Draft -- April 19, 2000
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COMMUNITY HEALTH SYSTEMS, INC.
(a Delaware corporation)
o Shares of Common Stock
U.S. PURCHASE AGREEMENT
Dated: o, 2000
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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
(b) Officer's Certificates..................................15
SECTION 2. Sale and Delivery to U.S. Underwriters; Closing.........15
(a) Initial Securities......................................15
(b) Option Securities.......................................15
(c) Payment.................................................16
(d) Denominations; Registration.............................16
SECTION 3. Covenants of the Company................................17
(a) Compliance with Securities Regulations and
Commission Requests.....................................17
(b) Filing of Amendments....................................17
(c) Delivery of Registration Statements.....................17
(d) Delivery of Prospectuses................................18
(e) Continued Compliance with Securities Laws...............18
(f) Blue Sky Qualifications.................................18
(g) Rule 158................................................19
(h) Use of Proceeds.........................................19
(i) Listing.................................................19
(j) Restriction on Sale of Securities.......................19
(k) Reporting Requirements..................................19
(l) Compliance with NASD Rules..............................20
(m) Compliance with Rule 463................................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 the Company......................21
(c) Opinion of Counsel for the U.S. Underwriters............21
(d) Officers' Certificate...................................21
(e) Accountant's Comfort Letter.............................22
(f) Bring-down Comfort Letter...............................22
(g) Approval of Listing.....................................22
(h) No Objection............................................22
(i) Lock-up Agreements......................................22
(j) Purchase of Initial International Securities............22
(k) Recapitalization........................................23
(l) Conditions to Purchase of U.S. Option Securities........23
i
(m) Additional Documents....................................23
(n) Termination of Agreement................................24
SECTION 6. Indemnification.........................................24
(a) Indemnification of the U.S. Underwriters................24
(b) Indemnification of Company, Directors and Officers......25
(c) Actions against Parties; Notification...................26
(d) Settlement without Consent if Failure to Reimburse......26
(e) Indemnification for Reserved Securities.................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
Schedule C - List of Persons subject to Lock-up............Sch C-1
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EXHIBITS
Exhibit A-1 - Form of Opinion of Company's General Counsel....A-1-1
Exhibit A-2 - Form of Opinion of Fried, Frank, Harris, Xxxxxxx
& Xxxxxxxx......................................A-2-1
Exhibit B - Form of Lock-up Letter.............................B-1-1
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COMMUNITY HEALTH SYSTEMS, INC.
(a Delaware corporation)
o Shares of Common Stock
(Par Value $.01 Per Share)
U.S. PURCHASE AGREEMENT
o, 2000
XXXXXXX XXXXX & CO.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
Banc of America Securities LLC
Chase Securities Inc.
Credit Suisse First Boston Corporation
Xxxxxxx, Xxxxx & Co.
Xxxxxx Xxxxxxx & Co. Incorporated
as U.S. Representatives of the several U.S. Underwriters
x/x Xxxxxxx Xxxxx & Xx.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
Xxxxx Xxxxx
Xxxxx Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Ladies and Gentlemen:
Community Health Systems, Inc. (formerly known as Community Health Systems
Holding Corp.), a Delaware corporation (the "Company"), and CHS/Community Health
Systems, Inc. (formerly known as Community Health Systems, Inc.), a Delaware
corporation ("CHS"), confirm their agreement with Xxxxxxx Xxxxx & Co., Xxxxxxx
Lynch, Pierce, Xxxxxx & Xxxxx Incorporated ("Xxxxxxx Xxxxx") 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 Xxxxxxx Xxxxx, Banc of
America Securities LLC, Chase Securities Inc., Credit Suisse First Boston
Corporation, Xxxxxxx, Xxxxx & Co. and Xxxxxx Xxxxxxx & Co. Incorporated are
acting as representatives (in such capacity, the "U.S. Representatives"), with
respect to the issue and sale by the Company and the purchase by the U.S.
Underwriters, acting severally and not jointly, of the respective numbers of
shares of Common Stock, par value $.01 per share, of the Company ("Common
Stock") set forth in said 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
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of up to o additional shares of Common Stock to cover over-allotments, if any.
The aforesaid o shares of Common Stock (the "Initial U.S. Securities") to be
purchased by the U.S. Underwriters and all or any part of the o shares of Common
Stock subject to the option described in Section 2(b) hereof (the "U.S. Option
Securities") are hereinafter called, collectively, the "U.S. Securities".
It is understood that the Company and CHS are concurrently entering into
an agreement dated the date hereof (the "International Purchase Agreement")
providing for the offering by the Company of an aggregate of o shares of Common
Stock (the "Initial International Securities") through arrangements with certain
underwriters outside the United States and Canada (the "International Managers")
for which Xxxxxxx Xxxxx International, Bank of America International Limited,
Chase Securities Inc., Credit Suisse First Boston (Europe) Limited, Xxxxxxx
Xxxxx International and Xxxxxx Xxxxxxx & Co. International Limited 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 o additional shares of Common Stock solely to cover overallotments, if any
(the "International Option Securities" and, together with the U.S. Option
Securities, the "Option Securities"). The Initial International Securities and
the International Option Securities are hereinafter called the "International
Securities". It is understood that the Company 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
dated the date hereof (the "Intersyndicate Agreement") providing for the
coordination of certain transactions among the Underwriters under the direction
of Xxxxxxx Xxxxx (in such capacity, the "Global Coordinator").
The Company and CHS understand that the U.S. Underwriters propose to make
a public offering of the U.S. Securities as soon as the U.S. Representatives
deem advisable after this Agreement has been executed and delivered.
The Company, CHS and the U.S. Underwriters agree that up to ! shares of
the Initial U.S. Securities to be purchased by the U.S. Underwriters and that up
to ! shares of the Initial International Securities to be purchased by the
International Managers (collectively, the "Reserved Securities") shall be
reserved for sale by the Underwriters to some of the Company's directors,
officers, employees, business associates and related persons (collectively,
"Eligible Persons"), as part of the distribution of the Securities by the
Underwriters, subject to the terms of this Agreement, the International Purchase
Agreement, the applicable rules, regulations and
2
interpretations of the National Association of Securities Dealers, Inc. (the
"NASD"), the 1933 Act (as defined below), the 1933 Act Regulations (as defined
below) and all other applicable laws, rules and regulations. To the extent that
such Reserved Securities are not orally confirmed for purchase by such Eligible
Persons by the end of the first business day after the date of this Agreement,
such Reserved Securities may be offered to the public as part of the public
offering contemplated hereby.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-1 (No. 333-M) covering the
registration of the Securities under the Securities Act of 1933, as amended (the
"1933 Act"), including the related preliminary prospectus or prospectuses.
Promptly after execution and delivery of this Agreement, the Company will
prepare and file a prospectus in accordance with the provisions of Rule 430A
("Rule 430A") of the rules and regulations of the Commission under the 1933 Act
(the "1933 Act Regulations") and paragraph (b) of Rule 424 ("Rule 424(b)") of
the 1933 Act Regulations. Two forms of prospectus are to be used in connection
with the offering and sale of the Securities: one relating to the U.S.
Securities (the "Form of U.S. Prospectus") and one relating to the International
Securities (the "Form of International Prospectus"). The Form of International
Prospectus is identical to the Form of U.S. Prospectus, except for the front
cover and back cover pages and the information under the caption "Underwriting."
The information included in any such prospectus that was omitted from such
registration statement at the time it became effective but that is deemed to be
part of such registration statement at the time it became effective pursuant to
paragraph (b) of Rule 430A is referred to as "Rule 430A Information." Each Form
of U.S. Prospectus and Form of International Prospectus used before such
registration statement became effective, and any prospectus that omitted the
Rule 430A Information that was used after such effectiveness and prior to the
execution and delivery of this Agreement, is herein called a "preliminary
prospectus." Such registration statement, including the exhibits thereto and
schedules thereto at the time it became effective and including the Rule 430A
Information, is herein called the "Registration Statement." Any registration
statement filed pursuant to Rule 462(b) of the 1933 Act Regulations is herein
referred to as the "Rule 462(b) Registration Statement," and after such filing
the term "Registration Statement" shall include the Rule 462(b) Registration
Statement. The final Form of U.S. Prospectus and the final Form of International
Prospectus in the forms first furnished to the Underwriters for use in
connection with the offering of the Securities are herein called the "U.S.
Prospectus" and the "International Prospectus," respectively, and collectively,
the "Prospectuses." For purposes of this Agreement, all references to the
Registration Statement, any preliminary prospectus, the U.S. Prospectus, the
International Prospectus or any amendment or supplement to any of the foregoing
shall be deemed to include the copy filed with the Commission pursuant to its
Electronic Data Gathering, Analysis and Retrieval system ("XXXXX").
Immediately prior to the consummation of the offering of the Securities,
(i) each outstanding share of the Company's Class B common stock will be
exchanged pursuant to the Company's certificate of incorporation for o
shares of the Company's Class A common stock; (ii) each outstanding option to
purchase a share of the Company's Class C common stock will be exchanged for an
option to purchase o shares of the Company's Class A common stock; (iii) the
3
Class A common stock will be redesignated as Common Stock; (iv) the Company will
effect a o-for-o stock split with respect to the Common Stock; and (v) the
Company's certificate of incorporation will be amended and restated to reflect a
single class of common stock (which is the Common Stock), and to increase the
number of authorized shares of Common Stock and preferred stock (collectively,
(i) through (v) are referred to as the "Recapitalization").
SECTION 1. REPRESENTATIONS AND WARRANTIES.
(a) REPRESENTATIONS AND WARRANTIES BY THE COMPANY. The Company and CHS
represent and warrant to each U.S. Underwriter as of the date hereof, as of the
Closing Time referred to in Section 2(c) hereof, and if any U.S. Option
Securities are purchased, as of each Date of Delivery referred to in Section
2(b) hereof, and agrees with each U.S. Underwriter, as follows:
(i) COMPLIANCE WITH REGISTRATION REQUIREMENTS. Each of the
Registration Statement and any Rule 462(b) Registration Statement has
become effective under the 1933 Act and no stop order suspending the
effectiveness of the Registration Statement or any Rule 462(b)
Registration Statement has been issued under the 1933 Act and no
proceedings for that purpose have been instituted or are pending or, to
the knowledge of the Company, are contemplated by the Commission, and any
request on the part of the Commission for additional information has been
complied with in all material respects.
At the respective times the Registration Statement, any Rule 462(b)
Registration Statement and any post-effective amendments thereto became
effective and at the Closing Time (and, if any U.S. Option Securities are
purchased, at the Date of Delivery), the Registration Statement, the Rule
462(b) Registration Statement and any amendments and supplements thereto
complied and will comply in all material respects with the requirements of
the 1933 Act and the 1933 Act Regulations and did not and will not contain
an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading, and the Prospectuses, any preliminary prospectuses and any
supplement thereto or prospectus wrapper prepared in connection therewith,
at their respective times of issuance and at the Closing Time, complied
and will comply in all material respects with any applicable laws or
regulations of foreign jurisdictions in which the Prospectuses and such
preliminary prospectuses, as amended or supplemented, if applicable, are
distributed in connection with the offer and sale of Reserved Securities.
Neither of the Prospectuses nor any amendments or supplements thereto
(including any prospectus wrapper), at the time the Prospectuses or any
amendments or supplements thereto were issued and at the Closing Time
(and, if any U.S. Option Securities are purchased, at each Date of
Delivery), included or will include an untrue statement of a material fact
or omitted or will omit to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under which
they were made, not misleading. The representations and warranties in this
subsection shall not apply to statements in or omissions from the
Registration Statement or the U.S. Prospectus made in reliance upon and in
conformity
4
with information furnished to the Company in writing by any U.S.
Underwriter through the U.S. Representative expressly for use in the
Registration Statement or the U.S. Prospectus.
Each preliminary prospectus and the prospectuses filed as part of
the Registration Statement as originally filed or as part of any amendment
thereto, or filed pursuant to Rule 424 under the 1933 Act, complied when
so filed in all material respects with the 1933 Act Regulations and each
preliminary prospectus and the Prospectuses delivered to the Underwriters
for use in connection with this offering was identical to the
electronically transmitted copies thereof filed with the Commission
pursuant to XXXXX, except to the extent permitted by Regulation S-T.
(ii) INDEPENDENT ACCOUNTANTS. The accountants who certified the
financial statements and supporting schedules included in the Registration
Statement are independent public accountants as required by the 1933 Act
and the 1933 Act Regulations.
