 1933 Act Regulations.
(x) The form of certificate used to evidence the Common
Stock complies in all material respects with all applicable statutory
requirements, with any applicable
requirements of the Articles of Incorporation and by-laws of the
Company and the requirements of the New York Stock Exchange.
(xi) To the best of our knowledge, except for matters
disclosed in the Registration Statement, 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 or
threatened, against or affecting the Company, Trigon Insurance or any
of its subsidiaries, which is required to be disclosed in the
Registration Statement, or which might reasonably be expected to result
in a Material Adverse Effect, or which might reasonably be expected to
materially and adversely affect the properties or assets thereof or the
consummation of the transactions contemplated in the U.S. Purchase
Agreement, the International Purchase Agreement and the Plan or the
performance by the Company or Trigon Insurance of their respective
obligations thereunder.
(xii) The information in the Prospectuses under "The
Demutualization", "Business - Regulation", "Business - The Blue Cross
and Blue Shield License", "Legal Proceedings", "Management",
"Description of Capital Stock" and, in the International Prospectus,
"Certain United States Tax Consequences to Non-U.S. Holders" and in the
Registration Statement under Item 14, to the extent that such
information constitutes matters of law, summaries of legal matters, the
Company's Articles of Incorporation and bylaws or legal proceedings, or
legal conclusions, has been reviewed by us and is accurate in all
material respects.
(xiii) To the best of our knowledge, there are no statutes or
regulations that are required to be described in the Prospectuses that
are not described as required.
(xiv) All descriptions in the Prospectuses of contracts and
other documents to which the Company, Trigon Insurance or any of its
subsidiaries are a party are accurate in all material respects; to the
best of our 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 or incorporated by reference as exhibits thereto.
(xv) To the best of our knowledge, (a) neither the Company,
Trigon Insurance nor any of its subsidiaries is in violation of its
charter or by-laws and (b) no default by the Company or any subsidiary
exists in the due performance or observance of any material obligation,
agreement, covenant or condition contained in any contract, indenture,
mortgage, loan agreement, note, lease or other agreement or instrument
that is described or referred to in the Registration Statement or the
Prospectuses or filed or incorporated by reference as an exhibit to the
Registration Statement, except for such defaults that could not
reasonably be expected to have a material adverse effect and except
that no opinion is
given under this paragraph (xv) with respect to the Blue Cross License
Agreement and Virginia Blue Shield License Agreement referred to in
paragraph (xxiv) herein.
(xvi) No filing with, or authorization, approval, consent,
license, order, registration, qualification or decree of, any court or
governmental authority or agency, domestic or foreign, is necessary or
required for the performance by the Company of its obligations under
the U.S. Purchase Agreement or under the Plan, in connection with the
offering, issuance or sale of the Securities under the U.S. Purchase
Agreement and the International Purchase Agreement, in connection with
the issuance of the Member Shares to Eligible Members in exchange for
their Membership Interests and of cash and Class C Stock to the
Treasurer of the Commonwealth of Virginia in satisfaction of the Common
wealth Payment pursuant to the Plan, or the consummation of the
transactions contemplated by the U.S. Purchase Agreement, the
International Purchase Agreement and the Plan, except (a) such as have
been already obtained or as may be required under the 1933 Act or the
1933 Act Regulations and foreign or state securities, insurance
securities or blue sky laws in connection with the offering, issuance
or sale of the Securities under the U.S. Purchase Agreement and the
International Purchase Agreement, as to which we express no opinion,
and (b) such filings, authorizations, approvals, consents, licenses,
orders, registrations, qualifications or decrees in connection with the
Plan that, if not made or obtained or complied with, could not
reasonably be expected to have a Material Adverse Effect or have a
material adverse effect on the ability of the Company or Virginia BCBS
to perform their respective obligations under the Plan or to consummate
the transactions contemplated therein.
(xvii) The execution, delivery and performance of the U.S.
