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EXHIBIT 4.5
EXECUTION VERSION
EXTENDICARE HEALTH SERVICES, INC.
$125,000,000
6 7/8% SENIOR SUBORDINATED NOTES DUE 2014
PURCHASE AGREEMENT
April 15, 2004
Lehman Brothers Inc.
Piper Jaffray & Co.
ABN AMRO Incorporated
c/o Lehman Brothers Inc.
745 Seventh Avenue, 19th Floor
New York, New York 10019
Ladies and Gentlemen:
Extendicare Health Services, Inc., a Delaware corporation (the
"COMPANY"), proposes to issue and sell to
the several Initial Purchasers named
in Schedule 1 hereto (the "INITIAL
PURCHASERS") $125,000,000 aggregate principal
amount of its 6 7/8% Senior Subordinated
Notes due 2014 (the "NOTES") guaranteed
(the "GUARANTEES") by the Company's
domestic subsidiaries signatory hereto
(collectively, the "SUBSIDIARY GUARANTORS")
pursuant to the terms of an
indenture (the "INDENTURE"), to be dated as
of April 22, 2004, among the
Company, the Subsidiary Guarantors and U.S.
Bank, N.A., as trustee (the
"TRUSTEE").
The Notes will be offered and sold to you pursuant to an
exemption
from the registration requirements under
the Securities Act of 1933, as amended
(the "SECURITIES ACT"). The Company has
prepared a preliminary offering
memorandum, dated April 9, 2004 (as amended
or supplemented, the "PRELIMINARY
OFFERING MEMORANDUM"), and will prepare a
final offering memorandum (as amended
or supplemented, the "OFFERING
MEMORANDUM"), to be dated April 15, 2004,
relating to the Company, the Notes and the
Guarantees.
Upon
original issuance thereof, and until such time as the same is
no longer required under the applicable
requirements of the Securities Act, the
Notes (and all securities issued in
exchange therefor or in substitution
therefor) shall bear substantially the
following legend:
THE NOTES
EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE
OFFERED,
SOLD,
PLEDGED OR OTHERWISE TRANSFERRED, IN THE ABSENCE OF SUCH
REGISTRATION, UNLESS THE
TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO,
THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THE HOLDER OF
THIS
NOTE BY
ITS ACCEPTANCE HEREOF (1) REPRESENTS THAT (A) IT IS A
"QUALIFIED
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INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES
ACT) OR
(B) IT IS
NOT A U.S. PERSON AND IS ACQUIRING THIS NOTE IN AN "OFFSHORE
TRANSACTION" PURSUANT TO RULE 904 OF REGULATION S UNDER THE
SECURITIES
ACT, (2)
AGREES THAT IT WILL NOT PRIOR TO (A) THE DATE WHICH IS TWO
YEARS
(OR SUCH
SHORTER PERIOD OF TIME AS PERMITTED BY RULE 144(k) UNDER THE
SECURITIES
ACT OR ANY SUCCESSOR PROVISION THEREUNDER) AFTER THE LATER OF
THE
ORIGINAL ISSUE DATE HEREOF (OR OF ANY PREDECESSOR OF THIS NOTE) OR
THE
LAST DAY
ON WHICH THE COMPANY OR ANY AFFILIATE OF THE COMPANY WERE THE
OWNERS OF
THIS NOTE (OR ANY PREDECESSOR OF THIS NOTE) AND (B) SUCH LATER
DATE, IF
ANY, AS MAY BE REQUIRED BY APPLICABLE LAW (THE "RESALE
RESTRICTION TERMINATION DATE"), OFFER, SELL OR OTHERWISE TRANSFER
THIS
NOTE
EXCEPT (I) TO THE COMPANY, (II) PURSUANT TO A REGISTRATION
STATEMENT
WHICH HAS
BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (III) FOR SO
LONG AS
THE NOTES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A
PERSON IT
REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS
DEFINED IN
RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN
ACCOUNT OR
FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM
NOTICE IS
GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A,
(IV)
PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR
OUTSIDE
THE UNITED
STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES
ACT OR (V)
PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND (3) AGREES THAT IT WILL GIVE
TO
EACH
PERSON TO WHOM THIS NOTE IS TRANSFERRED A NOTICE SUBSTANTIALLY TO
THE
EFFECT OF
THIS LEGEND; PROVIDED THAT THE COMPANY, THE TRUSTEE AND THE
REGISTRAR
SHALL HAVE THE RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER
PURSUANT
TO CLAUSE (IV) OR (V) TO REQUIRE THAT AN OPINION OF COUNSEL,
CERTIFICATIONS AND/OR OTHER INFORMATION SATISFACTORY TO THE
COMPANY, THE
TRUSTEE
AND THE REGISTRAR IS COMPLETED AND DELIVERED BY THE TRANSFEROR.
THIS
LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE
RESALE
RESTRICTION TERMINATION DATE. AS USED HEREIN, THE TERMS
"OFFSHORE
TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS
GIVEN TO
THEM BY
REGULATION S UNDER THE SECURITIES ACT.
You have advised the Company that you will make offers and
sales
(the "EXEMPT RESALES") of the Notes
purchased hereunder on the terms set forth
in the Offering Memorandum solely to (i)
persons whom you reasonably believe to
be "qualified institutional buyers" as
defined in Rule 144A under the Securities
Act ("QIBs") and (ii) outside the United
States to
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persons other than U.S. persons in offshore
transactions meeting the
requirements of Regulation S under the
Securities Act ("REGULATION S") (such
persons specified in clauses (i) and (ii)
being referred to herein as the
"ELIGIBLE PURCHASERS"). As used herein, the
terms "offshore transaction,"
"United States" and "U.S. person" have the
respective meanings given to them in
Regulation S. You will offer the Notes to
Eligible Purchasers initially at a
price equal to 97.5001% of the principal
amount thereof. Thereafter, the
offering price may be changed at any time
without notice.
