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DRAFT
OCTOBER 3, 1996
$450,000,000
MEDPARTNERS, INC.
___% SENIOR NOTES DUE 2006
UNDERWRITING AGREEMENT
October 3, 1996
XXXXX XXXXXX INC.
XXXXXXX LYNCH, XXXXXX, XXXXXX & XXXXX
INCORPORATED
X.X. XXXXXX SECURITIES INC.
XXXXXX XXXXXXX & CO. INCORPORATED
NATIONSBANC CAPITAL MARKETS, INC.
c/o XXXXX XXXXXX INC.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
MedPartners, Inc., a Delaware corporation (the "Company"), proposes,
upon the terms and conditions set forth herein, to issue and sell $450,000,000
aggregate principal amount of its ___% Senior Notes due 2006 (the "Notes") to
Xxxxx Xxxxxx Inc., Xxxxxxx Lynch, Xxxxxx, Xxxxxx & Xxxxx Incorporated, X.X.
Xxxxxx Securities Inc., Xxxxxx Xxxxxxx & Co. Incorporated and NationsBanc
Capital Markets, Inc. (collectively, the "Underwriters"). The Notes will be
issued pursuant to the provisions of an Indenture to be dated as of October 8,
1996 (the "Indenture") between the Company and The First National Bank of
Chicago, as Trustee (the "Trustee").
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The Company wishes to confirm as follows its agreement with the
Underwriters, in connection with the several purchases by the Underwriters of
the Notes.
1. Registration Statement and Prospectus.
The Company has prepared and filed with the Securities and Exchange
Commission (the "Commission") in accordance with the provisions of the
Securities Act of 1933, as amended, and the rules and regulations of the
Commission thereunder (collectively, the "Act"), a registration statement on
Form S-1 (File No. 333-12465) under the Act (the "registration statement"),
including a prospectus subject to completion relating to the Notes. The term
"Registration Statement" as used in this Agreement means the registration
statement (including all financial schedules and exhibits), as amended at the
time it becomes effective, or, if the registration statement became effective
prior to the execution of this Agreement, as supplemented or amended prior to
the execution of this Agreement. If it is contemplated, at the time this
Agreement is executed, that a post-effective amendment to the registration
statement will be filed and must be declared effective before the offering of
the Notes may commence, the term "Registration Statement" as used in this
Agreement means the registration statement as amended by said post-effective
amendment. If an additional registration statement is prepared and filed with
the Commission in accordance with Rule 462(b) under the Act (an "Additional
Registration Statement"), the term "Registration Statement" as used in this
Agreement includes the Additional Registration Statement.
The term "Prospectus" as used in this Agreement means the
prospectus in the form included in the Registration Statement, or, if the
prospectus included in the Registration Statement omits information in reliance
on Rule 430A under the Act and such information is included in a prospectus
filed with the Commission pursuant to Rule 424(b) under the Act, the term
"Prospectus" as used in this Agreement means the prospectus in the form
included in the Registration Statement as supplemented by the addition of the
Rule 430A information contained in the prospectus filed with the Commission
pursuant to Rule 424(b). The term "Prepricing Prospectus" as used in this
Agreement means
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the prospectus subject to completion in the form included in the registration
statement at the time of the initial filing of the registration statement with
the Commission, and as such prospectus shall have been amended from time to
time prior to the date of the Prospectus.
2. Agreements to Sell and Purchase. The Company hereby agrees,
subject to all the terms and conditions set forth herein, to issue and sell to
the Underwriters and, upon the basis of the representations, warranties and
agreements of the Company herein contained and subject to all the terms and
conditions set forth herein, each of the Underwriters agrees, severally and not
jointly, to purchase from the Company, at a purchase price of ____% of the
principal amount thereof, the principal amount of the Notes set forth opposite
the name of such Underwriter in Schedule I hereto (or such principal amount of
Notes increased as set forth in Section 10 hereof).
3. Terms of Public Offering. The Company has been advised by the
Underwriters that the Underwriters propose to make a public offering of their
respective portions of the Notes as soon after the Registration Statement and
this Agreement have become effective as in their judgment is advisable and
initially to offer the Notes upon the terms set forth in the Prospectus.
4. Delivery of the Notes and Payment Therefor. Delivery to the
Underwriters of and payment for the Notes shall be made at the office of
Skadden, Arps, Slate Xxxxxxx & Xxxx, 000 Xxxxx Xxxxxx, Xxx Xxxx, XX 00000, at
10:00 A.M., New York City time, on October 8, 1996 (the "Closing Date"). The
place of closing for the Notes and the Closing Date may be varied by agreement
between the Underwriters and the Company.
The Notes will be delivered to the Underwriters against payment of the
purchase price therefor specified in Section 2 hereof by wire transfer to an
account previously designated to Xxxxx Xxxxxx Inc. by the Company of Federal
(same day) funds and registered in such names and in such denominations as the
Underwriters shall request prior to 1:00 P.M., New York City time, on the
second business day preceding the Closing Date. The Notes to be delivered to
the Underwriters shall be made available to the Underwriters in New York City
for
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inspection and packaging not later than 9:30 A.M., New York City time, on the
business day next preceding the Closing Date.
5. Agreements of the Company. The Company agrees with the several
Underwriters as follows:
(a) If, at the time this Agreement is executed and
delivered, it is necessary for the Registration Statement or a post-effective
amendment thereto or any Additional Registration Statement to be declared
effective before the offering of the Notes may commence, the Company will
endeavor to cause the Registration Statement or such post-effective amendment
to become effective as soon as possible and will advise the Underwriters
promptly and, if requested by the Underwriters, will confirm such advice in
writing, when the Registration Statement or such post-effective amendment has
become effective.
(b) The Company will advise the Underwriters promptly
and, if requested by the Underwriters, will confirm such advice in writing: (A)
of any request by the Commission for amendment of or a supplement to the
Registration Statement, any Prepricing Prospectus or the Prospectus or for
additional information; (B) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or of the suspension
of qualification of the Notes for offering or sale in any jurisdiction or the
initiation of any proceeding for such purpose; and (C) within the period of
time referred to in paragraph (f) below, of any change in the Company's
condition (financial or other), business, prospects, properties, net worth or
results of operations, or of the happening of any event, including the filing
of any information, documents or reports pursuant to the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), that makes any statement of a
material fact made in the Registration Statement or the Prospectus (as then
amended or supplemented) untrue or which requires the making of any additions
to or changes in the Registration Statement or the Prospectus (as then amended
or
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supplemented) in order to state a material fact required by the Act or the
regulations thereunder to be stated therein or necessary in order to make the
statements therein not misleading, or of the necessity to amend or supplement
the Prospectus (as then amended or supplemented) to comply with the Act or any
other law. If at any time the Commission shall issue any stop order suspending
the effectiveness of the Registration Statement, the Company will make every
reasonable effort to obtain the withdrawal of such order at the earliest
possible time.
(c) The Company will furnish to the Underwriters, without
charge (A) six signed copies of the registration statement as originally filed
with the Commission and of each amendment thereto, including financial
statements and all schedules and exhibits to the registration statement, (B)
such number of conformed copies of the registration statement as originally
filed and of each amendment thereto, but without exhibits, as the Underwriters
may request and (C) such number of copies of the Indenture as the Underwriters
may request.
(d) The Company will not (A) file any amendment to the
Registration Statement or make any amendment or supplement to the Prospectus of
which the Underwriters shall not previously have been advised or to which the
Underwriters shall reasonably object after being so advised or (B) so long as,
in the opinion of counsel for the Underwriters, a Prospectus is required to be
delivered in connection with sales by any Underwriter or dealer, file any
information, documents or reports pursuant to the Exchange Act, without
delivering a copy of such information, documents or reports to the
Underwriters, prior to or concurrently with such filing.
(e) Prior to the execution and delivery of this
Agreement, the Company has delivered to the Underwriters, without charge, in
such quantities as the Underwriters have requested, copies of each form of the
Prepricing Prospectus. The Company consents to the use, in accordance with the
provisions of the Act and with the securities or Blue Sky laws of the
jurisdictions in which the Notes are offered by the several Underwriters and by
dealers, prior to the date of the Prospectus, of each Prepricing Prospectus so
furnished by the Company.
