<PAGE>
As filed with the Securities and Exchange Commission on December 9, 1999
Registration No. 333-83761
===========================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________________________
PRE-EFFECTIVE AMENDMENT NO. 5 TO
FORM S-1
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
_____________________________________
HEALTHEXTRAS, INC.
(Exact Name of Registrant as Specified in its Certificate of Incorporation)
<TABLE>
<S> <C> <C>
Delaware 8999 52-2181356
(State or Other Jurisdiction (Primary Standard Industrial (I.R.S. Employer Identification Number)
of Incorporation or Organization) Classification Code Number)
</TABLE>
2275 Research Boulevard, Seventh Floor
Rockville, Maryland 20850
(301) 548-2900
(Address, including Zip Code, and Telephone Number,
including Area Code, of Registrant's Principle Executive Offices)
David T. Blair
Chief Executive Officer
HealthExtras, Inc.
2275 Research Boulevard, Seventh Floor
Rockville, Maryland 20850
(301) 548-2900
(Name, Address, including Zip Code, and Telephone Number,
including Area Code, of Agent for Service)
__________________________________________
Copies to:
<TABLE>
<S> <C>
Douglas P. Faucette, Esq. Donald J. Murray, Esq.
Thomas J. Haggerty, Esq. Dewey Ballantine LLP
Muldoon, Murphy & Faucette LLP 1301 Avenue of the Americas
5101 Wisconsin Avenue, N.W. New York, New York 10019
Washington, D.C. 20016 (212) 259-8000
(202) 362-0840
</TABLE>
___________________________________________
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the Prospectus is expected to be made pursuant to Rule 434,
check the following box. [ ]
______________________________________________
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment that specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, as amended, or until the Registration Statement
shall become effective on such date as the Securities and Exchange Commission,
acting pursuant to said Section 8(a), may determine.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
<TABLE>
<S> <C>
SEC Registration Fee................................... $ 28,000
NASD Filing Fee........................................ 10,900
NASDAQ Stock Market National Listing Fee............... 95,000
Printing, engraving, postage and mailing............... 115,000
Legal fees and expenses................................ 400,000
Accounting fees and expenses........................... 125,000
Transfer agent fees and expenses....................... 2,500
Blue Sky fees and expenses............................. 10,000
Miscellaneous.......................................... 13,600
--------
TOTAL........................................... $800,000
========
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
As permitted by Section 145 of the Delaware General Corporation Law,
Articles 8 and 9 of the Registrant's Certificate of Incorporation provide, as
follows, the Corporation shall, to the fullest extent permitted by Delaware law,
as amended from time to time, indemnify its directors and officers:
EIGHTH:
A. Each person who was or is made a party or is threatened to be made a
party to or is otherwise involved in any action, suit or proceeding, whether
civil, criminal, administrative or investigative (hereinafter a "proceeding"),
by reason of the fact that he or she is or was a Director or an Officer of the
Corporation or is or was serving at the request of the Corporation as a
Director, Officer, employee or agent of another corporation or of a partnership,
joint venture, trust or other enterprise, including service with respect to an
employee benefit plan (hereinafter an "indemnitee"), whether the basis of such
proceeding is alleged action in an official capacity as a Director, Officer,
employee or agent or in any other capacity while serving as a Director, Officer,
employee or agent, shall be indemnified and held harmless by the Corporation to
the fullest extent authorized by the Delaware General Corporation Law, as the
same exists or may hereafter be amended (but, in the case of any such amendment,
only to the extent that such amendment permits the Corporation to provide
broader indemnification rights than such law permitted the Corporation to
provide prior to such amendment), against all expense, liability and loss
(including attorneys' fees, judgments, fines, ERISA excise taxes or penalties
and amounts paid in settlement) reasonably incurred or suffered by such
indemnitee in connection therewith; provided, however, that, except as provided
in Section C hereof with respect to proceedings to enforce rights to
indemnification, the Corporation shall indemnify any such indemnitee in
connection with a proceeding (or part thereof) initiated by such indemnitee only
if such proceeding (or part thereof) was authorized by the Board of Directors of
the Corporation.
B. The right to indemnification conferred in Section A of this Article
EIGHTH shall include the right to be paid by the Corporation the expenses
incurred in defending any such proceeding in advance of its final disposition
(hereinafter an "advancement of expenses"); provided, however, that, if the
Delaware General Corporation Law requires, an advancement of expenses incurred
by an indemnitee in his or her capacity as a Director or Officer (and not in any
other capacity in which service was or is rendered by such indemnitee,
including, without limitation, services to an employee benefit plan) shall be
made only upon delivery to the Corporation of an undertaking (hereinafter an
"undertaking"), by or on behalf of such indemnitee, to repay all amounts so
advanced if it shall ultimately be determined by final judicial decision from
which there is no further right to appeal (hereinafter a "final adjudication")
that such indemnitee is not entitled to be indemnified for such expenses under
this Section or otherwise. The rights to indemnification and to the advancement
of expenses conferred in Sections A and B of this Article EIGHTH shall be
contract rights and such rights shall continue as to an indemnitee who has
ceased to be a Director, Officer, employee or agent and shall inure to the
benefit of the indemnitee's heirs, executors and administrators.
<PAGE>
C. If a claim under Section A or B of this Article EIGHTH is not paid in
full by the Corporation within sixty days after a written claim has been
received by the Corporation, except in the case of a claim for an advancement of
expenses, in which case the applicable period shall be twenty days, the
indemnitee may at any time thereafter bring suit against the Corporation to
recover the unpaid amount of the claim. If successful in whole or in part in
any such suit, or in a suit brought by the Corporation to recover an advancement
of expenses pursuant to the terms of an undertaking, the indemnitee shall be
entitled to be paid also the expenses of prosecuting or defending such suit. In
(1) any suit brought by the indemnitee to enforce a right to indemnification
hereunder (but not in a suit brought by the indemnitee to enforce a right to an
advancement of expenses) it shall be a defense that, and (2) in any suit by the
Corporation to recover an advancement of expenses pursuant to the terms of an
undertaking, the Corporation shall be entitled to recover such expenses upon a
final adjudication that, the indemnitee has not met any applicable standard for
indemnification set forth in the Delaware General Corporation Law. Neither the
failure of the Corporation (including its Board of Directors, independent legal
counsel, or its stockholders) to have made a determination prior to the
commencement of such suit that indemnification of the indemnitee is proper in
the circumstances because the indemnitee has met the applicable standard of
conduct set forth in the Delaware General Corporation Law, nor an actual
determination by the Corporation (including its Board of Directors, independent
legal counsel, or its stockholders) that the indemnitee has not met such
applicable standard of conduct, shall create a presumption that the indemnitee
has not met the applicable standard of conduct or, in the case of such a suit
brought by the indemnitee, be a defense to such suit. In any suit brought by
the indemnitee to enforce a right to indemnification or to an advancement of
expenses hereunder, or by the Corporation to recover an advancement of expenses
pursuant to the terms of an undertaking, the burden of proving that the
indemnitee is not entitled to be indemnified, or to such advancement of
expenses, under this Article EIGHTH or otherwise shall be on the Corporation.
D. The rights to indemnification and to the advancement of expenses
conferred in this Article EIGHTH shall not be exclusive of any other right which
any person may have or hereafter acquire under any statute, the Corporation's
Certificate of Incorporation, Bylaws, agreement, vote of stockholders or
Disinterested Directors or otherwise.
E. The Corporation may maintain insurance, at its expense, to protect
itself and any Director, Officer, employee or agent of the Corporation or
subsidiary or Affiliate or another corporation, partnership, joint venture,
trust or other enterprise against any expense, liability or loss, whether or not
the Corporation would have the power to indemnify such person against such
expense, liability or loss under the Delaware General Corporation Law.
F. The Corporation may, to the extent authorized from time to time by the
Board of Directors, grant rights to indemnification and to the advancement of
expenses to any employee or agent of the Corporation to the fullest extent of
the provisions of this Article EIGHTH with respect to the indemnification and
advancement of expenses of Directors and Officers of the Corporation.
NINTH:
A Director of this Corporation shall not be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a Director, except for liability (1) for any breach of the Director's
duty of loyalty to the Corporation or its stockholders; (2) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law; (3) under Section 174 of the Delaware General Corporation Law;
or (4) for any transaction from which the Director derived an improper personal
benefit. If the Delaware General Corporation Law is amended to authorize
corporate action further eliminating or limiting the personal liability of
Directors, then the liability of a Director of the Corporation shall be
eliminated or limited to the fullest extent permitted by the Delaware General
Corporation Law, as so amended.
Any repeal or modification of the foregoing paragraph by the stockholders
of the Corporation shall not adversely affect any right or protection of a
Director of the Corporation existing at the time of such repeal or modification.
II-2
<PAGE>
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
The registrant, HealthExtras, Inc., a Delaware corporation, was formed on
July 12, 1999. HealthExtras has, to date, not issued any shares of its common
stock.
Pursuant to a commitment made in February 1999, on May 27, 1999,
HealthExtras, which was then a Maryland limited liability company, contributed
substantially all of its assets to HealthExtras, LLC, a Delaware limited
liability company, and Capital Z Healthcare Holding Corp., invested $5 million
in that entity in exchange for a 20% ownership interest. Capital Z Healthcare
Holding Corp. serves only as a vehicle for its sole stockholder, Health
Partners, to invest in HealthExtras and does not conduct any other operations.
In addition, pursuant to a commitment made March 1, 1999 and affirmed by the May
27, 1999 transactions, HealthExtras, LLC granted compensatory effective member
interests aggregating 1.87% to members of its management. These management
interests vest over four year.