In connection with the offering of the Notes, the Company and
the
Subsidiary Guarantors will enter into an
amended and restated credit facility in
the amount of up to $155.0 million pursuant
to a second amended and restated
credit agreement among Extendicare
Holdings, Inc., the Company, the Subsidiary
Guarantors, Lehman Commercial Paper Inc.,
as the administrative agent, and the
other lenders thereto (the "NEW CREDIT
FACILITY") to amend and restate the
credit agreement, dated as of June 28,
2002, among Extendicare Holdings, Inc.,
the Company, the Subsidiary Guarantors,
Lehman Commercial Paper Inc., as the
administrative agent, and the other lenders
thereto (the "EXISTING CREDIT
FACILITY"). The net proceeds from the sale
of the Notes will be used to
refinance all the Company's $200.0 million
outstanding 9.35% Senior Subordinated
Notes Due 2007 and to pay related fees and
expenses, as described in the "Use of
Proceeds" section of the Offering
Memorandum. The entering into of the New
Credit Facility, the offering of the Notes
and the use of the net proceeds from
the sale of the Notes as provided in the
"Use of Proceeds" section of the
Offering Memorandum are collectively
referred to herein as the "TRANSACTIONS."
Holders (including subsequent transferees) of the Notes will
have
the registration rights set forth in the
registration rights agreement (the
"REGISTRATION RIGHTS AGREEMENT") among the
Company, the Subsidiary Guarantors
and the Initial Purchasers, to be dated as
of the Closing Date (as defined
below), in the form of Exhibit A hereto,
for so long as such Notes constitute
"TRANSFER RESTRICTED SECURITIES" (as
defined in the Registration Rights
Agreement). Pursuant to the Registration
Rights Agreement, the Company and the
Subsidiary Guarantors will agree to file
with the Securities and Exchange
Commission (the "COMMISSION") under the
circumstances set forth therein, (i) a
registration statement under the Securities
Act (the "EXCHANGE OFFER
REGISTRATION STATEMENT") relating to a
separate series of the Company's 6 7/8%
Senior Subordinated Notes due 2014 (the
"EXCHANGE NOTES") to be offered in
exchange for the Notes (such offer to
exchange being referred to collectively as
the "REGISTERED EXCHANGE OFFER") and (ii)
if required by the terms of the
Registration Rights Agreement, a shelf
registration statement pursuant to Rule
415 under the Securities Act (the "SHELF
REGISTRATION STATEMENT") relating to
the resale by certain holders of the Notes,
and to use their reasonable best
efforts to cause such Registration
Statements to be declared effective. This
Agreement, the Notes, the Exchange Notes,
the Guarantees, the Exchange Note
Guarantees (as defined below), the
Indenture and Registration Rights Agreement
are hereinafter referred to collectively as
the "OPERATIVE DOCUMENTS." This is
to confirm the agreements concerning the
purchase of the Notes from the Company
by the Initial Purchasers.
SECTION 1. Representations, Warranties and Agreements of the
Company
and the Subsidiary Guarantors. The Company
and the Subsidiary Guarantors,
jointly and severally, represent, warrant
and agree that:
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(a) The Preliminary Offering Memorandum and the Offering
Memorandum
have been
or will be prepared by the Company and Subsidiary Guarantors
for
use by the
Initial Purchasers in connection with the Exempt Resales. No
order or
decree preventing the use of the Preliminary Offering
Memorandum
or the
Offering Memorandum, or any order asserting that the
transactions
contemplated by this Agreement are subject to the registration
requirements of the Securities Act has been issued and no
proceeding for
that
purpose has commenced or is pending or, to the knowledge of the
Company
and Subsidiary Guarantors, is contemplated.
(b) The Preliminary Offering Memorandum and the Offering
Memorandum
as of
their respective dates did not, and the Offering Memorandum as
of
the
Closing Date will not, contain an untrue statement of a material
fact
or omit to
state a material fact necessary, in order to make the
statements
made therein, in the light of the circumstances under which
they were
made, not misleading, except that this representation and
warranty
does not apply to statements in or omissions from the
Preliminary
Offering
Memorandum and the Offering Memorandum made in reliance upon
and
in
conformity with information relating to the Initial Purchasers
furnished
to the Company in writing by or on behalf of the Initial
Purchasers
expressly for use therein, as specifically identified in
Section
8(e) hereof.
(c) The Company and each of the Subsidiary Guarantors (i) have
been
duly
organized or formed, are validly existing and are in good
standing
under the
laws of their respective jurisdictions of organization, and
(ii)
are duly
qualified to do business and are in good standing in each
jurisdiction in which their respective ownership or lease of
property or
the
conduct of their respective businesses requires such
qualification,
except
where the failure to so qualify or to be in good standing would
not
have a
material adverse effect on the general affairs, management,
consolidated financial position, shareholders' equity, results
of
operations, business or prospects of the Company and its
subsidiaries
taken as a
whole (a "MATERIAL ADVERSE EFFECT"). The Company and each of
the
Subsidiary Guarantors have all power and authority necessary to own
or
hold their
respective properties and to conduct the businesses in which
they are
engaged, and none of the subsidiaries of the Company, other
than
Extendicare Homes, Inc., Northern Health Facilities, Inc.,
Extendicare
Health
Network, Inc., Extendicare Health Facility Holdings, Inc. and
Extendicare Health Facilities, Inc., is a "significant subsidiary,"
as
such term
is defined in Rule 405 under the Securities Act.
