EXHIBIT
1.1
EXECUTION COPY
Sun Healthcare Group,
Inc.
10,000,000 Shares
Common Stock
($0.01 par value per
Share)
Underwriting Agreement
EXECUTION COPY
Underwriting Agreement
December 14, 2006
New York, New
York 10171-0026
Sun Healthcare
Group, Inc., a Delaware corporation (the “ Company
”), proposes to issue and sell to the underwriters named in
Schedule A annexed hereto (the “ Underwriters
”), for whom you are acting as representative, an aggregate
of 10,000,000 shares (the “ Firm Shares ”) of
common stock, $0.01 par value per share (the “ Common
Stock ”), of the Company. In addition, solely for the
purpose of covering over-allotments, the Company proposes to grant
to the Underwriters the option to purchase from the Company up to
an additional 1,500,000 shares of Common Stock (the “
Additional Shares ”). The Firm Shares and the
Additional Shares are hereinafter collectively sometimes referred
to as the “ Shares .” The Shares are described
in the Prospectus which is referred to below.
The Company has
prepared and filed, in accordance with the provisions of the
Securities Act of 1933, as amended, and the rules and regulations
thereunder (collectively, the “ Act ”), with the
Securities and Exchange Commission (the “ Commission
”) a registration statement on Form S-3 (File No. 333-135547)
under the Act (the “ registration statement ”),
including a prospectus, which registration statement incorporates
by reference documents which the Company has filed, or will file,
in accordance with the provisions of the Securities Exchange Act of
1934, as amended, and the rules and regulations thereunder
(collectively, the “ Exchange Act ”). Amendments
to such registration statement, if necessary or appropriate, have
been similarly prepared and filed with the Commission in accordance
with the Act. Such registration statement, as so amended, has
become effective under the Act.
Except where
the context otherwise requires, “ Registration
Statement ,” as used herein, means the registration
statement, as amended at the time of such registration
statement’s effectiveness for purposes of Section 11 of the
Act, as such section applies to the respective Underwriters (the
“ Effective Time ”), including (i) all documents
filed as a part thereof or incorporated or deemed to be
incorporated by reference therein, (ii) any information contained
or incorporated by reference in a prospectus filed with the
Commission pursuant to Rule 424(b) under the Act, to the extent
such information is deemed, pursuant to Rule 430B or Rule 430C
under the Act, to be part of the registration statement at the
Effective Time, and (iii) any registration statement filed to
register the offer and sale of Shares pursuant to Rule 462(b) under
the Act.
The Company has
furnished to you, for use by the Underwriters and by dealers in
connection with the offering of the Shares, copies of one or more
preliminary prospectus supplements, and the documents incorporated
by reference therein, relating to the Shares. Except where the
context otherwise requires, “ Pre-Pricing Prospectus
,” as used herein, means
each such preliminary prospectus supplement, in
the form so furnished, including any basic prospectus (whether or
not in preliminary form) furnished to you by the Company and
attached to or used with such preliminary prospectus supplement.
The parties hereto agree that the only Pre-Pricing Prospectus is
the preliminary prospectus supplement relating to the Shares, dated
December 6, 2006, together with the basic prospectus attached
thereto. Except where the context otherwise requires, “
Basic Prospectus ,” as used herein, means any such
basic prospectus and any basic prospectus furnished to you by the
Company and attached to or used with the Prospectus Supplement (as
defined below).
Except where
the context otherwise requires, “ Prospectus
Supplement ,” as used herein, means the final prospectus
supplement, relating to the Shares, filed by the Company with the
Commission pursuant to Rule 424(b) under the Act on or before the
second business day after the date hereof (or such earlier time as
may be required under the Act), in the form furnished by the
Company to you for use by the Underwriters and by dealers in
connection with the offering of the Shares.
Except where
the context otherwise requires, “ Prospectus ,”
as used herein, means the Prospectus Supplement together with the
Basic Prospectus attached to or used with the Prospectus
Supplement.
“
Permitted Free Writing Prospectuses ,” as used herein,
means the documents listed on Schedule B attached hereto and
each “road show” (as defined in Rule 433 under the
Act), if any, related to the offering of the Shares contemplated
hereby that is a “written communication” (as defined in
Rule 405 under the Act) (each such road show, a “Road
Show”) listed on Schedule C attached hereto. The
Underwriters have not offered or sold and will not offer or sell,
without the Company’s consent, any Shares by means of any
“free writing prospectus” (as defined in Rule 405 under
the Act) that is required to be filed by the Underwriters with the
Commission pursuant to Rule 433 under the Act, other than a
Permitted Free Writing Prospectus.
“
Disclosure Package ,” as used herein, means any
Pre-Pricing Prospectus or Basic Prospectus, in either case together
with any combination of one or more of the Permitted Free Writing
Prospectuses, if any.
