Psychiatric Solutions,
Inc.
7 3 / 4
% Senior Subordinated Notes due
2015
Banc of America Securities
LLC
Barclays Capital Inc.
Citigroup Global Markets Inc.
J.P. Morgan Securities Inc.
RBC Capital Markets Corporation
Banc of America
Securities LLC
as Representative of the Initial
Purchasers named in Schedule A
One Bryant Park
New York, New York 10036
Introductory . Psychiatric Solutions, Inc., a corporation
organized under the laws of Delaware (the “Company”),
proposes to issue and sell to the several Initial Purchasers named
in Schedule A (the “Initial Purchasers”), acting
severally and not jointly, the respective amounts set forth in such
Schedule A of $120,000,000 aggregate principal amount of the
Company’s 7 3 / 4
% Senior Subordinated Notes due 2015
(the “Notes”, and together with the Guarantees (as
defined below), the “Securities”). Banc of America
Securities LLC has agreed to act as the representative of the
several Initial Purchasers (the “Representative”) in
connection with the offering and sale of the Securities.
The Securities
will be issued pursuant to an indenture, to be dated as of the
Closing Date (as defined below) (the “Indenture”),
among the Company, each of the Guarantors (as defined below) and
U.S. Bank National Association, as trustee (the
“Trustee”). The Securities will be issued only in
book-entry form in the name of Cede & Co., as nominee of The
Depository Trust Company (the “Depositary”), pursuant
to a letter of representations, to be dated on or before the
Closing Date (the “DTC Agreement”), among the Company,
the Guarantors, the Trustee and the Depositary.
The holders of the
Securities will be entitled to the benefits of a registration
rights agreement, to be dated as of the Closing Date (the
“Registration Rights Agreement”), among the Company,
each of the Guarantors and the Representative, pursuant to which
the Company and the Guarantors may be required to file with the
Securities and Exchange Commission (the “Commission”),
under the circumstances set forth therein, (i) a registration
statement under the Securities Act of 1933 (as amended, the
“Securities Act”, which term, as used herein, includes
the rules and regulations of the Commission thereunder) relating to
another series of debt securities of the Company with terms
substantially identical to the Securities (the “Exchange
Securities”) to be offered in exchange for the Securities
(the “Exchange Offer”) and (ii) to the extent
required by the Registration Rights Agreement, a shelf registration
statement pursuant to Rule 415 of the Securities Act relating
to the resale by certain holders of the Securities, and in each
case, to use its reasonable best efforts to cause such registration
statements to be declared effective. All references herein to the
Exchange Securities and the Exchange Offer are only applicable if
the Company and the Guarantors are in fact required to consummate
the Exchange Offer pursuant to the terms of the Registration Rights
Agreement.
The payment of
principal of and premium, if any, on the Notes will be fully and
unconditionally guaranteed (the “Guarantees”) on a
senior subordinated unsecured basis, jointly and severally by each
of the Company’s direct and indirect domestic subsidiaries
set forth on Schedule B hereto (the “Guarantors”) and
(ii) any subsidiary of the Company formed or acquired after
the Closing Date that executes an additional guarantee in
accordance with the terms of the Indenture, and their respective
successors and assigns.
The Company
understands that the Initial Purchasers propose to make an offering
of the Securities on the terms and in the manner set forth herein
and in the Pricing Disclosure Package (as defined below) and agrees
that the Initial Purchasers may resell, subject to the conditions
set forth herein, all or a portion of the Securities to purchasers
(the “Subsequent Purchasers”) on the terms set forth in
the Pricing Disclosure Package (the first time when sales of the
Securities are made is referred to as the “Time of
Sale”). The Securities are to be offered and sold to or
through the Initial Purchasers without being registered with the
Commission under the Securities Act, in reliance upon exemptions
therefrom. Pursuant to the terms of the Securities and the
Indenture, investors who acquire Securities shall be deemed to have
agreed that the Securities may only be resold or otherwise
transferred, after the date hereof, if such Securities are
registered for sale under the Securities Act or if an exemption
from the registration requirements of the Securities Act is
available (including the exemptions afforded by Rule 144A
under the Securities Act (“Rule 144A”) or
Regulation S under the Securities Act
(“Regulation S”)).
The Company has
prepared and delivered to each Initial Purchaser copies of a
Preliminary Offering Memorandum, dated May 4, 2009 (the
“Preliminary Offering Memorandum”), and has prepared
and delivered to each Initial Purchaser copies of a Pricing
Supplement, dated May 4, 2009 (the “Pricing
Supplement”), describing the terms of the Securities, each
for use by such Initial Purchaser in connection with its
solicitation of offers to purchase the Securities. The Preliminary
Offering Memorandum and the Pricing Supplement are herein referred
to as the “Pricing Disclosure Package.” Promptly after
this Agreement is executed and delivered, the Company will prepare
and deliver to each Initial Purchaser a final offering memorandum,
dated the date hereof (the “Final Offering
Memorandum”). The Company hereby confirms that it has
authorized the use of the Pricing Disclosure Package and the Final
Offering Memorandum, and any amendment or supplement thereto, in
connection with the offer and sale of the Securities by the Initial
Purchasers.