(f) As soon after the execution and delivery of this
Agreement as possible and thereafter from time to time for such period as in
the opinion of counsel for the Underwriters a prospectus is required by the Act
to be delivered in connection with sales by any Underwriter or
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dealer, the Company will expeditiously deliver to each Underwriter and each
dealer, without charge, as many copies of the Prospectus (and of any amendment
or supplement thereto) as the Underwriters may request. The Company consents to
the use of the Prospectus (and of any amendment or supplement thereto) in
accordance with the provisions of the Act and with the securities or Blue Sky
laws of the jurisdictions in which the Notes are offered by the several
Underwriters and by all dealers to whom the Notes may be sold, both in
connection with the offering and sale of the Notes and for such period of time
thereafter as the Prospectus is required by the Act to be delivered in
connection with sales by any Underwriter or dealer. If during such period of
time any event shall occur that in the judgment of the Company or in the
opinion of counsel for the Underwriters is required to be set forth in the
Prospectus (as then amended or supplemented) or should be set forth therein in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading, or if it is necessary to supplement or
amend the Prospectus to comply with the Act or any other law, the Company will
forthwith prepare and, subject to the provisions of paragraph (d) above, file
with the Commission an appropriate supplement or amendment thereto, and will
expeditiously furnish to the Underwriters and dealers a reasonable number of
copies thereof. In the event that the Company and the Underwriters agree that
the Prospectus should be amended or supplemented, the Company, if requested by
the Underwriters, will promptly issue a press release announcing or disclosing
the matters to be covered by the proposed amendment or supplement.
(g) The Company will cooperate with the Underwriters and
with counsel for the Underwriters in connection with the registration or
qualification of the Notes for offering and sale by the several Underwriters
and by dealers under the securities or Blue Sky laws of such jurisdictions as
the Underwriters may designate and will file such consents to service of
process or other documents necessary or appropriate in order to effect such
registration or qualification; provided that in no event shall the Company be
obligated to qualify to do business in any jurisdiction where it is not now
otherwise required to be so qualified or to take any action which would subject
it to service of process in
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suits, other than those arising out of the offering or sale of the Notes, in
any jurisdiction where it is not now so subject.
(h) The Company will make generally available to its
securityholders a consolidated earnings statement, which need not be audited,
covering a twelve-month period commencing after the effective date of the
Registration Statement and ending not later than 15 months thereafter, as soon
as practicable after the end of such period, which consolidated earnings
statement shall satisfy the provisions of Section 11(a) of the Act.
(i) So long as any of the Notes are outstanding, the
Company will furnish to the Underwriters (A) as soon as available, a copy of
each report of the Company mailed to stockholders or Noteholders or filed with
the Commission or the New York Stock Exchange and (B) from time to time such
other information concerning the Company as the Underwriters may request.
(j) If this Agreement shall terminate or shall be
terminated after execution pursuant to any provisions hereof (otherwise than
pursuant to the second paragraph of Section 10 hereof or by notice given by the
Underwriters terminating this Agreement pursuant to Section 10 or Section 11
hereof) or if this Agreement shall be terminated by the Underwriters because of
any failure or refusal on the part of the Company to comply with the terms or
fulfill any of the conditions of this Agreement, the Company agrees to
reimburse the Underwriters for all out-of-pocket expenses (including fees and
expenses of counsel for the Underwriters) incurred by the Underwriters in
connection herewith.
(k) The Company will apply the net proceeds from the sale
of the Notes in accordance with the description set forth in "Use of Proceeds"
in the Prospectus.
(l) If Rule 430A of the Act is employed, the Company will
timely file the Prospectus pursuant to Rule 424(b) under the Act and will
advise the Underwriters of the time and manner of such filing.
(m) Except as stated in this Agreement and in the
Prepricing Prospectus and Prospectus, the Company has
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not taken, nor will it take, directly or indirectly, any action designed to or
that might reasonably be expected to cause or result in stabilization or
manipulation of the price of the Notes to facilitate the sale or resale of the
Notes.
6. Representations and Warranties of the Company. The Company
represents and warrants to each Underwriter that:
(a) The execution and delivery of, and the performance by
the Company of its obligations under, this Agreement have been duly and validly
authorized by the Company, and this Agreement has been duly executed and
delivered by the Company and constitutes the valid and legally binding
agreement of the Company, enforceable against the Company in accordance with
its terms, except as enforcement of rights to indemnity and contribution
hereunder may be limited by federal or state securities laws or principles of
public policy and subject to the qualification that the enforceability of the
Company's obligations hereunder may be limited by bankruptcy, insolvency,
reorganization, moratorium and other laws relating to or affecting creditors'
rights generally, and by general equitable principles.
(b) Each Prepricing Prospectus included as part of the
registration statement as originally filed or as part of any amendment or
supplement thereto, or filed pursuant to Rule 424 under the Act, complied when
so filed in all material respects with the provisions of the Act. The
Commission has not issued any order preventing or suspending the use of any
Prepricing Prospectus.
(c) The registration statement in the form in which it
became or becomes effective and also in such form as it may be when any
post-effective amendment thereto or any Additional Registration Statement shall
become effective, and the Prospectus and any supplement or amendment thereto
when filed with the Commission under Rule 424(b) under the Act, complied or
will comply in all material respects with the provisions of the Act and did not
or will not at any such times 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, except that this representation and
warranty does not apply to statements
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in or omissions from the registration statement or the Prospectus made in
reliance upon and in conformity with (A) information relating to any
Underwriter furnished to the Company in writing by or on behalf of any
Underwriter expressly for use therein or (B) the Trustee's Statement of
Eligibility and Qualification (Form T-1) under the Trust Indenture Act of 1939,
as amended (the "1939 Act").
(d) The Company has not distributed and, prior to the
later to occur of (A) the Closing Date and (B) completion of the distribution
of the Notes, will not distribute any offering material in connection with the
offering and sale of the Notes other than the Registration Statement, the
Prepricing Prospectus, the Prospectus or other materials, if any, permitted by
the Act.
(e) The Company is a corporation duly organized and
validly existing in good standing under the laws of the State of Delaware with
full corporate power and authority to own, lease and operate its properties and
to conduct its business as presently conducted and as disclosed in the
Registration Statement and the Prospectus, and is duly registered and qualified
to conduct its business and is in good standing in each jurisdiction or place
where the nature of its properties or the conduct of its business requires such
registration or qualification, except where the failure so to register or
qualify does not and will not have a material adverse effect on the condition
(financial or other), business, prospects, properties, net worth or results of
operations of the Company and the Subsidiaries (as hereinafter defined) taken
as a whole (a "Material Adverse Effect").
(f) All the Company's subsidiaries (collectively, the
"Subsidiaries") are listed in Exhibit 21 to the Registration Statement. Each
Subsidiary that is a corporation is duly organized, validly existing and in
good standing in the jurisdiction of its incorporation, and each Subsidiary
that is a partnership, limited liability company, association or business
organization is legally formed and validly existing under the laws of the
jurisdiction of its organization. Each Subsidiary has full corporate or
organizational power and authority to own, lease and operate its properties and
to conduct its business as presently conducted. Each Subsidiary is duly
registered and qualified to conduct
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its business (and, if a corporation, is in good standing) in each jurisdiction
or place where the nature of its properties or the conduct of its business
requires such registration or qualification, except where the failure so to
register or qualify does not and will not have a Material Adverse Effect; all
the outstanding shares of capital stock of each Subsidiary that is a
corporation have been duly authorized and validly issued, are fully paid and
nonassessable, and all ownership interests in each Subsidiary that is not a
corporation have been validly created pursuant to the partnership or other
agreements or organizational documents of each such Subsidiary, and, except as
disclosed in the Prospectus, the shares or other interests owned by the Company
are owned by the Company directly, or indirectly through one of the other
Subsidiaries, free and clear of any lien, adverse claim, security interest,
equity or other encumbrance.
(g) The Indenture has been duly and validly authorized
and, upon its execution and delivery by the Company and assuming due execution
and delivery by the Trustee, will be a valid and binding agreement of the
Company, enforceable in accordance with its terms, except to the extent that
enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium and other laws relating to or affecting creditors' rights generally,
and by general equitable principles; and the Indenture has been duly qualified
under the 1939 Act and conforms to the description thereof in the Registration
Statement and the Prospectus.
(h) The Notes have been duly authorized and, when
executed by the Company and authenticated by the Trustee in accordance with the
Indenture and delivered to the Underwriters against payment therefor in
accordance with the terms hereof, will have been validly issued and delivered,
and will constitute valid and binding obligations of the Company entitled to
the benefits of the Indenture and enforceable in accordance with their terms,
except to the extent that enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium and other laws relating to or affecting creditors'
rights generally, and by general equitable principles; and the Notes will
conform to the description thereof in the Registration Statement and the
Prospectus.
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(i) The authorized and outstanding capital stock of the
Company is as set forth under the caption "Capitalization" in the Prospectus
and all the outstanding shares of Common Stock, par value $.001 per share, of
the Company (A) have been duly authorized and validly issued, (B) are fully
paid and nonassessable, (C) are free of any preemptive or similar rights and
(D) have been issued and sold in compliance with all applicable federal and
state securities laws.