In order to effect this offering, HealthExtras, Inc. has agreed in
principal with HealthExtras, LLC and Capital Z Healthcare Holding Corp. to enter
into a Reorganization Agreement pursuant to which, prior to the sale of the
common stock in this offering, HealthExtras, LLC will merge into HealthExtras,
Inc. and Capital Z Healthcare Holding Corp. will effect a merger, share exchange
or similar transaction whereby its sole stockholder, Health Partners, will
receive common stock in HealthExtras, Inc. representing the same proportionate
ownership position which Capital Z Healthcare Holding Corp. has in HealthExtras,
LLC. The distribution of these shares of common stock by HealthExtras, Inc.
will be effected in reliance upon the exemption from the registration
requirements of the Securities Act of 1933, as amended, afforded by Section 4(2)
thereof.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
See the Exhibit Index filed as a part of this Registration Statement.
ITEM 17. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes to provide to the
underwriter at the closing specified in the underwriting agreements certificates
in such denominations and registered in such names as required by the
underwriter to permit prompt delivery to each purchaser.
(b) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described under Item 14 above, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
(c) The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as
part of this registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the registrant pursuant to
Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be
deemed to be part of this registration statement as of the time it was
declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
HealthExtras, Inc., the Registrant, has duly caused this Pre-Effective Amendment
No. 5 to the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Rockville, State of
Maryland on the 9th day of December, 1999.
HEALTHEXTRAS, INC.
By: /s/ David T. Blair
-----------------------
David T. Blair
Chief Executive Officer
POWER OF ATTORNEY
The undersigned sole director and officers of HealthExtras, Inc. do hereby
constitute and appoint Thomas L. Blair, David T. Blair and Michael P. Donovan,
and each of them, with full power of substitution, our true and lawful
attorneys-in-fact and agents to do any and all acts and things in our name and
behalf in our capacities as directors and officers, and to execute any and all
instruments for us and in our names in the capacities indicated below which such
person may deem necessary or advisable to enable HealthExtras, Inc. to comply
with the Securities Act of 1933, as amended (the "Securities Act"), and any
rules, regulations and requirements of the Securities and Exchange Commission,
in connection with this Registration Statement, including specifically, but not
limited to, power and authority to sign for us, or any of us, in the capacities
indicated below and any and all amendments (including pre-effective and post-
effective amendments or any other registration statement filed pursuant to the
provisions of Rule 462(b) under the Securities Act) hereto; and we do hereby
ratify and confirm all that such person or persons shall do or cause to be done
by virtue hereof.
Pursuant to the requirements of the Securities Act, this Pre-Effective
Amendment No. 5 to the Registration Statement has been signed below by the
following persons on December 9, 1999 in the capacities indicated:
By: /s/ Thomas L. Blair Sole Director
-------------------
Thomas L. Blair
By: /s/ David T. Blair Chief Executive Officer
------------------
David T. Blair
By: /s/ Michael P. Donovan Chief Financial Officer
----------------------
Michael P. Donovan (Chief Accounting Officer)
II-4
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
No. Description
- ------- ----------------------------------------------------------------------------------------
<C> <S>
1.0 Form of Underwriting Agreement (filed herewith)
2.1 Form of Reorganization Agreement by and among HealthExtras, Inc., HealthExtras, LLC, and
Capital Z Healthcare Holding Corp. (1)
3.1(a) Certificate of Incorporation of HealthExtras, Inc. (1)
3.1(b) Form of Amended and Restated Certificate of Incorporation (1)
3.2 Bylaws of HealthExtras, Inc. (1)
4.1 Specimen Stock Certificate of HealthExtras, Inc. (1)
4.2 Form of Stockholders' Agreement (1)
5.1 Opinion of Muldoon, Murphy & Faucette LLP re: legality (1)
10.1 Form of Employment Agreement between HealthExtras, Inc. and David T. Blair (1)
10.2 Form of Employment Agreement between HealthExtras, Inc. and certain Executive Officers (1)
10.3 Program Administrator's Agreement by and between HealthExtras LLC and Reliance National
Insurance Company (1)
10.4 Administrative Services Agreement by and between HealthExtras, LLC and United Payors &
United Providers, Inc. /(1)/
10.5 Agreement by and between United Payors & United Providers, Inc. and HealthExtras, LLC re:
network access (1)
10.6 Agreement by and between Cambria Productions, Inc. f/s/o Christopher Reeve and HealthExtras,
Inc. (1)(2)
10.7 Indemnification Agreement (1)
10.8 Sublease Agreement by and between United Payors & United Providers, Inc. and
HealthExtras, LLC (1)
10.9 Form of HealthExtras, Inc. 1999 Stock Option Plan (1)
10.10 Form of Registration Rights Agreement (1)
23.1 Consent of Independent Accountants for HealthExtras, LLC (1)
23.2 Consent of Independent Accountants for HealthExtras, Inc. (1)
23.3 Consent of Muldoon, Murphy & Faucette LLP (1)
24.0 Powers of Attorney (included on signature page)
27.0 Financial Data Schedule (1)
99.1 Consent of Julian A.L. Allen to serve as a Director of the Company (1)
99.2 Consent of David T. Blair to serve as a Director of the Company (1)
99.3 Consent of Thomas J. Graf to serve as a Director of the Company (1)
99.4 Consent of Julia M. Lawler to serve as a Director of the Company (1)
99.5 Consent of Karen M. Shaff to serve as a Director of the Company (1)
99.6 Consent of Paul H. Warren to serve as a Director of the Company (1)
</TABLE>
- --------------------------
(1) Previously filed.
(2) Confidential treatment requested for portions of agreement pursuant to
Section 406 of Regulation C, promulgated under the Securities Act of 1933,
as amended.
II-5
<PAGE>
Exhibit 1.0
HealthExtras, Inc.
5,500,000 Shares
Common Stock
($.01 Par Value)
UNDERWRITING AGREEMENT
December , 1999
<PAGE>
UNDERWRITING AGREEMENT
December __, 1999
Warburg Dillon Read LLC
PaineWebber Incorporated
Prudential Securities Incorporated
SG Cowen Securities Corporation,
as Representatives to the Several Underwriters
named on Schedule A hereto
c/o Warburg Dillon Read LLC
299 Park Avenue
New York, New York 10171-0026
Ladies and Gentlemen:
HealthExtras, Inc., a Delaware corporation (the Company), proposes to
issue and sell to the underwriters named in Schedule A annexed hereto (the
Underwriters) an aggregate of 5,500,000 shares (the Firm Shares) of Common
Stock, $.01 par value per share (the Common Stock), of the Company. In
addition, solely for the purpose of covering over-allotments, the Company
proposes to grant to the Underwriters the option to purchase from the Company up
to an additional 825,000 shares of Common Stock (the Additional Shares). The
Firm Shares and the Additional Shares are hereinafter collectively sometimes
referred to as the Shares. The Shares are described in the Prospectus which is
referred to below.
The Company hereby acknowledges that in connection with the proposed
offering of the Shares, it has requested Warburg Dillon Read LLC (WDR) to
administer a directed share program (the Directed Share Program) under which up
to 275,000 shares of the Firm Shares to be purchased by you (the Reserved
Shares) shall be reserved for sale by you at the initial public offering price
to the Company's officers, directors, employees, and consultants and others
having a business relationship with the Company (the Directed Share
Participants) as part of the distribution of the Shares by the Underwriters,
subject to the terms of this Agreement, the applicable rules, regulations and
interpretations of the National Association of Securities Dealers, Inc. and all
other applicable laws, rules and regulations. The number of Shares available for
sale to the general public will be reduced to the extent that Directed Share
Participants purchase Reserved Shares. You may offer any Reserved Shares not
purchased by Directed Share
<PAGE>
Participants to the general public on the same basis as the other Shares being
issued and sold hereunder. The Company has supplied WDR with the names,
addresses and telephone numbers of the individuals or other entities which the
Company has designated to be participants in the Directed Share Program. It is
understood that any number of those designated to participate in the Directed
Share Program may decline to do so.
The Company has filed, in accordance with the provisions of the
Securities Act of 1933, as amended, and the rules and regulations thereunder
(collectively called the Act), with the Securities and Exchange Commission (the
Commission) a registration statement on Form S-1 (File No. 333-83761) including
a prospectus, relating to the Shares. The Company has furnished to you, for use
by the Underwriters and by dealers, copies of one or more preliminary
prospectuses (each thereof being herein called a Preliminary Prospectus)
relating to the Shares. Except where the context otherwise requires, the
registration statement, as amended when it becomes effective, including all
documents filed as a part thereof, and including any information contained in a
prospectus subsequently filed with the Commission pursuant to Rule 424(b) under
the Act and deemed to be part of the registration statement at the time of
effectiveness pursuant to Rule 430(A) under the Act, and also including any
registration statement filed pursuant to Rule 462(b) under the Act, is herein
called the Registration Statement, and the prospectus, in the form filed by the
Company with the Commission pursuant to Rule 424(b) under the Act on or before
the second business day after the date hereof (or such earlier time as may be
required under the Act) or, if no such filing is required, the form of final
prospectus included in the Registration Statement at the time it became
effective, is herein called the Prospectus.
As described in the Registration Statement and the Prospectus, the
business of the Company is currently conducted by HealthExtras LLC, a Delaware
limited liability company (LLC). Prior to the time of purchase (as defined
herein), LLC will merge into HealthExtras, Inc. Through this merger,
HealthExtras, Inc. will succeed to the assets, liabilities and business
operations of LLC. The merger and related transactions discussed in the
Registration Statement and Prospectus under the caption "Certain Transactions-
Reorganizations" are collectively referred to herein as the Reorganization.
Any certificate signed by any officer of the Company or LLC, delivered
to the Representatives or counsel for the Underwriters in connection with the
offering of the Shares shall be deemed to be a representation and warranty by
the Company or LLC, respectively, as to matters covered thereby, to each
Underwriter.
-2-
<PAGE>
The Company, LLC and the Underwriters agree as follows:
1. Sale and Purchase. Upon the basis of the warranties and
-----------------
representations andsubject to the terms and conditions herein set forth, the
Company agrees to sell to the respective Underwriters and each of the
Underwriters, severally and not jointly, agrees to purchase from the Company the
aggregate number of Firm Shares set forth opposite the name of such Underwriter
in Schedule A attached hereto in each case at a purchase price of $________ per
Share. The Company is advised by you that the Underwriters intend (i) to make a
public offering of their respective portions of the Firm Shares as soon after
the effective date of the Registration Statement as in your judgment is
advisable and (ii) initially to offer the Firm Shares upon the terms set forth
in the Prospectus. You may from time to time increase or decrease the public
offering price after the initial public offering to such extent as you may
determine.