All references
herein to the terms “Pricing Disclosure Package” and
“Final Offering Memorandum” shall be deemed to mean and
include all information filed under the Securities Exchange Act of
1934 (as amended, the “Exchange Act,” which term, as
used herein, includes the rules and regulations of the Commission
promulgated thereunder) prior to the Time of Sale and incorporated
by reference in the Pricing Disclosure Package (including the
Preliminary Offering Memorandum) or the Final Offering Memorandum
(as the case may be), and all references herein to the terms
“amend,” “amendment” or
“supplement” with respect to the Final Offering
Memorandum shall be deemed to mean and include all information
filed under the Exchange Act after the Time of Sale and
incorporated by reference in the Final Offering
Memorandum.
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The Company hereby
confirms its agreements with the Initial Purchasers as
follows:
SECTION 1.
Representations and Warranties . Each of the Company and the
Guarantors, jointly and severally, hereby represents, warrants and
covenants to each Initial Purchaser that, as of the date hereof and
as of the Closing Date (references in this Section 1 to the
“Offering Memorandum” are to (x) the Pricing
Disclosure Package in the case of representations and warranties
made as of the date hereof and (y) the Pricing Disclosure
Package and the Final Offering Memorandum in the case of
representations and warranties made as of the Closing
Date):
(a) No
Registration Required . Subject to compliance by the Initial
Purchasers with the representations and warranties set forth in
Section 2 hereof and with the procedures set forth in
Section 7 hereof, it is not necessary in connection with the
offer, sale and delivery of the Securities to the Initial
Purchasers and to each Subsequent Purchaser in the manner
contemplated by this Agreement and the Offering Memorandum to
register the Securities under the Securities Act or, until such
time as the Exchange Securities are issued pursuant to an effective
registration statement, to qualify the Indenture under the Trust
Indenture Act of 1939 (the “Trust Indenture Act,” which
term, as used herein, includes the rules and regulations of the
Commission promulgated thereunder).
(b) No
Integration of Offerings or General Solicitation . None of the
Company, its affiliates (as such term is defined in Rule 501
under the Securities Act) (each, an “Affiliate”), or
any person acting on its or any of their behalf (other than the
Initial Purchasers, as to whom the Company makes no representation
or warranty) has, directly or indirectly, solicited any offer to
buy or offered to sell, or will, directly or indirectly, solicit
any offer to buy or offer to sell any security which is or would be
integrated with the sale of the Securities in a manner that would
require the Securities to be registered under the Securities Act.
None of the Company, its Affiliates, or any person acting on its or
any of their behalf (other than the Initial Purchasers, as to whom
the Company makes no representation or warranty) has engaged or
will engage, in connection with the offering of the Securities, in
any form of general solicitation or general advertising within the
meaning of Rule 502 under the Securities Act. With respect to
those Securities sold in reliance upon Regulation S,
(i) none of the Company, its Affiliates or any person acting
on its or their behalf (other than the Initial Purchasers, as to
whom the Company makes no representation or warranty) has engaged
or will engage in any directed selling efforts within the meaning
of Regulation S and (ii) each of the Company and its
Affiliates and any person acting on its or their behalf (other than
the Initial Purchasers, as to whom the Company makes no
representation or warranty) has complied and will comply with the
offering restrictions set forth in Regulation S.
(c)
Eligibility for Resale Under Rule 144A . The Securities
are eligible for resale pursuant to Rule 144A and will not be,
at the Closing Date, of the same class as securities listed on a
national securities exchange registered under Section 6 of the
Exchange Act or quoted in a U.S. automated interdealer quotation
system.
-3-
(d) The
Pricing Disclosure Package and Offering Memorandum . The
Preliminary Offering Memorandum, as of its date, did not contain or
include an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in
light of the circumstances under which they were made, not
misleading; neither the Pricing Disclosure Package, as of the Time
of Sale, nor the Final Offering Memorandum, as of its date or (as
amended or supplemented in accordance with Section 3(a), as
applicable) as of the Closing Date, contains or includes an untrue
statement of a material fact or omits to state a material fact
necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading;
provided that this representation, warranty and agreement shall not
apply to statements in or omissions from the Preliminary Offering
Memorandum, the Pricing Disclosure Package, the Final Offering
Memorandum or any amendment or supplement thereto made in reliance
upon and in conformity with information furnished to the Company in
writing by any Initial Purchaser through the Representative
expressly for use in the Pricing Disclosure Package, the Final
Offering Memorandum or amendment or supplement thereto, as the case
may be. The Pricing Disclosure Package contains, and the Final
Offering Memorandum will contain, all the information specified in,
and meeting the requirements of, Rule 144A. The Company has
not distributed and will not distribute, prior to the later of the
Closing Date and the completion of the Initial Purchasers’
distribution of the Securities, any offering material in connection
with the offering and sale of the Securities other than the Pricing
Disclosure Package and the Final Offering Memorandum.