(iii) FINANCIAL STATEMENTS. The consolidated financial statements
included in the Registration Statement and the Prospectuses, together with
the related schedules and notes, present fairly, in all material respects,
the financial position of the Company and its consolidated subsidiaries at
the dates indicated and the statement of operations, stockholders' equity
and cash flows of the Company and its consolidated subsidiaries for the
periods specified; said financial statements have been prepared in
conformity with generally accepted accounting principles ("GAAP") applied,
except as set forth in the notes to the financial statements, on a
consistent basis throughout the periods involved. The supporting schedules
included in the Registration Statement present fairly, in all material
respects, in accordance with GAAP the information required to be stated
therein. The selected consolidated financial and other data and the
summary consolidated financial and other data included in the Prospectuses
present fairly, in all material respects, the information shown therein
and have been compiled on a basis consistent with that of the audited
consolidated financial statements included in the Registration Statement.
The pro forma financial information included in the Registration Statement
and the Prospectuses present fairly, in all material respects, the
information shown therein, and have been properly compiled on the bases
described therein, and the assumptions used in the preparation thereof are
reasonable and the adjustments used therein are appropriate to give effect
to the transactions and circumstances referred to therein.
(iv) NO MATERIAL ADVERSE CHANGE IN BUSINESS. Since the respective
dates as of which information is given in the Registration Statement and
the Prospectuses, except as otherwise stated therein, (A) there has been
no material adverse change in the condition, financial or otherwise, or in
the earnings, business affairs or business prospects of the Company and
its subsidiaries considered as one enterprise, whether or not arising in
the ordinary course of business (a "Material Adverse Effect"), (B) there
have been no transactions entered into by the Company or any of its
subsidiaries, other than those in the ordinary course of business, which
are material with respect to the Company and its
5
subsidiaries considered as one enterprise, and (C) there has been no
dividend or distribution of any kind declared, paid or made by the Company
on any class of its capital stock.
(v) GOOD STANDING OF THE COMPANY. The Company has been duly
organized and is validly existing as a corporation in good standing under
the laws of the State of Delaware and has corporate power and authority to
own, lease and operate its properties and to conduct its business as
described in the Prospectuses and to enter into and perform its
obligations under this Agreement; and the Company is duly qualified as a
foreign corporation to transact business and is in good standing in each
other jurisdiction in which such qualification is required, whether by
reason of the ownership or leasing of property or the conduct of business,
except where the failure so to qualify or to be in good standing could not
result in a Material Adverse Effect.
(vi) GOOD STANDING OF SUBSIDIARIES. (A) Each "significant
subsidiary" of the Company (as such term is defined in Rule 1-02 of
Regulation S-X) and CHS, Community Health Investment Corporation, CHS
Professional Service Corporation and Hallmark Healthcare Corporation and
each other subsidiary which is a hospital holding company or an operating
hospital (each a "Subsidiary" and, collectively, the "Subsidiaries") has
been duly organized and is validly existing as a corporation in good
standing under the laws of the jurisdiction of its incorporation, has
corporate power and authority to own, lease and operate its properties and
to conduct its business as described in the Prospectuses and is duly
qualified as a foreign corporation to transact business and is in good
standing in each jurisdiction in which such qualification is required,
whether by reason of the ownership or leasing of property or the conduct
of business, except where the failure so to qualify or to be in good
standing would not reasonably be expected to result in a Material Adverse
Effect. Except as otherwise disclosed in Exhibit 21 to the Registration
Statement, all of the issued and outstanding capital stock of each such
Subsidiary has been duly authorized and validly issued, is fully paid and
non-assessable and is owned by the Company, directly or through
subsidiaries, free and clear of any security interest, mortgage, pledge,
lien, encumbrance, claim or equity and none of the outstanding shares of
capital stock of any Subsidiary was issued in violation of the preemptive
or similar rights of any securityholder of such Subsidiary. The only
subsidiaries of the Company are (a) the subsidiaries listed on Exhibit 21
to the Registration Statement and (b) certain other subsidiaries which,
considered in the aggregate as a single Subsidiary, do not constitute a
"significant subsidiary" as defined in Rule 1-02 of Regulation S-X.
(B) Except to the extent disclosed in Exhibit 21 to the Registration
Statement, each of the hospitals described in the Prospectuses as owned or
leased by the Company is owned or leased and operated by a Subsidiary of
which the Company directly or indirectly owns 100% of the outstanding
ownership interests. Except as disclosed in the Prospectuses, there are no
encumbrances or restrictions on the ability of any Subsidiary (i) to pay
any dividends or make any distributions on such Subsidiary's capital
stock, (ii) to make any loans or
6
advances to, or investments in, the Company, CHS or any other Subsidiary,
or (iii) to transfer any of its property or assets to the Company, CHS or
any other Subsidiary.
(vii) CAPITALIZATION. The authorized, issued and outstanding capital
stock of the Company is as set forth in the Prospectuses in the column
entitled "Actual" under the caption "Capitalization" (except for
subsequent issuances, if any, pursuant to this Agreement, pursuant to
reservations, agreements or employee benefit plans referred to in the
Prospectuses or pursuant to the exercise of convertible securities or
options referred to in the Prospectuses). The shares of issued and
outstanding capital stock of the Company have been duly authorized and
validly issued and are fully paid and non-assessable; none of the
outstanding shares of capital stock of the Company was issued in violation
of the preemptive or other similar rights of any securityholder of the
Company. The shares of issued and outstanding capital stock of the Company
have been issued in compliance, in all material respects, with all federal
and state securities laws. Except as disclosed in the Prospectuses, there
are no outstanding options or warrants to purchase, or any preemptive
rights or other rights to subscribe for or to purchase, any securities or
obligations convertible into, or any contracts or commitments to issue or
sell, shares of the Company=s capital stock or any such options, warrants,
rights, convertible securities or obligations. The description of the
Company=s stock option and purchase plans and the options or other rights
granted and exercised thereunder set forth in the Prospectuses accurately
and fairly describe, in all material respects, the information required to
be shown with respect to such plans, arrangements, options and rights.
(viii) AUTHORIZATION OF AGREEMENT. This Agreement and the
International Purchase Agreement have been duly authorized, executed and
delivered by the Company.
(ix) AUTHORIZATION AND DESCRIPTION OF SECURITIES. The Securities to
be purchased by the U.S. Underwriters and the International Managers from
the Company have been duly authorized for issuance and sale to the U.S.
Underwriters pursuant to this Agreement and the International Managers
pursuant to the International Purchase Agreement, respectively, and, when
issued and delivered by the Company pursuant to this Agreement and the
International Purchase Agreement, respectively, against payment of the
consideration set forth herein and the International Purchase Agreement,
respectively, will be validly issued, fully paid and non-assessable; the
Common Stock conforms, in all material respects, to all statements
relating thereto contained in the Prospectuses and such description
conforms to the rights set forth in the Company's Restated Certificate of
Incorporation to be in effect following this offering, no holder of the
Securities will be subject to personal liability by reason of being such a
holder; and the issuance of the Securities is not subject to the
preemptive or other similar rights of any securityholder of the Company.
(x) The consummation of the Recapitalization has been duly
authorized by the Company's board of directors and security holders, and
no other corporate proceedings on the part of the Company are needed to
authorize the Recapitalization.
7
(xi) ABSENCE OF DEFAULTS AND CONFLICTS. Neither the Company nor any
of its subsidiaries is in violation of its charter or by-laws or in
default in the performance or observance of any obligation, agreement,
covenant or condition contained in any contract, indenture, mortgage, deed
of trust, loan or credit agreement, note, lease or other agreement or
instrument to which the Company or any of its subsidiaries is a party or
by which it or any of them may be bound, or to which any of the property
or assets of the Company or any subsidiary is subject (collectively,
"Agreements and Instruments"), except for such defaults under Agreements
and Instruments that would not reasonably be expected to result in a
Material Adverse Effect; and the execution, delivery and performance of
this Agreement and the International Purchase Agreement and the
consummation of the transactions contemplated in this Agreement, the
International Purchase Agreement and in the Registration Statement
(including the issuance and sale of the Securities and the use of the
proceeds from the sale of the Securities as described in the Prospectuses
under the caption "Use of Proceeds" and the completion of the
Recapitalization) and compliance by the Company and CHS with their
obligations under this Agreement and the International Purchase Agreement
have been duly authorized by all necessary corporate action and, after
giving effect to the use of proceeds as contemplated in the Prospectuses
under the caption "Use of Proceeds," do not and will not, whether with or
without the giving of notice or passage of time or both, conflict with or
constitute a breach of, or default or Repayment Event (as defined below)
under, or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company, CHS or any of
their subsidiaries pursuant to, the Agreements and Instruments (except for
such conflicts, breaches or defaults or liens, charges or encumbrances
that would not reasonably be expected to result in a Material Adverse
Effect), nor will such action result in any violation of the provisions of
the charter or by-laws of the Company, CHS or any of their subsidiaries
or, any applicable law, statute, rule, regulation, judgment, order, writ
or decree of any government, government instrumentality or court, domestic
or foreign, having jurisdiction over the Company, CHS or any of their
subsidiaries or any of their assets, properties or operations. As used
herein, a "Repayment Event" means any event or condition which gives the
holder of any note, debenture or other evidence of indebtedness (or any
person acting on such holder's behalf) the right to require the
repurchase, redemption or repayment of all or a portion of such
indebtedness by the Company, CHS or any of their subsidiaries.
(xii) ABSENCE OF LABOR DISPUTE. No material labor dispute with the
employees of the Company, CHS or any of their subsidiaries exists or, to
the knowledge of the Company or CHS, is imminent, and neither the Company
nor CHS is aware of any existing or imminent labor disturbance by the
employees of any of their or any of their subsidiaries' principal
suppliers or contractors, which would reasonably be expected to result in
a Material Adverse Effect.
(xiii) ABSENCE OF PROCEEDINGS. There is no action, suit, proceeding,
inquiry or investigation before or brought by any court or governmental
agency or body, domestic or foreign, now pending (other than any sealed
"qui tam" actions of which neither the
8
Company nor CHS has any knowledge), or, to the knowledge of the Company or
CHS, threatened, against or affecting the Company, CHS or any of their
subsidiaries, which is required to be disclosed in the Registration
Statement (other than as disclosed therein), or which would reasonably be
expected to result in a Material Adverse Effect, or which could materially
and adversely affect the properties or assets thereof or the consummation
of the transactions contemplated in this Agreement and the International
Purchase Agreement or the Recapitalization, or the performance by the
Company or CHS of their obligations hereunder or thereunder; the aggregate
of all pending legal or governmental proceedings to which the Company, CHS
or any of their subsidiaries is a party or of which any of their
respective property or assets is the subject which are not described in
the Registration Statement, including ordinary routine litigation
incidental to the business, would not reasonably be expected to result in
a Material Adverse Effect.
(xiv) ACCURACY OF EXHIBITS. There are no contracts or documents
which are required to be described in the Registration Statement or the
Prospectuses or to be filed as exhibits to the Registration Statement
which have not been so described and/or filed as required.
(xv) POSSESSION OF INTELLECTUAL PROPERTY. The Company, CHS and their
subsidiaries own or possess, or can acquire on reasonable terms, adequate
patents, patent rights, licenses, inventions, copyrights, know-how
(including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures),
trademarks, service marks, trade names or other intellectual property
(collectively, "Intellectual Property") necessary to carry on in all
material respects the business now operated by them, and none of the
Company, CHS or any of their subsidiaries has received any notice or is
otherwise aware of any infringement of or conflict with asserted rights of
others with respect to any Intellectual Property or of any facts or
circumstances which could render any Intellectual Property invalid or
inadequate to protect the interest of the Company, CHS or any of their
subsidiaries therein, except for such infringements or conflicts (if the
subject of any unfavorable decision, ruling or finding) or invalidities or
inadequacies which would not, singly or in the aggregate, reasonably be
expected to result in a Material Adverse Effect.
(xvi) ABSENCE OF FURTHER REQUIREMENTS. No filing with, or
authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or agency
is necessary or required for the performance by the Company or CHS of
their obligations hereunder, in connection with the offering, issuance or
sale of the Securities under this Agreement and the International Purchase
Agreement, the consummation of the Recapitalization or the transactions
contemplated by this Agreement and the International Purchase Agreement,
except (i) such as have been already obtained or as may be required under
the 1933 Act or the 1933 Act Regulations and foreign or state securities
or blue sky laws and (ii) such as have been obtained under the laws and
regulations of jurisdictions outside the United States in which the
Reserved Securities are offered.