In addition, the Company hereby grants to the several Underwriters the
option to purchase, and upon the basis of the warranties and representations and
subject to the terms and conditions herein set forth, the Underwriters shall
have the right to purchase, severally and not jointly, from the Company, ratably
in accordance with the number of Firm Shares to be purchased by each of them,
all or a portion of the Additional Shares as may be necessary to cover over-
allotments made in connection with the offering of the Firm Shares, at the same
purchase price per share to be paid by the Underwriters to the Company for the
Firm Shares. This option may be exercised by you on behalf of the several
Underwriters at any time and from time to time on or before the thirtieth day
following the date hereof, by written notice to the Company. Such notice shall
set forth the aggregate number of Additional Shares as to which the option is
being exercised, and the date and time when the Additional Shares are to be
delivered (such date and time being herein referred to as the additional time of
purchase); provided, however, that the additional time of purchase shall not be
-------- -------
earlier than the time of purchase (as defined below) nor earlier than the second
business day/1/ after the date on which the option shall have been exercised nor
later than the tenth business day after the date on which the option shall have
been exercised. The number of Additional Shares to be sold to each Underwriter
shall be the number which bears the same proportion to the aggregate number of
Additional Shares being purchased as the number of Firm Shares set forth
opposite the name of such Underwriter on Schedule A hereto bears to the total
number of Firm Shares (subject, in each case, to such adjustment as you may
determine to eliminate fractional shares).
/1/ As used herein "business day" shall mean a day on which the New York Stock
Exchange is open for trading.
-3-
<PAGE>
2. Payment and Delivery. Payment of the purchase price for the Firm
--------------------
Shares shall be made to the Company by Federal Funds wire transfer, against
delivery of the certificates for the Firm Shares to you through the facilities
of the Depository Trust Company (DTC) for the respective accounts of the
Underwriters. Such payment and delivery shall be made at 10:00 A.M., New York
City time, on ___________, 1999 (unless another time shall be agreed to by you
and the Company or unless postponed in accordance with the provisions of Section
8 hereof). The time at which such payment and delivery are actually made is
hereinafter sometimes called the time of purchase. Certificates for the Firm
Shares shall be delivered to you in definitive form in such names and in such
denominations as you shall specify on the second business day preceding the time
of purchase. For the purpose of expediting the checking of the certificates for
the Firm Shares by you, the Company agrees to make such certificates available
to you for such purpose at least one full business day preceding the time of
purchase.
Payment of the purchase price for the Additional Shares shall be made
at the additional time of purchase in the same manner and at the same office as
the payment for the Firm Shares. Certificates for the Additional Shares shall
be delivered to you in definitive form in such names and in such denominations
as you shall specify no later than the second business day preceding the
additional time of purchase. For the purpose of expediting the checking of the
certificates for the Additional Shares by you, the Company agrees to make such
certificates available to you for such purpose at least one full business day
preceding the additional time of purchase.
Deliveries of the documents described in Section 6 below with respect
to the purchase of the Shares shall be made at the offices of Dewey Ballantine
LLP, 1301 Avenue of the Americas, New York, New York at 9:00 a.m., New York
time, on the date of the closing of the purchase of the Firm Shares or the
Additional Shares, as the case may be.
3. Representations and Warranties. The Company and LLC represent
------------------------------
and warrant to each of the Underwriters that:
(a) the Company has not received, and has no notice of, any order of
the Commission preventing or suspending the use of any Preliminary
Prospectus, or instituting proceedings for that purpose, and each
Preliminary Prospectus, at the time of filing thereof, conformed in all
material respects to the requirements of the Act; and when the Registration
Statement became or becomes effective, the Registration Statement and the
Prospectus complied or will comply fully in all material respects with the
provisions of the Act, and the Registration Statement did not or will not
contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading, and the Prospectus did not or will not contain an
untrue statement of a material fact or omit to state a
-4-
<PAGE>
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading and the Prospectus, any Preliminary Prospectus and any
supplement thereto or prospectus wrapper prepared in connection therewith,
at their respective times of issuance and at the time of closing, complied
and will comply in all material respects with any applicable laws or
regulations of jurisdictions in which the Prospectus and such preliminary
prospectus, as amended or supplemented, if applicable, are distributed in
connection with the offer and sale of Reserved Shares, provided, however,
-------- -------
that the Company makes no warranty or representation with respect to any
statement contained in the Registration Statement or the Prospectus in
reliance upon and in conformity with information concerning the
Underwriters and furnished in writing by or on behalf of any Underwriter
through you to the Company expressly for use in the Registration Statement
or the Prospectus; and the Company has not distributed directly or
indirectly any offering material in connection with the offering or sale of
the Shares other than the Registration Statement, the Preliminary
Prospectus, the Prospectus or any other materials, if any, permitted by the
Act;
(b) as of the date of this Agreement and after giving pro forma
effect to the Reorganization, the Company has authorized and outstanding
capital stock as set forth under the heading entitled "Pro Forma" in the
section of the Registration Statement and the Prospectus entitled
"Capitalization" and, as of the time of purchase, and assuming the receipt
and application of the net proceeds as described under the section of the
Registration Statement and the Prospectus entitled "Use of Proceeds," the
Company shall have an authorized and outstanding capital stock as set forth
under the heading entitled "As Adjusted" in the section of the Registration
Statement and the Prospectus entitled "Capitalization"; all of the shares
of capital stock including Common Stock of the Company to be issued and
outstanding upon completion of the Reorganization will be duly and validly
authorized and issued, fully paid and non-assessable, will have been issued
in compliance with all federal and state securities laws and will not have
been issued in violation of any preemptive right, resale right, right of
first refusal or similar right;
(c) each of the Company and LLC has been duly organized and is
validly existing as a corporation (in the case of the Company) or limited
liability company (in the case of LLC) and is in good standing under the
laws of the State
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of Delaware, with full power and authority to own, lease and operate its
properties and conduct its business as described in the Registration
Statement;
(d) each of the Company and LLC is, and upon completion of the
Reorganization the Company will be, duly qualified to do business as a
foreign corporation (in the case of the Company) or limited liability
company (in the case of LLC) and is in good standing in each jurisdiction
in which the ownership or leasing of its properties or the conduct of its
business requires such qualification, except where the failure to so
qualify would not have a material adverse effect on the business,
prospects, properties, condition (financial or otherwise) or results of
operation of the Company or LLC (a "Material Adverse Effect"). Neither the
Company nor LLC has any subsidiaries (as defined in the Act); neither the
Company nor LLC owns, directly or indirectly, any shares of stock or any
other equity or long-term debt securities of any corporation or has any
equity interest in any firm, partnership, limited liability company, joint
venture, association or other entity except as set forth in the
Registration Statement and the Prospectus; complete and correct copies of
the certificate of incorporation and bylaws or other organizational
documents of the Company and LLC and all amendments thereto have been
delivered to you, and except as set forth in the exhibits to the
Registration Statement no changes therein will be made subsequent to the
date hereof and prior to the time of purchase or, if later, the additional
time of purchase.
(e) neither the Company nor LLC is in breach of, or in default under
(and no event has occurred which with notice, lapse of time, or both would
result in any breach of, or constitute a default under), its charter or by-
laws or other organizational documents or in the performance or observance
of any obligation, agreement, covenant or condition contained in any
indenture, mortgage, deed of trust, bank loan or credit agreement or other
evidence of indebtedness, or any lease, contract or other agreement or
instrument to which the Company or LLC is a party or by which it or any of
its properties is bound, and the consummation of the Reorganization, the
execution, delivery and performance of this Agreement, the issuance and
sale of the Shares contemplated hereby and by the Registration Statement
will not conflict with, or result in any breach of or constitute a default
under (nor constitute any event which with notice, lapse of time, or both
would result in any breach of, or constitute a default under), any
provisions of the charter or by-laws or other organizational documents of
the Company or LLC or under any provision of any license, permit,
franchise, indenture, mortgage, deed of trust, bank loan or credit
agreement or other evidence of indebtedness, or any lease, contract or
other agreement or instrument to which the Company or LLC is a party or by
which either of them or
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their respective properties may be bound or affected, or under any federal,
state, local or foreign law, regulation or rule or any decree, judgment or
order applicable to the Company or LLC;
(f) this Agreement has been duly authorized, executed and delivered
by each of the Company and LLC and is a legal, valid and binding agreement
of the Company and LLC, enforceable in accordance with its terms;
(g) the capital stock of the Company, including the Shares, conforms
in all material respects to the description thereof contained in the
Registration Statement and Prospectus, the certificates for the Shares are
in due and proper form and the holders of the Shares will not be subject to
personal liability by reason of being such holders;
(h) the Shares have been duly and validly authorized and, when issued
and delivered against payment therefor as provided herein, will be duly and
validly issued, fully paid and non-assessable;
(i) no approval, authorization, consent or order of or filing with
any national, state or local governmental or regulatory commission, board,
body, authority or agency is required in connection with the consummation
of the Reorganization, the execution, delivery and performance of this
Agreement, the issuance and sale of the Shares contemplated hereby and by
the Registration Statement, other than registration of the Shares under the
Act, which has been or will be effected by the Company, and any necessary
qualification under the securities or blue sky laws of the various
jurisdictions in which the Shares are being offered by the Underwriters or
under the rules and regulations of the National Association of Securities
Dealers, Inc. (NASD);
(j) no person has the right, contractual or otherwise, to cause the
Company or LLC to issue to it, or register pursuant to the Act, any shares
of capital stock or other equity or membership interests upon the issuance
and sale of the Shares to the Underwriters hereunder, nor does any person
have preemptive rights, co-sale rights, rights of first refusal or other
rights to purchase any of the Shares. Except as set forth in the
Registration Statement and the Prospectus: (i) no person has the right,
contractual or otherwise, to cause the Company or LLC to issue to it, or
register pursuant to the Act, any shares of capital stock or other equity
or membership interests; and (ii) no person has any preemptive rights, co-
sale rights, rights of first refusal or other rights to purchase any shares
of Common Stock of the Company.