(j) Except as disclosed in the Prospectus, there are no
outstanding options, warrants or other rights calling for the issuance of, nor
any commitment, plan or arrangement to issue, any shares of capital stock of
the Company or any security convertible into or exchangeable or exercisable for
capital stock of the Company.
(k) No holder of any security of the Company or any other
person has the right, contractual or otherwise, which right has not been fully
complied with or waived in writing by the holder thereof with evidence of such
waiver heretofore delivered to the Underwriters, (A) to cause the Company to
sell or otherwise issue to them, or to permit them to underwrite the sale of,
the Notes, (B) to have any securities of the Company included in the
registration statement or (C) as a result of the filing of the registration
statement or consummation of the transactions contemplated by this Agreement,
to require registration under the Act of any securities of the Company.
(l) There are no legal or governmental proceedings
pending or, to the knowledge of the Company, threatened, against the Company or
any of the Subsidiaries, or to which the Company or any of the Subsidiaries, or
to which any of their respective properties is subject, that are required to be
disclosed in the Registration Statement or the Prospectus but are not disclosed
as required, and there are no agreements, indentures, leases or other
instruments that are required to be disclosed in the Registration Statement or
the Prospectus or to be filed as an exhibit to the Registration Statement that
are not disclosed or filed as required by the Act.
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(m) Neither the Company nor any of the Subsidiaries is
(A) in violation of its respective certificate or articles of incorporation or
by-laws, or other organizational documents; (B) in violation of any statute,
law, regulation, ordinance, administrative or governmental rule or regulation
applicable to the Company or any of the Subsidiaries or of any order, ruling,
judgment, injunction, order or decree of any court or governmental agency or
body having jurisdiction over the Company or any of the Subsidiaries or any of
their respective properties; or (C) in default in any material respect in the
performance of any obligation, agreement or condition contained in any bond,
debenture, note or any other evidence of indebtedness or in any material
agreement, indenture, lease or other instrument to which the Company or any of
the Subsidiaries is a party or by which any of them or any of their respective
properties may be bound, and no condition or state of facts exists, which with
the passage of time or the giving of notice or both, would constitute such a
default, except in the case of (B) and (C) above, for such violations or
defaults which, individually or in the aggregate, would not have a Material
Adverse Effect.
(n) None of the issuance, offer, sale or delivery of the
Notes, the execution, delivery or performance of this Agreement and the
Indenture by the Company, the compliance by the Company with the provisions
hereof and thereof or the consummation by the Company of the transactions
contemplated hereby and thereby (A) requires any consent, approval,
authorization or other order of, or registration or filing with, any court,
regulatory body, administrative agency or other governmental body, agency or
official (except such as may be required for the registration of the Notes
under the Act, the qualification of the Indenture under the 1939 Act and
compliance with the securities or Blue Sky laws of various jurisdictions, all
of which have been or will be effected in accordance with this Agreement); (B)
conflicts or will conflict with or constitutes or will constitute a breach or
violation of, or a default under, the certificate or articles of incorporation
or by-laws, or other organizational documents, of the Company or any of the
Subsidiaries; (C) conflicts or will conflict with or constitutes or will
constitute a breach or violation of, or a default under, any agreement,
indenture, lease or other instrument to which the Company or any of the
Subsidiaries is a party or by which any of them or any of their respective
properties may be bound; (D) violates or will violate any statute, law,
regulation, ordinance, administrative or governmental rule or regulation
applicable to the Company or any of the Subsidiaries or of any order, ruling,
judgment, injunction, order or decree of any court or governmental agency or
body having jurisdiction over the Company or any of the
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Subsidiaries or any of their respective properties; or (E) will result in the
creation or imposition of any lien, charge or encumbrance upon any property or
assets of the Company or any of the Subsidiaries pursuant to the terms of any
agreement or instrument to which any of them is a party or by which any of them
may be bound or to which any of the property or assets of any of them is
subject.
(o) Except as disclosed under "Business--Legal
Proceedings" in the Prospectus, to the Company's knowledge, the conduct of the
business of the Company and each of the Subsidiaries as presently conducted
complies with all applicable laws, ordinances and administrative or
governmental rules or regulations applicable to the Company and each Subsidiary
and with all orders, rulings, judgments or decrees of any courts or
governmental agencies or bodies having jurisdiction over the Company and each
Subsidiary. To the Company's knowledge, each affiliated physician group,
affiliated medical group and independent practice association (as such terms
are used in the Prospectus and hereinafter referred to collectively, as the
"Affiliated Groups") is operating in material compliance with all applicable
health care laws, rules and regulations, including, without limitation, those
relating to reimbursement by government agencies and fraudulent or wrongful
xxxxxxxx, and no physician in an Affiliated Group is practicing in conflict
with or violation of any such laws, rules or regulations.
(p) Except as disclosed in the Prospectus, to the
Company's knowledge, none of the Company, any of the Subsidiaries, any employee
or agent of the Company or any Subsidiary or any physician in an Affiliated
Group has made any payment of funds or received or retained any funds in
violation of any law, rule or regulation, including laws and regulations
prohibiting fee-splitting or fees for the referral of patients.
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(q) Except as disclosed in the Prospectus, to the
Company's knowledge there are no material Medicare, Medicaid, or any other
managed care recoupment or recoupments of any third-party payor being sought,
threatened, requested or claimed against the Company, any of the Subsidiaries
or to the Company's knowledge, any Affiliated Group or any physician in any
Affiliated Group.
(r) No labor dispute with the employees of the Company or
any of the Subsidiaries exists or, to the knowledge of the Company, is
imminent.
(s) All employee benefit plans (as defined in Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")) established, maintained or contributed to by the Company or any of
the Subsidiaries (the "Plans") comply in all material respects with
requirements of ERISA and the Internal Revenue Code of 1986, as amended (the
"Code"). With respect to the Plans, neither the Company nor any of the
Subsidiaries has any liability, contingent or otherwise, under ERISA or the
Code, nor does the Company expect that any such liability will be incurred,
that could, singly or in the aggregate, have a Material Adverse Effect and no
employee pension benefit plan (as defined in Section 3(2) of ERISA) has
incurred or assumed an "accumulated funding deficiency" within the meaning of
Section 302 of ERISA or has incurred or assumed any material liability (other
than for the payment of premiums) to the Pension Benefit Guaranty Corporation.
(t) The Company and each of the Subsidiaries has good and
marketable title to all property (real and personal) disclosed in the
Prospectus as being owned by it, free and clear of all liens, claims, security
interests or other encumbrances, except such as are disclosed in the
Registration Statement and the Prospectus or in a document filed as an exhibit
to the Registration Statement and all the property disclosed in the Prospectus
as being held under lease by the Company and each of the Subsidiaries is held
by it under valid, subsisting and enforceable leases.
(u) The Company and each of the Subsidiaries, and to the
Company's knowledge, each Affiliated Group has such consents, approvals,
permits, licenses, franchises
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and authorizations of governmental or regulatory authorities ("permits") as are
necessary to own its respective properties and to conduct its business as
presently conducted, subject to such qualifications as may be set forth in the
Prospectus; the Company and each of the Subsidiaries, and to the Company's
knowledge, each Affiliated Group has fulfilled and performed all of its
material obligations with respect to such permits and no event has occurred
which allows, or after notice or lapse of time would allow, revocation or
termination thereof or result in any other material impairment of the rights of
the holder of any such permit, subject in each case to such qualification as
may be set forth in the Prospectus; and, except as disclosed in the Prospectus,
none of such permits contains any restriction that is materially burdensome to
the Company, any of the Subsidiaries or any Affiliated Group.
(v) The Company and the Subsidiaries own or possess all
patents, trademarks, trademark registrations, service marks, service mark
registrations, trade names, copyrights, licenses, inventions, trade secrets and
rights disclosed in the Prospectus as being owned by them or any of them or
necessary for the conduct of their respective businesses, and the Company is
not aware of any claim to the contrary or any challenge by any other person to
the rights of the Company and the Subsidiaries with respect to the foregoing.
(w) The Company and each of the Subsidiaries, and to the
Company's knowledge, each of the Affiliated Groups is insured by insurers of
recognized financial responsibility against such losses and risks and in such
amounts as are customary in the businesses or professions in which they are
engaged; all policies of insurance insuring the Company and/or the Subsidiaries
or their respective businesses, assets, employees, officers and directors and
to the Company's knowledge, the Affiliated Groups are in full force and effect;
the Company and each of the Subsidiaries, and to the Company's knowledge, each
of the Affiliated Groups are in compliance with the terms of such policies and
instruments in all material respects; and there are no claims by the Company or
any of the Subsidiaries, or to the Company's knowledge, any of the Affiliated
Groups under any such policy or instrument as to which any insurance company is
denying
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liability or defending under a reservation of rights clause.