Any reference
herein to the registration statement, the Registration Statement,
any Basic Prospectus, any Pre-Pricing Prospectus, the Prospectus
Supplement, the Prospectus or any Permitted Free Writing Prospectus
shall be deemed to refer to and include the documents, if any,
incorporated by reference, or deemed to be incorporated by
reference, therein (the “ Incorporated Documents
”), including, unless the context otherwise requires, the
documents, if any, filed as exhibits to such Incorporated
Documents. Any reference herein to the terms “ amend
,” “ amendment ” or “
supplement ” with respect to the Registration
Statement, any Basic Prospectus, any Pre-Pricing Prospectus, the
Prospectus Supplement, the Prospectus or any Permitted Free Writing
Prospectus shall be deemed to refer to and include the filing of
any document under the Exchange Act on or after the initial
effective date of the Registration Statement, or the date of such
Basic Prospectus, such Pre-Pricing Prospectus, the Prospectus
Supplement, the Prospectus or such Permitted Free Writing
Prospectus, as the case may be, and deemed to be
incorporated
therein by reference.
As used in this
Agreement, “ business day ” shall mean a day on
which the New York Stock Exchange (the “ NYSE ”)
is open for trading. The terms “herein,”
“hereof,” “hereto,”
“hereinafter” and similar terms, as used in this
Agreement, shall in each case refer to this Agreement as a whole
and not to any particular section, paragraph, sentence or other
subdivision of this Agreement. The term “or,” as used
herein, is not exclusive.
The Company and
the Underwriters agree as follows:
1.
Sale and Purchase
. Upon the basis of the
representations and warranties and subject to the terms and
conditions herein set forth, the Company agrees to issue and sell
to the respective Underwriters and each of the Underwriters,
severally and not jointly, agrees to purchase from the Company the
number of Firm Shares set forth opposite the name of such
Underwriter in Schedule A attached hereto, subject to
adjustment in accordance with Section 8 hereof, in each case at a
purchase price of $10.586 per Share. The Company is advised by you
that the Underwriters intend (i) to make a public offering of their
respective portions of the Firm Shares as soon after the
effectiveness of this Agreement as in your judgment is advisable
and (ii) initially to offer the Firm Shares upon the terms set
forth in the Prospectus. You may from time to time increase or
decrease the public offering price after the initial public
offering to such extent as you may determine.
In addition,
the Company hereby grants to the several Underwriters the option
(the “ Over-Allotment Option ”) to purchase, and
upon the basis of the representations and warranties and subject to
the terms and conditions herein set forth, the Underwriters shall
have the right to purchase, severally and not jointly, from the
Company, ratably in accordance with the number of Firm Shares to be
purchased by each of them, all or a portion of the Additional
Shares as may be necessary to cover over-allotments made in
connection with the offering of the Firm Shares, at the same
purchase price per share to be paid by the Underwriters to the
Company for the Firm Shares. The Over-Allotment Option may be
exercised by UBS Securities LLC (“ UBS ”)”
on behalf of the several Underwriters at any time and from time to
time on or before the thirtieth day following the date of the
Prospectus Supplement, by written notice to the Company. Such
notice shall set forth the aggregate number of Additional Shares as
to which the Over-Allotment Option is being exercised and the date
and time when the Additional Shares are to be delivered (any such
date and time being herein referred to as an “ additional
time of purchase ”); provided , however ,
that no additional time of purchase shall be earlier than the
“time of purchase” (as defined below) nor earlier than
the second business day after the date on which the Over-Allotment
Option shall have been exercised nor later than the tenth business
day after the date on which the Over-Allotment Option shall have
been exercised. The number of Additional Shares to be sold to each
Underwriter shall be the number which bears the same proportion to
the aggregate number of Additional Shares being purchased as the
number of Firm Shares set forth opposite the name of such
Underwriter on Schedule A hereto bears to the total number
of Firm Shares (subject, in each case, to such adjustment as UBS
may determine to eliminate fractional shares), subject to
adjustment in accordance with Section 8 hereof.
2.
Payment and Delivery
. Payment of the purchase price for
the Firm Shares shall
be made to the
Company by Federal Funds wire transfer against delivery of the
certificates for the Firm Shares to you through the facilities of
The Depository Trust Company (“ DTC ”) for the respective accounts of the
Underwriters. Such payment and delivery shall be made at 10:00
A.M., New York City time, on December 20, 2006 (unless another time
shall be agreed to by you and the Company or unless postponed in
accordance with the provisions of Section 8 hereof). The time at
which such payment and delivery are to be made is hereinafter
sometimes called the “ time of purchase .”
Electronic transfer of the Firm Shares shall be made to you at the
time of purchase in such names and in such denominations as you
shall specify.
Payment of the
purchase price for the Additional Shares shall be made at the
additional time of purchase in the same manner and at the same
office as the payment for the Firm Shares. Electronic transfer of
the Additional Shares shall be made to you at the additional time
of purchase in such names and in such denominations as you shall
specify.
Deliveries of
the documents described in Section 6 hereof with respect to the
purchase of the Shares shall be made at the offices of Cravath,
Swaine & Moore LLP at 825 Eighth Avenue, New York, NY 10019, at
9:00 A.M., New York City time, on the date of the closing of the
purchase of the Firm Shares or the Additional Shares, as the case
may be.
3.
