Select Medical Holdings
Corporation
Common Stock, par value $0.001
per share
Goldman, Sachs
& Co.
Morgan Stanley & Co. Incorporated
Merrill Lynch, Pierce, Fenner & Smith Incorporated
J.P. Morgan Securities Inc.
As
representatives of the several Underwriters
named in Schedule I hereto
85 Broad
Street
New York, New York 10004
Morgan Stanley
& Co. Incorporated
1585 Broadway
New York, New York 10036
Merrill Lynch,
Pierce, Fenner & Smith Incorporated
4 World Financial Center
New York, New York 10080
J.P. Morgan
Securities Inc.
383 Madison Avenue
New York, New York 10179
Select Medical
Holdings Corporation, a Delaware corporation (the “
Company ”), proposes to issue and sell to the several
Underwriters named in Schedule I hereto (the “
Underwriters ”) an aggregate of 30,000,000 shares of
the common stock, par value $0.001 per share, of the Company (the
“ Firm Shares ”).
The Company also
proposes to issue and sell to the several Underwriters not more
than an additional 4,500,000 shares of its common stock, par value
$0.001 per share (the “ Additional Shares ”), if
and to the extent that you, as managers of the offering, shall have
determined to exercise, on behalf of the Underwriters, the right to
purchase such shares of common stock granted to the Underwriters in
Section 2 hereof. The Firm Shares and the Additional Shares
are hereinafter collectively referred to as the “
Shares .” The shares of common stock, par value $0.001
per share, of the Company to be outstanding after giving effect to
the sales contemplated hereby are hereinafter referred to as the
“ Common Stock .”
The Company has
filed with the Securities and Exchange Commission (the “
Commission ”) a registration statement on Form S-1, as
amended (No. 333-
152514),
including a prospectus, relating to the Shares. The registration
statement as amended at the time it becomes effective, including
the information (if any) deemed to be part of the registration
statement at the time of effectiveness pursuant to Rule 430A
under the Securities Act of 1933, as amended (the “
Securities Act ”), is hereinafter referred to as the
“ Registration Statement ”; the prospectus in
the form first used to confirm sales of Shares (or in the form
first made available to the Underwriters by the Company to meet
requests of purchasers pursuant to Rule 173 under the Securities
Act) is hereinafter referred to as the “ Prospectus
.” If the Company has filed an abbreviated registration
statement to register additional shares of Common Stock pursuant to
Rule 462(b) under the Securities Act (the “ Rule 462
Registration Statement ”), then any reference herein to
the term “ Registration Statement ” shall be
deemed to include such Rule 462 Registration
Statement.
For purposes of
this Agreement, “ free writing prospectus ” has
the meaning set forth in Rule 405 under the Securities Act, “
Time of Sale Prospectus ” means the preliminary
prospectus together with the free writing prospectuses, if any,
each identified in Schedule II hereto, and “ broadly
available road show ” means a “bona fide electronic
road show” as defined in Rule 433(h)(5) under the
Securities Act that has been made available without restriction to
any person. As used herein, the terms “Registration
Statement,” “preliminary prospectus,” “Time
of Sale Prospectus” and “Prospectus” shall
include the documents, if any, incorporated by reference
therein.
Merrill Lynch,
Pierce, Fenner & Smith Incorporated (“ Merrill
Lynch ”) has agreed to reserve a portion of the Shares to
be purchased by it under this Agreement for sale to the
Company’s directors, officers, employees and business
associates and other parties related to the Company (collectively,
“ Participants ”), as set forth in the
Prospectus under the heading “Underwriters” (the
“ Directed Share Program ”). The Shares to be
sold by Merrill Lynch and its affiliates pursuant to the Directed
Share Program are referred to hereinafter as the “
Directed Shares. ” Any Directed Shares not confirmed
orally or in writing for purchase by any Participant by the end of
the business day on which this Agreement is executed will be
offered to the public by the Underwriters as set forth in the
Prospectus.
1.
Representations and Warranties of the Company . The Company
represents and warrants to and agrees with each of the Underwriters
that:
(a) The
Registration Statement has become effective; no stop order
suspending the effectiveness of the Registration Statement is in
effect, and no proceedings for such purpose are pending before or
threatened by the Commission.