(x) Except as disclosed in the Registration Statement and
the Prospectus (or any amendment or supplement thereto), subsequent to the
respective dates as of which such information is given in the Registration
Statement and the Prospectus (or any amendment or supplement thereto), neither
the Company nor any of the Subsidiaries has incurred any liability or
obligation, direct or contingent, or entered into any transaction, not in the
ordinary course of business, that is material to the Company and the
Subsidiaries taken as a whole, and there has not been any change in the capital
stock, or material increase in the short-term debt or long-term debt, of the
Company or any of the Subsidiaries, or any material adverse change, or any
development having or which may reasonably be expected to have a Material
Adverse Effect.
(y) The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurances that (A) transactions are
executed in accordance with management's general or specific authorization; (B)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain accountability for assets; (C) access to assets is permitted only in
accordance with management's general or specific authorization; and (D) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(z) The Company and each of the Subsidiaries have duly
filed with appropriate governmental authorities all tax returns required to be
filed, which returns are complete and correct, and neither the Company nor any
Subsidiary is in default in the payment of any taxes which were payable
pursuant to said returns or any assessments with respect thereto and there is
no tax deficiency that has been asserted against the Company or any Subsidiary
that would, if adversely determined, have a Material Adverse Effect.
(aa) The financial statements, together with related
schedules and notes included in the Registration
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Statement and the Prospectus (and any amendment or supplement thereto), present
fairly the consolidated financial position, results of operations and changes
in financial position of the Company and the Subsidiaries on the basis stated
in the Registration Statement at the respective dates or for the respective
periods to which they apply; such statements and related schedules and notes
have been prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods involved, except as disclosed
therein; the pro forma financial statements and other pro forma financial
information included in the Registration Statement and the Prospectus (and any
amendment or supplement thereto) present fairly the information shown therein,
have been prepared in accordance with the Commission's rules and guidelines
with respect to pro forma financial statements and have been properly compiled
on the pro forma 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 or circumstances referred to
therein; and the other financial and statistical information and data included
in the Registration Statement and the Prospectus (and any amendment or
supplement thereto) are accurately presented and prepared on a basis consistent
with such financial statements and the books and records of the Company and the
Subsidiaries.
(ab) The financial statements together with related
schedules and notes included in the Registration Statement and the Prospectus
(and any amendment or supplement thereto), present fairly the consolidated
financial position, results of operations and changes in financial position of
Caremark International Inc., a Delaware corporation ("Caremark"), and New
Management, a California general partnership ("New Management"), on the basis
stated in the Registration Statement at the respective dates or for the
respective periods to which they apply; such statements and related schedules
and notes have been prepared in accordance with generally accepted accounting
principles consistently applied throughout the periods involved, except as
disclosed therein.
(ac) The accountants Xxxxx & Young LLP who have certified
the consolidated financial statements of the
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Company and the financial statements of New Management included in the
Registration Statement and the Prospectus (or any amendment or supplement
thereto) are independent public accountants as required by the Act.
(ad) The accountants Price Waterhouse LLP who have
certified the consolidated financial statements of Caremark included in the
Registration Statement and the Prospectus (or any amendment or supplement
thereto) are independent public accountants as required by the Act.
(ae) There has been no storage, disposal, generation,
manufacture, refinement, transportation, handling or treatment of medical
wastes or hazardous substances by the Company or any of the Subsidiaries (or,
to the knowledge of the Company, any of its predecessors in interest) at, upon
or from any of the property now or previously owned or leased by the Company or
any of the Subsidiaries, in violation of any applicable law, ordinance, rule,
regulation, order, judgment, decree or permit or which would require remedial
action under any applicable law, ordi- xxxxx, rule, regulation, order,
judgment, decree or permit, except for any violation or remedial action which
would not have, or could not be reasonably likely to have, singularly or in the
aggregate with all such violations and remedial actions, a Material Adverse
Effect; there has been no material spill, discharge, leak, emission, injection,
escape, dumping or release of any kind onto such property or of any medical
wastes or hazardous substances due to or caused by the Company or any of the
Subsidiaries or with respect to which the Company or any of the Subsidiaries
had knowledge, except for any such spill, discharge, leak, emission, injection,
escapes, dumpings or releases which would not have or would not be reasonably
likely to have, singularly or in the aggregate with all such spills,
discharges, leaks, emissions, injections, escapes, dumpings or releases, a
Material Adverse Effect; and the terms "hazardous substances" and "medical
wastes" shall have the meanings specified in any applicable local, state,
federal and foreign laws or regulations with respect to environmental
protection.
(af) The Company is not now, and after sale of the Notes
to be sold by it hereunder and application of the net proceeds from such sale
as disclosed in the Prospectus under the caption "Use of Proceeds" will not
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be, an "investment company" within the meaning of the Investment Company Act of
1940, as amended (the "1940 Act").
(ag) The Company has complied with all provisions of
Florida Statutes, Section 517.075, relating to issuers doing business with
Cuba.
(ah) The Company has filed all reports and other documents
required to be filed by it under the Exchange Act and each such report or
document when so filed complied in all material respects with the provisions of
the Exchange Act and the rules and regulations of the Commission thereunder.
(ai) Neither the Company nor any of the Subsidiaries (A)
employs any of the physicians in any Affiliated Group, (B) exercises any
influence or control over the practice of medicine by such physicians, or (C)
represents to the public that it offers medical services; and the Company and
each of the Subsidiaries contracts with the physicians or Affiliated Groups as
independent contractors to provide medical services and is not engaged in the
practice of medicine.
(aj) Each of the practice management agreements, currently
in effect, copies of which have been delivered to the Underwriters, has been
duly authorized, executed and delivered by the Company and each Subsidiary
which is a party to said agreement and is a valid, legal and binding agreement
of the Company and each such Subsidiary enforceable against the Company and
such Subsidiary in accordance with its terms; and the business of the Company
and the Subsidiaries as presently conducted, and the terms of each of the
Practice Management Agreements and the performance thereof by the Company and
the Subsidiaries which are party thereto, do not violate any statute,
administrative or governmental rule or regulation applicable to the Company or
such Subsidiaries or laws prohibiting the corporate practice of medicine,
fee-splitting or fees for the referral of patients, or any orders, rulings,
judgments or decrees of any courts or governmental agencies or bodies having
jurisdiction over the Company and/or the Subsidiaries.
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7. Indemnification and Contribution.
(a) The Company agrees to indemnify and hold harmless
each Underwriter and each Underwriter and each person, if any, who controls any
Underwriter within the meaning of Section 15 of the Act or Section 20(a) of the
Exchange Act, and the agents, employees, officers and directors of each
Underwriter and each such controlling person, from and against any and all
losses, claims, damages, liabilities and expenses (including reasonable costs
of investigation) arising out of or based upon any untrue statement or alleged
untrue statement of a material fact contained in any Prepricing Prospectus or
in the Registration Statement or the Prospectus or in any amendment or
supplement thereto, or arising out of or based upon any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as such
losses, claims, damages, liabilities or expenses arise out of or are based upon
any untrue statement or omission or alleged untrue statement or omission which
has been made therein or omitted therefrom in reliance upon and in conformity
with the information relating to such Underwriter furnished in writing to the
Company by or on behalf of any Underwriter through the Underwriters expressly
for use in connection therewith; provided, however, that the indemnification
contained in this paragraph (a) with respect to any Prepricing Prospectus shall
not inure to the benefit of any Underwriter (or to the benefit of any person
controlling such Underwriter or any agent, employee, officer or director of
such Underwriter or such controlling person) on account of any such loss,
claim, damage, liability or expense arising from the sale of the Notes by such
Underwriter to any person if a copy of the Prospectus shall not have been
delivered or sent to such person within the time required by the Act and the
regulations thereunder, and the untrue statement or alleged untrue statement or
omission or alleged omission of a material fact contained in such Prepricing
Prospectus was corrected in the Prospectus, provided that the Company has
delivered the Prospectus to the several Underwriters in requisite quantity on a
timely basis to permit such delivery or sending. The foregoing indemnity
agreement shall be in addition to any liability which the Company may otherwise
have.