9
(xvii) POSSESSION OF LICENSES AND PERMITS. The Company, CHS and
their subsidiaries possess such permits, licenses, provider numbers,
certificates, approvals (including, without limitation, certificate of
need approvals), consents, orders, certifications (including, without
limitation, certification under the Medicare and Medicaid programs),
accreditations (including, without limitation, accreditation by the Joint
Commission on Accreditation of Healthcare Organizations) and other
authorizations (collectively, "Governmental Licenses") issued by, and have
made all declarations and filings with, the appropriate federal, state,
local or foreign regulatory agencies or bodies necessary to conduct the
business now operated by them (including, without limitation, Governmental
Licenses as are required (i) under such federal and state healthcare laws
as are applicable to the Company, CHS and their subsidiaries and (ii) with
respect to those facilities operated by the Company, CHS or any of their
subsidiaries that participate in the Medicare and/or Medicaid programs, to
receive reimbursement thereunder), except where the failure to poses such
Government Licenses or to make such declarations and filings would not
reasonably be expected to result in a Material Adverse Effect; the
Company, CHS and their subsidiaries are in compliance with the terms and
conditions of all such Governmental Licenses, except where the failure so
to comply would not, singly or in the aggregate, reasonably be expected to
result in a Material Adverse Effect; all of the Governmental Licenses are
valid and in full force and effect, except when the invalidity of such
Governmental Licenses or the failure of such Governmental Licenses to be
in full force and effect would not reasonably be expected to result in a
Material Adverse Effect; and none of the Company, CHS or any of their
subsidiaries has received any notice of proceedings relating to the
revocation or modification of any such Governmental Licenses which, singly
or in the aggregate, if the subject of an unfavorable decision, ruling or
finding, would reasonably be expected to result in a Material Adverse
Effect. All of the hospitals operated by the Company, CHS and their
subsidiaries are "providers of services" as defined in the Social Security
Act and the regulations promulgated thereunder and are eligible to
participate in the Medicare and Medicaid programs (it being understood
that this representation and warranty is to the best of the Company's and
CHS's knowledge with respect to the five hospitals acquired by the Company
since September 1, 1999).
(xviii) ACCOUNTS RECEIVABLE. The accounts receivable of the Company,
CHS and their subsidiaries have been and will continue to be adjusted to
reflect material changes in the reimbursement policies of third party
payors such as Medicare, Medicaid, private insurance companies, health
maintenance organizations, preferred provider organizations, managed care
systems and other third party payors (including, without limitation, Blue
Cross plans). The accounts receivable, after giving effect to the
allowance for doubtful accounts, relating to such third party payors do
not and shall not materially exceed amounts the Company, CHS and their
subsidiaries are entitled to receive.
(xix) COMPLIANCE WITH SOCIAL SECURITY ACT AND OTHER FEDERAL
ENFORCEMENT INITIATIVES. Neither the Company and CHS nor, to the knowledge
of the Company and CHS, any officers, directors or stockholders, employees
or other agents of the Company, CHS or any of their subsidiaries or the
hospitals operated by them, has engaged in any
10
activities which are prohibited under Federal Medicare and Medicaid
statutes including, but not limited to, 42 U.S.C. " 1320a-7 (Program
Exclusion), 1320a-7a (Civil Monetary Penalties), 1320a-7b (the
Anti-kickback Statute), 42 U.S.C. ' 1395nn and 1396b (the "Xxxxx" law,
prohibiting certain self-referrals), or any other federal law, including,
but not limited to, the federal TRICARE statute, 10 U.S.C. '1071 ET SEQ.,
the Federal Civil False Claims Act, 31 U.S.C. " 3729-32, Federal Criminal
False Claims Act, 18 U.S.C. ' 287, False Statements Relating to Health
Care Matters, 18 U.S.C. ' 1035, Health Care Fraud, 18 U.S.C. ' 1347, or
the federal Food, Drug & Cosmetics Act, 21 U.S.C. ' 360aaa, or any
regulations promulgated pursuant to such statutes, or related state or
local statutes or regulations or any rules of professional conduct,
including but not limited to the following: (i) knowingly and willfully
making or causing to be made a false statement or representation of a
material fact in any applications for any benefit or payment under the
Medicare or Medicaid program or from any third party (where applicable
federal or state law prohibits such payments to third parties); (ii)
knowingly and willfully making or causing to be made any false statement
or representation of a material fact for use in determining rights to any
benefit or payment under the Medicare or Medicaid program or from any
third party (where applicable federal or state law prohibits such payments
to third parties); (iii) failing to disclose knowledge by a claimant of
the occurrence of any event affecting the initial or continued right to
any benefit or payment under the Medicare or Medicaid program or from any
third party (where applicable federal or state law prohibits such payments
to third parties) on its own behalf or on behalf of another, with intent
to secure such benefit or payment fraudulently; (iv) knowingly and
willfully offering, paying, soliciting or receiving any remuneration
(including any kickback, bribe or rebate), directly or indirectly, overtly
or covertly, in cash or in kind (a) in return for referring an individual
to a Person for the furnishing or arranging for the furnishing of any item
or service for which payment may be made in whole or in part by Medicare
or Medicaid or any third party (where applicable federal or state law
prohibits such payments to third parties), or (b) in return for
purchasing, leasing or ordering or arranging for or recommending the
purchasing, leasing or ordering of any good, facility, service, or item
for which payment may be made in whole or in part by Medicare or Medicaid
or any third party (where applicable federal or state law prohibits such
payments to third parties); (v) knowingly and willfully referring an
individual to a person with which they have ownership or certain other
financial arrangements (where applicable federal law prohibits such
referrals); and (vi) knowingly and willfully violating any enforcement
initiative instituted by any governmental agency (including, without
limitation, the Office of the Inspector General and the Department of
Justice), except for any such activities which are specifically described
in the Prospectus or which would not, singly or in the aggregate,
reasonably be expected to result in a Material Adverse Effect.
(xx) REGULATORY FILINGS. None of the Company, CHS or any of their
subsidiaries or any of the hospitals operated by any of them has failed to
file with applicable regulatory authorities any statement, report,
information or form required by any applicable law, regulation or order,
except where the failure to be so in compliance could not, individually or
in the aggregate, have a Material Adverse Effect. Except as described in
the
11
Prospectus, all such filings or submissions were in compliance with
applicable laws when filed and no deficiencies have been asserted by any
regulatory commission, agency or authority with respect to any such
filings or submissions, except for any such failures to be in compliance
or deficiencies which would not, singly or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
(xxi) TITLE TO PROPERTY. The Company, CHS and their subsidiaries
have good and marketable title to all real property owned by them and good
title to all other properties owned by them, in each case, free and clear
of all mortgages, pledges, liens, security interests, claims, restrictions
or encumbrances of any kind except such as (a) are described in the
Prospectuses or (b) do not, singly or in the aggregate, in a manner that
would reasonably be expected to result in a Material Adverse Effect,
affect the value of such property or interfere with the use made or
proposed to be made of such property by the Company, CHS or any of their
subsidiaries; and all of the leases and subleases of the Company and their
subsidiaries, considered as one enterprise, and under which the Company,
CHS or any of their subsidiaries holds properties described in the
Prospectuses, are in full force and effect, and none of the Company, CHS
or any of their subsidiaries has any notice of any claim of any sort that
has been asserted by anyone adverse to the rights of the Company, CHS or
any of their subsidiaries under any of the leases or subleases mentioned
above, or affecting or questioning the rights of the Company, CHS or such
subsidiary to the continued possession of the leased or subleased premises
under any such lease or sublease, except where the failure to be in full
force and effect or such claim would not reasonably be expected to have a
Material Adverse Effect.
(xxii) INVESTMENT COMPANY ACT. None of the Company, CHS or their
subsidiaries is, and upon the issuance and sale of the Securities as
herein contemplated and the application of the net proceeds therefrom as
described in the Prospectuses none of them will be, an "investment
company" or an entity "controlled" by an "investment company" as such
terms are defined in the Investment Company Act of 1940, as amended (the
"1940 Act").
(xxiii) ENVIRONMENTAL LAWS. Except as described in the Registration
Statement and except as would not, singly or in the aggregate, reasonably
be expected to result in a Material Adverse Effect, (A) none of the
Company, CHS, their subsidiaries or any of the hospitals owned, leased or
operated by them is in violation of any federal, state, local or foreign
statute, law, rule, regulation, standard, guide, ordinance, code, policy
or rule of common law or any judicial or administrative interpretation
thereof, including any judicial or administrative order, consent, decree
or judgment, relating to pollution or protection of human health or
safety, the environment (including, without limitation, ambient air,
surface water, groundwater, land surface or subsurface strata) or
wildlife, including, without limitation, laws and regulations relating to
the release or threatened release of chemicals, pollutants, contaminants,
wastes, toxic substances, hazardous substances (including, without
limitation, asbestos, polychlorinated biphenyls, urea-formaldehyde
insulation, petroleum or petroleum products) (collectively, "Hazardous
Materials") or to
12
the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling, release or threatened release of
Hazardous Materials (collectively, "Environmental Laws"), (B) the Company,
CHS, their subsidiaries and each of the hospitals owned, leased or
operated by them have all permits, authorizations and approvals required
under any applicable Environmental Laws and are each in compliance with
their requirements, (C) there are no pending or threatened administrative,
regulatory or judicial actions, suits, demands, demand letters, claims,
liens, notices of noncompliance or violation, investigation or proceedings
relating to any Environmental Law against the Company, CHS, their
subsidiaries or any of the hospitals owned, leased or operated by them and
(D) there are no events or circumstances that might reasonably be expected
to form the basis of an order for clean-up or remediation, or an action,
suit or proceeding by any private party or governmental body or agency,
against or affecting the Company, CHS, any of their subsidiaries or any of
the hospitals owned, leased or operated by them relating to Hazardous
Materials or any Environmental Laws.
(xxiv) REGISTRATION RIGHTS. Except as disclosed in the Prospectuses
under the caption "Shares Eligible for Future SaleBRegistration Rights,"
there are no persons with registration rights or other similar rights to
have any securities of the Company, CHS or any of their subsidiaries
registered pursuant to the Registration Statement or otherwise registered
by the Company or any other person under the 1933 Act.
(xxv) INSURANCE. The Company, CHS and each of their subsidiaries and
each of the hospitals owned, leased or operated by them are insured by
insurers of recognized financial responsibility against such loses and
risks and in such amounts as are prudent and customary in the healthcare
industry; none of the Company, CHS, their subsidiaries or any of the
hospitals owned, leased or operated by them has been refused any material
insurance coverage sought or applied for since January 1, 1999; and
neither the Company nor CHS has any reason to believe that it or any of
the hospitals owned, leased or operated by them, will not be able to renew
its existing insurance coverage as and when such coverage expires or to
obtain similar coverage from similar insurers as may be necessary to
continue its operations except where the failure to renew or maintain such
coverage would not reasonably be expected to result in a Material Adverse
Effect. The officers and directors of the Company are insured by insurers
of recognized financial responsibility against such losses and risks and
in such amounts as the Company believes are prudent and customary for
officers= and directors= liability insurance of a public company and as
the Company believes would cover claims which would reasonably be expected
to be made in connection with the issuance of the Securities; and the
Company has no reason to believe that it will not be able to renew its
existing directors= and officers= liability insurance coverage as and when
such coverage expires or to obtain similar coverage from similar insurers
as may be necessary to cover its officers and directors.
(xxvi) TAX RETURNS AND PAYMENT OF TAXES. The Company, CHS and their
subsidiaries have timely filed all federal, state, local and foreign tax
returns that are required to be filed or has duly requested extensions
thereof and all such tax returns are
13
true, correct and complete, except to the extent that any failure to file
or request an extension, or any incorrectness would not reasonably be
expected to result in a Material Adverse Effect. The Company, CHS and
their subsidiaries have timely paid all taxes shown as due on such filed
tax returns (including any related assessments, fines or penalties),
except to the extent that any such taxes are being contested in good faith
and by appropriate proceedings, or to the extent that any failure to pay
would not reasonably be expected to result in a Material Adverse Effect;
and adequate charges, accruals and reserves have been provided for in the
financial statements referred to in Section 1(a)(iii) above in accordance
with GAAP in respect of all Federal, state, local and foreign taxes for
all periods as to which the tax liability of the Company, CHS and their
subsidiaries has not been finally determined or remains open to
examination by applicable taxing authorities except (A) for taxes incurred
after the date of the financial statements referred to in Section
1(a)(iii) or (B) where the failure to provide for such charges, accruals
and reserves would not reasonably be expected to result in a Material
Adverse Effect. None of the Company, CHS or their subsidiaries is a
"United States real property holding corporation" within the meaning of
Section 897(c)(2) of the Internal Revenue Code of 1986, as amended (the
"Code").