(d) The Subsidiary Guarantors constitute all of the active
subsidiaries of the Company and each of the Company's other
subsidiaries
are
individually and in the aggregate inactive and immaterial.
(e) The Company has an authorized capitalization as set forth in
the
Offering
Memorandum. All of the issued shares of capital stock of the
Company
have been duly and validly authorized and issued and are fully
paid and
non-assessable; and all of the issued shares of capital stock
and
limited
partner or limited liability company interests of each of the
Subsidiary
Guarantors have been duly and validly authorized and issued and
are fully
paid and non-assessable (except, in the case of such Subsidiary
Guarantors
that are Wisconsin corporations, for certain statutory
liabilities that may be imposed by
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Section
180.0622(2)(b) of the Wisconsin Business Corporation Law for
unpaid
employee wages) and are owned directly or indirectly by the
Company, free and clear of all
liens, encumbrances, equities or claims,
other than
liens, encumbrances, equities or claims under the Existing
Credit
Facility and contemplated under the New Credit Facility or
otherwise
described in the Offering Memorandum, and none of such shares
of
capital
stock, or limited partner or limited liability company
interests
were
issued in violation of preemptive or other similar rights arising
by
operation
of law, under the charter and bylaws of the Company or under
any
agreement
to which the Company or any Subsidiary Guarantor is a party or
otherwise.
(f) Each of the Company and the Subsidiary Guarantors has all
requisite
power and authority to execute, deliver and perform its
respective
obligations under this Agreement and each of the other
Operative
Documents to which it is a party.
(g) This Agreement has been duly and validly authorized,
executed
and
delivered by the Company and the Subsidiary Guarantors.
(h) The Registration Rights Agreement has been duly and validly
authorized
by the Company and each of the Subsidiary Guarantors, and when
duly
executed by the proper officers of the Company and each of the
Subsidiary
Guarantors (assuming due authorization, execution and delivery
by the
Initial Purchasers) and delivered by the Company and each of
the
Subsidiary
Guarantors, will constitute a legal, valid and binding
agreement
of the Company and each of the Subsidiary Guarantors,
enforceable against the Company and each of the Subsidiary
Guarantors in
accordance
with its terms, subject to applicable bankruptcy, insolvency,
fraudulent
conveyance, reorganization, moratorium and other similar laws
relating
to or affecting creditors' rights and remedies generally, and
subject,
as to enforceability, to general principles of equity,
including
principles
of commercial reasonableness, good faith and fair dealing
(regardless of whether enforcement is sought in a proceeding at law
or in
equity),
and except that rights to indemnification and contribution
thereunder
may be limited by federal or state securities laws or public
policy
relating thereto.
(i) The Indenture has been duly and validly authorized by the
Company
and each of the Subsidiary Guarantors, and when duly executed
by
the proper
officers of the Company and each of the Subsidiary Guarantors
(assuming
due authorization, execution and delivery by the Trustee) and
delivered
by the Company and each of the Subsidiary Guarantors, will
constitute
a legal, valid and binding agreement of the Company and each of
the
Subsidiary Guarantors enforceable against the Company and each of
the
Subsidiary
Guarantors in accordance with its terms, subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium
and other
similar laws relating to or affecting creditors' rights and
remedies
generally, and subject, as to enforceability, to general
principles
of equity, including principles of commercial reasonableness,
good faith
and fair dealing (regardless of whether enforcement is sought
in a
proceeding at law or in equity). No qualification of the
Indenture
under the
Trust Indenture Act of 1939, as amended (the "TRUST INDENTURE
ACT"), is
required in connection with the offer and sale of the Notes
contemplated hereby or in connection with the Exempt Resales.
The
Indenture
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conforms
to the requirements of the Trust Indenture Act and the rules
and
regulations thereunder applicable to an indenture that is
qualified
thereunder.
(j) The Notes have been duly and validly authorized by the
Company
and when
duly issued by the Company in accordance with the terms of the
Indenture
and, assuming due authentication of the Notes by the Trustee,
when
delivered to the Initial Purchasers against payment therefor in
accordance
with the terms hereof, will have been validly issued and
delivered,
and will constitute legal, valid and binding obligations of the
Company
entitled to the benefits of the Indenture and enforceable
against
the
Company in accordance with their terms, subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium
and other
similar laws relating to or affecting creditors' rights and
remedies
generally, and subject, as to enforceability, to general
principles
of equity, including principles of commercial reasonableness,
good faith
and fair dealing (regardless of whether enforcement is sought
in a
proceeding at law or in equity).
(k) The Guarantees have been duly and validly authorized by each
of
the
Subsidiary Guarantors and when duly endorsed on the Notes in
accordance
with the terms of the Indenture and, assuming due
authentication of the Notes by the Trustee, upon delivery to the
Initial
Purchasers
against payment therefor in accordance with the terms hereof
will
constitute legal, valid and binding obligations of each of the
Subsidiary
Guarantors entitled to the benefits of the Indenture and
enforceable against each of the Subsidiary Guarantors in accordance
with
their
terms, subject to applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws
relating to
or
affecting creditors' rights and remedies generally, and subject, as
to
enforceability, to general principles of equity, including
principles of
commercial
reasonableness, good faith and fair dealing (regardless of
whether
enforcement is sought in a proceeding at law or in equity).
(l) The Exchange Notes have been duly and validly authorized by
the
Company
and if and when duly issued by the Company in accordance with
the
terms of
the Indenture and, assuming due authentication of the Exchange
Notes by
the Trustee, if and when delivered in accordance with the
Registered
Exchange Offer contemplated by the Registration Rights
Agreement,
will constitute legal, valid and binding obligations of the
Company
entitled to the benefits of the Indenture and enforceable
against
the
Company in accordance with their terms, subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium
and other
similar laws relating to or affecting creditors' rights and
remedies
generally, and subject, as to enforceability, to general
principles
of equity, including principles of commercial reasonableness,
good faith and fair dealing
(regardless of whether enforcement is sought
in a
proceeding at law or in equity).