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(b) If any action, suit or proceeding shall be brought
against any person (the "indemnified party") entitled to indemnification
pursuant to the preceding paragraph in respect of which indemnity may be sought
against the Company pursuant to the provisions of the preceding paragraph, such
indemnified party shall promptly notify the party or parties against whom
indemnification is being sought (the "indemnifying parties"), and such
indemnifying parties shall assume the defense thereof, including the employment
of counsel and payment of all fees and expenses. Such indemnified party shall
have the right to employ separate counsel in any such action, suit or
proceeding and to participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such indemnified party unless (A)
the indemnifying parties have agreed in writing to pay such fees and expenses,
(B) the indemnifying parties have failed to assume the defense and employ
counsel, or (C) the named parties to any such action, suit or proceeding
(including any impleaded parties) include both such indemnified party and the
indemnifying parties and such indemnified party shall have been advised by its
counsel that representation of such indemnified party and any indemnifying
party by the same counsel would be inappropriate under applicable standards of
professional conduct (whether or not such representation by the same counsel
has been proposed) due to actual or potential differing interests between them
(in which case the indemnifying party shall not have the right to assume the
defense of such action, suit or proceeding on behalf of such indemnified
party). It is understood, however, that the indemnifying parties shall, in
connection with any one such action, suit or proceeding or separate but
substantially similar or related actions, suits or proceedings in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the reasonable fees and expenses of only one separate firm of
attorneys (in addition to any local counsel) at any time for all such
indemnified parties not having actual or potential differing interests with the
Underwriters or among themselves, which firm shall be designated in writing by
Xxxxx Xxxxxx Inc., and that all such fees and expenses shall be reimbursed as
they are incurred. The indemnifying parties shall not be liable for any
settlement of any such action, suit or proceeding effected without their
written consent, but if settled
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with such written consent, or if there be a final judgment for the plaintiff in
any such action, suit or proceeding, the indemnifying parties agree to
indemnify and hold harmless any indemnified party, to the extent provided in
the preceding paragraph, from and against any loss, claim, damage, liability or
expense by reason of such settlement or judgment.
(c) Each Underwriter agrees, severally and not jointly,
to indemnify and hold harmless the Company, its directors, its officers who
sign the Registration Statement, and any person who controls the Company within
the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act, and
the agents and employees of the Company and each such controlling person, to
the same extent as the foregoing indemnity from the Company to each
Underwriter, but only with respect to information relating to such Underwriter
furnished in writing by or on behalf of such Underwriter through the
Underwriters expressly for use in the Registration Statement, the Prospectus or
any Prepricing Prospectus, or any amendment or supplement thereto. If any
action, suit or proceeding shall be brought against the Company, any of its
directors, any such officer, or any such controlling person or any agent or
employee of the Company or any such controlling person, based on the Prospectus
or any Prepricing Prospectus, or any amendment or supplement thereto, and in
respect of which indemnity may be sought against any Underwriter pursuant to
this paragraph (c), such Underwriter shall have the rights and duties given to
the Company by paragraph (b) above (except that if the Company shall have
assumed the defense thereof such Underwriter shall not be required to do so,
but may employ separate counsel therein and participate in the defense thereof,
but the fees and expenses of such counsel shall be at such Underwriter's
expense), and the Company, any of its directors, any such officer, and any such
controlling person, and any agents and employees of the Company and each such
controlling person, shall have the rights and duties given to the Underwriters
by paragraph (b) above.
(d) If the indemnification provided for in this Section 7
is unavailable to a party entitled to indemnification under paragraphs (a) or
(c) hereof in respect of any losses, claims, damages, liabilities or expenses
referred to therein, then an indemnifying party,
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in lieu of indemnifying such indemnified party, shall contribute to the amount
paid or payable by such indemnified party as a result of such losses, claims,
damages, liabilities or expenses (A) in such proportion as is appropriate to
reflect the relative benefits received by the Company on the one hand and the
Underwriters on the other hand from the offering of the Notes, or (B) if the
allocation provided by clause (A) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (A) above but also the relative fault of the Company on
the one hand and the Underwriters on the other hand in connection with the
statements or omissions that resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one hand
and the Underwriters on the other hand shall be deemed to be in the same
proportion as the total net proceeds from the offering (before deducting
expenses) received by the Company bear to the total underwriting discounts and
commissions received by the Underwriters, in each case as set forth in the
table on the cover page of the Prospectus. The relative fault of the Company on
the one hand and the Underwriters on the other hand shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Company on the one hand or
by the Underwriters on the other hand and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
(e) The Company and the Underwriters agree that it would
not be just and equitable if contribution pursuant to this Section 7 were
determined by a pro rata allocation (even if the Underwriters were treated as
one entity for such purpose) or by any other method of allocation that does not
take account of the equitable considerations referred to in paragraph (d)
above. The amount paid or payable by an indemnified party as a result of the
losses, claims, damages, liabilities and expenses referred to in paragraph (d)
above shall be deemed to include, subject to the limitations set forth above,
any legal or other expenses reasonably incurred by such indemnified party in
connection with investigating
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any claim or defending any such action, suit or proceeding. Notwithstanding the
provisions of this Section 7, no Underwriter shall be required to contribute
any amount in excess of the amount by which the total principal amount of the
Notes underwritten by it and distributed to the public exceeds the amount of
any damages which such Underwriter has otherwise been required to pay by reason
of 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 Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Underwriters' obligations to
contribute pursuant to this Section 7 are several in proportion to the
respective principal amounts of Notes set forth opposite their names in
Schedule I hereto (or such principal amounts of Notes increased as set forth in
Section 10 hereof) and not joint.
(f) No indemnifying party shall, without the prior
written consent of the indemnified party, effect any settlement of any pending
or threatened action, suit or proceeding in respect of which any indemnified
party is or could have been a party and indemnity could have been sought
hereunder by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability on claims
that are the subject matter of such action, suit or proceeding.
(g) Any losses, claims, damages, liabilities or expenses
for which an indemnified party is entitled to indemnification or contribution
under this Section 7 shall be paid by the indemnifying party to the indemnified
party as such losses, claims, damages, liabilities or expenses are incurred.
The indemnity and contribution agreements contained in this Section 7 and the
representations and warranties of the Company set forth in this Agreement shall
remain operative and in full force and effect, regardless of (A) any
investigation made by or on behalf of any indemnified party, the Company, its
directors and officers, and any person who controls the Company, and the agents
and employees of the Company and each such controlling person, (B) acceptance
of any Notes and payment therefor hereunder, and (C) any termination of this
Agreement. A successor to any indemnified party, or to the Company, its
directors and officers, and any person who controls
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the Company, and the agents and employees of the Company and each such
controlling person shall be entitled to the benefits of the indemnity,
contribution and reimbursement agreements contained in this Section 7.
8. Conditions of Underwriters' Obligations. The several
obligations of the Underwriters to purchase the Notes hereunder are subject to
the following conditions:
(a) If, at the time this Agreement is executed and
delivered, it is necessary for the registration statement or a post-effective
amendment thereto or an Additional Registration Statement to be declared
effective before the offering of the Notes may commence, the registration
statement or such post-effective amendment or Additional Registration Statement
shall have become effective not later than 5:30 P.M., New York City time, on
the date hereof, or at such later date and time as shall be consented to in
writing by the Underwriters, and all filings, if any, required by Rules 424 and
430A under the Act shall have been timely made; no stop order suspending the
effectiveness of the registration statement shall have been issued and no
proceeding for that purpose shall have been instituted or, to the knowledge of
the Company or any Underwriter, threatened by the Commission, and any request
of the Commission for additional information (to be included in the
registration statement or the prospectus or otherwise) shall have been complied
with to the Underwriters satisfaction.
(b) Subsequent to the effective date of this Agreement,
there shall not have occurred (A) any change, or any development involving a
prospective change, in or affecting the condition (financial or other),
business, prospects, properties, net worth or results of operations of the
Company or the Subsidiaries not contemplated by the Prospectus, which in the
Underwriters' opinion would materially adversely affect the market for the
Notes, or (B) any event or development relating to or involving the Company or
any officer or director of the Company which makes any statement made in the
Prospectus untrue or which, in the opinion of the Company and its counsel or
the Underwriters and their counsel, requires the making of any addition to or
change in the Prospectus in order to state a material fact required by the Act
or any other law to be stated therein or necessary in order to make
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26
the statements therein not misleading, if amending or supplementing the
Prospectus to reflect such event or development would, in the opinion of the
Underwriters materially adversely affect the market for the Notes.