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(b) (i) The
Registration Statement, when it became effective, did not contain
and, as amended or supplemented, if applicable, as of the date of
such amendment or supplement will not contain any untrue statement
of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading, (ii) the Registration Statement and the Prospectus
comply and, as amended or supplemented, if applicable, as of the
date of such amendment or supplement will comply in all material
respects with the Securities Act and the applicable rules and
regulations of the Commission thereunder, (iii) the Time of
Sale Prospectus does not, and at the time of each sale of the
Shares in connection with the offering when the Prospectus is not
yet available to prospective purchasers and at the Closing Date (as
defined in Section 4 hereof), the Time of Sale Prospectus, as
then amended or supplemented by the Company, if applicable, will
not, contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not
misleading, (iv) each broadly available road show, if any,
when considered together with the Time of Sale Prospectus, does not
contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not
misleading, (v) the Prospectus does not contain and, as
amended or supplemented, if applicable, as of the date of such
amendment or supplement will not contain any untrue statement of a
material fact or omit to state a material fact necessary to make
the statements therein, in the light of the circumstances under
which they were made, not misleading and (vi) each free
writing prospectus, if any, identified in Schedule II hereto,
and any broadly available road show does not conflict with the
information then contained in the Registration Statement, the Time
of Sale Prospectus or the Prospectus, except that the
representations and warranties set forth in this paragraph do not
apply to statements or omissions in the Registration Statement, the
Time of Sale Prospectus or the Prospectus based upon information
relating to any Underwriter furnished to the Company in writing by
such Underwriter through you expressly for use therein.
(c) The
Company is not an “ineligible issuer” in connection
with the offering pursuant to Rules 164, 405 and 433 under the
Securities Act. Any free writing prospectus that the Company is
required to file pursuant to Rule 433(d) under the Securities Act
has been, or will be, filed with the Commission in accordance with
the requirements of the Securities Act and the applicable rules and
regulations of the Commission thereunder. Each free writing
prospectus that the Company has filed, or is required to file,
pursuant to Rule 433(d) under the Securities Act or that was
prepared by or behalf of or used or referred to by the Company
complies or will comply in all material respects with the
requirements of the Securities Act and the applicable rules and
regulations of the Commission thereunder. Except for the free
writing prospectuses, if any, identified in Schedule II
hereto, and electronic road shows, if any, each furnished to you
before
3
first use, the
Company has not prepared, used or referred to, and will not,
without your prior consent, prepare, use or refer to, any free
writing prospectus.
(d) The
Company has been duly incorporated, is validly existing as a
corporation in good standing under the laws of the jurisdiction of
its incorporation, has the corporate power and authority to own its
property and to conduct its business as described in the Time of
Sale Prospectus and is duly qualified to transact business and is
in good standing in each jurisdiction in which the conduct of its
business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so
qualified or be in good standing would not have a material adverse
effect on the Company and its subsidiaries, taken as a
whole.
(e) Each of
the Company’s significant subsidiaries within the meaning of
Rule 1-02 of Regulation S-X under the Securities Exchange
Act of 1934, as amended (the “ Exchange Act ”)
(each, a “ Material Subsidiary ”) has been duly
organized, is validly existing as a corporation, limited liability
company or partnership in good standing under the laws of the
jurisdiction of its organization, has the corporate, limited
liability company, or partnership power and authority to own its
property and to conduct its business as described in the Time of
Sale Prospectus and is duly qualified to transact business and is
in good standing in each jurisdiction in which the conduct of its
business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so
qualified or be in good standing would not have a material adverse
effect on the Company and its subsidiaries, taken as a whole; all
of the issued shares of capital stock or other equity interests of
each Material Subsidiary of the Company have been duly and validly
authorized and issued, are fully paid and non-assessable and are
owned directly by the Company or through subsidiaries of the
Company, free and clear of all liens, encumbrances, equities or
claims, except for any lien or encumbrance in connection with the
Credit Agreement (the “ Credit Agreement ”),
dated as of February 24, 2005, as subsequently amended, among
Select Medical Holdings Corporation, Select Medical Corporation, as
Borrower, the Lenders party thereto, JPMorgan Chase Bank, N.A., as
Administrative Agent and Collateral Agent, Wachovia Bank, National
Association, as Syndication Agent and Merrill Lynch and CIBC Inc.,
as Co-Documentation Agents, and (ii) equity interests owned by
minority investors in non-wholly owned subsidiaries.
(f) This
Agreement has been duly authorized, executed and delivered by the
Company.
(g) The
authorized capital stock of the Company conforms as to legal
matters to the description thereof contained in each of the Time of
Sale Prospectus and the Prospectus.
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(h) The
shares of Common Stock outstanding prior to the issuance of the
Shares to be sold by the Company have been duly authorized and are
validly issued, fully paid and nonassessable.
(i) The
Shares to be sold by the Company have been duly authorized and,
when issued and delivered by the Company and paid for in accordance
with the terms of this Agreement, will be validly issued, fully
paid and nonassessable, and the issuance of such Shares will not be
subject to any preemptive or similar rights.