(m) The guarantees of the Exchange Notes (the "EXCHANGE NOTE
GUARANTEES") have been duly and validly authorized by each of
the
Subsidiary
Guarantors and if and when duly endorsed on the Exchange Notes
in
accordance with the terms of the Indenture and, assuming due
authentication of the Exchange Notes by the Trustee, if and when
the
Exchange
Notes are delivered in accordance with the Registered
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Exchange
Offer contemplated by the Registration Rights Agreement, will
constitute
legal, valid and binding obligations of each of the Subsidiary
Guarantors
entitled to the benefits of the Indenture and enforceable
against
each of the Subsidiary Guarantors in accordance with their
terms,
subject to
applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or
affecting
creditors'
rights and remedies generally, and subject, as to
enforceability, to general principles of equity, including
principles of
commercial
reasonableness, good faith and fair dealing (regardless of
whether
enforcement is sought in a proceeding at law or in equity).
(n) The Company and the Subsidiary Guarantors have all
requisite
corporate
power and authority to enter into (A) the New Credit Facility
and (B) any and all other
agreements and instruments ancillary to or
entered
into in connection with the transaction contemplated by the New
Credit
Facility (items (A) and (B) are referred to collectively as the
"CREDIT
DOCUMENTS").
(o) Each of the New Credit Facility and the other Credit
Documents
has been
duly and validly authorized by the Company and the Subsidiary
Guarantors, to the extent they are a party thereto, and when duly
executed
by the
proper officers of the Company and each of the Subsidiary
Guarantors
(assuming due authorization, execution and delivery by the
other
parties thereto) and delivered by the Company and each of the
Subsidiary
Guarantors, to the extent they are a party thereto, will
constitute
a legal, valid and binding agreement of each of the Company and
the
Subsidiary Guarantors, enforceable against the Company and each of
the
Subsidiary
Guarantors in accordance with its terms, subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium
and other
similar laws relating to or affecting creditors' rights and
remedies
generally, and subject, as to enforceability, to general
principles
of equity, including principles of commercial reasonableness,
good faith
and fair dealing (regardless of whether enforcement is sought
in a
proceeding at law or in equity). As of December 31, 2003, after
giving
effect to the closing of the sale of the Notes, the receipt by
the
Company of
the proceeds therefrom, the closing of the New Credit Facility,
anticipated borrowings of $30.0 million under the New Credit
Facility, the
$45.3
million of letters of credit outstanding under the New Credit
Facility
and the application of the proceeds from the Notes and the New
Credit
Facility as described under the caption "Use of Proceeds" in
the
Offering
Memorandum, the Company would have had $79.7 million of
borrowings
available to it under the New Credit Facility. All
representations and warranties made by the Company in the New
Credit
Facility
and the other Credit Documents will be true and correct in all
material
respects as of the date thereof.
(p) The Indenture, the Notes, the Guarantees, the Registration
Rights
Agreement and the Credit Documents conform in all material
respects
to the
descriptions thereof in the Offering Memorandum.
(q) The execution, delivery and performance of this Agreement,
the
other
Operative Documents, the New Credit Facility and the other
Credit
Documents
by the Company and the Subsidiary Guarantors and the
consummation of the Transactions will not conflict with or result
in a
breach or
violation of any of the terms or provisions of, or
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constitute
a default under, (i) any indenture, mortgage, deed of trust,
loan
agreement or other agreement, license or instrument to which
the
Company or
any of the Subsidiary Guarantors is a party or by which the
Company or
any of the Subsidiary Guarantors is bound or to which any of
the
property or assets of the Company or any of the Subsidiary
Guarantors
is
subject, (ii) the provisions of the charter or bylaws of the
Company or
the
charter, bylaws or other organizational documents of any of the
Subsidiary
Guarantors or (iii) any statute or any order, rule or
regulation
of any court or governmental agency or body having jurisdiction
over the
Company or any of the Subsidiary Guarantors or any of their
properties
or assets, except, in the case of clauses (i) and (iii) for
such
conflicts, breaches, violations or defaults that would not have
a
Material
Adverse Effect. Except as may be required in connection with
(1)
the
registration of the Notes, the Exchange Notes, the Guarantees
and/or
the
Exchange Note Guarantees under the Securities Act in accordance
with
the
Registration Rights Agreement, (2) qualification of the
Indenture
under the
Trust Indenture Act, (3) compliance with the securities or blue
sky laws
of various jurisdictions and (4) filings required by the terms
of
the Credit
Documents, no consent, approval, authorization or order of, or
filing or
registration with, any such court or governmental agency or
body
is
required for the execution, delivery and performance of this
Agreement,
any of the
other Operative Documents, the New Credit Facility and the
other
Credit Documents by the Company and the Subsidiary Guarantors
and
the
consummation of the Transactions.
(r) The financial statements (including the related notes and
supporting
schedules) included in the Offering Memorandum comply as to
form in
all material respects with the requirements of Regulation S-X
under the
Securities Act and present fairly the financial condition and
results of
operations and cash flows of the entities purported to be shown
thereby,
at the dates and for the periods indicated, and have been
prepared
in conformity with generally accepted accounting principles
applied on
a consistent basis throughout the periods involved. The other
financial
data, selected pro forma ratios, operating data and statistical
information and data, including EBITDA (as defined in the
Offering
Memorandum), included in the Offering Memorandum is presented
fairly and
has been prepared on a basis
consistent with such financial statements and
the books
and records of the Company.