(c) The Underwriters shall have received on the Closing
Date an opinion of Xxxxxxx Xxxxxxxxx & Xxxxx, L.L.C., special counsel for the
Company, dated the Closing Date and addressed to the Underwriters to the effect
that:
(i) The Company is a corporation duly
incorporated and validly existing in good standing under the laws of the State
of Delaware with full corporate power and authority to own, lease and operate
its properties and to conduct its business as presently conducted and as
disclosed in the Registration Statement and the Prospectus, and is duly
registered and qualified to conduct its business and is in good standing in
each jurisdiction or place where the nature of its properties or the conduct of
its business requires such registration or qualification, except where the
failure so to register or qualify does not and will not have a Material Adverse
Effect;
(ii) To the best knowledge of such counsel,
after reasonable inquiry, the Company has no subsidiaries other than the
Subsidiaries. Each Significant Subsidiary (as defined in Schedule II hereto) is
duly organized, validly existing and in good standing in the jurisdiction of
its incorporation, if a corporation, and is legally formed and validly existing
under the laws of the jurisdiction of its organization, if a partnership,
limited liability company, association or business organization, with full
corporate or organizational power and authority to own, lease and operate its
properties and to conduct its business as presently conducted. Each Significant
Subsidiary is duly registered and qualified to conduct its business (and, if a
corporation, is in good standing) in each jurisdiction or place where the
nature of its properties or the conduct of its business requires such
registration or qualification, except where the failure so to register or
qualify does not and will not have a Material Adverse Effect; all the
outstanding shares of capital stock of each Significant Subsidiary that is a
corporation have been duly authorized and validly issued, are fully paid
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27
and nonassessable, and all ownership interests in each Significant Subsidiary
that is not a corporation have been validly created pursuant to the partnership
or other agreements or organizational documents of each such Significant
Subsidiary, and, except as disclosed in the Prospectus, the shares or other
interests owned by the Company are owned by the Company directly, or indirectly
through one of the other Subsidiaries, free and clear of any lien, adverse
claim, security interest, equity or other encumbrances;
(iii) The Indenture has been duly and validly
authorized, executed and delivered by the Company and assuming due execution
and delivery by the Trustee, is a valid and binding agreement of the Company,
enforceable in accordance with its terms, except to the extent that enforcement
may be limited by bankruptcy, insolvency, reorganization, moratorium and other
laws relating to or affecting creditors' rights generally, and by general
equitable principles; and the Indenture has been duly qualified under the 1939
Act and conforms in all material respects to the description thereof in the
Registration Statement and the Prospectus;
(iv) The Notes have been duly authorized and
executed by the Company and, assuming due authentication of the Notes by the
Trustee in accordance with the Indenture, upon delivery to the Underwriters
against payment therefor in accordance with the terms hereof, have been validly
issued and delivered, and will constitute valid and binding obligations of the
Company entitled to the benefits of the Indenture and enforceable in accordance
with their terms, except to the extent that enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium and other laws relating to
or affecting creditors' rights generally, and by general equitable principles;
and the Notes conform in all material respects to the description thereof in
the Registration Statement and the Prospectus;
(v) To the best knowledge of such counsel, no
holder of any security of the Company or any other person has the right,
contractual or otherwise, which right has not been fully complied with or
waived in writing by the holder thereof, (A) to cause the Company to sell or
otherwise issue to them, or to permit them to underwrite the sale of, the
Notes, (B) to have any
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securities of the Company included in the registration statement or (C) as a
result of the filing of the registration statement, to require registration
under the Act of any securities of the Company;
(vi) The Company has full corporate power and
authority to enter into this Agreement and to perform its obligations
hereunder, including to issue, sell and deliver the Notes to be sold by it to
the Underwriters as provided herein, and this Agreement has been duly and
validly authorized, executed and delivered by the Company and is a legal, valid
and binding agreement of the Company, enforceable against the Company in
accordance with its terms, except as enforcement of rights to indemnity and
contribution hereunder may be limited by federal or state securities laws or
principles of public policy and subject to the qualification that the
enforceability of the Company's obligations hereunder may be limited by
bankruptcy, insolvency, reorganization, moratorium and other laws relating to
or affecting creditors' rights generally, and by general equitable principles;
(vii) No consent, approval, authorization or
other order of, or registration or filing with, any court, regulatory body,
administrative agency or other governmental body, agency or official is
required on the part of the Company (except as have been obtained under the
Act, the Exchange Act or the 1939 Act, and such as may be required under state
securities or Blue Sky laws governing the purchase and distribution of the
Notes) for the valid issuance and sale of the Notes to the Underwriters as
contemplated by this Agreement or the performance by the Company of its other
obligations hereunder;
(viii) None of the issuance, offer, sale or
delivery of the Notes, the execution, delivery or performance of this Agreement
or the Indenture by the Company, the compliance by the Company with the
provisions hereof and thereof or the consummation by the Company of the
transactions contemplated hereby and thereby (A) conflicts or will conflict
with, or constitutes or will constitute a breach or violation of, or a default
under, the certificate or articles of incorporation or by-laws, or other
organizational documents, of the Company or any of the Significant
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Subsidiaries; (B) conflicts or will conflict with or constitutes or will
constitute a breach or violation of, or a default under, any agreement,
indenture, lease or other instrument to which the Company or any of the
Significant Subsidiaries is a party or by which any of them or any of their
respective properties is bound that is an exhibit to the Registration
Statement, or is known to such counsel after reasonable inquiry; (C) violates
or will violate any statute, law, regulation, ordinance, administrative or
governmental rule or regulation applicable to the Company or any of the
Significant Subsidiaries (assuming compliance with all applicable state
securities and Blue Sky laws) or of any order, ruling, judgment, injunction,
order or decree of any court or governmental agency or body having jurisdiction
over the Company or any of the Significant Subsidiaries or any of their
respective properties; or (D) will result in the creation or imposition of any
lien, charge or encumbrance upon any property or assets of the Company or any
of the Significant Subsidiaries pursuant to the terms of any agreement or
instrument that is an exhibit to the Registration Statement, or is known to
such counsel after reasonable inquiry;
(ix) To the best knowledge of such counsel after
reasonable inquiry, neither the Company nor any of the Significant Subsidiaries
is (A) in violation of its respective certificate or articles of incorporation
or by-laws, or other organizational documents; (B) except as disclosed under
"Business--Legal Proceedings" in the Prospectus, in violation of any statute,
law, regulation, ordinance, administrative or governmental rule or regulation
applicable to the Company or any of the Significant Subsidiaries or of any
order, ruling, judgment, injunction, order or decree of any court or
governmental agency or body having jurisdiction over the Company or any of the
Significant Subsidiaries or any of their respective properties; or (C) in
default in any material respect in the performance of any obligation, agreement
or condition contained in any bond, debenture, note or any other evidence of
indebtedness or in any material agreement, indenture, lease or other instrument
to which the Company or any of the Significant Subsidiaries is a party or by
which any of them or any of their respective properties may be bound, and no
condition or state of facts exists, which with the passage of time or the
giving of notice or both, would
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constitute such a default, except in the case of (B) and (C) above, for such
violations or defaults which, individually or in the aggregate, would not have
a Material Adverse Effect;
(x) (A) The business of the Company as
disclosed in the Prospectus, and the terms of each Practice Management
Agreement and the consummation thereof by the Company and the Significant
Subsidiaries who are parties thereto do not violate, and (B) to the best
knowledge of such counsel after reasonable inquiry, neither the Company nor the
Significant Subsidiaries is in violation of, any health care statute,
administrative or governmental rule or regulation of the United States of
America applicable to the Company or any of the Significant Subsidiaries,
including, but not limited to 42 U.S.C. Section 1395nn; 42 U.S.C. Section
1396b(s); 42 U.S.C. Section 1320a-7b(b), or any health care judgment,
injunction, order or decree of any court or government entity or
instrumentality of the United States of America having jurisdiction over the
Company or any of the Significant Subsidiaries;
(xi) To the best knowledge of such counsel after
reasonable inquiry, neither the Company nor any of the Significant Subsidiaries
is in violation of any health care statute, law, ordinance, decree,
administrative or governmental rule or regulation applicable to the Company
or any of the Significant Subsidiaries, including, without limitation, those
relating to reimbursement by government agencies and fraudulent or wrongful
xxxxxxxx;
(xii) To the best knowledge of such counsel after
reasonable inquiry, except as disclosed in the Prospectus, neither the Company
nor any of the Significant Subsidiaries nor any employee or agent of the
Company or any Significant Subsidiary has made any payment of funds or received
or retained any funds in violation of any law, rule or regulation, including,
without limitation, any law, rule or regulation prohibiting fee-splitting or
fees for the referral of patients;
(xiii) To the best knowledge of such counsel after
reasonable inquiry, neither the Company nor any of the Significant Subsidiaries
(A) employs any of
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the physicians in any Affiliated Group, (B) exercises any influence or control
over the practice of medicine by such physicians, or (C) represents to the
public that it offers medical services; and the Company and each of the
Significant Subsidiaries contracts with the physicians or Affiliated Groups as