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<PAGE>
(k) PricewaterhouseCoopers LLP, whose report on the balance sheets of
the Company and reports on the consolidated financial statements of LLC are
filed with the Commission as part of the Registration Statement and
Prospectus, are independent public accountants as required by the Act;
(l) each of the Company and LLC has, and upon completion of the
Reorganization the Company will have, all necessary licenses, permits,
franchises, authorizations, consents and approvals, and made all necessary
filings required under any federal, state, local or foreign law, regulation
or rule, and has obtained all necessary authorizations, consents and
approvals from other persons, in order to conduct its business; neither the
Company nor LLC is in violation of, or in default under, any such license,
permit, franchise, authorization, consent or approval or any federal,
state, local or foreign law, regulation or rule or any decree, order or
judgment applicable to the Company or LLC, as the case may be, the effect
of which could have a Material Adverse Effect;
(m) all statutes and regulations and all contracts, leases or
documents required to be described in the Registration Statement or the
Prospectus or to be filed as an exhibit to the Registration Statement have
been so described or filed as required;
(n) there are no private or governmental actions, suits, claims,
investigations or proceedings pending, threatened or, to the knowledge of
the Company or LLC, contemplated, to which the Company or LLC or any of
their respective officers is subject or of which any of their respective
properties is subject, whether at law, in equity or before or by any
federal, state, local or foreign governmental or regulatory commission,
board, body, authority or agency;
(o) the audited balance sheet of the Company included in the
Registration Statement and the Prospectus presents fairly the financial
position of the Company as of the date indicated; the audited financial
statements of LLC included in the Registration Statement and the Prospectus
present fairly the combined financial position of LLC as of the dates
indicated and the combined results of operations and cash flows of LLC for
the periods specified; all such financial statements have been prepared in
conformity with generally accepted accounting principles applied on a
consistent basis during the periods involved; the pro forma financial data
included in the Registration Statement and the Prospectus comply as to form
in all material respects with the applicable accounting requirements of
Regulation S-X of the Securities Act, and the pro forma adjustments have
been properly applied to the historical amounts in the
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<PAGE>
compilation of those statements; and the other financial and statistical
data set forth in the Registration Statement and the Prospectus are
accurately presented and prepared on a basis consistent with such financial
statements and the books and records of the Company or LLC, as the case may
be;
(p) subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, there has not been
(i) any material adverse change, or any development involving a prospective
material adverse change, in the business, prospects, properties, condition
(financial or otherwise) or results of operations of the Company or LLC,
(ii) any transaction which is material to the Company or LLC, (iii) the
incurrence by the Company or LLC of any obligation, direct or contingent,
which is material to the Company or LLC, (iv) any change in the capital
stock or other equity or membership interest or outstanding indebtedness of
the Company or LLC or (v) any dividend or distribution of any kind
declared, paid or made on the capital stock or other equity or membership
interest of the Company or LLC. Neither the Company nor LLC has any
material contingent obligations which are not disclosed in the Registration
Statement;
(q) Each of the Company and LLC has good and marketable title to all
property (real and personal) described in the Prospectus as being owned by
it, free and clear of all liens, claims, security interests or other
encumbrances except such as are described in the Registration Statement and
the Prospectus. All the property described in the Prospectus as being held
under lease by the Company or LLC is held thereby under valid, subsisting
and enforceable leases;
(r) Each of the Company and LLC is insured by insurers of recognized
financial responsibility against such losses and risks and in such amount
as are customary in the business in which it is engaged. All policies of
insurance insuring the Company or LLC or any of their respective
businesses, assets, employees, officers and directors are in full force and
effect, and the Company and LLC are in compliance with the terms of such
policies in all material respects. There are no claims by the Company or
LLC under any such policy or instrument as to which any insurance company
is denying liability or defending under a reservation of rights clause;
(s) neither the Company nor LLC has either sent or received any
notice of termination of any of the contracts or agreements referred to or
described in, or filed as an exhibit to, the Registration Statement, and no
such termination has been threatened by the Company, LLC or any other party
to any such contract or agreement;
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<PAGE>
(t) Each of the Company and LLC maintains a system of internal
accounting controls sufficient to provide reasonable assurances that (i)
transactions are executed in accordance with management's general or
specific authorization; (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain accountability for assets;
(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 existing assets at reasonable intervals and
appropriate action is taken with respect to any differences;
(u) Each of the Company and LLC has filed all federal, state, local
and foreign tax returns and tax forms required to be filed. Such returns
and forms are complete and correct in all material respects, and all taxes
shown by such returns or otherwise assessed that are due or payable have
been paid, except such taxes as are being contested in good faith and as to
which adequate reserves have been provided. All payroll withholdings
required to be made by the Company or LLC with respect to employees have
been made. The charges, accruals and reserves on the books of the Company
and LLC in respect of any tax liability for any year not finally determined
are adequate to meet any assessments or reassessments for additional taxes.
There have been no tax deficiencies asserted and, to the knowledge of the
Company and LLC, no tax deficiency might be reasonably asserted or
threatened against the Company or LLC that could, individually or in the
aggregate, have a Material Adverse Effect;
(v) the Company has obtained the agreement of each of its officers
and stockholders with the Underwriters not to sell, offer to sell, contract
to sell, hypothecate, grant any option to sell or otherwise dispose of,
directly or indirectly, any shares of Common Stock or securities
convertible into or exchangeable for Common Stock or warrants or other
rights to purchase Common Stock for a period of 180 days after the date of
the Prospectus; and
(w) neither the Company nor LLC is, and, after giving effect to the
Reorganization, the offering and sale of the Shares, the Company will not
be, an "investment company" or a "promoter," "principal underwriter" for or
an entity "controlled" by an "investment company," as such terms are
defined in the Investment Company Act of 1940, as amended (the "Investment
Company Act").
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<PAGE>
4. Certain Covenants. Each of the Company and LLC hereby agrees:
-----------------
(a) to furnish such information as may be required and otherwise to
cooperate in qualifying the Shares for offering and sale under the
securities or blue sky laws of such states as you may designate and to
maintain such qualifications in effect so long as required for the
distribution of the Shares; provided that the Company shall not be required
to qualify as a foreign corporation or to consent to the service of process
under the laws of any such state (except service of process with respect to
the offering and sale of the Shares); and to promptly advise you of the
receipt of any notification with respect to the suspension of the
qualification of the Shares for sale in any jurisdiction or the initiation
or threatening of any proceeding for such purpose;
(b) to make available to the Underwriters in New York City, as soon
as practicable after the Registration Statement becomes effective, and
thereafter from time to time to furnish to the Underwriters, as many copies
of the Prospectus (or of the Prospectus as amended or supplemented if the
Company shall have made any amendments or supplements thereto after the
effective date of the Registration Statement) as the Underwriters may
request for the purposes contemplated by the Act; in case any Underwriter
is required to deliver a prospectus beyond the nine-month period referred
to in Section 10(a)(3) of the Act in connection with the sale of the
Shares, the Company will prepare promptly upon request and at its cost such
amendment or amendments to the Registration Statement and such prospectuses
as may be necessary to permit compliance with the requirements of Section
10(a)(3) of the Act;
(c) to advise you promptly and (if requested by you) to confirm such
advice in writing, (i) when the Registration Statement has become effective
and when any post-effective amendment thereto becomes effective and (ii) if
Rule 430A under the Act is used, when the Prospectus is filed with the
Commission pursuant to Rule 424(b) under the Act (which the Company agrees
to file in a timely manner under such Rules);
(d) to advise you promptly, confirming such advice in writing, of any
request by the Commission for amendments or supplements to the Registration
Statement or Prospectus or for additional information with respect thereto,
or of notice of institution of proceedings for, or the entry of a stop
order suspending the effectiveness of the Registration Statement and, if
the Commission should enter a stop order suspending the effectiveness of
the Registration Statement, to use its best efforts to obtain the lifting
or removal of such order as soon as possible; to advise you promptly of any
proposal to amend or supplement the
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<PAGE>
Registration Statement or Prospectus and to file no such amendment or
supplement to which you shall object in writing;
(e) subject to Section 4(o) hereof, to file promptly all reports and
any definitive proxy or information statement required to be filed by the
Company with the Commission in order to comply with the Exchange Act
subsequent to the date of the Prospectus and for so long as the delivery of
a prospectus is required in connection with the offering or sale of the
shares, and to promptly notify you of such filing;
(f) if necessary or appropriate, to file in a timely fashion a
registration statement pursuant to Rule 462(b) under the Act;
(g) to furnish to you and, upon request, to each of the other
Underwriters for a period of five years from the date of this Agreement (i)
copies of any reports or other communications which the Company shall send
to its stockholders or shall from time to time publish or publicly
disseminate, (ii) copies of all annual, quarterly and current reports filed
with the Commission on Forms 10-K, 10-Q and 8-K, or such other similar form
as may be designated by the Commission, (iii) copies of documents or
reports filed with any national securities exchange on which any class of
securities of the Company is listed, and (iv) such other information as you
may reasonably request regarding the Company or its subsidiaries, in each
case as soon as such communications, documents or information becomes
available;
(h) to advise the Underwriters promptly of the happening of any event
known to the Company or LLC within the time during which a Prospectus
relating to the Shares is required to be delivered under the Act which
would require the making of any change in the Prospectus then being used so
that the Prospectus would not include an 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 are made, not
misleading, and, during such time, to prepare and furnish promptly to the
underwriters, at no expense to the Underwriters, such amendments or
supplements to such Prospectus as may be necessary to reflect any such
change and to furnish you a copy of such proposed amendment or supplement
before filing any such amendment or supplement with the Commission;
(i) to make generally available to its security holders, and to
deliver to you, as soon as practicable an earnings statement of the Company
(which will satisfy the provisions of Section 11(a) of the Act) covering a
period of twelve
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<PAGE>
months beginning after the effective date of the Registration Statement (as
defined in Rule 158(c) of the Act) and ending not later than 15 months
thereafter;
(j) to furnish to its shareholders as soon as practicable after the
end of each fiscal year an annual report (including a balance sheet and
statements of income, shareholders' equity and of cash flow of the Company
for such fiscal year, accompanied by a copy of the certificate or report
thereon of nationally recognized independent certified public accountants);
(k) to furnish to you four conformed copies of the Registration
Statement, as initially filed with the Commission, and of all amendments
thereto including all exhibits thereto) and sufficient conformed copies of
the foregoing (other than exhibits) for distribution of a copy to each of
the other Underwriters;
(l) to furnish to you as early as practicable prior to the time of
purchase and the additional time of purchase, as the case may be, but not
later than two business days prior thereto, a copy of the latest available
quarterly (if available) or monthly unaudited interim consolidated
financial statements, if any, of the Company and of LLC, which have been
read by the Company's independent certified public accountants, as stated
in their letter to be furnished pursuant to Section 6(b) hereof;
(m) to apply the net proceeds from the sale of the Shares in the