(s) Except as set forth in the Offering Memorandum, there are
no
legal or
governmental proceedings pending to which the Company or any of
the
Subsidiary Guarantors is a party or of which any property or assets
of
the
Company or any of the Subsidiary Guarantors is the subject which,
if
determined
adversely to the Company or any of the Subsidiary Guarantors,
would have
a Material Adverse Effect, and to the Company's knowledge, no
such
proceedings are threatened or contemplated by governmental
authorities or others.
(t) Except as set forth in the Offering Memorandum, there are
no
contracts,
agreements or understandings between the Company and/or the
Subsidiary
Guarantors and any person granting such person the right to
require
the Company or the Subsidiary Guarantors to file a registration
statement
under the Securities Act with respect to any securities of the
Company or
the Subsidiary Guarantors owned or to be owned by such person
or to
require the Company or the Subsidiary Guarantors to include
such
securities
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in the
securities to be registered pursuant to the Exchange Offer
Registration Statement or the Shelf Registration Statement or in
any
securities
registered or to be registered pursuant to any other
registration statement filed by or required to be filed by the
Company or
the
Subsidiary Guarantors under the Securities Act.
(u) Except as disclosed in the Offering Memorandum, since the
date
of the
latest audited consolidated financial statements of the Company
included
in the Offering Memorandum, none of the Company or the
Subsidiary
Guarantors
has incurred any liability or obligation, direct or contingent,
or entered
into any transaction, in each case not in the ordinary course
of
business, that is material to the Company or the Subsidiary
Guarantors,
taken as a
whole, and there has not occurred, to the knowledge of the
Company
and the Subsidiary Guarantors, any development or event
involving
a Material Adverse Effect and,
except as disclosed in or contemplated by
the
Offering Memorandum, there has been no (i) dividend or distribution
of
any kind
declared, paid or made by the Company or its affiliates on any
class of
its respective capital stock, (ii) issuance of securities by
the
Company or
its affiliates (other than the Notes and the Guarantees offered
thereby or
pursuant to an issuance by the Company or its affiliates of
options to
purchase the capital stock of the Company or its affiliates) or
(iii)
material increase in short-term or long-term debt of the Company
or
the
Subsidiary Guarantors.
(v) The Company is in full compliance with the reporting
requirements of Section 13 or 15(d) of the Exchange Act. All
reports filed
by the
Company with the Commission pursuant to Section 13 or 15(d) of
the
Exchange
Act comply as to form with the Exchange Act and the rules and
regulations of the Commission thereunder and when filed did not
include
any untrue
statement of a material fact or omit to state any material fact
necessary
to make the statements therein not misleading.
(w) The Company and each Subsidiary Guarantor (i) makes and
keeps
accurate
books and records and (ii) maintains a system of internal
accounting
controls sufficient to provide reasonable assurance that (A)
transactions are executed in accordance with management's
authorization,
(B)
transactions are recorded as necessary to permit preparation of
its
financial
statements in conformity with generally accepted accounting
principles
and to maintain accountability for its assets, (C) access to
its assets
is permitted only in accordance with management's authorization
and (D)
the recorded accountability for its assets is compared with
existing
assets at reasonable intervals and appropriate action is taken
with
respect to any differences.
(x) KPMG LLP, who have certified certain financial statements of
the
Company,
whose report appears in the Offering Memorandum and who have
delivered
the initial letter referred to in Section 7(j) hereof, are
independent public accountants under rule 101 of the AICPA's Code
of
Professional Conduct and its interpretations and rulings.
(y) The statistical and market-related data included in the
Offering
Memorandum
are based on or derived from sources that the Company and the
subsidiaries believe to be reliable and accurate.
9
<PAGE>
(z) Except as disclosed in or specifically contemplated by the
Offering
Memorandum, each of the Company and the Subsidiary Guarantors
has
such
permits, licenses, patents, franchises, certificates of need
and
other
approvals or authorizations of governmental or regulatory
authorities ("PERMITS") as are necessary under applicable law to
own its
properties
and to conduct its businesses in the manner described in the
Offering
Memorandum, except where the failure to have any such Permit
would not,
individually or in the aggregate, have a Material Adverse
Effect;
each of the Company and the Subsidiary Guarantors has fulfilled
and
performed all of its obligations with respect to the Permits,
except
where the
failure to so fulfill and/or perform such obligations would not
have a
Material Adverse Effect; and, except as disclosed in or
specifically contemplated by the Offering Memorandum, no event
has
occurred
which allows, or after notice or lapse of time would allow,
revocation
or termination thereof or results in any other impairment of
the rights
of the holder of any such Permit, except where any such
revocations, terminations or impairments would not, individually or
in the
aggregate,
have a Material Adverse Effect. Except as disclosed in or
specifically contemplated by the Offering Memorandum, none of the
Permits
contains
any restriction that is materially burdensome (other than such
burdens as
are common or customary to such Permits) to any of the Company
or the
Subsidiary Guarantors.
(aa) The Company and each of the Subsidiary Guarantors carry, or
are
covered
by, insurance in such amounts and covering such risks as is
adequate
for the conduct of their respective businesses and the value of
their
respective properties and as is customary for companies engaged
in
similar
businesses in similar industries.
(bb) The Company and each of the Subsidiary Guarantors own or
possess
adequate rights to use all patents, patent applications,
trademarks, service marks, trade names, trademark registrations,
service
mark
registrations, copyrights and licenses necessary for the conduct
of
their
respective businesses and have no reason to believe that the
conduct
of their
respective businesses will conflict with, and have not received
any notice
of any claim of conflict with, any such rights of others, and
the
Company and the Subsidiary Guarantors are not aware of any pending
or
threatened
claim to the contrary or any pending or threatened challenge by
any other
person to the rights of the Company and the Subsidiary
Guarantors
with respect to the foregoing which, if determined adversely to
any of the
Company or the Subsidiary Guarantors, would have a Material
Adverse
Effect.