(e)
Company Additional Written Communications . The Company has
not prepared, made, used, authorized, approved or distributed, and
will not prepare, make, use, authorize, approve or distribute, any
written communication that constitutes an offer to sell or
solicitation of an offer to buy the Securities (each such
communication by the Company or its agents and representatives
(other than a communication referred to in clauses (i) and
(ii) below) a “Company Additional Written
Communication”) other than (i) the Pricing Disclosure
Package, (ii) the Final Offering Memorandum and (iii) any
electronic road show or other written communications, in each case
used in accordance with Section 3(a). Each such Company
Additional Written Communication, when taken together with the
Pricing Disclosure Package, at the Time of Sale did not, and at the
Closing Date will not, contain any untrue statement of a material
fact or omit to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under
which they were made, not misleading; provided that this
representation, warranty and agreement shall not apply to
statements in or omissions from each such Company Additional
Written Communication made in reliance upon and in conformity with
information furnished to the Company in writing by any Initial
Purchaser through the Representative expressly for use in any
Company Additional Written Communication.
(f) No
Other Compensation . None of the Company, the Guarantors or any
of its or their respective subsidiaries has paid or agreed to pay
to any person any compensation for soliciting another to purchase
the Notes (except as contemplated by this Agreement or as described
in or contemplated by the Pricing Disclosure Package, any Company
Additional Written Communication and the Final Offering
Memorandum).
-4-
(g) No
Stabilization . None of the Company, the Guarantors or any of
its or their respective subsidiaries has, directly or indirectly,
taken any action designed to cause or which has constituted or
which might reasonably be expected to cause or result in, under the
Exchange Act or otherwise, the stabilization or manipulation of the
price of any security of the Company to facilitate the sale or
resale of the Securities.
(h)
Incorporation and Good Standing . Each of the Company, the
Guarantors and its or their respective subsidiaries has been duly
incorporated, organized or formed and is validly existing as a
corporation, limited liability company or partnership in good
standing under the laws of its jurisdiction of organization, is
duly qualified to own or lease, as the case may be, and to operate
its properties and to conduct its business as described in the
Pricing Disclosure Package, any Company Additional Written
Communication and the Final Offering Memorandum, except such
failures to be qualified or in good standing as would not, either
individually or in the aggregate, have a material adverse effect on
the condition (financial or otherwise), prospects, earnings,
business or properties of the Company and its subsidiaries, taken
as a whole, and, in the case of the Company and the Guarantors, to
enter into and perform their obligations under each of this
Agreement, the Registration Rights Agreement, the DTC Agreement,
the Securities, the Exchange Securities and the Indenture. Each of
the Company, the Guarantors and its or their respective
subsidiaries is duly qualified to do business as a foreign
corporation, limited liability company or partnership and is in
good standing under the laws of each jurisdiction in which its
ownership or lease of property or the conduct of its business
requires such qualification, except such failures to be qualified
or in good standing as would not, either individually or in the
aggregate, have a material adverse effect on the condition
(financial or otherwise), prospects, earnings, business or
properties of the Company and its subsidiaries, taken as a
whole.
(i) No
Violation . None of the Company, the Guarantors or any of its
or their respective subsidiaries (i) is in violation of its
charter or by-laws, (ii) is in default, and no event has
occurred that, with notice or lapse of time or both, would
constitute such a default, in the due performance or observance of
any term, covenant, condition or other obligation contained in any
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, 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 or has failed to obtain or maintain any
license, permit, certificate, franchise or other governmental
authorization necessary to the ownership of its property or to the
conduct of its business, except in the case of clauses
(ii) and (iii) for such violations or defaults that
(a) could not reasonably be expected to have a material
adverse effect on the performance of this Agreement, the Indenture,
the Registration Rights Agreement or the DTC Agreement, or the
consummation of any of the transactions contemplated hereby and
thereby, or (b) could not reasonably be expected to have a material
adverse effect on the condition (financial or otherwise),
prospects, earnings, business or properties of the Company, the
Guarantors and their respective subsidiaries, taken as a whole,
whether or not arising from transactions in the ordinary course of
business (clauses (a) and (b) collectively, a
“Material Adverse Effect”).