(xxvii) NO STABILIZATION OR MANIPULATION. None of the Company, CHS
or their subsidiaries or, to the best of their knowledge, any of their
directors, officers or affiliates has taken or will take, directly or
indirectly, any action designed to, or that could be reasonably expected
to, cause or result in stabilization or manipulation of the price of the
Securities in violation of Regulation o under the Securities Exchange Act
of 1934, as amended (the "1934 Act").
(xxviii) CERTAIN TRANSACTIONS. Except as disclosed in the
Prospectuses, there are no outstanding loans, advances, or guarantees of
indebtedness by the Company, CHS or any of their subsidiaries to or for
the benefit of any of the executive officers or directors of the Company
or any of the members of the families of any of them that would be
required to be so disclosed under the 1933 Act, the 1933 Act Regulations
or Form S-1.
(xxix) STATISTICAL AND MARKET DATA. The statistical and
market-related data included in the Prospectuses are derived from sources
which the Company and CHS reasonably and in good faith believe to be
accurate, reasonable and reliable in all material respects and the
statistical and market-related data included in the Prospectuses agrees
with the sources from which it was derived in all material respects.
(xxx) ACCOUNTING AND OTHER CONTROLS. The Company has established a
system of internal accounting controls sufficient to provide reasonable
assurances that (i) transactions were, are and will be executed in
accordance with management=s general or specific authorization; (ii)
transactions were, are and will be recorded as necessary to permit
preparation of financial statements in conformity with GAAP and to
maintain accountability for assets; (iii) access to assets was, is and
will be permitted only in accordance with a management=s general or
specific authorizations; and (iv) the recorded
14
accountability for assets was, is and will be compared with existing
assets at reasonable intervals and appropriate action was, is and will be
taken with respect to any differences.
(xxxi) YEAR 2000. The Company and CHS have reviewed their operations
and those of the hospitals owned, leased or operated by them to evaluate
the extent to which the business or operations or any of the hospitals
owned, leased or operated by them will be affected by the Year 2000
Problem. The Company does not anticipate incurring operating expenses or
costs material to the financial position or results of operations of the
Company and the hospitals owned, leased or operated by it in connection
the Year 2000 Problem. As a result of the aforementioned review, the
Company has no reason to believe that the Year 2000 Problem would
reasonably be expected to have a Material Adverse Effect. The "Year 2000
Problem" as used herein means any risk that computer hardware or software
used in the receipt, transmission, processing, manipulation, storage,
retrieval, retransmission or other utilization of data or in the operation
of mechanical or electrical systems of any kind will not, in the case of
dates or time periods occurring after December 31, 1999, function at least
as effectively as in the case of dates or time periods occurring prior to
January 1, 2000.
(b) OFFICER'S CERTIFICATES. Any certificate signed by any officer of the
Company, CHS or any of their 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 to each U.S.
Underwriter as to the matters covered thereby.
SECTION 2. SALE AND DELIVERY TO U.S. UNDERWRITERS; CLOSING.
(a) INITIAL SECURITIES. On the basis of the representations and warranties
herein contained and subject to the terms and conditions herein set forth, the
Company 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) 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 o 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
15
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 & Xxxxxxxx, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or at such
other place as shall be agreed upon by the Global Coordinator and the Company,
at 9:00 A.M. (Eastern time) on the third (fourth, if the pricing occurs after
4:30 P.M. (Eastern time) on any given day) business day after the date hereof
(unless postponed in accordance with the provisions of Section 10), or such
other time not later than ten business days after such date as shall be agreed
upon by 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. Xxxxxxx Xxxxx, 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
16
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.
(e) APPOINTMENT OF QUALIFIED INDEPENDENT UNDERWRITER. The Company hereby
confirms its engagement of Xxxxxxx Xxxxx as, and Xxxxxxx Xxxxx hereby confirms
its agreement with the Company to render services as, a "qualified independent
underwriter" within the meaning of Rule 2720 of the Conduct Rules of the
National Association of Securities Dealers, Inc. with respect to the offering
and sale of the U.S. Securities. Xxxxxxx Xxxxx, solely in its capacity as
qualified independent underwriter and not otherwise, is referred to herein as
the "Independent Underwriter".
SECTION 3. COVENANTS OF THE COMPANY. The Company covenants with each
U.S. Underwriter as follows:
(a) COMPLIANCE WITH SECURITIES REGULATIONS AND COMMISSION REQUESTS.
The Company, subject to Section 3(b), will comply with the requirements of
Rule 430A and will notify the Global Coordinator immediately, and confirm
the notice in writing, (i) when any post-effective amendment to the
Registration Statement shall become effective, or any supplement to the
Prospectuses or any amended Prospectuses shall have been filed, (ii) of
the receipt of any comments from the Commission, (iii) of any request by
the Commission for any amendment to the Registration Statement or any
amendment or supplement to the Prospectuses or for additional information,
and (iv) of the issuance by the Commission of any stop order suspending
the effectiveness of the Registration Statement or of any order preventing
or suspending the use of any preliminary prospectus, or of the suspension
of the qualification of the Securities for offering or sale in any
jurisdiction, or of the initiation or threatening of any proceedings for
any of such purposes. The Company will promptly effect the filings
necessary pursuant to Rule 424(b) and will take such steps as it deems
necessary to ascertain promptly whether the form of prospectus transmitted
for filing under Rule 424(b) was received for filing by the Commission
and, in the event that it was not, it will promptly file such prospectus.
The Company will make every reasonable effort to prevent the issuance of
any stop order and, if any stop order is issued, to obtain the lifting
thereof at the earliest possible moment.
(b) FILING OF AMENDMENTS. The Company will give the Global
Coordinator notice of its intention to file or prepare any amendment to
the Registration Statement (including any filing under Rule 462(b)), or
any amendment, supplement or revision to either the prospectus included in
the Registration Statement at the time it became effective or to the
Prospectuses, will furnish the Global Coordinator with copies of any such
documents a reasonable amount of time prior to such proposed filing or
use, as the case may be, and will not file or use any such document to
which the Global Coordinator or counsel for the U.S.
Underwriters shall reasonably object.
17
(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 XXXXX, except to the extent
permitted by Regulation S-T.
(d) DELIVERY OF PROSPECTUSES. The Company has delivered to each U.S.
Underwriter, without charge, as many copies of each preliminary prospectus
as such U.S. Underwriter reasonably requested, and the Company hereby
consents to the use of such copies for purposes permitted by the 1933 Act.
The Company will furnish to each U.S. Underwriter, without charge, during
the period when the U.S. Prospectus is required to be delivered under the
1933 Act or the 1934 Act, such number of copies of the U.S. Prospectus (as
amended or supplemented) as such U.S. Underwriter may reasonably 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 XXXXX, except to the
extent permitted by Regulation S-T.
(e) CONTINUED COMPLIANCE WITH SECURITIES LAWS. The Company will
comply with the 1933 Act and the 1933 Act Regulations so as to permit the
completion of the distribution of the Securities as contemplated in this
Agreement, the International Purchase Agreement and in the Prospectuses.
If at any time when a prospectus is required by the 1933 Act to be
delivered in connection with sales of the Securities, any event shall
occur or condition shall exist as a result of which it is necessary, in
the opinion of counsel for the U.S. Underwriters or for the Company, to
amend the Registration Statement or amend or supplement any Prospectus in
order that the Prospectuses will not include any untrue statement of a
material fact or omit to state a material fact necessary in order to make
the statements therein not misleading in the light of the circumstances
existing at the time it is delivered to a purchaser, or if it shall be
necessary, in the opinion of such counsel, at any such time to amend the
Registration Statement or amend or supplement any Prospectus in order to
comply with the requirements of the 1933 Act or the 1933 Act Regulations,
the Company will promptly prepare and file with the Commission, subject to
Section 3(b), such amendment or supplement as may be necessary to correct
such statement or omission or to make the Registration Statement or the
Prospectuses comply with such requirements, and the Company will furnish
to the U.S. Underwriters such number of copies of such amendment or
supplement as the U.S. Underwriters may reasonably request.
18
(f) BLUE SKY QUALIFICATIONS. The Company will use its best efforts,
in cooperation with the U.S. Underwriters, to qualify the Securities for
offering and sale under the applicable securities laws of such states and
other jurisdictions (domestic or foreign) as the Global Coordinator may
designate and to maintain such qualifications in effect for a period of
not less than one year from the later of the effective date of the
Registration Statement and any Rule 462(b) Registration Statement;
provided, however, that the Company shall not be obligated to file any
general consent to service of process or to qualify as a foreign
corporation or as a dealer in securities in any jurisdiction in which it
is not so qualified or to subject itself to taxation in respect of doing
business in any jurisdiction in which it is not otherwise so subject. In
each jurisdiction in which the Securities have been so qualified, the
Company will file such statements and reports as may be required by the
laws of such jurisdiction to continue such qualification of the Securities
in effect for a period of not less than one year from the effective date
of the Registration Statement and any Rule 462(b) Registration Statement.
(g) RULE 158. The Company will timely file such reports pursuant to
the 1934 Act as are necessary in order to make generally available to its
securityholders as soon as practicable an earnings statement for the
purposes of, and to provide the benefits contemplated by, the last
paragraph of Section 11(a) of the 1933 Act.
(h) USE OF PROCEEDS. The Company will use the net proceeds received
by it from the sale of the Securities in the manner specified in the
Prospectuses under "Use of Proceeds".
(i) LISTING. The Company will use its best efforts to effect and
maintain the quotation of the Common Stock (including the Securities) on
the New York Stock Exchange.
(j) RESTRICTION ON SALE OF SECURITIES. During a period of 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) any shares of Common Stock issued by the Company
upon the exercise of an option or warrant or the conversion of a security
outstanding on the date hereof and referred to in the Prospectuses, (C)
any shares of Common Stock issued or options to purchase Common Stock
granted pursuant to employee
19
benefit plans of the Company referred to in the Prospectuses, (D) any
shares of Common Stock issued pursuant to any non-employee director stock
plan or dividend reinvestment plan, or (E) the issuance by the Company of
shares of Common Stock pursuant to the Recapitalization.
(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 NASD RULES. The Company hereby agrees that it
will ensure that the Reserved Securities will be restricted as required by
the NASD rules from sale, transfer, assignment, pledge or hypothecation
for a period of three months following the date of this Agreement. The
Underwriters will notify the Company as to which persons will need to be
so restricted. At the request of the Underwriters, the Company will direct
the transfer agent to place a stop transfer restriction upon such
securities for such period of time. Should the Company release, or seek to
release, from such restrictions any of the Reserved Securities, the
Company agrees to reimburse the Underwriters for any reasonable expenses
(including, without limitation, legal expenses) they incur in connection
with such release.
(m) COMPLIANCE WITH RULE 463. The Company will comply with the
requirements of Rule 463 of the 1933 Act Regulations.
SECTION 4. PAYMENT OF EXPENSES. (a) EXPENSES. The Company and CHS will pay
all expenses incident to the performance of their obligations under this
Agreement, including (i) the preparation, printing and filing of the
Registration Statement (including financial statements and exhibits) as
originally filed and of each amendment thereto, (ii) the preparation, printing
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
20
counsel for the Underwriters in connection therewith and in connection with the
preparation of the Blue Sky Survey and any supplement thereto, (vi) the printing
and delivery to the Underwriters of copies of each preliminary prospectus and of
the Prospectuses and any amendments or supplements thereto, (vii) the
preparation, printing and delivery to the Underwriters of copies of the Blue Sky
Survey and any supplement thereto, (viii) the fees and expenses of any transfer
agent or registrar for the Securities, (ix) the filing fees incident to, and the
reasonable fees and disbursements of counsel to the Underwriters in connection
with, the review by the NASD of the terms of the sale of the Securities, (x) the
fees and expenses incurred in connection with the listing of the Securities on
the New York Stock Exchange, (xi) all costs and expenses of the Underwriters,
including the fees and disbursements of counsel for the Underwriters, in
connection with matters related to the Reserved Securities which are designated
by the Company for sale to Eligible Persons who have expressed an interest in
purchasing the Reserved Securities and (xii) the expenses of the Independent
Underwriter.