Purchase Agreement, the International Purchase Agreement and the Plan
and the consummation of the transactions contemplated in the U.S.
Purchase Agreement, the International Purchase Agreement, the Plan and
in the Registration Statement (including the issuance of the Member
Shares to Eligible Members in exchange for their Membership Interests
pursuant to the Plan, the issuance of cash and Class C Stock to the
Treasurer of the Commonwealth of Virginia in satisfaction of the
Commonwealth Payment pursuant to the Plan, and the issuance and sale of
the Securities, and the use of the proceeds from the sale of the
Securities as described in the Prospectuses under the caption "Use Of
Proceeds") and compliance by the Company and Trigon Insurance with
their obligations under the U.S. Purchase Agreement, the International
Purchase Agreement and the Plan do not and will not, whether with or
without the giving of notice or lapse of time or both, conflict with or
constitute a breach of, or default or Repayment Event (as defined in
the Purchase Agreements) under or result in the creation or imposition
of any lien, charge or encumbrance upon any property or assets of the
Company, Trigon Insurance or any subsidiary pursuant to any contract,
indenture, mortgage, deed of trust, loan or credit agreement, note,
lease or any other agreement or instrument, listed on a schedule
attached to such opinion (which schedule shall be satisfactory in form
and substance to counsel for the U.S. Underwriters), to which the
Company, Trigon Insurance or any subsidiary 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, Trigon Insurance or any
subsidiary is subject (except for such conflicts, breaches or defaults
or liens, charges or encumbrances that would not have a Material
Adverse Effect), nor will such action result in any violation of the
provisions of the charter or by-laws of the Company, Trigon Insurance
or any subsidiary, or any applicable law, statute, rule, regulation,
judgment, order, writ or decree, known to us, including, without
limitation, Virginia Code ss. 38.2-1005.1 and the insurance laws and
regulations of Virginia, of any government, government instrumentality
or court, domestic or foreign, having jurisdiction over the Company,
Trigon Insurance or any subsidiary or any of their respective
properties, assets or operations (other than foreign or state
securities, insurance securities or blue sky laws in connection with
the offering, issuance or sale of the Securities under this Agreement
and the International Purchase Agreement), except for such violations
resulting from the failure to make or obtain or comply with such
filings, authorizations, approvals, consents, licenses, orders,
registrations, qualifications or decrees in connection with the Plan
that could not reasonably be expected to have a Material Adverse Effect
or have a material adverse effect on the ability of the Company or
Virginia BCBS to perform their respective obligations under the Plan or
to consummate the transactions contemplated therein.
(xviii) To the best of our knowledge, there are no persons
with registration rights or other similar rights to have any securities
registered pursuant to the Registration Statement or otherwise
registered by the Company under the 1933 Act.
(xix) The Company is not, nor is Trigon Insurance or any of
its subsidiaries, an "investment company" or an entity "controlled" by
an "investment company," as such terms are defined in the ▇▇▇▇ ▇▇▇.
(xx) Pursuant to the Merger: (a) TMSI has merged with and into
Virginia BCBS, the separate existence of TMSI has ceased, and Virginia
BCBS has become a wholly owned subsidiary of the Company; (b) Virginia
BCBS has become a stock corporation incorporated under and governed by
the Virginia Stock Corporation Act, ss.13.1-601 et seq. and by the
Virginia Insurance Code; (c) each issued and outstanding share of
common stock of TMSI owned by the Company immediately prior to the
effectiveness of the Plan has, as a result of the Merger and without
any action on the part of the Company, been canceled and converted into
one share of stock of Trigon Insurance; (d) all Membership Interests of
all Members in Virginia BCBS have been canceled, and in consideration
for their Membership Interests, including their interests in the
surplus of Virginia BCBS, Eligible Members are entitled to receive
Common Stock from the Company and/or cash from Trigon Insurance
pursuant to and in accordance with the Plan; and (e) all issued and
outstanding shares of capital stock in the Company owned by Virginia
BCBS have been canceled.