manner set forth under the caption "Use of Proceeds" in the Prospectus;
(n) to pay all costs, expenses, fees and taxes (other than any
transfer taxes and fees and disbursements of counsel for the Underwriters
except as set forth under Section 5 hereof and (iii), (iv) and (vi) below)
in connection with (i) the preparation and filing of the Registration
Statement, each Preliminary Prospectus, the Prospectus, and any amendments
or supplements thereto, and the printing and furnishing of copies of each
thereof to the Underwriters and to dealers (including costs of mailing and
shipment), (ii) the registration, issue, sale and delivery of the Shares,
(iii) the producing, word processing and/or printing of this Agreement, any
Agreement Among Underwriters, any dealer agreements, any Powers of Attorney
and any closing documents (including compilations thereof) and the
reproduction and/or printing and furnishing of copies of each thereof to
the Underwriters and (except closing documents) to dealers (including costs
of mailing and shipment), (iv) the qualification of the Shares for offering
and sale under state laws and the determination of their eligibility for
investment under state law as aforesaid (including the legal fees and
filing fees and other disbursements of counsel for the Underwriters) and
the printing and furnishing of
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<PAGE>
copies of any blue sky surveys or legal investment surveys to the
Underwriters and to dealers, (v) any listing of the Shares on any
securities exchange or qualification of the Shares for quotation on NASDAQ
and any registration thereof under the Exchange Act, (vi) any filing for
review of the public offering of the Shares by the NASD, including the
associated fees and disbursements of counsel for the Underwriters, and
(vii) the performance of the Company's and LLC's other obligations
hereunder;
(o) to furnish to you, before filing with the Commission subsequent
to the effective date of the Registration Statement and during the period
referred to in paragraph (h) above, a copy of any document proposed to be
filed pursuant to Section 13, 14 or 15(d) of the Exchange Act;
(p) not to sell, offer or agree to sell, contract to sell, grant any
option to sell or otherwise dispose of, directly or indirectly, any shares
of Common Stock or securities convertible into or exchangeable or
exercisable for Common Stock or warrants or other rights to purchase Common
Stock or any other shares of the Company that are substantially similar to
Common Stock or permit the registration under the Act of any shares of
Common Stock for a period of 180 days after the date hereof (the "Lock-up
Period"), without the prior written consent of Warburg Dillon Read LLC
(WDR), except for (i) the registration of the Shares and the sales to the
Underwriters pursuant to this Agreement, (ii) the issuance in connection
with the Reorganization, as described in the Registration Statement and the
Prospectus, of Common Stock and rights to purchase Common Stock to persons
who have entered into lock-up agreements with the Underwriters as
contemplated by Section 3(v) hereof and (iii) the grant of options to
purchase Common Stock disclosed in the Registration Statement and the
Prospectus as to be outstanding, granted to officers of the Company and not
exercisable prior to the expiration of the Lock-up Period;
(q) to use their best efforts to cause the Common Stock to be listed
for quotation on the National Association of Securities Dealers Automated
Quotation National Market System ("NASDAQ"); and
(r) to effect the Reorganization and implement all attendant
agreements and activities, on the terms set forth and as otherwise
described in the Registration Statement.
5. Reimbursement of Underwriters' Expenses. The Company and LLC
---------------------------------------
agree, jointly and severally, that if the Shares are not delivered for any
reason other than the termination of this Agreement pursuant to the first
two paragraphs of Section 8
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<PAGE>
hereof or the default by one or more of the Underwriters in its or their
respective obligations hereunder, they shall, in addition to paying the amounts
described in Section 4(n) hereof, reimburse the Underwriters for all of the out-
of-pocket accountable expenses actually incurred by the Underwriters, including
the fees and disbursements of their counsel.
6. Conditions of Underwriters' Obligations. The several obligations
---------------------------------------
of the Underwriters hereunder are subject to the accuracy of the representations
and warranties on the part of the Company and LLC on the date hereof and at the
time of purchase (and the several obligations of the Underwriters at the
additional time of purchase are subject to the accuracy of the representations
and warranties on the part of the Company and LLC on the date hereof and at the
time of purchase (unless previously waived) and at the additional time of
purchase, as the case may be), the performance by the Company and LLC of their
obligations hereunder and to the following additional conditions precedent:
(a) The Company shall furnish to you at the time of purchase and at
the additional time of purchase, as the case may be, an opinion of Muldoon,
Murphy & Faucette LLP, counsel for the Company and LLC, addressed to the
Underwriters, and dated the time of purchase or the additional time of
purchase, as the case may be, with reproduced copies for each of the other
Underwriters and in form satisfactory to Dewey Ballantine LLP, counsel for
the Underwriters, stating that:
(i) the Company has been duly organized and is validly
existing as a corporation and is in good standing under the laws of the
State of Delaware, with full power and authority to own, lease and operate
its properties and conduct its business as described in the Registration
Statement and the Prospectus, to execute and deliver this Agreement, to
complete the Reorganization and to issue, sell and deliver the Shares as
herein contemplated;
(ii) LLC, immediately prior to the Reorganization, was duly
organized and validly existing as a limited liability company and was in
good standing under the laws of the State of Delaware, with full power and
authority to own, lease and operate its properties and conduct its business
as described in the Registration Statement and the Prospectus, to execute
and deliver this Agreement and to complete the Reorganization;
(iii) the Company is, and LLC immediately prior to the
Reorganization was, duly qualified to do business as a foreign corporation
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(in the case of the Company) or limited liability company (in the case of
LLC) and in good standing in each jurisdiction in which the ownership or
leasing of its properties or the conduct of its business requires such
qualification, except where the failure to so qualify would not have a
Material Adverse Effect;
(iv) this Agreement has been duly authorized, executed and
delivered by each of the Company and LLC;
(v) the Shares have been duly authorized and, when issued and
delivered to and paid for by the Underwriters, will be validly issued,
fully paid and non-assessable;
(vi) the Company has authorized and outstanding shares of
capital stock as set forth in the Registration Statement and the
Prospectus; giving effect to the Reorganization, the outstanding shares of
capital stock of the Company have been duly and validly authorized and
issued and are fully paid, nonassessable and free of statutory and, to such
counsel's knowledge, contractual preemptive rights, resale rights, rights
of first refusal and similar rights, except as set forth in the Prospectus
and the Registration Statement; the Shares when issued will be free of
statutory and, to such counsel's knowledge, contractual preemptive rights;
the certificates for the Shares are in due and proper form and the holders
of the Shares will not be subject to personal liability by reason of being
such holders;
(vii) the capital stock of the Company, including the Shares,
conforms to the description thereof contained in the Registration Statement
and Prospectus;
(viii) the Registration Statement and the Prospectus (except as
to the financial statements and schedules and other financial and
statistical data contained therein, as to which such counsel need express
no opinion) comply as to form in all material respects with the
requirements of the Act;
(ix) such counsel has been informed by the staff of the
Commission that the Registration Statement has become effective under the
Act and, to such counsel's knowledge, no stop order proceedings with
respect thereto are pending or threatened under the Act and any required
filing of the Prospectus, and any supplement thereto pursuant to Rule 424
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under the Act has been made in the manner and within the time period
required by such Rule 424;
(x) no approval, authorization, consent or order of or filing
with any national, state or local governmental or regulatory commission,
board, body, authority or agency is required in connection with the
completion of the Reorganization, the execution, delivery and performance
of this Agreement, the issuance and sale of the Shares and the consummation
of the transactions contemplated hereby and by the Registration Statement,
other than registration of the Shares under the Act and other than any
necessary qualification under the state securities or blue sky laws of the
various jurisdictions in which the Shares are being offered by the
Underwriters, as to which such qualification such counsel need express no
opinion);
(xi) the completion of the Reorganization, the execution,
delivery and performance of this Agreement by the Company and LLC, the
issuance and sale of the Shares contemplated hereby and by the Registration
Statement do not and will not conflict with, or result in any breach of, or
constitute a default under (nor constitute any event which with notice,
lapse of time, or both, would result in any breach of, or constitute a
default under), any provisions of the charter or by-laws or other
organizational documents of the Company or LLC or under any provision of
any license, permit, franchise, indenture, mortgage, deed of trust, bank
loan or credit agreement or other evidence of indebtedness, or any lease,
contract or other agreement or instrument to which the Company or LLC is a
party or by which either of them or their respective properties may be
bound or affected that is filed as an exhibit to the Registration Statement
or is otherwise known to such counsel, or under any federal, state, local
or foreign law, regulation or rule or any decree, judgment or order
applicable to the Company or LLC;
(xii) to such counsel's knowledge, neither the Company is, nor
LLC immediately prior to the Reorganization was, in violation of its
charter or by-laws, and neither the Company is nor LLC immediately prior to
the Reorganization was, in breach of nor in default under (nor has any
event occurred which with notice, lapse of time, or both would result in
any breach of, or constitute a default under), any license, permit,
franchise, indenture, mortgage, deed of trust, bank loan or credit
agreement or other evidence of indebtedness, or any lease, contract or
other agreement or instrument to which the Company or LLC is or was a
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party or by which either of them or their respective properties may be
bound or affected or in violation of any federal, state, local or foreign
law, regulation or rule or any decree, judgment or order applicable to the
Company or LLC;
(xiii) to such counsel's knowledge, there are no contracts,
licenses, agreements, leases or documents of a character which are required
to be filed as exhibits to the Registration Statement or to be summarized
or described in the Prospectus which have not been so filed, summarized or
described;
(xiv) to such counsel's knowledge, there are no private or
governmental actions, suits, claims, investigations or proceedings pending,
threatened or contemplated to which the Company or LLC or any of their
respective officers is subject or of which any of their respective
properties is subject, whether at law, in equity or before or by any
federal, state, local or foreign governmental or regulatory commission,
board, body, authority or agency;
(xv) neither the Company nor LLC is, and after giving effect to
the Reorganization and the offering and sale of the Shares, the Company
will not be, an "investment company," or a "promoter," "principal
underwriter" for or an entity controlled by an "investment company," as
such terms are defined in the Investment Company Act;
(xvi) the statements in the Registration Statement and
Prospectus, insofar as they are descriptions of contracts, agreements or
other legal documents, or refer to statements of law or legal conclusions,
are accurate in all material respects and present fairly the information
required to be shown;
In addition, such counsel shall state that it has participated in
conferences with officers and other representatives of the Company and LLC,
representatives of the independent public accountants of the Company and LLC and
representatives of the Underwriters at which the contents of the Registration
Statement and Prospectus were discussed and, although such counsel is not
passing upon and does not assume responsibility for the accuracy, completeness
or fairness of the statements contained in the Registration Statement or
Prospectus (except as and to the extent stated in subparagraphs (vi) and (vii)
above), on the basis of the foregoing nothing has come to the attention of such
counsel that causes them to believe that the Registration Statement or any
amendment thereto
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<PAGE>
at the time such Registration Statement or amendment became effective
contained an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading, or that the Prospectus or any supplement
thereto at the date of such Prospectus or such supplement, and at all times
up to and including the time of purchase or additional time of purchase, as
the case may be, contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which
they were made, not misleading (it being understood that such counsel need
express no opinion with respect to the financial statements and schedules
and other financial and statistical data included in the Registration
Statement or Prospectus).