(cc) There are no contracts or other documents which would be
required
to be described in a prospectus included in or filed as an
exhibit to
a registration statement on Form S-1 under the Securities Act
that have
not been described in the Offering Memorandum or filed with the
Commission.
(dd) No relationship, direct or indirect, exists between or
among
the
Company and the Subsidiary Guarantors, on the one hand, and the
directors,
officers, shareholders, customers or suppliers of the Company
or the
Subsidiary Guarantors, on the other hand, which would be
required
to be
described in a prospectus included in a registration statement
on
Form S-1
under the Securities Act that is not described in the Offering
Memorandum.
10
<PAGE>
(ee) No labor disturbance by the employees of the Company or any
of
the
Subsidiary Guarantors exists or, to the knowledge of the Company,
is
imminent
which would have a Material Adverse Effect.
(ff) The Company is in compliance in all material respects with
all
presently
applicable provisions of the Employee Retirement Income
Security
Act of
1974, as amended, including the regulations and published
interpretations thereunder ("ERISA"); no "reportable event" (as
defined in
ERISA) has
occurred with respect to any "pension plan" (as defined in
ERISA) for
which the Company would have any material liability; the
Company
has not incurred and does not expect to incur any material
liability
under (i) Title IV of ERISA with respect to termination of, or
withdrawal
from, any "pension plan" or (ii) Sections 412 or 4971 of the
Internal
Revenue Code of 1986, as amended, including the regulations and
published
interpretations thereunder (the "CODE"); and each "pension
plan"
for which
the Company would have any liability that is intended to be
qualified
under Section 401(a) of the Code is so qualified in all
material
respects
and nothing has occurred, whether by action or by failure to
act,
which
would cause the loss of such qualification.
(gg) The Company and the Subsidiary Guarantors have filed all
federal,
state and local income and franchise tax returns required to be
filed
through the date hereof, other than those being contested in
good
faith, and
paid all taxes due thereon, other than those being contested in
good
faith, and no tax deficiency has been determined adversely to
the
Company or
any of the Subsidiary Guarantors, nor does the Company have any
knowledge
of any tax deficiency which, if determined adversely to the
Company or
any of the Subsidiary Guarantors, would have a Material Adverse
Effect.
(hh) Neither the Company nor any of the Subsidiary Guarantors (i)
is
in
violation of its charter, bylaws or other organizational
documents,
(ii) is in
default, and no event has occurred which, with notice or lapse
of time or
both, would constitute such a default, in the due performance
or
observance of any term, covenant or condition contained in any
material
indenture,
mortgage, deed of trust, loan agreement or other agreement or
instrument
to which it is a party or by which it is bound or to which any
of its
properties or assets is subject, except for such defaults that
would not
have a Material Adverse Effect, or (iii) is in violation of any
law,
ordinance, governmental rule, regulation or court decree to which
it
or its
property or assets may be subject, except for such violations
that
would not
have a Material Adverse Effect.
(ii) Neither the Company nor any of the Subsidiary Guarantors,
nor
any
current director or officer, or to the Company's knowledge, any
current
agent, employee or other person associated with or acting on
behalf of
the Company or any of the Subsidiary Guarantors, has used any
corporate
funds for any unlawful contribution, gift, entertainment or
other
unlawful expense relating to political activity; made any direct
or
indirect
unlawful payment to any foreign or domestic government official
or
employee from corporate funds; violated or is in violation of
any
provision
of the Foreign Corrupt Practices Act of 1977; or made any
bribe,
rebate,
payoff, influence payment, kickback or other unlawful payment.
11
<PAGE>
(jj)
Neither the Company nor the Subsidiary Guarantors has stored,
disposed
of, generated, manufactured, refined, transported, handled or
treated
toxic wastes, medical wastes, solid wastes, hazardous wastes or
hazardous
substances or other similar materials ("HAZARDOUS MATERIALS")
and, to
the knowledge of the Company, there has been no storage,
disposal,
generation, manufacture, refinement, transportation, handling or
treatment
of
Hazardous Materials by any other person at, upon or from any of
the
properties
now owned or leased by the Company or the Subsidiary Guarantors
in
violation of any applicable law, ordinance, rule, regulation,
order,
judgment,
decree or permit which could reasonably be expected to have,
individually or in the aggregate with all such violations and
remedial
actions, a
Material Adverse Effect; there has been no material spill,
discharge,
leak, emission, injection, escape, dumping or release of any
kind onto
such property or into the environment surrounding such property
of any
toxic wastes, medical wastes, solid wastes, hazardous wastes or
hazardous
substances due to or caused by the Company or any of the
Subsidiary
Guarantors or with respect to which the Company or any of the
Subsidiary
Guarantors have knowledge, which could reasonably be expected
to have,
individually or in the aggregate with all such spills,
discharges, leaks, emissions, injections, escapes, dumpings and
releases,
a Material
Adverse Effect; and the terms "hazardous wastes," "toxic
wastes,"
"hazardous substances," "solid wastes" and "medical wastes"
shall
have the
meanings specified in any applicable local, state, federal and
foreign
laws or regulations with respect to environmental protection.
(kk) The Company and each of the Subsidiary Guarantors have good
and
marketable
title in fee simple to all real property and good and
marketable
title to all personal property owned by them, in each case,
free and
clear of all liens, encumbrances and defects except such as are
existing
under the Existing Credit Facility and contemplated under the
New
Credit
Facility or otherwise described in the Offering Memorandum or
such
as do not
materially affect the value of such property and do not
materially
interfere with the use made and proposed to be made of such
property
by the Company and the Subsidiary Guarantors; and all assets
held
under lease by the Company
and the Subsidiary Guarantors are held by them
under
valid, subsisting and enforceable leases, with such exceptions
as
are not
material and do not interfere with the use made and proposed to
be
made of
such assets by the Company and the Subsidiary Guarantors.