(j) The
execution and delivery by the Company of, and the performance by
the Company of its obligations under, this Agreement will not
contravene: (i) any provision of applicable law, (ii) the
certificate of incorporation or by-laws of the Company,
(iii) any agreement or other instrument binding upon the
Company or any of its subsidiaries, or (iv) any judgment,
order or decree of any governmental body, agency or court having
jurisdiction over the Company or any subsidiary, except in the case
of clauses (i), (iii) and (iv) above, where such
contravention would not, singly or in the aggregate, have a
material adverse effect on the Company and its subsidiaries, taken
as a whole, or on the power and ability of the Company to perform
its obligations under this Agreement or to consummate the
transactions contemplated by the Time of Sale Prospectus. No
consent, approval, authorization or order of, or qualification
with, any governmental body or agency is required for the
performance by the Company of its obligations under this Agreement,
except such as (X) have been obtained and made or (Y) may
be required by the securities or Blue Sky laws of the various
states in connection with the offer and sale of the Shares and the
rules and regulations of the Financial Industry Regulatory
Authority (“ FINRA ”).
(k) There has
not occurred any material adverse change, or any development
involving a prospective material adverse change, in the condition,
financial or otherwise, or in the earnings, business or operations
of the Company and its subsidiaries, taken as a whole, from that
set forth in the Time of Sale Prospectus.
(l) There are
no legal or governmental proceedings pending or, to the knowledge
of the Company, threatened to which the Company or any of its
subsidiaries is a party or to which any of the properties of the
Company or any of its subsidiaries is subject (a) other than
proceedings (i) accurately described in all material respects in
the Time of Sale Prospectus, (ii) that would not have a
material adverse effect on the Company and its subsidiaries, taken
as a whole, or (iii) that would not have a material adverse
effect on the power or ability of the Company to perform its
obligations under this Agreement or to consummate the transactions
contemplated by the Time of Sale Prospectus or (b) that are
required to be described in the Registration Statement or the
Prospectus and are not so described; and there are no statutes,
regulations, contracts or other documents that
5
are required to
be described in the Registration Statement or the Prospectus or to
be filed as exhibits to the Registration Statement that are not
described or filed as required.
(m) Each
preliminary prospectus filed as part of the Registration Statement
as originally filed or as part of any amendment thereto, or filed
pursuant to Rule 424 under the Securities Act, complied when
so filed in all material respects with the Securities Act and the
applicable rules and regulations of the Commission
thereunder.
(n) The
Company is not, and after giving effect to the offering and sale of
the Shares and the application of the proceeds thereof as described
in the Prospectus will not be, required to register as an
“investment company” as such term is defined in the
Investment Company Act of 1940, as amended.
(o) The
Company and its subsidiaries (i) are in compliance with any
and all applicable foreign, federal, state and local laws and
regulations relating to the protection of human health and safety,
the environment or hazardous or toxic substances or wastes,
pollutants or contaminants (“ Environmental Laws
”), (ii) have received all permits, licenses or other
approvals required of them under applicable Environmental Laws to
conduct their respective businesses and (iii) are in
compliance with all terms and conditions of any such permit,
license or approval, except where such noncompliance with
Environmental Laws, failure to receive required permits, licenses
or other approvals or failure to comply with the terms and
conditions of such permits, licenses or approvals would not, singly
or in the aggregate, reasonably be expected to have a material
adverse effect on the Company and its subsidiaries, taken as a
whole.
(p) To the
knowledge of the Company, neither the Company nor its subsidiaries
have any outstanding obligation to incur costs pursuant to or
liabilities associated with Environmental Laws (including, without
limitation, any capital or operating expenditures required for the
clean-up or closure of properties pursuant to Environmental Laws or
compliance with Environmental Laws, including any permit, license,
approval or any related constraints on operating activities and any
potential liabilities to third parties) which would, singly or in
the aggregate, reasonably be expected to have a material adverse
effect on the Company and its subsidiaries, taken as a
whole.
(q) Except as
described in the Time of Sale Prospectus and the Prospectus, there
are no contracts, agreements or understandings between the Company
and any person granting such person the right to require the
Company to file a registration statement under the Securities Act
with respect to any securities of the Company or to require the
Company to include such securities with the Shares registered
pursuant to the Registration Statement.
6
(r) Neither
the Company nor any of its subsidiaries, nor, to the knowledge of
the Company, any director, officer, employee, agent or
representative of the Company or of any of its subsidiaries, has
taken any action on behalf of the Company in furtherance of an
offer, payment, promise to pay, or authorization or approval of the
payment or giving of money, property, gifts or anything else of
value, directly or indirectly, to any “government
official” (including any officer or employee of a government
or government-owned or controlled entity or of a public
international organization, or any person acting in an official
capacity for or on behalf of any of the foregoing, or any political
party or party official or candidate for political office) to
influence official action or secure an improper advantage; and the
Company and its subsidiaries have conducted their businesses in
compliance with applicable anti-corruption laws to which they may
be subject.