(b) You shall have received from PricewaterhouseCoopers LLP,
letters dated, respectively, the date of this Agreement and the time of
purchase and additional time of purchase, as the case may be, and addressed
to the Underwriters (with reproduced copies for each of the Underwriters)
in the forms heretofore approved by Dewey Ballantine LLP, counsel for the
Underwriters.
(c) You shall have received at the time of purchase and at the
additional time of purchase, as the case may be, the favorable opinion of
Dewey Ballantine LLP, counsel for the Underwriters, dated the time of
purchase or the additional time of purchase, as the case may be, with
respect to the issuance and sale of the Shares by the Company, the
Registration Statement, the Prospectus (together with any supplement
thereto) and other related matters as the Underwriters may require.
(d) No amendment or supplement to the Registration Statement
or Prospectus shall be filed prior to the time the Registration Statement
becomes effective to which you object in writing.
(e) The Registration Statement shall become effective, or if
Rule 430A under the Act is used, the Prospectus shall have been filed with
the Commission pursuant to Rule 424(b) under the Act, at or before 5:30
P.M., New York City
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<PAGE>
time, on the date of this Agreement, unless a later time (but not later
than 5:30 P.M., New York City time, on the second full business day after
the date of this Agreement) shall be agreed to by the Company and you in
writing or by telephone, confirmed in writing; provided, however, that the
-------- -------
Company and you and any group of Underwriters, including you, who have
agreed hereunder to purchase in the aggregate at least 50% of the Firm
Shares may from time to time agree on a later date.
(f) Prior to the time of purchase or the additional time of
purchase, as the case may be, (i) no stop order with respect to the
effectiveness of the Registration Statement shall have been issued under
the Act or proceedings initiated under Section 8(d) or 8(e) of the Act;
(ii) the Registration Statement and all amendments thereto, or
modifications thereof, if any, shall not contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading; and
(iii) the Prospectus and all amendments or supplements thereto, or
modifications thereof, if any, shall not contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they are made, not misleading.
(g) Between the time of execution of this Agreement and the
time of purchase or the additional time of purchase, as the case may be,
(i) no material and unfavorable change, or any development involving a
prospective material and adverse change, financial or otherwise (other than
as specifically identified in the Registration Statement and Prospectus),
in the business, prospects, properties, condition or results of operations
of the Company or LLC shall occur or become known and (ii) no transaction
which is material and unfavorable to the Company or LLC shall have been
entered into by the Company or LLC.
(h) The Company will, at the time of purchase or additional
time of purchase, as the case may be, deliver to you a certificate of its
President and its Chief Financial Officer to the effect that the
representations and warranties of the Company and LLC as set forth in this
Agreement are true and correct as of each such date, that the Company and
LLC have performed such of their obligations under this Agreement as are to
be performed at or before the time of purchase and at or before the
additional time of purchase, as the case may be, and the conditions set
forth in paragraphs (e), (f) and (g) of this Section 6 have been met.
(i) You shall have received signed letters, dated the date of
this Agreement, from each of the officers of the Company and all
stockholders of the
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<PAGE>
Company agreeing with the Underwriters that such persons will not sell,
offer or agree to sell, contract to sell, grant any option to sell or
otherwise dispose of, directly or indirectly, any shares of Common Stock of
the Company or securities convertible into or exchangeable or exercisable
for Common Stock or warrants or other rights to purchase Common Stock or
any other securities of the Company that are substantially similar to the
Common Stock for a period of 180 days after the date of the Prospectus
without WDR's prior written consent.
(k) The Company and LLC shall have furnished to you such other
documents and certificates as to the accuracy and completeness of any
statement in the Registration Statement and the Prospectus as of the time
of purchase and the additional time of purchase, as the case may be, as you
may reasonably request.
(l) The Shares shall have been approved for listing for
quotation on NASDAQ, subject only to notice of issuance at or prior to the
time of purchase or the additional time of purchase, as the case may be.
(m) The Reorganization shall have occurred on the terms set
forth and as otherwise described in the Registration Statement.
7. Effective Date of Agreement; Termination. This Agreement
----------------------------------------
shall become effective (i) if Rule 430A under the Act is not used, when you
shall have received notification of the effectiveness of the Registration
Statement, or (ii) if Rule 430A under the Act is used, when the parties hereto
have executed and delivered this Agreement.
The obligations of the several Underwriters hereunder shall be
subject to termination in the absolute discretion of you or any group of
Underwriters (which may include you) which has agreed to purchase in the
aggregate at least 50% of the Firm Shares, if, since the time of execution of
this Agreement or the respective dates as of which information is given in the
Registration Statement and Prospectus, there has been any material adverse and
unfavorable change, or any development involving a prospective material adverse
change, financial or otherwise (other than as specifically identified in the
Registration Statement and Prospectus), in the business, prospects, properties,
condition or results of operations of the Company or LLC which would, in your
judgment or in the judgment of such group of Underwriters, make it impracticable
to market the Shares, or, if, at any time prior to the time of purchase or, with
respect to the purchase of any Additional Shares, the additional time of
purchase, as the case may be, trading in securities on the New York Stock
Exchange, the American Stock Exchange or the Nasdaq National Market shall have
been suspended or limitations or minimum
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<PAGE>
prices shall have been established on the New York Stock Exchange, the American
Stock Exchange or the Nasdaq National Market, or if a banking moratorium shall
have been declared either by the United States or New York State authorities, or
if the United States shall have declared war in accordance with its
constitutional processes or there shall have occurred any material outbreak or
escalation of hostilities or other national or international calamity or crisis
of such magnitude in its effect on the financial markets of the United States
as, in your judgment or in the judgment of such group of Underwriters, to make
it impracticable to market the Shares.
If you or any group of Underwriters elects to terminate this
Agreement as provided in this Section 7, the Company and each other Underwriter
shall be notified promptly by letter or telegram.
If the sale to the Underwriters of the Shares, as contemplated by
this Agreement, is not carried out by the Underwriters for any reason permitted
under this Agreement or if such sale is not carried out because the Company or
LLC shall be unable to comply with any of the terms of this Agreement, neither
the Company nor LLC shall be under any obligation or liability under this
Agreement (except to the extent provided in Sections 4(n), 5 and 9 hereof), and
the Underwriters shall be under no obligation or liability to the Company or LLC
under this Agreement (except to the extent provided in Section 9 hereof) or to
one another hereunder.
8. Increase in Underwriters' Commitments. Subject to
-------------------------------------
Sections 6 and 7, if any Underwriter shall default in its obligation to take up
and pay for the Firm Shares to be purchased by it hereunder (otherwise than for
a reason sufficient to justify the termination of this Agreement under the
provisions of Section 7 hereof) and if the number of Firm Shares which all
Underwriters so defaulting shall have agreed but failed to take up and pay for
does not exceed 10% of the total number of Firm Shares, the non-defaulting
Underwriters shall take up and pay for (in addition to the aggregate number of
Firm Shares they are obligated to purchase pursuant to Section 1 hereof) the
number of Firm Shares agreed to be purchased by all such defaulting
Underwriters, as hereinafter provided. Such Shares shall be taken up and paid
for by such non-defaulting Underwriter or Underwriters in such amount or amounts
as you may designate with the consent of each Underwriter so designated or, in
the event no such designation is made, such Shares shall be taken up and paid
for by all non-defaulting Underwriters pro rata in proportion to the aggregate
number of Firm Shares set opposite the names of such non-defaulting Underwriters
in Schedule A.