(b) 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 and CHS 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 CHS contained in Section 1
hereof or in certificates of any officer of the Company, CHS or any of their
subsidiaries delivered pursuant to the provisions hereof, to the performance by
the Company of their covenants and other obligations hereunder, and to the
following further conditions:
(a) EFFECTIVENESS OF REGISTRATION STATEMENT. The Registration
Statement, including any Rule 462(b) Registration Statement, has become
effective and at Closing Time no stop order suspending the effectiveness
of the Registration Statement shall have been issued under the 1933 Act or
proceedings therefor initiated or threatened by the Commission, and any
request on the part of the Commission for additional information shall
have been complied with to the reasonable satisfaction of counsel to the
U.S. Underwriters. A prospectus containing the Rule 430A Information shall
have been filed with the Commission in accordance with Rule 424(b) (or a
post-effective amendment providing such information shall have been filed
and declared effective in accordance with the requirements of Rule 430A).
(b) OPINION OF COUNSEL FOR THE COMPANY. At Closing Time, the U.S.
Representatives shall have received the favorable opinion, dated as of
Closing Time, of:
(i) Xxxxxx X. Xxxxxxx, Vice President, Secretary and General Counsel
of the Company, in form and substance reasonably satisfactory to
counsel for the U.S. Underwriters, together with signed or
reproduced copies of such letter for each of the other U.S.
Underwriters to the effect set forth in Exhibit A-1 hereto and to
such further effect as counsel to the U.S. Underwriters may
reasonably request; and
(ii) Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx, special counsel for
the Company, in form and substance reasonably satisfactory to
counsel for the U.S. Underwriters, together with signed or
reproduced copies of such letter for each of the other U.S.
21
Underwriters to the effect set forth in Exhibit A-2 hereto and to
such further effect as counsel to the U.S. Underwriters may
reasonably request.
(c) OPINION OF COUNSEL FOR THE U.S. UNDERWRITERS. At Closing Time,
the U.S. Representatives shall have received the favorable opinion, dated
as of Closing Time, of Debevoise & Xxxxxxxx, counsel for the U.S.
Underwriters, together with signed or reproduced copies of such letter for
each of the other U.S. Underwriters in form and substance reasonably
satisfactory to the U.S. Underwriters.
(d) OFFICERS' CERTIFICATE. At Closing Time, there shall not have
been, since the date hereof or since the respective dates as of which
information is given in the Prospectuses, any material adverse change in
the condition, financial or otherwise, or in the earnings, business
affairs or business prospects of the Company, CHS and their subsidiaries
considered as one enterprise, whether or not arising in the ordinary
course of business, and the U.S. Representatives shall have received a
certificate of the President and Chief Executive Officer and the Executive
Vice President and Chief Financial Officer of the Company, dated as of
Closing Time, to the effect that (i) there has been no such material
adverse change, (ii) the representations and warranties in Section 1(a)
hereof are true and correct with the same force and effect as though
expressly made at and as of Closing Time, (iii) the Company and CHS have
complied with all agreements and satisfied all conditions on their part to
be performed or satisfied at or prior to Closing Time, and (iv) no stop
order suspending the effectiveness of the Registration Statement has been
issued and, to such person's knowledge after due inquiry, no proceedings
for that purpose have been instituted or are pending or are contemplated
by the Commission.
(e) ACCOUNTANT'S COMFORT LETTER. At the time of the execution of
this Agreement, the U.S. Representatives shall have received from Deloitte
& Touche LLP a letter, dated such date, in form and substance reasonably
satisfactory to the U.S. Representatives, together with signed or
reproduced copies of such letter for each of the other U.S. Underwriters,
containing statements and information of the type ordinarily included in
accountants' "comfort letters" to underwriters with respect to the
financial statements and certain financial information contained in the
Registration Statement and the Prospectuses.
(f) BRING-DOWN COMFORT LETTER. At Closing Time, the Representatives
shall have received from Deloitte & Touche LLP a letter, dated as of
Closing Time, to the effect that they reaffirm the statements made in the
letter furnished pursuant to 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 shall have
been approved for listing on the New York Stock Exchange, subject only to
official notice of issuance.
22
(h) NO OBJECTION. The NASD has confirmed that it has not raised any
objection with respect to the fairness and reasonableness of the
underwriting terms and arrangements with respect to the Securities.
(i) LOCK-UP AGREEMENTS. At the date of this Agreement, the U.S.
Representatives shall have received an agreement substantially in the form
of Exhibit B hereto signed by the persons listed on Schedule C hereto.
(j) 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.
(k) RECAPITALIZATION. Prior to the purchase of the Securities by the
Underwriters, the Recapitalization shall have been consummated.
(l) 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 contained herein and the
statements in any certificates furnished by the Company or any subsidiary
of the Company hereunder shall be true and correct as of each Date of
Delivery and, at the relevant Date of Delivery, the U.S. Representatives
shall have received:
(i) OFFICERS' CERTIFICATE. A certificate, dated such Date of
Delivery, of the President and Chief Executive Officer, and of the
Executive Vice President and Chief Financial Officer of the Company,
confirming that the certificate delivered at the Closing Time
pursuant to Section 5(d) hereof remains true and correct as of such
Date of Delivery.
(ii) OPINION OF COUNSEL FOR COMPANY. The favorable opinion of Fried,
Frank, Harris, Xxxxxxx & Xxxxxxxx, special counsel for the Company,
together with the favorable opinion of Xxxxxx X. Xxxxxxx, Vice
President, Secretary and General Counsel of the Company, each in
form and substance reasonably satisfactory to counsel for the U.S.
Underwriters, dated such Date of Delivery, relating to the U.S.
Option Securities to be purchased on such Date of Delivery and
otherwise to the same effect as the opinions required by Section
5(b) hereof.
(iii) OPINION OF COUNSEL FOR U.S. UNDERWRITERS. The favorable
opinion of Debevoise & Xxxxxxxx, 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.
23
(iv) BRING-DOWN COMFORT LETTER. A letter from Deloitte & Touche LLP,
in form and substance reasonably satisfactory to the U.S.
Representatives and dated such Date of Delivery, substantially in
the same form and substance as the letter furnished to the U.S.
Representatives pursuant to Section 5(f) hereof, except that the
"specified date" in the letter furnished pursuant to this paragraph
shall be a date not more than five days prior to such Date of
Delivery.
(m) ADDITIONAL DOCUMENTS. At Closing Time and at each Date of Delivery,
counsel for the U.S. Underwriters shall have been furnished with such documents
and opinions as they may reasonably require for the purpose of enabling them to
pass upon the issuance and sale of the Securities as herein contemplated, or in
order to evidence the accuracy of any of the representations or warranties, or
the fulfillment of any of the conditions, herein contained; and all proceedings
taken by the Company in connection with the issuance and sale of the Securities
as herein contemplated shall be reasonably satisfactory in form and substance to
the U.S. Representatives and counsel for the U.S. Underwriters.
(n) TERMINATION OF AGREEMENT. If any condition specified in this Section
shall not have been fulfilled when and as required to be fulfilled, this
Agreement, or, in the case of any condition to the purchase of 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 THE U.S. UNDERWRITERS. (1) The Company and
CHS jointly and severally agree to indemnify and hold harmless each U.S.
Underwriter and each person, if any, who controls any U.S. Underwriter within
the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act as
follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged
untrue statement of a material fact contained in the Registration
Statement (or any amendment thereto), including the Rule 430A Information,
or the omission or alleged omission therefrom of a material fact required
to be stated therein or necessary to make the statements therein not
misleading or arising out of any untrue statement or alleged untrue
statement of a material fact included in any preliminary prospectus or the
Prospectuses (or any amendment or supplement thereto), or the omission or
alleged omission therefrom of a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading;
24
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of (A) the violation of any
applicable laws or regulations of any jurisdiction where Reserved
Securities have been offered and (B) any untrue statement or alleged
untrue statement of a material fact included in the supplement or
prospectus wrapper material distributed in any jurisdiction in connection
with the reservation and sale of the Reserved Securities to employees,
directors and other persons with relationships with the Company who have
expressed an interest in purchasing the Reserved Securities or the
omission or alleged omission therefrom of a material fact necessary to
make the statements therein, when considered in conjunction with the
Prospectuses or preliminary prospectuses, not misleading;
(iii) 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 or in connection with any violation
of the nature referred to in Section 6(a)(1)(ii)(A) hereof; provided that
(subject to Section 6(d) below) any such settlement is effected with the
written consent of the Company; and
(iv) against any and all expense whatsoever, as incurred (including
the fees and disbursements of counsel chosen by Xxxxxxx Xxxxx), 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 or in connection with any violation of the nature referred to in
Section 6(a)(1)(ii)(A) hereof, to the extent that any such expense is not
paid under (i), or (ii) or (iii) above;
PROVIDED, HOWEVER, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent (x) arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by any
U.S. Underwriter through the U.S. Representatives expressly for use in the
Registration Statement (or any amendment thereto), including the Rule 430A
Information, or any preliminary prospectus or the U.S. Prospectus (or any
amendment or supplement thereto) or (y) resulting from the fact that a court of
competent jurisdiction shall have made a final, non-appealable determination
that (1) the untrue statement or omission was corrected in the U.S. Prospectus,
(2) that at a time sufficiently prior to the Closing Time, the Company furnished
copies of the U.S. Prospectus in sufficient quantities to such Underwriter, (3)
that such Underwriter failed to send or give a copy of the U.S. Prospectus to
the person asserting such loss, liability, claim, damage or expense prior to the
written confirmation or the sale of Securities to such person by such
Underwriter as required by the 1933 Act or the 1933 Act Regulations, and (4)
that the sending of the U.S. Prospectus to the person asserting such loss,
liability, claim, damage or expense would have constituted a defense to the
claim asserted by such person or persons.
25
(2) In addition to and without limitation of the Company's obligation to
indemnify Xxxxxxx Xxxxx as an Underwriter, the Company also agrees to indemnify
and hold harmless the Independent Underwriter and each person, if any, who
controls the Independent Underwriter within the meaning of Section 15 of the
1933 Act or Section 20 of the 1934 Act, from and against any and all loss,
liability, claim, damage and expense whatsoever, as incurred, incurred as a
result of the Independent Underwriter's participation as a "qualified
independent underwriter" within the meaning of Rule 2720 of the Conduct Rules of
the National Association of Securities Dealers, Inc. in connection with the
offering of the U.S. Securities.
(3) Insofar as this indemnity agreement may permit indemnification for
liabilities under the 1933 Act of any person who is a partner of a U.S.
Underwriter or who controls an underwriter within the meaning of Section 15 of
the 1933 Act or Section 20 of the 1934 Act and who, at the date of this
Agreement, is a director or officer of the Company or controls the Company
within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act,
such indemnity agreement is subject to the undertaking of the Company in the
Registration Statement under Item.
(b) INDEMNIFICATION OF COMPANY, DIRECTORS AND OFFICERS. Each U.S.
Underwriter severally agrees to indemnify and hold harmless the Company, CHS and
their respective directors, each of the officers of the Company who signed the
Registration Statement, and each person, if any, who controls the Company within
the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act against
any and all loss, liability, claim, damage and expense described in the
indemnity contained in subsection (a)(1) of this Section, as incurred, but only
with respect to untrue statements or omissions, or alleged untrue statements or
omissions, made in the Registration Statement (or any amendment thereto),
including the Rule 430A Information, or any preliminary 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)(1) above,
counsel to the indemnified parties shall be selected by Xxxxxxx Xxxxx, 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
26
related actions in the same jurisdiction arising out of the same general
allegations or circumstances; provided, that, if indemnity is sought pursuant to
Section 6(a)(2), then, in addition to the fees and expenses of such counsel for
the indemnified parties, the indemnifying party shall be liable for the
reasonable fees and expenses of not more than one counsel (in addition to any
local counsel) separate from its own counsel and that of the other indemnified
parties for the Independent Underwriter in its capacity as a "qualified
independent underwriter" and all persons, if any, who control the Independent
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
1934 Act 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 if, in the reasonable judgment of the Independent Underwriter,
there may exist a conflict of interest between the Independent Underwriter and
the other indemnified parties. Any such separate counsel for the Independent
Underwriter and such control persons of the Independent Underwriter shall be
designated in writing by the Independent Underwriter. 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, such indemnifying party
agrees that it shall be liable for any settlement of the nature contemplated by
Section 6(a)(1)(iii) effected without its written consent if (i) such settlement
is entered into more than 45 days after receipt by such indemnifying party of
the aforesaid request, (ii) such indemnifying party shall have received notice
of the terms of such settlement at least 30 days prior to such settlement being
entered into and (iii) such indemnifying party shall not have reimbursed such
indemnified party in accordance with such request prior to the date of such
settlement.