(xxi) Until immediately prior to the effectiveness of the
Plan, all of the issued and outstanding shares of capital stock of TMSI
were duly authorized and validly issued and were fully paid and
non-assessable and, to the best of our knowledge, were owned by the
Company, free and clear of any security interest, mortgage, pledge,
lien, encumbrance, claim or equity. All of the outstanding shares of
capital stock of Trigon Insurance are duly authorized and validly
issued and are fully paid and non-assessable and, to the best of our
knowledge, are owned by the Company, free and clear of any security
interest, mortgage, pledge, lien, encumbrance claim or equity.
(xxii) The Member Shares have been duly authorized, and when
issued and delivered to Eligible Members in exchange for their
Membership Interests pursuant to the Plan, will be validly issued,
fully paid and non-assessable; no holder thereof will be personally
liable for any debts, obligations, liabilities or losses of the Company
by reason of being such a holder; such Member Shares are not subject to
the preemptive or other similar rights of any securityholder of the
Company (except as may be provided in Articles VI, VII and VIII of the
Articles of Incorporation of the Company in the form filed as an
Exhibit to the Registration Statement) and all corporate action
required to be taken for the authorization and issuance of the Member
Shares has been validly and sufficiently taken.
(xxiii) The issuance and delivery of the Member Shares to
Eligible Members in exchange for their Membership Interests pursuant to
the Plan is exempt from the registration requirements of the 1933 Act.
(xxiv) To the best of our knowledge, the Blue Cross and Blue
Shield Association (the "BCBSA") has not asserted noncompliance by
Virginia BCBS or any of its subsidiaries that is required by the BCBSA
as of the date hereof to be a party to a Blue Cross Affiliate License
Agreement with the requirements of the Blue Cross License Agreement,
dated as of November 16, 1995, between Virginia BCBS and the BCBSA, and
the Virginia Blue Shield License Agreement, dated as of November 16,
1995, between Virginia BCBS and the BCBSA, except in each case where
such noncompliance could not reasonably be expected to have a Material
Adverse Effect.
(xxv) To the best of our knowledge, (a) the Company, Trigon
Insurance and its subsidiaries each possess such permits, licenses,
approvals, consents and other authorizations (collectively,
"Governmental Licenses") issued by the appropriate federal, state,
local or foreign regulatory agencies or bodies necessary to conduct the
business now operated by them, except where the failure to possess such
Government Licenses could not reasonably be expected to have a Material
Adverse Effect; (b) 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 could not reasonably be expected to have a Material
Adverse Effect; and (c) neither the Company, Trigon Insurance nor any
of its 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, could reasonably be expected
to result in a Material Adverse Effect.
(xxvi) To the best of our knowledge, (a) the Company has made
all required filings under insurance holding statutes applicable to it,
and is duly licensed or authorized as an insurance holding company in
each jurisdiction in which it is required to be so licensed or
authorized, except where the failure to have made such filings or to be
so licensed or authorized in any such jurisdiction could not reasonably
be expected to have a Material Adverse Effect; (b) each of Trigon
Insurance and its subsidiaries which is engaged in the insurance
business (the "Insurance Subsidiaries") is duly licensed or authorized
to conduct its insurance business under the insurance laws of each
jurisdiction in which it conducts such business so as to require such
licensing or authorization, except where the failure to be so licensed
or authorized could not reasonably be expected to have a Material
Adverse Effect; (c) all such licenses or authorizations are in full
force and effect, except where the invalidity of such licenses and
authorization or failure to be in full force and effect could not
reasonably be expected to have a Material Adverse Effect; (d) neither
the Company, Trigon Insurance nor any Insurance Subsidiary has received
any notice of any event, inquiry, investigation or proceeding that
would reasonably be expected to result in the suspension, revocation or
limitation of any such licenses or authorizations or otherwise impose
any limitation on the conduct of the business of the Company, Trigon
Insurance or any Insurance Subsidiary, except any such suspension,
revocation or limitation which could not reasonably be expected to have
a Material Adverse Effect; (e) each of the subsidiaries of Trigon
Insurance operating as a health maintenance organization (the "HMO
Subsidiaries") is duly licensed as a health maintenance organization
insurer under the laws of each jurisdiction in which it conducts such
business so as to require such licensing, except where the failure to
be so licensed could not reasonably be expected to have a Material
Adverse Effect; and (f) each of ______________, ______________ and
___________ is duly qualified as a health maintenance organization
under The Health Maintenance Organization Act of 1973, as amended, and
the rules and regulations of the Department of Health and Human
Services thereunder.