-5-
(j)
Capitalization . The Company has an authorized
capitalization as set forth in the Pricing Disclosure Package, any
Company Additional Written Communication and the Final Offering
Memorandum. All of the issued shares of capital stock of the
Company and the Guarantors have been duly authorized and validly
issued and are fully paid and non-assessable; and all of the issued
shares of capital stock of each Guarantor are owned directly or
indirectly by the Company or the Guarantors (except for the stock
of Laurelwood Associates, Inc.), free and clear of all liens,
encumbrances, equities or claims, other than liens, encumbrances,
equities or claims under or permitted by the Company’s
existing senior secured credit facilities.
(k)
Purchase Agreement . Each of the Company and the Guarantors
has all requisite corporate, limited liability company or
partnership power and authority to enter into this Agreement. This
Agreement has been duly authorized, executed and delivered by, and
is a valid and binding agreement of, the Company and the
Guarantors, enforceable in accordance with its terms (assuming due
authorization, execution and delivery by the Initial Purchasers),
except as rights to indemnification and contribution hereunder may
be limited by applicable law and except as the enforcement thereof
may be limited by applicable bankruptcy, reorganization,
insolvency, moratorium, fraudulent conveyance, preference or other
laws affecting creditors’ rights generally from time to time
in effect and to general principles of equity.
(l)
Indenture . Each of the Company and the Guarantors has all
requisite corporate, limited liability company or partnership power
and authority to enter into the Indenture. The Indenture has been
duly authorized by the Company and each of the Guarantors, and,
assuming due authorization, execution and delivery thereof by the
Trustee, when executed and delivered by the Company and each of the
Guarantors, will constitute a legal, valid and binding instrument
enforceable against the Company and each of the Guarantors in
accordance with its terms (assuming due authorization, execution
and delivery by the Trustee), except as rights to indemnification
and contribution hereunder may be limited by applicable law and
except as the enforcement thereof may be limited by applicable
bankruptcy, reorganization, insolvency, moratorium, fraudulent
conveyance, preference or other laws affecting creditors’
rights generally from time to time in effect and to general
principles of equity.
(m) Notes
and Guarantees . Each of the Company and the Guarantors has all
requisite corporate, limited liability company or partnership power
and authority to enter into the Notes and the Guarantees, as
applicable. The Notes have been duly authorized by the Company and
the Guarantees have been duly authorized by each of the Guarantors,
and when duly executed by the Company and each of the Guarantors,
as applicable, and the Notes are authenticated by the Trustee in
accordance with the provisions of the Indenture and delivered to,
and paid for, by the Initial Purchasers in accordance with the
terms of this Agreement, the Notes and the Guarantees will
constitute legal, valid, binding and enforceable obligations of the
Company and each of the Guarantors, respectively, entitled to the
benefits of the Indenture (subject, as to the enforcement of
remedies, to applicable bankruptcy, reorganization, insolvency,
moratorium, fraudulent conveyance, preference or other laws
affecting creditors’ rights generally from time to time in
effect and to general principles of equity).
-6-
(n)
Exchange Notes and Exchange Guarantees . Each of the Company
and the Guarantors has all requisite corporate, limited liability
company or partnership power and authority to enter into the
Exchange Notes and the Exchange Guarantees, as applicable. The
Exchange Notes have been duly authorized by the Company and the
Exchange Guarantees have been duly authorized by each of the
Guarantors, as applicable, and when the Exchange Notes are executed
and authenticated in accordance with the provisions of the
Indenture and issued and delivered to the holders of the Securities
in exchange therefor as contemplated by the Registration Rights
Agreement and the Indenture, the Exchange Notes and the Exchange
Guarantees will have been duly executed and delivered by the
Company and the Guarantors, respectively, and will constitute
legal, valid and binding obligations of the Company and the
Guarantors, respectively, entitled to the benefits of the Indenture
(subject, as to the enforcement of remedies, to applicable
bankruptcy, reorganization, insolvency, moratorium, fraudulent
conveyance, preference or other laws affecting creditors’
rights generally from time to time in effect and to general
principles of equity).
(o)
Registration Rights Agreement . Each of the Company and the
Guarantors has all requisite corporate, limited liability company
or partnership power and authority to enter into the Registration
Rights Agreement. The Registration Rights Agreement has been duly
authorized by the Company and each of the Guarantors, and, assuming
due authorization, execution and delivery thereof by the Initial
Purchasers, when executed and delivered by the Company and each of
the Guarantors, will constitute a legal, valid, binding and
enforceable instrument of the Company and each of the Guarantors
(subject, as to the enforcement of remedies, to applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance, preference or other laws affecting creditors’
rights generally from time to time in effect and to general
principles of equity).