(e) INDEMNIFICATION FOR RESERVED SECURITIES. In connection with the offer
and sale of the Reserved Securities, the Company and CHS jointly and severally
agree, promptly upon a request, in writing, to indemnify and hold harmless the
Underwriters from and against any and all losses, liabilities, claims, damages
and expenses incurred by them as a result of the failure of Eligible Persons who
have expressed an interest in purchasing the Reserved Securities to pay for and
accept delivery of Reserved Securities which, by the end of the first business
day following the date of this Agreement, were subject to a properly confirmed
agreement to purchase.
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
27
shall contribute to the aggregate amount of such losses, liabilities, claims,
damages and expenses incurred by such indemnified party, as incurred, (i) in
such proportion as is appropriate to reflect the relative benefits received by
the Company and CHS on the one hand and the 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 CHS on the
one hand and of the U.S. Underwriters on the other hand in connection with the
statements or omissions, or in connection with any violation of the nature
referred to in Section 6(a)(1)(ii)(A) hereof, which resulted in such losses,
liabilities, claims, damages or expenses, as well as any other relevant
equitable considerations.
The relative benefits received by the Company and CHS on the one hand and
the U.S. Underwriters on the other hand in connection with the offering of the
U.S. Securities pursuant to this Agreement shall be deemed to be in the same
respective proportions as the total net proceeds from the offering of the U.S.
Securities pursuant to this Agreement (before deducting expenses) received by
the Company and the total underwriting discount received by the U.S.
Underwriters, in each case as set forth on the cover of the U.S. Prospectus bear
to the aggregate initial public offering price of the U.S.
Securities as set forth on such cover.
The relative fault of the Company, and CHS 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 by the U.S. Underwriters and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission or any violation of the nature referred to in Section
6(a)(1)(ii)(A) hereof.
The Company, CHS and the U.S. Underwriters agree that Xxxxxxx Xxxxx will
not receive any additional benefits hereunder for serving as the Independent
Underwriter in connection with the offering and sale of the U.S.
Securities.
The Company, CHS 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.
28
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 0000 Xxx) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who controls a U.S.
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act shall have the same rights to contribution as such U.S.
Underwriter, and each director of the Company or CHS, each officer of the
Company who signed the Registration Statement, and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act or Section
20 of the 1934 Act shall have the same rights to contribution as the Company and
CHS. The 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, CHS or any of their subsidiaries
submitted pursuant hereto, shall remain operative and in full force and effect,
regardless of any investigation made by or on behalf of any U.S. Underwriter or
controlling person, or by or on behalf of the Company, and shall survive
delivery of the Securities to the U.S. Underwriters.
SECTION 9. TERMINATION OF AGREEMENT.
(a) TERMINATION; GENERAL. The U.S. Representatives may terminate this
Agreement, by notice to the Company, at any time at or prior to Closing Time (i)
if there has been, since the time of execution of this Agreement or since the
respective dates as of which information is given in the U.S. Prospectus, any
material adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise, whether or not arising in the
ordinary course of business, or (ii) if there has occurred any material adverse
change in the financial markets in the United States or the international
financial markets, any outbreak of hostilities or escalation thereof or other
calamity or crisis or any change or development involving a prospective change
in national or international political, financial or economic conditions, in
each case the effect of which is such as to make it, in the judgment of the U.S.
Representatives, impracticable to market the Securities or to enforce contracts
for the sale of the Securities, or (iii) if trading in any securities of the
Company has been suspended or materially limited by the Commission or the New
York Stock Exchange, or if trading generally on the American Stock Exchange or
the New York Stock Exchange or in the Nasdaq National Market has been suspended
or materially limited, or minimum or maximum prices for trading have been fixed,
or maximum ranges for prices have been required, by any of said exchanges or by
such system or by order of the Commission, the National Association of
29
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 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 occurs after 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.
30
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 to Debevoise & Xxxxxxxx, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx, attention of Xxxxxxx X. Xxxxx; and notices to the Company or CHS shall be
directed to them at 000 Xxxxxxxx Xxxx, Xxxxx 000, Xxxxxxxxx, Xxxxxxxxx 00000,
attention of Xxxxxx X. Xxxxxxx, Vice President, Secretary and General Counsel,
with a copy to Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx, Xxx Xxx Xxxx Xxxxx, Xxx
Xxxx, Xxx Xxxx 00000, attention of Xxxxxxx Xxxxxx.
SECTION 12. PARTIES. This Agreement shall inure to the benefit of and be
binding upon the U.S. Underwriters and the Company and their respective
successors. Nothing expressed or mentioned in this Agreement is intended or
shall be construed to give any person, firm or corporation, other than the U.S.
Underwriters and the Company and CHS and their respective successors and the
controlling persons and officers and directors referred to in Sections 6 and 7
and their heirs and legal representatives, any legal or equitable right, remedy
or claim under or in respect of this Agreement or any provision herein
contained. This Agreement and all conditions and provisions hereof are intended
to be for the sole and exclusive benefit of the U.S. Underwriters and the
Company and 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 WITHOUT
GIVING EFFECT TO CONFLICTS OF LAW PRINCIPLES THEREOF. EXCEPT AS OTHERWISE SET
FORTH HEREIN, SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME.
SECTION 14. EFFECT OF HEADINGS. The Article and Section headings herein
and the Table of Contents are for convenience only and shall not affect the
construction hereof.
31
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof, whereupon
this instrument, along with all counterparts, will become a binding agreement
between the U.S. Underwriters, the Company and CHS in accordance with its terms.
Very truly yours,
COMMUNITY HEALTH SYSTEMS, INC.
By
-----------------------------
Name:
Title:
CHS/COMMUNITY HEALTH SYSTEMS, INC.
BY
---------------------------
Name:
Title:
CONFIRMED AND ACCEPTED,
as of the date first above written:
XXXXXXX XXXXX & CO.
XXXXXXX LYNCH, PIERCE, XXXXXX
& XXXXX INCORPORATED
BANC OF AMERICA SECURITIES LLC
CHASE SECURITIES INC.
CREDIT SUISSE FIRST BOSTON CORPORATION
XXXXXXX, XXXXX & CO.
XXXXXX XXXXXXX & CO. INCORPORATED
BY: XXXXXXX LYNCH, PIERCE, XXXXXX
& XXXXX INCORPORATED
By _________________________________
Authorized Signatory
For themselves and as U.S. Representatives of the
other U.S. Underwriters named in Schedule A hereto.
32
SCHEDULE A
Number of
Initial U.S.
NAME OF U.S. UNDERWRITER Securities
------------------------ ----------
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated.....................................
Banc of America Securities LLC
Chase Securities Inc.
Credit Suisse First Boston Corporation
Xxxxxxx, Xxxxx & Co.
Xxxxxx Xxxxxxx & Co. Incorporated...........................
--------
Total....................................................... o
=========
Sch A - 1
SCHEDULE B
COMMUNITY HEALTH SYSTEMS, INC.
o 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 $o.
2. The purchase price per share for the U.S. Securities to be paid
by the several U.S. Underwriters shall be $o, being an amount equal to the
initial public offering price set forth above less $o per share; provided
that the purchase price per share for any U.S. Option Securities purchased
upon the exercise of the over-allotment option described in Section 2(b)
shall be reduced by an amount per share equal to any dividends or
distributions declared by the Company and payable on the Initial U.S.
Securities but not payable on the U.S. Option Securities.
Sch B - 1
SCHEDULE C
Xxxxxx X. Xxxxx
Xxxxxx X. Xxxx
J. Xxxxxxx Xxxxxxxxx
Xxxxxxxx X. Xxxxxxxxx
Xxxxxxxx X. Xxxxxxxxx
Xxxx X. Xxxx
Xxxxxx X. Xxxxxxx
Xxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxx
Xxxxxx X. Xxxx
Xxxxx X. Xxxxx
W. Xxxxx Xxxx
Xxxx Xxxxxxxx
Xxxxx Xxxxxx
Xxxx Xxxxxxx
Xxxxxxx X. Xxxxxxxx
Xxxxxxx X. Xxxxxxx
All Other Class B Stockholders
Sch C - 1
Exhibit A-1
FORM OF OPINION OF COMPANY'S GENERAL COUNSEL
TO BE DELIVERED PURSUANT TO
SECTION 5(b)(i)
_________________, 2000
Xxxxxxx Xxxxx & Co.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
Banc of America Securities LLC
Chase Securities Inc.
Credit Suisse First Boston Corporation
Xxxxxxx, Xxxxx & Co.
Xxxxxx Xxxxxxx & Co. Incorporated
As U.S. Representatives of the several U.S. Underwriters
x/x Xxxxxxx Xxxxx & Xx.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
Xxxxx Xxxxx
Xxxxx Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Xxxxxxx Xxxxx International
Bank of America International Limited
Chase Securities Inc.
Credit Suisse First Boston (Europe) Limited
Xxxxxxx Xxxxx International
Xxxxxx Xxxxxxx & Co. International Limited
As Lead Managers of the several International Managers
c/o Merrill Xxxxx International
Ropemaker Place
00 Xxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxx XX0X 0XX
Ladies and Gentlemen:
I am Vice President, Secretary and General Counsel of Community Health
Systems, Inc., a Delaware corporation (the "Company"), and CHS/Community Health
Systems, Inc., a Delaware corporation and a wholly owned subsidiary of the
Company ("CHS"). I am delivering this opinion pursuant to (i) Section 5(b)(i) of
the U.S. Purchase Agreement, dated __________, 2000 (the "U.S. Purchase
Agreement"), among the Company, CHS and Xxxxxxx Xxxxx & Co., Xxxxxxx Lynch,
Pierce, Xxxxxx & Xxxxx Incorporated, Banc of America Securities LLC, Chase
Securities Inc., Credit Suisse First Boston Corporation, Xxxxxxx, Xxxxx & Co.
and Xxxxxx Xxxxxxx & Co. Incorporated, as
Xxxxxxx Xxxxx & Co. et al.
2 ______________, 2000
U.S. Representatives of the several U.S. Underwriters named in Schedule A
thereto, and (ii) Section 5(b)(i) of the International Purchase Agreement, dated
_________, 2000 (the "International Purchase Agreement," and together with the
U.S. Purchase Agreement, the "Purchase Agreements"), among the Company, CHS and
Xxxxxxx Xxxxx International, Bank of America International Limited, Chase
Securities Inc., Credit Suisse First Boston (Europe) Limited, Xxxxxxx Xxxxx
International and Xxxxxx Xxxxxxx & Co. International Limited, as Lead Managers
of the several International Managers named in Schedule A thereto. All
capitalized terms used herein that are defined in, or by reference in, the
Purchase Agreements have the meanings assigned to such terms therein, or by
reference therein, unless otherwise defined herein. With your permission, all
assumptions and statements of reliance expressly set forth herein have been made
without any independent investigation or verification on my part except to the
extent otherwise expressly stated, and, except to the extent otherwise expressly
stated, I express no opinion with respect to the subject matter or accuracy of
such assumptions or items relied upon.
In connection with this opinion, I have (i) investigated such questions
of law, (ii) examined originals or certified, conformed or reproduction copies
of such agreements, instruments, documents and records of the Company and CHS,
such certificates of public officials and such other documents and (iii)
received such information from officers and representatives of the Company, CHS
and others, in each case as I have deemed necessary or appropriate for the
purposes of this opinion.
In all such examinations, I have assumed the legal capacity of all
natural persons, the genuineness of all signatures, the authenticity of original
and certified documents and the conformity to original or certified copies of
all copies submitted to me as conformed or reproduction copies. As to various
questions of fact relevant to the opinions expressed herein, I have relied upon,
and assume the accuracy of, the representations and warranties contained in the
Purchase Agreements and certificates and oral or written statements and other
information of or from public officials, officers or representatives of the
Company, CHS and others and assume compliance on the part of all parties to the
Purchase Agreements with the covenants and agreements contained therein.