independent contractors to provide medical services and is not engaged in the
practice of medicine;
(xiv) Each practice management agreement has been
duly authorized, executed and delivered by the Company and each Significant
Subsidiary which is a party thereto and is a valid, legal and binding agreement
of the Company and each such Significant Subsidiary, enforceable against the
Company and such Significant Subsidiary in accordance with its terms, subject
to the qualification that the enforceability thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium, and other laws relating to
or affecting creditors' rights generally and by general equitable principles;
and, except as described under "Business--Legal Proceedings" in the
Prospectus, to the best knowledge of such counsel, the business of the Company
and the Significant Subsidiaries as presently conducted, and the terms of each
Practice Management Agreement and the performance thereof by the Company and
the Significant Subsidiaries which are party thereto, do not violate any
statute, administrative or governmental rule or regulation applicable to the
Company or such Significant Subsidiaries or laws prohibiting the corporate
practice of medicine, fee-splitting or fees for the referral of patients, or
any ruling, judgment, injunction, order or decree of any court or government
entity or instrumentality having jurisdiction over the Company and/or the
Significant Subsidiaries;
(xv) To the best knowledge of such counsel,
there are no legal or governmental proceedings pending or threatened, against
the Company or any of the Significant Subsidiaries, or to which the Company or
any of the Significant Subsidiaries, or to which any of their respective
properties is subject, that are required to be disclosed in the Registration
Statement or the Prospectus but are not disclosed as required;
(xvi) To the best knowledge of such counsel, (A)
the Company and each of the Significant
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Subsidiaries is duly licensed or authorized in each jurisdiction where it is
required to be so licensed or authorized to conduct its respective businesses;
the Company and each of the Significant Subsidiaries has all other necessary
consents, approvals, permits, licenses, franchises and authorizations of and
from all regulatory authorities to conduct its respective businesses as
presently conducted and to perform its respective obligations under each
Practice Management Agreement, and (B) neither the Company nor any of the
Significant Subsidiaries has received any notification from any regulatory
authority, including, without limitation, any health care regulatory authority,
to the effect that any additional approval is required to be obtained by the
Company or any of the Significant Subsidiaries;
(xvii) Except as disclosed in the Prospectus, to
the best knowledge of such counsel, the Company and the Significant
Subsidiaries own all patents, trademarks, trademark registrations, service
marks, service mark registrations, trade names, copyrights, licenses,
inventions, trade secrets and rights disclosed in the Prospectus as being owned
by them or any of them or necessary for the conduct of their respective
businesses, and such counsel is not aware of any claim to the contrary or any
challenge by any other person to the rights of the Company and the Significant
Subsidiaries with respect to the foregoing;
(xviii) The statements in the Registration
Statement and Prospectus insofar as such statements constitute summaries of the
legal matters, documents or proceedings referred to therein, fairly present the
information called for with respect to such legal matters, documents and
proceedings and fairly summarize the matters referred to therein;
(xix) Such counsel does not know of any
agreements, indentures, leases or other instruments required to be disclosed in
the Registration Statement or the Prospectus (or any amendment or supplement
thereto) or to be filed as an exhibit to the Registration Statement that are
not so disclosed or filed as required by the Act, and such agreements,
indentures, leases or other instruments as are summarized in the Registration
Statement or the Prospectus are fairly summarized in all material respects;
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(xx) The Registration Statement and the
Prospectus and any supplements or amendments thereto (except for the financial
statements and the notes thereto and the schedules and other financial and
statistical data included therein and the Statement of Eligibility on Form T-1,
as to which such counsel need not express any opinion) comply as to form in all
material respects with the requirements of the Act;
(xxi) The Registration Statement and all
post-effective amendments and Additional Registration Statements, if any, have
become effective under the Act and, to the best knowledge of such counsel after
reasonable inquiry, no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that purpose are
pending before or contemplated by the Commission; and any required filing of
the Prospectus pursuant to Rule 424(b) has been made in accordance with Rule
424(b);
(xxii) The Company has filed all reports and other
documents required to be filed by it under the Exchange Act and each such
report or document when so filed complied in all material respects with the
provisions of the Exchange Act and the rules and regulations of the Commission
thereunder; and
(xxiii) The Company is not, and after the sale of
the Notes and the application of the net proceeds therefrom as disclosed in the
Prospectus under the caption "Use of Proceeds" will not be, an "investment
company" within the meaning of the 1940 Act.
In addition, such counsel shall state that they have participated in
the preparation of the Registration Statement and the Prospectus, including
review and discussion of the contents thereof, and nothing has come to the
attention of such counsel that has caused them to believe that the Registration
Statement at the time the Registration Statement became or becomes effective
contained or contains an untrue statement of a material fact or omitted or
omits to state a material fact required to be stated therein or necessary to
make the statements therein not misleading or that the Prospectus or any
amendment or supplement to the Prospectus, as of their respective dates, and as
of the Closing Date contained or contains any untrue statement of a material
fact or omitted or omits to state a material
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fact necessary in order to make the statements therein, in the light of the
circumstances under which they were or are made, not misleading (it being
understood that such counsel need express no opinion with respect to the
financial statements and the notes thereto and the schedules and other
financial and statistical data included in the Registration Statement or the
Prospectus or with respect to the Statement of Eligibility on Form T-1).
In rendering their opinion as aforesaid, such counsel may rely upon an
opinion or opinions, each dated the Closing Date, of other counsel retained by
them or the Company as to laws of any jurisdiction other than the United States
and the States of Delaware and Alabama, provided that (A) each such local
counsel is acceptable to the Underwriters, (B) such reliance is expressly
authorized by each opinion so relied upon and a copy of each such opinion is
delivered to the Underwriters and is in form and substance satisfactory to them
and their counsel, and (C) counsel shall state in their opinion that they
believe that they and the Underwriters are justified in relying thereon.
(d) The Underwriters shall have received on the Closing
Date an opinion of Xxxxxxx, Arps, Slate, Xxxxxxx & Xxxx, counsel for the
Underwriters, dated the Closing Date and addressed to the Underwriters with
respect to certain of the matters referred to in clauses (v), (vi), (ix),
(xxiii) and (xxiv) of paragraph (c) of this Section 8 and the penultimate
paragraph of paragraph (c) of this Section 8 and such other related matters as
the Underwriters may request.
(e) The Underwriters shall have received letters
addressed to the Underwriters and dated the date hereof and the Closing Date
from Ernst & Young LLP and Price Waterhouse LLP, independent certified public
accountants, substantially in the forms heretofore approved by the
Underwriters.
(f)(A) No stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall have been taken or, to the knowledge of the Company, shall be
contemplated by the Commission at or prior to
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the Closing Date; (B) there shall not have been any change in the capital stock
of the Company or any material increase in the short-term or long-term debt of
the Company (other than in the ordinary course of business) from that set forth
or contemplated in the Registration Statement or the Prospectus (or any
amendment or supplement thereto); (C) there shall not have been, since the
respective dates as of which information is given in the Registration Statement
and the Prospectus (or any amendment or supplement thereto), except as may
otherwise be stated in the Registration Statement and the Prospectus (or any
amendment or supplement thereto), any material adverse change in the condition
(financial or other), business, prospects, properties, net worth or results of
operations of the Company and the Subsidiaries taken as a whole; (D) the
Company and the Subsidiaries shall not have any liabilities or obligations,
direct or contingent (whether or not in the ordinary course of business), that
are material to the Company and the Subsidiaries, taken as a whole, other than
those reflected in the Registration Statement or the Prospectus (or any
amendment or supplement thereto); and (E) all the representations and
warranties of the Company contained in this Agreement shall be true and correct
on and as of the date hereof and on and as of the Closing Date as if made on
and as of the Closing Date, and the Underwriters shall have received a
certificate, dated the Closing Date and signed by the chief executive officer
and the chief financial officer of the Company (or such other officers as are
acceptable to the Underwriters), to the effect set forth in this Section 8(f)
and in Section 8(g) hereof.
(g) There shall not have been any announcement by any
"nationally recognized statistical rating organization", as defined for
purposes of Rule 436(g) under the Act, that (A) it is downgrading its rating
assigned to any class of securities of the Company, or (B) it is reviewing its
rating assigned to any class of securities of the Company with a view to
possible downgrading, or with negative implications, or direction not
determined.
(h) The Company shall not have failed at or prior to the
Closing Date to have performed or complied with any of its agreements herein
contained and required
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to be performed or complied with by it hereunder at or prior to the Closing
Date.
(i) The Company shall have furnished or caused to be
furnished to the Underwriters such further certificates and documents as the
Underwriters shall have reasonably requested.
All such opinions, certificates, letters and other documents will be
in compliance with the provisions hereof only if they are satisfactory in form
and substance to the Underwriters and counsel to the Underwriters.
Any certificate or document signed by any officer of the Company and
delivered to the Underwriters, or to counsel for the Underwriters, shall be
deemed a representation and warranty by the Company to each Underwriter as to
the statements made therein.