(s) (i) The
Company represents that neither the Company nor any of its
subsidiaries (collectively, the “ Entity ”) or,
to the knowledge of the Entity, any director, officer or employee
of the Entity, is an individual or entity (“ Person
”) that is, or is owned or controlled by a Person that is the
subject of any sanctions administered or enforced by the U.S.
Department of Treasury’s Office of Foreign Assets Control
(“ OFAC ”) (“ Sanctions
”).
(ii) Without
precedential effect, except as to proceeds used for the
Entity’s repayment of its senior secured credit facility, 7
5/8% senior subordinated notes or senior floating rate notes to the
Underwriters or affiliates of the Underwriters, the Entity
represents and covenants that it will not, directly or indirectly,
use the proceeds of the offering, or lend, contribute or otherwise
make available such proceeds to any subsidiary, joint venture
partner or other Person to fund or facilitate any activities or
business of or with any Person or in any country or territory that,
at the time of such funding or facilitation, is the subject of
Sanctions.
(t) Subsequent
to the respective dates as of which information is given in each of
the Registration Statement, the Time of Sale Prospectus and the
Prospectus: (i) the Company and its subsidiaries have not
incurred any material liability or obligation, direct or
contingent, nor entered into any material transaction,
(ii) the Company has not purchased any of its outstanding
capital stock, nor declared, paid or otherwise made any dividend or
distribution of any kind on its capital stock other than ordinary
and customary dividends and (iii) there has not been any
material change in the capital stock, short-term debt or long-term
debt of the Company and its subsidiaries, except in each case as
described in each of the Registration Statement, the Time of Sale
Prospectus and the Prospectus, respectively.
(u) The
Company and its subsidiaries have good title in fee simple to all
real property and good title to all personal property owned by them
which is
7
material to the
business of the Company and its subsidiaries, in each case free and
clear of all liens, encumbrances and defects except such as
(i) are described in the Time of Sale Prospectus or
(ii) would not have a material adverse effect on the Company
and its subsidiaries, taken as a whole; and any real property and
buildings held under lease by the Company and its subsidiaries are
held by them under valid, subsisting and enforceable leases with
such exceptions as would not have a material adverse effect on the
Company and its subsidiaries, taken as a whole, in each case except
as described in the Time of Sale Prospectus.
(v) The
Company and its subsidiaries own or possess, or, to the knowledge
of the Company, can acquire on reasonable terms, all material
patents, patent rights, licenses, inventions, copyrights, know-how
(including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures),
trademarks, service marks and trade names currently employed by
them in connection with the business now operated by them. Neither
the Company nor any of its Material Subsidiaries has received any
unresolved notice of infringement of or conflict with the
intellectual property rights of others with respect to any of the
foregoing which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would have a material
adverse effect on the Company and its subsidiaries, taken as a
whole.
(w) No
material labor dispute with the employees of the Company or any of
its subsidiaries exists, except as described in the Time of Sale
Prospectus, or, to the knowledge of the Company, is imminent; and
the Company is not aware of any existing, threatened or imminent
labor disturbance by the employees of any of its principal
suppliers, manufacturers or contractors that would reasonably be
expected to have a material adverse effect on the Company and its
subsidiaries, taken as a whole.
(x) The
Company and each of its subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks
and in such amounts as the Company believes are prudent and
customary in the businesses in which they are engaged; neither the
Company nor any of its subsidiaries has been refused any material
insurance coverage sought or applied for since January 1,
2005; and neither the Company nor any of its subsidiaries has any
reason to believe that it will not be able to renew its existing
insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to
continue its business at a cost that would not have a material
adverse effect on the Company and its subsidiaries, taken as a
whole, except as described in the Time of Sale
Prospectus.
(y) The
Company and its subsidiaries possess all certificates,
authorizations and permits issued by the appropriate federal, state
or foreign regulatory authorities necessary to conduct their
respective businesses, including, without limitation, such
certificates, authorizations and permits as are required
(i)
8
under such
federal and state healthcare laws as are applicable to the Company
and such subsidiary and (ii) with respect to those facilities
operated by the Company or any of its subsidiaries that participate
in Medicare and/or Medicaid, to receive reimbursement thereunder,
except in the case of clauses (i) and (ii) above where
the failure to possess such certificates, authorizations and
permits would not reasonably be expected to have a material adverse
effect on the Company and its subsidiaries, taken as a whole, and
neither the Company nor any of its subsidiaries has received any
notice of proceedings relating to the revocation or modification of
any such certificate, authorization or permit which, singly or in
the aggregate, if the subject of an unfavorable decision, ruling or
finding, would have a material adverse effect on the Company and
its subsidiaries, taken as a whole, except as described in the Time
of Sale Prospectus. The Company and each of its subsidiaries have
fulfilled and performed all of their obligations with respect to
such certificates, authorizations and permits, except for such
instances which would not have a material adverse effect on the
Company and its subsidiaries, taken as a whole, and no event or
change in condition has occurred which allows, or after notice or
lapse of time would allow, revocation or termination of any such
certificates, authorizations and permits or result in any other
material impairment of the rights of the holder thereof, except for
such instances as may be set forth in the Time of Sale Prospectus
and the Prospectus or which would not have a material adverse
effect on the Company and its subsidiaries, taken as a whole.