Based upon the foregoing, and subject to the limitations,
qualifications and assumptions set forth herein, I am of the opinion that:
1. The Company is duly qualified as a foreign corporation to transact
business and is in good standing in each jurisdiction in which such
qualification is required, whether by reason of the ownership or leasing of
property or the conduct of business, except where the failure so to qualify or
to be in good standing would not result in a Material Adverse Effect.
2. Each subsidiary of the Company has been duly incorporated and is
validly existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, has corporate power and authority to own,
lease and operate its properties
Xxxxxxx Xxxxx & Co. et al.
3 ______________, 2000
and to conduct its business as described in the Prospectuses and is duly
qualified as a foreign corporation to transact business and is in good standing
in each jurisdiction in which such qualification is required, whether by reason
of the ownership or leasing of property or the conduct of business, except where
the failure so to qualify or to be in good standing would not result in a
Material Adverse Effect.
3. Except as otherwise disclosed in the Registration Statement, all of
the issued and outstanding capital stock of each Subsidiary has been duly
authorized and validly issued, is fully paid and non-assessable and, to the best
of my knowledge, is owned by the Company, directly or through subsidiaries, free
and clear of any security interest, mortgage, pledge, lien, encumbrance, claim
or equity; none of the outstanding shares of capital stock of any Subsidiary was
issued in violation of the preemptive or similar rights of any securityholder of
such Subsidiary.
4. All descriptions in the Prospectuses of contracts and other
documents to which the Company, CHS or their subsidiaries are a party are
accurate in all material respects; to the best of my knowledge, there are no
franchises, contracts, indentures, mortgages, loan agreements, notes, leases or
other instruments required to be described or referred to in the Registration
Statement or to be filed as exhibits thereto other than those described or
referred to therein or filed as exhibits thereto, and the descriptions thereof
or references thereto are correct in all material respects.
5. None of the Company or CHS is in violation of its charter or
by-laws.
6. The Company, CHS and each of their subsidiaries and each of the
hospitals owned, leased or operated by any of them have all necessary permits,
licenses, certificates, approvals (including, without limitation, certification
under the Medicare and Medicaid programs), accreditations (including, without
limitation, accreditation by the Joint Commission on Accreditation of Healthcare
Organizations) and other authorizations ("Governmental Licenses") (except where
the failure to have such Governmental Licenses, individually or in the
aggregate, would not reasonably be expected to have a material adverse effect on
the business, operations or financial condition of the Company, CHS and their
subsidiaries taken as a whole), to own their respective properties and to
conduct their respective businesses as now being conducted.
7. No filing, consent, approval, authorization, order, registration or
qualification of or with any Tennessee court or governmental agency or body is
required by or on behalf of the Company for the sale of the Securities or the
consummation by the Company and CHS of the transactions contemplated by the
Purchase Agreements, expect for such consents, approvals, authorizations,
orders, registrations or qualifications as may be required under state or
foreign securities or Blue Sky laws, rules and regulations in connection with
the purchase and distribution of the Securities by the Underwriters.
Xxxxxxx Xxxxx & Co. et al.
4 ______________, 2000
8. There is not pending or, to my knowledge, threatened any action,
suit, proceeding, inquiry or investigation to which the Company or any
subsidiary is a party, or to which the property of the Company or any subsidiary
is subject, before or brought by any court or governmental agency or body,
domestic or foreign, which would reasonably result in a Material Adverse Effect,
or which might reasonably be expected to materially and adversely affect the
consummation of the Recapitalization, the transactions contemplated in the
Purchase Agreements or the performance by the Company of its obligations
thereunder; it being understood that I express no opinion with respect to any
"qui tam" action as to which I have no knowledge of its pendency.
9. The statements in the Prospectuses under "Business - Legal
Proceedings," "Business - Government Regulations", Business - Payment" and
"Business - Compliance Program," in so far as they constitute summaries of legal
matters or documents referred to therein, fairly summarize in all material
respects the matters referred to therein.
In the course of the preparation by the Company of the Registration
Statement and the Prospectuses, I attended conferences with certain of the
officers and representatives of the Company and CHS, representatives of the
independent public accountants for the Company and CHS and representatives of
the Underwriter, at which the contents of the Registration Statement and the
Prospectuses were discussed. Between the date of effectiveness of the
Registration Statement and the time of delivery of this opinion, I attended
additional conferences with certain of the officers and representatives of, and
the independent public accountants for, the Company and CHS, at which the
contents of the Prospectuses were discussed to a limited extent. Given the
limitations inherent in the independent verification of factual matters and the
character of determinations involved in the registration process, I am not
passing upon and do not assume any responsibility for the accuracy, completeness
or fairness of the statements contained in the Registration Statement and the
Prospectuses, other than as set forth in paragraph 5 above. Subject to the
foregoing and on the basis of the information I gained in the performance of the
services referred to above, including information obtained from officers and
other representatives of, and the independent accountants for, the Company and
CHS, nothing has come to my attention that causes me to believe that, as of the
time it became effective, the Registration Statement contained an untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not misleading, or
that the Prospectuses as of their dates contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. Also, subject to the
foregoing, nothing has come to my attention in the course of proceedings
described in the second sentence of this paragraph that causes me to believe
that the Prospectuses on the date and time of delivery of this letter contain an
untrue statement of a material fact or omit to state a material fact necessary
to make the statements therein, in light of the circumstances under
Xxxxxxx Xxxxx & Co. et al.
5 ______________, 2000
which they were made, not misleading. I express no view or belief, however, with
respect to the financial statements, related notes and schedules thereto and
other financial data included in or omitted from the Registration Statement or
the Prospectuses.
The opinions expressed herein are limited to the federal laws of the
United States of America, the laws of the State of Tennessee and, to the extent
relevant to the opinions expressed herein, the General Corporation Law of the
State of Delaware, each as currently in effect. The opinions expressed herein
are given as of the date hereof, and I undertake no obligation to supplement
this letter if any applicable laws change after the date hereof or if I become
aware of any facts that might change the opinions expressed herein after the
date hereof or for any other reason.
The opinions expressed herein are solely for your benefit in connection
with the Purchase Agreements and may not be relied on in any manner or for any
purpose by any other person or entity and may not be quoted in whole or in part
without my prior written consent.
Very truly yours,
Xxxxxx X. Xxxxxxx
Vice President, Secretary
and General Counsel
Exhibit A-2
FORM OF OPINION OF FRIED, FRANK,
HARRIS, XXXXXXX & XXXXXXXX
TO BE DELIVERED PURSUANT TO
SECTION 5(b)(ii)
212-859-8136
_________, 2000 (FAX: 000-000-0000)
Xxxxxxx Xxxxx & Co.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
Banc of America Securities LLC
Chase Securities Inc.
Credit Suisse First Boston Corporation
Xxxxxxx, Xxxxx & Co.
Xxxxxx Xxxxxxx & Co. Incorporated
As U.S. Representatives of the several U.S. Underwriters
x/x Xxxxxxx Xxxxx & Xx.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
Xxxxx Xxxxx
Xxxxx Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Xxxxxxx Xxxxx International
Bank of America International Limited
Chase Securities Inc.
Credit Suisse First Boston (Europe) Limited
Xxxxxxx Xxxxx International
Xxxxxx Xxxxxxx & Co. International Limited
As Lead Managers of the several International Managers
c/o Merrill Xxxxx International
Ropemaker Place
00 Xxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxx XX0X 0XX
Ladies and Gentlemen:
We are acting as special counsel to Community Health Systems, Inc., a
Delaware corporation (the "Company"), and CHS/Community Health Systems, Inc., a
Delaware corporation and a wholly owned subsidiary of the Company ("CHS"), in
Xxxxxxx Xxxxx & Co. et al.
2 _____________,2000
connection with the underwritten public offering of ________ shares (the
"Securities") of common stock, par value $.01 per share (the "Common Stock"), of
the Company. This opinion is delivered to you at the Company's request pursuant
to (i) Section 5(b)(ii) of the U.S. Purchase Agreement, dated __________, 2000
(the "U.S. Purchase Agreement"), among the Company, CHS and Xxxxxxx Xxxxx & Co.,
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated, Banc of America Securities
LLC, Chase Securities Inc., Credit Suisse First Boston Corporation, Xxxxxxx,
Xxxxx & Co. and Xxxxxx Xxxxxxx & Co. Incorporated, as U.S. Representatives of
the several U.S. Underwriters named in Schedule A thereto, and (ii) Section
5(b)(ii) of the International Purchase Agreement, dated _________, 2000 (the
"International Purchase Agreement," and together with the U.S. Purchase
Agreement, the "Purchase Agreements"), among the Company, CHS and Xxxxxxx Xxxxx
International, Bank of America International Limited, Chase Securities Inc.,
Credit Suisse First Boston (Europe) Limited, Xxxxxxx Xxxxx International and
Xxxxxx Xxxxxxx & Co. International Limited, as Lead Managers of the several
International Managers named in Schedule A thereto. All capitalized terms used
herein that are defined in, or by reference in, the Purchase Agreements have the
meanings assigned to such terms therein, or by reference therein, unless
otherwise defined herein. With your permission, all assumptions and statements
of reliance expressly set forth herein have been made without any independent
investigation or verification on our part except to the extent otherwise
expressly stated, and, except to the extent otherwise expressly stated, we
express no opinion with respect to the subject matter or accuracy of such
assumptions or items relied upon.
In connection with this opinion, we have (i) investigated such
questions of law, (ii) examined originals or certified, conformed or
reproduction copies of such agreements, instruments, documents and records of
the Company and CHS, such certificates of public officials and such other
documents and (iii) received such information from officers and representatives
of the Company, CHS and others, in each case as we have deemed necessary or
appropriate for the purposes of this opinion.
In all such examinations, we have assumed the legal capacity of all
natural persons, the genuineness of all signatures, the authenticity of original
and certified documents and the conformity to original or certified copies of
all copies submitted to us as conformed or reproduction copies. As to various
questions of fact relevant to the opinions expressed herein, we have relied
upon, and assume the accuracy of, the representations and warranties contained
in the Purchase Agreements and certificates and oral or written statements and
other information of or from public officials, officers or representatives of
the Company, CHS and others, and assume compliance on the part of all parties to
the Purchase Agreements with the covenants and agreements contained therein.
Insofar as statements herein are based upon our knowledge, such phrase means and
is limited to the conscious awareness of facts or other information by lawyers
in this Firm who gave substantive attention to the representation of the Company
and CHS in connection with the Purchase Agreements.
Xxxxxxx Xxxxx & Co. et al.
3 _____________,2000
With respect to the opinion expressed in the second sentence of
paragraph 3 below, we have relied solely on the stock transfer books of the
Company. With respect to the opinions expressed in paragraphs 10 and 11 below,
our opinions are is limited to our review of only those laws and regulations
that, in our experience, are normally applicable to transactions of the type
contemplated in the Purchase Agreements. With respect to the opinion expressed
in paragraph 7, we have relied solely on the oral advice of the Staff of the
Securities and Exchange Commission (the "Commission") that the Commission has
issued an order declaring the registration under the 1933 Act of the U.S.
Securities effective and as to the absence of any stop order or any proceeding
relating thereto.
Based upon the foregoing, and subject to the limitations,
qualifications and assumptions set forth herein, we are of the opinion that:
1. The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware. CHS has
been incorporated and is validly existing as a corporation in good standing
under the laws of the State of Delaware.
2. Each of the Company and CHS has the corporate power and authority to
own, lease and operate its properties and to conduct its business as described
in the Prospectuses and to enter into and perform its obligations under the
Purchase Agreements.
3. The Company has an authorized capitalization as set forth in the
Prospectuses under the caption "Capitalization". The outstanding shares of
Common Stock have been duly authorized and validly issued and are fully paid and
non-assessable. None of the outstanding shares of Common Stock were issued in
violation of the preemptive or other similar rights of any securityholder of the
Company.
4. The Securities to be purchased by the Underwriters from the Company
pursuant to the Purchase Agreements have been duly authorized for issuance and
sale to the Underwriters and, when issued and delivered by the Company pursuant
to the Purchase Agreements against payment of the consideration set forth in the
Purchase Agreements, will be duly authorized, validly issued, fully paid and
non-assessable and no holder of the Securities will be subject to personal
liability under the Delaware General Corporation Law by reason of being such a
holder.