(p)
Description of the Securities and the Indenture . The
Securities, the Exchange Securities and the Indenture will conform
in all material respects to the respective statements relating
thereto contained in the Offering Memorandum.
(q) No
Material Adverse Change . Except as otherwise disclosed in the
Offering Memorandum, subsequent to the respective dates as of which
information is given in the Offering Memorandum exclusive of any
amendment or supplement thereto: (i) there has been no
material adverse change, or any development that could reasonably
be expected to result in a material adverse change, in the
condition, financial or otherwise, or in the earnings, business,
results of operations or prospects, whether or not arising from
transactions in the ordinary course of business, of the Company and
its subsidiaries, considered as one entity (any such change is
called a “Material Adverse Change”); (ii) the
Company and its subsidiaries, considered as one entity, have not
incurred any material liability or obligation, indirect, direct or
contingent, not in the ordinary course of business nor entered into
any material transaction or agreement not in the ordinary course of
business; and (iii) there has been no dividend or distribution
of any kind declared, paid or made by the Company or, except for
dividends paid to the Company or other subsidiaries, any of its
subsidiaries on any class of capital stock or repurchase or
redemption by the Company or any of its subsidiaries of any class
of capital stock.
-7-
(r) No
Further Authorizations or Approvals Required . No consent,
approval, authorization or other order of, or registration or
filing with, any court or other governmental or regulatory
authority or agency, is required for the Company’s and the
Guarantors’ execution, delivery and performance of this
Agreement, the Registration Rights Agreement, the DTC Agreement or
the Indenture, or the issuance and delivery of the Securities or
the Exchange Securities, or consummation of the transactions
contemplated hereby and thereby and by the Offering Memorandum,
except such as have been obtained or made by the Company and the
Guarantors and are in full force and effect under the Securities
Act, applicable securities laws of the several states of the United
States or provinces of Canada and except such as may be required by
the securities laws of the several states of the United States or
provinces of Canada with respect to the Company’s and the
Guarantors’ obligations under the Registration Rights
Agreement.
(s) No
Conflicts . None of the execution, delivery and performance of
this Agreement, the Indenture, the Registration Rights Agreement
and the DTC Agreement, the issuance and sale of the Securities or
the Exchange Securities, or the consummation of any of the
transactions contemplated hereby or thereby, or the performance by
the Company or any Guarantors of its obligations hereunder or
thereunder (i) will conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute a
default under, any indenture, mortgage, deed of trust, loan
agreement, lease or other agreement or instrument to which the
Company, the Guarantors or any of its or their respective
subsidiaries is a party or by which the Company, the Guarantors or
any of its or their respective subsidiaries is bound or to which
any of the property or assets of the Company, the Guarantors or any
of its or their respective subsidiaries is subject, (ii) will
result in any violation of the provisions of the charter or by-laws
of the Company, the Guarantors or any of its or their respective
subsidiaries or (iii) will violate any applicable statute,
order, rule or regulation of any court or governmental agency or
body having jurisdiction over the Company, the Guarantors or any of
its or their respective subsidiaries or any of their properties or
assets, except, with respect to clauses (i) and (iii), for
such conflicts, breaches, violations or defaults that do not have a
Material Adverse Effect.
(t)
Historical Financial Statements . The historical financial
statements of the Company (including the related notes and
supporting schedules) included in or incorporated by reference in
the Pricing Disclosure Package, any Company Additional Written
Communication and the Final Offering Memorandum present fairly in
all material respects the financial condition and results of
operations 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.
(u)
Selected Financial Data . The selected financial data set
forth under the caption “Selected Consolidated Financial and
Operating Data” in the Pricing Disclosure Package, any
Company Additional Written Communication and the Final Offering
Memorandum fairly present in all material respects, on the basis
stated in the Pricing Disclosure Package, any Company Additional
Written Communication and the Final Offering Memorandum, the
information included therein.
-8-
(v) Other
Financial Data and Statistical Information . The other
financial data, operating data and statistical information and data
of the Company included in or incorporated by reference in the
Pricing Disclosure Package, any Company Additional Written
Communication and the Final Offering Memorandum is presented fairly
in all material respects and, to the extent derived therefrom, has
been prepared on a basis consistent with such financial statements
and the books and records of the Company and its
subsidiaries.
(w)
Independent Accountants . Ernst & Young LLP, who has
certified certain historical financial statements of the Company,
whose reports are incorporated by reference in the Pricing
Disclosure Package, any Company Additional Written Communication
and the Final Offering Memorandum and who (a) has delivered
the initial letter referred to in Section 5(a) hereof and
(b) will deliver on the Closing Date the bring-down letter
referred to in Section 5(a) hereof, is an independent registered
public accounting firm within the meaning of Regulation S-X
under the Securities Act and the Exchange Act and the rules of the
Public Company Accounting Oversight Board during the periods
covered by the financial statements on which it reported that were
or are incorporated by reference in the Pricing Disclosure Package,
any Company Additional Written Communication and the Final Offering
Memorandum. Any non-audit services provided by Ernst & Young
LLP to the Company or any of the Guarantors have been approved by
the Audit Committee of the Board of Directors of the
Company.