Except for any specialty hospitals or outpatient rehabilitation
facilities under development as of the date hereof or as disclosed
in the Time of Sale Prospectus, all of the specialty hospitals and
substantially all of the outpatient rehabilitation facilities
operated by the Company and its subsidiaries are eligible to
participate in the Medicare program.
(z) Neither
the Company nor any of its subsidiaries has failed to file with
applicable regulatory authorities any statement, report,
information or form required by any applicable law, regulation or
order, except to the extent that the failure to so file would not
have a material adverse effect on the Company and its subsidiaries,
taken as a whole, and all such filings or submissions were in
compliance with applicable laws when filed and no deficiencies have
been asserted by any regulatory commission, agency or authority
with respect to any such filings or submissions, except to the
extent that such non-compliance or deficiency would not have a
material adverse effect on the Company and its subsidiaries, taken
as a whole.
(aa) During
the period for which financial statements are included in the Time
of Sale Prospectus and the Prospectus, denials by third party
payors of claims for reimbursement for services rendered by the
Company have not had a material adverse effect on the Company and
its subsidiaries, taken as a whole.
9
(bb) Neither
the Company nor any of its subsidiaries has received any written
notice from a federal health care program, including but not
limited to Medicare and Medicaid, or other managed care insurer
seeking, threatening, requesting or claiming recoupment against the
Company or any of its subsidiaries, except (i) for claims
rejected or payments recouped in the ordinary course of business or
(ii) to the extent that such recoupment would not have a
material adverse effect on the Company and its subsidiaries, taken
as a whole.
(cc) The
accounts receivable of the Company and its subsidiaries have been
and will continue to be adjusted to reflect reimbursement policies
of third party payors such as Medicare, Medicaid, private insurance
companies, health maintenance organizations, preferred provider
organizations, managed care systems and other third party payors in
accordance with generally accepted accounting principles. The
accounts receivable relating to such third party payors do not and
shall not exceed amounts the Company and its subsidiaries estimate
that they are entitled to receive, subject to adjustments to
reflect reimbursement policies of third party payors and normal
discounts in the ordinary course of business.
(dd) None of
the Company, its subsidiaries nor, to the knowledge of the Company,
any of their respective officers, directors, stockholders,
employees or agents, has engaged on behalf of the Company or such
subsidiary in any of the following: (A) knowingly and
willfully making or causing to be made a false statement or
representation of a material fact in any applications for any
benefit or payment under the Medicare or Medicaid program or from
any third party (where applicable federal or state law prohibits
such payments to third parties), (B) knowingly and willfully
making or causing to be made any false statement or representation
of a material fact for use in determining rights to any benefit or
payment under the Medicare or Medicaid program or from any third
party (where applicable federal or state law prohibits such
payments to third parties), (C) knowingly and willfully failing to
disclose knowledge by a claimant of the occurrence of any event
affecting the initial or continued right to any benefit or payment
under the Medicare or Medicaid program or from any third party
(where applicable federal or state law prohibits such payments to
third parties) on its own behalf or on behalf of another, with
intent to secure such benefit or payment fraudulently or
(D) knowingly and willfully offering, paying, soliciting or
receiving any remuneration (including any kickback, bribe or
rebate), directly or indirectly, overtly or covertly, in cash or in
kind (1) in return for referring an individual to a person for
the furnishing or arranging for the furnishing of any item or
service for which payment may be made in whole or in part by
Medicare or Medicaid or any third party (where applicable federal
or state law prohibits such payments to third parties) or
(2) in return for purchasing, leasing or ordering or arranging
for or recommending the purchasing, leasing or ordering of any
good, facility, service or item for which payment may be made in
whole or in part
10
by Medicare or
Medicaid or any third party (where applicable federal or state law
prohibits such payments to third parties), except in each of
clauses (A)-(D) above where such activities would not reasonably be
expected to have a material adverse effect on the Company and its
subsidiaries, taken as a whole.