Representations and Warranties of
the Company . The Company
represents and warrants to and agrees with each of the Underwriters
that:
(a) the Registration Statement has heretofore become
effective under the Act or, with respect to any registration
statement to be filed to register the offer and sale of Shares
pursuant to Rule 462(b) under the Act, will be filed with the
Commission and become effective under the Act no later than 10:00
P.M., New York City time, on the date of determination of the
public offering price for the Shares; no stop order of the
Commission preventing or suspending the use of any Basic
Prospectus, any Pre-Pricing Prospectus, the Prospectus Supplement,
the Prospectus or any Permitted Free Writing Prospectus, or the
effectiveness of the Registration Statement, has been issued, and
no proceedings for such purpose have been instituted or, to the
Company’s knowledge, are contemplated by the
Commission;
(b) the Registration Statement complied when it
became effective, complies as of the date hereof and, as amended or
supplemented, at the time of purchase, each additional time of
purchase, if any, and at all times during which a prospectus is
required by the Act to be delivered (whether physically or through
compliance with Rule 172 under the Act or any similar rule) in
connection with any sale of Shares, will comply, in all material
respects, with the requirements of the Act; the conditions to the
use of Form S-3 in connection with the offering and sale of the
Shares as contemplated hereby have been satisfied; the Registration
Statement meets, and the offering and sale of the Shares as
contemplated hereby complies with, the requirements of Rule 415
under the Act (including, without limitation, Rule 415(a)(5) under
the Act); the Registration Statement did not, as of the Effective
Time, contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to
make the statements therein not misleading; each Pre-Pricing
Prospectus complied, at the time it was filed
with the
Commission, and complies as of the date hereof, in all material
respects with the requirements of the Act; at no time during the
period that begins on the earlier of the date of such Pre-Pricing
Prospectus and the date such Pre-Pricing Prospectus was filed with
the Commission and ends at the time of purchase did or will any
Pre-Pricing Prospectus, as then amended or supplemented, include an
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, and at no time during such period did or will any
Pre-Pricing Prospectus, as then amended or supplemented, together
with any combination of one or more of the then issued Permitted
Free Writing Prospectuses, if any, include an 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; each Basic Prospectus
complied or will comply, as of its date and the date it was or will
be filed with the Commission, complies as of the date hereof (if
filed with the Commission on or prior to the date hereof) and, at
the time of purchase, each additional time of purchase, if any, and
at all times during which a prospectus is required by the Act to be
delivered (whether physically or through compliance with Rule 172
under the Act or any similar rule) in connection with any sale of
Shares, will comply, in all material respects, with the
requirements of the Act; at no time during the period that begins
on the earlier of the date of such Basic Prospectus and the date
such Basic Prospectus was filed with the Commission and ends at the
time of purchase did or will any Basic Prospectus, as then amended
or supplemented, include an 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, and at no time during such period
did or will any Basic Prospectus, as then amended or supplemented,
together with any combination of one or more of the then issued
Permitted Free Writing Prospectuses, if any, include an 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; each
of the Prospectus Supplement and the Prospectus will comply, as of
the date that it is filed with the Commission, the date of the
Prospectus Supplement, the time of purchase, each additional time
of purchase, if any, and at all times during which a prospectus is
required by the Act to be delivered (whether physically or through
compliance with Rule 172 under the Act or any similar rule) in
connection with any sale of Shares, in all material respects, with
the requirements of the Act (in the case of the Prospectus,
including, without limitation, Section 10(a) of the Act); at no
time during the period that begins on the earlier of the date of
the Prospectus Supplement and the date the Prospectus Supplement is
filed with the Commission and ends at the later of the time of
purchase, the latest additional time of purchase, if any, and the
end of the period during which a prospectus is required by the Act
to be delivered (whether physically or through compliance with Rule
172 under the Act or any similar rule) in connection with any sale
of Shares did or will any Prospectus Supplement or the Prospectus,
as then amended or supplemented, include an 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; at no time during the
period that begins on the date of such Permitted Free Writing
Prospectus and ends at the time of purchase did or will any
Permitted Free Writing Prospectus include an
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 , however , that the Company makes no
representation or warranty in this Section 3(b) with respect to any
statement contained in the Registration Statement, any Pre-Pricing
Prospectus, the Prospectus or any Permitted Free Writing Prospectus
in reliance upon and in conformity with information concerning an
Underwriter and furnished in writing by or on behalf of such
Underwriter through you to the Company expressly for use in the
Registration Statement, such Pre-Pricing Prospectus, the Prospectus
or such Permitted Free Writing Prospectus; each Incorporated
Document, at the time such document was filed with the Commission
or at the time such document became effective, as applicable,
complied, in all material respects, with the requirements of the
Exchange Act and did not include an 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;
(c) prior to the execution of this Agreement, the
Company has not, directly or indirectly, offered or sold any Shares
by means of any “prospectus” (within the meaning of the
Act) or used any “prospectus” (within the meaning of
the Act) in connection with the offer or sale of the Shares, in
each case other than the Pre-Pricing Prospectuses and the Permitted
Free Writing Prospectuses, if any; the Company has not, directly or