5. The issuance and sale of the Securities by the Company is not
subject to preemptive or other similar rights arising under (i) the Delaware
General Corporation Law, (ii) the Restated Certificate of Incorporation or
By-laws of the Company, or (iii) any indenture, mortgage, deed of trust, loan
agreement, other agreement or instrument, or court decree or order (including,
without limitation, any settlement agreement)
Xxxxxxx Xxxxx & Co. et al.
4 _____________,2000
which has been filed as an exhibit to the Registration Statement or otherwise
identified to us in a certificate provided by the Chief Financial Officer and
the General Counsel of the Company as material to the Company and its
subsidiaries taken as a whole (collectively, the "Identified Documents").
6. Each of the Purchase Agreements has been duly authorized, executed
and delivered by the Company and CHS.
7. The Registration Statement[, including any Rule 462(b) Registration
Statement,] has been declared effective under the 1933 Act and no stop order
suspending the effectiveness of the Registration Statement has been issued under
the 1933 Act and no proceedings for that purpose have been instituted or are
pending or threatened by the Commission. 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).
8. The Registration Statement[, including any Rule 462(b) Registration
Statement,] 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, related notes, supporting
schedules and other financial data included therein or omitted therefrom, as to
which we express no opinion) appeared on their face to be responsive as to form
in all material respects with the requirements of the 1933 Act and the 1933 Act
Regulations.
9. The statements in the Prospectuses under "Description of Capital
Stock," "Description of our Indebtedness," "Shares Eligible for Future Sale" and
"United States Federal Income Tax Considerations for Non-United States Holders"
and the statements in the Registration Statement under Item 14, in so far as
they constitute summaries of legal matters or documents referred to therein,
fairly summarize in all material respects the matters referred to therein.
10. No filing, consent, approval, authorization, order, registration or
qualification of or with any United States, New York or, with respect to matters
arising under the Delaware General Corporation Law, Delaware court or
governmental agency or body is required by or on behalf of the Company for the
sale of the Securities or the consummation by the Company and CHS of the
transactions contemplated by the Purchase Agreements, except the registration
under the 1933 Act of the Securities and such consents, approvals,
authorizations, orders, registrations or qualifications as may be required under
state or foreign securities or Blue Sky laws, rules and regulations in
connection with the purchase and distribution of the Securities by the
Underwriters.
Xxxxxxx Xxxxx & Co. et al.
5 _____________,2000
11. The execution, delivery and performance by the Company and CHS with
all of the provisions of the Purchase Agreements and the consummation of the
transactions contemplated by the Purchase Agreements and the Recapitalization do
not and will not conflict with, or result in a breach or violation of, any of
the terms or provisions of, or constitute a default or a Repayment Event under,
or result in the creation or imposition of any lien, charge or encumbrance upon
any property or assets of the Company, CHS or any of their subsidiaries pursuant
to, (i) any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which the Company or any of its subsidiaries is a
party or by which the Company or any of its subsidiaries is bound or to which
any of the property or assets of the Company or any of its subsidiaries is
subject, (ii) the provisions of the Restated Certificate of Incorporation or
By-laws of the Company, (iii) the Delaware General Corporation Law or any
present law, or present regulation of any government agency or authority, of the
State of New York or the United States of America known by us to be applicable
to the Company or any of its subsidiaries or their respective properties or (iv)
any court decree or order binding upon the Company or any of its subsidiaries or
their respective properties (it being understood that with respect to the
opinions in clauses (i) and (iv) of this paragraph, such opinions are limited to
the Identified Documents.
12. Other than as disclosed in the Prospectuses, to our knowledge,
there are no persons with registration rights or other similar rights to have
any securities of the Company registered pursuant to the Registration Statement
or otherwise registered by the Company under the 1933 Act.
13. The Company is not an "investment company," as such term is defined
in the Investment Company Act of 1940, as amended.
14. The Recapitalization was duly authorized by the Company's Board of
Directors and stockholders and has been consummated in accordance with its
terms.
In the course of our engagement to represent or to advise the Company,
we have not become aware of any pending legal proceeding before, or pending
investigation by, any court or administrative agency or authority or any
arbitration tribunal of the United States or the State of New York against or
directly affecting the Company, CHS or any of their respective subsidiaries or
properties which seeks to enjoin or otherwise prevent the consummation of, or to
recover any damages or obtain relief in connection with or which would
materially adversely affect the legality, validity or enforceability of, the
Purchase Agreements, the Recapitalization or the transactions contemplated
thereby. In making the foregoing statement, we have endeavored, to the extent we
have believed necessary, to determine from lawyers currently in our Firm who
have performed substantive legal services for the Company, whether such services
involved substantive attention in the form of legal representation concerning
pending legal proceedings or pending investigations of the nature referred to
above. Beyond that, we have not made any
Xxxxxxx Xxxxx & Co. et al.
6 _____________,2000
review, search or investigation of public files or records or files or records
of the Company, CHS or any of their respective subsidiaries or of their
transactions, or any other investigation or inquiry with respect to the
foregoing statement.
In the course of the preparation by the Company of the Registration
Statement and the Prospectuses, we attended conferences with certain of the
officers and other representatives of the Company and CHS, representatives of
the independent public accountants for the Company and CHS and representatives
of the Underwriters, at which the contents of the Registration Statement and the
Prospectuses were discussed. Between the date of effectiveness of the
Registration Statement and the time of delivery of this opinion, we attended
additional conferences with certain of the officers and representatives of, and
the independent public accountants for, the Company and CHS, at which the
contents of the Prospectuses were discussed to a limited extent. Given the
limitations inherent in the independent verification of factual matters and the
character of determinations involved in the registration process, we are not
passing upon and do not assume any responsibility for the accuracy,
completenesss or fairness of the statements contained in the Registration
Statement and the Prospectuses, other than as set forth in paragraph 9 above.
Subject to the foregoing and on the basis of the information we gained in the
performance of the services referred to above, including information obtained
from officers and other representatives of, and the independent accountants for,
the Company and CHS, nothing has come to our attention that causes us to believe
that, as of the time it became effective, the Registration Statement contained
an untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading, or that the Prospectuses as of their dates contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. Also, subject to
the foregoing, nothing has come to our attention in the course of proceedings
described in the second sentence of this paragraph that causes us to believe
that the Prospectuses on the date and time of delivery of this letter contain an
untrue statement of a material fact or omit to state a material fact necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading. We express no view or belief, however, with respect
to the financial statements, related notes and schedules thereto and other
financial data included in or omitted from the Registration Statement or the
Prospectuses.
Xxxxxxx Xxxxx & Co. et al.
7 _____________,2000
The opinions set forth above are subject to the following
qualifications:
A. With respect to the opinion expressed in paragraph 11 above: (i) we
have made no independent investigation as to whether the Identified Documents
identified to us in the Officer's Certificate, which are governed by the laws of
any jurisdiction other than the State of New York, will be enforced as written
under the laws of such jurisdiction; and (ii) we express no opinion with respect
to any conflict with or any breach or violation of, or default under, any
Identified Document (x) not readily ascertainable from the face of such
document, (y) arising under or based upon any cross-default provisions insofar
as such conflict, breach, violation or default relates to a default under a
document which is not an Identified Document, or (z) arising under or based upon
any covenant of a financial or numerical nature or which requires arithmetic
computation.
B. We express no opinion as to the indemnity, contribution or governing
law provisions of any agreement.
C. The opinions expressed above are subject to the effect of, and we
express no opinions herein as to, the application of state or foreign securities
or Blue Sky laws or any rules and regulations thereunder.
The opinions expressed herein are limited to the federal laws of the
United States of America, the laws of the State of New York and, to the extent
relevant to the opinions expressed herein, the General Corporation Law of the
State of Delaware, each as currently in effect. The opinions expressed herein
are given as of the date hereof, and we undertake no obligation to supplement
this letter if any applicable laws change after the date hereof or if we become
aware of any facts that might change the opinions expressed herein after the
date hereof or for any other reason.
Xxxxxxx Xxxxx & Co. et al.
8 _____________,2000
The opinions expressed herein are solely for your benefit in connection
with the Purchase Agreements and may not be relied on in any manner or for any
purpose by any other person or entity and may not be quoted in whole or in part
without our prior written consent.
Very truly yours,
FRIED, FRANK, HARRIS, XXXXXXX & XXXXXXXX
By:
--------------------------------------
Xxxxxxx Xxxxxx
[FORM OF LOCK-UP AGREEMENT FROM DIRECTORS, OFFICERS OR
OTHER STOCKHOLDERS PURSUANT TO SECTION 5(I)]
Exhibit B
XXXXXXX XXXXX & CO.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
Banc of America Securities LLC
Chase Securities Inc.
Credit Suisse First Boston Corporation
Xxxxxxx, Xxxxx & Co.
Xxxxxx Xxxxxxx & Co. Incorporated
as U.S. Representatives of the several
U.S. Underwriters to be named in the
within-mentioned U.S. Purchase Agreement
Xxxxxxx Xxxxx International
Bank of America International Limited
Chase Manhattan International Limited
Credit Suisse First Boston (Europe) Limited
Xxxxxxx Xxxxx International
Xxxxxx Xxxxxxx & Co. International Limited
x/x Xxxxxxx Xxxxx & Xx.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
Xxxxx Xxxxx
Xxxxx Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Re: PROPOSED PUBLIC OFFERING BY COMMUNITY HEALTH SYSTEMS
Dear Sirs:
The undersigned, a stockholder and/or an officer and/or a director of Community
Health Systems, Inc. a Delaware corporation (the "Company"), understands that
(i) Xxxxxxx Xxxxx & Co., Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated
("Xxxxxxx Xxxxx") and Banc of America Securities LLC, Chase Securities Inc.,
Credit Suisse First Boston Corporation, Xxxxxxx, Xxxxx & Co. and Xxxxxx Xxxxxxx
& Co. Incorporated propose to enter into a U.S. Purchase Agreement (the "U.S.
Purchase Agreement") with the Company providing for the public offering of
shares (the "Securities") of the Company's common stock, par value $.01 per
share (the "Common Stock") and (ii) Xxxxxxx Xxxxx International, Bank of America
International Limited, Chase Manhattan International Limited, Credit Suisse
First Boston (Europe) Limited, Xxxxxxx Xxxxx International and Xxxxxx Xxxxxxx &
Co. International Limited propose to enter into an International Purchase
Agreement with the Company providing for the public offering of the Common Stock
of the Company (together with the U.S. Purchase Agreement, the "Purchase
Agreements"). In recognition of the benefit that such an offering will confer
upon the
undersigned as a stockholder and/or an officer and/or a director of the Company,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the undersigned agrees with each underwriter to
be named in the Purchase Agreements that, during a period of 180 days from the
date of the Purchase Agreements, the undersigned will not, without the prior
written consent of Xxxxxxx Xxxxx, directly or indirectly, (i) offer, pledge,
sell, contract to sell, sell any option or contract to purchase, purchase any
option or contract to sell, grant any option, right or warrant for the sale of,
or otherwise dispose of or transfer any shares of the Company's Common Stock or
any securities convertible into or exchangeable or exercisable for Common Stock,
whether now owned or hereafter acquired by the undersigned or with respect to
which the undersigned has or hereafter acquires the power of disposition, or
file any registration statement under the Securities Act of 1933, as amended,
with respect to any of the foregoing or (ii) enter into any swap or any other
agreement or any transaction that transfers, in whole or in part, directly or
indirectly, the economic consequence of ownership of the Common Stock, whether
any such swap or transaction is to be settled by delivery of Common Stock or
other securities, in cash or otherwise.
Notwithstanding the foregoing, the undersigned may transfer shares of Common
Stock (i) as a BONA FIDE gift or gifts, provided that prior to such transfer the
donee or donees thereof agree in writing to be bound by the restrictions set
forth herein, (ii) to any trust for the direct or indirect benefit of the
undersigned or the immediate family of the undersigned, provided that prior to
such transfer the trustee of the trust agrees in writing to be bound by the
restrictions set forth herein, and provided further that any such transfer shall
not involve a disposition for value or (iii) if such transfer occurs by
operation of law, such as rules of descent and distribution, statutes governing
the effects of a merger or a qualified domestic order, provided that prior to
such transfer the transferee executes an agreement stating that the transferee
is receiving and holding the shares subject to the provisions of this agreement.
For purposes of this Lock-Up Agreement, "immediate family" shall mean any
relationship by blood, marriage or adoption, not more remote than first cousin.
Very truly yours,
Signature:
Print Name:
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