(ll) Immediately after the consummation of the Transactions,
the
fair value
and present fair saleable value of the assets of the Company
and each
of the Subsidiary Guarantors (each on a consolidated basis)
will
exceed the
sum of its stated liabilities and identified contingent
liabilities; none of the Company nor any of the Subsidiary
Guarantors
(each on a
consolidated basis) is, nor will any of the Company or any of
the
Subsidiary Guarantors (each on a consolidated basis) be, after
giving
effect to
the execution, delivery and performance of this Agreement and
the other
Operative Documents and the New Credit Facility and the other
Credit
Documents and the consummation of the Transactions, (A) left
with
unreasonably small capital with which to carry on its business as
it is
proposed
to be conducted, (B) unable to pay its debts (contingent or
otherwise)
as they mature or (C) otherwise insolvent.
(mm) Neither the Company nor any Subsidiary Guarantor is, or, as
of
the
Closing Date after giving effect to the Transactions and the
application of the proceeds as
12
<PAGE>
described
in the Offering Memorandum under the section entitled "Use of
Proceeds,"
will be, an "investment company" within the meaning of such
term under
the Investment Company Act of 1940, as amended (the "INVESTMENT
COMPANY
ACT").
(nn) Except as set forth in the Offering Memorandum, neither
the
Company
nor any of the Subsidiary Guarantors nor, to the knowledge of
the
Company,
any other person who has a direct or indirect ownership or
control
interest in the Company or any of the Subsidiary Guarantors or
who
is an
officer, director, agent or managing employee of the Company or
any
Subsidiary
Guarantor: (1) has engaged in any activities which are
prohibited, or are cause for criminal or civil penalties and/or
mandatory
or
permissive exclusion from Medicare or Medicaid, under Section
1320a-7,
1320a-7a,
1320a-7b, or 1395nn of Title 42 of the United States Code, the
federal
TRICARE statute, the Federal False Claims Act 31
U.S.C.Section 3729-3733, or the regulations promulgated pursuant to
such
statutes
or regulations or related state or local statutes or by
generally
recognized
professional standards of care or conduct; (2) has had a civil
monetary
penalty assessed against it under Section 1128A of the Social
Security
Act ("SSA"); (3) is currently excluded from participation under
the
Medicare program or a Federal Health Care Program (as that term
is
defined in
SSA Section 1128(B)(f)); or (4) has been convicted (as that
term is
defined in 42 C.F.R. Section 1001.2) of any of the categories
of
offenses
described in SSA Section 1128(a) and (b)(1), (2) and (3).
(oo) Neither the Company nor any other affiliate (as defined in
Rule
501(b) of
Regulation D under the Securities Act ("REGULATION D")) of the
Company
has directly, or through any agent (provided that no
representation is made as to the Initial Purchasers or any person
acting
on their
behalf), (i) sold, offered for sale, solicited offers to buy or
otherwise
negotiated in respect of, any security (as defined in the
Securities
Act) which is or could be integrated with the offering and sale
of the
Notes and the Guarantees in a manner that would require the
registration of the Notes and the Guarantees under the Securities
Act or
(ii)
engaged in any form of general solicitation or general
advertising
(within
the meaning of Regulation D, including, but not limited to,
advertisements, articles, notices or other communications published
in any
newspaper,
magazine, or similar medium or broadcast over television or
radio, or
any seminar or meeting whose attendees have been invited by any
general solicitation
or general advertising) in connection with the
offering
of the Notes and the Guarantees. Neither the Company nor any
Subsidiary
Guarantor has offered, sold or issued any securities, or
securities
that are convertible into other securities, with terms that are
substantially similar to the Notes and the Guarantees during the
six-month
period
preceding the date of the Offering Memorandum, including any
sales
pursuant
to Section 4(2) of the Securities Act or Regulation D or
Regulation
S under the Securities Act.
(pp) Each of the Preliminary Offering Memorandum and the
Offering
Memorandum
and each amendment or supplement thereto, as of its date,
contains
the information specified in, and meets the requirements of,
Rule
144A(d)(4)
under the Act.
(qq) Neither the Company nor any Subsidiary Guarantor has
distributed and, prior to the later to occur of the Closing Date
and
completion
of the distribution of the Notes and the Guarantees, will not
distribute
any offering material in connection with the
13
<PAGE>
offering
and sale of the Notes other than the Preliminary Offering
Memorandum
and the Offering Memorandum.
(rr) When issued and delivered pursuant to this Agreement, the
Notes
will not
be of the same class (within the meaning of Rule 144A under the
Securities
Act) as securities of the Company that are listed on a national
securities
exchange registered under Section 6 of the Exchange Act or that
are quoted
in a U.S. automated inter-dealer quotation system.
(ss) Assuming (i) that your representations and warranties in
Section 2
of this Agreement are true, (ii) compliance by you with the
covenants
set forth herein and (iii) that each of the Eligible Purchasers
is a QIB
or a person who acquires the Notes and the Guarantees outside
the
United
States in an "offshore transaction" and is not a "U.S. person"
(within
the meaning of Rule 904 of Regulation S), it is not necessary
in
connection
with the purchase of the Notes and the Guarantees and the offer
and
initial resale of the Notes and the Guarantees by you in the
manner
contemplated by this Agreement and the Offering Memorandum, to
register
the Notes
and the Guarantees under the Securities Act or to qualify the
Indenture
under the Trust Indenture Act.