(ee) The
Company and each of its subsidiaries maintain a system of internal
accounting controls sufficient to provide reasonable assurance that
(i) transactions are executed in accordance with
management’s general or specific authorizations;
(ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset
accountability; (iii) access to assets is permitted only in
accordance with management’s general or specific
authorization; and (iv) the recorded accountability for assets
is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences. Except
as described in the Time of Sale Prospectus, since the end of the
Company’s most recent audited fiscal year, there has been (i)
no material weakness in the Company’s internal control over
financial reporting (whether or not remediated) and (ii) no
change in the Company’s internal control over financial
reporting that has materially affected, or is reasonably likely to
materially affect, the Company’s internal control over
financial reporting.
(ff) Except
as described in the Time of Sale Prospectus, the Company has not
sold, issued or distributed any shares of Common Stock during the
six-month period preceding the date hereof, including any sales
pursuant to Rule 144A under, or Regulation D or S of, the
Securities Act, other than shares issued pursuant to employee
benefit plans, qualified stock option plans or other employee
compensation plans or pursuant to outstanding options, rights or
warrants.
(gg) Each
employee benefit plan, within the meaning of Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended
(“ ERISA ”), that is maintained, administered or
contributed to by the Company or any of its affiliates for
employees or former employees of the Company has been maintained in
all material respects in compliance with its terms and the
requirements of any applicable statutes, orders, rules and
regulations, including ERISA and the Internal Revenue Code of 1986,
as amended (the “ Code ”). No prohibited
transaction, within the meaning of Section 406 of ERISA or
Section 4975 of the Code, has occurred with respect to any
such plan excluding transactions effected pursuant to a statutory
or administrative exemption and transactions with respect to which
no material liability to the Company has occurred or could
reasonably be expected to occur, either individually or in the
aggregate; and no such employee benefit plan is subject to the
funding rules of Section 412 of the Code or Section 302
of ERISA.
11
(hh) Neither
the Company nor any of its Material Subsidiaries is in
(i) violation of its certificate of incorporation or by-laws
or (ii) default in any material respect, and no event has
occurred which, with notice or lapse of time or both, would
constitute such a default, in the due performance or observance of
any term, covenant or condition contained in any indenture,
mortgage, deed of trust, credit agreement or other agreement or
instrument to which it is a party or by which it is bound or to
which any of its property or assets is subject, except for any
default described in clause (ii) above which would not have a
material adverse effect on the Company and its subsidiaries, taken
as a whole.
(ii) The
Registration Statement, the Prospectus, the Time of Sale Prospectus
and any preliminary prospectus comply, and any amendments or
supplements thereto, if applicable, as of the date of such
amendment or supplement will comply in all material respects with
any applicable laws or regulations of foreign jurisdictions in
which the Prospectus, the Time of Sale Prospectus or any
preliminary prospectus, as amended or supplemented, if applicable,
are distributed in connection with the Directed Share
Program.
(jj) No
consent, approval, authorization or order of, or qualification
with, any governmental body or agency, other than those obtained,
is required in connection with the offering of the Directed Shares
in any jurisdiction where the Directed Shares are being offered,
except (i) such as have been obtained and made or
(ii) such as may be required by the securities or Blue Sky
laws of the various states in connection with the offer and sale of
the Shares and the rules and regulations of FINRA.
(kk) The
Company has not offered, or caused Merrill Lynch to offer, Shares
to any person pursuant to the Directed Share Program with the
specific intent to unlawfully influence (i) a customer or
supplier of the Company to alter the customer’s or
supplier’s level or type of business with the Company or
(ii) a trade journalist or publication to write or publish
favorable information about the Company or its products.
2.
Agreements to Sell and Purchase . The Company hereby agrees
to sell to the several Underwriters, and each Underwriter, upon the
basis of the representations and warranties herein contained, but
subject to the conditions hereinafter stated, agrees, severally and
not jointly, to purchase from the Company at $9.40 a share (the
“ Purchase Price ”) the number of Firm Shares
(subject to such adjustments to eliminate fractional shares as you
may determine) set forth in Schedule I hereto opposite the
name of such Underwriter.
On the basis of
the representations and warranties contained in this Agreement, and
subject to its terms and conditions, the Company agrees to sell to
the Underwriters the Additional Shares, and the Underwriters shall
have the right to purchase, severally and not jointly, up to
4,500,000 Additional Shares at the
12
Purchase Price.
Goldman, Sachs & Co., Morgan Stanley & Co. Incorporated,
Merrill Lynch, Pierce, Fenner & Smith Incorporated and J.P.