Without relieving any defaulting Underwriter from its obligations
hereunder, the Company agrees with the non-defaulting Underwriters that it will
not sell any Firm Shares hereunder unless all of the Firm Shares are purchased
by the
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Underwriters (or by substituted Underwriters selected by you with the approval
of the Company or selected by the Company with your approval).
If a new Underwriter or Underwriters are substituted by the
Underwriters or by the Company for a defaulting Underwriter or Underwriters in
accordance with the foregoing provision, the Company or you shall have the right
to postpone the time of purchase for a period not exceeding five business days
in order that any necessary changes in the Registration Statement and Prospectus
and other documents may be effected.
The term Underwriter as used in this Agreement shall refer to and
include any Underwriter substituted under this Section 8 with like effect as if
such substituted Underwriter had originally been named in Schedule A.
If the aggregate number of Shares which the defaulting
Underwriter or Underwriters agreed to purchase exceeds 10% of the total number
of Shares which all Underwriters agreed to purchase hereunder, and if neither
the non-defaulting Underwriters nor the Company shall make arrangements within
the five business day period stated above for the purchase of all the Shares
which the defaulting Underwriter or Underwriters agreed to purchase hereunder,
this Agreement shall be terminated without further act or deed and without any
liability on the part of the Company to any non-defaulting Underwriter and
without any liability on the part of any non-defaulting Underwriter to the
Company. Nothing in this paragraph, and no action taken hereunder, shall relieve
any defaulting Underwriter from liability in respect of any default of such
Underwriter under this Agreement.
9. Indemnity and Contribution.
--------------------------
(a) Each of the Company and LLC, jointly and severally, agrees
to indemnify, defend and hold harmless each Underwriter, its partners, directors
and officers, and any person who controls any Underwriter within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act, and the successors and
assigns of all of the foregoing persons from and against any loss, damage,
expense, liability or claim (including the reasonable cost of investigation)
which, jointly or severally, any such Underwriter or any such person may incur
under the Act, the Exchange Act, the common law or otherwise, insofar as such
loss, damage, expense, liability or claim arises out of or is based upon (i) any
untrue statement or alleged untrue statement of a material fact contained in the
Registration Statement (or in the Registration Statement as amended by any post-
effective amendment thereof by the Company) or in a Prospectus (the term
Prospectus for the purpose of this Section 9 being deemed to include any
Preliminary Prospectus, the Prospectus and the Prospectus as amended or
supplemented
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<PAGE>
by the Company), or arises out of or is based upon any omission or alleged
omission to state a material fact required to be stated in either such
Registration Statement or Prospectus or necessary to make the statements made
therein not misleading, except insofar as any such loss, damage, expense,
liability or claim arises out of or is based upon any untrue statement or
alleged untrue statement of a material fact contained in and in conformity with
information furnished in writing by or on behalf of any Underwriter through you
to the Company expressly for use with reference to such Underwriter in such
Registration Statement or such Prospectus or arises out of or is based upon any
omission or alleged omission to state a material fact in connection with such
information required to be stated in such Registration Statement or such
Prospectus or necessary to make such information not misleading or (ii) any
untrue statement or alleged untrue statement made by the Company in Section 3 of
this Agreement or (iii) any untrue statement or alleged untrue statement of any
material fact contained in any audio or visual materials provided by the Company
or based upon written information furnished by or on behalf of the Company
including, without limitation, slides, videos, films, tape recordings, used in
connection with the marketing of the Shares, or (iv) the Directed Share Program,
provided that, the Company shall not be responsible for any loss, damage,
expense, liability, or claim that is finally judicially determined to have
resulted from the bad faith or gross negligence of the Underwriters in
conducting the Directed Share Program.
If any action, suit or proceeding (together, a "Proceeding") is
brought against an Underwriter or any such person in respect of which indemnity
may be sought against the Company or LLC pursuant to the foregoing paragraph,
such Underwriter or such person shall promptly notify the Company in writing of
the institution of such Proceeding and the Company or LLC shall assume the
defense of such Proceeding, including the employment of counsel reasonably
satisfactory to such indemnified party and payment of all fees and expenses;
provided, however, that the omission to so notify the Company shall not relieve
- -------- -------
the Company or LLC from any liability which the Company or LLC may have to any
Underwriter or any such person or otherwise. Such Underwriter or such person
shall have the right to employ its or their own counsel in any such case, but
the fees and expenses of such counsel shall be at the expense of such
Underwriter or of such person unless the employment of such counsel shall have
been authorized in writing by the Company in connection with the defense of such
Proceeding or the Company or LLC shall not have, within a reasonable period of
time in light of the circumstances, employed counsel to defend such Proceeding
or such indemnified party or parties shall have reasonably concluded that there
may be defenses available to it or them which are different from, additional to
or in conflict with those available to the Company or LLC (in which case the
Company shall not have the right to direct the defense of such Proceeding on
behalf of the indemnified party or parties), in
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<PAGE>
any of which events such fees and expenses shall be borne by the Company and LLC
and paid as incurred (it being understood, however, that the Company and LLC
shall not be liable for the expenses of more than one separate counsel (in
addition to any local counsel) in any one Proceeding or series of related
Proceedings in the same jurisdiction representing the indemnified parties who
are parties to such Proceeding). Neither the Company nor LLC shall be liable for
any settlement of any Proceeding effected without the written consent of the
Company or LLC but if settled with the written consent of the Company or LLC,
the Company and LLC agree to indemnify and hold harmless any Underwriter and any
such person from and against any loss or liability by reason of such settlement.
Notwithstanding the foregoing sentence, if at any time an indemnified party
shall have requested an indemnifying party to reimburse the indemnified party
for fees and expenses of counsel as contemplated by the second sentence of this
paragraph, then the indemnifying party agrees that it shall be liable for any
settlement of any Proceeding effected without its written consent if (i) such
settlement is entered into more than 60 business days after receipt by such
indemnifying party of the aforesaid request, (ii) such indemnifying party shall
not have reimbursed the indemnified party in accordance with such request prior
to the date of such settlement and (iii) such indemnified party shall have given
the indemnifying party at least 30 days' prior notice of its intention to
settle. No indemnifying party shall, without the prior written consent of the
indemnified party, effect any settlement of any pending or threatened 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 Proceeding and does
not include an admission of fault, culpability or a failure to act, by or on
behalf of such indemnified party.
(b) In connection with the offer and sale of the Reserved
Shares, each of the Company and LLC, jointly and severally, to pay WDR the full
purchase price of all Reserved Shares which were subject to a properly confirmed
agreement to purchase and for which any Directed Share Participant failed to pay
therefor and accept delivery thereof.
(c) Each Underwriter severally agrees to indemnify, defend and
hold harmless the Company, LLC, their respective directors and officers, and any
person who
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<PAGE>
controls the Company or LLC within the meaning of Section 15 of the Act
or Section 20 of the Exchange Act, and the successors and assigns of all of
the foregoing persons from and against any loss, damage, expense, liability
or claim (including the reasonable cost of investigation) which, jointly or
severally, the Company, LLC or any such person may incur under the Act,
the Exchange Act, the common law or otherwise, insofar as such loss,
damage, expense, liability or claim arises out of or is based upon any
untrue statement or alleged untrue statement of a material fact contained
in and in conformity with information furnished in writing by or on behalf
of such Underwriter through you to the Company expressly for use with
reference to such Underwriter in the Registration Statement (or in the
Registration Statement as amended by any post-effective amendment thereof
by the Company) or in a Prospectus, or arises out of or is based upon any
omission or alleged omission to state a material fact in connection with
such information required to be stated in such Registration Statement or
such Prospectus or necessary to make such information not misleading.
If any Proceeding is brought against the Company, LLC or any
such person in respect of which indemnity may be sought against any
Underwriter pursuant to the foregoing paragraph, the Company, LLC or such
person shall promptly notify such Underwriter in writing of the institution
of such Proceeding and such Underwriter shall assume the defense of such
Proceeding, including the employment of counsel reasonably satisfactory to
such indemnified party and payment of all fees and expenses; provided,
--------
however, that the omission to so notify such Underwriter shall not relieve
-------
such Underwriter from any liability which such Underwriter may have to the
Company, LLC or any such person or otherwise. The Company, LLC or such
person shall have the right to employ its own counsel in any such case, but
the fees and expenses of such counsel shall be at the expense of the
Company, LLC or such person unless the employment of such counsel shall
have been authorized in writing by such Underwriter in connection with the
defense of such Proceeding or such Underwriter shall not have, within a
reasonable period of time in light of the circumstances, employed counsel
to have charge of the defense of such Proceeding or such indemnified party
or parties shall have reasonably concluded that there may be defenses
available to it or them which are different from or additional to or in
conflict with those available to such Underwriter (in which case such
Underwriter shall not have the right to direct the defense of such
Proceeding on behalf of the indemnified party or parties, but such
Underwriter may employ counsel and participate in the defense thereof but
the fees and expenses of such counsel shall be at the expense of such
Underwriter), in any of which events such fees and expenses shall be borne
by such Underwriter and paid as incurred (it being understood, however,
that such Underwriter shall not be liable for the expenses of more than one
separate counsel (in addition to any local counsel) in any one Proceeding
or series of related Proceedings in the same jurisdiction representing the
indemnified
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parties who are parties to such Proceeding). No Underwriter shall be liable
for any settlement of any such Proceeding effected without the written
consent of such Underwriter but if settled with the written consent of such
Underwriter, such Underwriter agrees to indemnify and hold harmless the
Company, LLC and any such person from and against any loss or liability by
reason of such settlement. Notwithstanding the foregoing sentence, if at
any time an indemnified party shall have requested an indemnifying party to
reimburse the indemnified party for fees and expenses of counsel as
contemplated by the second sentence of this paragraph, then the
indemnifying party agrees that it shall be liable for any settlement of any
Proceeding effected without its written consent if (i) such settlement is
entered into more than 60 business days after receipt by such indemnifying
party of the aforesaid request, (ii) such indemnifying party shall not have
reimbursed the indemnified party in accordance with such request prior to
the date of such settlement and (iii) such indemnified party shall have
given the indemnifying party at least 30 days' prior notice of its
intention to settle. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened 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 Proceeding.