indirectly, prepared, used or referred to any Permitted Free
Writing Prospectus except in compliance with Rules 164 and 433
under the Act; assuming that such Permitted Free Writing Prospectus
is so sent or given after the Registration Statement was filed with
the Commission (and after such Permitted Free Writing Prospectus
was, if required pursuant to Rule 433(d) under the Act, filed with
the Commission), the sending or giving, by any Underwriter, of any
Permitted Free Writing Prospectus will satisfy the provisions of
Rule 164 and Rule 433 (without reliance on subsections (b), (c) and
(d) of Rule 164); the conditions set forth in one or more of
subclauses (i) through (iv), inclusive, of Rule 433(b)(1) under the
Act are satisfied, and the registration statement relating to the
offering of the Shares contemplated hereby, as initially filed with
the Commission, includes a prospectus that, other than by reason of
Rule 433 or Rule 431 under the Act, satisfies the requirements of
Section 10 of the Act; neither the Company nor the Underwriters are
disqualified, by reason of subsection (f) or (g) of Rule 164 under
the Act, from using, in connection with the offer and sale of the
Shares, “free writing prospectuses” (as defined in Rule
405 under the Act) pursuant to Rules 164 and 433 under the Act; the
Company is not an “ineligible issuer” (as defined in
Rule 405 under the Act) as of the eligibility determination date
for purposes of Rules 164 and 433 under the Act with respect to the
offering of the Shares contemplated by the Registration Statement;
the parties hereto agree and understand that the content of any and
all “road shows” (as defined in Rule 433 under the Act)
related to the offering of the Shares contemplated hereby is solely
the property of the Company;
(d) in accordance with Rule 2710(b)(7)(C)(i) of the
National Association of Securities Dealers, Inc. (the “
NASD ”), the Shares have been registered with the
Commission on Form S-3 under the Act pursuant to the standards for
such Form S-3 in effect prior to October 21, 1992;
(e) as of the date of this Agreement, the Company
has an authorized an outstanding capitalization as set forth in the
sections of the Registration Statement, the Pre-Pricing Prospectus
and the Prospectus entitled “Capitalization” and
“Description of capital stock” (and any similar
sections or information, if any, contained in any Permitted Free
Writing Prospectus), and, as of the time of purchase and any
additional time of purchase, as the case may be, the Company shall
have an authorized and outstanding capitalization as set forth in
the sections of the Registration Statement, the Pre-Pricing
Prospectus and the Prospectus entitled “Capitalization”
and “Description of capital stock” (and any similar
sections or information, if any, contained in any Permitted Free
Writing Prospectus) (subject, in each case, to the issuance of
shares of Common Stock upon exercise of stock options and warrants
disclosed as outstanding in the Registration Statement (excluding
the exhibits thereto), each Pre-Pricing Prospectus and the
Prospectus, the grant of options under existing stock option plans
described in the Registration Statement (excluding the exhibits
thereto), each Pre-Pricing Prospectus and the Prospectus and the
issuance of shares of Common Stock pursuant to the Company’s
Plan of Reorganization); all of the issued and outstanding shares
of capital stock, including the Common Stock, of the Company have
been duly authorized and validly issued and are fully paid and
non-assessable, have been issued in compliance with all applicable
securities laws and were not issued in violation of any preemptive
right, resale right, right of first refusal or similar right; no
further approval or authority of the stockholders or the Board of
Directors of the Company are required for the issuance and sale of
the Shares; and the Shares are duly listed, and admitted and
authorized for trading, subject to official notice of issuance, on
the Nasdaq Global Market (the “ NASDAQ
”);
(f) the statements set forth in the Registration
Statement, Pre-Pricing Prospectus and Prospectus under the caption
“Description of capital stock”, insofar as they purport
to constitute a summary of the terms of the Shares, are accurate
descriptions or summaries in all material respects;
(g) the Company has been duly incorporated and is
validly existing as a corporation in good standing under the laws
of the State of Delaware, with full corporate power and authority
to own, lease and operate its properties and conduct its business
as described in the Registration Statement, the Pre-Pricing
Prospectuses, the Prospectus and the Permitted Free Writing
Prospectuses, if any, to execute and deliver this Agreement and to
issue, sell and deliver the Shares as contemplated
herein;
(h) the Company is duly qualified to do business as
a foreign corporation and is in good standing in each jurisdiction
where the ownership or leasing of its properties or the conduct of
its business requires such qualification, except where the failure
to be so qualified and in good standing would not, individually or
in the aggregate, have a material adverse effect on the business,
properties, financial condition, results of operations or prospects
of the Company and its subsidiaries taken as a whole (a “
Material Adverse Effect ”);
(i) except as disclosed in Schedule D hereto,
the Company owns all of the issued and outstanding capital stock of
each of its subsidiaries (as defined in the Act); except as
disclosed in Schedule D hereto, other than the capital stock
of its subsidiaries, the Company does not own, directly or
indirectly, any shares of stock or any other equity interests or
long-term debt securities of any corporation, firm, partnership,
joint venture, association or other entity; complete and correct
copies of the certificates of incorporation and the bylaws of the
Company and its subsidiaries and all amendments thereto have been
made available to you, and no changes therein will be made on or
after the date hereof through and including the time of purchase
or, if later, any additional time of purchase; each subsidiary of
the Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the jurisdiction of
its incorporation, with full corporate power and authority to own,
lease and operate its properties and to conduct its business as
described in the Registration Statement, the Pre-Pricing
Prospectuses, the Prospectus and the Permitted Free Writing
Prospectuses, if any; each subsidiary of the Company is duly