(x) No
Material Actions or Proceedings . There are no legal or
governmental proceedings pending to which the Company, the
Guarantors or any of its or their respective subsidiaries is a
party or of which any property or assets of the Company, the
Guarantors or any of its or their respective subsidiaries is the
subject that, if determined adversely to the Company, the
Guarantors or any of its or their respective subsidiaries, would
reasonably be likely to have a Material Adverse Effect, and, to the
Company’s knowledge, no such proceedings are threatened or
contemplated by governmental authorities or threatened by
others.
(y)
Intellectual Property . Except as would not have a Material
Adverse Effect, the Company, the Guarantors and each of their
respective subsidiaries own or possess adequate rights to use all
material 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.
(z)
Property . The Company, the Guarantors or each of their
respective subsidiaries have good and marketable title to all real
property and good title to all personal property owned by them, in
each case free and clear of all liens, encumbrances and defects
except such as are described or incorporated by reference in the
Pricing Disclosure Package, any Company Additional Written
Communication and the Final Offering Memorandum (exclusive of any
amendment or supplement thereto) and such as do not materially
affect the value of the property of the Company, the Guarantors or
any of its or their respective subsidiaries taken as a whole and do
not materially interfere with the use made and proposed to be made
of such property by the Company, the Guarantors or any of its or
their respective subsidiaries; and all real property and
-9-
buildings held
under lease by the Company, the Guarantors or any of its or their
respective subsidiaries 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 property and buildings by the Company, the Guarantors or any
of its or their respective subsidiaries in each case except as
disclosed in the Pricing Disclosure Package, any Company Additional
Written Communication and the Final Offering Memorandum.
(aa) No
Taxes . There are no stamp or other issuance or transfer taxes
or duties or other similar fees or charges required to be paid in
connection with the execution and delivery of this Agreement or the
issuance or sale by the Company and the Guarantors of the
Securities.
(bb) No
Prohibition or Dividends . No subsidiary of the Company or any
Guarantor is currently prohibited, directly or indirectly, from
paying any dividends to the Company or the Guarantors, from making
any other distribution on such subsidiary’s capital stock,
from repaying to the Company or the Guarantors any loans or
advances to such subsidiary from the Company or the Guarantors or
from transferring any of such subsidiary’s property or assets
to the Company or the Guarantors or any other subsidiary of the
Company or the Guarantors, except as described in or contemplated
in the Pricing Disclosure Package, any Company Additional Written
Communication and the Final Offering Memorandum (exclusive of any
amendment or supplement thereto).
(cc) All
Necessary Permits, etc . Except as set forth in or contemplated
in the Pricing Disclosure Package, any Company Additional Written
Communication and the Final Offering Memorandum (exclusive of any
amendment or supplement thereto) and except as would not have a
Material Adverse Effect, the Company, the Guarantors and each of
its and their respective subsidiaries possess such valid and
current certificates, authorizations or permits issued by the
appropriate state, federal or foreign regulatory agencies or bodies
necessary to conduct their respective businesses, and neither the
Company, the Guarantors nor any of its or their respective
subsidiaries has received any notice of proceedings relating to the
revocation or modification of, or non-compliance with, any such
certificate, authorization or permit which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or
finding, would result in a Material Adverse Effect.
(dd)
Accounting Controls . The Company, the Guarantors and its
and their respective subsidiaries maintain a system of internal
accounting controls that is in compliance in all material respects
with the Sarbanes-Oxley Act (as defined below) and is sufficient to
provide reasonable assurance that (i) transactions are
executed in accordance with management’s general or specific
authorizations; (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with
generally accepted accounting principles and to maintain asset
accountability; (iii) access to assets is permitted only in
accordance with management’s general or specific
authorization; and (iv) the recorded accountability for assets
is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any
differences.
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(ee) Tax
Law Compliance . Each of the Company, the Guarantors or its or
their respective subsidiaries has filed all federal, state and
local income and franchise tax returns required to be filed through
the date hereof (except in any case in which the failure to do so
would not have a Material Adverse Effect) and has paid all taxes
due thereon, except with respect to any assessment that is
currently being contested in good faith or as would not have a
Material Adverse Effect, and no tax deficiency has been determined
adversely to the Company, the Guarantors or any of its or their
respective subsidiaries that has had (nor does the Company, the
Guarantors or any of its or their respective subsidiaries have any
knowledge of any tax deficiency that, if determined adversely to
the Company, the Guarantors or any of its or their respective
subsidiaries, might have) a Material Adverse Effect. The Company
has made adequate charges, accruals and reserves in the applicable
financial statements referred to in Section 1(t) hereof in respect
of all federal, state and foreign income and franchise taxes for
all periods as to which the tax liability of the Company or any of
its subsidiaries has not been finally determined.