(d) If the indemnification provided for in this Section 9 is
unavailable to an indemnified party under subsections (a) and (b) of this
Section 9 in respect of any losses, damages, expenses, liabilities or
claims referred to therein, then each applicable indemnifying party, 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,
damages, expenses, liabilities or claims (i) 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
Shares or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause (i) above but
also the relative fault of the Company and LLC on the one hand and of the
Underwriters on the other in connection with the statements or omissions
which resulted in such losses, damages, expenses, liabilities or claims, 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
shall be deemed to be in the same respective proportions as the total
proceeds from the offering (net of underwriting discounts and commissions
but before deducting expenses) received by the Company and the total
underwriting discounts and commissions received by the Underwriters, bear
to the aggregate public offering price of the Shares. The relative fault of
the Company and LLC on the one hand and of the
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Underwriters on the other shall be determined by reference to, among other
things, whether the untrue statement or alleged untrue statement of a
material fact or omission or alleged omission relates to information
supplied by the Company, LLC or by the Underwriters and the parties'
relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The amount paid or payable
by a party as a result of the losses, damages, expenses, liabilities and
claims referred to in this subsection shall be deemed to include any legal
or other fees or expenses reasonably incurred by such party in connection
with investigating, preparing to defend or defending any Proceeding.
(e) The Company, LLC and the Underwriters agree that it would
not be just and equitable if contribution pursuant to this Section 9 were
determined by pro rata allocation (even if the Underwriters were treated as
one entity for such purpose) or by any other method of allocation that does
not take account of the equitable considerations referred to in subsection
(c) above. Notwithstanding the provisions of this Section 9, no Underwriter
shall be required to contribute any amount in excess of the amount by which
the total price at which the Shares underwritten by such Underwriter and
distributed to the public were offered to the public exceeds the amount of
any damage which such Underwriter has otherwise been required to pay by
reason of such untrue statement 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 9 are
several in proportion to their respective underwriting commitments and not
joint.
(f) The indemnity and contribution agreements contained in
this Section 9 and the covenants, warranties and representations of the
Company and LLC contained in this Agreement shall remain in full force and
effect regardless of any investigation made by or on behalf of any
Underwriter, its partners, directors or officers or any person (including
each partner, officer or director of such person) who controls any
Underwriter within the meaning of Section 15 of the Act or Section 20 of
the Exchange Act, or by or on behalf of the Company, LLC, their respective
directors or officers or any person who controls the Company or LLC within
the meaning of Section 15 of the Act or Section 20 of the Exchange Act, and
shall survive any termination of this Agreement or the issuance and
delivery of the Shares. The Company, LLC and each Underwriter agree
promptly to notify each other of the commencement of any Proceeding against
it and, in the case of the Company or LLC, against any of the Company's or
LLC's officers or directors in connection with the issuance and sale of the
Shares, or in connection with the Registration Statement or Prospectus.
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<PAGE>
10. Notices. Except as otherwise herein provided, all
-------
statements, requests, notices and agreements shall be in writing or by
telegram and, if to the Underwriters, shall be sufficient in all respects
if delivered or sent to Warburg Dillon Read LLC, 299 Park Avenue, New York,
N.Y. 10171-0026, Attention: Syndicate Department and, if to the Company or
LLC, shall be sufficient in all respects if delivered or sent to the
Company at the offices of the Company at 2275 Research Boulevard, 7th
Floor, Rockville, Maryland 20850, Attention: Michael Donovan, Chief
Financial Officer.
11. Governing Law; Construction. This Agreement and any
---------------------------
claim, counterclaim or dispute of any kind or nature whatsoever arising out
of or in any way relating to this Agreement ("Claim"), directly or
indirectly, shall be governed by, and construed in accordance with, the
laws of the State of New York. The Section headings in this Agreement have
been inserted as a matter of convenience of reference and are not a part of
this Agreement.
12. Submission to Jurisdiction. Except as set forth below, no
--------------------------
Claim may be commenced, prosecuted or continued in any court other than the
courts of the State of New York located in the City and County of New York
or in the United States District Court for the Southern District of New
York, which courts shall have jurisdiction over the adjudication of such
matters, and the Company and LLC consent to the jurisdiction of such courts
and personal service with respect thereto. The Company and LLC hereby
consent to personal jurisdiction, service and venue in any court in which
any Claim arising out of or in any way relating to this Agreement is
brought by any third party against Warburg Dillon Read LLC or any
indemnified party. Each of Warburg Dillon Read LLC and the Company and LLC
(on their respective behalfs and, to the extent permitted by applicable
law, on behalf of their respective stockholders and affiliates) waives all
right to trial by jury in any action, proceeding or counterclaim (whether
based upon contract, tort or otherwise) in any way arising out of or
relating to this Agreement. The Company and LLC agree that a final judgment
in any such action, proceeding or counterclaim brought in any such court
shall be conclusive and binding upon the Company and LLC and may be
enforced in any other courts in the jurisdiction of which the Company or
LLC is or may be subject, by suit upon such judgment.
13. Parties at Interest. The Agreement herein set forth has
-------------------
been and is made solely for the benefit of the Underwriters, the Company
and LLC and to the extent provided in Section 9 hereof the controlling
persons, directors and officers referred to in such section, and their
respective successors, assigns, heirs, personal representatives and
executors and administrators. No other person, partnership, association or
corporation (including a purchaser, as such purchaser, from any of the
Underwriters) shall acquire or have any right under or by virtue of this
Agreement.
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14. Counterparts. This Agreement may be signed by the parties
------------
in one or more counterparts which together shall constitute one and the
same agreement among the parties.
15. Successors and Assigns. This Agreement shall be binding
----------------------
upon the Underwriters, the Company and LLC and their successors and assigns
and any successor or assign of any substantial portion of the Company's,
LLC's and any of the Underwriters' respective businesses and/or assets.
16. Miscellaneous. Warburg Dillon Read LLC, an indirect,
-------------
wholly owned subsidiary of UBS AG, is not a bank and is separate from any
affiliated bank, including any U.S. branch or agency of Warburg Dillon Read
LLC. Because Warburg Dillon Read LLC is a separately incorporated entity,
it is solely responsible for its own contractual obligations and
commitments, including obligations with respect to sales and purchases of
securities. Securities sold, offered or recommended by Warburg Dillon Read
LLC are not deposits, are not insured by the Federal Deposit Insurance
Corporation, are not guaranteed by a branch or agency, and are not
otherwise an obligation or responsibility of a branch or agency.
A lending affiliate of Warburg Dillon Read LLC may have lending
relationships with issuers of securities underwritten or privately placed
by Warburg Dillon Read LLC. To the extent required under the securities
laws, prospectuses and other disclosure documents for securities
underwritten or privately placed by Warburg Dillon Read LLC will disclose
the existence of any such lending relationships and whether the proceeds of
the issue will be used to repay debts owed to affiliates of Warburg Dillon
Read LLC.
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<PAGE>
If the foregoing correctly sets forth the understanding among the
Company, LLC and the Underwriters, please so indicate in the space provided
below for the purpose, whereupon this letter and your acceptance shall
constitute a binding agreement among the Company, LLC and the Underwriters,
severally.
Very truly yours,
HEALTHEXTRAS, INC.
By:_____________________________
Name:
Title:
HEALTHEXTRAS, LLC
By:_____________________________
Name:
Title:
Accepted and agreed to as of the
date first above written, on behalf of
themselves and the other several Underwriters
named in Schedule A
WARBURG DILLON READ LLC
PAINEWEBBER INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
SG COWEN SECURITIES CORPORATION
By: WARBURG DILLON READ LLC
By: __________________________
Title:
By: __________________________
Title:
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<PAGE>
SCHEDULE A
<TABLE>
<CAPTION>
Number of
Underwriter Firm Shares
- ----------- -----------
<S> <C>
WARBURG DILLON READ LLC.......................................
PAINEWEBBER INCORPORATED.....................................
PRUDENTIAL SECURITIES INCORPORATED............................
SG COWEN SECURITIES CORPORATION...............................
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Total................................ 5,500,000
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Form of Lockup Agreement
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,1999
Warburg Dillon Read LLC
299 Park Avenue
New York, New York 10171
Ladies and Gentlemen:
This letter is being delivered to you in connection with the proposed
Underwriting Agreement (the "Underwriting Agreement"), between HealthExtras,
Inc., a Delaware corporation (the "Company"), and Warburg Dillon Read LLC,
PaineWebber Incorporated, Prudential Securities Incorporated and SG Cowen
Corporation, as representatives of the several underwriters named therein, with
respect to an underwritten public offering of Common Stock, $0.01 par value (the
"Common Stock"), of the Company.
In order to induce you to enter into the Underwriting Agreement, the
undersigned will not, without the prior written consent of Warburg Dillon Read
LLC, offer, sell, contract to sell, pledge or otherwise dispose of, or file (or
participate in the filing of) a registration statement with the Securities and
Exchange Commission in respect of, or establish or increase a put equivalent
position or liquidate or decrease a call equivalent position within the meaning
of Section 16 of the Securities Exchange Act of 1934, as amended, and the rules
and regulations of the Securities and Exchange Commission promulgated thereunder
with respect to, any shares of capital stock of the Company or any securities
convertible into or exercisable or exchangeable for such capital stock, or
publicly announce an intention to effect any such transaction, for a period of
180 days after the date of execution of the Underwriting Agreement.
If for any reason the Underwriting Agreement shall be terminated prior
to the Closing Date (as defined in the Underwriting Agreement), the agreement
set forth above shall likewise be terminated.
Yours very truly,
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Name:
Title:
33