qualified to do business as a foreign corporation and is in good
standing in each jurisdiction where the ownership or leasing of its
properties or the conduct of its business requires such
qualification, except where the failure to be so qualified and in
good standing would not, individually or in the aggregate, have a
Material Adverse Effect; each subsidiary of the Company is in
compliance in all respects with the laws, orders, rules,
regulations and directives issued or administered by such
jurisdictions, except where the failure to be in compliance would
not, individually or in the aggregate, have a Material Adverse
Effect; all of the outstanding shares of capital stock of each of
the subsidiaries of the Company have been duly authorized and
validly issued, are fully paid and non-assessable, have been issued
in compliance with all applicable securities laws, were not issued
in violation of any preemptive right, resale right, right of first
refusal or similar right and are owned by the Company subject to no
security interest, other encumbrance or adverse claims, except as
set forth in the Registration Statement (excluding the exhibits
thereto), each Pre-Pricing Prospectus, the Prospectus or any
Permitted Free Writing Prospectuses; and no options, warrants or
other rights to purchase, agreements or other obligations to issue
or other rights to convert any obligation into shares of capital
stock or ownership interests in any subsidiary of the Company are
outstanding; the Company has no “significant
subsidiary,” as that term is defined in Rule 1-02(w) of
Regulation S-X under the Act, other than subsidiaries set forth on
Schedule D ;
(j) the Shares have been duly and validly authorized
and, when issued and delivered against payment therefor as provided
herein, will be duly and validly issued, fully paid and
non-assessable and free of statutory and contractual preemptive
rights, resale rights, rights of first refusal and similar rights;
the Shares, when issued and delivered against payment therefor as
provided herein, will be free of any restriction upon the voting or
transfer thereof pursuant to the Company’s charter or bylaws
or other governing documents or any agreement or other instrument
to which the Company or any of its subsidiaries is a party or by
which any of them or any of their respective properties may be
bound or affected;
(k) the capital stock of the Company, including the
Shares, conforms in all
material respects to each description thereof,
if any, contained or incorporated by reference in the Registration
Statement, the Pre-Pricing Prospectus, the Prospectus and any
Permitted Free Writing Prospectus; the certificates for the Shares
are in due and proper form; and the holders of the Shares will not
be subject to personal liability by reason of being such
holders;
(l) this Agreement has been duly authorized,
executed and delivered by the Company;
(m) neither the Company nor any of its subsidiaries
is in breach or violation of or in default under (nor has any event
occurred which, with notice, lapse of time or both, would result in
any breach or violation of, constitute a default under or give the
holder of any indebtedness (or a person acting on such
holder’s behalf) the right to require the repurchase,
redemption or repayment of all or a part of such indebtedness
under) (A) its respective charter or bylaws, or (B) any indenture,
mortgage, deed of trust, bank loan or credit agreement or other
evidence of indebtedness, or any license, lease, contract or other
agreement or instrument to which the Company or any of its
subsidiaries is a party or by which any of them or any of their
respective properties may be bound or affected, or (C) any federal,
state, local or foreign law, regulation or rule, including, without
limitation, any such law, rule or regulation applicable to the
health care industry (“Health Care laws”)or (D) any
rule or regulation of any self-regulatory organization or other
non-governmental regulatory authority (including, without
limitation, the rules and regulations of the NASDAQ), or (E) any
decree, judgment or order applicable to the Company or any of its
subsidiaries or any of their respective properties, other than in
the case of clauses (B) and (C) such breaches, violations or
defaults as would not, individually or in the aggregate have a
Material Adverse Effect;
(n) the execution, delivery and performance of this
Agreement, the issuance and sale of the Shares and the consummation
of the transactions contemplated hereby will not conflict with,
result in any breach or violation of or constitute a default under
(nor constitute any event which, with notice, lapse of time or
both, would result in any breach or violation of, constitute a
default under or give the holder of any indebtedness (or a person
acting on such holder’s behalf) the right to require the
repurchase, redemption or repayment of all or a part of such
indebtedness under) (or result in the creation or imposition of a
lien, charge or encumbrance on any property or assets of the
Company or any subsidiary of the Company pursuant to) (A) the
charter or bylaws of the Company or any of its subsidiaries, or (B)
any indenture, mortgage, deed of trust, bank loan or credit
agreement or other evidence of indebtedness, or any license, lease,
contract or other agreement or instrument to which the Company or
any of its subsidiaries is a party or by which any of them or any
of their respective properties may be bound or affected, or (C) any
federal, state, local or foreign law, regulation or rule,
including, without limitation, Health Care Laws, or (D) any rule or
regulation of any self-regulatory organization or other
non-governmental regulatory authority (including, without
limitation, the rules and regulations of the NASDAQ), or (E) any
decree, judgment or order applicable to the Company or any of its
subsidiaries or any of their respective properties, other than in
the case of clause (B) for such breaches, violations and
defaults
that would not, individually or in the
aggregate, have a Material Adverse Effect;
(o) no approval, authorization, consent or order of
or filing with any federal, state, local or foreign governmental or
regulatory commission, board, body, authority or agency, or of or
with any self-regulatory organization or other non-governmental
regulatory authority (including, without limitation, the NASDAQ),
or approval of the stockholders of the Company, is required in
connection with the issuance and sale of the Shares or the
consummation by the Company of the transactions contemplated
hereby, other than (i) registration of the Shares under the Act,