9. Expenses. The Company agrees to pay the following costs and
expenses and all other costs and expenses incident to the performance by it of
its obligations hereunder: (A) the preparation, printing (or reproduction), and
filing with the Commission of the registration statement (including the
financial statements and exhibits thereto), each Prepricing Prospectus, the
Prospectus, and each amendment or supplement to any of them, this Agreement,
the Indenture and the Statement of Eligibility and Qualification of the
Trustee; (B) the printing (or reproduction) and delivery (including postage,
air freight charges and charges for counting and packaging) of such copies of
the Registration Statement, each Prepricing Prospectus, the Prospectus, and all
amendments or supplements to any of them as may be reasonably requested for use
in connection with the offering and sale of the Notes; (C) the preparation,
printing, authentication, issuance and delivery of certificates for the Notes,
including any stamp taxes in connection with the original issuance and sale of
the Notes; (D) the printing (or reproduction) and delivery of this Agreement,
the preliminary and supplemental Blue Sky Memoranda and all other agreements or
documents printed (or reproduced) and delivered in connection with the offering
of the Notes; (E) the registration or qualification of the Notes for offer and
sale under the securities or Blue Sky laws of the several
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states as provided in Section 5(g) hereof (including the reasonable fees,
expenses and disbursements of counsel for the Underwriters relating to the
preparation, printing (or reproduction), and delivery of the preliminary and
supplemental Blue Sky Memoranda and such registration and qualification); (F)
the filing fees and the fees and expenses of counsel for the Underwriters in
connection with any filings required to be made with the National Association
of Securities Dealers, Inc.; (G) the transportation and other expenses incurred
by or on behalf of representatives of the Company and its representatives in
connection with presentations to prospective purchasers of the Notes; (H) the
fees and expenses of the Trustee; (I) the fees and expenses associated with
obtaining ratings for the Notes from nationally recognized statistical rating
organizations; (J) the fees and expenses of the Company's accountants; and (K)
the fees and expenses of counsel (including local and special counsel) for the
Company.
10. Effective Date of Agreement. This Agreement shall become
effective: (A) upon the execution and delivery hereof by the parties hereto; or
(B) if, at the time this Agreement is executed and delivered, it is necessary
for the registration statement or a post-effective amendment thereto to be
declared effective before the offering of the Notes may commence, when
notification of the effectiveness of the registration statement or such
post-effective amendment has been released by the Commission. Until such time
as this Agreement shall have become effective, it may be terminated by the
Company, by notifying the Underwriters, or by the Underwriters by notifying the
Company.
If any one or more of the Underwriters shall fail or refuse to
purchase Notes which it or they have agreed to purchase hereunder, and the
aggregate principal amount of the Notes which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase is not more than
one-tenth of the aggregate principal amount of Notes, each non-defaulting
Underwriter shall be obligated, severally, in the proportion which the
aggregate principal amount of Notes set forth opposite its name in Schedule I
hereto bears to the aggregate principal amount of Notes set forth opposite the
names of all non-defaulting Underwriters or in such other proportion as the
Underwriters may specify in accordance
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with Section 20 of the Master Agreement Among Underwriters of Xxxxx Xxxxxx,
Xxxxxx Xxxxx & Co. Incorporated (predecessor to Xxxxx Xxxxxx Inc.), to purchase
the Notes which such defaulting Underwriter or Underwriters agreed, but failed
or refused, to purchase. If any Underwriter or Underwriters shall fail or
refuse to purchase Notes and the aggregate principal amount of Notes with
respect to which such default occurs is more than one-tenth of the aggregate
principal amount of Notes and arrangements satisfactory to the Underwriters and
the Company for the purchase of such Notes are not made within 36 hours after
such default, this Agreement will terminate without liability on the part of
any non-defaulting Underwriter or the Company. In any such case which does
not result in termination of this Agreement, either the Underwriters or the
Company shall have the right to postpone the Closing Date, but in no event for
longer than seven days, in order that the required changes, if any, in the
Registration Statement and the Prospectus or any other documents or
arrangements may be effected. Any action taken under this paragraph shall not
relieve any defaulting Underwriter from liability in respect of any such
default of any such Underwriter under this Agreement.
Any notice under this Section 10 may be given by telegram, telecopy or
telephone but shall be subsequently confirmed by letter.
11. Termination of Agreement. This Agreement shall be subject to
termination in absolute discretion of the Underwriters, without liability on
the part of any Underwriter to the Company, by notice to the Company, if prior
to the Closing Date (A) trading in securities generally on the New York Stock
Exchange, the American Stock Exchange or the Nasdaq National Market shall have
been suspended or materially limited, (B) a general moratorium on commercial
banking activities in New York shall have been declared by either Federal or
state authorities, or (C) there shall have occurred any outbreak or escalation
of hostilities or other international or domestic calamity, crisis or change in
political, financial or economic conditions, the effect of which on the
financial markets of the United States is such as to make it, in the
Underwriters' judgment, impracticable or inadvisable to commence or continue
the offering of the Notes at the offering price to the public
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set forth on the cover page of the Prospectus or to enforce contracts for the
resale of the Notes by the Underwriters. Notice of such termination may be
given to the Company by telegram, telecopy or telephone and shall be
subsequently confirmed by letter.
12. Information Furnished by the Underwriters. The statements set
forth in the last paragraph on the cover page, the stabilization legend on the
inside cover page, and the statements in the first and third paragraphs under
the caption "Underwriting" in any Prepricing Prospectus and in the Prospectus,
constitute the only information furnished by or on behalf of any Underwriter
through the Underwriters as such information is referred to in Sections 6(b)
and 7 hereof.
13. Miscellaneous. Except as otherwise provided in Sections 5, 10
and 11 hereof, notice given pursuant to any provision of this Agreement shall
be in writing and shall be delivered (A) if to the Company, at the office of
the Company at 0000 Xxxxxxxx Xxxxx, Xxxxx 0000, Xxxxxxxxxx, XX 00000,
Attention: Xxxxx X. Xxxxx and X. Xxxxxx Xxxxxxxx, Xx., Esq., with a copy to
Xxxxxxx Xxxxxxxxx & Xxxxx, LLC, 0000 XxXxxxx/Xxxxxxx Xxxxx, 0000 Xxxxx Xxxxxx
Xxxxx, Xxxxxxxxxx, XX 00000, Attention: Xxxxxx X. Xxx Xxxxxx, Esq. and X.
Xxxxxxx XxXxxxxx, Jr., Esq. and (B) if to the Underwriters, care of Xxxxx
Xxxxxx Inc., 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, XX 00000, Attention: Manager,
Investment Banking Division, with a copy to Skadden, Arps, Slate, Xxxxxxx &
Xxxx, 000 Xxxxx Xxxxxx, Xxx Xxxx, XX 00000, Attention: Xxxxxxx X. Xxxxx, Esq.
This Agreement has been and is made solely for the benefit of the
several Underwriters, the Company, its directors and officers, and the other
controlling persons referred to in Section 7 hereof and their respective
successors and assigns, to the extent provided herein, and no other person
shall acquire or have any right under or by virtue of this Agreement. Neither
the term "successor" nor the term "successors and assigns" as used in this
Agreement shall include a purchaser from any Underwriter of any of the Notes in
his status as such purchaser.
14. Applicable Law; Counterparts. This Agreement shall be governed
by and construed in accordance with the
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laws of the State of New York applicable to contracts made and to be performed
within the State of New York.
This Agreement may be signed in various counterparts which together
constitute one and the same instrument. If signed in counterparts, this
Agreement shall not become effective unless at least one counterpart hereof
shall have been executed and delivered on behalf of each party hereto.
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Please confirm that the foregoing correctly sets forth the agreement
among the Company and the several Underwriters.
Very truly yours,
MEDPARTNERS, INC.
By:
-----------------------
President and Chief
Executive Officer
Confirmed as of the date first
above mentioned.
XXXXX XXXXXX INC.
XXXXXXX LYNCH, XXXXXX, XXXXXX & XXXXX
INCORPORATED
X.X. XXXXXX SECURITIES INC.
XXXXXX XXXXXXX & CO. INCORPORATED
NATIONSBANC CAPITAL MARKETS, INC.
By XXXXX XXXXXX INC.
By:
------------------------
Managing Director
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SCHEDULE I
MEDPARTNERS, INC.
Principal Amount
Underwriter of Notes
----------------
Xxxxx Xxxxxx Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Xxxxxxx Xxxxx, Xxxxxx, Xxxxxx & Xxxxx
Incorporated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
X.X. Xxxxxx Securities Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Xxxxxx Xxxxxxx & Co. Incorporated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
NationsBanc Capital Markets, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $450,000,000
============
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SCHEDULE II
MEDPARTNERS, INC.
SIGNIFICANT SUBSIDIARIES
MP of Delaware, Inc.
MedPartners of Florida, Inc.
MedPartners Acquisition Corp. (MAC)
Pacific Physician Services, Inc.
Team Health, Inc.
Caremark International Inc.
Caremark Inc.
Caremark Physician Services Inc.
Friendly Hills Healthcare Network Inc.
KP-PSI of Texas L.P.