(ff)
Insurance . To the extent not self-insured, the Company, the
Guarantors and each of their subsidiaries carry, or are covered by,
insurance in such amounts and covering such risks as is customary
for companies engaged in similar businesses in similar industries;
and to the extent the Company or any of its subsidiaries is
self-insured, such entity is self-insured against losses in a
manner that such entity believes is commercially reasonable. The
Company has no reason to believe that it or any subsidiary will not
be able (i) to renew its existing insurance coverage as and
when such policies expire or (ii) to obtain comparable
coverage from similar institutions as may be necessary or
appropriate to conduct its business as now conducted and at a cost
that would not result in a Material Adverse Effect. Neither of the
Company nor any subsidiary has been denied any insurance coverage
which it has sought or for which it has applied.
(gg)
Solvency . The Company and the Guarantors on a consolidated
basis are, and immediately after the Closing Date will be, Solvent.
As used herein, the term “Solvent” means, with respect
to any person on a particular date, that on such date (i) the
fair market value of the assets of such person is greater than the
total amount of liabilities (including contingent liabilities) of
such person, (ii) the present fair salable value of the assets
of such person is greater than the amount that will be required to
pay the probable liabilities of such person on its debts as they
become absolute and matured, (iii) such person is able to
realize upon its assets and pay its debts and other liabilities,
including contingent obligations, as they mature and (iv) such
person does not have unreasonably small capital.
(hh)
Labor Matters . No labor disturbance by the employees of the
Company, the Guarantors or any of its or their respective
subsidiaries exists or, to the knowledge of the Company, the
Guarantors or any of its or their respective subsidiaries, is
imminent that could reasonably be expected to have a Material
Adverse Effect.
(ii)
ERISA Matters . Each of the Company and the Guarantors 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
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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, the
Guarantors or any of its or their respective subsidiaries would
reasonably be expected to have any liability; neither the Company,
the Guarantors or any of its or their respective subsidiaries has
incurred and does not expect to incur liability under
(i) Title IV of ERISA with respect to the 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, the Guarantors or
any of its or their respective subsidiaries 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
reasonably be expected to cause the loss of such qualification. Set
forth on Exhibit A hereto is a list of each employee pension
or benefit plan with respect to which the Company or any Guarantor
is a party in interest or disqualified person.
(jj)
Regulations T, U, X . None of the Company, the Guarantors or
any of their respective subsidiaries or any agent thereof acting on
their behalf has taken, and none of them will take, any action that
might cause this Agreement or the issuance or sale of the
Securities to violate Regulation T, Regulation U or
Regulation X of the Board of Governors of the Federal Reserve
System.
(kk)
Compliance with Environmental Laws . Except for such matters
as would not, individually or in the aggregate, either result in a
Material Adverse Effect or require disclosure in the Pricing
Disclosure Package, any Company Additional Written Communication
and the Final Offering Memorandum, the Company, the Guarantors and
its or their respective subsidiaries (or, to the knowledge of the
Company, any of their predecessors in interest) (i) are
conducting and have conducted their businesses, operations and
facilities in compliance with Environmental Law (as defined below);
(ii) possess, and are in compliance with, any and all permits,
licenses or registrations required under Environmental Law
(“Environmental Permits”); (iii) will not require
material expenditures to maintain such compliance with
Environmental Law or their Environmental Permits or to remediate,
clean up, abate or remove any Hazardous Substance (as defined
below); and (iv) are not subject to any pending or, to the
best knowledge of the Company, the Guarantors or any of its or
their respective subsidiaries, threatened claim or other legal
proceeding under any Environmental Laws against the Company, the
Guarantors or any of its or their respective subsidiaries, and have
not been named as a “potentially responsible party”
under or pursuant to any Environmental Law. As used in this
paragraph, “Environmental Law” means any and all
applicable federal, state, local and foreign laws, ordinances,
regulations and common law, or any administrative or judicial
order, consent, decree or judgment thereof, relating to pollution
or the protection of human health or the environment, including,
without limitation, those related to (x) emissions, discharges,
releases or threatened releases of, or exposure to, Hazardous
Substances, (y) the generation, manufacture, processing,
distribution, use, treatment, storage, disposal, transport or
handling of Hazardous Substances, or (z) the investigation,
remediation or cleanup of any Hazardous Substances. As used in this
paragraph, “Hazardous Substances” means pollutants,
contaminants or hazardous, dangerous, toxic, biohazardous or
infectious substances, materials or wastes or any other chemical
substance regulated under Environmental Laws.