which has been effected (or, with respect to any registration
statement to be filed hereunder pursuant to Rule 462(b) under the
Act, will be effected in accordance herewith), (ii) any necessary
qualification under the securities or blue sky laws of the various
jurisdictions in which the Shares are being offered by the
Underwriters or (iii) under the Conduct Rules of the National
Association of Securities Dealers, Inc. (the “ NASD
”);
(p) except as described in the Registration
Statement (excluding the exhibits thereto), each Pre-Pricing
Prospectus and the Prospectus, (i) no person has the right,
contractual or otherwise, to cause the Company to issue or sell to
it any shares of Common Stock or shares of any other capital stock
or other equity interests of the Company, (ii) no person has any
preemptive rights, resale rights, rights of first refusal or other
rights to purchase any shares of Common Stock or shares of any
other capital stock of or other equity interests in the Company and
(iii) no person, other than the Underwriters, has the right to act
as an underwriter or as a financial advisor to the Company in
connection with the offer and sale of the Shares, in the case of
each of the foregoing clauses (i), (ii) and (iii), whether as a
result of the filing or effectiveness of the Registration Statement
or the sale of the Shares as contemplated thereby or otherwise; no
person has the right, contractual or otherwise, to cause the
Company to register under the Act any shares of Common Stock or
shares of any other capital stock of or other equity interests in
the Company, or to include any such shares or interests in the
Registration Statement or the offering contemplated thereby,
whether as a result of the filing or effectiveness of the
Registration Statement or the sale of the Shares as contemplated
thereby or otherwise;
(q) each of the Company and its subsidiaries has all
necessary licenses, permits, authorizations, consents and approvals
and has made all necessary filings required under any applicable
law, regulation or rule, and has obtained all necessary licenses,
permits, authorizations, consents and approvals from other persons,
(i) as are necessary for such party to acquire and own, lease or
operate its properties and (ii) in order to conduct its respective
businesses, except where the failure to have or obtain such
licenses, permits, authorizations, consents or approvals would not,
individually or in the aggregate, have a Material Adverse Effect;
the Company and each of its subsidiaries have fulfilled and
performed all of their obligations with respect to such licenses,
permits, authorizations, consents and approvals, except where the
failure to fulfill or perform such obligations would not,
individually or in the aggregate, have a Material Adverse Effect;
neither the Company nor any of its subsidiaries is in violation of,
or in default under, or has received notice of any proceedings
relating to revocation or modification of, any such
license, permit, authorization, consent or
approval or any federal, state, local or foreign law, regulation or
rule or any decree, order or judgment applicable to the Company or
any of its subsidiaries, except where such violation, default,
revocation or modification would not, individually or in the
aggregate, have a Material Adverse Effect;
(r) all legal or governmental proceedings, affiliate
or related party transactions, off-balance sheet transactions
(including, without limitation, transactions related to, and the
existence of, “variable interest entities” within the
meaning of Financial Accounting Standards Board Interpretation No.
46), statutes, regulations, contracts, licenses, agreements,
properties, leases or documents of a character required to be
described in the Registration Statement, the Pre-Pricing Prospectus
or the Prospectus or to be filed as an exhibit to the Registration
Statement or any Incorporated Document have been and will be so
described or filed as required;
(s) other than as set forth in the Registration
Statement (excluding the exhibits thereto), each Pre-Pricing
Prospectus and the Prospectus, there are no actions, suits, claims,
investigations or proceedings pending or, to the Company’s
knowledge, threatened or contemplated to which the Company or any
of its subsidiaries or, to the Company’s knowledge, any of
their respective directors or officers is or would be a party or of
which any of their respective properties is or would be subject at
law or in equity, before or by any federal, state, local or foreign
governmental or regulatory commission, board, body, authority or
agency, or before or by any self-regulatory organization or other
non-governmental regulatory authority (including, without
limitation, the NASDAQ), except any such action, suit, claim,
investigation or proceeding which, if resolved adversely to the
Company or any of its subsidiaries, would not, individually or in
the aggregate, have a Material Adverse Effect or prevent or
materially interfere with consummation of the transactions
contemplated hereby;
(t) Ernst & Young LLP, whose report on the
consolidated financial statements of the Company and its
subsidiaries is included and incorporated by reference in the
Registration Statement, the Pre-Pricing Prospectuses and the
Prospectus, are independent registered public accountants as
required by the Act and by the rules of the Public Company
Accounting Oversight Board;
(u) PricewaterhouseCoopers LLP, whose report on the
consolidated financial statements of Harborside Healthcare
Corporation and its subsidiaries is incorporated by reference in
the Registration Statement, the Pre-Pricing Prospectuses and the
Prospectus, are independent registered public accountants as
required by the Act and by the rules of the Public Company
Accounting Oversight Board;
(v) the financial statements included or
incorporated by reference in the Registration Statement, the
Pre-Pricing Prospectus, the Prospectus and any Permitted Free
Writing Prospectus, together with the related notes and schedules,
present fairly, in all material respects, the consolidated
financial position of the Company and its subsidiaries as of the
dates indicated, of Peak Medical Corporation and its subsidiaries
as of the dates indicated and of Harborside Healthcare Corporate
and its subsidiaries as of
the dates indicated and the consolidated results
of operations, cash flows and changes in stockholder’s equity
of the Company and its subsidiaries for the periods specified, of
Peak Medical Corporation and its subsidiaries for the periods
