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PURCHASE AGREEMENT

Purchase and Sale Agreement

PURCHASE AGREEMENT | Document Parties: PSYCHIATRIC SOLUTIONS INC | Barclays Capital Inc | Cede & Co | Citigroup Global Markets Inc | RBC Capital Markets Corporation | US Bank National Association You are currently viewing:
This Purchase and Sale Agreement involves

PSYCHIATRIC SOLUTIONS INC | Barclays Capital Inc | Cede & Co | Citigroup Global Markets Inc | RBC Capital Markets Corporation | US Bank National Association

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Title: PURCHASE AGREEMENT
Governing Law: New York     Date: 5/8/2009
Industry: Healthcare Facilities     Law Firm: Cahill Gordon;Waller Lansden     Sector: Healthcare

PURCHASE AGREEMENT, Parties: psychiatric solutions inc , barclays capital inc , cede & co , citigroup global markets inc , rbc capital markets corporation , us bank national association
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Exhibit 4.1

Psychiatric Solutions, Inc.

$120,000,000

7 3 / 4 % Senior Subordinated Notes due 2015

PURCHASE AGREEMENT

dated May 4, 2009

Banc of America Securities LLC
Barclays Capital Inc.
Citigroup Global Markets Inc.
J.P. Morgan Securities Inc.
RBC Capital Markets Corporation

 


 

PURCHASE AGREEMENT

May 4, 2009

Banc of America Securities LLC
     as Representative of the Initial Purchasers named in Schedule A
One Bryant Park
New York, New York 10036

Ladies and Gentlemen:

      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.

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     (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).

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     (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”).

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     (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).

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     (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.

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     (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.

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     (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

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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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