(xxvii) In accordance with Virginia Code ss. 38.2-1005.1, the
Plan has been duly adopted by the required vote of the Members and all
necessary approvals under Virginia Code ss. 38.2-1005.1 for the Plan to
become effective have been obtained, all such approvals are in full
force and effect and no other approvals are required to be obtained
under Virginia Code ss. 38.2-1005.1 for the effectiveness of the Plan;
the time period within which an appeal to the Commission Order must be
noted in order for an appeal to be validly made has expired and, to our
knowledge, no appeals were so noted; and upon the issuance by the State
Corporation Commission of the certificate of merger with respect to the
Merger (as defined in the Plan), the Plan will have become effective in
accordance with its terms.
While we have not ourselves checked the accuracy and
completeness of, or otherwise verified, and are not passing upon and
assume no responsibility for the accuracy or completeness of, the
statements contained in the Registration Statement or the Prospectuses,
except to the limited extent stated in paragraph (xii), in the course
of our review and discussion of the contents of the Registration
Statement and the Prospectuses with certain officers and employees of
the Company and Trigon Insurance and their independent accountants, but
without independent check or verification, nothing has come to our
attention that would lead us to believe that the Registration Statement
or any amendment thereto, including the Rule 430A Information and Rule
434 Information (if applicable), (except for financial statements and
schedules and other financial data included therein or omitted
therefrom, as to which we make no statement), at the time such
Registration Statement or any such amendment became effective,
contained an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading or that the Prospectuses or any
amendment or supplement thereto (except for financial statements and
schedules and other financial data included therein or omitted
therefrom, as to which we make no statement), at the time the
Prospectuses were issued, at the time any such amended or supplemented
prospectus was issued or at the Closing Time, included or includes an
untrue statement of a material fact or omitted or omits to state a
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
In rendering such opinion, such counsel may rely (A) as to
matters involving the application of the laws of North Carolina,
Wisconsin and Texas, upon the opinions of special counsel to the
Company acceptable to the U.S. Representatives (which opinions shall be
dated and furnished to the U.S. Representatives at the Closing Time,
shall be satisfactory in form and substance to counsel for the U.S.
Underwriters and shall expressly state that the U.S. Underwriters may
rely on such opinions as if they were addressed to them, provided that
McGuire, Woods, Battle & ▇▇▇▇▇▇, L.L.P. shall state in their opinion
that they believe that they and the U.S. Underwriters are justified in
relying upon such opinions, and (B) as to matters of fact (but not as
to legal conclusions), to the extent they deem proper, on certificates
of responsible officers of the Company and Trigon Insurance and public
officials. Such opinion may state that to the extent that the opinions
rendered therein (i) relating to the issuance of the Member Shares to
Eligible Members in exchange for their Membership Interests involve
foreign or state securities, insurance securities or blue sky laws or
(ii) involve insurance laws, statutes, rules or regulations other than
those of Virginia and states oas to which such counsel is relying upon
opinions of special counsel, such opinions are subject to the
qualifications and limitations contained in a schedule to such opinion,
which shall be satisfactory in form and substance to counsel for the
U.S. Underwriters. Such opinion shall not state that it is to be
governed or qualified by, or that it is otherwise subject to, any
treatise, written policy or other document relating to legal opinions,
including, without limitation, the Legal Opinion Accord of the ABA
Section of Business Law (1991).