specified and of Harborside Healthcare Corporation, and have been
prepared in compliance with the requirements of the Act and the
Exchange Act and in conformity with U.S. generally accepted
accounting principles applied on a consistent basis during the
periods involved, except as may be expressly stated in the related
notes thereto; all pro forma financial statements and other pro
forma financial data included or incorporated by reference in the
Registration Statement, any Pre-Pricing Prospectus, the Prospectus
or any Permitted Free Writing Prospectus comply with the
requirements of the Act and the Exchange Act, including, without
limitation, Article 11 thereof, and the assumptions used in the
preparation of such pro forma financial statements and data are
reasonable, the pro forma adjustments used therein are appropriate
to give effect to the transactions or circumstances described
therein and the pro forma adjustments have been properly applied to
the historical amounts in the compilation of those statements and
data; the other financial data relating to the Company, Peak
Medical Corporation or Harborside Healthcare Corporation that are
contained or incorporated by reference in the Registration
Statement, any Pre-Pricing Prospectus, the Prospectus or any
Permitted Free Writing Prospectus are accurately and fairly
presented and prepared on a basis consistent with the financial
statements and books and records of the Company; there are no
financial statements (historical or pro forma) that are required to
be included or incorporated by reference in the Registration
Statement, any Pre-Pricing Prospectus or the Prospectus (including,
without limitation, as required by Rules 3-12 or 3-05 or Article 11
of Regulation S-X under the Act) that are not included or
incorporated by reference as required; the Company and its
subsidiaries do not have any material liabilities or obligations,
direct or contingent (including any off-balance sheet obligations),
not described in the Registration Statement (excluding the exhibits
thereto), each Pre-Pricing Prospectus and the Prospectus; except as
disclosed in the Registration Statement (excluding the exhibits
thereto), each Pre-Pricing Prospectus and the Prospectus, neither
the Company nor any of its subsidiaries is, together with its
“related parties,” the “primary
beneficiary” of any “variable interest entity”
(as such terms are used in Financial Accounting Standards Board
Interpretation No. 46); and all disclosures contained or
incorporated by reference in the Registration Statement, any
Pre-Pricing Prospectus, the Prospectus or any Permitted Free
Writing Prospectus regarding “non-GAAP financial
measures” (as such term is defined by the rules and
regulations of the Commission) comply with Regulation G of the
Exchange Act and Item 10 of Regulation S-K under the Act, to
the extent applicable;
(w)
subsequent to the
respective dates as of which information is given in the
Registration Statement, the Pre-Pricing Prospectuses, the
Prospectus and the Permitted Free Writing Prospectuses, if any, in
each case excluding any amendments or supplements to the foregoing
made after the execution of this Agreement, there has not been (i)
any material adverse change, or any development involving a
prospective material adverse change, in the business, properties,
management, financial condition or results of operations of the
Company and its subsidiaries taken as a whole, (ii) any transaction
which is material to the Company and its subsidiaries taken as a
whole, (iii) any obligation or liability, direct or contingent
(including any off-balance sheet
obligations), incurred by the Company or its
subsidiaries, which is material to the Company and its subsidiaries
taken as a whole, (iv) any change in the capital stock or
outstanding indebtedness of the Company or its subsidiaries or (v)
any dividend or distribution of any kind declared, paid or made on
the capital stock of the Company or any of its
subsidiaries;
(x) neither the Company nor any subsidiary of the
Company is, and at no time during which a prospectus is required by
the Act to be delivered (whether physically or through compliance
with Rule 172 under the Act or any similar rule) in connection with
any sale of Shares will either of them be, and, after giving effect
to the offering and sale of the Shares, neither of them will be, an
“investment company” or an entity
“controlled” by an “investment company,” as
such terms are defined in the Investment Company Act of 1940, as
amended (the “ Investment Company Act
”);
(y) other than as set forth in the Registration
Statement (excluding the exhibits thereto), each Pre-Pricing
Prospectus and the Prospectus, each of the Company and its
subsidiaries has good and marketable title to all property (real
and personal) described in the Registration Statement, the
Pre-Pricing Prospectus, the Prospectus and any Permitted Free
Writing Prospectus as being owned by any of them, free and clear of
all liens, claims, security interests or other encumbrances, except
such as do not, individually or in the aggregate, materially affect
the value of such property and do not materially interfere with the
use currently made and proposed to be made of the property by the
Company and its subsidiaries; all the property and buildings
described in the Registration Statement, the Pre-Pricing
Prospectus, the Prospectus and any Permitted Free Writing
Prospectus, as being held under lease by the Company or any of its
subsidiaries is held thereby under valid, subsisting and
enforceable leases;
(z) the Company and its subsidiaries own, or have
obtained valid and enforceable licenses for, or other rights to
use, the inventions, patent applications, patents, trademarks (both
registered and unregistered), tradenames, service names,
copyrights, trade secrets and other proprietary information
described in the Registration Statement, the Pre-Pricing
Prospectus, the Prospectus and any Permitted Free Writing
Prospectus as being owned or licensed by them or which are
necessary for the conduct of their respective businesses as
currently conducted or as proposed to be conducted, except where
the failure to own, license or have such rights would not,
individually or in the aggregate, have a Material Adverse Effect
(collectively, “ Intellectual Property ”); (i)
there are no third parties who have or, to the Company’s
knowledge, will be able to establish rights to any Intellectual
Property, except for, and to the extent of, the ownership rights of
the owners of the Intellectual Property which is licensed to the