Morgan Securities Inc. (the “ Representatives ”)
may exercise this right on behalf of the Underwriters in whole or
from time to time in part by giving written notice to the Company
not later than 30 days after the date of this Agreement. Any
exercise notice shall specify the number of Additional Shares to be
purchased by the Underwriters and the date on which such shares are
to be purchased. Each purchase date must be at least one full
business day after the written notice to the Company is given and
may not be earlier than the closing date for the Firm Shares nor
later than ten business days after the date of such notice.
Additional Shares may be purchased as provided in Section 4
hereof solely for the purpose of covering over-allotments, if any,
made in connection with the offering of the Firm Shares. On each
day, if any, that Additional Shares are to be purchased (an “
Option Closing Date ”), each Underwriter agrees,
severally and not jointly, to purchase the number of Additional
Shares (subject to such adjustments to eliminate fractional shares
as you may determine) that bears the same proportion to the total
number of Additional Shares to be purchased on such Option Closing
Date as the number of Firm Shares set forth in Schedule I
hereto opposite the name of such Underwriter bears to the total
number of Firm Shares.
The Company hereby
agrees that, without the prior written consent of two of the four
Representatives on behalf of the Underwriters, it will not, during
the period ending 180 days after the date of the Prospectus,
(1) offer, pledge, sell, contract to sell, sell any option or
contract to purchase, purchase any option or contract to sell,
grant any option, right or warrant to purchase, lend, or otherwise
transfer or dispose of, directly or indirectly, any shares of
Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock or (2) enter into any swap or other
arrangement that transfers to another, in whole or in part, any of
the economic consequences of ownership of the Common Stock, whether
any such transaction described in clause (1) or (2) above
is to be settled by delivery of Common Stock or such other
securities, in cash or otherwise or (3) file any registration
statement with the Commission relating to the offering of any
shares of Common Stock or any securities convertible into or
exercisable or exchangeable for Common Stock.
The restrictions
contained in the preceding paragraph shall not apply to
(a) the Shares to be sold hereunder, (b) the issuance by
the Company of shares of Common Stock upon the exercise of an
option or warrant or the conversion of a security outstanding on
the date hereof of which the Underwriters have been advised in
writing, (c) the issuance by the Company of options to
purchase shares of Common Stock under stock option or similar plans
as in effect on the date of this Agreement and as described in the
Time of Sale Prospectus, (d) the establishment of a trading
plan pursuant to Rule 10b5-1 under the Exchange Act for the
transfer of shares of Common Stock, provided that such plan
does not
13
provide for the
transfer of Common Stock during the 180-day restricted period or
(i) the filing by the Company of any registration statement on
Form S-8 with the Commission relating to the offering of securities
pursuant to terms of a stock option or similar plan in effect on
the date of this Agreement and as described in the Time of Sale
Prospectus. Notwithstanding the foregoing, if (1) during the
last 17 days of the 180-day restricted period the Company
issues an earnings release or material news or a material event
relating to the Company occurs; or (2) prior to the expiration
of the 180-day restricted period, the Company announces that it
will release earnings results during the 16-day period beginning on
the last day of the 180-day period, the restrictions imposed by
this agreement shall continue to apply until the expiration of the
18-day period beginning on the issuance of the earnings release or
the occurrence of the material news or material event. The Company
shall promptly notify the Representatives of any earnings release,
news or event that may give rise to an extension of the initial
180-day restricted period.
3. Terms
of Public Offering . The Company is advised by you that the
Underwriters propose to make a public offering of the Shares as
soon after the Registration Statement and this Agreement have
become effective as in your judgment is advisable. The Company is
further advised by you that the Shares are to be offered to the
public initially at $10.00 a share (the “ Public Offering
Price ”) and to certain dealers selected by you at a
price that represents a concession not in excess of $0.36 a share
under the Public Offering Price. The Public Offering Price of the
Shares is not in excess of the price recommended by Goldman, Sachs
& Co., acting as a “qualified independent
underwriter” within the meaning of Rule 2720 of the
Rules of Conduct of the National Association of Securities Dealers,
Inc.
The Company hereby
confirms its engagement of Goldman, Sachs & Co. as, and
Goldman, Sachs & Co. hereby confirms its agreement with the
Company to render services as, a “qualified independent
underwriter” within the meaning of Rule 2720(f)(12) of
the Financial Industry Regulatory Authority (“FINRA”)
with respect to the offering and sale of the Shares. Goldman, Sachs
& Co., in its capacity as qualified independent underwriter and
not otherwise, is referred to herein as the “qualified
independent underwriter.”
4.
Payment and Delivery . Payment for the Firm Shares shall be
made to the Company in Federal or other funds immediately available
in New York City by wire transfer as designated by the Company
against delivery of such Firm Shares for the respective accounts of
the several Underwriters at 10:00 a.m., New York City time, on
September 30, 2009, or at such other time on the same or such
other date, not later than October 7, 2009, as shall be
designated in writing by you. The time and date of such payment are
hereinafter referred to as the “ Closing Date
.”