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(ll)
Medicare, Medicaid, etc . Except as set forth or
incorporated by reference in the Pricing Disclosure Package, any
Company Additional Written Communication and the Final Offering
Memorandum (exclusive of any amendment or supplement thereto),
neither the Company, the Guarantors or any of its or their
respective subsidiaries nor, to the knowledge of the Company, any
other person who has a direct or indirect ownership or control
interest in the Company, the Guarantors or any of its or their
respective subsidiaries or who is an officer, director, agent or
managing employee of the Company or any of its subsidiaries
(i) 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 program and
corresponding regulations, the Federal False Claims Act 31 U.S.C.
§ 3729-3733, the Federal Criminal False Claims Act, 18
U.S.C. Section 287, False Statements Relating to Health Care
Matters, 18 U.S.C. Section 1035, Health Care Fraud, 18 U.S.C.
Section 1347, or the privacy, security and transactions
provisions of the Health Insurance Portability and Accountability
Act of 1996 (Public Law 104-191), 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, except for such activities as would not, individually
or in the aggregate, result in a Material Adverse Effect;
(ii) has had a civil monetary penalty assessed against it
under Section 1128A of the Social Security Act
(“SSA”); (iii) 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 (iv) has been convicted (as that term is defined in 42
C.F.R. § 1001.2) of any of the categories of offenses
described in SSA Section 1128(a) and (b)(1), (2) and
(3).
(mm) Except
as set forth or incorporated by reference in the Pricing Disclosure
Package, any Company Additional Written Communication and the Final
Offering Memorandum (exclusive of any amendment or supplement
thereto), (i) the Company, the Guarantors and their respective
subsidiaries possess all required permits, licenses, provider
numbers, certificates, approvals (including, without limitation,
certificate of need approvals), consents, orders, certifications
(including, without limitation, certification under the Medicare,
Medicaid, Tricare programs and other governmental healthcare
programs in which they participate), accreditations (including,
without limitation, accreditation by The Joint Commission) and
other authorizations (collectively, “ Governmental
Licenses ”) issued by, and have made all required
declarations and filings with, the appropriate federal, state or
local regulatory agencies or bodies and accreditation organizations
necessary to conduct the business now operated by them, except
where the failure to possess such Governmental Licenses or to make
such declarations and filings would not reasonably be expected to
result in a Material Adverse Effect; (ii) the Company, the
Guarantors and their respective subsidiaries are in compliance with
the terms and conditions of all such Governmental Licenses, except
where the failure so to comply would not, individually or in the
aggregate, reasonably be expected to result in a Material Adverse
Effect; (iii) all of the Governmental Licenses are valid and
in full force and effect, except where the invalidity of such
Governmental Licenses or the failure of such Governmental Licenses
to be in full force and effect would not reasonably be expected to
result in a Material Adverse Effect and (iv) none of the
Company, the Guarantors or any of their respective subsidiaries has
received any notice of proceedings relating to the revocation
or
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modification of
any such Governmental Licenses which, individually or in the
aggregate, if the subject of an unfavorable decision, ruling or
finding, would reasonably be expected to result in a Material
Adverse Effect.
(nn)
Investment Company Act . The Company has been advised of the
rules and requirements under the Investment Company Act of 1940, as
amended (the “Investment Company Act,” which term, as
used herein, includes the rules and regulations of the Commission
promulgated thereunder). None of the Company, the Guarantors or any
of their respective subsidiaries is, or after giving effect to the
offering and sale of the Notes and the application of the proceeds
thereof as described in the Pricing Disclosure Package, any Company
Additional Written Communication and the Final Offering Memorandum
will be required to register as an “investment company”
as defined in the Investment Company Act.
(oo)
Minutes . The minute books and records of the Company
relating to proceedings of its stockholders, board of directors and
committees of its board of directors made available to Cahill
Gordon and Reindel llp
, counsel for the Initial Purchaser, are the original minute books
and records or are true, correct and complete copies thereof, with
respect to all proceedings of said stockholders, board of directors
and committees since April 30, 2006, through the date hereof.
In the event that definitive minutes have not been prepared with
respect to any proceedings of such stockholders, board of directors
or committees, the Company has provided Cahill Gordon and Reindel
llp with originals or
true, correct and complete copies of draft minutes or written
agendas relating thereto, which drafts and agendas, if any, reflect
all events that occurred in connection with such
proceedings.
(pp)
Disclosure Requirements . The statements contained or
incorporated by reference in (i) the Pricing Disclosure Package,
any Company Additional Written Communication and the Final Offering
Memorandum under the captions “Description of the
Notes”, “Description of Other Indebtedness”,
“Notice to
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