(tt) None of the Company, any Subsidiary Guarantor or any of
their
affiliates
or any person acting on their behalf (provided that no
representation is made as to the Initial Purchasers or any person
acting
on their
behalf) has engaged or will engage in any directed selling
efforts
within the meaning of Rule 902(c) of Regulation S with respect
to
the Notes,
and the Company, the Subsidiary Guarantors and their other
affiliates
and all persons acting on their behalf (provided that no
representation is made as to the Initial Purchasers or any person
acting
on their
behalf) have complied with and will comply with the offering
restrictions requirements of Regulation S in connection with the
offering
of the
Notes outside of the United States and, in connection
therewith,
the
Offering Memorandum will contain the disclosure required by
Rule
902(g).
The sales of the Notes pursuant to Regulation S are not part of
a
plan or
scheme to evade the registration provision of the Securities
Act.
(uu) The Notes sold in reliance on Regulation S will be
represented
upon
issuance by a temporary global security that may not be exchanged
for
definitive
securities until the expiration of the 40-day restricted period
referred
to in Rule 903(b)(2) of the Securities Act and only upon
certification of beneficial ownership of such Notes by non-U.S.
persons or
U.S.
persons who purchased such Notes in transactions that were
exempt
from the
registration requirements of the Securities Act.
(vv) In connection with the distribution of the Notes and the
Guarantees, neither the Company nor any of its subsidiaries has
taken or
will take,
directly or indirectly, any action designed to cause or result
in, or
which has constituted or which might reasonably be expected to
constitute, the stabilization or manipulation of the price of the
Notes
and the
Guarantees to facilitate the sale or resale of the Notes and
the
Guarantees.
14
<PAGE>
(ww) No "nationally recognized statistical rating organization"
as
such term
is defined for purposes of Rule 436(g)(2) under the Securities
Act (i)
has imposed (or has informed the Company that it is considering
imposing)
any condition (financial or otherwise) on the Company's
retaining
any rating assigned as of the date hereof to the Company or any
of their
respective securities or (ii) has indicated to the Company that
it is
considering (A) the downgrading, suspension or withdrawal of, or
any
review for
a possible change that does not indicate the direction of the
possible
change in, any rating so assigned or (B) any negative change in
the
outlook for any rating of the Company.
(xx) The Company has not taken, and will not take, any action
that
might
cause this Agreement or the issuance or sale of the Notes and
the
Guarantees
to violate Regulation T (12 C.F.R. Part 220), Regulation U (12
C.F.R.
Part 221) or Regulation X (12 C.F.R. Part 224) of the Board of
Governors
of the Federal Reserve System.
(yy) The Company and each Subsidiary Guarantor understands that
the
Initial
Purchaser and, for purposes of the opinions to be delivered to
the
Initial
Purchaser pursuant to Section 7 hereof, counsel to the Company
and
counsel to
the Initial Purchasers will rely upon the accuracy and truth of
the
foregoing representations and hereby consents to such reliance.
SECTION 2. Representations, Warranties and Agreements of the
Initial
Purchasers. Each of the Initial Purchasers,
severally and not jointly,
represents and warrants to, and agrees
with, the Company and the Subsidiary
Guarantors, that:
(a) Such Initial Purchaser is a QIB with such knowledge and
experience
in financial and business matters as are necessary in order to
evaluate
the merits and risks of an investment in the Notes and the
Guarantees.
(b) Such Initial Purchaser (i) is not acquiring the Notes and
the
Guarantees
with a view to any distribution thereof or with any present
intention
of offering or selling any of the Notes and the Guarantees in a
transaction that would violate the Securities Act or any state
securities
laws or
any other applicable jurisdiction; (ii) in connection with the
Exempt
Resales, will solicit offers to buy the Notes and the
Guarantees
only from,
and will offer to sell the Notes and the Guarantees only to,
the
Eligible Purchasers in accordance with this Agreement and on the
terms
contemplated by the Offering Memorandum; and (iii) will not offer
or sell
the Notes
and the Guarantees, nor has it offered or sold the Notes and
the
Guarantees
by, or otherwise engaged in, any form of general solicitation
in
connection with the offering of the Notes and the Guarantees.
(c) The Notes and the Guarantees have not been and will not be
registered
under the Securities Act and may not be offered or sold within
the United
States or to, or for the account or benefit of, U.S. persons
except in
accordance with Regulation S under the Securities Act or
pursuant
to an exemption from the registration requirements of the
Securities
Act. Such Initial Purchaser represents that it has not offered,
sold or
delivered the Notes and the Guarantees, and will not offer,
sell
or deliver
the Notes and the Guarantees (i) as part of their distribution
at any
time or (ii) otherwise until 40 days after the later of the
commencement of the offering of the Notes and the Guarantees and
the
15
<PAGE>
Closing
Date (such period, the "DISTRIBUTION COMPLIANCE PERIOD"),
within
the United
States or to, or for the account or benefit of U.S. persons,
except in
accordance with Rule 144A under the Securities Act.
Accordingly,
such
Initial Purchaser represents and agrees that neither it, its
affiliates
nor any persons acting on its behalf have engaged or will
engage in
any directed selling efforts within the meaning of Rule 902(c)
of
Regulation S with respect to the Notes and the Guarantees, and
its
affiliates
and all persons acting on its behalf have complied and will
comply
with the offering restrictions requirements of Regulation S.
(d) Such Initial Purchaser agrees that, at or prior to
confirmation
of a sale
of Notes and Guarantees (other than a sale pursuant to Rule
144A), it
will have sent to each distributor, dealer or person receiving
a
selling
concession, fee or other remuneration that purchases Notes and
Guarantees
from them during the Distribution Compliance Period a
confirmation or notice su