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Payment for any
Additional Shares shall be made to the Company in Federal or other
funds immediately available in New York City by wire transfer as
designated by the Company against delivery of such Additional
Shares for the respective accounts of the several Underwriters at
10:00 a.m., New York City time, on the date specified in the
corresponding notice described in Section 2 hereof or at such
other time on the same or on such other date, in any event not
later than November 9, 2009, as shall be designated in writing
by you.
The Firm Shares
and Additional Shares shall be registered in such names and in such
denominations as you shall request in writing not later than one
full business day prior to the Closing Date or the applicable
Option Closing Date, as the case may be. The Firm Shares and
Additional Shares shall be delivered to you on the Closing Date or
an Option Closing Date, as the case may be, for the respective
accounts of the several Underwriters, with any transfer taxes
payable in connection with the transfer of the Shares to the
Underwriters duly paid, against payment of the Purchase Price
therefor.
5.
Conditions to the Underwriters’ Obligations . The
obligations of the Company to sell the Shares to the Underwriters
and the several obligations of the Underwriters to purchase and pay
for the Shares on the Closing Date are subject to the condition
that the Registration Statement shall have become effective not
later than 3:00 p.m. (New York City time) on the date
hereof.
The several
obligations of the Underwriters are subject to the following
further conditions:
(a) Subsequent
to the execution and delivery of this Agreement and prior to the
Closing Date:
(i) there shall
not have occurred any downgrading, nor shall any notice have been
given of any intended or potential downgrading or of any review for
a possible change that does not indicate the direction of the
possible change, in the rating accorded any of the securities of
the Company or any of its subsidiaries by any “nationally
recognized statistical rating organization,” as such term is
defined for purposes of Rule 436(g)(2) under the Securities
Act; and
(ii) there shall
not have occurred any change, or any development involving a
prospective change, in the condition, financial or otherwise, or in
the earnings, business or operations of the Company and its
subsidiaries, taken as a whole, from that set forth in the Time of
Sale Prospectus as of the date of this Agreement that, in your
judgment, is material and adverse and that makes it, in your
judgment, impracticable to market the Shares on the terms and in
the manner contemplated in the Time of Sale Prospectus.
15
(b) The
Underwriters shall have received on the Closing Date a certificate,
dated the Closing Date and signed by an executive officer of the
Company, to the effect set forth in Sections 5(a)(i) and
5(a)(ii) above and to the effect that the representations and
warranties of the Company contained in this Agreement are true and
correct as of the Closing Date and that the Company has complied
with all of the agreements and satisfied all of the conditions on
its part to be performed or satisfied hereunder on or before the
Closing Date.
The officer
signing and delivering such certificate may rely upon his or her
knowledge as to prospective changes and proceedings
threatened.
(c) The
Underwriters shall have received on the Closing Date an opinion of
Dechert LLP, outside counsel for the Company, dated the Closing
Date, to the effect set forth on Exhibit B hereto.
(d) The
Underwriters shall have received on the Closing Date an opinion, of
Michael E. Tarvin, General Counsel of the Company, dated the
Closing Date, substantially in the form attached as Exhibit C
hereto.
(e) The
Underwriters shall have received on the Closing Date an opinion of
Reed Smith LLP, special regulatory counsel for the Company, dated
the Closing Date, to the effect set forth on Exhibit D
hereto.
(f) The
Underwriters shall have received on the Closing Date an opinion of
Davis Polk & Wardwell LLP, counsel for the Underwriters, dated
the Closing Date, covering such matters as the Underwriters may
reasonably request.
With respect to
Sections 5(c) - 5(f) above, Dechert LLP, Reed Smith LLP or
Davis Polk & Wardwell LLP, as applicable, may state that their
opinions and beliefs are based upon their participation in the
preparation of the Registration Statement, the Time of Sale
Prospectus and the Prospectus and any amendments or supplements
thereto and review and discussion of the contents thereof, but are
without independent check or verification, except as
specified.
The opinions
described in Sections 5(c) - 5(e) above shall be rendered to
the Underwriters at the request of the Company and shall so state
therein.
(g) The
Underwriters shall have received, on each of the date hereof and
the Closing Date, a letter dated the date hereof or the Closing
Date, as the case may be, in form and substance satisfactory to the
Underwriters, from PricewaterhouseCoopers LLP, independent public
accountants, containing statements and information of the type
ordinarily included in accountants’ “comfort
letters” to underwriters with respect to the financial
statements and certain financial information contained in the
Registration Statement, the Time of
16
Sale Prospectus
and the Prospectus; provided that the letter delivered on
the Closing Date shall use a “cut-off date” not
earli
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