Company; (ii) to the Company’s knowledge, there is no
infringement by third parties of any Intellectual Property; (iii)
there is no pending or, to the Company’s knowledge,
threatened action, suit, proceeding or claim by others challenging
the Company’s rights in or to any Intellectual Property, and
the Company is unaware of any facts which could form a reasonable
basis for any such action, suit, proceeding or claim; (iv) there is
no pending or, to the Company’s knowledge, threatened action,
suit, proceeding or claim by others challenging the validity,
enforceability or scope of any Intellectual Property, and
the
Company is
unaware of any facts which could form a reasonable basis for any
such action, suit, proceeding or claim; (v) there is no pending or,
to the Company’s knowledge, threatened action, suit,
proceeding or claim by others that the Company or any of its
subsidiaries infringes or otherwise violates any patent, trademark,
copyright, tradename, service name, trade secret or other
proprietary rights of others, and the Company is unaware of any
facts which could form a reasonable basis for any such action,
suit, proceeding or claim; (vi) to the Company’s knowledge,
there is no patent or patent application that contains claims that
interfere with the issued or pending claims of any of the
Intellectual Property; and (vii) to the Company’s knowledge,
there is no prior art that may render any patent application owned
by the Company within the Intellectual Property unpatentable that
has not been disclosed to the U.S. Patent and Trademark
Office;
(aa) neither the Company nor any of its subsidiaries
is engaged in any unfair labor practice; except for matters which
would not, individually or in the aggregate, have a Material
Adverse Effect, (i) there is (A) no unfair labor practice complaint
pending or, to the Company’s knowledge, threatened against
the Company or any of its subsidiaries before the National Labor
Relations Board, and no grievance or arbitration proceeding arising
out of or under collective bargaining agreements is pending or, to
the Company’s knowledge, threatened, (B) no strike, labor
dispute, slowdown or stoppage pending or, to the Company’s
knowledge, threatened against the Company or any of its
subsidiaries and (C) no union representation dispute currently
existing concerning the employees of the Company or any of its
subsidiaries, (ii) to the Company’s knowledge, no union
organizing activities are currently taking place concerning the
employees of the Company or any of its subsidiaries and (iii) there
has been no violation of any federal, state, local or foreign law
relating to discrimination in the hiring, promotion or pay of
employees, any applicable wage or hour laws or any provision of the
Employee Retirement Income Security Act of 1974 (“
ERISA ”) or the rules and regulations promulgated
thereunder concerning the employees of the Company or any of its
subsidiaries;
(bb) the Company and its subsidiaries and their
respective properties, assets and operations are in compliance
with, and the Company and each of its subsidiaries hold all
permits, authorizations and approvals required under, Environmental
Laws (as defined below), except to the extent that failure to so
comply or to hold such permits, authorizations or approvals would
not, individually or in the aggregate, have a Material Adverse
Effect; there are no past, present or, to the Company’s
knowledge, reasonably anticipated future events, conditions,
circumstances, activities, practices, actions, omissions or plans
that could reasonably be expected to give rise to any material
costs or liabilities to the Company or any of its subsidiaries
under, or to interfere with or prevent compliance by the Company or
any of its subsidiaries with, Environmental Laws; except as would
not, individually or in the aggregate, have a Material Adverse
Effect, neither the Company nor any of its subsidiaries (i) to the
Company’s knowledge, is the subject of any investigation,
(ii) has received any notice or claim, (iii) is a party to or
affected by any pending or, to the Company’s knowledge,
threatened action, suit or proceeding, (iv) is bound by any
judgment, decree or order or (v) has entered into any agreement, in
each case relating to any alleged violation of any Environmental
Law or any actual or alleged
release or
threatened release or cleanup at any location of any Hazardous
Materials (as defined below) (as used herein, “
Environmental Law
” means any federal, state,
local or foreign law, statute, ordinance, rule, regulation, order,
decree, judgment, injunction, permit, license, authorization or
other binding requirement, or common law, relating to health,
safety or the protection, cleanup or restoration of the environment
or natural resources, including those relating to the distribution,
processing, generation, treatment, storage, disposal,
transportation, other handling or release or threatened release of
Hazardous Materials, and “ Hazardous Materials ”
means any material (including, without limitation, pollutants,
contaminants, hazardous or toxic substances or wastes) that is
regulated by or may give rise to liability under any Environmental
Law);
(cc) all tax returns required to be filed by the
Company or any of its subsidiaries have been filed, and all taxes
and other assessments of a similar nature (whether imposed directly
or through withholding) including any interest, additions to tax or
penalties applicable thereto due or claimed to be due from such
entities have been paid, other than those being contested in good
faith and for which adequate reserves have been
provided;
(dd) the Company and each of its subsidiaries
maintain insurance covering their respective properties,
operations, personnel and businesses as the Company reasonably
deems adequate (after giving effect to any self-insurance and
retention levels compatible with the following standards); such
insurance insures against such losses and risks to an extent which
is adequate in accordance with customary industry practice to
protect the Company and its subsidiaries and their respective
businesses; all such insurance is fully in force on the date hereof
and will be fully in force at the time of purchase and each
additional time of purchase, if any; neither the Company nor any of
its subsidiaries has reason to believe that it will not be able to
renew any such insurance as and when such insurance
expires;
(ee) neither the Company nor any of its subsidiaries
has sustained since the date of the last audited consolidated
finan
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